(Bloomberg) — The U.S. warned Hong Kong that it could face penalties if it does business with an oil tanker headed for the city that allegedly violated sanctions on Iran.

Washington wants to put China and the autonomous city on notice that it will aggressively and consistently enforce its Iran sanctions, a senior U.S. official said on Tuesday, speaking on condition of anonymity. The official said China would be informed that any entity doing business with the ship would expose it to U.S. sanctions.

The attention levied on this single vessel, the Pacific Bravo, underscores Washington’s desire to stymie Iran’s oil exports. Relations between the two sides have deteriorated sharply in recent weeks, following President Donald Trump’s pledge to force Iran’s vital oil exports down to zero and a revocation of key sanctions waivers.

The Pacific Bravo is owned by China’s Bank of Kunlun, according to the senior U.S. official. Reuters reported in October that the bank — once Beijing’s major channel for transactions with Iran — would stop handling such payments due to sanctions pressure.

Next Stop

While the U.S. official said the tanker is heading to Hong Kong, ship-tracking data compiled by Bloomberg shows a vessel called the Pacific Bravo off the coast of Sri Lanka and signaling Indonesia as its next stop.

The senior U.S. official said it was imperative that Hong Kong authorities prevent the vessel from docking or allowing local entities from providing services to ships that might misrepresent themselves in order to avoid exposing themselves to sanctions violations.

Washington wants to make clear that anyone doing business with Iran, won’t be doing business with the U.S., the official said, adding that there would be more sanctions to come.

Hong Kong’s Marine Department said in an email Wednesday that at present, it “has no information showing if the respective vessel will enter or pass by Hong Kong waters.”

Rising Tensions

Reuters reported on May 16 that a tanker in violation of U.S. sanctions had unloaded close to 130,000 tons of Iranian fuel oil into storage tanks near the eastern Chinese city of Zhoushan. It had earlier reported that a batch of Iranian fuel oil had sidestepped American sanctions on petroleum exports by using ship-to-ship transfers involving four vessels including that tanker — the Marshal Z.

Trump has increased pressure on Iran since taking office, exiting the landmark 2015 nuclear deal that gave the Islamic Republic sanctions relief in exchange for curbs on its disputed nuclear program.

Senior Iranian officials have made recent tours of neighboring countries in an effort to boost support, after the U.S. announced it would increase troop deployments in the Middle East and sell weapons to some of Iran’s rivals.

Source: US Warns Hong Kong to Avoid Oil Tanker  | Rigzone

(Bloomberg) — Schlumberger Ltd. had its debt rating lowered by S&P Global Inc. as belt-tightening in the U.S. shale patch translates into less drilling and fracking work for the world’s top oilfield services provider.

The rating was cut a notch to A+, the fifth-highest invest grade, from AA-, S&P said on Friday. Its biggest rival, Halliburton Co., had its outlook revised to negative from stable by the ratings firm. Under pressure from shareholders, exploration and production companies are keeping spending in check, which is reducing demand for oilfield services, S&P said.

“Oilfield services companies will no longer be able to generate the high operating margins they did in 2014,” Carin Dehne-Kiley, an analyst at S&P, wrote Friday in a report to investors. “The oilfield services industry has fundamentally changed due to permanent efficiency and productivity gains realized by E&P companies as well as investor sentiment calling for E&P companies to live within cash flow and limit production growth.”

Oil services were hit hard by the steep sell-off in the oil market that started in 2014. North American customers cut back in response and now face an urge to return more cash to investors. A separate report from oil servicer Baker Hughes on Friday showed the number of rigs drilling for crude in the U.S. fell to the lowest in more than a year.

Representatives for Schlumberger and Halliburton declined to comment.

Companies in the Philadelphia Oil Services Index have failed to keep up with the overall recovery in the global oil market. While global crude prices have more than doubled since hitting bottom in January of 2016, the index is down about 40% over the same period. Energy producers in the S&P 500 are up 17%.

Schlumberger, based in Houston and Paris, has about $13.5 billion in bonds and loans, according to Bloomberg data.

Source: Schlumberger Suffers Credit Hit  | Rigzone

Eni expands in Mozambique with three new offshore licenses

Italian oil company Eni has acquired rights to explore and develop offshore blocks A5-B, Z5-C and Z5-D, located in the deep waters of Angoche and Zambezi Basins offshore Mozambique. 

Through a farm-in agreement, signed with ExxonMobil Moçambique Exploration & Production Limitada and authorized by Mozambican institutions, Eni’s subsidiary Eni Mozambico acquires a 10% stake in the three blocks, the company announced on Wednesday.

Block A5-B is located about 1,300 kilometers northeast of the capital Maputo, in a completely unexplored area off the city of Angoche. It has an area of 6,080 square kilometers, at a water depth of between 1,800 and 2,500 meters.

Blocks Z5-C and Z5-D cover a total area of 10,205 square kilometers, at a water depth between 500 and 2,100 meters, in a scarcely explored area facing the delta of the Zambezi River, about 800 kilometers to the north-east of the capital Maputo.

The three blocks, assigned under the 5th Licensing Round, are operated by ExxonMobil (40%), in partnership with the Mozambican State company Empresa Nacional de Hidrocarbonetos (ENH, 20%), Rosneft (20%), and Qatar Petroleum (10%).

It is worth reminding that Qatar Petroleum signed a farm-in deal with ExxonMobil to acquire a 10 percent stake in blocks A5-B, Z5-C and Z5-D in December 2018. This marked QP’s entry into the country.

“With this acquisition, Eni further strengthens its presence in Mozambique, a country of strategic importance for the company,” Eni said.

In the 5th Licensing Round, Eni Mozambico was also awarded operatorship of Block A5-A, adjacent to block A5-B, with a 59.5% stake. Other partners are Sasol (25.5%) and ENH (15%).

A farm-out agreement enabling Qatar Petroleum to acquire a 25.5% participating interest in Block A5-A, reducing Eni shares to 34%, is pending authorization by the Mozambican authorities.

Source: Eni expands in Mozambique with three new offshore licenses | Offshore Energy Today

Inpex, Indonesia agree on main points for $20B Abadi gas field development

Indonesia’s giant Abadi gas field in the Arafura Sea might finally be developed, almost two decades after the discovery made by Japan’s oil and gas company Inpex.

The Indonesian energy ministry said this week that the energy minister had met on Monday with Inpex CEO where “a number of strategic points were successfully agreed upon, which should enable this giant gas field to be developed.”

The ministry said that the parties had earlier in May reached an agreement on the final plan of the development framework. The meeting on Monday, the ministry said, discussed the details of the framework, so that an agreement between Indonesia and Inpex can be signed soon.

According to the statement by the ministry, the investment value of the development should reach $20 billion. The ministry further said that a “win-win solution” was agreed with regards to the profit sharing scheme “in which the government will receive at least 50 percent.”

The development of the offshore find has been delayed first by Inpex which had its initial FLNG development plan approved by the government in 2010, only for the company to revise the plan in 2015 to include a larger capacity FLNG following the increase of estimated reserves at the field.

After the second submission, the Indonesian government then in April 2016 decided the floating solution was no longer an option, telling the company to go back to square one devise a plan for the Abadi field development via an onshore LNG plant.

Inpex in 2018 conducted Pre-FEED work for an onshore development option with an expected annual production capacity of 9.5 million tons.

The signing of the final agreement between the Government of Indonesia and Inpex Corporation is planned to be held at the G20 countries meeting in Japan, scheduled for June 29-30.

Inpex operates the project, owning a 65 percent stake with the remaining 35 percent stake held by Shell.

According to Japan Times, the Masela block in which the Abadi field is located will be able to produce 1.200 billion standard cubic feet per day of gas and 24,000 barrels per day of condensate for 24 years.

“The facility is scheduled to become fully operational in 2024 and start piping gas in 2026, two years before Inpex’s and Shell’s contracts expire,” Japan Times has reported

Source: Inpex, Indonesia agree on main points for $20B Abadi gas field development | Offshore Energy Today

Two North Sea contract renewals for Petrofac

Alwyn North; Source: Survitec

Petrofac’s Engineering and Production Services (EPS) business has been awarded two Operations and Maintenance (O&M) contract extensions for long-standing clients worth a combined value of approximately $32 million.

Petrofac said on Tuesday it had secured a 12-month renewal from Total E&P UK for the supply of O&M support to its Alwyn and Dunbar platforms in the Northern North Sea – a role it has held for 14 years.

The company has also been awarded a 12-month extension from a major International Oil Company (IOC), under which it will continue to provide offshore and onshore O&M support to one of its platforms in the Central North Sea.

Both contracts will be managed via Petrofac’s dedicated 24/7 Operations Hub, through which all its labor supply contracts are managed.

Nick Shorten, Managing Director for Petrofac’s Engineering and Production Services business in the Western Hemisphere, commented: “These contract renewals reflect the strength and collaborative nature of our long-standing relationships with both IOCs and are testament to the knowledge our teams have gained our clients’ assets.”

Petrofac currently supports 45 assets in the North Sea, and 80% of these contracts have been held for a decade or more.

Located 440km north east of Aberdeen, Total’s Northern North Sub hub has been a linchpin of the company’s portfolio since first oil was achieved in 1987.

Total E&P UK Limited owns 100% equity of their Northern North Sea hub centered on the Alwyn Area which consists of the Alwyn North platforms (NAA and NAB linked by a bridge), the Dunbar platform and a series of subsea fields tied back to these installations.

Source: Two North Sea contract renewals for Petrofac

Husky Energy’s five-year plan puts focus on offshore projects

Canadian oil company Husky Energy has disclosed its updated five-year plan, which includes investments in several offshore projects offshore China, Indonesia, and Canada.

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Husky said on Tuesday that the company would focus investments which would continue to grow high-netback gas production offshore China and Indonesia, as well as completing construction of the West White Rose Project off Canada.

Namely, the investments in the five-year plan will support the completion of subsea installations at the Liuhua 29-1 field at the Liwan Gas Project off China with first production expected around the end of 2020. Husky has a 75% working interest in the field.

The company added it would also advance the MDA-MBH-MDK gas developments offshore Indonesia with a revised target for first gas from 2020 to 2021.

The project is located in the Madura Strait production sharing contract offshore East Java, Indonesia, some 65 kilometers east of Surabaya and 16 kilometers south of Madura Island. It is operated by a joint venture between Husky Energy and CNOOC.

Husky explained in its five-year plan that it would also complete the construction of the West White Rose Project in Canada’s Atlantic region, with first oil expected in late 2022.

The West White Rose development will use a fixed wellhead platform tied back to the SeaRose floating production, storage and offloading (FPSO) vessel. Husky expects to achieve a gross peak production rate of approximately 75,000 barrels per day (bbls/day) in 2025, as development wells are drilled and brought online.

 

Reducing capital spending

 

Husky said that its plan had reduced capital spending of $3.15 billion for 2019 – 2023 versus the previously planned 2018 – 2022 annual average of $3.5 billion.

Total capital spending over the 2019 – 2023 five-year period is reduced by about $1.7 billion, with total free cash flow before dividends expected to reach $8.7 billion at a flat $60 U.S. WTI planning price.

Husky CEO Rob Peabody said: “Husky’s updated five-year plan demonstrates strong capital discipline in the current environment. The plan achieves a significant increase in free cash flow while increasing production by about 100,000 barrels per day through 2023.”

The company added it was on target with its 2019 capital spending guidance of $3.3 to $3.5 billion and a production guidance also remains unchanged at 290,000 to 305,000 boe/day.

Apart from the offshore, Husky Energy will focus its investments in next five years in its Integrated Corridor.

The Integrated Corridor represents about 70% of cash flow from operating activities and investments will be set towards growing Saskatchewan thermal bitumen production and maximizing the value captured by the company’s downstream assets.

The Integrated Corridor is a manufacturing business, processing crude oil production from Alberta and Saskatchewan into refined products such as gasoline, diesel, jet fuel and asphalt, which are primarily sold into the U.S. Midwest market.

Offshore Energy Today Staff

Source: Husky Energy’s five-year plan puts focus on offshore projects