Global energy trader Vitol Group has set up a new U.S. venture to produce oil and gas called Vencer Energy, the company said July 20, its first foray into the upstream business in the United States.
Vencer, led by industry veteran Don Dotson, will seek to buy mature, producing oil and gas assets, in key U.S. basins.
The announcement comes at a pivotal moment as the oil price crash and global economic slowdown due to the novel coronavirus laid bare the heavily indebted U.S. shale industry.
Major independent producers like Chesapeake Energy, Whiting Petroleum and California Resources are among those that have filed for bankruptcy, opening up opportunities for new entrants.
“I am looking forward to leveraging my decades of industry experience operating in multiple basins to build a large-scale oil and gas enterprise,” Dotson said in the Vitol statement.
Vitol, which is run out of London, is the world’s biggest independent oil trader, involved in trading 8 MMbbl/d of crude and refined products. In addition, it has global refining, retail, storage and logistics businesses.
Vitol already has some upstream oil operations, producing about 32,000 boe/d, but none in the United States. Its main project is the Sankofa development, offshore Ghana, where it is a partner with Italy’s Eni and Ghana’s state energy firm GNPC.
Trading firms have traditionally tried to remain asset light, preferring to hold small stakes or to enter long-term oil-backed loans whereby they provide cash in return for future physical crude cargoes.
Rivals Gunvor and Glencore both tried upstream with limited success. Gunvor wrote down an asset in 2018 while Glencore has tried to sell its fields in Chad.
Vitol’s move into upstream has not been smooth either. Last year, the trader pulled out of a $1.5 billion deal to buy a stake in two major Nigerian oilfields.
Recommended Reading
Exxon Mobil Green-lights $12.7B Whiptail Project Offshore Guyana
2024-04-12 - Exxon Mobil’s sixth development in the Stabroek Block will add 250,000 bbl/d capacity when it starts production in 2027.
E&P Highlights: April 1, 2024
2024-04-01 - Here’s a roundup of the latest E&P headlines, including new contract awards.
Exxon Ups Mammoth Offshore Guyana Production by Another 100,000 bbl/d
2024-04-15 - Exxon Mobil, which took a final investment decision on its Whiptail development on April 12, now estimates its six offshore Guyana projects will average gross production of 1.3 MMbbl/d by 2027.
E&P Highlights: Jan. 29, 2024
2024-01-29 - Here’s a roundup of the latest E&P headlines, including activity at the Ichthys Field offshore Australia and new contract awards.
Deepwater Roundup 2024: Offshore Africa
2024-04-02 - Offshore Africa, new projects are progressing, with a number of high-reserve offshore developments being planned in countries not typically known for deepwater activity, such as Phase 2 of the Baleine project on the Ivory Coast.