Press digest from last week

12.03.2018

Eni becomes first Italian company to win Abu Dhabi offshore concession

Eni secures $875mn ADNOC offshore deals

Abu Dhabi National Oil Company (Adnoc) awarded Italy’s multinational oil and gas company Eni stakes in two of Abu Dhabi’s offshore concession areas with 10 per cent interest in the Umm Shaif and Nasr concession and a 5 per cent interest in the Lower Zakum concession.

This is the first time an Italian energy company has been given concession rights in Abu Dhabi’s oil and gas sector.

Eni contributed a participation fee of Dh2.1 billion ($575 million) to enter the Umm Shaif and Nasr concession and a fee of Dh1.1 billion ($300 million) to enter the Lower Zakum concession, Adnoc said in a statement on Sunday.Both concessions will be operated by Adnoc Offshore, a subsidiary of Adnoc, on behalf of all concession partners.

The agreements, which have a term of 40 years, backdated to March 9, 2018, were signed by Dr Sultan Ahmad Al Jaber, Adnoc Group Chief Executive Officer, and Claudio Descalzi, CEO of Eni in the presence of His Highness Sheikh Mohammad Bin Zayed Al Nahyan, Crown Prince of Abu Dhabi, and Deputy Supreme Commander of the UAE Armed Forces, and Paolo Gentiloni, Prime Minister of Italy.

“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,” said Dr Al Jaber.

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Wood wins Saudi contract to develop world’s largest crude oil to chemicals project

Aberdeen-headquartered energy services firm Wood has won a contract to develop the world’s largest crude oil to chemicals (COTC) project for Saudi Aramco and SABIC.The complex in Saudi Arabia is expected to process 400,000 barrels per day and process approximately nine million tonnes of chemicals and base oil annually.Wood says it expects the deal will continue through to the start of operations, which are scheduled for 2025.

The work will be executed from Wood’s offices in Reading and Al-Khobar.By 2035, the COTC is expected to be a significant contributor to Saudi Arabia’s gross domestic product and diversification away from crude exports.

Saudi Aramco, the state-owned oil producer in the kingdom, and SABIC, a Saudi manufacturing firm, have awarded the contract amid a visit by Prince Mohammed bin Salman to the UK.

Robin Watson, Wood’s chief executive: “We are proud to have been selected to be a contractor with Saudi Aramco and SABIC to deliver this significant greenfield onshore facility that will be a first for Saudi Arabia and among the first in the world to integrate the refinery and chemical process in this way.

“Wood has a strong track record of successful delivery for both customers across their broad project portfolios. We will leverage our diverse capabilities, from design to EPC, to support the evolution of the facility at each phase.

“Our commitment is to combine our ingenuity, global expertise and local knowledge to ensure the safe, successful and timely delivery of this mega-project.“Our close collaboration with the in-country supply chain and the creation of opportunities to nurture new industry talent in Saudi Arabia, will be central to our execution of this contract.”In November, Saudi Aramo and SABIC signed a deal to bring the mega-project to its next stage of development.

Amin H. Al-Nasser, president and CEO of Saudi Aramco, said: “This is an important milestone in a partnership that we are proud of between Saudi Aramco and Sabic; a partnership that is in line with Saudi Aramco’s strategy for business integration, adding value and tackling global growth opportunities in chemicals.

“It is also important to mention that this project will achieve a direct conversion rate from crude oil to chemicals of almost 50%, a globally unprecedented rate. This offers the Kingdom solid opportunities to produce chemicals as a feedstock as part of Saudi Aramco’s efforts to maximize return on investments in hydrocarbon resources.”

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Total closes Maersk deal to become second biggest North Sea oil, natural gas producer

French oil major Total closed Thursday its $7.5 billion purchase of Denmark's Maersk Oil and Gas in a deal which sees it leapfrog Shell as the second biggest producer in the North Sea.

The acquisition of Maersk from its parent AP Moller-Maersk, first announced in August last year, brings 160,000 b/d of oil equivalent production to Total this year and renews its North Sea portfolio with some big new projects.

Closure of the deal, which sees Total enter Denmark and makes it the second-largest operator in the North Sea behind Norway's Statoil with a projected output of 500,000 boe/d by 2020, follows approval last week from the Danish Energy Agency for the sale."First, it illustrates our strategy to build on our strengths and grow our presence in Total's core areas, like the North Sea, to strengthen our leadership there," Total CEO Patrick Pouyanne said in a statement. "Second, it brings high-quality and low-breakeven assets, enhancing our worldwide portfolio."

As crude production in the North Sea continues to evolve, its role in an increasingly globalized market has started to shift, having an impact on Dated Brent and its position as a global oil benchmark. In this report, S&P Global Platts delves into the dynamics affecting the North Sea and Northwest Europe crude markets and the continuing evolution of Dated Brent.

Total gains an 8.44% stake in Norway's giant Johan Sverdrup complex, due on stream at the end of the decade, a 49.99% stake in the UK's Culzean gas and condensate field, due on stream in 2019, and a 31.2% stake in Denmark's Tyra gas field. Output from the assets is set to ramp up to more than 200,000 boe/d by the early 2020s.

Total is picking up around 1 billion barrels of oil equivalent of 2P reserves and resources, mainly in the OECD countries. The deal could also see Total jump ahead of rival Chevron in lifting its oil and gas production to 3 million b/d of oil equivalent at the end of the decade, assuming Johan Sverdrup goes to plan.
Total has said Maersk's volumes represent "high margin" production with cash flow breakevens below $30/b. Due to existing operational and commercial overlaps, mainly in the North Sea, it also expects to capture synergies of $400 million a year from the deal.
One of the biggest challenges facing Total as it takes over Maersk is the $3.4 billion redevelopment of the Tyra gas field in the Danish sector of the North Sea.
The aging Tyra field -- which is integral to Denmark's gas industry with more than 90% of the country's gas production processed through the field's facilities -- had been threatened with permanent closure from 2018 due to poor economics.
But in March 2017, Maersk and its partners in the operating DUC consortium struck a deal with the Danish government on maintaining the operational life of the Tyra field through improved fiscal terms.
The partners took the final investment decision in December, which will allow the field to operate for an additional 25 years and boosts the prospect of new developments in the Danish sector of the North Sea.
Tyra will be shut in for the redevelopment in November 2019, and production is expected to recommence in July 2022 at a rate of around 60,000 boe/d, with two-thirds of the production expected to be gas and the rest oil.
That equates to an annual gas production rate of 2 Bcm, according to S&P Global Platts estimates, almost half of Denmark's gas demand of around 5 Bcm. Total now holds a 31.2% stake in Tyra and is operator on behalf of DUC, whose other partners are Shell (36.8%), Nordsofonden (20%) and Chevron (12%).Total said the acquisition, which is immediately accretive to its cashflow and earnings per share, is effective from March 8, 2018.

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Gazprom Completes 50% of Offshore Section of Turkish Stream Gas Pipeline

Gazprom has completed the laying of 50% of the offshore section of the Turkish Stream gas pipeline, reports South Stream Transport B.V, the subsidiary of Gazprom which is implementing the project.

On March 1, Gazprom Chairman Alexei Miller, in an interview with Anadolu, reported that Gazprom had laid more than 910 kilometers of the offshore section of the Turkish Stream gas pipeline, which is 49% of its total length.

“Laying of 50% of the offshore section of the Turkish Stream gas pipeline ended on March 6. More than 930 kilometers of the Black Sea gas pipeline have been laid in two strings by ‘Pioneering Spirit’ [Editor’s Note: Pioneering Spirit is the world's largest construction vessel, designed for the single-lift installation and removal of large oil and gas platforms and the installation of record-weight pipelines], which carried out the deepwater laying of the Turkish Stream, 706 km of the first line of the gas pipeline and 224 km of the gas pipeline on the second line in 2017,” Miller said.

The laying of the marine section of Turkish Stream was begun on May 7, 2017, by the ship Audacia. On June 23, 2017, Pioneering Spirit look over laying in the deep-water area and then carried out a pipe-laying campaign along the approved route in a round-the-clock mode.

On May 7, 2017, Gazprom started construction of the offshore section of the Turkish Stream gas pipeline. The project involves the construction of two threads with a capacity of 15.75 billion cubic meters each. The first line is intended for gas supplies to Turkish consumers; the second, for gas supply to the countries of South and South-Eastern Europe. The first gas supplies are planned for the end of 2019. Gazprom is considering options for the continuation of the Turkish Stream through Bulgaria and Serbia, or through Greece and Italy.

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