November 2016, Vol. 243, No. 11

In The News

World News

Petrobras to Sell 90% of Gas Pipeline Unit to Brookfield-Led Consortium

Brazilian state-run oil company Petrobras will sell a 90% stake of its natural-gas pipeline unit to a consortium led by Brookfield Asset Management Inc. for $5.2 billion as part of its debt-reduction plan. Petrobras will keep a 10% stake in the unit, Nova Transportadora do Sudeste SA, or NTS. Canada-based Brookfield said the consortium also includes CIC Capital Corporation, GIC Private Limited and others.

NTS is a 2,048-km (1,273-mile) pipeline system that transports natural gas in Brazil’s most industrialized and populated states in the south-central region of the country. Most of its assets were installed in the last 10 years and connect the Brazilian states of Rio de Janeiro, São Paulo and Minas Gerais with natural gas coming from Bolivia and Brazil’s offshore oil and gas fields.

“This is a unique opportunity to invest in a large-scale, high-quality utility business and participate over time in Brazil’s growing gas industry,” Brookfield Infrastructure BIP Chief Executive Sam Pollock said. Brookfield Infrastructure is the publicly listed infrastructure company of Brookfield Asset Management.

Petrobras is planning to sell about $15.1 billion in assets through the end of the year. So far, including the sale of NTS unit, Petrobras has already sold around $9.8 billion.

24 Crude, Natural Gas Projects Planned In FSU by 2025

A total of 24 key crude and natural gas projects are expected to start operations in the Former Soviet Union (FSU) region by 2025, with Russia and Kazakhstan driving production, said research and consulting firm GlobalData.

The company’s report said Rosneft Oil Co. will lead the way with nine, of which eight will be conventional crude projects. Key planned projects in the region are expected to contribute 2.1 MMbpd to global crude production in 2025 and 10.4 Bcf/d to global gas production.

Russia accounts for most of the planned oil and gas production in the FSU, with Gazprom contributing the highest production levels in the region by 2025.  GlobalData’s latest estimates suggest the company’s key planned assets could contribute 1.7 MMboe/d of production in 2025, followed by Rosneft Oil Co. and Lukoil Oil Co. with 693.5 Mboe/d and 224.2 Mboe/d, respectively.

“Over the past two years of low crude prices, Russian production continued growing to new records aided by ruble devaluation, which reduced dollar-denominated costs, the progressive taxation system, and fiscal incentives available to select new fields. These production drivers will remain relevant in the near term, contributing to stable production until 2020,” said Anna Belova, GlobalData’s senior analyst covering oil and gas.

In terms of capital expenditures, GlobalData said Russia will lead the region with $31.7 billion during the 2016-2025 period, of which $6 billion will be spent on the Kovyktinskoye project.

She concluded, “Conventional onshore production will remain the main source of Russian crude and gas over the forecast period, with smaller contributions made by shelf projects in the Caspian, Pechora, and Okhotsk seas.” 

Beijing Gas to Spend Big on Pipeline, Storage Construction  

Beijing Gas Group plans to spend up to $1.2 billion a year over 2017 and 2018 to build pipelines and storage to meet a surge in demand in the capital and beyond by the end of the decade.

Reuters reported that Beijing Gas, which distributes 16 Bcm of natural gas annually to Beijing’s 23 million people, awarded its first tender to purchase LNG to France’s Engie last month. Beijing’s gas consumption is set to reach 20 Bcm a year by 2020, up 44% from 2015, with new demand from rural areas.

Beijing Gas is looking at potential equity investments in gas distribution in Indonesia, as well as partnership with smaller city gas distributors in China. The parent firm, Beijing Enterprises Group, is finalizing a deal to acquire a 20% stake from a unit of Russian oil giant Rosneft, which will help Beijing Gas branch into oil and gas exploration.

As China prepares to free up the state-dominated gas market, Beijing Gas is looking to build its own LNG-receiving terminal with facilities able to store 500-600 MMcm of gas to cover any emergency shortage. The firm owns a small share in a PetroChina-controlled terminal in Tangshang, near Beijing.

TAP Starts Pipeline Construction in Albania

The Trans Adriatic Pipeline (TAP) AG has begun ipeline construction in Albania. The occasion was marked by an inauguration ceremony near the town of Fier, attended by the Albania Prime Minister Edi Rama, Minister of Energy and Industry Damian Gjiknuri, and TAP Managing Director Ian Bradshaw.

Rama and Gjiknuri emphasized the importance of the project to Albania. As one of the largest foreign investments in the country, TAP will improve the energy sector and help encourage other foreign investments, they said.

Once completed, TAP will transport natural gas from the giant Shah Deniz II field in Azerbaijan to Europe. The 878-km pipeline will connect with the Trans Anatolian Pipeline (TANAP) at the Turkish-Greek border at Kipoi, cross Greece and Albania and the Adriatic Sea, before coming ashore in Southern Italy.

TAP’s routing can supply gas to several southeastern European countries, including Bulgaria, Albania, and Bosnia and Herzegovina. TAP’s landfall in Italy provides multiple opportunities for further transport of Caspian natural gas to some of the largest European markets such as Germany, France, the United Kingdom, Switzerland and Austria.

TAP will promote economic development and job creation along the route; it will be a major source of foreign direct investment and it is not dependent on grants or subsidies. With first gas sales to Georgia and Turkey targeted for late 2018, first deliveries to Europe will follow in early 2020.

Pipeline May Help Ghana Gain Energy Sufficiency

In an interview in the Daily Graphic, Dr. George Adjah Sipah-Yankey, CEO of Ghana National Gas Company Ltd., said Ghana plans to enter into an agreement leading to the African nation becoming gas sufficient by 2018.

The Ministry of Petroleum mandated Ghana Gas to build the pipeline from Aboadze in the western region to Tema in the Greater Accra Region. The route of the 24-inch, 290-km pipeline passes through four regions – Western, Central, Eastern and Greater Accra. It is expected to handle a maximum capacity of 380 MMscf/d in phase one and up to a maximum capacity of 550 MMscf/d in its second phase.

As proposed, the $500 million pipeline would be fed with gas from the Jubilee, TEN and ENI projects in the offshore western region. First gas from the project is expected in early 2018 to minimize the occasional gas curtailment to power plants in Tema and Takoradi. Construction is expected within the next six months with completion coming within 24 months.

Saudi Aramco Awards Contract for Pipeline Network  

Saudi KAD was selected as Saudi Aramco’s contractor for executing several pipeline projects related to the Master Gas Program Phase II and the Fadhili Gas Program. When completed in 2018, the Master Gas System capacity will increase to 12.5 Bcf/d.

The scope of these projects will entail the engineering, procurement, construction and commissioning of a pipeline network totaling 1,118 km in length and expand Saudi Aramco’s gas sales throughout Saudi Arabia. The pipeline sizes will vary, reaching 56 inches.