Politics, Geopolitics & Conflict
The Armenian government has signed what it has referred to as a “painful” agreement with Russia and Azerbaijan to end the war over the disputed area of Nagorno-Karabakh. Under the deal, Azerbaijan will retain areas of Nagorno-Karabakh that it has taken during the ongoing conflict. Armenia has agreed to withdraw from several other adjacent areas over the next few weeks. The deal sparked celebrations in Azerbaijan and protests in Armenia, while Michael Carpenter, an adviser to U.S. president-elect Joe Biden, criticized the deal as a geopolitical victory for Russia. The truce calls for the deployment of nearly 2,000 Russian peacekeepers to the disputed enclave. This is a hugely - and dangerously - unpopular move on the part of Armenian PM Nikol Pashinyan, who now faces the specter of mass protests at home, which could pressure him to renege on the deal.
The U.S. government has imposed sanctions on 19 individuals and entities for allegedly providing support to Syrian President Bashar al-Assad oil production network. The Treasury's Office of Foreign Assets Control (OFAC) said those sanctioned include high-ranking officials and Syrian and Lebanese nationals attempting to revive Syria's oil industry, which is largely under the Assad government’s control.
Just weeks after acquiring Noble Energy’s high-profile Israel offshore gas assets, Chevron is already butting heads with the Israelis with tough renegotiations…
Politics, Geopolitics & Conflict
The Armenian government has signed what it has referred to as a “painful” agreement with Russia and Azerbaijan to end the war over the disputed area of Nagorno-Karabakh. Under the deal, Azerbaijan will retain areas of Nagorno-Karabakh that it has taken during the ongoing conflict. Armenia has agreed to withdraw from several other adjacent areas over the next few weeks. The deal sparked celebrations in Azerbaijan and protests in Armenia, while Michael Carpenter, an adviser to U.S. president-elect Joe Biden, criticized the deal as a geopolitical victory for Russia. The truce calls for the deployment of nearly 2,000 Russian peacekeepers to the disputed enclave. This is a hugely - and dangerously - unpopular move on the part of Armenian PM Nikol Pashinyan, who now faces the specter of mass protests at home, which could pressure him to renege on the deal.
The U.S. government has imposed sanctions on 19 individuals and entities for allegedly providing support to Syrian President Bashar al-Assad oil production network. The Treasury's Office of Foreign Assets Control (OFAC) said those sanctioned include high-ranking officials and Syrian and Lebanese nationals attempting to revive Syria's oil industry, which is largely under the Assad government’s control.
Just weeks after acquiring Noble Energy’s high-profile Israel offshore gas assets, Chevron is already butting heads with the Israelis with tough renegotiations of the gas sales deals struck previously by Noble and partners for the offshore Tamar gas field. A deal struck with the Israel Electric Corp is now a major point of contention, with Cheron (25% stake in Tamar) and Israeli Delek Drilling (22%) opposing the other partners in a deal that had earlier agreed to cut the Israeli utility’s prices paid for Tamar gas. The Israeli utility is now accusing Chevron of halting supplies.
Libya’s warring sides have agreed to hold new elections in 18 months. That is the much-lauded outcome of peace talks being held in Tunisia. A lot can happen in 18 months in Libya, and we will be closely watching as foreign troops and mercenaries conduct talks about a withdrawal from Sirte--the gateway to Libya's oil resources and ports.
Deals, Mergers & Acquisitions
Hess has completed the sale of its 28% working interest in the Shenzi Field in the deep-water Gulf of Mexico to the field’s operator, BHP, for a total consideration of $505 million. The field holds estimated recoverable reserves of between 350 million and 400 million barrels of oil equivalent. It produced an average of 11,000 net barrels of oil equivalent per day in the first eight months of 2020.
Tullow Oil has completed the sale of its Ugandan assets to French Total SA for a sum of $575 million. Tullow’s upstream segment includes nine production and two exploration licenses in the country. The company still has net debt of $2.4 billion and available liquidity of $1 billion.
US-based Sempra Energy says it is hoping that by the end of the year to receive a green light by the Mexican government for a 20-year export permit for its proposed Costa Azul LNG export plant. Sempra has been waiting for the permit since the start of the year, but it has been held up largely due to the pandemic. Mexican President Andrés Manuel López Obrador said in September that foreign investments, including Sempra’s, are welcomed as long as it is beneficial for the country.
Exxon Mobil sold its petrochemical pipeline system that runs from Houston to Corpus Christi to midstream operator Easton Energy LLC. The companies did not disclose a purchase price. The line has been used to transport oil and natural gas liquids, but most recently shipped refinery grade propylene.
Discovery & Development
ConocoPhillips has discovered gas condensate offshore Norway, northwest of the Heidrun Field. The company said that preliminary estimates place the size of the discovery between 50 and 190 MMboe recoverable.
The UAE’s Adnoc and French Total have delivered the first gas from the Ruwais Diyab concession in the United Arab Emirates. Adnoc plans to produce 1 billion cubic feet per day from the concession by 2030, which would ultimately enable gas self-sufficiency for the country.
Colombia is holding another bidding round for a pilot project to explore non-conventional oil and gas deposits. Fracking is not permitted in Colombia at present, and the pilot project will be used to gather data and use it to make a determination on the future of fracking in the country.
Oman is looking to raise $3 billion in a debt issue next year via a new company expected to hold the country’s majority stake in its largest oil-producing block. Block 6 is currently operated by state-backed Petroleum Development Oman. According to Wood Mackenzie, the Block 6 contract area is the most significant oil and gas operation in Oman and contains more than 75% of the country’s remaining crude oil reserves.
Energean, operating in the Eastern Mediterranean, has increased its estimate of the size of its offshore Israeli gas fields to 729 MMboe, following the completion of an independent evaluation of the Karish, Karish North, and Tanin fields. That number represents a 44% increase on previous estimates. FDI on Karish North is expected by the end of this year.
Regulations and Legislation
Toronto-Dominion Bank said this week that it would not provide financial services for project-specific oil and gas related activities in the Arctic Circle. It is the latest addition to a host of lenders who are refusing to back fossil fuel projects in the Arctic.
San Francisco authorities banned the use of natural gas in new buildings, requiring them to rely on the electric grid instead. Starting in June, newbuilds in the city will be barred from having natural gas heating, gas appliances or gas fireplaces. The ban would affect the planned development of more than 54,000 homes. Based on the recent data, the gas is responsible for about 44% of San Francisco’s overall emissions of greenhouse gases.
Norway is planning to ban the use of heavy fuel oil around its Svalbard archipelago in the Arctic Ocean, citing the catastrophic effects that a heavy oil spill would impart on the area, and UN efforts that have been slow in coming. The regulation hasn’t passed yet and must go through a public hearing in parliament before it can be implemented.
Equitrans Midstream Corp’s $6B Mountain Valley natural gas pipeline took a legal hit this week, with a U.S. federal appeals court granted a stay for water crossing permits in two states. The permits were originally issued in September but were later challenged by several conservation and climate activist groups. The pipeline is set to be complete next year, pending approvals. The stay will last until a circuit court of appeals rules on the objection to the permits.
A local governor in Japan has approved plans from utility Tohoku Electric Power to restart one of its nuclear reactors, nearly a decade after it was damaged in the earthquake and tsunami that caused the Fukushima disaster.
Renewables
In a project announced this week, as the buzz around hydrogen intensifies globally, the U.S. Department of Energy has awarded nearly $14 million to build a hydrogen-energy production facility at a nuclear power plant in Minnesota in a collaboration between Idaho National Laboratory and Minneapolis-based Xcel Energy.
NextEra Energy made an offer to acquire U.S. power utility Evergy Inc. for $15 billion. Evergy turned down the offer, and it’s not clear when or if NextEra will submit another offer. Evergy is the second rejection NextEra has received in the last few months.
Total’s battery subsidiary, Saft, added another production hub in China that will produce large-scale battery units that will store output from wind and solar. The units are estimated to hold around 480MWh annually.
Eni and HitecVision--two oil companies--are launching a renewables JV in Norway called Vargonn. Vargonn will develop, build, and operate renewable energy capacity in Norway.
Orsted and BP are also looking at developing a renewables project--a large-scale green hydrogen project in Germany. The project will develop a 50MW electrolyzer which will produce 9,000 metric tons of hydrogen per year. FID is expected in 2022 and could be up and running by 2024.
Two U.S. oil majors, Occidental and ConocoPhillips, have jumped on the net-zero goal bandwagon. While its European brethren have been quicker to proclaim net-zero goals, the addition of two American companies on the list may indicate that a change is coming in the United States, particularly as the climate-change atmosphere gets less and less fossil-fuel friendly.
