LNG

UK-based major Shell reported better-than-expected earnings to start 2024 despite lower prices and a decline in LNG sales as the natural gas, oil and chemicals trading units all  performed well.

Galp Energia, the Portuguese oil and gas company whose most valuable upstream assets has been its stake in one of Africa’s prolific natural gas basins and LNG projects offshore Mozambique, says a new discovery off the southwest African nation of Namibia could contain 10 billion barrels of oil equivalent or more.

Shell reported a drop in fourth-quarter and annual profits as oil and gas prices declined from last year while the UK major’s LNG sales increased to over 67 million tonnes for the year.

UK major Shell reported much reduced third-quarter profits of $6.2 billion, lower than the $9.45Bln of profits returned in the same three months of 2022 as natural gas prices dropped, while quarterly sales of liquefied natural gas were still over 16 million tonnes.

The largest European energy major Shell posted a 47 percent drop in overall quarterly profits, reflecting lower LNG trading and optimisation results and a drop in oil and gas prices as well as refining margins.

Malaysian energy company Petronas and Indonesian state-owned oil and gas company Pertamina have agreed with Shell to jointly acquire the UK company’s minority Masela natural gas block in Indonesian waters that will underpin the Abadi LNG export project in Indonesia and boost future cargo availability in the Pacific Basin.

UK major Shell plc reported an increase in net profits for the first three months of the year as liquefied natural gas sales volumes rose by 6 percent on the previous quarter, though were slightly less than the same quarter of 2022.

Shell UK said it completed the restart of operations at the Pierce field in the UK Central North Sea after a significant upgrade project to allow natural gas to be produced after years of the field producing only oil.

Shell has pulled out of its last high-profile upstream operation in California by completing the sale of majority stake in Aera Energy, headquartered in Bakersfield, and with around 13,000 wells in the state’s San Joaquin Valley producing oil and associated gas.

The divestment process involved Shell completing the sale of its 100 percent interest in Shell Onshore Ventures LLC which held a 51.8 percent interest in Aera Energy to two asset management firms for around $2 billion in cash with additional contingent payments based on oil prices.

Aera Energy was created as a joint venture between Shell and ExxonMobil and is California's second-largest oil and gas producer, accounting for nearly 25 percent of the state's production.

“The sale is part of Shell’s strategy to create a resilient and competitive Upstream portfolio by focusing on positions with high growth potential and a strong integrated value chain,” said Shell.

The European major will still be active in California, though with a lower profile from its other activities including LNG fuelling stations, gas and power trading and electric vehicle charging.

Canada Pension Plan Investment Board (CPP Investments) is partnering with Hamburg, Germany-based international asset management group IKAV to acquire Aera Energy.

California demands

“CPP Investments and IKAV intend to help Aera balance its energy transition efforts with the need to continue meeting California's conventional energy demands by investing in a renewable energy portfolio that will power Aera's existing operations,” they said.

“Over time, renewable power will be deployed across Aera's land holdings, while selected legacy oil and gas infrastructure will be repurposed to create carbon capture and storage capability,” the buyers explained.

Constantin von Wasserschleben, Chairman of IKAV, said his firm was aligned with CPP Investments in its commitment to achieving a smooth and sustainable transition to renewable energy.

“By delivering an energy solution at Aera that ties renewable growth with the safe and responsible operation of conventional energy assets, we are pursuing the right steps to balance California's energy demand with its future climate goals,” added Von Wasserschleben.

Bruce Hogg, Managing Director, Head of Sustainable Energies at CPP Investments, comments the Toronto-based firm’s investment in Aera Energy was consistent with a number of investments made to help California with its “green” energy policies.

“CPP Investments believes that enabling emissions reduction and business transformation in the energy sector can drive strong returns for long-term investors,” stated Hogg.

Nov 1 (LNGJ) - Shell completed the sale of its 45 percent shareholding in the Malampaya gas field in the Philippines to Malampaya Energy XP Ltd, a subsidiary of Prime Infrastructure Capital of the Philippines. Shell staff will continue their employment under the new ownership. The other main remaining shareholder in the gas field is local company Udenna Corp.

   “Since operations began in 2002, the Malampaya gas field has supplied an important part of the Philippines’ energy demand through the dedicated work of our partners and staff, past and present,” said Zoe Yujnovich, Shell’s Upstream Director. “This sale supports our strategy to create a resilient and competitive Upstream portfolio,” she added. The Malampaya gas field is in the process of depleting and is increasing the urgency for LNG imports to the Philippines.