Oil and gas companies currently have assets for sale with recoverable reserves of more than 5 billion barrels of liquids and 7.5 billion barrels of oil equivalent (boe) of natural gas, according to research by Rystad Energy.
Oil and gas companies currently have assets for sale with recoverable reserves of more than 5 billion barrels of liquids and 7.5 billion barrels of oil equivalent (boe) of natural gas, according to research by Rystad Energy.
While some of these planned divestments were announced before the Covid-19-related oil price crash, more were added in reaction to the pandemic and its impact.
The majority of resources on offer are in the producing phase, followed by volumes of undeveloped resources in the pre-front-end engineering and design (pre- FEED) stage. In other words, companies are either getting rid of their mature portfolio to focus on key projects, or want to avoid additional greenfield costs in light of the current low crude price, said Rystad.
‘Many players are trying to divest their low-priority assets, while others are considering this the right time to break into the industry or expand their portfolios by acquiring these assets at a lower price,’ said Rystad Energy’s senior upstream analyst Siva Prasad of the research that excludes unconventional and US onshore assets announced since the fourth quarter of 2019.
The majors contribute nearly 70% of the liquid volumes and 50% of the gas reserves lined up for divestment globally, according to the report..
ExxonMobil is looking for interested buyers for upstream assets in the US Gulf of Mexico, the UK North Sea, Germany, Nigeria, Malaysia, Indonesia, Romania, Azerbaijan, Vietnam, Chad and Equatorial Guinea as part of its wider plan to generate $15 billion by 2021 and $25 billion by 2025 from divestments.
Meanwhile, Chevron is seeking to divest its equity in eight Nigerian blocks, both onshore and in shallow waters, as part of a global drive to reshape its portfolio. The US major is also considering selling its stake in the Indonesian deepwater development gas project as part of its strategy to sell its low-priority natural gas projects.
Total’s 12.5% stake in the Nigerian offshore block OML 118, which includes the Bonga, Bonga Southwest and Aparo fields, is up for sale as part of its bid to raise $5 billion from asset sales around the world by 2020.
Total and Tullow aim to reduce their stakes in a joint sale of the blocks 10 BA, 10 BB and 13T in the South Lokichar Basin in Kenya. Total, meanwhile, is aiming to sell up to half of its 25% stake in the Kenyan project. The entire project is valued at between $1.25 billion and $2 billion.
Among industrial companies, Japan’s Inpex is considering farming out of its Australian operations, centred around the $45 billion Ichthys LNG project, among others.
Mining conglomerate BHP is considering selling its assets in Victoria’s Bass Strait fields as its Australian oil and gas production continues to decline and the global shift towards electric vehicles paints a grim outlook for long-term demand for hydrocarbons. ExxonMobil, which owns the remaining 50% stake in the Bass Strait oil and gas fields, announced in last September that it was selling its interests.
An estimated 104,000 km2 of acreage is also up for grabs in potential exploration licensing sales.
