Page 8 - Euroil Week 50 2019

EurOil PIPELINES & TRANSPORT EurOil
Equinor scraps plan for Castberg oil terminal
NORWAY
The plan was uneconomical.
NORWAY’S Equinor and its partners at the Johan Castberg oilfield have axed plans to build an oil terminal at Veidnes because of its high cost, the state oil producer said on December 13.
The group, which also includes Eni unit Var Energi and another state firm Petoro, dropped plans for a large-scale terminal in March last year and began looking into the construction of a downscaled ship-to-ship transfer terminal instead. But this option has been ruled out as well, Equinor said in a statement.
The plan is now to transport oil from Johan Castberg directly to market, according to the company.
“In a demanding period for the industry we have managed to develop Johan Castberg into a profitable project,” Equinor’s vice-president for technology, projects and drilling, Anders Opedal, said. “We have, however, not been able to develop a profitable export solution for the Johan Castberg oil involving a terminal at Veidnes.”
Based on output from Johan Castberg and the smaller Goliat field, Equinor estimates it would have lost NOK3.6bn ($398mn) from funnelling their oil through a terminal rather than deliver- ing it directly. Were other Barents Sea fields to use the facility, this loss would narrow to just
above NOK2.8bn.
Johan Castberg was identified in 2011 and is
estimated to contain 450-650mn barrels of oil. It is one of the last remaining major discoveries off Norway yet to come on stream, following the larger Johan Sverdrup’s launch last month. First oil is anticipated in 2022.
Low oil prices have dented the project’s pros- pects, forcing Equinor to make considerable cost savings to keep it viable. The company notably decided to use a floating production storage and offloading (FPSO) vessel instead of a more costly fixed platform. These efforts have paid off, with the project’s cost now at around NOK50bn – half of its original estimate.
Equinor’s decision against a terminal was met with criticism from Norway’s largest labour union of oil workers, Industri Energi, who warned it would mean fewer jobs in northern Norway.
“We’re very disappointed,” Industri Energi leader Frode Alfheim said in a statement. “They are wasting a golden opportunity to establish good infrastructure which could have contrib- uted to further boosting activity in the region.”
Equinor operates Johan Castberg with a 50% stake, while Var Energi has 30% and Petoro 20%.™
INVESTMENT
INA signs off on €537mn refinery upgrade
CROATIA
The project will make Rijeka a top-tier European refinery.
CROATIAN oil company INA has sanctioned a HRK4bn (€537mn) project to modernise its 90,000 barrel per day (bpd) refinery in the northern Adriatic port of Rijeka, to a bid to lift profits.
The investment will cover the construction of a delayed coker, which cracks heavy residual oil into more valuable gas oil and petroleum coke. Existing units will also be upgraded and restored in order to boost production of prof- itable motor fuels, helping Croatia wean itself off imports.
INA controls two refineries – one in Rijeka and a smaller 44,000 bpd plant in the central town of Sisak, due to be converted into a bitu- men production facility by 2021. Its investment at Rijeka will be the largest in its history, estab- lishing the plant as a top-tier European refinery.
“After 2023 INA expects an average annual increase in Ebitda of more than HRK1bn,” INA said in a statement on December 12. “The works on the new facility will start soon and it is planned to become operational in 2023.”
INA earned HRK16.55bn in revenues during
the first nine months of this year, up 2% y/y. But its profits slumped 36%, landing at HRK681mn. The company has been suffering annual losses of around HRK1bn from its refining business, offset by upstream and midstream earnings.
INA’s main shareholder is Hungarian oil and gas group MOL, which holds a stake of just below 50%, while the Croatian govern- ment has just under 45%. The government has set out to buy back shares in INA held by MOL, having hired a consultant for due dili- gence work.
MOL has locked horns with Croatian authorities for years over management rights and investment policy at INA. The pair are stuck in arbitration proceedings over the 2009 deal that gave MOL a major stake in INA, and Croatia has even issued an international arrest warrant for MOL CEO Zsolt Hernadi, accusing him of giving bribes to ensure the takeover was successful.
The new project at Rijeka is one of the few decisions at INA that is backed by both MOL and the government. ™
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w w w . N E W S B A S E . c o m Week 50 19•December•2019