Page 8 - LatAmOil Week 26

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Downstream: UAE pipeline deal with overcapacity and ever more efficient fuel
At a time when investment in oil and gas is at consumption.
unprecedented lows, the UAE’s Abu Dhabi The coronavirus (COVID-19) crisis and the
National Oil Co. (ADNOC) raised $10.1bn from resulting collapse in fuel demand may prove
the transfer of a near-half stake in its gas pipe- to be the final straw for Swiss-based Gunvor,
line business last week. The investors in question which is considering the closure of its 107,500
were the US entities Global Infrastructure Part- barrel per day (bpd) plant in the Belgian port of
ners and Brookfield Asset Management, Sin- Antwerp. Gunvor says it will take time for the
gapore’s sovereign wealth fund GIC, Canada’s supply glut created by the pandemic to be soaked
Ontario Teachers’ Pension Plan Board, South up, and in the meantime, its plant will continue
Korea’s NH Investment & Securities and the Ital- to generate negative cash flow. The company has
ian pipeline operator Snam. The deal is expected stressed that the decision would not affect opera-
to be closed in July. tions at its 88,000-bpd refinery in Rotterdam, the
Rather than a simple sale and purchase trans- Netherlands, or its 110,000-bpd plant in Ingol-
action, ADNOC will lease out its ownership stadt, Germany. Other refiners may consider
interest in the assets for 20 years in exchange similar options, and for the long-term health of
for a volume-based tariff. This marks the latest European refining, reduced capacity may not be
in a series of divestment deals by the national such a bad thing.
oil producer, which needs funding to diversify Meanwhile, Mediterranean-focused Ener-
its business and shore up its cash reserves dur- gean has secured a significant price cut in its deal
ing the downturn. Last year, it also shed a 40% to acquire the upstream arm of Italy’s Edison.
stake in its oil pipeline network to US investors It will pay only $284mn, instead of an original
Blackrock and KKR for $4bn. In Mozambique, price of $750mn. This is largely because Edison’s
France’s Total and its partners at the 13mn tonne Algerian and Norwegian assets have been omit-
per year (tpy) Mozambique LNG export plant ted from the transaction, although weaker mar-
are inching towards closing a financing deal that ket conditions also helped drive down the price.
will pave the way for a final investment deci- BP, meanwhile, has agreed to sell its $5bn
sion (FID). Around 20 commercial banks are petrochemicals business to UK chemicals group
expected to take part. Ineos to help meet its $15bn divestment target
Meanwhile, fuel prices have spiked in Zim- early and reshape its business for the energy
babwe, following the government’s removal of transition. By divesting its petrochemicals, BP is
a fixed exchange rate in place since March. US also separating itself from its peers such as Royal
dollar scarcity has exacerbated fuel shortages in Dutch Shell and ExxonMobil, both of which are
Zimbabwe, which lacks any refining capacity of expanding their petrochemicals businesses.
its own and therefore imports all of its gasoline,
diesel and other petroleum products. If you’d like to read more about the key events shaping
Europe’s oil and gas sector then please click here for
If you’d like to read more about the key events shaping NewsBase’s EurOil Monitor.
the downstream sector of Africa and the Middle East,
then please click here for NewsBase’s DMEA Monitor. FSU: Gazprom’s bold claim
The long-serving head of Russia’s state gas sup-
European asset sales at risk plier Gazprom made a bold claim last week,
The European refining sector has not had an easy saying it would one day send up to 130bn cubic
time over the years, amidst structural problems metres (bcm) per year of gas to China.

P8 www. NEWSBASE .com Week 25 25•June•2020