Monday, 15 September 2014 11:13
Posted by Shoaib-ur-Rehman Siddiqui
South Korea's imports of Iranian crude doubled in August from a year ago but fell 8 percent in the first eight months year-on-year, reflecting moves by the world's fifth-largest crude oil importer to navigate terms of sanctions reliefs.
Preliminary customs data showed on Monday that Seoul bought 567,913 tonnes of crude oil from Tehran last month, or 134,284 barrels per day (bpd), compared with 558,690 tonnes a month ago and 272,090 tonnes a year ago.
The low level of imports in August 2013 reflected South Korea's move to meet its target of cutting shipments from the OPEC member in the June-November period of last year by 15 percent to extend a US sanctions waiver.
The intake of Iranian crude in January-August this year by Asia's fourth-largest economy stood at 4.24 million tonnes, or 127,944 bpd, down 8 percent from a year ago and 5 percent below the 2013 average at 134,000 bpd, according to the data and Reuters' calculations.
Iran and Western powers agreed a preliminary deal in Geneva in November 2013 under which Iran suspended higher-grade uranium enrichment, a potential route to bomb-making, in exchange for some easing of sanctions on its oil-dependent economy. South Korea and other Asian buyers are supposed to hold their crude imports from Iran at end-2013 levels - or between 1 million and 1.1 million bpd - under the terms of the Geneva accord.
Iran and world powers remain far apart over Tehran's nuclear programme, and they face a "difficult road" to reach a deal by a late November deadline, a senior Iranian negotiator said earlier this month.
The six powers, also including Russia and China, will hold their first full negotiating round with Iran since July on Sept. 18 in New York.
Only two of South Korea's four refiners - SK Energy and Hyundai Oilbank - import Iranian oil, and imports fluctuate as one of the pair buys the crude only every second month.
Overall, South Korea imported 11.4 million tonnes of crude last month, or 2.7 million bpd, compared with 9.7 million tonnes in August last year, the customs data showed. Final data for August crude oil imports will be released by state-run Korea National Oil Corp later this month.
Copyright Reuters, 2014
September 15, 11:04
Kazakh President Nursultan Nazarbayev met with his Chinese counterpart Xi Jinping on the sidelines of the Shanghai Cooperation Organization (SCO) summit held in Dushanbe, the capital of Tajikistan from Sept.11 to Sept.12, Acorda (Kazakh president's official website) said.
“During the negotiations, the presidents reviewed the key areas of cooperation in the trade, economic, investment, fuel and energy, transit, transport, cultural and humanitarian spheres,” said the message.
Nazarbayev and Xi Jinping discussed cooperation between the two countries in international and regional organizations. The sides also exchanged views on the topical issues on the international agenda.
Kazakh president praised the level of cooperation between the two countries.
“Our countries intensely cooperate in the fuel and energy sphere. Today, 20 percent of Kazakh oil is produced by Chinese companies. Turkmenistan-Uzbekistan-Kazakhstan-China gas pipeline also operates successfully,” Nazarbayev stressed.
Chinese president, for his part, emphasized the positive dynamics in the Kazakh-Chinese relations and touched upon Nazarbayev’s visit to China in May 2014.
“You paid a successful state visit to China in May 2014 and took part in the Conference on Interaction and Confidence Building Measures in Asia (CICA),” Jinping said, adding that the bilateral agreements reached in the international and regional organizations are actively implemented.
He stressed that China is ready to make every effort to ensure the continuous cooperation between the two countries.
Nazarbayev congratulated President Xi Jinping with the upcoming 65th anniversary of the founding of the People’s Republic of China and wished success and prosperity to the Chinese people.
trend.az
DAN MURTAUGH
BISMARCK, North Dakota (Bloomberg) -- North Dakota’s oil output grew slower than expected in July, possibly as a result of new rules passed to reduce the amount of natural gas wasted at wells.
The state produced 1.11 MMbopd in July, up 1.7% from June, according to data from the state’s Department of Mineral Resources.
The increase wasn’t as large as the state expected, Lynn Helms, the department’s director, said on a conference call Sept. 12. One possible reason is that producers might be waiting to bring new oil wells online until gas infrastructure is in place, he said.
About 26% of the gas produced in the state was flared at the well in July, down from 35% in January.
“It may be that producers are focusing on flaring and gas capture,” Helms said.
North Dakota passed new rules in July trying to reduce the amount of gas flared at the wellhead. With oil prices much higher than gas, some producers weren’t willing to wait for gas pipelines and processing plants and were just burning gas in order to extract the valuable oil.
New Rules
The new rules, which go into effect in October, will give the state power to curtail oil output and levy fines of as much as $12,500 a day to producers who don’t meet requirements.
Horizontal drilling and hydraulic fracturing in an underground layer of shale rock known as the Bakken have boosted North Dakota from an energy afterthought to the U.S.’s second-largest oil-producing state, behind Texas.
The number of energy rigs in North Dakota rose to 185 Sept. 12, according to data from oil field services firm Baker Hughes Inc. That matches the level reached Aug. 15, which was the highest in two years.
With North Dakota oil such a prominent part of the energy landscape, a new price benchmark should be developed that reflects the price producers can sell for straight from the well, Helms said. Current benchmarks in Oklahoma and Minnesota are at various times higher and lower than the price on the ground, he said.
“It would be nice to have one that accurately captures what the tax department sees as the price paid at the well,” he said.
09/15/2014
September 15, 10:32
By Saule Tasboulatova
“New Company Joint Venture” (NCJV) that will replace the current NCOC company (“North Caspian Operating Company”) becomes the new operator of the Kashagan North Caspian project.
To recall, North Caspian Consortium participants agreed to do transition to the unified consolidated joint company in May of this year.
NCOC press service then circulated press release where it stated: “Transition of the Kashagan project from the development stage to production stage will give the opportunity of further integration and merging of its operator and agents activity for the purpose of preparation of the Consortium to further development of resources within the framework of NCPSA (North Caspian Project Sharing Agreement). In order to utilize this opportunity in the best way, Consortium participants agreed on gradual transition from current operational model to the unified consolidated joint company. The new structure will use in its activity the achievements of NCOC and its agents in the sphere of development, drilling and operation. The new company will work within the unified corporate control system that combined the existing tools and processes, developed by participants of the Consortium. It is proposed that the unified consolidated joint company will be called the North Caspian Operating Company (NCOC)”.
Our sources informed that the new name of the registered operator is NCJV. Its fundamental difference from the former operator (NCOC) will be the absence of agency companies that complicated and bought difficulty to the work because of its complicatred hierarchical system.
To recall, NCOC had four agency companies. The first agency company Agip KCO (Eni’s daughter” – Consortium’s shareholder) was responsible for implementation of Stage I - Experimental program, including drilling activities. Shell Development Kazakhstan (Shell’s subsidiary) – was responsible for planning and development of Stage II. ExxonMobil Kazakhstan Ink. (ExxonMobil’s subsidiary) was responsible for drilling operations during Stage II. KMG and Shell jointly were charged with production operation at all subsequent stages via Joint venture - NCPOC. But, as we know, the Italians didn't cope with Stage I. And now, most likely, all shareholders will need to correct their mistakes using their joint efforts.
Concerning the emergence of a new operator Uzakbai Karabalin, the then RoK Minister of oil and gas said: “The appearance of the new operator connected with the fact that both contractors and us weren't really happy with the exiting system of organization.. It turned out to be more expensive than envisaged, and most importantly, the decision-making process and other moments of organizational planning was too long, because of its complex hierarchy. Now this system is simplified and the relationships have new option”.
During the briefing in May Karabalin said that all organizational issues regarding the creation of the new operator will be completed by September of the current year.
The new form of company is joint venture and as we reported earlier, the transition to new model will not bring changes neither to NCPSA nor to its property structure.
The managing director of NCJV will be Stephan de Mayo, seconded from ExxonMobil company, who was appointed to the position in May of this year. The new company will consist of three departments: Phase-1 department, drilling and exploration departments. It also will be small in terms of its staff.
NCJV office will be based in Atyrau. The majority of its employees will move to Atyrau this fall. Firstly, it will be the administration staff, technical experts.
The compelled shutdown of oil production, as well as expenses connected with repair works on full replacement of oil and the gas pipeline, forced the management to sharp optimization and closing of many of its departments. The personnel will also be reduced by three-four times.
Thus, since 1998 NCJV is already the fourth consolidated operator of the North Caspian project.
JOE CARROLL
IRVING, Texas (Bloomberg) -- Exxon Mobil Corp.’s work on a $700 million Arctic well in Russia could be stopped before it’s finished under new U.S. and European Union sanctions that outlaw the drilling partnership.
New sanctions ban U.S. and EU companies from working with Russian officials or companies to find or produce crude from deep seas, shale fields or the Arctic. The decrees, reported earlier this week by Bloomberg, were imposed Sept. 12, the 35th day of drilling at the 9 Bbbl Universitetskaya prospect off Russia’s northern coast that was scheduled to last for 70 days.
American and European explorers such as Exxon and Royal Dutch Shell Plc, which is drilling in Siberian shale rock formations, will have to act fast to avoid violating the bans, said Mark Herlach, an international lawyer and partner at the Sutherland Asbill Brennan LLP law firm in Washington. U.S. companies have until Sept. 26 to shut down sanctioned operations with Russian partners, according to the new rules.
“The purpose of the sanctions is penalizing Russian interests for their actions in Ukraine, so there’s no policy reason to allow a delay,” Herlach said. “The high likelihood is that there is no grace period” for the oil companies.
The U.S. and EU have been ratcheting up economic pressure on Russian President Vladimir Putin to halt support for pro-Russian separatists in eastern Ukraine since March. In an exclusive report Sept. 10, Bloomberg News spelled out the widest, hardest-hitting sanctions the EU and U.S. were preparing to impose.
Exxon ‘Assessing’
Exxon, which began drilling the well last month as part of a $3.2 billion venture with Moscow-based OAO Rosneft, declined to say whether it has begun transporting employees or contractors from the drilling project, or if it has plans in place to do so. “We are assessing the sanctions,” a spokesman said in an emailed statement.
For Exxon, whose $410 billion market valuation makes it the world’s largest energy producer, Russia represents the second-biggest exploration prospect worldwide. The Irving, Texas-based company holds drilling rights across 11.4 million acres in Russia, an area only eclipsed by its 15.1 million U.S. acres.
Exxon Chairman and CEO Rex Tillerson is counting on Russian oil discoveries to reverse a trend of stalled exploration and escalating costs to pump crude and natural gas from the ground. Production from the company’s wells fell in 2012 and 2013 and is expected to be flat this year.
Costs Rising
Exxon found commercial quantities of oil or gas in 67% of the exploratory wells it drilled worldwide in 2013, unchanged from 2012, according to a filing with the U.S. Securities and Exchange Commission. At the same time, Exxon’s costs to produce the equivalent of a barrel of crude jumped to $11.48 last year from $9.91 in 2012.
Fighting in Ukraine has killed more than 3,000 people this year, driven 1 million from their homes, toppled a president and heightened tensions between Russia and its former Cold War foes. Putin’s regime threatened to increase its own retaliatory sanctions against the U.S. and Europe today, singling out automobiles and textile imports as potential targets.
The Universitetskaya well, about 70 miles (113 km) off the coast of Novaya Zemlya, is the first of 40 offshore Arctic prospects Exxon and Rosneft plan to drill by the end of 2018. The partners are using a floating rig leased from a unit of Bermuda-based Seadrill Ltd. to drill the well.
Extended Pain
The latest round of sanctions imposed by the U.S. and EU cut off Russia’s access to technology and expertise needed to find and harvest oil from Arctic, deep water and shale fields. The measures also curtailed the Russian energy sector’s access to capital markets and forbade sales of so-called dual use equipment to defense firms.
The oil-industry sanctions “impose pain on Russia on a five- to 10-year horizon,” said Anna Belova, lead Russian oil and gas analyst at GlobalData Ltd. The exploration projects disrupted or delayed by the sanctions wouldn’t turn into productive oilfields for years, she said.
Schlumberger Ltd., the world’s largest provider of oilfield services, last month warned that sanctions on Russia would shave 3 cents off third-quarter earnings. The Paris- and Houston-based company relies on Russia for 5% to 7% of annual sales, according to RBC Capital Markets.
The restrictions also are expected to hurt Halliburton Co., Baker Hughes Inc. and Weatherford International Plc, which compete to help oil companies drill wells and maximize output from fields. The companies each generate 4% to 5% of annual sales from Russia, according to RBC.
09/12/2014
The most recent, tougher EU sanctions on the Russian oil sector are unlikely to have a noticeable effect on crude production if they are short lived, Russian analysts said Friday.
However, the fact that the new measures were adopted despite peace efforts in Ukraine may indicate that it will take more than a ceasefire to ease tensions between the Kremlin and the West and stop the sanctions escalating, they said.
Meanwhile, long-term restrictions imposed on the Russian oil sector will likely put pressure on the production growth rates already being dampened by the maturity of the West Siberian brownfields, a key crude source now, analysts said.
Earlier in the day, the EU imposed fresh sanctions on Russia over its role in the Ukraine crisis, with oil producers Rosneft and Gazprom Neft, as well as the national oil pipeline operator Transneft among the targets.
In particular, the sanctions restricted the companies’ access to EU capital market as well as to services for deepwater, Arctic and shale oil exploration and production. The ban cannot be applied to deals or framework agreements reached before September 12 or to any contracts that are necessary to implement the agreements.
“The expansion of the embargo to the supply of services, such as drilling, well measurement and logging, is for now relatively harmless, because it only applies to the deep offshore, Arctic and shale oil, projects with little to no current production,” analysts at Russia’s Sberbank CIB said.
Rosneft, Gazprom Neft and Transneft did not comment Friday on their assessment of the new sanctions. In the current environment, the sanctions may benefit Russia-based service companies, such as Eurasia Drilling and C.A.T. Oil, VTB Capital analysts said in their Friday note.
“The Russian oil services market is quite self-sufficient or might easily replace European and US equipment with its own or Chinese variants in services like hydrocracking, horizontal drilling, high resolution 3D seismic,” VTB Capital said.
However, if the EU ban on oil services is extended to conventional production or lasts more than several years, it could have painful consequences for Russian oil production, analysts said. “In particular, [prolonged sanctions] could slow down the drilling of horizontal wells, where such services are particularly valued,” Sberbank CIB analysts said.
Currently, conventional onshore fields are a key source of Russian crude, and according to analysts, output growth is slowing due to the maturity of West Siberian brownfields and lower drilling rates.
Nigerian October crude cargoes are selling very slowly due to tepid demand caused by an oversupply of light sweet crudes, trading sources said Friday.
There was almost half of the October program or 30 odd cargoes still available which, sources said, was very long for this point in the trading cycle. “The structure is at a contango of 80 cents and differentials are correcting. Nigerian crudes have been slow to sell, despite better refining margins, as the Atlantic Basin was awash with material, especially light sweet crudes,” a trader said.
Sources said Nigerian crudes had been slow to sell despite better refining margins as the Atlantic Basin was inundated with too many crudes especially light sweet crudes. “[Refining margins] are still looking pretty good in Europe,” a second trader said. “On the Nigerian side, it is difficult to know where deals are struck so far, but we can see that most offers have not been changed [much].”
Sources said light sweet crudes were struggling even in the Mediterranean and North Sea and with Libyan exports rising quite sharply in the last month, differentials for such crudes were likely to remain under pressure. “The light sweet [crudes] are really in the doldrums still,” a third trader said. “Libya [coming back] is starting to hit the Med and it is therefore hurting West African arbitrage values into that region. Look at [the values for] Azeri Light.” Sources said some spot activity was heard later in the week.
Traders said the Qua Iboe for October 25-26 loading was heard sold to an end user while the October 29-30 Brass River stem was heard sold to a Northwest European refiner.
Earlier in the week, the October 7-8 Qua Iboe was also sold though details of the buyer could not be confirmed at the time of writing. A fourth trader said grades such as Qua Iboe are really struggling to clear.
“One way or another, this should impact both Bonny Light and Bonga. So while overall the market is stable, I am pretty bearish and the market is still pretty long oil, which is why the Brent structure is where it is,” the trader said.
Five cargoes of Azeri Light crude have been scheduled to load out of the Georgian Black Sea port of Supsa in October, up from the four seen in September and August, according to a copy of the loading schedule seen by Platts Friday.
The average daily loading rate for the port is set to rise to 96,774 b/d, up from the 80,000 b/d seen in September. Turkey’s TPAO is scheduled to load one 600,000-barrel cargo at the beginning of the month, while Socar is scheduled to load three cargoes, and Chevron one.
Trading sources said that TPAO has already sold their cargo via tender, reportedly to Glencore. A representative from Glencore could not be immediately reached for comment.
At the Turkish port of Ceyhan, where the bulk of Azeri Light volume is exported, overall loadings were set to fall 1.2 million barrels month on month to 19.3 million barrels in October, in the shortest schedule for the port since October last year.
The Georgian Black Sea port of Batumi typically loads one or two 600,000-barrel cargoes/month.
Canadian crude exports fell 39,000 b/d to 2.803 million b/d in June, according to the most recent monthly data released by the country’s National Energy Board.
June exports were 231,000 b/d higher than the same month last year and 337,000 b/d higher than June 2012. Heavy crude exports fell 34,000 b/d to 1.939 million b/d in June, while exports of light crudes were 863,750 b/d, down 5,080 b/d from May, according to the data, released Thursday.
The US imported 2.752 million b/d of Canadian crude in June, according to the most recent data from the US Energy Information Administration. Some Canadian crude, especially grades produced offshore Newfoundland and Labrador, is exported to Europe and Latin America.
Mitsubishi said Friday it would make Japan’s first foray into the upstream sector in Cote d’Ivoire after agreeing to buy a 20% stake in Block CI-103 from US-based Anadarko Petroleum Corporation.
Block CI-103 is about 50 km off the coast of West Africa’s Cote d’Ivoire, at a water depth of 2,000 meters. Mitsubishi said the transfer of interest in the production sharing contract would be finalized once the government of Cote d’Ivoire issues the required approvals.
The deepwater block could start producing from as early as 2019 with a peak output of around 60,000 b/d of crude oil once partners make a final investment decision at the end of 2015, following their drilling of an appraisal well in October and subsequent appraisal works, a Mitsubishi spokesman said.
Mitsubishi expects its net peak crude output from from Block CI-103 to be about 13,000 b/d, which will likely be its largest output in Africa, the spokesman said. He said that the company decided to make its move into Cote d’Ivoire as it has decades of experience in Gabon and Angola in West Africa.
Japan’s Ministry of Economy, Trade and Industry welcomed Mitsubishi’s foray into Cote d’Ivoire’s upstream sector as the government has identified Africa as “a frontier” for acquiring oil concessions to enhance Japan’s energy security, Ryo Minami, METI’s director of petroleum and natural gas division, said.
Upon completion of the transaction, Anadarko’s stake in Block CI-103 will be reduced to 35%. The other partners in the deepwater block are the UK’s Tullow Oil with 30% stake and Cote d’Ivoire national oil company Petroci, with 15% interest.
Tullow Oil is in the process of handing over its operatorship to Anadarko Petroleum, the Mitsubishi spokesman said. Anadarko, Tullow Oil and Petroci have been approved to proceed with appraisal operations, having confirmed oil and gas deposits at an exploratory well they drilled in 2012, Mitsubishi said.
Mitsubishi currently aims to double its equity production by 2020 under its current mid-term corporate strategy, the company said. In the fiscal year ended March 31, Mitsubishi produced 169,000 b/d of oil equivalent.
New York (Platts)--12Sep2014/534 pm EDT/2134 GMT
ICE October Brent crude settled 97 cents lower at $97.11/barrel Friday, the lowest front-month close since late June 2012, as expectations of lower global oil demand continue to push oil futures lower.
NYMEX October crude closed 56 cents lower at $92.27/b. In refined products action, NYMEX October ULSD fell 1.56 cents to $2.7405/gal while NYMEX October RBOB slid 53 points to $2.5188/gal.
US macroeconomic data released Friday was seen as bullish for oil, but prices slid as traders continue to digest a Thursday report that revised the International Energy Agency's oil demand forecast due to weakening Chinese and European economies.
US retail sales increased 0.6% in August, on top of an upwardly revised July figure, the largest increase in four months, the US Department of Commerce said.
In addition, the Thomson Reuters/University of Michigan consumer sentiment index was up 2.1 points to 84.6 in early September, its highest level since July 2013.
The economic news could not outweigh the bearish tone of the IEA's latest demand estimate, as ICE Brent futures fell for the second day in a row.
The last time front-month ICE Brent settled lower than Friday's close was on June 28, 2012 at $91.36/b.
"The IEA report showing demand is soft is starting to hit at concerns that maybe the world economy isn't in all that good shape," Bill O'Grady, chief market strategist at Confluence Investment Management, said.
"Oil usually trades in ranges, so if this is breaking down to a new range you need a reason why. One possibility could be a big slowdown in global growth. That would do the trick," he said.
Another factor contributing to the weaker demand outlook is the role of the European Union and American sanctions on Russia, analysts say.
Close business ties between Europe and Russia could mean sanctions end up hurting the European economy, depressing oil demand in the process, they say.
On Friday, the EU and US separately announced new sanctions against Russia over Moscow's role in the Ukraine crisis.
The new sanctions will make it more difficult for state-owned Russian companies, including oil giant Rosneft, to tap Western financial markets for funding.
A senior Obama administration official told reporters the sanctions are designed to "shut down" Russia's ability to develop Arctic, deepwater and shale oil projects.
"The historical focus on geopolitical events has been looking at supply implications," Kyle Cooper, an analyst at IAF Advisors, said.
The situation in Ukraine has caused a "shift in mentality," Cooper said, as attention shifts to the impact of the Russian sanctions on oil demand, instead.
Oil futures have been declining since their recent highs in June. Front-month ICE Brent is down roughly $18/b, despite fighting continuing in eastern Ukraine during most of that time.
Western sanctions are aimed at Russian oil companies. However, the types of upstream projects impacted -- Arctic, deepwater, shale -- are still on the drawing board.
London (Platts)--12Sep2014/909 am EDT/1309 GMT
Nigerian October crude cargoes are selling very slowly due to tepid demand caused by an oversupply of light sweet crudes, trading sources said Friday.
There was almost half of the October program or 30 odd cargoes still available which, sources said, was very long for this point in the trading cycle.
"The structure is at a contango of 80 cents and differentials are correcting. Nigerian crudes have been slow to sell, despite better refining margins, as the Atlantic Basin was awash with material, especially light sweet crudes," a trader said.
Sources said Nigerian crudes had been slow to sell despite better refining margins as the Atlantic Basin was inundated with too many crudes especially light sweet crudes.
"[Refining margins] are still looking pretty good in Europe," a second trader said. "On the Nigerian side, it is difficult to know where deals are struck so far, but we can see that most offers have not been changed [much]."
Sources said light sweet crudes were struggling even in the Mediterranean and North Sea and with Libyan exports rising quite sharply in the last month, differentials for such crudes were likely to remain under pressure.
"The light sweet [crudes] are really in the doldrums still," a third trader said. "Libya [coming back] is starting to hit the Med and it is therefore hurting West African arbitrage values into that region. Look at [the values for] Azeri Light."
Sources said some spot activity was heard later in the week.
Traders said the Qua Iboe for October 25-26 loading was heard sold to an end user while the October 29-30 Brass River stem was heard sold to a Northwest European refiner. Earlier in the week, the October 7-8 Qua Iboe was also sold though details of the buyer could not be confirmed at the time of writing.
A fourth trader said grades such as Qua Iboe are really struggling to clear. "One way or another, this should impact both Bonny Light and Bonga. So while overall the market is stable, I am pretty bearish and the market is still pretty long oil, which is why the Brent structure is where it is," the trader said.
Singapore (Platts)--12Sep2014/508 am EDT/908 GMT
Asia's outright prices for middle distillates sank to fresh lows Thursday, September 11, in tandem with lower crude oil prices amid weak market fundamentals pressured down by thin demand and high stocks.
Benchmark 500 ppm sulfur gasoil fell to a near 17-month low, to be assessed at $111.39/barrel at 0830 GMT, close of Asian trade Thursday, down $1.63/b from the previous day.
The outright value was last lower April 18, 2013, when it was at $110.57/b, Platts data showed.
Meanwhile, FOB Singapore jet fuel nose-dived by $1.61/b day on day to be assessed at $111.80/b on Thursday, its lowest in nearly 17 months.
The jet fuel marker was last lower at $111.53/b on April 23, 2013.
The sharp overnight fall in middle distillates prices was attributed mostly to weaker crude oil futures prices, where front-month ICE October Brent futures settled at a near 17-month low of $98.08/b Thursday.
Traders said that the fall in outright prices will provide a boost in end-user demand, although the impact on the market will not be immediate.
"I'm not sure if diesel responds to flat price as quickly," said a middle distillate trader based in Singapore.
Another regional trader pointed out that regional stockpiles were sufficient to absorb any potential surge in demand.
"Vietnam, Myanmar, Laos, and even China ... All stockpiled," he said, adding that the FOB Singapore cash differentials will not be reflecting the uplift in demand until there is "substantial buying" in the physical market.
As for jet fuel, narrowing East-West arbitrage economics following a deluge of arbitrage arrivals into Europe and the US, along with incremental spot supply from Northeast Asia and the Middle East, have continued to lend downward pressure on the Asian market.
Participants however, were skeptical over whether the lower outright prices would spur buying interest for jet fuel.
"It looks a lot harder to move jet from here .... Europe strength has tailed off as demand comes to end of seasonal peak. Refinery issues being resolved has seen US West Coast jet differential move a lot weaker as well," a Singapore-based trader said.
Adding to the bearishness, sources noted that rising freight rates have further narrowed East-West arbitrage economics.
Singapore (Platts)--12Sep2014/1249 am EDT/449 GMT
Iran's LPG exports to Asia rebounded to nearly 300,000 mt for September loading after sliding to 152,000 mt in August, with most cargoes bound for China and one set for India, shipping sources said Thursday, September 11.
China is scheduled to take delivery of around 240,000 mt in six cargoes, and India is due to take one 45,000-mt parcel.
For August loading, three 44,000-mt shipments were China-bound and one 20,000-mt parcel was set for India, sources said.
Iranian LPG exports hit a peak of around 319,000 mt in May after breaking above 300,000 mt in April, signaling that the Middle Eastern producer was almost returning to export volumes seen before the July 2012 sanctions, sources said.
Iran resumed LPG shipments in May 2013 after an eight-month hiatus because worries over an EU ban on shipping insurance.
But volumes waned for cargoes loaded in June to 199,000 mt before recovering to 242,000 mt in July, sources said.
The July-loading shipments included destinations such as South Korea and Southeast Asia, but dominated by China, sources added.
The August and September volumes take total exports from Iran to Asia since January to almost 2.1 million mt, figures obtained from shipping sources showed.
Of these, around 1.7 million mt were being shipped to China, while the rest headed to India, South Korea and Southeast Asia, shipping sources added.
Among the ships loading in August and September is the 29,171-dwt Gas Magic, owned by Turkish company Galata Denizcilik, which has not previously been seen moving Iranian cargoes to Asia.
In August, the vessel loaded a 20,000-mt cargo from National Iranian Oil Co. at Assaluyeh port for India/Sri Lanka or Singapore, and in September it is loading another NIOC cargo at Bandar Imam Khomeini, or Assaluyeh, bound for China, according to shipping sources and Platts ship tracking software cFlow.
The VLGC Sea Danuta is loading a 44,000-mt NIOC cargo this month at Assaluyeh for China, and is currently off-port limits near Ras Tanura, according to cFlow and sources.
Last month, the vessel had been at several eastern China ports such as Jiangsu and Shanghai.
Siam Lucky Marine is loading this month a combined cargo from NIOC and Kharg Petrochemical Co., or KPC, for delivery to China on board the VLGC Schumi.
Alpine International, a trading company which has been regularly moving Iranian cargoes to the East since February, is loading a 44,000-mt cargo from Petrochemical Commercial Co., or PCC, aboard the Gas Jasmine and a similar PCC cargo aboard the VLGC Alpha for the journey to China, sources said.
Sources said an Iranian businessman, Imam Jome, will be loading at Kharg Island this month a 45,000-mt cargo from KPC aboard the VLGC GMS Unity, formerly called Penguin, for an Indian destination.
Shipping sources said that Jome has bought three smaller LPG vessels and has been looking to acquire a VLGC, but it was not known if he had made the purchase.
Jome had also been moving smaller lots of 5,000 mt each to Iraq since January, sources said.
On top of the shipments to Asia, three smaller vessels -- the 5,000-mt White Pearl, 5,900-mt Black Pearl and 3,600-mt Liberty N, also call at Assaluyeh three times a month to load a total of 50,000 mt for deliveries to Iraq under term deals, shipping sources said.
SOME TALKS UNDERWAY FOR 2015 SUPPLY
Another trading company making regular shipments of Iranian LPG to China since February is Triliance Petrochemical Co.
The Shanghai-based firm will this month be loading a 44,000-mt NIOC cargo aboard the Gas Sapphire for China, shipping sources said.
According to cFlow, the vessel is overdue for arrival at Assaluyeh and is currently in the Persian Gulf, after last discharging a cargo in Raoping, China around mid-August, cFlow showed.
Triliance was also slated to load two 44,000-mt cargoes in August at Assaluyeh for China.
The VLGC Carmen, formerly the Sam Russ, loaded end-August/early September and is due to arrive in Fang Cheng, eastern China late September, cFlow showed. The VLGC Gas Beryl also carried a 44,000-mt cargo which arrived in Hukou around September 6, cFlow showed.
Industry sources said the key person behind Triliance Petrochemical Co., which also moves propane and methanol to China, is a Hong Kong-based Iranian businessman who has worked in the export unit of a number of Iranian petrochemical companies.
Industry sources said that Iranian exporters have started to negotiate on contracts for 2015, and a team visited China last month to discuss with an unspecified Chinese buyer for a one-year contract involving around 600,000 mt of LPG.
They added that Chinese buyers had bought term and spot cargoes this year at double-digit discounts.
Traders said that due to the delay in the startup of proposed propane dehydrogenation, or PDH, plants some Chinese petrochemical companies that have taken contracted propane had been reselling some of their cargoes since early this year, including those from Iran.
This had also contributed to the ample supplies in the Asian market this year -- along with the rising flows of Western cargoes -- and helped to meet steadily growing demand in Southeast Asia and Taiwan, as well as stabilize spot prices, traders said.
New York (Platts)--11Sep2014/643 pm EDT/2243 GMT
NYMEX October crude increased $1.16/barrel to $92.83/b Thursday, one day after the futures contract fell to a low not seen since January.
ICE October Brent was up 31 cents to $98.35/b.
NYMEX October RBOB was down 24 points to $2.5241/gal, and NYMEX October ULSD was up 28 points to $2.7561/gal.
The oil complex was down in early trading after the International Energy Agency, in its monthly oil outlook, slashed its forecast for oil demand growth in 2014 and 2015, compared with the agency's last report in August.
Citing a weak outlook in Europe and China, IEA reduced 2014 demand growth by 150,000 b/d to 900,00 b/d and its estimate for 2015 growth by 165,000 b/d to 1.2 million b/d.
NYMEX October crude hit an intraday low of $90.74/b, down 93 cents compared with Wednesday's close. ICE October Brent fell as low as $96.72/b, which represented a $1.32 drop over Wednesday's close.
A picture of slowing growth, combined with ample production, has pushed crude prices lower since the summer. Front-month ICE Brent closed $115.06/b on June 19 before beginning to slide.
However, current prices already reflect the supply-demand picture outlined in Thursday's IEA report, which explains why the dip was not sustainable over the course of the day, Tradition Energy analyst Gene McGillian said.
"When we step back and consider the economic outlook isn't as dire in the US as in Europe or China, WTI hitting a low was overdone, so it was due for some profit-taking," he said.
The October Brent-NYMEX crude spread narrowed as far as $4.94/b Thursday before settling at $5.25/b.
A narrowing spread likely reflects a still-strong pull for North American crudes by US Gulf Coast refiners, while imports continue to get backed out.
This demand has provided downside support to NYMEX crude, while ICE Brent has been plagued a glutted Atlantic Basin where spot grades compete for discounts amid sharply lower official selling prices for Saudi, Iraqi and Kuwaiti crudes.
The prompt spread was last below $5/b in late-July amid record US crude demand. Crude runs at US refineries hit a record 16.63 million b/d for the reporting week ended July 11, EIA data shows. This was especially true in the Midwest, where run rates exceeded 100%.
While US crude runs have since fallen to around 16.33 million b/d for the week ended September 5, that is still more 436,000 b/d higher than year-ago levels.
The most recent narrowing in the October Brent/NYMEX crude spread is likely a re-calibration from where fundamentals left off after the September-October roll. At that time, the NYMEX crude structure was sharply backwardated, causing the spread to widen.
With Brent futures below $100/b, attention is turning to the role of Saudi Arabia, and whether the Gulf producer will take action to try and support prices.
On Thursday, Saudi Oil Minister Ali Naimi seemed to downplay the recent drop in oil prices.
"Prices of oil always go up and down, so I really don't know why the big fuss about it this time," AFP quoted Naimi as saying. Naimi was speaking to reporters in Kuwait City ahead of a regular meeting of oil ministers of the six Gulf Cooperation Council states.
Tokyo (Platts)--12Sep2014/423 am EDT/823 GMT
Japanese utility Tokyo Electric Power Company said Friday, September 12, it has signed its first portfolio long-term contract to buy up to 1.2 million mt/year of lean LNG from BP Singapore for 17 years starting April 2017.
The contract uses Henry Hub-linked gas prices for indexation, which should help Tepco procure lean LNG at competitive prices, the company said.
"The agreement will enable Tepco's steady purchase of LNG through diversification since BPS will provide LNG from various supply areas," Tepco said in a statement.
Tepco in 2012 set a goal of raising its lean LNG purchases to 10 million mt/year within 10 years, to almost half the total volume of its annual LNG purchases.
LNG Daily
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This latest deal brings its current lean LNG contracted volumes to 2 million mt/year, Tepco said.
BP in 2013 signed an agreement to lift 4.4 million mt/year from train 2 of the Freeport LNG export project on the US Gulf Coast.
Volumes from the US terminal are expected to begin delivery in 2019.
BP Singapore, an affiliate of BP, has a sales and purchase agreement with Japan's Chubu Electric, signed in 2012, to supply around 8 million mt of LNG over 16 years on an ex-ship delivery basis.
Japan's Kansai Electric in 2012 signed a "key terms agreement" to buy around 500,000 mt/year of LNG from BP Singapore for 15 years from fiscal 2017-18 at Henry Hub-linked gas prices.
Lean LNG is predominantly methane with small quantities of ethane and has a very low High Heating Value.
Washington (Platts)--11Sep2014/330 pm EDT/1930 GMT
The NYMEX natural gas futures contract fell 13.1 cents, or 3%, Thursday to settle at $3.823/MMBtu, after the US Energy Information Administration estimated gas in storage rose by a larger-than-expected 92 Bcf in the week ended Friday.
The contract was down 6 cents Thursday morning ahead of the EIA release. The estimated storage build was well above analysts' consensus expectations of an 83-Bcf injection, well above the 83 Bcf consensus of analysts. After the report was issued, the contract continue to fall.
"I still would have thought [the price drop] would have been more," Gelber & Associates analyst Aaron Calder said. "There's no doubt it's a pretty bearish injection, but there's support at $3.80[/MMBtu]."
The contract lost most of its ground in the morning and spent the afternoon banging between $3.81 and $3.82/MMBtu.
Higher "[p]roduction had accounted for the increase in demand last week and the same is true this week," Gelber said. "This week confirmed the trend -- it's still bearish."
"It was a big number and it [the NYMEX contract] went south," INTL FC Stone broker Tom Saal said. "I don't see anything holding it up, it has momentum [and] it can go further to the downside." The October gas contract traded Thursday in between $3.809/MMBtu and $3.963/MMBtu.
The NYMEX settlement is considered preliminary and subject to change until a final settlement price is posted at 7 pm EDT (2300 GMT).
Platts: Global Petrochemical Prices Fell 1% in August
Lackluster Derivative Demand, Returning Production Reversed Two-month Uptrend
London - September 12, 2014
Prices in the $3-trillion-plus global petrochemicals market dropped 1% in August as energy prices fell globally, according to the just-released monthly Platts Global Petrochemical Index(PGPI). The PGPI is a benchmark basket of seven widely used petrochemicals and is published by Platts, a leading global energy, petrochemicals and metals information provider and a top source of benchmark price references.
The August PGPI fell $19 from July to $1,427 per metric ton (/mt) and reversed the increases of the last two months. On a year-over-year basis, petrochemical priceswere up 5% from August 2013.
PLATTS GLOBAL PETROCHEMICAL INDEX IN DOLLARS PER METRIC TON
The daily price reflected as a monthly average
| Aug 2014 | Monthly % Change | Annual % change | Aug 2013 | July 2014 | June 2014 | May 2014 | Apr 2014 |
| $1,427 | -1% | 5% | $1,362 | $1,446 | $1,387 | $1,360 | $1,363 |
"For the past two months, petrochemical production was reduced because of delayed plant restarts, which helped push prices higher," said Jim Foster, Platts editorial director of petrochemical analytics. "As those issues were resolved, prices in August started to fall. Downward price pressure also followed the declining prices of crude oil and naphtha - which petrochemical products are derived from."
Petrochemicals are used to make plastic, rubber, nylon and other consumer products and are utilized in manufacturing, construction, pharmaceuticals, aviation, electronics and nearly every commercial industry.
OLEFINS
Prices of olefins - a group of hydrocarbon compounds which are the building blocks to many petrochemical products used to produce everyday goods - were mixed in August. Ethylene prices rose 1% month over month, due to strong gains in late July and early August, which took a downturn by the end of the month due to falling crude oil and naphtha prices. Propylene, the other olefin component in the PGPI, was down 2% in August, led by softening energy prices.
Polyethylene, a polymer produced from ethylene, saw a price decline of 1% in August despite the slight increase in ethylene prices. Polypropylene, a polymer produced from propylene, was down less than 1% last month.
AROMATICS
Prices of aromatics - a group of scented hydrocarbons with benzene rings used to make a variety of petrochemicals - slipped in August, due to falling energy prices and lackluster demand from derivative markets. Toluene, a petrochemical that can be blended into gasoline or converted into benzene and xylenes, posted the largest decrease of 6% month over month. Benzene and paraxylene prices were both down 4% in August.
The price decreases in global petrochemical markets occurred amid a mixed performance by global equity markets in August. The Nikkei 225 fell 1% during the month, while the Dow Jones Industrial Average climbed 3% and the London Stock Exchange Index (FTSE) advanced 1%.
To access a summary of the August performance of each of the seven key petrochemicals included in the PGPI, visit this link: http://www.platts.com/newsfeature/2014/Petrochemicals/pgpi/index.
The PGPI reflects a compilation of the daily price assessments of physical spot market ethylene, propylene, benzene, toluene, paraxylene, low-density polyethylene (LDPE) and polypropylene as published by Platts and is weighted by the three regions of Asia, Europe and the United States. Used as a price reference, a gauge of sector activity, and a measure of comparison for determining the profitability of selling a barrel of crude oil intact or refining it into products, the PGPI was first published by Platts in August 2007.
Published daily in a real-time news service Platts Petrochemical Alert and other Platts publications, the PGPI is anchored by Platts' robust and long-established price assessment methodology and the firm's 100-year history of energy price reporting.
Platts petrochemicals experts are available for media interviews. A sample list of experts may be found at the Platts Media Center. For more information on petrochemicals, visit the Platts website at www.platts.com.
By Kadhim Ajrash and Khalid Al-Ansary Sep 13, 2014 8:49 PM GMT+0700
Islamic State militants set fire to an oil storage tank at Iraq’s largest refinery as the U.S. prepares to escalate the campaign against the extremist group.
Militants fired mortar rounds at the Baiji refinery, 130 miles north of Baghdad, causing a crude storage tank to catch fire and emit a plume of smoke visible from miles away, the police said in a statement read over the phone by an officer.
“The fire could go on for two or three days as there is no civil defense to put it out,” police said in the statement, without indicating how much oil the tank contained. “The situation in the refinery’s perimeter is quiet now.”
Islamic State militants have attacked the refinery several times since June as they seek to secure fuel and funding for a so-called caliphate they proclaimed in areas stretching over the Iraqi-Syrian border. They already control oil producing regions in eastern Syria.
The Baiji refinery has an installed capacity of 310,000 barrels a day and the storage tank that came under attack belongs to a group that typically contain 100,000 barrels each, Saad Al-Obaidi, a protection force personnel at the plant, said by phone. The plant stopped working in June.
The U.S. appointed John R. Allen, a retired Marine general who served in Afghanistan and in Iraq, to coordinate the international effort against the IS, the New York Times (NYT) said Sept. 11, citing administration officials.
By Terry Atlas and Volodymyr Verbyany Sep 15, 2014 4:00 AM GMT+0700
U.S. Secretary of State John Kerry will meet Russian Foreign Minister Sergei Lavrov today after pro-Russian rebels continued to clash with Ukraine troops in several locations including the Donetsk airport.
The U.S. is concerned about renewed fighting and has no details about the content of a Russian convoy that entered and left Ukraine over the weekend, a State Department official said. Russia still has about 25,000 troops along the border and more than 3,000 soldiers inside the country, according to the Ukrainian government. The U.S. and other NATO countries are commencing military exercises in the country today.
Kerry will meet with Lavrov at a conference on Iraq that will take place in Paris. While Russian President Vladimir Putin has denied supporting pro-Russian rebels, Ukrainian Prime Minister Arseniy Yatsenyuk said that Putin seeks to restore the Soviet Union and take the entire country.
The conflict has claimed more than 3,000 lives and clashes have occurred daily since a truce took effect Sept. 5. Artillery fire caused casualties among civilians in the city of Donetsk yesterday, according to the city council. Attacks on Ukrainian army positions occur in three to five spots per day, Defence Minister Valeriy Geletey said.
The Donetsk airport was shelled from east and south on Saturday in two rebel attacks that were repelled, and troops were also shelled in the Luhansk region, a military spokesman said.
Guns, Mortar
In addition, militants of the self-proclaimed Donetsk People’s Republic were using guns and mortar to try to break through Ukrainian troop lines near Panteleymonivka north of Donetsk, the Ukrainian military said. Three Ukrainian border soldiers were wounded near the southern city of Mariupol when they were returning from patrol duty in a car, the Ukrainian state border service said on Saturday.
The U.S. on Sept. 12 expanded sanctions against Russia to Include OAO Sberbank, the country’s largest bank, because of the fighting in eastern Ukraine. The European Union added 15 companies, including Gazprom Neft, OAO Rosneft (ROSN) and Transneft, and 24 people to its own list of those affected by its restrictions.
“Putin cannot cope with the idea that Ukraine will be part of the European family,” Yatsenyuk said at a conference in Kiev Sept. 13. “He wants to restore the Soviet Union.”
Putin’s Goal
“His goal is to take the entire Ukraine,” Yatsenyuk told the Yalta European Strategy Annual Meeting. “Russia is a threat to the global order and to the security of the whole of Europe.”
The second Russian convoy of 220 trucks entered and left Ukraine over the weekend, the Organization for Security and Cooperation in Europe said. All vehicles crossed into Ukraine without being inspected by Ukrainian border guards, customs officers or the International Committee of the Red Cross, according to the OSCE. The OSCE cited Russian officials as saying the convoy carried only food products.
The U.S. will participate in an annual training exercise in Ukraine with 14 other nations that begins today, according to a statement from Navy Captain Greg Hicks, a spokesman for U.S. European Command.
The two-week field training exercise, which won’t include any live fire, was planned before the outbreak of hostilities in Ukraine, Hicks said. About 1,300 military personnel from the U.S., Ukraine, Great Britain, Poland, Canada, Georgia and Germany, among other countries, will take part in the exercise to be conducted near Yavoriv, Hicks said.
By Bloomberg News Sep 14, 2014 11:00 PM GMT+0700
China Petroleum & Chemical Corp. (386), Asia’s top refiner, agreed to sell a 107 billion yuan ($17.5 billion) stake in its retail business to a group of investors including China Life Insurance Co.
Sinopec, as the company is known, said the unit will sell a combined 29.99 percent stake to 25 investors including Fosun International Ltd. (656), run by billionaire Guo Guangchang. China Life will buy 10 billion yuan of shares while gas supplier ENN Energy Holdings Ltd. (2688) committed 4 billion yuan, Sinopec said in a Hong Kong stock exchange filing yesterday. A fund backed by Tencent Holdings Ltd., Asia’s biggest listed Internet company, is investing 10 billion yuan, according to the filing.
The deal comes amid a push by the Chinese government to restructure state-run companies and allow markets greater sway in resource allocation. The Sinopec retail business runs the country’s biggest network of fuel stations, with more than 30,000 locations, as well as 23,000 convenience stores.
“The retail business is a big cash cow with the potential to increase margins,” Gordon Kwan, head of oil and gas research at Nomura International Hong Kong Ltd., said by phone yesterday. “There is a lot of scope to make the business better.”
RRJ Capital Ltd., run by former Goldman Sachs Group Inc. partner Richard Ong, will purchase a 3.6-billion-yuan stake in the unit while white-goods maker Haier Electronics Group Co. agreed to invest 1.2 billion yuan. Hopu Investment Management Co., a private-equity firm set up by the head of Goldman Sachs’s Chinese securities venture, and bad-loan manager China Cinda Asset Management Co. are also among investors, the filing shows.
‘Gold Mine’
The fuel-station business is a “huge gold mine” whose full potential “hasn’t been tapped,” Sinopec Chairman Fu Chengyu said on a March conference call with analysts. The sale paves the way for an eventual listing of the unit, people familiar with the matter said in July.
Shares of Sinopec have risen 25 percent in Hong Kong trading since the start of the year, outpacing a 5.5 percent gain in the benchmark Hang Seng Index.
Sinopec’s parent company, China Petrochemical Corp., will list its petroleum engineering business in Hong Kong as part of a 30.6 billion yuan reorganization, according to a Sept. 12 filing to the city’s stock exchange. The state-owned company agreed to sell Sinopec Oilfield Service Corp. to a Hong Kong-listed polyester maker it controls, Sinopec Yizheng Chemical Fibre Co. (1033), the filing shows.
Last year, Sinopec Engineering Group Co. (2386), a unit of China Petrochemical that builds refineries, raised $1.8 billion in a Hong Kong initial public offering, data compiled by Bloomberg show.
By Sheenagh Matthews and Tino Andresen
BASF SE (BAS)’s oil and gas arm agreed to buy assets from Norway’s Statoil ASA (STL) for $1.25 billion, diversifying energy supplies for Germany’s biggest chemical maker as relations between Europe and Russia worsen.
BASF’s Wintershall is acquiring a share in two producing fields, two development projects, the Polarled pipeline project and a share in four exploration licenses, the Ludwigshafen, Germany-based company said today in an e-mailed statement. Wintershall’s daily production in Norway will increase 50 percent to about 60,000 barrels of oil equivalent.
The Norwegian deal will make BASF, Germany’s largest industrial user of gas, less reliant on supplies from Russia as the U.S. and European Union ratchet up sanctions in response to the conflict in Ukraine. An asset swap with OAO Gazprom (OGZD), agreed to in 2012 and expected to close this autumn, was set to boost Russia’s share of BASF’s supply to more than half the total.
“With domestic production in Europe, we are strengthening the European supply security,” Rainer Seele, chief executive officer of Wintershall, said in today’s statement. “We want to become one of the leading oil and gas companies in Norway.”
The EU is concerned about the reliability of gas supply from Russia because of the Ukraine crisis and the resulting sanctions. EON SE, Germany’s largest utility, said earlier this week it sees “minor supply limitations” from Russia’s Gazprom, which also limited natural gas flows to Poland.
The Statoil transaction will be financially effective retroactively to Jan. 1, BASF said. A further payment of $50 million will be made if the field development project is executed according to plan.
North Sea
Two years ago, the world’s largest chemical maker paid Statoil $1.35 billion for stakes in oil and gas sites that helped it boost North Sea output more than 10 fold.
“With the acquisition of these shares in oil and gas fields, we are continuing on our growth course in Norway and intensifying the cooperation with our partner Statoil,” said Kurt Bock, chief executive officer of BASF.
For Statoil, the deal fits into a strategy of reducing investment plans as the company seeks to increase shareholder returns amid rising costs and stagnating energy prices. The deal with Wintershall will reduce the company’s investment commitments by $1.8 billion until 2020, it said in a separate statement.
Statoil, which has said it will continue to sell assets in the future as it becomes increasingly selective on projects, has gotten proceeds from the sale of offshore fields and downstream assets of about $20 billion since 2010. The 67 percent state-owned Norwegian company is also deploying an efficiency program aimed at reducing annual costs by $1.3 billion by 2016.
By Ladka Bauerova and Misha Savic
Eastern European nations from Poland to Serbia are boosting stockpiles of natural gas after Russia reduced deliveries during the armed conflict in eastern Ukraine and concerns rose about a winter shutoff.
Underground storage in the Czech Republic and Poland is at full capacity, while Slovakia expects to top up its storage facilities in the next several days, the countries’ gas companies said. Serbia, whose sole depot has a capacity of 450 million cubic meters, may ask neighboring Hungary to store as much as 200 million cubic meters of gas in its reservoirs, according to Energy Minister Aleksandar Antic.
While the level of eastern European countries’ dependence on Russian gas through Ukraine varies, the region as a whole relies more on deliveries from OAO Gazprom (OGZD) than western Europe and is therefore stocking up in case flow from Russia via Ukraine stops entirely. During the past few days, Russia began slightly reducing supplies to countries like Slovakia and Poland, which provide reverse gas flows to Ukraine.
“Only Latvia has enough storage capacity to survive through the winter without Russian gas,” Mikhail Korchemkin from East European Gas Analysis said by e-mail. “Other countries of central and eastern Europe don’t have enough storage capacity.”
Southeastern European nations such as Bulgaria and Serbia are particularly exposed to interruptions since they are almost 100 percent dependent on Russian gas coming through Ukraine. The current crisis has rekindled memories of 2006 and 2009, when Gazprom disputes with Ukraine left the Balkan nations without fuel for weeks.
South Stream
As a result, southeastern Europe’s governments were long reluctant to halt preparatory work on Gazprom’s South Stream project, designed to run under the Black Sea from Russia and enter the EU in Bulgaria, bypassing Ukraine.
Authorities were betting on the 2,446-kilometer (1,520-mile) pipeline to boost the security of supplies and halted the construction under lobbying from Brussels and the U.S. earlier this year.
The U.S. expanded sanctions against Russia today to include the country’s largest bank, OAO Sberbank, as well as energy, defense and technology companies owned by the state. Treasury Secretary Jacob J. Lew warned of Russia’s growing “economic and diplomatic isolation.”
In Serbia, where hundreds of thousands of households rely partly or completely on electricity for heating due to capped electricity prices, a gas shortage could cause a spike in power consumption that would destabilize the national grid, former Energy Minister Petar Skundric said. In case of a cutoff, Serb storage may cover as much as 45 days of consumption in wintertime.
Full Capacity
The Czech Republic’s gas storage is full, one month before schedule, according RWE AG (RWE), which operates 92 percent of the country’s underground storage with a capacity of 2.7 billion cubic meters. Polish utility Polskie Gornictwo Naftowe i Gazownictwo SA also filled its 2.6 billion cubic meters of to the limit.
Still, gas companies across eastern Europe are reporting reduction in gas supplies from Russia. PGNiG said it received as much as 24 percent less gas from Gazprom than it ordered on Sept. 8 and 9. Slovakia, which started the reverse flow to Ukraine at the beginning of September, saw a 10 percent decrease in the amount of gas ordered from Russia every day since Sept. 10, operator Slovensky Plynarensky Priemysel AS said. Gas flow to Romania was cut by 5 percent.
Emerging Europe
“We are seeing a similar story across emerging Europe - Poland, Slovakia, Hungary and Romania, as Russia tries to limit any surplus gas available in the region for reverse flow back to Ukraine,” said Timothy Ash, the chief economist for emerging markets at Standard Bank Group Ltd. in London.
Slovakia’s SPP said so far the supplies are sufficient to cover all of the country’s demand and the storage is almost full.
Gas supplies to Austria were also 15 percent lower than agreed yesterday and will remain at the same level today, OMV AG spokesman Robert Lechner said in a phone interview today. The Austrian oil company is getting more gas than what’s needed and its own gas storages are 98 percent full, Lechner said.
The Czechs are less dependent on the supply of gas via the Ukrainian pipeline than surrounding countries because of its interconnection with Germany, which can cover their entire consumption. The country is also able to supply neighboring Slovakia, a former federal partner, in case it’s needed, Czech Industry and Trade Minister Jan Mladek said.
Baltic Supplies
Lithuania has enough gas reserves to last until its new LNG terminal in Klaipeda opens in December, Prime Minister Algirdas Butkevicius said on Sept. 11. Latvia’s Incukalns storage facility is 70 percent full, with enough gas to last the country for more than a year, Prime Minister Laimdota Straujuma said on Sept. 9.
Estonia, the smallest of the three Baltic republics, has gas stocks for only five days. While gas represents only 9 percent in the nation’s energy mix, it is used to heat 58 percent of the capital Tallinn.
Romania has a sizable domestic production and its storage with a capacity of 2.8 billion cubic meters is currently half full. The country can last about six months without any gas imports from Russia, Energy Minister Razvan Nicolescu said in June.
“Without Ukrainian transit, Bulgaria would suffer the most,” Korchemkin said. As for LNG potentially imported by Lithuania and Poland, it “would replace just about 25-30 percent of the daily volumes of Russian gas delivered via Ukraine.”
By James G. Neuger, Daryna Krasnolutska and Ilya Arkhipov
Russia threatened retaliation against a U.S. and European Union decision to stiffen sanctions, saying the move to expand penalties undermines the peace process in Ukraine.
Russia will react “calmly, appropriately” to the EU sanctions, Foreign Minister Sergei Lavrov told state TV in an interview. The EU added 15 companies, including OAO Gazprom Neft, OAO Rosneft and OAO Transneft, and 24 people to the list of those affected by its sanctions against Russia. The U.S. will also “deepen and broaden” its measures against Russia’s financial, energy and defense industries, President Barack Obama said yesterday.
The moves raise the level of confrontation and follow reprisals last month, when Russia banned a range of food imports after an earlier round of U.S. and European penalties. Russian President Vladimir Putin denies any involvement in the fighting that broke out after he annexed Crimea in March in what has become the worst crisis between Russia and its former Cold War adversaries since the fall of communism.
“The current political risks, various restrictions and barriers are worsening the situation,” Putin said today in Dushanbe, Tajikistan. “They directly harm the global business climate and reduce trust in international trade and the financial system.”
New Penalties
Under the new penalties published today in the Official Journal, the EU extended a ban on share or bond sales with a maturity of more than 30 days to the three energy companies and three industrial producers -- Oboronprom, Uralvagonzavod and United Aircraft Corp. Nine defense companies are subject to a curb on imports of dual-use technology.
The targeted individuals include Rostec Corp. Chief Executive Officer Sergei Chemezov and Vladimir Zhirinovsky, a lawmaker in Russia’s lower house of parliament.
To slap more sanctions on Russia as the peace process in Ukraine “starts to be sustainable, means to choose a path to undermine the peace process,” Lavrov said. We’ll react “calmly, appropriately. We will act to protect our own interests.”
Russia’s Economy Ministry drafted a list of goods that may be banned, including automobile imports, particularly used cars, as well as textiles and clothing, state-run RIA Novosti reported, citing Kremlin economic aide Andrei Belousov yesterday. It was also weighing restrictions on overflights to the Asia-Pacific as a response to sanctions against Aeroflot’s low-cost unit Dobrolet.
Ruble Weakens
The ruble weakened to a record for a second day. The currency retreated as much as 0.6 percent to 37.7265 before trading 0.4 percent lower at 1:40 p.m. in Moscow, bringing this week’s loss to 2 percent. Government bonds due in February 2027 rose for the first time in five days, sending the yield four basis points lower to 9.68 percent.
The fighting in Ukraine has killed more than 3,000 people and driven more than 1 million from their homes, according to the United Nations.
The Sept. 5 cease-fire still showed signs of strain, with the separatists firing at checkpoints and the Donetsk airport overnight, Ukrainian military spokesman Oleksiy Dmytrashkovskyi said. Overnight shelling also damaged buildings in Donetsk and local pipelines, the city council said on its website.
Troop Withdrawal
President Petro Poroshenko said in Kiev that Russian troop withdrawal from Ukraine’s conflict zone has halted and urged for it to continue.
Poroshenko demanded that Russia and the rebels immediately release all prisoners. The rebels are preparing for a next swap of prisoners in two days, Interfax reported, citing Andrei Purgin, an official of the self-proclaimed Donetsk people’s republic.
Ukraine is “hoping” for special status within NATO and needs peace to restart investments and the economy, Poroshenko said, vowing to regain control of Crimea one day.
“There can be no compromise on territorial integrity and the independence of Ukraine,” he said.
Ukraine was preparing a law that envisions regional elections to be held alongside parliamentary elections next month that would also guarantee the use of the Russian language in the rebel-held areas, presidential adviser Yuriy Lutsenko told reporters.
The 28-member EU is offering to ease the sanctions once the Kremlin makes a good-faith effort to end the conflict.
Reversing Measures
“We have always stressed the reversibility and scalability of our restrictive measures,” EU President Herman Van Rompuy said in a statement from Brussels. A review of the cease-fire in eastern Ukraine by the end of September may lead to EU “proposals to amend, suspend or repeal the set of sanctions in force, in all or in part.”
The EU won’t spell out what it wants to see on the ground to justify an easing or lifting of sanctions, according to an official from the bloc who spoke on condition of anonymity. It also won’t predict exactly when this decision will be made. The review will cover all sanctions now in force.
“Only if Russia significantly and verifiably implements the peace plan can the sanctions be withdrawn,” German Foreign Minister Frank-Walter Steinmeier said in an interview with Passauer Neue Presse newspaper. “We’ve seen too often in the past months that Moscow promises much, but its actions haven’t contributed to an easing of the situation in eastern Ukraine.”
Sanctions run until the end of July 2015, the official said. A unanimous decision by all 28 EU governments will be required to renew them.
Some EU countries had argued that rushing ahead with the restrictions would give the Kremlin a pretext to restart the fighting.
“It is certainly a difficult situation because every further set of sanctions can lead to counter reactions that we don’t know today,” Austrian Finance Minister Hans Joerg Schelling said today before the meeting of euro-are
By Clyde Russell
Gulf News
Launceston, Australia: If you could pick the worst set of circumstances in which to start up a giant, export-oriented oil refinery, you might well have them right now. Saudi Aramco and joint venture partner Sinopec have started test runs at their 400,000 barrel per day (bpd) Yanbu refinery, located in the oil-rich kingdom.
This puts the new plant on schedule to begin commercial exports in November, possibly even by the second half of October, according to trade sources. Yanbu will be the second major refinery to come online in Saudi Arabia in little more than a year, following the September 2013 start-up of the similar 400,000 bpd Jubail plant, a joint venture between Aramco and France’s Total.
Both these plants are largely aimed at the export market and can supply to both Europe and Asia because of their location. However, Yanbu is coming online at a time when crude demand growth in Asia is disappointing, the region’s refiners are struggling to make decent profits, crude prices have gone into contango and Middle East producers are cutting official selling prices (OSPs).
The extra refined products from Yanbu may have two undesirable impacts, from a Saudi perspective. The first is that they will lower demand from the region’s refiners for crude deliveries as competition in the refined fuels market gets tougher, prompting some plants to run at lower utilisation rates.
The second is that the additional products will put downward pressure on prices, thus reducing Asian margins, prompting refiners to ask for greater discounts on crude supplies. Saudi Aramco cut its OSP for its flagship Arab Light blend for Asian refineries for October cargoes to a discount of 5 cents a barrel to regional crude marker Oman/Dubai.
That was a cut of $1.70 (Dh6.24) a barrel from September cargoes, bigger than the market had anticipated and the largest reduction since February 2012. It’s also the first time since November 2010 that Arab Light has been at a discount to Oman/Dubai, according to a report from consultants Energy Aspects.
While the large cut in the OSP is probably in part a response to the sharp fall in the spread between Brent and Dubai crudes, it may also be a sign of Saudi concern about the state of Asian demand. The premium of Brent to Dubai dropped from a 2014 peak of $4.96 a barrel on June 13 to just 94 cents on August 28.
This has led Asian refiners to prefer crude priced off Brent rather than Dubai, thereby prompting Middle East producers to start offering lower OSPs. The switch to contango for Oman futures traded on the Dubai Mercantile Exchange, whereby prompt prices are weaker than future months, is also a sign of weak current demand.
This market structure has led to traders buying oil and storing it for later sale, which creates a further headache for producers, since when the stockpiled oil is eventually released, it will be a drag on prices.
Asian refinery margins have recovered in recent weeks, with the five-day average for a Singapore plant using Dubai at $5.63 a barrel, slightly higher than the moving 365-day average of $5.35 but weaker than levels above $6 that prevailed for most of the January to April period this year.
Asian refiners are still not making as much money as their counterparts on the US Gulf coast or in north-west Europe, and the addition of new plants in the region, such as Yanbu, will make life tougher for them.
What the start-up of Yanbu highlights is that Middle East oil producers will probably have to cut crude prices further in the next few months, or hope for a cold northern winter to spark a surge in demand.a finance ministers in Milan, Italy.
By DAVID D. KIRKPATRICKSEPT. 14, 2014
BAGHDAD — Libya’s newly elected Parliament voted on Sunday to fire the chairman of the central bank, setting off a struggle for control of the country’s wealth and vast oil reserves.
The central bank, which holds more than $100 billion in foreign cash reserves and investments, has so far remained aloof from the chaos that has steadily engulfed Libya since the ouster of Col. Muammar el-Qaddafi in 2011.
But Libya’s oil riches have always been the unstated stakes behind the strife, and now two rival coalitions of cities, tribes, militias and factions have squared off in a nationwide conflict. One side, which includes some Islamist groups, has seized control of the capital, Tripoli. The other side is aligned with the new Parliament, convening in the eastern city of Tobruk.
The bank’s chairman, Sadel Omar el-Kaber, a respected veteran of several international banks who was appointed by the Western-backed transitional government after Colonel Qaddafi fell, had sought to remain neutral. “The central bank is the last line of defense of state institutions and it is very important that it stays far away from political struggles,” the bank said in a statement at the beginning of the month.
But a dispute arose over a request by the new Parliament for a payment from the bank of $65 million, according to a lawmaker, speaking on the condition of anonymity for the safety of family members still living in Tripoli. The Parliament accused Mr. Kaber of blocking the transfer, and lawmakers said that members who were present had voted by 95 to 1 to remove him.
The full Parliament is 200 seats, and what coalition or faction of lawmakers might ultimately control it has never been determined. It was elected earlier this year, but about 20 seats were left empty because threats of violence had obstructed the voting.
Other lawmakers have boycotted Parliament since the chamber’s initial leader — chosen by age — convened it in Tobruk, territory controlled by a renegade general who had called for a coup to purge the country of Islamists. Transportation difficulties caused by the unrest may have lowered attendance as well.
Mr. Kaber could not be reached for comment. The lawmaker said Mr. Kaber had not been accused of personal corruption, only of obstructing Parliament to favor the rival faction.
A person associated with the bank who supports Mr. Kaber accused Parliament of forcing him out in order to use the bank as a weapon, potentially to finance its side of the factional conflict.
By Eurasianet | Sun, 14 September 2014 00:00 | 0
The unraveling of Iraq may have some interesting, even alarming implications for the Caspian Basin state of Azerbaijan.
Unlike other Arab states in turmoil, including Libya and Syria, Iraq has a religious and cultural profile that somewhat mimics Azerbaijan’s. For one, both countries have Shia Islamic majorities with large Sunni minorities. In addition, both have lengthy experience with coercive, top-down secularism. In Iraq, Saddam Hussein’s Baath Party promoted secularism during the three-and-a-half decades it held power in the country. In Azerbaijan, the secular tradition dates back to the Bolsheviks’ arrival in power in the 1920s and extends to the present day.
There are two significant ways in which the disintegration of Iraq might pose security challenges to Azerbaijan. The first and most obvious is connected with the rise in Iraq of a Sunni jihadist movement, known as ISIS. This development, over time, could stoke sectarian tension in Azerbaijan, a country where, even though secularism remains a powerful force in society, religion is making a strong comeback.
For Shias worldwide, including those in Azerbaijan, opposing the violently anti-Shia ISIS movement is an existential issue. For now, Shia leaders in Azerbaijan have urged sectarian restraint. Even so, there has already been an incident in the southern Azerbaijani town of Sabirabad, where local Shia residents attacked a man who followed the tenets of Salafi Islam. Such incidents are still rare in a secular Azerbaijan where the numbers of passionate believers, Shia and Sunni alike, are still relatively low. Even so, secularism in Azerbaijan appears to rest on shaky ground, and a rapidly rising number of citizens are using faith to help define their identities.
Where older generation of Azerbaijanis saw themselves as Muslims mostly in a cultural sense, often with a blurred distinction between Shiasm and Sunnism, new believers are very conscious of their identities, and globalist in their outlook. When the wider community of believers is perceived to be threatened in Iraq, Syria or elsewhere, young Azerbaijanis are more prone to be galvanized into action against perceived enemies.
Among Azerbaijani Sunnis, the consolidation and expansion of the territorial foothold of ISIS in Iraq could act as a magnet, attracting the discontented to the jihadist banner. This phenomenon has already occurred in Syria, where some Azerbaijanis, such as a prominent An-Nusra fighter, Hattab al-Azeri, have taken up arms against Bashar al-Assad’s regime with an eye toward gaining experience that could be used one day against Ilham Aliyev’s administration in Baku. ISIS’ gains in Iraq, then, would seem to significantly increase the opportunities for and capabilities of Azerbaijani jihadists one day to launch terror and propaganda campaigns in Azerbaijan.
A second set of challenges is linked to the prospect of Iraq´s disintegration along ethnic lines. The Kurdish Regional Government (KRG) has announced plans to prepare a referendum on the independence of Iraqi Kurdistan. While a vote is not imminent, there is little doubt that if and when it took place, the pro-independence stance would win easily. This would encourage Kurds in Turkey and Iran to want to join their brothers in a new Kurdish state. And while no state other than Israel has so far expressed clear support for an independent Kurdistan, an expectation that a Kurdish state might be pro-Western in orientation could conceivably lead to a subtle change in the position of the West. Indeed, the idea of remapping the Middle East along more homogenous sectarian and ethnic lines, once a purely mental exercise, is now being taken more seriously in Western policy-making discussions.
The problem for Azerbaijan is that there is considerable overlap between the Kurdish and Azeri populations in western Iran. A Kurdish attempt to neatly separate, then, could easily spark tension in Iran, Azerbaijan’s neighbor. That, in turn, could ignite a nationalistic backlash among Iranian Azeris, placing the government in Baku in a difficult position. On the one hand, Baku would feel pressure to show solidarity with "southern Azerbaijanis," as Iranian Azeris are known in Azerbaijan proper; on the other hand, Azerbaijani leaders need to maintain a good working relationship with the Iranian government in Tehran. While the Aliyev administration has been careful not to antagonize Tehran on nationality issues, the idea of a 'greater Azerbaijan' might gain more traction if regional borders start being re-drawn, and if the West and Iran fail to reach a mutually acceptable nuclear deal, thus causing new Western efforts to economically and diplomatically isolate Tehran. A potential 'greater Azerbaijan' would be as likely to be as pro-Western and Israel-friendly as an "independent Kurdistan.”
But it would be folly to expect that any process of re-drawing the maps of Iraq and Iran could go as smoothly as the velvet divorce between Czechs and Slovaks in 1990s. It would be an inevitably brutal and bloody affair, and it is highly unlikely that the Republic of Azerbaijan would be left unscathed by such a process.
Azerbaijan has little or no ability to influence events in Iraq and Iran. Under the present circumstances, the Aliyev administration can best prepare to contend with forces that it can’t control by taking steps to unite Azerbaijani society behind it, rather than divide it. A good way to start such a unification process would be to stop jailing dissidents, human rights and civil society activists, and release those already in prison.
By Eldar Mamedov
Originally published by EurasiaNet.org
By Andy Tully | Sun, 14 September 2014 00:00 | 0
The Kremlin says strengthened sanctions from the European Union and United States against Moscow will cost the West more than Russia.
The EU on Sept. 12 formally extended its ban on 15 companies’ access to shares or bonds issued by European institutions that mature in more than 30 days. The companies include three energy giants – Gazprom Neft, Rosneft and Transneft – and three major manufacturers – Oboronprom, Uralvagonzavod and United Aircraft Corp.
The new sanctions also forbid EU companies from signing new contracts for oil drilling and exploration in partnership with Russian firms. And they prohibit European companies from providing related services to Russian energy ventures in the Arctic, offshore deposits, and shale formations.
Washington imposed similar penalties the same day in a coordinated effort to punish Russia for unilaterally annexing Ukraine's Crimean peninsula in March and for Moscow's suspected support of pro-Russian separatists fighting Kiev's forces in eastern Ukraine.
In announcing the measures, the U.S. Treasury Department said, “Today’s step, which complements Commerce Department restrictions and is similar to new EU measures published today, will impede Russia’s ability to develop so-called frontier or unconventional oil resources, areas in which Russian firms are heavily dependent on U.S. and western technology.”
It added, “While these sanctions do not target or interfere with the current supply of energy from Russia or prevent Russian companies from selling oil and gas to any country, they make it difficult for Russia to develop long-term, technically challenging future projects.”
Russian President Vladimir Putin called the latest round of Western sanctions “strange” and said he has been supporting peace efforts in Ukraine. On a visit to Dushanbe, Tajikistan, he said the continued ramping up of sanctions makes the situation worse.
The Russian Foreign Ministry, meanwhile, said it would retaliate for what it called yet another “hostile step.” Putin spokesman Dmitry Peskov said Sept. 11 that European taxpayers and companies “will have to pick up the costs” for the expanded EU penalties.
In August, Russia responded to a previous strengthening of U.S. and EU sanctions by barring the import of various foods from the West. In response to the latest sanctions, Kremlin economic adviser Andrei Belousov told RIA Novosti that the Economy Ministry may ban the import of many Western products and was considering restricting Western airlines’ flights in Russia's Asia-Pacific air space.
But European Parliament President Martin Schulz, speaking the following day at a conference in Kiev, said Moscow should recognize the strengthening of the sanctions as a message that there is “no return to business as usual.”
By Andy Tully of Oilprice.com
By Andy Tully | Sun, 14 September 2014 00:00 | 0
Two academic studies of the health dangers of hydraulic fracturing, or fracking, have produced different conclusions.
One, conducted by Yale University, said people living near fracking sites report increased health problems. The other, by Penn State University, says fracking water stays underground, far below the groundwater supplies that people use for drinking, and poses no threat.
Both studies were conducted in Pennsylvania, part of the Marcellus Shale formation in the sprawling Appalachian Basin in the eastern United States. It holds enormous reserves of gas and has been a focus of fracking activity and protests.
In the Yale study, former Yale medical professor Dr. Peter Rabinowitz reported in the journal Environmental Health Perspectives that residents living near a fracking site in southwestern Pennsylvania were more than twice as likely to report skin problems and respiratory illnesses than those living farther away.
Rabinowitz, now at Pennsylvania’s University of Washington, surveyed 492 people in 180 households in Washington County, PA -- the heart of the Marcellus Shale. Thirty-nine percent of respondents living within 0.6 of a mile of a gas well reported sinus infections and nosebleeds, compared with 18 percent who said the same and lived more than twice as far away.
The difference was even starker for those reporting skin problems: Thirteen percent reported rashes, while only 3 percent of people who lived farther away had the same complaints.
Rabinowitz said his is “the largest study to date” of its kind. But he cautioned that he isn’t directly linking fracking to the health problems. To determine that will require more research, he said, because “it’s more of an association than a causation.”
The Penn State study concluded that the water and chemicals that are injected into deep shale to help extract gas stays far below the surface and therefore doesn’t pose a serious threat to drinking water supplies.
The study, whose results were published in the Journal of Unconventional Oil and Gas Resources, was conducted by Terry Engelder, professor of geosciences at Penn State; Lawrence Cathles, professor of earth and atmospheric sciences at Cornell University; and Taras Bryndzia, a geologist at Shell International Exploration and Production, Inc.
Opponents of fracking say the contaminated water used to help extract the gas could seep toward the surface and foul clean groundwater. The Penn State study says this isn’t likely because the water would seep up too slowly, if it seeped at all.
Further, it says, upward migration of tainted water isn’t plausible because of the forces used to inject the water into the shale. “As water is wicked into gas shale, the natural gas in the shale is pushed out, Engelder says. “The capillary forces that suck the [water] into the gas shale keep it there.”
The debate continues.
By Andy Tully of Oilprice.com
14 September 2014 21:19 (Last updated 14 September 2014 21:20)
Egyptian General Petroleum Corporation discovers oil reservoirs in the Gulf of Suez and Western Sahara
CAIRO
Egypt's national oil company Egyptian General Petroleum Corporation has announced the discovery of two new oil reservoirs in the Gulf of Suez and the Western Sahara.
Each reservoir has a capacity of 600 barrels of oil production per day, Egyptian General Petroleum Corporation (EGPC) said in a statement on Sunday.
Egypt’s refined petroleum output averaged 445,000 barrel per day in 2013, suggesting the refinery was operating at a capacity of about 63 percent.
The country’s refinery output declined by 28 percent from 2009 to 2013, despite growing domestic oil consumption.
But the potential capacity of the two current reservoirs cannot meet Egypt's growing thirst for oil.
Output decline
The Annual Statistical Bulletin of the Organization of the Petroleum Exporting Countries' (OPEC) suggests the decline in output has been due to foreign oil producers based in the country being allowed to export more crude oil in order to increase revenue to the heavily indebted EGPC.
Egypt has needed to import petroleum to make up for the shortfall in output, and the imported oil is sold in the domestic market at a lower price than that at which it was purchased, which has led to a $19.6 billion budget deficit to date this year.
According to the U.S Energy Information Administration, Egypt is the largest non-OPEC oil producer in Africa and the continent's largest oil consumer, accounting for more than 20 percent of total oil consumption there last year.
Despite Egypt having the largest oil refinery capacity in Africa, it operates well below capacity.
Power plants assisted
Most of its imports came from countries in the European Union and Asia.Some Persian Gulf countries have sent Egypt $3 billion in petroleum supplies to help the country cope with its lower output in domestic refined oil.
Saudi Arabia, Kuwait and the United Arab Emirates (UAE) have sent Egypt gasoil and fuel oil to help fuel the country’s power plants.
Egypt imported almost 170,000 barrel of petroleum products per day in 2013.
www.aa.com.tr/en
14 September 2014 22:15 (Last updated 14 September 2014 22:17)
Natural gas stocks in America have risen as supplies grow at a rate above the five-year average, the U.S. Energy Information Administration reported.
by Murat Temizer
ANKARA
U.S. natural gas storage injections have continued to outpace the average for 2009 to 2013 over the summer, with stocks at 2.8 billion cubic feet as of September 5, the administration said in the Weekly Natural Gas Storage Report.
High levels of natural gas injection reduce pressure on prices in winter, when demand peaks. This affects consumers in both the U.S. and countries that import U.S. gas.
Stocks in March were almost 1 trillion cubic feet below the five-year average due to a particularly cold winter, producing the lowest March figures since 2003.
By the beginning of September, the deficit was reduced to 463 billion cubic feet by relatively higher net injections.
The administration’s latest short-term outlook expects this trend to continue and forecasts stocks of 3.5 billion cubic feet by the end of October, still below the five-year average and the lowest end-October in five years.
The report noted: "Strong domestic production growth and mild demand have supported strong injections through the summer. Mild weather reduced natural gasuse for electric generation. Natural gas prices have also fallen during [the] injection season."
Too many Americans in line of fire, advocacy groups say.
By Daniel J. Graeber | Sept. 12, 2014 at 10:23 AM | 0 Comments (Leave a comment)
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Groups sue U.S. federal agency for lack of action on DOT-111 rail cars carrying crude oil. (Photo: Daniel J. Graeber)
WASHINGTON, Sept. 12 (UPI) -- Advocacy groups said they filed a lawsuit against the Department of Transportation for not responding to calls to pull crude oil rail cars out of service.
The Department of Transportation in July published a 200-page proposal calling for the eventual elimination of older rail cars designated DOT 111 used to ship flammable liquids, "including most Bakken crude oil."
The increase in U.S. crude oil production is more than the existing network of pipelines can handle and industry officials say rail is the primary alternative transit method.
DOT-111 rail cars carrying crude oil have been involved in a series of disastrous derailments, including the deadly incident in Lac-Megantic, Quebec in 2013.
Earthjustice, ForestEthics and the Sierra Club filed a lawsuit against the Department of Transportation for not responding to a petition filed in July calling for a ban on shipping Bakken crude using DOT-111 cars.
Matt Krogh, campaign director with ForestEthics, said DOT-111 cars are "tin cans on wheels."
"We can't run the risk of another disaster like Lac-Megantic," Earthjustice attorney Patti Goldman said in a statement Thursday.
U.S. regulators in January issued an advisory warning Bakken crude oil may be more prone to catch fire than other grades.
The North Dakota Petroleum Council in May published a study saying crude oil taken from the Bakken reserve area does not, as the U.S. Department of Transportation suggests, pose a greater risk when transported by rail.
Company already cleared for project in North Dakota.
By Daniel J. Graeber | Sept. 12, 2014 at 10:07 AM | 0 Comments (Leave a comment)
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ST. PAUL, Minn., Sept. 12 (UPI) -- The Minnesota Public Utilities Commission called on pipeline builder Enbridge Energy to examine new routes for its planned Sandpiper oil project.
Sandpiper would stretch 616 miles from Tioga, N.D., through Minnesota and to an Enbridge terminal in Superior, Wisc. It would then transfer oil to other pipelines for delivery to the U.S. and Canadian refinery markets.
State regulators in a 3-2 decision called on Enbridge to study the environmental issues surrounding six alternative routes through the state proposed by outside groups.
State Commissioner Dan Lipschultz said Minnesota regulators need to take their time in approving a pipeline designed to carry crude oil from the Bakken reserve area in North Dakota.
"I don't want to rush to a thumbs down any more than I want to rush to a thumbs up," he said Thursday. "I want to get it right."
Enbridge in June received backing from state legislators in North Dakota to build Sandpiper. Enbridge attorney Christina Brusven said each setback is a setback in terms of the pipeline's economic benefits.
Enbridge said it wants to have Sandpiper in service by 2016.
Domestic oil production at 8.59 million bpd.
By Daniel J. Graeber | Sept. 12, 2014 at 9:38 AM | 0 Comments (Leave a comment)
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U.S. relying more on domestically produced oil, government data show. UPI/Gary C. Caskey
WASHINGTON, Sept. 12 (UPI) -- The four-week average of crude oil imports into the United States is nearly 7 percent less than last year, the U.S. Energy Information Administration said.
EIA published its weekly status report on the petroleum markets. For the week ending Sept. 5, EIA said crude oil imports averaged over 7.6 million barrels per day, down 54,000 bpd from the previous week. The four-week average of 7.6 million bpd was 6.8 percent less than the same period in 2013.
Canada remained the top crude oil exporter to the U.S. market. Year-on-year, imports from Canada are up 27.2 percent. Imports from Saudi Arabia and Mexico, the No. 2 and No. 3 exporters, respectively, nearly doubled from the previous week.
In terms of production, EIA said the United States produced an average 8.59 million bpd during the week ending Sept. 5. That's 40,000 bpd less than the previous week, but 845,000 bpd more year-on-year.
The cumulative average daily production for the week ending Sept. 5 was 14.6 higher year-on-year, EIA said Thursday.
The increase in U.S. oil production has sparked debates over trade policies. Legislation enacted in response to the 1970s era oil embargo from Arab members of the Organization of Petroleum Exporting Countries limits crude oil exports.
Analysis this week found lifting the ban would still leave some U.S. markets to dependent on foreign oil.
Mexican energy reforms taking shape.
By Daniel J. Graeber | Sept. 12, 2014 at 9:22 AM | 0 Comments (Leave a comment)
MEXICO CITY, Sept. 12 (UPI) -- Mexico's state-run energy company said it's focusing on production of fuels at five domestic refineries in an effort to wean itself from imports.
Mexico relies on imports from its North American counterparts for some of its energy needs. Last year, the United States exported 658 trillion cubic feet of natural gas to the Mexican market, a 6 percent increase from the previous year.
State-owned Petroleos Mexicanos, known also as Pemex, said it's spending $2.5 billion to upgrade domestic refineries to produce more diesel and gasoline. The effort could cut back on Mexico's imports from the United States and eventually lead to fuel exports.
Lawmakers in Mexico are putting the final touches on plans embraced by President Enrique Peña Nieto aimed at drawing international energy companies into the nation's energy sector. The move opens Mexico up to private investors after more than 70 years under a monopoly controlled by Pemex.
The country's energy sector accounted for more than 10 percent of export earnings last year.
The U.S. Energy Information Administration, the statistical arm of the energy department, said Pemex reforms are starting to result in their desired effect.
Wintershall claims production win in acquisition.
By Daniel J. Graeber | Sept. 12, 2014 at 9:05 AM | 0 Comments (Leave a comment)
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Norwegian energy company Statoil unloads offshore assets to Wintershall. UPI/A.J. Sisco..
STAVANGER, Norway, Sept. 12 (UPI) -- Norwegian energy company Statoil said Friday it sold off some of its assets on the Norwegian continental shelf to its German counterpart, Wintershall.
"We have a strong portfolio of projects," Arne Sigve Nylund, president of development and production at Statoil, said in a statement. "This transaction focuses our Norwegian shelf portfolio and further improves our capacity to invest in core areas."
All told, Wintershall paid about $1.25 billion, with another $50 million contingent on development.
Statoil, one of the largest companies of its kind in the world, described Wintershall as one of the better established players on the Norwegian continental shelf.
The deal includes nine separate offshore assets. Statoil stays on as operator of five in the area and leaves fully two assets -- Gjoa and Vega.
Wintershall subsidiary, BASF, said the deal will result in an increase of its net production in Norway to 40,000 barrels of oil equivalent to 60,000 boe.
Canada still No. 1 oil exporter to the United States.
CALGARY, Alberta, Sept. 12 (UPI) -- Total crude oil exports from Canada in June were about 38,000 barrels per day less than the previous month, government data show, and on par with the average.
The Canadian National Energy Board released data from total oil exports through June, the last full month for which data are available.
Total exports for June were 2.8 million barrels per day, about 38,000 bpd, or roughly 1 percent, less than the previous month. So far this year, Canadian exports have averaged about 2.78 million bpd.
Canadian Prime Minister Stephen Harper has sought to add a layer of diversity to an energy export economy that depends almost exclusively on the United States.
Canadian exports to the United States for the second week of September are up about 27 percent compared with the same time last year.
For the week ending Sept. 5, the U.S. Energy Information Administration said Canada was the No. 1 oil exporter to the United States, sending an average 2.9 million bpd across the border for the week.
South China Sea, frontier areas, included in auction.
By Daniel J. Graeber | Sept. 12, 2014 at 8:44 AM | 0 Comments (Leave a comment)
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China opens offshore areas up to bidders. UPI/A.J. Sisco..
BEIJING, Sept. 12 (UPI) -- China's state-owned oil company, CNOOC, announced the opening of bidding for 33 reserve areas off the Chinese coast, including South China Sea areas.
China National Offshore Oil Corp. put 33 blocks totaling 48,691 square miles on the auction block. Seven of the 17 blocks for sale in the eastern basin of the Pearl River are in deep waters, with the rest scattered throughout the South China Sea.
CNOOC is trying to reverse sagging production from mature fields. During the first half of the year, production from the Bohai Bay, which accounts for more than half of all Chinese production, declined 2.5 percent from last year to 411,000 barrels of oil equivalent per day.
Five of the areas up for auction are on frontier territory.
China is suspected of making a land grab with some of its actions in disputed maritime territory.
CNOOC early this year deployed drilling rig HD-981 to an area about 120 miles off the coast of Vietnam.
The Vietnamese government said it would take "all the proper and necessary measures" to protect its interests, saying the rig was encroaching on its sovereignty.
CNOOC in August scored a success with a gas discovery offshore last month. Twelve of the blocks up for bidding were offered during a 2013 auction.
Continental Resources COO in search of greener pastures.
By Daniel J. Graeber | Sept. 12, 2014 at 8:40 AM | 0 Comments (Leave a comment)
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Top executive at Continental Resources resigns from Bakken shale player to pursue other options. UPI/Gary C. Caskey
OKLAHOMA CITY, Sept. 12 (UPI) -- The head of Continental Resources, the largest player in North Dakota shale, is leaving to pursue his options elsewhere, the company said.
Continental announced President and Chief Operating Officer Rick Bott had resigned "to pursue other options."
When releasing its second quarter results in August, the company said net production from the Bakken field, spread out over much of North Dakota and Montana, totaled 108,573 barrels of oil equivalent per day during the second quarter, a 23 percent increase year-on-year.
The company boasted that cumulative oil production from the Bakken reserve reached the 1 billion barrel mark at some point during the first quarter. Quarterly profits for the second quarter, however, were down 68 percent.
Chairman and Chief Executive Office Harold Hamm said the company is ahead of its five-year plan to triple production by 2017, drawing on Bakken and its shale reserves in other western states.
"Continental continues its industry leading, oil-concentrated growth and the depth of our bench lends itself to an expansion in the operating management of the company," he said Thursday. "Continental continues on the dynamic path that we have followed for nearly half a century, and the best is yet to come."
Measures imposed in response to crisis in Ukraine.
By Daniel J. Graeber | Sept. 12, 2014 at 8:28 AM | 0 Comments (Leave a comment)
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Herman Van Rompuy, President of the European Council, says new sanctions targeting Russian energy sector are now in force. UPI/John Angelillo
BRUSSELS, Sept. 12 (UPI) -- New sanctions against the Russian energy sector entered into force Friday in response to continued aggression in Ukraine, the European Union declared.
Herman Van Rompuy, president of the European Council, said the series of restrictive measures adopted Monday are now in force, barring Russian oil company Rosneft and its counterparts Transneft and Gazprom Neft from working in European capital markets.
"In addition, certain services necessary for deep water oil exploration and production, arctic oil exploration or production and shale oil projects in Russia may no more be supplied, for instance drilling, well testing or logging services," the European Council's package from Monday read.
The European Council said it opted to strengthen existing sanctions "in view of the gravity of the situation on the ground in eastern Ukraine."
Russia relies heavily on oil and natural gas revenues to support its economy. When earlier sanctions went into force, Andrei Belousov, an economic adviser to the Kremlin, said the Central Bank of Russia may sell some of its foreign currencies to blacklisted companies in an effort to offset the punitive measures.
A cease-fire agreement in eastern Ukraine was reached during multilateral talks in Minsk. The White House, which said it would mirror the latest European efforts, said the truce came as a result of the economic pressure on Russia.
For Van Rompuy, the measures may be scaled back should the situation change for the better.
"We have always stressed the reversibility and scalability of our restrictive measures," he said.
Company behind effort disappointed, but not surprised.
By Daniel J. Graeber | Sept. 11, 2014 at 10:28 AM | 0 Comments (Leave a comment)
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Shale bid for British national park rejected. UPI/Kevin Dietsch
LONDON, Sept. 11 (UPI) -- A shale pioneer in the United Kingdom said Thursday it was disappointed, but not surprised, by the rejection of its oil and gas exploration bid.
Celtique Energie said its application to explore shale oil and natural gas reserves in the South Downs National Park in southern England was rejected.
"We are disappointed by today's decision by the South Downs National Park Authority," Geoff Davies, Chief Executive Officer of Celtique Energie, said in a statement. "However, we are not surprised, given the authority's public stance regarding oil and gas exploration in National Parks, both in Sussex and elsewhere."
The company said it believed the untapped oil and natural gas reserves thought to be present in the area would be nationally significant.
The British government has endorsed shale reserves as part of a diverse energy mix. Shale campaigns in the country are in their infancy, however, and have been met with widespread opposition from environmental advocacy groups.
"The benefits of fracking have been hugely over-hyped," British Friends of the Earth campaigner Brenda Pollack said. "With the need to tackle climate change becoming more urgent than ever, it's time to build a sustainable energy future based on efficiency and renewable power."
Bakken project could lead to net reduction in greenhouse gas emissions.
By Daniel J. Graeber | Sept. 11, 2014 at 10:24 AM | 0 Comments (Leave a comment)
http://cdnph.upi.com/sv/em/upi/UPI-9691410444150/2014/1/c972d885c84b40af28dc038deca6d583/New-gas-flaring-for-North-Dakota.jpg
New expansion project in North Dakota would cut back on gas flaring from Bakken projects. UPI/A.J. Sisco.
NEW YORK, Sept. 11 (UPI) -- The expansion of a project in the Bakken reserve area of North Dakota will cut down on costs in part due to the use of flared natural gas, project leaders said.
The U.S. subsidiary of Norwegian energy company Statoil, along with a joint venture between General Electric and Ferus Natural Gas Fuels, announced plans to expand the so-called Last Mile project in order to capture flared natural gas and use it to power Statoil's drilling operations in North Dakota.
"By using this captured natural gas in place of diesel in our drilling and hydraulic fracturing operations, we are further reducing emissions and costs," Lance Langford, Statoil's vice president for Bakken development and production, said in a statement Wednesday.
Natural gas associated with the vast shale oil deposits in the states is burned off, or flared, because of a lack of processing capabilities. North Dakota lags behind other oil-producing states in gas utilization, but set a goal of capturing 90 percent of associated gas within six years.
The companies involved in the Last Mile project estimate they'll be able to capture as much as 5 million cubic feet of natural gas per day from operations in the Bakken oil field by the end of the year.
This, in turn, could translate to a reduction in greenhouse gas emissions of as much as 200,000 tons per year.
