Page 6 - Euroil Week 39 2019

EurOil COMMENTARY EurOil
Strategic refocus
Wood Mackenzie estimates that ExxonMobil has secured an “attractive” price for its assets.
“ExxonMobil’s exit brings an end to one of the industry’s longest running stories - the super-major was awarded the first licence ever awarded on the Norwegian Continental Shelf,” WoodMac analyst Neivan Boroujerdi said. “Exx- onMobil’s asset sales programme has been slow to get moving, but this will help get the campaign into full swing. The attractive exit price will have been too good an opportunity to pass by.”
Reports indicate Exxon is also mulling a sale of its UK North Sea business as part of its stra- tegic refocus. Talks have been held with several interested parties, Reuters cited sources as saying in August, with its assets potentially fetching up to $2bn. ExxonMobil currently produces around 80,000 bpd of oil and 441mn cubic feet (4.56bn cubic metres) per day of gas in the UK North Sea.
“Combined with its Norwegian assets, which
ExxonMobil recently announced its intention to market, could see the super-major reach one- third of the way to meeting its $15bn divestment target,” Boroujerdi said at the time. He noted Exxon’s British business “is attractive. It is highly cash-generative, with operating costs around half of the UK average.”
Exxon is also suspected of wanting to sell its stake in the Neptun Deep gas field off Roma- nia, where it is partnered with Austria’s OMV Petrom. But the major has not confirmed this plan, and recent moves by the Romanian gov- ernment to backtrack on unpopular gas indus- try legislation should improve the project’s prospects.
ExxonMobil suffered a 21% year-on-year decline in profits in the second quarter, owing to maintenance and poor margins in its down- stream and chemicals sector. Upstream earn- ings, however, were up 7.3% y/y at $3.26bn, on the back of higher US Permian basin output.™
PIPELINES & TRANSPORT
Romgaz to buy 20% stake in Greek LNG project
GREECE
Romgaz is paying little but will partly finance the project.
THE shareholders of Romanian natural gas producer Romgaz have approved in principle the purchase of a 20% stake in Greek liquefied natural gas (LNG) terminal operator Gastrade that also involves €12.5mn capital contribution, according to a statement from the company sub- mitted to the Bucharest stock exchange.
The price to be paid for the stake is only €0.4mn but Romgaz will commit to partly finance the project, Bursa daily reported. The LNG terminal is estimated to cost over €370mn, but it will receive funding support from the European Union. The LNG terminal would have a transit capacity of over 6bn cubic metres of gas per year and a storage capacity of 170,000 cubic metres of LNG.
Greece currently has one LNG terminal on an islet off Athens, but Greece’s Public Gas Com- pany (DEPA) signed a deal with Gastrade on the LNG terminal in Alexandroupolis on the side- lines of the Southeast Europe Energy Forum in September last year.
The project aims to provide an alternative source of gas supply to Southeast European markets and will offer security of supply, diver- sification of gas routes and sources, price flexi- bility and enhanced competition to the region. It will satisfy the additional gas demand in the region mid and long term, give access to LNG and contribute to lifting the isolation of markets and enhance gas market penetration.
Greek company Gastrade is the sole promoter and owner of the project for the construction of the LNG terminal in Alexandroupolis.
The construction of the terminal is condi- tional on obtaining a derogation from European regulations regarding the common rules for the internal market in the natural gas sector (the unbundling rules, more precisely), the company shows in a document. Gastrade estimates that the derogation decision from the provisions of the directive will be issued in November this year, and the final investment decision in the project is planned for December, a decision that must be taken unanimously by the project shareholders.
Romgaz, which has a market capitalisation of almost €3bn, is 70%-controlled by the Romanian state. ™
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Week 39 03•October•2019