Page 10 - Euroil Week 07 2020

EurOil INVESTMENT EurOil
Repsol puts aside $900mn for arbitration with Sinopec
SPAIN
The case relates to Repsol’s joint venture with Sinopec.
SPAIN’S Repsol has set aside almost €837mn ($903mn) – around 4% of its market capitalisa- tion – in the event it loses a long-running arbi- tration suit over a UK North Sea joint venture.
An arbitration tribunal in Singapore recently announced a “partial award” to China’s Sinopec and its Canadian subsidiary Addax, which are partnered with Repsol at Aberdeen-based Rep- sol Sinopec Resources UK (RSRUK). Repsol has said it will challenge the ruling, which is only the rst of ve in the case.
However, the Spanish rm said on February 18 it “had been prudent and decided to make the afore-mentioned provision.”
“ ere are still a lot of pending issues and the court will rule on the four outstanding claims in due course,” it said. “ ere is no de nite date, but this is not expected until at least Q1 2022.”
Sinopec took former Canadian oil producer Talisman to court in 2015, attempting to recover $1.5bn that Addax paid three years earlier for a 49% share in Talisman’s UK North Sea business.
Sinopec had said the cost of the acquisition was too high and wanted further compensation to cover “any additional investment” and “loss of opportunity.”
e total compensation it is demanding is $5.5bn.
Repsol became the target of the suit after acquiring Talisman in 2015, which landed it a 51% stake in Talisman Sinopec Energy UK, which was later rebranded RSRUK.
Repsol complained in 2016 that the arbitra- tion was “groundless” and “inconsistent with the loyalty to be expected from a business partner.”
rough RSRUK, Repsol and Sinopec work together at 48 elds on the UK shelf.
Despite the stando between its sharehold- ers, RSRUK has managed to improve its per- formance considerably over recent years. From su ering losses during the worst years of the oil market downturn, the company ended 2018 with a $1.7bn pro t. It is yet to publish results for last year. ™
PERFORMANCE
Norwegian oil, gas output disappoints in January
NORWAY
Norway’s outlook is strong, but low prices could affect growth.
NORWEGIAN oil and gas production trailed behind forecasts in January, the Norwegian Petroleum Directorate (NPD) said on February 19, attributing this to “technical problems and maintenance work.”
Oil production fall 6.8% month on month in January to 1.64mn barrels of oil equivalent per day (boepd), the NPD said, ending a period of steady growth since the start-up of the giant Johan Sverdrup oil eld in early October. Out- put was 6.6% below forecast, but still 12.1% higher than the level in January 2019, thanks to Sverdrup.
Total liquids production similarly declined 5.4% m/m to 1.96mn boepd, and came in 6.5% below forecast, but was 7.9% higher year on year.
Norwegian gas extraction averaged 337mn cubic metres per day, which was only 1.7% below forecast. It fell 2.9% m/m and 6.3% y/y, however.
e outlook for Norwegian oil is strong, with production predicted to exceed 2mn boepd this year, up from 1.41mn boepd in 2019. Sverdrup
will be behind this growth. e North Sea eld was owing around 350,000 boepd of oil at the end of 2019, and its rst-phase production is slated to peak at 440,000 bpd this summer.
Its second stage will raise capacity to 660,000 bpd, pushing Norwegian production to 2.05mn bpd in 2024.
Gas output, meanwhile, should rise from 113.2bn cubic metres in 2019 to 115 bcm in 2020 and continue climbing to a peak of 118.2 bcm in 2023.
In the near term oil and gas production could disappoint because of the coronavirus outbreak in China, which has sapped demand for fossil fuels in the world’s biggest import market. Oil and gas prices were already under pressure from oversupply prior to the epidemic.
Norway’s Equinor and others held back some gas supply last year because of weak prices, causing output to lag behind forecasts for most of the year. ey could take similar steps this year.™
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w w w. N E W S B A S E . c o m Week 07 20•February•2020