South America

ExxonMobil Completes Purchase of 50% of Statoil’s Interests in Brazil’s Pre-salt Carcara Oil Field

  • Agreement to add interest in resource with approximately 2 billion barrels of high-quality oil
  • ExxonMobil and partners high bidders in adjacent and other blocks in recent bid rounds
  • ExxonMobil adds more than 1.25 million net acres to deepwater portfolio offshore Brazil

ExxonMobil announced that it has completed an agreement to purchase half of Statoil’s interest in the BM-S-8 block offshore Brazil, which contains part of the pre-salt Carcara oil field.

The Carcara field contains an estimated recoverable resource of 2 billion barrels of high-quality oil. The block is located approximately 200 miles offshore Rio de Janeiro.

Statoil currently holds a 66 percent interest in the block, which contains about half the Carcara field. The other part of the field is in the adjacent North Carcara block, where ExxonMobil, Statoil and Petrogal Brasil were high bidders in a bid round held today. Statoil will continue to operate the Carcara development and hold 33 percent interest.

Over the last month, through bid rounds and announced farm-in agreements, ExxonMobil has added 14 blocks comprising more than 1.25 million net acres offshore Brazil to its portfolio, bringing its total acreage in the country to more than 1.4 million net acres.

“These agreements and recent bid round results mark ExxonMobil’s entry into a world-class resource and prospective exploration acreage in Brazil,” said Darren Woods, chairman and chief executive officer of ExxonMobil. “ExxonMobil has a long history in the country and we’re confident our deepwater technology and project expertise can help to further grow the value of Brazil’s energy resources. We look forward to working with Petrobras and all our partners to begin to explore and develop this high quality acreage.”

Separately, ExxonMobil recently added highly prospective acreage to the company’s portfolio after completing a farm-in agreement with Queiroz Galvão Exploração e Produção (QGEP).

ExxonMobil will make an upfront cash payment of approximately $800 million for the interest in BM-S-8 block, and an additional contingent cash payment for a potential total of approximately $1.3 billion. The transaction is subject to government approvals and is expected to close in 2018.

Following the close of the transaction, partner interests in the BM-S-8 block will be 33 percent for Statoil, 33 percent for ExxonMobil, 14 percent for Petrogal Brasil, a subsidiary of Galp, and 10 percent each for QGEP and Barra.

South America

Neuquén Province government Approves Exxon Plans for Unconventional Exploration in Los Toldos

  • 35-year unconventional exploitation concession approved by provincial government
  • Initial project investment approximately $200 million
  • Builds on ExxonMobil’s extensive operations in the Vaca Muerta with interests in six unconventional and one conventional block

ExxonMobil announced that the Neuquén Province government has approved the investment plan for the development of a 35-year unconventional exploitation concession in the Los Toldos I South block.

The initial investment of about $200 million calls for a pilot project that brings up to seven wells to production, the construction of production facilities and development of export infrastructure.

“We are very optimistic about this resource and the provincial government’s approval enables us to do the necessary work to continue expanding our operations,” said Sara Ortwein, president of ExxonMobil’s XTO Energy. “We look forward to continuing to work with the government and our partners to develop the country’s energy resources.”

ExxonMobil and its partners, Gas y Petroleo del Neuquén and Americas Petrogas Argentina S.A (APASA), are looking for opportunities to further develop this block and bring wells into production.

If the pilot project is successful, it could lead to a staged development of approximately 300 horizontal wells of up to 3,000 meters in length. The block could have estimated production of 11 million cubic meters per day of gas when at full production.

Los Toldos I South is located 85 kilometers (52 miles) northwest of Añelo and 175 kilometers (108 miles) northwest of Neuquén city.

ExxonMobil Exploration Argentina S.R.L (EMEA) is the operator and holds 80 percent interest in partnership with Gas y Petroleo del Neuquén, which holds 10 percent interest, and APASA (Tecpetrol), which has 10 percent.

To date, ExxonMobil’s investment in exploration and early development of its Vaca Muerta operations has exceeded $500 million since it began exploration and early development in the area.

“ExxonMobil has been in Argentina for more than 100 years, and an active player in the Neuquén basin since 2010,” said Daniel De Nigris, Argentina general manager. “We are actively analyzing additional opportunities to accelerate gas production in other blocks and look forward to making further progress.”

South America

BP begins providing natural gas to Mexico

BP Energía México, BP’s natural gas marketing and trading arm in Mexico, has started to deliver approximately 200,000 mmbtu/d of natural gas to industrial users, local distribution companies and independent power producers in eight states in Mexico, making BP one of the first private companies to supply natural gas to the domestic market under the country’s energy reform measures.

The announcement comes after BP Energía México was awarded pipeline transportation rights at an auction hosted earlier this year by CENAGAS, Mexico’s national center for natural gas control. BP Energía México has also executed a firm transport agreement with CENAGAS in addition to agreements with other transporters and local distribution companies in order to offer bundled services for delivery of natural gas.

Delivery has begun across eight states – Nuevo Leon, Coahuila, San Luis Potosi, Veracruz, Mexico State, Guanajuato, Tamaulipas and Queretaro.

“We see this as an important milestone in BP’s increasing involvement in and commitment to Mexico,” said Orlando Alvarez, CEO of BP Energy Company, BP’s North America energy marketing and trading group of which BP Energía México is a part. “We intend to continue to grow our Mexican customer base and be a reliable supplier of natural gas into the country for many years to come.”

BP has invested in Mexico for more than 50 years, starting with marketing and distribution of Castrol. In December 2016, BP participated in Mexico’s first tender for deepwater licences, winning interests in two exploration blocks in Cuenca Salina in the Southeast Basin. In March BP opened its first fuels retail site in Mexico and plans to open around 1,500 sites across the country over the next five years.

“BP has a long history in Mexico and we are looking to continue to grow our presence here in line with the country’s energy reforms. Supplying natural gas is another step forward, building on our other businesses and bringing new offers to Mexico’s consumers as we seek opportunities across the energy sector,” added Chris Sladen, head of country for BP in Mexico.

South America

BP and Bridas to combine PAE and Axion Energy, forming new integrated energy company

New joint venture will be largest privately-owned integrated energy company operating in Argentina

BP today announced that it has agreed with Bridas Corporation (Bridas) to form a new integrated energy company by combining their interests in the oil and gas producer Pan American Energy (PAE) and the refiner and marketer Axion Energy (Axion) in a cash-free transaction. The new company, Pan American Energy Group (PAEG), will be the largest privately-owned integrated energy company operating in Argentina.

PAEG will be owned equally by BP and Bridas Corporation, itself a 50:50 joint venture of Bridas Energy Holdings of Argentina and CNOOC Limited of China. PAE is currently owned 60% by BP and 40% by Bridas, while Axion is wholly-owned by Bridas. There will be no payments for the equity exchange.

The combination of PAE and Axion under unified ownership will align the PAEG shareholders’ interests across the upstream and downstream value chains in Argentina, Uruguay and Paraguay. PAEG is expected to benefit from BP’s global upstream technical and downstream marketing experience as well as Bridas’ deep operating knowledge. The combination may also offer further integration synergies; the Axion refinery is already the primary customer for PAE’s Argentine crude oil production.

“Supported by the combined skills and expertise of BP and Bridas, this new integrated business will be able to pursue growth and development opportunities in Argentina, Uruguay, Paraguay and Mexico,” said Bob Dudley, BP Group Chief Executive.

“We see value-enhancing opportunities throughout PAEG’s businesses; from extending the life of mature production and developing new unconventional resources including Vaca Muerta, to growth in retail fuels and lubricants marketing. These fit well with BP’s strategy and will allow us to strengthen and deepen our long-term relationship with Bridas.”

“For the past 58 years, we have been investing in the energy sector in Argentina and the region. Efficient investment has been the main factor behind our growth as an oil and gas company. By signing this agreement, a new phase begins for our company, as we integrate our operations with those of our partners,” remarked Alejandro Bulgheroni, Chairman and President of Bridas Corporation.

“This integration agreement ratifies our commitment to investment, employment and the efficient development of resources our region needs,” stated Marcos Bulgheroni, Executive Director at Pan American Energy.

PAE is Argentina’s second largest producer of oil and gas. It had daily production in 2016 of around 262,000 barrels of oil equivalent (boe), equivalent to approximately 18% of Argentina’s total oil and gas production. It has interests in Argentina’s four main hydrocarbon basins, including operating Cerro Dragon, Argentina’s largest oil field, and interests in the prospective Vaca Muerta shale. PAE also operates the Hokchi block in the shallow water Mexican Gulf of Mexico.

Axion Energy owns and operates the 90,000 barrels of oil a day (b/d) refining capacity Campana refinery north of Buenos Aires, has over 750 retail sites in Argentina, Uruguay and Paraguay, and also has material lubricant and aviation fuels businesses.

PAEG’s board of eight will comprise four directors from each shareholder and the shareholders will share nomination rights for key senior executives for the company. PAEG will be self-funded.

The transaction is subject to regulatory filing or approval in several jurisdictions. Completion of the agreement is anticipated in early 2018.

South America

BP begins production from Juniper project in Trinidad

Juniper is the fifth BP Upstream major project, and second in Trinidad, to start-up in 2017.

BP Trinidad and Tobago (BPTT) today announced first gas from the Juniper development, the fifth of BP’s seven Upstream major project start-ups planned for 2017. Juniper has begun production on schedule and under budget.

The project is expected to boost BPTT’s gas production capacity by an estimated 590 million standard cubic feet a day (mmscfd).

With an investment of approximately US$2 billion, Juniper is BP’s first subsea field development in Trinidad. It produces gas from the Corallita and Lantana fields via the new Juniper platform, 80 kilometres (50 miles) off the south-east coast of Trinidad in water approximately 110 metres deep. The gas then flows to the Mahogany B hub via a new ten-kilometre flowline that was installed in 2016.

Bernard Looney, chief executive of BP’s Upstream business, said: “Delivered on schedule and under budget, Juniper is a major milestone in BP’s more than 50 years of investment in Trinidad and Tobago. It is the largest new project brought into production in Trinidad for several years and the second major project we have started here this year. Together they represent a significant portion of the new production capacity we expect to bring online in 2017.”

Another major project in Trinidad, the Trinidad Onshore Compression project, began operations in April. In June BPTT announced that it had sanctioned development of the Angelin gas field, which is expected to start production in late 2019. BPTT also announced two gas discoveries which may support future developments offshore Trinidad.

“The safe start-up of production from Juniper is a proud moment for BPTT, and further demonstrates our commitment to helping improve production capacity for Trinidad and Tobago,” said Norman Christie, BPTT’s regional president. “We thank the Government, our contractors and the hundreds of team members across the globe that worked to safely bring Juniper on to production.”

Juniper is BPTT’s 14th offshore platform in Trinidad and its sixth to be constructed at the fabrication yard in La Brea, Trinidad.

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