LNG

US majors ExxonMobil Corp. and Chevron Corp. recorded their second-largest annual profits in 10 years as oil and natural gas production increased and Chevron shipped record LNG cargoes from Australia even amid work stoppages.

NuStar Energy, the US liquids terminal and pipelines operator with 9,500 miles of pipeline and 63 terminal and storage facilities, has been acquired by Sunoco LP, the motor fuels distributor, in an all-equity transaction valued at $7.3 billion including assumed debt.

The takeover of NuStar is the latest in US energy industry mergers over the past 12 months involving majors like ExxonMobil Corp. and Chevron Corp. as well as natural players like Chesapeake Energy.

The buyer Sunoco LP is a master limited partnership with core operations that include the distribution of fuel at 10,000 convenience stores, independent dealers and distributors located in more than 40 US states and the general partner owner is Dallas-based natural gas pipelines operator Energy Transfer LP.

Under the terms of the agreement, NuStar common unit-holders will receive 0.400 Sunoco common units for each NuStar common unit, implying a 24 percent premium as of January 19.

Refinancing

Sunoco said it had secured a $1.6 billion 364-day bridge term loan to refinance NuStar’s notes and revolving credit facilities and financing agreements

Under the terms, around $3.1Bln of Sunoco equity will be issued to NS unit-holders, though secondly a total of $2.6Bln of existing NS Senior Notes and GoZone Bonds will remain outstanding.

And thirdly, $1.6Bln of NS preferred equity and outstanding notes and borrowings will be refinanced.

“The transaction has been unanimously approved by the board of directors of both companies and is expected to close in the second quarter of 2024 upon the satisfaction of closing conditions, including approval by NuStar’s unit-holders and customary regulatory approvals,” said the statement on the transaction.

The companies said that the strategic rationale of the deal was that it increased stability by diversifying the business, adding scale and capturing the “benefits of vertical integration” that comes with the combination.

NuStar, headquartered in San Antonio, Texas, will bring complementary assets to the deal with the pipelines and terminals and growing renewables business as well as its Permian crude gathering system anchored by high-quality acreage and investment-grade customers.

Stable foundation

Sunoco’s main business makes it the largest US independent fuel distributor and with a “stable foundation” from long-term take-or-pay agreements with 7-Eleven stores, seven-to-10 fuel supply agreements, a real estate portfolio generating stable lease income as well as 42 fuel product terminals.

The previous US deal in an active year for mergers and acquisitions was Talos Energy, the US oil and gas company, acquiring operator QuarterNorth Energy in a $1.29Bln cash and stock deal announced on January 16 to boost its presence in the Gulf of Mexico.

It was the latest in a long list of US energy M&A moves that included several mega-deals.

Chesapeake Energy on January 12 announced a deal to buy smaller market rival Southwestern Energy.

Chesapeake’s transaction was for $7.4Bln in stock and to create a company that will be the nation’s largest natural gas producer.

Natural gas and oil

The combined Chesapeake-Southwestern company will also assume a new name at the closing of that transaction.

In earlier mega-deals, ExxonMobil in October 2023 announced the acquisition of Pioneer Natural Resources, the biggest oil producer in Texas, in a $60Bln all-stock deal.

In the same month, Chevron Corp. finalised an agreement to acquire Hess Corp. for $53Bln.

Occidental Petroleum then announced the acquisition of CrownRock for nearly $12Bln in December 2023 and in early January 2024 Houston-based APA, one of whose subsidiaries is Apache Corp., said it had agreed to acquire Callon Petroleum for $4.5Bln.

Talos Energy, the US oil and gas company, has acquired the operator QuarterNorth Energy in a $1.29 billion cash and stock deal to boost its presence in the Gulf of Mexico in the latest of a long list of US energy industry mergers and acquisitions that included several mega-deals.

Chesapeake Energy Corp. said it would purchase smaller market rival Southwestern Energy Co. for $7.4 billion in an all-stock transaction creating a $24Bln company that will be the nation’s largest natural gas producer.

Occidental Petroleum, the Houston-based company with US oil and gas assets and Warren Buffett as a main shareholder as well as owning oil and natural gas stakes in Algeria, Oman and the United Arab Emirates, has agreed to buy US Permian Basin-focused energy producer CrownRock in a cash and stock deal valued at $12 billion including debt.

Rosneft, the Russian oil and gas company and the largest refiner and former partner of international majors such as ExxonMobil and BP, reported a fall in profits but is still managing the Western sanctions storm better than pipeline natural gas company Gazprom and LNG project developer Novatek.

Rosneft said that in the nine months to the end of September 2023 revenues declined to 6,612 trillion roubles ($74.4 billion), down from last year 7,202 trillion roubles ($81.05Bln) during the same nine months.

Operating income dropped to 1,778 trillion roubles ($20.10 billion) from 2,014 trillion ($22.65Bln) in the same nine months of 2022.

BP had previously held a 20 percent shareholding in Rosneft but pulled out immediately following the Russian invasion of Ukraine in February 2022.

Sakhalin projects

ExxonMobil also ended its decades-long involvement in Russia, exiting major oil and gas joint ventures with Rosneft off Sakhalin Island in the Russian Far East.

Rosneft said its production of liquid hydrocarbons increased by 3.9 percent in the first nine months of 2023 to 4 million barrels per day, mainly due to resumption of production at the Sakhalin-1 oil project.

Total production of all hydrocarbons rose by 10.7 percent in the nine months to 5.5M barrels per day of oil equivalent, whereas output of hydrocarbons in the third quarter had amounted to 5.4 million barrels per day of oil equivalent.

Production of liquid hydrocarbons in the third quarter equalled 3.9M barrels per day amid Russian oil production restrictions since March 2023 to offset the effects of sanctions.

Rosneft’s natural gas production increased by 33 percent in the nine months year-on-year to 1.5M barrels of oil equivalent per day.

Natural gas and associated gas are produced by 35 subsidiaries and joint ventures of Rosneft in Western and Eastern Siberia, Central Russia, Southern European Russia and the Far East.

Refining

Over the years, Rosneft has been consistently implementing a programme to modernise its refineries, which has enabled it to expand its product range and improve the quality of its products such as gasoline, diesel and jet fuel.

The company's refining unit operates 13 major refineries in the Russian Federation and total design capacity of the company's refineries in Russia is 118.4 million tons of oil per year.

Rosneft, which has a 40 percent share of the Russian refining market, said its oil refining throughput increased by 3.3 percent in the reporting period year-on-year to 65.8M tons, and rose 0.9 percent quarter-on-quarter to 21.7M tons.

Italian oil and gas and LNG project engineering company Saipem, which has extensive global subsea and pipeline expertise, said it reached “new and important project” landmarks by contributing to the start of production of the Payara field, offshore the tiny nation of Guyana in the northeast corner of South America.

The start of production of the offshore oil field is the third project to which Saipem has contributed in the Stabroek Block

The field is operated by a consortium comprising US major ExxonMobil Corp, New York-based Hess Corp., currently being acquired by Chevron Corp., and the Chinese major China National Offshore Oil Corp.

Saipem contributed to the project development by providing engineering, procurement, construction and installation of the underwater facilities.

Saipem installed over 130 kilometres of thick rigid pipelines and risers in about 2,000 metres of water depth.

Guyana reserves

Guyana is among the leading oil and gas reserve holders in Latin America and will be a future large exporter of hydrocarbons along with Argentina, Brazil and Mexico as well as LNG producers Peru and Trinidad and Tobago.

The contract was fully released in 2020 by ExxonMobil Guyana and Saipem said its leading subsea assets such as “FDS2” and “Saipem Constellation” were deployed to carry out the project.

Furthermore, Saipem used its fabrication facility in Georgetown, Guyana, for the fabrication of 48 rigid jumpers, ensuring important local activity and jobs and enhancing sustainable investment in the country.

“Saipem has a consolidated presence in the country, having previously contributed to the development of the two phases of the Liza Project and to the start of the Yellowtail Project,” said the Milan-based company.

Guyana economic boost

The International Energy Agency noted that oil will be required for vehicle transport in the South American and Caribbean region well through 2050.

“Oil production has been rising in Brazil and Guyana, while it is in decline in Venezuela and Mexico,” said the IEA.

“Increased demand and prices for liquefied natural gas has also shone a spotlight on the important role played by LNG exporters such as Trinidad and Tobago and Peru in easing market tightness,” the Paris-based agency added.

Oil currently accounts for 86 percent of energy consumption today in the Latin American transport sector compared with 91 percent globally.

“The share of oil in road transport will decline below 80 percent by 2030 to around 40 percent by 2050,” said the IEA, forecasting that 60 percent of bus and other vehicle transport will come from the “growing use of electricity and bioenergy” vehicles.

“However, rising incomes also prompts an increase in the ownership of appliances and air conditioners, which are the main drivers of electricity consumption growth,” it added.

ExxonMobil Corp., the largest US oil company and leading LNG producer as a partner of Qatar, agreed to acquire Texas-based Pioneer Natural Resources for $59.5 billion and with an enterprise value of $64.5Bln in the largest acquisition since the historic tie-up between Exxon and Mobil in 1999.

ExxonMobil Corp., the US major and significant participant in the liquefied natural gas business, said oil, pipeline natural gas and LNG would still make up more than half of the world’s energy supply through 2050 because the usefulness of oil and gas in meeting the world’s needs remained unmatched.

Russian natural gas company Gazprom has signed up the Central Asian republic of Uzbekistan as its newest customer after the cut-off in 2022 of European pipeline gas deliveries by the Nord Stream route to Germany after the Ukraine invasion.