PETROL & ENERGY 06.11.2015


Just as the energy industry has brushed aside concerns that the world could run out of oil, industry executives now say they believe it is demand, rather than supply, that is nearing its apex.

In 1985, Ian Taylor, today the chief executive of the world's largest oil trader Vitol, was part of a team at Royal Dutch Shell that forecast oil prices would rise five fold to $125 a barrel in 2015 as global reserves were expected to become more scarce. Now he says it is unlikely to ever reach those levels again.

Oil today stands at around $50 a barrel, having more than halved since June 2014 after global supplies dramatically rose due in large part to the U.S. shale oil boom but also due to the unlocking of huge offshore reserves in Brazil, Africa and Asia.

"We all talk about 'peak supply' and maybe with shale that is becoming a disabused concept. I have begun feeling that... we are coming to peak demand towards 2030," Taylor said on Wednesday at The Economist Energy Summit in London.

"I believe we may not see $100 (a barrel) ever again," Taylor said. 

 

Africa

Angola: The strategic and operational partnership between Sonangol and Italian oil company (ENI) has been further reinforced since Wednesday, as a result of an agreement signed in Rome, Italy, between the two companies. The Understanding "embodies the effort and commitment of Sonangol to work for the continuous improvement of attractiveness in developing the Angolan oil industry", said Sonangol in a note that reached Angop this Thursday. The document informs that the agreement was signed by the Chairman of Sonangol Board of director, Francisco de Lemos Maria, and by his ENI counterpart, Cláudio Descalzi. 

 
Congo: Eni S.p.A. announced Thursday that a new discovery of gas and condensates has been made offshore Congo in the exploration prospect of Nkala Marine, located in Marine XII block. The discovery, which was realized through the Nkala Marine 1 well, could contain between 250 and 350 million barrels of oil equivalent in place, according to the Italian energy firm. During a production test, the well provided over 10 million cubic feet of gas and associated condensates per day. Eni intends to start the evaluation of Nkala Marine through new delineation wells, although no timeframe has been given as to when this development will occur. Through its subsidiary Eni Congo, Eni is the operator of Marine XII block with a 65 percent stake. Its partners in the block comprise New Age, which holds a 25 percent stake, and the Congolese state company Societé Nationale des Pétroles du Congo (SNPC), which holds the remaining 10 percent stake. 


Egypt: BP announced Thursday that it has signed an agreement with the Egyptian Minister of Petroleum to accelerate the development of the Atoll gas discovery, located in the North Damietta Offshore Concession in the East Nile Delta, offshore Egypt. Full field development of Atoll, which is estimated to hold 1.5 trillion cubic feet of gas resources and 31 million barrels of condensates, is expected to consist of two phases. The first phase will consist of two development wells tied back to existing infrastructure, with production expected to start up in 2018. Success of this first phase is expected to trigger additional investment and further wells to increase production.


Libya: Libya's Nafoura and Al-Majid oil fields, with a combined production of around 29,000 barrels per day, have been closed after Zueitina oil port was shut down, an energy official said on Thursday. Libya's National Oil Corporation has declared force majeure on the port after guards there said they would only allow tankers registered with the country's recognised government in the east to load crude. Omran Al-Zwei, spokesman for eastern Libyan oil unit AGOCO told Reuters the two fields were closed after the port decision by the Petrol Facilities Guard, a force commanded by federalist leader Ibrahim al-Jathran. 


Nigeria: An overhang of Nigerian crude oil for November loading began to ease on Thursday, traders said, but differentials were low, with high supply of oil and slack demand. A fall in futures prices and a strong recovery in gasoline refining margins has helped shore up demand for light sweet Nigerian crude oil, but slow sales up until now have kept differentials low. High freight costs and a high premium of Brent to Dubai DUB-EFS-1M has made West African oil less competitive for Asian buyers. Providing some support, there was lower supply from competing Libyan oil after the country's Nafoura and Al-Majid oil fields, with a combined production of around 29,000 barrels per day, closed following the Zueitina oil port being shut down, an energy official said on Thursday. 


Sudan: Oil-producing South Sudan appointed its second director for state-owned Nile Petroleum Corp. in about six months, tasking him with solving fuel shortages that have left pumps dry at gas stations across the capital. Machar Aciek Ader replaces Joseph Cleto Deng, who only took up the position in May, presidential spokesman Ateny Wek Ateny said Thursday by phone from Juba. Deng was fired by President Salva Kiir on Nov. 1 because of his failure to tackle the fuel crisis, Ateny said. “We have an issue really about the drop in prices of oil on the international market which delays the country in getting the U.S. dollars,” Ateny said. 
 

Middle East

Iran / South Africa: South Africa's deputy president will visit Iran to explore opportunities for co-operation in the energy sector with a view to attracting investment into a refinery Pretoria is planning to build, his office said on Thursday. South Africa is considering building an oil refinery that will process Iranian crude to bolster its petrol supply and reduce its dependence on foreign companies. Pretoria has said it will resume oil imports from Tehran "tomorrow" if sanctions are lifted but without its own refinery, it would have to rely on foreign oil companies who own refineries in Africa's most developed economy.

Iraq: The political authority for Iraq’s economic capital – has announced that it is in the process of establishing Basra Company, to attract foreign direct investment in key sectors, including oil, gas and infrastructure. Speaking at the Basra Oil, Gas and Infrastruture Conference, officials from Basra Council and Basra Governorate announced plans to develop under-utilised and degraded oil and gas fields, as well as a range of new infrastructure projects. Basra Governorate is home to 70% of Iraq proven gas reserves, estimated at almost 112tn cubic feet – the 12th largest in the world according to the US Energy Information Administration (EIA). Basra also contains 59% of the Iraq oil reserves. 


Saudi Arabia: Saudi Arabia nudged pricing higher for December sales of all its crude grades to Asia, where refiners that buy its oil are earning bigger profits. The world’s largest crude exporter cut pricing for U.S. customers as it fights to retain market share. State-owned Saudi Arabian Oil Co. increased its official selling price for Arab Light crude to Asia by 30 cents to a discount of $1.30 below the regional benchmark, the company said in an e-mailed statement. That beat expectations for a 25-cent increase, according to the median estimate of of six refiners and traders surveyed by Bloomberg this week. “Asia’s refinery margins are good, so the Saudis see enough demand to warrant slightly higher prices,” Ole Hansen, head of commodity strategy at Saxo Bank A/S in Copenhagen, said by phone. “They’re still pursuing the market share approach to keep up sales in the region.” 


UAE: In a bid to boost confidence in Abu Dhabi’s energy sector, the organisers of ADIPEC have revealed that 144 new companies were registered in the emirate’s oil and gas industry over the last 12 months. With the new additions, the total number of oil and gas companies operating from Abu Dhabi has now increased to 1,467, the Abu Dhabi Chamber stated. The figures were revealed during the opening press conference for Abu Dhabi International Petroleum Exhibition and Conference (ADIPEC) 2015 by senior industry professionals, who are part of the event’s organising panel. 

 

Rest of the World

Australia: Japan's Inpex Corp. announced Thursday the Inpex-operated Ichthys liquefied natural gas (LNG) Project off Australia safely completed the offshore pipelay for its 553-mile (890-kilometer), 42-inch diameter gas export pipeline that began in June 2014. It is the longest subsea pipeline in the southern hemisphere and the third longest subsea pipeline in the world. The gas export pipeline will deliver gas from the Ichthys Gas-condensate Field to the onshore facilities at Bladin Point near Darwin for processing. 



Canada: Enbridge Inc. reported a loss in the third quarter as one-time charges and a delay in startup of a pipeline to Eastern Canada dragged on earnings. Canada’s largest pipeline company reported net loss of C$609 million ($463 million), or 72 cents a share, compared with a loss of C$80 million, or 10 cents, a year earlier, according to a statement Thursday. Excluding one-time items, per-share profit missed by 3 cents the 50-cent average of 13 analysts’ estimates compiled by Bloomberg. Enbridge has been transferring assets to affiliates such as Enbridge Income Fund Holdings Inc. which contributed to C$351 million in costs in the quarter, along with C$654 million in one-time expenses related to changes in the value of derivatives. The delay of the reversal of Line 9, running from from southern Ontario to Quebec and initially expected to be in service in early 2015, and now will start deliveries in December, also contributed to lower adjusted earnings. 


Canada: TransCanada Corp. is scrapping plans for a marine terminal in Quebec as part of its Energy East pipeline, ending months of debate about oil shipments on the St. Lawrence River that has delayed the project. The company will amend its application with Canadian regulators for the C$12 billion ($9.1 billion) oil pipeline to reflect the change before the end of the year, TransCanada said Thursday in a statement. The project, which would carry 1.1 million barrels a day from Western Canada to a port on the Atlantic Coast, will still supply Quebec refineries owned by Suncor Energy Inc. and Valero Energy Corp. 


Indonesia: Indonesia's state-owned energy firm Pertamina plans to process more domestic crude oil in a bid to limit the impact on the country of declining production, a plight that is also affecting oil-rich neighbours Malaysia and Brunei. All three countries, which rely heavily on energy revenues, are running out of oil. Reuters research based on government, industry and consultancy data shows they could run dry within the next 25 years. (Selected by SPTEC Advisory from Rigzone, November 5)

Malaysia: Malaysia's national oil company Petroliam Nasional Berhad (PETRONAS) marked a milestone Wednesday, as it celebrates the success of achieving first oil and gas for Bukit Tua field and first gas for Kepodang field, two of its largest operated upstream projects in Indonesia. Director General of Oil and Gas from the Ministry of Energy and Mineral Resources of Indonesia, IG Nyoman Wiratmaja Puja presided over the ceremony, which was held at the Onshore Receiving Facility (ORF) in Gresik, East Java, Indonesia.



Russia / Ukraine: Russia's Gazprom has received $24 million from Ukraine in prepayment for gas, the company's chief executive Alexei Miller said in a statement on Thursday. He added that along with the prepayment received before, this would be enough for five days and will expire on Nov. 10.  



Russia: Russian gas processing and petrochemicals company Sibur said it has sold a liquefied petroleum gas (LPG) and light oil products terminal in the Baltic port of Ust-Luga and expects the new owners to expand the terminal's capacity by 30 percent. Sibur said it sold the terminal to an investment consortium for an undisclosed amount, which a company spokesperson said was roughly equal to the terminal's construction costs. Sibur previously said it cost about 20 billion rubles to build the facility. The terminal's capacity is expected to rise to 5.2 million tonnes from 4 million, including 2.4 million tonnes of LPG, up from 1.5 million, and 2.8 million tonnes of light oil products, an increase from 2.5 million, Sibur said. It didn't provide a timeline for the expansion but industry sources said it would take no more than two years. 


USA: Memorial Production Partners LP (MEMP) has completed an acquisition of the remaining interests in its oil and gas properties offshore Southern California, from a third party for approximately $101 million. The acquired interests in the transaction primarily consist of the 48.25% remaining working interests in 58 gross producing wells in three Pacific Outer Continental Shelf blocks in the Beta field, located in federal waters approximately 11 miles offshore the Port of Long Beach, California. The acquired interests also include the 48.25% remaining interest in associated facilities including (i) two combined production and drilling platforms, (ii) one production processing platform, (iii) a 17.5 mile long 16-inch diameter oil pipeline, and (iv) an onshore pump station, tankage and metering facility. 



USA: SandRidge Energy has agreed to acquire the assets of EE3 LLC for $190 million in cash. With this acquisition, SandRidge will have a material, derisked Niobrara Shale position in the North Park Basin, Jackson County, Colorado. The Niobrara Shale is characterized by numerous stacked pay reservoirs, proven production history, long-lived reserves and repeatable drilling results. The acquired acreage is largely concentrated in rural north central Colorado and ideal for pad drilling and efficient infrastructure installation. 

 
Energy Prices

Crude Oil ($/BBL)

Brent: $ 48.27 -0.80%
WTI: $ 45.55 -1.79%
OPEC Basket: $ 44.43 +1.12%
 

Natural Gas ($/MMBTU)
Henry Hub: $ 2.36 +4.42%

Steel ($/MT)
Steel Billet: $ 185.00
(LME Official – 3 months Buyer)

Euro/USD
€ 1 = $ 1.0869 +0.13%

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