AFTER selling its Denmark operations for US$150 million, Hess Corporation is planning to inject all of its profits from that sale into expanding and developing its more lucrative oil exploration and production activities in Guyana.

Reports are that INEOS E&P AS, which is a component of INEOS Energy, had entered into an agreement to acquire the subsidiary Hess Denmark ApS. for a total consideration of US$150 million, effective January 1, 2021. INEOS is said to be one of the largest oil and gas producers in the British, Norwegian and Danish regions of the North Sea.

A statement issued by the two companies indicated that the sale will see INEOS acquiring some 61.5 per cent of the Hess-operated Syd Arne oilfield, in which INEOS already holds the remaining stake, and a 4.8 per cent stake in the INEOS-operated Solsort field.

Commenting on the sale, Chief Executive Officer of Hess Corporation, John Hess said, “The sale of our Denmark asset enables us to further focus our portfolio and strengthen our cash and liquidity position. Proceeds will be used to fund our world-class investment opportunity in Guyana.”

As it is, Hess Corp is operating out of the Stabroek Block located approximately 120 miles offshore Guyana. This 6.6-million-acres block is equivalent in size to 1,150 Gulf of Mexico blocks, and has already seen 22 discoveries amounting to nine billion barrels of oil equivalent, and counting.

“The discoveries on the block to date have established the potential for at least six Floating Production, Storage and Offloading (FPSO) vessels by 2027 to develop the current discovered recoverable resource base,” Hess Corp said.

The Liza Phase 1 development, with a production capacity of 120,000 gross barrels of oil per day, delivered first production in December 2019 utilising the Liza Destiny FPSO. The second phase of the Liza development, sanctioned in May 2019, will utilise the Liza Unity FPSO with gross production capacity of approximately 220,000 barrels of oil per day; this is expected to be up and running by early 2022.

A third phase of development at the Payara Field was sanctioned in September 2020. First oil is expected in 2024, according to the company. It related too that the Payara project will utilise the Prosperity FPSO, which will have the capacity to produce up to 220,000 gross barrels of oil per day. A fourth development, Yellowtail, has been identified on the Stabroek Block with anticipated start-up in 2025, pending government approvals and project sanctioning.

Additionally, in April 2018, Hess was also able to acquire an interest in the Kaieteur Block, located approximately 155 miles offshore and adjacent to the Stabroek Block. The Kaieteur Block covers 3.3 million acres which is equivalent in size to more than 580 deep-water blocks in the Gulf of Mexico. Meanwhile, for INEOS Energy, the deal with Hess Corp is expected to increase the group’s oil output of about 60,000 barrels of oil equivalent per day (boed) by around 6,000 barrels per day, according to Reuters.

In a statement, Executive Chairman of INEOS Energy, Brian Gilvary, said, “I am pleased we have been able to complete the acquisition. The deal represents a major step in reshaping our energy business. It also opens up prospects that can be developed in Denmark’s offshore oil and gas sector, supported by a very promising carbon storage project.”

He further explained that the deal with Hess represents a major step in reshaping its energy business, since HESS was one of the earliest pioneers in developing the North Sea basin.

“This deal will open up future growth prospects that can be developed in Denmark’s offshore oil and gas sector, supported by a very promising carbon storage project helping to deal with future emissions,” Gilvary noted.

He added that the Greensands project in Denmark will make a significant contribution to our understanding and growth of carbon storage technology, whilst supporting Denmark’s wider CO2 emission reduction targets for 2030 and beyond. Gilvary was also quoted by Reuters as saying that further expansion in Denmark will allow INEOS to increase the share of oil in its overall production from 15 per cent to 25 per cent in the coming years.

“It takes us from a position in Denmark where effectively we ran an end-game to a position now where we can grow out to the mid-2040s,” Gilvary told Reuters.

He further indicated that the group’s oil and gas exploration and extraction in the north see will wrap-up in time to comply with a decision taken by the Danish government to end all oil operations in the North Sea by 2050.

“The new investment will also help INEOS to develop the Greensands carbon storage project in Denmark, which will capture and store carbon emissions from the oilfields in depleted fields,” Gilvary told the London news agency.