LNG

Private capital from Asian exploration and production (E&P) investor are flocking to the North American market in search for LNG-linked assets. Deal flow is shaped by a ‘merger of equals’ as consolidation among Canada’s Montney shale producers accelerates, and Asian buyers seek to get their hands on shale and LNG-linked assets in the US.

Mitsubishi has disclosed it will buy Aethon Energy's assets in the Haynesville Shale – a move that positions the Japanese company to capitalise on burgeoning LNG exports from the US Gulf Coast. The transaction includes $5.2 billion in equity and $2.33 billion in assumed debt.

Sempra has agreed to divest a 45% stake in its infrastructure arm to KKR and CPP Investments for $10 billion. By ceding majority control of its LNG export and midstream assets, Sempra’s future earnings will mostly come form regulated utilities.

Eni’s gas discovery in the Kutei Basin, Indonesia, and Petronas’ stake in the Abadi LNG development are likely to form key parts of a new Southeast Asian energy major. The Malaysian national oil company and its Italian partner announced plans to merge selected upstream assets into a new, standalone joint venture.

Additionally, Wood Mackenzie expects Petronas to contribute production and exploration assets in Sarawak and Sabah from its domestic portfolio in Malaysia into the new JV. Petronas’ largest domestic oil and gas producing field is the SK316 block in Sarawak, which includes the Kasawari development.

“Managing capital commitments, unlocking new growth opportunities and broadening strategic relationships are the key drivers behind the formation of the new venture,” commented Andrew Harwood, Wood Mackenzie’s VP corporate research, Asia Pacific.

Going forward, the standalone company will have an estimated 3 billion barrels of oil equivalent (boe) in reserves and a combined equity production target of 500,000 boe per day in the medium-term.

For Eni, the move follows similar ventures in Angola, (Azule Energy in partnership with BP), Norway (Var Energi), and the UK (Ithaca). Previous spin-offs by Eni sought to unlock value from non-core assets that struggled to attract capital within a larger portfolio.

But the situation is different in Indonesia – poised to turn out one of the largest producing countries in Eni’s global portfolio by the early 2030s.

Argentina’s Vaca Muerta basin has seen shale oil production rise 35% yoy in the third quarter to 400,000 barrels per day (bpd) due to productivity gains. To sustain growth, the $2.5 billion Vaca Muerta Sur pipeline is being developed to expand takeaway capacity from the field to global markets.