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Phil - Part of the UK investment includes creating an extra capacity to support an Oil industry on the Islands with regards to electricity for the extra buildings etc that will need to be constructed for it.
Ovets, the 300m investment in the Falklands was announced by Michael Fallon over six years ago, pre brexit, I am puzzled as to how you are drawing significant conclusions from this other than that military installations periodically need investment to maintain operational effectiveness, the Rapier air defence system is also due to be replaced.
BB, I'm still waiting to hear your explanation about why the building of new military and other accommodation on the FI already progressing, if nothing's going to happen there.
Shapps has put the Antarctic on the green list for travel. A wink is as good as a nod etc ?
First, if the UK is to become a more World-focused power (as Boris seems to envisage), it's going to need staging points in more remote areas and being near to the Antarctic is quite useful too.
Second, considering the TPP, which Boris wants to join, then Chile is just round the corner.
Third, as I've said, the naval base probably isn't the main priority, but having such a staging point, subsidised by oil/gas revenues, in such a remote area, would be very useful. The US would probably find it useful too. World order is changing and the UK needs to prepare for it.
Ovets
You say "Access to ASEAN/RCEP is just the other side of Cape Horn"
What map are YOU looking at ... Australia is 7000 miles just the other side of Cape Horn and Japan is about 11000 miles.
BB, That's exactly why some sort of base/foothold is needed, because there's nothing there.
Regarding distance to the Far East, which route are you considering? We've just seen the Suez Canal blocked for over a week merely because of a freak gust of wind (apparently) and Panama could be shut down just as easily. Then what?
Not saying the Naval thing is the main objective necessarily, but would be a useful combination of resources and facilities.
Access to ASEAN/RCEP is just the other side of Cape Horn and the UK has stated that as being it's major trading objective. Signing a trade agreement with Australia was part of the plan to gain access to it.
You haven't explained why brand new military accommodation is all-of-a-sudden being built on the FI, rather than just refurbishing what's already there.
Ovets
Why on earth would the Royal Navy be interested in the Falklands ..... there's nothing down there. Portsmouth is closer to the Far East than the Falklands are.
https://www.google.com/maps/@29.0905326,40.5721704,3z
Good morning Marunam2
You wrote; " I see no reason to think they will back out Sealion because the project is big or that renewables will be here within a decade to cater for the worlds energy needs.."
My point is ; the evidence is there; BIG money is moving into renewables, no matter the cost or how long it takes.
Ideally; its big cash rich companies we need investing in Falkland's oil.; not renewables.
The evidence is that BIG oil IS spending BIG money in renewables. We need BIG money interest ; where is it coming from?
Harbour bought PMO to get a listing and use of giant tax losses in the NS.
Its all about whether harbour Harbour thinks SL is the best place to invest its limited funds. I do not see anyone else rushing to replace Harbour in SL or investing in BOR's asset.
Which is what I've been saying from long before HBR hit the scene.
Look at what's going on around the World and the recent events in the Black Sea with HMS Defender, with the support of the new HMS Queen Elizabeth in the Med.
There's no doubt that under Boris and post-Brexit, we're starting to see a much less Europe-focussed UK, as he promised, with greater focus on the Far East and elsewhere.
That much less Europe-focused UK is going to need closer allegiance with the USA and some footholds around the World to support the new "Great" Britain vision.
My guess is that the FI is destined to become one such VERY important foothold on the other side of the World, where it would be very useful, particularly for the Royal Navy, supported by new energy production in the region.
Maybe that's why new military accommodation in the FI is already being built (i.e. they're already quietly getting on with it)?
My guess is that the negotiations are pretty advanced with all the parties involved. I expect one of Boris' BIG announcements, scheduled for spring 2022, just before the 40th Anniversary of the Falklands War, with Boris showing that he's finishing-off what Maggie started back in 1982 and HBR will be an important part of that.
So, yes this is going ahead, but in a much more spectacular way than most currently anticipate.
Cyan,
"BP and partner paying £900m for entry into UK offshore wind market
BP has entered the UK offshore wind market with leases for a combined three-gigawatts of projects in the Irish Sea."
hTTps://www.energyvoice.com/renewables-energy-transition/297268/bp-uk-offshore-wind-irish-sea/
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I note from the article you refer to above that it will take 7 years for that to come to fruition. when compared to the similar dogger bank wind farm , the costs are estimated to be $6 billion.
So 7 years to complete and at a cost of $6 billion for 3GW !!.
It's obvious there will be thousands of similar projects required to cater just for Europe, what about the entire rest of the world ??
It's going to take trillions and god knows how long before "renewables " get a strong enough foothold to supply energy for the planet.
Simply put, there is no co ordinated fully committed energy transition, all the talk of it is just that talk, because governments and companies know the scale of investment required for a committed transition is beyond them ,currently.
HBR themselves say unashamedly they are a pure oil and gas company, the best ones have always been ruthless and greedy, I see no reason to think they will back out Sealion because the project is big or that renewables will be here within a decade to cater for the worlds energy needs, they simply wont.
GLA
Appreciate you can not reply today; but I had to comment on this line of yours;
"Majors are falling over themselves to show they are going green, not by investing the huge amounts required in renewables but by under investment in the very product they make their money out of."
There is plenty of evidence of the huge renewable investments by the big boys;
"BP and partner paying £900m for entry into UK offshore wind market
BP has entered the UK offshore wind market with leases for a combined three-gigawatts of projects in the Irish Sea."
hTTps://www.energyvoice.com/renewables-energy-transition/297268/bp-uk-offshore-wind-irish-sea/
Hi Cyan,
I don't think big oil will get involved, but there would be renewed interest in the next tier down. When profits and POO are higher then companies will be interested. IF, the supply crunch comes from massive underinvestment in the next 2 years as predicted , then like any business the likelihood of sustained profits will bring more to the table.
If OPEC members themselves are being urged to start recommencing more investment to sustain supplies , then it will be an even greater shortfall going forward if they don't.
Majors are falling over themselves to show they are going green, not by investing the huge amounts required in renewables but by under investment in the very product they make their money out of. Selling assets can only go on for a certain time BUT the reality is that will take a long time to go green , their reserves will dwindle over time and their debt mountains to feed the dividend will increase.
Where will the supply that makes up the rest of the world needs not supplied by OPEC+ and NOC's come from ?
It's not just the big majors that are going to be cash rich currently , every oil co' will be generating cash at $70 even those frackers whose cost per barrel is above $45 - $50 range,but the rig counts in the US tells me that that is no stampede to add rigs willy nilly like in the recent past. OIL co's are liking the high prices and profits as they are now, new investments take time to come to the market as you know, yet no signs of a soaring rig count.
It's taken nearly 2 years to get rid of bloated supplies, how long would it take to supply an under supplied market with current resources worldwide depleting in the next 2-3 years. It may not seem likely now, but the oil market and traders are telling you supply will be tight and get tighter if the driving season in the US and travel to more countries opens up in the next 6 months. If supply is tight now with little or no travel , summer heat, winter cold, etc, what will the jolt be like when it suddenly does.
Apologies in advance ,I cannot reply today to your follow up comments.
GLA
Good afternoon Marunam2
You wrote "If HBR relinquish the licence then it ALL reverts back to RKH, all 100% of it with all the works on FEED, EIA etc ."
That would be a disaster as I have seen no evidence of the big oil companies having any interest in the FI's oil.
Navitas are a small opportunist outfit trying to get a great deal at our expense; if only they were cash rich; so I take no comfort from their interest.
The cash rich BIG oil companies we need are choosing to invest in Argentinian exploration rather than our discovered, proven assets.
Its Harbour; or nobody. They see many easier , faster hits elsewhere and have an ambitious capital expenditure plans already. SL is huge in every way; not sure they can afford it.
Do not forget the huge tax losses Harbour can use in the NS . Its not all old useless assets that are left; JOG have plans for a multi asset development that would be more tax efficient.
I really wish I had your confidence that SL will be sanctioned by harbour.
No appetite to repeat that , both can live together, they have to .
Cyan, Why would the FIG not get it?
If I look at it from the their point of view of FIG and the Islanders :
FIG are the Government in place and are dealing with the companies involved. They use UK professional bodies in the oil and gas sector and have used the highest standards for the EIA,etc
It's not their fault that the previous operator was virtually bankrupt for so many years or the pandemic hit.
Whilst as a shareholder I would like them to offer better terms, from their point of view it's also a massive risk. Their industries also rely on the surrounding seas for their local economy, so if they are going to allow such a massive upheaval to their way of life I would expect them to drive a hard a bargain as possible. It could be 2 decades of oilmen and women coming and going on a small Island which is not their home.
Oil companies come and go , if they don't make a profit they leave and if they do ,they want most of it for their shareholders and substantial returns as possible on their investment.
I am confident it will go ahead , it benefits all concerned for a long period of time and that gives security to all parties , which is what they are all looking for.
If Harbour wants to play ,they have this time to state their demands, if their demands are not met , what then ?
Well, the oil is going nowhere and they will not get a licence renewal next time imo, this puts HBR in a take it or leave it position.
HBR will squeeze the cost down as much as possible, but the very thing they want, higher POO, will negate that somewhat. HBR need to get creative to seal a deal that will be palatable to FIG, after all HBR are the ones that need replenishment of stocks in the next 3 to 4 years. Buying aging NS assets from majors is no longer going to be cheap .
HBR will just look at Zama as to what happens when you invest in unstable environments .
In the FI they are in charge and it's a vast acreage , with significant amounts of oil which will need a one of cost for the infrastructure , phase 2 will use the same and no requirement to build again from scratch as they would with another project elsewhere.
Lets say $100m per month free cash flow for HBR right now, reduction in debt of $200 in 2 months, Billion plus credit facility etc, UKEF may still help as the demand may be lower , personally I think they can go it alone as $1.8 b is not required as a lump sum investment, phasing the cost as they go along as required, drilling and oil exploration infrastructure, let say 2 over years, then all the umbilical's, then FPSO lease say after 3 years etc, I may be wrong but that is how I see it generally.
If HBR relinquish the licence then it ALL reverts back to RKH, all 100% of it with all the works on FEED, EIA etc .
That alone is worth a good sum of money with POO in the $60 to &0 range.
Neiliues makes some good points re opec+ / fracking, both OPEC and fracking have had their chestnuts roasted good and proper, no appe
SL is just so capital intensive with a long lead time. It ticks the box for Harbour as regards being operator in control but its really so big in every way ; an intimidating long term financial risk. Maybe if UKEF support was still available Harbour would be keener to proceed.
I can see why they are carefully reviewing. Not sure that the FIG 'get it'
The oil price may drop/crash but I think that those that due to the OPEC+ and US frackers working in tandem that, unless they fall out, they will pump to suit demand but not pump to the point the price drops low. Why would they? MBS, Putin, frackers etc have tried all that and surely have learned their lesson. My observations of the weekly US rig count is that there are a 'few' coming on line now (9 last week) which isn't suprising at prices in low to mid 70s.
So, considering SL, it is an interesting change, someone sort of mentions this below that the game is changing, HBR management are now maybe looking at SL with a realisation that they would rather negligent to not be pursuing SL. In the next 6 months the discussions about SL are going to change from "IF they will develop SL" to "When will they develop SL" and then "Why aren't they developing SL". In short in 6 months time they are going to start looking incompetent if they haven't and the long grass waffle will have to be replaced with a FID and project timeline or people are going to be asking questions as to why an out and out oil company is dragging its feet.