Mexico's Dos Bocas Refinery Continues to Face Delays

Discovery & Development

Chevron has asked the Cypriot government for an extension to complete the FEED study for its Aphrodite natural gas project in Cyprus. The two have a PSC that was agreed to in 2019. Under the terms spelled out in the PSC, the FEED study was supposed to kick off on November 7, but Chevron asked for a four-month extension for the negotiating period for modifying the offshore gasfield development and production plan, concurrent with its requested four-month extension that it requested for starting the FEED. Cyprus pushed back and proposed a two-month delay instead. The Aphrodite reservoir is thought to hold an estimated 4.5 tcf of recoverable gas. Chevron is operator with a 35% stake, with Israel-based NewMed Energy holding 30%.

A proposed Rhode Island wind farm known as Revolution Wind just received approval from the Fed Permitting Improvement Steering Council this week. Revolution Wind is run by Orsted and Eversource and is designed to provide 704MW of energy to Connecticut and Rhode Island. The second stage of the project known as Revolution Wind 2 was canceled back in March when the Rhode Island utility turned down Orsted's proposal on grounds that it would cost consumers too much.

Shell's Integrated Gas & Upstream Director said the company has an "imminent" $5B investment opportunity in the Bonga North oil project in Nigeria and that she is eager to make an investment "as soon as possible." Nigeria's oil industry has been battered for years by a series of oil thefts and pipeline sabotage, but its efforts to develop offshore-which is less susceptible to attacks-has allowed the country to make small gains. Nigeria has been making a push to attract investments into to oil industry but it has found it challenging due to the business environment.

Pemex still has yet to come up with a solid start-up date for its 340,000 bpd Dos Bocas refinery, although it said months ago that it had started production as part of a ramping-up process. The refinery was supposed to be operational and making diesel and gasoline this month. The project has seen delays and significant cost overruns of more than 100%. The original deadlines and cost projections for Dos Bocas elicited intense skepticism among industry analysts and the media. The refinery is critical to Mexico, which imports a significant amount of gasoline and diesel.

Deals, Mergers & Acquisitions

Chevron has raised its planned capex for next year to between $18.5 billion and $19.5 billion on new oil and gas projects-up from $17B this year. $5B will be spent on projects in the Permian, and $2B will be spent on projects in the GoM. To compare, Exxon plans to spend between $22B and $27B every year between 2024 and 2027. While the numbers are an increase over this year, the planned capex for next year is about half what it was in 2013. The $18.5B is separate from its planned acquisition of Hess Corp. Although Chevron raised its capex, it did not announce any change in its production forecast for oil.

Japan's Inpex sold half of its 40% stake in the Eridu oilfield in Iraq to Lukoil. The Russian company will now own 80% of the project. Earlier reports said that Lukoil's purchase from Inpex would own the whole field, but those reports were later deemed inaccurate. Eridu lies in Block 10 and is 150km from West Qurna 2, in which Lukoil holds a 75% stake. Eridu is expected to produce a high of 250,000 bpd by 2028.

The FTC asked Exxon and Pioneer for additional information on the proposed $60B tie-up so it can determine whether the deal could be anticompetitive. Democratic senators asked the FTC to investigate this deal and the deal between Chevron and Hess. Pioneer said it still expects the deal to close in June as planned.

Woodside Energy and Santos have opened talks over a merger that would create an LNG behemoth in the country. The two companies have a combined value of A$77B. The talks are in the preliminary stages.