Friday, March 11, 2011

Galp to sell $4.2bn stake - Opportunity for foreign oil companies looking to make inroads into Brazilian Presalt

Galp Energia is considering the sale of a 30% stake in its Brazilian assets to finance the company's investment plans. The sale of these assets could generate as much as 3 billion euros ($4.2 billion) for the company.

Galp Eenrgia’s Brazil operations overview:
-- Participation, in partnership with Petrobras, in 22 projects, 17 offshore and 5 onshore, totalling 36 blocks spread over seven basins covering area of 20,326 sq km
-- According to DGM 2010 year end reserves report, Galp’s net entitled Proved + Probable reserves - 397 MMBOE; Proved + Probable + Possible reserves - 574 MMBOE (Brazil's Lula and Cernambi fields responsible for over 90% of total reserves)

-- Santos Basin: Block BM-S-11 (10%), Block BM-S-8 (14%), Block BM-S-2 (20%), Block BM-S-24 (20%); BM-S-11 contains Lula and Cernambi fields (formerly Tupi and Iracema) with total recoverable volume of 8.3 billion BOE; 9 FPSOs sanctioned for the Lula and Cernambi development; FLNG FEEDs already concluded with final investment decision expected in 2011; In 4Q-2010, the field’s pilot net entitled production was 2,170 BO/d.

-- Espirito Santo Basin: Block ES-M-592 (20%) covering 722 sq km in the water depths of 2,000-2,200 metres.
-- Potiguar Basin: BM-POT-16 contract (20%) includes Blocks POT-M-663 and POT-M-760 covering 1,535 sq km in the water depths of 50-2,000 metres; BM-POT-17 contract (20%) includes Blocks POT-M-665, POT-M-853 and POT-M-855 covering 2,302 sq km in the water depths of 50-2,000 metres; In onshore, Galp has 14 blocks with eight appraisal wells drilled in 2009, which confirmed to light oil discoveries.
-- Campos Basin: Block C-M-593 (15%) covering 85 sq km in the water depths of 100-400 metres.
-- Pernambuco Basin: PEP B-M-783, PEP B-M-839 and PEP B-M-837 with 20% interest covering 1,713 sq km in the water depths of 1,000-2,000 metres; A 3D seismic programme was performed in 2009.
-- Sergipe Alagoas Basin: Blocks 412 and 429 with 50% interest covering 91 sq km; In 2009 four exploration wells were drilled, which led to two discoveries, and one appraisal well.
-- Amazonas Basin: Blocks AM-T-84, AM-T-85 and AM-T-62 with 40% interest covering 5,718 sq km.

Stake sales to generate intense interest from foreign oil companies
Galp, a smaller company focused mainly on refining for its domestic market, faces difficulties in raising the cash needed to finance its share of development and exploration costs for the Brazilian assets. The possible stake sale would generate intense interest from foreign oil companies looking to make inroads into Brazil, where a recent overhaul of the country's oil laws now places the pre-salt region under a production-sharing regime.

Jordan to reduce its reliance on neighbours for oil & gas imports. Jordan, being explored by majors like BP, Shell, Total and Petrobras, signs $1.8 billion oil shale deal with Karak International.

An oil shale surface retort concession agreement in Al-Lajjun area (35 sq km) in the southern governorate of Karak was signed between the Jordanian Government and Karak International Oil which is wholly owned by the British Company Jordan Energy and Mining Ltd. Over a period of 5-7 years the production is planned to reach 15,000 bpd after which it may be increased to 60,000 bpd in phased expansions.

The Al Lajjun Oil Shale Deposit was discovered in the late 1960’s by a joint Jordanian-German geological study. In the decades following discovery intermittent exploration activity at Al Lajjun has resulted in 198 drill holes totaling in excess of 11 km of drilling. Recent estimates for the entire Al Lajjun deposit have identified approximately 1 billion tonnes of oil shale resources.

The deal defines a major non-conventional oil venture to be completed in the Al- Lajjun area with a capital investment of $1.8 billion and will put Jordan on track for self sufficiency in liquid hydrocarbons. On completion of the project and with oil prices remaining high the government will receive more than 65% of net operating profits and if oil prices reach the very high levels of 2008 (>$120/bbl) the Government will receive some $10 billion of revenues over the projected 30 year project life.

Jordan, a new pie to taste!!
Exploration in Jordan has already been initiated by majors like BP, Shell, Total and Petrobras in the yesteryears. According to the Natural Resources Authority data, the Jordan Kingdom has more than 40 billion tons of oil shale; this quantity is capable, if were exploited using cutting-edge technology, to meet the oil needs of the Kingdom estimated at 110,000 bpd and even may allow export of additional quantities over a span of hundreds of years.

"This major new oil shale venture with Karak will make a significant contribution to the Government declared Energy Strategy to increase energy from indigenous oil shale resources from 0 to 14% of the country’s energy requirements by 2020; and thereby reducing our reliance on imported oil and gas products from our neighbours", said Touqan, Minister of Energy and Mineral Resources.

With the signature of this agreement, Jordan follows the European countries like Poland, France, etc., to reduce relying on foreign countries for oil & gas imports, having robust belief on their shale resources. 


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