Saudi To Invest US$10bn In Chinese Downstream

ChinaOil – China Oil & Gas

28 February 2019, Week 08, Issue 732

Saudi Arabia will invest another US$10 billion in China’s refining and petrochemicals sector, this time in a partnership with state-owned military equipment manufacturer China North Industries Corp. (Norinco).

The project at Panjin in northeast Liaoning Province will comprises a 300,000 bpd refinery plus an ethylene cracker with 1.5 million tpy of capacity and a paraxylene plant with 1.3 million tpy of capacity.

Saudi Aramco said in a statement it anticipated supplying 70% of the crude oil needed for the refinery, which is slated to commence operation by 2024. State-owned Aramco is taking a 35% stake in the project, Norinco will hold 36% and local government enterprise Panjin Sincen 29%. They will form for a new operating business called Huajin Aramco Petrochemical.

The agreement was signed during last week’s visit to China by a top-level Saudi business and government team led by Crown Prince Mohammed bin Salman (MbS).

The visit also provided more details of Aramco’s pledge in October 2018 to invest at least US$300 million in Zhejiang Petrochemical and its expansion of refining capacity to 800,000 bpd. Aramco signed memoranda of understanding (MoUs) with the Zhoushan government and Zhejiang Petrochemical’s other shareholders Rongsheng Holding Group, Juhua Group and Tongkun Group to acquire a 9% interest in the grassroots refinery project.

Aramco signed a third MoU with Zhejiang Energy Group to build a large-scale retail fuel network over the next five years that will sell oil products production by Zhejiang Petrochemical’s downstream complex.

“Involvement in the project will come with a long-term crude supply agreement and the ability to utilise Zhejiang Petrochemical’s large crude oil storage facility to serve its customers in the Asian region,” Aramco said.

In his meeting with the Saudi crown prince, Chinese President Xi Jinping called on the Middle Eastern producer to sign up to the Belt and Road Initiative (BRI) of trade routes and economic development, the state-run Global Times said. Xi also urged joint co-operation in energy projects.

The Saudi delegation earlier visited Pakistan and India, where Aramco is seeking investment in oil refining. Saudi Arabia will participate in the China-Pakistan Economic Corridor (CPEC) which links northwest China with the Pakistani port of Gwadar, Global Times said.

https://newsbase.com/topstories/saudi-invest-us10bn-chinese-downstream

Edited by

Andrew Kemp

Editor

Any questions? Please get in touchandrewk@newsbase.com

Murphy Oil sells Malaysia assets to Thailand’s PTTEP for US$2.1b

By Reuters – March 22, 2019 @ 12:46pm

Murphy Oil Corp is selling its oil and gas assets in Malaysia to Thailand’s PTTEP. – NSTP/File pic

KUALA LUMPUR: Murphy Oil Corp is exiting Malaysia with a US$2.13 billion sale of its oil and gas assets there to Thailand’s PTTEP and said it will use the proceeds to pay down debt, buy back shares and fund potential deals in the United States.

Besides the enterprise value of the sale, PTT Exploration and Production Public Co Ltd (PTTEP), a unit of state-owned PTT PCL, will also pay Murphy Oil up to US$100 million as a bonus if certain exploration projects show results before October 2020, the companies said on Thursday.

The deal between Murphy and PTTEP comes as M&A activity is heating up in Malaysia’s oil and gas sector, where global companies pursuing expansion plans are spotting opportunities.

Reuters reported that Murphy was nearing a deal to sell its Malaysian assets to PTTEP earlier on Thursday.

“Like many Asian national companies, PTTEP suffers from a maturing domestic portfolio. To improve its production outlook the company has been on the hunt for licence extensions and counter-cyclical M&A opportunities, with a focus on Southeast Asia,” said Alex Siow, a research analyst at energy research firm Wood Mackenzie, in an email.

“This is the biggest oil and gas deal in Southeast Asia for over five years, and supports our view that 2019 is set to be a big year for M&A activity in the region,” he said.

Reuters reported in November, citing sources, that Murphy was in talks to sell its Malaysian assets after an unsolicited bid.

Sources had said Spanish oil major Repsol, whose presence in Malaysia is focused on the upstream sector, or other global majors could be potential buyers for Murphy’s assets.

Murphy had proven reserves of 816 million barrels of oil equivalent (boe) in 2018, of which 129 million boe were from Malaysia. Those assets produced over 48,000 boe per day for Murphy last year.

The deal follows moves by other U.S. oil majors to turn investment to high-yielding shale fields at home, where output has soared to more than 12 million barrels per day (bpd), rising over 2 million bpd since early 2018.

WESTERN FOCUS

Murphy, which also has operations in Canada, Brazil and other regions, said it will focus on the Western Hemisphere – mostly on the Eagle Ford basin in Texas and the U.S. Gulf of Mexico – for future exploration and production deals.

“We expect to generate approximately US$1.2 billion of free cash flow at a flat US$55 West Texas Intermediate price,” CEO Roger Jenkins said on a call with analysts.

Futures for light crude were trading at around US$60 per barrel on Friday.

Murphy shares rose as much as 1.8 percent before closing at US$30.97 on Thursday.

PTTEP said the deal is expected to promptly raise sales volumes by 15 percent and operating cash flow upon completion.

“This diversified self-funded portfolio will add a mix of production, development and exploration assets that will provide immediate revenue stream, production and reserves for both short and long term,” PTTEP said in a statement.

Malaysian state-owned Petronas partners Murphy in Malaysia, which has seen M&A pick-up in the energy sector.

In September, Austrian oil and gas company OMV agreed on a joint venture with Sapura Energy Bhd, paying US$540 million for a 50 percent stake in the exploration assets of the Malaysian firm.

In August, citing sources, Reuters reported that U.S. company Hess Corp’s Southeast Asian offshore natural gas assets had attracted bid interest from PTTEP and OMV. Hess later said it had no plans to sell its Southeast Asian assets.

Murphy also announced a US$500 million share buyback as well as debt reduction of about US$750 million. The company had about $US3 billion in debts as of December 2018.

The deal on the Malaysian assets is expected to close by the end of the second quarter.

Bank of America Merrill Lynch served as advisor to Murphy on the sale, while Tudor, Pickering, Holt & Co was the financial advisor. Jefferies Group LLC was the financial advisor to PTTEP. –Reuters

https://www.nst.com.my/business/2019/03/471882/murphy-oil-sells-malaysia-assets-thailands-pttep-us21b

CNOOC Plans to Boost Production to 2021

by  Andreas Exarheas|Rigzone Staff

Wednesday, January 23, 2019

CNOOC Limited revealed Wednesday that it plans to boost production to 2021.

The company’s net production target for 2019 is 480 million to 490 million barrels of oil equivalent (boe). Net production for 2020 and 2021 is estimated to increase to 505 million to 515 million boe and 535 million to 545 million boe, respectively. CNOOC Limited’s net production for 2018 is expected to be approximately 475 million boe.

CNOOC Limited plans to drill 173 exploration wells and acquire approximately 10,810 square miles of 3D seismic data this year. The company also expects a total of six new projects to come on stream in 2019. Two of these – the Egina oil field project and the Huizhou 32-5 oil field comprehensive adjustment/Huizhou 33-1 oil field joint development project – have already commenced production.

Total capital expenditure for CNOOC Limited in 2019 is budgeted at $10.3 billion (RMB 70 billion) to $11.7 billion (RMB 80 billion). The capital expenditures for exploration, development and production account for approximately 20 percent, 59 percent and 19 percent, respectively, according to CNOOC Limited.

“The company will maintain its prudent financial policy and investment decision-making and ensure the effective implementation of the capital expenditure plan to improve the overall performance of the company,” Xie Weizhi, chief financial officer of CNOOC Limited, said in a company statement.

On January 16, CNOOC Limited announced that the Huizhou 32-5 oilfield comprehensive adjustment/Huizhou 33-1 oilfield joint development project had commenced production. The project, which is located in south-central part of the eastern South China Sea, is expected to reach a peak production of approximately 19,200 barrels of crude oil per day in 2020.

The company announced the output start up of the Egina Field, located in deepwater offshore Nigeria, on January 2. The project is expected to reach a peak production of approximately 200,000 barrels of crude oil per day in 2019.

The CNOOC Limited group is the largest producer of offshore crude oil and natural gas in China and one of the largest independent oil and gas exploration and production companies in the world, according to the company’s website.

https://www.rigzone.com/news/cnooc_plans_to_boost_production_to_2021-23-jan-2019-157980-article/

CNOOC starts up Huizhou oil project offshore China

16-January-2019

Offshore staff

HONG KONG – CNOOC has started production from the Huizhou 32-5 oilfield comprehensive adjustment/Huizhou 33-1 oilfield joint development project in the eastern South China Sea.

The location is around 170 km (106 mi) from Hong Kong in a water depth of 115 m (377 ft). Development involved construction of a drilling and production platform connected to the existing facilities serving the Huizhou 25-8 oilfield.

Currently one well is onstream: peak production of around 19,200 b/d of crude oil should follow in 2020.

CNOOC operates with a 100% interest.

https://www.offshore-mag.com/articles/2019/01/cnooc-starts-up-huizhou-oil-project-offshore-china.html

Bakken, Guyana earmarked for 75% of Hess’s $2.9-billion budget in 2019

HOUSTON, Dec. 1012/10/2018 By OGJ editors

Hess Corp. will allocate some 75% of its $2.9-billion 2019 exploration and production capital and expenditure budget to high-return growth assets in the Bakken and in Guyana.

Net production is forecast to average 270,000-280,000 boe/d in 2019, excluding Libya, compared with 245,000 boe/d in 2018 proforma for the sale of the company’s joint venture interests in the Utica shale play. Bakken net production is forecast to average 135,000-145,000 boe/d in 2019.

Production will account for 65% of the company’s capex for 2019, while 20% will go to offshore developments, and 15% is earmarked for exploration and appraisal activities.

Regarding production activities, Hess budgets the following:

• $1.425 billion to fund an increase to 6 rigs from an average of 4.8 rigs in 2018, and the shift to higher intensity plug and perf wells in the Bakken. The company expects to drill 170 wells and to bring online 160 wells in 2019. Funds are also included for investment in non-operated wells.

• $290 million for production in the deepwater Gulf of Mexico, including continued development of Stampede field (Hess-operated, 25%) and tieback opportunities at Llano field (Hess, 50%) and Tubular Bells field (Hess-operated, 57%).

• $150 million for production activities in the Gulf of Thailand at North Malay basin (Hess-operated, 50%) and the Malaysia/Thailand Joint Development Area (Hess, 50%).

Hess has budgeted its development, exploration, and appraisal projects as follows:

• $260 million associated with the Liza Phase 1 development offshore Guyana (Hess, 30%), where first production is expected by 2020.

• $310 million includes spend for Liza Phase 2 development, completing the plan of development for Payara, and front-end engineering and design work for future development phases.

• $440 million to drill exploration and appraisal wells on the Stabroek Block offshore Guyana (Hess, 30%). Funds are also included for seismic acquisition and processing in Guyana, Suriname, and the deepwater Gulf of Mexico, as well as for license acquisitions.

https://www.ogj.com/articles/2018/12/bakken-guyana-earmarked-for-75-of-hess-s-2-9-billion-budget-in-2019.html

Expanded Pluto LNG complex could handle Scarborough gas

Offshore staff

PERTH, Australia – Woodside Energy has contracted Bechtel (Western Australia) to perform front-end engineering design for the Pluto Train 2 project.

The work will include activities needed to finalize the costs and technical definition for the proposed second LNG train at the Pluto LNG complex on the northwest Australian coast, with an option for Woodside to progress to a lump sum EPC contract for execute phase activities, pending a positive investment decision.

Pluto Train 2 is the operator’s preferred destination for gas from the offshore 7.3-tcf Scarborough field development. Woodside is targeting 5 MMt/yr capacity at the second LNG train.

Woodside is targeting FID for the Pluto Train 2 project in 2020 and ready for start-up in 2024.

https://www.offshore-mag.com/articles/2018/12/expanded-pluto-lng-complex-could-handle-scarborough-gas.html

Onshore-Offshore Vietnam Contract Goes to Saipem

by  Matthew V. Veazey|Rigzone Staff|Wednesday, January 30, 2019

Saipem has won an onshore-offshore front end engineering design (FEED) contract for a proposed integrated natural gas-to-power development in Vietnam.

A joint venture of ExxonMobil Exploration and Production Vietnam Limited (EMEPVL), PetroVietnam and PetroVietnam Exploration Production Corp. awarded Saipem the FEED contract for the Ca Voi Xanh (Blue Whale) project, Saipem reported in a written statement emailed to Rigzone Wednesday.

According to Saipem, the project entails designing the facilities for the development of an offshore gas and condensate reservoir in Block 118 offshore Vietnam. Treated gas from Ca Voi Xanh – Vietnam’s largest gas field, discovered in 2011 – will be delivered to two third-party power complexes to generate electricity locally, Saipem and ExxonMobil reported. Saipem noted that it will design the following under the FEED contract:

• An offshore platform
• Offshore gas and condensate pipelines
• Offshore fiber optic cabling
• An onshore gas treatment plant
• Onshore pipelines
• An onshore condensate offloading facility

“The awarded contract boosts our strategic collaboration with ExxonMobil, an important client with a strong focus on innovation and on energy transition,” stated Mauro Piasere, Saipem XSIGHT’s chief operating officer. “The contract also allows Saipem to operate once more in Vietnam, further consolidating the company’s presence in the area of South-East Asia.”

In a separate announcement emailed to Rigzone Wednesday, ExxonMobil stated that it is filing permits, planning applications and other preparatory work for the proposed development. Should the “Blue Whale” project advance beyond the FEED stage, ExxonMobil will lead its construction and operation, the supermajor noted.

“The Ca Voi Xanh project could bring a number of long-term benefits to the country, including cleaner, reliable power to help drive economic growth and improved living standards,” said Liam Mallon, president of ExxonMobil Development Co. “If the project goes forward, it is estimated to generate $20 billion in revenue to the Vietnamese government, thousands of local jobs and improved energy security from domestic gas development.”

ExxonMobil also stated that Vietnam Electricity, PetroVietnam and Sembcorp are holding talks to build and operate the power plants, which would generate three gigawatts of electricity. That amounts to roughly 10 percent of Vietnam’s current total power demand, ExxonMobil added.

Depending on regulatory approvals, government guarantees, executed gas sales agreements and economic competitiveness, a final investment decision on the integrated gas-to-power project could occur in 2020, ExxonMobil concluded.

https://www.rigzone.com/news/onshoreoffshore_vietnam_contract_goes_to_saipem-30-jan-2019-158040-article/

CNOOC targets steady production increase during 2019-21

01/23/2019

Offshore Staff

HONG KONG – CNOOC is targeting net production in 2019 of 480-490 MMboe, with output from China and overseas accounting for 63% and 37%, respectively.

Last year the company achieved net production of around 475 MMboe – its estimates for 2020 and 2021 are respectively 505-515 MMboe and 535- 545 MMboe.

Six new projects are scheduled to come onstream – of these, the Egina oil field off Nigeria and the Huizhou 32-5 oil field comprehensive adjustment/Huizhou 33-1 oil field joint development projectoffshore are already in production.

The other four are Appomattox in the US Gulf of Mexico, and the Bozhong 34-9 oil field, Caofeidian 11-1/11-6 comprehensive adjustment project and Wenchang 13-2 comprehensive adjustment project offshore China.

During 2019, the company plans to drill 173 exploration wells and acquire roughly 28,000 sq km (10,811 sq mi) of 3D seismic data.

Its budget capex is in the range RMB70-80 billion ($10.3-11.8 billion), with exploration, development, and production accounting for around 20%, 59%, and 19% of this figure.

https://www.offshore-mag.com/articles/2019/01/cnooc-targets-steady-production-increase-during-2019-21.html

Santos draws first oil from Van Gogh infill project offshore Australia

By Compelo Staff Writer

Australian energy company Santos has achieved first oil from the Van Gogh infill project located in the offshore Exmouth Basin in Western Australia.

Image: Santos begins production from Van Gogh infill project. Photo: courtesy of suwatpo/FreeDigitalPhotos.net.

Santos said that the start of production from the infill project marks the successful completion of the two-well program aimed at boosting production from the Van Gogh field.

The Van Gogh field is one of three subsea oil field developments in the Exmouth Basin, which has been tied-back into the Ningaloo Vision Floating Production, Storage and Offloading vessel (FPSO).

Located in in Production License WA-35-L, the Van Gogh field has been producing since 2010. The nearby Coniston and Novara fields, which began production in 2015 and 2016, respectively, are the other two fields to have been tied back to the Ningaloo Vision FPSO.

Santos is the operator of the Van Gogh-Coniston-Novara project with a stake of 52.5%.

The company commenced the Van Gogh infill project in September 2018. The project saw drilling and completion of two subsea wells, which were connected to existing offshore infrastructure.

According to the Australian oil and gas producer, the two dual-lateral wells were targeted in order to access bypassed oil that wasn’t drained from the original wells.

The company said that these were technically the most challenging of any wells in the development, particularly drilling horizontal sections in the reservoirs as long as 3,500m only and 950m below the seabed.

Santos managing director and CEO Kevin Gallagher said: “The campaign has also been delivered safely and efficiently, highlighting the tremendous offshore expertise we have brought into the business with last year’s acquisition of Quadrant Energy.”

Discovered in 2003, the Van Gogh field was developed through the drilling of 19 horizontal production laterals, two water injection wells and one gas injection well.

The offshore field’s previous operator was the US-based Apache, which in 2015, divested its Western Australian oil and gas assets to a consortium made up of Brookfield Asset Management and Macquarie Capital.

The Western Australian oil and gas assets, including the Van Gogh field, came under the portfolio of Quadrant Energy, which was launched by the consortium following the acquisition.

Towards the end of last year, Quadrant Energy was acquired by Santos in a $2.15bn deal.

https://www.compelo.com/energy/news/santos-van-gogh-infill-project/

ADNOC awards two offshore exploration blocks to Eni, PTTEP consortium

HOUSTON, Jan 14, 2019

By OGJ editors 

Abu Dhabi National Oil Co. (ADNOC) has awarded two offshore blocks to a consortium led by Italy’s Eni SPA and Thailand’s PTT Exploration & Production PCL following a competitive bid round.

The two blocks in the northwest of Abu Dhabi—Offshore 1 and Offshore 2—are the first to be awarded among the geographical areas that were offered for commercial bidding by ADNOC in April 2018 as part of Abu Dhabi’s first competitive open block licensing strategy (OGJ Online, Apr. 10, 2018).

Under the terms of the agreements, Eni will operate the concessions and PTTEP and Eni will both hold a 100% stake in the exploration phase, investing at least $230 million to explore for oil and gas, and appraise the existing discoveries on Offshore Block 2. Simultaneously, exploration and appraisal plans for Offshore Block 1 will be finalized. The two blocks cover 8,000 sq km.

Upon successful exploration, Eni and PTTEP will together be granted the opportunity to develop and produce any discoveries, with ADNOC retaining the option to hold a 60% stake in the production phase.

https://www.ogj.com/articles/2019/01/adnoc-awards-two-offshore-exploration-blocks-to-eni-pttep-consortium.html