BASRA, 19 hours, 4 minutes ago
Oil production at southern Iraq's West Qurna-1 field is running at a rate of 360,000 barrels per day (bpd) due to problems with low levels of water injection to boost production, the head of the joint management committee said.
Madhi Abdul Razzaq told Reuters the reason for the decline from a planned output of 400,000 bpd was due to "lateness in referring some contracts and a decrease in reservoir pressure."
An industry source had said earlier this month that output from West Qurna – 1 which is operated by ExxonMobil, has fallen almost 40 per cent to around 300,000 bpd compared with last year, citing the shortage of water as one of the reasons.
Abdul Razzaq said there was a problem with water injection a key issue that threatens Iraq's plans to raise its oil output.
There is a multi-billion dollar common seawater injection scheme designed to boost production from the giant export oilfields in southern Iran but that project has been delayed.
The shortage of water is hurting production in West Qurna-1 and Zubair, official and industry sources have told Reuters.
"Yes it is a problem of water injection and for us to solve this problem we have a contract to provide 75,000 barrels of waters per day, what is happening now is 55,000 barrels per days," Abdul Razzaq said.
For Iraq's giant Rumaila oilfield, the general manager of the Rumaila Operating Organisation, Salah Mohammad, said the plan throughout 2015 would be to reach 1.31 mbpd, compared to the current production of 1.28 mbpd.
Mohammad said that there were plans to build a new de-gassing station with a capacity of 450,000 bpd, in addition to three new water injection stations.
Technical analysis for the offers will be completed in November, Mohammad said, adding that he expected contracts to be signed in the middle of next year. -- Reuters
New York (Platts)--19Sep2014/451 pm EDT/2051 GMT
NYMEX October RBOB settled up 5.04 cents at $2.6114/gal, as the oil complex turned mostly higher Friday on news of a widening US-led campaign against Islamic State jihadists in Iraq.
ICE November Brent settled 69 cents higher at $98.39/b, while NYMEX October crude closed 66 cents lower at $92.41/b. NYMEX October ULSD settled up 43 points to $2.7166/gal.
"Refining margins are better in the US than Europe, but US refineries are producing less gasoline than in the summer, so you're starting to see pressure for higher prices," said Carl Larry, president of Oil Outlooks.
The difference on Friday between the price of Brent crude and NYMEX RBOB was $7.74/b.
The latest data from the US Energy Information Administration released this week showed the largest weekly draw of gasoline stocks on the US Atlantic Coast since August 2013.
"Petroleum products are weak but it looks like that RBOB gasoline will perform better than heating oil/ultra-low sulfur diesel," Phil Flynn, analyst at Price Futures Group, said in a client note. Retail gasoline prices have hit four year lows, he said.
Traders, meanwhile, were mulling over events in the Middle East and Africa with supply implications.
France carried out its first air strike in Iraq against Islamic State, which the market viewed as bullish for oil prices, analysts said.
A week-long strike by workers at state-owned Nigerian National Petroleum Corp over pensions is continuing, though it has yet to impact exports.
In Libya, there are no signs of the Zawiya export terminal and associated Sharara oilfield reopening, which were closed this week by the National Oil Co. due to nearby rocket attacks.
The closure has reduced Libyan crude production to around 700,000 b/d from nearly 900,000 b/d last week.
London (Platts)--19Sep2014/158 pm EDT/1758 GMT
The upstream oil and gas industry called Friday for a focus on reforms needed to revive the UK's flagging North Sea production, following Scotland's decisive rejection of independence in a referendum.
Shell was among those greeting the vote for staying in the UK at Thursday's referendum, following warnings the uncertainty was clouding investment decisions in the UK's main oil producing region.
Shell said it "welcomes the decision by the people of Scotland to remain within the UK, which reduces the operating uncertainty for businesses based in Scotland," it said.
Shell had warned against independence and also voiced concern at a potential further referendum on whether the UK should leave the EU -- a vote that remains a possibility following a general election next May.
On Friday, Shell said it would "continue to work closely with both the UK and Scottish governments to help the industry deliver vital energy supplies through investment in the UK's oil and gas resources."
Others highlighted the need for the UK to stick with plans for an overhaul of an upstream tax regime widely seen within the industry as a drag on investment, as well as the importance of a planned new regulator that would focus on upstream production issues.
UK oil and gas production has fallen rapidly in recent years, with oil output last year down 62% from a decade earlier at 820,000 b/d.
Amid a tight political timetable ahead of next year's election, industry lobby group Oil and Gas UK said that "to safeguard the industry's future, it is particularly important that the government now presses swiftly ahead with fiscal reform," as well as implementing recommendations made earlier in the year on setting up a new, dedicated regulator.
The comments were echoed by Chevron, which said: "We hope the [fiscal review] work will result in ensuring the regulatory and fiscal environment provides a strong foundation to maximize the economic recovery of the offshore oil and gas resource."
ExxonMobil said it hoped the UK government and devolved authorities in Scotland would "work together to promote continued investment" and development of oil and gas.
BP, the target of an angry outburst threatening nationalization by a key figure in the Scottish Nationalist campaign for independence, said: "The North Sea is important to BP and we expect to be an active participant in the oil and gas industry in Scotland for years to come.
"BP will continue to work closely with both the UK and Scottish governments to realise our shared ambition of maximizing economic recovery from the North Sea."
In the downstream segment, traders expressed relief that the potential disruption of a "yes" vote had been averted, including in relation to Scotland's only refinery, Grangemouth.
One trader said nationalization of the loss-making facility "would have been a very real prospect in the early years" of independence simply to keep it open and avoid 100% import dependence. FRAGILE MOOD
Amid a boost to UK business confidence from Thursday's vote, there were signs the country would continue to hold attractions for oil and gas investors, including a benign security environment and high levels of industry expertise.
However, the mood remained fragile, even as some in the sector saw signs of output recovering slightly in coming years following record investment aimed at tackling chronic inefficiency at aging North Sea facilities.
BP CEO Bob Dudley said in July the average rate of "up time" across all North Sea assets was about 57% and that BP's own assets were "not a whole lot above that."
Referendum uncertainty has added to UK industry's underlying issues, which include tax rates as high as 81% for fields approved before 1993, a higher rate than in neighboring Norway.
On top of fiscal reform and the setting up of a new regulator to drive cooperation within the industry, the issue of liability for decommissioning aging assets remains a drag on deal-making in the UK, said Jon Clark, Ernst & Young's oil and gas transaction advisory leader for Europe, the Middle East, India and Africa.
"'Business as usual' has had a degree of a pause with the uncertainty on [the] potential outcome of the referendum," he said. "I think the key now is for the industry and government to get on with the various proposed initiatives. With aging infrastructure there is a time-critical element to all of this."
Amid moves to set up the new regulator in the Scottish city of Aberdeen, and ahead of a December 3 announcement by the government on fiscal changes, the sense of impatience felt by some in the industry has been voiced by Bill Transier, CEO of struggling Houston-based Endeavour International, which has most of its assets in the North Sea.
"The North Sea is a tremendous petroleum system that has been there producing for over 40 years. It still has a lot left behind, but the industry itself, the government, the traditional way in which we do things ... will not allow you to use new technologies, will not allow you to get access to infrastructure," he said last month.
"They changed the tax code on us several times. The tax code is just too high to incentivize investment. ... You have got to look at the facts and say, here are the facts and if we do not do something dramatic fairly soon, something that I consider a national treasure for the UK is going to just go away."
WEEKLY WRAP: LHS differential falls as demand for sweet crudes tumbles
Houston (Platts)--19Sep2014/156 pm EDT/1756 GMT
The Light Houston Sweet differential dropped 20 cents/b week-on-week as demand for light sweet crudes on the US Gulf Coast waned, causing the region's crude differentials to weaken.
LHS was assessed Thursday $1.85/b below the Light Louisiana Sweet differential, or $94.02/barrel, and 90 cents/b above WTI.
With the LHS differential narrower on the week, while the LLS differential declined by 85 cents/b in that same time, the outright price fell 91 cents/b as the NYMEX crude contract strengthened.
The October NYMEX crude contract increased by 14 cents/b to $93.12/b Thursday from $92.98/b September 11.
The LHS differential weakened steadily from the end of last week and into this week, but on Wednesday the differential dropped 10 cents/b.
October domestic sweet blend, the WTI lookalike that is blended in Cushing, Oklahoma, and sent to Houston, was heard offered on Wednesday at the East Houston terminal at WTI plus $1.10/b.
Domestic sweet blend carries a quality discount to unblended WTI from West Texas, as it has a different distillation yield due it being the product of blended light sweet shale crude and heavy sour crude in order to meet WTI specifications. Contributing to its discount is that it travels down the 400,000 b/d Cushing-to-Houston Enbridge/Enterprise Seaway crude line that also ships heavy Canadian crude with higher levels of sulfur and metals, which the domestic sweet blend picks up in transit.
The domestic sweet blend was heard to be carrying a 10 cents/b discount to unblended WTI in East Houston, which led to it being assessed on Wednesday at WTI plus $1.15/b.
The lower levels for light sweet crude in Houston has been attributed to recent government data showing high crude imports and low demand as of regional refiners conduct seasonal maintenance, US crude sources said.
Data released by the US Energy Information Administration on Wednesday showed total US imports rose 493,000 b/d to 8.11 million b/d for the week that ended September 12.
The EIA data also showed that refinery utilization rates in the US Gulf Coast fell 1.6 percentage points to 93.4%, as crude runs decreased 23,000 b/d to 8.47 million b/d.
"Huge imports into the US discourage these prices," a crude source said.
WTI Midland specifications at the East Houston terminal apply to the Platts LHS assessment methodology. The LHS assessment methodology reflects barrels of WTI Midland marketed from Magellan Midstream Partners' 275,000 b/d Longhorn Pipeline and the 300,000 b/d Magellan/Occidental BridgeTex pipeline at the East Houston terminal.
London (Platts)--19Sep2014/929 am EDT/1329 GMT
Combined inventories of diesel, gasoil and jet kerosene held in the Amsterdam- Rotterdam-Antwerp region rose 1.5 million barrels to 24.2 million barrels in the latest week, according to data published Friday by BNP Paribas.
The increase for the week ending September 17 was larger than in recent weeks, with marginal builds in distillates and jet inventories.
By product, jet kerosene stocks totaled 3.4 million barrels, or around 435,900 mt, up 1.6%.
That left levels down 5.6% on last year, and 23.3% under the five-year average.
Distillates stocks -- diesel and gasoil -- rose 7.2% to 20.8 million barrels, or around 2.78 million mt. Inventories are 19.3% higher than last year, or 12.3% above the five-year average.
"ARA gasoil stocks recovered to counterbalance a large draw of a week earlier and stocks remain ample," BNP Paribas analysts said in the report.
While middle distillates stocks edged higher, gasoline stocks fell 350,000 barrels, or 10.5%, , with the overall level at 5.16 million barrels, which was 15.5% below the five-year average.
The report attributed the decline to higher exports on spot cargo bookings to the US.
Northwest European gasoline market fundamentals have pointed to overall tightness in the summer-grade market, supported by the refinery turnaround season and increased West African-grade gasoline blending.
Looking at fuel oil, inventories rose 12.5% to 4 million barrels, which was 2.9% higher than four weeks ago and 34.1% lower year on year.
ARA residual fuel oil stocks were building up despite large volumes being lifted to Asia and the West Mediterranean, traders said.
Healthy European supply was attributed to steady flows from Russia and lackluster regional demand for bunker market, traders said.
Singapore fuel stocks rose 7.2% week on week to 19.179 million barrels, the BNP report said.
London (Platts)--19Sep2014/816 am EDT/1216 GMT
Average loadings of Nigeria's naphtha-rich Agbami crude in November are set to rise to 260,000 b/d from 251,613 b/d in October, according to a copy of the preliminary loading schedule seen by Platts on Friday.
Total loadings of Agbami for November will be at 7.8 million barrels, the same as seen for October.
In total, eight cargoes of 975,000 barrels each will load in November, the same as in October.
Chevron is currently scheduled to load six cargoes in November, while Nigeria's state-owned NNPC holds two stems in the program.
Agbami, a light sweet crude with low acid content, is produced 70 miles (113 km) offshore of Nigeria in OPL blocks 26 and 217 and loads from the Agbami FPSO.
With a gravity of 47.2 API, Agbami is one of the lightest grades produced in Nigeria, and its sulfur level of 0.05% is one of the region's lowest.
Moscow (Platts)--19Sep2014/924 am EDT/1324 GMT
Russia's Gazprom expects gas market trends of recent years -- that saw its share on the European gas market increasing -- to continue over the next 10 years, despite ongoing changes and stagnation in the markets, CEO Alexei Miller said Friday.
"In 10 years, those trends, which have been seen in the past several years, will persist," he said, speaking at an investment forum in Russia's Black Sea resort of Sochi.
"Those trends are very very positive for us in respect of the market [share]. Starting from 2010, the share of Russian gas in the EU's consumption rose to 30% from 23%," Miller said.
"What is even more remarkable is the fact that Gazprom's share in Europe's overall gas imports will exceed 64% in 2014, gaining 17% over the last four years."
Gazprom's supplies to Europe have been rising as gas production in Europe and supplies from other sources continue to decline.
Another factor that likely sparked the increase in gas purchases is the looming risk of possible disruptions in gas transits via Ukraine.
In June, Russia halted gas deliveries to its western neighbor as Kiev refused to pay a $5 billion debt for gas already supplied amid a gas price dispute.
The talks have brought no resolution so far.
Miller added that he is confident that Russian gas deliveries to Europe will grow further, getting an even bigger share in the market in the next 10 years.
"The most important thing ... we can say for sure is that we can meet European demand in full," he said.
This will happen even though Gazprom expects to start sending significant volumes of natural gas to the Asian markets, he said.
Earlier this month, Gazprom held an official ceremony to mark the start of construction of the so-called eastern route to China, dubbed Power of Siberia, to send 38 billion cubic meters/year of gas to China, with first deliveries expected in 2019.
Gazprom is also negotiating a 30 Bcm/year contract for supplies via a so-called western route, dubbed Altai.
Earlier this week, Miller said there is a possibility of supplying between 30 Bcm/year and 100 Bcm/year via this route to China.
In 2013, Gazprom raised its gas exports to Europe by 16% to 161.5 Bcm -- despite lower overall demand in the region -- because of disruption to Libyan supplies to Italy and lower Norwegian exports to northern Europe, as well as declining production within the EU itself.
Calgary (Platts)--18Sep2014/419 pm EDT/2019 GMT
China will look to drive "a hard bargain" on prices when signing LNG off-take deals with Canadian producers in large part because of its recently signed supply deal with Russia, an official with China National Offshore Oil Corp. said Thursday.
"We are in a strong position with the Russia deal and that puts us in the driver's seat while conducting price negotiations in Canada," Chen Wei Dong, chief energy researcher with the national oil company's Energy Economics Institute said on the sidelines of the Canada LNG Export Conference and Exhibition in Calgary.
China in May signed an deal with Russia to import 38 billion cubic meters/year of gas through a pipeline for 30 years.
"We are negotiating another deal with Russia, which we are hoping to sign late this year or early 2015," Dong said, noting the agreements are part of China's efforts to diversify its energy sources.
While he did not mention a specific price range, Dong said Canadian producers will have to consider disconnecting LNG prices from the price of crude if they wish to be competitive.
Prospective Japanese buyers of LNG from Canada have suggested that British Columbia producers consider a "hybrid" pricing formula that would combined crude and gas prices.
The "pricing formula [in Canada] should change," Mitsuru Sato, director general of oil and gas finance with Japan Bank for International Cooperation, said at the event. "The options are hub-linked, or hybrid or new a cost-based LNG formula."
Coal now accounts for 78% of China's total power generation, followed by hydro at 15% and natural gas at 2%, he said.
But to enhance energy efficiency and reduce CO2 emissions, the nation is turning toward natural gas as a cleaner source of energy.
And even with the gas deal with Russia, China's National Development and Reforms Commission has estimated China will fall short of gas by 2020.
"[O]ur buyers are looking at global producers to secure additional LNG supplies," Dong said at the conference.
China has been importing LNG from Australia since 2005, but the delivered price of LNG gas been increasing, making the nation look to North America supply, he said.
The NDRC has begun market price reforms and despite coal being priced at $3/MMBtu, or 20% of the average LNG price of about $15/MMBtu, Chinese electric utilities will still have to look at importing gas, Dong said.
"CO2 emissions [are] a big factor that will make us more [interested in] LNG," he said, adding that while China already has eight LNG regasification terminals operating, four more import facilities, with a combined capacity of 16 million mt/year, are being built.
Brian Tuffs, executive vice president of exploration and new ventures with Sinopec Canada, said Western Canadian LNG producers are working on profit margins that typically range from $2/MMBtu to $3/MMBtu.
"Significant consolidation will likely take place between the various players in Western Canada before final investment decisions are taken on moving ahead with construction of the multi-billion-dollar export projects," he told the conference.
Tuffs added that the next 24 to 36 months will be a critical period for planned LNG facilities in Western Canada.
Sinopec Canada which has a 10% stake in the Petronas-backed 12 million mt/year Pacific Northwest LNG project in British Columbia, is in negotiations to buy additional volumes of LNG from the planned facility.
Sinopec has an agreement to buy 1.2 million mt/year from the terminal, with an option to increase off-take volume to 4.8 million mt/year, Tuffs said.
The company also is building two regasification terminals at Wengzhou and Guangxi in China, each with a capacity of 3 million mt/year that are due to be completed next year, he said.
Exxon Mobil Corp. (XOM) said the U.S. government is giving the company more time to shut its Russian Arctic well beyond the deadline for sanctions aimed at halting the $700 million project.
Exxon asked Washington for an extension to allow it to continue performing shut-down work on the Universitetskaya-1 (University-1) well in Russia’s Kara Sea to make sure the well was safe before it’s temporarily abandoned. The Irving, Texas-based company already had ceased drilling the offshore well after U.S. sanctions set a Sept. 26 deadline for ending the work.
“The U.S. Treasury Department, recognizing the complexity of the University-1 well and the sensitive Kara Sea arctic environment, has granted a license to Exxon Mobil and other U.S. contractors and persons involved to enable the safe and responsible winding down of operations related to this exploration well,” Exxon said in a statement today.
The most-recent round of sanctions intended to punish Russia for its involvement in separatist violence in Ukraine barred U.S. and European Union companies from helping Russia exploit oil resources in the Arctic, deep seas and shale formations.
Waging Financial War
The measures had prompted Exxon and its partner OAO Rosneft (ROSN) to temporarily halt drilling at the well, which lies about 260 feet (79 meters) beneath the sea surface off Siberia’s northern coast, according to three people familiar with the project. The well is aiming to tap a resource estimated to hold as much as 9 billion barrels of crude, worth $880 billion at current prices.
More Time
Exxon sought the exemption from the deadline after engineers involved in the project warned they needed more time to properly plug the well with cement and conduct tests to ensure there are no leaks, cracks or faults that could damage the reservoir or allow environmental contamination, according to a source with knowledge of the matter who asked not to be identified because he was not authorized to speak publicly.
Exxon and Rosneft are exploring a geologic formation never before drilled by humans, which means the pressure changes, layer densities and temperatures at various depths are unknown, increasing the risks of unexpected collapses or pressure bursts. For that reason, the engineers closing the well need to map the formation a foot at a time as they back out of the well, a process that can take weeks.
Slowing Progress
The halt at Universitetskaya-1 is a blow to Russian President Vladimir Putin’s quest to find a new generation of oil fields to replace declining output from some of the country’s Soviet-era reserves. The Russian oil industry is dependent on expertise and equipment from the U.S. and Europe to penetrate crude reservoirs that are deeper, denser and more remote than anything they’ve attempted before.
The disruption also is a setback for Exxon as the company seeks to lift production that touched a 4-year low in 2013 as the rate it’s replacing output with new discoveries tumbled to the lowest in half a decade.
Exxon’s $3.2 billion exploration pact with Moscow-based Rosneft is a linchpin of the U.S. company’s bid to spur production and reserves growth in the next decade, said Brian Youngberg, an analyst at Edward Jones & Co. in St. Louis.
‘Enormous’ Potential
“The Arctic drilling potential for Exxon is really enormous,” said Youngberg, who has a hold rating on Exxon shares. “It’s one of the key growth areas they’re looking to post-2020.”
Rosneft’s press office in Moscow declined to comment. Hagar Chemali, a U.S. Treasury Department spokesperson, declined to comment and referred a Bloomberg News inquiry to Exxon.
Exxon is using the West Alpha rig owned by Seadrill Ltd. (SDRL)’s North Atlantic (NADL) Drilling unit at the Universitetskaya-1 site about 70 miles offshore. The rig departed a Norwegian shipyard in July and sailed around the northern coast of Scandinavia and into Russian territory right before the U.S. and EU prohibited exports of gear for Arctic, deep-water and shale drilling.
Within weeks, the U.S. and EU moved to close loopholes in the sanctions by also banning the export of services such as engineering expertise and geological analysis for Russian Arctic, deep-water and shale projects.
Exxon rose 0.5 percent to $97.12 at the close of trading in New York. Seadrill fell 4.1 percent today in Oslo to its lowest closing price since November 2011.
The measures left untouched so-called conventional oil developments that aren’t part of Putin’s hunt for next-generation oilfields, including the Sakhalin-1 development off Russia’s Pacific Coast managed by Exxon and Rosneft.
Nigeria’s oil unions called off a four-day strike, averting a threat to exports from a nation whose shipments equate to about 2 percent of global demand.
The Pengassan union that represents managers and blue-collar Nupeng oil union suspended industrial action after talks with Petroleum Minister Diezani Alison-Madueke and state-owned Nigeria National Petroleum Corp.
“The strike action embarked upon by Nupeng and Pengassan is hereby suspended,” according to a joint e-mailed statement yesterday by the minister, labor leaders and NNPC.
The strike started on Sept. 16 in a dispute over pensions and unions representing workers at NNPC. Nigeria is the continent’s largest oil producer and relies on the commodity for more than 70 percent of government revenue and 95 percent of foreign-exchange income. The West African nation pumped 2.3 million barrels a day of oil in August, the most since 2006, according to data compiled by Bloomberg.
“The strike didn’t yet have an impact on Nigeria’s oil exports,” Manji Cheto, vice president for West Africa at consultants Teneo Intelligence, said by phone from London before the strike was called off. “If it had gone beyond next week, then we would have seen an impact on export volumes.”
Nigeria exported about 1.9 million barrels a day last year, according to data collated by the International Trade Centre’s Trade Map, a venture between the World Trade Organization and the United Nations. Global demand is about 92 million barrels a day.
The NNPC runs joint ventures with Royal Dutch Shell Plc (RDSA), Chevron Corp. (CVX), Exxon Mobil Corp. (XOM), Total SA (FP) and Eni SpA (ENI) that pump about 80 percent of Nigeria’s crude.
House leaders say Americans feeling squeezed by high gas prices; AAA says gas prices are falling at their fastest rate since 2010.
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Doc Hastings, R-Wash., says Americans feeling the pain at the pump, though data suggests otherwise. (UPI Photo/Kamenko Pajic)
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Doc Hastings, R-Wash., says Americans feeling the pain at the pump, though data suggests otherwise. (UPI Photo/Kamenko Pajic)
WASHINGTON, Sept. 19 (UPI) -- A bill that passed through the U.S. House of Representatives will bring relief to consumers feeling the "squeeze" of high gasoline prices, backers say.
The House of Representatives passed a measure largely along party lines that supporters said would lower energy prices and expand U.S. energy production.
House Natural Resources Committee Chairman Doc Hastings, R-Wash., said the bill came in response to bureaucratic red tape getting in the way of true U.S. energy potential.
The measure is "a common sense" approach to "provide relief to hardworking Americans who are feeling the squeeze of higher gasoline and electricity prices, reduce burdensome government barriers to American energy production, and increase America's energy security," he said in a statement Thursday.
The American Petroleum Institute, which represents the business interests of the energy sector, said permits for everything from the Keystone XL oil pipeline to liquefied natural gas exports were piling up and it was up to Senate leaders to move the legislation forward.
The measures are likely to die in the Senate amid criticism House leaders are pushing their energy agenda in the run up to November elections.
Separate analysis from API this week found crude oil production is at its highest level in nearly three decades. Motor club AAA said gasoline prices are falling at their fastest rate since 2010.
Net production down from 1980s peaks.
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Russia moving to new energy frontiers, analysis finds. UPI/Brian Kersey
WASHINGTON, Sept. 19 (UPI) -- Russia is looking to develop energy in hard-to-reach areas as legacy production falls from its peak, the U.S. Energy Information Administration found.
EIA said Russia typically depends on oil and gas fields in West Siberia. Production there has fallen from peak production levels in the 1980s and companies like Rosneft and Gazprom Neft are looking at new prospects.
Last year, Russia was the largest producer of crude oil and condensate and the second-largest producer of natural gas. Oil production in 2013 increased 1.3 percent and gas by 2.1 percent.
"However, new technologies, growing Asian markets, and Western sanctions have the potential to shift the regional balance of Russian oil and natural gas production in the long term," EIA said.
Last week, Russian oil company Gazprom Neft said it reached a milestone with the production of its 1 millionth barrel of oil from the arctic Prirazlomnoye field.
In June, the Russian government said investments in the oil industry in the eastern part of the country are expected to grow by more than $1 trillion.
Confidence ensured with vote for unity.
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LONDON, Sept. 19 (UPI) -- After a "no" vote, British energy company BP said Friday it would work closely with the governments in Edinburgh and London to boost North Sea recovery.
More than half of the voters taking part in a Thursday referendum for independence from the United Kingdom chose to continue on with 307 years of unity.
BP said it would stay on with its commitments in the North Sea.
"BP will continue to work closely with both the UK and Scottish governments to realize our shared ambition of maximizing economic recovery from the North Sea," the company said.
Scotland said independence would have drawn in substantial oil and gas wealth in the North Sea, with power coming from renewable resources.
Edinburgh touted the revenue potential on the day of the referendum. Analysis this week from Wood Mackenzie found that while most of the North Sea reserves would've gone to Scotland, production was on the way to a precipitous decline.
For Shell Chief Executive Officer Ben van Buerden, the "no" vote removed a level of uncertainty in North Sea investments.
"We look forward to continuing our proud association with Scotland," he said.
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Gazprom Chief Executive Alexei Miller still sees Europe as top gas destination. (UPI Photo/Anatoli Zhdanov)
MOSCOW, Sept. 19 (UPI) -- Though China is becoming an important business partner, the European market is the prime destination for Russian gas, the CEO of Gazprom said Friday.
Chief Executive Officer Alexei Miller said Russian gas would account for 64 percent of European imports this year, up 17 percent from four years ago.
"The European market is No. 1 for us, and we are Europe's No. 1 gas supplier," he said.
Gazprom officials have expressed interest in moving deeper into a growing Asian economy in an effort to offset a stagnant European Union. Construction started this month on the 2,500-mile Power of Siberia natural gas pipeline to carry Russian gas to China.
A contract between Russian natural gas company Gazprom and China National Petroleum Corp. is for 30 years and calls for 1.3 trillion cubic feet of natural gas per year.
Russia's role in the European energy sector has come into question amid ongoing crises in Ukraine. Most of Russia's gas to Europe runs through a Soviet-era pipeline system in Ukraine and past debt rows have led to regional gas shortages.
Russia has options to diversify transit options with its South Stream natural gas pipeline, though European leaders this week adopted a resolution calling on European contractors to pull out of the project.
Non-monetary exchange includes 17,000 acres.
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Exxon grabs acreage in Permian shale basin in Texas. UPI/Gary C. Caskey
IRVINE, Calif., Sept. 19 (UPI) -- Exxon Mobil said it added to its portfolio in the Permian shale basin in Texas in exchange for a portion of its field operations in California.
Exxon under the terms of a non-monetary exchange with LINN Energy gets 17,000 net acres in the Permian basin in exchange for 500 acres at its Belridge field in California.
Permian production increased 58 percent from 2007 to reach 1.35 million barrels per day last year, which represents 18 percent of total U.S. crude oil production. Exxon said the Belridge field is producing approximately 3,400 bpd.
The Permian area will be operated by Exxon's subsidiary XTO Energy Inc.
"We continue to expand our leasehold position in a prolific area that is poised for profitable volumes,"
Randy Cleveland, president of XTO Energy, said in a Thursday statement.
For LINN, it said it would examine 300 potential future drilling locations in a California basin it says holds approximately 27 million barrels of oil equivalent.
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Russian banks clouded by pressure of economic sanctions. UPI/Alex Volgin
MOSCOW, Sept. 19 (UPI) -- It will be "very hard" to maintain economic growth in Russia amid sanctions pressure on its energy sector, the head of Russia's largest bank said Friday.
Last week, the European Union enforced a new round of sanctions targeting Russian energy efforts in shale, arctic oil and deep waters. The U.S. and European governments already have imposed punitive sanctions on Russian energy companies Rosneft, Gazprom Neft and others in response to the crisis in Ukraine.
Herman Gref, the director of Russian bank Sberbank, told Rossiya-24 television the sanctions, which extend into the banking realm, were taking their toll.
Russian Prime Minister Dmitry Medvedev said earlier this month the government had a responsibility to support companies like Rosneft, controlled in part by the Kremlin.
The European Bank for Reconstruction and Development said sanctions "have negatively affected business confidence in Russia."
Algeria has the tenth-largest natural gas deposits in the world and is among the top gas suppliers to Europe. Its exports have been in decline, however, because of lagging foreign investments.
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Secretary of State John Kerry discusses taking Algerian relationship beyond energy UPI/Olivier Douliery/Pool
WASHINGTON, Sept. 19 (UPI) -- The Algerian foreign minister said from Washington bilateral ties with the United States are not limited exclusively to the energy sector.
Algerian Foreign Minister Ramtane Lamamra met Thursday in Washington with U.S. Secretary of State John Kerry, who made his first official visit to Algeria in April.
Algeria has the tenth-largest natural gas deposits in the world and is among the top gas suppliers to Europe. Its exports have been in decline, however, because of lagging foreign investments.
The country's energy minister told U.S. officials Algeria was evaluating the potential for shale oil and gas, something the government said was "absolutely vital" for energy security.
Lamamra told Kerry the bilateral ties with the United States were now without boundaries.
"It is not anymore limited to energy; it covers so many areas, and it is really a good terrain and good ground for American companies to come and to contribute in the development of Algeria," he said.
Kerry, for his part, said the strategic partnership with Algeria included efforts on the counter-terrorism front.
Terrorist in Algeria in 2013 attacked the country's In Amenas natural gas facility, and the country is facing regional pressure from the Islamic State and from turmoil in neighboring Libya.
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WASHINGTON, Sept. 19 (UPI) -- U.S. imports of crude oil in August were the lowest they've been in almost 20 years, the American Petroleum Institute said.
API said in its monthly report on trends in the U.S. energy sector crude oil imports of 7.6 million barrels per day in August, the last full month for which data are available, was 6.2 percent less than last year and the lowest level for August since 1996.
Total imports of petroleum productions were down 10.2 percent year-on-year.
August crude oil production of 8.6 million bpd, meanwhile, was the highest for the month in nearly three decades. Production was boosted largely by output from North Dakota and Texas.
In terms of demand, API said its petroleum delivery metric showed a 1 percent increase year-on-year to 19.3 million bpd, the highest in three years.
"Petroleum demand last month showed slow but steady growth, mirroring economic indicators for domestic manufacturing, air travel and job creation," said API Chief Economist John Felmy.
Production of gasoline in August was 4.6 percent higher year-on-year, while demand fell to its lowest level for August since 2011.
Gasoline prices since August have declined as the summer vacation season waned.
