LNG

ARA Petroleum, part of the Zubair Corporation based in the Sultanate of Oman in the Arabian peninsula, has been granted a 25-year development licence for the Ntorya gas discovery area onshore the far south of Tanzania.

The licence was awarded to the operator of the existing Ruvuma joint venture, ARA Petroleum Tanzania Limited (APT), a wholly owned subsidiary of ARA Petroleum.

APT took over operatorship of the onshore Ruvuma JV in 2020 and now owns a 75 percent working interest.

The Ntorya gas field lies within the Tanzanian onshore Ruvuma JV licence area and is adjacent to a region containing the world-class offshore natural gas resources with the same name in the Rovuma Basin underpinning LNG projects in Mozambique waters to the south.

ARA Petroleum is based in Muscat, Oman, and has affiliated offices in London, Dar es Salaam in Tanzania and Trondheim in Norway.

Onshore resources

The award of the development licence allows ARA Petroleum’s APT unit to proceed with Tanzania’s largest onshore gas development with the goal of producing gas for the growing domestic market in the next year.

“We are delighted to receive this licence from the Ministry of Energy and thank all the Tanzanian agencies involved,” said Erhan Saygi, General Manager of APT.

“We are ready to launch work immediately to bring this onshore development project into production,” he stated.

APT explained that it had prepared a field development plan that includes, but is not limited to, converting an existing well into a producing well, building in-field gas processing facilities and contracting a rig operator to drill a third well to appraise the field further.

APT expects to produce 40 million standard cubic feet a day in the first year of production and to increase that to 140 million standard cubic feet a day within a few years, according to a gas sales agreement signed with the Tanzanian Petroleum Development Corporation (TPDC) earlier in 2024.

Such volumes would increase significantly current Tanzanian gas production.

Additionally, APT believes the potential for gas production from the field is far larger having commissioned, acquired and interpretated 338 square kilometres of 3D seismic data over the Ruvuma JV licence area.

Gas potential

Following the interpretation of the seismic data, APT said it considered the area to yield a matured unaudited Contingent Resource estimate of 3.45 trillion cubic feet of Gas Initially In Place (GIIP), with an mean unrisked GIIP potential of 16.4 Tcf and a risked mean potential of 6.9 Tcf for the wider Ruvuma JV area.

“Acknowledging this wider potential, the development licence divides the original ‘Mtwara Exploration Licence’ area into nine blocks: five blocks containing the Ntorya discovery and four blocks labelled as ‘adjoining’ blocks,” the company explained.

The Ruvuma JV parties are required to undertake geological, geophysical and geochemical studies in the area and drill at least one additional exploration well within five years while spending a minimum of $10 million.

“We are excited about further exploration and appraisal work in this area as we consider it to hold truly enormous volumes of gas,” said APT’s Saygi.

“We believe the Ntorya gas field and wider area could be game-changing for Tanzania’s efforts to alleviate energy poverty, spur further economic development and potentially transform the country into a regional energy hub,” he added.

Naturgy Group, the Spanish global utility company with LNG supplies from the US and Russia and natural gas and utility businesses in Spain and South America as well as renewables projects in Europe, the US and Australia, reported a first-half surge in revenues and net profits.

Mitsubishi Corp., the Japanese trading house with widespread LNG assets from Canada, to the US Gulf Coast to the Asia-Pacific and Russia, said it was retaining its stake for now in the Sakhalin LNG export project in the Russian Far East.

This Mitsubishi Natural Gas division’s assets and volumes are concentrated in the Asia-Pacific region, Russia, the US, Canada and Oman.

“We are working on initiatives to strengthen our existing business platform and develop new projects in traditional LNG-producing countries such as Brunei, Malaysia, Indonesia, Australia and Oman,” said the company.

Mitsubishi’s project stakes in addition to Sakhalin LNG in Russia include Sempra’s Cameron LNG in Louisiana, Shell’s LNG Canada project, Brunei LNG, Malaysia LNG, Oman LNG, Tangguh LNG in Indonesia and the Donggi Senora LNG plant, also in Indonesia.

It also has volumes from the Chevron-operated Wheatstone LNG project in Western Australia and the North West Shelf plant operated by Woodside Energy.

“Earnings were increased in the LNG-related business, despite trading losses in the LNG sales business,” said Mitsubishi in its fiscal first-half earnings statement.

Price benefits

Like global energy companies, Japanese trading houses have benefited from skyrocketing oil, gas and coal prices in 2022.

For the April-September first half, Mitsubishi’s net profit nearly doubled to a record 720 billion yen ($4.90Bln), a rise of 97 percent from the 360.56Bln yen ($2.45Bln) logged in the fiscal first half of 2021.

Revenues for the six months came to 10.72 trillion yen ($73.05Bln) compared with 7.72 trillion yen ($57.63Bln) in the first half of 2021.

“This was mainly due to increased market prices and transaction volumes,” said Mitsubishi.

“In addition to Natural Gas and Mineral Resources, which were bolstered by market factors, Automotive & Mobility, Power Solution, Industrial Materials and other segments are forecast to see greater earnings than originally forecast,” said the company.

Mitsubishi is an investor and trader in LNG along with the other Japanese trading houses such as Mitsui & Co, Marubeni Corp and Sumitomo Corp.

Sakhalin situation

On Russia, Mitsubishi said the company’s main business in Russia consists of a financial service business in the Automotive and Mobility segment and investment in the LNG-related business as part of its Natural Gas division.

“As of September 30, 2022, the carrying amount of total assets related to the company’s business in Russia was 209.91Bln yen ($1.43Bln),” said Mitsubishi.

“The company holds a 10 percent ownership interest in Sakhalin Energy Investment Company (SEIC), which has been engaged in LNG-related business in Russia, and accounts for this investment as a financial asset,” explained Mitsubishi.

It said that based on the Russian Federation presidential decree issued on June 30, 2022 and a further resolution, a new company, Sakhalin Energy LLC (SELLC), was established to take over the operation of this LNG business, and the rights and obligations of SEIC were transferred to SELLC.

“Mitsubishi submitted its notice to continue ownership in the LNG-related business to the Russian government and received approval on August 31, 2022. As a result, the company continues to hold a 10 percent ownership interest in the LNG-related business,” it added.

“However, the details related to the operation of SELLC, including the terms of the LLC members agreement, will need to be discussed once the LLC members composition of SELLC will be determined,” said Mitsubishi.

“As such, there remains uncertainty surrounding this investment,” it declared.

Oman, the LNG producer and exporter, has signed an exploration and production sharing agreement with UK major Shell and French company TotalEnergies to explore, appraise and develop natural gas resources at Block 11 onshore the Sultanate on the Arabian Peninsula.

PTTEP of Thailand, the oil and natural gas producer, has reduced its spending plans for the rest of 2020, though would remain on track with key investments in projects such as Mozambique LNG and development of the company’s largest ever southeast Asian natural gas discovery in the Lang Lebah field offshore Sarawak.

PTTEP, whose official name is Exploration and Production Public Company Ltd, noted in its latest newsletter to shareholders that it had adjusted investment plans to cope with the impact from the Covid-19 pandemic that suppressed domestic energy demand.

PTTEP said its 2020 expenditure has been reduced by 15-20 percent with some exploration activities deferred, while maintaining reasonable capital expenditure levels to ensure the continuity of the energy supply of the country.

In the LNG sector, PTTEP has an 8.5 percent stake in the Area 1 licence of the Rovuma Basin offshore Mozambique in southeast Africa.

Part of the overall stake, about 26 percent, was transferred to French major Total from Anadarko Petroleum of the US as a side-deal to the Occidental Petroleum takeover in 2019 of Anadarko.

PTTEP in 2019 also made a Malaysian acquisition from Murphy Oil of the US, including a large stake in the Rotan natural gas discovery offshore Malaysia, which is subject to a floating LNG joint venture.

“PTTEP will continue with investment in development projects such as Mozambique Area 1 and additional drilling activity in the Malaysian Lang Lebah gas field in Block Sarawak SK410B, to ensure the first production of these projects in the next four years as planned,” stated the Thai company.

PTTEP’s Lang Lebah gas field is the largest commercial discovery of petroleum resources it has ever made in what was its first exploration well at the Sarawak SK410B Project just over a year ago.

The natural gas discovery at Lang Lebah-1RDR2 encountered 252 metres of net gas pay and has an estimated several trillion cubic feet of gas in place.

The SK410B project is located in shallow waters about 90 kilometres offshore Sarawak in PTTEP acreage of around 1,870 square kilometres.

PTTEP in its post Covid-19 and oil crisis review revised downwards its overall estimated sales volume in 2020 to 362,000 barrels of oil equivalent per day, a decrease of 7 percent overall from the previous target.

However, the company said it was staying on track with its current investments and was also ready to spend on expansion.

“After the oil price crisis, PTTEP is ready for investment opportunities as we follow our strategic expansion plans that emphasize Southeast Asia where we have built expertise and experience and in the Middle East,” said the company.

PTTEP said it had expanded investment in Thailand, Malaysia, the United Arab Emirates and Oman for short and long-term gains as well as acquired projects that immediately generate income.

The company was also prepared for digital transformation through investment in new businesses that will enhance technical performance.

“Through these strategies, we aim to achieve solid growth and maintain Thailand’s energy security in the long term,” said the company.

The PTTEP update also included a mention of the company’s celebration of its 35th anniversary.

A ceremony was held at PTTEP headquarters in Bangkok to mark its founding in 1985 with the mission as a state-owned petroleum exploration and production enterprise to strengthen national energy security.

The event was attended by senior board members and executives.

They were led by Prajya Phinyawat, Chairman and Head of the Independent Directors Committee of PTTEP, Tongchat Hongladaromp, Advisor to the Board and former PTTEP President, as well as Phongsthorn Thavisin, the current President and Chief Executive.

KBR, the US energy and LNG engineering company, said it was awarded a front-end engineering and design contract by Oman LNG for the debottlenecking of liquefaction facilities at the port of Sur on the Arabian Peninsula.

“This project builds on KBR's extensive track record of developing and implementing LNG projects and providing solutions to complex developments around the world,” said Jay Ibrahim, KBR President for Energy Solution Services.

The Omani facilities export to Japan, South Korea and the spot market and comprise the amalgamated three liquefaction Trains of Oman LNG and Qalhat LNG, now producing more than 10 million tonnes per annum.

The Sultanate has revitalised its LNG production after the Khazzan natural gas discovery by BP and the plants near the port of Sur have been at near nameplate capacity since 2017.

The three Trains had previously suffered from a lack of feed-gas as supplies were diverted to fill domestic gas shortages.

The Omani government allocates Oman LNG feed-gas supplies from various gas fields and the Khazzan field production has ended all resource concerns for the near future.

Houston, Texas-based KBR explained that it would act as an extension to Oman LNG's project team and help manage the overall execution of the debottlenecking efforts, whereby better output can be achieved by fixing inefficiencies, both technical and operational.

“The contract underpins Oman LNG's robust commitment towards knowledge-sharing and boosting staff competency in dealing with such complex projects,” said KBR.

KBR’s Ibrahim said the company was excited to be a part of this important project and to continue to grow and maintain its presence in Oman.

French energy major Total and Oman recently signed an accord for the development of an onshore natural gas block that will provide feed-gas for separate LNG production reserved for LNG fuel for shipping in the Arabian Peninsula.

The deal was signed between Ministry of Oil and Gas of Oman and Total and is linked to the award of exploration licence for onshore Block 12 where there are “significant prospective” gas resources.

Total said it would use its equity gas entitlement as feedstock to develop in Oman a regional hub for LNG bunkering services.

Oman is a major anchorage and stop-over point for tankers and other vessels on trade routes between the Middle East, Asia and Europe.

Total has previously outlined plans for its LNG hub project involving a small-scale modular liquefaction plant to be built near the deepwater port of Sohar in the north on the Gulf of Oman.

Oman is planning to increase its natural gas production for domestic use and LNG exports to such an extent that the sultanate in the Arabian peninsula will see gas output levels overtaking oil by around 2025.

BP of the UK and Italian energy company Eni signed a heads of agreement with the Ministry of Oil and Gas of the Sultanate of Oman to work jointly towards a significant new exploration opportunity in the Arabian Peninsula nation where BP’s onshore Khazzan natural gas discovery revitalized LNG production.

BP said that under the accord, the two companies would work with Oman towards the award of a new exploration and production sharing agreement (EPSA) for Block 77 in central Oman.

BP and Eni will now enter discussions with the Ministry to finalise details.

“This would represent a further deepening of BP’s important position in Oman, building on our successful delivery of the major Khazzan project in 2017 and its second phase of development that is currently under construction,” said Bernard Looney, BP chief executive of the upstream division in reference to additional output achieved by Oman LNG from having sufficient domestic gas supplies.

“We look forward to continuing to explore and efficiently develop the country’s resources, working in close partnership with Eni and Oman to underpin our commitment to delivering long-term gas production for Oman,” he added.

The country’s three existing liquefaction Trains at the facilities near the town of Sur have been at full capacity since 2017 after previously suffering from a lack of feed-gas as supplies were diverted to fill domestic gas shortages.

The Omani government allocates Oman LNG supplies from various gas fields and the Khazzan field production has ended all feed-gas concerns for the near future.

The three Omani LNG processing Trains currently produce around 10.4 million tonnes per annum and supply nations such as Japan, South Korea, India and Kuwait.

Block 77, with a total area of almost 3,100 square kilometre, is located in central Oman, 30km east of the BP-operated Block 61, which contains the already-producing Khazzan gas project as well as the Ghazeer project currently under development.

The Khazzan natural gas field began production in 2017, under budget and ahead of schedule. Khazzan now produces around 1 billion cubic feet of gas a day.

The Ghazeer field is expected to add a further 0.5 bcf/d of production and is expected to come on stream in 2021.

BP has had an upstream presence in Oman since 2007 when it signed an exploration and production sharing agreement for Block 61.

Gas sales agreements and approval for the development of the Khazzan project on Block 61 were signed in 2013. In 2016, the EPSA for Block 61 was amended, adding a further 1,000 square kilometres and allowing a second phase of development.

French energy major Total has signed an accord with the Government of Oman to develop an LNG fuel supplies hub for the maritime industry with bunkering infrastructure and a small-scale production plant at Sohar port.

BP of the UK said it had approved the development with Oman Oil Company of the Ghazeer project in the Sultanate of Oman as the second phase of the giant Khazzan natural gas venture in the Arabian Peninsula nation that has helped revive LNG production.