Week in Review – March 6-12

By Elisabeth Nguebana.

This week’s review looks at Shell’s sale of assets in Canadian Oil Sands; Rosneft’s partnership with David Yakobashvili; and Eni’s acquisition in the Eastern Mediterranean Sea.

Shell’s divestment program underway

Royal Dutch Shell has agreed to sell most of its Canadian Oil Sands assets for $7.25 billion to Canadian Natural. According to Blomberg report, two companies have also agreed to jointly acquire Marathon Oil Canada Corporation, a subsidiary of Marathon Oil, for $1.25 billion each. The deal puts the Anglo-Dutch producer almost two-thirds of the way through a $30 billion divestment program to reduce debt, which soared following its biggest-ever acquisition of BG Group Plc last year. The company ended an almost two-decade long refining partnership with Saudi Arabian Oil Co., and earlier this year sold more than half of its oil fields in the U.K. North Sea.

More on the topic:

Rakteem Katakey, Amanda Jordan. Shell Cuts Debt With $7.25 Billion Sale of Canada Oil Sands. Bloomberg, March 9, 2017. https://www.bloomberg.com/news/articles/2017-03-09/shell-agrees-to-sell-oil-sands-operations-for-7-25-billion

Ron Bousso. BG shareholders give Shell’s $52 billion acquisition final nod. Reuters, January 29, 2016. http://uk.reuters.com/article/uk-bg-group-m-a-shell-idUKKCN0V61X9

Javier Blas, Joe Carroll, Margot Habiby. Saudi Aramco to Pay Shell $2.2 Billion in Refinery Breakup. Bloomberg, March 7, 2017. https://www.bloomberg.com/news/articles/2017-03-07/saudi-aramco-and-shell-agree-on-terms-of-motiva-asset-breakup

Adam Vaughan, Nick Fletcher. Shell sells more than half of its North Sea oil and gas fields for $3.8bn. The Guardian, January 31, 2017. https://www.theguardian.com/business/2017/jan/31/shell-sells-north-sea-oil-gas-fields-chrysaor-linda-cook

Rosneft expands trade activities despite the sanctions

Rosneft is making moves to boost its trading amidst the challenging environment created by the sanctions regime. In order to expand trade in Turkey and the South-eastern Europe, Rosneft expands cooperation with Petrocas. Petrocas is an oil products trading and logistics firm which was bought by David Yakobashvili, previously active in business in juice and dairy businesses, a few years back. Petrocas has a strategic ownership of many crude terminals and other assets in the Black and Caspian Sea area. In 2014, Rosneft bought 49% of the firm for $144 million. Since then, Petrocas business expanded, as it passed from selling around 1 million tons of oil products per year in 2014 to 3,5 million in 2016. Petrocas is now planning to heavily increase its exports to Turkey, in a bid to capture a part of its growing market. Some analysts stress specific interest that Rosneft attributes to presence in refined product markets as opposed to crude oil sales. The recent takeover of Essar Oil and its refineries in India shows that Rosneft can acquire refining plants without western banks capitals, partnering up with global trading houses, such as Glencore and Trafigura.

More on the topic:

Olga Yagova, Dmitry Zhdannikov. Russian oil major turns to former juice king to boost trade. CNBC, March 10, 2017. http://www.cnbc.com/2017/03/10/reuters-america-russian-oil-major-turns-to-former-juice-king-to-boost-trade.html

WBD co-founder switches over to oil business. RosBusinessConsulting, January 21, 2013. http://rbcnews.com/free/20130121112204.shtml

«Роснефть» купила 49% Petrocas Energy у Якобашвили. Forbes, December 29, 2014. http://www.forbes.ru/news/276875-rosneft-kupila-49-petrocas-energy-u-yakobashvili

«Роснефть» приобретает 49% Essar Oil Limited. Rosneft Press Release. October 15, 2017. https://www.rosneft.ru/press/releases/item/184097/

ENI enlarges its portfolio in the Eastern Mediterranean

On March 7, the Council of Ministers of Cyprus approved ENI’s agreement with Total to acquire 50 per cent share in Block 11 offshore Cyprus (which is next to Zohr field in the Egyptian exclusive economic zone, see Figure 1). With the acquisition of Block 11, ENI follows its strategy of reinforcing its dominant position in the Eastern Mediterranean with new exploration area of 2,215 square kilometres. The Zohr field, which was discovered back in 2015, is also owned by ENI. The company is also an operator in the Blocks 9, 3, 2, Block 6 (ENI 50% Op., Total 50%) and Block 8 (ENI 100% Op.). These activities make ENI one of the central actors in Eastern Mediterranean turning into a powerful hub for natural gas in the future.

Exploration blocks offshore Cyprus

Figure 1. Exploration Blocks Offshore Cyprus and the Zohr Field. Source: http://www.naturalgasworld.com

More on the topic:

ENI Completes Cyprus Block 11 Farm-In. Natural Gas World, March 7, 2017. http://www.naturalgasworld.com/eni-completes-cyprus-block-11-farm-in-36288

ENI Finalizes Farm-In Agreement with Total, Acquiring Interest Offshore Cyprus. World Oil, March 7, 2017. http://www.worldoil.com/news/2017/3/7/eni-finalizes-farm-in-agreement-with-total-acquiring-interest-offshore-cyprus

Elisabeth Nguebana is a student at ENERPO Program, European University at Saint Petersburg. She can be contacted via email mnguebana@eu.spb.ru

Stories are weekly collected by the reporting team: Timothy Abraham, Alexander Geysman, Elisabeth Nguebana, Sophie Nguebana, Daniel Tsvetanov, Alberto Perego.

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