Daily Digest: March 27th, 2020

Woodside Defers FID on Key Projects

Australian Woodside Petroleum has deferred targeted final investment decisions (FID) on Scarborough, Pluto Train 2 and Browse and slashed approximately 50% in forecast 2020 total expenditure in response to uncertain market conditions created by low oil prices and Covid-19 outbreak, it said.

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The Big Picture:

• It will delay target FID for US$11bn Scarborough project, which it owns with BHP, and Pluto Train 2 to 2021. The FID on Scarborough was expected in the first half of this year. The FID on US$20bn Browse has been deferred to an unspecified date.

• Both Scarborough and Browse projects are key to Woodside’s plan to triple its oil and gas reserves in less than a decade.

Oil Could go Lower as Demand Drops: IEA

Global oil demand may fall about 20mn b/d, or 20% year on year, in 2020 thanks to the imposed lockdown around the world, the head of the International Energy Agency (IEA) Fatih Birol said.

The Big Picture:

• According to IEA, transport accounted for about a quarter of global energy demand last year. This year governments have taken tight measures in repsonse to Covid-19, including massive lockdowns of the civilian population worldwide, affecting most people who would normally be driving to work, boarding an aircraft and so on.

• Birol says for the first time in decades falling oil demand has coincided with huge oversupply. According to him, the price could go as low as $20/barrel.

UK LNG Imports Soar in 2019

UK piped gas imports slumped 28% in 2019, statistics published by the Department of Business, Energy and Industrial Strategy (Beis) on March 26 show, while LNG imports more than doubled.

The Big Picture:

• LNG shipments climbed to their highest level since 2011, when deliveries surged because of low temperatures and a disruption in Norwegian supplies.

• Qatari supplies tripled in 2019, accounting for 49% of the UK's total LNG imports, while deliveries from the US and Russia doubled. There were also increases from Algeria, Equatorial Guinea, Nigeria and Peru.

US Extends Iranian Waiver for Baghdad

Washington gave Iraq a waiver that allows it to continue importing Iranian gas and power. At the same time it slapped sanctions on dozen of Iraqi individuals and companies for bypassing Iranian-related sanctions.

The Big Picture:

• US has given several waivers to Iraq since October 2018 to continue Iranian gas and power imports. Iraq depends on Iran for about a third of its electricity supply.

• If US stops granting waivers for Iraq, it would be a huge challenge for both Iraq and Iran. Iran has allowed for revenues of $4bn from gas sales to Iraq and Turkey in the current budget.

PetroChina's 2019 Profit Drops 14% 

Chinese state-run PetroChina’s net income in 2019 was yuan 45.6bn ($6.4bn), down 13.9% yr/yr owing to lower oil and gas prices. 

The Big Picture:

• PetroChina did not disclose its capital expenditure and output targets for this year. Another Chinese state-run firm, Cnooc, which announced its 2019 results earlier this week, also did not spell out its capital expenditure plans for 2020.

• Most companies are opting for radical cuts in response to the decline in oil prices and Covid-19 outbreak.

UK's MetalNRG Renegotiates Romanian Purchase 

UK natural resources investment firm MetalNRG has reopened talks on its acquisition of a 75% stake in a Romanian oil and gas concession in light of the oil price collapse, it said on March 26.

The Big Picture:

• The company added that the current market situation also presented new "potentially attractive" transactions in the oil and gas industry.

Spirit Energy Well Boosts UK Output

Spirit Energy will be able to add up ot 15mn ft³/day to its output from a new well in the Southern North Sea, the Anglo-German joint venture said.

The Big Picture:

• The additional gas and oil from Chiswick and Chestnut provide a boost to production from two UK fields at a time when the secure supply of energy is critical.

• Spirit is a joint venture between Centrica and Stadtwerke Munchen. Centrica has announced plans to sell its majority share. The present low demand, low price oil and gas market is expected to see a wave of consolidation.

UK's Cairn Announces 23% Capex Cut

The UK's Cairn Energy has slashed its 2020 capital expenditure plan by 23% in response to the market downturn, it said.

The Big Picture:

• Capex on UK producing assets will be cut by over 30% to $45mn, by deferring activities at the Premier-operated Catcher field in the North Sea and making other savings.

• All exploration and appraisal activity has been put on hold except for ongoing work at the Eni-operated Ehecatl well in Mexico, the company said.

Coastal GasLink Winds Down Ahead of Spring

TC Energy subsidiary Coastal GasLink (CGL) is winding down work on the line that will bring gas from northeast British Columbia to LNG Canada's plant on BC’s northern coast, it said March 26. Spring is bringing the thaw, limiting work on the 670-km line to Kitimat.

The Big Picture:

• Coastal GasLink will consist of 670 km of pipeline and associated facilities. It will pump up to 2.1bn ft³/day of Western Canadian basin gas from Dawson Creek to Kitimat in British Columbia.

• In light of the current situation surrounding the Covid-19 pandemic, CGL says it isn’t yet certain when construction work will continue after the spring pause.