Oil and Gas News: April 29-May 3, 2013
Last Updated: 06-May-2013
1. Chesapeake Energy Swings to 1st-Quarter Profit (May 1, 2013)
Chesapeake Energy has reported first quarter profit of USD58 million as compared to a loss of USD28 million last year. Chesapeake recently witnessed a management overhaul when its long time chief executive and company co-founder stepped down. Significantly, Chesapeake has been able to establish itself as the second largest natural gas producer in the US, next only to Exxon Mobil, by aggressively acquiring new acreage. However, Chesapeake has not been able to reduce its debt as quickly as it had promised.
2. Imperial starts up Kearl oil sands mine (April 29, 2013)
Production of mined diluted bitumen has been reported from the first of three trains at Imperial Oil Ltd.’s Kearl oil sands project. Production is expected to reach 110,000 b/d when all three trains are operational later in 2013. Production from Kearl is expected to double by the end of 2015 and reach an output of about 345,000 b/d by 2020. The ultimate recovery of 4.6 billion bbl of bitumen is expected to be spread over a period of more than 40 years. Imperial holds a 70.96% interest in the Kearl project and is the operator.
EUROPE AND RUSSIA
1. Statoil ‘On Track’ for 2.5 MMboepd by 2020 (May 2, 2013)
For Q1 2013, Statoil has reported production of 2 MMboepd which is a decrease as compared to Q1 2012’s production of 2.19 MMboepd. Although the company had anticipated lower production, it reduced further due to operational disruptions at three of its fields. The company however said that it managed to deliver record international production. The company further said that it was on track to deliver 2%-3% average annual production growth from 2012 to 2016, with production above 2.5 million barrels of oil equivalent per day (MMboepd) by 2020.
2. Lukoil to develop West Siberia license (April 30, 2013)
In September 2014, Lukoil plans to start developing the oil project on its Imilorsko-Istochnoye license in West Siberia. The company is hopeful of starting oil production by March 2015. As per early estimates, the area has 193.7 million tonnes of crude oil reserves.
3. Rosneft, Mitsui sign petrochemical MOU (April 29, 2013)
Japan’s Mitsui and Co. and Russian Rosneft have signed an MoU to together build a petrochemical complex in far-east Russia. The petrochemical plant is expected to have the capacity to process 3.4 million tonnes per year (tpy) of feedstock to produce ethylene and propylene.
1. Iraqis, Kurds Reach Agreement over Oil Payments (May 2, 2013)
Officials from Iraq have said that there has been an agreement between the Iraqi federal government and Iraq’s semi-autonomous region of Kurdistan, which is expected to solve the dispute over payments to foreign companies. Because of the dispute, most of the crude oil exports from the region had come to a standstill. After the provisions of the agreement become operational, Kurdistan will be able to restart export of almost 250,000 barrels of oil per day through and export pipeline controlled by the Iraqi federal government, thereby raising Iraq’s exports to almost 2.9 million barrels per day.
2. Shell in 30-Year JV to Develop Bab Gas Field (April 30, 2013)
Royal Dutch Shell has been selected by the state-run Abu Dhabi National Oil Co. or Adnoc to operate the Bab sour gas field. Shell has entered into a 30-year JV with Adnoc to develop the Bab sour gas reservoirs. Shell will hold a 40% equity stake in the JV while Adnoc will hold the remaining stake. Gas output from the Bab Gas Field will supply the local market in the UAE.
3. EIA: Sanctions reduced Iran’s oil exports and revenues in 2012 (April 26, 2013)
According to US Energy Information Administration, in 2012, Iran’s crude oil and lease condensate exports reached the lowest level since 1986. This was due to the tightening of US and European Union sanctions aimed at Iran’s oil sector. In 2012, Iran exported 1.5 mb/d of crude oil and lease condensates which fetched export revenues of USD69 billion which was much lower than that of USD95 billion in 2011.
1. Egypt To Adopt New Oil, Gas Licensing Policy (April 30, 2013)
Egypt’s oil minister has said that the country will introduce a new licensing policy for its future oil and gas exploration contracts signed with foreign companies. As per the new licensing policy, the country will have a larger share of production. Also, Egypt’s share of the output will increase with increase in production. The new policy will however not be applicable to the eight oil and gas exploration projects in the Mediterranean Sea that Egypt awarded earlier in April.
1. Petronet considering LNG imports from US, Canada (May 3, 2013)
Petronet LNG Ltd. is considering importing LNG from Canada and the US to meet the surging energy requirements of India. Petronet is India’s largest importer of LNG. Last month Petronet had signed an agreement with United LNG of the US for purchase of 4 million tonnes of LNG per annum for 20 years beginning from 2018.
2. ONGC’s oil production down 6% (May 2, 2013)
For the year ended March 31, 2013, ONGC has reported a drop in crude oil production by 6%. In 2012-2013, the company produced 20.5 million tonnes of crude oil which was almost 5.8% lower than the production of 21.8 million tonnes of crude oil in 2011-2012. The decline in production was due to poor output from its Mumbai High fields. However, the company produced 23.5 billion cubic meters (bcm) of natural gas, higher than that of 23.3 bcm in 2011-12.
3. Essar seeks sovereign guarantee from government for import of crude oil from Iran (May 2, 2013)
Essar oil has asked for a sovereign guarantee from the government of India for importing crude oil from Iran. Essar Oil, that runs a 20 million tonnes a year refinery in Gujarat, has sought the guarantee as global reinsurers are not providing re-insurance for refineries that process Iranian crude and the informal arrangement with local general insurance companies is not sufficient enough to cover the risks. Essar is expecting an insurance cover of USD2.21 billion (INR120) billion while the oil pool can provide insurance of only USD368 million (INR20 billion).
4. Shell, ONGC alliance ahead in race to buy 20% in Mozambique gas block (May 2, 2013)
Indian consortium led by state-run ONGC and global oil and gas giant Shell, are leading the race to buy 20% stake in the huge oil field in Rovuma basin offshore Mozambique. The sale is expected to fetch USD6 billion. Anadarko Petroleum and India’s Videocon Industries are selling 10% stake each in the Rovuma-1 offshore block. Shell is likely to have an edge over the Indian consortium because of its strong financial position and domain expertise.
5. ONGC’s US5 billion Kazakh oil deal may fall through (May 1, 2013)
It is being anticipated that ONGC’s USD5 billion deal to acquire US energy giant ConocoPhillips’ stake in a Kazakhstan oil field may not materialize. Industry insiders attribute it to the Indian government’s inability to convince the Kazakhstan government to approve the transaction. ONGC had already struck a deal in November 2012 to buy CononoPhillip’s stake in Kashagan but the cabinet is yet to approve the transaction. Kazakhstan may exercise its pre-emption rights to buy ConocoPhillips’s 8.4% stake in Kashagan oil field before selling it to a Chinese company.
6. ONGC announces three significant oil and gas discoveries in KG basin (April 30, 2013)
ONGC has announced the discovery of two new oil and gas fields in the Krishna-Godavari (KG) basin blocks and one in a western offshore block. In the KG basin, discoveries have been made in deepwater blocks KG-DWN-2005/1 and KG-DWN-98/2 and in the western offshore block the discovery has been made in the GK-28 Kutch Offshore block. The commercial potential of these new discoveries is yet to be ascertained.
7. Directorate General of Hydrocarbons wants Reliance Industries to give up 86% of KG-D6 area (April 28, 2013)
The Directorate General of Hydrocarbons has indicated that RIL should give up 86% of its KG-D6 gas block area as RIL has crossed the time limit given to it to develop the area. This includes relinquishing 8 gas discoveries worth at least USD5 billion.