Last week in the world oil:
- Lingering concerns over the wealth of supply coming out of America, as well as recovering Libya and Nigeria, have kept crude oil prices on a weaker note. While pessimism is not yet at levels seen three weeks ago, crude prices remain in the mid-US$40/b levels – high enough to encourage US drilling, and low enough to send jitters among producers.
Upstream & Midstream
- Petrobras and Chevron are both attempting to sell off their 70% and 30% stakes in the Maromba field in the Campos basin, as the shallow water heavy oil site proves to be unattractive to develop in the current climate.
- Italy’s Eni has struck oil in the PL532 Licence, southwest of the Johan Castberg field in Norway’s Barents Sea. Preliminary estimates indicate that the discovery holds on 100-180 million barrels of oil, of which 25-50 million barrels are recoverable. While minor in size, it is an indication that increased drilling activity in the area is beginning to pay off.
- Total announced a delay to the start of production at its Martin Linge field in the North Sea due to an accident in the shipyard building the rig platform in South Korea. The new start date is now in 1H2019. Total (51%), Petoro (30%) and Statoil (19%) are the stakeholders in the field.
- As expected, the mild dip the week before gave way to a jump in drilling activity, as seven new oil and five gas rigs started up, bringing the total active number to 952. And, predictably, causing crude oil prices to slump.
Natural Gas and LNG
- Freeport LNG has submitted a formal application with the US Federal Energy Regulator Commission to build a fourth liquefaction train at its Texas facility. If approved – and this is likely – the new train will add some 5.1 mtpa of capacity to the site, expected to enter service in 2022.
- BP will be exiting Block 24 in Angola’s Kwanza basin, relinquishing its 50% stake where the Katambi-1 wildcat discovery was made to Sonangol and taking a US$750 million write-off in the process. Non-associated gas is of little value to upstream players in Angola as it is owned by the state.
- Statoil will be pushing ahead with the development of the Snefrid Nord gas discovery near the Aasta Hansteen field in the country’s Norwegian Sea. Recoverable reserves of some five bcm of natural gas will be tied back to facilities in Aasta Hansteen, producing some 4 mcm/d of gas.
- Central Europe seems to remain in two minds on relying on Russian gas. Just as Hungary signed a deal with Gazprom to link to the Turkish Stream pipeline by end-2019, Poland is looking West towards the US for Gulf Coast LNG to feed its growing gas requirements. Bulgaria and Serbia already have agreements to tap into Gazprom’s Turkish Stream pipeline system – after the South Stream project was cancelled in 2014 over Russia’s involvement in the Ukrainian conflict – while international connectors through Romania and Croatia are also being planned.
- Baker Hughes and GE Oil & Gas have completed their merger, creating BHGE, touted as the industry’s ‘first and only fullstream player’, covering all areas of the energy business from upstream, midstream and downstream. It trades under the name Baker Hughes, a GE company.
Last week in Asian oil
- Total and Iran have inked a preliminary US$2 billion deal to build three petrochemical plants, as Iran moves to realise its downstream ambitions. Total - which has extensive presence in Iran, most recently in South Pars Phase 11 – aims to build 2.2 million tons of petrochemical and polymer capacity with Iran’s National Petrochemical Company.
- While Saudi Arabia’s promises to participate in Indonesia’s ambitious refining expansions may have proved hollow in the past, it’s latest commitment to assist Pertamina in upgraded the Cilacap refinery has weight, in light of the company’s move to establish key downstream sites across major Asian markets ahead of its IPO. The US$5 billion upgrade is aimed to expanding Cilacap’s capcity from 348 kb/d to 400 kb/d, while also expanding its secondary units to produce more transport fuels.
Natural Gas & LNG
- Japan’s Fair Trade Commission has made a landmark ruling. All new contracts for LNG imports signed by Japanese buyers can no longer have restrictions on the resale of cargoes going forward, a decision that was pushed for by all Japanese LNG importers to allow them freedom to redirect suppliers and establish a trading network. For existing contracts that have not expired, the FTC directed buyers to communicate with major sellers – Qatar and Malaysia in this case – to review the ‘competition-restraining business practices’. This would be important in putting Japan’s existing LNG suppliers on equal footing with the new LNG volumes coming from North America, which deliver clause-less cargoes.
- Remaining defiant in the face of sustained diplomatic pressure from Saudi Arabia, the UAE and its allies, Qatar has announced that it plans to boost natural gas production at its giant North Field by 20%. This raise was already in the cards, after a self-imposed moratorium was lifted in April, but has taken new significance as the tiny Gulf state finds itself isolated geographically and diplomatically. If the crisis drags on, then the 30% boost in LNG production capacity will go a long way to ensure sufficiency.
- Gazprom’s Power of Siberia natural gas pipeline will start service in December 2019, moving the valuable fuel to China as the race to supply the fastest-growing natural gas consumer in the world heats up.
- Weak demand has lead Malaysia’s Lotte Chemical Titan Holding to cut the size of its IPO from the original range of RM7.60-8 to a lower range of RM6.40-8 per share, raising worries about the health of the country’s markets on a weak currency and government corruption scandals. Despite this, the IPO has been the largest since 2012, when plantations group Felda Global Ventures listed.
- In an attempt to dilute the power held of its founding family, Japanese refiner Idemitsu Kosan plans to issue new shares to raise US$1.2 billion. The family has already announced it will file a court injunction to block the share issue, hoping to preserve a powerful stake that allowed the family to prevent Idemitsu’s merger with Showa Shell Sekiyu last year.
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