Russia’s Rosneft has closed the US$1.13 billion deal to acquire stake in the Shorouk concession, containing the giant Zohr field offshore Egypt from Italy’s Eni.

Map of Zohr, from Eni.

Rosneft now owns 30% stake in the Shorouk concessions agreement for the development of the deepwater Zohr field, the largest gas field in the Mediterranean Sea.

Rosneft says it has also refunded its share in past project costs to Eni.

The deal, according to the Russian giant, will enable the company to  share significant experience in offshore field development, using existing competencies in offshore production.

Participation in the development of a unique production asset will strengthen positions of Rosneft in the strategic markets of Europe and Middle East, Rosneft says.

"This transaction confirms once again the validity of Eni’s 'dual exploration' strategy, which consists of selling minority stakes in its exploration successes, while maintaining control and operatorship, in parallel to the fast track development of discovered reserves," says Eni. "Through this strategy, which allows accelerated monetization of the exploration successes, Eni has been able to cash in more than $9 billion in the last four years."

Zohr, discovered in 2015, lies in the Nile Delta basin off Egypt in the Block 9 (Shorouk block), close to Cypriot waters. Its acreage covers about 230sq km, with its in-place reserves exceeding 850 Bcm.

“Having closed the deal to acquire a stake in the concession agreement for the development of Zohr gas field, Rosneft has entered the world class project,” says Rosneft Chief Executive Officer Igor Sechin. “It opens up the opportunities for the Company to reinforce its positions in the promising and strategic region, broadens potential of our trading division and enhances our mutually beneficial cooperation with Egypt.”

Eni has estimated total gas resources in place in Zohr to be approximately 30 Tcf. The first phase of two for the development of Zohr is being fast-tracked, with first gas expected in late 2017.  "Its [Zohr's] start-up is scheduled by the end of 2017, just over two years after its discovery, setting a record for the industry," says Eni.

With the close of the deal, Eni remains operator of Zohr through its subsidiary IEOC with 60% stake. Rosneft holds 30% through its subsidiary Upstream Projects PTE, and BP holds 10%.

In February, BP completed its $375 million deal to acquire 10% in the Shorouk concession. 

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Eni has been ordered to shut down all production from the Goliat floating production, storage and offloading (FPSO) unit, after the Petroleum Safety Authority of Norway (PSA) gives the Italian giant a notice to improve its electrical safety. 

The Goliat FPSO. Image from Eni.

The PSA has issued an order to Eni Norge to minimize the ignition threat posed by possible faulty Ex motors on the Goliat field in the Barents Sea.

“Until the order has been complied with to the PSA’s satisfaction, all production from the Goliat FPSO unit must remain shut down,” the PSA said in a statement. 

An audit of electrical safety and the person in charge of the electrical facilities at Eni on board the Goliat FPSO was conducted between 19-28 September 2017. The order was given last week on 5 October. 

Eni must complete the systematic survey of potential ignition sources related to electric Ex motors, and implement the necessary technical, operational and organizational measures to reduce as far as possible the threat of ignition from all faults, which represent an ignition source.

According to the PSA, the audit revealed a high fault rate with the  Ex integrity of the equipment was established through random sampling of reports from Ex inspections of electric motors incorporating an emergency stop arrangement. This also included equipment in hazardous areas. 

Eni submitted that the total fault rate for the relevant equipment after inspection-related repair was 38%. It further emerged that 3.5% of these represented serious faults in Eni’s own assessment.

Eni has three weeks to lodge a possible appeal against the order. 

Offshore oil and gas operators in the Gulf of Mexico, including Anadarko and Shell, have begun redeploying personnel to the Gulf of Mexico following Hurricane Nate.

Tropical depression Nate as of 8 October. Image from National Weather Service.

Nate formed as a tropical storm on Thursday morning (5 October), and made landfall as a Category 1 hurricane in Mississippi on Sunday (8 October). The storm has since been downgraded to a tropical depression.

Yesterday (8 October), Anadarko said the company had begun the process of safely redeploying personnel to its operated facilities following Hurricane Nate's passage through the GoM. 

"We expect to resume production as quickly and safely as possible," the company said in a statement.

Also yesterday, supermajor Shell said it was in the process of returning personnel to its Mars, Olympus, Ursa and Ram Powell production hubs.

"Production operations will resume once we can verify the integrity of our assets for safe operation, and the associated pipelines and downstream gas plants are back on line to accept product," Shell said.

Based on data Bureau of Safety and Environmental Enforcement (BSEE) received from offshore operator reports as of today (9 October) 11:30 a.m. CST, it is estimated that approximately 85.09% of the current oil production in the Gulf of Mexico has been shut-in, which equates to nearly 1.5 MMb/d. It is also estimated that approximately 64.78% of the natural gas production, or 2 MMcf/d in the Gulf of Mexico has been shut-in. 

Personnel remain evacuated from eight drilling rigs (non-dynamically positioned (DP) rigs), equivalent to 40% of the 20 rigs of this type currently operating in the Gulf.

Seven DP rigs are still off location out of the hurricane’s path as a precaution. This number represents 38.9% of the 18 DP rigs currently operating in the Gulf. 

Of those operators that evacuated last week, supermajor BP said that it is closely monitoring the storm to safely ensure its personnel and operations in the deepwater Gulf of Mexico.

“With forecasts indicating the system likely to strengthen as it moves to the north, we are now taking additional steps to respond. BP has begun securing offshore facilities and evacuating non-essential personnel from the Thunder Horse and Na Kika platforms and the West Vela drilling rig in the deepwater Gulf of Mexico. Safety is our top priority and we will continue to monitor weather conditions closely to determine next steps,” BP said in a statement yesterday (4 October).

Shell is said on 4 October that the company is also monitoring the Tropical Storm Nate. 

"As a precautionary measure, we are minimizing the number of people working offshore at our assets in the Eastern Gulf of Mexico and are taking steps to safely secure our facilities in preparation for potentially severe weather. There are currently no impacts to our production or drilling operations," Shell said in a statement last week.

Cue Energy Resources has granted a further extension to supermajor BP to mull over the option of acquiring stake in the Ironbark prospect offshore Western Australia.

Ironbark. Map from Cue.

BP subsidiary BP Developments Australia has already been given several extensions on whether to take 42.5% stake in Ironbark; the last of which was set to expire later this month on 25 October. The new extended deadline is 11 December 2017.

Ironbark is next to BP’s operated WA-409-B permit, less than 50km from the North Rankin platform (North West Shelf LNG) and near the Pluto and Wheatstone LNG infrastructure, which Cue says provides cost effective commercialization options.

“If BP exercise the option over WA-359-P, 50% of the Ironbark well cost will be funded,” Cue Energy said in a statement. “Cue is seeking to secure a partner or partners to join themselves and BP in WA-359-P to drill an exploration well in 2018 to test the Ironbark prospect.”

The Ironbark prospect is a giant Mungaroo Formation prospect that is mapped with an area of up to 400sq km with a best technical estimate of 15 Tcf of prospective recoverable gas resource based on an internal technical assessment performed by Cue Energy.

Wood Mackenzie estimates that the North West Shelf LNG plant and infrastructure will have spare capacity from 2021.

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