Regulatory Alerts
Gabon & Offshore Licenses: The Government of Gabon has abruptly withdrawn offshore license agreements awarded to Noble Energy, Cobalt International and Elenito. The three companies had been awarded the oil and gas blocks in October last year, along with 8 other companies who won a total of 13 offshore licenses. According to the government, Noble, Cobalt and Elenito failed to meet the significant investment requirements associated with the offshore blocks. These are deepwater blocks which Gabon hopes will double its output.
Lebanon Offshore Auction: The situation in Lebanon continues to concern prospective oil and gas explorers as the new government delays the passage of legislation necessary to hold the country's first offshore auction in the highly prospective Levant Basin. Earlier this month, Lebanon announced that it had pushed back the deadline for the first licensing round to 14 August. This is the fourth time the licensing round has been postponed and rescheduled. Two decrees delineating blocks and setting up a model exploration and production agreement have yet to be passed. Bids cannot be submitted without these decrees in place.
Incident Alerts
Indian elections: For the first time since 1984, a single party has won an absolute majority in Indian general elections. Narenda Modi's BJP won a landslide victory in last week's elections, gaining 336 seats in parliament, against the Congress Party-led UPA coalition's 59 seats. Large…
Regulatory Alerts
Gabon & Offshore Licenses: The Government of Gabon has abruptly withdrawn offshore license agreements awarded to Noble Energy, Cobalt International and Elenito. The three companies had been awarded the oil and gas blocks in October last year, along with 8 other companies who won a total of 13 offshore licenses. According to the government, Noble, Cobalt and Elenito failed to meet the significant investment requirements associated with the offshore blocks. These are deepwater blocks which Gabon hopes will double its output.
Lebanon Offshore Auction: The situation in Lebanon continues to concern prospective oil and gas explorers as the new government delays the passage of legislation necessary to hold the country's first offshore auction in the highly prospective Levant Basin. Earlier this month, Lebanon announced that it had pushed back the deadline for the first licensing round to 14 August. This is the fourth time the licensing round has been postponed and rescheduled. Two decrees delineating blocks and setting up a model exploration and production agreement have yet to be passed. Bids cannot be submitted without these decrees in place.
Incident Alerts
Indian elections: For the first time since 1984, a single party has won an absolute majority in Indian general elections. Narenda Modi's BJP won a landslide victory in last week's elections, gaining 336 seats in parliament, against the Congress Party-led UPA coalition's 59 seats. Large infrastructure projects have more of a chance of moving ahead now, though BJP will still see strong opposition in the upper house, which is controlled by the Congress party.
Kenya Terrorist Attacks: Fears of terrorist attacks in Kenya are mounting amid an uptick in incidents in recent weeks and months, as the country moves closer to commercial oil production. At least 12 people were killed in two explosions in a busy market place in the capital, Nairobi, last week in the latest incident. Al-Shabaab, shifting over from Somalia, has demonstrated an increased penchant for targeting Kenya, whose security forces helped weaken the group inside Somalia. For a full assessment of al-Shabaab's capabilities in Kenya and the level of risk they pose to foreign investors, contact our intelligence wing, OP Tactical.
Libya Climax: The situation in Libya is reaching a climax, with a rebel attack on the country's parliament last week, and the forced dissolution by rebels of the General National Congress. At this point, we are unable to determine whether the rebel forces, led by former General Khalifa Haftar, have the capabilities to take Tripoli in full, but in the interim, the capital city should be considered a war zone. Yesterday, the rebels secured more power with the defection of the country's top airforce officials to their side. What is in effect happening is a coup intended to take down a government that has, at best, been unable to deal with roving militias, protests and the usurpation of the country's ports. Libyan air force commander Colonel Gomaa al-Abbani said in a televised address on Tuesday that he was backing General Haftar against Libya's current lawmakers and extremist groups. Non-Islamist lawmakers in the now dissolved parliament also appear to be siding with General Haftar.
Merger & Acquisition Highlights
Nigeria Oil Blocks: Local Nigerian oil producer Pan Ocean has won the bid for Shell's number 24 lease-which is one of four onshore blocks Shell owns in Eastern Nigeria. Oil Mining Lease 24 is operated by Shell, with interests held by Italy's Eni and France's Total. The partners valued the lease at $500 million to $1 billion, but the details of Pan Ocean's bid have not yet been revealed. The lease currently delivers around 25,000 bpd of oil from three fields, along with 8 million Mscf/d of gas. This is the third sale made by Shell and partners of onshore Niger Delta assets, as the majors seek to divest and move offshore, where security is easier to ensure.
Murphy Oil Malaysia: Mid-cap US-based Murphy Oil Corp is reportedly seeking to divest $2 billion in oil and gas assets in Malaysia in order to refocus its portfolio at home. Murphy may divest up to 30% of its stake in Malaysian assets, with the first round of bids rumored to be expected in June.
MOL Retail acquisitions: Hungary's state-owned MOL oil and gas group is eyeing additional retail acquisitions in the Central and Eastern European market, as motor fuel sales rise. Earlier this month, MOL signed a deal to buy units of Italian Eni, including filling stations, across the Czech Republic, Slovakia and Romania.
Encana Eagle Ford: Earlier this month, Calgary-based Encana Corp. paid $3.1 billion for assets in Eagle Ford, Texas, prompting questions about the move based on the company's first-quarter earnings report. Analysts have pointed out that not all of the 45,500 acres Encana scooped are up in the heart of Eagle Ford.
GE in Europe: General Electric has announced its submission of a $17 billion binding offer to acquire French Alstom's power and grid business to expand its power business in Europe. The acquisition would be in line with GE's portfolio shift forwards industrial segments. Power, aviation and oil and gas are GE's largest growth segments.
Kuwait Petroleum Expanding In Italy: Kuwaiti state-run oil group Kuwait Petroleum Corp has announced plans to acquire Italian petroleum product companies Shell Italia SpA and Shell Italia Aviazione Srl from Royal Dutch Shell in a deal scheduled to take place in mid-June.
EDF: France's EDF utility has announced plans to acquire, in late June, the domestic segment of French energy services company Dalkia, which is currently controlled jointly by EDF and Veolia water and waste group.
Acquisitions In Peru: Also in late June, Canada Pension Plan Investment Board (CPPIB), Peruvian engineering company Grana y Montero and Spanish gas network operator Enagas plan to jointly acquire control of Peruvian gas pipeline operator Tecgas Inc. CPPIB currently is the sole controller of Tecgas Inc.
Latin America Update from our Partners at Southern Pulse
Nicaraguan canal project: In Nicaragua, the Russian government has announced it is considering joining the Nicaraguan canal project. According to an 18 May 2014 report, the Russian government will decide in June whether or not to participate in the construction of a new Nicaraguan canal connecting the Atlantic and Pacific Oceans. Foreign Minister Sergei Lavrov said that the decision is pending a study of the project's technological and economic feasibility. Based on official estimates, the canal will cost US$40 billion and could generate economic growth of 10.8 percent in 2014 and 15 percent by 2015.
Ecuador Human rights: In Ecuador, a government delegation, including Attorney General Diego GarcÃa and Justice Minister Ledy Zúñiga, met with judges of the Inter-American Court of Human Rights in San José, Costa Rica on 13 May 2014 in the hope of preventing the court from leveling provisional measures against the Ecuadoran state. The meeting, requested by Ecuador, comes after the court condemned the country in 2012 for failing to consult the Sarayaku community prior to initiating oil exploration activities in their territory.
Chile LNG: In Chile, on 14 May 2014, President Michelle Bachelet announced that liquefied natural gas (LNG) along with non-conventional renewable energy sources will have a larger role in the country's energy matrix as a part of her administration's energy agenda. The agenda also includes the decentralization of the electricity market, and a larger state role in promoting new players and facilitating competition in the country's energy sector in the hope of decreasing energy prices.
Central European Energy Infrastructure Progress Report
Given the situation in Ukraine and the predominance of talk of European energy independence in the media, we offer this update on key projects that could help shape Central European energy security in the coming 5-10 years.
Talk of a North-South Gas Corridor for Central and Eastern Europe, and Poland's proposal this month for a Pan-European energy security partnership have gained momentum since the crisis in Ukraine. One key focus is on creating access to LNG supplies via a planned terminal on the island of Krk in Croatia, which would receive supplies from a variety of venues, including the US. Another focus is the construction of natural gas interconnections within the region and with Western Europe to eliminate isolated markets. A third focus is on the Trans-Adriatic Pipeline (TAP) with Bulgaria (via the Interconnector Greece-Bulgaria) and eventually the Western Balkans (via the prospective Ionian-Adriatic Pipeline, IAP), courtesy of the Shah Deniz consortium. These three projects would link all of Central Europe's gas systems from Poland to Croatia. Progress to date includes:
• Poland's Swinoujscie LNG terminal is under construction and scheduled to go online in 2015, with its first imports of LNG from Qatar that same year.
• Croatia's planned LNG terminal on the island of Krk is still struggling with financing issues, which the authorities are hoping will be invigorated by the crisis in Ukraine. The authorities are finalizing the documentation for the terminal now, and hoping for an EU Commission decision on financing the project before the end of this year. What's happening here, though, is that Croatia has failed to give the LNG terminal top priority. Like Hungary, it is tempted by the parallel project of Russia's South Stream pipeline. Authorities are hoping that this terminal could be up and running and receiving its first shipments by 2016.
• Poland-Slovakia interconnectors are under construction. The project was agreed upon in November 2013 and is slated for completion in 2018. The interconnector will give Slovakia access to LNG from Poland's Swinoujscie terminal.
• Slovakia-Hungary interconnectors are under construction. This interconnector has already been built, with a test run scheduled for 1 July 2014. It should be fully operational beginning on 1 January 2015 with an annual capacity of 5 bcm.
• Ukraine-Slovakia reverse flow capabilities are progressing. In April 2014, Ukraine inked a deal with Slovakia for the reverse flow to Ukraine of 3.2 bcm beginning in October this year. The reverse flow goes through an unused pipeline to Slovakia. By Spring 2015, they are estimating 10 bcm in reverse flow to Ukraine.
• The 870-km TAP is part of the transmission system that will carry gas from the Shah Deniz II field in the Caspian Sea to Europe. It will connect with the Trans-Anatolian Pipeline (TANAP) near the Turkish-Greek border, and will include a section crossing the Adriatic Sea with landfall in southern Italy. TAP expects onshore pipeline construction to begin in 2016, with three segments in Greece and two in Albania. TAP is not likely to add to supply for Central Europe until the early 2020s.