Guest views are now limited to 12 pages. If you get an "Error" message, just sign in! If you need to create an account, click here.

Jump to content
  • CRYPTO REWARDS!

    Full endorsement on this opportunity - but it's limited, so get in while you can!

Private Equity Scrambles To Buy Assets In This Emerging Oil & Gas Hotspot


Pitcher
 Share

Recommended Posts

Private Equity Scrambles To Buy Assets In This Emerging Oil & Gas Hotspot

By Irina Slav - May 26, 2019, 10:00 AM CDT

Gas

A little known investment vehicle-based in Cyprus is raising US$5-10 billion for acquisitions of underutilized natural gas assets in the Eastern Mediterranean, Bloomberg’s Yaacov Benmeleh wrote this week, noting the assets included production facilities operated by supermajors such as Exxon and Shell spanning Egypt, Israel, and Cyprus.

The firm, Cynergy Group, is negotiating the fundraising with “some of the most respected global family offices, private equity firms and sovereign funds,” its chief executive told Benmeleh. As to why it is focusing on this particular region in its natural gas investment push, Mike Germanos said asset consolidation would do the industry good as now there were too many assets that were either underutilized or straight away idled.

 

 

It is an odd fact that natural gas production assets and LNG plants could be idled at a time of soaring demand growth for natural gas but the Eastern Mediterranean is a special case politically, which is reason enough for investors to steer clear of it, and also legally, according to the Bloomberg report. At the same time, however, it is an attractive natural gas destination.

Major discoveries of gas have been made in all three of the countries collectively referred to as the Eastern Mediterranean in the report. Egypt has the ambition to turn into a major regional player in natural gas after the political situation began to calm down after the Arab spring rebellion and trouble with fundamentalists, and earlier this year it even resumed LNG sales after a five-year pause. The resumption of exports took place at the Idku LNG plant, which Bloomberg’s Benmeleh listed among assets that could become targets for Cynergy Group.

While Germanos did not name any assets he and his team had in mind when the money was raised, some of the others that could be considered underutilized or idled include the giant Leviathan gas field in Israel as well. It is one of the largest gas discoveries in recent years and has led Israel to stake a claim in the regional gas market. Operated by Israeli Delek Group and U.S. Noble Energy, Leviathan holds an estimated 605 billion cu m of natural gas and production at some 1 billion cu ft (28.3 million cu m) daily to date. Leviathan is definitely a tasty morsel for anyone interested in gas.

There is also another LNG plant in Egypt among assets that Cynergy Group might be interested in—Union Fenosa’s and Eni’s Damietta project—as well as two gas fields in Cyprus.

 

The Damietta plant was idle for seven years after the feed of gas was cut off in 2012 after the revolution that wreaked havoc on gas production in the country. LNG production and exports from Damietta were only resumed earlier this year because Union Fenosa agreed to drop a US$2-billion arbitration it had filed against the Egyptian government (the largest stakeholder) for losses suffered during the period of suspension of operations. Related: China Set To Defy U.S. Sanctions On Iran

In Cyprus, two recently discovered fields could draw the attention of Cynergy Group, according to Bloomberg’s Benmeleh. The first is the Aphrodite field, just 30 km from the Leviathan in Israeli waters. The field is part of Block 12, which is estimated to contain some 3.6-6 trillion cu ft of natural gas. The operators, including Delek again, along with Noble Energy, and Shell, recently struck a gas supply deal with the Egypt LNG facilities to get the gas from Aphrodite to international markets.

The second discovery, Glaucus-1, was made by Exxon and Qatar Petroleum earlier this year and is ranked the third-largest gas discovery off the Cypriot coast. It contains an estimated 682 million barrels of oil equivalent, of which about 90 percent is natural gas.

There are assets to pick from, certainly, and Cynergy Group may be just the first of several investment projects for the region. The largest discoveries in the Eastern Mediterranean are relatively close to each other and the deal between the operators of the Aphrodite field and Egypt LNG plants suggest partnerships are an obvious way of utilizing these assets in a mutually beneficial way.

This means lower costs and internationally competitive LNG. Amid tightening competition, this should be quite an attractive idea despite Israel’s chronic geopolitical problems and the equally chronic hostility between Cyprus and Turkey, which has already spread to natural gas exploration after Turkey decided to start drilling in Cypriot waters.

 

 

https://oilprice.com/Energy/Natural-Gas/Private-Equity-Scrambles-To-Buy-Assets-In-This-Emerging-Oil-Gas-Hotspot.html

  • Thanks 2
  • Upvote 2
Link to comment
Share on other sites

How Trump And Xi Killed The Oil Rally

By Nick Cunningham - May 23, 2019, 6:00 PM CDT

Trump Xi

WTI fell below $60 per barrel for the first time in two months, dragged down by growing fears of a global economic slowdown.

Oil had been stuck between geopolitical risk and supply outages on the one hand, and the U.S.-China trade war and grim economic news on the other. Depending on the day, whichever concern seemed more pressing drove oil price movement.

 

 

For the time being at least, economic concerns seem to be winning out.

While the Trump administration announced higher tariffs on $250 billion worth of Chinese goods a few weeks ago, global financial markets seemingly thought there was a decent chance that the worst would be avoided and that the two sides would reach a deal.

However, the rhetoric on both sides has changed, with top American and Chinese officials digging in and striking a more nationalistic tone. The Trump administration has not only hiked tariffs, but has since taken a hardline on Huawei Technologies and is rumored to be drawing up sanctions on other Chinese companies.

For its part, China is beginning to steel itself, a sign that it won’t take the conflict lying down. “We are here at the starting point of the Long March to remember the time when the Red Army began its journey,” Xi said at a rally in Jiangxi province. “We are now embarking on a new Long March, and we must start all over again!” Only a few weeks ago, China was much more cautious in how it discussed its standoff with the U.S. The shift in language suggests that the trade war will be a protracted affair.

 

 

The higher tariffs – 25 percent on $200 billion of Chinese imports, and reciprocal tariffs on $60 billion of U.S. imports into China – is bad enough. A worse scenario awaits, however. Trump has threatened another round of tariffs, consisting of a 25 percent levy on a further $300 billion of Chinese imports, which would just about cover everything. Once seen as unthinkable, analysts at Nomura have made that scenario their baseline forecast and said the odds of such an outcome is roughly 65 percent, as Bloomberg notes.

“The U.S.-China relationship has moved further off track over the past two weeks after a period of what appeared, on the surface, to be steady progress towards reaching an admittedly narrow agreement,” Nomura analysts wrote. “We do not think the two sides will be able to get back to where they seemed to be in late April.” Related: Oil Tanks On Worst Day In Six Months

 

Oil markets have taken note. Oil prices fell sharply on Wednesday and WTI dipped below $60 per barrel during midday trading on Thursday. Crude is set for its worst week in six months.

In addition to trade fears are tangible cracks in the global economy. Global auto sales continue to slow and automakers around the world are slashing their payrolls. The latest was Ford, which just announced that it was laying off 7,000 people, or 10 percent of its white-collar workforce. In total, roughly 38,000 job cuts have been announced by carmakers around the world.

The gloomier outlook comes at a time when U.S. crude oil inventories continue to rise. Stocks jumped by another 4.7 million barrels last week, rising to their highest level in nearly two years. The increase in inventories is feeding the narrative that the oil market is not, in fact, under-supplied, despite a series of major supply outages around the world.

U.S. crude inventories should not necessarily be taken as gospel, however, especially since OPEC+ is watching closely. “It is misleading to look only at stock trends in the US when assessing the situation on the global oil market,” Commerzbank wrote in a note. “After all, stocks in the US are influenced considerably by US-specific factors such as the rise in domestic oil production and insufficient pipeline capacities. Consequently, WTI is still trading at a significant discount of nearly $10 as compared with Brent. What is more, the further rising US stocks could make Saudi Arabia even more reluctant to step up production.”

The sudden weakness in the economy and the oil market adds pressure on OPEC+ to keep its cuts in place in the second half of the year. Commerzbank said that price weakness is likely “temporary.”

But precisely because U.S. inventory data is so closely watched, it may take inventory declines before everyone starts believing that the oil market is seriously tightening up. For now, economic gloom is taking hold.

 

https://oilprice.com/Energy/Energy-General/How-Trump-And-Xi-Killed-The-Oil-Rally.html

  • Thanks 3
  • Upvote 2
Link to comment
Share on other sites

Vietnam Is On The Verge Of An Energy Crisis

By Tim Daiss - May 23, 2019, 2:00 PM CDT

Petrovietnam

As the U.S. finds itself embroiled in a host of problems around the world, from trying to convince North Korea to come back to the bargaining table, to ramping up tensions with Iran, smoothing over differences in the decades long U.S.-Saudi alliance and hiking punishing tariffs on of $200 bn worth of Chinese goods from 10 percent to an economically damaging 25 percent, it is also at odds with Russia over its continued meddling in Ukraine, allegations of election interference in the U.S. and its support of the al-Assad regime in the ongoing Syrian Civil War. Now, it seems that the U.S. and Russia could soon be vying for a share of Vietnam’s fledgling liquefied natural gas (LNG) market.

On Wednesday, Russia’s largest independent gas producerNovatek said that it signed a memorandum of understanding (MoU) with Vietnam’s Ninh Thuan Provincial People’s Committee to develop an integrated energy-generating project with the use of LNG within Vietnam.

 

 

Novatek added that the project provides for the delivery of LNG utilizing existing infrastructure as well as developing new infrastructure, including the construction of an LNG regasification terminal and new gas-fired power plants within Vietnam.

Novatek chairman Leonid Mikhelson, noted “strong economic growth within Vietnam generates additional demand for energy, which can be sustainability met with the development of an integrated gas generation project. The building of gas-fired power generation increases the demand for us to provide competitively priced LNG supplies to the country. This project could be realized in a relatively short period of time with the support of the Ninh Thuan province.

Significant take-aways

There are several significant takeaways from Novatek’s disclosure. First, it comes as Vietnam is on the verge of an energy crisis. Due to both population and increased economic growth, the country needs to find alternative energy sources to offset its own domestic gas production. The problem for Vietnam isn’t that it doesn’t have ample offshore natural gas reserves, but those reserves are in waters that Beijing also claims - despite being in Vietnam’s UN-mandated 200-nautical mile Exclusive Economic Zone (EEZ). Beijing has thwarted Vietnam’s plans twice in the last few years with both economic and military threats if the country continued to push through with two of its nearly completed offshore gas production projects. Related: Natural Gas Prices In The Permian Flip Negative Again

 

Vietnam has to turn to solar, wind and LNG to make up the difference in its energy mix. In December, the U.S. Trade and Development Agency (USTDA) said it would fund a feasibility study that will aid Vietnam Electricity Corporation (EVN) in its assessment of site selection opportunities and other important core elements of LNG development, including a receiving terminal, marine port, storage, regasification, and related infrastructure. In March, T&T Group and its U.S. partner Gen X Energy 5 had a meeting with leaders of Vietnam’s  Ba Ria Vung Tau Province to discuss a plan to invest in an LNG project with a total price tag ofnearly $6 bn. Other U..S.LNG producers would also like to lock in long term supply deals with Vietnam.

This is where the situation becomes interesting. The U.S. is about to be propelled to become the world’s third-largest LNG exporter, while it could be the mid part of the next-decade vie with both Australia and Qatar as global LNG leader in terms of liquefaction capacity if the so-called second phase of the U.S. LNG development story materializes. However, the ongoing trade war between the U.S. and Beijing and fresh duties of 25 percent on U.S. LNG as well as the reluctance of Chinese firms to sign long term supply deals with U.S. greenfield LNG projects could thwart U.S. plans for LNG Dominance. On the other hand, even only a percentage of the current LNG project proposals are built, the U.S. will solidify its hold as the third or possibly second largest LNG exporter though the next decade and likely beyond.

However, Russia’s gas ambitions aren’t just limited to maintaining its decades-long geopolitically charged gas monopoly in Europe, it also wants to rival the world’ top LNG exporters. Arguably, it’ a tough sell due to both Qatar’s and Australia's LNG capacity, but Russia’s LNG development will progress, and it will pose greater competition for both Europe and Asian market share.

Geopolitical intersection

In the foreseeable future, both Russia and the U.S. will work with Vietnam to develop new LNG receiving terminals, with long term off-take deals attached to their assistance. In so doing, Vietnam will have also become a focal point between Russian and American gas pursuits as well as global hegemony pursuits of both countries. The U.S and Vietnam are already allies in a mutual pursuit of checking China's push in Asia and Beijing’s problematic building of artificial islands in the South China Sea. Russia, for its part, has a long history of working with Vietnam’s energy sector, dating back to the cold war. The trick for Hanoi will be how it will juggle two competing world powers just as it has to currently micro-manage its relations with both the U.S. and China.

 

https://oilprice.com/Energy/Natural-Gas/Vietnam-Is-On-The-Verge-Of-An-Energy-Crisis.html

  • Thanks 1
  • Upvote 2
Link to comment
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.
Note: Your post will require moderator approval before it will be visible.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...
 Share

  • Recently Browsing   0 members

    • No registered users viewing this page.


  • Testing the Rocker Badge!

  • Live Exchange Rate

×
×
  • Create New...

Important Information

By using this site, you agree to our Terms of Use.