September 2016, Vol. 243, No. 9

In The News

World News

PDVSA’s Future Clouded by Venezuelan Crisis

National oil company PDVSA may badly need money and could be in such a precarious condition that it causes the demise of the wider Venezuelan oil sector, according to an article in

Oilfield union officials in the Lake Maracaibo region leaked news to Platts that all is not well in the drilling sector there, with sources saying major international operator Schlumberger halted the majority of its operations. Union leaders said Schlumberger shut down four of six rigs it was operating for offshore oil production in Lake Maracaibo because of a lack of payment for drilling services from PDVSA. suggests the shutdown could be be a “last straw” for PDVSA’s operations. Funding for drilling appeared to come under stress earlier this year after Schlumberger and Halliburton said they were reducing rigs in Venezuela due to non-payment. At the same time, fellow drillers San Antonio and Petrex suspended 36 rigs across Venezuela.

But PDVSA had appeared to be making headway, with Schlumberger saying in June it had reached an agreement with the oil major to keep six rigs operational in the Lake Maracaibo area. That most of those drills have now been idled suggests that PDVSA’s last-ditch contract efforts failed. This could signal a significant cliff ahead for drilling across Venezuela, which could foreshadow an accelerated decline in production. Such a downturn would have big implications for a) global oil supply, b) Latin American oil trade (including the U.S. Gulf Coast) and c) Venezuela projects, national finances and politics.

Improved Ties Bode Ill for Rival Gas Lines

Russia and Turkey signaled last month they would resuscitate the development of a natural gas pipeline between them, potentially undermining European efforts to reduce reliance on Russian energy with fuel piped in from Azerbaijan.

Presidents Vladimir Putin and Recep Tayyip Erdogan suggested backing for the Turkish Stream project, which would bring gas from Siberia under the Black Sea. The project was sidelined after a Turkish jet shot down a Russian warplane in November.

When complete, the pipeline would have the capacity to pump more natural gas into Turkey than it could consume, making the country a potential hub for sending Russian gas into Europe, according to the Wall Street Journal.

That would deal a blow for Azerbaijan, which wants to become a major gas exporter to replace revenues from declining oil production. Azerbaijan and European officials had touted development of a southern gas corridor, a 2,200-mile network from the Caspian Sea to Italy. Pipelines for the southern corridor are under construction and the first gas deliveries to Europe are expected in late 2019. With TurkStream possibly coming online that year, it might not be feasible to expand its capacity as planned.

Sub-Saharan Africa Expects 43 Project Starts by 2025

A total of 43 crude and natural gas projects are expected to start operations in Sub-Saharan Africa by 2025, of which 31 are crude and 12 are natural gas, according to research and consulting firm GlobalData.

The company’s latest report, H1 2016 Production and Capital Expenditure Outlook for Key Planned Upstream Projects in Sub-Saharan Africa, said Nigeria is set to lead the region with 11 projects, followed by Angola with eight.

“The region will experience investment delays across a wide scope of projects,” said Joseph Gatdula, GlobalData senior upstream analyst. “However, developments will continue to come online in the mid-term, including fields that started development prior to the downturn in prices and those which demonstrate break evens at or below today’s oil prices.”

Tullow Oil and Total S.A. will lead the region in terms of operatorship with five planned projects each. Of the projects the two companies are expected to operate, nine are crude and one is natural gas, with Chevron Corp. occupying third place in terms of development with its three planned projects.

Planned projects in the Sub-Saharan region are expected to contribute 1.1 MMbpd to global crude production and 7.7 Bcf/d to global gas production in 2025. About $153.5 billion is expected to be spent from 2016-2025 with Mozambique leading with a capex of $70.4 billion. Most of that will be spent on the Rovuma Area 1 and Area 4 Complex projects.

“Progress on the LNG projects in Mozambique has slowed over the last few years due to financing issues and regulatory uncertainty,” said Jonathan Markham, GlobalData upstream analyst. “The operators are expected to start with relatively small-scale developments such as Eni’s 3.4 million metric floating LNG solution.”

Among companies in the Sub-Saharan region, Eni SpA will have the highest capex spending, with $21.3 billion on key planned projects over the next 10 years.

West African Ventures Completes Pipelay in Nigeria

Sea Trucks Group completed the pipelay and construction campaign on the Sonam Field development for Chevron Nigeria Ltd. The contract was awarded to West African Ventures Ltd, Sea Trucks’ principle Nigerian business in June 2015.

The Sonam Field is located off Nigeria in water depths ranging from 7 to 66 meters. The work scope included transportation and installation of the Okan PRP jacket, piles, deck and bridge; surveying the pipeline route and installation of the 32 km of 20-inch pipeline between Sonam NWP and the Okan PRP platform; fabrication loadout and installation of risers and subsea spools for Sonam NWP and Okan PRP; pre-commissioning and commissioning of the pipeline (hydrotest, dewatering, drying and nitrogen purging).

Saudi Aramco Signs Off on Mega Gas Project

Saudi Aramco President and CEO Amin H. Nasser presided over a signing ceremony of the Fadhili gas project, marking a milestone in the company’s drive to expand gas production and supply to meet growing domestic demand for energy.

Scheduled for completion in 2019, the Fadhili project will become a key component of the kingdom’s master gas system, processing gas from onshore and offshore fields. Together, with Wasit and Midyan, Saudi Aramco’s two other new major gas projects, Fadhili will add over 5 Bscf/d of non-associated gas processing capacity. The increase in the supply of natural gas will exceed 17 Bscf/d by 2020.

Saipem Wins Zohr Gas Field Contract

Petrobel awarded Saipem an engineering, procurement, construction and installation (EPCI) contract for the accelerated startup for Egypt’s Zohr Gas Field. Petrobel, a joint venture between Eni and Egyptian General Petroleum Corp. (EGPC), is in charge of developing Zohr on behalf of PetroShorouk, a joint venture between Egyptian Natural Gas Holding Company (EGAS) and Eni.

The work encompasses installation of a 26-inch export trunkline, and 14-inch and 8-inch service trunklines, as well as EPCI work for field development in up to 1,700 meters of six wells and the installation of the umbilical system. Work began in July and should be completed by the end of 2017.

Work Begins on Johan Sverdrup Field Riser Platform

Construction began in June at the Samsung Heavy Industries shipyard in South Korea on part of a platform that will deploy at the giant Johan Sverdrup oil field that Statoil is developing 140 km west of Stavanger, Norway.

Statoil and its partners at Johan Sverdrup, Maersk Oil and Lundin Petroleum, in early 2014, outlined the development plan for the field using multiple phases. The first phase calls for four platforms and should yield up to 380,000 bopd, roughly half of the expected peak production rate. Once in full swing, the field, the fifth-largest discovered off the Norwegian coast, should account for up to 25% of all Norwegian petroleum production.

The portion of the platform under production in South Korea will weigh about 23,000 tons, the largest of the four parts of the infrastructure for Johan Sverdrup. Construction of the processing platform began in July.

OneSubsea Wins EPC Contract off Australia

OneSubsea, a Schlumberger company, was awarded a $300 million engineering, procurement and construction contract from Woodside Energy Ltd. OneSubsea will supply a subsea production system and a dual multiphase boosting system for the Greater Enfield Project, offshore northwest Australia.

This includes six horizontal SpoolTree subsea trees, six horizontal trees for the water injection system, six multiphase meters, a high-boost dual pump station with high-voltage motors, umbilicals, topside, subsea controls and distribution, intervention and workover control systems, landing string, and installation and commissioning services.

Tengiz Expansion in Kazakhstan Gains Approval

Chevron’s 50%-owned affiliate, Tengizchevroil (TCO), will proceed with the development of its Future Growth and Wellhead Pressure Management Project (FGP-WPMP), which will increase crude production at the Tengiz oil field in Kazakhstan by about 260,000 bpd. FGP-WPMP is estimated to cost $36.8 billion, which includes $27.1 billion for facilities, $3.5 billion for wells and $6.2 billion for contingency and escalation.


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