Libyan Oil Output Rises to 700,000 bpd After Port Fighting Ends
Libya's oil production has reached 700,000 barrels per day (bpd), the National Oil Corporation (NOC) said on Wednesday, recovering from a drop earlier this month caused by fighting at two key oil ports.
"We are working very hard to reach 800,000 barrels by the end of April 2017, and, God willing, we will reach 1.1 million barrels next August," NOC Chairman Mustafa Sanalla was quoted as saying in a statement.
The NOC said in a separate statement it hoped to produce 55,000 bpd in the coming weeks from the Abu Attifel and Rimal fields, which are currently closed for maintenance.
The fields are operated by Mellitah Oil and Gas, a joint venture between the NOC and Italy's ENI. The NOC said Mellitah is currently producing 41,000 bpd from onshore and offshore fields, as well as 43,000 bpd of condensate.
Libya's output fell to around 600,000 bpd after eastern security forces lost control on March 3 of the major oil terminals of Es Sider and Ras Lanuf, before regaining them 11 days later.
Sanalla has said he expects to regain control over operations at the ports, despite some officials in eastern Libya appearing to cast doubt over continuing cooperation with the NOC in Tripoli.
Workers at the ports have been gradually returning to their posts, and a tanker is expected to load of crude at Es Sider on Saturday or Sunday, according to shipping sources.
The NOC said on Monday that some gains could come from the southwestern Sharara field, where it hopes to boost production by 70,000 bpd, from 221,000 bpd currently.
Libya's output remains well below the 1.6 million bpd the North African country had been pumping before a 2011 uprising.
Libya along with Nigeria is exempt from recent production cuts agreed by the Organization of the Petroleum Exporting Countries (OPEC).
Algeria’s Sonatrach to Invest $50 billion, Boost Crude Output
Algeria’s state-run energy producer plans to boost crude oil output by 14% in the four years to 2019 and invest billions of dollars in exploration projects.
Sonatrach Group expects to invest $9 billion from 2017 to 2021 in its search for new deposits of oil and natural gas, said Farid Djettou, head of the company’s associations division, which is responsible for foreign contracts. Sonatrach will drill an average of 100 wells annually over the same five years and plans to invest more than $50 billion in all of its operations during this period, Djettou said Wednesday in an interview in the coastal city of Oran.
Algeria is Africa’s biggest gas producer and a member of OPEC, and Sonatrach’s exports generate more than half of the government’s budget revenue. The country’s oil output has declined since August 2008, and its production of 1.04 MMbpd in February was at the lowest level since 2002, according to data compiled by Bloomberg. The government appointed a new chief executive officer for Sonatrach on Monday, bringing in the company’s sixth leader since 2010.
Sonatrach’s annual production will exceed 230 million tons of oil equivalent by 2021, with foreign companies increasing their yearly output by 10 million tons of oil equivalent, Djettou said in the interview at the North Africa Petroleum Exhibition and Conference in Oran.
Algeria championed a historic deal to curb production when it hosted its fellow members of the Organization of Petroleum Exporting Countries in September in the capital Algiers. Together with oil producers outside the group, OPEC subsequently agreed to cut output by a combined 1.8 MMbpd for at least six months starting in January. An increase in Sonatrach’s output could complicate efforts to curb a global glut and prop up crude prices.
Dubai: Oil and gas firms in existential crisis due to growing shift from fossil fuels
According to Ioannis Ioannou, LBS associate professor of strategy and entrepreneurship, it is no surprise that a number of oil companies across the Middle East are already beginning to invest in renewable forms of energy, hoping that such investments will act as a stepping stone for the next phase of the energy landscape.
For the oil and gas industry, perception and timing are critical – the recently announced $5bn investment in solar panels by Aramco, ahead of what could become the biggest IPO ever, warrants closer attention, he noted.
Ioannou said: “Commitment to renewables and a credible pitch towards investors should be embedded throughout organizational structures and processes. Financial commitments may not be enough, given the increasing sophistication of the investment community in evaluating companies’ commitment to a more sustainable future.”
Research shows that companies perform better in the long run and thus produce superior shareholder returns, only when environmental and social issues become part of a corporation’s DNA, he said.
“For Saudi Aramco, this means a credible commitment to renewables will have to include appropriate ways to incentivize top executives and formal responsibility for the renewables division at the highest levels of the company’s hierarchy,” Ioannou said.
Transparency
It also requires transparency with regards to the company’s overall impact on climate change and reporting transparency around both renewables as well as the fossil fuels division of the company.
According to Ioannou, the adoption of these elements would signal deep engagement with stakeholders in the renewables industry in the long term and it also signal a longer-term time horizon for decision-making at Aramco more broadly. This would result in financial investments carrying a greater weight with investors when they are backed up by credible organizational commitments.
He said: “Importantly, one should also not underestimate the challenge of competing in the same industry – in this case, the energy industry – with two very distinct business models: fossil fuels and solar.”
He added: “Aramco’s long-term success – and hence, its ability to generate investment returns – will hinge upon its ability to evaluate whether the synergies generated by competing with two positions in the same industry outweigh the costs, and whether the resulting conflicts can be managed effectively.”
Survival threat
It is very likely that at Aramco, attempts to run these two businesses side by side will generate various forms of conflict, ranging from challenges in terms of corporate culture and incentives to cannibalization concerns if the fossil fuels division perceives the renewables division as a threat to its own survival, he said.
Putting fossil fuels and renewables under the same roof may not only fail to generate incremental value but may even destroy value for shareholders.
The investment community will undoubtedly be watching closely to see how Aramco manages these challenges and how the company’s commitment to a sustainable future manifests through its organizational processes and structures, over and above its recent financial commitments, he stated.
Anadarko Announces Multi-billion-dollar Capital Program
Anadarko Petroleum Corporation recently announced its 2017 initial capital program of $4.5 to $4.7 billion along with its 2017 initial capital expectations and guidance.
"In 2017, we plan to allocate approximately 80% of our total capital program toward our U.S. onshore upstream and midstream activities, and our expanded position in the deepwater Gulf of Mexico," said Al Walker, Anadarko Chairman, President and CEO. "These investments provide the foundation for our increased five-year oil growth expectations of more than 15% on a compounded annual basis at current prices, and we are prepared to be flexible throughout the year if we see the opportunity in the Delaware and DJ basins to accelerate activity to capture additional value. Furthermore, sustained oil production from our deepwater Gulf of Mexico, Algeria and Ghana assets is expected to generate significant free cash flow to support growth and fund future value creation through exploration success and our LNG business."
U.S. onshore
During 2016, Anadarko high-graded its U.S. onshore portfolio by divesting a number of natural-gas-weighted assets and concentrating its top-tier positions in the Delaware and DJ basins, which resulted in an expected 25% increase in liquids composition from the U.S. onshore relative to 2015 on a same-store-sales basis.
In the Delaware Basin in West Texas, Anadarko increased its estimated net resources in the Wolfcamp A formation by about 50% to more than 3 Bboe of net resources. In addition, the company estimates it has more than 1 Bboe of incremental potential upside on its acreage in the Wolfcamp B, C and D formations, the Bone Spring, and Avalon Shale opportunities. In 2017, the company plans to invest approximately $820 million in Delaware Basin upstream activities, with an additional $560 million of Anadarko capital allocated toward the expansion of its midstream backbone to enable future growth. Anadarko plans to average 10 to 14 operated drilling rigs during the year and drill more than 150 operated mid-lateral-equivalent wells.
In the DJ Basin of northeast Colorado, Anadarko increased its estimated net resources by about 33% as a result of improved recoveries and additional down-spacing opportunities. The company now estimates it has more than 2 Bboe of net resources within its development area, with additional upside on its acreage in the greater DJ Basin. In 2017, Anadarko plans to invest approximately $840 million in DJ Basin upstream activities, average five to six operated rigs and drill approximately 290 mid-lateral-equivalent wells.
"We expect our current 2017 U.S. onshore capital allocation to deliver significant oil growth toward the end of the year as we overcome the effects of last year's reduced activity levels on our shorter-cycle onshore opportunities," added Walker. "We anticipate achieving an exit rate of approximately 50,000 boped in the Delaware Basin, which is more than 80% higher than 2016, and in the DJ Basin, we expect our oil-production exit rate to be about 100,000 bpd, a 30% increase over the prior year."
Deepwater, international operations
In 2017, Anadarko expects to invest approximately $1.1 billion in its deepwater Gulf of Mexico, Algeria and Ghana assets.
In the Gulf of Mexico, the company plans to continue leveraging its premier infrastructure position and drill approximately seven development tiebacks during the year. In addition, Anadarko expects to benefit from a full year of production from the recently acquired Freeport-McMoRan properties, which doubled Anadarko's sales volumes to more than 160,000 boed at the end of last year. Minimal capital investments are expected to be required in 2017 to maintain the steady, long-lived, high-margin oil production provided by the company's strong cash-generating assets in Algeria and offshore Ghana.
Deepwater, international exploration, LNG
Exploration and LNG development continue to be differentiating components of Anadarko's business. In 2017, the company expects to invest approximately $770 million in its deepwater and international exploration program and LNG project in Mozambique.
During the year, Anadarko plans to drill up to 10 exploration/appraisal wells in the deepwater Gulf of Mexico, Côte d'Ivoire, and Colombia, where Anadarko recently added to its previous exploration success with another discovery at the Purple Angel prospect.
The company expects to continue advancing the Mozambique LNG project where it has made good progress on the legal and contractual framework, and recently submitted a Development Plan to the Government of Mozambique for the Golfinho/Atum discoveries.