24 january 2020

Equinor to launch carbon-free ammonia-fuelled supply vessel

Norwegian firm Equinor has signed an agreement to convert a supply vessel to operate on carbon-free ammonia-powered fuel cells.

The five-year contract will see subsea, seismic and cable-laying shipping firm Eidesvik Offshore modify the Viking Energy supply vessel.

Equinor said that the contract would be effective from April this year.

The supply vessel will operate as part of a research project. The project will cover the development, installation and testing of long-distance sailing powered by carbon-free ammonia.

It will also test to see if the technology can deliver 100% carbon-free power over long-distance sailing.

Testing will be performed on the vessel from 2024.

The main partners involved in this research project are NCE Maritime Cleantech, Eidesvik Offshore, Wartsila, Prototech and Equinor.

Wartsila will deliver the power technology, ammonia storage and distribution systems while Prototech will deliver the fuel cell system.

Equinor’s joint operations support senior vice-president Cecilie Rønning said: “Equinor aims to reduce the emissions in our supply chain, and regards the use of ammonia as a promising solution.

“Viking Energy may become the first supply vessel in the world covering long distances fuelled by pure carbon-free ammonia.”

Equinor said that ammonia will deliver 60%-70% of the power required on board. The test period will extend for at least one year, according to the project plans.

The Viking Energy supply vessel will still be able to use LNG as fuel while the remaining power requirement will be met using a battery.

Earlier this year, Equinor and the Konkraft partners launched a joint ambition to reduce the greenhouse gas (GHG) emissions from oil and gas operations in Norway by 40% by 2030.

The partners also aim to cut down the emissions to nearly zero by 2050.


23 january 2020

Coronavirus could cut down oil prices by $3 per barrel: Goldman Sachs

The outbreak of a new strain of coronavirus in China could have a negative impact on crude oil demand, cutting the price by $3 per barrel, Goldman Sachs told its investors in a note. Oil prices today have hit the lowest point in a month, with Brent crude shares falling to $62.34, while the price for WTI was around $55.79.

According to the Goldman Sachs senior commodity strategist Damien Courvalin, the global oil demand could potentially fall by 260,000 barrels per day, hitting the aviation sector the hardest.

He wrote: “Ultimately we expect jet fuel markets — including cracks, regrade and Asian differentials — to decline most if this outbreak persists given the likely decline in regional air travel.”

Analysts at London-based consultancy firm Energy Aspects said they do not expect the oil demand to fall significantly as the virus has not yet triggered the restrictions on travel and trade that were set in place during the 2002-2003 SARS crisis.

Energy Aspects said in a research note published today: “While the SARS outbreak was estimated to have impacted up to 0.26 mb/d of oil demand globally, according to anecdotal reports, we currently do not expect global oil demand to fall significantly as a result of the coronavirus.”

Voluntary trip cancellations are expected, said Energy Aspects, but as the spread of the coronavirus has been minimal outside of China, it should not impact significantly the global demand for transportation fuel. “The World Health Organisation (WHO) is currently hesitant to declare the coronavirus a public health emergency, meaning airline cancellations remain unlikely.”

Even though the Chinese government has taken a more efficient approach to the spread this time, the firm said, if Chinese authorities decided to implement more aggressive measures to contain the outbreak, global oil demand could be more affected.

“In a worst-case scenario that assumes the outbreak spreads across the nation, we expect jet demand growth to slow to 20,000 b/d year-on-year after having grown by 75 thousand b/d year-on-year in H2 2019,” Energy Aspects said in its report. It added it is monitoring the situation as it unfolds.

Originating in Wuhan – the capital of China’s Hubei province with a population of more than 11 million people – the coronavirus has spread to other countries, including Japan, South Korea and the US. According to the latest reports, 582 cases have been confirmed including 17 deaths, prompting Chinese authorities to impose a lockdown on Wuhan and some other cities.


23 January 2020

MoU signed between India and Brazil for oil and gas exploration

Indian Prime Minister Narendra Modi’s Union Cabinet has approved a memorandum of understanding (MoU) on co-operation with Brazil in the oil and gas sector.

As part of the MoU, the two countries will focus on exploration and production (E&P) and liquefied natural gas (LNG) opportunities.

Both India and Brazil will also focus on research and development in the energy sector.

Indian Oil minister Dharmendra Pradhan tweeted: “India is diversifying its crude oil supply and our oil companies have expressed interest in sourcing more crude from Brazil if offered favourable commercial terms.

“We further discussed to collaborate our efforts in the field of biofuels. We are targeting to achieve 20% ethanol blending in petrol and 5% bio-diesel blending capacity by 2030.”

According to the Indian Government, the two countries will encourage collaboration in oil energy and environmental issues. They will also cooperate in energy policies such as energy efficiency and energy research development.

The partnership will also focus on the expansion of regional energy infrastructure networks.

The MoU is expected to be signed later this month when Brazil’s President visits India.

Currently, India’s state-controlled ONGC Videsh has interests in two exploration blocks in Brazil, BC-10 and BM Seal-4.

India is also looking at increasing its oil imports from Brazil. This will help the country to spread its import avenues, which currently is mostly dependent on the Middle-East.


23 JANUARY 2020

Equinor faces legal challenge over Great Australian Bight oil drilling

The Wilderness Society has launched legal action against NOPSEMA over its approval of oil drilling plans made by Equinor in the Great Australian Bight.

The Environmental Defenders Office is representing the Wilderness Society, which has membership of the Great Australian Bight Alliance.

Last month, Nopsema accepted Equinor’s environment plan for exploratory petroleum drilling in the Great Australian Bight for the ultra-deepwater Stromlo-1 exploration well.

Equinor needs to clear four regulatory hurdles before it can begin drilling, of which this represents the second.

Wilderness Society South Australia director Peter Owen said: “To be clear, this is not a step we wanted to have to take. We have engaged diligently and constructively via consultation with other fossil fuel companies seeking approvals in the Bight, including BP.

“We have engaged diligently and constructively with Nopsema. We have consistently requested that Equinor consults with us as an affected and relevant party.

“It is patently clear that Equinor has refused to undertake best practice consultation, and it is our view that it didn’t even meet the basic regulatory requirements. Our view is that Nopsema made an important legal error in accepting Equinor’s substandard consultation.”

The Stromlo-1 well is 2.2km deep in water and nearly 400km off the southwest of Ceduna. It is 372km south of the coast and 476km west of Port Lincoln.

At the time of the approval, the regulator said that it had imposed stringent conditions. These include limits on when activity can take place and regular public reporting on environmental impact. This will ensure high-level protection to the Great Australian Bight environment.

In November last year, Nopsema ordered Equinor to resubmit its environmental plan for the proposed drilling project in the Great Australian Bight. It asked the energy major to provide more information on its consultation with affected groups. It also requested information on the risks posed by oil spills.

In September 2016, Wilderness Society urged Nopsema to refuse BP’s application to drill in the Great Australian Bight.


21 January 2020

Turkey receives invitation from Somalia to explore offshore oil

The President of Turkey, Tayyip Erdogan, has said that the country received an invitation to explore oil in Somalian waters from Somalia.

NTV reported that Turkey signed a maritime delimitation agreement with Libya’s Government of National Accord (GNA) last year.

An exclusive economic zone can be established from Turkey’s southern coast to Libya’s northeast shores. Also, this relationship between Turkey and Libya could result in attracting international oil companies.

During a meet with reporters, Erdogan said Turkey would take necessary steps in line with the offer. He did not give further details.

Seismic studies have revealed that there could be significant oil and gas resources in offshore Somalia.

Erdogan said: “There is an offer from Somalia. They are saying: ‘There is oil in our seas. You are carrying out these operations with Libya, but you can also do them here.’ This is very important for us.

“Therefore, there will be steps that we will take in our operations there.”

Since the Somalian famine of 2011, Turkey has been a major source of aid for the country. Turkey has helped it to build roads and trained soldiers.

Earlier this month, the Upper House of the Somalian Parliament has approved a new petroleum law which it expects to attract investments from big oil companies.


20 January 2020

“No energy company will be unaffected by clean energy transitions,” says IEA report

The International Energy Agency (IEA) has released a peer-reviewed report today, focussed on the efforts of oil and gas companies to reduce their environmental footprints, concluding that companies’ failure to address growing calls to reduce greenhouse gas emissions could threaten their long-term social acceptability and profitability.

The IEA’s ‘Oil and Gas Industry in Energy Transitions’ report suggested that oil companies must balance their desire for near-term financial returns and a long-term future by playing a much more significant role in combating the climate crisis.

The paper points out that the nearing of the Paris Agreement 2030 Agenda for Sustainable Development will increase the pressure on all industries to find solutions to their production of emissions.

IEA executive director Dr Fatih Birol said “No energy company will be unaffected by clean energy transitions. Every part of the industry needs to consider how to respond. Doing nothing is simply not an option.”

He pointed that the first immediate task for all parts of the industry is reducing the environmental footprint of their operations.

“As of today, around 15% of global energy-related greenhouse gas emissions come from the process of getting oil and gas out of the ground and to consumers. A large part of these emissions can be brought down relatively quickly and easily.”

Other suggested options include lowering the emission intensity of delivered oil and gas to eliminate routine flaring and integrating renewables and low-carbon electricity into new upstream and liquefied natural gas developments.

While some oil and gas companies have taken steps to support efforts to combat climate change, the report found that so far, investment by oil and gas companies outside their core business areas has been less than 1% of total capital expenditure, with the largest outlays going to solar PV and wind.

For example, environmental efforts of the largest explorers have been modest with BP having invested about 3% of its annual capital expenditure in low carbon activities in 2018, according to its annual report. Similarly, ExxonMobil has invested $9bn over almost two decades.

According to the report, stepping up investment in hydrogen, biomethane and advanced biofuels is crucial, because within ten years, “these low-carbon fuels would need to account for around 15% of overall investment in fuel supply if the world is to get on course to tackle climate change,” according to the report In the absence of low-carbon fuels, any transitions would become much harder and more expensive.

Currently, national oil companies are estimated to account for over 50% of global production and as the study points out, many are “poorly positioned to adapt to changing global energy dynamics.”

Dr Birol suggested that investment in oil and gas projects will still be needed, even in rapid clean energy transitions as if such investment was to stop completely, the decline in output would be around 8% per year.

“The scale of the climate challenge requires a broad coalition encompassing governments, investors, companies and everyone else who is genuinely committed to reducing emissions,” Birol added.

The report concluded that “transformation of the energy sector can happen without the oil and gas industry, but it would be more difficult and more expensive.” The IEA also suggests that the oil and gas industry needs to clarify what clean energy transition means for it and explain the contributions companies can make to accelerate the pace of change.

The report was produced in cooperation with the World Economic Forum (WEF) and it will be presented to government and industry leaders during the WEF’s Annual Meeting in Davos on 21 January 2020.


20 JANUARY 2020

Cyprus accuses Turkey of illegal drilling operations

The government of Cyprus has called Turkey a “pirate state” after Ankara announced on Friday that the drilling ship Yavuz started to conduct its third drilling operation on the southern coast of Cyprus.

The Cypriot government accused Turkey of carrying out “a flagrant violation” of the country’s sovereignty and maritime law as the drilling was conducted inside exploration block 8, which Cyprus has licensed to Eni and Total. Exploration block 8 is part of Cyprus’s Exclusive Economic Zone, a 70,000 km2 area divided into 13 exploration blocks where the country has special rights regarding exploration and the use of resources.

According to the Turkish foreign ministry, the operations are legal as the licence was granted to state-owned Turkish Petroleum in 2011 by the Turkish Republic of Northern Cyprus, a de facto state not recognised by the international community.

On 13 July 2019, Turkish Cypriot authorities proposed to Cyprus a deal where the two states would partner and share revenues coming from oil and natural gas drillings.

Turkish foreign ministry spokesperson Hami Aksoy said: “In this licence area, as the co-owners of the Island, Turkish Cypriots have rights as much as the Greek Cypriots.”

European External Action Service (EEAS) spokesperson Peter Stano criticised Turkey’s drilling attempts and reaffirmed the need for states to abide by international law.

He said: “Concrete steps towards creating an environment conducive to dialogue in good faith are needed. The intention by Turkey to launch further exploration and drilling activities in the wider region goes, regrettably, in the opposite direction.”

Turkey accused the EU of having double standards and ignoring the rights of Turkish Cypriots.

“The European Union has remained silent since 2003, to the usurpation and violation of the rights of both Turkey and the Turkish Cypriots in the Eastern Mediterranean. The EU, acting under the pretext of union solidarity should first of all end its unrealistic, prejudiced and double standard policies,” said Aksoy.


17 January 2020

Premier Oil steps closer to taking over North Sea reserves

A UK court has granted oil exploration company Premier Oil approval to take over oil and gas fields in the North Sea if it can beat a creditor vote.

It plans to buy five gas fields in the Andrew area and a stake in the Shearwater field from BP for $625m. It would also purchase another 25% stake in the Tolmount field which it operates from Dana for $191m and contingent payments of $55m.

The company says this will “materially strengthen Premier’s financial position” and adds that the assets are forecast to generate over $1bn of free cash flow to the end of 2023.

Premier Oil chief executive Tony Durrant said: “These acquisitions are materially value accretive for Premier and are in line with our stated strategy of acquiring cash-generative assets in the UK North Sea.

“We are also pleased to have consolidated our interest in the high return Tolmount development where we see material upside. The cash flow generated from the acquired assets will also accelerate the deleveraging of Premier’s balance sheet.”

In order to acquire the fields, Premier will need creditors owning more than 75% of the company’s credit to agree the purchase.

Premier owes over $2bn to creditors, according to Asia Research and Capital (ARCM), Premier Oil’s largest creditor. It said it will ‘vigorously contest’ the acquisition.

ARCM currently has a 16.85% net short position on Premier, the second-largest percentage position ever recorded by the UK’s Financial Conduct Authority.

It listed several reasons for doing so, including the increase in decommissioning liabilities and Premier’s “high-risk strategy”.

ARCM said in a press release: “ARCM is deeply concerned about Premier Oil’s intention to pursue acquisitions as stated in its announcement, as they will only serve to increase risk for stakeholders.

“We are concerned about the supply/demand dynamics of the UK gas market and the potential impact on the company’s cash flow generation capacity.”

The hedge fund says Premier “appears to be acknowledging that it cannot repay the outstanding debt in accordance with its terms”.

However, Premier says it has already received the required support in at least two of the needed areas.

A spokesperson for Ad Hoc Creditors, a group which supports Premier Oil’s plans, told Offshore Technology: “The agreement to proceed with the Scheme of Arrangement is an important step in securing a strong platform for Premier Oil’s future success.

“Any frustrating actions by ARCM would be designed to cause maximum disruption and uncertainty in order to fuel the hedge fund’s only recently disclosed material short position in the company.

“Their comments are further proof that ARCM is motivated by its own agenda to actively work against other stakeholders.”