Kurdistan: The Rosneft connection

Rosneft provided a much welcomed source of funding for Kurdistan in February 2017 when it entered into an off-take contract for crude oil. Under the contract, Rosneft will purchase Kurdish crude until 2019 – the volume commitments were not disclosed. In April 2017, Kurdistan received USD1 billion for the first cargo of 600,000 bbl.

The was an important landmark deal for the KRG, being the first time that crude was sold directly to a government-linked oil company. Up until then, all crude was sold to traders. The first cargo was landed at Italy and then transported to Rosneft’s refineries in Germany.

The Rosneft connection was deepened in June at the St. Petersburg International Economic Forum with the signing of a series of agreements supporting the expansion of cooperation between Rosneft and the KRG “in exploration and production of hydrocarbons, commerce and logistics”. The agreements paved the way for the full entry of Rosneft into Kurdistan with the company signing PSCs for five blocks, which were selected from the 22 blocks that the Ministry of Natural Resources put out for licensing at the beginning of the year.

Baghdad has mostly been quiet around Kurdish crude exports and there were no signs of Federal Iraq aggressively pursuing legal cases around the sale of crude by Kurdistan which it viewed as illegal. However, in a surprise turn of events, Baghdad procured a warrant from the Canadian courts to block a Kurdish crude cargo from being offloaded in Nova Scotia on 29th June. The warrant for the arrest of c.722,000 bbl on board the M/T Neverland is a reminder that the dispute between Baghdad and Erbil remains unresolved.

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Point Resources acquires ExxonMobil's Norwegian operated assets

On 29^th March 2017, Point Resources announced its acquisition of ExxonMobil's operated upstream business in Norway for an undisclosed amount (estimated valuation of c.USD1bn). The deal transforms Point Resources into a top 10 producer on the Norwegian Continental shelf and increases production c.10-fold to 48mboepd while adding 128mmboe of oil-weighted reserves. The transaction adds significant technical capability with the transfer of 300 staff to Point Resources.

Point Resources was formed in 2016 by the merger of Core Energy, Spike Exploration and Pure Energy, all portfolio companies of Norwegian E&P private equity specialist HitecVision. The merger created a company with a portfolio weighted towards exploration and development positions (e.g. Brage, Brasse, Pil) and the acquisition of the ExxonMobil assets helps to reweight the portfolio into more of a full cycle one.

The key assets acquired were ExxonMobil’s operated positions: Balder, Ringhorne and Jotun; Forseti is being decommissioned. Point Resources has identified significant upside in the asset base that can be achieved through infill drilling – likely to have been overlooked by ExxonMobil with the portfolio being increasingly immaterial within ExxonMobil’s global business. For ExxonMobil, the divestment leaves it with a non-operated portfolio in Norway and therefore a much lower country cost base, but still provides a platform to access high impact Norwegian and Barents Sea exploration.

Source: Wood Mackenzie
4D seismic has identified new development locations and exploration targets around Balder and Ringhorne

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