Multinational oil and natural gas companies are pursuing more property and equity deals.
In addition, OAO Gazprom established a joint venture with BASF AG subsidiary Wintershall AG, creating the opportunity for a German company to produce Russian natural gas.
The JV, named OAO Achimgaz, was established in Novy Urengoi in western Siberia to produce gas from the Achimov horizon of Urengoi field. The reserves, located within the Arctic Circle, are estimated at 200 billion cu m of gas and 40 million tonnes of condensate, BASF said.
In other recent upstream news:
The Croatian government accepted a $505 million bid by Hungarian oil company MOL PLC to buy 25% of Croatian state oil company Industrija Nafte d.d. Zagreb (INA).
CNOOC Ltd., a unit of China National Offshore Oil Corp., has increased its equity interest in Qinhuangdao (QHD) 32-6 oil field to 75.5% and in Liuhua (LH) 11-1 oil field to 100%.
Oil Search Ltd. (OSL), Port Moresby, said it will acquire Chevron Niugini Ltd. (CNL), the indirect, wholly owned affiliate of ChevronTexaco Corp., as well as all of the major's assets in Papua New Guinea, for $96.6 million.
NAL Oil & Gas Trust, Calgary, and an unidentified institutional investor agreed to pay $278.5 million (Can.) to Nexen Inc. of Calgary for its interest in a number of noncore properties in southeastern Saskatchewan, Nexen said.
UK-based Tullow Oil PLC agreed to buy ENI SPA's 23.33% equity interest in the southern North Sea's Thames gas fields and the associated license interest in P037 (Block 49/28).
Unocal Corp. agreed to acquire the outstanding limited partner interest in Spirit Energy 76 Development LP, a consolidated limited partnership that holds interests in oil and gas-producing properties in the Gulf of Mexico.
As general partner, Esprit Exploration Ltd., Calgary, agreed to buy all the oil and gas assets owned by Canadian 88 Diversified Energy Fund 1991 LP for $1.997 million, subject to the approval of other partners and regulators.
Meanwhile, in downstream news:
BASF Corp., the North American affiliate of BASF AG, is acquiring the Callery Chemical division of Mine Safety Appliances Co. (MSA), Pittsburgh, for $65 million.
Gaz de France agreed to acquire 40% of the gas business of Italy's Italcogim, that country's fourth largest gas distributor and leading private natural gas distributor. The remaining interest in the company will remain privately held.
Gazprom-Wintershall JV
Gazprom and Wintershall will hold equal interest in the newly formed JV, Achimgaz. The two parent companies said they together invested $700 million. Gazprom will buy Achimgaz's gas production, of which it expects to sell 75% in Russia and to export the rest.
Gazprom CEO Alexey Miller said that Achimgaz will use new technology to enable production from a geologically difficult formation. The JV "represents a model for cooperation with foreign partners in the production of natural gas in Russia," he said.
In 1990, Wintershall and Gazprom created a gas marketing JV, Wingas GMBH, which provides Gazprom with direct access to the German natural gas market. Currently 33% of the gas consumed in Germany comes from Russia.
Achimgaz plans a pilot phase starting in 2004, which is expected to cost $90 million and include six wells, plus the construction of necessary processing plants. If deemed feasible, development will start in 2008, with investment estimated at another $600 million.
MOL buys stake in INA
MOL outbid rivals OMV AG of Austria and OAO Rosneft of Russia for its stake in INA, said Baker Botts LLP, legal adviser to the Croatian Ministry of Economy. Previously, the embattled INA had reduced its refined products output as a result of its inability to buy crude oil supplies (OGJ Online, June 6, 2002).
OMV CEO Wolfgang Ruttenstorfer said the decision would not hinder his company's European growth strategy.
"In 2001, we defined a clear strategy: We aim to double our market position by 2008 through organic growth— supported by selected acquisitions. The INA acquisition would have fit with this strategy, and we therefore submitted an offer of $420 million. It was, however, clear from the start that we could still achieve our goal without this option," Ruttenstorfer said.
CNOOC off China
CNOOC paid $150 million to BP China Exploration & Production Co. for its 24.5% interest in QHD 32-6.
In addition, it paid $20 million each for two 24.5% stakes in LH 11-1, which were acquired from BP China and Kerr-McGee China Petroleum Ltd.
CNOOC Ltd. is the vehicle through which China carries out oil and gas exploration, development, and production activities off China and internationally.
OSL's acquisition
OSL agreed to buy ChevronTexaco's oil and gas interests in Kutubu, Moran, Gobe Main, and South East Gobe oil fields in Papua New Guinea. More specifically, the assets to be acquired include interests in Petroleum Development License 2, Petroleum Prospecting Licence 219 (25%), Petroleum Retention License 2 (21.5%), Petroleum Retention License 3 (25%), Pipeline License 2 (19.375%), Pipeline License 3 (13.65938%), and other infrastructure assets in Papua New Guinea.
ChevronTexaco's decision to sever its Papua New Guinea business unit was "a result of the company's ongoing review of its global portfolio," said ChevronTexaco Vice-Chairman Peter Robertson, adding that the assets no longer fit the company's future strategy.
The sale, which is subject to Papua New Guinea government approvals, is expected to close in the fourth quarter.
NAL's Saskatchewan deal
NAL will pay half of the total cost for Nexen's Saskatchewan properties, while the unidentified institutional investor will pay the remainder. The properties are near NAL's existing southeastern Saskatchewan operating area.
The sale, expected to close Aug. 28, will be effective retroactive to July 1. During the first half, production from these properties averaged 9,400 boe/d.
"Proceeds from the sale of these properties will be used to reduce debt and improve our capacity to fund our major development projects over the next few years," said Nexen Pres. and CEO Charlie Fischer.
Tullow ups N. Sea stake
Tullow's acquisition is worth £5.2 million, said the company, which already holds 43.33% interest in Thames fields (OGJ Online, June 20, 2001).
The net remaining reserves attributed to the latest interest being acquired are estimated at 10 bcf of sales gas. Gas associated with this interest is sold under long-term contract to British Gas Trading, as is gas produced from Tullow's existing interest.
The deal is expected to be completed late this year, subject to governmental approvals.
Last month, Tullow agreed to purchase interests in three North Sea licenses involving various equity interests in Southern Gas basin blocks from BP PLC (OGJ Online, June 5, 2003).
Unocal LP stake
Net cost to Esprit Exploration will be nearly $1.3 million. Esprit Exploration is the former Canadian 88 Energy Corp., which changed its corporate name earlier this year (OGJ Online, Apr. 9, 2003)
Members of the limited partnership will be asked at an Aug. 22 special meeting to approve resolution for the sale of the properties and dissolution of the partnership.
The members then are to receive $22,730/unit of the partnership held as their pro rata share of the sale proceeds and residual cash held by the partnership at the time of its dissolution.
The partnership was formed in 1991 to explore for natural gas and oil in western Canada.
Esprit acquisition
Unocal will pay the limited partner $252 million in exchange for the partnership interest that has been reflected as a minority interest on Unocal's balance sheet.
The acquisition is part of Unocal program to use the company's available cash to prepay debt and other financings, the company said.
Without the acquisition, Financial Accounting Standards Board Interpretation No. 46 would have required Unocal to reclassify essentially all of the limited partner's investment as long-term debt on its own balance sheet in the third quarter.
BASF acquires Callery
BASF is acquiring land and all production facilities at Callery's Evans City, Pa., site as well as its business relationships and inventory.
The transaction, expected to close in September, is aimed at broadening BASF's inorganic chemicals portfolio and support its expansion into noncyclical life science markets globally. The deal remains subject to required regulatory approval.
"Callery is a perfect fit for BASF," said Wayne Hill, vice-president of BASF's intermediates and inorganics group. "It is an attractive business containing specialty inorganic products that expand our inorganic product line to one of the broadest available."
BASF plans to continue manufacturing operations at the Evans City plant north of Pittsburgh.
Once the transaction closes, Callery will become part of BASF's North American inorganics business and its global inorganics division. Manufacture of MSA's safety products will continue at the Evans City location under a multiyear lease agreement between the parties.
GdF buys 40% of Italcogim
The value of GdF's deal to acquire part of Italcogim was not disclosed. Italcogim serves more than 500,000 residential customers, service businesses, and industries and markets about 600 million cu m/year of gas, mainly in central and southern Italy. Gas is distributed through a 6,000 km pipeline.
Italcogim gas business unit, which employs about 450 workers, is managed by two affiliates: network manager Italcogim Reti and gas marketer Italcogim Vendite. The company earned 200 million euros in 2002.
GdF said the acquisition falls within its European growth strategy and significantly bolsters the company's presence in Italy, Europe's third largest gas market. In early 2002, GdF purchased a stake Arcalgas Progetti, which distributes gas to more than 140,000 customers in northern Italy.