TotalEnergies Announces Start of Production in the Absheron Gas Field in Azerbaijan

TotalEnergies and its partner SOCAR (State Oil Company of the Republic of Azerbaijan) announce the start of production of the first phase of development of the Absheron gas and condensate field in the Caspian Sea, around 100 km south-east of Baku, said the company.

This first phase connects a subsea production well to a new gas processing platform, itself linked to SOCAR’s existing facilities in Oil Rocks. It has production capacity of 4 million cubic meters of gas per day and 12,000 barrels a day of condensate. The gas will be sold on the domestic market in Azerbaijan.

The development of the Absheron field provides an additional gas supply to meet growing demand, at a competitive technical cost and low greenhouse gas emissions intensity, in line with TotalEnergies’ strategy.

TotalEnergies and SOCAR both hold a 50% interest in the project, which is operated by the joint company JOCAP (Joint Operating Company of Absheron Petroleum).

"We are very pleased to announce the start-up of the Absheron gas field, the result of our exploration team’s success. This project is in line with the Company's strategy of meeting the growing demand for gas and reinforces our partnership with the national company SOCAR” said Nicolas Terraz, President, Exploration & Production at TotalEnergies.

We remind, TotalEnergies signed with Sonatrach, Occidental and Eni an extension of its Production Sharing Contract for a period of 25 years for onshore Blocks 404a and 208 in the Berkine basin, in Eastern Algeria, said the company.
This contract, signed under the new Algerian Hydrocarbon Law published in 2019, will allow to develop additional liquids hydrocarbon resources, while reducing these fields carbon intensity through a dedicated carbon reduction program.

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U.S. refining profits are expected to fall from last year's records but remain strong as domestic refining outages and increased foreign competition pose challenges, said Hydrocarbonprocessing.

Refiners have come off a wave of favorable pricing and strong demand after pandemic-era plant closings and Russia's invasion of Ukraine boosted margins. Slowing economic activity and an increase in global refining capacity has brought the market down from last year's highs.

"Earnings will not be weak by any stretch, but should be more normal," said TD Cowen analyst Jason Gabelman. Oil production cuts from OPEC+ in the second quarter took heavy, sour barrels from the market that US refiners buy cheaply to make a higher profit off fuel sales.

A winter shortage of distillate fuels that allowed refiners to fetch a much higher price for jet fuel compared with diesel earlier in the year has also eased. Crude differentials and jet premiums to diesel are back near historical levels, Gabelman said.

Refiners such as Marathon and Phillips 66 also had problems with large fuel producing units in major facilities in Texas and New Jersey, preventing them from fully realizing potential profits.

Unplanned outages averaged near 550,000 bpd in June, 2023, compared to near 290,000 bpd in June 2022, according to data from refining intelligence firm IIR Energy.

Valero Energy, the second-largest U.S. refiner by capacity, kicks off earnings on Thursday with per share profit expected to fall by more than half at USD5.07, based on the mean estimate of 17 analysts compiled by Refinitiv, compared to a whopping USD11.36 per share a year ago.

Top U.S. refiner by volume Marathon Petroleum is forecast to show a per share profit of USD4.60 compared to USD10.61 a year ago, while Phillips 66 could deliver a USD3.58 per share, compared to USD6.77 a year ago, according to Refinitiv. Both are scheduled to report in early August.

Earlier this month, Exxon signaled that refining margins also reduced operating results at its gasoline and diesel business by USD2.1 B.

We remind, Marathon Petroleum has acquired a 49.9% interest in renewable natural gas (RNG) company LF Bioenergy for USD50mln. Marathon may pay a potential additional USD50m, based on certain earn-out targets. Dallas, Texas-based LF Bioenergy is described as an emerging RNG company, focused on developing and growing a portfolio of dairy farm-based, low carbon intensity RNG projects.

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Russia is considering limiting the number of companies allowed to export oil products in a bid to curb illegal exports of fuel intended for the domestic market, said Reuters.

The Kommersant newspaper reported earlier that Russia was looking at creating a list of approved refiners to combat so-called "grey exports" of subsidised domestic fuel.

We remind, Russian oil exports from western ports are set to fall by some 100,000-200,000 barrels per day next month from July levels, a sign Moscow is making good on its pledge for fresh supply cuts in tandem with OPEC leader Saudi Arabia. OPEC and major producers including Russia, together known as OPEC+, have been cutting supply since November to support prices. Moscow this month pledged to cut exports by 500,000 bpd in August, while Saudi Arabia extended its 1 million bpd output cuts.

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Canada on Monday released a framework for eliminating inefficient fossil fuel subsidies, making it the first G20 country to deliver on a 2009 commitment to rationalize and phase out government support for the sector, said Hydrocarbonprocessing.

The framework will apply to existing tax measures and 129 non-tax measures, but the government has not put a dollar value on the subsidies that will be affected.

Fossil fuel actives will be exempt from the framework if they fall into one of six categories: enabling significant carbon emissions reductions, supporting clean energy, providing essential energy to a remote community or short-term support for an emergency response, supporting Indigenous participation in fossil fuel activities or are projects that have a credible plan to reach net-zero by 2030.

"It ensures that the only federal support for oil and gas goes to projects that decarbonize the sector and result in significant greenhouse gas emissions reductions," federal Environment Minister Steven Guilbeault told a press conference.

We remind, NOVA Chemicals Corporation has made a significant expansion of its Circular Solutions business today by announcing an investment into developing its first mechanical recycling facility in Connersville, Ind. The facility will process post-consumer plastic films to produce the company’s SYNDIGO recycled polyethylene (rPE) at commercial scale as early as 2025, delivering over 100 million pounds of rPE to the market by 2026.

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A regional court has overturned the permit issued to INEOS for its Project One cracker project at Antwerp in Belgium, calling the future of the project into question, said the company.

The project, unveiled in 2019, is the first new cracker to be built in the region for a quarter of a century, with commissioning scheduled for 2026 and full operation by early 2027. INEOS moved ahead with the project after the province of Antwerp approved a permit for in December 2021, which was reinforced by a separate approval by the Flemish government in June 2022.

However local residents and environmental groups continued a campaign against the project, taking cases to several regional governments in Belgium and the Netherlands. Today’s ruling annuls the existing permits issued to INEOS.

The decision, issued by Belgium’s Service of the Administrative Courts (DBRC), centres around nitrogen emissions from the project which it claims will damage habitats in a nearby nature reserve. The reserve is protected under the European Habitats Directive.

It rules that the Flemish government did not taken these emissions sufficiently into account when granting the permit.

According to a translation of a statement released by the court: “Because the permit has been cancelled, INEOS Olefins Belgium no longer has permission to carry out the works for the ethane cracker. The Government of Flanders has six months to decide again on the license application.”

Expected onstream by 2026 before the ruling came down, the project stands to be the first new European cracker in decades, and set to be the lowest-carbon complex in the region.

INEOS announced in February that it had locked down €3.5bn in financing for the project from 21 organisations, including a sizeable portion guaranteed by Gigarant, a vehicle of the Flemish government.

The unit will have a carbon footprint more than three times lower than the average European facility, and less than half of the top 10% lowest-emitting steam crackers in the region, with Europe’s ageing cracker stock making the comparisons of CO2 footprint especially stark.

We remind, Ineos Olefins & Polymer Europe has signed a renewable power agreement with Skagerak Energitjenester to provide 100 % green energy to its Rafnes and Bamble plants in Norway. Combined with the recently announced Ineos Inovyn deal in Norway, all of Ineos’ assets in the region are now supplied with 100 % green power generated from hydroelectric production.

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