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7 oil & gas projects to watch in 2016

Despite project budgets being severely affected, there is still major work to look out for on oil and gas developments globally. Here are seven projects to watch in 2016 and beyond.

Read more: 7 oil & gas projects to watch in 2017

1.Construction of the fourth leg of the Uzbekistan-China natural gas pipeline

Value: $800 million
Timeframe: 2015-2017

A fresh injection of investment from the China Development Bank will pay for the fourth and final leg of the Central Asia-China gas pipeline. Construction on the pipeline began in 2007, and once it is finished it will reach an annual deliverability of 85 billion cubic metres – making it the largest gas transportation system in Asia.

China is one of the nations primarily invested in Uzbekistan’s oil and gas industry, as China National Petroleum Corporation (CNPC) has been working in the country since 2006. Together with Uzbekneftegaz, Uzbekistan’s national oil and gas company, CNPC has been developing fields in numerous locations across Uzbekistan for the past decade.

Gazprom has said it will be increasing its purchase of Uzbek gas in 2016 too. As Gazprom has stopped imports of LNG from Turkmenistan, some 3.1bcm of gas from Uzbekistan will be purchased by the company.

Oil & Gas Uzbekistan exhibition and conference - Tashkent, Uzbekistan

 

2.Third-stage development of Galkynysh field, Turkmenistan

Value: N/A at the time of writing
Timeframe: 2016-onwards

Turkmenistan has announced it will begin work expanding the Galkynysh gas fields in 2016, following on from the second stage of development that began in 2014.

The Galkynysh field sits upon the second largest reserves of natural gas in the world. Approximately 21.1 tcm of gas is situated below the field, located in four areas in Turkmenistan - Yeloten, Osman, Yashlar and Minara.

Total investments in the Galkynysh field since its first discovery in 2006 have totalled $9.8 billion to date. Significant contributors include Petrofac and CNPC. With further investment, the chairman of state-owned Turkmengas Ashirguly Begliyev is confident the field’s output could reach 95 bcm once this development stage is complete. This would be a major step forward, as previous estimates suggest that the field was producing 30 bcm of marketable gas since the first stages of development were completed in 2013.

China will be very interested in this project – the world’s largest energy consumer has already overtaken Russia as the biggest importer of Turkmen natural gas.

Oil & Gas Turkmenistan exhibition - Turkmenbashi, Turkmenistan

 

3.Ichthys off-shore LNG project, North-West Australia

Cost: $34 billion
Timeframe: 2016-2017

 

The Ichthys offshore LNG development could be one of the world’s biggest projects in any sector, let alone the oil and gas industry. Spearheaded by Japanese oil and gas company INPEX, with 30% of investment coming from French energy titans Total, this project seeks to exploit one of Australia’s biggest deposits of natural gas.

The project’s scale is huge. Situated nearly 890km from the chosen processing site of Darwin, which will receive gas via the Southern Hemisphere’s biggest pipeline, Ichthys will involve the construction of various structures, including a central processing rig and boat-shaped floating production, storage and offloading facility, with the end goal of producing 8.9 million tonnes of LNG and 1.9 million tonnes of LPG each year.

In late 2015, INPEX’s statement that costs could increase by 10% and that further delays are expected left investors feeling less than confident. However, INPEX has actually increased production estimates, to the total mentioned above, from 8.4 million tonnes of LNG – so, could the delays and cost increases actually be justified by increased output? Only time will tell.

 

4.Repairs to Kashagan, Kazakhstan

Cost: $1.8 billion
Timeframe: 2016-2017

 

The Kashagan field is the largest oil field outside of the Middle East. The development has frequently been cited as the most expensive energy project ever with total costs having run well over $50 billion.

The facility has been plagued by leaks causing production, which started in 2013, to be disrupted several times. Italian oil service company Saipem won a $1.8 billion contract to supply Kashagan with upgraded, leak-free pipes. The new pipes will be used to update 95 kilometres of pipeline, which had suffered from stress fractures resulting from prolonged exposure to hydrogen sulphide. With the new pipes in place, production is expected to resume in 2017.

Kazakhstan International Oil & Gas Exhibition and Conference (KIOGE) - Almaty, Kazakhstan

 

5. Yamal LNG Plant, Russia

Cost: $27 billion
Timeframe: 2016-2017

 

The Yamal plant in the north of the country will become Russia’s second LNG production facility if the project stays on track. At peak, the plant is projected to produce up to 5.5 million tonnes of liquefied natural gas each year.

Finding funding for the project has not been easy – not least due to sanctions on various areas of Russian oil and gas exploration and production. However, the development, and prime stakeholder Novatek, has received a big boost after China Insurance Investment Ltd. put a further $6 billion into the Yamal plant.

Russian President Vladimir Putin has also said the state will continue to support the Yamal development. This is a shot in the arm for the project, taking into account the sanctions that have closed Russian energy products to some of the world’s key markets. With further financial backing and support, the future is looking good for the Yamal development.

Moscow International Oil & Gas Exhibition (MIOGE) - Moscow, Russia

 

6.ENI/Anadarko joint export project, Mozambique

Cost: N/A at the time of writing
Timeframe: 2016-2026

 

Mozambique’s economy received a major boost when Anadarko discovered huge offshore natural gas reserves in 2010. Italian player ENI also discovered gas fields, their biggest ever, close by and the decision has been made to launch a joint export project between ENI and Anadarko. Potentially enough natural gas to supply the UK, France, Germany and Italy for two decades can be found in Mozambique, so the joint deal could proof extremely lucrative.

The financial outlines of the deal, including initial investments, have yet to be decided but the end results could change the fortunes of Mozambique and the global gas market as a whole.

Africa Oil Week - Cape Town, South Africa

 

7.TAPI, Multiple locations

Cost: $10 billion+
Timeframe: 2016-2019

 

After the groundbreaking ceremony in late 2015, Turkmenistan has begun construction on its section of the TAPI pipeline, which will transport Turkmen gas through Afghanistan and Pakistan before reaching massive net-importer India.

The project, which is due for completion in 2019, is of major importance for all nations involved. India is hoping to source a more cost-effective supply of gas, whereas Turkmenistan is looking to expand its markets for its most abundant natural resource. The USA, meanwhile, believes that efficient energy supplies will provide a stabilising effect on Afghanistan.

The TAPI pipeline is being overseen by a holding company comprised of all member states, but further agreements have been finalised regarding which country holds what in the agreement. Turkmengaz, Turkmenistan’s nation gas and oil company, will take a controlling share with 85% of equity. The remaining countries will all take a 5% stake each. UAE’s Dragon Oil has also pledged a further $10 billion into the project.

The total costs of bringing TAPI to life are projected to hit a third of Turkmenistan’s total budget – a big investment, but the payoff could be huge.

Read more: 7 oil & gas projects to watch in 2017


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