LNG

China National Offshore Oil Corp. (CNOOC), the Chinese energy major with international and domestic LNG interests, has signed independent exploration and production agreement with the southeast African nation of Mozambique near where another Chinese major holds LNG project stakes.

Italian energy company Eni has reached an agreement on the combination of substantially all of its upstream assets in the UK with Ithaca Energy to significantly strengthen its presence on the Continental Shelf of the UK, a significant LNG importer.

Eni is one of the most dynamic oil and gas exploration and production companies that has brought transformational energy resources through gas discoveries and development of existing fields offshore nation like Mozambique and Egypt and in others in Asia.

Under the terms of the business combination agreement Eni and Ithaca will combine the Eni UK Business with the existing Ithaca business.

The combination is being funded through the issue to Eni UK of a number of new ordinary shares that represents 38.5 percent of the enlarged issued share capital of Ithaca.

The economic effective date for the combination will be 30 June 2024, with completion expected in the third quarter.

Ithaca is one of the largest independent oil and gas companies on the UKCS, with a substantial resource base and playing a key role in energy supply security in the region, with stakes in six of the 10 largest fields and the top two largest development fields on the UKCS.

Stronger group

“The combination will immediately create an enlarged and stronger group with 2024 production greater than 100,000 barrels of oil equivalent per day and the underlying potential to organically grow to 150,000 boepd by the early 2030s,” said Eni.

“The combination is aimed at replicating the previous successful execution of upstream combinations that Eni has formed using its distinctive Satellite Model including Vår Energi in Norway and Azule Energy in Angola,” the Milan-based company explained.

“The Satellite Model is a strategic response to the challenges and opportunities of energy markets, creating focused and lean companies able to attract new capital to create value through operating and financial synergies and the acceleration of growth,” said Eni.

With this approach Eni said it would thereby strengthen its commitment to the UK after its previous acquisition Neptune Energy.

Eni concluded an agreed acquisition for $4.9 billion of UK-based Neptune in June 2023, gaining key global LNG stakes and gas field assets in Algeria, Indonesia, Norway, the UK, the Netherlands and Australia.

Under the terms of the takeover, Eni purchased Neptune for $2.6Bln and Eni’s Norwegian-listed subsidiary Vår Energi agreed to pay $2.3Bln to acquire Neptune’s operations in Norway.

Changing market

“This agreement represents a further example of Eni adapting to the demands of the changing energy market and in this case deploying our successful Satellite Model,” said Eni Chief Executive Claudio Descalzi.

“It affords the opportunity to build scale, realising efficient upstream growth and maximising value under a dedicated and focused management structure supported by Eni resources and expertise,” Descalzi added.

“We have moved quickly after the acquisition by Eni of Neptune Energy to transform our competitive position in the UK and we see the opportunity for Eni and Ithaca to realise material long-term value in helping to address the key challenges of security, affordability and sustainability of energy supply,” the CEO stated.

Somalia is attempting to return to the international fold after decades of being known mostly for piracy, terrorism and violent militia activity and said in a statement just issued that it was advancing with plans for offshore oil and natural gas exploration with a little-known US company based in Houston, Texas.

Eni, the Italian major developing Mozambique LNG and with stakes in liquefaction plants in Angola and Nigeria, said the Mozambican Coral South floating LNG project would start up in the second half of 2022.

Eni made the point on Coral South FLNG as it reported upstream adjusted gross earnings in the first nine months of €5.7 billion ($6.6Bln).

On Coral South FLNG, Eni added that there would be 3.4 million tonnes per annum and the LNG would be entering the market at the right time.

Eni also gave a limited update on plans for the Area 4 natural gas resources in the Rovuma Basin of Mozambique.

“Regarding Area 4, the updated project and the new final investment decision date will be defined and based on the results of the ongoing optimization phase,” said Eni.

“We will also take into account the evolution of the security situation in the northern part of Cabo Delgado Province in Mozambique,” it added.

This was a reference to violence in the area from insurgents that shut-down the TotalEnergies-led onshore LNG project for Mozambique’s Area 1 Rovuma Basin natural gas resources.

The third-quarter results for Milan-based Eni amounted to €2.4Bln ($2.8Bln), which was above the pre-Covid levels even as production was still ramping up after the maintenance season.

Project ramp-ups

Eni said the ramp-ups in Indonesia, Sharjah in the United Arab Emirates and in Angola more than offset the negative effects of US Hurricane Ida.

The company said its cash flow from operations before working capital for the nine months was strong at €8.1Bln, more than covering capital expenditure of €4Bln in the same period.

For all of 2021, Eni expects cash flow from operations before working capital to be close to €12Bln, based on a Brent crude oil price of around $70 a barrel.

Eni expects overall production to further recover in the fourth quarter at 1.76 million barrels per day.

Eni also explained the positive prospects for a discovery made in September 2021 offshore the Ivory Coast in West Africa.

“The first well discovered light oil and associated gas in a new play concept in the deep water Baleine Prospect, with preliminary estimate of more than 2 billion barrels of oil equivalent,” said Eni.

The company explained that the Baleine project would be designed to target fast-track development to meet the West African nation’s domestic natural gas need in an environmentally-friendly manner.

Eni said it had additionally signed an agreement with Russia’s Gazprom to revise the terms of existing long-term pipeline gas supply contracts in Europe.

“This is in the light of the current and future market evolution, including the settlement of the ongoing disputes between the parties,” explained Eni.

“The agreement underlines the importance of the role played by gas in the decarbonization process and sustainability strategies,” it added.

African Energy Week 2021 is scheduled to take place in Cape Town from November 9-12 and will unite African Energy Ministers, oil and gas executives as well as national and international companies for four days of discussions and presentations.

The four-day event is taking place at the V&A Waterfront in the South African coastal city.

As the premier oil and gas event and the first sub-Saharan energy conference to take place on the continent in 2021, AEW 2021 is expected to provide the most suitable platform for a collaborative discussion on Africa’s energy future.

The theme of the Cape Town conference is “Making Energy Poverty History by 2030” and it will be hosted by South African Minister of Mineral Resources and Energy Gwede Mantashe, who will be one of the key speakers.

“AEW is a major exhibition and networking event of the African Energy Chamber (AEC) that seeks to unite African energy stakeholders and drive industry growth and development,” said the AEC.

“The event promotes Africa and its energy future with a four-day, high-level conference comprising networking sessions, innovative exhibitions, one-on-one private meetings and much more,” added the AEC.

Attendees

African ministers likely to attend AEW include those from leading LNG producers and countries with LNG projects, including Chief Timipre Sylva, Nigeria’s Minister of State for Petroleum, Diamantino Azevedo, Angola’s Minister of Mineral Resources and Petroleum, Gabriel Obiang Lima, Equatorial Guinea’s Minister of Mines and Hydrocarbons and Aissattu Sophie Gladima, the Minister of Petroleum and Energy for Senegal.

Other ministers in the line-up include Jaden Ali Obaid from Sudan, Alhaji Sesay of Sierra Leone, Ruth Nankabirwa from Uganda, Bruno Jean Richard Itoua, Minister of Hydrocarbons for the Republic of Congo, and Tom Alweendo, Minister of Mines and Energy for Namibia.

After attending AEW 2021 in Cape Town, the ministers will likely head for the Abu Dhabi National Oil Co. hosted ADIPEC forum in the United Arab Emirates, taking place from November 15-18.

ADIPEC will provide another platform for the discussion of Africa’s energy landscape, with a dedicated “Focus on Africa” session, led by African energy ministers and offering up key insight into Africa’s post-Covid-19 pandemic energy outlook.

“The UAE and Africa have a long history of successful relations across the entire energy sector value chain,” said Equatorial Guinea’s Gabriel Obiang.

“Through the Organization of Petroleum Exporting Countries, as well as with regard to the African energy transition, the UAE has emerged as a valuable partner for the continent, working closely with African countries to help develop both their economies and energy sectors,” stated the Minister. 

While Corporate America caves-in to woke extremism on most issues and now even kowtows with Big Tech to China, leading Australian and European energy and LNG companies have drawn a line in the sand by defeating environmental extremists demanding a timetable for giving up oil and gas.

One of the world’s main liquefied natural gas projects, Mozambique LNG, is threatened with a long-term delay because of growing terrorist attacks by Islamist groups that have led to urgent travel warnings by nations like the US and the UK and with France now stating that a large-scale “humanitarian crisis” could develop.