Page 10 - EurOil Week 38

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fuels. The government has recently ended sub- to acquire small stakes in two producing fields
sidies for domestic fuel supplies – a move neces- from Royal Dutch Shell for an undisclosed sum.
sary to spur investment in refining but one that PGNiG has been building up its position on
will increase costs for motorists. the Norwegian shelf in recent years, obtaining
Meanwhile in Saudi Arabia, two petrochem- resources to fill its 10bn cubic metre per year Bal-
ical firms are considering a merger after sustain- tic Pipe project to Poland. The pipeline is due to
ing heavy losses, raising the prospect of further start flowing gas in October 2022.
consolidation of the kingdom’s downstream In a statement on September 21, PGNiG
industry. said it had agreed to take a 6.45% interest in the
Saudi Industrial Investment Group (SIIG) Kvitebjorn field and a 3.225% interest in the adja-
said on September 20 that its board of direc- cent Valemon field. It will also gain interests in
tors had approved initial talks on a tie-up with the infrastructure used to transport the fields’
On September 21, National Petroleum Co. (Petrochem). No agree- output.
PGNiG said it had ment has been reached and it is yet to be decided Production at both fields is in decline. Even
what structure the deal might take, SIIG said in a so, PGNiG says the transaction will enable it to
agreed to take a filing on the Saudi Stock Exchange. boost its output in Norway by 45% to 0.9 bcm
Such a transaction would mark the latest in in 2021 versus the level last year. It expects to
6.45% interest a series of mergers and acquisitions in the Saudi net 0.2 bcm in annual gas supply from the fields
in Norway’s petrochemicals industry. Most recently, Saudi between 2023 and 2028.
Aramco closed the purchase of a 70% stake in
Kvitebjorn field petrochemicals giant SABIC in June from the If you’d like to read more about the key events shaping
state.
Europe’s oil and gas sector then please click here for
and a 3.225% If you’d like to read more about the key events shaping NewsBase’s EurOil Monitor .
interest in the the downstream sector of Africa and the Middle East, Russian tax overhaul

adjacent Valemon then please click here for NewsBase’s DMEA Monitor. Russia’s Finance Ministry has submitted several
bills to the State Duma that would radically over-
field. European M&A haul the country’s oil taxation system, largely at a
Premier Oil is in financing talks with its rival cost to producers.
Chrysaor, potentially leading to a merger The ministry has proposed changes to the
between two of the UK’s biggest oil and gas excess profits tax (EPT) regime introduced last
producers. year, which it previously said had caused a loss of
Bloomberg reported on September 15 that over $3bn to the budget. It has also called for the
the company, saddled with just under $2bn of removal of tax breaks at specific projects, moving
net debt, had held initial talks with Chrysaor on some of those fields to the EPT regime instead.
an all-or-partial merger of the two businesses. As analysts note, the changes appear to go
Premier has confirmed these talks, but said its further than simply increasing oil industry tax
preference was to follow through with a prelim- revenue. Rather, they seem aimed at streamlin-
inary deal reached with creditors in late August ing Russia’s excessively complex oil tax regime.
to refinance over 45% of its debt. Generally, though, the impact will be nega-
However, talks with Chrysaor and others on tive for oil producers, while gas producers are
alternative financing solutions will nevertheless unaffected. Gazprom Neft will be hit hardest,
continue, Premier said. High debt levels were a losing up to 21% of its EBITDA if the ministry’s
concern of Premier’s creditors even before the proposals are adopted. Tatneft might lose 20%,
pandemic struck. But this has not stopped the while Lukoil’s earnings could lose 8%.
company from pursuing a takeover of BP assets However, Russia’s biggest oil producer Ros-
in the North Sea. neft will fare relatively well from the many
Meanwhile, PGNiG has continued its Norwe- changes. Not only this; while the ministry’s pro-
gian buying spree, announcing a deal this week posals are generally aimed at increasing the tax

P10 www. NEWSBASE .com Week 38 24•September•2020