PETROL & ENERGY


More than $200 billion worth of oil and natural gas assets are for sale globally as companies come under renewed financial pressure from the prolonged commodity price rout, according to IHS Inc.

There are about 400 buying opportunities as of September, IHS Chief Upstream Strategist Bob Fryklund said in an interview. Deals will accelerate later this year and into 2016 as companies sell assets to meet debt requirements, he said. West Texas Intermediate crude has averaged about $51 a barrel this year, more than 40 percent below the five-year mean.

Low prices have slashed profits and as of the second quarter about one-sixth of North American major independent crude and gas producers faced debt payments that are more than 20 percent of their revenue. Companies have announced $181.1 billion of oil and gas acquisitions this year, the most in more than a decade, compared with $167.1 billion the same period in 2014, data compiled by Bloomberg show.

“Basically almost everything is for sale,” Fryklund said Oct. 8 in Tokyo. “Low cycles are when a lot of these companies can rebalance their portfolios. In theory, this is when you upgrade your existing portfolio.” 

 

Africa

Cameroon: Golar LNG says it has received final approval for its Cameroon floating liquefied natural gas (FLNG) project, due to be commissioned in 2Q 2017. At a ceremony in Yaoundé, Cameroon’s state oil and gas company Société Nationale des Hydrocarbures (SNH), Perenco Cameroon, Golar Hilli Corp., and Golar Cameroon executed a binding gas convention. This endorses installation and operation of the GoFLNG vessel in Cameroon waters to receive supplies from the offshore Kribi fields. SNH should also approve the tolling agreement shortly. This establishes the terms under which Golar will provide liquefaction, storage, and offloading services to SNH and Perenco as upstream joint venture partners. 

Ghana: Tullow Oil has confirmed that it is fully funded to meet its commitments for the deepwater Tweneboa-Enyenra-Ntomme (TEN) development offshore Ghana. TEN is on budget to deliver first oil in mid-2016, Tullow added – the projected cost is around $4.9 billion. The MODEC-supplied FPSO for the development, constructed in Singapore, was named Prof. John Evans Atta Mills by Ghana’s First Lady Dr. Lordina Mahama, ahead of sail away at the end of this year. 

Nigeria: Nigeria should split its proposed petroleum industry law into parts to avoid further delays to reforms that have been stuck in parliament for seven years, said the head of the national oil company. “As long as we continue to want to pass a holistic PIB, it’s going to be a major challenge,” said Emmanuel Kachikwu, managing director of the state-owned Nigerian National Petroleum Corp., on Wednesday. PIB refers to the Petroleum Industry Bill, which aims to consolidate a slew of oil and gas legislation and help make Nigeria’s oil industry more transparent. 


Senegal: Africa-focused oil and gas exploration company FAR Limited reported Wednesday that the firm and its partners have contracted the Ocean Rig Athena (UDW drillship) for an upcoming exploration drilling program at the joint venture's blocks offshore Senegal. The Ocean Rig Athena, currently under long term contract with ConocoPhillips which will play a key role in project managing the drilling program, is now in Angola and FAR expects the drillship to commence mobilization to Senegal in the next few days. The Senegal drilling program includes three wells -- comprising two appraisal wells at the SNE-1 oil discovery that will include a coring and testing program -- and one shelf exploration well to further evaluate the shelf area prospectivity. This drilling, logging, coring and testing program is expected to be completed by mid-2016.

Sudan: The Ministry of Oil and Gas and the Russian GTL company have signed Sunday an agreement for the exploitation of the gas produced from Niemes field in square (4) and convert it to liquid fuel. The agreement includes the establishment of a gas liquefaction plant for the processing of 10 million cubic feet of the associated gas per day and turns it into petroleum products such as gasoline and benzene at a rate estimated to 100 million tons of fuel annually. The project of which the Sudapet Company owns 51% while the Russian company owns 49% is expected to be implemented within 18 months.
 

Middle East

Jordan: Jordan has awarded half of its four-year, up to 78-cargo liquefied natural gas (LNG) buy tender to Royal Dutch Shell which will cover deliveries in 2016 and 2017, overlooking commodity traders for the business, trade sources said. Two traders said Shell had clinched the first two years of supply under the tender, but it was not clear whether Jordan has awarded deliveries for 2018 and 2019 or if this will be re-tendered at a later date. A trader involved in the tender said all participating trading houses had received regret letters from Jordan's National Electric Power Company following the tender's award this weekend. 

Oman: Oman has announced the launch of the first independent power generation project in its territory of Musandam. A foundation stone laying ceremony to build the plant, which has a generation capacity of 120MW, was held on Monday.Musandam Power Company (MPC) is developing the Musandam Independent Power Project (Musandam IPP). The plant will use natural gas as the main fuel to maintain the stability of the local electricity supply and “support sustainable development” in the Musandam Governorate, a report says. 

OPEC: Venezuelan Oil Minister Eulogio del Pino said on Tuesday that eight non-OPEC countries have been invited to an Oct. 21 oil meeting: Azerbaijan, Brazil, Colombia, Kazakhstan, Norway, Mexico, Oman and Russia. The technical meeting of oil experts from the Organization of Petroleum Exporting Countries and non-OPEC countries will be held in Vienna, he told Reuters. "The confirmations are coming in gradually and I'm personally calling ministers to ensure that the delegation is of the adequate level of authority," del Pino said. 

Saudi Arabia / Angola: Saipem has tallied more than €600 million ($680.87 million) in offshore engineering and construction contracts. Saudi Aramco has awarded Saipem an engineering, procurement, construction, installation (EPIC) project for offshore structures including an observation platform, wellhead production deck module, auxiliary platforms, 20-in. internally cladded flowline, and composite power cable, all for offshore Saudi Arabia. Saipem also has an EPIC contract from Eni for the offshore Angola East Hub development in block 15/06. The project includes five flexible risers and 20 km (12 mi) of rigid flowlines, as well as installing SURF facilities which include umbilical sections, rigid spools, well jumpers, and 14 PLETs to be fabricated in Angola. The project is scheduled to be completed by the end of 2016. 
 

Rest of the World

Azerbaidjan: Azerbaijan expects to keep oil production at its main Azeri, Chirag and Guneshli (ACG) fields at 31.5 million tonnes in 2015, the same level as in 2014, vice president of the Azeri state energy company SOCAR said on Wednesday. "We would like to keep oil production at the ACG block in 2015 at the last year's level," Khoshbakht Usifzade said at the Caspian Business Forum. He said oil production at the BP -operated ACG fields in 2014 was 31.5 million tonnes. 

Brazil: Rosneft Brasil (100% owned Rosneft subsidiary) and Petro Rio S.A. (PetroRio) announce the closing of the Rosneft Brasil transaction to acquire PetroRio's 55% in the Solimões project. Closing follows formal approval of the transaction by ANP (Agencia Nacional do Petroleo, Gas Natural e Biocombustiveis - Brazil). The finalization of the transaction will lead to Rosneft Brasil receiving 100% control and full operatorship in the Solimões project to the company. The transaction totaled USD 55 million. 

China: Sino Gas & Energy Holdings Limited (Sino Gas or the Company) reported Wednesday the delivery of first supply of natural gas from the Linxing Central Gathering Station (CGS) in the Ordos Basin, China. Linxing is Sino Gas’ second CGS in the Ordos Basin as part of its pilot production program and its start-up represents another significant milestone in the progressive de-risking of the Company’s assets in the region as it moves towards full field development. 

France: Minority shareholders of MPI are closing ranks in a bid to block the French oil explorer’s proposed acquisition by Etablissements Maurel & Prom SA. The deal undervalues MPI, Lux-Investment Professionals SICAV-FIS SA, which owns 0.9 percent of the company, wrote in a letter to the board of directors. That follows criticism of the proposed deal last week by Cape Town-based Allan Gray, one of African’s biggest funds and holder of a 5.9 percent stake. Maurel’s offer of 2.09 euros per MPI share is “grossly unfair to minority shareholders,”Jan Vantomme and Bruno Toye, directors at Lux-Investment, said in their Oct. 12 letter seen by Bloomberg. The “absolute minimum” value for MPI taking into account its cash holdings and a stake in Nigerian oil company Seplat Petroleum Development Co. must be 3.26 euros, Vantomme said separately by phone Tuesday from Oudenaarde, Belgium. 

Indonesia: Indonesian oil and gas exploration firm PT Energi Mega Persada Tbk (EMP) reported Monday that it has received official approval to proceed with the development of the Seng and Segat gas fields in the Bentu block in Riau, Sumatra, Indonesia.  The development, approved by Indonesia's upstream regulator SKK Migas, will increase the block’s output by over 50 million cubic feet per day (MMcf/d) of gas from 2017, with the gas to be sold to Pertamina Dumai at a price ranging between $7.5 and $8 per million British thermal unit (MMBtu). Gas production from the Bentu block stood at an average of 48.1 MMcf/d as of June 30, with the existing gas production sold to PLN Pekanbaru at $5.5 MMBtu, Riau Andalan Pulp & Paper at $5.2/MMBtu and Perusda Pelalawan at $4.7/MMBtu. 


Norway: E.ON has signed an agreement to sell 100% of its shares in E.ON E&P Norge AS to DEA Deutsche Erdoel AG (DEA) for $1.6 billion, including $100 million of cash. E.ON E&P Norge holds the Norwegian portfolio of E.ON’s oil and gas North Sea upstream business, comprising equity interests in 43 licenses which includes a 28% interest in Skarv field and a 30% interest in Njord field. As per the agreement, DEA will also acquire interests in additional developments and discoveries, including Snilehorn, Snadd and Fogelberg, on the Norwegian Continental Shelf. 

Norway: Det norske has entered into an agreement to acquire Svenska Petroleum Exploration AS, the Norwegian subsidiary of Svenska Petroleum, for a cash consideration of $75 million on a cash free, debt free basis. Svenska holds 13 licenses in Norway, including the Krafla/Askja (25%), Garantiana (20%), Frigg Gamma Delta (40%) and Fulla/Lille-Frigg (25%) discoveries in the North Sea. In addition, the company holds four exploration licenses in the Norwegian Sea. The transaction is expected to close in Q1-2016. 

Romania: PJSC Lukoil announced Wednesday that its wholly owned subsidiary LUKOIL Overseas Atash BV has, along with its joint venture partners PanAtlantic Petroleum Ltd and Societatea Nationale de Gaze Naturale Romgaz SA, discovered a deepwater gas field within the Trident block (EX-30) offshore Romania. The discovery was made following the completion of the Lira 1X exploration well, which was drilled to a depth of 8,858 feet using the GSF Development Driller II (DW semisub). The well has been temporarily abandoned for further evaluation of the gas discovery. According to seismic data the field’s reserves could potentially exceed 1.05 trillion cubic feet of gas. The size of the discovery, and a precise assessment of the potential hydrocarbon reserves available at the site, will be confirmed in 2016, according to Lukoil. 

Sri Lanka: Sri Lanka will issue a fresh international tender for offshore oil and gas blocks after billionaire Anil Agarwal’s Cairn India Ltd. relinquished its exploration rights in the South Asian island. Cairn will be “departing in a couple of weeks” after coming to an agreement with the Sri Lankan government, petroleum minister Chandima Weerakkody said in an interview on Monday. The island nation will keep Cairn’s seismic study worth about $300 million and won’t charge any penalty for pulling out," he said. 

 
Energy Prices

Crude Oil ($/BBL)

Brent: $ 49.27 -0.08%
WTI: $ 46.46 -0.64%
OPEC Basket: $ 46.00 -4.11%
 

Natural Gas ($/MMBTU)
Henry Hub: $ 2.52 +1.20%

Steel ($/MT)
Steel Billet: $ 185.00
(LME Official – 3 months Buyer)

Euro/USD
€ 1 = $ 1.1486 +0.75%

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