LNG

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.

Norway, the nation that helped restore Europe’s energy security with natural gas, oil and LNG supplies after Russian links were cut following the invasion of Ukraine two years ago, has become the first country in the world to approve commercial deep-sea mining in its waters to supply rare minerals needed to make electric vehicles and other technology.

The Norwegian Parliament voted 80-20 on January 9 to approve a cross-party proposal that could revolutionise the global supply of minerals, which are pivotal for an array of clean technologies, including batteries for electric vehicles.

Under the new legislation Norway is opening up 280,000 square kilometres (108,000 square miles) of the Norwegian Continental Shelf, an area equivalent to the size of the UK, for the granting of exploration licences for minerals and chemical elements such as lithium, cobalt and scandium.

Norway’s approval of deep-sea mining in its own waters will add momentum to moves to open up some international waters for extracting rare minerals.

Mineral sources

Lithium and cobalt are only found below ground in a small number of countries, including onshore the Republic of Congo in West Africa, which will also soon become an LNG exporter with an offshore natural gas project being developed by Italian major Eni.

Norway itself has impeccable environmental and conservation profile as a nation and easily stepped in to increase its natural gas supplies to Europe when Russian deliveries were cut after the invasion of Ukraine in February 2022.

The Norwegians are also Europe’s largest producers of hydro-electric power and more than 95 percent of their electricity and 50 percent of all the country’s power comes from renewables, including wind.

The Norwegians also run the Hammerfest LNG export plant on Melkoya Island in northern Norway supplying nations such as France, the Netherlands, Italy, the UK, Spain and Lithuania with cargoes.

Failure of ideas

The Norwegian move on deep-sea mining was, of course, condemned by the environmental groups, run by the elites and who have forced governments to get petrol-driven cars off the road and replace them with electric vehicles without themselves coming up with any worthwhile suggestions except for sowing chaos and energy poverty.

Analysts say that estimates for the rare minerals industry’s new potential range from hundreds of millions to trillions of dollars.

They add that pressure from opponents mean detailed environmental studies will have to be carried out before any mining can take place, potentially delaying extraction until the 2030s.

None of Norway’s 17 protected marine areas are included in the Norwegian zones proposed for mining and the Government in Oslo has insisted that every commercial licence will have to be approved by its parliament, the Storting.

The first steps for commercial mining companies will be to undertake exploration and mapping activities to increase knowledge of what is below ground in the NCS.

The world’s largest sovereign wealth fund belonging to Norway, the main pipeline natural gas supplier to the European Union and an LNG producer, reported a loss of almost $34 billion in the third quarter as all asset classes fell in value.

Production companies seeking efficient and cost-effective methods of increasing their output are forecast to increase spending by almost 20 percent in 2023 to total $58 billion for additional oil and natural gas resources to satisfy global demand for energy such as LNG and pipeline gas and for necessary activities like petroleum refining and chemicals production to make products such as pharmaceuticals.

July 3 (LNGJ) - Equinor, the owner of the recently re-opened Hammerfest LNG export plant after a September 2020 fire, reported a second fire on July 3 at its Mongstad refinery in Norway. “The incident was reported today at 5:46 am local time to Equinor’s emergency response organisation. The plant has been evacuated apart from critical personnel handling operations and emergency response. No personnel injuries are reported,” stated Equinor.

“Public rescue services and authorities have been notified and Equinor's emergency response organisation has been mobilised. A controlled burning of trapped volumes through pressure relief is being conducted, with continuous cooling of the surrounding equipment,” the company added. Mongstad is located in western Norway and is Equinor's largest refinery.

Norway, an exporter of LNG and pipeline natural gas as well as oil cargoes, is a frugal country when it comes to its own natural gas demand with annual needs of just 6.3 billion cubic metres.

The Norwegian Ministry of Petroleum and Energy has issued details of the 2022 oil and natural gas exploration and production licence round for allocations in predefined areas (APA) on the Norwegian Continental Shelf and with the application deadline set for Monday 12th of September 2022.

Norwegian energy major Equinor has awarded Transocean Spitsbergen a firm drilling programme on behalf of licence holders consisting of nine wells and options for another two as Europe awaits further natural gas output from Norway’s pipelines.

Norway, the LNG producer and a main supplier of natural gas and petroleum in Western Europe, praised the progress of its Northern Lights carbon-capture joint venture, one of the largest in the world to capture and store carbon dioxide, the main greenhouse gas.

Norwegian Minister of Petroleum and Energy Marte Mjøs Persen has just made a speech on the progress of the Northern Lights CCS project.

“Despite living in the grasp of the pandemic, I consider climate change and the energy transition as the challenges of our lifetime,” she stated.

“Last month, I had the pleasure to visit the Northern Lights facility at Øygarden,” explained the Minister.

The Northern Lights joint venture is the storage part of an even larger project called Longship.

Northern Lights will receive captured CO2 transported on ships to the Øygarden municipality on the Western Coast of Norway.

NCS site

The CO2 will then be temporarily stored at Øygarden before being sent through a pipeline to the storage site on the Norwegian Continental Shelf.

At the storage site CO2 will be pumped down to a sealed reservoir for permanent storage 2,600 metres below the seabed.

“What I already knew, and which certainly became even clearer there, is that CCS is a crucial part of the solution to the climate challenge,” said Mjøs Persen.

“And, that Norway can offer an open access storage solution that is built on the knowledge and experience we have developed on the Norwegian Continental Shelf,” she stated.

The Minister added that CCS can also make an important contribution to the development of new and green industries, such as carbon neutral cement production and hydrogen.

“The government is committed to following up the Longship-project and invest in CCS to cut emissions and create jobs and to develop a robust value-chain for CCS and the storage in the North Sea,” she declared.

“However, as we all know, if CCS is to become an efficient instrument in reducing emissions, the Norwegian CCS project must be a catalyst for other European projects and for international technology development,” said Mjøs Persen

The Norwegian CO2 reservoir site is located in the northern part of the North Sea, southwest of the Troll oil and gas field, one of the largest on the NCS.

The estimated total investment under the development plan is close to 6 billion Norwegian crowns ($780 million) and annual operating costs will be around 370M crowns ($44M).

The approved plan has the capacity to store 1.5 million tonnes of CO2 annually and has a planned operational period of 25 years.

Northern Lights will be built and operated by the Northern Lights joint venture, comprising energy companies Equinor of Norway, and the Norwegian subsidiaries of Shell and France’s TotalEnergies.

TechnipFMC is continuing its development of challenging hydrocarbon fields as a subsea operator around the world after the spin-off of the TechnipFMC LNG engineering division, now operating as a separate company, TechnipEnergies.