Talisman Energy Inc., Calgary, has completed late last month the long-awaited sale of its 25% stake in Sudan's Greater Nile Oil Project (GNOP) to New Delhi-based ONGC Videsh Ltd. (OVL), the overseas arm of India's state-owned Oil & Natural Gas Corp. (ONGC).
The Indian stake will be held by an Amsterdam-based subsidiary, ONGC Nile Ganga BV ABN Amro, the only Dutch bank operating in India, has been appointed as advisor to ONGC Nile Ganga.
In other recent company news:
- El Paso Corp. reported Mar. 21 that it signed a deal with California and other western states to resolve litigation and claims relating to the Houston-based energy company's alleged manipulation of the sale and delivery of natural gas and electricity to US western markets during September 1996 through the present.
- Shell Kazakhstan Development BV completed the $165 million acquisition of Kerr-McGee Corp.'s interests in Kazakhstan (OGJ Online, Feb. 5, 2003).
- Philadelphia-based Sunoco Inc. has signed a long-term definitive agreement with Equistar Chemicals LP—a joint venture of Lyondell Chemical Co. and Millennium Chemicals Inc.—to form a new limited partnership involving Equistar's La Porte, Tex., ethylene facility.
- Saudi Basic Industries Corp. (SABIC) and Süd-Chemie AG announced a joint agreement to acquire Scientific Design Co. Inc., Little Ferry, NJ, from Linde AG. SABIC and Süd-Chemie will manage Scientific Design through a 50-50 joint venture. The amount of the deal was undisclosed.
- Pluspetrol Norte, a unit of Argentine independent Pluspetrol SA and operator of oil fields on Peru's northern jungle Blocks 1AB and 8, has obtained a $75 million loan from Credit Suisse First Boston. Pluspetrol Norte holds 100% of Block 1AB and 60% of Block 8.
Talisman sale specifics
Talisman announced last October its intention to sell, saying it expected the transaction to be completed by the end of 2002. But the deal was blocked by Talisman's partners in GNOP, which had right of first refusal over any sale (OGJ Online, Mar. 11, 2003).
Apart from Talisman (operator, 25%), equity owners in the 250,000 b/d GNOP are China National Petroleum Corp. 40%, Malaysia's state oil company Petronas Carigali Overseas Sdn. Bhd. (Petronas) 30%, and Sudan's national petroleum company Sudapet Ltd. (5%).
Industry sources told OGJ that CNPC and Petronas each wanted to increase their equity stakes in GNOP, but that the Sudanese government had objected. CNPC eventually dropped its demands altogether, while Petronas did so only after being offered another asset instead.
Talisman said it completed the sale of its indirectly held interest in GNOP to OVL for an aggregate amount of $771 million subject to what it called "postclosing adjustments."
"Under the transaction, an indirect wholly owned subsidiary of Talisman sold and assigned to OVL all of the shares of Talisman (Greater Nile) BV (TGN BV), as well as the debt owed by TGN BV to the subsidiary," Talisman explained.
According to Talisman's Oct. 30, 2002, announcement of the sale, OVL was entitled to receive the benefit of all free cash flow from TGN BV's interest in GNOP commencing Sept. 1, 2002, as well as associated working capital.
"Talisman's subsidiary has received approximately $84 million from TGN BV since Aug. 31, 2002, and consequently, closing cash proceeds were approximately $687 million," the firm said.
Sale marks end of era
Talisman's transaction with OVL marks the ends of an era for the Canadian firm.
Talisman acquired its operatorship and 25% interest in GNOP in October 1998 through the acquisition of Arakis Energy Corp. for about 8.9 million common shares of Talisman (OGJ, Oct. 19, 1998, p. 44).
Talisman's acquisition provided an infusion of capital that enabled the consortium to complete a 930 mile pipeline to transport oil from fields in southern Sudan to an export terminal near Port Sudan on the Red Sea.
The pipeline began filling with crude in July 1999, and the first cargo of "Nile Blend" departed the export terminal in early September 1999. Originally constructed to move 150,000 b/d of oil, the pipeline has a current capacity of 250,000 b/d and can be expanded to 450,000 b/d.
But Sudan also marked a troublesome time for Talisman, best summed up by President and CEO Jim Buckee when he announced the sale last year: "Talisman's shares have continued to be discounted based on perceived political risk in-country and in North America to a degree that was unacceptable for 12% of our production. Shareholders have told me they were tired of continually having to monitor and analyze events relating to Sudan" (OGJ Online, June 18, 2002).
Boon for OVL
For OVL, the deal means close to 60,000 b/d of additional production, and it expects to find a market for the oil in India, possibly with ONGC's Mangalore Refinery & Petrochemicals Ltd. (MRPL).
"Once the deal is formally approved by the Sudanese government, we are planning to bring the first possible shipment of our share of the medium sweet crude oil from the field to India," OVL Managing Director Atul Chandra said when the transaction was announced in October.
OVL's plans
Meanwhile, OVL has retained the services of Trafigura Ltd. of London to trade its share of GNOP crude oil on global markets.
"Trafigura Ltd. has been given the mandate to trade for us for next 6 months by when we hope to put in place a mechanism of shipping the Sudan crude to India," an OVL spokesman said.
Industry sources told OGJ that Petronas, for dropping its objections to the Talisman sale, was offered the opportunity of acquiring an altogether different asset in Sudan.
The day after Talisman's Mar. 12 announcement, Petronas International Corp. Ltd., a wholly owned Petronas subsidiary, announced that it had acquired Mobil Oil Sudan Ltd. from Mobil International Petroleum Corp.
Mobil Oil Sudan, a company incorporated in Sudan, is involved in the retailing and marketing of oil, motor fuels, jet and marine fuels, lubricants, and other petroleum products in Sudan.
In addition to having a network of service stations throughout the country, the company also owns three petroleum depots—one each in Port Sudan, Khartoum, and Gaili.
In a statement, Petronas said its new acquisition would be renamed Petronas Marketing Sudan Ltd. and that it "would further pave the way for Petronas to add value to its activities in Sudan and strengthen its brand position."
The Malaysian firm said the acquisition signified "another long-term commitment to enhance its presence in Sudan."
El Paso settles gas, power suit
Based on El Paso's deal—which is an agreement in principle—the company will pay the litigants more than $1.7 billion in cash, stock, and commodities. The settlement is expected to be finalized by yearend and requires approval by the courts and the US Federal Energy Regulatory Commission.
El Paso is admitting no wrongdoing.
Deal details
Based on the signed agreement, El Paso will take the following actions:
- Present an up-front cash payment of $100 million to California and other western states, including Washington, Oregon, and Nevada.
- Make a $2 million payment from the company's officer bonus pool.
- Pay $125 million in El Paso common stock (about 26.4 million shares).
- Provide $900 million worth of natural gas over the course of 20 years starting in 2004.
- Reduce by $125 million the price on power contracts with the California Department of Water Resources through 2005.
- Pay $22 million/year for the next 20 years starting 1 year after the settlement becomes final
Reaction
Some analysts interpreted the news of the deal as a sign that the company could wipe the slate clean and begin anew following years of negative publicity and press.
"Though we have never been convinced of the case against El Paso," said Ronald Barone, analyst with UBS Warburg LLC, in a research note, "we believe the effective global nature of this pending settlementUremoves a material overhang off (El Paso) that should substantially facilitate its ability to get back on its feet quickly."
Barone added, "We believe this is the route of choice for the company vs. waiting for the FERC ruling which—even if successful—would have likely resulted in litigation being dragged on for years."
Shell's Kazakhstan acquisition
The main object of Shell's Kazakhstan acquisition was Kerr-McGee's 1.75% working interest in the Caspian Pipeline Consortium. Shell said that interest balances its export pipeline capacity with anticipated equity production volumes that will come mainly from giant Kashagan oil field in the Caspian Sea, which is to begin producing in 3-4 years.
Shell already held, in a joint venture with OAO Rosneft, a 7.5% interest in CPC with a commensurate capacity right of 60,000 b/d escalating to 100,000 b/d with future expansions. The acquired 1.75% interest adds 55,000 b/d of capacity building to 60,000 b/d. The combined interests provide Shell with export capacity of as much as 110,000 b/d of equity oil in the medium term, the company said.
Shell also acquired Kerr-McGee's 50% interest in Arman oil field on the Buzachi Peninsula in the North Ustyurt basin. It is producing 5,000 b/d. Shell becomes operator of Arman field and the nearby, partly explored Mertvyi Kultuk exploration license (see map, OGJ, Aug. 15, 1994, p. 36). The block, which originally included 3 million acres and excluded undeveloped Komsomolsk oil field, lies 30 miles south of supergiant Tengiz oil and gas field.
Sunoco-Equistar LP
According to the agreement between Sunoco and Equistar, Equistar and the partnership will enter into a 15-year, 700 million lb/year propylene supply contract with Sunoco. Of this amount, 500 million lb will come from the La Porte partnership, and the remainder will be based on another long-term contract.
Pricing for the majority of Sunoco's purchases will be based on a cost-based formula that includes a fixed discount, the company said. Equistar will continue to manage and serve as operator of the La Porte facility on behalf of the partnership.
Separately, Sunoco reported it would purchase Equistar's Bayport 400 million lb/year polypropylene facility at Pasadena, Tex., for $190 million.
Currently Sunoco operates an 800 million lb/year polypropylene plant at La Porte as well as polypropylene facilities at Neal, W.Va., and Marcus Hook, Pa.
SABIC acquisition
Under this changed ownership, Scientific Design, which produces catalysts and sells licenses for process technology, will remain an independent entity.
Süd-Chemie said that through this acquisition, the company will be adding market segments to its product portfolio, which will open up sales potential of more than $200 million.
Pluspetrol obtains loan
As the funds come in to finance Pluspetrol Norte's operations, it will free funds for the Camisea natural gas fields where Pluspetrol Peru Corp. SA is the upstream operator on Block 88.
Meanwhile Parker Drilling Co. is drilling its third Camisea well, San Martin 1002, currently down to 2,790 m with a drilling target of 3,400 m, following the San Martin wells 1001 and 1004.
All construction material has arrived at the upstream site, including compressors, on which work has begun, and units for the erection of the cryogenic plant.
