Saudi Arabia Debating Shape of Aramco
Saudi Arabia is considering two options for the shape of Saudi Aramco when it sells shares in the national oil giant next year: a global industrial conglomerate, and a specialized international oil company, industry and banking sources said.
The listing of Aramco, expected to be the world's biggest initial public offer and raise tens of billions of dollars, is a centerpiece of the government's ambitious plan - known as Vision 2030 - to diversify the economy beyond oil.
When the plan was publicly released in June last year, it pledged to "transform Aramco from an oil-producing company into a global industrial conglomerate".
But now Saudi officials and their advisers are debating whether to make Aramco "a Korean chaebol", as one source said, referring to sprawling South Korean conglomerates, or a specialized company focused purely on oil and gas.
A specialized company might be easier to value because of its simplicity and, since the risks in its business would be clearer, achieve a higher price for its shares.
"There are two options being studied now. Either to make Aramco a pure oil and gas company, or a conglomerate and expand its role in petrochemicals and other sectors," said a Saudi industry source, declining to be identified because the debate is being conducted in private.
An Aramco spokesperson said: "Saudi Aramco does not comment on rumor or speculation."
Other than its core oil and gas production, exploration and refining businesses, Aramco - which employs more than 55,000 people - has plans to build solar and wind power facilities.
As the Saudi's biggest company and one of its most efficient, it is being pressed into service to jump-start industrial projects that are too big or daunting for the private sector. It is developing a $5 billion ship repair and building complex on the east coast, and working with General Electric on a $400 million forging and casting venture.
It has also often been tasked with executing government projects that have social goals, such as building industrial cities, stadiums and cultural centers. It was involved in creating the King Abdullah University of Science and Technology.
The plan to sell up to 5 percent of Aramco, championed by Deputy Crown Prince Mohammed bin Salman, who oversees the country's energy and economic policies, is also running into other complexities that have not yet been resolved.
Last year, Prince Mohammed said he expected the IPO would value Aramco at a minimum of $2 trillion, and that the figure might end up being higher. But this will depend partly on the tax regime which Aramco faces.
The company currently pays a 20 percent royalty and 85 percent tax to the government
Second Pipeline in Place at China's Liwan
Gas sales volumes from the Liwan field offshore China averaged 220 MMcf/d during 3Q, says partner Husky Energy, with associated liquids production of 10,600 b/d.
Installation has been completed of the second 22-in. subsea pipeline, providing additional operating flexibility and redundancy over the lifespan of the project.
Elsewhere in the Far East, construction of facilities continues for the liquids-rich BD field in the Madura Strait offshore Indonesia, with the project now around 90% complete.
Pipeline construction continues, and all four development wells have been drilled and cased to target depth. Construction of the FPSO to process the gas and liquids is nearly finished, with preparations under way for transportation to and installation at the field location.
Husky anticipates first production from the BD field to start next year.
At the shallow water MDA-MBH fields, engineering, procurement, and construction is roughly 20% complete, and tendering is nearing a conclusion for a floating production unit.
EPCO tendering has finished at the MDK field. The fields will be developed in tandem and are due to enter production during 2018-2019.
Offshore Newfoundland, Husky’s 3Q net production averaged around 24,800 b/d, reflecting a turnaround on the SeaRose FPSO.
In mid-September first oil flowed from the Hibernia formation well at North Amethyst. At South White Rose, drilling is under way of a third infill well that should begin producing around year-end.
The partners continue to assess West White Rose, focusing on increased capital efficiency and improved resource capture.
Husky and Statoil are also planning their next steps in the Flemish Pass basin, where they have discovered the Bay du Nord, Mizzen, Harpoon, Bay de Verde, and Baccalieu oilfields.
Gabon Oil Sector Braces for Change
Gabon's oil sector is likely to see more deals this year after French oil group Total agreed to sell its stake in some oil fields and infrastructure to Perenco, while Shell has been looking to dispose of onshore assets.
Shell and Total dominate the central African country's oil sector and this is expected to have a major impact as the country seeks to reverse the decline of its oil production.
Total has agreed to sell interests in its mature oil fields in Gabon to Anglo-French company Perenco, which translates to a divestment of 13,000 b/d of oil output, the company said.
The $350 million deal includes the sale of stakes and the transfer of operatorship in various mature assets in Gabon to Perenco, which is already active in the country, including the sale of the Rabi-Coucal-Cap Lopez pipeline network.
Total said the deal came about in an environment where "reducing the breakeven of our operations is a top priority" due to oil price volatility.
"This agreement demonstrates our ability to capture value through the disposal of mature assets while benefiting from the synergies generated by the transfer of operatorship," said Arnaud Breuillac, president of Total Exploration & Production.
Total is the operator of the Cap Lopez terminal, from which the key export grades of Mandji and Rabi Light are exported.
Total Gabon's equity share of operated and non-operated oil production averaged 47,400 b/d in 2016, from 47,300 b/d the previous year.
Its revenue amounted to $745 million in 2016, down 11% from 2015 mainly due to the lower average selling price for oil, partly offset by the 6% increase in volumes sold over the period due to the lifting schedule.
Shell said recently it was in talks related to the divestment of assets in Gabon, which could affect oil output in the country.
Shell's production in Gabon is around 55,000 b/d of oil equivalent. It also operates the Gamba terminal from which a further 20,000 boe/d from other producers is exported.
Production reached a peak of 365,000 b/d in 1996 but has since steadily declined, mainly due to maturing fields and also because of a lack of any significant oil projects over the past decade.
Gabonese crude attracts a fairly broad and eclectic customer base, including refiners in Australia, France, Malaysia and Trinidad & Tobago.
Added Wells Lift Petrobras’ Presalt Oil Output
Petrobras’ production in Brazil last month averaged 2.74 MMboe/d.
Oil production was 3% lower than in December, averaging 2.23 MMb/d.
This was due mainly to the scheduled stoppage of the P-40 platform at the Marlim Sul field, and to maintenance work on a production well at Parque das Baleias. Both fields are in the Campos basin.
However, the company’s presalt oil production reached a new high of 1.34 MMb/d on Jan. 4, falling back later to average 1.28 MMb/d.
The improvement was mainly due to higher output through new wells connected to FPSOs in the Santos basin, namely Cidade de Caraguatatuba (over the Lapa field); Cidade de Saquarema, Cidade de Mangaratiba, and Cidade de Itaguaí (all serving the Lula field); and Cidade de São Paulo (Sapinhoá).
There was also an improved operating performance at the P-58 platform serving Parque das Baleias.
Petrobras’ share of oil production in fields overseas rose 13% last month to 69,000 b/d, mainly as a result of operations resuming at the deepwater Agbami field off Nigeria following a scheduled stoppage in December.
Following a pair of incidents that occurred on the Arendal Spirit maintenance and safety unit, Petrobras has suspended charter payments to Teekay Offshore Partners, while it conducts an operational review.
Teekay revealed the news in its most recent financial report. The review was initiated after the second incident, which occurred in November 2016 and was related to Arendal Spirit’s dynamic positioning system.
The first event occurred in April 2016, when the UMS’ gangway, then connected to an FPSO, suffered extensive damage. The system was declared off-hire under its charter contract.
“The partnership has completed an investigation to identify the cause of the incidents and has implemented corrective measures,” Teekay said, noting that it “had been in dialogue with Petrobras to address its concerns to bring the unit back into operations as soon as possible.”
The new-build flotel, which features Sevan Marine’s cylindrical hull design, was delivered to Teekay from the Cosco Nantong yard in 2015. It began working for Petrobras under a three-year charter the same year. The DP-3 unit can accommodate 500 people and has a deck area of more than 2,000 sq m (21,528 sq ft).
Income and cash flow from vessel operations for 4Q 2016 were impacted by the suspension of these payments, which Petrobras began in early November 2016, Teekay said.