The UK’s Buzzard oil field contributed 47% to Forties crude blend output in the week to June 1, Forties pipeline operator BP said on its website Wednesday, compared to 49% the previous week.
This decreases the sulfur content of Forties blend to 0.87% from approximately 0.89% previously, according to a BP conversion table.
For June, BP estimates Buzzard content within Forties Blend at 43.3%, up from 40.7% previously, and for 44.6% in July, up from its previous estimate of 44.2%.
The August share of Buzzard is now estimated at 23.3%, down from a previous estimate of 36.2%. The month-on-month drop is due to planned maintenance for 25 days starting in late July.
The Buzzard field has a nameplate capacity of 220,000 b/d, but production averaged 156,591 b/d in 2012, according to UK Department of Energy and Climate Change data.
It is the UK’s single-largest oil field, and the largest feeding into the Forties blend, one of four grades forming the basis of the Dated Brent crude oil benchmark.
The oil complex is expected to tighten this summer amid better demand from developed markets, Credit Suisse said in a conference call Wednesday.
An already narrow range for front-month ICE Brent futures is at risk of narrowing further, and this presents problems for traders amid thin volatility, Credit Suisse’s Head of Energy Commodities Research Jan Stuart said.
But any outsized move upwards or downwards could present a more opportunistic trading environment. The ICE July Brent Bollinger Band range — to which Stuart referred — was trading at $107.72-$111.15/b Wednesday, in from around $101-$119/b a year ago.
But long call spreads should allow a trader to take advantage of any move to the upside, should fundamentals line up, Credit Suisse trader Christopher Kenny said.
“Going long [NYMEX] $105 calls gives us the ability to take advantage of an unexpected buying environment, should there be a breakout,” he said.
“Net length in WTI futures and options very high, which is why we’re focused on the $105/b area. If we see a breakthrough above that, we anticipate a large amount of acceleration in price.” Stuart said US demand could be expected to grow this summer amid a rebounding economy and lower cost NGLs, while faltering European demand would begin to flatten out — both bullish scenarios.
This net increase in OECD demand would likely see a higher call on Saudi crude and geopolitical factors keeping Libyan and Iraqi barrels off the market.
Non-OECD growth would likely continue, but at the expense of China. “We’re not worried about China,” he said. “The world of oil does not revolve around China, not like copper does.”
The price of copper is often correlated to the strength of the Chinese economy, as the commodity has been a key element in the country’s decades-long infrastructure build-out. NYMEX July copper futures were trading around $3.10/pound Wednesday, having moved steadily higher throughout much of the second quarter.
Crude stocks in the US Gulf Coast fell 6 million barrels last week as refiners in the region upped utilization rates and crude imports plunged, data from the US Energy Information Administration showed Wednesday.
Total US crude stocks fell 3.4 million barrels to 389.5 million barrels for the May 30 reporting week, putting inventories at a 3.92% surplus to the EIA five-year average. That surplus, however, has narrowed from more than 13% in November 2013.
The total stock draw outpaced analyst expectations of a 2 million-barrel decline. Movements in the USGC accounted for the bulk of the stock decline, with inventories in that region dipping 6 million barrels to 207.1 million barrels.
That’s partly due to refiners there ramping utilization rates up to 90.1% of capacity, from a prior 89.9%.
Refinery runs in the region rose despite an idled crude unit at Marathon Petroleum’s 522,000 b/d Garyville, Louisiana, refinery that was shut after a tornado damaged the plant May 28. The company expects the unit to be back online by mid-June and noted it “does not expect total refinery throughputs to be significantly impacted, projecting less than a 5% reduction to the company’s prior throughput guidance for this quarter.”
Total US refinery utilization rates climbed 2.2 percentage points to 90.8% of capacity.
At the same time, crude imports to the USGC fell 1.05 million b/d to 2.87 million b/d. Total imports to the US were down 686,000 b/d to 7.12 million b/d, led by a 338,000 b/d drop in Colombian imports to 64,000 b/d and a 326,000 b/d decline in Venezuelan imports to 527,000 b/d.
Crude stocks in the Midwest fell 300,000 barrels to 89.7 million barrels. At the NYMEX delivery hub at Cushing, Oklahoma, crude stocks fell for the eighth straight week to 21.37 million barrels, from a prior 21.69 million barrels. The decline puts stocks there at a 47.8% deficit to the five-year average.
Tim Evans, commodity analyst at Citi Futures Perspective, noted there has been some talk in the market that Cushing inventories might recover over the second half of the year, “a plausible development that would remove one of the market’s critical fundamental supports of the past four months.”
Continental Resources is seeking permission from the US Commerce Department to export crude oil and is likely targeting European and Latin American markets for the light sweet crude it produces in the Bakken, analysts said Wednesday.
A Continental spokeswoman confirmed that the company had applied for a permit to export crude it produces in North Dakota, but, citing the commercial terms of the request, declined to discuss details of the application.
“The pending license is to further demonstrate the need for a free market for crude — just like refined products already have,” Continental spokeswoman Kristin Miskovsky said. “We are attempting to get light sweet to the refineries that are configured for it.” A Commerce spokesman did not respond to requests for comment.
Miskovsky indicated that the application was an attempt to overturn longstanding restrictions on US crude exports. “Our belief is that the market for light sweet crude extends beyond the borders of the US, and as such, there is a need for lifting the ban,” she said.
Scott Jensen, a consultant with Baker & O’Brien, said Continental was likely targeting refineries in Europe and Latin America, which currently receive West African and North Sea crude.
Michael Leger, president of Turner, Mason & Co., also said these were the likely markets for Bakken crude, which has similar qualities to crude produced in West Africa and the North Sea.
Potential US crude exports are already causing a shift in West African and North Sea production, he said. “With the pushback from US production, those countries and those producers are having to seek new markets further into Europe and elsewhere,” Leger said.
By Dan Murtaugh Jun 5, 2014 3:22 AM GMT+0700
West Texas Sour crude strengthens to narrowest discount vs WTI since March 25 after Magellan Midstream Partners LP (MMP) said it’s filling storage tanks in Colorado City, Texas, for BridgeTex pipeline. * WTS +75c/bbl to discount of $6 at 201pm: data compiled by Bloomberg * WTI in Midland +5c/bbl to discount of $6.85 vs WTI in Cushing, Okla. * Magellan began filling storage tanks May 30: Robb Barnes, co.’s vice president for marine terminals and crude oil * Linefill on pipeline will follow storage tank filling: Barnes * Co. has 1.2m bbl storage in Colorado City: co. statement * BridgeTex pipeline will be able to deliver as much as 300k b/d crude to Houston from western Texas when operations begin * “It gives the market confidence that they’re moving on with BridgeTex commissioning,” said Andy Lipow, president of Lipow Oil Associates LLC in Houston. “It created a demand for the amount of oil it takes to fill the tanks.”
To contact the reporter on this story: Dan Murtaugh in Houston at dmurtaugh@bloomberg.net
To contact the editors responsible for this story: David Marino at dmarino4@bloomberg.net Charlotte Porter, Richard Stubbe
Pemex Sells $2.8 Billion Repsol Stake as Industry Opened
By Adam Williams and Rodrigo Orihuela Jun 4, 2014 11:38 PM GMT+0700
Repsol SA (REP) fell the most in four months after long-time shareholder Petroleos Mexicanos sold a $2.8 billion stake.
Spain’s largest oil producer dropped 3.6 percent to close at 20.11 euros in Madrid, after having dropped as much as 4.2 percent earlier today, the most since June 20, 2013. Pemex, as the Mexico City-based company is known, sold a 7.9 percent stake in the Spanish oil company in an offer managed by Citigroup and Deutsche Bank AG. (DBK) The holding was bought by institutional investors at a 3.7 percent discount to yesterday’s close, according to security filings in Spain.
The Mexican company is raising cash as lawmakers prepare regulations to open the country’s oil industry to foreign investment for the first time since 1938. Pemex’s relationship with Repsol didn’t provide “mutual benefits,” Chief Executive Officer Emilio Lozoya said today
“If Pemex is going to be restructured as a new company, it needs a nest egg of capital in its balance sheet,” George Baker, an energy consultant in Houston, said in a telephone interview before the sale. “This money is headed towards Pemex’s balance sheet to give it market credibility.”
Pemex plans to sell its remaining 1.4 percent stake in Repsol within the next few months.
‘Corporate’ Differences
“We wish Pemex the best of luck in their post-Repsol” venture, Repsol spokesman Kristian Rix said an e-mail from Madrid. Chief Financial Officer Miguel Martinez said May 5 that Repsol was “totally open and to collaborate with” Pemex and “we’re totally open to any suggestions.”
Differences over “corporate governance” is one of the factors behind the break up, Pemex said in an e-mailed statement today.
Pemex in August 2011 signed an agreement with Sacyr SA, Repsol’s second-largest holder, to press Antonio Brufau to name a separate chief executive officer for the Spanish oil producer. The attempt failed and Brufau continued to hold both the CEO and chairman positions until this year, when he proposed that the board name Josu Jon Imaz as CEO, which occurred. Brufau retained the chairmanship.
Funds from Repsol can be used in better ways by Pemex, though the state-owned oil producer has still to decide what to do with them, CEO Lozoya said today.
‘Not Bad Idea’
Reducing the stake would be “not a bad idea,” Mexican Finance Minister Luis Videgaray said May 4 in an interview with Radio Formula. Pemex could “bring that capital and invest it in the opportunities that Pemex is going to have in Mexico,” he said at the time.
An end to Mexico’s state oil monopoly would bring in an additional $20 billion of foreign investment a year, according to Bank of America Corp. Chevron Corp., the third most valuable oil producer, said last month that it has been in talks with Pemex about potential partnerships in onshore, shallow and deep water fields, according to Ali Moshiri, Chevron’s president of Latin America and Africa.
“If Pemex is going to go out and look for a joint venture with Chevron in deep-water Gulf of Mexico, they are going to want to know that Pemex has the resources to back up the commitments involved in that type of project,” Baker said.
Shale Interest
Pemex may not have the financial, technical or operational capabilities required to maintain all the fields it wants to keep, Lourdes Melgar, Mexico’s deputy energy minister, said in March. Pemex’s limitations will be considered by the ministry when awarding fields with potentially large amounts of oil reserves, Melgar said. The country’s oil regulator will decide by September which fields Pemex can keep.
Repsol’s growth plans were distracted by its feud with YPF SA after Argentina seized control of YPF from Madrid-based Repsol in 2012, Pemex’s CEO said in October. The stake “has returned zero” under the current administration, he told a congressional energy committee on Nov. 20.
Pemex, which has expressed interest in working with YPF to develop shale deposits in Argentina, helped broker a preliminary compensation accord between Repsol and YPF that led to a binding deal earlier this year. Repsol received and then sold about $5 billion in bonds from Argentina in May from the compensation.
Repsol’s stock had returned to investors about 100 percent in dollar terms since Brufau took the helm in 2004, compared with a 150 percent average gain among peers tracked by Bloomberg in the same span.
To contact the reporters on this story: Adam Williams in Mexico City at awilliams111@bloomberg.net; Rodrigo Orihuela in Madrid at rorihuela@bloomberg.net
To contact the editors responsible for this story: James Attwood at jattwood3@bloomberg.net Robin Saponar
By Moming Zhou Jun 4, 2014 11:22 PM GMT+0700
Gasoline demand in the U.S. fell from the highest level in almost three years following the Memorial Day holiday weekend.
Gasoline supplied to wholesalers, a proxy for demand, slid 2.2 percent, to 9.1 million barrels a day in the seven days ended May 30, the Energy Information Administration reported. Prices at the pump may decline through the end of June as demand slows, according to a forecast by AAA. Total fuel consumption decreased by 977,000 barrels a day, the biggest drop since December.
“It’s more of a seasonal drop,” said Phil Flynn, senior market analyst at the Price Futures Group in Chicago. “You usually see a decline in gasoline prices after the holiday.”
Gasoline futures for July delivery slipped 0.58 cent to $2.9429 a gallon at 12:19 p.m. on the New York Mercantile Exchange.
Regular gasoline at the pump averaged $3.663 a gallon nationwide yesterday, according to Heathrow, Florida-based AAA, the biggest U.S. motoring group. Prices will average $3.58 from Memorial Day to Labor Day on Sept. 1, according to an AAA forecast released before the holiday.
Over the past four weeks, demand rose to 9.2 million barrels a day, the highest since August and 5.4 percent above a year earlier. Consumption reached 9.31 million during the week ended May 23, the most since June 17, 2011.
“The four-week average is still strong and demand is still above 9 million barrels,” said Carl Larry, president of Oil Outlooks & Opinions LLC in Houston.
To contact the reporter on this story: Moming Zhou in New York at mzhou29@bloomberg.net
To contact the editors responsible for this story: David Marino at dmarino4@bloomberg.net Richard Stubbe
By Caroline Alexander and Maher Chmaytelli Jun 4, 2014 6:10 PM GMT+0700
Against the backdrop of a rising sun and an imposing lion, renegade Libyan general Khalifa Haftar strides over rugged terrain in combat fatigues and black boots.
The propaganda imagery on Haftar’s Facebook page is part of his bid to rally the nation against Islamist militias in Libya’s east and their political allies in the capital, Tripoli. It borrows from that employed by Egypt’s soldier-turned-president Abdel Fattah El-Sisi, who overthrew an elected Islamist leader before securing power at the ballot box. If Haftar harbors similar ambitions, his will be a far harder task.
Successive Libyan governments have failed to unify the forces that removed Muammar Qaddafi from power three years ago, with the chaos halting the recovery of crude output in the North African producer. The country has descended into a patchwork of virtual fiefdoms ruled by gunmen with motivations ranging from a desire to control oil wealth to religious ideology. Prime ministers have been attacked; scores of members of the security forces killed. Parliament barely functions.
“Haftar’s message of eradicating extremists touched a nerve with Libyans, who have grown tired of waiting for security and prosperity,” said Asma Magariaf, a U.S.-based analyst whose father briefly became Libya’s de facto leader after Qaddafi’s fall. “He’s attempting to mimic a Sisi-style coup. But while the alliances he’s building are critically important for his operation,” they may not hold, she said.
Oil Region
Magariaf cited the example of Colonel Wanis Abukhamada, the head of army special forces who joined Haftar’s campaign, which has so far focused mainly on the second city of Benghazi. While saying he backs a “war on terrorism,” he hasn’t pledged loyalty to the former general, Magariaf said.
Key groups supporting Haftar include the Al-Qaqaa and Al-Sawaiq Brigades from the western Zintan region that have helped protect the fledgling government; forces loyal to Ibrahim Al-Jedran, who’s seeking autonomy for the oil-rich east from his base south of Benghazi; as well as various army, airforce and navy units. Many allies were barred from office because of their links to Qaddafi under the 2013 Isolation Law.
The Islamist-led parliament has denounced Haftar’s campaign as an attempted coup and, in a bid to curb support for the offensive, called for elections June 25. Fighters from Misrata and other militias nominally under government authority have rejected Haftar’s appeals or refused to take sides.
War Fears
That unwillingness of powerful actors to join the fray, mediation by tribal leaders and a feeling among anti-Islamist groups they can win this month’s ballot are easing concerns Haftar’s campaign may plunge Libya into civil war, said Riccardo Fabiani, North Africa analyst at Eurasia Group in London.
“It looks like fighting will continue in Benghazi and in the east, but it’s unlikely to spill over in the west as the battle in Tripoli remains political,” he said.
Three of Haftar’s guards were killed in a suicide attack today on one of his bases near Benghazi, the SkyNews Arabia channel reported. “The retaliation will take place in several cities, and focus on Benghazi,” Haftar told the Abu Dhabi-based network. “They will pay a dear price.”
Haftar’s characterization of Libya’s struggle as primarily a fight between Islamists and non-Islamists simplifies a more complex reality often dominated by local loyalties and competing political agendas.
Envoy Killing
Still, groups such as Ansar al Sharia, accused of killing U.S. Ambassador Christopher Stevens in Benghazi in 2012, make attractive targets. The group has denounced Haftar’s campaign as a war on Islam and has vowed to fight his Libyan National Army.
Since Stevens was killed, violence has escalated in Benghazi. Hundreds of army personnel were assassinated in the city in past year, according to Abukhamada. Journalists have also been killed, churches and schools attacked.
“Islamic militants have been targeting army and police officers, they kill and decapitate them in order not to see them function,” he said.
As violence escalates, the loss of Libyan oil production, down about 90 percent from its pre-conflict level, has boosted the price of Brent, the benchmark for half the world’s traded crude. On May 21, Citigroup raised its 2014 Brent price forecast to $109 a barrel, from $104 a barrel, citing the Ukraine-Russia crisis and supply uncertainty, including from Libya.
Operation Dignity
A native of Libya’s east, Haftar began his army career under King Idris before helping oust the monarch and install Qaddafi in 1969, said Juma Missury, an Interior Ministry official.
After a quick rise through the military ranks, Haftar directed failed interventions in Chad in the 1980s. He fell out with Qaddafi and fled to the U.S., returning to Libya in 2011, when he was instrumental in leading eastern rebel forces.
While Libyans have demonstrated in support of Haftar’s Operation Dignity, he remains a controversial figure. That’s mostly due to “his past role in Qaddafi’s army, his widely assumed cooperation with U.S. intelligence” after leaving Libya, and his personal ambitions, Wolfram Lacher, an analyst at the German Institute for International and Security Affairs in Berlin, wrote in a report.
After Haftar’s initial assault on Islamists in Benghazi, his supporters stormed the parliament. Confusion reigns in Tripoli, where interim Prime Minister Abdullah al-Thinni is challenging a contested vote that saw Ahmed Maiteg named premier. Haftar says he wants a council of judges to form an emergency government until elections and won’t seek power unless the people ask him too.
“What his ultimate objective is, I have no idea but this campaign may potentially mark a watershed,” Ronald Bruce St John, author of 14 books on Libya including ‘Libya: From Colony to Independence,’ said. “You are seeing someone trying to draw a line, say enough is enough with the Islamists. It’s a conservative Islamic country but not one interested in radical Islam.”
To contact the reporters on this story: Caroline Alexander in London at calexander1@bloomberg.net; Maher Chmaytelli in Dubai at mchmaytelli@bloomberg.net
To contact the editors responsible for this story: Alaa Shahine at asalha@bloomberg.net Mark Williams, Karl Maier
By Sabrina Valle Jun 5, 2014 3:47 AM GMT+0700
Brazil’s Finance Minister Guido Mantega turned down Petroleo Brasileiro SA (PBR)’s most recent requests for fuel-price increases and told management that delivering on production targets would ease its financial difficulties, said a person with direct knowledge of the talks.
Mantega, who chairs Petrobras’ board of directors, told Chief Executive Officer Maria das Gracas Foster in April and May that a weaker local currency had helped the state-owned oil company’s short-term finances when she requested price adjustments, the person said, asking not to be identified because the discussion was private. Company officials expressed concern to Mantega that continued fuel price caps could result in a lower rating and higher credit costs, the person said.
The real has gained 3.4 percent against the U.S. dollar this year after falling 13 percent in 2013. A stronger currency reduces the cost of Petrobras’ fuel imports. The most indebted publicly-traded oil company has been subsidizing imported fuel since 2011 as part of a government policy to use price controls to slow inflation that has exceeded the official 4.5 percent target throughout President Dilma Rousseff’s term.
Mantega, since last year, has been pushing Petrobras to increase production in an effort to reduce imports, said a different person briefed on the matter. Mantega has told Petrobras management that international fuel prices would have less of an impact on its balance sheet if it produced enough to supply the domestic market, said the person, who asked not to be named because he isn’t authorized to speak publicly on the issue.
Petrobras fell 1.8 percent to 16.60 reais at the close in Sao Paulo while Brazil’s benchmark index slid 0.4 percent.
New Refineries
The Finance Ministry’s press office declined to comment on fuel-price negotiations with Petrobras. Petrobras didn’t respond to an e-mail and phone call requesting comment.
Petrobras is building new refineries to reduce imports and improve its return on capital, the company said in a June 2 e-mail. Its five-year business plan calls for a fuel-price alignment to improve leverage and shareholder returns, it said.
In early May, Petrobras estimated it was selling gasoline and diesel at a 15 percent and 13 percent discount, respectively, to international prices, the person said. Subsidies have cost the company more than $31 billion in three years, Citigroup Inc. said in a May 22 research note. Petrobras calculates annual losses of about $500 million for every percentage point gap in fuel prices, the person said.
Petrobras’s production has declined for two years in a row. It expects to boost domestic output 7.5 percent this year as it adds new offshore production units. Average output through April is little changed.
Spending Surge
The fuel losses have coincided with a jump in investments as the company expands its capacity to produce and refine oil. The Rio de Janeiro-based producer has the largest cash flow deficit of any publicly-traded oil company at $24 billion in the past 12 months, according to data compiled by Bloomberg.
Petrobras, the worst performing major oil stock in the past year, has risen 34 percent since March 17 on speculation Rousseff will either be voted out of office in October and replaced with a more business-friendly administration, or start adjusting fuel prices after the elections.
Polls show Rousseff’s lead narrowing at a time consumer-price increases erode purchasing power in Latin America’s largest economy, damping consumer and industry confidence.
Opposition Candidate
Presidential candidate Aecio Neves, 54, said June 2 his government would set clear rules for changing regulated prices, which he wouldn’t boost all at once. Neves, a senator with the Brazilian Social Democracy Party, said he would have to study the impact of altering prices for companies such as Petrobras.
Rousseff’s lead over Neves fell to 17 percentage points in a May 7-8 Datafolha poll from 28 points in February. She was supported by 37 percent in the May poll, which had a two percentage-point margin of error. That wouldn’t be enough for her to win in the Oct. 5 first round, where a candidate must have more votes than all others combined.
To contact the reporter on this story: Sabrina Valle in Rio De Janeiro at svalle@bloomberg.net
To contact the editors responsible for this story: James Attwood at jattwood3@bloomberg.net; Andre Soliani at asoliani@bloomberg.net Robin Saponar
By Investing.com | Commodities News | Jun 05, 2014 12:00AM GMT | Add a Comment
Investing.com - Crude oil prices fell in Asia on Thursday on bearish government data on U.S. petroleum stocks that signalled the summer driving season is not as robust as expected.
NYMEX crude falls in Asia as U.S. supply data seen as bearishNYMEX crude prices down in Asia
In its weekly report on domestic oil supplies, the U.S. Energy Information Administration said crude stockpiles fell 3.4 million barrels in the week ended May 30, a nominally bullish figure given expectations and reports of a much smaller decline.
Analysts expected stockpiles to fall for the week, and the American Petroleum Institute, an industry trade group that conducts its own survey of crude inventories, reported late Tuesday that inventories declined by 1.4 million barrels.
But the decline was largely due to a reduction in imports, and the report also contained bearish news for refined products, with demand falling and inventories rising for gasoline and distillates, which include heating oil and diesel. Falling gasoline demand was bearish since summer driving season is underway.
On the New York Mercantile Exchange, U.S. crude oil for delivery in July traded at $102.26 a barrel, down 0.38%.
The Brent oil contract fell 0.4% to $108.40 a barrel on the ICE Futures Europe exchange, its fourth consecutive losing session.
http://www.aawsat.net/wp-content/uploads/2014/03/Kurdish-market-in-Erbil-300x169.jpg
Ordinary citizens, commerce and cultural events in the Kurdistan region capital and elsewhere have been affected by delays in government payrolls—which Baghdad controls
A vendor displays material used for traditional Kurdish costumes at a market on February 23, 2014 in Erbil, the capital of the autonomous Kurdish region of northern Iraq. (AFP Photo/Safin Hamed)
A vendor displays material used for traditional Kurdish costumes at a market on February 23, 2014 in Erbil, the capital of the autonomous Kurdish region of northern Iraq. (AFP Photo/Safin Hamed)
Erbil, Asharq Al-Awsat—As tensions rise between the Kurdistan Regional Government (KRG) and Baghdad over Erbil’s decision to export oil independently of the Iraqi government, the Kurdistan region and its residents are feeling the full brunt of the dispute.
The Iraqi government considers the export of Kurdish oil independently of its state-owned oil company as “smuggling.” So when the KRG built a standalone pipeline to Turkey that began delivering crude in January and signed a number of contracts with major oil companies in preparation for its own oil export activities, Baghdad cut off the region’s 17-percent share of this year’s Iraqi budget—that is, 17 billion US dollars—and began to delay or reduce payment of wages of all government employees in Kurdistan.
With more than a fifth of Kurdistan’s 5-million-strong population currently on the government payroll, and with Baghdad forking out all of the 840 billion Iraqi dinars (722 million US dollars) that make up these wages every month, the dispute is hurting the pockets of ordinary people on the street, and not just the KRG.
Erbil resident Jia Hassan’s husband is a government employee. She told Asharq Al-Awsat the crisis had greatly affected their living conditions and social life. “I am a housewife and my husband is a clerk,” she said. “We have four children and rely totally on my husband’s salary.”
She added: “Months have passed and all we hear from politicians is that a solution is close—but where is the solution? What have we done to deserve to live like this? My husband started looking for another job to support us. Both parties must end their differences as soon as possible.”
Speaking to Asharq Al-Awsat, Mohamed Jabbar, another Erbil resident, held the federal government responsible for the problem. “The government in Baghdad has not changed and has imposed an economic siege on us,” he said. “Now, Prime Minister Nuri Al-Maliki implements the same policies as those who came before him. Today he cuts our budget and tomorrow he will mobilize his forces against us like the late Iraqi dictator Saddam Hussein did—so what is the solution? We are coming up to Ramadan and we have not received our salaries for the month of May.”
Jabbar has not paid his rent for months because of the shortage in funds. “I live in a rented house. What am I going to say to the landlord? Every month I tell him things will get better soon, but to no avail,” he lamented.
Kurdistan’s famous markets have also been affected by the crisis. Once vibrant and thronging with shoppers, now only a trickle of people pass through the souks of Erbil, Suleimaniyah and Dahuk. Zuhair Ahmed, an Erbil shopkeeper, told Asharq Al-Awsat that since the start of the crisis sales had “dropped markedly and the market has slowed down.”
The KRG previously stressed that it had tried over the last six months to reach agreement with Baghdad, but that Maliki’s government was not interested in resolving the dispute. As KRG Prime Minister Nechervan Barzani said in a news conference held at the Kurdistan parliament last week: “How can we agree a solution with a man who has such a mentality? . . . Who gave one person the right to stop the salaries of the people? He tells the Kurds to do whatever they like, because they are not part of Iraq.”
The rift is also threatening to harm a major source of income for the region: tourism. Erbil has been named the Arab Tourism Capital for 2014, with a number of cultural and tourist activities scheduled throughout the year to mark the occasion and attract people from the region and beyond to the city’s relatively relaxed atmosphere and historic monuments. Many of the events associated with the project have also been affected by the budget cuts, with public funds in Kurdistan quickly running out.
Hamza Hamed, the media and public relations officer for the Erbil governorate, told Asharq Al-Awsat the KRG had allocated some 20 million dollars from its budget to fund the project’s activities throughout the year. But following the problems relating to the dispute with Baghdad, the funds stopped rolling in.
He said the KRG was now resorting to asking the private sector in Kurdistan for help after Baghdad refused to help with the project. Hamed said Erbil had called on Prime Minister Maliki to support the project because it was “a federal project” like those which awarded Baghdad and Najaf the Arab and Islamic capitals of culture for 2013 and 2012, respectively—projects the federal government in Baghdad had supported. In the end, though, “unfortunately [Baghdad did] not respond to our requests.”
Tawfiq Sheikhani, public relations manager of Cork Communications, one of the private companies that heeded the call of the KRG to chip in and support the Erbil project, told Asharq Al-Awsat his company was now in constant contact with the government and civil institutions in Iraq and Kurdistan, and was happy to help.
“As sponsors of government institution activities in normal times, our responsibility in the private sector has become greater. We cannot allow all activities to stop in a country which is suffering a financial crisis,” he said.
As for a solution to the dispute, things seem to be heating up. Kurdistan officially sold its first batch of oil independently of Baghdad—1 million barrels previously stored at the Ceyhan port in Turkey—10 days ago, and the Iraqi government threatened on Sunday to take legal action against the KRG, with the latter claiming there was no legal basis for any arbitration.
So with both sides firmly holding their ground on the issue, and with Erbil one of Iraq’s main oil-producing regions—claiming to hold some 45 million barrels of oil in reserves and currently producing 220,000 a day—the oil revenues that are the very source of the problem, may also be its solution.
By Dow Jones Business News, June 04, 2014, 06:35:00 PM EDT
WASHINGTON--The White House on Wednesday said global crude-oil supplies were sufficient to allow other nations to cut imports from Iran, though efforts to further curtail such sales were on hold while nuclear talks continue.
This prediction model is worth noting because it nearly triples the market's average yearly gain.
"The United States has committed to pause efforts to further reduce Iran's crude-oil sales for a six-month period," spokesman Jay Carney said. "In return for this and other limited relief measures, Iran has committed to take steps that halt--and in key respects roll back--progress on its nuclear program."
The Obama administration has sought to squeeze Iran financially by limiting its access to financial markets and hard currency.
The White House statement came in a statement required by Congress regarding the global supply of petroleum products from countries other than Iran. The statement was referring to existing agreements on Iran nuclear talks.
"There currently appears to be sufficient supply of non-Iranian oil to permit foreign countries to reduce significantly their purchases of Iranian oil, taking into account current estimates of demand, increased production by countries other than Iran, inventories of crude oil and petroleum products, and available spare production capacity," Mr. Carney said in the statement.
Write to Jeffrey Sparshott at jeffrey.sparshott@wsj.com
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(END) Dow Jones Newswires
06-04-141835ET
Platts Analysis of U.S. EIA Data: U.S. Gulf Coast (USGC) crude oil stocks plunged 6 million barrels last week
Quito, Ecuador (Platts)--4Jun2014/833 pm EDT/033 GMT
Ecuador expects to sign a deal with the Chinese government for $2 billion to help finance a delayed 200,000 b/d refinery construction project on the South American OPEC country's Pacific Coast, the minister for strategic sectors said Wednesday.
Some $500 million of this will be freely usable by the administration, Rafael Poveda added during a meeting between President Rafael Correa and foreign reporters.
The total Ecuador will need to borrow to complete the 6-year-old project will be $9 billion, with another $7 billion to be provided in a separate loan by the Industrial and Commercial Bank of China by the end of September, he said.
It originally estimated that the plant, including a petrochemical complex, would have a 300,000 b/d capacity, a third more, and cost $12.5 billion. The entry of China National Petroleum Corp. as a shareholder in the project, as announced last year, will help to underpin the viability of the loans. CNPC previously announced that it would provide capital to take a 30% stake in the refinery project.
Ecuador currently produces around 550,000 b/d of crude.
Under terms of the "master agreement" reached between the parties last year, Venezuela's state company PDVSA will see its share in the facility, known as Refineria del Pacifico Eloy Alfaro, drop to 19% from 49% currently, while Ecuador's Petroecuador will continue with its 51% majority.
Ecuador and CNPC signed a framework agreement on the refinery project plus upstream development projects a year ago. CNPC did not at that time say what its share in the refinery would be, noting that "further negotiations will be carried out on the basis of the agreement, and the cooperation contract is expected to be signed within the year."
Ecuador has been seeking Chinese funding for the project since early 2012, given a lack of funding from its Venezuelan partner. CNPC and the ICBC signed a letter of intent for participation in the project in February 2012.
Correa's populist government wants the refinery to go online by 2017. Originally planned to provide Ecuador with the capacity to export refined fuels from 2013, five years after the first stone was laid, delays with the funding have led the project to be downsized to 200,000 b/d. Some Ecuadorean energy analysts estimate that it may have to be reduced another 50% before it can be fully funded.
So far, detailed engineering for the refinery and basic engineering for a planned petrochemical plant have been completed, as well as leveling of the ground at its site near Manta. Petroecuador has spent some $900 million on the project so far, Poveda said during Correa's State of the Nation speech last May 24.
The Ecuadorean state company is also in the midst of a wholesale refurbishment at its main refinery at Esmeraldas, to return it to its 1976 capacity of 110,000 b/d. This will lead to full shutdowns during the second half of this year.
--Stephan Kueffner, newsdesk@platts.com --Edited by Annie Siebert, ann.siebert@platts.com
London (Platts)--4Jun2014/1149 am EDT/1549 GMT
Asian demand for West African crudes has been weak for July barrels despite a slight fall in the Brent/Dubai premium in the past few days, as Chinese demand remained low on weak refining margins and high crude stocks.
The Brent/Dubai exchange of futures for swaps (EFS) has narrowed slightly in the past few days with a downward trend seen on the ICE Brent futures complex.
EFS month-1 fell to its lowest in over a month Tuesday at $4.27/barrel, Platts data showed, and through Wednesday was trading $4.35-4.44/b.
Brent futures have come under pressure from poor crude demand in Europe on the back of thin refining margins, amid a weak diesel market.
Traders said that despite the narrowing EFS, the flow of West African crudes -- which are typically priced off the Brent complex -- to Asia was lower than usual as the EFS was still fairly wide and also because Asian crude demand for July was generally low.
An analysis of recent data from Chinese state companies PetroChina and Sinopec pointed to their first-quarter refinery utilization rates being at the lowest in over a decade amid slow oil demand and rising capacity. Anecdotal reports from traders suggested demand has remained relatively low in the second quarter.
Asian demand, especially Chinese, for Angolan crudes has been particularly low because of cheaper Persian Gulf crude prices, a wide Dubai/Brent EFS, and high crude stocks, sources said.
China is a key buyer of Angolan grades buying up to 45-50% of Angola's monthly export program every month. But for July, Chinese demand has been very soft so far, traders said.
"Cabinda is usually taken by the Asian refiners and they are not keen on such grades any more. The Brent/Dubai spread is very wide, and there are cheaper PG grades out there," another trader said.
"So, this is having a negative effect on Angola as the Chinese have other alternatives. Also, maybe they [Chinese refiners] are being impacted by the weak refining margins too. The main constraints are still refining margins."
--Eklavya Gupte, eklavya.gupte@platts.com
--Ned Molloy, ned.molloy@platts.com
--Edited by Dan Lalor, daniel.lalor@platts.com
Similar stories appear in Oilgram News See more information at http://www.platts.com/Products/oilgramnews
Kampala (Platts)--4Jun2014/809 am EDT/1209 GMT
Uganda, stepping up efforts to start exploiting its oil fields, said Wednesday that, so far, four companies have submitted detailed proposals for a 60,000 b/d refinery in the west of the country.
They are Japan's Marubeni Corp., and consortiums led by China Petroleum Pipeline Bureau-led consortium, Russia's RT Global Resources and South Korea's SK Energy.
They were among six companies selected by the government to submit proposals for the refinery, the ministry of energy and mineral development's permanent secretary, Kabagambe Kalisa, said. The six companies were given an opportunity to visit the refinery project site and some oil fields in March.
The oil refinery project manager, Robert Kasende, said: "Transaction adviser Tayor-Dejonghl and representatives from the government will undertake a detailed evaluation of these proposals in June and results will be announced within the same month".
The evaluation process will include, but not be limited to, overall technical experience and financial capacity and the development, financial and commercial plans submitted by bidders.
The refinery will be developed in phases, with output rising gradually from an initial 30,000 b/d within three years, to 60,000 b/d by 2019.
Construction was expected to start by the end of the year.
Uganda is estimated to have as much as 3.5 billion barrels of crude. Its three joint venture partners are China's CNOOC, France's Total, and the UK's Tullow Oil.
--Namala Doreen, newsdesk@platts.com
--Edited by Dan Lalor, daniel.lalor@platts.com
Similar stories appear in Oilgram News See more information at http://www.platts.com/Products/oilgramnews
Calgary (Platts)--4Jun2014/410 pm EDT/2010 GMT
Husky Energy aims to hike its heavy oil output in Western Canada to nearly 80,000 b/d by the end of the decade, compared with 46,200 b/d currently, a company executive said Wednesday.
The Calgary-based company plans capital expenditures in heavy oil totaling C$1.3 billion (US$1.1 billion) by 2016, with another C$1 billion by 2019, Ed Connolly, senior vice president for heavy oil, said at the company's investor day in Toronto. The event also was webcast.
Husky currently holds over 2 million net acres of land with heavy oil, he said, primarily in Alberta and Saskatchewan.
"We have over 4,000 wells at Lloydminster [in Alberta] that operate with a netback of C$4/barrel," he said, noting Husky has been a major heavy oil producer in that area since it started up the Pikes Peak project in 1984.
Heavy oil is in a "rejuvenation" stage in Western Canada, he said. Husky expects its Pikes Peak recovery rate to rise from 60% to 70% by the end of the decade, he said.
Pikes Peak produces about 4,100 b/d now, and a planned new phase at Pikes is one of nine new heavy oil projects that Husky has in the works in Western Canada. The other major ones include Rush Lake, Edam East, Edam West, Vawn and McMullen Thermal.
At Rush Lake, Husky remains on track to produce first oil from the 10,000 b/d facility in first-half 2015, followed by the startup of its 10,000 b/d Edam East and 10,000 b/d Vawn projects a year later, Connolly said.
The construction time for a new heavy oil project in Western Canada is about two years, he said, compared with a longer lead period of about seven years for an oil sands facility.
"The time it takes from startup to attaining peak production is three months, with an operating cost of C$10/barrel in the first two years," he said, without indicating what the costs would be after that timeline.
Connolly said the rate of return on investment for a 15-year heavy oil project in Western Canada is in excess of 20%, and compared that to 10%-15% for an Alberta an oil sands facility.
"Our thermal heavy oil projects provide a long-term and predictable cash flow that support sustainable growth," Husky CEO Asim Ghosh said at the same event, adding the company plans to spend about C$5 billion in 2014 to increase oil output companywide to 330,000-355,000 b/d of oil equivalent.
Last year, the company's average output was 312,000 boe/d, Ghosh said.
EXTRA 50,000 B/D FROM OFFSHORE ATLANTIC CANADA
Besides heavy oil, incremental crude oil output of some 50,000 b/d will come from offshore Atlantic Canada by the end of the decade, where Husky holds acreage in Newfoundland and Labrador, according to Malcolm Maclean, the region's senior vice president.
First oil from the South West Rose Extension is due end-2014, Maclean said, while a new well at the adjacent North Amethyst field is due to come on stream around the same time.
The South West Rose Extension and North Amethyst are forecast to produce 15,000 boe/d and 5,000 boe/d, respectively.
Husky also expects to get a new harsh-weather drilling rig, the West Mira, in third-quarter 2015, he said. The rig is under construction in South Korea.
Husky and its joint venture partner Statoil are also due to launch a 1,100 sq km (682 sq mile) 3D seismic survey at its Flemish Pass Basin discovery, made last year offshore Newfoundland and Labrador, Maclean said.
The discovery is home to three prospects: Bay du Nord, Harpoon and Mizzen, located 500 km (320 miles) northeast of capital St. John's. Operator Statoil holds 65% in the JV, with Husky holding 35%.
"We are looking at a phased strategy to develop the basin, with first oil in 2020," Maclean said. "Bay du Nord, with resources of 400 million barrels, will be the first in the queue. Our aim will also be to have a floating facility that will dodge the icebergs." PHASE 2 OF SUNRISE OIL SANDS PUSHED BACK
Meanwhile, Husky will delay development of the second phase of its Sunrise oil sands facility in Alberta, CEO Ghosh said, citing the need to strike a "balance between allocation of the company's capital and maximizing returns."
Work on the 30,000 b/d first phase of the project is on track, with startup later this year, he said.
But the 30,000 b/d phase 2A planned for 2019 has now been pushed back by a year, Ghosh said.
Sunrise is a 50:50 JV between operator Husky and BP, and the facility has Alberta government regulatory approval for a full capacity of 200,000 b/d of bitumen.
--Ashok Dutta, newsdesk@platts.com --Edited by Lisa Miller, lisa.miller@platts.com
Moscow (Platts)--4Jun2014/813 am EDT/1213 GMT
Deliveries of Russian gas to both Europe and Ukraine rose sharply in May as the gas price dispute between Russia and Ukraine persists, raising concerns over possible interruptions in supplies in June.
Deliveries to Europe rose more than 10% year-on-year to 13.75 billion cubic meters of natural gas in May, Gazprom's CEO Alexei Miller said late Tuesday.
"Gazprom continues to increase sales of gas to its clients in Europe even when it is compared to record supplies last year," he said, as quoted by Gazprom's press office.
In the first five months of the year, Gazprom's supplies of natural gas to European markets, including Turkey, grew 5%, Miller said, giving no absolute figures.
"That the increase came as gas production in Europe as well as supplies from other sources continue to decline," he said.
Another factor that likely sparked the increase in gas purchases is a looming risk of possible disruptions in gas transit via Ukraine as Russia has warned it could switch to prepayment supplies to Ukraine from June 9 if Kiev fails to pay for gas supplied in late 2013 and in April-May.
This means Gazprom would stop supplies to Ukraine if it receives no payment for June deliveries. As a result, Ukraine may start taking for its own needs transiting gas destined for Europe as happened during gas price disputes between Moscow and Kiev in 2006 and 2009.
GAS OFFTAKING
Meanwhile, Ukraine also took a record gas volumes of 3.529 Bcm in May, to replenish its gas stocks in anticipation of possible cuts in gas deliveries in June.
"This is a record volume, especially for this season," Gazprom's deputy CEO Alexander Medvedev told reporters at a briefing Tuesday.
Ukraine has increased its gas requests in May and Gazprom was meeting them despite uncertainty over payments for gas already delivered, he said.
In the four week from May 2 through May 30, Ukraine injected about 3.24 Bcm of gas into its underground storage facilities, according to Naftogaz Ukrayiny, the national energy company.
Gazprom's conservative forecast envisages gas exports to Europe and Turkey to total 158.4 Bcm in 2014, down 1.9% year-on-year from 161.5 Bcm in 2013.
But the actual total could be higher, depending on weather conditions, Gazprom's Medvedev said Tuesday.
In 2013, Gazprom raised its gas exports to Europe by 16% -- 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.
--Nadia Rodova, nadia.rodova@platts.com
--Edited by Jeremy Lovell, jeremy.lovell@platts.com
Similar stories appear in European Gas Daily See more information at http://www.platts.com/Products/europeangasdaily
Thursday, 05 June 2014 00:08
Posted by Muhammad Iqbal
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imageBAKU: Azerbaijan sees little threat to its natural gas export plans from abundant US shale gas because the Azeris have locked in long-term contracts and transport and other costs will drive up the price of the US product.
Azerbaijan is preparing to supply Europe with 10 billion cubic metres (bcm) of gas each year and Turkey with 6 bcm from 2019 from its vast Shah Deniz gasfield in the Caspian Sea, which holds estimated reserves of 1.2 trillion cubic metres.
In the United States, fracking has driven down gas prices, which are about a third of those in the European Union. But Azeri energy minister Natiq Aliyev said that US exports may not be as cheap once the additional costs of liquefying, transporting and re-gasifying are included.
"I think that shale gas won't pose any threat for Azeri natural gas to be transported to Europe," Aliyev told Reuters.
Buyers of Azeri gas from Shah Deniz II include Shell, Bulgargas, Gas Natural Fenosa, Greek DEPA, Germany's E.ON, France's GDF Suez, Italian regional utility Hera Trading, Switzerland's AXPO and Italy's Enel.
"There will be some limited competition (from the US shale gas), but I'd like to remind you that we signed deals with buyers of our gas (from Shah Deniz II) in Europe for 25 years," Vitaliy Baylarbayov, deputy vice-president at Azeri state oil company SOCAR, told Reuters. "So we have already taken our place on the market."
Baylarbayov added that he saw Asia as a potential market for US shale gas due to bigger demand, higher gas prices in Asia and cheaper transportation options.
Baylarbayov and Aliyev also said preliminary estimates indicated the presence of quite substantial shale gas reserves in Azerbaijan itself.
"We are exploring shale gas production potential, but I don't think we'll start its production in Azerbaijan any time soon," Baylarbayov said.
Shale gas production requires hydraulic fracturing the process of injecting water and chemicals at high pressure into underground rock formations to push out gas.
Critics say fracking can pollute water supplies and trigger small earthquakes, but advocates say it has a strong safety record.
Copyright Reuters, 2014
Singapore (Platts)--4Jun2014/940 am EDT/1340 GMT
China's state-owned Sinopec said Wednesday it has signed a pact with Kuwait Petroleum Co to enhance cooperation in the oil sector, including refining.
Sinopec, or China Petrochemical Corp., said the deal was signed Tuesday in Beijing in the presence of Chinese Premier Li Keqiang and Kuwaiti Prime Minister Sheikh Jaber Mubarak Al-Sabah.
Sinopec said both companies will continue to deepen cooperation in crude oil trading, crude reserves storage, refinery projects and refinery engineering services. No other details were provided.
The new deal indicates both sides could be reviving stalled talks for a joint venture refinery in Zhanjiang in China's southern Guangdong province.
Sinopec last said in its 2013 annual earnings statement issued late March that the 15 million mt/year Zhanjiang refinery would be delayed by a year to 2017. The plant will include an 800,000 mt/year ethylene unit and a 300,000 mt/year jetty.
Sinopec and KPC's overseas arm, Kuwait Petroleum International, had signed a joint venture agreement for the refinery in June 2011, following over five years of talks.
Sinopec was to hold a 50% stake in the refinery, and KPI the remaining 50%, although the Kuwaiti company had indicated its desire to farm out a 20% interest to a third partner.
The plan was for the $9 billion refinery to run on Kuwaiti crude. Since 2012 however, there has been little update on the equity sharing in the project and sources have previously said KPI's interest was waning and it was not clear if the company was still involved. Sinopec has also made no mention of KPI's involvement in its updates in the last two years.
--Song Yen Ling, yenling.song@platts.com
--Edited by Deepa Vijiyasingam, deepa.vijiyasingam@platts.com
Wed Jun 4, 2014 2:04pm EDT
By Nia Williams
CALGARY, Alberta, June 4 (Reuters) - Canada almost doubled imports of crude oil from the United States in April compared with the same month a year earlier, Statistics Canada data showed on Wednesday, as the U.S. light oil boom continued to displace barrels from overseas.
Crude exports are restricted in the United States under decades-old legislation, but companies are allowed to apply for licenses to sell oil to Canada.
Canada imported around 8.1 million barrels in April, or around 270,000 barrels per day, from the United States, a 95 percent increase on the 4.2 million barrels imported in April 2013.
It was a 4 percent increase from March 2014, when Canada brought in around 7.8 million barrels of crude from its southern neighbour.
In total, Canada imported 17.5 million barrels, or roughly 583,000 barrels per day, from around the world in April, with the United States as top supplier followed by Iraq.
All 2.26 million barrels, or 75,000 bpd, of Iraqi crude went to the Atlantic province of Newfoundland Labrador, where the Korea National Oil Corporation subsidiary North Atlantic Refining runs the 115,000 bpd Come-by-Chance refinery.
April also saw the first imports from Azerbaijan in more than a year of just over 1 million barrels of crude. Those barrels all went to the province of Quebec, where Suncor Energy Inc and Valero Energy Corp have refineries.
Canada has the world's third-largest crude reserves after Saudi Arabia and Venezuela and produces around 4.3 million bpd, but still imports crude because of limited pipeline access from the main oil-producing regions in Western Canada to some eastern refineries.
Refineries use rail, tankers, barges and pipelines to transport crude from booming U.S. shale plays such as the Eagle Ford in Texas and North Dakota Bakken.
"Refiners on the east coast are not really configured to process the dilbit (diluted bitumen) that comes out of Alberta. There's no reason for this trend (of rising imports) to stop," said oil economist Phil Verleger.
Even if opponents of the U.S. oil export ban were successful in getting it lifted, Verleger said Bakken shipments to Canada would be unaffected, as North Dakota crude has limited pipeline connection to U.S. ports.
Statistics Canada data showed Texas was the biggest exporter by state of U.S. crude to Canada for the fifth month in a row, although the number of barrels slipped to 4.4 million in April, down 20 percent from 5.5 million in March.
North Dakota picked up much of that slack as exports to Canada rose by 50 percent month-on-month to 3.1 million barrels.
Among the Canadian provinces Quebec imported the most U.S. crude in April with 4.3 million barrels. New Brunswick, home of the 300,000 bpd Irving Oil St John refinery, imported 2.3 million barrels of U.S. oil, mainly from Texas. (Reporting by Nia Williams in Calgary; Editing by Jessica Resnick-Ault and Marguerita Choy)
© Thomson Reuters 2014 All rights reserved.
June 4, 2014 by Ibrahim Khalil No Comments
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Iraqi oil exports increased by eight percent in May according to the spokesman for the Ministry of Oil in Iraq last Sunday, but the number remains below the government’s target for 2014.
The average exports reached in May, 2.582 million barrels per day, up from 2.39 million bpd in April, but below the target level of 3.4 million barrels per day for the current year.
The target level includes 400 thousand barrels per day from the semi-autonomous Kurdistan Region, which did not export any quantities of crude through the infrastructure of the central government for more than a year because of disagreements on the management of resources with Baghdad.
The export growth is also affected by the damage caused to the northern pipeline, which has been bombed by gunmen in early March and remained disabled since then.
An Iraq Ministry of Oil spokesman, Assem Jihad, said in a press releasee that the average price of a barrel of Iraqi oil stood at $100.80 dollars in May, which added revenues of $8.07 billion dollars.
Copyright 2000-2014 Iraqi News All Rights Reserved
4 Jun 2014, 10.59 pm GMT
Washington, 4 June (Argus) — President Barack Obama said today global oil supplies are adequate to extend sanctions designed to reduce Iran's crude export revenues, despite warnings from the Energy Information Administration (EIA) that markets are tight.
Obama's announcement, at this point, is more symbolic than substantive. Washington already has agreed not to try to coerce countries to reduce their Iranian oil purchases while the US and five other global powers are negotiating with Iran over Tehran's nuclear program.
But oil supply concerns eventually could force a change in policy. "I will continue to monitor this situation closely," Obama said in his official determination.
The determination referenced a 24 April report from the EIA estimating that global petroleum and other liquids consumption outpaced production in March and April, resulting in an implied, 100,000 b/d average drawdown from global stocks. Those withdrawals were similar to the previous two-month period.
"Global surplus crude oil production capacity remains low, and unplanned global supply disruptions remain elevated compared with historical levels, both indicating continued general market tightness," the EIA said.
That concern caught the White House's attention. US administration officials noted that OECD inventories are about 3pc below last year's levels.
The National Defense Authorization Act for fiscal year 2012 directs the administration to sanctions banks in countries that refuse to reduce their purchases of Iranian oil significantly. But the president has to certify that oil supplies are adequate to accommodate cuts in Iranian oil exports.
The White House noted that Brent prices are in line with levels six months ago. So while the markets may be tight, the administration concluded the sanctions could remain in force.
The US promised to pause efforts to force additional cuts in Iranian oil purchases for six months, while the US, UK, France, Russia, China and Germany try to reach a comprehensive nuclear deal with Iran by 20 July, although that deadline can be extended.
US officials estimated that Iran's oil exports were averaging 1mn-1.1mn b/d before the six-month pause began. US officials told ran's five main oil buyers – China, India, Japan, South Korea and Turkey – that Washington would not object to monthly fluctuations in purchases of Iranian oil, as long as the average over the six-month period represents no increase in purchases.
But oil purchases have been running substantially above that level, averaging 1.355mn b/d in April.
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June 4, 15:04
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Kazakhstan is looking for the sources to increasing oil production at the existing fields to compensate for the losses from Kashagan suspension, said Minister of Economy and Budget Planning Yerbolat Dossayev during today's plenary session of the lower chamber of Kazakh Parliament, az.kz reports.
“The Ministry of Oil and Gas together with the KazMunayGas NC JSC are seeking additional sources to increase production of oil in other fields in order to compensate for the current volume of loss,” said the Minister.
The Minister noted that the budget revenue from Kashagan project is not expected as all the income goes directly to the national fund.
"But the issue of (crude) production volumes, envisaged in the 2015 socio-economic forecast of the republic remains valid. Failure to put Kashagain into operation impacts GDP,"- noted Dossayev.
Earlier, Daniyar Berlibayev, deputy head of KazMunayGas national oil company, said that Kazakhstan lowered its oil production forecasts in 2014 down to 81,8mln tons vs the target level of 83 mln tons, due to delays with Kashagan project.
Dossayev earlier announced that dealy in the startup will cost Kazakhstan 0.5% of its GDP this year.
Total recoverable deposits of Kashagan are 38mln barrels
Recoverable oil reserves are estimated at about 10 billion barrels and the total geological reserves of raw materials - at 38 billion barrels. Kashagan is the fifth largest oil field in the world.
It has also major reserves of natural gas - over 1 trillion cubic meters. In the first days the oil field yielded about 40 thousand barrels per day.
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Baku, Azerbaijan, June 4
By Emil Ismayilov
Some 360 million tonnes of oil has been produced since the beginning of the development of the "Azeri-Chirag-Guneshli" block of the Azerbaijani offshore oil and gas fields, head of the Azerbaijan State Oil Company, Rovnag Abdullayev said.
Abdullayev made the remarks at the 21st International Caspian Oil and Gas-2014 Conference held in Baku.
"Some 96 billion cubic meters of gas has been produced from the block during the reported period," he said, adding that according to forecasts, the annual volume of oil on the block will make up 34-35 million tonnes.
It is expected that in 2015 the gas production (excluding volumes pumped into the reservoir) in Azerbaijan will reach 20 billion cubic meters, and in 2020 this figure will be 40 billion cubic meters, according to Abdullayev.
The contract on the Azeri-Chirag-Guneshli offshore field development project was signed in 1994. The agreement is valid for 30 years. The proven oil reserves of the field is estimated about one billion tonnes.
Shares in the contract for development of the Azeri-Chirag-Guneshli block of fields is distributed as follows: BP (operator in Azeri-Chirag-Guneshli) - 35.78 percent, Chevron - 11.27 percent, Inpex - 10.96 percent, AzACG - 11.65 percent, Statoil - 8.56 percent, Exxon - eight percent, TPAO - 6.75 percent, Itochu - 4.3 percent and ONGC - 2.72 percent.
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Baku, Azerbaijan, June 4
By Emil Ismayilov
To date, about 1.53 billion tonnes of oil and gas condensates has been produced in Azerbaijan, the Vice-President of the State oil Company of Azerbaijan (SOCAR) for Economic Affairs, Suleyman Gasimov said.
He made the remarks at the 21st International Caspian Oil and Gas-2014 Conference held in Baku.
Gasimov pointed out that to date, some 559.5 billion cubic meters of gas was produced in the country.
Talking about the increase in the gas production volume in Azerbaijan, the SOCAR vice-president emphasized the importance of the Shah Deniz field.
"Around 45.4 billion cubic meters of gas and approximately, 94.5 million tonnes of condensates have been produced at the field up to date," according to Gasimov.
He went on to add that the implementation of the second stage of development of the Shah Deniz field, will allow to annually produce some 16 billion cubic meters of gas that will be exported to Turkey and the European market.
On December 17, 2013, a final investment decision was made on the Stage 2 of the 'Shah Deniz' offshore gas and condensate field's development.
Some 16 billion cubic meters of gas per year will be produced as part of the second stage of Shah Deniz development, according to the forecasts.
Some six billion cubic meters of this volume will be supplied to Turkey, while 10 billion cubic meters - to Europe.
The gas to be produced as part of the Stage 2 of the field's development, will be exported to Turkey and to the European markets by means of expanding the South Caucasus Pipeline and construction of the TANAP and the Trans-Adriatic Pipeline (TAP).
The contract to develop the offshore Shah Deniz field was signed on June 4, 1996.
Partners operating for Shah Deniz field's development, which has reserves of 1.2 trillion cubic meters of gas, include SOCAR with a share of 16.7 percent, British BP (28.8 percent), Norwegian Statoil (15.5 percent), Iranian NICO (10 percent), French Total (10 percent), Russian Lukoil (10 percent) and Turkish TPAO (nine percent).
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Baku, Azerbaijan, June 4
Azerbaijani State Oil Company's (SOCAR) drilling operation volumes stood at 15,635 meters in May, 2014 (excluding joint ventures and operating companies), according to a message form the company.
Some 14,962 meters out of the total volume of drilling performed by SOCAR in May, 2014 accounted for production drilling, while the remaining 673 meters - for exploratory drilling.
SOCAR's drilling operations between January and May stood at 62,222 meters.
Some 60,627 meters out of the total drilling conducted in 2014 accounted for production drilling, and some 1,595 meters - for exploratory drilling.
SOCAR includes Azneft (enterprises producing oil and gas on land and sea), Azerkimya (chemical industry enterprises) and Azerigaz (deals with gas distribution) production associations.
The state company also has a number of oil and gas refineries on its balance sheet.
Together with foreign partners, SOCAR participates in major projects such as the development of the Azeri-Chirag-Guneshli block of oil and gas fields and the 'Shah Deniz' gas and condensate field in the Caspian Sea.
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Houston (Platts)--4Jun2014/602 pm EDT/2202 GMT
Only three of the nine LNG export terminal projects approved on the Canadian West Coast are likely to be built due to market constraints, physical challenges and social forces, a Calgary-based energy economist said Wednesday.
"There have been nine that have now been approved and 14 that are clamoring to build something," said Peter Tertzakian, chief energy economic and managing director of ARC Financial, on the sidelines of the Benposium conference in Houston.
"But realistically, given the mountain passes you have to cross over, the social resistance and labor pool constraints, the still fuzzy fiscal regime and First Nations' issues, those nine that have been approved will probably be whittled down to three viable candidates," he said.
Not only would fewer terminals be built than some other analysts have projected, but those that do get built will take longer to come online than forecast, said Tertzakian, also the keynote speaker at the conference.
By 2020, the year several projects have been forecast for start-up, the maximum send-out capacity from Canada's West Coast will be about 2 Bcf/d.
"I think that some of these other ones that were saying they were going to come online before 2020, will probably come online from 2020 to 2025," Tertzakian said. By 2025, Canadian LNG export capacity would increase to 4 Bcf/d-6 Bcf/d, he predicted.
The only US LNG export project assured of being built is the Sabine Pass terminal on the US Gulf Coast, he said. The proposed Cheniere Energy terminal is the only such project to have secured approvals by both the US Department of Energy and Federal Energy Regulatory Commission.
Tertzakian declined to speculate about how many other US export terminals will get built, saying a multitude of factors, including securing financing and regulatory approvals, go into the decision of whether to build these multi-billion industrial projects.
"It's all about arbitrage," he said. "As long as the money is there to attract investments to pour into these infrastructure facilities," then they will get built, he said. But both Canadian and American projects are threatened by the potential of an unexpected price rise for gas, Tertzakian said.
Tertzakian argued that a gas price of $4/MMBtu "is probably too low" to incentivize producers to drill for large quantities of gas.
"Across many different sectors there is demand growth for natural gas," he said. "Is it all going to come out of the ground at under four bucks or are you going to need progressively higher prices to bring it out of the ground to substitute for coal, to feed petrochemical plants and to send to the Mexicans through pipelines?" he asked, rhetorically.
Other factors, such as increased environmental regulations on drilling and hydraulic fracturing represent "very legitimate concerns," that also could slow the growth of North American gas production, Tertzakian said.
"What I've highlighted is a dynamic that there are no market and operational constraints to further growth in North America, but there are social, environmental and sustainability constraints that will likely amplify as the activity grows," he said. "That's also part of the overall picture that has to be factored in."
In US states such as Colorado, where a measure to restrict fracking is likely to be on the ballot this fall, additional regulation could slow production.
But Tertzakian does not foresee fracking bans as passing in those US states or Canadian provinces "that have a long history of oil and gas production and also of entrenched regulatory bureaucracy and a populace that is accustomed to the process, such as Texas, Oklahoma, Alberta," he said.
--Jim Magill, jim.magill@platts.com
--Edited by Richard Rubin, richard.rubin@platts.com
