Politics, Geopolitics & Conflict
• Clashes continue in the Libyan capital Tripoli between various militias. Since Thursday, nine people have been killed and residents are fleeing the Abu Salim neighborhood in the city center. The clashes pit forces allied with the UN-backed Government of National Accord (GNA) and a newly former militia guard. This is the blowback
• Iraqi forces have moved in to Mosul today, after taking the airport from ISIS on Thursday. In the meantime, a new report from the International Center for the Study of Radicalization and Political Violence says that ISIS’ income has dropped by half over the last two years, according to a report from the International Center for the Study of Radicalization and Political Violence. Much of this income used to come from oil: some $550 million in 2015, which fell to $250 million last year. The total income, comprising looting and confiscation, oil, taxes, and kidnappings, fell from $1.87 billion in 2014 to $870 million last year. Over the period, IS lost over 60% of the territory it controlled at the start.
• Trump continues to provoke the intelligence community, lashing out at the FBI over ‘leaks’ that are connecting his administration to Russia prior to his inauguration. It has now been revealed the one of his aides asked the FBI to discredit stories connection his administration to Russia—a request the FBI has refused out of hand. While Trump is attempting to portray these ‘leaks’ as a threat to national security, parts of the intelligence community view these not as leaks, rather as attempts to ensure national security by revealing dangerous connections to Russia, which clearly threaten security.
• South Sudan may lose the oil-rich Abyei region as it juggles between staying on the good side of its northern neighbor and dealing with internal problems, such as a string of recent resignations of senior army officials, which are threatening the progress of peace talks. Abyei holds a quarter of the formerly united Sudan and now the government of Sudan is eyeing control over it while South Sudan’s government tries to put an end to the civil war tearing it apart. Khartoum is preparing a referendum to see, it says, if the population of Abyei identifies itself as Sudanese or South Sudanese, even though the President and the Foreign Minister have both declared the region to be part of Sudan and have asked locals to apply for Sudan IDs. South Sudan does not want to anger its Sudan, fearing that Khartoum may step in in support of former vice president Riek Machar, the rebel leader causing the most headache for the government in Juba. Oil, however, is a vital commodity for both Sudans, and Khartoum lost all of it soil when South Sudan gained independence, maintaining only the leverage of oil transport as South Sudan has no option at present other than to transport its oil through Sudan.
Deals, Mergers & Acquisitions
• CNPC has struck a deal to buy an 8% stake in the Abu Dhabi Company for Onshore Petroleum Operations – the company set up to develop the emirate’s largest onshore field. The project’s estimated value is $22 billion and CNPC’s stake is worth $1.8 billion, to be paid as a signing bonus. Besides the Chinese giant, the Adco project also features Total, BP and two more Asian partners, Inpex Corp. from Japan and South Korea’s GS Energy Corp.
• Malaysia’s oil and gas major Petronas is mulling over the sale of a 49% interest valued at $1 billion in an offshore gas project in Sarawak. The sale, according to unnamed sources, is prompted by Petronas’ efforts to curb the development costs associated with the project, SK316, and improve its cash position.
• Sinochem plans to offload its 40% interest in the Peregrino offshore oilfield in Brazil. The move would constitute the Chinese refiner’s exit from an asset once praised for its high value. Sinochem bought the 40% stake from Statoil for $3.07 billion seven years ago but is now adjusting its priorities in tune with the new oil price environment. The stake equals daily supplies of 100,000 barrels of crude.
• The Supreme Court of Yukon has approved the purchase of InterOil by Exxon and now the deal could proceed to closing. The acquisition faced problems when InterOil’s founder filed a complaint with the court arguing Exxon’s bid, in the range of $2.503.6 billion, depending on reserves, undervalued the company. Now, the legal battle seems to be over and the acquisition should close by the end of this week.
• Aramco is joining forces with Petronas on the $27-billion Refinery and Petrochemical Integrated Development (RAPID) project in Malaysia. Earlier reports had it that the Saudi major had decided to quit the project but now sources in the know have a different message: that the partners are getting closer to sealing an official deal.
Tenders, Auctions & Contracts
• The EU will invest 102 million euros in the construction of an offshore LNG terminal in Croatia, as part of a wider 444-million-euro financing program focusing on energy and power generation projects. The new terminal should help diversify energy supplies in the region, currently dominated by Russia.
• Iran will ship 600,000 barrels of crude to Belarus, after Moscow cut its exports of the commodity to its neighbor because of unpaid gas bills. The shipment is the first for Belarus since sanctions against Tehran were lifted last year.
• Total is not leaving the South Pars gas field development project, despite reports hinting at the opposite, according to a senior Iranian energy official. Media had speculated that the French company was put off by U.S. President Trump’s hostile rhetoric regarding Iran but, if the country’s deputy energy minister is to be trusted, this is not the case and the $4.8-billion project is going ahead as planned.
• Saudi Arabia has officially launched its renewable energy program, valued at $50 billion, with a tender for the construction of 700 MW worth of solar and wind energy installations. The program is touted by Riyadh as a means of weaning the desert kingdom off crude oil. Plans are to have 10 GW in installed capacity from renewable sources until 2023.
• Chevron is discussing tax changes in Angola with the government and state-owned energy firm Sonangol. The changes could see Chevron increase its investments in Africa’s top producer. Both sides are bound to drive a hard bargain: Angola needs higher revenues, a lot of which come from taxing foreign oil companies, and these oil companies also need higher revenues as they still grapple with fallout from the oil price crisis.
• India will begin auctioning off oil exploration blocks by June this year after overhauling its licensing process last year and moving to revenue-sharing with pricing and marketing freedom for operators. The last major auction in India was in 2010, but it was unimpressive—offering up only 31 small fields that largely went to local firms.
Discovery & Development
• Iraq says its proven crude oil reserves have reached 153 billion barrels, after recent discoveries added 10 billion to the total. The discoveries were made in seven oilfields in central and southern Iraq the country’s oil minister said, without going into any more detail. Iraq has the fourth-largest oil reserves in OPEC, after Venezuela, Saudi Arabia, and Iran.
• Iran has announced a big shale oil find in the Lorestan province, where shale oil and gas exploration has been going on for a few years. The find is estimated at 2 billion barrels of light crude. Since 2013, exploration in Lorestan has uncovered deposits holding 6.5 billion barrels of crude and 1.76 trillion cu m of natural gas.
• A new refinery with a daily throughput capacity of 146,000 barrels of condensate has started operation in Qatar. The $1.5-billion facility, Laffan, will be supplied with condensate from the North Field, the world’s biggest single natural gas deposit.
• Israeli Delek Group, one of the operators of the giant Leviathan gas field, has closed a deal for the borrowing of up to $2.5 billion with a consortium of local and international banks. The money will be used for the development of the field. The loan will be released in tranches, based on reaching certain milestones.
• Woodside Petroleum will boost its LNG production rate on growing demand from Asia. The company said this will take place at its Pluto liquefaction plant, in Western Australia, which it plans to turn into a major LNG export hub, to be fed from gas fields in the area that have not been tapped yet.
• Brazil will relax local purchasing rules for the oil industry beginning in September 2017, to lower operating costs and attract more foreign investment, particularly offshore. The required for offshore oil fields will now be 18% local content—reduced by about half.