Ukraine halts oil flows via Russia pipeline to Europe over payment issue

Ukraine has suspended oil flows from Russian pipelines to parts of central Europe as Western sanctions prevent it from accepting transit fees from Moscow, reported Reuters, citing Russian state-controlled pipeline transport company Transneft. 

Oil flows along the southern route of the Druzhba pipeline have been halted since early this month, impacting countries such as Hungary, Slovakia and the Czech Republic. Via the southern leg of the Druzhba pipeline, Russia supplies 250,000 barrels per day. 

However, the northern route of the Druzhba pipeline, which supplies Poland and Germany, remains unaffected. 

Slovak pipeline operator Transpetrol and Hungarian energy firm MOL confirmed the halt of oil flows for a few days via the Druzhba pipeline, in the wake of issues related to transit fees payment. 

Transneft told the news agency that it made payments for oil transit for August 2022 to Ukrainian pipeline operator UkrTransNafta on 22 July 2022.

Russian bank Gazprombank handled the payment. However, the money was returned on July 28 due to the processing of the transaction failed due to European Union restrictions. 

Subsequently, UkrTransNafta halted oil flows from the critical pipeline. As per the new sanctions imposed on Russia by the Western nations, banks in Europe are required to receive approval from a relevant government authority to allow a transaction, Transneft said.

TC Energy partners with Mexico’s CFE to develop $4.5bn gas pipeline 

Canadian natural gas company TC Energy has signed a deal with the Comisión Federal de Electricidad (CFE), Mexico’s state-owned electric utility, to develop a $4.5bn natural gas pipeline. 

The Southeast Gateway Pipeline is intended to supply natural gas to Mexico’s central and southeast regions. The two firms have reached a final investment decision to proceed with the construction of the 715km-long offshore pipeline project, which is expected to have a capacity of 1.3 billion cubic feet per day. 

Planned to be commissioned by mid-2025, the pipeline will originate onshore in Tuxpan, Veracruz, then continue offshore, prior to making landfall at Coatzacoalcos, Veracruz and Dos Bocas, Tabasco. 

As part of the deal, TC Energy and CFE will consolidate existing assets that have been disputed between the two parties. These assets include the Tamazunchale, Tula-Villa de Reyes and Tuxpan-Tula pipelines. 

The assets will be consolidated under a US dollar-denominated take-or-pay transportation service agreement, which will be extended through to 2055. 

TC Energy president and CEO François Poirier said: “The Southeast Gateway Pipeline will be TC Energy’s second marine natural gas pipeline in Mexico, connecting to the coastal regions of Veracruz and Tabasco, and is another prime example of our ability to originate world-class projects that offer incremental growth to our long-term outlook.” 

ADNOC awards $3.4bn drilling contracts to expand production capacity 

ADNOC Drilling has received two contracts worth over $3.4bn (AED12.6bn) from UAE state-owned oil company ADNOC to charter eight jack-up rigs for offshore operations. 

Awarded by ADNOC’s subsidiary ADNOC Offshore, the two contracts are valued at $1.5bn (AED5.6bn) and $1.9bn (AED7bn), respectively. 

The jack-up rigs are planned to be hired together with personnel and equipment and will be deployed at ADNOC’s offshore fields that account for approximately half of the firm’s production capacity.

During the 15-year contracts, ADNOC Drilling’s rig fleet is expected to help in further unlocking the offshore oil and gas resources in Abu Dhabi. 

UAE Minister of Industry and Advanced Technology and ADNOC CEO Sultan Ahmed Al Jaber said: “This world-leading investment will significantly expand our drilling activity to accelerate growth, drive value, and responsibly unlock the UAE’s resources in response to globally rising demand for energy."

Exxon in talks to sell stake in Russia’s Sakhalin-1 development 

Exxon Mobil is considering selling its 30% stake in the Sakhalin-1 oil and gas development in Russia’s Far East to an undisclosed party. 

The Sakhalin-1 development reported a production rate of 220,000 barrels per day (bpd) in 2021, although output from the project declined to 10,000bpd following the sanctions imposed by Western nations on Russia, reported Reuters. 

Earlier this year, Exxon said it took an impairment charge of $4.6bn for exiting the Sakhalin-1 development, its largest Russian investment. In July this year, a senior Russian lawmaker said the Sakhalin-1 oil and gas project’s control would be transferred to Russia. 

According to Reuters, ExxonMobil spokesperson Casey Norton said that the company has made ‘significant progress’ in exiting the Sakhalin-1 venture. 

“As operator of Sakhalin-1, we have an obligation to ensure the safety of people, protection of the environment, and integrity of operations."

BP’s Q2 profits soar to $9.3bn due to high energy prices 

BP has reported a profit attributable to shareholders of $9.3bn for the second quarter of 2022, a three-fold jump from $3.1bn a year ago. 

The British oil major’s underlying replacement cost profit, used as a proxy for net profit, also tripled to $8.5bn, from $2.8bn in the second quarter of 2021. The surge was attributed to strong realised refining margins and oil trading, and higher liquids realisations. 

For the quarter that ended on 30 June 2022, the company’s total revenues and other income surged to $69.5bn, from $37.56bn a year earlier. Operating cash flow increased to $10.9bn, from $5.4bn in the same period a year ago. 

Production for the quarter stood at 924,000 barrels of oil equivalent per day, an increase of 5.5% compared with the same period in 2021. 

In a statement, the firm said: “For 2022 and subject to maintaining a strong investment grade credit rating, BP remains committed to using 60% of surplus cash flow for share buybacks and intends to allocate the remaining 40% to further strengthen the balance sheet.” 

Saudi Aramco to buy Valvoline’s lubricants unit in $2.65bn deal 

Saudi Aramco has agreed to acquire Valvoline’s lubricants unit, Valvoline Global Products, in a deal worth $2.65bn. 

Valvoline plans to use the cash proceeds to accelerate share repurchases, reduce debt and invest in its retail services business.

Aramco expects the acquisition to optimise its global base oils production capabilities and expand research and development (R&D) activities while complementing Aramco’s premium branded lubricant products. 

Subject to customary closing conditions and regulatory approvals, the transaction is scheduled to close in 2022 or early 2023.

Valvoline will also sign a long-term supply agreement with the Global Products business to purchase motor oil and related products. 

Earlier this year, Aramco announced a net income of $39.5bn for the first quarter of 2022. 

Aramco downstream senior vice-president Mohammed Al Qahtani said: “Valvoline’s global products business fits perfectly with Aramco’s growth strategy for lubricants as it will leverage our global base oils production, contribute to our R&D capabilities, and strengthen our existing relationships with original equipment manufacturers."