December 2016, Vol. 243, No. 12

In The News

World News

Offshore Production Accounts for 30% of Global Crude Output

A report from the U.S. Energy Information Administration showed global offshore oil production in 2015 was at the highest level since 2010, accounting for nearly 30% of total global crude oil production. Offshore production rose in both 2014 and 2015, reversing consecutive annual declines from 2010-13. Production from onshore tight oil plays has risen faster over the past several years and accounts for an increasing amount of total oil production.

The report said over 27 MMbbls of oil were produced offshore in 2015 in over 50 countries and global crude oil production is expected to remain high in 2016 with many oil-producing nations continuing to increase production.

A significant amount of global offshore production is concentrated in the following five countries:

Saudi Arabia – The world’s largest offshore producer has several large offshore oil fields including the Safaniya oil field, which produces between 1.1 and 1.5 MMbpd and is the highest-producing offshore field in the world. Saudi Arabia is responsible for 13% of the world’s total offshore production.

Brazil – Offshore production grew by 58% between 2005 and 2015, making Brazil the second-largest offshore producer in 2015. This growth was driven by expansion of deepwater pre-salt projects and should support small production increases in 2016 and 2017.

Mexico – The third-largest offshore producer has seen increasingly smaller yields from offshore assets, with production falling by 31% from 2005-15. Mexicostill produced nearly 2 MMbopd in 2015, accounting for 7% of global offshore production.

Norway – Although Norway’s offshore production declined 28% from 2005-10, it has remained steady since 2010, with 7% of global offshore production originating from Norwegian fields. Norwegian output is forecast to rise slightly in 2016 and to fall slightly in 2017.

United States – Recent strong production in the Gulf of Mexico increased offshore production in this region. From 2005-15, total offshore production grew by 6.5%. With several large projects coming online in 2016 and 2017, the Gulf of Mexico is expected to see production climb by about 0.1 MMbpd in 2016 and by an additional 0.2 MMbpd in 2017. By contrast, U.S. onshore production is expected to fall by 0.8 MMbpd in 2016 and by an additional 0.3 MMbpd in 2017.

The report indicated most offshore production is in shallow waters, which are cheaper and less technically challenging, but there has also been a move toward deepwater projects. Technological advances and the exhaustion of shallower prospects have led companies to explore increasingly deeper waters, particularly in Brazil and in the Gulf of Mexico.

Majors, State-Owned Oil Companies Talk ‘Market Changes’

Irina Slav of reported last month the CEOs of BP, ExxonMobil and Total, and the heads of four Middle Eastern state oil companies met in Abu Dhabi to discuss changes in how they do business. The meeting, attended by the heads of Aramco, Kuwait Petroleum, UAE’s Adnoc and Qatar Petroleum, took place behind closed doors, but the topic of conversation likely dealt with the changes that state oil companies in the world’s biggest oil producing region have undergone.

According to meeting moderator Dan Yergin, the parties realize they now operate in a much different market environment, indicating that changes are in order as to how the supermajors and state oil companies do business together. Traditionally, the relationships between International oil giants and national oil companies have not been the smoothest. The latter have, over the last decade, transformed into much more professional entities, apparently prompting a reconsideration of what the supermajors have seen as traditional.

However, both the national oil companies of the Middle East and the international majors have been hit hard by the oil price slump, and now both groups need each other’s help to weather the effects of the crisis.

According to Yergin, supermajors and state-owned companies discussed the former’s need for long-term investments and the latter’s need for new job creation to stimulate local economies. No details were given as to whether they agreed on specific moves, but a revisiting of their usual contracts would likely lead to changes, which are supposed to be mutually beneficial.

The state-owned companies have taken the upper hand in terms of value and performance over international majors, thanks to government financial support and favorable tax regimes in many cases. Supermajors, on the other hand, are growing increasingly aware of new market realities. They even pledged a fund of $1 billion to help tackle climate change. Although the amount is tiny compared to government pledges, it does signal a change in these companies’ perspective.

JGC Awarded Gas Pipeline/Storage Contract in Bahrain

GC Corporation’s affiliated company, JGC Gulf International Co., has been awarded a contract for the gas pipeline/gas storage tank construction project in Awali, Bahrain by the Bahrain National Gas Expansion Co. (BNGEC).

The project calls for construction of feed and transfer pipelines and product gas storage tanks under a contract signed by the two companies. The produced oil component gases (LPG and naphtha) shipped from the storage facilities will be exported from Bahrain. The project is scheduled for completion in 2018.

Russia’s CPC Operations Control Center Resumes Operations

A ceremony took place Oct. 31 at the Marine Terminal of Caspian Pipeline Consortium in Yuzhnaya Ozereevka after completion of the reconstruction of the Operations Control Center (OCC) of CPC crude pipeline system. The 1,511-km CPC pipeline connects oil fields in western Kazakhstan with the Marine Terminal near Novorossiysk.

The expansion includes rehabilitation of five pump stations and construction of 10 more (two in Kazakhstan and eight in the Russian Federation), six new storage tanks (100,000 cubic meters each) in addition to the existing four near Novorossiysk and a third SPM at the CPC Marine Terminal.

Pipeline Planned to Ship Oil to Ports in Georgia and Turkey

Azerbaijan and Kazakhstan plan to build the 739-km Eskene-Kuryk-Baku pipeline to export oil to ports in Georgia and Turkey. According to Azernews, the initial capacity of the pipeline will be 23-25 mtpa, with the possibility of future expansion to 56 mtpa. The feasibility study of the Eskene-Kuryk section of the pipeline foresees construction of an oil pumping station at the Tengiz field, the Tengiz-Oporny-Uzen-Aktau main oil pipeline, an oil terminal and a port in Kuryk village, as well as expansion of the port in Aktau city.

GAIL Awards Contracts for Pipeline Section

India’s state-owned GAIL Ltd. took a big step toward construction of the Jagadishpur-Haldia-Bokaro-Dhamra Natural Gas Pipeline (JHBDPL) by approving orders for the 345-km section from Phulpur to Dobhi (under phase-IB/Two section). The pipeline is targeted for completion by December 2018. Phase one will run 755 km. Once finished, the 2,539-km pipeline will connect homes in major cities and towns along the route with piped natural gas.

Gazprom Evaluates Deliverability of Gas Supply System

Gazprom said its Unified Gas Supply System (UGSS) facilities will be able to provide reliable gas supplies to the Russian regions and meet its contractual obligations to consumers abroad. Potential daily deliverability of Gazprom’s UGS system will hit a record of 801.3 MMcm.

Comprehensive preparations for the autumn/winter season at the UGSS facilities included 16 sets of preventive maintenance and repair operations, all of which were completed. Over the first nine months of 2016, the company overhauled about 660 km of gas pipelines and 262 gas distribution stations.

In the meantime, 18,100-km of pipelines passed inline inspections, while 30 and 741 submerged crossings underwent repairs and check-ups, respectively. In addition, 353 gas compressors were repaired and 53 km of process pipes at compressor stations were overhauled.


{{ error }}
{{ comment.comment.Name }} • {{ comment.timeAgo }}
{{ comment.comment.Text }}