June 2015, Vol. 242, No. 6

In The News

BP Sells Equity in CATS Pipeline/Processing Facilities in North Sea

BP is selling its equity in the Central Area Transmission System (CATS) business in the UK North Sea to Antin Infrastructure Partners for $486 million. CATS can handle over 1.7 Bscf/d of natural gas and is considered one of the most significant events in UK’s natural gas industry. Operated by BP, CATS transports and processes gas for over 20 customers, including most major North Sea producers.

The CATS pipeline begins at a riser platform adjacent to the BG-operated Everest gas field in the Central North Sea and transports gas 250 miles to the CATS processing terminal in Teesside on the north east coast of England.

Gazprom and Greece PM Discuss Pipeline Plans

Gazprom Chairman Alexey Miller and Greek Prime Minister Alexis Tsipras recently met to discuss the prospects for a Russian-Greek gas pipeline. Talks covered diversifying supply routes to Europe and the role of a new gas pipeline from Russia to Turkey, which is expected to increase European energy security.

According to Gazprom, the parties agreed that a Russian-European consortium could build gas transmission facilities in Greece. Miller stressed that the EUR 2 billion project comply with European law. Ultimately, the project is expected to guarantee the transit of up to 47 Bcm from Gazprom, and that will provide Greece with external funds for other projects.

Meanwhile, the United States is pushing the Greek government to resist Russia’s plan. State Department envoy Amos Hochstein urged Greece to support a Western-backed project that would instead link Europe to natural gas supplies in Azerbaijan. Hochstein said Greece would increase its appeal to Western investors — and would help reduce the European Union’s dependence on Russian gas supplies — if it declined Gazprom’s proposal. He said Moscow’s interest “is not an economic project” but is “only about politics.”

Northwest Territories Still Hopes to Develop Mackenzie Valley Gas

The minister in charge of resource development in the Northwest Territories said he hopes the federal permit to build the long-dormant Mackenzie Valley gas pipeline will be extended. “We don’t want to see all the work that’s gone into it just disappear and have to be started all over again at some other point in time,” David Ramsay said in an interview from Houston, where he received an update on the 742-mile gas pipeline project from ExxonMobil.

ExxonMobil is the majority owner of Imperial Oil, the Calgary-based company leading the effort. When the project got its federal certificate in 2011, backers were given until the end of 2015 to start construction. But the proposed line, which would run from gas fields near the coast of the Beaufort Sea to connect with the pipeline grid at the Alberta boundary, has been put on hold indefinitely. The market has changed significantly since proponents first filed for regulatory approval a decade ago.

In April, Imperial sent a letter to the National Energy Board requesting a meeting “to seek guidance on the process required for the board to consider an extension to the date for commencement of construction.” Many in the Northwest Territories had been looking forward to the economic boost that would come from developing its gas resources. The best hope now for Mackenzie gas would be to pipe it to an LNG export terminal on the British Columbia coast, Ramsay said.

Pakistan’s First LNG Import Terminal Commissioned

Officials from Engro Corp., Excelerate Energy and Pakistan inaugurated Pakistan’s first LNG import terminal in Port Qasim on March 28. Located in a channel of the Indus River east of Karachi, the terminal is a result of a fast-track LNG import solution built to alleviate the energy shortage facing the country, and was in service 11 months from the start of construction. Utilizing Excelerate’s floating storage and regasification vessel, the Exquisite, the facility can deliver up to 690 MMcf/d of natural gas directly to Sui Southern Gas Company’s pipeline system.

Rosneft Focuses On Russian Gas As Latin American Prospects Appear Limited

Despite the recent Memorandum of Understanding (MoU) between Rosneft and Golar LNG, the former’s gas strategy is narrowly focused on developing domestic reserves and initiating LNG projects in Russia, according to an analyst with the research and consulting firm GlobalData.

While the MoU can be interpreted as the continuation of Rosneft’s expansion into the Latin American upstream sector, where it already has interests in Venezuelan heavy oil developments and Brazilian exploration blocks, the region’s natural gas opportunities may struggle to compete with low-cost prospects in Russia.

Anna Belova, GlobalData’s upstream analyst covering the Former Soviet Union, said that in the current environment of low prices and economic sanctions, it is fair to assume that a company such as Rosneft needs to prioritize existing investments.

“If there is any LNG development linked to Rosneft, it will most likely come from production in Russia. Rosneft’s ability to export LNG was signed into law in late 2013 after several years of aggressive lobbying, so it will probably seek to capitalize on this opportunity. Despite Rosneft’s ambition to become a world-class integrated oil company, the firm’s major stakeholder, the Russian government, is not in a position to finance large international projects.”

Swiber Lands Contracts Totaling US$405.6 Million

Swiber Holdings Limited has landed a total of US$405.6 million in contracts, including its latest US$333 million contract for engineering, procurement, installation and construction (EPIC) services in India.

The contract in India is the second awarded to Swiber by the same national oil company in a month. The project involves transportation and installation of submarine pipelines and engineering works and modification of existing facilities. Phase 1 is expected to be completed by the second quarter of 2016 and Phase II, the second quarter of 2017.