Page 12 - FSUOGM Week 15

FSUOGM INVESTMENT FSUOGM
SOCAR, BP delay greenlight for $1.6bn Turkish petchem venture
TURKEY
Construction was originally due to get underway this year.
AZERBAIJAN’S state oil firm SOCAR and its partner BP have delayed taking a final invest- ment decision (FID) on the construction of a new petrochemical complex in western Turkey, in light of the oil price collapse.
With oil benchmarks trading at $20-30 per barrel, the pair have decided to push back the FID by a year, to the fourth quarter of 2021, the head of SOCAR’s Turkish business, Zaur Gahra- manov, told local media.
SOCAR and BP signed a heads of agreement (HoA) on the project, known as Mercury, in late 2018. The planned complex will be sited in Izmir Province on the shore of the Mediterranean, and will turn out 1.25mn tonnes per year of purified terephthalic acid (PTA), 840,000 tpy of parax- ylene (PX) and 340,000 tpy of benzene at peak capacity. It will run on feedstock provided by SOCAR’s nearby STAR oil refinery and its Pet- kim petrochemicals plant.
The partners initially aimed to sanction the $1.8bn project by the end of 2019 but then post- poned the decision until late 2020. They had
hoped to break ground on construction as early as this year. Production was originally slated to begin before the end of 2023.
Mercury is set to be one of the biggest com- bined PTA, PX and aromatics complexes in the world. PTA is used to manufacture polyesters – a key product in Turkey’s growing textile and packaging industries that the country currently imports.
Petrochemicals are tipped to see rapid growth over the coming decades. But the sector has struggled over the last several years as a result of lacklustre global economic growth. The corona- virus (COVID-19) pandemic has further weak- ened its outlook. BP and SOCAR, which both rely predominately on oil and gas sales for their revenues, also have less available capital for new investments following the oil price crash.
The pair each have a 50% stake in Mercury. They are yet to announce an engineering, pro- curement and construction (EPC) contractor for the venture, despite holding a tender to select one early last year.™
PERFORMANCE
Regal ups output, but revenues slide in 2019
UKRAINE
Regal was stung by low gas prices.
UKRAINE-FOCUSED junior Regal Petroleum increased production by 26% to 4,263 barrels of oil equivalent per day (boepd) in 2019, it reported last week.
The London-listed firm, which operates the Mekhediviska-Golotvshinska (MEX-GOL), Svyrydivske (SV) and Vasyschevskoye (VAS) fields in eastern Ukraine, boosted gas output by 25.5% to around 199mn cubic metres, it said. Condensate extraction rose by 32% to 640 bar- rels per day, while liquefied petroleum gas (LPG) yields grew 22% to 274 bpd.
Despite the output bump, Regal recorded a 15% slide in revenues for the year to $55.9mn, followingasharpdeclineincommodityprices. The price for gas slumped 33%, condensate by 19% and LPG by 14%, the company said.
Pre-tax profits were down by more than two thirds at $21.8mn. Regal also benefitted from a $34.5mn impairment reversal in 2018, but recorded no such gain last year.
CEO Sergii Glazunov commented: “2019 was a strong operational year for Regal Petroleum. Record production from the MEX-GOL, SV and VAS fields helped offset the impact of lower gas prices experienced in the year.”
The company will continue with its develop- ment programme in order to raise production
rates and expand its revenue stream further, he said, while being mindful of the potential risks connected to the COVID-19 crisis.
“There has been no operational disruption linked to the COVID-19 pandemic, and no material impact is currently envisaged on the group’s prospects,” he continued. “However, the board and management remain acutely aware of the risks, and are taking action to mitigate them where possible.”
In March, Regal announced the $8.6mn acquisition of smaller peer Arkona Gas-Energy, which has a 20-year exploration licence for the Svystunivsko-Chervonolutskyi (SC) field, 15 km fromSV.TheSCareaholds38mnboeinC1+C2 reserves. Through the deal, Regal will expand its resource base greatly. At present, it has 50mn boe in proven and probable reserves.
“It is likely that most of the declared C1+C2 reserves under Ukrainian classification, con- trolled by Arkona, will be confirmed as 2P reserves under international classification,” Kyiv-based brokerage Concorde Capital said. “The acquisition will also improve the usage efficiency of Regal’s assets.”
At the end of the second half of last year, some 49% of Regal’s assets were cash, estimated at $67.8mn. ™
P12
w w w . N E W S B A S E . c o m Week 15 15•April•2020