Page 5 - LatAmOil Week 38 2019

LatAmOil COMMENTARY LatAmOil
 It has also supplied LNG for ship bunkering in the south-eastern US, setting an example that Eagle LNG hopes to emulate.
Competition
Other US operators are likely to follow suit, especially since opportunities for exports to higher-volume markets are limited. Europe is already awash with gas from Russia, Qatar and other suppliers, while the outlook for the Asia-Pacific region is constrained by economic uncertainty and trade disputes between the US and China.
On the other hand, Africa and South Amer- ica are also showing more interest in gas, which is a relatively clean fuel for the residen- tial, business and power-generating sectors. Nevertheless, African and South American gas consumers might do better to promote the development of domestic gas reserves or look to regional suppliers – including existing pro- ducers such as Nigeria and Argentina or future producers such as Mozambique and Brazil.
The Caribbean market, by contrast, has remained relatively underserved, despite its growing demand for energy and dwindling interest in traditional fuels such as heavy fuel oil and other petroleum products. As such, it represents an opportunity for US gas operators – especially those willing to take advantage of
new delivery options such as floating storage and regasification (FSRU) vessels and contain- erised LNG shipments.
This opportunity is not boundless, how- ever. The US is not the only gas producer in close proximity to the Caribbean. Trinidad and Tobago, which lies off the coast of Venezuela, is already an exporter of LNG, while Brazil hopes eventually to extract enough gas from its off- shore fields to justify LNG exports. Argentina, for its part, became a small-scale LNG exporter earlier this year and is looking to build addi- tional export facilities that will process gas from the onshore Vaca Muerta Basin.
In short, Eagle LNG and other US companies that target the Caribbean market should expect to face competition from South American pro- ducers, even though the latter are still some years away from being able to export LNG on anything approaching the US scale.
They could gain an edge, though, by doing more than just offering up their production for sale. If they offer to contribute to the building of the infrastructure facilities that Caribbean states will need to import more LNG – regasification terminals, including FSRU vessels; container ports; onshore transport and distribution pipe- lines, and storage facilities – they may be able to strike deals with a larger number of potential customers. ™
The Caribbean “
market has remained relatively undersrved, despite its growing demand for energy and dwindling interest in petroleum- based fuels
CNH gives Eni green light for Ehecatl-1 well
MEXICO
MEXICO’S National Hydrocarbons Commis- sion, known by its Spanish acronym CNH, has reportedly given Eni (Italy) and its partners Cairn Energy (UK) and Citla (Mexico) per- mission to move forward with the drilling of an exploration well at the offshore Block 7.
Edinburgh-based Cairn said last week that CNH had authorised the group to proceed with the drilling of Ehecatl-1, an exploration well within the Ehecatl section of Block 7. The drilling site lies in 420-metre-deep water, and the well will be sunk to a depth of 4,400 metres below the sea floor, it noted.
The company did not say exactly when the partners expected to spud Ehecatl-1. It did state, though, that drilling was due to begin after the completion of Saasken, an exploration well at Block 10, also located offshore Mexico. Addi- tionally, it said that the well would be finished in about 70 days.
Ehecatl may contain as much as 140mn bar- rels of oil equivalent (boe). Eric Hathon, Cairn’s director of exploration, said that some of these reserves might lie in an untapped portion of Mexico’s offshore zone.
He stated: “Ehecatl is a very robust structure, being a three-way trapped against salt, and it’s targeting also lower Miocene sands, which again
have been rarely penetrated in the basin. So suc- cess here will open up a whole new play.”
Cairn holds a 30% stake in the produc- tion-sharing contract (PSC) for Block 7, and the remaining equity is split between Eni, the oper- ator, with 45%, and Citla, with 25%. The part- ners teamed up to explore and develop Block 7 in 2017. At the time, they described the block as a good investment. This was partly because it was near sites where significant quantities of oil and gas have been found. Also, the licence area is close to existing Pemex infrastructure, which means that it will be easy to move output away from Ehecatl.
Image: Premier Oil
Week 38 26•September•2019 w w w . N E W S B A S E . c o m
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