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.

WaveCrest Energy has announced the start of a market consultation process for a proposed Teesside Flexible Regas Port as the UK’s third liquefied natural gas import destination in advance of a planned capacity auction to be launched in the third quarter of 2024.

The North Sea Transition Authority (NSTA), the UK regulator that is launching renewed oil and gas activities in British territorial waters that will affect future import needs for pipeline gas, LNG and oil has issued an Area Plan for cross-licence and cross-Hub collaborative frameworks to ensure maximum recovery of oil and gas in six areas.

The six areas where oil and gas activities will take place are the Central North Sea, the Northern North Sea, the Southern North Sea, West of Shetland, East of Shetland and the East Irish Sea.

The NSTA, formerly known as Oil and Gas Authority, had previously drawn up a “Maximising Economic Recovery of UK Petroleum (MER UK) Strategy” with added “behavioural Guidelines” written by the industry for the industry and aimed at helping all participants.

The report estimates that the effective use of Area Plans has the potential to unlock around 4 billion barrels of resources.

Working with operators

“The NSTA is working closely with operators, licence holders and other interested parties to develop Area Plans across the oil and gas life cycle,” said the report.

“These integrate exploration, development, production, and decommissioning to ensure operations ensure economic recovery with the optimum use of infrastructure to extend asset life,” the NSTA added.

The NSTA explained that Area Plans, like industry, are evolving with scopes of work now incorporating energy integration and net-zero considerations.

“Area Plans represent a shared view amongst industry participants of the optimal way to ensure economic resource recovery,’ said the report.

“For the majority of Area Plans, the NSTA will normally expect industry to lead on developing and delivering the plans,” it stated.

The NSTA has developed Guidance (revised in November 2023) to aid the industry’s understanding of their responsibilities for developing Area Plans and help improve collaboration across the UK Continental Shelf.

Updates

“As experience and practice develop, the NSTA will update and review this guidance,” it said.

Under the leadership of Steve Phimister, Industry Cultural Change Champion, the “Behavioural Guidelines” have been created to help those involved in Area Plans.

These Guidelines provide advice, share insights from existing Area Plans groups and signpost to relevant tools and resources.

The Guidelines are categorised into four “Area Plan Essentials”: 1.) Create the Right Environment; 2.) Secure the Right People at the Right Time; 3.) Clarify the Boundaries for Collaboration; and 4.) Agree an Appropriate Decision Process.

The full report is available on the NSTA Web site.

National Grid Plc, the UK power transmission and infrastructure company with several businesses in the US and the Isle of Grain LNG import near London, reported declines in fiscal first-half profits while investments in projects increased amid a more positive winter energy outlook for the UK and its near neighbours.

Shell, one of the world’s leading LNG traders with about 64 million tonnes per annum of sales, is increasing its UK offshore activities for its Integrated Gas division by re-submitting an amended environmental statement to the UK Oil and Gas Authority (OGA) for the Jackdaw natural gas and condensate field in the North Sea.