LNG

ExxonMobil Corp. and its partners in the huge oil and gas discoveries offshore the tiny nation of Guyana in the northeast corner of South America are moving forward on an LNG export project.

May 6 (LNGJ) - Seatrium of Singapore has secured a floating production, storage and offloading (FPSO) topsides integration contract from a long-standing customer, Offshore Frontier Solutions, a subsidiary of Japan’s Modec Group. The scope of work covers the installation and integration of topside modules onboard the “FPSO Errea Wittu” and includes completion and commissioning support for Modec.

   The Singaporean company said the “FPSO Errea Wittu” would be deployed in the Uaru Field in the Stabroek Block located 200 kilometres (124 miles) offshore Guyana. The field is 45-percent owned by ExxonMobil Corp., 30 percent by Hess of the US and 25 percent by China’s CNOOC Petroleum. The FPSO is expected to have a production capacity of 250,000 barrels of oil per day, water injection capacity of 350,000 barrels of water per day and 540 million cubic feet per day of natural gas production and with a storage capacity of two million barrels of oil.

April 16 (LNGJ) - TechnipFMC, the US oil and gas services company, has been awarded a large contract by ExxonMobil Corp. to supply subsea production systems for the Whiptail project in the Stabroek Block of the South American nation of Guyana. TechnipFMC said it would provide project management, engineering and manufacturing to deliver 48 subsea trees and associated tooling, as well as 12 manifolds and associated controls and tie-in equipment.

   “ExxonMobil Guyana will utilize our Subsea 2.0 systems and manifolds, which help provide schedule certainty,” said Jonathan Landes, President of Subsea at TechnipFMC. “We have already delivered more than 100 subsea trees for ExxonMobil Guyana - the location of one of the world’s fastest developing basins - and we look forward to deepening our relationship with them through Whiptail,” Landes added. TechnipFMC stated that it currently employs around 140 Guyanese and expects to continue to hire and train additional local staff in support of this contract.

ExxonMobil Corp., the largest US oil company and leading LNG producer and a partner of Qatar in many global projects, will have its first-quarter 2024 earnings impacted by price shifts while also completing the sale of its stake in the Adriatic LNG import terminal offshore Italy and pursuing the huge takeover of Pioneer Natural Resources in the US.

ExxonMobil estimated that large decreases in oil, gas and fuel prices would deliver a first-quarter operating profit of between $6.65 billion and $11.6Bln for the first three months of the year compared with $7.63Bln in the fourth quarter of 2023.

ExxonMobil filed its first-quarter earnings indicator with the US Securities and Exchange Commission.

The ExxonMobil earnings total would be well below the prior-year first quarter when natural gas prices were much higher.

Weaker prices

Overall weaker oil and gas prices alone were expected to reduce ExxonMobil’s profits by about $600 million compared with the fourth quarter of 2023.

The company also said fuel derivatives adversely affected gains in gasoline and diesel margins, costing it about $1.1Bln compared with the fourth quarter.

Refining maintenance costs also increased during the fourth-quarter and the first quarter of the 2024.

“To give perspective regarding market and planned factors affecting 1Q 2024 results, we are providing the summary of items management believes will impact 1Q 2024 results relative to 4Q 2023 results,” said the company.

“These factors are generally limited to significant planned activities, market dynamics and seasonal demand patterns,” the filing explained.

“This is only intended to provide information regarding current estimates of these factors,” said the filing.

“It is not comprehensive of all changes between 4Q 2023 and 1Q 2024 results and is not an estimate of 1Q 2024 earnings for the Corporation,” ExxonMobil stated.

Adriatic LNG sale

Dutch energy storage group VTTI has also acquired the 70 percent stake previously held by ExxonMobil in Italy's biggest LNG terminal, the gravity-based structure facility Adriatic LNG, and the balance of 30 percent is now owned by Italian gas grid and terminals operator SNAM.

ExxonMobil had stated in March 2023 that it was considering selling its stake of just over 70 percent in Adriatic LNG as a non-core asset.

The Adriatic terminal is located 15 kilometres (9.3 miles) off the Veneto coastline of Italy and has been on line since 2009.

It includes two LNG storage tanks, each with a capacity of 125,000 cubic metres.

The operating company is called Terminale GNL Adriatico. ExxonMobil had held its majority stake while a QatarEnergy unit, Qatar Terminal Company, owned 22 percent and SNAM had held 7.3 percent.

ExxonMobil is also pursuing the all-stock deal to acquire Texas-based Pioneer Natural Resources for $59.5Bln.

The combination gives ExxonMobil a stronger position in the Permian Basin in Western Texas and New Mexico.

ExxonMobil is expected to report first-quarter earnings on April 26.

ExxonMobil Corp. has filed for arbitration to retain pre-emption rights in a world-class oil field offshore Guyana in the northeast tip of South America, threatening Chevron Corp.’s agreed $53 billion acquisition of New York-based oil and gas company Hess Corp.

Suriname, once known as Dutch Guiana and a former colony of the Netherlands until 1975, has announced plans to be a liquefied natural gas producing nation using an FLNG production hull.

Hess Corp., the New York-based oil and gas company being acquired by Chevron Corp. in a transaction agreed in October and valued at $53 billion, is trying to re-assure Chevron that one of its main assets in Guyana was safe from any pre-emption purchase offer from the other shareholders in the block.

Chevron Corp., the US major oil and gas company with LNG operations in Australia and Africa, has received a vote of confidence from US investor Warren Buffett whose Berkshire Hathaway has taken its stake to almost 7 percent.

Buffett’s Berkshire Hathaway has increased its stake in San Ramon, California-based Chevron by over 15.84 million shares.

This transaction has brought Berkshire Hathaway's total share count in Chevron to 126.09M shares, representing about 5.96 percent of Buffett’s investment portfolio and 6.81 percent of Chevron's outstanding shares.

Lower price

According to Berkshire Hathaway data, the Chevron shares were acquired at an average price of $149.16 each and were valued at $18.80 billion.

Buffett is a celebrity figure among America’s small retail investors and is known to his fans as “The Oracle of Omaha”.

Buffett’s other main energy investment is in Houston, Texas-based Occidental Petroleum which forms 4.19 percent of the Berkshire Hathaway portfolio. The Buffett firm also has a huge 50 percent represented by shares in Apple Inc.

Chevron’s shares have recently risen to $154.63 per share, backed by positive earnings and the company’s acquisition agreement signed in October 2023 with US oil and gas company Hess Corp.

The value of the Buffett stake has already risen and at current prices on February 19, 2024, is now worth just short of $20Bln at $19.49Bln.

Chevron recently reported annual net profits of $21.41Bln, down from $35.60Bln in the previous year, though apart from 2022 the Chevron performance was the strongest since 2013.

LNG projects advance

Chevron listed among its highlights as achieving first natural gas production from the Gorgon Stage 2 development in Western Australia where its operates both the Gorgon LNG and Wheatstone LNG export plants.

Chevron also reached a final investment decision with partners to construct a third gathering pipeline that is expected to increase natural gas production capacity at the Leviathan gas field and a future LNG hub in the East Mediterranean offshore Israel.

The company additionally expanded the Bayou Bend carbon-capture and sequestration project on the US Gulf Coast through an acquisition of nearly 100,000 acres.

However, Chevron assets in the Permian Basin in Texas and New Mexico also helped to underpin the earnings.

Chevron posted an increase in its Permian production by 10 percent in 2023 with US quarterly output coming to 1.16 million barrels per day compared with 895,000 barrels per day, helped by the 2023 acquisition of US independent oil and gas company PDC Energy.

Chevron is also paying $53Bln for New York-based Hess, giving it access to major oil discoveries in the South American nation of Guyana as well as more US shale assets in the Bakken Shale Basin of North Dakota.

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.

Chevron Corp. has agreed to acquire US energy company Hess Corp in an all-stock transaction valued at $53 billion and is the second huge American merger and acquisitions deal in October 2023 after ExxonMobil’s agreement to acquire Texas-based Pioneer Natural Resources for $59.5Bln with both takeovers having a focus on US shale oil and gas assets.