PETROL & ENERGY 08.07.2015

Almost $300 billion of planned LNG (liquefied natural gas) projects could be surplus to requirements, suggests a new report from the respected think tank Carbon Tracker Initiative. 

The London-based organisation says that there is some room for gas demand to grow while we remain within the “carbon budget” that will keep temperature increases to safe limits, but not as much as the gas industry believes. “We certainly don’t see any prospect of a ‘golden age of gas’, as the International Energy Agency suggested a few years ago,” said Anthony Hobley, CEO of Carbon Tracker.

“If the world is to stay within a carbon budget that limits global warming to the 2⁰C UN target, energy companies will need to be selective over which gas projects they develop,” says the report, Carbon supply cost curves: Gas capital expenditures.

“Gas is a complex fossil fuel,” said Hobley. “The gas industry argues that coal is the enemy and gas is part of the solution. Obviously there is a push to position it as a bridge to a low-carbon future and there is some basis for that, particularly in North America and Europe. There is some room for growth, but nowhere near as much as the gas industry would have us believe. Certainly in the LNG sector, most of the capacity that will be needed for the next 10 years has already been built." 



Egypt: Egypt and Russia's top oil producer Rosneft have signed two initial deals for the supply of petroleum products and liquefied natural gas to Cairo, the two sides said on Tuesday. The oil ministry said in a statement the deals include the supply of benzine and bitumen, as well as 24 LNG cargoes for state gas company EGAS over two years starting from the fourth quarter of 2015. Rosneft does not produce its own LNG yet but plans to launch production jointly with ExxonMobil after 2018. Under the terms of the agreements, Rosneft also plans to supply Egypt, the most populous Arab country, with liquefied petroleum gas (LPG), a step Rosneft said it hoped would lead to more deals to supply LPG to North Africa. 

Ghana: Tullow Oil Plc’s Ghana unit said an unplanned shutdown on a floating production vessel at its Jubilee field offshore Ghana has disrupted exports. Delivery “to the Ghana Gas onshore processing plant has been temporarily halted” by the shutdown on FPSO Kwame Nkrumah, the London-based company said in a statement. “We are working hard to reinstate gas export as a matter of priority.” Tullow last week raised its production forecast after a strong performance from its West African fields, including Jubilee. The company raised its guidance for 2015 to as much as 70,000 barrels of oil equivalent a day from a previous upper range of 68,000 barrels, it said on July 1. 


Ghana: Ghana Institute of Governance and Security (GIGS), a leading Non-governmental Organisation (NGO), has appealed to the former Secretary General of the United Nations (UN), Kofi Annan, as a matter of urgency to advise the government to withdraw the Petroleum Exploration and Production Bill 2014 from Parliament, to save the country from the unprecedented economic robbery in the name of investment. According to the NGO, if the bill is passed into law, it would amount to an economic suicide committed by the leaders of the West African second largest economy. (Selected by SPTEC Advisory from All Africa, July 7)     

Nigeria: Nigeria will pay out $3.5 billion to federal, state and local governments to reduce a growing backlog of debts and restructure short-term loans as Africa's biggest oil producer suffers from declining revenues, officials said. The finance ministry said late on Monday that Nigeria would release 359.37 billion naira ($1.81 billion) of liquefied natural gas (LNG) revenues to help ease the debt backlog, while the accountant general said it would share out $1.7 billion from its oil savings pot, Excess Crude Account (ECA). Nigeria splits its oil and gas revenues on a monthly basis but it received extra gas funds in June when the state-owned company Nigeria Liquefied Natural Gas Co remitted an additional $1.6 billion in tax to the government.     


Middle East

Iran: Oil production from Salman oil field that Iran shares with with the UAE in the Persian Gulf, has increased by 3,000 barrels per day. Head of Lavan operational zone Abbass Rajabkhani said due to sensitive conditions in the joint fields, the drilling activities, repair and maintenance of wells have thus far been going on continuously. He said wells No. 55 and 56 are in drilling stage and over the past two months, wells number 54 and 57 entered production phase, indicating an increase of 3,000 barrels per day.    

Kuwait: Kuwait's oil minister said on Wednesday that proceeding with a refinery project with China would depend on how it would benefit his country. "We are not ready to go ahead with the China refinery project unless it achieves sufficient benefit to us," Ali al-Omair told parliament. The minister appeared to be referring to stalled talks with China's Sinopec regarding a joint venture refinery in Zhanjiang, Guangdong province. 

Oman: Metso, a Helsinki, Finland-based company in the flow-control business, has been chosen by South Korean construction firm Daelim to ensure highly reliable emergency shutdown (ESD) valve operations for over 600 safety-critical valves being used in the expansion project at Orpic's Sohar Refinery. Daelim selected Metso's Neles ValvGuard intelligent solenoid valves to ensure that all safety actions can be implemented reliably on demand, if needed. In November 2013, a 50:50 joint venture of Petrofac, the UK-based international oil and gas services provider, and Daelim Industrial Co Ltd was awarded the US$2.1bn Sohar Refinery expansion contract.

Saudi Arabia: Saudi Arabia's Sadara Basic Services said on Tuesday that its parent firm signed a 14.13 billion riyal ($3.77 billion) deal with Saudi Electricity Company to supply electric power to its chemicals complex in Jubail Industrial City. The agreement signed by Sadara Chemical Company , the parent company of Sadara Basic Services, has a 20 year renewable term, a statement from Sadara said. Sadara Chemical Company is a $20 billion joint venture between state-oil giant Saudi Aramco and Dow Chemical Company. 

Rest of the World

Australia: Karoon Gas Australia Ltd. reported Monday the commencement of the high impact Levitt-1 exploration well in WA-482-P Carnarvon Basin, offshore Western Australia. Levitt-1 was spud 1230 AEST July 4. The shallow hole section has been drilled 239 feet (73 meters), in a water depth of 3,815 feet (1,163 meters) to the current depth of 4,140 feet (1,262 meters) Rotary Table  and the conductor casing has been set. The well is located to evaluate the deeper North Rankin and the shallower Legendre formations which are expected to receive hydrocarbons migrating from the oil mature source kitchen. A successful result would open up a new exploration play in the Carnarvon Basin. 

Australia: Australia's Horizon Oil Ltd. reported Tuesday the successful completion of the Maari Growth Project offshore New Zealand with the final well, MR10, now on production. The MR10 well has been successfully drilled and completed and, as of July 6, was flowing approximately 2,000 barrels of oil per day (bopd), with daily production of approximately 16,500 bopd. The final flow rate for MR10 will be optimized by the Operator, OMV New Zealand, based on engineering data collected as the well continues to stabilize. A total of four new production wells were drilled in the Maari Growth Program using the jackup Ensco 107 (400' ILC). The operator of the Maari joint venture anticipates the field’s production capacity to increase to approximately 20,000 bopd with the optimization of production from MR10 and an upcoming 2015 work-over campaign. 

Australia: Woodside Energy Ltd. and OneSubsea, a Cameron and Schlumberger company, jointly announce that OneSubsea has been awarded a front-end engineering and design (FEED) contract for the proposed Woodside-operated Browse FLNG Development offshore northwest Australia. A dedicated team of OneSubsea experts, operating out of OneSubsea’s Perth city office, will now work collaboratively with Woodside to fully define and determine the optimal subsea production system design and equipment requirements for the Browse FLNG Development.

Brazil: Brazil's state-run Petrobras must pay the government about 350 million reais ($112 million) more in royalties each quarter for oil produced in seven offshore fields under an arbitration ruling, the company said on Monday. The fields, 100 percent owned by Petroleo Brasileiro SA , as Petrobras is formally known, include three of Brazil's 20 biggest-producing concessions. Those three fields produced 273,000 barrels of oil and natural gas equivalent a day in May, about 10 percent of Petrobras' total Brazilian output. The preliminary ruling by an arbitration panel is a precautionary measure and does not touch on the merit of a claim by Brazil's oil regulator, the ANP, for another 2.2 billion reais in royalties dating back to the second quarter of 2014, Petrobras said in a statement. 

China: China will allow private domestic enterprises to bid for a handful of oil and gas blocks in the far-western region of Xinjiang, the Ministry of Land and Resources said on Tuesday, in an attempt to attracted diversified investment. Six blocks in oil-rich Xinjiang will be offered as part of a trial, the ministry said in a statement on its website. "There are plans to invite bids on blocks from the society in stages," the statement said, in a reference to non-state-owned firms. No further details were given, but a government oil and gas researcher said the blocks totalled 15,000 square km in size and have had very limited exploration work done, adding that the potential for big commercial finds are slim. Bidders are required to own net assets worth at least one billion yuan ($161 million) each, the researcher said. 

China: Triple Energy Ltd., an Australian oil and gas exploration company, provided Monday the following update on drilling activites at the Naioshan-1 well in the Bird Mountain area in China's Heilongjiang province. The first of two wells (Niaoshan-1), was spud in the Bird Mountain area June 28. It is located around 1.2 miles (2 kilometers) fromn the previous Xian Xian-1 well drilled by the Joint Venture in 2013. The well is targeting several major coal seams for intersection which will be cored for desorption analysis and tested. The well is currently drilling ahead having set surface casing and tested gas measuring equipment over the last week. As of 8 am July 6 the well has reached a depth of 220 feet (67 meters) measured depth. The well is planned to be drilled to a depth of approximately 4,265 feet (1,300 meters), which is expected to take around six weeks, inclusive of coring and testing. 


Denmark: 3i Infrastructure and AMP Capital have entered into an agreement to jointly acquire ESVAGT from Maersk Group and ESE-Holding A/S for DKK 4.1 billion (US$610 million). ESVAGT was founded in 1981 by ESE-Holding A/S. In 1991 the Maersk Group bought 50% stake in ESVAGT, and in 1998 the Maersk Group’s ownership share increased to 75%. The remaining 25% has remained with ESE-Holding A/S. Post completion of this transaction, which is anticipated by the end of Sep-2015, 3i Infrastructure and AMP Capital will hold 50% stake each in ESVAGT. ESVAGT, headquartered in Esbjerg, Denmark is a provider of offshore safety and support at sea primarily in and around the North Sea and the Barents Sea. The company has a fleet of 43 vessels. 


Korea: Hyundai Heavy Industries, the world’s biggest shipbuilder, announced that the company has jointly developed world’s first gas turbine-powered 174,000 m3 LNG carrier with GE Aviation and Marine (GE), a leading industrial gas turbine maker, and has secured Approval in Principle (AIP) on the vessel from the UK-based Lloyd’s Register. The IMO Tier III-compliant 174,000 m3 LNG carrier is equipped with GE’s gas turbine-based Combined Gas turbine Electric and Steam system (COGES 2.0). The vessel is expected to save shipowners or operators an estimated 20 billion Korean won ($17.83 million) on the assumption that the LNG carrier operates for 20 years with an annual operating cost of $720,000, since it does not need additional equipment to handle exhaust emissions.  


Peru: The presidents of Peru and Bolivia agreed to study a project that would grant Bolivia access to the Pacific coast of Peru by connecting into the existing pipeline from the Camisea Project (SPG). Antilles Oil and Gas NL is pleased to announce progress in the development of gas infrastructure in onshore southern Peru, specifically at Block 105 where Antilles holds 100% equity. The Presidential meeting on 23 June 2015 between Peru and Bolivia discussed the prospect of Bolivia linking into the South Peru Gas (SPG) pipeline project. The presidents of Peru and Bolivia agreed to study a project that would grant Bolivia access to the Pacific coast of Peru by connecting into the existing pipeline from the Camisea Project (SPG). The pipeline is scheduled to finish construction by March 2019 and will transport gas over the Andes to the coast from the Camisea jungle area.


USA: Royal Dutch Shell Plc's icebreaker vessel Fennica returned to the Dutch Harbor in Alaska with a small breech in the hull, raising concerns about the company's plan to resume drilling in the Arctic later this month. Shell said in June it plans to restart drilling for oil in the Arctic off Alaska as early as the third week of July after a conditional approval by the United States. Shell was given a conditional approval by the U.S. Department of the Interior in May to return to the Arctic for the first time since its mishap-plagued 2012 drilling season. 


USA: Swift Energy Co. is struggling to find buyers for a $640 million loan that will boost liquidity at the oil and gas explorer amid a renewed plunge in oil prices, according to three people with knowledge of the matter. Investors are demanding more than the 10.5 percent yield that’s being proposed on the five-year debt, said the people, who asked not to be identified because the information isn’t public. Oil prices have plunged 11 percent since a June 29 deadline for lenders to commit to the financing. Doug Atkinson, a spokesman for Houston-based Swift, didn’t immediately return phone calls and respond to an e-mail seeking comment. Tasha Pelio, a spokeswoman for JPMorgan Chase & Co., the bank arranging the financing, didn’t immediately comment. 

Energy Prices

Crude Oil ($/BBL)
Brent: $ 56.46 -1.17%

WTI: $ 52.01 -1.76%
OPEC Basket: $ 55.76 -3.94
Natural Gas ($/MMBTU)
Henry Hub: $ 2.71 -2.17%

Steel ($/MT)
Steel Billet: $ 115.00
(LME Official – 3 months Buyer)

€ 1 = $ 1.1008 -0.23%


Mehmet Akif Mah.Acun Sokak
New Palas No :21 D: 44
34760 Ümraniye / İstanbul / TÜRKİYE
Telefon: +90 216 418 22 03
Faks: +90 216 418 22 63

» US

700 Boulevard East 2E
Weehawken 07086 New Jersey US
Cell: +90 973 685 4949 || +1 973 704 7373
+1 973 685 5959