By David Malingha Doya Sep 18, 2014 9:33 PM GMT+0700
Kenya expects its estimate of oil resources to almost double to 1 billion barrels as well-drilling climbs and the government forges ahead with plans to build an export pipeline, an energy ministry official said.
Tullow Oil Plc. (TLW) and its partner Africa Oil Corp. (AOI) have discovered an estimated 600 million barrels of oil in the South Lokichar Basin since announcing the country’s first crude find in March 2012. The discovery has spurred the East African nation to accelerate infrastructure-development plans, including construction of an oil pipeline that will link Uganda to a planned port in the Kenyan coastal town of Lamu.
Initial data acquired from northern Kenya indicates the figure for estimated oil resources is set to rise with increased drilling, said Petroleum Commissioner Martin Heya.
“Most licenses will move to the drilling stage next year because that is when their initial license period of two to three years starts to expire,” Heya said in a Sept. 16 interview in the capital, Nairobi. “They usually use the initial phase for data collection” and spend the second stage conducting exploration drilling, he said.
Kenya has licensed 41 out of its 46 oil and gas blocks to 21 companies including BG Group Plc (BG/), Eni SpA (ENI), Anadarko Petroleum Corp. (APC) and Total SA (FP), said Heya. The country may start producing oil at the end of the decade, as it aims for quicker production of natural gas to first meet domestic power-generation needs before any surplus supplies can be exported, President Uhuru Kenyatta said in an interview Aug. 2.
Gas Finds
Africa Oil, which found gas in Sala-1, Block 9 in the Anza Graben in northeastern Kenya, is discussing fast-tracking gas-to-power development and a production-sharing contract with the Kenyan government, according to its website. Africa Oil has a 50 percent interest in Block 9, which it operates, while the remaining stake is owned by Marathon Oil Kenya Ltd.
“There is about 1 trillion cubic feet of natural gas now that can power a 550-megawatt power plant for 20 years,” Heya said. “Government plans to extend the transmission line to the area of discovery. We also expect more gas resources as Africa Oil completes drilling Sala-2 and moves to Sala-3.”
Tullow, which has interests in five blocks in Kenya, said last month that “successful results” from appraisals in two onshore blocks, 10BB and 13T, reinforces the London-based company’s belief that the northwestern South Lokichar Basin holds considerable potential. Neighboring basins may have similar promise, it said.
The governments of Kenya and neighboring Uganda are recruiting contractors for the construction of an oil pipeline scheduled to be completed by 2018, Energy Secretary Davis Chirchir said on Sept. 16. Uganda has an estimated 6.5 billion barrels of oil in place and a recoverable crude potential of 1.4 billion barrels, according to its Energy Ministry.
Kenyatta said that his administration plans to have new legislation in “months” to guide activities of the oil industry and maximize the country’s benefits from the sector.
By Grant Smith and Maher Chmaytelli Sep 18, 2014 2:56 PM GMT+0700
A reduction in OPEC crude output deepened as Libya’s biggest producing oilfield stopped pumping amid supply cuts from Saudi Arabia and potential disruptions to Nigerian exports.
Libya halted the Sharara oilfield as a precaution after a rocket attack on the connected Zawiya refinery three days ago, closing down about 30 percent of national output. In Africa’s largest oil producer, state-owned Nigerian National Petroleum Corp. was in talks yesterday to prevent a strike that threatened to disrupt exports. Saudi Arabia told the Organization of Petroleum Exporting Countries that in August it made the deepest production cut in 18 months.
Brent crude futures declined 14 percent in the past three months, falling to a two-year low of $96.21 a barrel on Sept. 15. Global oil demand growth is the slowest since 2011, while the U.S. shale boom means oil production outside OPEC is rising by the most since the 1980s, according to the International Energy Agency. Brent rebounded to $99.05 a barrel on Sept. 16 after OPEC Secretary-General Abdalla El-Badri said the group may need to reduce output next year, and traded at $98.42 at 8:41 a.m. on the ICE Futures Europe exchange in London.
“Libya, Nigeria show us to be cautious,” Miswin Mahesh, an analyst at Barclays Plc, said by phone from London yesterday. “The Saudi cuts in August helped to balance the market slightly. We’re not out of the woods yet, but it is certainly a beginning.”
Stalled Recovery
Libya’s output had recovered after rebels lifted a yearlong blockade of eastern oil ports in July, which had diminished the North African nation to the rank of OPEC’s smallest member. Production rose to 870,000 barrels a day on Sept. 14, according to National Oil Corp. spokesman Mohamed Elharari. Still, Islamist militias have expanded their influence after seizing Tripoli, the capital, last month and the country’s government has had to relocate to the eastern city of al-Bayda.
A rocket exploded near a crude storage tank at the Zawiya plant on Sept. 15, Elharari said the following day. Sharara, which was producing about 250,000 barrels a day of oil, was shut on Sept. 16 after the discovery of damage to the storage tank, Mansur Abdallah, director of oil movement at the Zawiya plant, said by phone yesterday.
“Supply from Libya could quickly be restored if the situation improves, but it highlights the fragility of the country’s output recovery and raises questions over its sustainability,” said Julian Lee, an oil strategist at Bloomberg First Word in London. “The oil supply-demand balance will remain at the mercy of fighting between militias in Libya until the government is able to exert authority over them, and that still seems a long way off.”
Saudi Outlook
Saudi Arabia’s output reduction in August was the largest it has reported to OPEC since December 2012, the group’s data shows. The kingdom will need to make another cut of similar size to sustain prices above $100 a barrel, BNP Paribas SA, Citigroup Inc. and Societe Generale SA estimate.
“The most important recent change in OPEC supply is Saudi Arabia’s production cut, both because it is the largest single reduction and also because it was intentional, whereas others are consequences of unplanned external factors,” Bloomberg’s Lee said.
In Nigeria, workers operating flow stations that pump crude to export terminals and at NNPC’s 23 gasoline depots joined strike action, according to Babatunde Oke, a Lagos-based spokesman for both a managers’ union and a blue-collar workers’ union.
“We’re optimistic that the terminals won’t be affected,” Ohi Alegbe, a spokesman for NNPC, said by phone from Abuja yesterday, adding he expected a solution to the labor dispute by the end of the day. The strike began Sept. 16 over pensions.
Nigeria, Africa’s biggest oil producer, pumped 2.3 million barrels of oil a day in August, data compiled by Bloomberg show.
By Boris Groendahl and Alexander Weber Sep 18, 2014 8:20 PM GMT+0700
OMV AG (OMV), central Europe’s biggest oil and gas producer, may see changes to its management and strategy after a review started in the first quarter, according to its biggest shareholder, Austrian government agency OeIAG.
“The international oil and gas market is changing massively in a way that puts fundamental doubts over the rules of the market that prevailed so far,” OeIAG Chief Executive Officer Rudolf Kemler, who is also OMV’s supervisory board chairman, said in an e-mailed statement today. “Acting too late or not at all isn’t an option. We have to align the company quickly and forcefully.”
Potential changes to OMV’s management and structure will be discussed “on the basis of its findings,” Kemler said. OMV, controlled jointly by OeIAG and an Abu Dhabi wealth fund, has changed course under CEO Gerhard Roiss since 2010, moving upstream by selling gas stations and refineries. The company also reduced its dependence on Libya, Yemen and Iraq, where it has experienced supply disruptions, by last year buying $2.7 billion of assets in the North Sea.
Roiss has said that he’s unhappy with the performance of OMV’s gas and power unit after its operating profit fell for a third straight year to 139 million euros ($179 million) in 2013. Coming up with a new strategy for the business may take as long as one year, he said.
Production Goal
Production of 400,000 barrels of oil equivalent per day by 2016, compared with 310,000 barrels this year, remains the company’s goal, Johannes Vetter, a spokesman for OMV, said by phone. An OMV-commissioned study by consultancy MTG found that a maximum of 350,000 barrels is more realistic, daily newspaper Kurier reported, citing the document.
OMV rose 0.8 percent to 27.63 euros by 2:20 p.m. in Vienna, paring this year’s decline to 21 percent. The stock is the second-worst performer in the 23-company Bloomberg European Energy Index, which rose 6.7 percent this year.
While Kemler denied a report this week in Kurier saying he was seeking to become OMV CEO, he stopped short of endorsing Roiss. Kemler also denied disagreements with the Abu Dhabi wealth fund, International Petroleum Investment Corp., over the Borealis joint venture, which was reported in the same newspaper story.
OeIAG, or Oesterreichische Industrieholding AG, also manages the government’s stakes in Telekom Austria AG (TKA) and Oesterreichische Post AG. (POST)
By Anna Shiryaevskaya Sep 18, 2014 8:30 PM GMT+0700
OAO Rosneft hired OAO Gazprom’s deputy head of liquefied natural gas exports, four people with direct knowledge of the matter said.
Victoria Shterengarts joined Rosneft in Moscow from Gazprom's export unit as head of gas marketing and new markets this month, said two of the people, who asked not to be identified because the matter is private. A spokesman for Rosneft and a spokeswoman for Gazprom Export declined to comment, asking not to be identified because of company policy.
Rosneft, the biggest publicly traded oil company by output, is poised to become an exporter of LNG after President Vladimir Putin ended Gazprom’s monopoly on foreign sales last year. Gazprom, the biggest gas producer, remains the sole exporter of pipeline fuel. Putin ordered the government in June to consider opening access to Gazprom’s future pipelines from eastern Russia.
Rosneft has been seeking access to Gazprom’s planned Power of Siberia network to China since the beginning of the year. The Moscow-based company, which aims to almost double gas output to 100 billion cubic meters by 2020 compared with 55 billion this year, also plans to build an LNG plant in eastern Russia.
Vlada Rusakova, Rosneft’s vice president for its gas business, also joined last year after serving on Gazprom’s management board and heading its strategic development department.
By Glen Carey Sep 19, 2014 2:39 AM GMT+0700
Saudi and U.S. leaders have been speaking in harmony about the threat posed by Islamic State, after a period in which the allies of 70 years frequently sounded discordant notes.
The breakaway al-Qaeda group’s rampage through northern Iraq and eastern Syria has persuaded the U.S. to launch air strikes and seek Arab support for a broader campaign. Saudi Arabia hosted a coalition-building summit last week for Secretary of State John Kerry and 10 Middle Eastern states. After that session, and more than two hours of talks with King Abdullah, Kerry told reporters that “you could not have heard a more fulsome commitment to doing anything that is necessary.”
Such solidarity hasn’t always characterized ties between the nations since 2001, when Saudi citizens were involved in the Sept. 11 attacks. A decade later, they split again over the Arab revolts, with Saudis blaming the U.S. for abandoning allies such as Egypt’s Hosni Mubarak. President Barack Obama’s decision to hold back from military action against the Syrian government last year, and his engagement in talks with Iran, have also been unpopular among Saudi leaders. American critics of the kingdom say it shares blame for the rise of Sunni extremism.
Al-Qaeda’s Heirs
“It’s an ironic twist of fate that just as al-Qaeda’s attack against the U.S. greatly damaged U.S.-Saudi relations, the threat ISIS poses to both countries could go a long way toward mending their relations,” said Fahad Nazer, a political analyst at JTG Inc., a consultancy based in Vienna, Virginia, using an alternative name for Islamic State.Oil Producer
The U.S. has underwritten the security of OPEC’s biggest oil producer in an alliance that dates to the 1940s. More recent differences have receded as the two countries join forces to formulate a plan for defeating Islamic State. The kingdom has agreed to host training camps for moderate Syrian rebels, U.S. officials say, and its top religious scholars have been urging citizens not to join militant groups in Syria and Iraq.
By contrast, after the Sept. 11 attacks in the U.S., Saudi Arabia didn’t immediately perceive a domestic threat. The Saudi crackdown only began about three years later, when al-Qaeda began to carry out attacks there. One of the biggest came in 2006, when car bombs struck the world’s biggest oil processing plant at Abqaiq. Saudi forces later dismantled much of the organization in the kingdom.
Now, Islamic State is deploying social media to recruit young Saudi men to its cause, threatening to destabilize the Persian Gulf region that holds almost half the world’s crude reserves.
‘Islamist Radicals’
“The Al Saud family have been the targets of Islamist radicals” in the past, Daniel Benjamin, a former State Department counterterrorism coordinator who’s now director of the Dickey Center for International Understanding at Dartmouth College, said in an e-mail. “Saudi officials seem to be eager to support American efforts against ISIS.”
The danger from Islamic State “has exceeded its geography,” Saudi Foreign Minister Prince Saud al-Faisal said in a speech in Paris on Sept. 15. “It has become a danger that threatens us all and requires us to fight it.”
Prince Saud said that any strikes against the Islamic State must include targets in Syria. Obama signaled this month he’s ready to take that step, expanding a campaign that’s already seen more than 160 airstrikes against the group’s positions in Iraq.
Toppling Assad
Saudi policy in Syria has been focused on toppling President Bashar al-Assad, which is also one of the goals of Islamic State. In Iraq, the Saudi priorities have been different from those of the U.S. As the U.S. supported Shiite leaders Nouri al-Maliki and current premier Haidar al-Abadi, Saudi Arabia voiced the concerns of its allies in Iraq’s Sunni minority who said they suffered discrimination.
Behind Saudi concerns in Syria and Iraq lies its hostility toward Shiite-ruled Iran, which backs the governments in both countries. Saudi leaders blame Iran for fomenting unrest among Shiites in the kingdom and its neighbors, while Iran and its allies in Iraq and Syria say Sunni extremists across the region receive money and encouragement from Saudis.
It’s Saudi Arabia’s status as the region’s leading Sunni power that makes its support against Islamic State valuable to the U.S., said Nazer, who was also an analyst at the Saudi Embassy in Washington.
‘Fairly Candid’
“Senior U.S. officials have been fairly candid about the need for Sunni countries to be front and center in this campaign,” he said. “They want to counteract claims by ISIS -- as well as some mainstream Muslims around the world -- that the U.S. is colluding with Shiite majority countries in a conspiracy against Sunnis.”
One area where the U.S. says it wants help from Arab nations is in undercutting the religious message of Islamic State. Saudi Arabia hosts Islam’s holiest sites in Mecca and Medina, and in the past month the kingdom’s grand mufti has spoken out against the group, calling its members “criminals who spread corruption.”
Senior Saudi scholar Abdulaziz Al Al-Sheikh today called for Muslim clerics to support the government. Every preacher is “responsible for his words and guidance,” Al Al-Sheikh said in a speech carried today by the official Saudi Press Agency. They shouldn’t “seek to break” up the nation and make “people suspect their rulers,” he said.
‘Very Encouraged’
A committee of the country’s top Muslim scholars yesterday issued a statement banning citizens from traveling to conflict zones. Authorities should “refer to trial whoever issues such fatwas or opinions to justify terrorism by whatever means,” the scholars said.
Kerry told the House Foreign Affairs Committee in Washington today that he was “very encouraged” by the move. He said the influence of preachers is vital because stopping potential recruits from joining Islamic State and “getting to the battlefield in the first place is actually the most effective measure that we can take.”
Some religious authorities in the kingdom have sent the opposite message in the past.
“The Americans are not blind to the influence of some Saudi clerics in mobilizing support at home in the kingdom and abroad for extremist groups,” said Lori Boghardt, a fellow on Gulf politics at the Washington Institute.
On the Saudi side, too, there’s a “question of trust,” said Mustafa Alani, an analyst at the Gulf Research Center.
“They don’t think Obama is going to follow through on the promises he gave on ISIS,” Alani said. “They are going to wait and see what he does.”
EDINBURGH, Scotland, Sept. 18 (UPI) -- A "yes" vote in Thursday's referendum will translate to vast oil wealth for an independent Scotland, the Scottish energy minister said as voting gets under way.
Voting began Thursday in a one-sentence referendum for independence from the United Kingdom. Scottish Energy Minister Fergus Ewing trumpeted findings from an employment firm that said an independent Scotland could draw on an oil fund that could reach $239 billion within 25 years of a "yes" vote.
"This is interesting new analysis which highlights the huge resource which the people of Scotland can secure for future generations by voting yes," he said in a statement Thursday.
Scotland said it could draw revenue from offshore oil and gas reserves while powering its economy on renewable energy resources.
A Wednesday report from energy consultant group Wood Mackenzie said oil and gas companies working in the region need fiscal assurances now matter how the vote unfolds. Most of the offshore reserves would go to Scotland in the event of a "yes" vote, though production is expected to decline dramatically because of field maturation.
Ewing said Scotland could replicate Norway's experience with North Sea oil by managing its reserve assets better. Per capita gross domestic product in Norway is 80 percent higher than for the United Kingdom.
"Poor stewardship of resources, frequent changes to the tax regime, a lack of focus on value creation and mismanagement of revenues are all mistakes that we cannot let happen again, and which an independent Scotland will address," Ewing said.
HOUSTON, Sept. 18 (UPI) -- Pipeline company Kinder Morgan announced it filed a proposal with authorities in Maine to expand natural gas capacity for the state.
Kinder subsidiary Tennessee Gas Pipeline Co. filed a proposal with the Maine Public Utilities Commission to bring gas to the region through its proposed Northeast Energy Direct Project.
"We are thrilled to be able to offer the state of Maine a contract for capacity on Tennessee Gas Pipeline's proposed Northeast Energy Direct Project that will bring needed natural gas to New England and support both gas and electric reliability," Kimberly Watson, regional president for Kinder Morgan, said in a statement Wednesday.
Kinder says the project could have the capacity to bring roughly 500 million cubic feet of natural gas from regional shale plays to the region per day.
Regional governors had expressed support for projects that could lower the cost of energy in an area without much pipeline infrastructure.
Kinder's proposed project would draw on gas reserves from regional shale areas. Opponents of the pipeline worry about the fallout from hydraulic fracturing in shale and have expressed concern the project would run through sensitive ecosystems along the East Coast.
By Daniel J. Graeber | Sept. 18, 2014 at 9:37 AM | 0 Comments (Leave a comment)
ESSEN, Germany, Sept. 18 (UPI) -- German energy company RWE Dea said it won the rights to explore two areas off the coast of Egypt it says will provide "promising opportunities."
The German company said it secured the rights to two offshore areas in an award from the Egyptian General Petroleum Corp.
"Both blocks provide promising opportunities in an area, where we know the geological conditions very well," Regional Manager Maximilian Fellner said in a statement Wednesday.
The German company will hold the entire stake in the offshore East Ras Fanar concession and split the rights to the Northwest El Amal block with U.S. energy company Edison International.
Both blocks are situated near existing oil fields, including the lucrative Morgan field and "the latest significant oil find in the Gulf of Suez -- the Saqqara field," the German company said.
The company provided no reserve estimate of the new concessions, but said it was planning surveys and exploration work to determine the potential.
The German company announced a major natural gas discovery offshore Egypt in March.
BRUSSELS, Sept. 18 (UPI) -- Members of the European Parliament passed a resolution Thursday calling for the cancellation of contracts for Russia's planned South Stream gas pipeline.
Russian energy company Gazprom touts South Stream as a pipeline that would help support European energy security by avoiding geopolitically sensitive territory in Ukraine. Russia meets about a quarter of Europe's gas needs, though the bulk of those supplies run through the Soviet-era transit network in Ukraine.
Members of the European Parliament passed a resolution Thursday expressing support for the ratification in Kiev of an association agreement with the EU. A cease-fire in eastern Ukraine appears to be holding, the resolution said, but it could break given recent Russian aggressions.
"EU sanctions are just and must be stepped up," the resolution said.
For South Stream, members of Parliament had their reservations, calling on "EU countries to cancel planned energy sector agreements with Russia, including the South Stream gas pipeline."
European Energy Commissioner Guenther Oettinger in June said the South Stream project should be put on hold because it's not in compliance with legislation passed in the EU.
South Stream has an optimum capacity of 2.2 trillion cubic feet per year.
BAGHDAD, Sept. 18 (UPI) -- Oil exports from the southern Iraqi port cities were 73.6 million barrels for August, the Iraqi Ministry of Oil declared Thursday.
Oil ministry spokesman Assim Jihad said Thursday oil exports from the southern port city were sent to nearly three dozen international companies.
August exports were down more than 2 percent from the 75.7 million barrels sent from southern port cities the previous month.
SOMO is the only entity authorized to export oil from Iraq, the federal government in Baghdad says. The semiautonomous Kurdish government has exported oil taken from its northern provinces at least since May, to the frustration of Baghdad.
The Oil Ministry said Thursday exports to Ceyhan from a pipeline from the restive northern Iraqi city of Kirkuk have been idled since May because of terrorist actions.
Militants from the Islamic State, referred to often as ISIS or ISIL, claimed in June they took over the Baiji oil refinery, the largest in Iraq.
Oil Minister Adil Abdel Mahdi visited the Baiji refinery in Saladin province to inspect the status of the facilities there.
There, he "praised the high national spirit of the employees," the security of the refinery and the military operations taken against the Islamic State.
U.S. oil production up 10 percent year-on-year
Oil imports down 3.6 percent, data show.
By Daniel J. Graeber | Sept. 18, 2014 at 8:32 AM | 0 Comments (Leave a comment)
WASHINGTON, Sept. 18 (UPI) -- U.S. crude oil production for the second week in September was more than 10 percent higher than the previous year, government data show.
The U.S. Energy Information Administration said in a weekly petroleum report total U.S. crude oil production for the week ending Sept. 13 was 8.6 million bpd, a 12.6 percent increase from the same week in 2013.
The increase in U.S. crude oil production has generated debate over the durability of legislation enacted in response to the oil embargo from Arab members of the Organization of Petroleum Exporting Countries that limits crude oil exports from the United States.
Supporters of lifting the ban say it will increase U.S. leverage overseas and push the price of petroleum products like gasoline lower. Opponents question those claims and argue more exports would come with environmental consequences.
EIA data show overall crude oil imports into the United States were down 3.6 percent year-on-year. Trend lines suggest, however, that imports may increase in the coming months.
Canada is the No. 1 crude oil exporter to the United States.
Nakao said Pakistan has a "tremendous" opportunity for growth given its strategic location, its young population and its access to rich natural resources.
ISLAMABAD, Sept. 18 (UPI) -- The Asian Development Bank stands behind an energy overhaul in Pakistan, though Islamabad needs to do its part to shore up financing, the ADB president said.
ADB President Takehiko Nakao wrapped up his two-day visit Thursday with meetings with Pakistani Finance Minister Ishaq Dar.
Nakao said Pakistan has a "tremendous" opportunity for growth given its strategic location, its young population and its access to rich natural resources.
Pakistan is working to reform an energy sector plagued by deteriorating infrastructure by seeking outside help for construction of liquefied natural gas facilities. The ADB is already behind a gas pipeline planned from Pakistan, though Islamabad needs to do its part, Nakao said.
"Progress depends on the government's efforts to strengthen infrastructure investment, enhance tax revenue, spend more on health and education, and improve the business environment to attract investments," he said in a statement.
The Pakistani finance minister, for his part, said the government has arranged the necessary financing to build hydroelectric projects that could generate 4,500 megawatts of power for the sagging grid.
The U.S. and European governments have imposed punitive sanctions on Russian energy companies Rosneft, Gazprom Neft and others in response to the crisis in Ukraine.
By Daniel J. Graeber | Sept. 18, 2014 at 6:48 AM | 0 Comments (Leave a comment)
LONDON, Sept. 18 (UPI) -- Sanctions imposed in response to the situation in eastern Ukraine have resulted in a loss of business confidence in Russia, a European bank said Thursday.
The U.S. and European governments have imposed punitive sanctions on Russian energy companies Rosneft, Gazprom Neft and others in response to the crisis in Ukraine. Last week, the European Union increased the pressure with sanctions on deep water energy operations, arctic oil exploration and shale projects.
The European Bank for Reconstruction and Development said the sanctions were taking a toll on the Russian economy.
"The Western sanctions, combined with uncertainty about their possible escalation in the future, have negatively affected business confidence in Russia, constrained the ability of corporations and banks to access international debt markets, and contributed to capital flight," the bank said in a briefing.
The Kremlin last week said it was the duty of the government to support the energy sector during what Rosneft Chief Executive Officer Igor Sechin said were difficult operating conditions.
In terms of Ukraine, the EBRD said the lack of Russian gas supplies because of contractual issues could create a secondary crisis during the upcoming winter heating season.
"So far the transit flow of gas [through Ukraine] to Europe has not been affected," the bank said.
BEIJING, Sept. 18 (UPI) -- Though off to a slow start, the Chinese government said it expected gas production from shale will eventually make up about 20 percent of total output.
Beijing said it expected to get at least 60 billion cubic feet of natural gas per day from shale deposits by 2020. Production this year will be around 1.5 bcf, but could increase tenfold within the next two years.
"If measures are appropriate, there is hope that production can reach 40 bcm - 60 bcm, accounting for roughly a fifth of total gas output," Peng Qiming, director of exploration of the Ministry of Land Resources, said Wednesday.
The Chinese government said its consumption of natural gas should increase as it embraces a low-carbon economy. By 2020, Beijing expects the share of natural gas in the energy mix should be about 10 percent, about double the current footprint.
An August briefing from the U.S. Energy Information Administration says China may hold the largest reserves of technically recoverable shale natural gas in the world. Technical and geological challenges, however, could impede full-scale development.
China nearly tripled overall gas production since 2003.
MILAN, Italy, Sept. 18 (UPI) -- Italian energy company Eni said Thursday it made an oil discovery in Ecuador that could hold as much as 300 million barrels in place.
Eni announced the discovery at the Olgan-2 exploration well. Drilling encountered a 236-foot column of crude oil and initial production tests yielded a flow rate of 1,100 barrels of oil per day.
"Early estimates suggest that the Oglan discovery potentially contains about 300 million barrels of oil in place," the company said in a statement.
Ecuador has the third largest oil reserves in South America after Venezuela and Brazil. A member of the Organization of Petroleum Exporting Countries, it exports an average 388,000 bpd and produces around 526,000 bpd.
Eni said the discovery was made less than 10 miles away from processing facilities already producing about 12,500 bpd.
The Italian company stressed its work in the Amazon rainforest in Ecuador was conducted in what it said was a pioneering way that minimized the impact on the environment to the greatest extent possible.
Singapore (Platts)--18Sep2014/1211 am EDT/411 GMT
China has slashed its official target for shale gas production in the medium term by up to a third and now expects to achieve 30 billion cubic meters of output by 2020, according to the country's Ministry of Land and Resources at a briefing in Beijing Wednesday, September 17.
Production this year will likely total 1.5 Bcm and is expected to exceed the government's 2015 target of 6.5 Bcm next year, said Peng Qiming, director of geological exploration at the ministry, according to its website.
Based on the current pace of development, overall shale gas output will rise to 15 Bcm/year by 2017, before hitting 30 Bcm/year by 2020.
"If measures are appropriate, there is hope that production can reach 40-60 Bcm, accounting for roughly a fifth of total gas output," Peng said.
The ministry's briefing comes after earlier concerns that while China will achieve the 2015 target, it faces extreme challenges reaching the longer-term target of 60-100 Bcm by the end of the next five-year economic plan in 2020.
Both output targets were set in 2012, when the National Energy Administration said the priority to 2015 would be on exploring and developing reserves, with a view to realizing large-scale commercial production by the end of the decade.
CNPC, SINOPEC TAKE THE LEAD
Production next year will primarily come from state-owned China National Petroleum Corp. and China Petroleum and Chemical Corp. or Sinopec, according to the ministry.
Since early this year, Sinopec has trumpeted achievements at its Fuling shale project in Chongqing in central China, which it started developing in 2012.
Fuling has certified proved reserves of 106.75 Bcm and production could reach 10 Bcm/year during 2017, up from 600 million cu m/year in March this year. Output is projected to reach 1 Bcm in 2014 and 3.5 Bcm in 2015.
Fuling gas is currently piped into the company's 8.5 Bcm/year Sichuan-Eastern China gas pipeline network, which also transports gas from its conventional Qingxi, Puguang and Yuanba fields to cities in the eastern region.
In the Sichuan Basin, CNPC is planning to drill 154 wells over 2014-2015 at its Changing and Weiyuan blocks, with investment reaching Yuan 11.2 billion ($1.8 billion). Output at the project was expected to exceed 2.5 Bcm next year, the ministry said.
Besides the two companies, the ministry said that state-owned Yanchang Petroleum has been prospecting in the Ordos Basin since 2011 as well, with over 20 wells drilled to date.
PROGRESS DESPITE HURDLES
Observers have long been skeptical about China's ability to replicate the shale revolution seen in the US because of both above and below ground challenges.
These include Chinese companies' lack of technology and skilled personnel, complex geology as well as a less-than-ideal regulatory framework that discourages innovation and competition.
The ministry stressed, however, that significant progress has been made over the last few years.
There are now 54 shale gas blocks carved out in China, spanning 170,000 sq km (65,637 sq miles). Four hundred wells have been drilled, 130 of which are horizontal.
China's shale gas reserves are now close to 500 Bcm, while production has totaled 680 million cu m to date, from virtually zero two years ago.
Cumulative investment has reached Yuan 20 billion. Besides this, important discoveries have also been made in the Ordos, Sichuan and Qaidam basins.
China has held two shale gas bid rounds so far, in an effort to encourage more competition and involve a wider range of participants in the sector.
Yet the ministry later acknowledged that these companies lacked the necessary expertise and in some cases, financial clout to accelerate development as quickly as it had hoped.
Another criticism was that the most prospective acreage had been kept by the state-owned giants, resulting in less attractive blocks offered in the bid rounds.
While the first bid round saw only two blocks awarded in 2011, the ministry gave out 19 blocks to 16 domestic companies in its second tender in late 2012, none of which had any oil and gas experience.
Coal and power companies won eight blocks, while the rest were awarded to investment companies set up by local governments.
Foreign firms were not permitted to participate in the bid rounds, although the winning companies were free to bring in both local and foreign partners.
To date, operators of most of the 21 blocks given out in the bid rounds have completed 2D seismic acquisition, while drilling has commenced in a handful of them, including the Nanchuan and Chengkou blocks in Chongqing and Cengong in Guizhou, the ministry said.
Investment has amounted to over Yuan 2 billion ($325 million). This, however, pales in comparison to Sinopec's plan to invest Yuan 21.5 billion in Fuling over 2013-2015 and CNPC's pledged investment of Yuan 11.2 billion at its Changning and Weiyuan blocks.
TECHNOLOGICAL CATCH-UP
Peng noted that exploration and development technologies as well as available drilling equipment have reached some measure of localization, resulting in continually declining costs and drilling times for horizontal well.
Solitary wells now cost in the region of Yuan 50 million to Yuan 70 million, compared with Yuan 100 million previously, while the average length taken to drill a well has been reduced from 150 days to between 46 and 70 days.
Chinese operators last year noted that well costs and drilling completion times in the shale sector were at least four times higher in China than in the US.
Peng said the government had pledged to implement a new shale evaluation across the country to prove up more reserves and would also establish more demonstration zones.
It intended to offer more acreage up for development, particularly to the private sector.
He said the government would also encourage oil companies to devote more efforts to shale exploration at their existing conventional oil and gas blocks.
Peng added that the government would work to enhance the regulatory framework to create a better operating environment, giving no further details.
The Ministry of Finance had introduced a Yuan 0.4/cu m (6 cents/cu m) subsidy to shale producers in November 2012 to help defray their costs and promote production.
Houston (Platts)--18Sep2014/631 pm EDT/2231 GMT
Continental Resources unveiled results of the Springer Shale on Thursday, a new Oklahoma oil play that could help boost the state's already growing production to levels not seen in decades.
The Springer, chiefly sited in Grady and parts of Garvin counties at 12,500-foot depths, is yielding top-notch initial output rates and economic returns, company managers said Thursday in webcast remarks during Continental's 2014 Analyst Day in Oklahoma City.
The company's results in the Springer, combined with its own and the industry's mounting production at the South Central Oklahoma Oil Play and output from other formations in the state's subsoil, is adding to Oklahoma's already mounting production of 345,000 b/d in June, according to US Energy Information Administration data.
"Oklahoma could potentially become the nation's [third-highest] oil-producing state," Continental CEO Harold Hamm said in opening the 2014 event, its first such investor gathering in two years.
Oklahoma's recent peak output was in 1982 at about 500,000 b/d. Today it is the fifth-highest producing state. Texas ranks first, North Dakota second, California third and Alaska fourth.
Continental, a pioneer in North Dakota/Montana's massive Bakken Shale oil play reservoir, was instrumental in getting activity there off the ground nearly a decade ago. Today it ranks first in production there among dozens of operators at nearly 110,000 b/d of net oil equivalent.
The Bakken produces about 1.1 million b/d of oil.
Continental debuted SCOOP at its 2012 Analyst Day and produced 34,400 boe/d from it in the second quarter; the company expects 36,400 boe/d by year's end.
In the two years since Continental first publicly showcased it, SCOOP has become an industry phenomenon among Oklahoma players and has attracted such large operators as Marathon Oil, Newfield Exploration and several others.
In Hamm's estimation, SCOOP rivals the Bakken. He estimated Continental's acreage holds about 3.6 billion boe of resource, against the Bakken's 4.1 billion boe. And, the "type curve," or typical well in the SCOOP, is 655,000 boe, compared to the Bakken's 603,000 boe.
Early wells in the Springer Shale -- located in the heart of SCOOP -- have shown a type curve around 940,000 boe, although they yield about 67% oil, compared with the Bakken's 85%. And the return rates for Springer wells are high, about 105%, compared with 45% in the Bakken, according to presentation slides showed by Continental's President and Chief Operating Officer Jack Stark, who was named to his post Wednesday.
"If you liked the Bakken, you're going to love SCOOP," Stark said at the Thursday meeting.
The company now has 112 operated wells in the SCOOP, including 86 wells drilled in the two years since it first showcased the play.
The Springer Shale holds about 447 million boe of net resource potential to Continental, which breaks down to 127 million boe in the oil fairway and 320 million boe in the gas and condensate fairways. The company holds 195,000 net acres in the play, including 118,000 net acres in the oil fairway.
Continental drilled its first Springer well about 20 months ago and its first 11 producing wells averaged a solid 700 boe/d each for 30 days.
The Springer complements SCOOP, Resource Development Manager Dan Harms said.
"This is definitely an oil play and really exciting, even for engineers," Harms said.
He said Continental's August production from the play alone averaged a net 3,629 boe/d.
Also, in the Woodford Shale -- also within the SCOOP play, consisting of earlier-age rocks below the Springer and prospective in an area south of Oklahoma City -- longer laterals or horizontal legs of at least 7,500 feet are the order of the day going forward, Continental officials said. That compares with around 4,500 feet previously.
The result is lower drilling costs of about 50% less per lateral foot, officials said.
The Woodford is thick, up to 950 feet in some places, and has good organic content porosity and permeability, said Andy Rihn, Continental senior exploration geologist.
"We believe that extended laterals will further unlock the oil window," Rihn said.
Meanwhile, in the Bakken, development on tighter spacing continues, as Continental reaps the benefits of its long expertise in the play. The company has increased production 58%/year in the last three years and reduced well costs to $7.5 million each at end-2013.
Continental's 4.1 billion boe of estimated Bakken resource potential on its acreage is up from 3.4 billion boe just two years ago, said Stan Wilson, the company's vice president of resource development.
And Continental keeps expanding its holdings there. In the past two years, the company has added about 250,000 Bakken acres, said Don Key, Continental's Bakken land manager.
"We think we'll get to look at acquisitions and trade opportunities going forward," Key said.
Rio de Janeiro (Platts)--18Sep2014/407 pm EDT/2007 GMT
The recent string of discoveries Brazilian state-run oil company Petrobras has made in the Sergipe-Alagoas Basin off the country's northeast coast holds light oil and condensate rated 38-44 API, a company official said Thursday.
"The oil is very good and very light," said Claudio Valdetaro Madeira, who manages the unit interpreting seismic and drilling data of the region for Petrobras.
The grade of the light oil and condensate varies across six discoveries made in three blocks of the Sergipe-Alagoas Basin, Madeira said during a presentation at the Rio Oil & Gas 2014 conference.
"So you have some areas where the API is 38 and others where it's 44, but the average is about 40," Madeira said. "It's not one accumulation, but various."
The string of discoveries has opened a new oil frontier in Latin America's largest country, generating additional exploration buzz in a nation that has been better known for the subsalt cluster of discoveries further south. The Sergipe-Alagoas finds, however, sit closer to shore and don't require expensive drilling through a layer of shifting salt, potentially making them less costly to develop than the subsalt finds.
The outlook for the basin has also shifted dramatically, forcing geologists to update earlier models that focused on shallow-water areas estimated to hold 500 million-1.5 billion barrels of recoverable oil. Now, geologists believe the deepwater portion of the basin could also hold 1 billion barrels or more of recoverable crude.
Madeira declined to estimate the volume of oil and natural gas the blocks may hold, saying such a determination will only be made when individual fields are declared commercially viable for development.
Development of the region, with first oil from an as-yet-undecided field expected in 2018, could further add to prospects for increased oil production in Brazil. Petrobras expects crude oil production to reach 3.2 million b/d by 2018, with slightly more than half coming from the subsalt fields. That would be up from an average 1.931 million b/d in 2013.
Petrobras currently plans to install a single production system capable of producing 100,000 b/d in Sergipe-Alagoas in 2018, followed by a second system of the same size in 2020. Madeira, however, said that Petrobras may have underestimated the potential of the basin.
"We think we are going to need more," he said. "A good volume of oil is there, so it's a very promising area."
The discoveries are the fruit of an intense drilling campaign that started in 2008, with 16 of the 24 exploration and appraisal wells finding oil, condensate or natural gas, Madeira said. And Petrobras has not yet completed its work, Madeira said.
"The exploration phase is still ongoing," Madeira said.
The exploration phase for the BM-SEAL-11 concession area ends in 2016, while similar phases for the BM-SEAL-4 and BM-SEAL-10 concession areas will end in 2018, he said.
The company will conduct broadband three-dimensional seismic surveys of 3,400 square km of deepwater areas across the block, while 3,200 square km of seismic surveys will be shot in shallow water regions, Madeira said. It will take the company six months to complete each survey, then an additional 18 months to finish interpreting the data, he said.
Petrobras owns 100% of the BM-SEAL-10 concession. The company also operates the BM-SEAL-4 concession with a 75% stake, with the remaining 25% held by India's ONGC. The BM-SEAL-11 concession is operated by Petrobras with a 60% stake, while the remaining 40% stake is retained by IBV-Brasil, a joint venture between Indian firms Bharat Petroleum Corp. and Videocon Industries Ltd.
The area is so promising that Petrobras continues to look at evaluate older data on areas that could be made available in the 13th bidding round announced earlier this week, Madeira said. The auction of exploration and production concessions is expected to be held in the first half of 2015, with the focus on offshore blocks along Brazil's eastern seaboard from Rio Grande do Norte state in the north to Rio Grande do Sul state in the south.
London (Platts)--18Sep2014/925 am EDT/1325 GMT
Weekly US imports of Angolan crude have hit their highest level since November 2013, according to Platts analysis of EIA data released late Wednesday.
Some 319,000 b/d of Angolan crude traveled to the US for the week ending September 12, an increase of 128% over the previous week.
The last time a similar volume was recorded on the transatlantic route was at the start of November, when Angolan exports to the US touched 329,000 b/d.
Meanwhile, the US imported no Nigerian crude for the week ending September 12, marking the third week of the past four in which there were no Nigerian crude shipments to the US.
The recent uptick in interest for heavier Angolan grades by US refiners is due to their desirability for blending with light, sweet US shale oil.
The physical quality of Angolan crude -- heavy and sweet -- has resulted in slightly lower demand elasticity from the US, relative to producers of lighter grades like Nigeria.
With the tight shale oil boom in the US, the country's demand for Angolan heavy and sweet crudes has increased because of the comparative ease of blending that crude with shale oil, as well as demand for heavy refined products and feedstocks, which favors Angolan crudes.
US Angolan deliveries have averaged around 122,432 b/d to the US since the start of 2014, compared with just 70,108 b/d for Nigerian crude, according to recent EIA import data.
This will be the first year in which US Angolan crude imports surpass Angolan imports since the EIA started tracking such data in 1973, Platts analysis shows.
London (Platts)--18Sep2014/610 am EDT/1010 GMT
Burdened by resiliently poor margins, a number of refiners in Europe have opted to change tack and target significant new investments in deep processing units -- such as hydrocrackers, delayed cokers and vacuum units -- to maintain profitability during these doggedly dark times for the sector.
Analysts believe that falling global demand for fuel oil has forced refiners' hands -- convert your facility to produce higher-value middle distillates or close your refinery.
Announcements of new units have come thick and fast in recent months. In early July, US major ExxonMobil said it planned to invest over $1 billion at its 320,000 b/d refinery in Antwerp, Belgium, to enable the plant to convert heavy, higher sulfur oils into marine gasoil and diesel.
Just two months later, the company surprised the market with another announcement, this time an investment plan to install new processing equipment, including a vacuum unit, at its 6 million mt (120,000 b/d) Slagen refinery in Norway to produce vacuum gasoil and less heavy fuel oil.
Total's Antwerp refinery, meanwhile, is currently undergoing a major upgrade following the French major's decision a year ago to invest Eur1 billion (around $1.3 billion) to boost middle distillates production.
The project, which aims at converting heavy fuel oil into desulfurized diesel and ultra low sulfur heating oil, consists of a solvent de-asphalting unit and a mild hydrocracker and is scheduled to start up in early 2016.
And while those projects are yet to come online, Total and Russian Lukoil's 155,000 b/d Zeeland refinery in Flushing, the Netherlands, this summer completed the upgrade of its hydrocracker.
There is little doubt that refineries need to shift away from fuel oil as stricter environmental regulations come into force on sulfur content in bunker fuels.
"There will be less and less fuel oil -- all forecasts are pointing to the same thing: demand is going to fall quickly," said a trader.
Jonathan Leitch, principal analyst with Wood Mackenzie, added: "The fuel oil crack spread will remain weak and diesel will remain relatively strong."
RUSSIAN UPGRADE IMPACT?
There has been some speculation, though, that the trend toward conversion could leave the market short of fuel oil, but traders and analysts believe the latest string of announcements won't impact the market.
"Globally, [these refinery upgrades will not have] much influence [on the market], as they will not come all at once," a trader said.
"We'll find offers elsewhere if some are short. For now, we are not seeing any stress in the market about this," he said.
Flows of Russian fuel oil, for instance, have been steady and even rising as Russian refineries upgrade their primary processing units, while secondary upgrades only come slowly online.
But other projects could hit fuel oil output.
In the pipeline are Gazprom Neft's plans to build a flexicoker at its (243,000 b/d) Moscow refinery and Tatneft's plan to launch a delayed coker at its (140,000 b/d) Taneco refinery.
Russia has already seen two hydrocrackers launched in the past year -- one at Taneco and another at Surgutneftegaz' 480,000 b/d Kirishi refinery.
EASTERN MEDITERRANEAN PLANTS
Eastern Europe and Turkey are also set to see a number of new conversion projects come online.
Turkey's Tupras is close to completing the installation of a delayed coker and hydrocracker at its 230,000 b/d Izmit refinery, which will process heavy residue oil from Izmit and other Tupras-owned refineries.
The upgraded complex will provide additional output of about 3.5 million mt of light products, primarily diesel and jet, and also gasoline and LPG.
At Lukoil's 196,000 b/d Burgas refinery in Bulgaria, 80% of the construction work on a new hydrocracker had been completed as of early August and 86% of the equipment installed.
This summer, OMV Petrom's 84,000 b/d Petrobrazi refinery in Romania completed its modernization program, focused on a VGO conversion project and maximizing diesel production.
As a result of the project, diesel production has increased to more than 1.5 million mt from 900,000 mt in 2009.
And in Poland, shareholders in the country's second largest refiner, Grupa Lotos, approved recently a Zloty 1 billion ($310 million) share issue to finance a delayed coking unit at its 210,000 b/d Gdansk refinery and upstream investments.
Ultimately, says Robert Campbell, head of oil products research at Energy Aspects, "most refineries have a view that the fuel oil market is in decline and it will be increasingly difficult to make money when you produce large amounts."
Lagos (Platts)--18Sep2014/607 am EDT/1007 GMT
Employees from Nigeria's Department of Petroleum Resources have joined the ongoing strike by workers at the state-owned Nigerian National Petroleum Corp, prompting the parliament to summon the country's oil minister Diezani Alison-Madueke, union officials said Thursday.
"The workers at DPR and other NNPC subsidiaries on Wednesday joined the strike called by the unions at the NNPC headquarters. This is because the issues under dispute affect all the workers," an official of the Pengassan union said.
The strike for now is, however, restricted to the offices, refineries and depots owned by NNPC, officials said.
Union officials also said that the closure of NNPC offices including subsidiary Nigerian Gas Co,. resulted in the switching off of gas supply to the West African Gas Pipeline, which transports gas to neighboring Ghana, Togo and the Benin Republic.
Union officials said the shutdown of Nigeria's oil export terminals would be considered if talks with the NNPC management failed to address workers' demands, including adequate funding of the pension scheme.
The talks, which began on Wednesday, hit a deadlock, NNPC officials said.
Meanwhile, members of the House of Representatives have summoned Alison- Madueke along with NNPC CEO Joseph Dawha in connection with the oil workers' strike.
The parliamentary joint committees on petroleum resources -- upstream, downstream and gas -- in a statement late Wednesday expressed concern over the impact of the strike on Nigeria's economy.
"Alive to our constitutional responsibilities, the joint committee has decided to intervene in this matter with a view to resolving whatever the issues may be. Accordingly, we have invited the Minister of Petroleum Resources and the affected unions and relevant stakeholders in the sector to a meeting on Thursday," the statement said.
London (Platts)--18Sep2014/728 am EDT/1128 GMT
Marine gasoil prices in the South African port of Durban plummeted after the recent return of the Enref refinery from maintenance, traders said Thursday.
Ex-Wharf Durban marine gasoil fell to $957.50/mt Wednesday from $999.50/mt the previous day, the lowest level since Platts began assessing the grade in February 2013.
However, by Thursday market sources were reporting that prices may have already rebounded to around the $965/mt level.
"Singapore was up yesterday," said one trader.
The Durban bunker fuel market typically tracks Singapore gasoil and 180 CST HSFO prices.
The Engen refinery restarted earlier in September following the end of maintenance that began on August 4.
Singapore (Platts)--17Sep2014/718 am EDT/1118 GMT
The outright price of Singapore 380 CST ex-wharf bunker fuel hit a 27-month low of $571/mt on Tuesday on the back of weakening crude -- Front-month Brent crude futures fell below $100/b on September 8 for the first time in over a year -- and falling cargo market, Platts data showed.
The last time the outright price was at such a level was on June 25, 2012 when the 380 CST ex-wharf grade was assessed at $569.50/mt.
On the supply front, the situation in the second half of September has recovered from the slight tightness seen in H1, with more cargoes having arrived in time for September delivery, market sources said.
Demand, however, remains weak despite the fall in outright prices. Buyers were still lifting cargoes from term contracts for September or Q3, they added.
October was also looking well supplied, with Western cargo arrivals estimated at around 1 million mt.
Cargoes already loaded on vessels heading to Singapore in September are expected to total 1.5 million mt, market sources said earlier.
Total volumes are expected to be at least 4.2 million-4.3 million mt, based on estimates of fixtures moving east in October, while another 350,000 mt or so were likely to be confirmed fixed, taking the total to around 4.6 million mt, more or less the same level as in September, industry sources said last week.
Houston (Platts)--16Sep2014/338 pm EDT/1938 GMT
Bunker fuel deliveries to the ports of Los Angeles and Long Beach in July surpassed 1.1 million barrels for the third consecutive month as shipping traffic continued to surge in Southern California, data from the ports show.
After a slow start during the first four months of the year, bunkering volumes have steadily risen since May.
The combined bunkering volumes from Los Angeles and Long Beach ports, which together handled nearly a quarter all US cargo traffic last year, totaled 1,193,862 barrels in July, a 47% jump from July 2013, the data shows.
In Los Angeles, delivered bunker volumes totaled 927,001 barrels, a 44% increase from the year-ago month. Bunker deliveries in Long Beach were counted at 266,861 barrels, a 56% gain from a year ago.
Traders say Southern California's bunkering market has benefited from the addition of a third major supplier: Denmark-based OW Bunker, which started operations in the Los Angeles market in late April.
"The addition of OW has brought lower pricing and operational flexibility to the market," one California bunker trader said.
The price of high sulfur bunker fuel in Los Angeles between May and August averaged $559/mt ex-wharf, a 10% decrease from the average price of $622/mt ex-wharf for the same product over the same span last year, according to Platts data.
HSFO was assessed Monday at $508/mt ex-wharf.
Also driving the increasing bunker deliveries is a rising level of cargo traffic from Asia, sources say.
Container volumes at the port of Los Angeles were up 7.6% through August, according to a monthly report released by the port Monday.
Shippers so far this year have moved 5,527,337 20-foot equivalent units through the port, an increase of 391,062 TEUs from the same period last year.
Keeping up with the growth in cargo volumes, bunker fuel deliveries in Los Angeles have increased 10.3% on the year through July, according to port data.
The ports have made up ground from a slumping winter and spring.
In May, Los Angeles and Long Beach posted a net increase in bunker fuel deliveries over a year-ago month for the first time in 12 months.
Since then, bunker fuel deliveries have steadily risen in both ports -- up 23% in June, 47% in July.
Despite the gains, delivered bunker volumes in Long Beach are down 19.9% on the year, according to the port data.
Bunker deliveries in the port totaled 1,909,832 barrels through July, 457,055 barrels behind last year's pace.
Houston (Platts)--15Sep2014/416 pm EDT/2016 GMT
Container traffic at the Port of Los Angeles last month reached its highest level in four years, according to monthly cargo volumes released by the port Monday.
Imports and exports at the port totaled 757,702 TEUs, a 6.7% increase from the year-ago month and the most units moved since August 2010, the data shows. The report credited "peak season volumes" and larger vessels for the increase in container traffic.
The port, the busiest in the country by container volume, has seen a recent surge in cargoes.
Inbound containers in August were up 7.8% to 383,551 TEUs compared with the previous year. Outbound container traffic also grew to 168,248 TEUs, a 6.2% increase. The port handled 205,903 empty containers, a 5.3% jump from August 2013.
For the year to date, the Port of Los Angeles has handled 5.5 million TEUs, a 7.6% increase over last year's pace.
A TEU, or 20-foot equivalent unit, is unit of measurement for cargo containers.
Houston (Platts)--15Sep2014/309 pm EDT/1909 GMT
The US Port of Charleston has been awarded nearly $11 million by the federal government for the port's push to accommodate post-Panamax ships expected to arrive once the Panama Canal expansion is completed.
The US Department of Transportation said Friday it is giving a $10.8 million grant to the Port of Charleston, in South Carolina, to rehabilitate the Wando Welch Terminal, the port's busiest container terminal that accounts for 60% of the port's exports.
The grant will be used to upgrade structural support of the wharf and modify cranes to handle larger ships. The Port of Charleston is the ninth-busiest US port and fourth-busiest on the East Coast.
"The prevailing sentiment throughout the maritime community and supporting industries is that ports are facing significant infrastructure improvement needs," South Carolina Ports Authority president and CEO Jim Newsome said in a news release. "It is clear that post-Panamax vessels are the new standard and that port competitiveness is and will continue to be driven by the ability to accommodate big ships."
The Panama Canal is adding a third shipping lane that is wider than the existing two lanes and that will allow larger ships to transit the isthmus between the Pacific Ocean and the Caribbean Sea, allowing them to reach the Atlantic Ocean. The expansion is expected to begin operating in January 2016.
Once completed, many East Coast ports believe larger ships will more frequently visit the Atlantic Coast to load and unload cargo. Increased cargo loadings can lead to increased bunkering operations.
September 19, 2014 - 4:15:21 am
MOSCOW: Russian gas producer Gazprom is likely to record its lowest output this year since its creation a quarter of a century ago after cutting supplies to Ukraine and losing market share to domestic rivals.
Gazprom reduced its 2014 production forecast this week, and analysts regard even this figure as overoptimistic due to Moscow’s battle with Kiev over gas prices and its role in the conflict in eastern Ukraine.
Falling output could put further pressure on the economy, which relies heavily on oil and gas sales and is already slowing to a crawl partly as Western sanctions start to bite.
Gazprom chief Alexei Miller told President Vladimir Putin on Wednesday that he expected production this year to be 463 billion cubic metres (bcm), a 6.7 percent decrease from the 496.4 bcm announced by Gazprom at a May presentation and down from 487.4 bcm produced last year.
Putin looked sanguine but analysts said the crisis in Ukraine and the Kremlin-controlled company’s decision in June to cut gas supplies to its second-largest market after Germany were taking their toll. Miller’s forecast is slightly above Gazprom’s record low hit in 2009 during the global financial crisis, but the analysts expect actual 2014 production to be significantly lower than this.
The gas row is part of the broader crisis in Ukraine, which erupted earlier this year and persists, even though a ceasefire in the east has given some respite from fighting between pro-Russian rebels and government troops.
Russian gas exports are exempt from the US and European Union sanctions. But Gazprom’s ability to boost production in the rest of this year is limited as European customers have already largely filled up their gas storage, fearing that Russian supplies which flow via Ukraine might be disrupted by the crisis.
Reuters
By Andy Tully | Thu, 18 September 2014 20:08 | 0
Libya’s decision to shut down its most productive oil field after a rocket attack on a related refinery has cut the North African nation’s output by nearly 30 percent and helped boost sagging global oil prices.
Mansur Abdallah, the director of oil shipments at the damaged refinery, told Bloomberg News that the Sharara field had been producing about 250,000 barrels of oil per day before the Sept. 15 attack. Libya had been producing about 870,000 barrels of oil per day before that, according to National Oil Corp. spokesman Mohamed Elharari.
The refinery is in Zawiya, on Libya’s coast along the Bay of Sidra, roughly 25 miles west of Tripoli. It is connected by an oil pipeline to Sharara, about 450 miles to the south. Elharari said one of several militias involved in Libya’s civil war fired a rocket that exploded near a crude oil storage tank near the refinery.
Operations at Zawiya and extraction at Sharara were at first merely reduced, but on Sept. 18 they shut down altogether and will stay closed as long as clashes in the area persist, Abdallah said.
The production cut demonstrates that Libya can’t indefinitely ignore the civil war that’s been raging for the past year and which has seen rebels blockade oil ports along the country’s northeast Mediterranean coast. The blockade was lifted in July, and oil production and exports resumed.
Still, the shutdown at Zawiya and Sharara illustrate that Libya “remains in a state of civil war, where anything can happen,” Andrey Kryuchenkov, and analyst at VTB Capital in London, told Bloomberg.
Oil prices lately have dropped because of lower demand and high levels of production, even in conflict zones such as Iraq and Libya.
The price of oil rose slightly on Sept. 16 after Russia hinted it might deploy troops in Crimea, which it annexed from Ukraine in March, in response to NATO military exercises in Ukraine near the Polish border.
Prices also were bolstered when OPEC Secretary General Abdallah El-Badri predicted that the cartel would cut oil output to 29.5 million barrels per day from 30 million barrels per day at its scheduled meeting in late November.
As a result, the fighting around the Zawiya refinery is good news for the oil industry, according to Phil Flynn, an analyst at Price Futures Group in Chicago.
“The talk of OPEC reducing production has given us a boost [in oil prices],” Flynn told Reuters, “and the Libya news is important because the market was expecting the recovery of that country’s exports to continue.”
By Andy Tully of Oilprice.com
