Partial electrification of Sleipner approved

The Ministry of Petroleum and Energy has approved a revised plan for development and operation (PDO) for partial electrification of the Sleipner field centre. The field centre will be tied to the Utsira High area solution, and Sleipner is expected to cut emissions by more than 150,000 tonnes of CO₂ per year.

“Partial electrification of the Sleipner field centre will contribute to major cuts in emissions from our activities and provide significant assignments for the supplier industry in a demanding time. As the authorities have approved the PDO, we can keep developing the Norwegian continental shelf (NCS) towards the goal of zero greenhouse gas emissions in 2050,” says Arne Sigve Nylund, executive vice president for Technology, Projects and Drilling in Equinor.

In June, Equinor and its partners Vår Energi, LOTOS and KUFPEC submitted a revised plan for development and operation (PDO) to the authorities. The investments are in the size of NOK 850 million. Sleipner is scheduled to be tied in to the Utsira High area solution by the end of 2022.

“Sleipner is an important field on the NCS contributing enormous value to Norwegian society. The partners have focused on being in the forefront of technology development and innovation to carry out for example carbon capture, injection and storage at the field. The decision to partly electrify the field helps the partners in their effort of further developing the field,” says Kjetil Hove, executive vice president for Development and Production Norway in Equinor.

Arne Sigve Nylund, executive vice president for Technology, Projects and Drilling in Equinor, and Kjetil Hove, executive vice president for Development and Production Norway in Equinor.

The Sleipner field centre solution involves laying a power cable from Sleipner to the Gina Krog platform, which will be tied to the power from shore Utsira High area solution.

The Utsira High area solution was originally planned for the four fields: Johan Sverdrup, Edvard Grieg, Ivar Aasen and Gina Krog. The Sleipner field centre and the Gudrun, Gina Krog, Utgard, Gungne and Sigyn tie-in fields will now receive power from shore through the area solution.

In June, Aibel was awarded the EPCIC contract (engineering, procurement, construction, installation and commissioning) for Sleipner modifications. The contract for production and laying of cables was awarded to the NKT cable supplier.

Worth around NOK 400 million, the EPCIC contract will require approximately 170 man-years distributed on two years at Aibel’s offices in Stavanger and at their yard in Haugesund. Purchase of equipment from sub-suppliers is expected to be in the size of NOK 150 million.

Sleipner licence partners: Equinor Energy AS (operator) 59.6%, Vår Energi AS 15.4%, LOTOS Exploration and Production Norge AS 15.0%, KUFPEC Norway AS 10.0%

Original article link: https://www.equinor.com/en/news/20210211-partial-sleipner-electrifiction-approved.html

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Mediocre week for UK exploration

This week saw a disappointing well result in Rowallan and a mediocre result in Verbier.

Rowallan
The keenly watched wildcat drilled at the Rowallan prospect "was not found to be hydrocarbon-bearing”. The 22/19c-7 well was targeting 143mmbbl in a structural fault and dip-closed trap analogous to Total’s Culzean field 20km away.

The well encountered a 182m section of sandstone and shale after being drilled to a depth of 4,641m .

The Dundonald and Sundrum prospects, which are geologically similar to Rowallan, have previously been identified as potential drilling targets in the block but will now be “re-evaluated in the light of the drilling results”, Serica said.

Serica, with a 15% interest in the block, did not incur any costs for the well as it was fully carried following an earlier farm-out. Eni operates the block with a 32% stake, with remaining partners JX Nippon (25%), Mitsui (20%) and Equinor (8%).

Verbier

Equinor (70%), Jersey Oil & Gas (18%) and CIECO (12%) completed appraisal well 20/05b-14 on the Verbier discovery last week. The well did not encounter Upper Jurassic sands as anticipated, and the contingent resources have been revised towards the lower end of initial resource estimates to 25mmboe.

Further upside potential exists in the area at deeper horizons and an additional prospect at Cortina. This will continue to be matured. At 25mmboe, Verbier is viewed to be commercial and development planning will now commence as part of a wider area development plan, which could include the Buchan Area.

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Total enters into two new 40 year concessions with ADNOC

Total has extended its commitment to the Abu Dhabi by entering into two new 40 year concessions with ADNOC for USD1.45 billion. This follows the deal last week between Eni and ADNOC.

Total has been granted a 5% interest in Lower Zakum and 20% interest in the new Umm, Shaif & Nasr concession. Total notes that the access cost equates to USD1/boe of reserves.

Comparison of transactions

	Total	Eni
Lower Zakum	5%	5%
Uum, Shaif & Nasr	20%	10%
Price Paid	USD1.45 billion	USD875 million

Each concession has a target production of c.450mbopd – the partners intend to grow production to these levels and beyond. At Umm, Shaif & Nasr, as well as growing production from the current 300mbopd, the fields have substantial gas reserves and could support 500mmcfpd. The gas would be used domestically to reduce the reliance on imports while associated condensates can be used in the petrochemicals industry.

The UAE remains an important region for Total who has been in the country for 80 years. Current production from Abu Dhabi alone is c.290mboe/d or 11% of the group’s overall production.

The Lower Zakum concession includes ONGC Videsh (10%), Inpex (10%), Eni (5%) and Total (5%). ADNOC expects to sign a deal for the remaining 10% stake, and has 60% interest.

For the Umm, Shaif & Nasr concession, Total has 20% interest, alongside Eni (10%), with ADNOC having 60% interest. A further agreement for the remaining 10% stake is yet to be signed.

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Eni enters the Emirates

Eni has made its first move into the Emirates with entry into various fields in Abu Dhabi. It has paid ADNOC USD875 million to acquire a 40-year licence on:

• 5% in Lower Zakum offshore oil field
• 10% in Umm, Shaif and Nasr offshore oil, condensate and gas fields

The fields require further investment with combined gross production from the fields targeting 910mbopd. Once at plateau, the fields will contribute material production and generate significant cash flow.

Eni press release below

Eni signed today in Abu Dhabi two Concession Agreements for the acquisition of a 5% stake in the Lower Zakum offshore oil field and of a 10% stake in the oil, condensate and gas offshore fields of Umm Shaif and Nasr, for a total participation fee of about 875 million US dollar and a duration of 40 years.

The signing ceremony was attended by His Highness Sheikh Mohamed bin Zayed Al Nahyan, Crown Prince of Abu Dhabi, and Deputy Supreme Commander of the United Arab Emirates Armed Forces, the Italian Prime Minister, Paolo Gentiloni, His Excellency Dr Sultan Ahmed Al Jaber, ADNOC Group Chief Executive Officer, and Eni’s Chief Executive Officer, Claudio Descalzi.

The agreements represent a strategic move for Eni gaining access to a Country with hydrocarbons reserves among the largest in the world.

Lower Zakum is located about 65 kilometers off the coast of Abu Dhabi. The discovery dates back to 1963 and production began in 1967. It has a target production of 450,000 barrels of oil per day. Umm Shaif and Nasr are located about 135 kilometers from the coast of Abu Dhabi and have a target production of 460,000 barrels of oil per day.

Eni's CEO Claudio Descalzi commented: «I'm very pleased about this agreement creating a larger presence for Eni in Middle East, in line with our expansion strategy, and creating a strong alliance with ADNOC and Abu Dhabi. The stakes in the two concessions give access to giant fields with huge potential and Eni is willing to contribute its best technology to maximize the future production».

H.E. Dr Al Jaber said: «These agreements underline the international market’s confidence in ADNOC’s long-term growth plans and the UAE’s stable and reliable investment environment. They also broaden and diversify our partnership base, while contributing experience, technology, capital and market access.

“Our partnership with Eni, and other concession partners, will enable us to accelerate our growth, increase revenue and improve integration across the upstream value chain, as part of our ongoing transformation and build on the foundations that have been laid to deliver a more profitable upstream business. With these agreements ADNOC continues to leverage its 46-year legacy of successful energy partnerships, in support of its 2030 strategy”.

In both concessions, ADNOC owns a 60% stake. The operator is ADNOC Offshore.

Eni press release: https://www.eni.com/en_IT/media/2018/03/eni-establishes-a-long-term-presence-in-uae-acquiring-a-stake-in-two-offshore-producing-concessions?lnkfrm=serp

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Mubadala enters Zohr - acquires 10% from Eni

Mubadala has agreed to acquire a 10% interest in Zohr from USD934 million. Mubadala will acquire an interest in the Shorouk concession which contains the Zohr field. The super giant field came onstream in December 2017, 28 months after its discovery. The field is currently producing 400mmcfpd and planned to reach plateau by the end of 2019.

For Mubadala, this adds a world class asset with long term cash flows into its investment portfolio. Musabbeh Al Kaabi, Chief Executive Officer of Petroleum & Petrochemicals, Mubadala Investment Company, and Chairman of Mubadala Petroleum said: “This is an important and attractive investment for Mubadala, adding a world-class asset to our portfolio with long-term cash flows. We are joining a strong partnership with Eni as operator, who have delivered the project in record time and with the full support of the Egyptian authorities.”

For Eni, the deal is consistent with its strategy of monetising development and producing assets to recycle cash flows for exploration. It also reduces Eni’s portfolio weighting more towards OECD, a long term shift that the company continues to pursue. Claudio Descalzi, Chief Executive Office of Eni, said: “We are pleased to be working with Mubadala and welcome them into the partnership for the Shorouk concession. This represents a further signal about the strength and quality of this world class asset developed by Eni”.

The deal follows Eni’s farm-out of Zohr to BP and Rosneft in November and December 2016 prior to development spending. At the time, BP acquired 10% for USD525 million and 30% to Rosneft for USD1.125 billion. This compares with Mubadala’s current buy-in price of USD934 million for 10%.

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OVL to bid for South Azadegan oil development in Iran

Indian oil giant ONGC Videsh Limited ("OVL") will bid for the development rights of the giant South Azadegan in Iran. There is strong competition with the likes of Gazprom, Lukoil, Rosneft, Shell, Total, Eni Petronas, Inpex, Sinopec and CNPC. of Malaysia and Russia’s Gazprom. OVL is one of 34 companies that pre-qualified last year for development of the field which is estimated to contain 6bnboe recoverable and currently produces 80mbbl/d - with the right investment, this could reach 320mbbl/d.

The National Iranian Oil Co ("NIOC") will issue a tender for the development shortly.

Separately, OVL will also rework the Farzad B gas field at a cost of USD6.2 billion, which it had discovered a decade ago and is trying to get Iran to award rights of the field to it. Sources say that OVL had last year made its ‘best’ offer to invest USD11 billion in developing the Farzad-B field and building export infrastructure but Iran has deterred awarding the rights of the field to OVL owing to differences over pricing of the fuel. OVL has now instead offered to do just the upstream part of bringing the field to production while leaving the marketing of the fuel to Iran, which will cost USD6.2 billion.

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Zohr II at Calypso offshore Cyprus

Eni has made a sizeable gas discovery offshore Cyprus which could accelerate the country’s path to gas exports. The Calypso-1 discovery was made on Block 6 which is dubbed as a “Zohr like” play.

Full announcement by Eni below:

Eni has made a lean gas discovery in Block 6 Offshore Cyprus with Calypso 1 NFW. The well, which was drilled in 2,074 meters of water depth reaching a final total depth of 3,827 meters, encountered an extended gas column in rocks of Miocene and Cretaceous age.

The Cretaceous sequence has excellent reservoir characteristics. An intensive and detailed data collection (fluids and rock samples) has been executed on the well.

Calypso 1 is a promising gas discovery and confirms the extension of the “Zohr like” play in the Cyprus Exclusive Economic Zone (EEZ).

Additional studies will be carried out to assess the range of the gas volumes in place and define further exploration and appraisal operations.

Eni is the Operator of Block 6 with 50% of participation interest while Total is partner with the remaining 50%. Eni has been present in Cyprus since 2013 and detains interests in six licenses located in the EEZ of Cyprus (in Blocks 2, 3, 6, 8, 9 and 11), five of which are operated.

Source: https://www.eni.com/en_IT/media/2018/02/eni-announces-a-gas-discovery-offshore-cyprus

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Zohr record breaker

In record time for a deepwater gas development of this scale, Eni has announced first production from Zohr. The field was discovered in August 2015 and FID taken in early 2016 - Eni achieved first gas from discovery in 2.5 years.

Zohr is the largest gas discovery ever made offshore Egypt and is located in the Shorouk block. The field has begun production at 350mmcfpd and is expected to grow to 1bcfpd by mid-2018. The speed of development is a testament to Eni's "Dual Exploration Model" which was adopted in 2013. Under this model, Eni works the exploration, appraisal and development planning and phases in parallel while bringing in minority partners at the same time to help fund the costs.

Zohr has >30tcf of GIIP and forms an important piece of the jigsaw to solving Egypt's short gas problem. The new production will help feed the hungry and growing domestic gas demand which Egypt has been trying to manage by raising domestic prices on the one hand and incentivising further gas exploration/development on the other.

The Zohr partners are Eni (60%), Rosneft (30%) and BP (10%). Eni is co-Operator of the project through Petrobel, which is jointly held by Eni and EGPC.

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Eni signs EPSA for Block 52 offshore Oman

The Government of the Sultanate of Oman, Oman Oil Company Exploration and Production ("OOCEP"), a subsidiary of state company Oman Oil Company ("OOC"), and Eni today entered into an Exploration and Production Sharing Agreement ("EPSA") for Block 52, located offshore Oman.

Block 52 is an underexplored area with hydrocarbons potential located offshore in the southern region of Oman. Block 52 has an area of approx. 90,000 Km2, with water depths ranging from 10 to over 3,000 meters. Pursuant to the EPSA, Eni is the Operator of the block, through its subsidiary Eni Oman B.V., with an 85% stake, whilst its partner OOCEP holds the remaining 15% stake.

During the same event, held in Muscat, Eni and Qatar Petroleum signed an agreement for the assignment of 30% interest in Block 52 to Qatar Petroleum. Following the conclusion of such agreement and subject to the consent of the competent authorities of the Sultanate of Oman, the Contractor under the EPSA will consist of affiliates of Eni with a 55% stake, Qatar Petroleum with 30% and OOCEP with 15%.

'The signing of the Block 52 EPSA represents an important milestone in Eni’s strategy to reinforce its presence in the Middle East region. We wish to establish with the Sultanate of Oman, which is a historical Oil & Gas producer in the region, a long-lasting relationship in the best tradition of Eni. It is also remarkable that, the same day, we are welcoming Qatar Petroleum as a partner in Block 52, to join our efforts with such a strong partner that is currently leading the LNG business worldwide', commented Eni CEO, Claudio Descalzi.

Block 52 was awarded to Eni and OOCEP following an international bid round process launched in October 2016.

Source: Eni

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Eni: Bringing in successive partners for Zohr

On 28^th November, Eni announced the divestment a 10% interest in Zohr to BP for USD375 million plus pro-rata reimbursement of past costs (c.USD150 million net), bringing total consideration to USD525 million. BP also has an option to acquire an additional 5% interest on the same terms before the end of 2017.

On 12^th December, Eni announced that it had divested a further 30% interest in Zohr to Rosneft for USD1.125 billion and USD450 million of back costs - i.e. on substantially the same terms as BP. Rosneft also has an option to acquire an additional 5% interest on the same terms.

The transactions reduce Eni's exposure to the Zohr development by 40% from 100% to 60%; this could fall to 50% if BP and Rosneft exercise their options for additional interests. The divestment will also reduce Eni's capex by c.USD900 million in 2017 ahead of first gas at the end of 2017. A similar capex saving is expected to be made in 2018.

Eni has successfully demonstrated its ability to monetise large resource finds. The farm-out significantly derisks the upcoming development and it is promising to see buyers for good quality assets despite the current oil price environment.

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