Page 11 - MEOG Week 10

MEOG ProJeCts & ComPanIes MEOG
FID on Qatari LNG expansion unlikely this year
Qatar
qATAR is unlikely to sanction the expansion of its giant North Field lNG project this year, Oslo- based Rystad Energy said in a recent research note, in light of the collapse in gas prices.
The world’s top lNG exporter plans to raise its liquefaction capacity from 77mn tonnes per year at present to 126mn tpy by 2027, According to Rystad, this project is likely to cost more than $50bn in greenfield investments at the North Field.
qatar had planned to take a final investment decision (FID) on the project’s first $35bn stage this year, but Rystad does not expect this mile- stone to be reached until the first half of 2021. Its operator qatar Petroleum is now re-evaluating the expansion’s commercial outlook, the consul- tancy said, owing to low gas prices. The commer- cial bid deadline for the liquefaction facilities had also been extended to the second quarter of 2020.
“Given the anticipated delays in formal sanc- tioning of the project, Rystad Energy has low- ered its total forecast for capital expenditure in the Middle East, predicting about $21.3bn of
investments will get the go-ahead in the region this year, versus the previous estimate of more than $56bn,” Rystad said. The expansion’s first phase comprises contracts for associated onshore liquefaction and storage facilities. Con- tractors are to be sought for building four lNG trains, utilities and offsite facilities, a helium recovery unit, non-technical buildings, ware- houses, workshops and associated facilities. qatar is likely to take an FID on the second stage of the expansion in 2023, at the earliest.
The global lNG market was oversupplied last year as a result of lacklustre gas demand in Asia and a surge in lNG production in the US and other countries. Making matters worse for pro- ducers, the coronavirus outbreak has resulted in weaker gas demand in China, the world’s biggest lNG importer.
Rystad also expects FIDs this year on $12.5bn of gas projects in the UAE, and the delayed Zuluf oilfield expansion in Saudi Arabia, which is tar- geting around 5bn barrels of oil equivalent (boe) and is slated to cost $10bn.™
Dana Gas operations uneffected by virus
KurdIstan
DANA Gas announced last week that its growth plan and operations remain unaffected by the coronavirus. Precautionary measures and con- tingency plans have already been put in place to safeguard personal and assets. The company says it has robust operations and cash flows since a large part of the company’s revenue comes from long term gas contracts rather than oil, whose price is largely uncorrelated to oil. This repre- sents a natural hedge against low oil prices.
For 2019, the company posted its highest annual net profit in seven years of $157 million (AED 575 million) as compared to a net loss of $186 million (AED 682 million) in 2018. The cash balance is $425 million (AED 1,558 mil- lion) versus $407 million (AED 1,495 million) at the prior year end. Group average production was 66,200 boepd versus 63,050 boepd, a 5% increase, led by an 18% rise in the kurdistan Region of Iraq ( kRI) output.
Patrick Allman-Ward, CEO of Dana Gas, said: “The first two months of trading in 2020 has been robust despite the current unpredictable economic environment resulting from the coro- navirus. We have appointed an EPC contractor, who will start immediately on building the first of Pearl Petroleum’s two gas processing trains in
the kRI. This will see production output increase 60% to 650 MMscfpd when it comes online in q1 2022. Our cash position remains strong at $425 million and the Board is expected to pro- pose the payment of a dividend to the AGM for the full year 2019.”
The company has appointed an engineer- ing, procurement and construction (‘EPC’) contractor for the first of two 250 MMscf/d gas processing trains planned at the khor Mor gas processing plant in the kRI. The appointment of a contractor follows final approval by the Ministry of Natural Resources of the kurdis- tan Regional Government, which oversees the project.
The contract award marks a key milestone in Pearl Petroleum’s long-term expansion plan. Production in the kRI has already increased by 18% to 31,500 boepd in 2019 as a result of the successful debottlenecking project that took place in q4 2018. This added $40 million to the company’s revenues in 2019. The implementa- tion of the first 250 MMscfpd gas processing train will be carried out immediately and first gas is expected by q1 2022. The second phase will take total production to 900 MMscfpd by the end of 2023.™
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