World Cup fans cheered as the Cape Verde team made it into the round of 32. What an inspiring story for the small island country of fewer than 500,000 people! So far, the tournament has been a bit of a sad story for the Asian fans, as nine out of 10 teams have been eliminated.
Congratulations to Morocco, which edged out my family’s beloved Netherlands team to advance to the Round of 16.
Now, let’s look at two pieces of energy news.
Shangyou Nie
Editor, Well Read
Venezuela Signs Its First Contracts with Shell for Gas Development
Saulo Ferreira Angelo/Shutterstock.com
The Venezuelan government has signed the first set of contracts with Shell to operate and develop the offshore Loran natural gas field through an LNG plant in neighboring Trinidad and Tobago.
The new Shell contracts:
According to a LinkedIn post from Shell’s Executive Vice President and Country Chair for Trinidad and Tobago, Adam Lowmass, the agreements were signed in front of Venezuelan Interim President Delcy Rodríguez and U.S. Secretary of the Interior Doug Burgum.
Shell will develop the 7-trillion-cubic-foot Loran gas field through its LNG plant in Trinidad and Tobago.
The Loran gas field is located to the South of Trinidad and Tobago, with reservoirs extending across the border.
Shell will also develop Venezuela’s Dragon Field (4.2 Tcf), located to the west of Trinidad and Tobago, in a similar arrangement.
According to Upstream, Shell also signed additional agreements around …
A technical partnership to support the expansion of the Monagas North Field
Assisting in reducing gas flaring in Venezuelan oil field development
Background:
During CERAWeek in March, Shell CEO Wael Sawan said that Shell could take FID for gas projects in Venezuela as early as this year.
Unlike for oil, which requires separate agreements with the U.S. government, gas development appears to be more directly controlled by the Venezuelan government.
Other majors’ activities:
Chevron signed an agreement to exit Blocks 2 and 3, which contain the Loran gas field, in April. In exchange, Chevron obtained additional onshore oil interests.
The agreement between Chevron and PDVSA paved the way for Shell to sign the latest deal to become the operator for the Loran gas field.
BP will reportedly also join in the development of Venezuelan offshore gas fields.
Shell and BP are equal partners for Atlantic LNG based in Trinidad and Tobago, with 45 percent interest each. Ten percent belongs to National Gas Company.
Atlantic LNG started production in 1999 and has 15 million tonnes per annum of capacity.
Securing additional supply gas for Atlantic LNG has been key to prolonging the life of Atlantic LNG.
What they’re saying:
“For the first time, the Hydrocarbons Law, which was recently reformulated and amended, is allowing us these forms of negotiations and flexible business agreements that will also boost production,” said Rodríguez.
“Shell has a long story in Venezuela, dating from 1912, and this week’s agreements represent a clear signal of Shell’s commitment to collaboration, capability-building, and progress that will benefit all,” said Lowmass in his LinkedIn post.
What to watch:
What contracts will BP sign in relation to Venezuelan gas development?
When will ExxonMobil and ConocoPhillips enter Venezuela, and for which projects?
ExxonMobil and ConocoPhillips—two American majors whose assets were previously nationalized—have reportedly been in discussion with President Rodriguez’s government about billions of dollars previously owed them, as well as potential new contracts with “durable terms.”
Venezuela would like to have these two American heavyweights back in its upstream business, in addition to Chevron.
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BP, TotalEnergies, and Asian Partners Win Bid to Develop Bab Gas Cap in the United Arab Emirates
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The United Arab Emirates gave the long-anticipated award for development rights for the Bab Gas Cap of the giant Bab oil field last Wednesday.
Winners include two European majors (BP and TotalEnergies, 10 percent each), and four Asian companies: CNPC (8 percent), ZhenHua Oil (4 percent), Inpex (5 percent), and GS Energy (3 percent). State company ADNOC will retain 60 percent equity.
Bab deal details:
Abu Dhabi’s Supreme Council awarded the new concession to ADNOC and five other partners from Europe and Asia on 24 June.
According to BP, the Bab Gas Cap Project will produce up to 1.5 billion cubic feet per day of gas, feeding into domestic markets and LNG export plans.
The gas produced will be transported to a facility to be developed by ADNOC Gas, a subsidiary of ADNOC. Gas production from BGC will add about 15 percent to the United Arab Emirates’ gas processing capacity.
According to Upstream, BGC will cost $8 billion. Majority owner ADNOC has started the tender process for engineering, procurement, and construction.
About the project:
BGC is the biggest project of its kind and consists of three reservoirs in the onshore Bab oil field.
The BGC project will produce gas and condensate.
No details about international players’ payments to enter the asset were disclosed.
Bab is one of the United Arab Emirates’ biggest oil and gas fields, estimated to contain 10 billion barrels of oil equivalent.
Bab is a significant contributor to the United Arab Emirates’ plan to reach 5 million barrels of oil per day of production by 2030 from its current 3.5 million barrels of oil per day.
The Bab oil field is being developed by ADNOC Onshore, a subsidiary of ADNOC, since it was awarded in 2015 for 40 years.
Big picture:
As countries and companies adjust to a slower-paced energy transition, competition for access to discovered oil and gas resources, such as those in the Middle East, has increased.
Compared to their American counterparts such as ExxonMobil and Chevron, European and Asian companies have limited exposure to American shale oil and gas—a major growth engine for the past 15–20 years.
Chinese and Japanese companies view the Middle East as a major region for upstream investments.
Bab is a significant contributor to the United Arab Emirates’ plan to reach 5 million barrels of oil per day of production by 2030.
The Bab oil field facility was the target of Iranian missiles in March after the Iran war broke out, according to the WSJ.
The United Arab Emirates keeps opening up:
The announcement comes after the United Arab Emirates’ recent decision to exit OPEC.
The United Arab Emirates has been the most outspoken Gulf country to side with the United States against Iran.
This award to Asian and European investors might be part of a geopolitical balancing act.
The United Arab Emirates has been one of the most open Gulf countries in attracting international investors for the past 30 years, allowing international investors to own equity in its oil and gas fields.
In comparison, Saudi Arabia and Kuwait, for example, welcome IOCs to be service providers, but keep the oil and gas rights within state company control.
What they are saying:
The BCG project is “expected to contribute to the UAE’s gas self-sufficiency, support the continued development of the country’s petrochemicals sector, and advance ADNOC’s plans to expand its liquified natural gas export capacity,” said the Abu Dhabi government in a statement.
“The Bab Gas Cap project is well in line with TotalEnergies’ Upstream strategy by adding low-cost, low-emissions resources with significant potential for production growth,” said Patrick Pouyanné, Chairman and CEO of TotalEnergies.
What to watch: It might not be immediate, but will Iran start planning to open its oil and gas sector to international investors?
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