Page 7 - Euroil Week 16 2020

EurOil INVESTMENT EurOil
Shell delays series of North Sea projects
UK
Shell has cut its 2020 capex by 20%.
ROYAL Dutch Shell has warned this month of delays to several key projects in the UK North Sea, including the launch of the Shearwater gas hub, because of the coronavirus (COVID-19) crisis and the resulting collapse in oil prices.
The Shearwater project was intended to redi- rect gas and condensate to St Fergus in eastern Scotland from the Shearwater field and other deposits developed by Shell and others in the area, including Arran, Fram and Columbus. Shell had hoped to finish the work, which includes installing a 37-km pipeline to link Shearwater with the Fulmar system, in 2020. Completion is now expected in 2021, however.
Another casualty of the crisis has been the Cambo oilfield, in which Shell has a 30% stake alongside private equity-backed operator Siccar Point Energy, with 70%. The pair had aimed to take a final investment decision (FID) later this year but sanctioning has now been pushed back to the second half of 2021, Siccar said in late March.
There has been another FID deferral at Shell’s
Jackdaw gas and condensate field some 250 km east of Aberdeen. The decision had been antic- ipated in the current quarter but is now antici- pated sometime next year.
Meanwhile, there are risk of delays at Shell’s Penguin redevelopment project in the North Sea. Construction of a floating production, stor- age and offloading (FPSO) vessel in China is running behind schedule, which could affect the project’s launch date, scheduled for 2022.
The Penguin field was first developed in the early 2000s. Shell’s plan is to drill eight new wells, in order to tap into compartmentalised reservoirs, and also take steps to boost reservoir pressure. The project is predicted to flow 45,000 barrels of oil equivalent per day (boepd) at peak.
Shell is a major investor in the North Sea, with stakes in the three biggest West Shetlands fields operated by BP – Schiehallion, Clair and Foina- ven. The Anglo-Dutch major announced in late March a 20% cut in capital expenditure this year to $20bn, in light of the oil price rout that began in early March. ™
PERFORMANCE
Norwegian oil output lags behind forecast in March
NORWAY
Norwegian output was still 16.1% higher year on year, however.
NORWEGIAN oil and other liquids production soared by 16.1% year on year in March, averag- ing 2.098mn barrels per day (bpd), data pub- lished by the Norwegian Petroleum Directorate (NPD) shows. However, yields were 3% lower than in February, and lagged behind forecasts by 2.9%, the NPD said.
The Norwegian government has said it will decide in the near future whether to imple- ment a unilateral cut to its oil production, in light of OPEC+’s historic deal on cuts. Doing so could derail growth plans at the Johan Sver- drup oilfield in the North Sea, which has been driving rising national output since its launch in October.
Equinor and its partners recently announced plans to bring forward the target for Sverdrup reaching its full first-phase production capacity by several months to May. The capacity will also be 30,000 bpd higher than initially planned at 470,000 bpd.
Of the overall figure for liquids, Norway pro- duced 1.682mn bpd of crude oil in March, up
21% y/y but down 4.5% month on month, and 4.4% below the forecast. Gas extraction averaged 344.4mn cubic metres per day, representing a 2% decline y/y but a 1.1% growth m/m. It surpassed the forecast by 2.3%.
If Norway imposes a cut on oil production, which would mark the first time it has taken such a step in almost two decades, it could have an impact on gas output as well. On the one hand, less associated gas will be extracted if less oil is lifted. On the other, a reduced need to re-inject gas to maintain oil well rates will free up some extra supplies for export.
In any case, the main factor affecting Norwe- gian gas production is likely to be gas prices in Europe. Despite having competitive gas, Nor- wegian producers nevertheless scaled back out- put last year because of weaker prices, with the expectation that the market would recover this year. Owing to coronavirus (COVID-19) lock- downs, prices have instead slid further, which could prompt producers to hold back more gas volumes. ™
Week 16 23•April•2020 w w w . N E W S B A S E . c o m P7