Petrobras swaps Itapu for Tupi in platform buyout
Brazil's state-controlled Petrobras will acquire a production platform originally earmarked for the Tupi pre-salt field from partners Shell and Galp for around $353mn, an unexpected change in the development of the pre-salt giant.
The 150,000 b/d P-71 floating production, storage, and offloading (FPSO) unit will now be installed in the Itapu field in the Santos basin cluster known as the Transfer of Rights (TOR). The platform is now in the final phase of construction at the Jurong Shipyard in Espirito Santo state.
The move means that first oil from the wholly-owned Itapu field will come in about one year, instead of in 2024 as originally planned.
Petrobras holds a 65pc interest in the BM-S-11 block where Tupi, formerly known as Lula, is located. Shell holds a 25pc working interest and Galp the remaining 10pc.
The consortium plans to submit a revised development plan for the Tupi field to oil regulator ANP in 2021.
"This initiative seeks to implement complementary production development projects resilient to low oil prices, allowing to further increase the recovery factor of the field," Petrobras said.
Shell will receive around $252mn from the platform sale by the end of 2021. The company says the sale and revised development plan are aligned with its cash preservation strategy.
"[We] continue to seek growth opportunities at the right time, whether in existing assets, such as Tupi, or in the next auction rounds," Shell's director of pre-salt assets Cristiano Pinto da Costa said.
Responsible for around 1mn b/d of 31˚API crude, Tupi is still Brazil's biggest oil and natural gas producer, but production from nine FPSOs is estimated to have peaked at the end of 2019. The Tupi consortium has been considering interventions to improve the recovery factor at the field since last year.
The acceleration of the Itapu development reflects Petrobras' pursuit of lower production costs.
In 2010, the federal government directly awarded Petrobras 5bn bl of oil equivalent (boe) in production rights from the six Santos basin areas that make up the TOR region. The contract governing the reserves is considered one of the most preferential in the country.
Petrobras went solo for the excess reserves in the Itapu block during last year's TOR auction. The field is estimated to hold recoverable reserves of around 900mn boe.
Related news posts
UK eyes new environmental guidance for oil, gas: Update
UK eyes new environmental guidance for oil, gas: Update
Adds comment from Shell London, 29 August (Argus) — The UK government will develop new environmental guidance for oil and gas firms, in the light of a recent Supreme Court decision that ruled consent for an oil development was unlawful, as the scope 3 emissions — those from burning the oil produced — were not considered. The ruling means that "end use emissions from the burning of extracted hydrocarbons need to be assessed", the government said today. The government will consult on the new guidance and aims to conclude the process "by spring 2025", it said today. It will in the meantime halt and defer the assessment of any environmental statements related to oil and gas extraction and storage activities until the new guidance is in place, including statements that are already being assessed. The Supreme Court in June ruled that Surrey County Council's decision to permit an oil development was "unlawful because the end use atmospheric emissions from burning the extracted oil were not assessed as part of the environmental impact assessment". The government also confirmed that it will not challenge judicial reviews brought against the development consent granted to the Jackdaw and Rosebank oil and gas fields in the North Sea. A judicial review in the UK is a challenge to the way in which a decision has been made by a public body, focusing on the procedures followed rather than the conclusion reached. Environmental campaign groups Greenpeace and Uplift launched legal challenges in December seeking a judicial review of the government's decision to permit Rosebank. Norway's state-owned Equinor and London-listed Ithaca hold 80pc and 20pc of Rosebank, respectively. Greenpeace in July 2022 separately filed a legal challenge against the permitting of Shell's Jackdaw field. "This litigation does not mean the licences for Jackdaw and Rosebank have been withdrawn", the government said. The Labour government, voted into office in July , pledged not to issue any new oil, gas or coal licences, but also promised not to revoke existing ones. Equinor is "currently assessing the implications of today's announcement and will maintain close collaboration with all relevant stakeholders to advance the project. Rosebank is a vital project for the UK and is bringing benefits in terms of investment, job creation and energy security", the company told Argus today. Shell is "carefully considering the implications of today's announcement... we believe the Jackdaw field remains an important development for the UK, providing fuel to heat 1.4mn homes and supporting energy security, as other older gas fields reach the end of production", the company told Argus . North Sea oil and gas production "will be a key component of the UK energy landscape for decades to come", the government said today. The UK government introduced a climate compatibility checkpoint in September 2022, designed to ensure that oil and gas licensing fits UK climate goals. The UK has a legally-binding target of net zero emissions by 2050. The checkpoint, though, does not take into account scope 3 emissions. These typically make up between 80pc and 95pc of total oil and gas company emissions. By Georgia Gratton Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Baghdad issues ultimatum to KRG to drive output down
Baghdad issues ultimatum to KRG to drive output down
Dubai, 29 August (Argus) — The federal Iraqi government has issued an ultimatum to northern Iraq's Kurdistan Regional Government (KRG) to reduce its crude output to "the minimum required", or face the possibility of not receiving its share of the budget. The move, communicated today by a senior official at Iraq's state marketer Somo, represents the latest attempt by Baghdad to pressure the KRG into cooperating to help bring Iraqi output below its Opec+ production target. KRG was asked "on several occasions" to cut its production according to the budget law "to the minimum required for their local refineries" — around 50,000 b/d, the official said. "Otherwise, the KRG will have to pay [the federal government] all the revenues they receive, for the extra barrels beyond what their refineries need". Iraq has emerged as the Opec+ group's biggest overproducer, failing to meet its target in any of the first seven months this year. The country, along with Kazakhstan and Russia, which are overproducing too, submitted updated plans to the Opec secretariat last week outlining how it intends to compensate for the extra volume. Iraqi officials said that a lack of visibility on KRG production are complicating efforts. Output has been gradually recovering in Kurdistan this year, even though the 400,000 b/d export pipeline that links fields in the north to the Turkish Mediterranean port of Ceyhan has been shut-in since March 2023 because of a dispute between Baghdad and Turkey. Crude production from the region collapsed below 100,000 b/d in the months following the pipeline closure, but has risen steadily, particularly from fields operated by foreign companies, as they find new outlets for their crude. Foreign operators operating in Kurdistan said they rely on trucking crude to local refineries to stay in business, but Kurdish crude is also being smuggled — by truck — across the border to neighboring Turkey, Iran and Syria, Argus understands. Different accounts Crude output from Iraqi Kurdistan is currently averaging around 350,000 b/d , a spokesperson for the Association of the Petroleum Industry of Kurdistan (Apikur) told Argus. Apikur is an industry body representing the foreign operators in the northern region . Argus assessed KRG production at 200,000-250,000 b/d on average in the first half of the year. But the federal government disputes those numbers, insisting that production from Kurdistan is around 150,000 b/d. "Any more than that will put huge pressure on the KRG," the official said. Assuming refining capacity of 50,000 b/d, the official labelled the higher estimates as "illogical." He pointed to the fact that about 500 trucks are already needed on a daily basis to export the region's 100,000 b/d, and that the state of the roads and service stations does not allow for the double amount of vehicles. Earlier attempts by the federal government to scale back Iraqi Kurdish production have failed, but the official thinks that Baghdad's latest ultimatum will have the desired impact. "These are serious steps," the official said. If KRG production remains above the 50,000 b/d needed for domestic refining, and it does not deliver the proceeds to Baghdad, it will not receive its share of the budget, which it is heavily dependent on to support its economy. Getting back on track Iraq's latest compensation plan put its overproduction in January-July at 206,000 b/d, compared with 197,000 b/d in January-June. Opec+ secondary sources estimated that output rose by 57,000 b/d on the month to 4.251mn b/d in July, some 251,000 b/d above the Opec+ target. The official said Iraqi production should fall to required levels from September. Somo canceled a spot cargo of 1mn bl this month, and Iraq is "working on deferring two similar shipments, before the end of the month," the official said. "That means we will be down around 3mn bl, or 90,000 b/d". He added that a 50,000 b/d decrease in domestic crude consumption resulting from increased gas imports from Iran and stronger domestic gas output will also help with the country's compliance. He said Iraq's August output levels will be down on the month, but dependent "on the position of the KRG". By Nader Itayim and Bachar Halabi Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
UK plans new environmental guidance for oil and gas
UK plans new environmental guidance for oil and gas
London, 29 August (Argus) — The UK government will develop new environmental guidance for oil and gas firms, in the light of a recent Supreme Court decision that ruled consent for an oil development was unlawful, as the scope 3 emissions — those from burning the oil produced — were not considered. The ruling means that "end use emissions from the burning of extracted hydrocarbons need to be assessed", the government said today. The government will consult on the new guidance and aims to conclude the process "by spring 2025", it said today. It will in the meantime halt and defer the assessment of any environmental statements related to oil and gas extraction and storage activities until the new guidance is in place, including statements that are already being assessed. The Supreme Court in June ruled that Surrey County Council's decision to permit an oil development was "unlawful because the end use atmospheric emissions from burning the extracted oil were not assessed as part of the environmental impact assessment". The government also confirmed that it will not challenge judicial reviews brought against the development consent granted to the Jackdaw and Rosebank oil and gas fields in the North Sea. A judicial review in the UK is a challenge to the way in which a decision has been made by a public body, focusing on the procedures followed rather than the conclusion reached. Environmental campaign groups Greenpeace and Uplift launched legal challenges in December seeking a judicial review of the government's decision to permit Rosebank. Norway's state-owned Equinor and London-listed Ithaca hold 80pc and 20pc of Rosebank, respectively. Greenpeace in July 2022 separately filed a legal challenge against the permitting of Shell's Jackdaw field. "This litigation does not mean the licences for Jackdaw and Rosebank have been withdrawn", the government said. The Labour government, voted into office in July , pledged not to issue any new oil, gas or coal licences, but also promised not to revoke existing ones. Equinor is "currently assessing the implications of today's announcement and will maintain close collaboration with all relevant stakeholders to advance the project. Rosebank is a vital project for the UK and is bringing benefits in terms of investment, job creation and energy security", the company told Argus today. North Sea oil and gas production "will be a key component of the UK energy landscape for decades to come", the government said today. Argus has also contacted Shell for comment. The UK government introduced a climate compatibility checkpoint in September 2022, designed to ensure that oil and gas licensing fits UK climate goals. The UK has a legally-binding target of net zero emissions by 2050. The checkpoint, though, does not take into account scope 3 emissions. These typically make up between 80pc and 95pc of total oil and gas company emissions. By Georgia Gratton Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Iraqi Kurdistan’s oil output at 350,000 b/d: Apikur
Iraqi Kurdistan’s oil output at 350,000 b/d: Apikur
Dubai, 29 August (Argus) — Crude production in northern Iraq's semi-autonomous Kurdistan region is around 350,000 b/d, according to a local industry body, just 50,000 b/d below what it was before the closure of a key pipeline to Turkey shut Kurdish producers out of international export markets in March last year. The production estimate relates to fields under the control of the Kurdistan Regional Government (KRG) and excludes those in the region that are controlled by the federal government in Baghdad. It was provided to Argus by the spokesperson for the Association of the Petroleum Industry of Kurdistan (Apikur), Myles Caggins. "The volume of production has generally increased since the shuttering of the pipeline in March 2023. All Apikur members remain focused on ultimately having the pipeline reopened for exports," Caggins said. Apikur represents eight foreign oil firms operating in the Kurdistan region — DNO, Genel Energy, Gulf Keystone, HKN Energy, Shamaran Petroleum, Western Zagros, Mol and Hunt Oil. Producers in the region have been selling their crude to local buyers since the pipeline was closed but they have had to settle for steep discounts. Caggins estimates local sales of Iraqi Kurdish crude are averaging $30-35/bl, which is around $45-50/bl lower than prevailing international oil prices. Apikur's estimate tallies with an operational update from Gulf Keystone today , which put crude output from the Shaikan field in the Kurdistan region close to capacity at 48,200 b/d in August and the current value of local crude sales at around $27/bl. Besides local refiners taking Iraqi Kurdish crude, Argus understands that some of the production is being smuggled into Turkey, Iran and Syria. Such robust production levels in the Kurdistan region are unlikely to be welcomed by Iraq's federal government in Baghdad, given the challenge it faces in keeping Iraqi output below the country's Opec+ cap. Iraq has failed to stick to its target in any month this year. Along with fellow overproducers Kazakhstan and Russia, Baghdad submitted updated plans on 23 August detailing how it intends to compensate. Iraqi officials say efforts to compensate for exceeding the Opec+ target are complicated by a lack of visibility on production in Iraqi Kurdistan, which they currently put at around 100,000 b/d, less than a third of the Apikur estimate. The KRG does not provide monthly production figures as part a wider clampdown on issuing data following the pipeline's closure. Sources at Iraq's oil ministry have told Argus that it will be easier to deliver compensation cuts after the summer season ends and temperatures begin to drop. By Bachar Halabi Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
![](/_next/image?url=%2F-%2Fmedia%2Fproject%2Fargusmedia%2Fmainsite%2Fimages%2F14-generic-hero-banners%2Fherobanner_1600x530_generic-c.jpg%3Fh%3D530%26iar%3D0%26w%3D1600%26rev%3D-1%26hash%3DFC2BEDE406483FEF5FDB9549159BAC11&w=3840&q=75)
Business intelligence reports
Get concise, trustworthy and unbiased analysis of the latest trends and developments in oil and energy markets. These reports are specially created for decision makers who don’t have time to track markets day-by-day, minute-by-minute.
Learn more