Posts Tagged ‘Shell’

Petronas Nears Deal to Invest in $31 Billion Canada Project

May 31, 2018

Malaysia’s Petroliam Nasional Bhd. is nearing a deal to invest in a proposed C$40 billion ($31 billion) liquefied natural gas project in Canada led by Royal Dutch Shell Plc, according to people with knowledge of negotiations.

An announcement may come as soon as Thursday, said one of the people, who asked not to be identified because the talks are private. The LNG Canada project, in northern British Columbia, is led by Shell and partners Mitsubishi Corp., PetroChina Co. and Korea Gas Corp.

Image result for Petronas towers, photos

LNG Canada executives weren’t immediately available for comment. Representatives for Petronas and Shell didn’t immediately respond to requests for comment.

A deal would mark a turnaround by Petronas after it abandoned its own $27 billion LNG proposal in the western Canadian province last July after the project faced spiraling costs and staunch opposition from environmental and indigenous groups. That decision left it without a plan to ship gas produced by its Progress Energy Canada unit to Asia as originally intended.

Image result for LNG ships, photos

Buying into the Shell-led project would help revive that prospect. LNG Canada plans to build an export facility at Kitimat near Prince Rupert — North America’s closest port to Asia — that could eventually reach 26 million tons a year in capacity.

Petronas’s involvement would also help bring financing and gas supplies to LNG Canada as the group nears a final investment decision, expected this year. Petronas’s Progress unit could contribute an additional 560 million cubic feet a day of production to the project, meaning it would have all the gas it needs to meet its initial export target, according to National Bank of Canada analyst Greg Colman.

Shell and its partners have twice delayed a final investment decision on the project amid a global supply glut. But in recent months, Shell has indicated the window for competitive projects may be reopening, saying that global LNG demand exceeded expectations last year and that the market may again face a supply shortage by the mid-2020s.

“It is looking very, very positive for this project,” Karl Johannson, head of Canada and Mexico natural gas pipelines for TransCanada Corp., which is set to build the pipeline to deliver gas to the export facility, said on an investor call in April.

— With assistance by Kevin Orland, Michael Bellusci, and Aaron Clark

Bloomberg

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https://www.bloomberg.com/news/articles/2018-05-31/petronas-said-near-investment-in-31-billion-lng-canada-project
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Big Oil Firms Hold Back on Drilling

April 27, 2018

Despite higher prices, Exxon, Chevron, Shell spend carefully under investor pressure

A worker cleaning a rig drilling for Chevron near Midland, Texas, U.S., in March. Chevron’s stock rose 1.8% Friday after the company said first-quarter profits were $3.6 billion, up 36% from a year ago.
A worker cleaning a rig drilling for Chevron near Midland, Texas, U.S., in March. Chevron’s stock rose 1.8% Friday after the company said first-quarter profits were $3.6 billion, up 36% from a year ago. PHOTO: DANIEL ACKER/BLOOMBERG NEWS

The world’s biggest oil companies are awash in cash, thanks to rising crude prices. But few, if any, are going on spending sprees, even as the prospect of a global oil shortage looms.

Western energy giants including Exxon Mobil Corp. XOM -3.40% Chevron Corp.CVX +0.98% and Royal Dutch Shell RDS.B -0.55% PLC just posted their best first-quarter profits in years, with most besting a time when crude sold for more than $100 a barrel.

Yet despite a 50% surge in prices since last year, drilling budgets at the largest oil-and-gas companies are up only about 7%, according to consultancy Wood Mackenzie.

Large publicly traded oil companies are moving carefully because they are under pressure from investors after spending heavily over the past decade when prices were higher, only to generate underwhelming returns.

“The newfound religion and confidence in the sector is, to say the least, fragile,” said Shell Chief Executive Ben van Beurden. “We’ll need to show a little longer that we actually mean what we say in terms of capital discipline.”

No Spending Spree for Big OilCrude-oil prices are rising far more thancompany budgets.Global oil prices, monthly average
.a barrelJan. ’17JulyJan. ’18455055606570$75

By contrast, smaller U.S. shale producers—especially those backed by private equity—have seized on the opportunity to ramp up drilling and gain market share.

Two years ago, the top 30 U.S. companies accounted for almost 64% of production. That percentage has fallen to 60% this year, according to consultancy Rystad Energy.

“Big companies are still cutting coupons to show that they can live within their means,” said Adam Flikerski, managing partner at BlackGold Capital Management LP, an asset manager that specializes in oil and gas lending. “Like technology companies, the smaller players are still rewarded for growth.”

The wary response from the world’s biggest producers comes as a global oil glut that has hung over the industry for the past four years finally appears to be withering away. Without stepped-up spending on new oil production, the International Energy Agency warns, the world could flip from abundance to supply crunch by 2020.

A lack of investment is “potentially storing up trouble for the future,” the Paris-based agency said last month.

Still, many investors in publicly traded oil and gas producers are pressing executives not to sow the seeds of another price crash with excessive growth. Their apathy about oil’s rally has shown.

Big companies are still cutting coupons to show that they can live within their means.

—Adam Flikerski, managing partner at BlackGold Capital Management

While the price of Brent crude, the international oil benchmark, is up around 11% this year, a leading barometer of energy stocks, the MSCI World Energy Index, is only up around 4%. A number of companies have performed even worse. Exxon is down 3.9%.

The pace of share buybacks has been a key factor for performance so far. ConocoPhillips  shares rose 3% Thursday after the company disclosed it had repurchased about $500 million in stock, as it reported that quarterly profits jumped 52% to $888 million.

Global spending on drilling activitySources: U.S. Energy Information Administration(prices); Wood Mackenzie (spending)Note: Oil price data is through April 26, 2018; Drillingspending in 2018 is an estimate
20172018$0 billion$100$200$300

Exxon fell 2% Friday in pre-market trading after announcing that it has not yet reinstated its longstanding program for buying back shares. Although the company posted its highest cash flow since 2014, it still fell short of analyst expectations for the second straight quarter. Profits rose 16% to $4.65 billion compared with the first three months of last year.

Shell’s U.K. shares on Thursday fell 0.7% after the company missed cash flow expectations and failed to give more clarity on when it would begin buying back $25 billion in stock, as it reported quarterly profits rose by two-thirds to nearly $6 billion.

Chevron’s stock rose 1.8% Friday after the company said first-quarter profits were $3.6 billion, up 36% from a year ago.

France’s Total SA announced a 3.2% dividend increase Thursday. Chief Executive Patrick Pouyanne said the company will use the excess cash it rakes in with oil above $70 a barrel to reward shareholders with higher dividends and share buybacks.

“Some of you may be worried about the financial discipline, but I can tell you we keep in mind the discipline,” Mr. Pouyanne told analysts.

Combined, profits at Exxon, Chevron, Shell and Total were $16.8 billion, the highest since 2014.

Sanford C. Bernstein expects the world’s biggest oil companies to generate record amounts of cash in excess of new investments this year.

The spending constraints aren’t so restrictive that the biggest companies are avoiding new developments completely. BP PLC, which reports earnings next week, sanctioned several new projects this month, including the second project in a $6 billion natural gas development in India.

Earlier this week, Shell announced plans for a new deep water project in the Gulf of Mexico. Exxon may take a final investment decision later this year on a new facility to manufacture polypropylene, a widely used form of plastic.

One reason for caution among larger companies is that some analysts, investors and executives still lack faith that crude prices will remain elevated through the end of the year.

“There’s potential weakness on the horizon in oil prices,” said Tom Ellacott, senior vice president for corporate research at Wood Mackenzie. “It’s still quite an uncertain environment.”

Smaller U.S. producers are exercising less caution, as many of them still have business models akin to startups’. They must invest in new wells to prove the viability of new prospects.

Those companies are a major reason why forecasters say U.S. oil output may reach 11 million barrels a day by the end of the year, surpassing the output of Saudi Arabia.

In February, companies that aren’t among the top U.S. crude producers made up almost half the permits approved for new drilling, according to data and analytics firm DrillingInfo. In the past six months, those operators accounted for about 42% of permits. Permits are generally a useful barometer for future drilling activity.

Many such companies will be affected by shortages in labor and trucking, as well as pipeline bottlenecks in the Permian basin in West Texas and New Mexico, the heart of U.S. drilling activity. Those challenges could curtail production by about 400,000 barrels a day, but output will continue surging as many companies have secured the supplies and contracts needed to meet their goals, said Artem Abramov, vice president of analysis at analytics firm Rystad.

“We’ve got a completely new generation of small, private players with very ambitious growth plans in the Permian basin,” he said. “Those plans will continue.”

Write to Bradley Olson at Bradley.Olson@wsj.com and Sarah Kent at sarah.kent@wsj.com

https://www.wsj.com/articles/big-oil-firms-hold-back-on-drilling-1524832558

Shell buying spree cranks up race for clean energy

January 26, 2018

Royal Dutch Shell has spent over $400 million on a range of acquisitions in recent weeks, from solar power to electric car charging points – in a bid to reduce its carbon footprint. (AFP)
LONDON: Royal Dutch Shell has spent over $400 million on a range of acquisitions in recent weeks, from solar power to electric car charging points, cranking up its drive to expand beyond its oil and gas business and reduce its carbon footprint.
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The scale of the buying spree pales in comparison to the Anglo-Dutch company’s $25 billion annual spending budget. But its first forays into the solar and retail power sectors for many years shows a growing urgency to develop cleaner energy businesses.
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The investments are not limited to renewables such as biofuels, solar and wind. Shell, as well as rivals such as BP , Exxon Mobil and Chevron, are betting on rising demand for gas, the least polluting fossil fuel, to power the expected surge in electric vehicles in the coming decades.
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To that end, Shell agreed in December to acquire independent British power provider First Utility for around $200 million, according to several sources close to the deal. The value of the acquisition had not been previously disclosed.
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Shell declined to comment..
With First Utility, the company hopes to find an outlet for its gas supplies via the retail power market, betting on rising demand as drivers charge electric vehicles at home.
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Earlier this month, the company ventured back into solar after a 12-year hiatus when buying a 43.86 percent stake in Silicon Ranch Corporation for $217 million.
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In the last three months of 2017, Shell also invested in two projects to develop charging stations for electric vehicles across Europe’s highways. It has also signed agreements to buy solar power in Britain and develop renewables power grids in Asia and Africa.
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According to analysts at Bernstein, Big Oil has invested over $3 billion on renewables acquisitions over the past five years, most of which went toward solar.
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“Green” merger and acquisition (M&A) activity today averages 13 percent of total energy M&A activity, they said.
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“However greater scale is needed for the majors to effectively operate and leverage their trading skills in this market, necessitating more M&A,” they said in a note.
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Other companies have also made investments.
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BP got back into solar power with a $200 million investment in solar generator Lightsource late last year, six years after exiting the sector with a large writedown.
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Total bought battery maker Saft for $1 billion in 2016.

(Reporting by Ron Bousso)

Shell warns of safety risks at occupied Nigeria plant

August 21, 2017

AFP

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© AFP/File | Children paddle past an oil pipeline head near their home in the Andoni settlement on Bonny waterways, in Nigeria’s southern Rivers state on April 12, 2011
LAGOS (AFP) – Royal Dutch Shell has raised an alarm over the continuing siege at a Nigerian facility by protesters, saying they could be putting their safety at risk.

Hundreds of protesters from the Kula and Belema communities in Nigeria’s restless southern Rivers state have occupied the plant since August 11 to press their demands for jobs and better living conditions.

“The illegal occupation of Belema Flow Station and Gas Plant in Rivers State has safety implications both for the people at the facilities and nearby communities,” the company’s Nigerian subsidiary, Shell Petroleum Development Company, said in a statement on Sunday.

It said it was “deeply concerned that unauthorised persons, including women and children, have been observed in close proximity to equipment that processes crude oil and gas without the protection of safety clothing.”

Shell said the occupation “exposes people at the plant to higher safety risks as anything could trigger a spill or fire with potentially serious consequences.”

The company said it had not been able to gain access to the plant since the seizure, and called on the protesters to leave.

The protesters also want Shell to shift the operation of the plant to a local company.

“We want Shell to hand over the operations of the flow station to Belema Oil Company because it appreciates our challenges and needs,” community leader Godson Egbelekro told AFP.

The plant transports crude oil to the Bonny Light export terminal, which has a production capacity of 225,000 barrels per day.

In 1993, Shell was forced to quit operation in Ogoniland because of community unrest, but the company still runs a network of pipelines in the area.

Nigeria, Africa’s biggest oil producer with some two million barrels per day, relies on the sector for 90 percent of foreign exchange earnings and 70 percent of government revenue.

Protestors occupy Shell plant in Nigeria

August 12, 2017

AFP

© AFP/File | Although Shell was forced to quit oil production in the area in 1993, the company still runs a network of pipelines criss-crossing the area

WARRI (NIGERIA) (AFP) – Hundreds of protesters have occupied a Nigerian oil facility owned by Anglo-Dutch oil giant Shell, demanding that a local company take over its operations, a community leader said Saturday.

“We want Shell to hand over the operations of the flow station to Belema Oil Company because it appreciates our challenges and needs,” community leader Godson Egbelekro told AFP.

Protesters from the Kula and Belema community in Nigeria’s restive southern Rivers state said the community has suffered through decades of poverty and neglect.

At the same time they say the owners and workers of multinational oil firms operating in the area are living a life of affluence thanks to abundant oil and gas resources.

“We will be here for as long as it takes until Shell meets our demands,” youth leader Alfred Epedi said, adding that “over 800 protesters” were occupying the flow station.

Security guards at the facility did not try to disperse the crowd as it entered the flow station on Friday.

The station, operated by Shell subsidiary the Shell Petroleum Development Corporation of Nigeria Ltd (SPDC), feeds crude oil into its Bonny Light export terminal, which has a production capacity of 225,000 barrels per day of oil.

The flow station’s output remained slow on Saturday.

Company officials “have been engaging representatives of the community (in) talks but nothing tangible has come out from the said talks,” Epedi said.

In a statement, SPDC spokesman Joseph Obari denied the protesters’ allegations of neglect and said the company was working to resolve the situation.

The company “has spent several millions of naira on social investment projects and university scholarship programmes for students of the area,” Obari said.

“SPDC has informed the authorities of the illegal occupation and is working towards resuming safe operations,” he added.

Community unrest in Ogoniland, in Nigeria’s oil rich south, is not uncommon.

Although Shell was forced to quit oil production in the area in 1993, the company still runs a network of pipelines criss-crossing the area.

In July, SPDC had to shut down its Trans Niger pipeline because of a “leak” — the preferred euphemism in Nigeria for crude oil theft.

Nigeria is Africa’s biggest oil producer and exporter, accounting for some two million barrels per day. It relies on the sector for 90 percent of foreign exchange earnings and 70 percent of government revenue.

Nigeria: Hundreds of protesters storm crude oil flow station owned by Shell

August 11, 2017

AKUKU-TORU, Nigeria — Hundreds of Nigerian protesters stormed a crude oil flow station owned by Shell in the restive Niger Delta on Friday, demanding jobs and infrastructure development, a Reuters witness said.

The protesters complained they did not benefit from oil production in their area, a common refrain in the impoverished swampland that produces most of Nigeria’s oil. They also demanded an end to oil pollution in the area.

Soldiers and security guards did not disperse the crowd as they entered the Belema Flow Station in Rivers State, which feeds oil into Shell’s Bonny export terminal.

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The Agbada oil flow station, operated by Shell in Port Harcourt, Nigeria. Photographer George Osodi for Bloomberg

Shell had no immediate comment, and it was not immediately clear whether there was an impact on oil production.

While Bonny Light crude oil is currently under force majeure due to the closure of the Trans Niger Pipeline, exports continue via another export line.

(Reporting by Tife Owolabi; additional reporting by Libby George; Writing by Ulf Laessing; Editing by Susan Fenton)

Image result for Shell's Bonny export terminal, Nigeria, photos

Shell operated Bonny oil terminal

Image result for Shell's Bonny export terminal, Nigeria, photos

Oil majors gushing in cash despite cheap crude

August 3, 2017

AFP

© AFP | Oil majors are no longer getting burned by low oil prices

PARIS (AFP) – The prospect of crude remaining near the current $50 level is no longer a doomsday scenario for the world’s oil majors whose latest earnings announcements show that cost-cutting lets them turn a profit even at these price levels.BP, Chevron, ExxonMobil, Shell and Total have all published results in recent days, showing they pocketed $23 billion in net profit in the first half of the year.

Either they increased their earnings or at least returned to profit compared with the same period last year.

With the exception of ExxonMobil they all benefitted from an increase in output from the same period last year, but more importantly they all profited from a rebound in crude prices as OPEC members and Russia agreed to limit production.

The price of the international benchmark Brent crude averaged $51.7 per barrel in the first half of this year, up considerably from $39.8 during the same period last year.

While the profits are still less than half of what the firms turned in during the same period three years ago when Brent was trading at over $100 per barrel, they show that the major firms can survive profitably if crude prices stay at current levels, a scenario many now foresee.

“It is a tough environment and it could remain that way for some time,” said BP’s chief executive Bob Dudley earlier this week.

“But we are building a business that is resilient to these changing conditions,” he said.

After crude prices began their descent in 2014 the oil majors reacted quickly: cutting costs, selling off assets judged non-strategic and focusing on the projects they considered the most profitable.

“Big Oils are showing strong ability to adapt to lower oil prices through cost cutting,” said analysts at US investment bank Goldman Sachs in a recent report.

By one measure, free cash flow — or the amount of funds a firm has left over after investments needed to maintain or expand their assets — they may even be better off.

Goldman Sachs analysts said European oil majors had a higher cash flow in the first half of this year than in the first half of 2014, when crude prices were more than double of what they are today.

– Lower, forever –

“Recent results are good news and average production costs have fallen by 40 percent since 2014,” said David Elmes, and energy specialist and professor at Warwick Business School.

“The important part of recent results is how firms are back to generating enough cash to cover such costs” like investment and high dividend payments that have kept many long-term investors on board, he told AFP.

While cheap oil was initially viewed as a phase that would soon pass relatively quickly as global demand continued to climb upwards, a shift has occurred and many now see lower prices as here to stay for a while.

Shell’s chief Ben van Beurden said the firm is now working with a “lower forever mindset”.

He said that Shell still believes there is a better than 50-50 chance that crude prices will trend higher in the coming years, but wasn’t going to base its business decisions on that.

“We do not want to have the mindset that higher oil prices are around the corner to help us out,” he said.

For the moment, the oil majors have shelved costly projects like extracting crude from Canadian tar sands or tapping certain Arctic fields.

However in the future they will have to face replacing their reserves at a profitable cost, something which may prove difficult in the medium term.

“The amount of affordable oil and gas big oil can access is limited,” said Elmes. “Much is in the control of national oil companies keen and able to develop it themselves.”

And when it comes to exploiting shale reserves in the United States, Elmes said that the smaller companies have shown themselves to be able to better control costs.

Shell Refinery in Rotterdam to Remain Closed Until at Least Mid-August

August 1, 2017

Royal Dutch Shell says a refinery in Rotterdam it largely shut down over the weekend following a fire at an electricity station will remain closed until at least mid-August.

Aug. 1, 2017, at 9:56 a.m.

The Associated Press

Explosion bei Shell in den Niederlanden

Shell spokesman Thijs van Velzen says the fire started late Saturday, July 29, 2017 and was extinguished by Sunday morning. Nobody was injured.

THE HAGUE, Netherlands (AP) — Royal Dutch Shell says a refinery in Rotterdam that it largely shut down over the weekend following a fire at an electricity station will remain closed until at least mid-August.

The energy multinational said in a statement Tuesday that it expects to restart operations at the Pernis refinery “at the earliest in the second half of August.”

The Pernis refinery in Rotterdam’s sprawling port is Europe’s largest. It has the capacity to refine just over 400,000 barrels of crude oil per day.

The company has not released details of the financial impact of the closure.

In a statement, Shell says: “we are doing everything we can to minimize impact to our customers.”

Related:

Shell Shuts Down Most of Netherlands Refinery — Europe’s Biggest — Due to Fire

July 30, 2017

THE HAGUE, Netherlands — Royal Dutch Shell is shutting down most units at its refinery in Rotterdam, the Netherlands after a fire at a high-voltage electricity switch station.

Explosion bei Shell in den Niederlanden

Shell spokesman Thijs van Velzen says the fire started late Saturday and was extinguished by Sunday morning. Nobody was injured.

The Pernis refinery in Rotterdam’s sprawling port is Europe’s largest. It has the capacity to refine just over 400,000 barrels of crude oil per day.

The shutdown led to Shell burning off excess gases at the plant, a process known as flaring. The move sent large flames into the sky on Sunday.

Van Velzen says the cause of the fire is under investigation. He declined comment on the financial implications of the shutdown.

Related:

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Local media in the Netherlands reported that people across a wide area heard blasts and could see flames soaring into the night sky from the 320-hectare (790-acre) chemical plant operated by oil giant Royal Dutch Shell in the town of Moerdijk near the port city of Rotterdam.

Shell spokesman Thijs van Velzen said that two people suffered minor injuries: “All the people that were present are safe,” he said. The cause of the explosion was not immediately clear.

Residents told local radio and television that they heard “two powerful bangs” which rocked the area around 10:45 pm (2045 UTC) and that the ground “shook like in an earthquake.” All road and river traffic near the site was suspended.

Dutch public television showed pictures of the flames and large plumes of smoke, which could be seen from Rotterdam, about 30 kilometres (18 miles) away.

The plant manufactures chemicals from petroleum used in products ranging from car components to insulation materials, paints and antifreeze.

The incident was close to the scene of another major fire three years ago at a chemical storage facility.

jm/msh (AP, Reuters, AFP)

Shell Oil Refinery in Rotterdam Shut Down For Fire — Europe’s largest refinery

July 30, 2017

AFP

© ANP/AFP | The fire at Europe’s largest refinery was brought under control early Sunday
THE HAGUE (AFP) – A fire on Sunday in the Dutch port city of Rotterdam forced the closure of Europe’s largest refinery run by Anglo-Dutch company Shell.Firefighters brought the blaze, which sent flames billowing into the sky, under control by around 6:00 am (0400 GMT).

“The fire started last night in a high-voltage power station at the Shell Pernis refinery in Rotterdam,” a Shell spokesman told AFP.

“Several units are stopped and for security reasons we are burning off the gas that remained inside them,” the spokesman added.

Shell has not confirmed local media reports that the fire may have been caused by a short circuit. Instead the company said it would “wait to know more about the circumstances of the incident.”

According to the regional security authority, there were no toxic materials in the smoke but there may be soot.

Shell could not immediately disclose the extent of the damage, nor when the refinery would be operating at full power.

“The shutting down and restarting the units can take several hours, or even a day for some,” the spokesman said.