Eni set to sign landmark Libyan gas deal worth $8bn
Libya's state-owned NOC is poised to sign an 845mn ft³/d offshore gas project deal with Italy's Eni worth an estimated $8bn, representing the largest single investment in the north African country's upstream sector since the 2011 civil war.
"We have reached an agreement with Eni and the signing ceremony will take place on 28 January," NOC chairman Farhat ben Gudara told local TV channel Al Masar. Eni declined to comment.
The long-delayed deal will not only help Libya meet rising domestic gas demand but will also boost its gas exports to Italy, which slumped to the lowest level since 2011 last year. The agreement is due to be signed in Tripoli during the first visit to Libya by Italian prime minister Giorgia Meloni, who is pushing her "Mattei plan" that seeks to deepen Italy's energy and political ties to Africa. Italy has been scrambling for alternative gas supplies since Russia's invasion of Ukraine and is looking to north Africa in particular.
Central to the agreement with Eni is the Structures A&E project in Block NC-41, which will have the capacity to produce 760mn ft³/d of gas and 47,000 b/d of liquids, mostly condensate. This is equal to about 65pc of Libya's current 1.2bn ft³/d of sales gas production capacity. The agreement is also likely to include the 85mn ft³/d Bouri Gas Utilization project, which plans to capture associated gas output that is currently being flared at the 25,000 b/d Bouri oil field in Block NC-41. With its own climate goals in mind — and Libya's nascent decarbonisation ambitions — Eni has floated the possibility of incorporating a carbon capture and storage (CCS) element to its projects in the block.
The company said in October last year that it expects first gas from Structures A&E in 2024, with the project slated to reach full capacity in 2027. The relatively safe location of the two projects offshore Tripoli makes them less vulnerable to disruption than Libya's onshore fields. The country's decade-long political quagmire has not only hampered new oil and gas projects from getting off the ground but has also frequently led to existing output being shut down for political purposes.
With Libya roughly split between rival western and eastern administrations, political division still poses a threat. The head of the eastern-aligned Government of National Stability (GNS), Fathi Bashagha, has pushed back against the Eni deal, saying the western-based Government of National Unity (GNU) lacks the legitimacy to sign such an agreement.
Eni is Libya's largest foreign gas producer, overseeing most of the country's gas output via its Mellitah Oil and Gas joint venture with NOC. Mellitah's production is split between the offshore Bahr Essalam project and the Wafa wet gas project located on the border with Algeria, as well as some fields in the Sirte basin, Libya's oil heartland. Mellitah's western output feeds the 775mn ft³/d Greenstream pipeline — Libya's only gas export outlet — which has been running at well below capacity over the past few years. Exports through Greenstream hit their lowest level since the 2011 revolution last year, averaging some 250mn ft³/d.
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US reimposes Venezuela oil sanctions
US reimposes Venezuela oil sanctions
Washington, 17 April (Argus) — The US administration today reimposed sanctions targeting Venezuela's oil exports and energy sector investments and set a deadline of 31 May for most foreign companies to wind down business with state-owned PdV. The US decision rescinds a sanctions waiver issued last October, which allowed Venezuela to sell oil freely to any buyer and to invite foreign investment in the country's energy sector. The waiver, which was due to expire on 18 April, was tied to Caracas' agreement to hold a competitive presidential election and to allow opposition politicians to contest it. Venezuelan president Nicolas Maduro's government reneged on that deal by refusing to register leading opposition candidate Maria Corina Machado or an alternative candidate designated by her, a senior US official said. The US considered the potential effects on global energy markets and other factors in its decision, but "fundamentally, the decision was based on the actions and non-actions of the Venezuelan authorities," the official said. The separate waivers granted to Chevron and to oil field service companies Halliburton, SLB, Baker Hughes and Weatherford will remain in place. Chevron will be allowed to continue lifting oil from its joint venture with PdV, solely for imports into the US. US-bound Venezuelan crude volumes averaged 133,000 b/d last year. Chevron said its Venezuela output was 150,000 b/d at the end of 2023. Argus estimated Venezuela's crude output at 850,000 b/d in March, up by 150,000 b/d on the year. PdV said it will seek to change terms of its nine active joint ventures , starting with Spain's Repsol, in an effort to boost production. The reimposition of sanctions will primarily affect Venezuelan exports to India and China. India has emerged as a major new destination for Venezuelan crude since the US lifted sanctions in October, importing 152,000 b/d in March. There are two more Venezuelan cargoes heading to India and are expected to arrive before the 31 May deadline. The VLCC Caspar left the Jose terminal on 14 March and was expected to arrive at a yet-unknown west coast Indian port on 26 April. The Suezmax Tinos left Venezuela on 18 March and was due at Sikka on 30 April. By contrast, Chinese imports of Venezuelan Merey, often labeled as Malaysian diluted bitumen, have been lower since October. Independent refiners in Shandong, which benefited from wide discounts on the sanctioned Venezuelan crude, cut back imports to just a fraction of pre-relief levels. By contrast, state-controlled PetroChina was able to resume imports. The Merey discount to Brent already widened in anticipation of a possible reimposition of US sanctions. Reprieve expected for European companies Separate US authorizations previously issued to Repsol and to Italy's Eni to allow oil-for-debt deals with PdV and to enable a Shell project to import natural gas from Venezuela's Dragon field to Trinidad and Tobago are expected to remain in place. The US sanctions enforcers as a rule do not disclose the terms of private sanctions licenses, and the European companies were not immediately available to comment. The US would still consider future requests for sanctions waivers for specific energy projects, another senior official said. Repsol imported 23,000 b/d of Venezuelan crude into Spain last year and 29,000 b/d so far this year, according to Vortexa data. The last cargo to arrive was on 15 April. Hope springs eternal The US administration says it will consider lifting the sanctions again if Maduro's government allows opposition candidates to participate in the July presidential election. The US action today "should not be viewed as a final decision that we no longer believe Venezuela can hold competitive and inclusive elections," a third senior official said. "We will continue to engage with all stakeholders, including Maduro representatives, the democratic opposition, civil society and the international community to support the Venezuelan people's efforts to ensure a better future for Venezuela." By Haik Gugarats and Kuganiga Kuganeswaran Chinese imports of Venezuelan crude Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
US House advances Ukraine, Israel aid bills
US House advances Ukraine, Israel aid bills
Washington, 17 April (Argus) — The Republican-controlled US House of Representatives is preparing to advance a bill to extend military and economic aid to Ukraine, as Kyiv has complained about critical shortages of ammunition on the battlefield and has resorted to aerial attacks against refineries in Russia. The House is also advancing a separate bill to extend military aid to Israel and to pay for the rising cost of US operations in the Middle East, including the cost of providing maritime protection from the Houthi attacks on commercial shipping in the Red Sea. Yet another bill would extend military aid to Taiwan and other US partners and allies in the Indo-Pacific region. The US Senate in February approved a bill providing around $60bn in military aid for Ukraine, $14bn for Israel, and $9bn in humanitarian aid to Gaza and other global crisis spots. House speaker Mike Johnson (R-Louisiana) has, in effect, deconstructed the Senate bill into individual components in an effort to facilitate their passage in a chamber where his party has a two seat majority and the Republican lawmakers allied with former president Donald Trump oppose aid to Ukraine. In an effort to secure the Republican caucus' assent to the three foreign aid bills, Johnson is also planning to advance a separate bill including a hodgepodge of his party's policy priorities, such as a ban on social media network TikTok and sanctions against Iran. Yet another bill would advance draconian restrictions on immigration and strengthen the security of the US-Mexico border. None of the bills released today would require President Joe Biden to reconsider his pause on the issuance of new LNG export licenses. Johnson's legislative proposal has immediately drawn opposition from some members of his party, two of which said they would move to oust him as speaker. Johnson assumed his position after his predecessor Kevin McCarthy was ousted in October following a compromise government funding deal with House Democrats. "Every true conservative America First patriot in the House should vote against the rule for this borrowed foreign aid bill with no border security!" congressman Bob Good (R-Virginia) said via X social network. The foreign aid bills will have to have the backing of the Democratic caucus and a sufficient number of Republicans in order to pass. Biden said he supports the three foreign aid bills proposed by Johnson. "The House must pass the package this week and the Senate should quickly follow," Biden said. The majority-Democratic Senate leaders likewise have signaled willingness to consider separate aid bills so long as those do not significantly differ from the version passed by the Senate. The only major differences in the House version of the Ukraine aid bill is a requirement that the US provide no more than 50pc of the total economic assistance extended to Ukraine by western countries, as well as a requirement for Ukraine to repay the $9.5bn in direct economic support under the bill. Congress since February 2022 has allocated $114bn in aid to Ukraine, including $66bn for military supplies. The EU in the same period has allocated $150bn to Ukraine, mostly in economic support. By Haik Gugarats Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
June deadline set for Citgo auction bids
June deadline set for Citgo auction bids
Houston, 17 April (Argus) — Bidders for Citgo's US refining assets have until 11 June to submit offers for the company's 805,000 b/d of refining capacity and associated assets, with a tentative sale hearing set for 15 July. Documents filed Tuesday in the US District Court for the District of Delaware set 11 June as the deadline for interested parties to submit final binding bids after non-binding bids were received 22 January. The court began the auction process for Citgo's parent PdV Holding (PdVH) in October, part of the process of satisfying debts owed by Venezuelan-state owned oil company PdV. The court will file a notice of a successful bid "as soon as reasonably practicable" following the 11 June deadline and selection of a successful bidder. No date has been set for the filing of objections to the sale or replies to the objections before the tentative 15 July hearing. The legal wrangling over Citgo is unlikely to conclude even if the Delaware court successfully executes the sale as 27 businesses have filed claims against Citgo amounting to more than $21bn. The scale of Citgo's operations in the US are also a challenge to any potential buyer. Few companies look ready to buy the company's three refineries, three lubricants plants and retail and midstream assets. The assets have been valued by various analysts anywhere between $6.5bn and $40bn, with a lofty valuation potentially deterring bidders. But the auction process itself has been the main cause for concern. Independent refiner PBF Energy's chief executive Matthew Lucey previously called the auction a "quagmire" , considering its ties to a complex geopolitical situation in Venezuela, saying he did not expect the sale to go anywhere in the near term. Marathon Petroleum expressed similar disdain. "We're not interested in the auction process," Marathon chief executive Michael Hennigan said on an earnings call in October . By Nathan Risser Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
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.
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