Oil Search rules out third train at PNG LNG

Spanish Market: Natural gas
23/02/21

Australian independent Oil Search said its partners in Papua New Guinea (PNG) are working on a four LNG production train plan, which means there is no proposal to add a third unit at the 6.9mn t/yr PNG LNG and the focus is solely on the development of the two-train 5.33mn t/yr Papua LNG.

Oil Search and its partners outlined plans last November to focus on developing Papua LNG, which is operated by Total, pausing on plans to add a third train at PNG LNG that is operated by ExxonMobil. The third PNG LNG train was to be developed together with Papua LNG, as both projects will share infrastructure with the liquefaction plant for Papua LNG being built beside the existing one at PNG LNG.

"We are working to a four-train scenario in PNG, we are not looking at a third train at PNG LNG, but we have yet to sign the agreement for the development of the P'nyang gas field and the terms of that agreement will confirm what the field will be used for," said Oil Search chief executive Keiran Wulff after the firm released its fiscal results for 2020.

Oil Search has a 22.8pc stake in Papua LNG and a 29pc stake in PNG LNG. ExxonMobil has a 37.1pc stake in Papua LNG and 33.2pc in PNG LNG.The Papua LNG partners earlier this month signed a fiscal agreement with the PNG government, which covers the terms the project partners will pay to Port Moresby once the project is in operation.

The firm said last month that production from PNG LNG is expected to produce lower volumes in 2021 compared with a record 8.8mn t last year because of planned maintenance.

Oil Search ruled out selling its PNG LNG stake to fund its share of costs for developing the $3bn, 80,000 b/d Pikka oil field in the North Slope region of Alaska that it has started initial engineering work on.

Oil Search is working with its Pikka partner Spanish oil firm Repsol to jointly sell a combined 30pc stake in the project, as well as having the option where both firms sell their stakes independent of each other. Repsol also plans to sell a 15pc stake to reduce its interest in the project to 34pc.

Oil Search posted a loss of $320.7mn in 2020 from a profit of $312.4mn in 2019.

By Kevin Morrison

Oil Search results ($mn)
	2020	2019	% ±

Revenue	1,074.2	1,584.8	-32
Production cost	289.2	348.7	-17
Impairment	-374.2	-5.9
Net profit	-320.7	312.4	-203
Production (mn boe)	29.0	27.9	4
Sales (mn boe)	28.4	27.8	2
Average realised oil/condensate price ($/bl)	37.2	62.9	-41
Average realised LNG/gas price ($/mn Btu)	6.5	9.6	-32
Source: Oil Search

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19/04/24

India mulls using more natural gas in steel sector

Mumbai, 19 April (Argus) — India's steel ministry is considering increasing natural gas consumption in the sector as it aims to lower carbon emissions from the industry. Steelmakers held a meeting with the steel ministry earlier this month, to discuss challenges and avenues to increase gas allocation to the sector, according to a government document seen by Argus . Steel producers requested that the government set gas prices at an affordable range of $7-8/mn Btu for them, to make their gas-based plants viable, as well as for a custom duty waiver on LNG procured for captive power. India's LNG imports attract a custom duty of 2.5pc. City gas distribution firms sell gas at market-determined prices to steel companies. Representatives from the steel industry also requested for the inclusion of gas under the purview of the country's goods and service tax, and to be given higher priority in the allocation of deepwater gas, which has a higher calorific value. Deepwater gas is currently deployed mostly to city gas distribution networks. Steelmakers are currently undertaking feasibility tests for gas pipeline connectivity at various steel plants. But a gas supply transmission agreement requires a minimum five-year period for investment approval. The steel industry is heavily reliant on coal, and the sector accounts for about 8-10pc of carbon emissions in the country. A task force of gas suppliers including IOC, Gail, BPCL, Shell, and HPCL and steel producers like Tata Steel, AMNS, All India Steel Re-roller Association and the Pellet Manufacturers Association has been set up, and the team is expected to submit a report on increasing natural gas usage and lowering carbon emissions by 15 May, the government document said. This team is one of the 13 task forces approved by the steel ministry to define the country's green steel roadmap. The steel ministry aims to increase green steel exports from the country in the light of the policies under the EU's Carbon Border Adjustment Mechanism (CBAM), which will take effect on 1 January 2026. Under the CBAM, importers will need to declare the quantity of goods imported into the EU in the preceding year and their corresponding greenhouse gas emissions. The importers will then have to surrender the corresponding number of CBAM certificates. CBAM certificate prices will be calculated based on the weekly average auction price of EU Emissions Trading System allowances, expressed in €/t of CO2 emitted. This is of higher importance to Indian steelmakers as the EU was the top finished steel export destination for Indian steelmakers during the April 2022-March 2023 fiscal year with total exports of 2.34mn t, and has been the preferred choice for Indian steel exports in the current fiscal year owing to higher prices compared to other regions. Indian steelmakers have started to take steps to lower their carbon emissions by announcing collaborations with technology companies to decarbonise, and are trial injecting hydrogen in blast furnaces, and increasing the usage of natural gas in ironmaking. By Rituparna Ghosh Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Karoon cuts 2024 guidance on lower US output

19/04/24

Karoon cuts 2024 guidance on lower US output

Sydney, 19 April (Argus) — Australia-listed oil producer Karoon Energy has cut its production guidance for 2024 to reflect lower production from its stake in the Who Dat floating production system in the US' Gulf of Mexico. Who Dat's weaker well and facility performance has led to the lower guidance, with Karoon now expecting to produce 29,000-34,000 b/d of oil equivalent (boe/d) in 2024, down from a previous 31,000-37,000 boe/d guidance. Karoon said it and joint-venture partner LLOG Exploration will continue to prioritise higher value oil production over gas for the remainder of the year. The firm's January-March output rose by 17pc against October-December 2023 . Who Dat's production on a net revenue interest (NRI) basis was 9,000 boe/d for January-March, with Karoon downgrading its forecast NRI production from 4mn-4.5mn boe in 2024 to 3-3.5mn boe. But output from Karoon's Bauna asset offshore Brazil was 15pc lower than the previous quarter because of continuing reliability problems with Bauna's floating production, storage and offloading (FPSO) vessel, the shut-in of the SPS-88 well for the full period and natural field decline. Production for January-March at Bauna was 24,000 b/d, down from 28,000 b/d the previous quarter. Karoon expects to resume production from the well during July-September following an intervention, assuming no delays in regulatory approval. Bauna's annual maintenance will take place next month with a three-week shutdown of the FPSO planned to boost reliability. By Tom Major Karoon Energy results Jan-Mar '24 Oct-Dec '23 Jan-Mar '23 y-o-y % ± q-o-q % ± Sales revenue ($mn) 197 209 144 37 -6 Production (b/d) 34,000 29,000 22,000 55 17 Sales volume (b/d) 30,000 28,000 22,000 36 7 Average prices ($/bl) Bauna oil price 76 83 73 4 -8 Who Dat sales gas ($/mn ft³) 2.95 2.22 n/a n/a 33 Who Dat oil, condensate, NGLs 78 73 n/a n/a 7 Source: Karoon Energy Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Australia’s Woodside records weaker Jan-Mar LNG output

19/04/24

Australia’s Woodside records weaker Jan-Mar LNG output

Sydney, 19 April (Argus) — Australian independent Woodside Energy's January-March output dropped against a year earlier and the previous quarter, as reliability fell at its 4.9mn t/yr Pluto LNG project offshore Western Australia. Woodside produced 494,000 b/d of oil equivalent (boe/d) across its portfolio for January-March, 5pc below the 522,000 boe/d reported during October-December and 4pc below its 2023 full-year figure of 513,000 boe/d. Lower production at its Bass Strait, Pyrenees and Pluto assets was partially offset by increased production at the 140,000 b/d Mad Dog phase 2 oil field in the US Gulf of Mexico, which hit peak production of 130,000 b/d during the quarter. Reliability at Pluto was 94.6pc for the quarter because of an offshore trip and an onshore electrical fault. Woodside made a final investment decision (FID) on the Xena-3 well to support Pluto production during the quarter. The 16.9mn t/yr North West Shelf (NWS) LNG achieved 97pc reliability for the quarter with NWS' joint-venture partners taking a FID on the Lambert West field, which will support continuing production. Lower seasonal market demand and offshore maintenance activity saw production drop at the firm's Bass Strait fields, while production ended at the Gippsland basin joint venture's West Kingfish platform because of slowing oil output from Kingfish field. The Pyrenees floating production storage and offloading vessel began planned maintenance in early March and will return to crude production for April-June, Woodside said. Two 550,000 bl cargoes of Pyrenees crude loaded each quarter during 2023. Revenue dropped by 31pc to $2.97bn from $4.33bn a year earlier and 12pc from $3.36bn during October-December. Woodside's total average realised price dipped to $63/boe, 6pc down on the previous quarter's $67/boe and 26pc below the year-earlier figure of $85/boe. Woodside's average realised price for LNG produced was $10.40/mn Btu or 10pc down on the previous quarter's $11.50/mn Btu. The firm is more heavily exposed to spot prices and gas hub pricing than fellow domestic LNG producer Australian independent Santos, with about 30pc of Woodside's equity-produced LNG sold at these spot prices. By Tom Major Woodside LNG production (mn boe) NWS Pluto Wheatstone* Total Jan-Mar '24 8.2 11.8 2.4 22.3 Oct-Dec '23 7.8 12.4 2.5 22.7 Jan-Mar '23 9.7 12.2 2.5 24.3 2023 32.8 45.6 10.2 88.6 2022 29.7 46.2 9.2 85.1 y-o-y % ± -15 -3 -4 -8 q-o-q % ± 5 -5 -4 -2 Source: Woodside *Woodside controls a 13pc interest in Wheatstone LNG Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Oil firm ReconAfrica agrees to class action settlement

18/04/24

Oil firm ReconAfrica agrees to class action settlement

Cape Town, 18 April (Argus) — Africa-focused, Canada-based upstream firm ReconAfrica has agreed to pay $10.8mn in total to eligible shareholders to settle class action lawsuits lodged in different jurisdictions over allegations that the company made misleading statements. The company will pay $7.05mn to investors who bought its shares on the US over-the-counter (OTC) markets and $3.7mn to shareholders who bought securities in the firm on Canada's TSX Venture Exchange and the Frankfurt Stock Exchange within specified class periods. In Canada, parties reached the proposed settlement after a full-day mediation in October 2023, without any admission of liability by ReconAfrica. A hearing has been scheduled on 20 June for the British Columbia Supreme Court to approve the settlement. The plaintiffs allege that between May 2020 and September 2021, ReconAfrica released misleading statements, including its plans to undertake hydraulic fracturing of "unconventional" resources and "shale" deposits within Namibia. The firm failed to disclose that Namibia has never before allowed fracking. The plaintiffs further claim that ReconAfrica did not disclose data from its test wells that revealed poor prospects for achieving commercially viable oil and gas production. The company also stands accused of undertaking unlicensed drilling and illegal water usage, as well as other environmental and human rights violations. It denies all these allegations. ReconAfrica has a current market capitalisation of C$204.7mn. Earlier this month, it raised C$17.25mn in a public share offering. The firm plans to undertake a multi-well drilling campaign this year, with the first well in Namibia's Damara Fold Belt scheduled for June. The company controls the entire Kavango sedimentary basin, which spans over 300km from the northeast of Namibia to northwest Botswana. Early estimates claimed the basin could hold as much as 31bn bl of oil, of which 22.3bn bl are in Namibia and 8.7bn bl in Botswana. ReconAfrica has a 90pc stake in the PEL 73 licence, which extends 25,000km² across northeast Namibia. The remaining 10pc is held by Namibian state-run company Namcor. The Kavango basin includes part of the ecologically sensitive Okavango Delta, a Unesco World Heritage site. The Okavango watershed consists of the Okavango river and a network of shallow, interlinked aquifers, which is a vital water source for more than a million people. The delta also serves as a habitat and migration path for many endangered animal species. Last year, ReconAfrica received environmental approval to drill 12 more wells in the Kavango. The firm recently completed a technical review of its entire exploration inventory in Namibia and now expects to find a mix of oil and gas. ReconAfrica announced an updated prospective resource estimate for Damara last month, indicating an unrisked 15.4bn bl of undiscovered oil initially-in-place. This compares with a previous estimate that pointed only to prospective natural gas resources amounting to 22.4 trillion ft³. The change "is the result of in-depth analyses of all geochemical data, including cores, cuttings, mud logs, seeps and additional basin modelling studies," ReconAfrica said. The firm has made the updated estimates available to potential joint venture partners and expects to complete this month a farm-out process that it started in December 2023. By Elaine Mills Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

NSTA fines Neo Energy for North Sea methane venting

18/04/24

NSTA fines Neo Energy for North Sea methane venting

London, 18 April (Argus) — UK offshore regulator the North Sea Transition Authority (NSTA) has fined UK upstream firm Neo Energy £100,000 for breaching its methane venting permit at North Sea fields. The company emitted 1,200t of methane in excess of its permit from the Donan, Lochranza and Balloch fields in the first nine months of 2022. Neo had permission to vent 378t of methane from installations at these fields in that year, but incorrectly assigned volumes vented through unlit flares to its flaring consent, the NSTA found. Neo showed a "lack of oversight" by failing to detect the licence breach for seven months, NSTA said. The company reached its annual limit by 21 March 2022, but continued venting without authorisation until October 2022. The company said it did not update its flare and vent allocation process to reflect NSTA guidance updated in 2021, and as such was still assigning its flaring and venting according to previous guidance. Neo becomes the fourth company to be fined by the NSTA over breaches relating to flaring and venting consents. The regulator in 2022 sanctioned Equinor and EnQuest and last year fined Spanish utility Repsol for consent breaches. The four companies have been fined a total of £475,000 for the breaches. And the regulator in February had four more investigations under way for breaches of vent consents. Neo Energy's fine is equivalent to £2.98/t of CO2e emitted, assuming a global warming potential of methane that is 28 times that of CO2 on a 100-year time scale, compared with a UK emissions trading system price of £34.40/t of CO2e on 17 April. The UK offshore industry targets a 50pc reduction in production emissions of greenhouse gases by 2030, from a 2018 baseline. And it intends to end all routine venting and flaring by that year. The regulator last year warned that "further, sustained action" would be needed to reach the 2030 emissions reduction goal. Methane emissions from offshore gas fell in recent years, to 1mn t in 2022 from 1.6mn t in 2018, according to NSTA data. Roughly half of methane emissions in the sector in recent years has been produced by venting, while flaring makes up about a quarter of the emissions. The UK government is a member of the Global Methane Pledge group of countries that aims to reduce methane emissions by 30pc by 2030 from a 2020 baseline. By Rhys Talbot Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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