THAILAND: PTT raised US$1.1 billion from successful bond issue

(EnergyAsia, October 31 2012, Wednesday) — Thai state oil and gas company PTT said it has raised US$1.1 billion from an international bond issue that was oversubscribed by more than 10 times.

The company said the sale of its bond, with a “BBB+” rating from Standard and Poor’s and “Baa1” from Moody’s, established a record-low coupon reference for future issuance from Thai borrowers.

The sale, arranged by Barclays, Citi, Deutsche Bank and J.P. Morgan, comprised US$500 million worth of 10-year bonds with a coupon rate of 3.375% and US$600 million worth of 30-year bonds at 4.5%. The coupon rates are 160 basis points above US Treasurys.

Pailin Chuchottaworn, President and CEO of PTT Public Company Limited, said the successful issuance not only allowing the company to lock in long-term funding at very attractive rates, but also established a new benchmark curve in the international capital markets for PTT and Thai borrowers.

PTT, which last tapped the international bond market in July 2005, said the proceeds will be used for general use and capital expenditure.

SINGAPORE: Indonesian coal miner Geo Energy, offshore fabricating company Triyards make strong debut on public listing

(EnergyAsia, October 31 2012, Wednesday) — Shares of fabricating and engineering firm Triyards Holdings and Indonesian coal miner Geo Energy Resources Ltd have performed well since their trading debut on the Singapore Exchange less than two weeks ago.

Triyards began trading on October 18 after it was spun off as a form of dividend by Singapore-listed Ezra Holdings Limited (Ezra) to shareholders. They received one Triyards share for every 10 Ezra shares held.

Ezra still owns about two thirds of Triyards which closed its first trading day at S$0.92 a share, up from an opening price of S$0.80.

Triyards CEO Wong Bheet Huan said: “This listing will enable us to build up our brand further and exploit growth opportunities that will propel us forward in our journey to becoming a world-class provider of engineering and fabrication solutions to the offshore sector.”

Geo Energy, whose retail offering was oversubscribed by 184 times, closed at S$0.43 on its debut on October 19, up about a third from the IPO price of S$0.325.

The company, which operates in East Kalimantan, will use the net proceeds of US$63.7 million to acquire mining equipment and machinery and construct jetty and barge loading facilities as well as undertake business expansion including acquisitions, joint ventures and strategic alliances.

Charles Antonny Melati, Geo Energy’s executive chairman, said: “We would like to thank the public and the institutional investment community for the strong support we have received from them, leading to the success of our IPO. This listing is a major milestone for the group.”

“We are delighted that Geo Energy, a regional minerals company, has chosen SGX as its preferred listing platform to expand their business. Demand for resources such as coal is expected to stay strong, and we look forward to companies like Geo Energy coming to SGX for capital raising and expansion,” said Lawrence Wong, SGX’s Head of Listings.

With a market capitalisation of S$376 million, Geo Energy brings the total number of SGX-listed mineral, oil and gas companies to 15 valued at a total of S$5.2 billion.

CHINA: PetroChina unit and TransCanada to jointly build C$3-billion oilsands pipeline

(EnergyAsia, October 31 2012, Wednesday) — Amid the intensifying debate over the role of Chinese state-owned companies in Canada’s oil and gas sector, a  PetroChina subsidary has concluded an equal joint venture deal with TransCanada  Corp to build a C$3 billion oil pipeline in Alberta province.

Phoenix Energy Holdings Ltd, the Canadian subsidiary of PetroChina Co Ltd, and TransCanada will build the 500-km Grand Rapids pipeline to deliver up to 900,000 b/d of oil sands from northwest of Fort McMurray to Fort Saskatchewan, near Edmonton starting 2017.

TransCanada will operate the system through which Phoenix has entered a long-term commitment to ship crude oil and diluent liquids.

The project will be constructed, owned and operated by the Grand Rapids Pipeline Limited Partnership, which is jointly owned by Phoenix and a wholly-owned subsidiary of  TransCanada.

This is the first oil pipeline project that has Chinese ownership, underlining the country’s growing interest to become a long-term player in Canada’s oil and gas sector.

Another state-owned company, CNOOC, is awaiting the Canadian government’s approval for its proposed C$15.1 billion takeover of Calgary-based Nexen Inc. The deal has run into major political headwinds as most Canadians are fearful of Chinese state companies having a bigger role in their country’s economy.

Russ Girling, TransCanada’s president and CEO, said:

“As Alberta crude oil production continues to grow, it’s critical to have the infrastructure in place to move oil to market from emerging developments west of the Athabasca River. This is the first major pipeline project to meet the needs of this fast-growing area.

“With over 60 years’ experience in Alberta and North America, TransCanada is a leader in providing safe, efficient and reliable operation of energy infrastructure. We are pleased Phoenix is joining us on the Grand Rapids Pipeline project to transport this growing, long-term supply of Canadian crude oil in a manner that respects the communities and environment where the pipeline will operate.”

Zhiming Li, Phoenix’s president and CEO, said:

“Phoenix is committed to developing its Dover and MacKay River oil sands assets through multiple phases. Given that transportation in the Athabasca region has become a bottleneck, working with TransCanada to build a pipeline system in a timely fashion is crucial to implement our development strategy. This transportation solution will be important to Phoenix and other potential producers in this area to monetise their huge resources.”

According to TransCanada, the pipeline’s route and design will be determined with Aboriginal and stakeholder input as well as consideration for environmental, archaeological and cultural values, land use compatibility, safety, constructability and economics.

TransCanada, which expects to apply for regulatory approval next year, said the project will expand its liquids transportation capabilities and complement extensive operating experience in Alberta. TransCanada recently announced the Northern Courier Pipeline project, a 90-km pipeline system to transport bitumen and diluent between the Fort Hills mine site and the Voyageur Upgrader located north of Fort McMurray.

RUSSIA: Gazprom to boost LNG production with eye on Asian markets

(EnergyAsia, October 31 2012, Wednesday) — Russian gas giant Gazprom is looking to boost the production of liquefied natural gas (LNG) for export to the lucrative Asian markets while reducing dependence on piped gas sales to Europe. The company will aim to boost LNG production and sales from the Russian Far East and Shtokman field…

This article is for Subscriber members only.
Log In Register

MARKETS: IEA, Goldman Sachs expect oil prices to be capped through 2016

(EnergyAsia, October 30 2012, Tuesday) — Weak demand and rising output will dampen the outlook on oil prices over the next five years, but geopolitical tensions and the risk of military conflict in the Middle East will keep the market from crashing, according to forecasts from two authoritative organisations. Both the International Energy Agency (IEA)…

This article is for Subscriber members only.
Log In Register

SINGAPORE: Ezra Holdings reports 62% rise in full year profit to US$65 million on record revenue

(EnergyAsia, October 30 2012, Tuesday) — Ezra Holdings, a Singapore-based provider of offshore oil and gas services, said its full-year net profit rose 62% to US$65 million with revenues surging 76% to a record US$984.2 million in its 20-year history.

The company attributed the sharp rise in revenue for the year to August 2012 to the successful integration of the sizeable subsea services operations under the EMAS AMC group, which was acquired in March 2011.

Ezra said the subsea services division trebled its turnover to US$551.6 million in FY2012 from US$179.5 million the year before, at the same time turning a previous loss of US$18.3 million to a profit of US$30.7 million.

Ezra’s managing director, Lionel Lee, said:

“FY2012 was a year of significant progress for Ezra. The group is reaping the benefits from our long-term strategy to move into subsea engineering and project management, which we put in place some three years back. We managed to complete the integration of the subsea business in just 18 months, and turned the division around at the same time.

“Together with the successful listing of TRIYARDS Holdings Limited, our engineering and fabrication division, the robust performance of EMAS AMC represents another milestone achievement for us in FY2012.”

On prospects for the coming year, Mr Lee said he expects demand for subsea and offshore support services to remain firm, underpinned by growth in capital expenditures by the energy majors.

“The Ezra group of companies is currently bidding for up to US$7 billion in projects globally,” he said.

With offices across five continents, Ezra’s various divisions provide a full range of seabed-to-surface engineering, construction, marine and production services around the world.

Ezra created EMAS AMC after acquiring Aker Marine Contractors AS, a world leader in providing subsea umbilicals, risers & flowlines (SURF) products and floater installations to deliver comprehensive seabed-to-surface solutions for the offshore sector including subsea construction and floating production, storage and offloading (FPSO) installation.

Another division, EMAS Energy, provides well intervention and drilling services both onshore and offshore, offering fully integrated solutions that combine its marine assets with state-of-the-art intervention equipment and services.

EMAS Marine manages and operates a young, versatile fleet of advanced offshore support vessels, offering an extensive range of maritime services that cater to the client’s needs throughout a field’s life cycle. It also manages EMAS AMC’s fleet of construction assets and third-party vessels.

EMAS Production, which is artly owned by EOC Limited, owns and operates FPSO facilities, offering services for post-exploration needs of offshore fields, such as FPSO conversion management.

 

ASIA: Region at growing risk of oil supply disruption with declining self-sufficiency and lack of stockpile, says Chatham House report

(EnergyAsia, October 30 2012, Tuesday) — Asia is increasingly at risk of oil supply disruptions as the region does not have sufficient strategic stockpiles while its oil deficit is projected to rise to 30 million b/d in 2030 from 18 million b/d in 2010, said UK-based Chatham House. In a new report, the research institute…

This article is for Subscriber members only.
Log In Register

SINGAPORE: Plans to invest S$500 million to build fourth LNG tank

(EnergyAsia, October 29 2012, Monday) — Singapore will invest S$500 million to add a fourth tank to its liquefied natural gas (LNG) terminal by 2017, boosting the total storage capacity to nine million tonnes, said the country’s Second Trade and Industry Minister S. Iswaran. (US$1=S$1.22).

The terminal is expected to start up in the second quarter of 2013 with two tanks of total capacity of 3.5 million tonnes to be followed by a third tank of 2.5 million tonnes later in the year, he told the Gas Asia Summit last week.

Singapore LNG Corp (SLNG) is already studying plans to build a fifth tank on the Jurong Island terminal which is designed to accommodate six tanks.

Mr Iswaran said the expansion was in response to Singapore’s faster-than-anticipated demand for LNG. Power generation companies and industries have committed to purchasing around 2.7 million tonnes/year or about 90% of the volume contracted for sourcing by BG.

He said the government is studying possible frameworks for future LNG import to allow for competitively-priced and reliable supplies while taking into consideration the needs of consumers and the operational efficiency of the terminal.

Singapore is paying one of the world’s highest natural gas prices having signed long-term contracts with Indonesia and Malaysia at a reported 15% premium to spot high sulphur fuel oil. Singapore power generators and chemical producers are paying between US$16 and US$18 per million BTU for piped gas, more than double the price in Europe and five times the US.

“As the cleanest fossil fuel that can now be procured from diverse supply sources, LNG is set to play an increasingly important role in Singapore’s energy mix. Hence, we must plan ahead to ensure that our infrastructure can cater to our future energy needs,” he said.

Apart from enhancing Singapore’s energy security by allowing further diversification of fuel sources, Mr Isawaran said the additional capacity will boost Singapore’s role as an international LNG trading hub.

He said the increased storage infrastructure could catalyse business opportunities such as LNG trading, break-bulk services and LNG bunkering.

In a separate speech, SLNG CEO Neil McGregor said LNG could account for 30% of Singapore’s gas demand when the terminal begins operating from the second quarter of next year.

 

 

MARKETS: OPEC raised forecasts for world oil demand for 2012 and 2013, but focus still on downside risks

(EnergyAsia, October 29 2012, Monday) — The Organisation of Petroleum Exporting Countries (OPEC) has marginally raised its forecasts for global oil demand to reach 88.81 million b/d in 2012 and 89.6 million b/d next year, but slashed the rate of growth for both years. Continuing its focus on the downside risks to the outlook for…

This article is for Subscriber members only.
Log In Register

COMPANY: Vopak raised US$1 billion from US private placement notes programme

(EnergyAsia, October 29 2012, Monday) — Dutch oil and chemicals logistics giant Royal Vopak said it has raised a total of US$1 billion in various currencies from a new notes programme through a private placement in the US.

Comprising a senior tranche of US$900 million and a subordinated tranche of US$100 million, the programme was subscribed to by 37 institutional investors, including 10 new ones.

The senior notes of various tranches with maturities ranging from 10.5 to 14.5 years pay an average annual interest rate of 3.94% while the seven-year subordinated notes pay an average annual interest rate of 4.99%.

Vopak said the proceeds, to be made available later this year, will be used to repay outstanding debt and for other general corporate purposes. The programme will align the maturity profile of the outstanding debt with Vopak’s long-term growth strategy and will provide maximum flexibility under the current EUR 1.2 billion revolving credit facility (RCF) which had been extended by a year to 2017 at the start of 2012.

Citigroup Global Markets Inc, JP Morgan Securities LLC and RBS Securities Inc acted as joint agents for this transaction.

Jack de Kreij, Vopak’s vice-chairman and chief financial officer, said:

“For our fourth US private placement programme since 2001, we again not only experienced strong interest, but were also able to attract a new group of long-term investors. This confirms Vopak’s ongoing access to relevant capital markets. In combination with our current US and Asian PP programmes, our RCF and our portfolio of specific project financing this new notes programme further enables the execution of our growth ambitions as reflected in our global terminal network expansion strategy, supported by a robust customer demand and a strong financial performance over the last years.”

 

 

MARKETS: EIA slashed forecast growth in world oil demand for 2012 and 2013

(EnergyAsia, October 29 2012, Monday) — Global oil demand will still breach the 90-million b/d ceiling next year, but the increase from this year will be smaller than earlier forecast, said the US Energy Information Administration (EIA) in its October short-term energy outlook. In its latest monthly forecast, the agency downgraded the world’s oil demand…

This article is for Subscriber members only.
Log In Register

AUSTRALIA: DNV leads industry in study to promote use of LNG as bunker fuel

(EnergyAsia, October 25 2012, Thursday) — Norwegian classification and inspection firm Det Norske Veritas (DNV) said it has teamed up with nine

Australian companies to conduct a four-month study into the use of liquefied natural gas (LNG) as a shipping fuel to protect the environment.

Similar to a pioneering study launched in Singapore in 2010, the Australian Joint Industry Project (JIP) will investigate the possibility and viability of adopting LNG as a shipping fuel in local waters.

DNV said the use of LNG as a marine fuel will help eliminate sulphur oxide (SOx) and particulate matter emissions, nets a 15% reduction in greenhouse gas emissions (GHG) emissions and diminishes that of nitrogen oxide (NOx) by 85-90%. DNV said: “The study aims to cover the infrastructure and regulatory requirements as well as the potential benefits and risks faced by energy majors, ports and ship-owners considering LNG fuelled vessels. The study concentrates on LNG fuelled OSVs and tugs plying in Australian waters, but the key recommendations developed will be valid for most ship types. “Geographically, focus will be on the ports of Dampier, Darwin and Melbourne.”

DNV is project manager as well as joint sponsor along with the Australian Maritime Safety Authority (AMSA), BOC Limited (Linde Group), Farstad Shipping Pty Ltd, Ports Australia, Rolls-Royce Marine AS, SVITZER Australia, Swire Pacific Offshore Operations (Pte) Ltd, Teekay Shipping (Australia) Pty Ltd and Woodside Energy Ltd.

The study will identify the main obstacles to promoting LNG-fuelled shipping, initially focusing on infrastructure and existing regulations. Safety is a primary concern as ports will face the challenge of offering safe storage and ship-specific bunkering of LNG.

The study will include an assessment of the regulatory framework and identify the infrastructure needed for LNG bunkering at the Federal and state levels. By the end of this year, the team will aim to complete an overview of the project’s legal and infrastructural challenges as well as opportunities for LNG bunkering in Australia.

Sanjay Kuttan, managing director of DNV’s Clean Technology Centre (CTC), said:

“The convergence of availability of gas, innovative technologies, progressive regulatory measures and visionary leadership will make LNG a major cleaner energy source for power generation, land and sea transportation, petrochemical feedstock and domestic gas a reality in the near future. The team at DNV CTC is honoured to be part of this momentum to fulfil DNV’s purpose in safeguarding life, property and the environment.”

 

 

 

ASIA: China, India surge ahead in Platts’ rankings of top 250 global energy companies, West still the elite

(EnergyAsia, October 25 2012, Thursday) — Western companies again dominated the elite in the latest rankings of the world’s top 250 energy companies by Platts that featured more companies from Asia led by China and India.

At an award dinner ceremony in Singapore on Tuesday, global energy media Platts announced that the Asia Pacific region provided 70 of the top 250 companies based on their fiscal 2011 financial performance in four key areas: asset value, revenues, profits and return on invested capital (ROIC).

China provided 23 companies while India had 12, said the McGraw-Hill company.

Larry Neal, president of Platts, a leading global energy, petrochemical and metals information provider, said:

“Chinese and Indian companies’ recent surge forward in the energy industry has been increasingly reflected in the Platts Top 250 roster.

“The fact that these Asian companies are outperforming themselves year after year is a testament to the region’s enormous growth and energy demand.”

Most indicative of the Asia-Pacific region’s growth was its dominance of the 50 ‘Fastest Growing Companies’ list. Asia-Pacific companies accounted for 30 of the 50, based on a three-year compound growth rate (CGR).

Of the 23 Chinese companies in the global Top 250 rankings, 20 appeared on the 50 Fastest Growing list, said Platts.

Similarly, India made an impressive showing, with half of its 12 Top 250 companies also among the 50 fastest growing companies. Cairn India Ltd topped the global fastest growing ranks, with a three-year CGR of 119.8% while new entrant Kunlun Energy Co Ltd of Hong Kong was in third place with a 69.6% CGR.

Despite their expanded global presence, the region is still unable to challenge the dominance of the Western majors, said Platts.

Apart from PetroChina, which was placed ninth, western integrated oil and gas (IOG) and exploration and production (E&P) companies took all of the top 10 spots on the 2012 list.

ExxonMobil reigned supreme in the number one spot of the Top 250 roster for the eighth consecutive year, while Anglo-Dutch major Royal Dutch Shell plc moved up from sixth position to second, displacing U.S. major Chevron to third.

ConocoPhillips dropped one place from seventh to eighth.

Among the Europeans, French major Total slipped from fifth position to seventh while Norway’s Statoil rose from 11th place to sixth.

One of the standout movers among the Top 10 and the overall rankings was BP. The UK major took fourth position on this year’s list, after having plummeted from second place in 2010 to 118th place last year after suffering more than US$38 billion in losses from the Macondo oil spill in the Gulf of Mexico.

Russia’s Gazprom dropped to fifth place this year from third place while Rosneft dipped from ninth to 10th, and LukOil slipped out of the Top 10 this year to 11th place, said Platts.

 

 

INDIA: Government turns to private firms to build strategic crude oil reserves

(EnergyAsia, October 25 2012, Thursday) — The Indian government wants private companies to build and operate strategic crude oil reserves to augment the stockpiling role played by state-owned companies. For now, Indian Strategic Petroleum Reserves Ltd (ISPR), a subsidiary of the Oil Industry Development Board, and the country’s leading state-owned companies have the responsibility to…

This article is for Subscriber members only.
Log In Register

AUSTRALIA: Santos claims country’s first commercial shale gas production, names first Asian to board

(EnergyAsia, October 25 2012, Thursday) — Australian upstream company Santos made two landmark announcements the past week.

It has claimed the country’s first production of natural gas from shale as well as admitted the first Asian businessman into its board of directors.

Santos said its Moomba-191 shale well in the Cooper Basin is producing around 2.7 million standard cubic feet/day (mmscf/d) of natural gas.

James Baulderstone, Santos’ vice president for Eastern Australia, said the production represented another milestone for its Cooper Basin unconventional gas programme which began in 2004.

“The connection of the Moomba-191 well is a significant step forward as we work to unlock the vast unconventional potential of the Cooper Basin,” he said.

“Producing commercial quantities of natural gas from the Cooper’s shale rock formations would provide the potential for ongoing energy security for South Australia and our eastern states, plus valuable export revenue.

“The well was only 350 metres from the existing pipeline network and eight kilometres from Moomba’s gas processing plant, which enabled it to be brought on line quickly, illustrating the importance of Santos’ existing infrastructure position in commercialising the region’s significant resource potential.”

The company is planning to expand drilling in the area that will include an ongoing vertical well appraisal programme and a first horizontal shale well for early 2013.

Santos has a 66.6% interest in the South Australian Cooper Basin Joint Venture. Its partners are Beach Energy (20.21%) and Origin Energy (13.19%).

In a separate announcement reflecting the company’s growing ties with Asia, Santos has appointed a Singaporean businessman to its nine-member board of directors.

Hock Goh, the chairman of Australia-based MEC Resources and Advent Energy Ltd, and Singapore-based NetGain Systems Pte Ltd, is the first Asian board member in Santos’ history.

The 57-year-old trained mechanical engineer who was appointed an independent non-executive director has had a 25-year career with Schlumberger, a leading oilfield services company, where he held senior positions in Asia, the Middle East and Europe.

Santos chairman Peter Coates said:

“It is very pleasing to appoint a new director with such notable experience across Asia. I am confident Mr Goh’s extensive background will be invaluable as we seek to grow Santos’ businesses in the region.”

 

AFGHANISTAN: China’s CNPC starts producing crude oil in northern Amu Darya basin

(EnergyAsia, October 25 2012, Thursday) — Afghanistan has become a crude oil producer for the first time following the recent start-up of operation in the Amu Darya basin in northern Afghanistan by China’s state-owned CNPC. Production is expected to rise to under 2,000 b/d by year end, and to more than 4,100 b/d from January,…

This article is for Subscriber members only.
Log In Register

OMAN: Plans to establish large refinery and world’s largest oil storage terminal

(EnergyAsia, October 24 2012, Wednesday) — Oman is looking to build a large refinery and the world’s largest oil storage terminal to hold up to 200 million barrels of crude in an area south of the Straits of Hormuz to reduce the risk of supply disruption from geopolitical events. State-owned Oman Oil Company has begun…

This article is for Subscriber members only.
Log In Register

CHINA: Ministry raised oil and gas resources estimates by 15%

(EnergyAsia, October 24 2012, Tuesday) — The Chinese government has raised its estimate of the country’s oil and gas reserves to 88.1 billion tonnes of oil equivalent as at end-2010, an increase of 15% over its previous survey in 2007, according to local media reports citing the Ministry of Land and Resources. Recoverable oil in…

This article is for Subscriber members only.
Log In Register

CHINA: China Offshore Oil Engineering Co Ltd and France’s Technip awarded 200-million-euro subsea contract

(EnergyAsia, October 24 2012, Wednesday) — France’s Technip and its consortium partner, China Offshore Oil Engineering Co Ltd (COOEC), have secured a 200-million euro contract to provide engineering, procurement, installation and construction services for an offshore oil and gas exploration project.

Technip said the contract was awarded by China National Offshore Oil Corporation (CNOOC) Deepwater Development Limited, a CNOOC subsidiary, to develop deepwater gas reserves in the South China Sea’s Panyu field, located about 150 kim south of Hong Kong.

The consortium will provide the services for a new subsea production system with six wells and its associated control system tied up to a new central processing platform. The contract covers the supply and installation of a 10” and a 6” diameter clad-lined pipelines, steel tube umbilicals and associated equipment.

“This award represents a major step forward to reinforce Technip’s strong presence in the emerging Chinese subsea market. We are delighted to have COOEC as our consortium partner to deliver this prestigious project to our key client, CNOOC,” said Technip.

As the consortium leader, Technip said its operating center in Kuala Lumpur, Malaysia will execute the contract with the support of COOEC. Duco Inc, Technip’s umbilical manufacturer in Houston, Texas, will fabricate the umbilicals while its Kuala Lumpur subsidiary, Genesis, will provide the engineering support and detailed design.

Offshore installation is scheduled to be completed in two phases during the third quarter of 2013 and the second quarter of 2014, using the Deep Orient, one of Technip’s deepwater construction vessels, and the HYSY 201, COOEC’s pipelay vessel.

Hallvard Hasselknippe, chief operating officer of Technip Subsea Division for the Asia Pacific, said:
“This award represents a major step forward to reinforce Technip’s strong presence in the emerging Chinese subsea market. We are delighted to have COOEC as our consortium partner to deliver this prestigious project to our key client, CNOOC.”

CHINA: Sinopec Kantons to use Vesta’s terminals for fuel distribution in Europe

(EnergyAsia, October 24 2012, Wednesday) — Hong Kong-listed Sinopec Kantons Holdings Limited said it will pay Swiss trader Mercuria Energy Group Limited 128.6 million euros for a 50% stake in its Europe-based oil storage firm as part of their establishment of a new joint venture. (US$1=0.77 euro) With its first foray into Europe, Sinopec Kantons…

This article is for Subscriber members only.
Log In Register

RUSSIA: BP agrees to sell TNK-BP shareholding to Rosneft

(EnergyAsia, October 23 2012, Tuesday) — UK major BP said it has signed heads of terms to sell its 50% share in TNK-BP to Rosneft, the Russian integrated oil and gas company. Rosneft has agreed in principle to buy BP’s share in TNK-BP, Russia’s third largest oil company, in two tranches.

This includes the sale of BP’s 50% shareholding in TNK-BP for US$17.1 billion in cash and Rosneft shares representing a 12.84% stake in Rosneft.

As a follow-up, BP will use US$4.8 billion of the cash consideration to acquire a further 5.66% stake in Rosneft from the Russian government at US$8 per share, representing a 12% premium to share closing price on the bid date of October 18.

The deal is subject to the Russian government agreeing to the sale of the 5.66% stake in Rosneft.

If approved and completed, BP said it would acquire a total 18.5% stake in Rosneft and net US$12.3 billion in cash. This would result in BP holding 19.75% of Rosneft stock, when aggregated with its 1.25% current holding in Rosneft.

At this level of ownership, BP said it expects to be able to account for its share of Rosneft’s earnings, production and reserves on an equity basis. In addition BP expects to have two seats on Rosneft’s nine-person main board.

In accordance with the heads of terms, BP and Rosneft have an exclusivity period of 90 days to negotiate sale and purchase agreements. After signing definitive agreements, completion would be subject to certain customary closing conditions, including governmental, regulatory and anti-trust approvals, and is currently anticipated to occur during the first half of 2013.

BP said it will agree not to dispose of any of the Rosneft shares acquired in the transaction for at least 360 days following the completion of the transaction.

BP chairman Carl-Henric Svanberg said: “This is an important day for BP. Russia is vital to world energy security and will be increasingly significant in years to come. Russia has also been an important country for us over the past 20 years. Our involvement has moved with the times. TNK-BP has been a good investment and we are now laying a new foundation for our work in Russia.

“Rosneft is set to be a major player in the global oil industry. This material holding in Rosneft will, we believe, give BP solid returns. We consider that this is a deal which will deliver both cash and long term value for BP and its shareholders. It provides us with a sustainable stake in Russia’s energy future and is consistent with our group strategy.”

BP’s group chief executive, Bob Dudley, said:

“This investment builds on BP’s track record of value creation in Russia. It is consistent with our strategy of deepening our positions in the world’s most prolific oil and gas regions.

“BP intends to be a long term investor in Rosneft – an investment which I believe will deliver value for our shareholders over the next decade and beyond.

“Rosneft is a company working to become a global leader in the sector. It is developing its substantial asset base with new technologies and improving its management processes and corporate governance. As a major investor BP looks forward to being able to contribute to Rosneft’s success and add value through our participation on the Board. In this regard BP is supportive of Rosneft’s intention to pursue further equity in TNK-BP in due course.”

Morgan Stanley & Co Ltd is acting as principal financial advisor to BP on the proposed transaction while UBS Investment Bank is acting as financial advisor and corporate broker to BP. Goldman Sachs International, Lambert Energy Advisory Ltd and Renaissance Capital have also each acted as financial advisors while Credit Suisse Securities (Europe) Ltd has provided a fairness opinion to BP’s board on the proposed transaction. Linklaters LLP are acting as principal legal advisors on the proposed transaction.

Producing 1.987 million barrels of oil equivalent last year, TNK-BP is a vertically integrated Russian oil company with a diversified upstream and downstream portfolio in Russia and Ukraine. It operates in nearly all of Russia’s major hydrocarbon regions, including West Siberia (in the Tyumen, Khanty-Mansiysk, Yamal-Nenetsk and Novosibirsk Regions), the Volga-Urals (in the Orenburg and Saratov Regions) and East Siberia (in the Irkutsk Region).

In 2011, Rosneft produced 2.45 million b/d of oil and had proved developed reserves of 9.96 billion boe and proved undeveloped reserves of 8.39 billion boe.

 

 

IRAQ: Oil production could double by 2020 if conditions are right to attract large flow of investments, says IEA

(EnergyAsia, October 23 2012, Tuesday) — Iraq could more than double its crude oil production to 6.1 million b/d by 2020 if it is able to attract international investment to build up its key infrastructure including power supply, transportation, storage and port facilities, pipelines and domestic security, said the International Energy Agency (IEA). In a…

This article is for Subscriber members only.
Log In Register

SINGAPORE: Oil rigging and lifting services provider Gaylin offering 110 million shares at S$0.35 each

(EnergyAsia, October 23 2012, Tuesday) — Gaylin, a Singapore-based oil rigging and lifting services provider, has launched an initial public offering (IPO) of 110 million shares at S$0.35 each for listing on the mainboard of the Singapore Exchange Securities Trading Limited (US$1=S$1.22).

At S$0.35 per share, the offering is priced at a price earnings ratio of 8.1 times based on the company’s historical earnings per share of S$0.043 cents for the financial year ended March 31 2012 and pre-offering share capital of 300 million shares.

The IPO comprises five million shares for the public and 105 million for private placement. It will be managed by CIMB Bank Berhad’s Singapore Branch with CIMB Securities (Singapore) Pte Ltd acting as the underwriter and placement agent.

Gaylin said it has granted CIMB Securities (Singapore) an over-allotment option to subscribe for up to 22 million additional shares, representing not more than 20% of the new shares.

Assuming the over-allotment option is not exercised, the offering represents 26.8% of the company’s enlarged share capital of 410 million shares after the IPO on October 23.

Gaylin, which began operating in 1974, said its board intends to recommend and distribute dividends of at least 30% of its net profits attributable to shareholders for FY2013 and FY2014.

Gaylin reported net profit of S$6.9 million in FY2010 and S$13 million in FY2012 on revenues of S$68.6 million and S$71.4 million for the two years.

As one of the Singapore’s largest rigging and lifting services providers to the offshore oil and gas industry, Gaylin owns and operates two warehouses and a fabrication facility in Singapore and a warehouse in Vietnam. It expects to start up new facilities in Malaysia in December.

 

MALAYSIA: Canadian oil industry, economy brace for fallout from rejection of Petronas takeover offer

(EnergyAsia, October 23 2012, Tuesday) — Canadian oil and gas stocks tumbled as an immediate response to the government’s shock decision to reject a generous C$5.9-billion offer by Malaysian state energy firm Petronas to take over mid-sized Calgary-based Progress Energy Resources Corp. Longer term, it might cast a shadow over Canada’s attraction as a destination…

This article is for Subscriber members only.
Log In Register

AUSTRALIA: Pipeline association chief warns against “regulating for the sake of it”

(EnergyAsia, October 22 2012, Monday) — Australia’s gas pipeline association said the government should not implement regulation for its own sake as the nation already has in place the “most appropriate” environmental rules.

Speaking at the opening session of the recent annual convention of The Australian Pipeline Industry Association (APIA) in Brisbane, its President, Kevin Lester, said:

“We need to ensure we are not regulating for the sake of it. We need to ensure that environmental regulatory and compliance framework is fit for purpose, and not some dreamt up ideal that hinders pipeline planning, approvals and construction.

“We need to be pragmatic and not lose sight of what we are actually trying to achieve – constructing a pipeline and the construction works, as I like to remind everyone, is temporary.

“Environmental Impact Statement (EIS) documentation is becoming so bulky that, in some instances, the process is a risk of becoming a real problem to getting projects off the ground.

“For example, a recent EIS for a new mine had 1,400 conditions, one of which was the relocation of a colony of 100 red-back spiders. We certainly don’t want to allow such thinking to creep into our industry.”

APIA is reviewing its own widely followed Environmental Code of Practise later this year.

“There is a lot happening in the coal seam gas (CSG) space so it is particularly pleasing that Version 2 of the CSG Code of Practise will shortly be issued,” said Mr Lester.

He said the pipeline industry has been affected by the high Australian dollar and the lack of support from local consumers.

“None of the huge pipe orders as a result of the CSG work in Queensland went to the local suppliers, and there was certainly some pipe within those orders that was within the capabilities of our local industries,” he said.