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Chevron has started drilling a new well in the Nargis natural gas field in the Mediterranean Sea, as part of ongoing efforts to develop the field, discovered in 2022

The project is being developed by Chevron as the main operator, in partnership with Eni, as well as Mubadala Energy and Tharwa Petroleum Company. The Nargis field is located in the prolific East Nile Delta Basin of the Mediterranean Sea, approximately 50 km offshore.

Eng. Karim Badawi, Minister of Petroleum and Mineral Resources, reviewed the launch of drilling activities aboard the drilling vessel Stena Forth, recently arrived in Egypt to begin operations at the field.

The Minister said that the drilling of the new well is part of the Ministry of Petroleum and Mineral Resources' strategy to encourage international energy companies to accelerate the development of untapped gas discoveries, including the Nargis Field, and bring them into the development and production portfolio.

The Egyptian government is encouraging investment and incentivising exploration and production to reverse years of decline and reduce energy imports, a drive which is being given additional impetus by the current situation in the Middle East. These efforts seem to be paying off, with a high level of exploration activity and a number of promising discoveries being made.

The most recent is the discovery by Agiba Petroleum Company, the joint venture between the Egyptian General Petroleum Corporation (EGPC) and Eni, in the Western Desert, representing the company's most significant discovery over the past 15 years.

The Ministry announced that the discovery was achieved through the South Bostan-1X exploratory well, drilled using the EDC-9 rig operated by the Egyptian Drilling Company (EDC). Preliminary estimates indicate reserves of approximately 330 bcf of gas and 10 million bbl of condensates and crude oil, with total estimated recoverable reserves reaching 70 million bbl of oil equivalent.

The significance of the new discovery is further enhanced by its proximity to existing facilities and infrastructure, which will enable its rapid development and swift tie-in to the production network.

The well encountered multiple sandstone and limestone reservoirs, with a net pay thickness of 400 feet, highlighting the discovery's strong economic potential and production significance.

The new discovery reflects the success of the Ministry of Petroleum and Mineral Resources' incentives to encourage partners to intensify exploration activities in areas adjacent to existing fields. This approach has facilitated the identification of new discoveries in close proximity to established infrastructure and production facilities, eliminating the need for significant new infrastructure investments. As a result, development costs are reduced, time to first production is accelerated, and operating efficiencies are enhanced

In early May Eni made a new natural gas discovery in the Nile Delta region, with estimated production rates of around 50 Mmcf/d, following its gas and condensate discovery in the Temsah concession in the Eastern Mediterranean in April, with preliminary estimates of about 2 trillion cubic feet of gas and 130 million barrels of associated condensates.

Also this year, Dragon Oil announced a new oil discovery following the successful drilling of the South El Wasl ‘B.B2’ exploration well in the Gulf of Suez, with initial results indicating production rates above 2,000 bpd of oil. While US Apache, in collaboration with the Egyptian General Petroleum Corporation (EGPC), made a new natural gas discovery in the Western Desert, following the drilling of the SKAL-1X exploratory well in the South Kalabsha area, with initial test results indicating a daily production rates of approximately 26 million cubic feet (mmcf) of natural gas and 2,700 barrels of condensate.

The seven OPEC+ countries, which previously announced additional voluntary adjustments in April and November 2023, namely Saudi Arabia, Russia, Iraq, Kuwait, Kazakhstan, Algeria, and Oman, have agreed to increase production by 188,000 bpd from July

However, the impact of this increased production quota is likely to be limited, according to Jorge Leon, head of geopolitical analysis at Rystad Energy

“With the Strait of Hormuz closed, the issue is not whether OPEC+ raises paper quotas, but whether additional barrels can actually reach the market,” he said.

“OPEC+’s decision to continue increasing production by 188,000 barrels per day confirms that the group remains on track to unwind the first tranche of voluntary cuts by September, if not earlier. But in the current market, the physical impact of such a decision would be close to zero.”

Leon noted that not only is the Gulf facing oil export obstacles, Russia is also under pressure as a result of intensifying drone attacks on its oil infrastructure.

“The latest increase will likely expose a widening gap between OPEC+ targets and Russia’s actual production capacity,” he said.

“The more important question is what happens after the first tranche of voluntary cuts has been fully unwound. The capacity assessment currently undergoing should serve as the basis for 2027 quotas, but with the Strait of Hormuz closed and several producers operating far below normal levels, it will be very difficult to accurately assess each country’s sustainable production capacity. That makes the next quota reset much more politically sensitive.”

Once the Strait of Hormuz reopens and flows gradually recover, the market could face a very large surplus, he pointed out, driven by returning OPEC+ supply, stronger US shale output and weaker demand after a period of very high oil prices. The UAE, now free from its OPEC quotas, would also likely ramp up production.

Once restocking concludes, OPEC+ may be forced to implement cuts again.

“That is when cohesion will become the central issue. OPEC+ cohesion is easy to maintain when the market does the discipline for you. The real test is whether that holds when the barrels come back, stocks rebuild and members have to decide who cuts.”

At the moment though, the reopening of the Strait of Hormuz seems a distant prospect, given the resumption of hostilities between Israel and Iran, which has caused the oil price to spike again.

“Despite ongoing diplomatic efforts, markets remain concerned that even a peace agreement would not immediately restore normal energy flows due to damaged infrastructure, mined waterways, and production outages,” commented MUFG Bank, echoing other industry analysts. “The renewed escalation has reinforced fears of prolonged supply disruptions, keeping upward pressure on oil prices despite OPEC+ plans to gradually increase output.”

Refined product markets have crossed a critical threshold where a historic supply disruption is evolving into an outright demand crisis, according to a new analysis by S&P Global Energy

Markets are now facing a severe demand reckoning that will likely last through the summer travel season, and possibly longer.

“Given the lags between any potential restart of flows through the Strait of Hormuz and the arrival of meaningful relief to product supply, the market equation cannot be solved without demand acting as the balancer,” stated Daniel Evans, vice president and global head of fuels and refining research at S&P Global Energy.

S&P Global Energy now expects global refinery runs to decline 5.2mn bpd and 2.7mn bpd year over year in the second and third quarters, respectively. On an annual average basis, global crude runs are now expected to decline by 1.9mn bpd.

The magnitude of losses in refinery runs are expected to be largely mirrored in refined product demand reductions, with year-over-year declines of 4.4mn bpd and 2.2mn bpd in the second and third quarters, respectively. That constitutes a decline of 1.8mn bpd in 2026, on an annual average basis.

The effective closure of the Strait of Hormuz is most likely to continue through May before a gradual return of oil flows. The demand decline in the second quarter is more than twice that experienced during the weakest quarter of the ‘Great Recession’ of 2008/2009. The Hormuz crisis is now a prolonged event with lasting physical consequences. Even if flows restarted immediately, operational and logistical delays would postpone meaningful relief to product markets by months rather than weeks.

“What matters now is the ‘call on demand curtailment’ — the volume of consumption that must disappear given fixed supply constraints and limited inventory draw capacity,” asserted Karim Fawaz, executive director of fuels and refining at S&P Global Energy.

The bulk of refinery run cuts outside of the Middle East are expected to come from Asia and to a lesser extent Europe, where exposure to disrupted flows is greatest and competition for replacement barrels is most intense. As refinery runs fall, so will refined product supply, creating pressure in both refining regions and those dependent on imports.

For the time being, North American, Latin American and African refineries are relatively better positioned and remain well insulated from the crude supply crisis. However, the burden of demand losses may spread across markets that have so far weathered the crisis unless the geopolitical tension eases.

SLB has announced it has entered into an agreement to acquire Tachyus Corp., a Houston-based technology company specialising in high-speed reservoir modelling and optimisation

This acquisition of the artificial intelligence-driven, physics-based modeling software company aims to meaningfully enhance SLB's reservoir management, production, and recovery capabilities across the energy sector. The transaction is expected to close shortly after the signing of the agreement, subject to the satisfaction of customary operational conditions.

Strategic portfolio enhancements

The proposed acquisition significantly strengthens SLB's overarching digital portfolio with differentiated, physics-based reservoir modeling capabilities. These advanced digital tools enable faster reservoir management decisions, which are critical to helping operators maximise overall resource recovery. Additionally, the integrated technology helps bridge the traditional gap between long-term development planning and active production execution across both complex and highly mature assets.

Highlighting the strategic importance of this move, Rakesh Jaggi, president of SLB's Digital business, stated, “Reservoir management is becoming increasingly dynamic as operators look to maximise recovery from existing assets”. Jaggi further elaborated on the expected synergies, stating, “The addition of Tachyus will strengthen our ability to deliver operational reservoir management workflows that help customers manage and optimise complex enhanced oil recovery schemes”.

Bridging planning and operations

As operators continually work to maximise recovery from their existing assets and simultaneously improve operational efficiency, the industry demand is rapidly increasing for technologies that support continuous reservoir management. While traditional high-fidelity reservoir simulators effectively support strategic field development decisions to optimise long-term recovery, Tachyus technologies uniquely enable operators to make more tactical decisions in response to rapidly changing operational conditions.

Tachyus achieves this by developing advanced software that seamlessly fuses machine learning with fundamental reservoir physics to effectively model reservoir behaviour under a vast array of different operating conditions. These technologies have the impressive capability to evaluate thousands of distinct reservoir scenarios in mere minutes. This rapid processing empowers reservoir and production teams to dynamically adjust field strategies based on current asset performance data while maintaining strict alignment with longer-term development plans.

The Aqueon Platform's global footprint

A core component of the newly acquired technology portfolio is the proprietary Aqueon platform. Highlighting its widespread industry adoption, the platform has already been deployed successfully across more than 7,500 wells globally. Operationally, the Aqueon platform actively supports a wide array of vital field functions, including waterflood management, precision pressure forecasting, and comprehensive production optimisation. Furthermore, it assists operators with saltwater disposal optimisation for complex unconventional operations, alongside driving enhanced oil recovery (EOR) operations.

Future digital integration plans

SLB plans to seamlessly integrate Tachyus technology directly into its Delfi digital platform, as well as its Lumi data and AI platform, following the successful closing of the transaction. This deep integration is a crucial technological step that will enable robust, closed-loop reservoir and production management workflows across the organisation.

This strategic acquisition will continuously strengthen SLB's expansive capabilities in AI-driven reservoir modeling through the deployment of combined data- and physics-based models that continuously adapt to evolving reservoir behavior. In addition to acquiring these technological assets, the agreement will also bring additional, highly specialised reservoir engineering, data science, and software development expertise directly into SLB's broader digital organisation.

Oil Review Middle East is hosting an exclusive webinar by GPT Industries on Dissimilar Flange Connections: Corrosion Risks, Misconceptions, and Practical Solutions, on Thursday 18 June at 9.30am GST

Dissimilar flange connections are widely used across industries, yet they remain a misunderstood and underestimated source of corrosion risk, operational failure, and unexpected cost. This webinar will explore why these connections exist, how they behave in real-world environments, and the critical factors that influence their performance. It will provide practical insight into the risks and realities of dissimilar flange connections, with a focus on corrosion mechanisms, common misconceptions, and effective mitigation strategies to improve reliability and reduce long-term costs.

The session will cover:
✔️ Understanding galvanic corrosion in dissimilar flanges
✔️ The dangers of localised corrosion and its impact on asset reliability
✔️ Common misconceptions around cladding and sealing methods
✔️ Available mitigation strategies, including coatings, bolting practices, and flange isolation kits
✔️ How to apply practical decision-making frameworks based on risk, environment, and lifecycle cost considerations

Register here

GPT Industries is a leading global manufacturer of critical pipeline sealing and electrical isolation products to protect the world’s pipelines, people and environment. With a focus on safety, performance and reliability, the company employs advanced engineering and manufacturing processes to meet the challenging demands of the oil and gas, water/wastewater, hydrogen and construction and infrastructure industries.

Expert presenters will be Rebecca ZImbra – product engineer, GPT Industries, metallurgical/materials engineer with industry, management, and research and development experience and expertise in materials testing, cathodic protection, failure analysis, and weld inspection; and Nick Bander, director – Engineering and Product Management at GPT Industries, an experienced technical team manager with a focus on manufacturing, pipeline corrosion mitigation, oil and gas, energy, and water/wastewater industries, and expertise in team/people development, product application, product design, pipeline, sealing, corrosion, and cathodic protection.

Don't miss this opportunity to gain exclusive practical insights into corrosion risks, mitigation strategies, and decision-making approaches for dissimilar flange connections!
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DNV has published a recommended practice (RP) for offshore hydrogen pipelines, supporting safe design, operation and requalification of pipeline infrastructure for transporting hydrogen

DNV-RP-F123 Hydrogen pipeline systems addresses hydrogen-specific integrity and safety considerations. It supplements DNV’s established submarine pipeline standard, DNV-ST-F101 and adds additional guidance tailored to transporting hydrogen gas and hydrogen blends in pipeline systems. It is relevant for new pipeline developments as well as for the requalifying of existing offshore infrastructure for hydrogen transport, supporting broader efforts to scale hydrogen networks.

Hydrogen is expected to play an increasing role in cutting emissions from hard-to-decarbonise sectors. However the transportation of hydrogen by pipeline faces certain risks and considerations, such as embrittlement.

DNV-RP-F123 has been developed through the H2Pipe joint industry project (JIP), which ran from 2021 to 2026 and brought together 37 industry partners across operators, manufacturers, engineering companies and academic advisors to provide guidance for engineering projects and qualification work.

The next step is large-scale testing to validate data and advance existing standards. This phase will include full-scale pipe testing at DNV’s Spadeadam Research and Development Facility. The results will feed into the continued development of DNV-RP-F123 and future guidance.

“Hydrogen service fundamentally changes the integrity picture for pipeline systems,” explained Prajeev Rasiah, executive vice president and regional director for Northern Europe, Energy Systems at DNV, “it cannot be treated as a simple variant of natural gas. This recommended practice moves beyond theoretical study to provide an evidence-based framework for assessing hydrogen-specific risks in design, requalification, and operation. By closing the gaps around material suitability and safety margins, we are giving teams the technical clarity needed to move projects from the study phase into execution. This is particularly vital for requalifying existing infrastructure, where the guidance helps define exactly what must be tested or upgraded to ensure a safe reliable and sustainable transition.”

“The objective of the H2Pipe JIP is to build guidance grounded in shared data and real technical experience from testing,” added Philippe Darcis, chairman of the H2Pipe JIP Steering Committee and Pipeline Technology Senior Director at Tenaris. “The real value of the H2Pipe JIP is in turning years of shared data into credible, site-ready guidance that engineers can use to scale hydrogen infrastructure. This is a practical tool built to reduce the 'unknowns' that often stall investment. Because it was developed through industry-wide collaboration, it gives operators a robust basis for making decisions, allowing us to move forward with fewer assumptions and greater confidence in our safety and performance standards.”