COLUMN | In 2025, making predictions is a fool’s game, so pass me the dunce’s hat: possible offshore projects plus the ongoing campaign against the Dark Tanker Fleet [Offshore Accounts]

The year 2024 was one of surprises. Nobody foresaw the fall of the Assad dictatorship in Syria in the space of just a week in December, as the president’s army collapsed and he fled to Moscow. Nobody foresaw that Ukraine would occupy parts of Kursk province, nor that North Korean troops would enter the war, nor that Russian ships would be using their anchors to damage critical infrastructure in the Baltic Sea.

Nobody foresaw that Bangladesh’s Prime Minister Sheikh Hasina would resign and escape the country in an army helicopter following widespread protests, dragging a British minister into a corruption scandal.

Five years on from the start of the Covid-19 pandemic, we know that we can only expect the unexpected. We can expect Canadian prime minister Justin Trudeau to be booted out of office this year, along with German chancellor Olaf Scholz, but beyond that, who knows?

I would anticipate more newbuilding supply vessels will be ordered. Tidewater CEO Quintin Kneen spent US$2 million of his own money buying shares in the company at under US$50 per share last month, having previously cashed out US$70 million of stock when the shares traded above US$100 earlier in 2024. This suggests that there could be upside for Tidewater in 2025, as, so far, his timing has been impeccable.

"Trying to predict the future is like trying to drive down a country road at night with no lights while looking out the back window," Management guru Peter Drucker once wrote, so please buckle up as we attempt to race this jalopy into the New Year with a few ideas of what the dim and dark future may hold.

I am not going to prognosticate on the oil price, the probability of China attacking Taiwan, Mr Trump’s relationship with Mr Musk, or on the life expectancy of any world leader. But I will offer….

Prediction number 1: New offshore projects get the green light

I think 2025 will be good for offshore as the investment cycle continues, although there may be rough patches – such as the UK sector of the North Sea, approvals for new offshore wind projects in the US, and in debt pressed Mexico, where the state oil company Pemex will emphasise paying down its loans rather than investing in new offshore exploration or paying its suppliers on time (watch Borr receivables as the canary in the mineshaft). Pemex has around US$97 billion of debt in total, and around US$9 billion of that debt is coming due for repayment this year, and another US$13 billion is due in 2026. Ouch.

But there will be good news elsewhere.

The end of 2024 saw several key projects finally reach fruition. BP and its partners announced that the long delayed Greater Tortue Ahmeyim (GTA) Phase 1 offshore gas development on the Senegal-Mauritania border was finally in production, with deepwater gas from reservoir in water depths of up to 2,850 metres flowing into a floating production storage and offloading (FPSO) vessel to strip out the condensates. The gas will then be pumped through a pipeline to be compressed into liquified natural gas (LNG) at the shallow water Floating LNG vessel Gimi, owned by Golar.

The first LNG export from the facility is expected in the next few months after Gimi is commissioned, over two years later than originally planned when the project was approved in 2018.

Once fully commissioned, GTA Phase 1 is expected to produce around 2.3 million tonnes per annum (MTPA) of LNG, a game changer for the government revenues of both countries. Now all eyes are on when Phase 2 of the project will be approved, with the goal of adding another three million MTPA of LNG production through a concrete, gravity- based structure.

On December 28, ENI successfully started production of Phase 2 from the Baleine field offshore Ivory Coast via the Altera Infrastructure owned FPSO Petrojarl Kong (the former Spirit Voyageur), which is deployed alongside the FSO Yamoussoukro to export the oil. All of the processed gas from Phase 2 will be used in-country to supply the local energy market via a pipeline ashore.

With the start-up of Baleine's Phase 2, all eyes are now on the approval for the development of Phase 3 of Baleine, which the Italian major sees as increasing total production from the field to 150,000 barrels per day (bpd) of oil, and 200 million cubic feet (5.66 million cubic metres) of associated gas per day.

These two examples show us that nothing helps success in oil and gas than previous success. The more drilling is done, the better reservoirs are understood and delineated. The more infrastructure is in place, the easier and cheaper it becomes to develop nearby fields as tie-backs to existing production facilities, and to export through existing pipelines. Going ahead with phase one of a project makes phase two cheaper and lower risk.

My first prediction is that 2025 will see progress with three long awaited projects which are game changers for their respective countries:

1)      TotalEnergies will finally restart the Mozambique LNG project that has been suspended for nearly four years following the horrific Islamist attack near the project site at Palma in the north of country in March 2021. Mozambique was then embroiled in political violence following the disputed presidential election in October of last year, as we reported, which the opposition claims was rigged by the ruling Frelimo party. Since then, the situation has deteriorated further, and the NGO Plataforma Decide said that 125 deaths occurred in the three days over Christmas as the police cracked down on protestors and a mass prison riot and jailbreak occurred at Maputo’s high security facility. This left at least 33 inmates dead when the prisoners clashed with prison staff as they tried to escape, and now 6,000 prisoners are on the run.

Daniel Chapo, the Frelimo candidate said last week that he “regretted” the violence, and promised that after his inauguration in mid-January, he would be “the president of all.” My guess is that with the economy in freefall, tourism and investment on the rocks, and society fractured, Chapo will seek to fast-track Total’s LNG project to attempt to generate employment and boost Mozambique’s flagging economy, even if he has to make concessions to the French oil major.

I have been wrong on the restart time after time, but with Indonesia’s long delayed Abadi LNG project finally moving ahead in 2025, surely Mozambique will finally progress its biggest project? Or maybe ENI will just approve a second FLNG for Mozambique and TotalEnergies will continue its waiting game.

2)      I also anticipate that TotalEnergies will also take the final investment decision on its deepwater Venus project offshore Namibia in 2025. Namibia is sizzling hot at the moment, as an exploration territory. Chevron, Rhino Resources and Woodside will all likely drill deepwater wells there this year.

On the last day of 2024, Portugal’s Galp announced that it had successfully drilled and logged the Mopane-2A well from Saipem’s Santorini drillship. Galp was delighted to have found a hydrocarbon column of gas-condensate along with a hydrocarbon column of light oil in a smaller reservoir, following on from its big discoveries earlier in the year in the same basin. Likely in 2025, Galp will sell down half its 80 per cent share in Mopane field for a fat profit, probably to Petrobras or ENI.

I predict that 2025 will be the year that Namibia begins its journey from exploration to production, following in the footsteps of Guyana, where first oil production began in 2019, and of Suriname where TotalEnergies approved the first deepwater oil project and began work on a new FPSO last year.

Shell also has plans to drill in Suriname this year. Guyana now produces 660,000 bpd of oil through three ExxonMobil-operated FPSOs, and ExxonMobil aims to install five FPSOs there between this year and 2030, in order to double output to 1.3 million bpd. There will be elections in Guyana in 2025 but don’t expect anyone to rock the boat. They should pass peacefully, unlike last time in 2020. Success feeds success.

3)      Also starting a journey to production will be the long-delayed Sea Lion development in the Falkland Islands, operated by Navitas, after Harbour Energy abandoned the project in 2021.

The field was first discovered in 2010, and last year the environmental study for the Northern Development Area, was submitted to the Falkland Islands Government for statutory public consultation. The development plan is based on production through Bluewater Energy’s Aoka Mizu FPSO at a peak rate of up to 55,000 bpd.

"Against a background of continued industry cost inflation, gross capex required to first oil has increased to US$1.4 billion (including contingency)," Rockhopper, the minority partner in the project, told its shareholders. "Despite this increase, project economics remain highly robust."

Therefore, with oil today at US$75 per barrel, I anticipate that Navitas and Rockhopper will obtain the necessary finance and finally approve the Sea Lion project this year and that the Falklands can look forward to first oil for in 2028.

One wild card to watch in 2025 is Colombia. Last month, Petrobras confirmed Colombia's most significant gas discovery ever when it announced the results of the Sirius-2 well drilled in the Caribbean off Santa Marta in the country's north in 803 meters of water by the Noble Discoverer semi-submersible. The assessment of the Sirius-2 well results confirmed local volumes of over six trillion cubic feet (Tcf) (170 billion cubic metres) in place, which will increase Colombia's current gas reserves by 200 per cent.

Petrobras is still drilling two more wells offshore Colombia, so 2025 could see more good news, but with wildcatting, how knows?

Petrobras plans the installation of subsea production systems and laying a pipeline to carry the gas from Sirius field to an onshore gas treatment unit, with a total additional investment  of US$2.9 billion to bring the field into production within three years of securing all environmental licenses. The Brazilian player is aiming for a 2027 project launch through four production wells with an expected production rate of roughly 13 million cubic metres per day for 10 years.

Shell also made a deepwater gas discovery further west, offshore Cartagena in 2022, so it will be interesting to see if it returns for further appraisals or exploration in Colombia following Petrobras’ success. Oxy also has acreage there. Watch this space.

Prediction number 2: the noose tightens on the Dark Tanker Fleet

The misadventures of the 2006-built Dark Fleet tanker Eagle S in the Baltic have only served to throw a spotlight on the shadowy network of aged tankers operating under flags of convenience ("open registries") to transport Russia, Iranian and Venezuelan crude, mainly to China and India.

The main power cable between Finland and Estonia was damaged on December 25 when the partially laden Cook Islands-flagged tanker dragged its anchor for many miles, also destroying four subsea telecoms lines.

This came on the back of a Chinese flagged ship, Yi Peng 3, apparently cutting two data cables in Baltic Sea in November, also by dragging its anchor after departing the Russian port of Ust-Luga, near St Petersburg. Eagle S was also outbound from Ust-Luga before its cable damage incidents.

On November 17, the Arelion cable between the Swedish island of Gotland and Lithuania was damaged and the next day the C-Lion 1 cable between the Finnish capital Helsinki and the German port of Rostock was severed.

The attitude of the Finnish authorities and the Swedish authorities was very different, and suggests a hardening of attitudes against the Dark Fleet and against the hybrid methods seemingly used by Russia to harm critical infrastructure.

After attending on board Yi Peng 3, the Swedish authorities allowed the Chinese vessel to sail to Egypt, despite the serious damage the ship appeared to have inflicted on the internet infrastructure of three states. The Swedes left the investigation to the Chinese authorities aboard the Chinese ship and said they attended merely as observers. So far, the Chinese have not released any preliminary findings.

The Finns adopted a far tougher line. Finnish authorities boarded Eagle S, which was carrying 35,000 tonnes of petrol, and detained the vessel on suspicion that it had caused the damage by deliberately dragging its anchor in the same way as the Chinese vessel appeared to have done.

As we reported, Finland's national power grid operator then demanded that a Helsinki court seize Eagle S as security for the damages to the subsea Estlink 2 electricity interconnector.

We would also suggest that the Finnish government and investigators might want to pressure the Cook Islands as flag state. The Cook Islands registry is run as a private business for private profit by a company owned by Cook Islands residents called Maritime Cook islands, as we highlighted in September.

Other Dark Fleet registries including those of Gabon and Sao Tome are also private businesses run for private gain. We would suggest the Dark Fleet registries and the flag states will face more pressure and scrutiny in 2025. I would not be surprised if individuals and private companies that certify and facilitate the Dark Fleet, or issue insurance to vessels like Eagle S, are not sanctioned to undermine the operation of these elderly and unsafe ships.

I predict that in 2025, western states will push for more checks and inspections of the Dark Fleet and its insurance cover, especially in sensitive areas like the Baltic, the English Channel, the Mediterranean and the Singapore Straits.

There will be increased security on subsea infrastructure all around the world; indeed, the Finnish press reported that the vice-chair of the country’s Defence Committee, Mikko Savola, had criticised the public visibility of Finland's critical infrastructure.

"Admittedly, we have been naïve in this society," said Mr Savola.

The year 2025 will be the year that Europe and the wider world becomes far less naïve about the dangers posed by the Dark Fleet, and it will also be the year that Russia’s oil exporting ports in the Baltic become a battleground. Ukraine has already demonstrated remarkable success in sinking Russian naval vessels in the Black Sea and in attacking refineries hundreds of kilometres from the frontline.

Over the weekend, on January 4, Ukrainian drones attacked Russia's Ust-Luga port in the Baltic. Ust-Luga has become one of the main export points for Russian oil, gas, coal, and other resources since the imposition of Western sanctions.

Expect increased Ukrainian airborne assaults on the refineries and export facilities in the Baltic, and on Russia’s navy bases there, along with stricter checks on all vessels entering or exiting the Baltic by western powers. This is broadly supportive of oil prices if Russian exports are reduced, and encourages continued investment in new production outside Russia.

This will be a year of living dangerously. The shocking attack by Russian air defences (as claimed by Azerbaijani government sources) on an Azerbaijan Airlines flight on Christmas Day, which resulted in the stricken plane crashing in Kazakhstan with the death of 38 people on board, is a reminder that in a tense international situation and an active war zone, civilians from all states are at risk. The Houthis may yet remind us of this again in and around the Arabian peninsula in 2025.

Nobody knows how the Ukrainian war will end, nor the conflict in Yemen, and we have to be careful to avoid predictions based on hope and aspirations of what we want to happen, rather than what is likely to happen.

Harold Macmillan was once asked what was the most troubling problem he faced during his time as British prime minister in the early 1960s. He replied, “Events, my dear boy, events.”

That analysis remains correct and explains why predictions for the year ahead will always be hostages to fortune.

Background reading

If you are not ready to throw yourself back into work yet (and I don’t blame you if you are not), check out Mental Floss’ 101 Things We Learned in 2024. Thse include 17th century cocaine use, seagull insurance, melting glaciers, wine produced by Dolly Parton, and the German Navy finally phasing out the use of floppy disks.