French oil and gas group Maurel & Prom eyes UK’s Amerisur
Oil and gas company Maurel & Prom has made a possible offer worth about 210 million pounds ($262.5 million) for UK peer Amerisur Resources, which could help the French firm boost its range of assets in Latin America. Maurel & Prom said on Monday its possible offer was priced at 17 pence per share for Amerisur, whose shares closed at 16.52 pence on Friday. “M&P sees considerable benefit to shareholders from a combination and believes that the enlarged group would offer significant value upside for both Amerisur’s and M&P’s shareholders,” the French company said in a statement. “The combination would result in a balanced portfolio of producing assets, with a wide range of high-impact exploration and development opportunities across Latin America and Africa,” added Maurel & Prom.
High stakes in natural gas standoff between Cyprus and Turkey
Longtime adversaries Cyprus and Turkey are locked in a tense “game of chicken” over the prospect of a multi-billion-dollar Mediterranean gas bonanza with neither side willing to capitulate, analysts say. Turkey vowed to escalate its activities in waters around the island after the European Union on Monday agreed measures to punish Ankara for pursuing “illegal” drilling in Cyprus’s exclusive economic zone. “This is a tit-for-tat game where nobody is ready to back down, with Turkey willing to go one step further,” Hubert Faustmann, professor of history and political science at the University of Nicosia, told AFP. Turkey “will continue to drill, they may even decide to drill in blocks licensed by the Cypriot government… it’s a game of chicken,” he added. The discovery of huge gas reserves in the eastern Mediterranean has stoked long-standing tensions between EU member Cyprus and Turkey. The island is divided between the internationally recognised Republic of Cyprus and a breakaway state set up after a Turkish invasion launched on July 20, 1974 in response to a coup sponsored by the military junta then ruling Greece. Turkey, the only country to recognise the Turkish Republic of Northern Cyprus, has sent three ships to carry out drilling off the Cypriot coast despite EU condemnation and strong words from Washington. In response EU foreign ministers agreed measures including cutting 145.8 million euros ($164 million) in pre-accession funds to Turkey allocated for 2020. Turkey, which does not recognise Cyprus as a sovereign or EU member state, says its actions abide by international law and that it is drilling inside its continental shelf. – ‘Turkey won’t step down’ – While negotiations to reunify the island remain on hold, Cyprus has moved to start gas and oil exploration by issuing licences to international companies. That has angered Ankara which argues that such exploration deprives the Turkish Cypriot minority of benefiting from the island’s natural wealth. “Turkey won’t step down and EU sanctions are mild, the sanctions are not painful, and Turkey knows there is no determination for a confrontation,” said Faustmann. He argued that Cyprus needs to find more gas to make it commercially viable to extract. “Unless there’s a big find, it might be a lot of noise over nothing, there isn’t enough extractable gas at the moment.” Experts also argue that if the escalation continues it will be difficult for energy companies to explore off Cyprus due to the risk. “Interest in operations is there, however tensions with Turkey are not helping. If tensions subside then there will be a lot of interest because there is support from the markets and the EU too,” said energy analyst Cyril Widdershoven, founder of the consultancy firm Verocy. Cyprus on Tuesday rejected as “unacceptable” a Turkish Cypriot proposal on energy revenue sharing to help de-escalate tensions. Nicosia argues that jointly managing the island’s untapped energy resources can only be workable once an elusive peace settlement has been agreed, while assuring Turkish Cypriots will get their equal share. – Challenging market – Atlantic Council senior associate Charles Ellinas said the rising tensions will make the waters choppier for energy companies when they resume drilling in blocks licensed by the Cyprus government, especially in areas disputed by Turkey. “Turkey will not back off unless the EU and the US apply serious sanctions that hurt its economy. But I do not see that happening… NATO, trade and refugees are important to them,” he told AFP. “Turkey will maintain aggression until Cyprus agrees to put hydrocarbons on the negotiating table.” The waters off Cyprus have attracted international giants such as ExxonMobil of the United States, France’s Total and Italy’s Eni. Sizeable natural gas deposits have been discovered in three areas but have yet to be extracted. Last month Cyprus said it expected to earn $9.3 billion over 18 years from exploiting a gas field in the Aphrodite block under a renegotiated contract with Royal Dutch Shell, US-based Noble and Israel’s Delek. In February US energy giant ExxonMobil announced the discovery of a huge natural gas reserve off the island’s coast which Cyprus hailed as one of the biggest worldwide in recent years. Ellinas estimates Cyprus’s discovered reserves so far are around 10 trillion cubic feet and “there is probably as much still to be discovered and possibly more.” He estimates total gas revenue could be about $160 billion, which could generate profits of $30 billion over 20 years, but finding buyers may be tough in a competitive international market. “Cyprus’s share could be $17 billion. But first, sales need to be secured, and there lies the challenge, in a market inexorably moving towards renewables and clean energy. The longer it takes the more difficult it becomes.”
Reliance says its main gas fields in KG-D6 block in late life stage
Reliance Industries has said its flagship natural gas fields in the KG-D6 block in the Bay of Bengal are in “a late life stage” with output plummeting to an all-time low. The company, beginning mid-2020, will bring to production three sets of new discoveries in the block that will reverse the years of decline in production. Dhirubhai-1 and 3 — once the country’s highest gas producing fields — are “in a late stage and affected by low pressure and water ingress related challenges,” the company said in an investor presentation post announcing June quarter earnings. The fields produced an average of 1.76 million standard cubic metres per day of gas during April-June, the firm said. RIL has till date made 19 oil and gas discoveries in the Krishna Godavari basin. Of these, MA — the only oil discovery in the block — began production in September 2008. D1 and D3 fields went onstream in April 2009. MA field ceased to produce in September last year and now D1 and D3 are in their last stage. KG-D6 had hit a peak of 69.43 mmscmd in March 2010 before water and sand ingress shut down wells. This peak output comprised 66.35 mmscmd from D1 and D3, the largest of the gas discoveries on the KG-D6 block, and 3.07 mmscmd from MA field. Gas production from MA field hit a peak of 6.78 mmscmd in January 2012. RIL in the presentation said it is now developing three sets of discoveries — R-Cluster, Satellite Cluster and MJ fields in KG-D6 block and these will together produce 30-35 mmscmd of peak output. “R-Cluster development (is) on track for first gas in mid-2020,” it said. “Satellite Cluster on track for first gas in Mid-2021 (and) MJ Development on track for production in Mid-2022.” While all six wells on R-Cluster have been completed and now a second phase of offshore installation activities are planned on the field in Q3 of FY20, for Satellite fields and MJ field all contracts have been awarded, it said. RIL is the operator of the block with 60 per cent interest while BP holds 30 per cent stake. Niko Resources of Canada has the remaining 10 per cent but it has defaulted on payments, triggering the process of assignment of its interest to RIL and BP. “Assignment of Niko’s PI (participating interest) to RIL and BP is in progress,” the company said in the presentation. MJ gas find is located about 2,000 metres directly below the currently producing D1 and D3 fields and is estimated to hold a minimum of 0.988 Trillion cubic feet (Tcf) of contingent resource. Besides MJ-1, four deepsea satellite gas discoveries — D-2, 6, 19 and 22 — are planned to be developed together with D29 and D30 finds on the block. The third set is the D-34 or R-Series find. Other discoveries have either been surrendered or taken away by the government for not meeting timelines for beginning production.
Oil Ministry eyes Rs 6,000-crore viability gap funding for Northeast gas grid project
The oil ministry will soon approach the Cabinet for about Rs 6,000 crore in viability gap funding (VGF) for the proposed gas grid in the northeast. Indradhanush Gas Grid Ltd (IGGL), a joint venture of Indian Oil, ONGC, GAIL, Oil India, and Numaligarh Refinery, plans to lay 1,600-kilometre northeast gas grid at a cost of about Rs 10,000 crore. IGGL would need about 60% funding support from the central government for this, an official said. Without funding support from the Centre, state firms will find it hard to launch the project, the official said, adding that the project was crucial to building the national gas grid and the economic development of the northeast region. The government had in 2016 provided a capital grant of Rs 5,176 crore, or 40% of the project cost, for 2,500-km-long Jagdishpur-Haldia and Bokaro-Dhamra Gas Pipeline (JHBDPL) project, which GAIL is currently executing. A higher 60% project funding support from the Centre would be needed for the northeast gas grid project since it is tougher than Jagdishpur-Haldia project due to the physical and economic conditions in the region, the official said. Indradhanush Gas Grid was set up in August 2018 but has not made much progress in a year due to lack of clarity on project financing. The oil ministry had earlier hoped to receive the Cabinet’s approval on funding ahead of the general election but the process got delayed. Delay in funding can affect the timelines and cost of the project that connects eight states of Assam, Arunachal Pradesh, Meghalaya, Manipur, Mizoram, Nagaland, Tripura, and Sikkim. The pipeline would connect to the proposed national grid at Guwahati. At present, about 16,800 km of the natural gas pipeline is operational and about 14,200 km of pipelines are being developed across the country to increase the supply of gas to households and industries. The government plans to raise the share of natural gas in the country’s primary energy mix to 15% by 2030 from 6% now. In its quest to turn India into a gas-based economy, the government is encouraging companies to build more gas pipelines, import terminals, and compressed natural gas distribution stations. Increased transport and distribution infrastructure and production capability can boost local consumption of natural gas, which is a relatively cleaner fossil fuel.
Pakistan receives 4 international bidders for shipment of LNG
Energy-starved Pakistan has received four bids from international bidders for the shipment of Liquefied Natural Gas for a 10-year period, officials said on Friday. Pakistan LNG Limited (PLL), a government entity mandated to procure Liquefied Natural Gas (LNG), floated a tender in June inviting international suppliers to make offers to bring LNG. PLL tender showed that the successful bidder would supply 240 LNG cargoes of 140,000 cubic metres each for delivery over a 10-year period for the country’s second LNG terminal which can receive 600 million cubic feet per day (mmcfd) of natural gas. The officials in the company told that Italy’s Eni, Azerbaijan state oil company SOCAR, PetroChina International Singapore, a unit of PetroChina Co Ltd and global trading house Trafigura filed bids by the last date of July 18. “We will award the contract to the lowest bidder in a transparent manner,” said an official. He said the contract will be finalized by August and the successful company would make the first delivery of LNG between September 2019 and March 2020. The contract would be between USD 5 billion to USD 6 billion and is being billed as one the biggest in the LNG shipment sector. Currently, Pakistan has a 15-year contract with Qatar for the supply of LNG. The contract was finalized when Shahid Khaqan Abbasi was minister for petroleum in 2016. Abbasi was arrested on July 18 for alleged corruption in the award of the contract. He has denied the allegations. A Pakistani court on Friday sent former premier Abbasi on a 13-day remand to the country’s anti-graft body, probing a case of alleged corruption of multi-billion-rupees in awarding an import contract of the LNG from Qatar. The Officials said that the current government would ensure transparency in the contract to avoid criticism by the opposition. Pakistan faced acute energy shortages until LNG supplies from Qatar began after contract which helped to address the problem. But its demand is increasing, creating pressure for a bigger and efficient supply chain.
AG&P sells minority stake to Japanese investors for $100 million
Atlantic Gulf and Pacific company of Manila (AG&P) today announced it has sold a minority stake to Japanese investors in a deal worth $100 million. The capital will be used to execute multiple global LNG initiatives including major projects in India. Under the deal, Osaka Gas, through its affiliate Osaka Gas Singapore (Osaka Gas) and the Japan Bank for International Cooperation (JBIC) have invested in a minority stake in AGP International Holdings. Commenting on the development, AG&P Chairman Jose P Leviste Jr said Osaka Gas and JBIC have expertise and experience in their respective fields. “We have a great responsibility to work very hard for them and our other shareholders to continue to grow AG&P’s unique business model that captures a large portion of the LNG value chain after the molecule has been shipped,” he said. The projects targeted to be implemented with the funds include AG&P’s City Gas Distribution business in India, where the company has won long-term, exclusive concessions to connect millions of people to compressed natural gas (CNG) for their vehicles and piped natural gas (PNG) directly into their homes across South India and Rajasthan. The funds will be utilized also for small and medium-scale LNG import terminals, such as AG&P’s pending terminals in Karaikal, India and elsewhere, that will provide the link to bring commercially attractive, convenient and safe gas to population centers that today rely on dirtier and more expensive fuels. The company said it would also invest in “LNG applications and logistics, such as LNG delivery to end-customers by different transportation options; and additional intellectual property that has made AG&P and its family engineering company, Gas Entec, leaders in the design, build, testing and commissioning of LNG bunkering vessels, floating storage and regasification (FSRUs, FRUs, FSUs and onshore variations) and LNG, dual-fuel applications for ships and other vehicles.” Other projects include modularization and field construction services to serve global energy and commodity markets in the US, Australia, the South Pacific and Southeast Asian markets and rapidly accelerating domestic infrastructure in the Philippines, where AG&P owns and operates two-yard facilities, employing 4,000 people. Osaka Gas is a 114-year old, vertically-integrated energy utility in Japan with revenue of $12 billion. It supplies natural gas to 5.5 million households and operates over 60,000 km of pipeline, in addition to a wide-range of gas, power and renewable assets around the world, including in the US, Europe, and Southeast Asia. Osaka’s investment in AG&P is expected to help both the parties work together to develop LNG infrastructure projects in South Asia, Southeast Asia and the Americas, among others. JBIC is an institution wholly-owned by the Japanese government with over JPY 16 trillion of debt, equity and guarantees extended in its global portfolio, as of March 31, 2019, intended to support Japanese industry and Japan’s strategic priorities. Its investment in AG&P was made, in line with its policy objectives to support Osaka Gas’ ongoing collaboration with AG&P in expanding its overseas business.