Shell shareholders approve BG takeover
Shell's shareholders have voted today in favour of the company taking over UK firm BG. BG holds its general shareholder meeting tomorrow, and its investors are also expected to approve the transaction. If the deal receives green light, the effective date of the takeover will be 15 February.
Shareholders voted 83.1pc in favour of the deal, with 16.9pc voting against. Around 61pc of eligible shareholders cast a vote.
The takeover was first announced in April last year, with the value of the deal at about $70bn. But as the transaction comprises only £13.2bn ($18.9bn) in cash and the rest in Shell B shares, the value of the deal has since fallen to about $50bn, as Shell's B shares have fallen roughly in line with oil prices.
Shell and BG published preliminary results last week to give shareholders the latest information on the companies' fourth-quarter and full-year metrics ahead of the votes. BG's strong operational performance — with 2015 production of 704,000 b/d of oil equivalent (boe/d) exceeding its guidance and jumping by 16pc from 2014 output — compared with Shell's continued fall in output and reserves could have convinced some undecided investors.
BG's high-margin assets with strong growth potential — Australian LNG and Brazilian deepwater projects — prompted Shell's takeover approach.
While the deal is likely to be beneficial for Shell in the longer-term, the company will have to deliver on its targets — including $30bn of disposals in 2016-18 — to balance its books in the shorter-term. Disposals play the key role in the company's announced plan to deleverage after its expected acquisition of BG, credit rating agency Fitch Ratings said this week.
Fitch has Shell's credit rating on negative watch, reflecting "the risk the BG deal presents to the rating in the current environment, although we believe it will be positive for Shell's business profile in the long run," Fitch said.
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South Sudan eyes Dar Blend export restart in 6-8 weeks
South Sudan eyes Dar Blend export restart in 6-8 weeks
London, 17 April (Argus) — South Sudan aims to restart exports of its heavy sweet Dar Blend crude grade within six-eight weeks as it works to repair a pipeline in war-torn Sudan, finance minister Awow Daniel Chuang told Argus . Problems along the Petrador pipeline since February have prevented around 100,000 b/d of South Sudan's Dar Blend from reaching Sudan's Bashayer terminal on the Red Sea for export. This has seen South Sudan's crude production almost halve to around 80,000 b/d because of a lack of alternative outlets for the grade. But production of the country's medium sweet Nile Blend grade continues as it is transported to Bashayer through the separate Greater Nile oil pipeline. Landlocked South Sudan is entirely reliant on Sudan to export its crude and depends on oil sales for more than 90pc of government revenues. Chuang, a former oil minister, said work to repair the pipeline was progressing well despite logistical challenges, and that unless something unforeseen happened, flows "should resume" within six-eight weeks. The pipeline has suffered from gelling issues — solidifying crude — leaks and pressure drops for months. One key issue has been a lack of diesel, which is typically used to heat the crude or dilute it to help it flow. Repairs have been complicated by the civil war in Sudan, pitting the army against the paramilitary Rapid Support Forces. The conflict passed the one-year mark on 15 April, with no end in sight. While production and exports in both Sudan and South Sudan held up surprisingly well at the start of the conflict, problems have begun to pile up over the past few months. South Sudan is sending diesel to Sudan because of the closure of the 100,000 b/d Khartoum refinery, which has come under repeated fire. Sudan typically produces around 50,000 b/d of mostly Nile Blend crude, but this is thought to have been impacted by the civil war. Argus assessed Sudan's crude output at 20,000 b/d in March. South Sudan's crude production was trending at around 150,000 b/d before the pipeline outage. Argus assessed South Sudan's crude output at 80,000 b/d in March. Crude exports from Sudan's Bashayer port averaged 130,000 b/d in 2023 and stood at 168,000 b/d in January, according to Kpler. But exports have only averaged about 65,000 b/d since February. South Sudan's crude production stood at around 300,000 b/d in the first few months following its independence from Sudan in 2011. It has a short-term target to grow output to 230,000 b/d and 450,000 b/d in the longer term — something the country's leaders acknowledge will require political stability and a surge in foreign investment. By Aydin Calik Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
TotalEnergies rows back on Uganda oil project timeline
TotalEnergies rows back on Uganda oil project timeline
Kampala, 17 April (Argus) — The head of TotalEnergies' Ugandan operations said the company may miss its long-standing target to start crude production from the country's 230,000 b/d Lake Albert project by the end of next year. "I want to answer this question that everyone is asking, will first oil flow in 2025? I am not sure end of 2025 will be the timeline," TotalEnergies' general manager in Uganda Philippe Groueix told an oil and gas conference in Kampala today. The timing will depend on the agility of stakeholders to co-operate to resolve outstanding issues, Groueix said. The Lake Albert project has been controversial since its inception. It involves building the world's longest heated crude export pipeline to connect the TotalEnergies-operated 190,000 b/d Tilenga and Chinese CNOOC-operated 40,000 b/d Kingfisher oil fields in Uganda's Lake Albert basin to the port of Tanga on Tanzania's Indian Ocean coast. The project partners have faced a barrage of legal challenges in the last few years from environmental groups and non-governmental organisations who claim the pipeline poses a risk to the environment and the livelihoods of local populations. Meanwhile, international banks have come under pressure to distance themselves from the project and in 2022, the European Parliament passed a resolution calling on TotalEnergies to delay work on the pipeline by a year in order to study the feasibility of an alternative route. Despite the above-ground challenges, TotalEnergies, CNOOC and the Ugandan government have stuck rigidly to a 2025 start-up. More recently, TotalEnergies tweaked its estimate to the "end of 2025", with chief executive Patrick Pouyanne telling investors in February that the project would be around 60pc complete by the end of this year. Groueix's comments today mark the first time the company has flagged a potential delay, although he did not offer a new timeline. "First oil will depend on our agility to work together, although we are all aiming to produce as soon as possible," Groueix said, adding that four rigs are drilling at the oil fields, three at Tilenga and the other at Kingfisher. "It is Uganda's right to exploit her natural resources and we shall produce this oil in the most responsible way possible to decarbonize," he said. "Our projects will not flare gas, but we shall produce LPG from this gas and this will reduce the use of charcoal and firewood by a big percentage, thereby saving trees and improving climate. So the activists should know that we are part of the agenda to promote the environment." Uganda's energy minister Ruth Nankabirwa gave a sanguine response to news of a possible delay, comparing Uganda's oil and gas projects to a woman in labour. "The child can come before the set timeline or shortly after, but the signs are showing that the child is kicking," she said. Nankabirwa said she will head to Beijing early next month to meet Chinese president Xi Jinping to discuss financing for the $5bn crude pipeline. Chinese export credit agency Sinosure is in talks to provide up to $3bn for the pipeline and is due to make a decision on this in June. By Mercy Mastsiko Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Japan’s Idemitsu builds stake in refiner Fuji Oil
Japan’s Idemitsu builds stake in refiner Fuji Oil
Tokyo, 17 April (Argus) — Idemitsu has agreed to buy an additional stake in fellow Japanese refiner Fuji Oil from domestic power producer Jera, adding to their existing partnership. Idemitsu on 16 April said it will buy Jera's entire 8.75pc share of Fuji, raising its stake to 21.79pc, for ¥2.5bn ($16.2mn). It is unclear when the companies will complete the deal. Jera declined to disclose the reasons for selling its stake. Idemitsu in March also bought domestic petrochemical producer Sumitomo Chemical's stake in Fuji to boost its share to 13.04pc from 6.58pc, becoming its main shareholder. It aims to further optimise fuel oil production and sales including refinery operations, while promoting decarbonisaton of its businesses. Idemitsu is enhancing its partnership with Fuji in the face of shrinking domestic oil and petrochemical demand and growing consumption in overseas, especially in southeast Asia. Idemitsu owns the 190,000 b/d Chiba refinery in the Keiyo industrial complex in east Japan's Chiba prefecture where Fuji operates the 143,000 b/d Sodegaura refinery. Their refineries are connected to Sumitomo Chemical's Chiba plant. Idemitsu's refineries also include the 150,000 b/d Hokkaido in the northernmost prefecture of Hokkaido, the 160,000 b/d Aichi in Aichi prefecture in central Japan and the 255,000 b/d Yokkaichi in Mie prefecture in the country's west. Idemitsu's subsidiary Toa Oil operates the 70,000 b/d Kawasaki refinery in east Japan's Kanagawa prefecture. By Nanami Oki Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
BHP to expand gas-fired West Australia power station
BHP to expand gas-fired West Australia power station
Sydney, 17 April (Argus) — Australian resources firm BHP plans to increase power generation at its 154MW Yarnima gas and diesel-fired facility near the Pilbara iron ore mining hub of Newman in Western Australia (WA) state. The proposal, according to documents filed with WA's Environmental Protection Authority (EPA), will see output increase by 85MW to a total of 239MW through gas reciprocating engines and associated infrastructure with up to 120MW of nominal new capacity to be built in stages. Peak scope 1 greenhouse gas (GHG) emissions from the project are predicted to be 480,030 t/yr of carbon dioxide equivalent (CO2e), while scope 3 emissions related to supplying the gas are expected to be 37,260t CO2e/yr. Power demand at BHP's iron ore operations in the Pilbara is forecast to increase from 150MW currently to 1GW by 2040, as the company reduces its GHG emissions through electrification of its rail and mining fleets and must balance renewables with firmed generation. The iron ore mining sector is a large-scale producer of Australian GHG emissions through its Pilbara-based operations. Displacing liquid fuels such as diesel, which Australia consumes at an average rate of around 500,000 b/d by electrifying processes and switching to lower CO2-emitting sources such as gas, is expected to trend as Australia's largest polluters meet government mandates . Yarmina currently runs a 35MW diesel-fired temporary power station as part of its installed capacity. Canadian energy firm TransAlta earlier this year lodged plans to build a new 150MW gas-fired power station for BHP's Nickel West operations in WA's Northern Goldfields region. WA's domestic market is likely to be short on gas later this decade despite being Australia's largest LNG export state, the Australian Energy Market Operator (Aemo) has warned in its Western Australia Gas Statement of Opportunities. Aemo's modelling released last year shows the closure of WA's state-owned coal-fired power stations will drive increased requirements for gas-fired electricity generation in the next decade. By Tom Major Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
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