The geopolitical influence of natural gas

– Natural gas continues to be an important diplomatic tool in the Middle East region, as the new gas giant, Israel, meets with the mediation of the United States to discuss the maritime borders that have a direct link with the oil riches and gas offshore the Mediterranean. If Lebanon ever solves its domestic political problems to the point that offshore exploration can actually begin, having a maritime agreement with Israel after decades of conflict will be perhaps the biggest vote of confidence for investors.

– After removing an exploration vessel from the shores of Cyprus last week, in a move that Turkey tried to pass as “diplomatic” but was likely related to the failure of the exploration, Ankara has deployed another vessel, this time in the territorial waters of Greece, in what is seen as a direct provocation. The Turkish seismic survey vessel has been deployed off the coast of Turkey, near the Greek island of Kastellorizo.

– Angolan state oil giant Sonangol, long a den of corruption diverting some $ 14 billion from state coffers, is being considered for listing on a stock exchange once the restructuring is complete. If that happens, Sonangol would likely be listed in New York, London or China. Angolan authorities have hinted that around 30% of the company could be offered on a listing as early as 2022.

– Philippine President Rodrigo Duterte has lifted the moratorium on oil and gas exploration in the Western Philippine Sea. The moratorium on all exploration and drilling activities was imposed in 2014 by the previous administration due to geopolitical tensions between the Philippines and China.

Oil market update amid COVID

Oil markets remain focused on demand, but this week shows that oil prices are becoming a bit more resistant to lower demand projections. OPEC’s MOMR this week showed that the cartel is predicting lower demand for oil than it had projected last month, and the IEA is now saying that oil demand will not return to pre-pandemic levels until 2023 – and that’s only if the pandemic is brought under control sometime next year.

And despite additional coronavirus shutdowns instituted in Europe this week, oil prices have remained in a tight band near $ 40 for WTI, and close to $ 43 for Brent.

– After a 7-month hiatus, Alberta will once again offer land for sale to oil and gas companies later this year. Typically Alberta holds its auctions twice a month. Alberta has cited the growing interest from oil and gas companies in leases in the area as a reason to resume auctions. The only question that remains is whether, at this point, Alberta is getting the price it needs for these leases.

– The Office of Oceanic Energy Management has scheduled the auction of all available areas in the Gulf of Mexico for November 18, the first sale of offshore leases by the federal government since March. BOEM will offer 78 million offshore acres of Texas, Louisiana, Mississippi and Alabama for oil and gas development.

Operations, mergers and acquisitions

After a dull third quarter, the M&A acquisition landscape may finally be heating up, suggesting that oil and gas companies have seen the coronavirus handwriting on the wall – it’s time to consolidate and trim more fat than the company can manage. laying off a handful of employees. There are deals to be made, and the ones they have are taking advantage of the ones they don’t have.

– On that front, this week we saw ConocoPhillips, the juicy Permian player for Concho Resources, which has a market capitalization of nearly $ 9 billion. Conoco expects a good deal in this case, in line with the great deal Chevron secured with Noble. For now, it’s just hearsay and speculation, but if a deal is struck, Conoco would become one of the largest E&P players in the world, capable of producing 1.3 million boe / d.

– BP will send natural gas from Azerbaijan to Europe at the end of 2020, despite the problems in the region between Armenia and Azerbaijan over Nagorno-Karabakh. The gas pipeline in which BP is a shareholder, the Trans-Adriatic Gas Pipeline (TAP), exports gas from the Shah Deniz field, located off the coast of Azerbaijan, and should be ready in November.

– Iraq is considering the creation of a new company that will take care of all oil operations in the Kurdistan region. The Iraqi government and the Kurdistan Region Government (KRG) have been in a bitter battle over oil in the region. If successful, the new entity would have control of the region that has been self-regulating for years, and as such, the country would be better equipped to control oil production and exports. However, the long dispute suggests that any agreement between the two will not be easy or straightforward. We have heard all of this before and a deal could still be elusive.

– Saudi Aramco is considering the sale of a $ 10 billion stake in its pipeline business. The potential deal, which Aramco calls “Project Seek,” is being kicked out by Blackrock, Brookfield and others, although nothing is certain. The deal could be critical for Aramco – and Saudi Arabia – who are struggling in the new environment of lower oil prices they helped create. Not only must Aramco fill its budget gaps – putting low oil prices aside – it must also pay $ 75 billion in dividends soon.

– Saido Aramco and ADNOC have reaffirmed their commitment to invest in a $ 44 billion, 60 million ton petrochemical complex in India with BPCL and HPCL. In the case of Aramco and ADNOC, new outlets for their crude would be propped up, and Aramco would supply half a million barrels a day to the refinery once it is completed.

Discovery and development

– The Chinese company Sinopec added to its proven reserves of shale gas this week in the Fuling gas field in the Sichuan basin. The Fuling block now has 793 billion cubic meters and is China’s first major commercial shale gas project.

– Turkey is ready to announce that it found new gas reserves off the Black Sea with the Turkish drillship Fatih, adding to the 320 billion cubic meters of Turkey’s natural gas reserves in the Sakarya gas field (also in the Black Sea). Turkey also has the Kanuni drillship exploring the Black Sea.

– Brazil’s Petrobras has plans to drill three more high-impact pre-salt wells in 2021 and 2022, at the Yba, Vaz Lobo and Monai prospects in the Campos and Espirito Santo basins. Equinor is a partner in the prospects, and Exxon is a partner in the Yba prospect. BP is a partner in Vaz Lobo, and Total is a partner in Monai. Petrobras has recently discovered hydrocarbons in the Naru well in the Campos basin, also in partnership with Equinor and Exxon.

Regulations and legislation

– Kazakhstan has once again banned the export of LPG to members of the Commonwealth of Independent States for three years. The ban is imposed to avoid the consequences of the discrepancy between LPG prices in the country and LPG prices outside Kazakhstan and to prevent the illegal importation of LPG.

– The European Union is reflecting on a set of new regulations for natural gas that would try to limit methane emissions. Any regulations the EU sets for natural gas would affect its natural gas suppliers, and the EU is a major importer of natural gas from Russia and Norway.

Renewable

– Enel Green Power North America, a subsidiary of Enel, has entered the construction phase of its 284MW Azure Sky solar and storage project in Texas. Once completed, the massive project will have 700,000 photovoltaic panels capable of generating a total of 586GWh of energy each year. The Home Depot has committed to purchase 75MW of power from the project, enough to supply 150 of its stores.

– UAE ADNOC is looking to diversify into clean energy, specifically hydrogen as a side business, but maintains its goal of increasing oil production capacity to 5 million barrels per day within the next decade, from its current 4 million barrels per day.

– In an effort to meet its commitment to eliminate both C02 by 2050 as it has emitted since 1975, Microsoft has signed a memorandum of understanding to investigate the use of a carbon dioxide storage facility.


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