Chevron commits to net zero by 2050

11 October | Environment

Chevron has committed to net-zero Scope 1 and 2 emissions by 2050, following increased pressure from investors and governments.

Chevron has set a target to cut certain types of upstream gas emissions to net zero by 2050, joining a list of energy companies taking steps to reduce their carbon footprint. The organisation has issued an updated climate change resilience report that adopts a 2050 net-
zero aspiration for upstream Scope 1 and 2 emissions.

In June, shareholder Engine no.1’s campaign forced Exxon Mobil, Chevron’s US peer, to accept new board members who could better exercise oversight over its business strategy and confront the risk of global climate change that many investors say Exxon has long been reluctant to address.

Last month, Chevron pledged to triple its investments to $10bn on reducing its carbon emissions footprint through 2028. It is expected to achieve its target through its pivot towards low-carbon business, including renewables, carbon capture technology, and hydrogen.

Michael Wirth, Chevron’s chairman and CEO, said in September: “Chevron intends to be a leader in advancing a lower-carbon future. Our planned actions target sectors of the economy that are harder to abate and leverage our capabilities, assets, and customer relationships.”

11 October | Deals

Colombia signs offshore exploration contracts with Occidental subsidiary

The Colombian Government has signed exploration and production (E&P) contracts with Anadarko Colombia, a subsidiary of Occidental Petroleum, for four offshore blocks.

The four blocks, COL-1, COL-2, COL-6, and COL-7, are estimated to cost $1.4bn in total, reported Reuters.

The blocks being offered by the government are located off the coasts of the La Guajira, Magdalena, and Atlantico provinces of Colombia.

According to Colombia’s National Hydrocarbons Agency (ANH), the blocks cover an area of nearly 1.6 million hectares.

ANH president Armando Zamora was quoted by the news agency as saying: “The four contracts make up a third node for exploratory activity which, added to the two existing areas being developed in the maritime areas of La Guajira and Uraba, completes the panorama of potential of the entire Caribbean coast.”

The ANH said that new blocks would ensure energy independence as the country is left with less than eight years of gas reserves.

Colombian Minister of Mines and Energy Diego Mesa said that the latest E&P contracts bring the total number of contracts signed under the present government to 39.

Mesa was cited by Reuters as saying: “This is a very important milestone. This confirms that Colombia’s hydrocarbons sector continues to very attractive to direct foreign investment.”

11 October | Law

Greenpeace to appeal before Supreme Court after losing BP case

Greenpeace has lost its court case after challenging a UK Government decision to grant the permit to BP for the drilling on the Vorlich field in the North Sea. Judges in Scotland’s highest court ruled that the government’s decision to grant a permit was lawful.

The environmental group had said that the emissions from the ultimate consumption of the oil, rather than just the smaller amount of emissions from the extraction process, should be the criterion for granting a licence.

The group also said that there had been errors in the consultation process preceding the grant of the permit; however, Judge Colin Sutherland of Scotland’s Court of Session said that Greenpeace had the opportunity to engage in the process before the permit was granted.

The judge said: “The question is whether the consumption of oil and gas by the end user, once the oil and gas have been extracted from the wells, transported, refined, and sold to consumers, and then used by them are ‘direct or indirect significant effects of the relevant project’. The answer is that it is not.

“It would not be practicable, in an assessment of the environmental effects of a project for the extraction of fossil fuels, for the decision maker to conduct a wide-ranging examination into the effects, local or global, of the use of that fuel by the final consumer.”

8 October | Exploration

ExxonMobil raises Stabroek resource estimate following new discovery

ExxonMobil has increased the gross recoverable resource estimate for the Stabroek Block offshore Guyana by nearly one billion oil-equivalent barrels following a significant discovery.

The updated resource estimate is approximately ten billion barrels of oil equivalent, including the new discovery at the Cataback-1 well, the 21st significant discovery within the Stabroek Block.

The well encountered around 243ft (74m) of net pay in high-quality hydrocarbon-bearing sandstone reservoirs. Cataback is located around 3.7 miles east of Turbot-1. It was drilled in 5,928ft of water by the Noble Tom Madden.

ExxonMobil senior vice-president of exploration and new ventures Mike Cousins said: “This discovery adds to the resource in the Turbot/Tripletail area, enhancing the development project potential.

“Our proprietary technologies, global exploration experience and drilling capabilities continue to yield positive results in the Stabroek Block, which will generate additional value for Guyana.”

The Stabroek Block includes an area of around 6.6 million acres. ExxonMobil affiliate Esso Exploration and Production Guyana operates the block with a 45% stake. Other stakeholders are Hess Guyana Exploration (30%) and CNOOC Petroleum Guyana (25%).

Hess CEO John Hess stated: “We are pleased that Cataback is our 21st significant discovery on the Stabroek Block and further underpins the potential for future developments. We continue to see multibillion barrels of additional exploration potential remaining on the block.”

7 October | Permits

UK’s OPRED rejects Shell’s Jackdaw gas field development plans

The Offshore Petroleum Regulator for Environment and Decommissioning (OPRED) in the UK has reportedly refused to approve Royal Dutch Shell’s Jackdaw gas field development plans in the North Sea.

According to a Reuters report, the British regulator declined to approve the environmental statement for the development.

However, it is not immediately clear why OPRED rejected the statement. The rejection comes despite a recent increase in natural gas and oil prices in several European countries, including the UK, due to a shortage in supplies.

A Shell spokesperson told the news agency: “We’re disappointed by the decision and are considering the implications.”

The UK Government’s Department for Business, Energy & Industrial Strategy (BEIS), of which OPRED is a part, did not respond to Reuters’ queries.

The Jackdaw field was discovered by Shell affiliate BG International in 2005. It is proposed to be developed at a water depth of around 256ft in blocks 30/02a, 30/02d and 30/03a of the UK central North Sea.

The environmental statement for the field development was submitted in January 2020. However, the timeline was affected by the Covid-19 pandemic. Under the original plan, Jackdaw field was expected to produce its first hydrocarbons in 2024.

6 October | Deals

Southwest Gas to buy Dominion Energy’s Questar Pipeline for $1.9bn

Southwest Gas has agreed to acquire the Questar Pipeline from Dominion Energy in an all-cash transaction worth $1.975bn, including debt.

Under the agreement, Southwest Gas will purchase affiliates associated with Dominion Energy, including the White River Hub, the Overthrust Pipeline and the Questar Field Services.

In July this year, Dominion Energy terminated the planned sale of the Questar Pipeline to Berkshire Hathaway Energy owing to the uncertainty associated with the Federal Trade Commission approval.

Following the termination, the company had launched a competitive process for the sale of the pipeline. Dominion Energy plans to use the proceeds from the transaction to reduce debt and support its capital plan.

Dominion Energy chair, president and CEO Robert M Blue said: “This transaction represents another significant step in our evolution as a company, allowing us to focus even more on fulfilling the energy needs of our utility customers and continuing growth of our clean-energy portfolio, including development of the largest offshore wind farm in North America.”

Upon the completion of the deal, the Questar Pipeline is planned to be operated as a standalone subsidiary of Southwest Gas Holdings.

However, the deal is being opposed by Carl Icahn, who owns a significant interest in Southwest Gas.

The gas distribution company is being urged by the investor to terminate the deal and shift focus towards improving its share price, Reuters reported citing a source familiar with the matter.

In brief

Ampol agrees to buy New Zealand’s Z Energy for $1.4bn

Ampol has agreed to acquire Z Energy for $1.39bn, which will create a Trans-Tasman fuel player with a network of 2,400 sites and a fuel supply capacity of approximately 23.5 barrels per annum.

Comstock Resources to divest Bakken shale assets for $154m

Comstock Resources will sell its assets in North Dakota’s Bakken basin, comprising more than 400 producing wells in Williams, McKenzie, Mountrail and Dunn Counties, to Northern Oil and Gas for $154m in cash.

Gazprom commissions new route to supply gas to Hungary and Croatia

Gazprom has commenced Russian natural gas supplies to Hungary and Croatia over the a route using the TurkStream gas pipeline, and announced it has started gas supplies to national gas transmission systems of Hungary, Bulgaria and Serbia.

Sinopec gets state approval for new LNG import terminal in China

Amid an unprecedented electricity crisis in China triggered by coal shortages, Sinopec has secured state approval for a proposed LNG receiving terminal, which will feature four storage tanks each with a size of 220,000m³.

1 October | Deals

Poland’s PGNiG buys Ineos’ Norwegian oil and gas business for $615m

PGNiG Upstream Norway, a Norwegian subsidiary of Polish state-owned PGNiG, has concluded the purchase of the Norwegian oil and gas business of Ineos Energy for $615m.

The transaction involved Ineos Oil & Gas’ stakes located on the Norwegian continental shelf.

Ineos Energy executive chairman Brian Gilvary said: “This represents another positive step in the INEOS Energy journey. The deal allows us to monetise a non-operated, predominantly gas portfolio at an attractive price compared to our hold value."

With the transaction, PGNiG Upstream Norway is expected to significantly increase its hydrocarbon reserves to 331 million barrels of oil equivalent.

In addition, the acquisition is anticipated to expand the company’s annual gas production by approximately 1.5 billion cubic metres (bcm).

30 September | Deals

Qatar Petroleum signs 15-year LNG supply deal with China’s CNOOC

State-owned Qatar Petroleum (QP) has signed a 15-year agreement with China National Offshore Oil Corporation (CNOOC) to supply LNG.

Under the sale and purchase agreement, QP will supply 3.5 million tonnes per annum (MTPA) of LNG to CNOOC’s subsidiary CNOOC Gas and Power Trading & Marketing, starting January 2022.

Qatar Minister of Energy and QP president and CEO Al-Kaabi said: “We are pleased to further build upon our strong relationship with CNOOC with the signing of this new long-term LNG supply agreement.

“We are especially proud to continue to meet the People’s Republic of China’s growing need for cleaner energy that LNG provides, and are thankful to CNOOC for partnering with us as their trusted LNG supplier.”

Qatar has supplied a total of 715 LNG cargoes to China as of August 2021. Of this, CNOOC received 270 cargoes representing more than 24 million tonnes of LNG.

30 September | Deals

BP to sell 25% stake in Azerbaijan exploration project to Lukoil

British oil major BP has agreed to divest a stake of 25% in the Shallow Water Absheron Peninsula (SWAP) exploration project offshore Azerbaijan to Russian firm Lukoil.

BP will continue to serve as operator with a 25% stake in the SWAP production sharing agreement (PSA) during the exploration period. Azerbaijan’s state-owned oil and gas company Socar owns a 50% stake in the project.

The SWAP PSA was signed in December 2014 between BP and SOCAR to jointly explore for and develop potential prospects in the shallow water area around the Absheron peninsula in the Azerbaijan sector of the Caspian Sea.

The SWAP contract area stretches along the Caspian basin margins to the south of the Absheron peninsula.

BP Azerbaijan, Georgia and Turkey regional president Gary Jones said: “We are pleased to welcome Lukoil to the SWAP partnership, building on our successful relationship in the Shah Deniz project.”

PJSC Lukoil president Vagit Alekperov said: “Lukoil’s joining of the project of BP and SOCAR falls in line with both Russia’s and Azerbaijan’s national interests related to the evolvement of international cooperation in energy domain.”

The deal, which is subject to approval from the Government of Azerbaijan, is scheduled for completion in the fourth quarter of 2021.

In brief

Russia plans to start operations of Nord Stream 2 gas pipeline soon

Russia plans to soon make the $10bn 1,230km Nord Stream 2 natural gas pipeline operational, a project that will double the country’s gas exports to Germany.

Iran commissions new oil terminal to bypass Hormuz Strait for exports

Iran has commissioned the Jask oil terminal and pipeline project along the Sea of Oman to bypass the Hormuz Strait for crude oil exports.

Oil Search turns down $6.5bn takeover offer from Santos

Oil Search has rejected the $6.5bn takeover proposal from Australia’s oil and gas producer Santos, which would have created a $16bn (A$22bn) LNG export giant.

Modec in talks with Toyo for FPSO joint venture

Japan’s Modec and Toyo Engineering Corporation (Toyo) have initiated talks to assess a business alliance related to floating production storage and offloading (FPSO) vessels.

Adnoc awards contracts worth $750m to boost production capacity

State-owned Abu Dhabi National Oil Company (Adnoc) has awarded integrated rig-less drilling services contracts worth $763.7m to boost production capacity.