Eni in Talks to Grow Presence in Persian Gulf
Italian major Eni is in talks to grow its footprint in Oman and the United Arab Emirates as part of plans to build its asset base in the oil-rich Persian Gulf and offset its reliance on Africa, a source close to the matter said.
The international oil company has a limited presence in the Middle East, where some of the world’s biggest oil and gas reserves lie, producing more than half its output in Africa.
“Eni is in talks with Oman for various opportunities,” the source told Reuters, adding recent geopolitical tensions in the area had not curbed its interest.
Last year Eni sealed its first deal in Oman, winning a majority stake in offshore acreage and selling on part to Qatar Petroleum.
This year it took a first step into Abu Dhabi, paying $875 million for stakes in two oil concessions and then buying part of the giant Ghasa gas field from state oil group Adnoc.
The source said Eni had submitted an expression of interest for a minority stake in Adnoc’s refinery business, confirming an earlier Reuters report.
Abu Dhabi has put on sale 40 percent of Adnoc’s refining unit valued at $8 billion but will never sell to a single company, the source said, adding many others were interested including Chinese and Indian firms and France’s Total.
“Eni is also interested in other downstream opportunities,” the source said, pointing to Adnoc’s ambitions in that area.
Last year Adnoc presented a 2030 strategy plan to open up its energy markets to foreign operators and attract the skills needed to develop E&P, refining and petrochemical industries.
Thanks to bumper gas discoveries in Mozambique’s Mamba field and Egypt’s Zohr, Eni has one of the strongest discovery records in the industry and one of the fastest time to market records.
“Getting into refining would give Eni a natural hedge to all its upstream business as well as allowing it to diversify away from Africa,” said Santander oil analyst Jason Kenney.
Sources have also told Reuters Eni is in the race to get into Qatar’s plans to expand its liquefied natural gas industry, saying teaming up with Qatar Petroleum in Mexico was a preparatory move.
Polish, Danish Grid Firms Agree to Norway Gas Link
The Polish and Danish gas grid operators have taken a final investment decision to build a gas pipeline linking Poland to Norwegian fields via Danish territory and the Baltic Sea, Poland’s state-owned Gaz-System said.
The 900-km (560-mile) pipeline, known as the Baltic Pipe, aims to reduce Poland’s reliance on Russian gas. The Baltic Pipe is expected to be ready in 2022 when Poland’s long-term deal with Russian gas company Gazprom expires.
“Construction of the section under the Baltic Sea will start in Spring 2020,” Piotr Naimski, the Polish government official responsible for power and gas infrastructure, told a news conference to announce the decision by the state company.
He said environment and other permits from the authorities were still required before construction could start.
The pipeline’s capacity will be 10 billion cubic metres (bcm) a year, with almost all of it booked by Polish state-run gas firm PGNiG. The company plans to produce 2.5 bcm a year of gas from holdings in Norwegian deposits.
Polish Energy Minister Krzysztof Tchorzewski told the news conference that Baltic Pipe was part of the North-South Gas Corridor a project to link Poland to a liquefied natural gas (LNG) terminal in Croatia, via the Czech Republic, Slovakia and Hungary.
The Baltic Pipe, costing about 1.6 billion to 2.1 billion euros ($1.8 billion to $2.4 billion), will run from the north of Poland through Swedish waters in the Baltic Sea and Danish territory where it would be linked to a North Sea pipeline.
Sten Arve Eide from Gassco, Norway’s gas system operator, said the new link to Denmark would offer “one more exit point available for gas deliveries.”
“Gassco will deliver the gas in accordance with the gas owners nominations. This will not affect the total gas exports from Norway,” he said.
Norway meets about a quarter of Europe’s natural gas needs and is the second largest supplier after Russia. Most of its deliveries are via a network of offshore pipelines to Britain, Germany, France and Belgium.
In 2015, Poland opened its first LNG terminal on the Baltic Sea as part of its efforts to diversify its sources of supply. Poland aims to expand the facility.
Russia Yamal LNG Transfers Anger US
Allowing ship-to-ship transfers in Norwegian waters from Yamal in Arctic Russia, one of the world’s largest liquefied natural gas (LNG) terminals, undercuts Europe’s energy diversification efforts, the U.S. State Department said.
By transferring LNG to more conventional tankers in Norway, the Arctic vessels cut in half the distance they would cover to deliver gas to Europe, enabling more frequent shipments from the Novatek terminal and increasing Russia’s gas exports.
The first such transfer took place off the Norwegian Arctic port of Honningsvag.
Asked what was the U.S. position on the activity in Norwegian waters, the U.S. State Department told Reuters: “At a time when Russian gas comprises a growing proportion of Europe’s energy imports, additional volumes of Russian gas will undercut Europe’s energy diversification efforts.
“We are working closely with our European partners to increase their energy security by promoting diversification of energy fuel types, energy routes, and energy source countries.”
Russia condemned the U.S. position.
“Such statements are a definitive example of resorting to political instruments for the sake of unfair competition, (and) direct infringement of trade freedom principles,” the Russian embassy in Oslo said in a statement.
The United States has been pressing Europe to cut its reliance on cheap Russian gas and buy much more expensive U.S. LNG instead, which many European countries, including industrial heavyweight Germany, have so far resisted.
It has called on European countries to reject Russian gas pipelines, which Washington says are being used to cement Moscow’s grip on Central and Eastern Europe.
In particular, the United States has said it could impose new sanctions on Russia to try to block the construction of the Nord Stream 2 pipeline across the Baltic Sea to the European Union.
Norway, Europe’s second-largest supplier of gas after Russia, said it was not “concerned” by the ship-to-ship transfers.
“Europe has a well-functioning gas market. The planned ship-to-ship transfers of Russian LNG in northern Norway are a commercial project,” the Norwegian Ministry for Oil and Energy told Reuters.
“The fact that LNG is brought to the market via such transfers is not a concern for the ministry.”
Thanks to the ship-to-ship transfers off Norway, Yamal is expected to export as much as 11.7 million tonnes of LNG in the next seven months, according to the port hosting its ship-to-ship operations and Reuters calculations.
The ramp-up in output puts the Novatek terminal, in operation for less than a year, in excess of its nameplate capacity, with the Norwegian transfers the only way it can deliver the additional LNG to the market.
Yamal uses Arctic-class LNG tankers to carry the gas through the Barents Sea; these vessels then transfer the cargo to more conventional tankers in Europe, enabling them to return sooner to the facility and pick up more supplies.
Energy Transfer Defends Mariner East 2 NGL Pipe Plan
Energy Transfer LP representatives headed to Pennsylvania’s capital for a hearing before utility regulators to defend the company’s plan to put the Sunoco Mariner East 2 natural gas liquids pipe into service by year end.
Energy Transfer wants to temporarily connect an existing 1930s-era 12-inch (30.5 centimeter) pipe to the parts of its long-delayed 20-inch Mariner East 2 pipeline that it has already completed so it can start transporting liquids for customers.
Those customers have been waiting for more than a year to ship liquids on Mariner East 2. When Energy Transfer first started working on the $2.5 billion project in February 2017, it had planned to put the 350-mile (563-kilometer) pipe into service in the third quarter of 2017.
Mariner East 2 and another Energy Transfer project, the Rover natural gas pipe from Ohio to Michigan, were delayed over the past year in part because the projects together racked up more than 800 state and federal permit violations while the company raced to build them.
Those opposed to Energy Transfer’s plans for Mariner East 2 asked the Pennsylvania Public Utility Commission (PUC) to stop construction on Mariner East 2 and also stop the company from transporting liquids on the existing Mariner East 1 pipeline.
The administrative law judge at the PUC scheduled to hear the case is Elizabeth Barnes, the same judge who heard a case earlier this year that sought to stop the Mariner East project.
In that case, Judge Barnes ordered Energy Transfer to stop transporting gas on Mariner East 1 and stop work on Mariner East 2 in West Whiteland Township after sinkholes were discovered near the pipeline.
In the latest case, seven residents of Delaware and Chester Counties in southeast Pennsylvania argued Energy Transfer did “not provide adequate notice of procedures sufficient to ensure the safety of the public in the event of a leak or rupture.”
In response, Energy Transfer spokeswoman Lisa Dillinger said in an email “We do not believe the claim is valid...The integrity of our Mariner East 1 and 2 pipelines has been verified in the last few months” by state and federal regulators.
Mariner East transports liquids from the Marcellus and Utica shale fields in western Pennsylvania to customers in the state and elsewhere, including international exports from Energy Transfer’s Marcus Hook complex near Philadelphia.
LNG Canada Gets Another Buyer
LNG Canada, the $30 billion liquefied natural gas (LNG) export project, has bagged another client after project shareholder Petronas signed an initial sales deal with trading house Vitol.
Royal Dutch Shell decided in October to construct the export terminal. It was the first major investment decision in a new North American LNG export project for two years and was expected to launch a new wave of such projects in the region.
Petronas, the Malaysian oil and gas company that bought a 25 percent stake in the project in May, will supply Vitol with 0.8 million tonnes per year (mtpa) of LNG starting from 2024 for 15 years, Vitol said in a statement.
“The primary supply to Vitol will come from LNG Canada as well as from (Petronas’) other global LNG supply portfolio,” Vitol said.
Vitol joins Asian utilities Tokyo Gas, Toho Gas and Korea Gas Corp (Kogas) as buyers, committing to offtake around 2.4 mtpa collectively.
Such long-term agreements normally underpin project finance and are critical before a final investment decision is taken.
But because Shell and partners Petronas, PetroChina, Mitsubishi and Kogas are such large players in the LNG market, they can absorb the output into their global portfolios without needing to find significant other buyers.
Under previously announced deals, Toho Gas will buy 0.3 mtpa, Tokyo Gas 0.6 mtpa and Kogas 0.7 mtpa from LNG Canada.
Basra Gas Co Output to Increase 17%
Output from Iraq’s Basra Gas Company (BGC) is expected to reach 1,050 million standard cubic feet per day (mcf/d) by the end of 2018, an increase of 150 million mcf/d from current levels, the oil ministry said in a statement. Iraq’s gas development plans have long focused on BGC, a $17 billion joint venture between Royal Dutch Shell, state-run South Gas Company and Mitsubishi.
The Basra gas project is seeking to reach a targeted level of capturing and processing 2,000 mcf/d, the statement said.
The project was designed to aggregate gas from fields in the south including West Qurna 1, operated by Exxon Mobil Corp , Zubair, operated by Italy’s Eni, and Rumaila, developed by BP.
To boost power generation, a deal has been reached with the electricity ministry to allow General Electric and Siemens to install liquefied natural gas-operated mobile power units at some small southern fields, Iraq’s deputy oil minister told the al-Sabah state newspaper.
The mobile power units will help Iraq process gas from small fields that could reach up to 15 (mcf/d) to feed the country’s power grid, Hamid al-Zobaie said.
In October 21, Iraq signed agreements with General Electric and Siemens to develop the country’s power infrastructure.
Zobaie did not elaborate on when the work could start to install the mobile power units or give any details on the small southern fields.
Iraq relies heavily on Iranian gas to feed its power stations.
The United States said earlier this month that Iraq can continue to import natural gas and energy supplies from Iran for a period of 45 days, as long as Iraq does not pay Iran in U.S. dollars. U.S. sanctions on Tehran’s oil sector took effect on Nov. 5.
Iraqi government officials said last month it will not be possible to stop imports of Iranian gas for now and the government needed more time to find an alternative source.
“The mobile power units will help cut Iranian electricity imports but not to stop it. Iraq will remain dependent on Iranian electricity for at least two more years,” said a senior government official and a member of Iraq’s ministerial energy committee.
Rosneft to Supply 2.4mt/y Oil to ChemChina
Russian oil giant Rosneft said it had signed a contract with China National Chemical Corp (ChemChina) to supply up to 2.4 million tonnes of ESPO blend crude oil ESPO-DUB via Russia’s Pacific port of Kozmino in one year.
The deal allows Rosneft to increase crude oil supplies to a strategically important market, the Russian company said in press release.
Supplies under the new contract are most likely to start in February as Rosneft allocated all its January volumes of ESPO Blend to China’s CEFC, two trading sources told Reuters.
Chemchina didn’t immediately respond to a Reuters request for a comment, sent after normal business hours in Beijing.
Chemchina has been a term buyer of Rosneft ESPO Blend crude oil since 2015, purchasing 1.2 million tonnes to 2.4 million tonnes per year under annual contracts.
The latest supply contract between Rosneft and Chemchina ended in mid-2018 and the companies paused ESPO Blend crude oil supplies for half a year to renegotiate the terms, three industry sources told Reuters.
One of the sources said Rosneft was not sure if it had enough ESPO Blend volumes to fulfil all its term agreements on the grade supplies to the end of 2018, due to capped production under an OPEC agreement and an increase in ESPO supplies to China via the pipeline.
Rosneft increased pipeline supplies of ESPO Blend to China’s Petrochina in July this year.
Rosneft will stop supplying Petrochina with seaborne crude oil cargoes of ESPO Blend ex-Kozmino port in January 2019, according to the quarterly export schedule for exports from Kozmino, which gives Rosneft spare volume to renew supplies to Chemchina, Reuters sources said.
Rosneft agreed to supply Petrochina with 1.7 million tonnes of ESPO Blend loading from Kozmino port in 2018.
In 2018, Rosneft supplied most of its ESPO Blend crude oil cargoes to China’s CEFC.