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CNOOC mulls internal merger
PROJECTS & COMPANIES
STATE-OWNED China National Offshore Oil Corp. (CNOOC) is reportedly planning to hand control of its natural gas and power division to listed unit CNOOC Ltd.
Reuters reported on March 10 that CNOOC had begun reviewing a potential internal merger in 2019 and had decided to revisit the plan after CNOOC Gas & Power recorded heavy losses last year.
While the deal has its advantages, such as streamlining the internal sale of domestic gas production to CNOOC’s power plants, analysts have said the deal could spook CNOOC Ltd investors. CNOOC owns about 64% of CNOOC Ltd.
“Shareholders may have welcomed it in 2017 or 2018 when China’s gas demand soared and terminal business was robust,” Reuters quoted an unnamed Western banking analyst as say- ing. “But the timing is wrong now because of the unit’s big trading losses.”
Another source said: “Apart from internal synergy ... an extension into the mid- and down- stream gas business can be a trendy topic in the capital markets as investors increasingly favour a ‘green’ energy firm.”
CNOOC’s power and gas unit reportedly suffered its deepest loss in more than a decade from liquefied natural gas (LNG) trading. The company was caught out by slowing domestic demand that sent local prices below those agreed in its long-term contracts, the newswire said.
CNOOC invoked force majeure on LNG cargoes in early February amid government-im- posed quarantines and travel restrictions over large swathes of the country in an effort to stem the spread of the coronavirus (COVID-19). However, Total, Royal Dutch Shell and Qatargas all rejected the notice.
Rystad Energy said in a research note released on March 10 that while CNOOC’s decision to invoke force majeure was prompted by logistical constraints at receiving ports, “there has been a growing concern in the industry that these notices are an attempt to renegotiate contracts”.
CNOOC Gas & Power owns 10 operational LNG terminals, with another three under con- struction, and is the country’s largest buyer of LNG. However, one of Reuters’ sources said the gas and power company was gearing up to hand over seven of the 13 terminals to newly estab- lished PipeChina later this year.
EUROPE
Bulgargaz to book 500 mcm per year of gas at Greece’s Alexandroupolis terminal
PROJECTS & COMPANIES
STATE-OWNED natural gas supplier Bulgargaz will book around 500mn cubic metres (mcm) of natural gas per year over a10-year period at the Alexandroupolis Independent Natural Gas System (INGS). The announcement follows a decision by Bulgaria’s government that came after the deadline for binding bids for capacity at the Alexandroupolis LNG facility was extended again, until March 20. No reason for the exten- sion has been given.
The country has said that it will reduce its imports of natural gas from Russia to 50% of its total consumption by the end of 2020. Currently, the country is completely dependent on Moscow for its gas, which gives Russia a strong tool with which to influence the country’s politics.
In January, Bulgaria announced that the state-owned gas network operator Bulgartrans- gaz would acquire a 20% stake in Gastrade, the company developing the floating LNG terminal
in Alexandroupolis. However, it will be Bulgar- gaz that will reserve capacity at the terminal.
Greece already has one LNG import terminal operating at Revithoussa, which entered service in 2000 and expanded its capacity in 2018. The Greek government is now supporting a second plant as part of efforts to become a regional gas hub.
Bulgaria currently serves as a transit route for Russian gas, but it has the potential to become a major trading centre thanks to a raft of new gas transport projects. A pipeline from Greece is due to start operations next year, allowing Bulgaria to receive gas from Greek LNG terminals. It will also be able to tap supplies from Azerbaijan once the Trans-Adriatic Pipeline (TAP) running through Greece and Albania to Italy is finished. Bulgaria is also helping Russia extend its Turk- Stream pipeline through its territory and on to Central Europe.
Week 10 13•February•2020 w w w. N E W S B A S E . c o m P9
