CNOOC lands in PNG - Tree - 03-18-2013
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Source:
The National, Monday 18th March, 2013
CHRIS Hart makes no bones about where Papua New Guinea-focused UMC Energy sits in the oil and gas sector’s food chain.
“We are a small company that under normal circumstances would struggle to finance the exploration and appraisal costs of our projects,” the company’s technical director said.
However, these are by no means normal circumstances UMC finds itself in.
The key to unlocking the huge potential of four onshore and offshore licences in Papua New Guinea is China National Offshore Oil Corporation (CNOOC), a Goliath of the industry.
Followers of the sector would be aware that CNOOC produces a million barrels of oil a day that help keep a resource-thirsty and growing Chinese economy turning.
What is little known, however, is that CNOOC has been tasked over the next five years to increase its annual output three-fold.
“China’s just a resource sponge,” Hart said.
“This works to our advantage - being involved in the development of energy resources with the CNOOC.
“I have been in joint-ventures with Exxon and Shell, where discoveries have been made, but they are still there undeveloped.
“That’s because Shell controls the joint venture with a majority share and is the operator – but it is booked as equity gas until the resource meets certain global merit order criteria, which doesn’t help the small company involved.
“UMC doesn’t have that worry because China needs everything that CNOOC discovers brought into production. What you’ll find is that discoveries are brought on incredibly quickly.”
Projects such as UMC’s, which geographically are right on China’s doorstep, are of huge importance to the Chinese economy.
CNOOC is earning 70% of the company’s four licences in return for financing the substantial exploration costs, estimated to be at a minimum around US$450 million.
“The arrangement we have is CNOOC is earning its interest by funding all the exploration, appraisal and field development and production development design,” says Hart.
The company’s PPL378 West permit is next door to the producing Moran field, operated by Exxon. This field has already produced over 70 million barrels of oil.
The Paua discovery in the PPL378 licence points to the prospectivity of the area.
The data suggests two scenarios, the first of which is a 3C, or “possible resource” which is mainly gas.
The estimated size of the resource is put at around 800 billion cubic feet of recoverable gas with just six million barrels of oil.
The second scenario gives a 3C resource of 68 million barrels of oil and 337 billion cubic feet of gas.
The remainder of the year will be devoted to the reprocessing and acquisition of 2D seismic coverage over the Moran oil field, Paua discovery and neighbouring Poro lead.
“We expect Paua and Poro will be drilled in 2014,” Hart reveale. – Proactive Investors
RE: CNOOC lands in PNG - admin - 03-18-2013
We may have to learn Chinese..
RE: CNOOC lands in PNG - Palm - 03-18-2013
Saw this; interesting the size of the finds they are interested in. Not near what IOC has found. If CNOOC is interested in finds of that size.....
RE: CNOOC lands in PNG - Tree - 03-18-2013
Why is it that these Majors keep moving on Island and none of them have an interest in ennerOle?
“UMC doesn’t have that worry because China needs everything that CNOOC discovers brought into production. What you’ll find is that discoveries are brought on incredibly quickly.”
Projects such as UMC’s, which geographically are right on China’s doorstep, are of huge importance to the Chinese economy."
Same holds true for JP and SK.
嘟嘟嘟嘟嘟
RE: CNOOC lands in PNG - SamAdams - 03-18-2013
[quote='Tree' pid='18952' dateline='1363569324'] Why is it that these Majors keep moving on Island and none of them have an interest in ennerOle? “UMC doesn’t have that worry because China needs everything that CNOOC discovers brought into production. What you’ll find is that discoveries are brought on incredibly quickly.” Projects such as UMC’s, which geographically are right on China’s doorstep, are of huge importance to the Chinese economy." Same holds true for JP and SK. 嘟嘟嘟嘟嘟 [/quote
Would CNOOC be considered a "surprise" bidder? That is a honest question. It would not be a shocker and many of us would have hoped for that but is that who is believed to be the NOC or would that be an upside surprise?
RE: CNOOC lands in PNG - Tree - 03-18-2013
'SamAdams' pid='18955' datel Wrote:
[quote='Tree' pid='18952' dateline='1363569324'] Why is it that these Majors keep moving on Island and none of them have an interest in ennerOle? “UMC doesn’t have that worry because China needs everything that CNOOC discovers brought into production. What you’ll find is that discoveries are brought on incredibly quickly.” Projects such as UMC’s, which geographically are right on China’s doorstep, are of huge importance to the Chinese economy." Same holds true for JP and SK. 嘟嘟嘟嘟嘟 [/quote
Would CNOOC be considered a "surprise" bidder? That is a honest question. It would not be a shocker and many of us would have hoped for that but is that who is believed to be the NOC or would that be an upside surprise?
If CNOOC were involved in IOC bid process I would bet they would be in consortium, likely with SHELL, and SHELL as principal/Operator. This is the politically expedient way for Chinese to operate in 'western' host nations.
RE: CNOOC lands in PNG - Libtardius Maximus - 03-18-2013
Perhaps timing is everything. CNOOC reports earnings this Friday.
RE: CNOOC lands in PNG - SamAdams - 03-18-2013
Shell would be a surprise as a friendly bidder.
RE: CNOOC lands in PNG - Tree - 03-18-2013
CNOOC had MOU with IOC for commercial development of LNG in the Spring of 2009 IOC almost sold stakes at a bid auction Summer 2009 and dropped the sales goal with emphasis of growing T count to add value Fall 2009. That is when Henry signed up.
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InterOil post-pones search for equity sale as drilling continues
Canadian exploration and production company InterOil plans to postpone the sale of a stake in its Liquid Niugini Gas project while it focuses on proving up its reserves. The company aims to test the Antelope 2 appraisal well for condensate and oil which could potentially increase its asset value, an official from InterOil told ICIS Heren.
“If all goes well, we hope to obtain all data by the end of Q1 2010,” said Wayne Andrews, the company’s vice president for capital markets and investor relations.
Meanwhile the company would continue discussions with potential partners with experience as an LNG operator.
Initial test yielded condensate levels of about 16–20 barrels/ million square feet (bbl/Mcf) at the top of the well, higher than the estimated levels of 5–16bbl/Mcf, he added. Following the evaluation of condensate levels, InterOil intends to drill deeper to check for a potential oil lake, and conduct horizontal drilling to obtain more information on rock quality.
The InterOil-led Liquid Niugini Gas consortium estimates its existing gas reserves can support one of its two planned 4 mtpa LNG trains at a proposed liquefaction plant in Port Moresby.
Experience required
Andrews admitted the existing consortium’s lack of operator expertise was a concern. He added that the company decided to sell equity interest at its fields to attract an experienced operator.
At present, InterOil, state-owned Petromin and financial investor IPWI Partners hold 55.67%, 22.5% and 21.83% stakes respectively.
InterOil and IPWI Partners plan to divest 35% in the project, with 25% sold to an industry partner and 2–2.5% to strategic offtakers. After the sale of equity stake, InterOil would be left with a 31.6% stake and IPWI Partners would hold 10.9%.
Tony Regan, principal consultant at Sinagpore-based consultancy Tri-Zen told ICIS Heren that it made sense for InterOil to achieve significant progress in Antelope-2 before finalising the sale of the stake as it could increase the company’s bargaining power. He added that InterOil has been actively seeking partners for some time, and “is close to one [with a potential operator] now”.
“I think its good timing on the part of InterOil as a lot of projects are slipping, especially those in Australia, so there is buying interest for LNG from the project,” Regan said.
The low proposed capital expenditure of InterOil’s PNG LNG project of $5–6billion also presented the project as comparatively economically attractive, he added.
“The project costs are low because of the existing infrastructure,” explained InterOil’s Andrews, who added that the terminal would be built on a former naval base with existing jetty, power and employee lodging infrastructure. The LNG plant would be constructed government-owned land which the firm has leased for 99 years.
Possible offtakers
A total of 18 companies have expressed an interest in equity stakes or offtake contracts, ICIS Heren understands.
These are thought to include Chinese majors CNOOC and PetroChina and Thailand’s PTT. Japan’s Osaka Gas is rumoured to have pulled out from the list of potential LNG buyers after securing supplies from ExxonMobil’s PNG LNG project and Chevron’s Gorgon.
LNG Japan also remains a possible offtaker based on its good working relationship with Petromin, under a MoU signed in 2007 for the exchange of technical and commercial expertise between the two firms.
While Regan was confident that timeline of first gas in end-2014 or start-2015 remained on-track, potential offtakers ICIS Heren spoke to were less optimistic, suggesting possible FID in mid-2011 in the best case scenario, and first production pushed back possibly six months.
“I think the PNG government is focused on ExxonMobil’s FID now and progress at InterOil PNG LNG might have to be pushed back till after end-2009,” the source said.
RE: CNOOC lands in PNG - ArtM72 - 03-18-2013
A couple years back CNOOC was reported on this board to be an interested IOC suitor. Granted, they have not been part of this active conversation, but China sure has been pouring the finance pledges into PNG during the interim.
Jeez, the Japanese, the Thai, the Chinese all wanting an audience with the PM. Hmmm. Something seems to be smoldering.
Here's a question for the economists onboard. Reselling gas and oil generates cash flow and profits. Using gas and oil on the other hand generates GNP. Which activity has the highest return on investment?
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