By Mario Parker Jun 10, 2014 3:29 AM GMT+0700
Denatured ethanol for July delivery climbs 0.3c to settle at $2.158/gal. on CBOT. * Ethanol’s discount to gasoline widens 4.28c to 82.68c/gal. * “It’s pretty cheap,” Jim Damask, manager at StarFuels Inc. in Jupiter, Fla., said today in telephone interview. “It’s a bargain.” * Gasoline for July delivery +4.58c, or 1.6%, to settle at $2.9848/gal. on Nymex * In cash market trading, ethanol in Gulf Coast +5.5c to $2.38/gal; Chicago +1c to $2.235; N.Y. -1c to $2.28; West Coast -1c to $2.625: data compiled by Bloomberg * Corn for July delivery -8c, or 1.7%, to $4.51/bu on CBOT * Corn crush spread at 52c
To contact the reporter on this story: Mario Parker in Chicago at mparker22@bloomberg.net
To contact the editors responsible for this story: David Marino at dmarino4@bloomberg.net Charlotte Porter, Bill Banker
By Greg Stohr Jun 10, 2014 4:42 AM GMT+0700
BP Plc (BP/) must pay potentially hundreds of millions of dollars in claims after the U.S. Supreme Court refused to halt disputed payments stemming from the 2010 Gulf of Mexico oil spill.
In a one-sentence order issued today, the justices said they wouldn’t put a hold on lower court rulings that require the oil company to begin making the payments, part of a $9.2 billion accord.
BP says some of the money would go to businesses whose losses were unrelated to the spill, including lawyers who lost their licenses and warehouses that burned down before the incident. The company says the process violates the Constitution and the federal rules that govern class action litigation.
BP believes that failure to suspend “the payment of business economic loss claims will allow hundreds of millions of dollars to be irretrievably scattered to claimants whose losses were not plausibly caused by the Deepwater Horizon accident,” Geoff Morrell, a company spokesman, said in an e-mail today.
BP’s American depositary receipts fell immediately after the court issued its order before recovering. They rose 3 cents to $50.84 at 4:15 p.m. in New York.
Under its normal scheduling practices, the high court will decide late this year whether to take up BP’s appeal.
2012 Settlement
BP settled with most private-party plaintiffs in 2012, initially estimating the cost of the agreement at $7.8 billion. The company contends that a flawed interpretation by the claims administrator helped raise the price to $9.2 billion or more.
Lawyers for spill victims say BP is trying to renege on a settlement that is proving more costly than anticipated.
“We’re pleased that this denial of BP’s request for a stay will allow businesses to continue to receive the compensation they’re rightly entitled to according to the objective, transparent formulas agreed to by BP,” Steve Herman and Jim Roy, lead lawyers for spill victims, said in an e-mailed statement. The case is BP Exploration v. Lake Eugenie Land, 13A1177.
To contact the reporter on this story: Greg Stohr in Washington at gstohr@bloomberg.net
To contact the editors responsible for this story: Patrick Oster at poster@bloomberg.net Mark McQuillan, Michael Shepard
By Selcan Hacaoglu Jun 10, 2014 4:00 AM GMT+0700
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Turkey may buy more Iranian natural gas if a price dispute can be settled, Prime Minister Recep Tayyip Erdogan said after talks with Hassan Rouhani, the first Iranian president to visit Turkey in 18 years.
Erdogan said he and Rouhani discussed gas pricing during a meeting in Ankara yesterday, and asked energy ministers from the two countries to keep working on it. Turkey filed a complaint to the International Court of Arbitration in 2012 over the price of the gas it imports from Iran.
“We have decided to improve relations in gas, oil and electricity, even though there are some snags,” Rouhani said at a joint press conference in the Turkish capital late yesterday, describing the talks as a “turning point” in relations.
Rouhani is seeking to reconnect Iran with the world economy after a decade of isolation. Trade with neighboring Turkey plunged last year as a result of U.S.-led sanctions. The countries have also sparred over Syria, where they’re supporting different sides in the civil war.
A regional rival to Iran, Turkey is also “a very important potential partner that could help Rouhani” as he seeks to ease Iran’s isolation, said Ozgur Unluhisarcikli, director of the German Marshall Fund of the United States in Ankara, in an e-mail on June 6.
Gold Trade
Rouhani was accompanied on his trip to Turkey by more than 100 businessmen, seven ministers and central bank Governor Valiollah Seif, according to his Twitter account. The countries agreed to link their railway networks and improve cooperation in banking, Rouhani told an earlier news conference with Turkish President Abdullah Gul.
The prospect of a final nuclear accord between Iran and world powers is encouraging governments and companies to prepare for a possible lifting of sanctions, which would create business opportunities in the Persian Gulf’s most populous country.
Turkey’s Development Minister Cevdet Yilmaz said June 3 that annual trade between the countries could double to $30 billion next year if the “unfair” sanctions against Iran are lifted. Trade climbed to $22 billion in 2012, propelled by purchases of Iranian natural gas with gold, before tumbling to $14.6 billion last year, Yilmaz said.
The gold trade with Iran largely ended after the U.S. Senate voted to approve new sanctions against Iran, closing gaps from previous measures, including trade in precious metals.
‘Drawing Together’
“There may be tension over the civil war in Syria. But there appears to be far more drawing these two neighbors together than driving them apart,” Jonathan Schanzer, vice president of research at the Foundation for Defense of Democracies in Washington, said in an e-mail. “This, of course, raises questions about Turkey’s reliability as a U.S. ally and as a NATO ally.”
Turkey’s engagement with Iran won’t raise objections in the U.S. or European Union, provided Turkey doesn’t break ranks in its commercial dealings with the Islamic republic, said Unluhisarcikli of the German Marshall Fund.
“So long as it plays along these lines, Turkey’s dialog with Rouhani will be more than welcome,” he said.
To contact the reporter on this story: Selcan Hacaoglu in Ankara at shacaoglu@bloomberg.net
To contact the editors responsible for this story: Alaa Shahine at asalha@bloomberg.net Ben Holland, Mark Williams
By Naureen S. Malik Jun 10, 2014 2:29 AM GMT+0700
Natural gas futures slipped from a one-month high in New York as cooler weather in the central U.S. limited demand for the power-plant fuel.
Gas fell 1.4 percent. MDA Weather Services predicted below-normal temperatures from the Midwest to Texas over the next five days, with unusually high readings on the East and West coasts. Gas inventory gains topped the five-year average for the past seven weeks during a seasonal demand lull.
“It’s a cooler pattern emerging of very little cooling demand in the midcontinent,” said Teri Viswanath, director of commodities strategy at BNP Paribas SA in New York. “A broad swath of the U.S. is going to have very light demand this week and possibly into next week.”
Natural gas for July delivery fell 6.5 cents to settle at $4.645 per million British thermal units on the New York Mercantile Exchange after touching $4.743, the highest intraday price since May 8. Volume for all futures traded was 4 percent above the 100-day average at 2:41 p.m. Gas is up 9.8 percent this year.
Above-average temperatures will spread across most of the East Coast into Texas and California from June 14 through June 18, said MDA in Gaithersburg, Maryland. The warmth will stay in Texas, the West Coast and around the Great Lakes during the following five days, with seasonal readings elsewhere.
Weather Outlook
Dallas’s high temperature tomorrow will be 84 degrees Fahrenheit (29 Celsius), 7 below normal, and then climb two weeks later to 100, 7 above average, according to AccuWeather Inc. in State College, Pennsylvania.
Power plants account for 31 percent of gas consumption, according to the U.S. Energy Information Administration, the Energy Department’s statistical arm.
Rising temperatures will boost demand for natural gas in mid-June, which “could have a negative impact on the weekly injections” of gas into storage, Dominick Chirichella, senior partner at the Energy Management Institute in New York, said in a note to clients today.
A widening premium for gas versus year-earlier levels suggests “the industry seems less relaxed that the recent pattern of above-normal injections over the last several weeks will continue throughout the season,” he said. Gas futures are up 21 percent from a year ago, rebounding after the premium had narrowed to 6.7 percent on May 21.
Inventory Estimates
U.S. inventories probably expanded by 114 billion cubic feet last week, Tim Evans, an energy analyst at Citi Futures in New York, wrote in note to clients today. Chirichella’s projection is for an increase of 109 billion. The five-year average for the period is 88 billion.
Stockpiles totaled 1.499 trillion cubic feet in the seven days ended May 30, the lowest level for the time of the year since 2003, EIA data show. Supplies were 37 percent below the five-year average and 33 percent lower than year-earlier levels.
Enbridge Inc.’s Manta Ray gas pipeline lifted a force majeure at the Sea Robin interconnection and said delivery nominations will resume today, according to a website notice. Volumes were halted after the company yesterday reported “operational issues” at the Sea Robin ST 292 deliver meter.
Manta Ray, which has 800 million cubic feet of capacity, gathers gas from the Gulf of Mexico, while Energy Transfer Partners LP’s Sea Robin pipeline system delivers offshore supplies to processing plants and markets in in Louisiana.
Gas supplies will expand to an all-time high for the fourth consecutive year as new wells come online at shale deposits such as the Marcellus in the Northeast, according to the EIA.
Marcellus output will increase 1.9 percent to 14.98 billion cubic feet a day in July from the previous month, the EIA said today in its monthly Drilling Productivity Report. July output will be 26 percent higher than year-earlier levels.
Record gas production will help boost U.S. inventories to 3.405 trillion cubic feet by the end of October, which would be the lowest level at the start of a heating season since 2008, government estimates show.
To contact the reporter on this story: Naureen S. Malik in New York at nmalik28@bloomberg.net
To contact the editors responsible for this story: Bill Banker at bbanker@bloomberg.net Charlotte Porter
Latest forecast shows production doubling by 2030, led by Alberta oilsands
By Gord Hoeskstra, Vancouver Sun June 9, 2014 5:21 PM
Canadian oil producers see need for more pipelines
Growing oil production will need significantly increased pipeline capacity to get to existing markets in North America and new markets in Asia, according to a report by the Canadian Association of Petroleum Producers.
Photograph by: Tony Gutierrez , AP
The forecast for Canadian oil production has dipped slightly to 6.4 million barrels a day by 2030, according to a report released Tuesday.
But despite the downward adjustment over last year’s forecast — a result of project timing tied to cost competitiveness and capital availability — growing production will still need significantly increased pipeline capacity to get to existing markets in North America and new markets in Asia, says the report by the Canadian Association of Petroleum Producers.
Production is forecast to double by 2030, led by the Alberta oilsands, with a forecast increase to 4.9 million barrels by the end of the decade.
Oil producers are anticipating a federal government decision, expected before June 17, on Enbridge’s $6.5-billion Northern Gateway project. It would open a line to the west coast to allow tankers to ship bitumen from the Alberta oilsands in large quantities to Asia for the first time.
The project has already received conditional approval from the National Energy Board, but needs approval from the federal Conservative government.
The decision is important because although transporting oil by rail in North America can alleviate pipeline constraints in the short term, eventually the capacity of the four major pipelines will be needed CAPP representative Greg Stringham said Monday.
“There’s some flexibility of the timing. But you can’t push them all off 10 years and still meet the (transportation) need,” said Stringham, CAPP’s vice-president for oilsands and markets.
In addition to Northern Gateway, the major projects include Kinder Morgan’s $5.4-billion Trans Mountain expansion to Burnaby, TransCanada’s $5.3-billion pipeline to the U.S. and TransCanada’s $13-billion Energy East project to New Brunswick.
“Clearly we hope Northern Gateway will get approved, and concerns that need to be are addressed,” Stringham said. “But if that can’t be the case, then we need to be looking at other alternatives.”
He suggested an idea floated to create a First Nation-approved pipeline corridor in British Columbia could be an alternative.
Both west coast pipelines — Northern Gateway and the Trans Mountain expansion — face significant opposition from First Nations, environmental groups and some municipalities. Their concerns include the risk and effect of spills on land and sea, as well as a belief that the long-term, local economic benefits are outweighed by spill risks.
The B.C. government has also rejected the Northern Gateway project, demanding five conditions be met before the province will support heavy oil pipelines. The conditions include improving spill prevention and response systems, addressing First Nations’ rights and receiving a fair share of economic benefits.
Stringham said he believes those conditions can be met, but acknowledged convincing British Columbians there are economic benefits for them is not an easy task.
With a government decision imminent on Northern Gateway, Natural Resources Minister Greg Rickford said Monday there have been significant strides made around pipeline and marine traffic safety in talks between Ottawa and First Nations. But Rickford says all agree there remain issues “around a specific project” or “specific aspects of energy transportation.”
Rickford gave no hint of when or what that decision will be on Northern Gateway. He’s been in B.C. repeatedly in recent weeks and returned Monday to deliver a speech to a marine traffic and tanker safety summit organized by the Musqueam band in Vancouver.
Leaders of the three most powerful aboriginal organizations in B.C. met with the minister but say the answer remains “no” to Northern Gateway as far as First Nations are concerned. The chiefs of the Assembly of First Nations in B.C., the Union of B.C. Indian Chiefs and the First Nations Summit said if Ottawa tries to proceed with the northern pipeline over aboriginal objections, they will end up in court and jeopardize future developments.
ghoekstra@vancouversun.com
With files from The Canadian Press
© Copyright (c) The Vancouver Sun
Organization relying on Kingdom to cover shortfall from diminished Iraqi, Iranian, Libyan production
Iraqi Oil Minister Abdul Kareem Al-Luaibi, refusing to take questions, arrives on June 8, 2014, at a hotel for a meeting of OPEC oil ministers in Vienna. (Reuters/Heinz-Peter Bader)
Iraqi Oil Minister Abdul Kareem Al-Luaibi, refusing to take questions, arrives on June 8, 2014, at a hotel for a meeting of OPEC oil ministers in Vienna. (Reuters/Heinz-Peter Bader)
London, Bloomberg—OPEC ministers say they will almost certainly leave their oil-production ceiling unchanged when the group meets this week. What really matters for markets is whether Saudi Arabia will respond to global supply shortfalls by pumping a record amount of crude.
Just six months ago, energy analysts predicted output from the Organization of Petroleum Exporting Countries would climb too high and Saudi Arabia needed to cut to make room for other suppliers. They changed their minds after production from Libya, Iran and Iraq failed to rebound as anticipated, and industrialized nations’ stockpiles fell to the lowest for the time of year since 2008. Saudi Arabia may need to pump a record 11 million barrels a day by December to cover the other member nations, says Energy Aspects, a consultant.
“Now it’s not whether the Saudis will make room, but whether they’ll keep it going and maintain enough spare capacity,” said Jamie Webster, a Washington-based analyst at IHS, an industry researcher. “OPEC is increasingly having a hard time just doing its job of bringing all the barrels needed.”
Even as the North American shale revolution propels US production to a three-decade peak, supply in other parts of the world is faltering. A battle for political control in Libya, pipeline attacks in Iraq, and prolonged sanctions against Iran are all preventing those nations from reviving output. While US crude inventories rose to a record in April, restrictions on exports are keeping those supplies in the country, tempering forecasts that global oil prices will decline this year.
Deutsche Bank, Morgan Stanley, Barclays and Citigroup raised their 2014 Brent price forecasts over the past three months, citing supply risks. The median estimate of the four banks climbed to 107.75 US dollars a barrel, from 100.25 dollars as of December 31. The grade has averaged 108.25 dollars a barrel this year, compared with 108.70 dollars in 2013.
OPEC, which produces about 40 percent of the world’s oil, will meet in Vienna on June 11 to discuss its 30-million-barrel daily output target. Ministers from Saudi Arabia, Angola and Kuwait said they expect no change, as did 22 of 23 analysts and traders surveyed by Bloomberg News.
OPEC’s Economic Commission Board, a panel that reviews supply and demand levels before the meeting, concluded on June 5 that the current production level is adequate, according to two OPEC delegates.
The International Energy Agency (IEA), the Paris-based adviser to 29 nations, recommended on May 15 a “significant rise in OPEC production” to meet demand of 30.7 million barrels a day in the second half of the year. Oil inventories in advanced nations were at 2.62 billion barrels in April, the lowest for that month since 2008, the year Brent reached a record 147.50 dollars a barrel, IEA data show.
Boosting output that high would be “a Herculean task for the group to surmount given that production has been below 30 million barrels a day for the last five months,” London-based Energy Aspects said in a May 27 research note.
The situation has reversed since OPEC last met in December. At that time, the IEA indicated the group would need to reduce output by about 3 percent in the first half of 2014 to make way for North America’s booming shale oil supplies.
US oil production rose to 8.47 million barrels a day in the week ending May 23, the highest since 1986, according to the Energy Information Administration. The nation’s crude inventories were at 399.4 million barrels through April 25, the highest in weekly data beginning in 1982, the EIA estimates.
Several OPEC nations have failed to boost output as their ministers suggested at the group’s last meeting in December. Iraq was aiming for a surge of about 30 percent in 2014 to 4 million barrels a day, Oil Minister Abdul Kareem Al-Luaibi said. Libya intended to restore within 10 days full daily capacity of almost 1.6 million barrels, from less than 20 percent previously, Oil Minister Abdulbari Al-Arusi said. Iran had secured six months of relief from sanctions imposed by western governments and was seeking its highest output in five years, Oil Minister Bijan Namdar Zanganeh said.
Iraq’s daily production contracted 8 percent since reaching a 35-year peak of 3.6 million barrels in February amid political disputes and pipeline bombings, according to the IEA. In Libya, output has fallen to a 10th of capacity because of protests at oil fields and strikes at export terminals. Iranian supply is little changed, while an end to sanctions relief looms in July if it cannot reach a broader deal on its nuclear program.
As a result, inventories of crude and refined oil in Europe were 86 million barrels below their five-year average at the end of March, according to the IEA. US benchmark West Texas Intermediate is about 6 dollars a barrel cheaper than North Sea Brent.
“At the start of this year, expectations around the return of Libyan, and subsequently Iranian, barrels were high,” Amrita Sen, the chief oil market strategist at Energy Aspects, said by email. “Today those possibilities have diminished substantially. The real question concerns how OPEC will meet higher demand for its crude in the third quarter. The onus falls on Saudi Arabia to do much of the heavy lifting.”
Saudi Oil Minister Ali Al-Naimi told reporters in Seoul on May 12 that any supply shortage in the oil market can be covered. The kingdom is capable of producing as much as 12.5 million barrels a day of crude and pumped 9.67 million in May, according to data compiled by Bloomberg. Media officials at Saudi Arabia’s oil ministry in Riyadh weren’t available to comment when contacted by Bloomberg on June 6 and yesterday. There was no response to an e-mail to Saudi Aramco’s media department yesterday.
Estimates vary on how much Saudi Arabia needs to produce before the end of the year. IHS projects about 10.3 million, while Société Générale says between 10.2 million and 10.5 million barrels a day in the third quarter. The high of 11 million that Energy Aspects says could be needed from Saudi Arabia would be more than the quarterly peak of 10.1 million reached in late 1980, according to OPEC data.
“At the time of the last OPEC meeting, there was a fair amount of concern about what would happen if disrupted production in key countries starts to come back in a big way,” said Mike Wittner, the head of oil market research at Société Générale in New York. “It’s not all happening in a big way. It means the market needs the Saudis to produce more crude.”
Asharq Al-Awsat
Asharq Al-Awsat is the world’s premier pan-Arab daily newspaper, printed simultaneously each day on four continents in 14 cities. Launched in London in 1978, Asharq Al-Awsat has established itself as the decisive publication on pan-Arab and international affairs, offering its readers in-depth analysis and exclusive editorials, as well as the most comprehensive coverage of the entire Arab world.
AFP
June 10, 2014, 5:20 am
Vienna (AFP) - The OPEC oil producers' cartel appeared set to maintain its output ceiling later this week, Iraq and Venezuela said here on Monday.
The Organization for Petroleum Exporting Countries, whose dozen member nations together supply about one third of the world's crude, have a daily collective output target of 30 million barrels of oil.
"I have a feeling we are expecting to have another rollover," Venezuelan Energy Minister Rafael Ramirez told reporters in the Austrian capital, two days before Wednesday's OPEC gathering.
Iraqi Oil Minister Abdelkarim al-Luaybi agreed that the OPEC cartel appeared to be heading for another rollover, meaning that the output ceiling would remain at the level it has now stood at since late 2011.
"There are indications that there will be a rollover," added Luayabi.
OPEC, which groups together nations from the Middle East, Africa and Latin America, is set to stick by its output ceiling as supply tensions linked to global crises help keep crude prices high, analysts say.
- Global oil prices up -
Global oil prices are about ten percent higher than at OPEC's last meeting in December, boosted by falling production from Libya -- plagued by ongoing unrest -- while Iran's output remains hit by Western sanctions over its disputed nuclear programme.
World oil prices have also jumped this year on the back of escalating Russia-Ukraine tensions, amid fears that all-out civil war could strain global energy supplies further.
Libya's acting oil minister, Omar Ali ElShakmak, told reporters upon his arrival in Vienna that the nation's crude output was far less than its full potential.
ElShakmak said Libya's production was currently "less than 200,000" barrels per day, compared with its full capacity of 1.5 million.
The north African country's oil production has been crippled by ongoing unrest, despite the 2011 ouster of Moamer Kadhafi.
In order to alleviate the loss of Libyan crude supplies, Iran and Iraq are pumping out additional oil.
Luaybi added on Monday that Iraq was targeting crude production of 8.4 million barrels of oil per day after 2018.
Average crude production target stood at between 3.6-3.7 mbpd in 2014, according to Luaybi, while average exports for 2014 will stand at 3.0 mbpd.
Saudi Arabia reportedly stated last month that $100 was a "fair price" for oil, indicating that the OPEC kingpin could also call for no change in the output ceiling.
Saudi Arabian Oil Minister Ali Naimi has stated that that "supply is sufficient" and there was "absolutely no reason" to raise the limit.
The International Energy Agency had urged OPEC last month to ramp up production to meet strong global energy demand this year, particularly from emerging markets.
Since the start of the year, global oil prices have rallied by about about $10.
Crude oil prices rose solidly on Monday, boosted by robust Chinese trade figures and a solid US jobs report that boosted hopes for a pick-up in demand, analysts said.
On Monday, New York's main contract, West Texas Intermediate (WTI) for delivery in July, stood at $103.36 a barrel.
Brent North Sea crude for July, the European benchmark, was at $108.69.
The Organization of the Petroleum Exporting Countries’ (Opec) oil output has risen to a three-month high in May, a Reuters survey found, as increased supplies from Angola and a further gain in exports from southern Iraq outweighed worsening unrest in Libya.
LONDON:
Issue Date: June 9-15, 2014
Supply from Opec has averaged 30.02 million barrels per day (mbpd), up from 29.68 mbpd in April, according to the survey based on shipping data and information from sources at oil companies, Opec and consultants.
The increase puts Opec output above the group’s nominal target of 30 mbpd for the first time since February.
The International Energy Agency on May 15 said Opec needed to pump more in the second half of the year to meet rising demand.
'For now, it seems to be appropriate,' said Carsten Fritsch, an analyst at Commerzbank in Frankfurt, referring to whether Opec’s output was sufficient. 'For the second half of the year, it might be different.' Outages mainly in Libya have weighed on Opec supply this year, helping to keep oil prices above $100 a barrel despite non-Opec supply growth and the US shale boom.
Opec pumps a third of the world’s oil. In May, output rose in Angola and Iraq, and to a lesser extent in Saudi Arabia and Iran, the survey found. The most significant drop was in Libya, while Nigerian production barely rose despite the lifting of an export force majeure by Royal Dutch Shell.
The largest rise in May came from Angola, which has exported 59 cargoes, up 11 from April. Three of the extra cargoes came from the BP-operated Plutonio field, which industry sources said had been undergoing maintenance. Iraq managed again to boost supply due to higher exports from its southern terminals, where shipments have averaged at or near 2.60 mbpd in May, the highest since at least 2003, according to loading data.
The sale of a crude cargo by Kurdistan, in defiance of the central government, also boosted Iraqi supplies. But there were no shipments of Kirkuk crude from northern Iraq, industry sources said, due to earlier bombings, keeping Iraq’s total exports below February’s record.
Iran’s exports climbed in May after dropping in April, tanker data showed, moving further above levels allowed by November’s interim deal on curbing Tehran’s nuclear programme.
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TEHRAN (FNA)- A senior Iranian oil official said the oil ministry plans to gain self-sufficiency in the production of gasoline by 2016 after the construction of a major oil refinery in the Southern part of the country is accomplished.
Deputy Head of National Iranian Oil Refining and Distribution Company (NIORDC) Shahrokh Khosravani said the Persian Gulf Star Refinery will end Iran’s import of gasoline.
“With the start-up of Persian Gulf Star Gas Condensate Refinery, imports will completely stop and Iran will even become a gasoline exporter,” he said.
Khosravani said gasoline consumption is predicted to increase five percent every year, adding that Iran is forecasted to consume 70 ml/d of gasoline in the current calendar year to March 2015. Iran is currently producing 60 ml/d of gasoline.
He said Iran’s gasoline production will reach 96 ml/d when Persian Gulf Star refiner becomes operational.
Khosravani said the refinery is now 70 percent complete and that the first phase of the facility is to come on-stream by March 2016.
Persian Gulf Star Refinery is expected to produce 13.5 ml/d of euro-4 gasoil and 36 ml/d of euro-4 gasoline.
So far, 2.6 billion euros has been spent on the project which still needs one billion euros.
Iran has expanded its refining capacity during the last couple of years, while its gasoline consumption has come down considerably following the implementation of the first phase of cutting energy subsidies.
The country plans to increase its gasoline and gasoil production capacity by 64 and 12 million liters per day by completion of 9 ongoing development plans at its oil refineries.
These 9 projects include gasoline making units at Abadan, Tabriz, Isfahan, Bandar Abbas, Tehran (Shahid Tondgouyan), Imam Khomeini (Shazand) plus development and upgrading plans at Persian Gulf Star and Lavan oil refineries.
Following the implementation of these projects, production of kerosene and jet fuel will boost each by 7.4 million liters and liquid petroleum gas by 7.4 million liters per day.
By Alex Lawler Reuters
7:59 a.m. EDT, June 9, 2014
VIENNA (Reuters) - A full lifting of sanctions on Iran could spark new rivalries within OPEC as Tehran seeks to reclaim its rank as No. 2 producer from former foe Iraq.
The two neighbors both aim to expand supplies in the next few years, which could make life difficult for the Organization of the Petroleum Exporting Countries if surging output from outside the group forces OPEC to consider cutbacks.
Baghdad got off to a galloping start this year, ramping up production to 3.4 million barrels per day (bpd) and lifting exports to a record 2.8 million bpd in February, nailing its position as OPEC's second-biggest producer behind Saudi Arabia.
"It's a race for capacity. They may be neck and neck for the next few years, but my money is on Iraq pulling away from a trailing Iran," said Peter Wells of geological consultancy Neftex, who has worked in Iran.
Deteriorating security has reversed early gains, but Iraqi output of around 3.2 million bpd is still up on 2013 and Baghdad is targeting about 4 million by year-end including the autonomous northern Kurdish region.
Iran, more confident after a partial lifting of Western sanctions, has squeezed out more oil to pump 2.8 million bpd. Oil Minister Bijan Zanganeh has vowed to return Tehran to its No. 2 slot as soon as sanctions are fully lifted.
Oil experts say rates could surge to 3.5 million bpd within six months of Tehran being fully unshackled - although the prospects for a final deal between Iran and Western powers may be some way off. Even so, that may not be enough for Iran to overtake Iraq.
"Iran's infrastructure is old but functional. The biggest issues affecting production growth are likely to be bureaucracy and logistics," said a senior oil company source.
"It will be difficult for Iran to surpass Iraq on a sustainable basis in less than two years and more likely three."Â
IRAQI EXPANSION
The world's biggest oil companies have been expanding Iraq's southern fields - Rumaila led by BP, West Qurna-1 run by Exxon Mobil and Zubair operated by Eni - since 2010 when they signed a series of service contracts with Baghdad.
That revival has gained momentum with the start-up of Lukoil-operated West Qurna-2, considered the world's second-largest untapped deposit, and additional oil from Majnoon, where Royal Dutch Shell is in charge.
But Big Oil could also be tempted by the riches of neighboring Iran, once sanctions are lifted. To woo them, Tehran has worked up a vastly improved version of its former buy-back investment contract.
Iranian officials say their terms are far more attractive than Iraq's.
"There will be no shortage of companies wanting to help. And if the new upstream terms become clear in the course of this year it would cut the negotiating time," said a senior oil executive from a Western oil company.
Foreign oil companies at work in Iraq's oilfields have long complained about slim margins, red tape and contract delays. But they are unlikely to give up on Iraq in favor of Iran.
"There are quite a few companies committed to Iraq right now. You don't just drop everything and leave after you've built up a local organization and made investments," said an executive from a Western oil company involved in Iraq.
"But when Iran does open up, it will put more pressure on Iraq to ensure their terms are competitive."
Copyright © 2014, Reuters
Mon Jun 9, 2014 3:42pm ED
By Lin Noueihed and Julia Payne
(Reuters) - Libya's attendance at Wednesday's OPEC meeting will be an oddity for historians of the oil exporters club - a member with virtually no oil for sale.
As it struggles with its worst crisis since the 2011 war that toppled Muammar Gaddafi, early talk of a swift resumption of output have given way to pessimism, leaving OPEC with a longer lasting hole of over one million barrels per day in its supply.
Production is below 200,000 barrels per day, Oil Minister Omar Shakmak said on arrival in Vienna on Monday for the meeting, a fraction of the 1.6 million bpd Libya pumped before the 2011 conflict.
"Until the government gets control it cannot export on a normal basis... It is unlikely Libyan oil production will increase significantly in the next six months," said Charles Gurdon, managing director of Menas Consulting.
"Most of 2014 will effectively be written off."
The near absence of Libyan oil from international markets has helped anchor prices in a narrow range around $110 a barrel. That is a comfortable level for OPEC and few expect the cartel to change its output target for the rest of the year.
Rebels have blocked Libya's major ports and fields since last summer, slashing output.
With a renegade general launching war on Islamists, successive prime ministers struggling for legitimacy and a lack of oil revenues, the caretaker government could be forced to divert what barrels were destined for export to domestic refineries to supply gasoline to the capital.
Foreign oil companies have pulled out staff and frozen exploration activities, while Libya's hungry European customers have turned elsewhere for more steady supplies.
Monday's court ruling resolving a standoff between rival governments was welcomed by rebels holding some of Libya's largest oil terminals at Es Sider and Ras Lanuf and raises hopes that a deal to restore key export facilities could be reached soon.
But even if a deal to reopen all the ports and fields is made, industry insiders and officials from Libya's National Oil Corp (NOC) say it is hard to tell how much damage the closures have already caused to its precious oil infrastructure or how long it would take to return to prewar capacity.
Libya's western El Sharara oilfield may take months to reach its full output of 340,000 bpd, for instance, because at least 20 damaged well pumps need to be replaced.
Once output can build up, the damage is taking its toll on the country's production capacity. The International Energy Agency, the West's energy watchdog, in May cut its estimate of Libya's sustainable output capacity to 1 million bpd.
Fires on pipelines elsewhere and lack of maintenance could make resumption of exports a long and costly process.
Technically, Libya can still pump upwards of 1 million bpd but the new NOC chairman Mustafa Sanallah said it would only ramp up exports gradually - and in cooperation with OPEC. That would help avert a sudden slide in oil prices.
"From a technical point of view, our facilities are ready ...and our people can resume production very soon," Sanallah told a Libyan oil conference in London last month.
"But in order to resume production, we have to agree with our rivals, partners and with OPEC. We have still high storage of oil... So we have to export our oil gradually and by good cooperation between Libya and OPEC."
At a London conference last month on on Libya's energy sector presentations focused on plans for a new oil law, enhanced oil recovery and even pipeline upgrades, skirting around the fact that the state could not even guarantee the flow of oil.
"It is a very difficult market to predict," said Eric Oudenot, of Boston Consulting Group. "Nobody is really able to craft a strategy for Libya as it is too unstable." (Additional reporting by Ulf Laessing in Tripoli, Alex Lawler in Vienna; Editing by William Hardy and Veronica Brown)
Most of the extra oil produced in the US in the next two years will be light crudes and condensates that domestic refineries will struggle to process - intensifying pressure for at least a partial relaxation of the country’s export ban.
LONDON:
Issue Date: June 9-15, 2014
US oil production is set to increase by another 2 million barrels per day (mbpd) in 2014-15. More than 60 per cent of the forecast growth will consist of light oils with a specific gravity of 40 degrees API or higher, according to the US Energy Information Administration. But with imports of competing crudes from West Africa already reduced close to zero, US refineries will be unable to process all this extra oil without enormous investment in equipment. Distillation towers, furnaces, heat exchangers and downstream conversion units would need expensive and time-consuming overhauls to enable them to handle a higher share of light oil.
'Projects designed to alter the refinery configuration or expand refining capacity take much more time (than building rail links and pipelines). Permitting is generally longer because there is a greater environmental impact and the engineering construction is longer,' Valero, the largest refiner in the US, warned investors in a conference call in March.
'Many refinery projects take two years to permit and can take at least two years to build. If you decide to do something today, it takes four or five years before your investment is operational,' the company explained.
Processing a higher share of light oil would also leave refineries unable to make full use of the expensive coking units installed in the 1990s and 2000s, when they expected to be handling more medium and heavy grades.
Refiners will make another round of changes only if they expect light grades to stay at a significant discount over the long term, which remains unclear. Without investment, refiners will demand even bigger discounts for handling unsuitable domestic crudes.
'The next big thing': Australia is poised to be the biggest exporter of LNG in the world by 2017.
Australia is poised to be the biggest exporter of LNG in the world by 2017. Photo: Bloomberg
Only a fraction of the natural gas export projects being developed around the globe will become reality as high costs and weakening gas prices torpedo those that until recently promised huge returns on investment.
Large natural gas field discoveries on and offshore have prompted several countries to plan liquefied natural gas (LNG) export projects, including in North America, Australia, East Africa and the east Mediterranean.
But high development costs and low profit margins in the gas sector mean most of the projects will fail, Royal Dutch Shell's director of projects and technology said in an interview.
"There is always so much talk about these big LNG projects around the world, but only a small fraction of them will get built," said Matthias Bichsel, who is also a member of Shell's executive committee.
"Costs in the oil and gas sector are still on the rise and outpacing inflation, and gas projects are extremely price-sensitive because the margins are so thin," he added.
European forward gas prices, which are used to make investment decisions for big pipeline and gas field projects, have dropped more than 15 percent since the beginning of the year.
They are close to five-year lows, and most analysts expect further declines as new producers flood markets with gas. Analysts have said many new gas projects will struggle to make the return on investment necessary to receive the required financing.
In Asia, where 70 percent of global LNG trading takes place, spot LNG prices have fallen more than 35 percent this year to their lowest since late 2012.
Struggling projects
In the east Mediterranean, where Israel and Cyprus have discovered large offshore gas fields, Australia's Woodside Petroleum last month pulled out of an agreement to take a stake worth up to $US2.7 billion in Israel's flagship Leviathan gas project.
Woodside is a specialist LNG developer and was targeting sales in Asia with its involvement in Israel.
"After many months of negotiations it is time to acknowledge we will not get there under the current proposal," Woodside CEO Peter Coleman said at the time.
In Central Asia, France's Total pulled out of Azerbaijan's huge Shah Deniz II gas project, which is expected to produce 16 billion cubic metres (bcm) of gas for export to Turkey and Europe towards the end of this decade.
Norway's Statoil had reduced its stake in the project in May.
In North America, several LNG export terminals are also beginning to have trouble attracting buyers.
In East Africa, where impoverished Mozambique and Tanzania hope recent offshore gas discoveries can bring future wealth, analysts have said developers will struggle to find necessary financing and that costly production delays are likely.
"I believe the speed with which the East African projects have been promised is somewhat ambitious since all infrastructure there has to be built from scratch," Shell's Mr Bichsel said.
Mozambique and Tanzania hope to export their first cargoes around the turn of the decade.
In Asia, uncertainty over future pricing of LNG has led consumers to hold off signing 20-year deals amid expectations that prices will soon enter a period of decline.
As a result, final investment decisions on new projects have come to a virtual standstill, while cost blowouts in Australiaare further deterring investors from signing up.
Local labour costs
Mr Bichsel said that in Australia, which hopes to overtake Qatar as the world's biggest LNG exporter, high labour costs had caused problems for developers.
Shell is building the world's first floating liquefied natural gas (FLNG) project in Australia, named Prelude, which will be the biggest maritime vessel ever constructed.
Despite the troubled perspective for many gas projects, Mr Bichsel said the outlook for the sector was positive.
"We're quite excited about gas, there is a lot it can be used for, for instance gas to liquids, gas for transport or gas to chemicals, and there's also a lot of work being done to bring down the production costs of LNG," he said.
"In oil, it's more maintaining production but in the long term, we're talking decades ahead, we see a decrease in oil demand and gas will take a more prominent role, including from shale gas. But it'll take time."
Reuters
Baghdad (IraqiNews.com) New infrastructure for the field’s commercial development has been put in place. The CGS’s first line has been constructed with a capacity of 60 thousand barrels per day and in March 2014 the Badra field was connected to the 165-kilometre-long main Iraqi oil pipeline system.
Production in the field will reach its peak of 170 thousand barrels per day (around 8.5 million tonnes per year) in 2017 and then remain the same for a period of 7 years.
Vadim Yakovlev, First Deputy CEO of Gazprom Neft said in a statement reviewed by IraqiNews.com “Development at the Badra field is one of Gazprom Neft’s first international assets in oil production. We launched this project from scratch and over a short period of time have completed all of the complex work necessary for the industrial development of the Badra field.”
It is worth mentioning that Badra oil field is located in Wasit Province in Eastern Iraq.
TEHRAN, June 9 (UPI) --Iranian Oil Minister Bijan Zanganeh said his country aims to more than double its crude oil production within the next three years.
The oil minister said Saturday the country's oil production stood at around 2.5 million barrels per day. Within the next three years, he said, production could reach 5.7 million bpd.
"The Petroleum Ministry's first program is to increase crude oil and gas condensate [production] capacity," he said in a statement Sunday. "To that effect, crude oil production should increase by 700,000 bpd."
The Organization of Petroleum Exporting Countries, of which Iran is a member, said Iran's oil production was 2.7 million bpd in April, the last full month for which data are available from the 12-member group. That's relatively in line with historic production, though off a 2012 level of 2.9 million bpd.
White House spokesman Jay Carney said last week there was enough crude oil on the global market to allow foreign countries to cut back on the amount of oil they get from Iran.
The U.S. government and its allies have placed sanctions on Iran's energy sector in response to its controversial nuclear program. Carney said with nuclear talks progressing, however, those sanctions would be limited.
"The United States has committed to pause efforts to further reduce Iran's crude-oil sales for a six-month period," he said.
Follow @dan_graeber and @UPI on Twitter.
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China and Russia are likely to sign a contract in the near future for the construction of the so-called “western route” gas pipeline to China across Russia’s Siberian federal district, according to Chinese media reports.
The “western route”, also called the Altai natural gas pipeline, might be "less capital-intensive" than the eastern route, but "it's no doubt going to cost tens of billions of US dollars," Xinhua Agency cited Russian presidential administration chief Sergei Ivanov as saying on June 5.
Russia and China signed a landmark 30-year gas deal in Shanghai during Russian president Vladimir Putin's state visit in May, as Platts reported. The planned 2,800 km Altai pipeline will pump natural gas from western Siberia to Xinjiang autonomous region in northwest China, according to an initial plan.
The western route could mainly benefit pipe makers in Russia, compared with the eastern route requires building a long pipeline in eastern China, a domestic analyst told Platts on June 9.
On May 21, China and Russia signed a long-awaited $400 billion gas deal in Shanghai to pipe 38 billion cubic meters/year of natural gas from Russia to China via a new "eastern route" for the next 30 years starting from 2018, concluding a decade of natural gas supply talks between the two neighbors.
As a result, China will build a new 3,060 km-long domestic pipeline with pipe diameter of 1,016-1,420mm for transporting gas to China's main consumption centers, while new pipelines with total length of 2,680 km will be built in Russia. The Chinese section of the new pipeline is likely to consume more than one million metric tons of line pipes on its main line, sources suggested.
-- Yuelin Dai
Montreal (Platts)--9Jun2014/452 pm EDT/2052 GMT
Brazilian ethanol exports to the US reached 124 million liters (32.7 million gallons) in May, up from 90.8 million liters in April and 10% higher compared with same period last year, according to the latest data from the Secretariat of Foreign Trade released Monday.
The volume sent to the US is the highest since October, when the country exported 182.6 million liters to the US.
Exports to the US in May represented 88% of the total exported out of Brazil.
The higher result surprised the market, which was expecting a decline in the volume sent to the US amid a closed arbitrage window.
Prices in the US corrected in late April and May after a surge in February and March due to harsh winter conditions and tank car delays, keeping supply from reaching the main market hubs.
Despite the high volume shipped to the US in May, most traders anticipate that only a part of the cargoes were fuel ethanol.
"There were some cargoes booked for early May shipment when US prices were still rallying in early April. The rest of it should be contracts for ETBE supply," a source said.
Last week shipping reports showed the Stolt Basuto and the Trans Catalonia fixed for a total of 40,000 cubic meters to leave Brazil in June for the US Gulf Coast. Sources have said they are carrying ethanol under term contracts for ETBE processing.
"If it goes to US Gulf Coast it is typically for ETBE processing. This is not a fuel import per se since it is re-exported," a trader said.
Brazilian ethanol exports to the US are expected to decline in June as US supplies inch higher, keeping prices under pressure.
US ethanol output rates were at a six-month high of 938,000 b/d while stockpiles hit a 14-month high of 18.25 million barrels for week ended May 30, EIA data showed.
"There is no reason for ethanol to hit Houston at this point. It is good to see nothing new headed north," a source said.
FOB Santos anhydrous ethanol was assessed by Platts at $625/cu m on Monday.
Discussions out of Brazil to the US are at a standstill, with the arbitrage for Brazilian product arriving in the US in July is now assessed closed by $79/cu m (30 cents/gal).
So far this year, Brazil has exported 376.8 million liters to the US, down from 554 million liters during the same period in 2013.
--Beatriz Pupo, beatriz.pupo@platts.com --Alessandra Rosete, alessandra.rosete@platts.com --Edited by Jason Lindquist, jason.lindquist@platts.com
Lima, Peru (Platts)--9Jun2014/551 pm EDT/2151 GMT
Peruvian exports of crude oil and natural gas slid 6% in April from a year ago on declining gas prices and shipments, the government said Monday.
Total oil and gas export revenue was $435 million in April compared with $463 million a year earlier, the central bank said in a statement posted on its website.
Crude exports from companies led by Argentina's Pluspetrol, CNPC and state oil company Petroperu gained 12% to $379 million as shipments rose to 3.7 million barrels from 3.3 million barrels a year ago, the bank said. Oil prices climbed to $102.70/b from $101.40/b a year earlier, the bank said.
Natural gas exports from the country's Peru LNG terminal plunged 55% to $56 million as shipments dropped 25% to 608,800 cubic meters from 815,600 cu m a year earlier. Natural gas prices fell to $92.40/cu m from $153.60/cu m in April 2013, the bank said.
Hunt Oil and partner SK Group started up the $4 billion Peru LNG terminal on Peru's south coast in 2010 to process gas from the Camisea fields in the Ucayali Basin. The TGP consortium is on track to bring online a $700 million expansion of the 640,000 Mcf/d Camisea gas pipeline to Peru LNG by the end of 2015, the company said last week.
--Alex Emery, newsdesk@platts.com
--Edited by Jason Lindquist, jason.lindquist@platts.com
Moscow (Platts)--9Jun2014/809 am EDT/1209 GMT
Kazakhstan's troubled giant offshore Kashagan field is set to see a revamp of the management model in the next several months, but will not change conditions of the field's production sharing agreement (PSA) and its shareholding structure, the Kashagan operator NCOC said in a statement Monday.
Earlier this month, Kazakhstan's oil and gas minister Uzakbay Karabalin told local media that the ministry was dissatisfied with Kashagan's rising costs and slow decision-making processes and expected the project's management system to become more efficient after the planned revamp.
"No changes to the PSA and/or the NCSPSA [the North Caspian Sea Production Sharing Agreement] ownership structure are envisioned as a result of the planned transition," NCOC said in a statement.
An NCOC spokesman denied last week's report by the Nefte Compass publication that US major ExxonMobil is to take over as Kashagan's effective operator from Italy's Eni.
"The appointment of an ExxonMobil secondee as managing director of the North Caspian Operating Company does not mean that ExxonMobil is taking over the operatorship of NCSPSA," the spokesman said.
According to the NCOC statement, Stephane de Mahieu, an ExxonMobil secondee, succeeded Total's Pierre Offant as NCOC managing director as of May 1, 2014.
Kashagan's new operating model, scheduled for implementation starting this year, envisions integration of the current operator, NCOC, and its development, production, and drilling agents into a single joint venture, according to the statement.
"The new company will operate under a single corporate management system, which integrates existing processes and tools from venture entities," NCOC said.
The transition period is expected to last for the next several months, an NCOC spokeswoman said.
NCOC is made up of state-owned KazMunaiGaz with 16.88%, Eni, ExxonMobil, Shell and Total, with 16.1% each, China's CNPC, with 8.33% and Japan's Inpex with 7.56%.
Production at Kashagan began in September 2013 after a decade of delays and spiraling multi-billion dollar costs, but was suspended after a gas leak.
A similar gas leak the following month led the project partners to halt production again, with the field currently still shut in.
The ongoing investigation has established that the root cause of the gas leaks was the high level of hydrogen sulfide in the associated gas. Kashagan's crude oil and sour gas contains 15-18% hydrogen sulfide.
Currently, Kazakhstan's energy officials and project shareholders say they expect to resume crude production at Kashagan some time in 2015 at the earliest.
Before the incidents, Kashagan's vast hydrocarbon reserves were expected to become the key driver of Kazakhstan's crude oil production in the near future.
Kashagan was expected to produce 8 million mt (58.64 million barrels) of crude in 2014, compared with the country's total crude oil production of some 83 million mt.
Kashagan holds around 38 billion barrels of oil in place, of which 13 billion barrels is proven recoverable reserves, making it the largest offshore crude field outside the Middle East.
--Dina Khrennikova, dina.khrennikova@platts.com
--Jeremy Lovell, jeremy.lovell@platts.com
Seoul (Platts)--9Jun2014/715 am EDT/1115 GMT
South Korea's state-run Korea National Oil Corp said Monday it has issued tenders to select oil suppliers for the country's "discount" fuel retail stations, with local refiners preparing to join the bidding round in order to secure market share.
The discount retailers, mostly located on highways, sell gasoline at prices around 2% lower than typical retail stations as they receive the fuel directly from KNOC and the National Agricultural Cooperative Federation (NSCF), which in turn buy fuel via tender from refiners and importers for sale at these discount retail stations.
The government introduced incentives for retailers to set up discount stations in July 2012 as part of an initiative to bring down retail prices.
Winning bidders in the current tender would supply auto fuels such as gasoline and gasoil and kerosene for one year from July to discount stations. There are now more than 1,060 across the country, accounting for 8.4% of the country's 12,700 retail stations.
"KNOC and the National Agricultural Cooperative Federation issued tenders today for oil suppliers to discount stations and will select winners by the end of this month," KNOC said in a statement. "Those who offered lower selling prices would be selected," it said.
They are required to supply more than 100,000 barrels/month, the statement said.
In the previous bidding round last year two smaller refiners, S-Oil and Hyundai Oilbank, were selected, beating out market leaders SK Innovation and GS Caltex. In 2012, GS Caltex and Hyundai Oilbank had the supply contracts with KNOC and NSCF.
KNOC has a separate agreement with Samsung Total Petrochemicals for oil product supplies to discount stations. Samsung Total, which is currently producing jet fuel and gasoline through blending with petrochemical byproducts, has agreed to boost its gasoline supplies to discount stations to 125,000 barrels/month this year, from 86,000 barrels/month in 2013 and 35,000 barrels/month in 2012.
The other four refiners said they are seeking to join the bidding for discount petrol stations.
"We are considering joining the bidding round for discount stations because they can serve as a stable market for oil products," an official at top refiner SK Innovation told Platts.
SK Innovation, which has been out of the discount petrol stations market, saw its share in the domestic fuel retail market decline to 28.6% in the first quarter of this year, from 30.9% a year earlier and 32.2% for the full year 2012, according to KNOC.
No. 2 refiner GS Caltex's share also fell to 24.4% in Q1, from 26.9% in the year-ago period and 27.0% in 2012.
In contrast, Hyundai Oilbank and S-Oil both increased their market share since they began distributing petroleum products to discount stations in April 2013 under contracts with the KNOC and NSCF. Hyundai Oilbank had a 15.1% share in Q1, up from 15.0% a year earlier and 14.4% in 2012. S-Oil had a 18.7% share as of the end of April, up from 16.5% in Q1 last year and 16.4% in 2012.
With KNOC importing oil products for discount stations and the government offering tax incentives for oil product imports to be traded on the country's online oil platform, importers' market share of the country's fuel market increased to 15.7% in Q1, from 10.7% a year earlier and 10.0% in 2012.
Kim Kyo-Jung, a senior official at KNOC's Oil Distribution Department, said the market shares of refiners could further change after this month's bidding round for discount stations.
The changed market share was largely attributable to the discount stations, which represent 8.4% of total pump stations," Kim told Platts.
The government plans to increase the ratio to 10% by 2015.
"We will select two oil firms as suppliers to discount stations through this round of bidding, which would further affect the market shares," he said.
--Charles Lee, newsdesk@platts.com
--Edited by Alisdair Bowles, alisdair.bowles@platts.com
Washington (Platts)--6Jun2014/148 pm EDT/1748 GMT
The Obama administration has received no formal request to allow the export of US condensates, despite seemingly growing pressure from Eagle Ford producers, the US Commerce Department told Platts Friday.
Commerce's Bureau of Industry and Security, the agency charged with a potential condensate change, has received no requests to change the current definition of condensate, a response to a Freedom of Information Act request showed.
The production of condensate, very light hydrocarbons that have typically been re-blended with crude oil during production, has dramatically increased amid the ongoing shale boom, and condensate production in the Eagle Ford has greatly outpaced blending capacity.
With a limited domestic market, producers want to ship condensate to overseas markets, particularly Asia, but lease condensate is defined by Commerce as crude oil and subject to long-standing export restrictions.
Analysts have said that some producers, including Pioneer Natural Resources, have met with Commerce officials and discussed a potential change to the condensate definition, although these discussions have largely focused on a broader change to crude export policy.
Continental Resources has applied to Commerce for a permit to export crude it produces in North Dakota, but, citing the commercial terms of the request, has declined to discuss it further.
On Friday, Commerce declined to provide any information in response to other FOIA inquiries by Platts in regard to requests for cross border crude oil or condensate exchanges, requests for re-exports of US-origin crude, and data and export licensing information detailing the grades of crude oil being exported form the US.
Commerce said this information was "specifically exempted from disclosure by statute."
--Brian Scheid, brian.scheid@platts.com
--Edited by Annie Siebert, ann.siebert@platts.com
Houston (Platts)--9Jun2014/807 pm EDT/007 GMT
Halcon Resources' first operated well in the Tuscaloosa Marine Shale in Mississippi came in on Monday at an initial output rate analysts applauded, while the company also announced a deal to help finance the operation.
In addition, Halcon said in a statement that its midstream subsidiary Halcon Field Services has acquired rights to develop an oil handling terminal at Mississippi's Natchez port. The location has direct access to more than 2 million b/d of refining capacity on the Lower Mississippi River. The port has existing infrastructure including loading docks, pipelines and direct access to Canadian National Railway track.
In the TMS, Halcon's Horseshoe Hill 11-22H-1 well in Wilkinson County achieved a 24-hour average initial production rate of 1,548 b/d of oil equivalent, including 1,208 b/d of oil, the company said in a statement.
"Solid first well in the play in our view," Wells Fargo analyst Gordon Douthat said in a Monday report.
Halcon has 314,000 net acres in the TMS, which also spans Louisiana. The company drilled the Horseshoe Hill well in 39 days, spud to total depth.
The well, which featured 24 fracture stages, came in at around 65 barrels of equivalent oil per frac stage, which was "in-line with recent wells" drilled by Goodrich Petroleum, another TMS operator, Douthat said.
The rate is "in-line with recent strong results announced out of [the] play and less oily," which could be good for pressure, said Tudor Pickering Holt in its daily report. Horseshoe Hill was 78% oil.
And Dan Katzenberg, an analyst with Robert W. Baird, said: "We expect additional constructive well results from Halcon in the coming months."
Last week, Goodrich said its CH Lewis 30-19H-1 well in Amite County, Mississippi, yielded 24-hour production of 1,450 boe/d, 96% of which was oil. That well had 26 frac stages.
Halcon plans to spud 10 to 12 operated wells in the TMS in 2014, running an average two rigs. The company also expects to participate in 15 to 20 non-operated TMS wells this year.
Upcoming wells include three in Wilkinson County: Black Stone 4H-2, which was drilled in 28 days (completion operations should begin this month); and Fassman 9H-1 and SD Smith 1H, both of which were recently spudded. APOLLO FINANCE DEAL
In addition, Halcon said it inked a definitive agreement with credit funds and accounts managed by Apollo Global Management affiliates, which will invest up to a total $400 million in Halcon's HK TMS subsidiary. HK TMS holds all Halcon's acreage in Mississippi and Louisiana that is prospective for TMS.
Halcon holds 100% of HK TMS common shares and is its sole manager. Apollo will initially contribute $150 million in cash for 150,000 of HK TMS preferred shares, and could acquire up to 250,000 additional preferred shares of HK TMS. Holders of the shares will receive quarterly dividends of 8%/year plus a 4% overriding royalty interest in 75 wells and potentially up to 200 wells.
"We are off to a solid start in the TMS, and the capital from our partnership with Apollo will help us to accelerate activity," Floyd Wilson, Halcon Chairman and CEO, said. "The TMS is quickly evolving into a world-class oil play."
The TMS, where until recently Goodrich was the most prominent operator, got off to a slow start. Goodrich had numerous operational problems, but in a detailed conference call in February outlined steps it would take to fix them. Based on growing initial production rates in its last few wells, the measures appear to be working.
--Starr Spencer, starr.spencer@platts.com --Edited by Lisa Miller, lisa.miller@platts.com
London (Platts)--9Jun2014/825 am EDT/1225 GMT
Gas prices on the Dutch and German trading hubs continued to fall Monday morning, on ample supplies and warmer-than-normal temperatures set to continue for several days.
At 1100 GMT, the day-ahead contract on the Dutch TTF was seen at Eur16.05/MWh, shedding 45 euro cents from its Friday assessment, while July was down 20 euro cents at Eur16.80/MWh.
On the neighboring German NetConnect, the day-ahead contract was down 10 euro cents at Eur16.05/MWh, while the GASPOOL dropped 40 euro cents in value to Eur15.85/MWh.
Norwegian gas exports to Germany and the Netherlands stood, at midday London time, at a healthy rate of 122.6 million cubic meters/day, according to exporter Gassco.
Morning nominations showed European markets would also be well supplied with Russian gas, with 97 million cu m/d expected to reach Germany via Nord Stream and 84 million cu m/d via Poland, Platts unit Bentek Energy data showed.
According to Slovak TSO Eustream, 120 million cu m/d of gas was expected at Velke Kapusany on the Slovak-Ukrainian border.
German forecaster DWD predicted 35 degrees Celsius in Berlin on Tuesday, 31 C in Hamburg, 32 C in Munich and 29 C in Cologne, which should keep demand muted, while Dutch forecaster KNMI predicted 24 C in Amsterdam.
Mumbai (Platts)--9Jun2014/813 am EDT/1213 GMT
India's Paradip Port Trust, or PPT, is trying to attract investment to build a second LNG terminal at Paradip Port in the eastern coastal state of Odisha, a senior company official said in Mumbai late Friday.
PPT, which operates the Paradip Port, is negotiating with other companies to build a second terminal as it carries out development plans and constructs breakwater facilities, Paradip Port Trust Chairman S S Mishra said Friday.
But he did not give details about the second terminal.
PPT has already signed a memorandum of understanding with gas transportation utility GAIL in October 2013 to build a floating storage and regasification unit at Paradip.
GAIL has committed to invest Rupees 31 billion ($525 million) to build the first phase of the terminal with an export capacity of around 5 million mt/year of LNG by 2017. It will invest a further Rupees 25 billion to add another 5 million mt/year capacity in the second phase, Mishra said Friday.
While the plan is to build an FSRU in the first phase, there is enough land to build a onshore storage facility if GAIL so wants, Mishra added.
GAIL has just completed the pre-FEED study for the terminal and has license to lay gas pipelines from Paradip to Surat on the western coast in Gujarat, Mishra added.
OTHER LNG TERMINAL PROJECTS COMING UP IN INDIA
GAIL is also working on an FSRU at Kakinada in Andhra Pradesh, which is connected to the western coast by the existing Reliance Gas Infrastructures East West pipeline. The pipeline was originally designed to deliver gas from Reliance Industries Ltd.'s eastern offshore gas block KG-D6.
Meanwhile, India's leading LNG importer, Petronet LNG, is also close to starting construction work on a 5 million mt/year LNG terminal at Gangavaram in the eastern coastal state of Andhra Pradesh, a senior Petronet LNG official said Friday.
"They [PPT] are developing the [Paradip] port and we had talks with them. There is nothing beyond that right now. We are committed to Gangavaram project," said R K Garg, finance director, Petronet LNG.
Apart from the proposed Paradip, Gangavaram and Kakinada LNG terminals, state-owned refiner Indian Oil Corporation is also expected to set up a 5 million mt/year LNG terminal in Ennore near Chennai on the eastern coast.
IOC has three Single Point Mooring facilities at Paradip Port to handle crude oil imports for its Barauni and Haldia refineries. It is close to commissioning its 15 million mt/year refinery at Paradip, Platts has reported.
State-owned refiner Bharat Petroleum Corp. Ltd. is also looking at setting up an SPM at Paradip, Mishra said Friday.
--M.C. Vaijayanthi, newsdesk@platts.com
--Edited by Haripriya Banerjee, haripriya.banerjee@platts.com
Lagos (Platts)--9Jun2014/633 am EDT/1033 GMT
State-owned Nigerian National Petroleum Corp is looking for more export markets in Europe for Nigerian gas, the company said Sunday.
Nigeria's revenues from crude oil have been declining due to large-scale theft and the rise of shale oil production in the US. But the OPEC member's estimated 187 Tcf of gas reserves remain largely untapped.
NNPC CEO Andrew Yakubu said at a meeting with a Belgian business delegation in Abuja that Nigeria was hoping to use the port of Antwerp to transport its gas to the rest of Europe, according to an NNPC statement.
"Europe is a good market for gas. We are working on independently marketing our abundant gas resources to Europe," Yakubu said.
Nigeria has the world's ninth largest gas reserves, with about 187 Tcf of proven gas, and current production is estimated at 8.24 Bcf/day.
The West African country currently exports around 22 million mt/year of LNG the Bonny LNG plant.
However, efforts to boost domestic supply have born very little fruit with industry officials saying the low gas prices set by the government barely cover the cost of production and processing, let alone investment in gas infrastructure.
--Staff, newsdesk@platts.com
--Edited by Jonathan Dart, jonathan.dart@platts.com
Lima (Platts)--6Jun2014/503 pm EDT/2103 GMT
US natural gas pipeline operator Energy Transfer and consortia led by US' Sempra Energy and Brazilian construction firm Odebrecht have pre-qualified to bid on the $3.6 billion first stage of a Peruvian natural gas pipeline, the government said Friday.
The three bidders have until June 26 to submit bids for the 600,000 Mcf/d Southern Andean Gas Pipeline project, Proinversion, the state agency to promote private investment in Peru, said in a statement. The contract is scheduled to be awarded June 30.
In addition to Energy Transfer, the potential bidders are Odebrecht and Spain's Enagas together in one consortium and Sempra, France's GDF Suez, Argentina's Techint and Colombia's TGI in another, the agency said. The contract involves building and operating a 1,085-km, 32-inch pipeline from the Camisea gasfields through the southern Andes to the port of Ilo.
Repeatedly delayed since its conception in 2007, the pipeline will create 5,000 construction jobs, Proinversion said. Part of $20 billion in investment commitments in Peru's energy industry over the next decade, the pipeline will supply gas to two 500-MW power plants and potential petrochemical projects including by the US' CF Industries, Australia's Orica, Brazil's Braskem and Sigdo Koppers of Chile.
The power plant concessions, awarded in December to GDF Suez's Enersur unit and Israel's IC Power, will account for 70% of the pipeline's initial capacity, according to the energy ministry. GDF Suez is the largest private energy generation company operating in Peru, with coal, gas-fired and hydroelectric power plants around the country.
The Southern Andean Gas Pipeline will be Peru's second gas conduit, adding to the 670,000 Mcf/d TGP gas pipeline that runs from Camisea to Lima built by Techint and in operation since 2004.
--Alex Emery, newsdesk@platts.com
--Edited by Richard Rubin, richard.rubin@platts.com
