Member Info for Marunam2

Re OM - Italy's decision and decision making re the moratorium is there in black and white.
Imagine being given licences to explore, make a discovery, appraise it, submit EIA at a cost of x xx millions, now how would you feel if FIG did that ?

It's strange that we will have nearly come full circle re POO since Sealion was discovered.
POO above $80pbo and expected by the usual suspects who trade oil to hit $90pbo, even $100pbo in the coming months.
China ordering its state energy companies to secure oil gas , coal and LNG at all cost to keep the lights on in homes and industries.
By the time Harbour have left the license, within 90 days , the world outlook for oil and gas may likely make Sealion an extremely attractive project. It's feed ready , adjustable in scope ,if Sam is to be believed and a reality will hit that oil and gas will take a long time for the world to wean off.
We may even see the reality of shortages as super powers use their strength to secure more supplies than needed, a bit like the petrol shortage scenario, where panic mode sets in to cause a further shortage.

Harbours decision does baffle me , happy to let go of a huge asset at a time when the project economies are improving and energy demands are increasing, even as the pandemic is still around in the most of the world.

The oil companies are sloshing around in cash , BUT massive under investment in replenishing stock is now firmly on the horizon. While the western politicians are falling over themselves to align with the green energy and supermajors are cutting investment across the board in exploration, the rest of the world just goes on using the cheapest energy they can lay their hands on that their economies are geared for.

So Harbour leaving at this time may well turn out to be a boon, and OM is not far away.

On another note, Re the de commissioning for the Harbour jetty in FI, I was told some months ago the it is very likely that FIG will want to keep that on as it is useful to them .

It's worth noting :In late September 2021, Italy made a request, and the Tribunal agreed, to admit a recent European Court of Justice judgment related to inter-EU Energy Charter Treaty disputes. The Tribunal has requested Rockhopper's legal advisers to respond to the European Court of Justice judgment by 6 October 2021.

In the scheme of ICSID timings, this is a minute's time to reply, unless they expect the claimants reply to be as expected and their ruling to be the same.

So in footballing terms I see it as this :
The FIFA world cup , world footballing nations sign on to take part, then when the World Cup is held in Europe, EUFA says only they can run it under their own laws and regulations when it's in Europe not FIFA . No matter that a country ( e.g Italy ) signed on under FIFA laws and regulations In addition UEFA rules that FIFA laws and regulations don't apply when it is held in Europe ,so are void.

Ovets,
I agree with you re allowing the argument.
I also suspect ICSID are using RKH as a way of replying to the CJEU on why their ruling does not apply to ICSID rulings and International law.
The Italian state has to be seen as a victim to their people and not a bungling and irresponsible government, so now they have their fall guy to take the blame , ICSID
The very fact they did not have a back up plan to the embargo after 2 years will in itself show that it was politically motivated to please and appease the green lobby at that time ,2017.

I very much doubt the RKH lawyers will wait for October to reply.

Ovets,
I agree with you re allowing the argument.
I also suspect ICSID are using RKH as a way of replying to the CJEU on why their ruling does not apply to ICSID rulings and International law.
The Italian state has to be seen as a victim to their people and not a bungling and irresponsible government, so now they have their fall guy to take the blame , ICSID
The very fact they did not have a back up plan to the embargo after 2 years will in itself show that it was politically motivated to please and appease the green lobby at that time ,2017.

I very much doubt the RKH lawyers will not wait for October to reply.

https://www.allenovery.com/en-gb/global/news-and-insights/publications/intra-eu-disputes-cannot-be-arbitrated-under-the-energy-charter-treaty-says-the-court-of-justice-of-the-european-union.
The decision is notable in that the pronouncement that intra-EU disputes cannot be arbitrated under the ECT was not a question referred to the Court; nor is it contained in the dispositive part of the judgment as the case did not concern an intra-EU dispute. While the Court cannot thus be said to have issued a formal ruling on the matter, it is a clear indication of how the Court would decide the question, if referred, in future.

Another notable feature is that the Court reached this conclusion purely from the vantage point of EU law, without any consideration of international law. The Court’s interpretation of “this Treaty” in Article 26(6) of the ECT as being a reference to EU law just because the EU is a signatory to the ECT is baffling and one may wonder whether every international agreement to which the EU is a signatory is now to be regarded as an instrument of EU law. The distinction with commercial arbitration is equally baffling, as the suggestion is that Member States did not enter into the ECT of their free will. If the reasoning were to be followed by international tribunals, it would lead to the absurd result that the ECT has a different meaning (or even legal status) on a case-by-case basis, depending on the parties to the relevant dispute. The multilateral nature of the ECT does matter as it is the common intention of all the parties, and not only some of them, that needs to be established pursuant to Article 31 of the Vienna Convention on the Law of Treaties.

It remains to be seen what consequences Member States will seek to draw from this decision. At least as a matter of international law, an instrument similar to the agreement for the termination of bilateral investment treaties (reported on here) is unlikely to be an option as a three-fourths majority of the Contracting Parties to the ECT is required to amend the ECT. However, the decision is likely to accelerate the Commission’s ongoing efforts to renegotiate the ECT.

Meanwhile, in particular in the case of intra-EU disputes, investors are advised to opt for arbitration under the auspices of the International Centre for Settlement of Investment Disputes or, if not available, avoid an EU seat. Where possible, investors may also look to enter into a specifically-negotiated agreement with the relevant Member State. Where no dispute is in existence or reasonably foreseeable, EU investors should consider (re)structuring their investments from outside the EU.

In case of a favourable award in an intra-EU dispute, investors will need to identify commercial assets not covered by immunity, and seek enforcement, most likely outside the EU.

If I see the word discontinuance in the next rns I will be a very happy bunny.

I can see Zama going to arbitration and look how long that takes.

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/

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

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

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

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

https://oilprice.com/Energy/Energy-General/Its-Too-Late-To-Avoid-A-Major-Oil-Supply-Crisis.html

This really will be the optimal time for Sealion FID, chronic lack of investment is going to be felt in the next few years and then there will be a stampede to find and bring new oil and gas fields and we know that takes 2 to 4 years at least .
In 4 years time HBR's NS assets will be declining significantly as per HBR's outlook .
Just because western Economies and politics want renewables does not mean the rest of the world will turn their back on oil, they simply can't afford to as its still the cheaper energy option for their economy and infrastructure., 2 of the 3 largest consumers , India and China will struggle to wean their industrial economies off oil .

HBR will be trying all sorts to get the costs down and rightly so, but with POO over $70 and rising it's going to be harder to extract cost savings.
HBR have now joined the market , I hope analysts grill them at the trading update, it was all a bit tame when they joined and they got away with not saying much.

OM case closed announcement hopefully any day now onwards.

GLA

Hi Cyan,

I believe it is not $40 breakeven , somewhere near $37 - $38, this is not so far off their currant breakeven for their business.
If as I hope that FIG have give them years break from 1st oil for Royalty (9% ) then the breakeven becomes very attractive. Even more so as the infrastructure would be in place for phase 2 , thereby reducing breakeven more more.
As to looking 4 years ahead, we can see from the Majors reaction to pressure from ESG and climate change activists that nothing can be taken for granted except that massive under investment in new exploration is going to be a fact that will come back to haunt them , oil and gas demand will only increase in the meantime as renewables will require trillions to come up to speed, certainly not within 4 years.

Cyan2,

Think they have had enough time to work out the decision, I suspect on a positive note they are making sure the legal argument is waterproof as this will have massive ramifications for Italy and other companies looking to use arbitration.

Harbour have had a month and a half to go over a fully developed FEED. Also in that time they must have been in touch with prospective partners, they are backed by an infrastructure giant as their "parent" company so would have many contacts with bigger boys than Navitas.

The longer Zama unitisation takes place the better for Sealion as PEMEX would / should need to drill a well on that acreage
to prove their share .With all the mess surrounding the Nationalisation of the energy sector it does not bode well for Harbours stated assertion to to business in a stable fiscal and political region.

I would be very surprised if FIG did not put pressure on Harbour when the license extension was granted to get this moving or drop it.
H2 2021 should see demand rocket up for oil and gas worldwide.
Brent has averaged $61 or so since January , this means a lot of cash coming into Harbours coffers whith their breakeven at roughly $35- $36pbo @ over 200000pbopd. If in H2 poo is well above $70pbo then they will be making serious money.

That's my point gkb47, we all know this years results will be much better , so coming to this time next year are we going to see them award themselves for this years performance then as well ??, I'm afraid the answer is going to be yes.
UOG starting to walk and salaries are up and running, salaries increase more than profit for the year.

It's always slippery road on AIM when directors award themselves huge rises for doing their job, not to mention shares handed out like confetti to themselves. It will be telling next year how much G and A increases.
No doubt they have performed well in Egypt , but Jamaica license needs to have a good farmin to set this company alight, that's where they need to really perform the "transformation" required.

Agree LeviStubbs,
The shareholder question was a fobbed off with some waffle from Brian.
Wages for 12 headcount at $1.7m up a million or so from last year.

https://oilprice.com/Energy/Energy-General/Small-Companies-Rush-To-Buy-Up-Big-Oils-Assets.html

Harbour Chairman thinks there will be a need for new production in 3 years time !!

https://oilprice.com/Energy/Energy-General/Big-Oils-Dwindling-Reserves-Are-A-Major-Problem.html

Adding reserves that will last more than 10 years will be like gold dust when the world's oil demand comes back and it will.
HBR may not be an Major ,yet ,but any ambitions to be one will require reserves and production to not only be at best maintained but replenished.

Bloobird, lol, you make it sound like Sealion is the only oil field in the world that's under scrutiny from those 3 ladies , bar Christina , bet neither of the other 2 have even heard of it.

No news on Zama still ? , cant see that being FID ready at this rate in 2021 !, better to deal with a government that wants to develop than one that wants to take it away. Zama going to Arbitration perhaps ?