Page 12 - FSUOGM Week 41 2019

FSUOGM INVESTMENT FSUOGM
Gazprom Neft, Shell near deal on Siberian JV
RUSSIA
The prospect of tougher US sanctions held up negotiations.
ROYAL Dutch Shell is set to seal a partnership with Russia’s Gazprom Neft on oil and gas devel- opment in Western Siberia by the start of next year.
The pair have filed an application with Rus- sia’s Federal Antimonopoly Service (FAS) for Shell to take a 50% stake in Gazprom Neft sub- sidiary Meretoyakhaneftegaz, the Russian firm’s deputy chairman Vadim Yakovlev told local media on October 10.
“We expect to close the deal at the end of this year or at the beginning of next year,” he said, noting that approvals would also be needed from both companies’ boards.
Gazprom Neft and Shell are already partners in Salym Petroleum, the operator of three major oilfields in the Western Siberian oil province of Khanty-Mansiysk. They signed an agreement in June on the new joint venture, which is targeting oil and gas further north in the Yamalo-Nenets region.
Meretoyakhaneftegaz currently holds a licence for the Meretoyakhinskoye field, but prior to completing the transaction with Shell, Gaz- prom Neft will also transfer to the venture rights to the Tazovskoye and North-Samburgskoye
fields, and the West-Yubileisky blocks. Tazovskoye, the largest of the assets, holds 438mn tonnes of oil and 186bn cubic metres of gas. Gazprom Neft began trial production drilling there last year. It aims to launch full- scale production in 2021, with plans to sink 132 oil and 10 gas wells. Oil output is set to peak at 2.1mn tonnes (42,000 barrels per day, (bpd)) in
the 2020s.
Gazprom Neft is also working on a plan to
build a 50-km gas pipeline to tie Tazovskoye to infrastructure at the Zapolyarnoye field, run by its parent company Gazprom. Zapolyarnoye is Russia’s largest field in terms of production capacity, with annual supply of 130 bcm. Most of this gas is sold in Europe.
Shell and Gazprom Neft have been dis- cussing a partnership at Tazovskoye for sev- eral years, with negotiations initially held up by prospects last year of stricter US sanctions on Russia’s oil industry. The two relevant sanctions bills, Defending American Secu- rity from Kremlin Aggression Act (DASKA) and the Defending Elections from Threats by Establishing Redlines Act, are still stuck in Congress, however.™
PERFORMANCE
FSU oil producers see mixed monthly results: OPEC
FSU
Russian output has stumbled after the post-Druzhba crisis rebound, while Kazakh production is down as a result of maintenance.
RUSSIAN oil production will falter in late 2019 and early 2020 but should pick up again later next year, OPEC forecast in its latest monthly report released on October 10.
The country’s output grew by 0.14mn barrels per day in August to 11.48mn bpd, following the removal of production bottlenecks linked to the Druzhba dirty oil crisis. However, it then slumped to 11.44mn bpd in September, which is also 0.11mn bpd lower year on year.
Production should average 11.42mn bpd in the third quarter, but will then slide to 11.34mn bpd in the fourth quarter and remain at this level during the first three months of 2020, OPEC said. But it will recover steadily over the rest of next year.
As a result, OPEC expects production to reach 11.50mn bpd in 2020, up from 11.41mn bpd in 2019 and 11.34mn bpd in 2018.
Meanwhile, the cartel predicts the output of the former Soviet Union’s second-biggest pro- ducer, Kazakhstan, to dip by 0.03mn bpd to 1.79mn bpd in 2020, in part due to lengthy main- tenance runs at the country’s largest oilfields.
Kazakh liquids output was down 0.11mn bpd month on month in August at 1.78mn bpd, largely owing to the partial shutdown at the Ten- giz oil project between August 1 and September 12. The Karachaganak field also shut down on September 15 for repairs that continued until October 13. Production also slumped in the summer because an overhaul of the offshore Kashagan field’s facilities.
Further ahead, output should grow by 0.03mn bpd in 2020 on the back of further growth at Kashagan.
Unlike Kazakhstan, fellow Caspian producer Azerbaijan is grappling with decline as its flag- ship Azeri-Chirag-Gunashli (ACG) project continues to mature. Output was down 0.03mn bpd month on month in August at 0.77mn bpd, OPEC. OPEC cut its guidance for Azeri liquids supply in the third quarter as a result of main- tenance, predicting an average of 0.79mn bpd, down 0.01mn bpd y/y. Full-year output is set to contract by 0.02mn bpd to 0.79mn bpd in 2019, but this will be followed by a modest growth of 0.01mn bpd in 2020.™
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w w w . N E W S B A S E . c o m Week 41 16•October•2019