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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Tuesday, 20 November 2018

Kirkuk exports resume via Kurdistan

The Kurdistan and Federal Iraq governments have announced an agreement for the resumption of oil exports from Kirkuk via the Kurdistan export pipeline to Ceyhan. This positive development will benefit the public revenues of Federal Iraq which has been grappling with funding issues in recent years with the oil price collapse on the one hand and need to fund defences along its borders on the other.

Kirkuk production was locked out of the Kurdistan export pipeline following the Kurdistan independence referendum last autumn, the result of which also led to Federal Iraq taking back over the Kirkuk fields from the Kurds.

Related posts:

Monday, 19 November 2018

INEOS swoops in for Conoco North Sea

As widely reported over the weekend, INEOS is the front-runner for the ConocoPhillips’ UK North Sea portfolio. ConocoPhillips had a buyer for the portfolio back in 2015, but pulled the deal citing that it had no desire to sell-out at the bottom of oil price cycle,

INEOS has beaten other likely UK North Sea focussed contenders which could include Ithaca Energy, Premier Oil, Neptune Energy, Chrysaor and SiccarPoint. The sale, estimated to be around USD3 billion, will exclude the Teeside Norsea terminal and London trading business.

INEOS existing North Sea portfolio
Source: The Times

The below was originally published on 24th June 2018:

ConocoPhillips' is one of the largest operators in the UK North Sea, being the operator of the Britannia area, the J-Area and large swathes of the Southern North Sea. ConocoPhillips is also a non-operated partner in the giant Clair field.

Clair is one of the largest oil fields in the UK offshore and located in the West of Shetlands which is making a name for being the last frontier of the UK and is increasingly attracting further exploration activity. The Clair field was brought onstream in 2005 and is currently undergoing a second phase of development (Clair Ridge). Clair Ridge is planned to come onstream in Q4 2018 with operator BP targeting an additional 640mmbbl which will extend the life of the Clair Area beyond 2050. As soon as Clair Ridge is onstream, the partners will be planning for the Phase 3 of the development known as Clair South.

On the operated assets, Britannia is one of the largest gas fields in the UK which has acted as a hub for various tie-backs over the years. The J-Area, although now beginning to mature, has been a highly successful gas hub in the Central North Sea where more infill drilling and exploration activity is planned into 2019 and 2020.

The Southen North Sea assets are the most mature with some going into decommissioning. ConocoPhillips has widely announced the closure of the Theddlethorpe gas processing plant which is the terminus for its CMS pipeline. This will lead to early/forced decommissioning of all the fields which currently utilise the CMS pipeline as the export route including the Faroe and Tullow Schooner and Ketch fields which will cease production in August 2018.

The ConocoPhillips' UK portfolio is concentrated around a few hubs and excluding the Southern North Sea, has a good amount of life remaining with current production at c.80mboe/d.

Sunday, 18 November 2018

PGNiG expands footprint in Norway

On 18th October PGNiG announced that it had agreed to acquire Equinor's interest in the Tommeliten Alpha gas and condensate field in the Norwegian North Sea. This continues PGNiG's strategy of diversifying its gas supply away from Russia.

PGNiG has always had an interest in Norwegian gas seeing it as as logical and accessible source of gas for Poland. As the long term Russian gas supply contracts come to expiry, PGNiG is making bold moves to secure new sources of gas and LNG. See PGNiG shuns Russian gas.

The operator of the discovery is ConocoPhilips (28.26%), and current partners are Total (20.23%), Eni Norge (9.13%) and Equinor (42.38%) which will sell its entire working interest to PGNiG. The agreed price for Equinor's stake was USD220 million at 1 January 2018 effective date.

The Tommeliten Alpha discovery is located in the vicinity of large, existing fields, most notably the giant Ekofisk field. According to current plans, production is expected to commence in 2024, and the development concept assumes a subsea tie-back to the existing infrastructure on Ekofisk.

Tommeliten Alpha is a gas and condensate field with estimated recoverable resources of 52 mmboe (net to PGNiG's 42.38%). PGNiG believes in an upside potential in the field reserves as well as significant exploration upside in the area.

The field was originally planned to start production in 2019, but development plans were shelved by operator ConocoPhillips in 2016 due to low oil prices.

#PGNiG #NorthSea #TommelitenAlpha # Equinor #Conoco

PGNiG shuns Russian gas

PGNiG is increasingly boldening its signals on shunning Russian gas as it turns to the west. The Polish state has historically been dependent on gas imports from its eastern neighbour but is looking to loosen its reliance to the communist state.

Poland consumes around 17 bcm of gas annually, more than half of which comes from Gazprom under a long-term contract that expires in 2022. It is seeing the upcoming expiry as the opportunity to diversify its gas supply ahead of time and has consistently stressed that Gazprom is charging Poland too much for the gas noting that Russia has taken advantage of the historic lack of other sources of gas which is now changing with the advent of LNG.

Poland has also vehemently opposed plans by Russia to build a new gas pipeline across the Baltic Sea which is aimed at strengthening its dominant market position into Europe. Instead Poland is looking to sanction the Baltic gas pipeline later this year or beginning of 2019 which will bring gas directly from Norway.

The last month has seen a flurry of newsflow around PGNiG’s activity in sourcing new gas.

In mid-October, PGNiG finalised terms with Venture Global for 2mtpa of LNG. It will buy LNG for 20 years on a FOB basis with supplies commencing under two contracts for 2022 and 2023. The FOB contracts are deemed attractive for PGNiG as it can choose to take the LNG to Poland or use it in its trading portfolio. The terms are not disclosed but understood to be in line with other Gulf Coast LNG contracts being 115% x Henry Hub plus a toll of c.USD2.50/mmbtu. Venture Global is currently developing the Calcasieu Pass LNG terminal on the US Gulf Coast.

This has been followed by a 24 year LNG deal with Cheniere Energy at the beginning of November. PGNiG has signed up a 1.45mtpa deal with LNG supplied by Cheniere’s Sabine Pass, Louisiana and Corpus Cristi, Texas liquefaction plants. The contract is for delivery on a DES basis directly to the 5Bcm/year Swinoujscie terminal in Poland. Poland is also looking to expand the import terminal to 7.5Bcm/year in part of the countries grander ambitions to become a LNG and gas trading hub.

PGNiG also farmed-in to the Tommeliten Alpha in the Norwegian North Sea on the upstream side at the end of October. See PGNiG expands footprint in Norway.

#PGNiG #LNG #Russia #Gazprom #VentureGlobal #Cheniere

Tuesday, 13 November 2018

Second chance for Petronas in West Africa

Following the recent disappointment at the Samo-1 well in The Gambia, Petronas has another chance in West Africa on the other side of the border in Senegal. Petronas is growing its West African exploration portfolio and is continuing its search for more acreage.

In August Petronas had farmed-in to 30% of Total's Rufisque Offshore Profond block, marking its entry into Senegal. Total retains 60% in the block with Société Nationale des Pétroles du Sénégal (Petrosen) holding the remaining 10%.

The block lies immediately to east to the Sangomar Deep block which contains the Cairn/Woodside/FAR SNE and FAN fields. The Rufisque Offshore Profond block covers 10,357km2 , with a water depth ranging from 100m to 3000m.

The partners now plan on the interpretation of the acquired 3D seismic data with exploration drilling activities planned to commence in 2019.

Related links:

#Petronas #Samo #FAR #Senegal #Gambia #Total #SNE #FAN

Hurricane's FPSO docked for changeover

Hurricane Energy has announced that the Aoka Mizu FPSO has been docked into Algeciras, Spain for planned personnel changes and bunkering.

The stopover will be extended to undertake a repair to an auxiliary system associated with power generation.

Commissioning activities will continue during its transit to the West of Shetlands as planned with first oil from the Lancaster field still on schedule for H1 2019.

The Aoka Mizu FPSO was designed and built and is owned by Bluewater Energy Services for operation as an FPSO in harsh environmental conditions. It was previously operated on the Ettrick and Blackbird fields in the North sea for Nexen Petroleum.

#Hurricane #Lancaster #AokaMizu #WOS

Friday, 9 November 2018

The Gambia's Samo-1 well disappoints

The JV in offshore Blocks A2/A5 has announced a disappointing result on the Samo-1 well. The JV, which comprises FAR Limited 40%, Petronas 40% and Erin Energy 20%, has hit water.

FAR Limited had prospective P50 resource estimates of 825mmbbl (gross unrisked) with a 55% geological chance of success. Wireline logs indicate that the target was water bearing. The Government of Gambia has now granted a six month extension to end of June 2019 to enable a thorough evaluation of the Samo-1 well result.

The blocks contain numerous other prospects including Saloo and Bambo for follow-up exploration. The findings from Samo-1 will guide next steps.

In the meantime, FAR Limited and its partners are continuing with the SNE development with development plans recently submitted to the Government of Senegal. FID for this 500+mmbbl development is targeting for end 2019 with first oil in 2022.

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