August 2017, Vol. 244, No. 8

In The News

World News

Cepsa Celebrates 30 Years in Algeria

Madrid-based Cepsa celebrated its 30th anniversary of uninterrupted operations in Algeria at a recent event attended by Spanish and Algerian officials and representatives from Cepsa, Sonatrach and Mobadala.

Algeria has played a key role in Cepsa’s growth which began exploration and production activities there working with Sonatrach before expanding to locations worldwide. In partnership with Sonatrach, it operates in three major oilfields in the Berkine basin to produce a total of 137,279 gross bpd.  It also has a 42% stake in the MEDGAZ subsea pipeline and participates with Total and Sonatrach in the Timimoun gas field, now in final development stage.

Spanish Energy Minister Álvaro Nadal spoke of the excellent relations between the two countries and added that “the collaboration of Cepsa and Sonatrach is a clear example of team work and success.”

Total is First to Iran with $4.8 Billion Gas Deal

Total and the National Iranian Oil Company (NIOC) have signed a contract for development and production of Phase 11 of the giant South Pars gas field (SP11).  It is Iran’s first deal with a European oil company in over a decade and the first since sanctions were lifted in early 2016.

Total is operator of the 20-year project with 50.1% interest alongside Chinese National Petroleum Corporation with 30% and NIOC’s Petropars subsidiary with 19.9%.  Total Chairman and CEO Patrick Pouyanné said the project fits a strategy to expand its Middle East presence and its gas portfolio by adding “low-cost, long-plateau assets.”

SP11 will be developed over 20 years.  The first stage will cost $2 billion and include 30 wells and two wellhead platforms connected to existing onshore treatment facilities by two subsea pipelines.  The second stage, estimated at $2.8 billion, will involve construction of South Pars’ first offshore compression facilities.  SP11 will have a production capacity of 2 Bcf/d or 400,000 boe/d including condensate.

Wood Group Wins Contract for LNG project off Greece

Wood Group said it secured the front end engineering design contract with Gastrade S.A for a proposed LNG unit offshore Greece described as a new “natural gas gateway to the markets of southeastern and central Europe.” The value of the contract was not disclosed.

Wood Group’s subsea team will perform the design and engineering definition of the Alexandroupolis Independent Natural Gas System and its subsystems, which will support the final investment decision for the floating LNG receiving, storage and regasification unit. The project has support from Greece, Bulgaria and the European Union.  A final investment decision is expected by late 2017.

Hungary, Gazprom Agree Gas Supplies via Turkish Stream Pipeline

Gazprom has signed an agreement with Hungary to deliver gas via the Turkish Stream pipeline, the MTI news agency reported, citing Hungary’s Foreign Minister Peter Szijjarto. He said the Turkish Stream branch to Hungary would be completed by the end of 2019. Budapest sees Turkish Stream gas supplies as the best option because other routes, across Romania and Croatia, are at an early stage, he said.

“This will improve Hungary’s energy security a great deal, so it is in our strategic interest for this cooperation to start,” said Szijjarto.

The Turkish Stream gas pipeline will consist of two branches. The first with a maximum capacity of 15.75 Bcm, is expected to be finished in 2018 and to deliver Russian natural gas directly to Turkey. The second branch is supposed to deliver gas to European customers. Russia accounts for over 75% of oil and 60% of gas consumption in Hungary which is supplied via Ukraine.

Qatari Expansion Plan Targets Competition in LNG

News reports said Qatar’s plan to boost its liquefied natural gas output by 30% is the opening shot in a price war for customers in Asia pitting the small Gulf state against competitors from the United States, Russia and Australia. Qatar, facing regional isolation in a diplomatic dispute with its Gulf neighbors, took energy markets by surprise July 4 when it said it would raise its LNG production to 100 million tons per year — equivalent to a third of current global supplies — within the next five to seven years.

It suggests the wealthy kingdom is preparing for a lengthy battle with Saudi Arabia, Egypt, the United Arab Emirates and Bahrain, which have imposed sanctions on Qatar over accusations it was aiding terrorism. Qatar’s move will add gas to an already oversupplied market in a thinly disguised challenge to other exporters that are also raising their output. With low production costs and infrastructure already in place including LNG export terminals closer to buyers in Europe and Asia, the move means U.S. producers could struggle to sell their LNG –  and projects that still need financing could struggle to find investors.

Qatar is well-placed to come out on top, analysts said. Flooding the market with more LNG will help defend its place as the world’s top exporter, a position challenged by Australia.

“Qatar is losing market share, so it could be about becoming No. 1 again in LNG,” said Neil Beveridge, senior oil and gas analyst at research and brokerage firm Sanford C. Bernstein. The main competitors challenged by Qatar’s move are those that have yet to make a final investment decision for their project, especially in the U.S. Chong Zhi Xin, at energy consultancy Wood Mackenzie, said Qatar’s low-cost LNG expansion “is pushing a lot of new projects out of the market.”

DNV GL Boosts Research and Testing Portfolio in UK 

DNV GL has reorganized its research and testing capability in the UK adding a facility at Bishop Auckland, County Durham, UK, to the portfolio. The site, formerly known as the Flow Centre, has been positioned to complement and enhance the research and testing capability at Spadeadam in Cumbria, increasing the scope across the two sites.