Saudi Arabia - joining the dots

A series of blog entries exploring Saudi Arabia's role in the oil markets with a brief look at the history of the royal family and politics that dictate and influence the Kingdom's oil policy

AIM - Assets In Market

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Iran negotiations - is the end nigh?

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Yemen: The Islamic Chessboard?

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Acquisition Criteria

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Valuation Series

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Thursday, 23 August 2018

Tolmount sanctioned with first gas by end 2020

Premier Oil, Dana Petroleum and Antin has sanctioned the Tolmount gas field in the UK North Sea which is planned to be onstream towards the end of 2020. This represents major project for the partners with 500bcf of gas and plateau production of 300mmcfpd.

This field will further help steer the fortunes of the two upstream partners. Premier Oil is looking for longer term growth projects having been financially constrained for years under a debt mountain and now that Catcher is onstream. For Dana, the company has been strategically lost with its parent KNOC providing minimal guidance over the years.

In progressing this project, Premier Oil has struck a smart deal. Although not necessarily the cheapest form of financing, Premier Oil has been able to secure a deal which massively limits its capex spend on the development. By bringing in Antin to fund its share of the platform and export pipeline to the Easington terminal, it has halved its capex spend to USD120m which will largely be for drilling. In return, Antin will charge a tariff for use of the platform/pipeline transportation from Premier Oil’s share of revenues.

#Premier #KNOC #Dana #Tolmount #NorthSea #Antin

Tuesday, 21 August 2018

Energean bearing fruit in the Eastern Med

Energean has published a new CPR highlighting the conversion of 2C resources into 2P reserves at the Karish and Tanin fields. Net 2P reserves for the fields now stands at 298mmboe with 22tcf gas and 32mmbbl liquids (gross) being upgraded. The company’s net 2P reserves including its Greek fields are now at 349mmboe.

A further 0.2tcf gas and 1mmbbl liquids remain in contingent resources relating to the Karish B reservoir and will be upgraded upon successful well production testing.

Energean is now thinking beyond its flagship development project with the recent award of its exploration acreage offshore Israel (Blocks 12, 21-23 and 31). These are estimated to contain 7.5tcf gas and over 100mmbbl liquids prospective resources. This massively enlarges the company’s exploration portfolio beyond the 1.3tcf Karish North prospect being drilled in early 2019. The company has secured an extension on the drilling rig for further exploration drilling should it have matured targets over the next 12 to 18 months.

#Karish #Tanin # Israel #Energean #EastMed #Greece

Thursday, 2 August 2018

All Tawke on Peshkabir: Is Tawke production declining?

The Tawke PSC encompasses the Tawke and Peshkabir fields. In 2017, operator DNO commenced production at Peshkabir and in 2018, drilled the Peshkabir-4 and -5 wells taking production up to 30-35mbopd.

However, the limited disclosure by DNO means it is difficult to break out the production on the Tawke PSC between the Tawke and Peshkabir fields. Based on various disclosures between DNO and partner Genel, it appears that production at Tawke is declining, masked by an uptick in Peshkabir.

The Tawke PSC has been producing just c.110mbopd. However closer study reveals that Peshkabir production is now compensating on falling production on the main Tawke field, and hence maintaining the c.110mbopd levels across the PSC.

Although more production history is required, there are now concerns of the problems encountered at TaqTaq by Genel where reserves and production were significantly reduced as water started to be produced from the reservoirs.

#Tawke #Peshkabir #TaqTaq #waterbreakthrough #Kurdistan #DNO #Genel

Wednesday, 25 July 2018

Map of the day: Ghana near-field tiebacks and upsides

#Ghana #Jubilee #Kosmos #TEN #Tullow

Wednesday, 18 July 2018

Trump administration hampers US oil

Plains All American Pipeline company has been denied a request for an exemption from steel import tariffs. This will hit plans to build much needed takeaway capacity for the evacuation of oil from the Permian Basin. The capacity bottleneck has already manifested in large discounts for Midland-Permian crude which is trading at a discount of c.USD12/bbl to WTI.

Plains sought an exemption for high-grade steel from Greece for its 585mbopd Cactus II pipeline to the port of Corpus Christi. However the government purports that the steel is domestically produced in “sufficient and reasonably available” quantities in denying the request. Plains is now looking to challenge the decision.

Plains released a strong statement criticising the government following the decision: “Collecting a tariff on steel pipe orders for projects like this constitutes a tax on the construction of critical U.S. energy infrastructure…and is a significant unintended consequence of current trade policy and risks U.S. energy security and American jobs.”

Tuesday, 17 July 2018

Kosmos hit by rig contract as dry hole is announced in Suriname

Kosmos could be liable for a share of the onerous contract in Ghana entered into by Tullow Oil, operator of the Jubilee and TEN fields. This could equate to over USD100 million for Kosmos which would wipe out Q2 2018 revenues and earnings since the beginning of the year.

Tullow, on behalf of the field partners entered into a long-term rig contract for the West Leo rig in 2012 for work in the Jubilee and TEN area. In 2016, Tullow declared force majeure under the contract, driven by the border dispute between Ghana and Côte d’Ivoire which forbid any further drilling around the TEN fields until the matter was resolved.

Although the partners had a choice to redeploy the rig at the Jubilee field to undertake further work, it decided not to given issues with the FPSO turret and therefore uncertainty over ongoing development at the field. In an effort to save costs, the partners declared force majeure on the rig contract, which England’s Commercial Court has now ruled was not a valid reason to trigger force majeure. The liability between the TEN and Jubilee partners stands at USD254 million.

This comes on the back of bad news for Kosmos in Suriname where the Anapai-1 well was dry. This extends the dry run of Kosmos and follows the high profile dry well at Requin Tigre (see Kosmos' end of a winning streak with dry well at Requin Tigre).

Monday, 16 July 2018

The nonsense of releasing US Strategic Petroleum Reserves

Trump is on a mission to contain oil prices and has been sending strong tweets and messages blaming OPEC and supposed ally Saudi Arabia for the current levels of “high” oil prices. The Trump administration’s policies are in complete dissonance as tampering with the Iranian sanctions is a key cause of the tightening of global oil supply and strong noises around US energy independence is in complete opposition to Trump asking OPEC to pump more oil, which illustrates that the US is far from energy independence and still needing to call up OPEC in times of need.

Trump is now considering tapping the US strategic petroleum reserves (“SPR”) in an attempt to lower oil prices in the run up to the US midterm elections; logic being that this will translate into lower prices at the pump. However, his administration may be wrongly conflating the two with no guarantee that a release of SPR will lower gasoline prices.

A release of SPR crude will likely do little to alleviate pump prices. US refiners are already running at near full capacity and additional crude will have limited ability to be absorbed and converted to gasoline domestically. In fact, additional crude on the market will likely depress WTI and increase the profits of the refiners rather than the benefits trickling through to the pumps. Furthermore, the SPR holds light crude whereas the feed slate for US Gulf refiners is typically heavy crude from South America.

The SPR was established in 1975 following the Arab oil embargo in 1973. The US, together with 28 other countries, are required by the International Energy Agency to hold no less than 90 days of import cover measured against the previous year’s net imports. It is designed to meet domestic demand in the case of supply disruptions. In the US, the SPR is held across four sites on the Gulf Coast with a total of 660mmbbl of mostly light crude. They can be released with a 13-day window once the POTUS gives the decision.