Page 12 - MEOG Week 43 2021

MEOG NEWS IN BRIEF MEOG

POLICY COMPANIES The credit profile of Delek Royalty is
driven by the rating of the Leviathan gas
Taliban ready to buy oil Tethys provides September field (Leviathan Bond Ltd; BB/Stable), a large
offshore gas field in Israel that pays royalties
from Iran update to the company. The rating considers Delek
Royalty’s exposure to refinancing risk in
Afghanistan is ready to buy oil from Iran, says Tethys Oil’s share of the production, 2023, given high initial leverage as well as
the chairman of Afghanistan’s Chamber of before government take, from Blocks 3&4 uncertainty on the timing of the royalty rate
Commerce and Investment (ACCI) Tawakal onshore the Sultanate of Oman amounted step-up, which is linked to the Leviathan gas
Ahmadyar. in September 2021 to 345,273 barrels of oil, field production.
This comes amid a time when trade with corresponding to 11,509 barrels of oil per day. The rating factors in the seniority of royalty
the war-torn nation is currently complicated Oil production in Oman is currently payments in the Leviathan gas field’s cash
for many companies as the country is run by subject to production limitations under flow waterfall as well as the stable cash flow
the Taliban, a group which has not yet been the OPEC+ agreement. As a consequence, generation supported by the field’s high-
recognized by any country. production from Blocks 3&4 is subject to quality reserves, the use of commercially
However, the ACCI chief, during a video limitations but is likely to fluctuate on a proven technology and the strong operating
conference with Iranian commercial attaché monthly basis. set-up with Chevron Mediterranean Ltd
Ebrahim Hosseini, discussed general trade The Official Selling Price (OSP) for Oman (Chevron) providing day-to-day operating
issues between the two nations and said that Export Blend Crude Oil for the month of services.
Afghanistan is ready to buy oil from Iran if September 2021 amounts to USD 72.73 per Delek Royalty benefits from the payment
Tehran paves the way for it. barrel. The OSP, as published by Sultanate of of overriding royalties (ORRI), which rank
According to Sputnik, as the Taliban is Oman’s Ministry of Energy and Minerals, is senior to operating costs and debt service on
struggling to resolve its ongoing issues with the benchmark price for Tethys Oil’s monthly the ‘BB’ bond issued by Leviathan Bond Ltd.
petroleum shortages, it hopes that Tehran will oil sales excluding trading and quality However, the increase in the royalty rate from
be able to lend a hand. But, for this to happen, adjustments. 1.5% to 6.5% at the well head (1.38% to 5.98%
Iran will have to help its neighbor in resolving Tethys Oil AB, through its wholly owned expected effective rate at the entry to the grid)
a number of issues. Ahmadyar, therefore, subsidiary Tethys Oil Block 3 & 4 Ltd, has a 30 will be linked to the timing of the full recovery
asked Hosseini to help his nation and said per cent interest in Blocks 3&4. Partners are of the Leviathan gas field investment (return
that it is imperative for both countries to Mitsui E&P Middle East B.V. with 20 per cent on investment; ROI) and this limits the
strengthen economic relations and promote and the operator CC Energy Development visibility of project cash flow generation over
trade. S.A.L. (Oman branch) holding the remaining the medium term.
The ACCI chief went on to say that Afghan 50 per cent. Under the Fitch Base Case (FBC), the ROI
petroleum importers are in dire need of being TETHYS date is in 2026, while under the Fitch Rating
provided with the required facilities by the Case (FRC), which assumes lower revenues in
Iranian government. The Iranian commercial Fitch affirms Delek line with the field’s 1P production forecast, it is
attaché, on the other hand, vowed to help in 2027, highlighting that the ORRI payment
Kabul to create the conditions necessary for Leviathan bond at B+ depends on the timing of revenue generation
launching the oil trade by “eliminating the of the gas field.
existing problems” and building facilities Fitch Ratings has affirmed Delek Overriding The Leviathan gas field benefits from a
required. Royalty Leviathan Ltd’s (Delek Royalty) diversified offtake structure with long-term
TEHRAN TIMES $180mn bond at ‘B+’. The outlook is stable. contracts with offtakers in Jordan and Egypt

P12 www. NEWSBASE .com Week 43 27•October•2021