PETROL & ENERGY 15.05.2015


Oil pared its ninth weekly advance, the longest rising streak since trading started in 1983, amid speculation the market’s rebound to $60 a barrel will sustain a global supply glut.

Futures slid as much as 0.5 percent in New York, retreating for a third day. OPEC and U.S. shale explorers are set to expand production later this year, preventing further price gains, said Pierre Andurand, a hedge fund manager. Crude stockpiles in the U.S., the world’s biggest consumer, are more than 100 million barrels above the five-year seasonal average, government data show.

Oil’s rally from a six-year low in March is stalling as U.S. output remains near a record even as the nation’s rig count shrinks. Gulf members of the Organization of Petroleum Exporting Countries are boosting supplies as they escalate a battle to defend market share, the International Energy Agency said. The price recovery threatens to prolong the surplus, according to Goldman Sachs Group Inc.

West Texas Intermediate for June delivery declined as much as 27 cents to $59.61 a barrel in electronic trading on the New York Mercantile Exchange and was at $59.80 at 12:49 p.m. Singapore time. The contract dropped 62 cents to $59.88 on Thursday. Total volume was about 66 percent below the 100-day average. Prices have climbed 0.7 percent this week. 

 

Africa

Angola: Angola produced 158.9 million barrels of oil in the first quarter of 2015, or 1.76 million barrels per day, indicates a report from the Angolan Petroleum Ministry released in Luanda. The report specifies that production level fluctuations in the first three months of the year were “due to operational reasons.” The most recent Angolan government forecast set out in the proposed revision of the 2015 state budget indicates total production of 669 million barrels of oil this year, up 10 percent over 2014, equivalent to more than 1.8 million barrels per day. During the same three-month period Angola imported 1.1753 million tons of fuel, or nearly 40 percent of needs for derivative products such as petrol and diesel, due to the country’s low refining capacity. The Luanda refinery processed 574,400 tons of crude oil from January thru March, nearly a fifth of the country’s needs. 

Kenya: Kenya's Energy Regulatory Commission on Thursday raised the maximum retail prices of diesel, petrol and kerosene for the next month. Kenya, which has set a cap on prices of petrol, diesel and kerosene since 2010, lists maximum prices for each area of the country at mid-month and they remain valid for a month. 

Libya: Despite the ongoing battle in Libya Italian firm ENI has been able to keep its petroleum production flowing. The company has had some shut ins since the country’s civil war erupt but currently ENI’s production is exceeding pre-revolution levels. The company said that despite the many challenges in Libya it is producing around 300,000; about 20,000 bpd more than during former Libyan strong man Muammar Qaddafi’s regime. Recently the company’s CEO, Claudio Descalzi, had expressed his concern over Libya’s security conditions in the country but said despite the problems operations were continuing as normal.

Niger: Savannah Petroleum, Niger-focused oil and gas company, has found 14 drill-ready exploration prospects with estimated total gross unrisked mean prospective oil resources of 215mn barrels at Eocene and Upper Cretaceous reservoir horizons in R1/R2 Licence Area. The company said that detailed 3D seismic mapping over an approximate 680 sq km area of the permit , around eight per cent of the total R1/R2 area, also resulted in the discovery of additional 37 exploration leads along the north-west and north-east flanks of the permit. Seismic mapping has identified a series of potentially large exploration leads along a regional high at the Upper Cretaceous horizon, with potential closures of up to 40 sq km. The R1/R2 permit is situated in the oil prolific Agadem Rift Basin of South East Niger and covers an area of approximately 8,406 sq km. A dataset consisting of 11,583 sq km of modern 3D seismic, 18,610 km of modern 2D seismic, around 30,000 km of vintage 2D seismic and over 250 wells with logs and final reports is held by the Ministry of Energy and Petroleum. 


Nigeria: The Trans Nigeria Pipeline that carries Nigeria's Bonny Light crude oil to an export terminal has been shut down since May 12, a Shell spokeswoman said on Thursday. The company closed the pipeline, which has the capacity to carry around 180,000 barrels per day of crude oil to the Bonny Export Terminal, following a leak in the Ogoni area of Nigeria. Shell said the closure has not led to a force majeure declaration, but would not otherwise comment on exports. The expected duration of the closure was not immediately clear, but traders have said Bonny Light loadings were delayed by four to six days, and that some of the June-loading cargoes could be deferred to July as a result.


South Africa: South African labour unions said on Thursday they will oppose a proposal to partially privatise power utility Eskom, limiting options for the government to shore up the cash-strapped firm and resolve an energy crisis. The Treasury said on Wednesday it was asked by a government-appointed commission tasked with finding a solution to the crisis to look into several options, including a proposal to partially privatise Eskom or sell some of its assets in order to secure further funding to expand generating capacity. But the unions see any form of privatisation as a threat to jobs and efforts to extend access to the grid to more black South Africans. The National Union of Mineworkers, which also has members at Eskom, said in a statement "any intention whatsoever to sell Eskom or part of Eskom will be resisted. Eskom is not for sale." The ruling African National Congress (ANC) party would comment once the proposal was sent to the party for policy discussion, its secretary general Gwede Mantashe said on Thursday. 


Tanzania: Senergy (GB) has completed a technical evaluation on the resources of Kiliwani North Development License and Ruvuma PSA for Aminex in Tanzania. The technical evaluation revealed that the Kiliwani North Development License has a PMean Gas Initially in Place (GIIP) of 44 Bcf of which 28 Bcf (gross) booked as contingent resources. Aminex said that it expects to book its first categorized reserves in Tanzania upon signing of a Gas Sales Agreement and commencement of production. On the Ruvuma PSA evaluation tagged total Pmean GIIP for discovered and undiscovered resources of 4.17 Tcf, gross. The Ntorya 1 discovery attributed 153 Bcf Pmean GIIP of which 70 Bcf booked as contingent resources. Aminex’s four main drillable targets attributed 3 Tcf PMean GIIP. Those drillable targets are the Ntorya Updip, Likonde Updip, Namisange, and Sudi. Aminex says the basin remains significantly underexplored according to international standards and it is likely that as further development occurs on the license area additional leads will be identified and high graded to prospects. The company remains focused on the deeper water potential of the Nyuni Area PSA. The identified deep water leads are analogous to the numerous large discoveries to the east of the Nyuni Area license.
 

Middle East

Iraq: Kurdistan Alliance in the Iraqi parliament confirmed on Wednesday, that the federal government has deducted 457 billion dinars from the financial benefits to the region planned for April, noting that Baghdad did not comply with the terms of the oil agreement signed between Baghdad and Erbil.A member of the bloc, Amin Bakr told Shafaq News, that Kurdistan's oil exports for April is nearly 500 000 barrels of oil per day, and this imposed on the federal government to send one trillion dinars to Kurdistan region, it is strange that Baghdad has sent 543 billion dinars , that means it deducting 457 billion dinars from the region's share. Bakr added that the monthly salaries and other obligations of Kurdistan reign are up to about 850 billion dinars, adding that the regional government compensated the shortfall in fiscal revenue through borrowing from banks to pay the employees' salaries. The head of Kurdistan regional government , Nechirvan Barzani said yesterday, that the region has a substitute if the Iraqi government in Baghdad has not adhered to the oil agreement, renewing the region's commitment to this agreement.


Iran / UAE: Iran and the UAE have signed a preliminary agreement for export of compressed natural gas (CNG), an official has said.The two countries reached a final agreement under which Iran will transport gas on board CNG containers to the UAE, deputy head of the National Iranian Oil Refining and Distribution Company Mansour Riahi said. Iran's natural gas will be condensed in Assaluyeh on the Persian Gulf coast and carried by 40-foot carrier ships by the private sector, the Mehr news agency quoted him as saying. Riahi said another preliminary agreement for sales of CNG has been signed with Pakistan, although it will take time to implement this new method for gas exports. Iran and the UAE have already a gas deal but it has run into trouble amid claims of kickbacks and other corruption. The deal with UAE's Crescent Petroleum was signed in 2001 for exports of 17 million cubic meter of gas per day from Iran's Salman field in the Persian Gulf for 25 years.  Critics of the deal maintain that the price agreed is 14 times below the market value. The UAE is one of Iran's largest trade partners. It is a major gateway for re-export of goods to Iran but business has wilted under US-led sanctions.


Saudi Arabia: Jacobs Engineering Group has been awarded a four-year contract by Sadara Chemical Company (Sadara) for engineering, procurement and construction management (EPCM) services. Sadara is currently building the world’s largest chemical complex to ever be constructed in a single phase, with 26 world scale manufacturing plants, in Jubail Industrial City II, Saudi Arabia. Under the terms of the contract, Jacobs is providing both In-Kingdom and Out-of-Kingdom EPCM services to Sadara. The contract value was not disclosed. The In-Kingdom services are being delivered from Jacobs’ local operations in Saudi Arabia with support from its extensive global network. 


UAE / South Korea: The awarding of the 3 per cent stake to GS Energy in Abu Dhabi concession did not come as a surprise to analysts who said that the new deal would help South Korea in securing energy supplies. Abu Dhabi National Oil Company (Adnoc) on Wednesday awarded the contract to GS Energy to develop onshore oilfields, which produce 1.6 million barrels of oil per day and have a target of 1.7 million from 2017. The South Korean firm is the third company to be awarded the stake after Japanese Inpex Corp bagged a 5 per cent stake in April and French oil major Total 10 per cent in January. According to reports, GS Energy paid $676 million (Dh2.48 billion) to win the deal. A Chinese oil and gas company may win a further stake in the Abu Dhabi concession but the industry there may be focused on domestic consolidation before moving into new ventures in the Middle East, Bell said. Abu Dhabi is awarding new contracts after a deal with major western oil companies dating back to the 1970s expired in January last year.


UAE: Abu Dhabi National Oil Co has pegged offers for two naphtha grades lifting in July 2015 to June 2016 at premiums of $16 and $17 a tonne to its own price formula on a free-on-board (FOB) basis, industry sources familiar with the matter said on Thursday. These were nearly double the premiums for its January-December 2015 contract for the two grades, which were at $9 a tonne each. The Middle Eastern seller has offered low-sulphur naphtha at a $16 a tonne premium and splitter naphtha at a $17 a tonne premium for the new 12-month contract. Traders were expecting to receive the offers from ADNOC in the week of May 2 but holidays in Japan, followed by production problems at its Ruwais refinery, could have delayed the offers. Industry sources said on Tuesday that ADNOC has lowered the operating rate at its newly expanded Ruwais refinery to about 50 percent after a new unit encountered start-up problems. But overall naphtha sentiment has been hurt by ample supplies which prompted spot prices in Taiwan to flip into a discount for the first time this week since late January. ADNOC's current offers, although higher than its January-December 2015 contract, were down by at least 38 to 42 percent versus premiums for the same grades lifting August 2014 to July 2015. 
 

Rest of the World

Canada: Tamarack Valley Energy announced the acquisition of Wilson Creek Cardium Assets for C$54 Million (US$45 million).  The assets in aggregate are expected to add approximately 1.4 MBOE/d (45% light oil and NGLs) as of the closing date and includes 128 (88 net) total sections of land in the greater Wilson Creek / Alder Flats area. Tamarack has identified 40 net one-mile equivalent high quality, one year or less payout Cardium drilling locations using current strip pricing and current realized industry service costs. Tamarack will also acquire 100% ownership in facilities which includes a 6 MMcf/d gas plant, 1 Mbbl/d central oil battery and over 220km of emulsion and pipeline infrastructure. In aggregate, Tamarack has estimated the replacement cost of these facilities to be in excess of C$60 million. 


Japan: Average liquefied natural gas (LNG) spot prices for buyers in Japan fell to a two-month low in April, trade ministry data showed on Thursday, in another sign of slack global demand. Spot LNG contracted in April for delivery to Japan averaged $7.60 per million British thermal units (mmBtu), down from $8 a month earlier, less than half the level a year ago, the Ministry of Economy, Trade and Industry (METI) said. Spot cargoes booked earlier and arriving in April averaged $7.90 per mmBtu, up from $7.60 in March. Asian benchmark spot LNG LNG-AS stood at $7.40 per mmBtu last week, little changed from a month ago, as demand from end users remained subdued. Tokyo started surveying spot LNG prices in March 2014 to add transparency to the market amid concerns about rising fuel costs in the wake of the shutdown of nuclear plants after the Fukushima crisis. The average spot price is based on around 10 percent of the nation's purchases of the super-chilled fuel. The trade ministry survey looks at samples of fixed prices for LNG sold to power companies and utilities among others, and excludes spot deals linked to benchmark prices such as the U.S. natural gas Henry Hub index. 


Malaysia: Malakoff Corporation Bhd , Malaysia's largest independent power producer, will explore opportunities to buy power assets, including those from state development fund 1MDB, its chief executive said. Asked if Malakoff was interested in 1MDB assets, CEO Syed Faisal Albar told reporters: "Yes, we are interested to grow the business whichever way it is as long it fits our profile and desires. Good return - we will look at it." Malakoff and 1MDB are not currently in talks about potential deals, he added. 1MDB, long dogged by controversy over its $11.8 billion debt and investment decisions, has been looking at a $3 billion listing of its Edra Global Energy unit although this has been delayed several times. Faisal Albar was speaking after Malakoff made a lukewarm debut on Malaysia's bourse on Friday. 

Mexico: Mexico’s oil sector regulator CNH approved the call for bids for its next package of contracts covering 26 onshore areas. The onshore oil and gas areas to be tendered are spread across five states and contain 2.5 BBOE in 3P reserves. The onshore areas range in size from about 7.7 sq km to 60 sq km and will be tendered as 26 individual license contracts. Winning bids will be announced on 15-Dec-2015. Crude oil output from the areas could reach 35 Mbbl/d while natural gas production could total 225 MMcf/d, officials from the national hydrocarbons commission (CNH) said. 


Mexico: Mexican state oil company Pemex said on Thursday it has signed a contract with South Korea's Hyundai to sell the company crude in the second half of this year. A Pemex spokesman said the contract calls for 5 million barrels to be sold to Hyundai Oilbank Co Ltd, mostly heavy Maya crude as well as some of Pemex's Isthmus light crude. "The contract remains open for additional sales," the spokesman added, who spoke on condition of anonymity in line with company policy. Hyundai Oilbank Co Ltd is a major producer and distributor of oil and refined products in South Korea, and is part of conglomerate Hyundai Group. In March, the head of Pemex's trading arm PMI said that by the end of this year the company expected to double crude exports to South Korea, one of the firm's top markets as it seeks to diversify its sales away from the United States. 


Mexico: Petroleos Mexicanos abandoned a third rig contract with Paragon Offshore Plc this week as the state-owned oil producer reduces spending after prices collapsed. Paragon received notice this week that Pemex will return the L781 jack-up rig after services weren’t approved, a week after receiving two other early termination notices, Andrew W. Tietz, senior vice president of marketing and contracts at the Houston-based provider, said on an earnings call Thursday. Pemex also terminated service and drilling contracts with Diamond Offshore Drilling Inc. in February after announcing $4.1 billion in budget cuts this year. Pemex’s Exploration and Production Director Gustavo Hernandez was temporarily reassigned Wednesday to a new role within the company a week after a rig collapse killed two workers in the Gulf of Mexico. Seven workers died and at least 238,000 barrels of crude were lost after anexplosion at a Pemex rig on April 1. 


New Zealand: Oil and gas operator TAG Oil Ltd., listed on the Toronto Stock Exchange (trading symbol TAO), and in the US on the OTCQX Market (trading symbol TAOIF), reports that pipeline construction connecting the Cheal-E development area to TAG's main Cheal-A production infrastructure is nearly complete. The TAG-led, NZ$4.5 million (US$3.3 million) project was completed on budget and ahead of schedule. The 4" pipeline connecting the new Cheal-E site to TAG's Cheal-A site production facility is undergoing pre-commissioning and rigorous testing now. It will shortly, over the next week, move into the commissioning phase, at which point a three-phase well stream of fluids (oil, gas and water) will be processed through the Cheal-A site production facility. In addition to the pipeline installation, an 11 kV HV electrical cable and a fibre optic cable have been installed to improve the power supply and communications between the Cheal-E and the Cheal-A production sites. 


Norway: Eni Norge AS (Eni) is the operator of the Goliat field, which is an oil and gas field located on the Tromsøflaket bank around 85 km north-west of Hammerfest. The field is being developed using a floating production, storage and offloading (FPSO) vessel of the Sevan 1000 type, along with subsea well templates. Eni has applied for consent to perform manned underwater operations as part of the installation of the facility on the field. The operations will also include the installation of risers. Water depth at the site is 370 metres. The facility has a draft of 19 metres and the underwater activities will not go deeper than 30 metres below the surface. The diving operations will be performed by Technip Norge AS, using the Technip Seahunter light diving craft. The operations will begin during the second quarter of 2015 and are scheduled to last for 26 days. The PSA has now issued consent for the manned underwater operations that Eni has applied for. 


Peu: Peru on Thursday opened bidding for rights to develop the country's largest oil block from mid 2015, the country's energy regulator Perupetro said. The licence is currently held by Pluspetrol. The regulator said it would announce the winning bid on July 15. 


Ukraine / Russia: Ukrainian state energy firm Naftogaz has transferred a $30 million prepayment to Russia's Gazprom for gas supplies, a spokeswoman for Naftogaz said on Thursday. In April, Ukraine signed an interim deal for cheaper supplies of gas from Russia for the next three months, providing breathing space for both sides in a protracted wrangle over pricing.


United Kingdom: Providence Resources P.l.c., (PVR LN, PRP ID) the Irish based oil and gas exploration company, provides an update on its Polaris oil prospect in the Rathlin Basin, offshore Northern Ireland. Providence currently holds a 100% interest in the Polaris prospect, located in P1885 which is situated offshore the Antrim coast. Providence has recently completed an assessment of satellite oil seep data acquired over P1885. These data have revealed the presence of two large seeps c. 3.5 km northwest of the Polaris prospect. These seeps appear to be related to faulting and may provide direct evidence of active oil migration from potential Lower Carboniferous source rocks. Accordingly, as part of its licence commitments and to minimize ongoing costs, Providence has relinquished c. 70% of P1885, retaining what it considers to be the most prospective area over the Polaris prospect. Separately, appraisal well planning is ongoing on the Rathlin Energy-operated Ballinlea oil discovery, which is located in the adjacent onshore exploration licence. 

USA: Cheniere Energy announced an FID for its liquefaction project (CCL Project) near Corpus Christ in Texas. The company has issued a 'notice to proceed' to Bechtel to construct first two natural gas liquefaction trains. The CCL Project is designed for up to three trains with expected aggregate nominal production capacity of approximately 13.5 MMTPA, three LNG storage tanks with capacity of approximately 10.1 Bcfe, two LNG carrier docks and a 22-mile, 48" natural gas supply pipeline. The first train is expected to start operations as early as 2018, with the second train expected to commence operations approximately six to nine months thereafter. Total project costs of approximately $11.5 billion for the first two trains, two LNG storage tanks, one dock and the natural gas supply pipeline will be funded with approximately $3.1 billion of project equity and approximately $8.4 billion of debt. 


USA: Shell Midstream Partners LP has signed an agreement with Shell Pipeline Company LP to acquire additional interests in the Zydeco Pipeline Company LLC (Zydeco) and Colonial Pipeline Company (Colonial) for $448 million. Shell Midstream will acquire 19.5% interest in Zydeco and 1.38% interest in Colonial. Post-acquisition, the company will hold 62.5% interest in Zydeco and 3% interest in Colonial. Shell Pipeline Company LP is a wholly owned subsidiary of Royal Dutch Shell and Shell Midstream is a master limited partnership formed by Royal Dutch Shell. The transactions are the Partnership's first acquisition since its IPO in Nov-2014. 


USA: The US Energy Department last week announced that it has issued a final authorization forDominion Cove Point LNG to export domestically produced LNG to countries that do not have a Free Trade Agreement (FTA) with the United States. The Cove Point LNG terminal in Calvert County, Maryland is authorized to export LNG up to the equivalent of 0.77 billion standard cubic feet per day (Bcf/d) of natural gas for a period of 20 years, Energy Dept. said in a press note published last Thursday. Dominion Cove Point has contracts to export LNG to Japan and India, both of which are non-FTA countries. Federal law generally requires approval of natural gas exports to countries that have an FTA with the United States. For countries that do not have an FTA with the United States, the Natural Gas Act directs the Department of Energy to grant export authorizations unless the Department finds that the proposed exports “will not be consistent with the public interest.” 


USA: The U.S. Energy Department cautioned Freeport LNG Development LP against signing up Chinese customers for the company’s planned liquefied natural gas export terminal in Texas, Chief Executive Officer Michael Smith said. In return for signing LNG purchase agreements, Chinese buyers demand equity stakes, which they say are required by their lenders, Smith said. Aside from Cheniere Energy Inc.’s Sabine Pass terminal, which has an investment from a Hong Kong-based company, no U.S. export projects have disclosed Chinese customers, according to ADI Analytics LLC in Houston. That contrasts with Canada, where Chinese investors are key backers of export projects. A glut of natural gas production from shale reservoirs has spurred dozens of projects to export LNG. The U.S. may become a net exporter of gas by 2017, government data show. In China, the third-largest market for LNG, demand for gas as a cleaner alternative to coal and oil for power generation is rising. 
 
Energy Prices

Crude Oil ($/BBL)
Brent: $ 66.66 +0.18%

WTI: $ 59.74 -0.60%
OPEC Basket: $ 62.49 +0.00
%
 
Natural Gas ($/MMBTU)
Henry Hub: $ 3.00 +2.04%

Steel ($/MT)
Steel Billet: $ 305.00
(LME Official – 3 months Buyer)

Euro/USD
€ 1 = $ 1.1384 +0.28%

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