(MENAFN – Daily News Egypt) The Ministry of Petroleum aims to increase Egypt’s natural gas production to 7bn cubic feet daily (scf/day) by June, compared to the current production of 6.8bn scf/day through increasing gas production from the Zohr field.

A source at EGAS told Daily News Egypt that the increase from Zohr to 2.6bn scf/day compared to 2.3bn scf/day now will compensate for the natural decline rates and increase the total local production.

He pointed out that new projects were connected to production, such as Zohr, Nawras, North Alexandria and 9B, and have contributed to increasing Egypt’s natural gas production.

The source added that it is targeted to increase Egypt’s natural gas production to 7.5bn scf/day in 2019/20.

The local market’s consumption of natural gas is currently dropping to 5.5bn scf/day as a result of the decrease of electricity plants consumption in winter.

Moreover, the source explained that the consumption rates of natural gas in the local market is growing according to the industrial development and urban plan and the increase in the number of cars that operate with natural gas.

The consumption of the electricity sector represents 61% of the total natural gas consumption, while the rest of the sector such as industry, household, and petroleum products consume 39%.

The source said that the local gas consumption rate would increase gradually to 7bn scf/day in the next fiscal year (FY) compared to 6.2bn scf/day this FY.

The average local market consumption of natural gas will increase to 9bn scf/day by FY 2020/21 according to the industrial development plan with the increase of the electric energy produced and delivered to homes, as well as to the largest number possible of cars operating with gas instead of petroleum products.

The Ministry of Petroleum’s plan aims to complete the implementation of Zohr, North Africa and Borollos to contribute to increasing local production and covering consumption rates with the operation of liquefaction factories through the gas comping from Cyprus and Israel.

he oil and gas sector is “facing a crisis of confidence” and a mounting lack of trust as climate change concerns rise worldwide, the chief executive of Norway’s top energy company said Monday.

Equinor CEO Eldar Sætre said at the CERAWeek by IHS Markit conference in Houston that the environmental issues represent a real threat to the industry unless oil and gas companies proactively step forward to dramatically reduce emissions and pollution.

“We are collectively not doing enough,” Sætre said.

The industry must align to promote more transparency, public engagement and climate change action. Equinor, for instance, touts having roughly half the carbon dioxide emissions on average as the rest of the oil and gas sector.

Equinor, although still an oil and gas firm, also invests heavily in renewable energy, especially offshore wind farms. In the U.S., Equinor has the Empire Wind farm offshore of New York and is now developing a similar project offshore of Massachusetts.

Sætre also bemoaned a general lack of help coming from governments when it would help if nations would set specific targets on emission reductions and incentives to help get there.

“Politics becomes ever more shortsighted,” he said, “and is increasingly governed by populism.”

This article first appeared on the Houston Chronicle – an Energy Voice content partner. For more from the Houston Chronicle click here.

HOUSTON (Bloomberg) — Cowboy boots and turquoise belt buckles are giving way to smart suits and silk ties as the world’s biggest shale oil field prepares for mergers.

As oil executives from across the world gather in Houston for the annual CERAWeek by IHS Markit conference, the Permian basin in the U.S. Southwest is on the cusp of a radical transformation with one simple premise: bigger is better. The energy industry appears primed for deals at a time when Big Oil is flexing its muscle in the region.

Just last week, Exxon Mobil Corp. and Chevron Corp. unveiled audacious growth plans for the Permian basin, hitherto the domain of smaller rivals. Royal Dutch Shell Plc is said to be on the prowl for deals while BP Plc bought in last year.

Meanwhile, independents are under increasing investor pressure to merge or sell out in an effort to end relentless production growth that has burned through some $200 billion over the past eight years. “The ability of the larger companies to do an accretive acquisition is probably at its highest level since the beginning of the shale revolution,” said Michael Roomberg, a fund manager at Miller/Howard Investments Inc. which manages $5 billion. “M&A interest is at its highest in nearly a decade.”

But the century-old oilfield cycle of big players swallowing up smaller ones may not happen quickly or follow the conventional path.

The supermajors, facing investor pressures of their own, are unwilling to throw cash around like they did in the heady days of $100-a-bbl oil. All-stock deals could be dilutive because many U.S. independents trade at higher price-to-earnings multiples than integrated oil companies, according to data compiled by Bloomberg.

Diamondback Energy Inc. and Concho Resources Inc. pulled off all-stock deals that together were worth almost $20 billion last year, showing a willingness to merge their way to gain scale.

Pressure has mounted on Permian-only and smaller companies in recent weeks. Pioneer Natural Resources Co. and Halcon Resources Corp. replaced their CEOs while names such as Alta Mesa Resources Inc., Centennial Resource Development Inc., and Laredo Petroleum Inc. have seen their market values decimated.

There are 112 operators in the Permian basin and that means an excessive number of management teams operating similar assets, said Ben Dell, founder of activist investor Kimmeridge Energy Management Co. Economies of scale are needed and about 20 companies, or any valued under $3 billion, should be combined in a “merger of equals,” he said.

Independents were once the innovators that worked out how to pump oil from previously impermeable shale formations. That turned the U.S. from a petroleum importer dependent on the Middle East into a global energy superpower. America’s record production has prompted OPEC to take measures intended to forestall a glut. Saudi Arabia plans to extend deeper-than-agreed supply curbs into April, a Saudi official familiar with the policy said yesterday.

For North American oil companies, the shale revolution came at a cost. Excluding the integrated majors, explorers spent $200 billion over the last eight years, according to data compiled by Bloomberg. Investors have signaled they’ve had enough. They want a manufacturing-style production mode, which favors the biggest, most efficient operators.

Exxon Chief Executive Officer Darren Woods was blunt in his assessment of how the supermajor will meet its Permian target of 1 MMbpd by 2024 – more than OPEC member Libya’s entire output. “We’re changing how the game gets played,” he said.

Exxon and Chevron both emphasized their focus on existing Permian holdings, favoring small land swaps rather than big corporate deals.

But the European supermajors, playing catch-up, appear to be willing to play the acquisition game. BP Plc entered the fray last year with its $10.5 billion purchase of BHP Billiton Ltd.’s onshore assets and Shell is said to be interested in buying Endeavor Energy Resources LP, one of the Permian Basin’s largest private operators, for as much as $8 billion.

The arrival of Big Oil may change the region’s Wild West image. Until now, the barrier of entry has been low, with dozens of private equity-backed wildcatters, many of whom are in their early 30s, flipping leases and drilling exploratory wells with the aim of selling them to the highest bidder.

It’s a far cry from Exxon’s systematic approach, perhaps a sign that the days of the rags-to-riches wildcatters may be ending.

The decision by the world’s biggest sovereign wealth fund to sell some of its energy holdings encompasses a vast array of companies, from US shale drillers and developers of Canadian oil sands, to off shore drillers from Africa to China. Norway’s $1tn investment fund said on Friday that it will gradually sell its holdings in oil and gas exploration and production companies in order to reduce the country’s exposure to a permanent decline in crude prices. That’s a smaller step than the full fossil-fuel divestment that some were proposing, but still aff ects some of the industry’s most famous names. Houston-based shale driller EOG Resources Inc is the biggest shareholding to be sold, with a total value $488mn, or just under 1% of the company, according to the fund’s website. Indian petroleum and chemicals giant Reliance Industries Ltd is the next largest, with a stake of 0.5% worth $485mn. Other notable US names include Anadarko Petroleum Corp, Apache Corp and Occidental Petroleum Corp On the other side of the Atlantic, explorers Tullow Oil Plc and Premier Oil Plc are aff ected. All of them appear on a list of 134 companies placed in the exploration and production category FTSE Russell. The stocks will be “phased out from the fund gradually over time,” according to Norway’s finance ministry, which may prevent the sale causing any big changes in these companies’ market values. But the move also raises questions about the industry’s appeal to investors in the very long term. “The Norwegian sovereign wealth fund is seen as something of a poster-child amongst sovereign wealth funds,” said Alejandro DeMichelis, director of oil and gas research at Hannam & Partners LLP. “This decision could also trigger other large investors to review their stance toward investing in the oil and gas sector.” Life is changing for oil companies. Ten years ago, they accounted for about 15% of the S&P 500 index. Today, they make up just 5%, having been mostly displaced by technology giants such as Facebook Inc and Apple Inc. Driving this shift is a smorgasbord of new energy sources that’s bringing unprecedented competition for capital. Consumer choices are set to drift farther from the hydrocarbons of the 20th century, with renewables potentially meeting about a quarter of demand by 2040, according to oil major BP Plc. It’s no surprise, then, that investors are increasingly questioning the wisdom of betting on oil. A divestment campaign started by activist group 350.org in 2012 has already persuaded funds holding $8tn to back away from fossil fuels, according to its website. Scrutiny could intensify as AGM season approaches. Catherine Howarth, chief executive off icer of ShareAction – a group that has targeted Royal Dutch Shell Plc in the past – said she expects a “ramp-up” of pressure at annual general meetings that start in the spring.

ConocoPhillips was awarded $8.75bn by the World Bank’s arbitration tribunal in re- sponse to Venezuela’s seizure of oil assets more than a decade ago. The Washington-based International Centre for Settlement of Investment Disputes published a report Friday upholding Conoco’s claim that Venezuela unlawfully confi scated its Hamaca and Petrozuata heavy crude oil projects in the Orinoco River basin in 2007, and said the Houston-based company must be compensated accordingly. The award comes as the US tries to ratchet up pressure on the administration of President Nico- las Maduro after sanctioning state oil company Petroleos de Venezuela SA and recognising Juan Guaido as the nation’s interim leader. Venezuela’s economy has been in turmoil as oil exports con- tinue to crash. Residents of Caracas and other cit- ies on Friday endured a second day without power while Maduro blamed “US imperialism.” “We welcome the ICSID tribunal’s decision, which upholds the principle that governments cannot unlawfully expropriate private invest- ments without paying compensation,” Conoco General Counsel Kelly B Rose said in a statement. Venezuela’s information ministry didn’t immedi- ately respond to requests for comment. Conoco was also awarded $2bn last year by the International Chamber of Commerce over the seizure of assets. Following that decision, the company moved aggressively to take over PDVSA facilities in the Caribbean islands of Bonaire, Cu- racao, St Eustatius and Aruba. Vessels carrying Venezuelan crude were or- dered to immediately pull away from Caribbean ports, creating a backlog of ships and hindering the nation’s oil exports. In August, Conoco reached a settlement with PDVSA under which the company agreed to pay the $2bn back in quarterly instalments over four- and-a-half years. Conoco said in January it had received about a quarter of what’s owed. Some of the payment had been made in crude. Conoco also said at the time it expected to get another pay- ment in February, despite US sanctions. “Given the size of the award and current adverse situation in Venezuela, receiving full payment in a timely manner remains to be determined,” Scott Hanold, an analyst at RBC Capital Markets LLC, wrote in a note.

When Opec started an oil-price war in late 2014, most people believed US shale was doomed. In reality, the giant oil majors suffered most – burdened by expensive mega-projects, Chevron Corp, BP Plc and the rest struggled to adapt to the fall in energy prices.
Slowly, those companies figured out how to survive in the lower-for-longer price era. They cut costs and, more importantly, learned how to stop them from rising again. In an industry that favoured tailored solutions for every project, companies started to talk about standardisation. At closed-door sessions in Davos, Switzerland, Big Oil bosses didn’t waste time on self-important talk, but instead discussed how to share the design of anything from underwater valves to pumps.
Nearly five years after the crash, the cultural change is starting to work. The world’s major energy companies have managed to press the reset button, allowing them to make profits today similar to what they did in a world of $100-plus a barrel oil prices.
“Big Oil has been able to re-emerge from this downturn stronger and lower on the cost curve,” said Michele Della Vigna, the top oil industry analyst at Goldman Sachs Group Inc, who had been a critic of the majors.
The level of spending at the world’s eight largest integrated oil and gas companies fell last year to $118bn, down 45% from a pre-crisis peak of $215bn in 2013, according to data compiled by Bloomberg News.
But their business model has changed a lot in the process. The reliance on multibillion dollar projects in far-flung corners of the world has been reduced and the majors are pouring billion into Texas’s Permian Basin, once dominated by independent exploration and production companies. Other strategies include trying to build new projects closer to existing ones and reusing old infrastructure to reduce costs. They’ve also re-discovered the joys of integration, investing in refineries and petrochemical plants that make money even when prices are low.
To the surprise of many in the industry, lower costs haven’t translated into slower development. In fact, projects have often come ahead of expectations.
The industry got a lot of help from its suppliers. According to Exxon Mobil Corp, the cost of 3D seismic technology, used to find underground reservoirs, and the deep-water rigs needed to exploit them has fallen more than 50% from the 2013 level.
The new era means combining projects that pay back quickly, whether in US shale or elsewhere, with some traditional larger projects. In the oil industry, it’s a model called short-and-long oil cycle, because some projects pay back in as little to two-to-three years, compared to as long as 10 years for conventional projects.
“Big Oil now wants a diversified portfolio with short-and-long cycle oil,” said Daniel Yergin, the oil historian that this week hosts the annual CERAWeek energy conference in Houston. “Before the oil crisis in 2014-15, the mere concept of short-cycle oil didn’t exist in Big Oil.”
Short-cycle oil has a one big advantage over mega-projects: companies can dial them up and down quickly to respond to changes in oil and gas prices.
The other significant change is natural gas. Big Oil had already embraced gas before the crisis, with companies like Exxon investing in massive projects in Qatar. But today some executives suggest gas is gaining the upper hand. “Gas is the fastest growing hydrocarbon,” said Bernard Looney, chief executive for upstream at BP. “It’s the future.”
Despite the significant reduction in spending and much lower energy prices, returns haven’t suffered, according to data complied by Bloomberg. The biggest oil companies posted return-on-capital-employed – a traditional yardstick used by investors – of about 8.7% last year, higher than the 8.4% of 2014.

The head of LNG Canada said he does “not see a single scenario” that would stop the nation’s largest infrastructure project from getting built, dispelling concerns that the $30bn gas export facility is at risk of mounting opposition from pipeline foes.
The liquefied natural gas project in northern British Columbia was approved by Royal Dutch Shell Plc and four Asian partners in October after obtaining the support of the province and 20 First Nation groups. But it continues to face a legal challenge disputing the constitutionality of the project’s approval, as well as protests by a group of indigenous holdouts.
“I do not see a single scenario that would cause the construction of this pipeline to be stopped,” Andy Calitz, LNG Canada’s chief executive officer, said in an interview in Vancouver.
TransCanada Corp is planning to build the pipeline that will carry the gas from western Canada’s prolific Montney shale formation to the coastal export facility in Kitimat. The whole project – including the gas fields, pipeline and liquefaction terminal – fall within British Columbia and was authorised by the provincial regulator.
But a private citizen in Smithers, Michael Sawyer, mounted a legal challenge saying the pipeline is a federal undertaking and should have sought approval from the National Energy Board. The federal regulator agreed in December to consider the jurisdictional challenge and has requested evidence from the parties involved with final oral arguments set for March.
“It’s a complex world – the paths are not clear,” Calitz said. Any decision by the federal regulator could later be appealed in the courts. “But what I am clear about is that this pipeline, by the time that happens, will be in advanced construction.”
Separately, TransCanada is seeking to sell a stake in the pipeline project. That move was long contemplated and doesn’t indicate that there are growing concerns about the project’s risks, Calitz said.
“It has always been a part of the financing strategy for the project,” Calitz said. “It has no impact on either the construction or the capacity or any other aspect of the project.

SINGAPORE (Bloomberg) — The country that’s driven global oil demand since the turn of the century may hit the brakes sooner than expected as travelers shift toward electric cars or even forgo the open road in favor of trains.

China’s oil consumption will peak in 2025, five to eight years earlier than market consensus, according to Morgan Stanley analysts including Andy Meng. The reversal will be driven by a transportation model unique to China: While most countries moving up the economic ladder show continued growth in oil demand from increased driving, mass-adoption of electric vehicles and high-speed rail in China will drastically reduce gasoline use, the bank said.

If the theory plays out, it could signal a huge shift for the oil market, which has relied on China for more than a third of global demand growth since 1999. An expanding body of research is painting a bleak future for oil, as rapid adoption of electric vehicles could mean global demand peaks by the 2030s, according to Bank of America and Royal Dutch Shell, a prospect that’s likely to worry energy executives and investors.

“China will no longer be the growth driver of global crude demand,” Meng said in a March 5 report. “We believe the refiners and petroleum stations are the largest potential losers, while the battery companies are likely to become the key winners.”

To be sure, some of the industry’s top prognosticators expect the country’s oil demand to keep growing for years, albeit at a slower pace. The International Energy Agency sees China crude consumption expanding through 2040, while the nation’s largest energy producer China National Petroleum has forecast that gasoline use will peak five years before oil demand does in 2030.

Disruptive Force

China’s electric vehicle penetration will reach 6.4% by the end of the decade and keep rising to 80% by 2040, according to Morgan Stanley, adding that an aggressive push by local battery companies into technology innovation may speed up that timeline.

Meanwhile the country is seeing solid growth in high-speed rail ridership, driven by a well-developed network and severe traffic congestion. Highways’ share of passenger turnover fell to 27% last year from 55% in 2012. In the U.S., the figure was 87% last year, according to Morgan Stanley.

Electric vehicles and high-speed rail are “a disruptive force on China oil demand,” the analysts said. “This pattern has been ignored by most investors in developed markets as there is no such experience from any precedent.”

China’s plans to loosen its solar subsidy policy will keep growth of the world’s largest market intact, according to the head of JinkoSolar Holding Co, which is increasing production capacity by as much as 20% this year.
Installations will probably maintain at about 40 gigawatts, close to the levels last year, Chen Kangping, chief executive officer of the world’s largest panel maker, said in an interview in Beijing. China’s main industry group said last month the country is planning more supportive policies, which include resuming quotas for some utility-scale projects.
The views from Chen suggest a brighter outlook for global solar companies reeling from Beijing’s abrupt decision in the middle of 2018 to halt approvals for some projects and reduce subsidies as part of efforts to curb overcapacity.
The move caused China’s solar additions to tumble last year from a record 53 gigawatts in 2017 and spurred predictions in January installations may fall a second year.
“The changes would reflect a maturing of China’s solar policy as regulators take more factors into consideration,” Chen said Wednesday on the sidelines of the nation’s annual parliamentary meeting. “It will help to stabilise the industry and market development.”
With the new plan, China Photovoltaic Industry Association said installations could climb in 2019 from 44 gigawatts last year. Citigroup Inc forecast capacity additions of 42 gigawatts, with a potential for a rise to 50 gigawatts.
JinkoSolar will raise panel capacity by 10% to 20% this year from 10.8 gigawatts last year.
Expansion will be in products with more advanced technology and command higher prices, according to Chen.
The supplier will be “cautious” with the rampups, weighing that against sales growth, with output already fully booked for the first half of the year, he said.

India and China will drive the natural gas market until 2040, International Energy Forum (IEF) secretary general Dr Sun Xiansheng said even as he underlined natural gas’s “critical role in achieving sustainable and inclusive growth”. The two Asian countries will be the major consumers over the next two decades followed by Africa and the Middle East, he said while delivering the second edition of the 2019 series of the Gas Exporting Countries Forum’s (GECF) monthly lecture here yesterday. Indian demand for gas is estimated to grow at 4.9% through 2040 while that of China at 4.7%, Xiansheng said while delivering the lecture entitled “Global Energy Security: The Role of Gas in Sustainable and Inclusive Growth” at the GECF’s headquarters in Doha. Africa’s demand will grow at an estimated 3.3% between now and 2040, while the Middle East at 2% during the period, he said. Demand in the US, the world’s largest economy, will grow at 0.7% through 2040, Xiansheng said. In terms of production, the IEF secretary general noted that Africa will grow at an estimated 3.7% until 2040. Mozambique will drive the African production at 12.2% during the period, he said. The Middle East will follow with a growth rate of 2.2% with Qatar and Iran leading gas production until 2040. In Asia–Pacifi c (2%), Australia and China will be major producers at 3% and 3.9% respectively. In his speech, Xiansheng underlined the critical role of natural gas in achieving sustainable and inclusive growth. This is a fact, he said, that has been proven by all major forecasting agencies, including Opec and the International Energy Agency. “In fact, the share of gas in the global energy mix will be no less than 25% by 2040,” he noted. The fi gure also corresponds with the fi gures projected in the GECF’s own Global Gas Outlook 2040. “Gas will continue to get momentum as it can be a solution to the Paris Agreement Goals,” Xiansheng stated. Looking at producers, he said several new emerging producers are expected in the market, but Qatar will continue to be a steady producer through the forecasted period. In terms of the consumers, the IEF secretary general mentioned there would be a shift to Asia, with China and India having the fastest growth rate. Xiansheng also called for collaboration in terms of policy and investment decisions and a necessity to develop infrastructure and pricing mechanisms. In order to ultimately reach energy security supply, he stressed that “international and regional energy cooperation is the solution”. This is where he praised the role of the GECF and called for the organisation’s “valued contributions” to the dialogue. In order to enhance this dialogue, the GECF will participate in the ‘9th IEA-IEFOPEC Symposium on energy outlook’ next week, of which the GECF will be the fourth partner. GECF secretary general Dr Yury Sentyurin made introductory remarks. Dr Xiansheng is an accomplished authority not only on energy policy related matters, but has ample industry experience, covering both oil and gas production, trading and pipeline construction, gathered through the various roles he held at China National Petroleum Corporation (CNPC). In his current role as the secretary-general of the IEF, an intergovernmental organisation that aims to foster greater mutual understanding and awareness of common energy interests among its members, he has contributed greatly to the global dialogue on energy. The organisation has some 72 member countries and between themselves account for the bulk of global supply and demand for oil and gas. Considering their similarities and aligned interests, such as encouraging the dialogue between producers and consumers, the GECF and the IEF have been collaborating for several years, an example of that being their joint work on the Joint Organisations Data Initiative (JODI- Gas). And while the focus of the GECF is on natural gas as the cleanest, most effi cient and most versatile source of energy, similarly to the IEF, it looks at the interrelation between gas and other energy sources as well as the sustainable growth of gas markets. Both organisations are united in their belief that achieving the United Nations Sustainable Development Goals (SDGs) and especially SDG 7 ‘Ensure access to affordable, reliable, sustainable and modern energy for all’ is of prime importance.