No one in Brazil is keen on OPEC diet, Rystad says
At an October forum in Saudi Arabia, Brazil’s president Jair Bolsonaro suggested that he would like to see Brazil join OPEC. If such a marriage were to come to fruition, OPEC would be the clear winner and Brazil the loser by a long shot, energy intelligence group Rystad Energy said.
Brazil has experienced a tremendous spurt in crude oil production, propelled by the development of its pre-salt resources.
However, taking Brazil’s oil production to its current level certainly didn’t come cheap. Petrobras has paid over 78% of Brazil’s $396 billion bill for exploration (excluding dry well costs), development and operations from 2010 to 2018. This, in 2014, made Petrobras the world’s most indebted listed E&P company. Petrobras would be counting on the revenues from its growing production to help scale its debt mountain.
According to Rystad, OPEC-mandated production cuts at its projects would threaten Petrobras’ attempts to reduce gearing. Petrobras doesn’t need OPEC — it needs to reduce its still substantial debt.
The established players with activities in Brazil don’t need OPEC — they seek returns on already considerable investments incurred, Rystad said. The new entrants nibbling at Petrobras’ divestment clusters don’t need OPEC — they want to stabilize and even grow production at their acquisitions.
The oilfield service industry doesn’t need OPEC — it would rather have increased production levels to ensure more business.
Brazil has been invited to join OPEC previously also; then the government stated that under Brazilian law it can’t interfere with production operations. So even the Brazilian government doesn’t really need OPEC. No one in Brazil appears keen on the OPEC diet, Rystad concluded.
Karoon to give up its exploration permit in Great Australian Bight
Australia-based Karoon Gas has decided to ditch its exploration permit located in the Great Australian Bight area offshore Australia thus joining oil majors Chevron and BP who had previously abandoned their Bight permits.
During the company’s general meeting on Friday, Karoon Chairman Bruce Phillips said the company had “listened to our broader stakeholder groups and have initiated actions to relinquish EPP46 in the Great Australian Bight.”
Karoon was awarded the exploration permit EPP46 in October 2016. The permit covers 17,793 square kilometers of Australia’s most active and prospective frontier oil exploration province, the Ceduna Sub‐Basin, in the Great Australian Bight (GAB), offshore South Australia.
Karoon’s initial three‐year firm commitment consisted of acquiring an extensive 2D seismic survey over the permit area, a targeted 3D seismic survey, and geotechnical studies.
At the time of the license award, Karoon said it would be monitoring the progress of then-current committed drilling programs and make an assessment of the environmental risks following those campaigns prior to committing to any exploration drilling.
Phillips also said that Karoon had relinquished WA-314-P in Australia after failing to attract a suitable farminee.
Oil majors back out
Oil companies’ attempts to drill in the Great Australian Bight area have been under scrutiny in the last couple of years. Environmental groups like Greenpeace and political party Australian Greens have hampered oil companies’ plans for the Bight, claiming that drilling in the area containing a marine park would threaten marine life, fisheries, and eco-tourism operators.
Back in October 2016, BP gave up on its drilling program in the Bight, citing a new upstream strategy with a focus on opportunities likely to create value in the near to medium term as the reason behind its abandonment.
A year later, in October 2017, Chevron also ditched its Great Australian Bight exploration program due to its inability “to compete in the current low oil price environment.” Chevron denied that its decision had anything to do with the government policy, regulatory, community or environmental concerns, pointing out that it was a commercial decision.
In more recent news, Norwegian giant Equinor has been working to obtain approval for its environment plan for the planned Stromlo well in the Great Australian Bight, which was submitted in April 2019.
Equinor’s planned well is located in the Ceduna sub-basin, off southern Australia. The well is located approximately 400 km southwest of Ceduna and 476 km west of Port Lincoln and in a water depth of approximately 2240 meters.
Australian regulator NOPSEMA earlier in November requested from Equinor to modify and resubmit its GAB plan. Equinor got a deadline of 21 days to provide NOPSEMA with further information about matters relating to consultation, source control, oil spill risk and matters protected under Part 3 of the Environment Protection and Biodiversity Conservation Act 1999.
According to Equinor’s plan, the petroleum activity will occur anytime between October and May during the three years validity period from 2020 to 2022.
Two Equinor workers injured in serious incident in North Sea
Two Equinor employees were injured in a serious work-related incident on board the Heimdal platform in the North Sea on Thursday, November 28.
The Heimdal platform. (Photo: Equinor/IKM)
Equinor said on Friday that the incident had occurred as a result of an explosion of a portable gas container on board, and was reported in to Equinor’s emergency response centre at 1806 CET. There were 70 personnel on board the platform when the incident occurred.
The two injured employees were taken care of by health personnel on board Heimdal, and were transported further to Haukeland University Hospital and Stavanger University Hospital with a SAR helicopter and a Joint Rescue Coordination Centre helicopter.
Equinor is following up both those injured and their families. The Heimdal organization is also being taken care of, Equinor said.
On Thursday night extra personnel travelled out to the platform to follow up those who were on board.
Equinor also said that relevant authorities had been informed and updated, and the incident would be investigated further.
Heimdal is a gas field west of Sveio in Hordaland county, in the northern part of the North Sea, north of Johan Sverdrup and south of Oseberg, near the border with the UK shelf. The Heimdal Gas Centre, on Production Licence (PL) 036, is a hub for the processing and distribution of gas. It consists of an integrated steel platform, and a riser platform.
Current Heimdal partners are Equinor (29.4% – operator), Petoro (20%), Total E&P Norge (16.7%), Spirit Energy (28.8%) and LOTOS Exploration and Production (5%).
Greek oil company Energean has pledged to become a net-zero emissions company by 2050.
Illustration only; Energean Force / Image source: Energean
The London/Tel Aviv-listed, Mediterranean focused, oil and gas explorer and producer said Monday that it was supporting and is committed to the pledges of the United Nations “Business Ambition for 1.5°C: Our Only Future” campaign.
Energeran said it was specifically committed to set science-based targets across its entire value chain and “ is pleased to make a commitment to be net-zero emissions company by 2050.”
The oil and gas company’s pledge comes in parallel with a campaign is being launched at the 25th annual United Nations Climate Change Conference — also known as COP 25 — taking place from 2 to 13 December in Madrid, Spain.
“The campaign calls on business leaders to set emissions reduction targets with the highest ambition for their companies in line with the report on 1.5°C by the Intergovernmental Panel on Climate Change (IPCC) and to reach net-zero emissions by no later than 2050. It should be noted, that Energean is the first London listed E&P company that commits to the specific campaign,” Energean said.
Mathios Rigas, CEO of Energean said: “We are proud to participate in the United Nations Global Compact and are pleased to be playing a leading industry role by not only committing to and supporting the United Nations “Business Ambition for 1.5°C: Our Only Future” campaign, but also to be committing Energean to net zero emissions by 2050. We are creating the leading independent, gas-focused, sustainable E&P company in the East Med which is committed to reducing our emissions and to the sustainability agenda.”
Offshore Energy Today has reached out to Energean, seeking more details on how the company plans to achieve its net-zero emissions goal, and what happens if the target is not met. We will update the article if we receive any response.
Energean owns producing assets in Greece and is developing Karish and Tanin gas fields offshore Israel. The company also owns an offshore block in Montenegro.
According to the UN, since the launch of the Business Ambition for 1.5°C — Our Only Future campaign, the number of companies committing to align their science-based emission reduction targets with a 1.5°C trajectory is increasing rapidly, with more than 75 Chief Executive Officers committing to the 1.5°C pledge as of 2019.
The companies represent 26 countries with 2.10 million employees, as well as a wide range of 22 sectors, such as telecommunications (16%), chemicals (9%), construction & materials (9%), pharmaceuticals & biotechnology (7%), financial services (7%) and electronic & electrical equipment (7%).
“Building a prosperous, net-zero carbon economy by 2050 will require transformational change across the economy. A growing body of analysis and evidence makes it clear that such a transition is achievable but only with decisive business leadership supported by ambitious government policies. Businesses joining the campaign are playing a key role in this transition through decarbonizing their own operations and articulating the targets and policies they need or want to see from Governments to help accelerate this transition,” the UN has said.
Rystad forecasts bleak outlook if OPEC+ fails to agree on deeper cuts
Barring additional oil production cuts by OPEC in 2020, Norwegian energy intelligence company, Rystad Energy, forecasts a substantial build of global crude stocks and a corresponding drop in oil prices.
A showdown is taking place in Vienna as OPEC countries plus Russia will gather in the Austrian capital on 5-6 December to discuss oil output levels in 2020.
“We have a clear message to the OPEC+ countries: A ‘roll-over’ of the current production agreement is not enough to preserve a balanced market and ensure a stable oil price environment in 2020,” says Bjørnar Tonhaugen, head of oil market research at Rystad Energy.
“The outlook will be bleak if OPEC+ fails to agree on additional cuts.”
According to Rystad Energy’s estimates, the global oil market will be fundamentally oversupplied to the tune of 0.8 million barrels per day (bpd) in the first half of 2020.
Empirical evidence has demonstrated that a 1 million bpd surplus of oil can be expected to cause an oil price decline of around 5% per month, implying a potential drop of 30% over six months.
“If OPEC and Russia don’t extend and deepen their cuts, we could see Brent Blend dip to the $40s next year for a shorter period,” Tonhaugen said.
“In order to ensure a balanced market, our research indicates that OPEC would need to reduce crude production to 28.9 million bpd – a drop of 0.8 million bpd from the level seen in the fourth quarter of 2019-levels – given our forecast for demand, non-OPEC supply and the impact of new IMO 2020 regulations on global crude runs,” Tonhaugen added.
New shipping fuel regulations, the so-called IMO 2020 effect, are expected to create more demand for crude oil in the near-term. However, if the actual effect of the IMO rules on crude demand turns out to be zero the “call on OPEC” – the amount of OPEC oil needed to meet demand – drops by 1.9 million bpd year-on-year to 28.3 million bpd.
“Despite decent cut compliance from the group as a whole and large involuntary declines in Iran and Venezuela this year, OPEC’s current crude production of about 29.7 million bpd is far above the ‘call’ for 2020. Alas, without deeper cuts taking effect in January 2020, large global implied stock builds are on the cards,” Tonhaugen remarked.
Rystad Energy sees three alternative OPEC+ decision scenarios:
**Base case: Extension of current production cuts to June 2020. Global oil market will be oversupplied to the tune of 1.2 million bpd in 2020. Significant oil price correction, possibly down to the low $40s for a short period, is likely.
**Deeper cuts: Additional cut of 0.75 million bpd on top of the 0.3 million bpd in the extension scenario would reduce the supply overhang and ensure stable prices.
**No deal/market share war: A ramp-up to maximum production capacity in all countries could have devastating effects. With potential stock builds of 2.3 million bpd, oil prices could fall below $30/bbl – lower than during the previous lows of 2016. Such a scenario would be devastating for the forward curve structure as potential stock builds would be larger than what we have observed historically.
Rystad Energy finds that OPEC+ as a whole has cut oil production by 2.6 million bpd year-to-date, compared to October 2018 reference levels and the cut target of approximately 1.2 million bpd. The additional 1.4 million bpd of “cuts” are owed entirely to involuntary declines from Iran and Venezuela, both of which are exempt from the agreement. Saudi Arabia has led the group’s compliance by cutting 870,000 bpd in 2019, or 2.7 times its target cut of 322,000 bpd.
“Saudi Arabia has signaled that it seeks stricter compliance by other producers and is no longer willing to shoulder the burden of sub-compliance by others, such as Russia, Iraq and Kazakhstan, which have all failed to reach 100% compliance with their target cuts,” Tonhaugen said.
The challenge for OPEC+ is the strong supply growth elsewhere in the world. Rystad Energy forecasts a supply growth of 2.6 million bpd year-on-year in 2020, led by US shale, Norway and Brazil against weak global demand growth of only 1.0 million bpd year-on-year. Rystad Energy forecasts that non-OPEC non-US supply will grow 1.2 million bpd year-on-year in 2020, OPEC estimates this number at 0.6 million bpd year-on-year.
Prosafe taps Atlas Professionals for offshore workforce
Offshore accommodation giant Prosafe has tapped Atlas Professionals for the provision of marine personnel outsourcing services.
Atlas, the international recruitment and manpower management firm, said it would provide marine personnel across the Prosafe fleet of offshore accommodation rigs.
Under the scope awarded after a tender procedure, Atlas will in January 2020 start providing manning services to Prosafe’s Safe Concordia semi-submersible accommodation rig when the unit will start a 120-day project offshore Brazil.
Under the contract with Equinor – awarded in July – the 2005-built Safe Concordia will provide gangway connected operations supporting maintenance and safety services at the Peregrino FPSO in the Campos Basin offshore Brazil.
Duncan Palmer, People & Organisation Director of Prosafe says: “Engaging Atlas to provide a fully outsourced crew management function will enable us to retain competence, to ensure safe and efficient operations and maximize flexibility in our operating costs during a period where demand remains lower than expected and with significant periods of time between contracts. We hope to continue to build on our long relationship with Atlas and look forward to their continued support when the market recovers and we again see an increase in operational activity.”
Worth reminding, Prosafe is working on creating the world’s largest offshore accommodation company through a merger with Floatel, as proposed in June 2019.
However, the company’s efforts have recently hit a stumbling block in Norway where the competition authority in October objected to the proposed merger claiming the combination of the two companies would reduce competition and lead to increased cost for customers. Prosafe has appealed the Norwegian Competition Authority’s decision to reject the proposed merger.
Court bans Greenpeace from boarding Shell’s North Sea installations
Oil major Shell has won a court order against Greenpeace aimed at preventing environmentalists from boarding the company’s oil installations in the North Sea.
Shell’s Brent; Photo by Marten van Dijl/Greenpeace
Following the protest, Shell sought an order from the Edinburgh court to ban protests near the company’s platforms.
Following reports that Shell has won the injunction, Offshore Energy Today has reached out to Shell seeking confirmation and further details about the order.
A Shell spokesperson said: “Shell sought this court order only to prevent protestors breaching the statutory 500m safety zones around platforms in the Brent field, putting themselves and Shell staff at risk. We wholeheartedly support the right to protest peacefully and safely. We’re pleased this decision recognizes that the existing legal safety zone should be respected by campaigners.”
Shell called on Section 21 of the Petroleum Act 1987, which automatically establishes 500-meter safety zones around installations which are stationed, being assembled or being dismantled in waters within the UK Continental Shelf. Under the act, it is an offense for any vessel to enter or remain in the safety zone except in accordance with regulations made by the Secretary of State or a consent given by the Health and Safety Executive.
BBC reported that the judge had concluded that since the installations were private property, Shell had a legal right to stop the climate activists from accessing them. The news agency also reported that the judge had ruled that given the physical state of the installations, protesters could injure themselves.
A setback for Greenpeace
In a statement on Wednesday, Greenpeace confirmed that the Scottish Court had granted Shell’s request for a temporary ban on future protests by Greenpeace International and Greenpeace Netherlands near or on Shell’s oil platforms in the Brent oil field.
Responding to the court order, Meike Rijksen, Campaigner for Greenpeace Netherlands said: “This is a setback, but the public will understand the real concern here is Shell’s plan. We will continue to fight alongside experts and governments against Shell’s intention to dump 11,000 tonnes of oil in the North Sea. Greenpeace has almost 50 years of experience with safe and peaceful protest. We strongly believe in the right to protest and will keep defending it. Shell can try to shut us up, but we will only get louder.”
Michelle Jonker-Argueta, Legal Counsel for Greenpeace International stated: “Currently we are waiting for the written ruling. Then we need to thoroughly analyze it before making any decisions about a possible appeal. In any event, Greenpeace will get to fight for the right to hold the industry accountable through safe and peaceful protest when the court considers Shell’s request for a permanent ban.”
According to Greenpeace, a ban on dumping installations and platforms in the North-East Atlantic Ocean was agreed in 1998 by all members of the OSPAR Commission. Shell has requested an exemption from the UK government. Both the Dutch Government and the German Government have criticized Shell’s plan and came to the conclusion that Shell’s study into the complete dismantling of the platforms is inadequate.
TGS has completed the sale of one of its seismic datasets to OGCI Climate Investments’ Net Zero Teesside project, a carbon capture, utilization and storage (CCUS) initiative planned for the North East of England.
Illustration. Source: TGS
TGS said on Thursday that the data would be used to verify the suitability for storage of CO2 in offshore reservoirs located in the Permian Gas Basin in the Southern North Sea.
Net Zero Teesside is an integrated CCUS project backed by OGCI Climate Investments, with direct project support from six of the largest oil and gas companies globally: BP, ENI, Equinor, Occidental Petroleum, Shell and Total.
OGCI Climate Investments and its partners are working closely with the UK Government on a supportive policy framework to enable the UK to become a leader and exporter of CCUS technologies globally.
Colin McGill, Net Zero Teesside Project Director, said, “To be able to remove carbon dioxide emissions and store them deep underground – preventing them from being released into the atmosphere – means we need to be 100 percent sure that the reservoir chosen is fit-for-purpose. Our agreement with TGS allows us to carefully analyze the geology of the reservoirs and make the correct decisions that will sustain our CCUS operations for millennia to come.”
Fredrik Amundsen, Executive Vice President, Europe and Russia at TGS, said, “The use of seismic data from TGS in the development of this landmark UK CCUS project is an important initiative for us as it marks the start of what could become a growing business area in the coming years. We recognize the need to actively engage in projects that support the energy transition and working with Net Zero Teesside is a recognition that our data can and will be used in new ways in the future.”
Polarcus begins seismic surveys over Neptune’s field offshore Australia
Seismic services provider Polarcus has begun seismic surveys in the Neptune Energy-operated Petrel field, located in the Bonaparte Basin offshore Australia, which is the first substantial investment in Petrel for five years.
Polarcus Asima seismic vessel; Source: Polarcus
Neptune said on Wednesday that the study would expand the area of seismic data the company holds and significantly increase the quality and breadth of data to allow Neptune and its partners to plan for the future.
Neptune, on behalf of the Petrel JV, has entered into a non-exclusive data licensing agreement with Polarcus, which is acquiring the Petrelex 3D seismic survey.
Neptune Energy Australia Managing Director, Janet Hann, said: “The Bonaparte Basin presents exciting growth opportunities for Neptune, and Petrel may play a significant role in our future aspirations for the area. We look forward to working closely with our partners as we deepen our knowledge of Petrel in order to define the potential for further development.”
Polarcus secured approval for an Environmental Plan allowing acquisition of new 3D multi-client data to be acquired across the field.
The Polarcus Asima vessel began the campaign on November 30 and will continue into late January 2020, subject to operational conditions, covering 2,900 Km2 of territory. Data from the survey will be available in the fourth quarter of 2020.
Neptune holds 54% of the project and alongside its partners Santos (40.25%) and Beach Energy (5.75%) is investing in new broadband technology over an expanded area in order to get a better understanding of the significant potential resources that Petrel holds.
Austrian oil company OMV has been under attack by Greenpeace activists in New Zealand at two separate occasions. First, the protesters boarded OMV’s supply vessel at a port in Timaru and then moved the protests in front of OMV’s offices in Plymouth.
Source: Greenpeace New Zealand
Activists spent three days this week protesting in front of OMV’s Plymouth offices. This protest was preceded by an occupation of OMV’s support vessel Skandi Atlantic in late November.
Namely, 30 people, including a team of Greenpeace climbers, on November 24 climbed aboard the support vessel for OMV’s oil rig and some locked themselves to the ship to stop it from leaving the port.
According to Greenpeace, the Bahamas-flagged Skandi Atlantic was preparing to leave the Port of Timaru and travel north to meet an oil rig commissioned by OMV, now stationed off the coast of Taranaki.
Greenpeace climate and energy campaigner, Amanda Larsson, said: “By occupying OMV’s henchboat, we’re delaying the monster rig from drilling for new oil in the middle of a climate emergency.”
Larsson added: “People are over it. We’re over companies being allowed to search for new oil to burn in the middle of a climate emergency, threatening the lives of millions of people. At every turn, OMV can expect us to be all over them.”
After 50 hours of occupying the support vessel in Timaru to prevent it from leaving the port, the last 10 protesters were forcibly removed by the police on Tuesday, November 26. However, Greenpeace did not stop there. The environmentalist organization then announced its intentions to continue the protest in front of OMV’s offices in Plymouth.
Larsson said in a statement on November 26: “This resistance is only set to continue. Next week, hundreds of people from around the country are gearing up to take part in a Climate Uprising mobilization in New Plymouth, where this vessel is heading and OMV has its Taranaki Headquarters.”
Following the end of protests on the support vessel, a group of people who had been occupying the vessel in the Port of Timaru raced north to New Plymouth – the destination of the boat and OMV’s Taranaki base.
Plymouth protest
On Monday, December 2 protesters formed a human barricade around OMV’s offices in Taranaki – shutting it down. The activists called on OMV to leave New Zealand.
The three-day occupation of OMV headquarters in New Plymouth wrapped up on Wednesday. Greenpeace claimed that at least 300 of the oil giant’s staff were forced to stay away from the office during the protest.
However, the activists have left OMV a parting gift. They’ve installed an outdoor pop-up museum in OMV’s front car park, full of artifacts from the oil industry’s past.
Greenpeace stated that OMV is about to begin drilling for new oil and gas off Taranaki, and has plans to move into the untouched, deep seas of the Great South Basin off Dunedin afterward.
Larsson said: “We are encouraging OMV executives to help New Zealanders make oil history by surrendering their permits to drill in New Zealand waters. We can always find a place for it in our oil museum.”
According to information on OMV’s New Zealand website, the company’s exploration team is actively working towards a drilling campaign in the Taranaki basin in 2019/2020 aiming to grow OMV’s and New Zealand’s reserves through new discoveries. This exploration drilling campaign is supported by the acquisition of the largest seismic survey ever acquired in the Taranaki Basin.
In addition, the company is committed to drill one exploration well in the Great South Basin, which is required to be drilled by July 2021.
In October 2019, Greenpeace protested on the Shell-operated Brent field in the North Sea against the company’s plans to leave parts of old oil structures with 11,000 tonnes of oil in the North Sea.
Following the protest, Shell sought an order from the Edinburgh court to ban protests near the company’s platforms. The judge concluded that since the installations were private property, Shell had a legal right to stop the climate activists from accessing them
Atlas, the international recruitment and manpower management firm, said it would provide marine personnel across the Prosafe fleet of offshore accommodation rigs.
