PETROL & ENERGY 05.10.2015

Oil is holding near $45 while the bad news keeps coming. For investor Jim Rogers, that’s usually a sign a rebound is near.

The Organization of Petroleum Exporting Countries is still pumping near record amounts of oil, China’s imports have slowed and U.S. crude stockpiles remain about 100 million barrels above the five-year seasonal average. Yet, U.S. benchmark prices have held steady for more than four weeks since plunging to a six-year low at the end of August.

“When there’s bad news and something doesn’t decline, it usually means it’s at a bottom and will be turning,” Rogers, who correctly predicted a commodities rally in 1999, said in an interview in Singapore on Thursday. “Whether we’re at a turning point or not, I don’t know yet and I’m watching this very closely.”

A persistent global glut of crude that’s cut prices by half over the past year has prompted banks including Citigroup Inc. to predict further declines, with Goldman Sachs Group Inc. warning they may drop to as low as $20 a barrel. The losses, driven by a U.S. shale boom and OPEC’s strategy to sustain output to defend market share, has led a slump in commodities that’s roiled currency, equity and debt markets across the world. 



Mozambique: Colleges and Institutes Canada Colleges and Institutes Canada (CICan) and American gas and petroleum exploration company Anadarko in Mozambique (AMA1) signed a Memorandum of Understanding to implement a program for the promotion and development of vocational training in Mozambique. Entitled Skills Training for Employment in Mozambique (STEM/CTEM), this project will support the development of a skilled workforce in Mozambique. It will strengthen the professional capacity of Mozambican women and men in order to meet the demands of the country's new emerging sectors. The objective is to improve the employment rate of graduates as well as the economic prospects offered to them and their communities. 

Namibia: The National Petroleum Corporation of Namibia (Namcor) is adamant that the much-anticipated N$35 billion Kudu gas-to-power project, which has been touted as the answer to the country's electricity woes, is feasible and bankable. In fact, Namcor has already spent N$285 million in executing a cabinet directive to develop the Kudu gas field. While presenting Namcor's annual results and introducing Immanuel Mulunga as its new managing director, the corporation's chairman, Johannes !Gawagab, said they hoped to finalise the technical operator and all final contracts for the project by the end of December.

Nigeria: Nigeria's former oil minister Diezani Alison-Madueke was arrested in London on Friday, a source from Nigeria's presidency circle and another with links to her family said. Alison-Madueke was minister from 2010 until May 2015 under former president Goodluck Jonathan, who was defeated by Muhammadu Buhari at the polls in March. Buhari took office in May promising to root out corruption in Africa's most populous country, where few benefit from the OPEC member's enormous energy resources. 

Somalia: Somalia opposes a moratorium on oil deals that’s being discussed at the United Nations as a way of stabilizing one of the world’s most fragile states, Finance Minister Mohamed Adan said. A new UN Monitoring Group report on Somalia, to be released in mid-October, will repeat a recommendation first made in 2013 that the Security Council ban any oil deals in Somalia. The group argues that the country lacks a legal and regulatory framework to oversee the exploitation of energy resources. “It’s a sovereign issue,” Adan told reporters Friday in the Kenyan capital, Nairobi. “We will not welcome a blanket oil moratorium.” 

South Africa: More than 1 000 senior executives in the oil and gas industry will later this month converge in Cape Town, South Africa for the 22nd Africa Oil Week/Africa Upstream Conference. Global Pacific & Partners will host the event in partnership with the ITE Group on October 26-30. This meeting commands unique global reputation as the most important in or on Africa, with some 120 speakers, 150 exhibitors, over 30 national oil companies and official licensing agencies as well as 1 000 key executives from 40 countries. 

Middle East

Iran: Lukoil PJSC, Russia’s second-largest oil producer, plans to sign a deal on exploration and production with Iran following changes in the Persian Gulf nation’s tax laws. Vagit Alekperov, Lukoil’s billionaire chief executive officer, said he plans to meet with Iran’s Oil Minister Bijan Namdar Zanganeh when the Organization of Petroleum Exporting Countries gathers in Vienna in December. 

Iran: Iran plans to increase crude output by 2 million barrels a day from about 50 energy projects slated for investors at a conference in Tehran next month, National Iranian Oil Co. Managing Director Roknoddin Javadi said. The package will also aim to boost natural gas production by 7 billion standard cubic feet, Javadi said at a conference in Berlin Thursday. Oil production is now about 2.8 million barrels a day, data compiled by Bloomberg show. Iran has the world’s largest gas reserves and the fourth largest oil reserves, according to BP Plc figures. Iran will need $30 billion of investment over five years to boost oil production, starting with about 350,000 barrels of new output next year, Goldman Sachs Group Inc. said in a report Thursday. 

OPEC / Russia: Russia would be ready to meet OPEC and non-OPEC oil producers to discuss the situation on global oil markets, Russian Energy Minister Alexander Novak told reporters on Saturday. "If such consultations are to happen we are ready to take part," he said. Novak added there were plans for Russian officials to meet ones from Saudi Arabia at the end of October and that he saw a good chance of Russia returning to Iran. 

Saudi Arabia: Saudi Arabia's PetroRabigh will launch the bidding process on Monday to build new units, including one to produce clean fuel, at its petrochemical and refining complex in Rabigh, it said on Sunday. It will launch engineering, procurement and construction (EPC) tenders for a polyether polyols plant with a capacity of 220,000 tonnes per year, a 17,000 barrels per day naphtha treating unit to produce clean fuel and a 106,000 tonnes per year sulphur recovery unit (SRU), it said in a bourse statement. 

Syria: It took more than a letter from Syrian President Bashar al-Assad to convince his Russian counterpart Vladimir Putin to send its air force to fight the Islamic State (Isis) in the country. Russia now reportedly enjoys an exclusive oil and gas exploration access in Syria. According to a report in WorldNetDaily (WND), the Syrian regime has reached an understanding to give an "unrestricted" access to the Russians to explore oil and gas in the country. "The silent agreement extends beyond the multi-million-dollar deal Syria signed in 2013 with Russian company Soyuzneftegaz for exclusive offshore drilling, development and production pertaining to a 2,190 square kilometre bloc of Syria's territorial waters,"  Jerusalem bureau chief of WND, Aaron Klein, revealed in a recent report. 

Rest of the World

Brazil: Brazil produced a record amount of oil in August, surpassing a previous high set in December 2014, oil agency ANP said on Thursday, as giant offshore oil deposits come onstream. Oil production reached 2.547 million barrels per day in August, an increase of 9.5 percent compared to a year earlier and 3.3 percent compared to the previous month. Production of oil and gas reached 3.171 million barrels of oil equivalent per day in August, also a new record. 


Brazil: Andes Energia, the Latin American E&P group, announces the termination of its joint venture agreement in Brazil. 'We have previously indicated that Brazil was not the focus of our development activities and we have now, mutually agreed with our partner in Brazil, to terminate the joint venture agreement without further obligations.' 

Finland: Finland's gas utility Gasum said on Friday it has dropped plans to build a regional liquefied natural gas (LNG) import terminal and a gas link to Estonia, citing declining gas demand and poor economics of the two projects. The decision would benefit Russia's Gazprom, Finland's sole natural gas supplier, which also has a 25 percent stake in Gasum. The government, which has the remaining 75 percent stake in Gasum, said the Nordic country can still apply with Estonia for European Union's financial support to build the pipeline across the Gulf of Finland. 

Malaysia: Lundin Petroleum announced Friday that its wholly owned subsidiary Lundin Malaysia BV has spud the Mengkuang-1 exploration well in license PM307, offshore Malaysia. The well, which will be drilled by West Prospero (400’ ILC) to a total depth of approximately 4,265 feet below mean sea level, will target hydrocarbons in Miocene aged sands around 46 miles northwest of the Bertam field, which is operated by Lundin Malaysia. Drilling operations are expected to take approximately 30 days. Lundin Malaysia holds a 75 percent working interest in PM307. PETRONAS Carigali Sdn Bhd holds a 25 percent working interest. Lundin Malaysia operates blocks PM307, PM319, PM308A, PM308B, PM328 and SB307/308 in Malaysia. 

Norway: The Norwegian Petroleum Directorate announced Friday that Maersk Oil Norway AS has made a minor gas/condensate discovery near the Tyrihans field in the Norwegian Sea. A preliminary estimate of the size of the discovery is between 52.97 million and 105.94 million cubic feet of recoverable oil equivalents. An assessment shows that the discovery is not profitable today. As a result, the well will now be permanently plugged and abandoned. 

Russia: Russia, the world's top oil producer, may see its oil production fall by 7-8 million tonnes next year if a previously agreed cut in taxation was not implemented, Russian Energy Minister Alexander Novak told reporters on Saturday. He said at a conference in Sochi that the Finance Ministry had proposed to keep the oil export duty calculation unchanged next year instead of the agreed cut. 

United Kingdom: British Prime Minister David Cameron said Volkswagen was wrong for cheating diesel emissions tests and that he did not rule out re-examining subsidies for diesel cars, The Sunday Telegraph newspaper reported. In his strongest comment to date on the crisis at the German car maker, Cameron was quoted as saying in an interview that Volkswagen "was wrong to break the rules" over emissions. 


USA: A bill to lift the 40-year-old ban on U.S. oil exports passed the Senate Banking Committee on Thursday, but the future of the measure is uncertain in the full chamber, after a controversial amendment was added to it. The bill, sponsored by Senator Heidi Heitkamp a Democrat from oil-producing North Dakota, passed 13 to 9. Heitkamp was the only Democrat to vote for the measure. Senator Pat Toomey, a Republican of Pennsylvania, added an amendment to the bill that would make Iran compensate U.S. victims of Iranian backed terrorism, language that senators said would doom the bill's future. 


USA: Technip was awarded by Shell Offshore Inc. a contract for the development of subsea infrastructure for the Stones project. Included in the service are two subsea production tie-backs to the Floating Production, Storage and Offloading (FPSO) vessel. The Stones field is located in the Walker Ridge area in the US Gulf of Mexico, at a water depth of 2,930 meters along the pipelay route. 

Energy Prices

Crude Oil ($/BBL)

Brent: $ 48.42 +0.60%
WTI: $ 45.81 +0.59%
OPEC Basket: $ 44.66 +0.00%

Natural Gas ($/MMBTU)
Henry Hub: $ 2.46 +0.41%

Steel ($/MT)
Steel Billet: $ 165.00
(LME Official – 3 months Buyer)

€ 1 = $ 1.1238 +0.32%


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