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Wednesday, 27 September 2017 11:31

Brazil sees success in 14th round

Brazil experienced a “historic day in the oil and gas sector” with its 14th Round, as the joint venture of Petrobras and ExxonMobil signed the largest bonus of US$701 million (R$2.24 billion) for a block in the Campos basin.

Oddone. Image from ANP Facebook.

A total of 287 exploration blocks were auctioned across nine basins today (27 September) with an estimated total of 50 billion bbl in place, both offshore and onshore.

The round saw the largest total signing bonus in the country’s history, which came in at nearly $1.2 billion (R$3.8 billion), and resulted in the two largest offers per block: about $701 million (R$2.24 billion) and $376 million (R$1.2 billion).

Companies acquired 37 blocks at an area of 25,011sq km for exploration and production with a projected investment of $264.6 million (R$845 million). The offshore acreage included blocks inPelotas, Santos, Espírito Santo, Sergipe-Alagoas, and the Campos basins.

In the Campos basin, eight blocks were sold at a value of $1.1 billion (R$3.65 billion).

The largest signature bonus in Campos was R$ 2.24 billion, offered for block C-M-346 by the Petrobras-led JV (50%), with partner ExxonMobil Brasil (50%).

Other winners in the Campos basin were: Exxon as operator with 100% stake in each of Blocks C-M-37, and C-M-67; and Petrobras as operator with 50:50 partner Exxon for Blocks C-M-210; C-M-277, C-M-344, C-M-346, C-M-411, and C-M-413.

In the Espírito Santo basin, winners consisted of CNOOC with 100% of Block ES-M-592; Repsol with 100% of ES-M-667; Bertek Produtos, Serviços e Mineração with 100% ofES-T-345 and ES-T-476; Imetame Energia with 100% of Blocks ES-T-354, ES-T-373, ES-T-441, ES-T-487, and ES-T-477; and Vipetro Petróleo with 100% in ES-T-453.

In Sergipe-Alagoas, winners included: Exxon as operator with 50% of SEAL-M-501 and SEAL-M-503 with partners Queiroz Galvão (30%) and Murphy E&P (20%) on both blocks; Muncks & Reboques Brasil with 100% stake in SEAL-T-132; and Greenconsult Consultoria Empresarial with 100% stake in SEAL-T-430.

Karoon’s Brazil subsidiary Karoon Petroleo e Gas won the lone block that was bid on in the Santos basin, Block S-M-1537. The total signing bonus charged on the concession of these blocks was approximately $6.2 million (R$20 million). The minimum investment planned for the basin is nearly $2 million (R$6.19 million).

There were no offers for the Pelotas basin.

In total, 20 companies from eight countries participated in the bid. Seventeen of them acquired blocks, of which 10 are Brazilian and seven are from other countries. The signing of contracts is expected to occur until 31 January 2018.

The success of the auction reflects the regulatory changes made by the Brazilian government, which have made the business environment more attractive to companies of different sizes, Brazil’s National Petroleum Agency (ANP) said.
ANP said it continues its strategy to expand exploration areas in the country and attract companies of different profiles.

For the 14th Bidding Round, some rules of the Brazilian concession regime were simplified, including: the adoption of a single exploration phase and the possibility of extending it due to technical reasons; the removal of local content as a bidding criteria; distinct royalties for new frontier areas and mature basins of greater risks; and incentives to increase the participation of small and medium-sized companies.

During the opening of the public session, the ANP Director General, Décio Oddone, stated that the occasion is “a historic day to the oil and gas sector in Brazil.

“This bidding round marks a new beginning of investments, after the biggest crisis this sector had ever experienced in Brazil,”Oddone said. “These measures will bring hundreds of billions of reais in investments, that is, wealth to the Brazilian society.”

The third pre-salt round will be held on 27 October in Rio de Janeiro, consisting of four areas that are close to fields or prospects whose reservoirs extend beyond the granted area. The areas are related to the discoveries Cat of Mato and Carcará, and to the fields of Green Turtle and Sapinhoá.

The third round will offer four areas in the Campos and Santos basins, in the region of the pre-salt polygon, related to the prospects of Pau Brasil, Peroba, Alto de Cabo Frio-Oeste and Alto de Cabo Frio-Central.

Currently, the 10 most productive wells in Brazil are located in the pre-salt polygon, which already accounts for half of the Brazilian production, according to the ANP.

Brazil plans to hold nine auctions between now and 2019. Investments related to these auctions is estimated at US$80 billion, resulting in 300 marine wells, plus 10 billion bbl recoverable, around $100 billion in royalties, 17 new production units, plus 2 MMb/d, over the duration of the contracts.

Bidding round positive for Petrobras, ExxonMobil

The 14th round was good news for the Brazilian government from a fiscal perspective and a positive outcome for Petrobras as it establishes a strong partnership with ExxonMobil to develop its pre-salt acreage, said Horacio Cuenca, Research Director, Upstream Latin America at Wood Mackenzie.

The company had previously formed partnerships with world-class operators like Shell, Total and Statoil. These are likely to extend into the upcoming 2nd and 3rd pre-salt rounds and the surplus volumes transfer of rights round expected in 2018.

"For ExxonMobil, a lack of presence in Brazil's pre-salt has been arguably the biggest gap in its portfolio, especially now that Shell holds a dominant position in this prolific, relatively low-breakeven play,” Cuenca said. “ExxonMobil's wins this round and its expected participation in the upcoming 2nd and 3rd production sharing contract rounds in October will help plug that gap and provide the company with perhaps the strongest pipeline of future oil growth opportunities within its peer group."

"Additionally, establishing a material position in Brazil's pre-salt play through exploration success would mark another positive step in repositioning ExxonMobil's oil portfolio lower down the oil cost curve, complementing Permian tight oil and Guyana,” Cuenca said.

However, basins outside of Brazil’s pre-salt areas received very little interest, indicating Brazil faces challenges in attractive significant investment in these areas even after implementing substantial regulatory enhancements, Cuenca added.

Read more:

Brazil sees spike in pre-salt round interest

Brazil reveals 14th Round terms

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Wednesday, 27 September 2017 09:22

Total takeover causes Maersk shake up

French major Total has appointed Maersk Oil leaders to their new management positions, following current Maersk Oil CEO Gretchen Watkins’s decision to leave the company. The changes will coincide with the US$7.45 billion takeover expected to become effective in Q1 2018.

Watkins. Image from Maersk Oil.

The move will see Martin Rune Pedersen, chief operating officer in Maersk Oil become vice president of Total’s operations in Norway, Denmark and Netherlands. 

Troels Albrechtsen, chief technology officer in Maersk Oil will be appointed vice president for the technical center to be established in Copenhagen. The center will be part of Total’s global technical organization, supplementing the existing centers in Paris and Pau. 

“I am pleased to see Total’s continued commitment to maximize the full value of Maersk Oil’s operational and technical capabilities and the positioning of a strong Danish leadership team in their North Sea business,” says Claus V. Hemmingsen, vice CEO of AP Moller – Maersk and CEO of the Energy division.

According to Maresk, the appointments follow the decision by Watkins, CEO of Maersk Oil, to pursue other career opportunities once Total’s acquisition of Maersk Oil successfully closes. Gretchen will continue to lead Maersk Oil until deal closure, leading the pre-integration process as the business moves towards new ownership.

“Gretchen has in her roles as CEO and prior to this, as chief operating officer in Maersk Oil, played a decisive role in steering a transformation in Maersk Oil’s operational performance. I am glad that she will be here to continue leading successful and safe delivery of the business, placing Maersk Oil in the best position possible, until the deal closes,” says Hemmingsen.

Watkins joined Maersk Oil as COO in January 2014 and has been CEO of Maersk Oil since October 2016.

“This has been a difficult decision for me. I couldn’t be prouder of the way Maersk Oil has successfully navigated what I believe will come to be judged as historically challenging conditions for the industry, emerging as a high performing business. I remain firmly committed to leading the safe and successful delivery of our business performance until deal closure, alongside overseeing a smooth pre-integration process, as we take the business into new ownership,” says Watkins.

“The appointments are subject to successful deal closure and will not be effective before this. Closing is still expected during Q1 2018, pending regulatory approvals,” Maresk said.

Total announced it would buy Maersk Oil from its parent company AP Møller – Mærsk in August in a $7.45 billion share and debt deal. Should the merger go through, Total said it will gain about 1 billion boe of 2P/2C reserves. 

Pedersen was appointed to the role of COO in October 2016, prior to which he held executive positions as managing director for Maersk Oil’s Operated Business Units in Denmark and the UK.

Pedersen served as a board member of Oil & Gas UK and Step Change in Safety, contributing to a successful pan-industry drive to improve offshore safety performance.   

He is a Danish national and an engineering graduate from the University of Aalborg. Pedersen was an Officer (Captain, reserves) in the Danish Army, and joined Maersk Oil in 1997.

Albrechtsen was appointed to the role of chief technology officer seven years ago, prior to which he held multiple senior leadership positions in Maersk Oil’s offices in Denmark, the UK and Qatar. In addition, Albrechtsen has led Maersk Oil’s activities in West Africa and South America. 

An executive with more than 25 years of experience in the industry, Albrechtsen has been chairman of Oil Gas Denmark since 2013. In that capacity, he leads the industry’s engagement with Government Ministers and officials.

He is a Danish national and a Geology graduate of the University of Copenhagen.

Read more:

Total in $7.45 billion Maersk Oil acquisition

Monday, 25 September 2017 08:54

Malfunction stops production at Tamar

Production at Noble Energy’s Tamar platform offshore Israel has come to a stop after a crack was found in an emission pipe used to release natural gas and pressure, according to partner Delek Drilling.

The Tamar platform. Image from Delek.

Noble was performing upgrade and improvement as planned, when the crack was found in the pipe, which is used routinely and in emergencies. Production was stopped on 21 September.

According to the Delek Group, Noble ensured that there were no safety or environmental exposure of the gas.

Noble is currently repairing the crack, and expects to complete work and have natural gas from the Tamar reservoir back in operation “during the coming week.”

“In the company’s estimation, the decline in the supply of natural gas from the date of cessation of the flow of natural gas until the expected date of repair of the malfunction is expected to amount to about 0.1 Bcm (100%), reflecting a decrease of approximately US$3.5 million in the partnership’s revenues from the sale of natural gas,” Delek Group said.

Noble Energy Mediterranean is the operator of the Tamar project with 32.5% stake. Partners include:  Isramco Negev 2 (28.75%), Delek Drilling (22%), Tamar Petroleum( 9.25%), Dor Gas Exploration (4%), and Everest Infrastructures (3.5%).

Transocean is taking a US$1.4 billion impairment in Q3 2017 following the drilling contractor’s decision to scrap five ultra deepwater floaters, and one deepwater rig.

The Sedco Express ultra deepwater floater will be scrapped. Image from Transocean. 

All six rigs, which were previously cold stacked, include: ultra deepwater floaters GSF Jack RyanSedco EnergySedco ExpressCajun Express, and Deepwater Pathfinder; and the deepwater Transocean Marianas vessel.

According to Transocean, the rigs will be classified as held for sale and will be recycled in an environmentally responsible manner. The company take an impairment charge of about $1.4 billion during Q3 as a result of the scrapping.  

“We continue to enhance the quality of our fleet through the addition of new, high-specification assets, and the retirement of older, less competitive rigs,” says Jeremy Thigpen, Transocean president and CEO.

“We remain committed to providing our customers with the most technically capable and highest quality ultra deepwater and harsh environment assets in the industry, and will continue to objectively evaluate our rigs and high-grade our fleet as the market evolves,” he said.

Earlier this week, Chevron axed its drilling contract with Transocean for the Discoverer Clear Leader ultra deepwater drillship, which has been working for the US supermajor in the Gulf of Mexico since November 2014. The termination becomes effective in November, nearly a year earlier than its original expiration date of October 2018. Transocean will receive a lump sum payment of about $148 million in contract termination fees.

Last month, Transocean announced it entered a deal to buy Songa Offshore in a $3.4 billion deal, in which the company will acquire four Cat-D harsh environment, semisubmersible drilling rigs on long-term contracts with Statoil in Norway; and Songa’s three semisubmersible drilling rigs.

With the merger, which is expected to close later this year, the combined companies will now have 45 offshore mobile offshore drilling units, consisting of 25 ultra deepwater floaters, 11 harsh environment floaters, two deepwater floaters and seven midwater floaters.

Transocean also has four ultra deepwater drillships under construction, two of which are under contract with Shell for 10 years each.

In the Q2 period, Transocean reported it had reactivated rigs, extended contracts, and created opportunities to work with old and new customers. The company had also identified multiple bidding opportunities globally, finding almost 60 floater programs that could begin within the next 18 months.

Read more:

Discoverer Clear Leader axed by Chevron

Transocean in US$3.4 billion Songa takeover

Transocean in shipshape