Hawk Energy 03 October 2024 Energy, Oil and Gas News issue
UAE ADNOC and SLB Drilling partner for unconventional oil and gas development
SLB has announced an agreement to create Turnwell Industries LLC OPC, a joint venture with ADNOC Drilling Company, SLB and Patterson-UTI. The joint venture will allow the three companies to leverage leading innovations in AI, smart drilling design, completions engineering and production solutions.
The joint venture will focus on the acceleration of UAE’s unconventional oil and gas program, with an initial 144 wells scheduled for completion by the end of 2025. SLB will provide integrated drilling, stimulation and completion services, as well as project management, digital capabilities and subsurface support as part of the venture. ADNOC Drilling through its wholly owned subsidiary ADH RSC LTD will hold a 55% majority equity stake, SLB a 30% equity stake and Patterson-UTI the remaining 15% equity stake.
“We are proud to join forces with ADNOC Drilling in this strategic partnership that demonstrates SLB’s leading position in the region deploying innovative digital, drilling and completion technologies in developing unconventional energy resources,” said Tarek Rizk, SLB’s president for the Middle East and North Africa region.
”UAE’s unconventional energy assets hold a promising future, and we are very much looking forward to elevating their performance in a safe and sustainable way.”
“Today marks a defining moment for Turnwell and our key partners SLB, and Patterson UTI. The acceleration of the well program is a testament to the innovation, collaboration and pursuit of excellence that will define our joint venture,” said Abdulrahman Abdulla Al Seiari, chief executive officer, ADNOC Drilling.
“Turnwell will not only unlock the immense potential of the UAE’s world-class unconventional energy resources but will also set new benchmarks for the global energy industry. We are proud to lead the way in responsibly shaping the future of energy, both in the UAE and beyond.”
Ewec invites bids for 1.5GW Abu Dhabi solar project
TradeArabia News Service + Hawk Energy NewBase
Emirates Water and Electricity Company (Ewec) today (October 1) invited expressions of interest from developer/developer consortiums for a new solar photovoltaic Independent Power Project (IPP) to be located in the Al Dhafra Region, in the Al Zarraf area in Abu Dhabi.
The Zarraf Solar PV project is a greenfield solar power project with a generation capacity of 1.5 gigawatts (GW) AC. The fifth utility-scale solar PV project from Ewec, it will be similar in scale and production capacity to Al Dhafra Solar PV, Al Ajban Solar PV, and Khazna Solar PV.
Once fully operational, the project will generate enough electricity for approximately 160,000 homes across the UAE, reducing CO2 emissions by more than 2.4 million metric tonnes per year and raising Ewec’s total solar power capacity to approximately 7GW (AC).
Announcing the bids, CEO Othman Al Ali said: “The Zarraf Solar PV project is a key component of Ewec’s world-leading deployment of solar power generation, as we strategically accelerate the UAE’s energy transition. We are proud to be leading the transformation of the energy ecosystem by
commissioning and deploying new low-carbon technologies.”
“We look forward to receiving expressions of interest for the development of the Zarraf Solar PV project, and welcome those willing to join us on our journey to decarbonise the energy sector. The deadline for submitting the bids has been set at October 22,” he stated.
The project scope for the winning bidder includes development, financing, construction, operation, maintenance and ownership of the solar PV plant and associated infrastructure, said Ewec in its statement.
The project will follow the independent power project programme of Abu Dhabi, where developers enter into a long-term power purchase agreement with EWEC as the sole procurer of electricity, it added.
US oil companies reveal massive payments to foreign governments
The three largest U.S. energy exploration companies paid more than $42 billion to foreign governments last year, about eight times more than what they paid in the United States, according to regulatory filings.
The disclosures from Exxon Mobil (XOM.N), opens new tab, Chevron Corp (CVX.N), opens new tab, and ConocoPhillips (COP.N), opens new tab were required this year for the first time ever under a new Securities and Exchange Commission requirement.
Transparency advocates had been pushing for the rule for more than a decade to shine a light on Big Oil’s foreign financial transactions in its global quest for oil, and provide a sense of whether U.S. taxpayers are getting a fair share of the value of soaring U.S. production.
The United States has become the world’s largest oil and gas producer in recent years, thanks mainly to a boom in the massive Permian Basin in Texas and New Mexico.
“The truth is, here in the U.S., we get one of the worst deals for the extraction of our natural resources,” said Michelle Harrison, deputy general counsel for EarthRights International, an environmental advocacy group.
About 90% of Exxon’s nearly $25 billion in global payments went to foreign governments in 2023, even though close to a quarter of Exxon’s global exploration and production earnings come from the United States.
The Texas-based oil giant paid out $22.5 billion in taxes, royalties and other items overseas, with the United Arab Emirates ($7.4 billion), Indonesia ($4.6 billion) and Malaysia ($3.2 billion) topping the list, according to the disclosures. By contrast, Exxon made about $2.3 billion in U.S.-based payments in 2023, including just $1.2 billion to the U.S. Internal Revenue Service, according to Exxon’s report. Exxon’s U.S.-based upstream earnings totaled $4.2 billion, compared to $17.1 billion in non-U.S. markets, according to Exxon’s 2023 annual report.
In the preamble of Exxon’s SEC report, the company complained that comparisons between U.S. and overseas payments were not fair and said U.S. government payments totaled $6.6 billion last year when you include more than $4 billion in state and local taxes omitted by the regulations.
Exxon declined to comment further.
Chevron, meanwhile, paid $14.6 billion to foreign governments in 2023, including $4 billion to Australia alone, according to the filings. The company paid just $2 billion in the U.S., according to the filings.
A Chevron spokesperson said the company’s overhead in the U.S. can be much lower than in overseas oil fields. Chevron’s holdings in the Permian Basin, for example, total about 2.2 million acres with about 75% of that land connected to either low or no royalty payments. Chevron executives see that as a huge
advantage and one that creates shareholder value, according to presentations by the company.
Last year, most of Chevron’s upstream profits were from international markets – at $17.4 billion compared to $4.1 billion in the United States – according to Chevron’s 2023 annual report.
Chevron did not criticize the disclosure parameters in its filing, and told Reuters it would continue to work with relevant agencies toward transparency and accountability between governments and the industry.
For ConocoPhillips, just $1.3 billion of a total $6.5 billion in total global payments last year went to the U.S., according to the disclosures.
The company declined to comment.
Section 1504 of the Dodd-Frank Act opened the door for the new disclosures around overseas activities by energy exploration and production companies.
A divided SEC adopted the rules in 2020 in a 3-2 vote, as the burgeoning ESG movement, which focuses on environmental, social and governance matters, demanded more transparency on behalf of millions of US Investors.
The adoption of the rule, however, came after a pitched years-long battle: A federal court in 2013 vacated the SEC’s first attempt at imposing the mandate, and Congress blocked a second attempt in 2017.
Oil rises on prospects of wider Middle East war, firmer global supply caps gains
Oil prices rose on Thursday as the prospect of a widening Middle East conflict that could disrupt crude oil flows from the key exporting region overshadowed a stronger global supply outlook.
Brent crude futures gained 98 cents, or 1.33%, to $74.88 a barrel as of 0645 GMT. U.S. West Texas Intermediate crude futures gained 102 cents, or 1.46%, to $71.12.
“Following the initial jitters from geopolitical risks in the Middle East, we have seen some calm return to global markets, but of course, with market participants still keeping a side-eye on any upcoming Israeli response,” said Yeap Jun Rong, a market strategist at IG. “The question for oil now is
whether Iran’s energy infrastructure will be in Israel’s crosshairs,” said Yeap.
Israel bombed central Beirut in the early hours of Thursday, killing at least six people, after its forces suffered their deadliest day on the Lebanese front in a year of clashes against Iran-backed armed group Hezbollah.
The strike comes a day after Iran fired more than 180 ballistic missiles at Israel in an escalation of hostilities, which have seeped out of Israel and occupied Palestinian territories into Lebanon and Syria.
“From here, it’s a waiting game to see what the Israeli response will be and I suspect that comes after the conclusion of the Rosh Hashanah holiday tomorrow,” said IG market analyst Tony Sycamore.
“I doubt that Israel will target Iranian oil infrastructure, as such a move would likely drive oil prices towards $80, which would be frowned upon by Israel’s allies, who are making strides against inflation,” Sycamore said. the underfloor heating system and to have hot water in the toilets during winter.’
Meanwhile, U.S. crude inventories rose by 3.9 million barrels to 417 million barrels in the week ended on Sept. 27, the Energy Information Administration said, compared with expectations in a Reuters poll for a 1.3 million-barrel draw. “Swelling U.S. inventories added evidence that the market is well supplied and can withstand any disruptions,” ANZ analysts said in a note. Some investors remained unfazed as global crude supplies have yet to be disrupted by unrest in the key producing region, and spare OPEC capacity tempered worries.
“After Iran’s attack, prices may stay elevated or remain more volatile for a little longer, but there’s enough production, there’s enough supply in the world,” chief executive officer of East Daley Analytics, Jim Simpson, told Reuters.
OPEC has enough spare oil capacity to compensate for a full loss of Iranian supply if Israel knocks out that country’s facilities. However, traders worry the producer group would struggle if Iran retaliates by hitting installations of its Gulf neighbours. “The effectively available spare capacity might be much lower if renewed attacks on energy infrastructure on countries in the region happen,” said Giovanni Staunovo, a UBS analyst.
On 02 Oct-2024 – Oil prices climbed more than 3% on rising concerns that Middle East tensions could escalate, potentially disrupting crude output from the region, following Iran’s biggest ever military blow against Israel.
Brent futures reached $75.98 a barrel. U.S. West Texas Intermediate (WTI) crude to $72.30 Both crude benchmarks on Tuesday surged more than 5% before closing around 2.5% higher.
Iran said early on Wednesday that its missile attack on Israel was over barring further provocation, while Israel and the U.S. promised to strike back against Tehran as fears of a wider war intensified. “This could include damaging or obliterating Iran’s oil facilities,” said Tamas Varga of oil broker PVM.
Tehran said any Israeli response to the attack, which Israel said involved more than 180 ballistic missiles, would be met with “vast destruction”.
Varga noted Iran’s or its allies’ retaliation could strike Saudi oil facilities like in 2019 or see the closure of the Strait of Hormuz. “Any of these events would irretrievably send oil prices considerably higher,” he said.
In another escalation of the conflict, the Israeli military on Wednesday sent regular infantry and armoured units to join ground operations in southern Lebanon against Iran-backed Hezbollah.
The United Nations Security Council scheduled a meeting about the Middle East for Wednesday, and the European Union called for an immediate ceasefire.
Iran’s oil output rose to a six-year high of 3.7 million barrels per day (bpd) in August, ANZ analysts said.
“A major escalation by Iran risks bringing the U.S. into the war,” Capital Economics said in a note. “Iran accounts for about 4% of global oil output, but an important consideration will be whether Saudi Arabia increases production if Iranian supplies were disrupted.” A panel of ministers from OPEC+, which includes Russia, meets later on Wednesday to review the market, with no policy change expected. The group is set to raise output from December by 180,000 bpd monthly.
“Any suggestion that production hikes will proceed could offset concerns of supply disruptions in the Middle East,” ANZ analysts said. However, Saudi Arabia’s oil minister said that oil prices could drop to as low as $50 per barrel if OPEC+ members do not stick to agreed-upon production limits, the Wall Street Journal reported on Wednesday citing delegates from the oil producers group. Before the news, the oil market was trading near a two-week low as an outlook for increased supplies and tepid global demand growth outweighed fears over escalating conflict in the Middle East and its impact on crude exports from the region.
A panel of ministers from the OPEC+ producer group meets on Oct. 2 to review the market, with no policy changes expected. Starting in December, the OPEC+ group comprising the Organizations of the Petroleum Exporting Countries (OPEC) plus allies such as Russia is scheduled to raise output by 180,000 barrels per day (bpd) each month.
The possibility of Libyan oil output recovering also weighed on the market. Libya’s eastern-based parliament agreed on Monday to approve the nomination of a new central bank governor, which could help to end a crisis that reduced the country’s oil output. UBS analyst Giovanni Staunovo said the looming resumption of Libyan output was bearish for oil prices, while Chinese stimulus, U.S. oil demand growth and slowing U.S. crude supply growth were
bullish.
In China, manufacturing activity shrank in September, a private sector survey showed on Monday. Analysts say stimulus measures over the last week are likely to bring China’s 2024 growth back to about 5% after several months of below-forecast data cast doubts over that target, though the longer-term outlook remains little changed.
Israel began ground incursions in Lebanon on Tuesday, with its military saying troops had begun raids against Hezbollah targets in the border area. Iran backs the Hezbollah group
The attacks follow Israel’s killing on Friday of Hezbollah head Hassan Nasrallah and represent an escalation in a conflict that threatens to suck in the U.S. and Iran.
“Risk weighting for front-month oil futures is currently contingent upon what Israel might do next and if there is a direct confrontation with Iran,” said independent oil analyst Gaurav Sharma.
U.S. OIL INVENTORIES
Weekly U.S. oil storage data is due from the American Petroleum Institute (API) trade group later on Tuesday and the U.S. Energy Information Administration (EIA) on Wednesday.
Analysts projected U.S. energy firms pulled about 2.1 million barrels of crude out of storage during the week ended Sept. 27. ,
If correct, that would be the third withdrawal in a row and compares with a withdrawal of 2.2 million barrels during the same week last year and an average increase of 0.4 million barrels over the preceding five years (2019-2023).