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The project’s second phase was expected to If you’d like to read more about the key events shaping
raise liquefaction capacity from 2.5mn tonnes the downstream sector of Africa and the Middle East,
per year to 10mn tpy. Reporting its third-quar- then please click here for NewsBase’s DMEA Monitor.
ter results, though, Kosmos said the expansion
would add only 2.5mn tpy, bringing the total to Europe: UK drilling slump
5mn tpy. UK crude oil and natural gas production is slated
The revised capacity represents “the sweet to fall this year as drilling slumps to its lowest
spot for leveraging all the major infrastructure level since the 1970s, Oil and Gas UK (OGUK)
from phase one,” Kosmos CEO Andy Inglis told warned in a report on November 11.
investors in an earnings call. Overall activity has dropped sharply as a
The second phase will utilise spare capacity result of low oil and gas prices and restrictions
at the subsea infrastructure already being devel- related to the coronavirus (COVID-19) pan-
oped for the first phase, Inglis explained. Rather demic. Only 54 wells were drilled in the first 10
than requiring a new floating production storage months of the year, compared with 112 for the
and offloading (FPSO) unit, the first-phase ves- whole of 2019. Only six exploration wells were
sel will instead be expanded. A second gas export completed during the period, and it is possible
line from the FPSO to the hub terminal will also there will be no more this year, OGUK said.
no longer be required. The recovery will not happen overnight, the UK oil and gas
“As a result, we believe phase two will be association has warned. It estimates that pro-
the most competitive brownfield LNG expan- jects shelved during the downturn could take drilling is slated
sion project globally,” Inglis said, “with limited three years to be restarted, with around the to fall this year
upstream capital requirements expected to be same amount of time needed for investment
less than $1bn gross to first gas.” to rebound to pre-crisis levels. The drilling and to its lowest level
Breakeven costs for this LNG are projected rig companies needed for implementing these
to come to just above $4 per mmBtu for Asian projects are also in dire shape, OGUK said, since the 1970s.
deliveries and even less for European ones, noting that many were undergoing bankruptcy
thanks to the lower capital costs. proceedings.
Over in the UAE, national oil company All this undermines the UK North Sea’s
(NOC) ADNOC said on November 9 it intended competitiveness versus other basins, the asso-
to start trading refined products in December ciation continued, and highlights the need for a
through its joint venture with Italy’s Eni and so-called North Sea transition deal to help oper-
Austria’s OMV. ADNOC Global Trading (AGT) ators get through the downturn and develop
is 65%-owned by ADNOC, 20% by Eni and 15% cleaner energies. The government has said it will
by OMV. The recently formed venture began publish the deal within the current parliament,
derivatives trading in September with a focus but OGUK is hopeful that it will arrive shortly,
on crude oil. It had hoped to launch trading possibly by the end of the year.
operations in the second quarter of this year, but In Norway, ConocoPhillips and its Polish
the coronavirus (COVID-19) pandemic led to partner PGNiG have made a “substantial” gas
delays. discovery in the Norwegian Sea, with an esti-
“Next month, we will begin trading the full mated size of between 8mn and 30mn cubic
portfolio of our refined products,” ADNOC CEO metres (50-189mn barrels) of recoverable oil
Sultan al-Jaber said at the ADIPEC conference. equivalent.
ADNOC has global ambitions for AGT. ConocoPhillips said it had found gas and
“The plan is to grow into Singapore, Europe and condensate at production licence (PL) 1009
potentially gain a presence in the US,” ADNOC’s after drilling a wildcat well some 35 km from
director for marketing, supply and trading said the Equinor-operated Heidrun oil and gas field,
at the conference. “We start with a [1mn barrel] where Conoco has a 24% position. The discov-
refinery behind us, and the relationship with ery is also 27 km south-west of the Aker BP-op-
[Vitol Tank Terminals International] allows us erated Skarv field, in which PGNiG has a 11.9%
access to locations all over the world.” stake.

P6 www. NEWSBASE .com Week 46 19•November•2020