Greetings from Shanghai. This is the last stop on my six-week trip through China before I return to the United States to vote in the upcoming election.
Now, let’s dig into two pieces of energy news from last week.
Shangyou Nie
Editor, Well Read
Galp Kicks Off Key Drilling Campaign in Namibia
Dancing_Man/Shutterstock.com
Portuguese company Galp Energia recently started an exploration campaign for up to four exploration and appraisal wells. Those in the industry should follow the campaign closely to see its outcome, as Namibia is on the cusp of becoming the latest oil-producing country in Africa.
The latest:
Galp Energia spudded appraisal well Mopane 1-A on 23 October, using the drilling ship Santorini from Saipem, according to Upstream.
Mopane 1-A will be the first of what could be up to a four-well campaign within the PEL 83 license in the Orange Basin, offshore Namibia.
Galp operates the block with 80 percent interest. Its partners are state company NAMCOR and Namibian independent oil and gas company Custos Energy, with 10 percent equity each.
Sintana Energy, a Toronto-listed Canadian company, owns 49 percent of Custos Energy.
Many major IOCs are reportedly in the race to join the block and potentially take over operatorship during the development and production phases.
What they are saying: “These efforts should provide additional insights into this world-class opportunity and into our broader Orange Basin portfolio, located at the heart of this emerging hydrocarbon province,” said Robert Bose, CEO of Sintana Energy.
The vessel will have a capacity of 160,000 barrels of oil per day—20,000 barrels of oil per day smaller than originally planned. Venus might be the first field to come on stream before 2030 in Namibia, according to NAMCOR.
Shell (operator, 45 percent) and its partners QatarEnergy (45 percent) and NAMCOR (10 percent) are evaluating the true potential of its discoveries in PEL 39.
Chevron, BP, ENI, and ExxonMobil have each signed new blocks in offshore Namibia over the past two years.
Patrick Pouyanné, TotalEnergies CEO, said that Namibia could have five to six FPSOs in the near future.
What to watch:
Galp was hoping that a major IOC would have been selected before drilling these new wells, so as to help share the cost.
Galp said that it is happy to sole risk the wells, showing a sign of confidence.
It is possible that one of the major IOCs could still join the program during the current, and/or any future, wells.
If an IOC joins after a successful exploration and appraisal campaign, the price for the farm-in will become significantly higher.
A message from AspenTech
Download the case study that demonstrates how Aspen Tempest™ ENABLE allowed a large North American energy customer to optimize their production from an existing field, enabling them to increase the field’s profitability by avoiding additional data acquisition costs; identifying optimal location of additional development wells; and, ultimately increasing the field’s production.
ENI Sells 25 Percent of Its Biofuels Business to a PE Firm
Mino Surkala/ Shutterstock.com
On 24 October, Italian major ENI announced that it has reached an agreement with private equity firm KKR to sell 25 percent of its biofuels business, Enilive, for 2.9 billion euros ($3.2 billion). This is one way for ENI to leverage external finances to help carry out its energy transition plan.
More about the deal:
According to ENI, the transaction will be funded via a 500-million-euro injection of capital into Enilive and 2.4 billion euros of ENI shares.
According to the WSJ, 100 percent Enilive equity is valued at 11.75 billion euros, near the midpoint of the valuation range of 11.5–12.5 billion euros that had been previously announced.
The two companies set up a pact in July to start exclusive negotiations for the transaction.
Geographically, Enilive plans to build on its European base and expand to the Far East and North America.
Enilive wants to focus heavily on sustainable aviation fuel and plans to build 300+ biofuels stations in Italy and abroad.
ENI changes plans:
In 2021, ENI planned to spin off its renewable business through an IPO, but adverse market conditions have forced the company to change plans via a “satellite strategy.”
According to the same Capital Market Update, ENI has set up several identities, including Enilive, Biochemistry, Plentitude and CCS to solve capital needs and add value.
Minority-stake sales like these will help ENI leverage external financial resources, while still allowing it to maintain control.
What to watch:
ENI reportedly will also sell a minority stake in its CCS division.
ENI could still move toward an IPO for some, or all, of the satellite businesses if/when market conditions become favorable.
Go deeper: In the November issue of AAPG Explorer, I will share an in-depth discussion of European IOCs’ approach to balancing traditional oil and gas business with renewables. This article will become available on AAPG’s website after November 1.
👍 If you enjoyed this edition of Well Read, consider supporting AAPG's brand of newsletters by forwarding to a friend or colleague and signing up for our other newsletters here.
➡️ Was this newsletter forwarded to you? Sign up for Well Read here.
AAPG thanks our advertisers for their support. Sponsorship has no influence on editorial content. If you're interested in supporting AAPG digital products, reach out to Melissa Roberts.
.png?upscale=true&width=220&upscale=true&name=Shangyou-Nie-Headshot-Signature%20(1).png)
