Deepwater Millennium: gas discovery offshore Mozambique

Transocean’s Deepwater Millennium is performing an accelerated well testing program that includes installing observation gauges and conducting several drill stem tests for Anadarko’s natural gas wells offshore Mozambique. 

 Anadarko Petroleum Corporation reported July 18 that it has discovered a new natural gas accumulation within Offshore Area 1 of the Rovuma Basin, offshore Mozambique.
 The Orca-1 discovery well encountered approximately 190 net feet of natural gas pay in a Paleocene fan system.

Videocon Industries has sold off to ONGC Videsh and Oil India (OIL) for $2.48 billion (Rs 14,880 crore) its 10 per cent interest in the prolific oil and gas offshore block in Mozambique’s Rovuma basin. The deal is expected to help Videocon reduce its huge debt and provide a piece of pie to the two Indian oil and gas explorers chasing resources abroad.

ONGC Videsh, the wholly owned subsidiary of Oil and Natural Gas Corporation (ONGC), and OIL expect to implement the acquisition through a newly incorporated entity in which OVL would hold 60 per cent stake while OIL would have 40 per cent stake by the end of this financial year.

 The largest deal of the quarter involved ONGC and Oil India, who acquired a 10% stake in the 100+ tcf gas discovery offshore Mozambique in the Rovuma basin for $2.5 billion from Videocon Industries. The $0.50 cost per recoverable mcf of gas reserves would usually represent good value but commercialization of the asset is at least five years away and will require large upfront payments to develop the field and construct the necessary LNG exporting terminal which would have made this field fall short of many public companies’ investment appraisals. The deal follows the acquisition of Cove Energy at the end of 2012 when another national oil company, PTT, keen to gain control of the company’s flagship asset of an 8.5% interest in the Rovuma Offshore Area 1, paid $2.2 billion.

Deepwater Horizon: revving up for the trial

Filings are starting before trial among BP and the contractors Halliburton and Transocean over blame in the Deepwater Horizon blast in April 2010, which killed 11 workers and led to 206m US gallons (780m litres) of crude oil escaping into the Gulf of Mexico. So far, BP, the majority owner of the Macondo well, has footed the bill for the emergency response and cleanup. Also involved are Anadarko Petroleum and Cameron International.
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The first trial over the disaster is scheduled to start 27 February in New Orleans. It is expected to last three months and determine the liability of each company involved in drilling the Macondo well. There will be other phases over cleanup costs, punitive damages and other claims.

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Deepwater Horizon: Anadarko settles with BP

BP has reached a $4bn (£2.5bn) settlement with a former partner in its Deepwater Horizon oil rig over claims related to last year's deadly explosion and oil spill at the offshore drilling platform.

Anadarko Petroleum's payment will form part of BP's $20bn compensation trust fund, set up to compensate victims and help pay for the clean-up after the fatal fire that killed 11 people and led to the largest oil spill in US history. Anadarko also agreed to drop its gross negligence claims against BP.

Texas-based Anadarko held a 25% stake in the Macondo well and has agreed to hand that to BP in return for a share of any funds BP recovers from third parties or insurance.

The settlement follows other agreements with Deepwater partners. In May, BP announced an agreement with MOEX Offshore 2007, a unit of Japan's Mitsui which owned 10% of the well. It agreed to pay BP $1bn. The following month Weatherford International, a Switzerland-based contractor that supplied parts to the rig, agreed to pay $75m to the trust fund to settle claims between itself and BP.
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HAI YANG SHI YOU 981: another for Petrochina

The $30 billion behemoth, Marine Oil 981, is designed to drill 800 deepwater wells that will produce $50 billion worth of oil annually by 2020. A similar floating rig is being built for PetroChina.

Deputy director Zhong Ziran of the national Geological Survey told reporters in January that his agency's annual spending for oil and gas exploration will rise tenfold, to 500 million yuan ($60 million). Sixty percent of that amount will support offshore projects, he adds. That's money to deploy platoons of scientists or defray the cost of dives by China's Jiaolong, a submersible capable of exploring to 5,000 meters' depth. A year ago the Jiaolong planted a Chinese flag in a South China Sea canyon 3,759 meters below sea level.
In November 2010, CNOOC told reporters that it has budgeted 200 billion yuan for development in the South China Sea. Leveraging the skills of foreign partners Devon Energy, Husky Energy and Anadarko Petroleum, CNOOC explained, it aimed to build up its capacity to drill in ever deeper water.

Beijing has warned Exxon-Mobil and BP to give up any thought of drilling in concessions granted by Vietnam close to the Spratly or Paracel archipelagos - though well within Vietnam's EEZ. BP chose not to drill; Exxon says it is going ahead. US Government analysts put the potential hydrocarbon bounty of the South China Sea area at 14 times China's current oil reserves and 10 times its gas reserves.

Whatever oil and gas turns out to be beneath the waves, hard evidence is mounting that China aims to find and secure by far the lion's share.


Another 30 billion yuan annually for "domestic" exploration is reportedly funneled through the national oil companies - CNOOC, Sinopec and PetroChina.



Up until now, China's offshore drilling has been limited to relatively shallow waters near its coast, employing 'jack-up rigs' that are planted on the seabed. In May, however, CNOOC announced plans to deploy its first floating drilling platform to waters within the exclusive economic zone (EEZ) claimed by the Philippines.
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Deepwater Horizon: litigation frenzy

The Swiss-incorporated, Houston-based drilling contractor is caught in a litigation frenzy over claims related to the blowout of BP’s Macondo well on Apr. 20, 2010 involving British Petroleum; Halliburton (HAL), which did cement work; and several other companies, including Anadarko Petroleum (AAPC), one of the minority stakeholders in the well, and Cameron International (CAM), manufacturer of a critical piece of safety equipment known as the blowout preventer. They are wrestling over who will get stuck with tens of billions of dollars in environmental damages. Its June 22 investigative report alleged that BP used a risky well design, skimped on the heavy drilling mud needed to hold back high-pressure hydrocarbons, and kept changing its plans in a way that invited disaster. The British company revised its plans for temporarily sealing Macondo five times in the two weeks preceding the blowout, according to Transocean. The fateful changes “were driven by BP’s knowledge that the geological window for safe drilling was becoming increasingly narrow.”
Lloyd’s of London may cover BP’s “excess liability” in cleanup and other costs. under its Transocean contract affording protection to pollution “originating above the surface of the land or water.”

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Deepwater Horizon: Mitsui settles with BP

Mitsui had accepted "the findings by the Presidential Commission into the lethal Macondo blowout that the accident was the result of a number of separate risk factors" although not in proportion to the $37.8 billion before tax charge that BP had put aside for the Gulf of Mexico. With its 10% stake, that would have been close to $4 billion, but as one of its Gulf of Mexico drilling partners agreed to pay $1.1 billion.

Still, analysts expect Anadarko - which owned 25% of the Macondo license - to come under pressure to settle with BP soon. If it settled on the same basis as Moex, Andarko would pay the oil giant nearly $2.7 billion. Moex, part of Japanese commodities trader Mitsui, which owned 10% of the ill-fated Macondo well, agreed to contribute toward the costs of the $41 billion disaster. Anadarko Petroleum, has a 25 percent stake in the project, and its joint operating agreement with BP gives it a 25 percent share of the liability. . Geneva-based Transocean owned the Deepwater Horizon, which was leased to BP PLC to drill its Macondo well in the Gulf of Mexico.
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In connection with the oil spill incident that occurred on April 2010 in the Gulf of Mexico on the exploratory block designated Mississippi Canyon 252, last year Transocean and certain of its affiliates (collectively, "Transocean"), the owner and operator of the rig, filed a limitation action based on maritime law in an effort to limit its liability (the "Limitation Action"), and in the Limitation Action, on February 18, 2011, Transocean tendered MOECO, MOEX USA Corporation (a 100% subsidiary of MOECO, "MOEX USA") and MOEX Offshore 2007 LLC (a 100% subsidiary of MOEX USA, "MOEX Offshore"), which owns a 10% working interest in the lease for the relevant block.

On April 19, 20 and 21, 2011, Transocean and the defendants in the Limitation Action filed cross-claims primarily seeking contribution and indemnification from one another, and as a result MOECO, MOEX USA and MOEX Offshore were served with cross-claims by Cameron International Corporation, Halliburton Energy Services, Inc. and Transocean. MOEX Offshore filed cross-claims against BP Exploration and Production, Inc. ("BP"), Transocean, Halliburton, Cameron, M-I LLC and Weatherford U.S. L.P. and certain of their affiliates, asserting that they should bear the responsibility, whether in whole or in part, for the alleged damages and seeking contribution and indemnification.

On April 4, 2011, BP sent a Notice of Dispute to its business partners, MOEX Offshore and Anadarko Petroleum Corporation, based on the Operating Agreement entered into by such parties. The Notice of Dispute states that as of February 28, 2011, BP's invoices to MOEX Offshore totaled approximately U.S. $1,856,000,000. In addition, MOEX Offshore has received invoices from BP after that date. The most recent invoice, dated April 5, 2011, states that MOEX Offshore's payment obligation totals approximately U.S. $2,067,000,000. MOEX Offshore expects to receive additional invoices from BP, but it expects to continue to withhold payment given that at the present time it is uncertain whether there will be an obligation to pay. Based on the Operating Agreement, the parties must designate a representative to meet and confer in an effort to resolve the claim made in the Notice of Dispute. MOEX Offshore has designated a representative. Notably, on April 27, 2011, BP filed a motion to stay MOEX Offshore's cross-claims in the Limitation Action referenced above based on the arbitration clause in the Operating Agreement.
Cameron, BP asserted, designed and built a faulty preventer and negligently maintained it.