PETROL & ENERGY IN THE WORLD 05.05.2015


Brent crude oil futures slipped towards $66 a barrel on Tuesday, falling from a 2015 high, as Saudi Arabia considered halting bombing in Yemen to allow the delivery of aid, which eased concerns about oil supply from the Middle East.

A stronger U.S. dollar also weighed on the dollar-denominated commodity, while investors waited for data on U.S. commercial crude oil inventories later this week for more direction.Brent crude oil futures slipped by 8 cents to $66.37 a barrel by 0215 GMT, after touching a 2015 high of $67.10 on Monday.U.S. crude oil futures fell by 8 cents to $58.85 a barrel.

"The stronger U.S. dollar and also news out of Saudi Arabia that they are halting the bombings in Yemen are two push-pull factors affecting the oil prices at the moment," said Ben Le Brun, a market analyst at OptionsXpress in Sydney.

The Saudi foreign minister said on Monday the Saudi-led Arab alliance conducting air strikes against Houthi fighters in Yemen was considering calling a truce in specific areas to allow humanitarian supplies to reach the country.

Investors are also waiting for inventory data out of the United States later this week, Le Brun said. "Obviously if we see a further tightening in supplies in the U.S., then that might be a catalyst to drive prices higher." 

 

Africa

Chad: Following improved security situation in the North Eastern part of the country, the Nigerian National Petroleum Corporation (NNPC) has said that it will soon resume oil exploration in the Chad Basin. The corporation's Group Managing Director, Joseph Dawha, disclosed this at the weekend at the 21st Annual General Meeting of the Integrated Data Services Nigeria Limited (IDSL), an NNPC subsidiary that is carrying out the seismic data acquisition in the Chad Basin. On IDSL's performance, Dawha said that inspite of the challenge of funding as a result of the fall in crude oil prices, the company's performance is encouraging as it recorded a 32 per cent revenue growth. IDSL's Managing Director, Victor Briggs, said the company, which was incorporated in 1988, is expanding its operations beyond the shores of Nigeria to the neighbouring West African countries and other emerging oil producing countries in Africa. Its services include provision of seismic data acquisition, processing and interpretation as well as petroleum and reservoir engineering data evaluation, computer and other ancillary services. 


Egypt: Egypt has issued a five-year tender to lease a second LNG import terminal, the head of the state gas board told news agency Reuters on Monday. "We launched yesterday a tender to lease a second LNG import terminal for a period of five years. We have sent it to eight international companies and we expect to get a reply within a week," Khaled Abdel Badie told the news agency in a telephone interview. Late last month, Hoegh Gallant floating storage and regasification unit (FSRU) from Norway's Hoegh LNG commenced commercial operations. The FSRU arrived in Egypt on the Gulf of Suez in early April. In November last year, Hoegh LNG finalised a five year deal with EGAS to supply FSRU by the end of first quarter of 2015. Höegh LNG had signed a Letter of Intent (LOI) with EGAS in May last year for the use of one of its FSRU as an LNG import terminal in the port of Ain Sokhna, located on the Red Sea's Gulf of Suez. The FSRU was scheduled to start operations in the third quarter of 2014 but was delayed. 

Libya: Libya's Hariga oil port plans to export 7 million barrels of crude in May, the state port operator said on Monday. Exports in April were 5.6 million barrels of crude, the operator AGOCO said in a statement. 


Morocco: Morocco's sole oil refiner Samir said on Monday it had obtained 3.1 billion dirham ($319 million) of loans via an agreement with Banque Centrale Populaire (BCP) , one of the country's three biggest lenders. Samir posted a record net loss of 3.42 billion Moroccan dirham in 2014, mainly due to inventory revaluations after oil prices fell. The company shares have lost more than 40 percent over the last 12 months on the Casablanca stock exchange. The shares opened 1.9 percent up after the loan announcement on Monday.The agreement with BCP includes a 1.2 billion dirham medium-term loan facility, 1 billion of opening credit lines and 800 million dirhams of banking facilities, a statement from Samir said.Another 100 million dirhams were granted to Samir's distribution subsidiary SDCC (Societe de Distrubution de Carburants et Combustibles). The $600 million will be used to finance crude oil and its derivatives purchases from February 2015. 

Nigeria: Oando Energy Resources (OER) saw its Q1 capital expenditures on OMLs 60 to 63 totaled $20.8 million. Capital expenditures included $10.8 million spent on development drilling and completion activities in the Ogbainbiri Deep 4 well and $4.6 million was spent on pipeline upgrades. In addition, the company spent another $5.4 million on other capital maintenance projects, moveable assets and geophysical exploration studies. For the remainder of the year the company estimates that $35.6 million will be expended on crude oil related projects and $24.1 million on gas projects in the OMLs 60 to 63 areas. The anticipated crude oil development expenditures include significant investment in environmental and safety projects, new development drilling, and completions and recompletions of previously drilled wells. Planned natural gas projects consist of drilling and completing new wells, along with enhancements to natural gas facilities and pipelines. 

 

Middle East

Iran: An American delegation is expected to visit Iran this week to discuss various energy related issues. A delegation of oil dealers and investors is scheduled to have a business tour of Iranian oil industry and meet with Iranian authorities this week, Mehr News Agency reported Monday. Deputy petroleum minister of Iran, Abbas Sheri-Moghaddam, who confirmed the news, said he expects more cooperation with US companies on Iran’s oil and gas projects after the removal of sanctions. “It is predicted that following the visit by the American delegation to Tehran and possible removal of sanctions against the oil industry, we will witness the presence of major international US oil and gas companies in Iran in future,” Sheri-Moghaddam said. The minister added that some European-American companies have also expressed interest in participating in new petrochemical projects in Iran.  Companies from Germany, Italy, and the Netherlands are willing to invest in petrochemical projects of Iran, he said. 

Oman: Duqm Refinery has announced that Galfar Engineering and Contracting SAOG has been awarded the tender for site preparation work for its upcoming refinery at the Special Economic Zone in Duqm. Site preparation work is expected to start in the second quarter of 2015 and complete during the second quarter of 2016. The site preparation work comprises the excavation and compaction of more than 12 million m3 of soil, and will lay the groundwork to commence refinery construction in 2016. Once the refinery is completed, it will have the capacity to process around 230,000 barrels of crude oil per day. Diesel, jet fuel, naphtha and LPG are to be its primary products. Duqm Refinery will be one of the growth engines for the special economic zone. It will provide development opportunities for new projects that will directly and indirectly interface with the refinery. These projects will look to benefit from the refinery’s products as well as provide different logistic services to the refinery. 

OPEC: Oil supply and demand don’t fully justify the 60 percent drop in prices between June and January as speculation also played a role, OPEC said. A rise in supply from outside the Organization of Petroleum Exporting Countries at a time when demand for oil was weak was the main reason for the drop, OPEC said in its monthly bulletin on Monday. Brent oil, benchmark for more than half of the world’s crude, tumbled from mid-June to a six-year low in January as U.S. output climbed to the highest level in more than four decades and OPEC members pumped more barrels. OPEC’s interest is different from that of traders in the market as hedge funds and speculators need prices to fluctuate to make profits, OPEC said. “The stability that OPEC and other energy stakeholders seek is of no help to them and severely limits their scope for gain,” OPEC said. 

Saudi Arabia: Saudi Arabia has instructed national oil company Saudi Aramco to cut jet fuel prices for airlines using airports in the kingdom, according to a cabinet meeting on Monday. Accordingly, jet fuel prices will be cut by 15 halalas ($0.04) per litre at Riyadh and Jeddah airports and by 20 halalas per litre at other airports. The national carrier, Saudi Arabian Airlines, unlike other airlines, receives subsidised jet fuel. 

Saudi Arabia: Sadara Chemical Company (Sadara) and Energy Chemical Sources Company (ECSC), a newly formed joint venture between Halliburton and TAQA, have signed a 20-year supply agreement, the companies said on Monday. Through the agreement ECSC will purchase product from Sadara to feed a new chemical production facility to be built in PlasChem Park located in Jubail Industrial City II. PlasChem Park is a 12 km2 industrial park that is being developed under the collaborative efforts between Sadara and the Royal Commission for Jubail and Yanbu (RCJY). Under the agreement, Sadara will supply Ethylene Oxide (EO) and Propylene Oxide (PO) to the new ECSC facility in PlasChem Park over a period of 20 years. ECSC is a local Saudi company that specialises in providing oilfield chemicals for the oil and gas industry. 

UAE: United Arab Emirates energy firm Dana Gas posted a 73.3 percent drop in its first-quarter net profit on Tuesday due to lower hydrocarbon prices but said it was pressing ahead with an offshore gas project in its home country. The privately-owned energy firm made a net profit of $12 million in the three months to March 31, down from $45 million in the prior-year period, it said in a statement. The company is owed $243 million in Egypt, and $770 million in the Kurdistan region of Iraq as of March 31, Dana said. The company also said precomissioning work has begun on the Zora natural gas field in the UAE. The offshore Zora field is expected to produce up to 6,650 barrels of oil equivalent per day and "first sales remain on track for mid-year 2015," Dana said. The company's cash position declined to $144 million, compared with $184 million at the end of last year, partly due to expenditure linked to the remaining equity investments required for the Zora project, Dana said. 
 

Rest of the World

Australia: Drillsearch Energy and partner Santos have a new wet gas discovery on the Western Wet Gas Fairway of the Cooper Basin in Australia, the sixth from seven wells drilled in FY2015. The Emery-1 near-field exploration well in PEL 513was drilled to a total depth of 3,262 metres. Drillsearch’s preliminary petrophysical interpretation of wireline logs calculated approx. 18.6 metres of net pay across several zones in the Patchawarra Formation with a gross interval of 533 metres and approx. 7.7 metres of net pay in the Tirrawarra Sandstone with a gross interval of 37 metres. In addition to the conventional pay, several zones with potential for unconventional pay were also observed, Drillsearch said. Based on the results of this preliminary analysis, Emery-1 has been cased and suspended as a future gas producer. Emery-1 is located 7 kms and 10.3 kms southeast of the Moonanga-1 and Raven-1 wells respectively, both of which are producing gas fields operated by Santos. The new discovery is also located close to the Santos-operated Gidgealpa oil and gas fields to the northeast. 

Azerbaijan: Following the completion of transaction between Norwegian Oil and Gas company Statoil and Malaysian Oil and Gas company Petronas regarding the sale of Statoil’s 15.5% participating interest in the Shah Deniz production sharing agreement, 15.5% in the South Caucasus Pipeline Company (SCPC), and 12.4% share in the Azerbaijan Gas Supply Company (AGSC) and in accordance with the relevant agreements signed on December 17, 2013 State Oil Company of the Republic of Azerbaijan (SOCAR) starting from May 1, 2015 has assumed operatorship of AGSC and commercial operatorship of SCPC. President of SOCAR Rovnag Abdullayev said the transfer of operatorship of AGSC and commercial operatorship of SCPC to SOCAR is a very important milestone in the process of further localization of PSA projects activities in Azerbaijan. It is a clear recognition by global leading energy companies of tremendous achievements, which SOCAR has made possible in developing its corporate technical and commercial capabilities as well as human resources up to the world standards. 

Bolivia / Chile: Landlocked Bolivia went to the World Court on Monday, seeking to force Chile to negotiate the granting of a corridor of sovereign territory giving it access to the sea for its natural gas and mineral exports. Opening proceedings at the International Court of Justice in The Hague, Chile asked judges to throw out the lawsuit, saying the tribunal had no jurisdiction over the matter. Bolivia lost its coastal territory after being defeated by Chile in the 1880s War of the Pacific. However, it has argued for decades that it should be allowed sovereign access to the ocean, through which it could export its natural gas. Most of this is presently sold to Argentina and Brazil to its east. Bolivia currently has nearly free ocean access, paying transport costs but no tariffs to export some 1.6 million tonnes of cargo through Chile's ports each year, including nickel, lead, silver and tin from Bolivia's mines. It nonetheless wants judges to order Chile to negotiate fully sovereign access, saying the 1948 Bogota Pact, to which both states are parties, gives judges the authority to do so. 

Brazil: Brazil is considering lifting a requirement for its national oil company to operate all new projects in a deepwater region where exploration costs are some of the highest in the industry. Any changes to regulations for the so-called pre-salt area will have to go through Congress with lawmakers “open to alternatives,” Energy Minister Eduardo Braga said Sunday in an interview in Houston before the Offshore Technology Conference. The government is also giving Petroleo Brasileiro SA freedom to set fuel prices, he said. The state-run company known as Petrobras lost billions subsidizing gasoline and diesel imports in President Dilma Rousseff’s first term. Efforts to develop discoveries it already made has contributed to Petrobras becoming the world’s most indebted oil producer. Chief Executive Officer Aldemir Bendine said last week that under current rules any new pre-salt ventures would increase leverage. More participation from foreign operators is welcome, Braga said. 

Canada: Heavy Western Canadian Select crude’s discount to West Texas Intermediate shrank to the least since 2012 as a new pipeline started and production sites were shut for maintenance. The discount to the U.S. benchmark narrowed 25 cents to $8.50 a barrel Monday, the smallest margin since September 2012, according to data compiled by Bloomberg. The grade’s absolute price rose 3 cents to $50.43, the highest since Dec. 4. WTI futures fell 22 cents to $58.93 in New York. WCS strengthened as Enbridge Inc. said it filled a new 570,000-barrel-a-day pipeline last month and MEG Energy Corp. was said to plan maintenance at its 210,000-barrel-a-day Christina Lake oil sands site. Filling the Enbridge line “could provide some tightness for WCS,” Michael Loewen, commodity strategist at TD Securities, said in an instant message. You “got to fill the pipeline. That takes up volumes.” The Enbridge line will raise the amount of crude that can be shipped from Edmonton, in northern Alberta, to the storage terminals in Hardisty, in southern Alberta.

Canada: Whitecap Resources Inc. ("Whitecap" or the "Company") (TSX: WCP) is pleased to announce that it has successfully completed the previously announced acquisition of Beaumont Energy Inc. ("Beaumont") pursuant to a plan of arrangement (the "Acquisition") under the provisions of the Business Corporations Act (Alberta). Whitecap acquired all of the issued and outstanding common shares of Beaumont for consideration consisting of approximately $7.3 million in cash and 36.3 million common shares of Whitecap ("Whitecap Shares") and also assumed Beaumont's debt. 

Canada: Leading international oilfield services company, Expro, has secured a key contract offshore Canada with Statoil in the Flemish Pass Basin. The initial 4-year contract is valued at $45m with options for two 1-year extensions. The contract will include the provision of surface well testing and subsea safety systems, drill stem testing tools, tubing conveyed perforation, downhole sampling and on-site chemistry services. Expro is well established in eastern Canada, providing well testing and subsea services for 15+ years to key clients in the region. The local workforce is based in the company’s state-of-the-art operational facility in Paradise, Newfoundland, which opened in 2012. Earlier this year, Expro announced a $200m contract with Statoil providing fully integrated well testing and sampling services on the Norwegian Continental Shelf. 

China: China National Offshore Oil Corp (CNOOC) has exported its first diesel and gasoline cargoes in April and will ship out more in May, after winning government approval for overseas sales, industry sources said on Tuesday. CNOOC sold 30,000 tonnes of 50 parts-per-million (ppm) sulphur diesel and 15,000 tonnes of 92-octane gasoline with 10 ppm sulphur for loading in April, one of the sources close to the matter said. The refiner also sold similar volumes for both oil products for loading in May, the source said. 

China: Sinopec and PetroChina have denied media speculation that the Chinese government is looking to merge their companies to create a national oil giant. "Neither the company nor its controlling shareholder has ever received any information, written or verbal, from any government authority," Sinopec said, followed by a similar statement from PetroChina. The Wall Street Journal reported in February that Beijing was considering merging the two NOCs. 

India: Oilex will bring into production three wells in two separate fields in Gujarat, India in 2015, the company said in its quarterly report last week. Cambay-73 will come into production this month; Bhandut-3 production expected to commence in July and Cambay-77 production will start in August, Oilex said. Oilex will recommence gas production in Cambay field for the first time since early 1990’s. The company late last month said it has completed the Cambay-73 oil and gas production facilities in India’s Gujarat state on budget and ahead of schedule. Construction of the pipeline has commenced and it is expected to be at site ready for connection to the production facilities during May 2015 which will enable final commissioning to be completed, the company said. Cambay-73 will supply gas to a low pressure gas market in the vicinity of the Cambay field and is expected to produce approx. 50-60 boepd of gas and condensate. 

Norway: Yngve Slyngstad, who manages Norway's $900 billion wealth fund, has said many times in the past year that in a low-and even negative-interest rate world the wealth fund will not be able to hit its expected 4 percent real return. The real world impact is that fiscal spending will need to be checked. The Norwegian government has a self-imposed rule capping use of the fund's money in its budget to the expected return. That has meant increased spending each year, in krone-terms, as the fund has ballooned in size. The current minority coalition said in October it will use a record 164 billion kroner ($21.8 billion) in 2015, or about 3 percent of the fund. Slyngstad revealed Wednesday that in the first quarter the fund received the lowest amount of new capital in 16 years. The Finance Ministry transferred a mere 5 billion kroner ($662.5 million), a far cry from the 128 billion kroner in the third quarter of 2008 after crude prices peaked at about $147. Inflows are generated from taxes on oil and gas, petroleum field ownership and dividends from its majority stake in Statoil ASA, its biggest crude producer. 

Papua New Guinea: Kina Petroleum (KPL) on Monday announced the spudding of Raintree-1 exploration well in PPL 337 in Papua New Guinea. The well will be drilled to a target depth between 800-1000 metres, at which point logging operations will occur, the company said. The well is operated by Heritage Oil under a farmout agreement between Heritage and KPL, whereby Heritage will carry KPL through the drilling and, if appropriate, testing of the Raintree-1 and Kwila-1 wells. KPL will retain a 30 percent participating interest in the licence upon completion of drilling, and in the event of a discovery will benefit from a carry through a seismic program to appraise the field or fields. Raintree is designed to test a carbonate reef analogous to but younger than the reservoir in Elk/Antelope. 

Papua New Guinea: Neptune is pleased to announce it has been awarded a five year offshore diving and subsea inspection services contract by Oil Search (PNG) Limited, in Papua New Guinea. The contract, which commenced in April 2015, is for call out diving support services and also allows for the provision of Neptune’s other key capabilities. Diving works will be performed from a client supplied vessel or facility and for the duration of the contract Neptune equipment will be permanently held in PNG, at the Oil Search base in Port Moresby. Works will be focused primarily on the Kumul Marine Terminal, the oil export pipeline and CALM buoy with the option to include other Oil Search assets as required. 

Russia: With Siberia’s aging oil fields slowly running dry, Russia is turning to a natural gas by-product to help maintain crude production and meet President Vladimir Putin’s target of 10 million barrels a day. As companies including OAO Gazprom, OAO Novatek and OAO Rosneft get new Siberian gas fields up and running, they’re also boosting output of condensate, a prized, ultra-light form of crude that’s a common component of underground gas reserves. Condensate is especially important now because it’s not covered by sanctions on Russia’s oil industry that have targeted Arctic drilling and shale projects. Condensate production may reach about 600,000 barrels a day, or 5 percent of the total annual oil output, he estimated. That may help the country post another record high for oil production in 2015 and maintain its position as the world’s second-largest producer. Russia produced 526.3 million tons of oil and condensate in 2014, an average of 10.57 million barrels per day. It’s on track to beat that this year. Production in January reached a historic post-Soviet record of 10.7 million barrels per day, and output in March remained close to that level. 

Russia: Rosneft subsidiary Vankorneft produced the 100 millionth tonne of oil on the Vankor oil and gas condensate field in Russia. The field was launched in 2009. Advanced engineering solutions across all the stages of drilling, pumping, processing and transportation of Vankor crude contributed to the high output. Vankor has one of the industry-highest oil recovery factors, with the daily output of over 60,000 million tonne of crude. Oil is being produced via 395 wells across 41 clusters. The transportation is carried out via the company’s proprietary 556km long pipeline Vankor-Pupre with four oil pumping stations on it. Vankor’s infrastructure includes over 400km of infield pipelines, 120km of roads and over 1400km of power transmission lines. All the crude produced on the Vankor field complies with the commercial oil requirements and is delivered for transportation across the main oil pipeline system to the crude oil delivery and acceptance point Vankorsky. 

USA: Chemical compounds used to extract natural gas were found in three water samples from Pennsylvania’s Marcellus Shale region, according to a study published Monday in the Proceedings of the National Academy of Sciences. The contamination occurred at three Bradford County households whose owners settled a lawsuit with Chesapeake Energy Corp. in 2012 after natural gas polluted their well water. The additional chemicals may have mixed with groundwater after a pit leak from a conventional well or when nearby drilling drove them toward the aquifer, according to the study. “We’re not claiming that it’s from hydraulic fracturing,” Garth Llewellyn, a hydrogeologist at Appalachia Hydrogeologic & Environmental Consulting LLC, and the study’s lead author, said in a telephone interview Monday. “We’re not trying to make assertions where we shouldn’t be. We’re looking at all the possibilities.” In hydraulic fracturing, water and chemicals are blasted into rock formations to extract oil and gas. Drillers, which last month decried the first U.S. regulations for fracking on federal land, have argued the practice is safe and, along with conventional gas extraction, doesn’t jeopardize groundwater supplies. 
 
Energy Prices

Crude Oil ($/BBL)
Brent: $ 66.46 -0.02%

WTI: $ 58.94 -0.36%
OPEC Basket: $ 62.18 +2.07
%
 
Natural Gas ($/MMBTU)
Henry Hub: $ 2.81 +1.08%

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

Euro/USD
€ 1 = $ 1.1113 -0.93%


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