ExxonMobil announces sale of production assets in North Sea
exxon
American giant ExxonMobil announced last month it had signed an agreement with Norwegian firm HitecVision for the sale of its shares in 14 sections of the North Sea where the company produced 38,000 barrels per day of oil equivalent

The deal, valued at $1 billion (with the possibility of $300 million in contingent payments based on potential for increases in commodity prices) is to be concluded in the middle of the year.

    Exxonmobil is to concentrate on liquefied natural gas and on extraction projects in Guyana, Brazil and the U.S Permian basin, with the aim of “increasing earnings potential and generating strong cash flow to fund future capital investments, reduce debt and maintain a reliable dividend,” Neil Chapman, senior vice president of ExxonMobil, was quoted as saying in a company statement.

    Such choices would seem logical, given that in recent years the Permian Basin has been one of the key drivers of growth in production outside OPEC and Guyana and Brazil have similar prospects thanks to shelf projects. Guyana offers the Stabroek block – of which 45 % belongs to ExxonMobil (30 % to U.S. company Hess and a further 25 % to Nexen, a subsidiary of Chinese state company CNOOC). Brazil has the Campos, Santos and Sergipe-Algoas basins on the Atlantic shelf, where ExxonMobil owns shares in 28 blocks (and is the operator in 17 of them).

    Work on the Stabroek block will proceed with the use of vessels for extraction, storage and unloading oil (FPSO – Floating production storage and offloading). The first such vessel – Liza Destiny – has a capacity of extracting 120,000 bpd and has been in place on the Guyanese shelf since December 2019,

    Two further ships – Liza Unity and Prosperity (each with a capacity of 220,000 bpd) – will go into service in 2022 and 2024 respectively.

    According to S&P Global Platts, production is also due to start in 2024 on Brazil’s Bacalhau shelf deposit, 40 % of which belongs to ExxonMobil, with a further 20 % held by Galp Energia of Portugal.

    There is also plenty of potential for boosting production in the Permian Basin – levels were unaffected even by the COVID pandemic. In the last quarter of 2019, ExxonMobil’s production levels rose 42 % compared to the same period a year earlier (up to 418,000 bpd according to accounting reports). And given that the company reduced operating costs in the Permian Basin by 25%, production levels could well rise further.

    LNG is also expected to play a leading role in growth, as  ExxonMobil plans to invest $5.1 billion in construction of a terminal in the Vietnamese port of Haiphong with the aim of broadening the company’s pool of LNG assets – in addition to functioning facilities in Qatar and Papua New Guinea.

     The prospect of expansion in LNG and in promising areas of production therefore should not therefore be viewed as a mere pretext for abandoning its interests in the North Sea.

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