Russian Bashneft’s Q1 crude output at 18-year high of 332,900 b/d
Russia’s sixth-largest oil company Bashneft produced an average of 332,900 b/d of crude in January-March, up 7% on the year, reaching its highest crude output in the last 18 years thanks to sustainable production at its mature fields and the recent launch of a major project in Russia’s north, the company said in a in its traditional operating area, Russia’s Republic of Bashkortostan, increased 2.2% year on year to 3.9 million mt despite maturity of the fields, as the company continues to apply the most up-to-date oil recovery technologies, it said.
The Trebs and Titov field in Russia’s northern Timan-Pechora region, a new operating area for Bashneft, produced 176,000 mt of crude. Bashneft launched the Trebs and Titov project jointly with Lukoil, Russia’s largest independent oil producer, in August 2013.
The venture, which so far continues to operate in test mode, is on track to reach a crude output level of some 900,000 mt this year, Bashneft first vice president for upstream and geology Mikhail Stavskiy told Platts in early April. Crude output at the venture is set to ramp up in stages from 1.5 million mt/year to some 3 million mt/year, before reaching a plateau level of 4.8 million mt/year in 2020, Stavskiy said. Bashneft holds 74.9% in the Trebs and Titov project, while Lukoil controls the remaining 25.1%. Bashneft’s record-high first-quarter crude output figure does not include production results of its West Siberian Burneftegaz unit, which Bashneft bought in late March for $1 billion, including the unit’s debts, the company said.
In the last five days of March, Burneftegaz produced 9,000 mt of crude, it said. CRUDE PROCESSING UP 2% Bashneft’s refineries, also located in Bashkortostan, processed 5.3 million mt of crude in January-March, up 2% year on year, the company said. The plants’ average refining depth in the first quarter decreased to 83.08% compared with 84.54% in the same period of 2013, while their light product yield decreased to 58.64% compared with some 60% in January-March 2013.
The decreases were a result of maintenance work ahead of the summer season, when product demand traditionally grows, Bashneft said. The refining depth is the proportion of crude oil processed at a refinery excluding saleable heating oil, liquid fuel used in production, and losses in drying and desalination. Bashneft’s total product output in the first quarter reached 4.85 million mt, including 1.16 million mt of gasoline, down 5.5% year on year, and 1.8 million mt of diesel, down 0.7% year on year. Due to lower domestic demand in the first quarter of 2014, the share of Euro 4 and Euro 5 gasoline in the total gasoline output decreased to 83.4% from 91.8% in the first quarter of 2013, Bashneft said.
White Rose hits five-month high as Canadian crudes rise
Prices rose sharply Wednesday for June crude loadings from the White Rose field off the coast of Newfoundland.
Market sources said two of three scheduled cargoes were sold after a relatively quiet start for the June program. One of the cargoes was sold at dated Brent plus $2.40/barrel, one trader said.
That would represent White Rose’s highest differential since hitting plus $3.15/b on October 11. The 60 cent/b rise from Tuesday’s assessment of dated Brent plus $1.80/b would also be the sharpest movement since falling $1.65/b on a deal on October 15.
Traders said they saw a cargo being offered at dated Brent plus $2.40/b early on Tuesday, but some saw that well above the market given the lack of demand thus far. Sources could not confirm the destination of the cargo, and at least one trader had no explanation for the sudden sharp rise. “East Coast barrels have been coming to Europe for years, although not often White Rose so far,” a second trader said. “I would say all the East Coast Canadian grades have picked up a bit.”
Hibernia crude, which had been assessed at only a 40 cent/b discount to White Rose, was heard offered Wednesday at plus $1.80/b, while a Terra Nova cargo was heard offered at plus $1.60/b.
US Gulf Coast crude stocks up 5.67 million barrels, levels down elsewhere
US crude stocks jumped 1.7 million barrels to a record high 399.4 million barrels last week, pushed up by a 5.67 million-barrel increase on the Gulf Coast, data released by the US Energy Information Administration showed Wednesday.
Stocks fell a combined 4 million barrels elsewhere in the US in the reporting week ending April 25. USGC crude stocks at 215.28 million barrels that week up 54.29 million barrels since January 10, the EIA data showed, reflecting an increase in US production and higher flows from the Midwest, courtesy of TransCanada’s 590,000 b/d Cushing Marketlink pipeline.The line, which started up in January, delivers crude from Cushing, Oklahoma, to Nederland, Texas.
US crude production at 8.35 million b/d last week was up 1.04 million b/d year-on-year. Stocks at Cushing — the delivery and pricing point for NYMEX crude futures — fell 612,000 barrels last week to 25.43 million barrels.
However, the Cushing draw did not appear supportive for NYMEX crude, considering the magnitude of the USGC build. Front-month crude futures were trading around $99.69/barrel shortly after the data was released, down $1.59/b on the day. The EIA also reported a 1.56 million-barrel build in US gasoline stocks to 211.57 million barrels, with just 94,000 barrels of that on the Atlantic Coast, home of the New York delivery point for NYMEX RBOB futures.
USAC stocks at 54.15 million barrels are on the tight side, slightly below the five-year average, but RBOB futures were bearish following the release of the EIA data. Front-month RBOB was lingering around 5.98 cents/gal lower at $3.0036/gal.
Spot market traders have cited an increase in imports into the region. USAC gasoline climbed 203,000 b/d last week to 605,000 b/d, the EIA data showed. Front-month NYMEX ULSD was also bearish early Wednesday, trading around $2.9324/gal, down 3.77 cents/gal.
The EIA reported a 1.94 million barrel build in US distillate stocks to 114.45 million barrels last week, with 1.66 million barrels of that in the USAC, home of the New York delivery point for NYMEX ULSD futures.
Ghana June Jubilee crude loadings rise to 3.8 million barrels
June loadings of Ghana’s flagship crude oil grade Jubilee will rise to 3.8 million barrels from 2.85 million barrels in May, according to a preliminary copy of the loading schedule seen by Platts Wednesday.
Average loadings in June will rise to 126,666 b/d from 91,935 b/d in May. This is the largest Jubilee loading program since January, when 3.8 million barrels of Jubilee were exported, according to Platts data.
Jubilee crude has been selling well in the past few months, with particularly good demand from refiners in South Africa and Taiwan, sources said.
Ghana began commercial production at the Jubilee oil field, operated by Tullow Oil in 2010. Output, which has averaged around 110,000 b/d since the beginning of 2013, was expected to increase to 120,000 b/d by mid-2014 after work on the floating production storage and offloading unit is completed.
Tullow has a 49.95% operating interest in the Deepwater Tano license in which the Jubilee field is located. Its partners are Kosmos (18%), Anadarko Petroleum (18%), Sabre Oil & Gas (4.05%) and the Ghana National Petroleum Corporation (10% carried interest).
Platts Analysis of US EIA Data: U.S. Gulf Coast (USGC) crude oil stocks jumped 5.7 million barrels last week
Alison Ciaccio, Platts Markets Editor
Jeff Mower, Platts Oilgram Price Report Editor-in-Chief
New York - April 30, 2014
Platts Commentary Highlights:
USGC refinery run rates down 1.2 percentage points
Cushing stocks fall 600,000 barrels, widen five-year deficit
U.S. Atlantic Coast (USAC) four-week average crude oil imports rise again
Gasoline stocks rise 1.6 million barrels as production dips
USGC stocks surged 5.7 million barrels the week ended April 25 to 215.3 million barrels as refiners in the region dialed back utilization rates, U.S. Energy Information Administration (EIA) data showed Wednesday.
Total U.S. crude oil stocks rose 1.7 million barrels to 399.4 million barrels, with the jump in USGC stocks partially offset by declines in inventories across the rest of the country.
Analysts polled by Platts were anticipating a 2.1 million-barrel build in total crude oil stocks.
The USGC stock total is another record for the region and puts stocks there at a 14% surplus to the EIA five-year average.
USGC stocks rose amid a drop in refinery utilization rates to 92.9% of capacity, down from 94.1% of capacity the week ended April 18.
Torbjorn Kjus, an oil market analyst at DNB Bank, said the large build in crude oil stocks does not bode well for Light Louisiana Sweet (LLS) crude oil values.
LLS fell to a $6.77 per barrel (/b) discount to Brent on Tuesday, according to Platts data, more than double the discount seen at the beginning of April. At the same time, the LLS-WTI spread moved to $2.15/b on Tuesday. A year earlier, the spread was at $10.85/b.
The continued flow of crude oil into the USGC has been due in part to pipelines connecting the USGC to the New York Mercantile Exchange (NYMEX) delivery point at Cushing, Oklahoma, like TransCanada's 590,000 barrels per day (b/d) Cushing Marketlink pipeline and the 400,000 b/d Seaway pipeline. The greater flow of crude oil into the USGC, analysts have noted, has been matched by higher refinery throughputs.
But as USGC stocks continue to rise and reach fresh records, inventories are moving closer to total storage capacity held in the region.
Commercial crude oil total storage capacity in the USGC stood at 303.4 million barrels as of September 2013, based on the latest EIA data, including refiners, terminals and tank farms.
Economist Phil Verleger, in a recent research report, noted that 70% of the storage capacity is at terminals and tank farms, not refiners. Of the storage held at terminals and tank farms, 65% is for the exclusive use of owners.
Only 35% of the storage is available for others to use, Verleger noted, adding that the "ownership of storage capacity for exclusive use is almost certainly creating a problem for those seeking to move oil to Houston and the Gulf."
By comparison, at Cushing, where storage capacity is 77.3 million barrels, some 85% of that is available for lease by others.
Cushing crude oil stocks, for the April 25 reporting week, fell 600,000 barrels to 25.4 million barrels, widening its deficit to the five-year average to 35.6%.
Also the week ended April 25, the U.S. Strategic Petroleum Reserve (SPR) fell 1 million barrels to 693.6 million barrels. This reduction reflects part of the 5 million-barrel test sale of SPR crude oil by the U.S. government, announced March 17. The SPR is the U.S. government's safety-net of oil supply.
U.S. CRUDE OIL IMPORTS FALL, USAC DOWN
U.S. crude oil imports fell 313,000 b/d to 7.48 million b/d. The decline was from a 350,000 b/d drop in Venezuelan imports and a 302,000 b/d drop in Mexican imports. A 229,000 b/d rise in Canadian imports lessened the overall decline in imports.
On the USAC, crude oil imports fell 136,000 b/d to 742,000 b/d the week ended April 25. This comes after imports surged to 878,000 b/d in the April 18 reporting week.
On a four-week moving average, USAC crude oil imports at 689,000 b/d were higher for the fourth week in a row. The increase follows a general upward trend in USAC imports this time of year, as refiners exit spring maintenance.
It is also possible the higher imports were related to a recent narrowing of the Brent-WTI spread, which gave Brent-priced West African crude oils the advantage over WTI-priced Bakken crude oil during the first half of April.
The delivered cost of Nigerian Bonny Light fell to a $2.31/b discount to the delivered cost of Bakken on April 10, for instance. The EIA's preliminary country of origin import data showed a rise in both Nigerian and Angolan crude oil imports over the past two weeks, although that data is not broken down by region.
The Bonny Light advantage was short-lived, though, with delivered Bonny rising to a $3.02/b premium to delivered Bakken by April 25.
GASOLINE STOCKS RISE, OUTPUT DROPS
U.S. gasoline stocks rose 1.6 million barrels to 211.6 million barrels the week ended April 25, counter to expectations of a 1.75 million-barrel draw.
The weekly build was the first since early February and came despite a 268,000 b/d reduction in gasoline production.
Implied demand* for gasoline rose 263,000 b/d to 8.69 million b/d, EIA data showed.
Kjus noted that the gasoline yield was at a low level the week ended April 25, and was not likely to be sustainable, adding that it should be easy to increase gasoline output without increasing crude oil runs in coming weeks.
"Gasoline has now provided the price signal to see exactly this kind of movement as gasoline in April is more expensive than heating oil for the first time since last summer," Kjus said in a note. "We expect a much higher gasoline yield to help increase the output of gasoline in the coming weeks."
U.S. distillate stocks rose 1.9 million barrels to 114.4 million barrels the week ended April 25, outpacing expectations of a 1 million-barrel build.
Output of Iran-China's $40-bln contracts: 50 kbbl oil
30 April 2014, 18:03 (GMT+05:00)
By Dalga Khatinoglu
Iran's oil ministry on April 29 officially expelled China National Petroleum Corporation International (CNPCI) from South Azadegan oilfield's development project due a five-year delay in carrying out the project.
Azadegan (Majnoon) - the joint field between Iran and Iraq- is the country's largest oil field with about 26 billion barrels proven reserves in Iranian side.
The Iranian part of the field was discovered in 1999.Japan's Inpex Company carried out the exploratory studies but due to the Japanese firm's unwillingness, Iran signed the contract for the field's development plan with China.
Iran, itself, invested in the field and started producing 25,000 barrels of oil per day from Azadegan in 2007. China's CNPCI signed a 2.5-billion dollar contract in 2009 to develop the field (the Chinese firm agreed to pay for 90 percent of the costs). But since then only 25,000 barrels of oil have been added to the field's production capacity.
The field was originally projected to produce 320,000 barrels of oil in the first phase. The field's output was expected to reach 600,000 barrels per day in the second. Some 185 wells were supposed to be drilled at the field in 52 months.
However, the managing director of Iran's Petroleum Engineering and Development Company (PEDEC), Abdolreza Haji Hosseinnejad said in January that the Chinese firm had only drilled seven wells at the field.
In the Iraqi sector, Anglo-Dutch multinational oil and gas company, Shell, the operator of Majnoon field project owns 45 percent of the Iraqi part of the oil field alongside with Malaysia's Petronas (30 percent) and Iraqi Missan Company (25 percent). The Iraqi side of the field's output currently stands at 210,000 barrels, which is 420 percent more than Iran's production.
Based on a report published by Shell on April 8, ten million man-hour of work have been done at the Iraqi side of the field last year. Some 2,500 Iraqis (around 75 percent of the field's total workers) have worked at the field.
Iraq started developing the Majnoon Field in 2009, when CNPCI signed a contract with Iran to develop South Azadegan field.
Since the pull out of giant gas companies from Iran following the US-engineered sanctions, Chinese firms such as SINOPEC, SINOC, and CNPCI managed to sign over 10 major oil and gas contracts, worth some $40 billion, to develop Iranian fields. The contracts were all signed during the eight-year presidency of Iran's former president Mahmoud Ahmadinejad.
North Azadegan, South Azadegan, Yadavaran, South Pars gas field's Phase 11, a liquid gas (LPG) production unit, and North Pars development plan were among the mentioned projects.
None them have come on stream so far.
Iran cancelled its contract for development of North Pars gas field with CNPCI in September 2011. A year later, it also cancelled the contract for development of South Pars gas field's Phase 11 with the same company.
The country also cancelled its contract for construction of a 10-million ton LPG production unit with a consortium of Chinese companies in November 2011.
Iran signed a 2-billion dollar contract for development of Yadavaran field with SINOPEC Company in December 2007. The Chinese firm was supposed to double the field's output to 50,000 barrels of oil per day by 2013, but it has failed to meet its obligations so far.
North Azadegan field's development project is also no different than its southern neighbor.
The Chinese companies were expected to tap 20,000 barrels of oil per day from the field last year as part of the first phase of the project. But according to Hosseinnejad, the drilling operation of the field is only 61 percent complete.
Apparently, Ahmadinejed administration's officials made the wrong forecast when trying to bypass sanctions by replacing giant international companies with Chinese firms.
Dalga Khatinoglu is specialist on Iran's energy sector and Iran News Service head in Trend Agency
Edited by C.N.
Follow us on Twitter @TRENDNewsAgency
Rosneft Quarterly Net Falls 65% to 86 Billion Rubles on Ruble
By Jake Rudnitsky Apr 30, 2014 7:20 PM GMT+0700 0 Comments Email Print
OAO Rosneft, the world’s biggest publicly oil company, said first-quarter net income fell 65 percent after foreign exchange losses.
Net income attributable to shareholders dropped to 86 billion rubles ($2.4 billion) from 286 billion rubles in the first quarter of last year, the Moscow-based company said in statement on its website. First-quarter revenue increased to 1.375 trillion rubles from 812 billion rubles.
Russia, the world’s biggest energy exporter, faces mounting pressure from the U.S. and Europe over tensions in neighboring Ukraine, boosting capital outflows and weakening the currency. Rosneft Chief Executive Officer Igor Sechin was added to the U.S. sanctions list this week, while the Treasury Department has refrained from targeting the company.
“The weak ruble meantime played a dirty trick on Rosneft’s net income,” Alexander Kornilov, an oil analyst at Alfa Bank in Moscow, said in a note before the results were published.
Profit for the period was 88 billion rubles compared with an adjusted 102 billion rubles, net of a retrospective revaluation of the TNK-BP assets and liabilities it acquired, in the first quarter last year, Rosneft said. The company recognized a non-cash foreign exchange loss of 84 billion rubles, compared with an 11 billion ruble loss last year.
Rosneft generated free cash flow of 121 billion rubles, not including prepayments received, compared with 33 billion rubles a year earlier, according to the company’s statement. It received 431 billion rubles in prepayments for oil the first quarter, compared with 163 billion rubles in the fourth quarter of last year.
To contact the reporter on this story: Jake Rudnitsky in Moscow at jrudnitsky@bloomberg.net
To contact the editors responsible for this story: Torrey Clark at tclark8@bloomberg.net Scott Rose
UPDATE 1-Rosneft Q1 core earnings beat forecasts
Wed Apr 30, 2014 3:36pm BST
* Q1 net profit down 14 pct y/y due to exchange rate
* Free cash flow more than tripled to 121 bln rbls
* Rosneft says Arctic development plan on track
By Vladimir Soldatkin
MOSCOW, April 30 (Reuters) - Rosneft, Russia's No. 1 oil company, said on Wednesday its first-quarter core profit more than doubled, year-on-year, to 289 billion roubles ($8 billion), beating analyst forecasts, on the back of rising sales.
Analysts, polled by Reuters, had expected January-March earnings before interest, taxation, depreciation and amortisation (EBITDA) of 280.7 billion roubles.
The company became the world's largest listed oil producer last year, when it bought the Anglo-Russian TNK-BP oil firm for $55 billion in what some observers see as Russian President Vladimir Putin's strategy of pursuing state capitalism.
After the deal, BP ended up with a 19.75 percent stake in the Kremlin energy champion. Rosneft, headed by Igor Sechin, a long-standing ally of Putin, borrowed more than $30 billion from banks to finance the TNK-BP purchase.
The company said on Wednesday its free cash flow more than tripled to reach 121 billion roubles in January-March, while net debt declined by 11.5 percent to 1.59 trillion roubles.
Rosneft's first-quarter net income declined by 14 percent to 88 billion roubles due to the impact of a weakening rouble, which it put at 84 billion roubles.
The Russian currency is down some 10 percent against the dollar so far this year.
SANCTIONS
Banking sources said on Tuesday that U.S. sanctions imposed on Sechin earlier this week over the Ukraine crisis are threatening Rosneft's plans to raise around $4 billion of oil prepayment loans.
Markets have largely brushed off the sanctions.
Rosneft's share prices reversed losses after the company published its results and were up 0.1 percent in late trade, in line with the broader market.
Putin said on Tuesday that Moscow saw no need for counter-sanctions against the West but that it could review its contracts with international majors if sanctions continued. Rosneft has deals with Exxon Mobil, Eni and Statoil to tap offshore Arctic resources.
Rosneft aims to drill a first exploratory well in the Arctic Kara Sea, which it plans to develop with Exxon, in August.
"Preparation for drilling the first well in the Kara Sea is unquestionably one of our key projects. Monetisation of Russia's enormous resource potential in the offshore Arctic is the key priority for the company," Sechin said in a statement.
($1 = 35.6277 Russian Roubles) (Reporting by Vladimir Soldatkin, editing by Nigel Stephenson)
UPDATE 2-Total hit by struggling refining, lower output
Wed Apr 30, 2014 10:23am BST
04/30/2014
* Q1 adj net down 10 pct at $3.3 billion
* Oil & gas output down to 2.179 mln boepd in Q1
* Books $350 mln depreciation charge on Russian project
* Says European refining margins start to recover in Q2 (Adds details, background, shares, analyst)
By Michel Rose
PARIS, April 30 (Reuters) - French oil major Total reported a 10 percent drop in first-quarter net profit on Wednesday, dragged down like its rivals by shrinking margins at its European refineries and a drop in oil and gas output.
Security issues hurt output from Libya and Nigeria while in the United Arab Emirates Abu Dhabi in January took over control of oilfields that had been run by oil majors such as Total for decades.
The group also booked a $350 million depreciation charge on a Russian Arctic gas project it hoped to develop with Gazprom but shelved due to the huge costs.
Total shares were down 1.3 percent in early trade, underperforming the European oil and gas index and rival Shell which was up 3 percent despite booking a $2.9 billion charge related to refineries in Europe and Asia.
Shell said was it was in the process of divesting refineries in four countries.
"The miss came from the downstream business," said Bernstein analysts in a note on Total. "Upstream net income per barrel was $15.8/boe versus expectations for $14.3/boe due to higher equity income (from affiliates Novatek and Angola LNG)."
Total said this month that European first-quarter refining margins had fallen to a four-year low.
"The impact of sharply lower European refining margins was limited thanks to the implementation of performance improvement plans by the segment," Chief Executive Christophe de Margerie said in a statement.
The economic slowdown has hit European oil demand in the past few years, leaving refineries operating at overcapacity.
Total said European margins had started to recover in the second quarter, but expected maintenance at its German and Dutch refineries in Leuna and Vlissingen to hit output.
FRONTIER DRILLING
In the upstream, the group said it expected the start-up of the big CLOV project in Angola at the end of June, and the coming on stream of the Laggan-Tormore field in Scotland and Nigeria's Ofon Phase 2 in the second half of the year.
The group also said it would soon start drilling in promising new fields in Brazil, the Kwanza basin in Angola and deep offshore Ivory Coast, where it struck oil earlier this year.
"Total is now entering an exciting period for exploration with a series of frontier wells to be drilled through the next two quarters," Bernstein analysts said.
Total gave the go-ahead to another Angolan investment this month, Kaombo, the latest in a series of African projects meant to help it meet its 2015 and 2017 production targets of 2.6 million and 3 million boepd respectively.
The loss of the ADCO licence in Abu Dhabi in January removed about 140,000 barrels per day, pushing production down 5.5 percent, while security issues in Libya and Nigeria lowered output by 1.5 percent.
A one-percent output rise from start-ups and lower maintenance meant production was down 6 percent overall versus the same quarter last year.
A 4-percent drop in Brent crude prices and exploration charges up about 20 percent year on year also weighed on net adjusted profit, which was down 10 percent to $3.3 billion in the first quarter, it said.
Non-adjusted net profit was up 71 percent due to a large impairment charge on a Canadian project booked in the first quarter of last year.
Total kept its quarterly dividend at 0.61 euros per share, level from the previous quarter. (Additional reporting by Sarah Young in London; Editing by David Holmes and Jason Neely)
In a mid-April meeting with Beaver County residents, Royal Dutch Shell officials said the multinational has now reached the fourth stage in its Beaver cracker project, the "define" stage which includes establishing detailed engineering, design and cost estimates for the cracker.
Pittsburgh Business Times
Royal Dutch Shell released its first quarter earnings Wednesday without mention of a decision on whether it will build an ethane cracker in Beaver County.
The multinational oil and gas giant saw its net income drop 45 percent to $4.5 billion, mainly due to a $2.9 billion impairment charge for refineries in Europe and Asia.
Neither the Beaver County cracker nor Shell's business in the Marcellus Shale were mentioned in the materials provided by Shell. Its upstream business in the Americas, which includes oil and gas, earned $547 million in the first three months of 2014, up from $310 million a year ago and from three previous quarterly losses.
In a prepared statement, new Shell CEO Ben van Beurden said he'd continue the company's strategy for better financial performance and higher efficiency.
"I am determined to improve our competitiveness and to adapt the company to respond to changes in the industry landscape, particularly in Oil Products and North America resources plays," said van Beurden in a prepared statement.
Shell (NYSE: RDS.A) has said it would take years to decide whether it would build the ethane cracker in Potter Township, although it continues to do work on the site of a Horsehead Holding Corp. (Nasdaq: ZINC) zinc smelter and has extended options there. Earlier this month, Shell held two public meetings to update Beaver County on the progress but said no decision had been made.
