Ophir Energy says that falling oil prices have pushed down the costs of oilfield services. “Service costs have fallen significantly and we expect this trend to continue”, the company says in its annual report. The London listed explorer is selectively exploiting this shift in the market: “seismic costs have now dropped to a third of 2014 prices and we commenced 3D acquisition in Myanmar in February 2015, where we have been able to triple the size of the survey for the same cost as originally budgeted”.

Wood Mackenzie, the industry intelligence firm, counsels that the pattern will soften the blow of budget cuts that are set to average 30% across the industry in 2015. “Company announcements of cuts, in particular those from Cobalt, Ecopetrol, Tullow and others that plan to slash investment by more than 70%, may give the false impression that exploration everywhere will grind to a halt”, Woodmac says in an intelligence note.

Those that hold exploration spending flat or make only modest cuts, such as BG, Chevron, Shell and Statoil, could yet achieve ‘more with less’. “The time is right for strong explorers to be counter-cyclical and increase their drilling in high-impact plays. Whilst overall well numbers will dip this year, it explains, it expects recovery in 2016 as many explorers seize their chance to drill at lower cost”.

Woodmac estimates exploration deflation will average 33%, “comprising three global elements that are locally compounded by favourable exchange rate moves:

Like-for-like costs will decline by 19%.
Simplification will save 5%.
Efficiency improvement will save 5%.
US dollar strength will save 4% overall, concentrated in areas of local currency weakness 



Angola: Cobalt International Energy (CIE) offered an update on its activities offshore Angola on blocks 20 and 21. On Block 20, the company’s Orca #2 appraisal well and DST results confirmed the presence of a large oil accumulation in the Sag section of the pre-salt. In addition, log and sampling evaluation results have confirmed the discovery of oil in the deeper Synrift reservoir of the pre-salt. The well was drilled 7 km from the Orca #1 discovery well and is Cobalt’s first appraisal well drilled on its significant 2014 Orca deepwater pre-salt discovery in the Kwanza Basin. Orca is the largest oil discovery found to date in the Kwanza Basin. Cobalt and its partners anticipate more appraisal activities in the future to determine Orca’s development and production potential. Cobalt, as operator, holds a 40% working interest in Orca. Over on Block 21, Cobalt is currently drilling the Cameia #4 development well. The company plans a continuous development drilling program at Cameia for the remainder of 2015 and early-2016. 

Angola: As a result of the fall in the price of crude oil in the global market, Angola is set to end petrol subsidies and increase the price of other fuels, the country’s finance ministry said on Thursday. A statement from the ministry said the drop in oil prices has adversely affected the finances of Africa’s second largest crude exporter. The statement added that the changes would come into effect on September 30. In February, Angola slashed spending in the 2015 budget, widened its fiscal deficit projections and said it would increase borrowing. The country imports most of its fuel due to insufficient refining capacity and it spent almost four per cent of its 2013 budget on fuel subsidies, according to the Angola Control Risks. Angola has increased fuel prices in recent months and has saved 110 billion kwanza ($1 billion) from reduced subsidies since October last year, the statement added. State-run oil company, Sonangol, will now determine the price of petrol, the finance ministry said. 

Cameroon: Drilling on the Tilapia PSC offshore Cameroon is estimated to begin in Q3 according to Noble Energy, the operator of the Tilapia PSC. Noble in its Q1 results said that the Cheetah Prospect was first on tap and it had executed a contract for a rig to drill the exploration well. The Cheetah, with unrisked gross mean resources of more than 100 million barrels of oil equivalent gross, is a four-way structure and represents the company’s first Cretaceous oil prospect in Cameroon.  Planned total depth of the well is 13,100 ft. The prospect comprises multiple Upper Cretaceous targets.

Comoros: AGR and SP Offshore Energy Services Ltd (SP Offshore) entered into a MoU under which AGR will provide a range of exploration services and the drilling of an ultra-deepwater (UDW) well off the Comoros Islands, between Mozambique and the Comoros. SP Offshore, through its subsidiary SPO E&P (Comoros) SARL, works exclusively for Western Energy (USA) and Safari Petroleum plc (Jersey) in the territorial waters of the Comoros Western Energy East Africa LTD (Western) & Safari Petroleum Indian Ocean Limited (Safari) were awarded a PSC in blocks 38, 39, and 40 in the Comoros in March 2014. It now plans a program of exploration studies including seismic interpretation, basin modelling, and resource assessments, followed by the drilling of an UDW exploration well. 

Libya: Libya's Nafoura oilfield has shut down due to a blockage in the pipeline linking it to the eastern port of Zueitina , a spokesman for the state operator AGOCO said on Thursday. Renewed protests have closed several Libyan oilfields and ports in the past two weeks as violence and a breakdown in state authority continues. The field's output was between 30,000 and 35,000 barrels per day (bpd), the spokesman said. Protesters demanding jobs this week stopped all crude flows to Zueitina. Zueitina was one of the few Libyan ports still exporting oil as the largest Ras Lanuf and Es Sider closed in December when clashes erupted between armed groups allied to Libya's two governments that are vying for control. While Zueitina was closed, a tanker left the eastern port of Hariga after lifting one million barrels of crude, an oil official said.A second tanker was about to dock at the port near the Egyptian border to lift 700,000 barrels, the official said, asking not to be named. 

Madagascar: ExxonMobil and Sterling Energy have relinquished the Ampasindava Block, offshore Madagascar. The two companies signed an agreement for the same with the Office des Mines Nationales et des Industries Strategiques. The decision followed a detailed subsurface re-assessment of the prospectivity of the block conducted by these companies. Sterling does not expect to have any liabilities associated with this relinquishment. 

Mozambique: Mozambique state oil and gas company Empresa Nacional de Hidrocarbonetos, or ENH, hired Standard Chartered Bank Plc to advise it on how to finance its stakes in two multi-billion dollar offshore gas projects. The bid from London-based Standard Chartered, made jointly with Mozambique’s largest bank, Millennium BIM, beat out competition from HSBC Plc and local partner Banco Unico, the World Bank said in an announcement published on its website. Standard Chartered’s bid was $721,000 compared with the $1.38 million tender by HSBC and Banco Unico, the announcement shows. ENH has a 10 percent stake in a project led by Woodlands, Texas-based Anadarko Petroleum Corp., and 15 percent in one led by Rome-based Eni SpA. They stem from gas discoveries in the Rovuma Basin that are big enough to make Mozambique the world’s third-largest producer of liquefied natural gas by the middle of the next decade, according to Anadarko. Each project will require investment exceeding the size of Mozambique’s $15 billion economy, a 2014 Standard Bank Group Ltd. report shows. 

Namibia: Engen took a major stride forward with an N$48 million investment in a new fuel depot in the north-Namibian town of Grootfontein. The new facility was completed in March 2015, with Engen taking occupation in April, said Nangula Hamunyela, managing director of Engen in Namibia. An official inauguration ceremony will be held in June. Hamunyela says Engen has long sought self-sufficiency in terms of the supply of its products to the northern part of the country. With capacity for products including ULP 95, ADO 500 and ADO 50ppm, the company’s new depot will bolster its supply chain, she says. “Independence enables us to provide a better service to our customers and allows us to be more competitive in the market.” Engen now brings its entire product line into the country. The company sports an extensive network of 54 retail service stations, covering the length and breadth of the country.

Nigeria: The Vice President and Head, Energy and Natural Resources, FBN Capital, Rolake Akinkugbe, has said Nigeria will require at least $20 billion to bridge its gas infrastructure deficit, The Nationreports. Akinkugbe who spoke at the luncheon/panel session organised by the Petroleum Technology Association of Nigeria (PETAN) at the ongoing Offshore Technology Conference in Houston Texas, said the investment would also provide the infrastructure required to adequately meet the gas needs of the nation’s 21 gas-fired power plants including the 10 power stations constructed by the Niger Delta Power Holding Company (NDPHC). In her presentation titled “Global Gas Outlook and Implications for Nigeria”, Akinkugbe said Nigeria’s gas-fired power plants require over 2.2 billion standard cubic feet per day (bscf/d) of gas. She also projected that the nation’s gas demand will reach 8bscf/d from the current 2.2bscf/d by 2020. She however, noted that making gas available to service domestic requirements will be a key challenge in the short-term. This also comes as the Nigerian National Petroleum Corporation (NNPC) on Wednesday said it was leading a drive to attract massive global investments into the nation’s gas sub-sector.

Nigeria: Nigeria Petroleum Development Company (NPDC), the operating arm of state hydrocarbon company NNPC, reported producing 708.54 million standard cubic feet (MMscf) of both non associated gas and associated gas (NAG/AG) on gross basis on March 31, 2015, the last day of the first quarter of the year.The company flared 51.84MMscf on said date, and of the remaining 656.70MMscf utilized, the net equity production (sold) was 453.86MMscf/d, all of which was delivered to the domestic market, mostly power plants. It’s the highest equity volume of gas sold by any company operating in Nigeria to the domestic market. Nigeria is struggling with a shortfall in gas supply to its power plants. The challenge has created a deficit of over 2,000MW in publicly generated power supply. On the surface, NPDC should be applauded as a key contributor to current supply. But critics say the company is, indeed, part of the problem. Its gas production comes from four gas processing plants; Utorogu, Oben, Sapele and Oredo, the first three acquired through sale of equity by Shell, TOTAL and ENI and the last, Oredo, constructed by NPDC itself to process gas from a field of the same name. 

South Africa: South Africa will gazette final regulations for shale gas exploration by June, two years after releasing draft rules and as companies reconsider investments due to volatile oil prices and delays in awarding licenses. In March, Royal Dutch Shell said it was pulling back from its shale projects in South Africa's semi-arid Karoo region which is believed to hold up to 390 trillion cubic feet of technically recoverable reserves. Shell had applied for an exploration license covering more than 95,000 square km, almost a quarter of the Karoo. A study commissioned by the company said extracting 50 trillion cubic feet or 12.8 percent of potential reserves, would add $20 billion or 0.5 percent of GDP to the South African economy every year for 25 years and create 700,000 jobs. Besides Shell, Falcon Oil and Gas in partnership with Chevron, and Bundu Gas have applied for exploration licenses. But environmentalists and land owners in the Karoo, situated in the heart of South Africa, have argued that exploring for shale by fracking, or hydraulic fracturing, would cause huge environmental damage in the water-scarce region. 

Tanzania: Tanzania on Tuesday set up a team of negotiators to represent the country in discussing all natural gas and oil contracts with international firms, reported Daily News Tanzania. The team would consist of 25 experts from different backgrounds to ensure that all the relevant issues for building a sustainable oil and gas economy are addressed, a statement issued by Institute of African Leadership Sustainable Development (UONGOZI) said. "It is my hope that this programme will help to equip participants with the requisite skills and tact to be good negotiators for the benefit of our nation, not only now but for generations to come," Ambassador Ombeni Sefue, Chief Secretary, UONGOZI stated, reported Daily News Tanzania. He added that negotiating oil and natural gas agreements with International Oil Companies (IOCs) is a challenge which governments of natural resource-rich countries from Africa must address. The East African nation has witnessed discovery of large amounts of natural gas in its offshore fields. Tanzania’s current proven reserves stood at 55 trillion cubic feet (tcf). 

Middle East

Iran: Iranian ambassador to Azerbaijan on Wednesday said that the country may join the Trans Anatolian Pipeline (TANAP), news agency Reuters reported. The pipeline, which will carry Azeri gas to European markets, is seen as Europe's alternative to its reliance on Russia. As per the plan TANAP would initially carry 16 billion cubic meters (bcm) of gas a year by mid-2018. By 2023, TANAP's capacity will rise to 23 bcm per year and then to 31 bcm by 2026. The gas will be sourced from Azerbaijan's Shah Deniz II field in the Caspian Sea, which is being developed by a BP led consortium. The TANAP will be operated by SOCAR, which currently holds 58 percent stake in the project. Turkey's pipeline operator BOTAŞ own 30 percent, while BP acquired 12 percent in the project on March 13, 2015. 

Iran: Iran could be ready to help Europe develop its liquefied natural gas market if and when sanctions are eased under a comprehensive nuclear deal, Petroleum Minister Bijan Namdar Zanganeh told diplomats and executives. The Persian Gulf country, with the world’s second biggest natural gas reserves, would favor shipping liquefied gas to Europe rather than building a pipeline, Zanganeh said at an energy-security conference in Berlin on Thursday. European gas prices make large infrastructure projects like pipelines difficult, he said. As nuclear negotiators inch closer to an agreement that would suspend Iranian economic isolation, Iran is looking for new channels to profit from an end to sanctions. Europe is seeking to diversify its energy suppliers beyond Russia due to the conflict over Ukraine and past gas delivery disputes. Diplomats have until June 30 to complete the technical parameters of an Iranian nuclear agreement. Qatar is currently the biggest LNG producer in the Middle East and ships 77 million tons of the fuel per year. Sanctions have forced Iran to slow down plans for a $3.3 billion LNG plant. Most Iranian natural gas exports are currently shipped via pipeline to Turkey. 

Iraq: Oil Search failed to discover hydrocarbons in Taza-2 appraisal well in Kurdistan region of Iraq. The objective of the well was to appraise the intervals discovered by Taza-1 well, including Dhiban/Jeribe and Euphrates/Kirkuk, and explore deeper Tertiary and Cretaceous targets including the Shiranish formation. Ownership of Taza-2: Oil Search (60%, operator), Total (20%) and Kurdistan Regional Government (20%). 

Oman: Oman's government will move ahead with plans to privatise parts of its oil and gas sector as it sees it as "a way to share the wealth with the public", accoridng to a senior official at the Ministry of Oil and Gas. The comments came from Salim bin Nasser Al Aufi, undersecretary at the ministry, who spoke at a roundtable meeting at the Occidental office on Monday, Times of Oman reproted. Al Aufi said that the plan to sell off parts of Orpic (Oman Oil Refineries and Petroleum Industries Company) has not been scrapped but will be implemented only after the company becomes profitable, according to the local paper. On the question of privatisation of state-owned companies in the lower oil price environment, Al Aufi said the government looks at it as a strategy to share the generated wealth from oil with as many people as possible. He added that sustained profitability needed to be achieved first, before companies move ahead with privatisation plans. 

Oman: Orpic's Muscat-Sohar Products Pipeline (MSPP) and Al Jifinan Terminal project, which will connect the company's existing Mina al Fahal refinery, with refineries in Sohar -- via a new two-way, 290-km, multi-product pipeline -- broke first ground yesterday on the future site of the project's Al Jifinan Terminal. To be valued at $320 million, this project is the first-of-its-kind to be constructed in Oman, enabling Orpic to eliminate its reliance on above-ground methods of transportation for oil products. Musab al Mahruqi, Orpic CEO, said the significance of the MSPP project for the local communities where Orpic operates; Orpic and its employees; and the Sultanate of Oman. Upon commissioning in 2017, the Jifnain Terminal will deliver 50 per cent of Oman's fuel via the modern storage facility. Orpic Logistics, a joint venture between Orpic and the Spanish firm Compañía Logística de Hidrocarburos (CLH), is delivering the MSPP project. 

Qatar: With long-term energy demand in Asia set to rise, Qatar is "well positioned" to supply existing and new customers in the region going forward, said HE the former Deputy Premier, Abdullah bin Hamad al-Attiyah."Asia and Qatar have long enjoyed a progressive and mutually beneficial relationship, and this isn't going to change. That said, Qatar is always on the lookout for new opportunities, which it will evaluate if and when they come up. Qatar certainly has the scope and flexibility to expand its footprint to other parts of the world if it makes economic sense," al-Attiyah said told Gulf Intelligence. On the policies Qatar's energy industry would pursue to remain competitive in the current, changing market environment, al-Attiyah said, "Qatar is committed to its National Vision 2030, which aims to create a balance between an oil-based and a knowledge-based economy, and therefore seeks to build a sustainable economy for future generations."Qatar's energy sector will play a critical role in supporting the National Vision by ensuring the responsible and sustainable exploitation of the country's hydrocarbon resources, and diversifying into other forms of energy such as renewables. 

Saudi Arabia: Saudi Aramco will soon start the production of shale gas to supply industrial projects in the Kingdom, accoridng to oil minister Ali al-Naimi. Speaking during the 18th annual meeting of the Saudi Economic Association, al-Naimi said that Saudi Aramco will initially provide shale gas to the Mining City of the North project and will supply a power generation plant, which is currently under construction. Initial production will be from 20 MMcf/D to 200 MMcf/D, with about 20 MMcf/D due to be supplied to the Saudi Arabia Mining Company (Ma’aden) and to the power generation plant, accoridng to the minister. Al-Naimi added that the Kingdom has made promising shale gas discoveries and has the technologies to produce it at a reasonable price. Saudi Aramco's unconventional gas programme became fully operational in 2013, just 2 years after launching its unconventional gas programme in the northern region. The company said at the time that it was ready to commit shale gas for the development of a 1,000-MW power plant that will feed a phosphate mining and manufacturing sector. Saudi Aramco is exploring unconventional gas in the North West of the Kingdom, in South Ghawar, and the Rub’a al-Khali known as the Empty Quarter. 

Rest of the World

Australia: AWE Limited (ASX: AWE) today announced initial results from the Irwin-1 exploration well, located in the onshore Perth Basin, Western Australia. The Irwin structure straddles the EP320 (AWE 33%) and L1 (AWE 50%, Operator) boundary and the Irwin-1 drilling program is being operated by AWE under an agency agreement with joint venture partner, Origin Energy Limited (ASX: ORG). The Irwin-1 well was drilled to a total depth of 4,049m. The primary target, the Dongara/Wagina sandstones, was intersected at 3,146m. Sidewall cores and gas samples were collected and have been sent for compositional analysis. Initial analysis of the wireline logs indicates a 32m gas column in the Dongara/Wagina tight gas reservoir with a gas/water contact interpreted at 3,085m total vertical depth subsea (TVDSS). This is the same depth as the log indicated gas/water contact in Warradong-1, previously drilled in the adjacent Synaphea structure, 4.5 km to the south. The common contact suggests that these two wells may have intersected the down-dip portion of a single large gas accumulation that includes both the Irwin and Synaphea structures. AWE estimates gross 2C Contingent Resources of 15 billion cubic feet (Bcf) of gas for Irwin and 134 Bcf of gas for Synaphea. The up-dip portion of the Synaphea structure, located in permit L1 has not yet been drilled. 

Brazil: Petroleo Brasileiro SA has drawn interest from Mitsui & Co. in the sale of a package of natural gas pipelines, according to people with knowledge of the matter. Petrobras, as the Brazilian state oil company is known, has been marketing the sale of 49 percent of its stake in the pipelines, according to the people, who asked not to be identified discussing a private process. Mitsui is seen as a natural buyer of the assets because it’s already a partner with Petrobras on gas pipelines, two of the people said. Still, talks between the companies are at a preliminary stage, the people said. Petrobras has 9,000 kilometers (5,600 miles) of natural gas pipelines, according to its website. Mitsui, Japan’s second-biggest trading house, has been active in Latin America’s largest economy, including a deal in December to buy a stake in gas distribution company Cia. de Gas do Ceara. Petrobras plans to divest about $14 billion in assets by the end of next year to meet core investment goals and start addressing the oil industry’s biggest debt load. The driller is also embroiled in a bribery scandal that led to the collapse of its stock and the replacement of then-Chief Executive Officer Maria das Gracas Foster with banker Aldemir Bendine. 

Brazil: Brazil offers opportunities for foreign companies planning to operate in the country’s oil and gas sector. This message was conveyed today (May 6) in Houston, USA, by Paulo Sergio Rodrigues Alonso, an advisor to Petrobras’ CEO. The executive, who is also the executive coordinator of the Program to Mobilize the National Oil and Gas Industry (Prominp), said that after 16 years in effect, Brazil’s Local Content Policy is mature. Alonso mentioned, among welcome initiatives for the sector, the collaboration between Brazilian and foreign manufacturers aimed at providing solutions for existing technological bottlenecks in domestic industry. The list of opportunities covers both manufacturers and service providers, which will be able to work in partnership with Brazilian suppliers. Alonso highlighted academia’s importance to innovation and the development of Brazilian industry and the oil sector. Alonso mentioned opportunities that will arise with regard to critical imported equipment and services required for the floating production, storage and offloading facilities (FPSOs, or platform-ships) that will operate between 2020 and 2030. 

Brazil: Karoon Gas Australia commenced production from Echidna-1 exploration well in Block S-M-1102 in Santos Basin, Brazil. The well intersected a 213m gross (104m net) oil column in Paleocene and Maastrichtian aged reservoirs. The well produced a stabilized flow rate of 4.7 Mbbl/d from Paleocene reservoirs. The recovered oil samples measured 38.6° API oil gravity, with no presence of measurable CO2, H2S or sand production. Ownership of Block S-M-1102: Karoon (65%, operator) and Pacific Rubiales Energy (35%). 

Canada: Canadian Natural Resources Ltd, Canada's largest independent oil and gas producer, said on Thursday it has advanced a planned maintenance shutdown at its 125,000 bpd Horizon oil sands plant in Alberta to June. Originally planned for autumn, the company said the work includes increasing the capacity of its diluent recovery units and improve the reliability of the plant's operations. 

Canada: Investors may want to steer clear of oil sands developers and coal producers and buy royalty stocks and companies with assets outside Alberta. That’s the advice of portfolio managers and analysts after energy stocks declined Wednesday following the surprise election victory by the New Democratic Party in Alberta. An index of Canadian energy companies plunged the most in three months after the win by Rachel Notley’s NDP, which has pledged to boost corporate taxes, review the government’s royalty rates for energy producers and phase out coal power. Canadian Oil Sands Ltd. is among the most exposed to a potential hike in royalties and stricter environmental policies, while electricity supplier TransAlta Corp. would suffer from the new government’s vow to shut coal plants sooner than planned, according to analysts at BMO Nesbitt Burns and RBC Dominion Securities. 

China: China's crude oil imports hit a record high in April as falling prices encouraged stockpiling, but coal imports plunged and shipments of other commodites generally eased on a year earlier amid a sluggish economy. China's exports unexpectedly fell 6.4 percent for the month, while imports tumbled by a deeper-than-forecast 16.2 percent, fueling expectations that Beijing will quickly roll out more stimulus to avert a sharper economic slowdown. China, the world's second-largest crude oil buyer, imported a higher-than-expected 7.4 million barrels per day in April, up 8.6 percent on a year ago, as oil firms built up stocks despite tepid underlying refined fuel demand, especially for diesel. With oil prices down 40 percent from last June's highs, China has been adding to its strategic reserves, although some analysts say imports may now pull back as the country starts to run out of storage space. 

Haiti: Haiti’s President Michel Martelly said he sees no sign Venezuela’s shipments of subsidized oil to Caribbean and Central American nations will end, and that his country would be the last to see the aid curbed in the case of cutbacks. Haiti, the most impoverished country in the Americas, is recovering from a 2010 earthquake by attracting tourism and investment, Martelly said Thursday. The nation plans to continue scheduled debt payments, including to Venezuela, its biggest creditor, rather than follow the path of the Dominican Republic, which settled its debt this year. Under Venezuela’s Petrocaribe program, South America’s biggest oil producer sends subsidized crude to the region’s poorer nations, who pay half the debt up front and the rest over 25 years at 1 percent or 2 percent interest. Suffering from recession and the world’s fastest inflation rate, Venezuela cut shipments to members 13 percent last year from 2013, according to state producer Petroleos de Venezuela SA. 

Indonesia: Indonesia's energy minister said on Thursday he would seek President Joko Widodo's approval for the country to rejoin OPEC, seven years after leaving the oil exporters' group. If it returned, Indonesia would be the fourth-smallest producer in the Organization of the Petroleum Exporting Countries ahead of Libya, Ecuador and Qatar, and bring the number of participants to 13 countries. Indonesia was the only Asian OPEC member for nearly 50 years before leaving the group in 2008 as oil prices hit a record high, and rising domestic demand and falling production turned it into a net oil importer. OPEC termed Indonesia's departure a "suspension" and Ecuador, which rejoined in 2007, set a precedent for a return from suspension. An OPEC source said the door was always open. OPEC's statute stipulates, however, that any "country with a substantial net export of crude petroleum, which has fundamentally similar interests to those of Member Countries, may become a Full Member of the Organization, if accepted by a majority of three-fourths of Full Members, including the concurring votes of all Founder Members." The group allows for associate members, which don't qualify for full membership "but are nevertheless admitted under such special conditions as may be prescribed." 

Japan: Japanese regional utility Hokuriku Electric Power Co on Thursday announced signing of LNG purchase agreement with Malaysia LNG. Hokuriku Electric has agreed to buy 380,000 tons of LNG a year from Malaysia, supply of which will begin from the fiscal year beginning in April 2018, it said in a statement. The LNG will be regasified for use in Hokuriku Electric's first gas-fired plant in Tokyo, which is scheduled to start operations from November 2018, news agency Reuters quoted a company spokesman as saying, confirming it was also the first LNG agreement. Petronas owns 90 percent stake in Malaysia LNG while Malaysia's Sarawak State Government and Japan's Mitsubishi Corp hold 5 percent each. 

Malaysia: ExxonMobil on Thursday announced commencement of gas production from the second phase of the Telok gas development project, the Telok B platform located off the east coast of Malaysia. The Telok development consists of two satellite platforms – Telok A, which started up in 2013, and Telok B. Both platforms combined are capable of producing more than 450 million cubic feet per day of natural gas. ExxonMobil and PETRONAS Carigali each hold a 50 percent interest in this project. “The completion of the Telok B platform highlights the capability of Malaysian contractors to design, fabricate and install oil and gas production facilities in a safe and efficient manner,” said See Kok Yew, President of ExxonMobil Exploration and Production Malaysia Inc. and Chairman of the ExxonMobil Subsidiaries in Malaysia. Drilling operations from Telok B commenced in September 2014 and full well stream natural gas is being produced via a 25-kilometre pipeline to the existing Guntong E platform for processing. (Selected by SPTEC Advisory from Natural gas Asia, May 7)

Norway: TENAS has received consent to use Mærsk Giant for plugging wells 15/12-A-2, A-4, A-9, A-11, A-12, A-13, A-15 and A-16 on the Varg field. TENAS has allocated up to 153 days for the activity, which will start in mid-May 2015. Water depth at the site is 367 metres. Varg is an oil field located south of Sleipner East in the central sector of the North Sea. The field will be produced using the Petrojarl Varg production vessel, which has integrated oil storage and is tied to the Varg A well-head facility. The wells will be drilled by Mærsk Giant which is a jack-up mobile drilling facility. It is owned and operated by the A.P. Møller-Mærsk Group. It was built in Japan by Hitachi and completed in 1986. 

Russia: Syzran Refinery, a Rosneft subsidiary, has switched completely to Euro 5 diesel fuel as part of its large-scale investment program to upgrade operations. This full transition to the latest environmental specification in diesel fuels ahead of the schedule established by the Russian legislators was made possible thanks to a number of technical solutions introduced by the refinery's process team, such as modifying the process flow of the diesel hydrotreaters and fine-tuning the feedstock mix. About 205,000 tonnes of the highest environmental standard 10 ppm sulfur diesel is expected in May alone. Before that, in March 2015, the Syzran Refinery launched Euro 5 motor gasolines. Thus, the refinery has now completed the transition to the highest environmental standard in fuels. (Selected by SPTEC Advisory from Your oil and gas news, May 7)

Russia: Russia's third-largest oil producer Surgutneftegaz has awarded Glencore the right to lift 1.2 million tonnes of crude oil from Russian Baltic Sea ports, traders said on Thursday. The cargoes, 200,000 tonnes a month, can be lifted between July and December this year. 

United Kingdom: Reuters reported that Mikhail Fridman's LetterOne fund will sell 11 gas fields in North Sea, estimated to be valued up to $1 billion, bowing to British threats to revoke the assets' licenses unless the Russian tycoon relinquishes ownership. The assets produce 3% to 5% of Britain's gas output. They will be offered individually and not as one block. LetterOne took ownership of the fields in the UK North Sea as part of its purchase of DEA, RWE's oil and gas unit, for $6 billion. Morgan Stanley is advising the sale. 

United Kingdom: Atlantic Petroleum has agreed to sell its 10% interest in P1724 (UK Block 43/13b which contains the Pegasus West Gas Discovery), P1727 (UK Blocks 43/17b and 43/18b) and P2128 (Block 43/12)P1724 (UK Block 43/13b) to Third Energy Offshore. The total purchase consideration is £16.5 million (US$25 million), out of which £7.5 million (US$11.4 million) is to be paid on completion, while remaining payments are conditional on production from Pegasus West and further development in the blocks. Ben Arabo, CEO of Atlantic Petroleum, said: “The sale of the Pegasus discovery and its surrounding acreage is a part of our strategy to realize value at an early stage from our exploration successes. The proceeds from the sale will be used to strengthen our balance sheet during the current period of low oil prices. The price achieved clearly demonstrates the value of our exploration portfolio.” 

USA: The U.S. Justice Department imposed a fine exceeding $232 million on a subsidiary of oilfield services firm Schlumberger for facilitating illegal trade with Iran and Sudan and trying to disguise the transactions. Schlumberger Oilfield Holdings Ltd. pleaded guilty to conspiring to violate the International Emergency Economic Powers Act authorizing the White House to regulate commerce with countries after declaring an emergency based on unusual or extraordinary threats to the United States that arise abroad. Trade with Iran and Sudan is specifically barred under the act. The penalty of $232,708,356 is the largest ever imposed on a company for violating the IEEPA and, in acknowledging its guilt, the oil services giant agreed to cease all its commercial operations with Iran and Sudan, as well as to turn over to U.S. authorities all information they request about those activities. In addition, the affiliate of Schlumberger, the largest oilfield services firm in the world, has agreed not to engage in any further criminal activity and to hire an independent consultant to review its compliance with court-ordered sanctions. 

USA: Gastar Exploration has agreed to sell certain non-core assets in Oklahoma to an undisclosed private third party for approximately $46.2 million. The assets to be sold include approximately 29,300 gross (19,000 net) acres in Kingfisher County, Oklahoma. For Q1-2015, net production from the associated acreage averaged approximately 170 BOE/d (57% natural gas) from 38 gross (16.7 net) wells. The transaction is expected to close on or before 22-Jun-2015. 

USA: Brazil's Braskem SA, Latin America's largest petrochemical company, said on Thursday it was reconsidering a West Virginia shale gas project and planned to cut over $100 million in annual spending due to a drop in global oil prices. Braskem announced the plans in its first-quarter earnings report, which showed a 49 percent drop in net profit, to 204 million reais ($67 million), from the year-ago period when asset sales boosted earnings. Braskem's focus on cost cutting and a more cautious expansion follows last year's plunge in crude prices, which continues to ripple through the petrochemical supply chain. Braskem also said it was making progress on plans to reduce its fixed costs by between 300 million reais and 400 million reais on an annual basis. First-quarter earnings before interest, taxes, depreciation and amortization, a gauge of operating profit known as EBITDA, fell 9 percent to 1.487 billion reais, the company said. 
Energy Prices

Crude Oil ($/BBL)
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