China invests in LNG; ConocoPhillips boosts output in AK; global events impact at the pump

China acquires 20 percent stake in Novatek’s Arctic LNG 2 Project
Malte Humpert, ArcticToday, April 30, 2019

Building on the success of that first project, Novatek is thus far sticking with the same project partners. As the company announced, the China National Petroleum Corporation (CNPC) and the China National Offshore Oil Corporation (CNOOC) each secured a 10 percent share, mirroring closely the 20 percent stake CNPC holds in Yamal LNG. French energy major Total, which holds a 20 percent stake in Yamal LNG, already bought a 10 percent share in Arctic LNG 2 last year. “The agreement is an important milestone in our Arctic LNG 2 project implementation as well as a continuation of our successful cooperation with CNPC,” noted Leonid Mikhelson, Novatek’s Chairman of the Management Board. “Arctic LNG 2 will be a game changer in the global gas market.”

Another key building block in Novatek’s strategy to export Arctic LNG to markets in Europe and Asia will be two transshipment hubs outside ice-covered waters near Murmansk, Russia and on the Kamchatka peninsula in the Far East. Currently, the company employs ship-to-ship transfers of LNG in Norwegian waters near Honningsvåg to reload up to 150 shiploads of LNG. However, Novatek recently made it clear that it does not seek to repeat this type of operation in the future, in part due to challenging weather conditions.

Our Take: Hopefully yesterday’s news of Marathon investing in the LNG plant on the Kenai Peninsula is indicative that Alaska is looking to get into the LNG market.

ConocoPhillips boosts Alaska output by 20% in 1Q
Elwood Brehmer, Journal of Commerce, April 30, 2019

ConocoPhillips continued its run of strong returns to start 2019 with its third consecutive quarterly profit of $1.8 billion as its Alaska oil production increased nearly 20 percent.  The Houston-based explorer and producer netted $384 million in the first quarter from its North Slope operations compared to $445 million in 2018, according to its earnings report released April 30. In turn, ConocoPhillips paid $249 million in taxes and royalties to the State of Alaska, according to spokeswoman Natalie Lowman.

Specifically to Alaska, ConocoPhillips produced an average of 210,000 barrels of oil per day in the state, up significantly from an average of 174,000 barrels per day to start 2018, according to the report.

Our take: Among other things, higher production rates mean more money in state coffers. Cheers to ConocoPhillips for showing that Alaska is, indeed, open for business.

Mine opponents ask SEC to investigate Pebble’s parent company
Liz Ruskin, KTOO, April 30, 2019

The Justice and Corporate Accountability Project sent the request on behalf of Earthworks, a mining watchdog. They told the commission that Northern Dynasty Minerals has described a massive deposit to potential investors, while Pebble’s permit application describes a mine barely one-tenth that size. Pebble spokesperson Mike Heatwole said in an email that Pebble has no plans to expand the mine beyond the 20-year development plan the Army Corps of Engineers is evaluating.

What Venezuela’s unrest means for gas prices in America
Thomas Heath, The Washington Post, April 30, 2019

Venezuela’s oil decline “potentially means a lot, especially if you combine it with what [the Trump] administration is up to with respect to Iran sanctions,” said Stephen Brown, an oil consultant with RBJ Strategies. “Regardless of whether you think [Trump’s] sanctions are good or bad,” Brown said, “the impact on global supplies will be significant and, thus, the impact on gasoline prices is going to be significant.” American drivers are feeling the surge at the pump. According to AAA, the national average price for regular gasoline Tuesday was $2.88 a gallon, about 25 cents more than a month ago.

Venezuela once pumped more than 3 million barrels a day and exported more than a third of that. It now produces less than 1 million barrels a day and almost all of that goes to domestic needs, including its 1 cent per gallon gasoline price that helps keep the Maduro regime in power.

Related:   The debate behind Trump’s move to tighten Iran oil sanctions