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Intel Notes - April 5th

Deals, Mergers & Acquisitions

- A French Engie-led consortium bidding for a natural gas pipeline network for sale by Petrobras has emerged as a potential winner after several investors left rival consortia. The group also includes Canadian pension fund Caisse de Depot et Placement du Québec. Petrobras is hoping to get some $8 billion for the network commonly known as TAG.

- ConocoPhillips is in talks with UK energy independent Chrysaor for the sale of several assets in the North Sea as the supermajor seeks to focus more on its shale oil operations at home. This is the second attempt of Conoco to sell the assets, after a deal with another UK independent, Ineos, fell through. That deal was valued at $3 billion. If Chrysaor agrees to buy the assets, they could add 60,000 bpd to its daily production of 125,000 bpd.

- Japan’s JERA has finalized the takeover of a power plant owned by its two shareholders and now ranks among the largest electricity generating companies globally. The joint venture, which is the largest LNG buyer in the world, is owned by Tokyo Electric Power and Chtubu Electric Power. The power plants they transferred to the JV have a combined capacity of 77 GW, of which 68 GW domestic capacity and 9 GW overseas.

- Noble Energy has acquired a 40% stake (and operatorship) in two offshore concessions previously owned by Shell in Colombia. The two blocks have yet to be explored, with initial investments under the contract Shell had signed with the Colombian authorities calculated at $100 million.

- Renewables on the US investment scene are increasingly luring in institutional investors, including BlackRock, which has now agreed to invest in CleanCapital, the owner and manager of $300 million in small-scale American solar systems. The size of the BlackRock investment has not been disclosed, but this is the world’s largest money manager, and investors should be taking stock of the partnership in general and what it indicates for the renewable sector. This isn’t BlackRock’s first flirtation with CleanCapital: Last year, they partnered to acquire a nearly 47-megawatt US solar power portfolio, and we note that CleanCapital has been making moves to expand its solar and solar storage business in both Mexico and Canada.

- French Total Eren SA, Norway’s Equinor ASA (formerly Statoil), Shell and BP are potentially in the market for renewable energy assets in Brazil, with an eye specifically for in-the-works plans or already-operating plants that have managed to secure power contracts with prospective customers.

- The Lego Group is going solar, with Kirkbi--Lego’s 75% owner, agreeing to buy a majority stake the US affiliate of Germany’s Enerparc AG solar developer as part of its long-term strategy on renewables. Enerparc is behind utility-scale solar photovoltaic projects. There is no word on the price tag for the acquisition.

Tenders, Auctions & Contracts

- Novatek has sealed a 15-year deal with Vitol for the supply of 1 million tons of LNG annually. The gas would come from the Arctic LNG 2 plant, which will comprise three trains, each with an annual capacity of 6.6 million tons. It will be fed natural gas from the Utrenneye field, which has resources estimated at 1.138 trillion cubic meters of gas and 57 million tons of hydrocarbon liquids.

- Total has inked a contract with Tellurian that will see the supermajor invest $500 million in the Driftwood LNG project and buy up to 2.5 million tons of LNG from the facility. The duration of the contract will be at least 15 years. Driftwood is under construction at the moment and is scheduled to begin operations in 2023.

- Nigeria is looking for buyers for assets in Nigeria that can fetch as much as $3 billion. The company will use the money to fund its domestic shale oil operations as well as its Guyana project where it has been making discovery after discovery. The supermajor has no plans to completely exit the West African oil producer, however.

- Chevron and Australian Woodside have applied for approval for a capacity expansion for their proposed Kitimat LNG project in British Columbia. Initially, the companies had requested approval from the National Energy Board for a 10-million-ton facility comprising two liquefaction trains but now wants to add a third train and boost production capacity to 18 million tons annually.

Discovery & Development

- Construction has begun at Venture Global LNG’s Louisiana Calcasieu plant, which will produce some 10 million tonnes annually of LNG (approximately 1.3 billion cubic feet per day of natural gas). Venture Global LNG received its final FERC authorization, along with export authorization from the DOE, the company said Thursday.

- Florida Power & Light Company will build a 409-MW solar farm complete with a battery storage system that will be the largest in the world. The completion of the facility, called the FPL Manatee Energy Storage Center, will accelerate the retirement of two gas-fired power plants. The project is part of the modernization plan for NextEra Energy’s subsidiary. The Manatee Storage Center is scheduled to go into operation in 2021.

- Italian Eni has launched a trial for a dual-use wave turbine that can be used to turn decommissioned offshore platforms into energy generators utilizing sea waves. The company says the technology will initially be used to power the offshore oil and gas production facilities but eventually could double as power generation for the grid.

- Total has announced the start of oil production from the second FPSO at the Kaombo field off the Angolan coast. The facility has a daily capacity of 115,000 barrels and will double the current production rate at the field. Kaombo, an ultra-deepwater field, holds an estimated 658 million barrels of crude. Its development will cost some $16 billion.

Regulations/Legislation

- Colorado’s controversial bill overhauling the regulation of oil and gas in Colorado has made it a step further, with the Senate approving amendments made in the House on Wednesday. Essentially, as we have noted in the past, this bill prioritizes public health, safety and the environment in all oil and gas projects, and voting is strictly along party lines. The bill will also give local and municipal authorities power over oil and gas projects at the expense of the main state regulators.

Politics, Geopolitics & Conflict

- We have noted repeatedly in recent weeks and months that General Haftar would make a move on Tripoli soon to consolidate his hold on Libyan oil. That moment has come, with Haftar on Thursday ordering his forces to march on the capital. The biggest uncertainty here will come as Haftar’s Libyan National Army (LNA) makes its final move and whether it will be met before it reaches Tripoli by the Misrata militia, which has vowed to fight back the LNA’s advance. This is now the final and decisive moment for Libyan oil, and even Haftar’s foreign allies as calling on the General to refrain from escalating the situation. Forces are now believed to be some 100 kilometers outside of Tripoli, with some units potentially having advanced further.

- Algeria’s long-time president Abdelaziz Bouteflika has agreed to step down by the end of April, bowing to pressure from mass protests and the military kingmakers. From an investor standpoint, a phase of high-level political uncertainty now begins for the gas-rich country, and deals will continue to be put on hold. Bouteflika’s resignation isn’t placating protesters. Before he stepped down, Bouteflika formed a new caretaker government with 21 new ministers (out of 27). But it’s a reshuffle that has protestors almost as worried as they were before the president’s resignation. This is a dangerous venue to have such a massive political vacuum. It borders Libya and the Sahel, and for certain, Islamist radicals are already plotting how they can take advantage of the destabilization. Destabilization in 1988 led to massive riots and unrest and a civil war against radical Islamist forces who are still circling and looking for an in. In 2013, they attacked and took control of a natural gas facility and took its workers hostage in an incident that the oil and gas world will not likely soon forget.

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