Page 8 - AsianOil Week 01

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Reach sinks new probe in Kazakhstan
PROJECTS & COMPANIES
MALAYSIAN oil firm Reach Energy has sunk a new exploration well at the Emir oil project in western Kazakhstan.
Work began on the Yessen-4 well, targeting a potential hydrocarbon trap near the existing Yessen oilfield, on December 24, Reach said in a filing on December 24. The aim is to confirm an extension of the Yessen structure.
The well should take 120 days to drill to a depth of 3,753 metres, Reach said, penetrating the T2 carbonate reservoirs, specifically T2A, T2B and T2C.
Reach acquired a 60% stake in Emir from Chinese firm MIE Holdings in 2016 for $176mn. The project consists of four commercially pro- ducing oilfields, Dolinnoe, Aksaz, Emir and Kariman, as well as Yessen and North Kariman, which are currently in trial production. Reach and MIE also control an 804.8-square km explo- ration area encompassing the fields, where a number of prospects have been identified.
The pair have drilled three previous wells at Yessen, all of which struck oil. The most recent, Yessen-3, was completed in October and inter- sected up to 34 metres of an oil-bearing reser- voir. Given these past results, Reach said the chance of success at Yessen-4 was “high.”
Reach also reported the discovery of a “highly graded” hydrocarbon trap at a new exploration well near the western flank of the Kariman field in November.
On the financial front, the Malaysian player’s recent performance has been less encouraging. The company’s core losses widened by 50.9% to MYR35.9mn ($8.75mn) in the nine months ending September 30, on the back of lower pro- duction and higher financing costs. Output was affected by workovers at some wells.
Malaysia’s Hong Leong Investment Bank (HLInvest) warned in a research note in early December that Reach needed to raise $100mn to fund its capital expenditure plans, and would likely turn to debt financing. It also had a MYR312.9mn payment that was due to be made to MIE by the end of 2019, according to HLIn- vest, which it was looking to defer. Reach could not be reached for a comment on whether this request was granted.
Meanwhile, Reach and MIE are yet to secure an extension from the authorities to their exploration permit at Emir, which expires this month. The pair are also working to obtain commercial production permits at Yessen and North Kariman.™
Hengyi ramps up Brunei refinery runs
PROJECTS & COMPANIES
CHINA’S privately run Hengyi Industries has begun operating its new refinery in Brunei at close to full capacity, Reuters quoted a company official as saying on January 2.
The company launched trial production at the 160,000 barrel per day (bpd) facility in July 2018 after construction began in 2017.
The plant, which is located on the island of Palau Muara Besar, includes a 1mn tonne per year aromatics plant and a 500,000 tpy benzene unit. The refinery is part of the island’s 955-hec- tare (9.55-square km) industrial park.
“Hengyi’s Brunei project is running at almost full capacity,” Reuters quoted an unnamed com- pany spokeswoman as saying. The comment came just days after another executive told the newswire that oil product exports had been pro- gressing smoothly.
“Almost all of our [liquefied petroleum gas] LPG exports went to the Philippines due to its geographic proximity. Indonesia is the main cli- ent for our gasoline shipments and diesel moved in the region, including Australia,” the other unnamed executive said. The source added that Hengyi had been exporting the refinery’s jet fuel production to Hong Kong and the US among other places.
With the refinery having ramped up to near full capacity, oil product output is projected to reach around 6mn tpy.
Hengyi Industries is a 70:30 joint venture between Zhejiang Hengyi Group and Brunei’s state-owned Damai Holdings. Damai is a wholly owned subsidiary of the Strategic Development Capital Fund.
Hengyi Industries’ CEO, Chen Liancai, told Xinhua in September 2019 that the first phase of the project’s development, which spans 276 hectares (2.76 square km) of land, required a total investment of $3.45bn. The company has said a second, $12bn phase of development is possible.
Chen added that one third of the refin- ery’s feedstock would come from Brunei’s oilfields, with the rest supplied from the international market.
With the first phase completed, the refinery is projected to supply 1.5mn tpy of paraxylene (p-Xylene) to the Chinese market.
The Brunei government has forecast that the project will increase the country’s GDP by $1.33bn in its first full year of operation, gen- erating 1,600 jobs in the process.™
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w w w. N E W S B A S E . c o m Week 01 08•January•2020