Northwest European refining margins have hit an eight-week low in the face of rising crude costs and a diesel market under pressure from US imports, market sources said Monday.
The netback margin for refining Russian sour grade Urals in the Amsterdam-Rotterdam-Antwerp hub dropped $0.235/barrel Friday to $1.48/b, its lowest since March 21, according to Platts data.
The margin for sweet Norwegian grade Oseberg dropped $0.54/b to $1.735/b, its lowest since March 19. “I think Dated [Brent] is just too high at these levels,” a source said, referring to the increase in crude costs for refiners. Dated Brent rose $1.43/b Friday to a 10-week high of $111.24/b, on the back of tight June loadings for North Sea sweet crudes amid field maintenance.
“The [North Sea crude] market is breaking out from Q2 weakness into Q3 strength,” said one trader. “To me, fundamentals have changed.”
The Brent complex has also been driven on the futures side by Ukraine concerns. “Once again, [Russian President] Vladimir Putin is writing letters warning the EU that if Ukraine does not pay its bills than a cut off of supply may be coming,” Price Futures Group senior market analyst Phil Flynn said Friday.
Products markets, meanwhile, have largely failed to keep pace with crude gains. The European gasoline market remains weak, according to market sources, with front-month crack swaps heard rangebound Monday morning at $11.40/barrel. Sources attributed the overall bearishness to weaker arbitrage opportunities into the US Atlantic Coast, the traditional outlet for Europe’s structurally long gasoline market.
“It is quite dead,” said a Northwest European refiner, with reference to the gasoline market. Eurobob, the European gasoline benchmark, was heard trading at a $2/mt premium to the front-month swap.
Meanwhile, in diesel, 10 ppm FOB Rotterdam barge premiums to front-month 0.1% ICE gasoil futures fell sharply at the end of last week on a marked increase in supply from arbitrage barrels arriving in the region, healthy exports from the Baltics, and local refineries returning from maintenance. This, combined with the rally on crude prices, drove ULSD barge cracks to a two-year low, marked at $13.06/b.
Some traders saw the market bottoming out around current levels. “The last two weeks, we saw volumes coming. But now the [US] arb is difficult. It is more or less closed...That said, [European] refinery margins have gone down, so maybe we are now at the floor” a trader said.
Crude exports from the Russian ports of Novorossiisk and Primorsk in the first four months of the year fell 19.3% year on year to 26.5 million mt, operator Novorossiisk Commercial Sea Port (NMTP) said Monday.
Oil product exports from the two ports in the period rose 10.8% to 9.8 million mt, NMTP said in a statement. Crude exports in the period were down 6.4 million mt, but in April throughput via Primorsk rose 10% compared with March.
Product exports were up, both on the year and on the month, with throughput via Primorsk reaching a record 1 million mt in April, a 14% increase from March. Overall, the ports handled 46.1 million mt of goods in the first four months of the year, down 6.9% year on year, said NMTP, also a stevedore company.
Grain exports led dry bulk exports, amounting to 2.1 million mt in January-April, up from 173,100 mt in the same period last year, when exports were hit by a bad harvest and high domestic prices. Summa Group, a private Russian holding company, and Russian oil pipeline operator Transneft together own 50.1% of NMTP.
US commercial crude stocks are expected to have declined a moderate 300,000 barrels last week as some shut-ins of units at US refiners was countered by high refinery run rates, a Platts poll of analysts showed Monday.
The American Petroleum Institute will release its weekly report at 4:30 pm EDT (2130 GMT) Tuesday, while the US Energy Information Administration is scheduled to release its weekly data at 10:30 am EDT (1530 GMT) Wednesday.
Phillips 66 shut its No. 40 fluid catalytic cracker at the joint venture Borger refinery for maintenance from May 16 until June 9, according to a filing last week.
The Borger refinery already shut its other No. 29 FCC May 14 for maintenance that is expected to end Wednesday.
Also last week, Tesoro shut an unspecified “major unit” at its 166,000 b/d Golden Eagle refinery near Oakland, California.
Still, analysts are expecting a 0.5 percentage point increase in US refinery utilization rates to 89.3% of capacity, based on EIA data.
Two weeks ago, Philadelphia Energy Solutions — the largest refinery on the East Coast — restarted a unifier and a reformer in the Point Breeze section of the 330,000 b/d plant in Philadelphia.
Carl Larry, president of Oil Outlooks, noted the difficulty in predicting moves in crude oil stocks, saying “everything that we could count on the past few years is out the window.” “What was once ‘seasonality’ is now as different as Daylight Savings Time.
Refineries are running higher despite an unseasonably long maintenance season. There’s also a major difference in imports as well as the high flow of crude coming in from Cushing,” he said. “Throw those last two factors in and that’s where we’re coming up with a draw. It’s about backing out imports this week and relying on the cheaper crude from Cushing.”
Cushing, Oklahoma, crude stocks, according to some analysts, could drop by as much as 1.5 million barrels. But some estimates called for a 500,000-barrel build.
Pemex has signed a six-month contract to supply Olmeca crude to a Cressier, Switzerland, refinery beginning in July, the Mexican state oil company said Monday.
“After the positive reception of the first cargo of Olmeca crude sent to Europe in February, Petroleos Mexicanos, through its affiliate PMI Comercio Internacional, has reached an agreement for the supply of this light sweet crude to the refinery in Cressier, Switzerland,” the company said in the statement.
Vitol operates the 68,000 b/d Cressier, Switzerland, refinery, which was previously owned by Petroplus. A source close to Vitol could not be reached for comment on the supply agreement.
The exports of Olmeca crude will begin in July and will remain in place for six months, said the release. Pemex, which typically exports Aframax-size cargoes to Europe and Suezmax-size cargoes to Asia, did not specify how much crude it would supply under the contract.
Olmeca has a gravity of 39.3 API and 0.8% sulfur crude and to Europe is priced with a formula that uses
Dated Brent and a K factor or constant that is set by Pemex each month. “The agreement is part of the diversification strategy of markets that Pemex has developed,” according to the statement.
Demand for light sweet crudes from the US has declined due to increased production from shale formations. Olmeca is the light, sweetest grade of crude that Mexico exports. Pemex exports Olmeca from the port of Dos Bocas and Pajaritos.
Taiwanese refiner Formosa Petrochemical Corp. has bought its first-ever Latin American crude, comprising a cargo of 750,000-1 million barrels of Ecuadorean Oriente grade, from Gunvor, a market source close to Gunvor said Monday.
The cargo, for delivery between July 20 and August 20 into Mailiao, was bought through a tender that sought either the Ecuadorean grade or Colombia’s Vasconia crude, at a minus $2.5/b to minus $2.6/b price differential to Platts front-month Dubai crude assessments.
Formosa’s purchase is the first import of Latin American crudes into Taiwan, which has traditionally relied on legacy Middle Eastern suppliers Saudi Arabia, Kuwait and Oman for the bulk of its needs. Imports of Iraqi crude have also ramped up in the last year.
The largest Asian consumers of Latin American crude to date are China and India. Chinese imports of Ecuadorean crude rose 5.1% year on year to 113,114 mt (9,200 b/d) in the first quarter of this year, while India last imported 1.09 million barrels (35,160 b/d) of Oriente in January, according to shipping data.
By Christine Buurma May 20, 2014 1:42 AM GMT+0700 3 Comments Email Print
Faster-than-expected gains in U.S. natural-gas inventories are easing concern that a shortage is looming next winter, spurring speculators to cut bullish bets.
Money managers’ net-long position fell 9.1 percent in the week ended May 13 to the lowest level since December, the U.S. Commodity Futures Trading Commission said. Bearish wagers are the highest in more than four months.
Gas futures fell 9.2 percent in the period as stockpile gains topped analysts’ forecasts for a third week. Production from shale deposits in the U.S. Northeast and Midwest climbed to a record 16.1 billion cubic feet a day in the week ended May 9, Credit Suisse Group AG said in a report May 15.
“We’re on the path to a more comfortable supply situation by the end of the summer,” Tom Saal, senior vice president of energy trading at FCStone Latin America LLC in Miami, said by phone on May 16. “That’s giving the bears a little bit of ammunition.”
Natural gas slid 44.1 cents to $4.358 per million British thermal units on the New York Mercantile Exchange in the week ended May 13. Prices fell to $4.289 on May 15, a six-week low, and rose 1.3 percent today to settle at $4.47 in New York.
The Energy Information Administration said inventories rose 74 billion cubic feet in the week ended May 2. Analysts predicted an increase of 70 billion. Supplies climbed by 105 billion the following week, narrowing the deficit to the five-year average to the least since Feb. 28.
Shale Formations
“We’ve had consecutive bearish surprises in the storage numbers,” Tim Evans, an energy analyst at Citi Futures in New York, said by phone on May 16. “There’s a risk that we’ll continue to probe the downside in the weeks ahead.”
Output from shale formations will lead to a record increase in stockpiles through the end of October, when heating demand kicks in, Goldman Sachs Group Inc. said.
“We still expect supply growth in 2014 and 2015 to continue to outpace demand,” Jeffrey Currie, the head of commodities research at Goldman in New York, said in a May 16 note to clients.
In other markets, hedge funds and other large speculators increased bullish crude oil wagers by 11,652 futures and options combined, or 3.9 percent, to 311,195.
WTI crude advanced 2.2 percent to $101.70 a barrel on the Nymex in the week covered by the report and ended at $102.61 today after settling at $102.02 on May 16. Oil climbed 1.3 percent on May 7 after crude supplies at Cushing, Oklahoma, the delivery point for U.S. futures, dropped to the lowest level in more than five years.
U.S. Pumps
Net-long positions in gasoline slid by 10,170 futures and options combined, or 14 percent, to 60,723, the CFTC report showed. Futures climbed 1.5 percent to settle at $2.9302 a gallon on the Nymex in the week covered by the report.
Gasoline at U.S. pumps, averaged nationwide, dropped 0.1 cent to $3.646 a gallon on May 17, according to data from Heathrow, Florida-based AAA, the nation’s largest motoring group. Prices were 0.6 cent higher than a year earlier.
Money managers’ bets on ultra low sulfur diesel advanced by 1,051, or 4.4 percent, to 24,974 futures and options combined, the CFTC report showed. Futures rose 1.9 percent to $2.944 a gallon in the week covered by the report and settled at $2.9536 a gallon on May 16.
The number of rigs drilling for natural gas in the U.S. climbed by three to 326 last week, according Baker Hughes Inc., a Houston-based field services company.
2014 Record
U.S. marketed gas output will increase 3 percent to average 72.26 billion cubic feet a day this year, an all-time high, EIA projections show.
Net-long positions on four U.S. natural gas contracts held by money managers dropped by 35,222 futures equivalents to 351,116 in the week ended May 13, falling for a third week, according to the CFTC. Long positions decreased by 5.1 percent, while bearish bets gained 3,955 to 230,883.
The measure includes an index of four contracts adjusted to futures equivalents: Nymex natural gas futures, Nymex Henry Hub Swap Futures, Nymex ClearPort Henry Hub Penultimate Swaps and the ICE Futures U.S. Henry Hub contract. Henry Hub, in Erath, Louisiana, is the delivery point for Nymex futures, a benchmark price for the fuel.
“Gas prices can fall below $4 this summer if we see enough inventory injections that are above the five-year average,” FCStone’s Saal said. “We’re going to get some more triple-digit storage increases over the next few weeks.”
To contact the reporter on this story: Christine Buurma in New York at cbuurma1@bloomberg.net
To contact the editors responsible for this story: Dan Stets at dstets@bloomberg.net Charlotte Porter
By Dana El Baltaji and Ayman Kekly May 19, 2014 2:40 PM GMT+0700 4 Comments Email Print
A Libyan military police chief said he disbanded parliament after a militia group he backs stormed it yesterday, spreading violence in the energy-rich nation to its capital and sending world oil prices higher.
In a televised speech late yesterday preceded by clashes, Mukhtar Fernana said parliament will be replaced by a 60-member group. Nuri Abu Sahmain, the head of the General National Congress, denied that it had been suspended and said yesterday he was running it from a “safe place,” the state-run Libyan News Agency reported.
Fernana said he won’t allow Libya to become a safe-haven for extremists or a “home for terrorists.” The assault, he said, was not a coup and reflects the “freedom that Libyans wanted and fought for.”
Brent for July settlement increased as much as 49 cents to $110.24 a barrel on the London-based ICE Europe Futures exchange and was at $110.14 at 3:55 p.m. Seoul time. The volume of all futures traded was about 15 percent above the 100-day average. Prices advanced 1.7 percent last week, snapping a two-week losing streak.
The troops who attacked the legislature are loyal to General Khalifa Haftar, who the government accused of attempting a coup last week in the restive eastern city of Benghazi, the country’s second largest. Two people were killed and 66 wounded in Tripoli in yesterday’s clashes, according to Al Jazeera.
Fight for Power
“Tripoli is unable to solidify its control, not only in the east, but also within Tripoli itself, as opposing forces on multiple levels scramble for power and prestige,” Theodore Karasik, director of research at the Institute for Near East and Gulf Military Analysis in Dubai, said by telephone. “This is Iraq in the making.”
The violence spotlighted the chaos that has become Libya, a nation whose central government has been unable to bring under control the various militias who played a key role in Muammar Qadhafi’s ouster and death three years ago. The government relies on some of the groups to stabilize the country, with many of the forces operating in tandem with the police and military.
At the same time, the government is grappling with conflicting demands by the militias, some of which are jostling for greater control of the country’s oil wealth in a fight that has hit the production and export of crude oil. Crude production in the country, the holder of Africa’s largest oil reserves, declined to 215,000 barrels a day last month, or 13 percent of installed capacity, data compiled by Bloomberg show.
Benghazi Violence
Libya’s government is already struggling to contain violence in Benghazi. At least 70 people have been killed and 141 injured since fighting there broke out on May 16, according to the Health Ministry. Officials say Haftar, a retired army general whose militia troops are battling Islamic militants, planned a coup. The government has threatened to punish any units that join him.
Libya’s government doesn’t see links between the violence in Tripoli yesterday and the fighting in Benghazi, it said in a statement on its website.
Haftar defected from Qaddafi’s army in the 1980s, finding refuge in the U.S. He was one of the commanders of the rebellion that broke out in February 2011 in Benghazi and ended Qaddafi’s 42-year rule. He declared his intention to “rescue” the country in February. The government dismissed his claim at the time, saying Haftar had no authority.
Fernana, in a statement he said was read on behalf of the leadership of the Libyan National Army, the same group which Haftar heads, said the new body would work until new elections are held. He described the interim government as working in an emergency capacity and prepared to act with the national army, police and security forces in a fight against “terrorism.”
The tensions come just weeks after a new interim prime minister supported by Islamists was chosen by parliament in a vote that some lawmakers derided as illegitimate.
To contact the reporter on this story: Dana El Baltaji in Dubai at delbaltaji@bloomberg.net
To contact the editors responsible for this story: Andrew J. Barden at barden@bloomberg.net
By Scott Rose, Daryna Krasnolutska and Volodymyr Verbyany May 20, 2014 4:07 AM GMT+0700 96 Comments Email Print
President Vladimir Putin ordered Russian troops near the Ukrainian border back to base, according to the Kremlin, signaling a possible easing of tensions days before Ukraine’s presidential election.
Putin told forces in the Rostov, Belgorod and Bryansk regions to return to their bases after completing exercises, according to the presidential press service. U.S. and NATO officials said they saw no immediate evidence of a withdrawal, echoing previous cases where Russia has promised to pull back troops from the border, most recently two weeks ago.
After annexing Crimea in March, Russia has been accused by the government in Kiev and its U.S. and European Union allies of fomenting unrest in the mostly Russian-speaking east of Ukraine. Putin has softened his rhetoric in recent days, welcoming contacts last week between the Kiev authorities and supporters of a decentralization of powers to the regions.
“There does appear to have been a moderation in tensions,” Tim Ash, head of emerging-markets research at Standard Bank Plc in London, said in an e-mail. “Both sides now are probably waiting to see the outcome of the presidential election next weekend and how this leaves the lay of the land.”
Russian markets extended gains on signs of a softening in the tensions over Ukraine, which have led the U.S. and EU to impose sanctions on Russia’s economy and threaten tougher ones.
‘Watching Closely’
The benchmark Micex Index of stocks rose 1.6 percent yesterday to the highest level since February. The ruble rose 0.5 percent against the central bank’s target dollar-euro basket.
Ukraine’s allies, who say that Russia has about 40,000 troops on the border, voiced skepticism about Putin’s pledge.
There’s no sign of Russian troop movements, Colonel Steve Warren, a Pentagon spokesman, told reporters yesterday. “We do realize that it would take up to 24 hours for movement to begin,” he said. “So we are watching closely.”
A spokesman for Ukraine’s Border Service said it had seen a reduction in Russian activity on the frontier in the past week.
Ukrainian forces continued to clash with pro-Russian insurgents in the eastern Donetsk and Luhansk regions, where pro-Russian groups held referendums on secession this month and set up self-proclaimed administrations.
A Snapshot of Ukraine's Past and Future
The Defense Ministry said yesterday that one separatist was killed when a group of about 50 attacked soldiers near a border checkpoint. Interior Ministry officials said there are about 900 rebel fighters in the east, and 50 have been detained.
‘Punitive Operation’
Putin called on Ukraine’s government to “immediately halt” its “punitive operation” against pro-Russian rebels.
Ukrainian Prime Minister Arseniy Yatsenyuk said the government will try to ensure the May 25 presidential election goes ahead throughout the country. “We realize that in certain places it will be difficult to conduct voting,” he said. “But there are very few such places, and this will not affect the election results.”
In Donetsk and Luhansk, most polling stations haven’t received official voter lists, Andriy Mahera, the deputy head of the Electoral Commission, said in an interview. Threats against members of election commissions have increased in both regions, said the Washington-based National Democratic Institute, which is sending election observers.
Chocolate billionaire Petro Poroshenko is set to win the vote, according to opinion polls.
To contact the reporters on this story: Scott Rose in Moscow at rrose10@bloomberg.net; Daryna Krasnolutska in Kiev at dkrasnolutsk@bloomberg.net; Volodymyr Verbyany in Kiev at vverbyany1@bloomberg.net
To contact the editors responsible for this story: Balazs Penz at bpenz@bloomberg.net; James M. Gomez at jagomez@bloomberg.net Eddie Buckle, Paul Abelsky
By Jim Efstathiou Jr. May 20, 2014 1:23 AM GMT+0700 2 Comments Email Print
The Obama administration is investigating the health risks of hydraulic fracturing after at least four deaths among oilfield workers since 2010 in North Dakota and Montana.
The National Institute for Occupational Safety and Health said the workers were exposed to high levels of volatile hydrocarbons during the drilling process known as fracking.
“NIOSH is actively conducting research on exposures for workers,” Christina Spring, a spokeswoman with NIOSH’s parent agency, the Centers For Disease Control and Prevention, said today in an e-mail.
Fracking that has helped push U.S. oil and gas production to record levels also has spurred worries about tainted water as well as earthquakes triggered by pumping the wasterwater underground.
In fracking, chemically treated water and sand are injected into shale rock to free trapped oil and gas. When the fluid returns to the surface as wastewater, it contains volatile hydrocarbons from the rock formation, according to the NIOSH. The fluid is temporarily stored in tanks or pits on the surface.
Hydrocarbons can affect the eyes, lungs and nervous system and at high levels also may lead to an abnormal heartbeat, NIOSH said today in a blog post. Workers can be at risk when they measure the fluid in the tanks with hand-held gauges using access hatches.
Williston Basin
The deaths occurred at wells in the Williston Basin (ICPAX) in North Dakota and Montana, the institute said, citing media reports and government agencies. Some of the deaths remain under investigation.
“Often these fatalities occurred when the workers were performing their duties alone,” according to the blog post.
The institute is asking oil and gas drillers to help assess the risks of exposure to chemicals in used fracking fluids. It is recommending that companies develop different ways to measure the fluid stored in tanks and to provide hazard awareness training.
“We are also looking to convene a meeting in the near future with our partners to look at the data that we currently have and discuss a path forward in collecting additional data, potentially through environmental sampling or other avenues,” NIOSH’s Spring said.
A spokesman for the American Petroleum Institute, the largest trade group for the oil and gas industry, had no immediate comment on the agency’s posting.
To contact the reporter on this story: Jim Efstathiou Jr. in New York at jefstathiou@bloomberg.net
To contact the editors responsible for this story: Jon Morgan at jmorgan97@bloomberg.net Steve Geimann
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MOSCOW, May 19 (RIA Novosti) – The final price for Russian gas under a potential new deal with China will be set at $350-380 per thousand cubic meters, Russia's Izvestia newspaper reported Monday citing a source in energy giant Gazprom.
“Despite the predictions that China will receive considerable discounts, the final price for gas will be ‘around average European,’ which means approximately $350-380 per thousand cubic meters,” the source told Izvestia.
According to the newspaper, Gazprom Head Alexei Miller must “negotiate only one figue,” which is expected to be settled on Monday during talks between Miller and his counterpart in Chinese energy giant China National Petroleum Corporation.
The source also revealed that Rosneft Head Igor Sechin will join the Russian delegation in China, while his company prepares a number of contracts for Russian President Vladimir Putin’s visit to Shanghai Tuesday.
“The Rosneft leadership is going there to discuss the possibility of participation of Chinese companies [CNPC, Sinopec] in exploitation of continental and shelf deposits of Rosneft as well as projects on oil refining,” the source was quoted as saying.
Putin will visit China on Tuesday to cement economic ties between the two countries, including on energy. During the visit, Gazprom and CNPC could agree on long-term gas supplies and increasing oil supplies.
In the context of the current political standoff between Moscow and Brussels over the Ukrainian crisis and EU plans to decrease its dependence on Russian gas supplies, experts earlier predicted Gazprom could offer China a significant discount to sign a long-awaited deal.
In March 2013, Gazprom and CNPC signed a memorandum of understanding on Russian gas supplies to China along the so-called eastern route via the Power of Siberia pipeline. Gazprom CEO Alexei Miller said the company could receive advance payment from China for the gas, which could start flowing as early as 2018. The project has been estimated to pump up to 38 billion cubic meters annually, which could later increase to 60 billion cubic meters.
By Daniel J. Graeber | Sun, 18 May 2014 00:00 | 0
Iran's oil output is moving away from a 20-month high reached earlier this year. Nevertheless, with OPEC expecting growing demand for its crude, Iran says it's ready to make its presence known on the international oil stage.
Iran is serious about achieving a position on the international stage that's reflective of its reserve potential, the country’s oil minister, Bijan Zanganeh, told an international energy summit in Moscow.
Zanganeh, a career official in the Iranian energy sector, said challenges of long-term energy security have come into question, though with what he says is 157 billion barrels of crude oil in place, the Islamic republic is up to the task.
Iran has touted its oil potential since agreeing last November to curb some of its nuclear activity in exchange for modest relief from Western sanctions. In January, a senior U.S. official said during a background briefing that doesn't mean Iran is open for business.
"Quite to the contrary," the official said. "The overwhelming majority of our sanctions and the basic structure of oil and banking and financial sanctions remain in place, and the administration is committed to aggressively enforcing those sanctions."
Iran, however, has exported more oil than it said it would in November, when it agreed to keep things at the 1 million barrel per day (bpd) mark. The International Energy Agency (IEA) said Iran exported about 1.65 million bpd in February, its highest level in more than two years. Exports from Iran, the Paris-based energy agency said, were "well above" last year's totals.
Abdalla el-Badri, secretary-general of the Organization of Petroleum Exporting Countries (OPEC), said at the Moscow energy summit that global demand for oil should increase by around 20 million bpd by 2035 and as much of 90 percent of that should come from developing Asian economies.
IEA said much of the increase in demand for Iranian crude oil came from China, India and South Korea. Japan, however, was taking on less Iranian oil.
In early May, Zanganeh said it was nobody’s business but Iran's how much oil it exported. Sounding defiant, last week he said the international energy market shouldn't be constricted by "politics and sanctions.”
In its latest report, IEA said Iranian oil export levels were closer to the November limit. OPEC, meanwhile, will need to step up its game to meeting growing demand for oil as stockpiles continue to slide, the Paris-based agency said.
For Iran, that means the door is now open. Zanganeh said Iran aims to expand its oil potential as much as possible and OPEC will have to make room, sanctions be damned.
"I am sure they will do it," he said. "They have told me directly face-to-face that they will go along with us and make room for Iranians."
By Daniel J. Graeber of Oilprice.com
BAKU Mon May 19, 2014 11:27am BST
May 19 (Reuters) - Azerbaijan's oil exports dropped by 0.9 percent year-on-year in the first four months of 2014 due to a decline in oil production at its main fields, where BP has a major interest, a source at the State Customs Committee said.
The source said Azerbaijan exported 11.281 million tonnes of oil, down from 11.351 million in the same four months last year.
Exports of oil via Russia through the Baku-Novorossiisk pipeline were 339,203 tonnes, down from 569,112 tonnes.
Exports of oil through the Baku-Supsa pipeline via Georgia were 1.438 million tonnes, down from 1.448 million tonnes, while exports through Baku-Tbilisi-Ceyhan via Georgia and Turkey were 9.199 million tonnes, up from 9.029 million.
Oil exports shipped by a rail via Georgia declined to 304,626 tonnes from 305,212 tonnes.
Azerbaijan's oil and condensate output fell by 1.4 percent year-on-year in January-April, to 14.1 million tonnes, the State Statistics Committee said last week.
The decline in oil output in January-April was linked to lower output at main oilfields Azeri, Chirag and Guneshli (ACG), where output fell by 1.99 percent in the first quarter to 7.9 million tonnes, from 8.06 million tonnes in January-March 2013.
Falling output at ACG oilfields - the biggest oil production project in Azerbaijan and one of the largest globally for oil major BP - have raised concerns in Baku.
BP and its partner, Azeri state energy firm SOCAR, have tried to calm those fears by saying last year that production had stabilised. Total oil output grew last year for the first time since 2011.
BP said earlier this year that oil production at ACG in 2014 might be slightly lower than in 2013 as the company planned maintenance work at the Central Azeri and West Azeri platforms, halting operations for a couple of weeks.
The company did not say when the work would start. (Reporting by Nailia Bagirova; Writing by Margarita Antidze; Editing by Pravin Char)
By Daniel J. Graeber
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TEHRAN, May 19 (UPI) --Three more sections of the South Pars natural gas field in the Persian Gulf are expected online this year, Iranian Oil Minister Bijan Zangenah said.
The Iranian government expects Phase 12 of a gas field it shares with Qatar will boost South Pars production by more than 875 million cubic feet per day once it's online in late May or early June.
Zanganeh said during a Sunday tour of the infrastructure associated with the field's development that Phase 12 is one of three new segments of the field expected online during the Iranian calendar year, which began March 21.
"Phase 12 is one of the important and big phases of the South Pars and its completion is important," he told1 the semi-official Fars News Agency.
South Pars accounts for about 35 percent of the total volume of gas produced from Iran2. In the past, the government has held out the field's output as an option for Europe.
Zanganeh said in May his government was " always willing3" to play a role in the European energy market, though European governments in the past have shied away from Iran because of lingering economic sanctions.
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Saudi Aramco President and CEO Khalid Al-Falih outlined the historic opportunities available for refining and chemicals in the Gulf in a speech delivered at the Middle East PetroTech conference in Bahrain.
“These are exciting days for petroleum here in the Gulf,” he remarked.
He said: “The thought of a thriving refining and petrochemical industry in the Gulf once seemed an elusive dream, given the dominance of the big American and European manufacturing hubs. Today, though, SABIC is one of the top five petrochemical companies, and Saudi Aramco and the Kuwait National Petroleum Corporation are two of the world’s top-tier refiners — ensuring that the Gulf is known for more than just oil wells, tank farms and loading terminals.”
The CEO said: “However, while we can celebrate the achievements our region has made to date in the downstream sector, we also need to recognize the huge yet-to-be-realized potential and focus on creating and extracting the maximum value from the business.”
He said: “Over the last three decades our region has continued to import technologies and primarily export lower value petrochemical bulk commodities, rather than adding greater value to our hydrocarbons through more product diversification and specialization, which in turn enables the creation of secondary and tertiary industries to produce semi-finished and finished goods for export.”
Al-Falih said: “That’s changing in front of our eyes, and today the Gulf’s downstream sector is poised to enter a new chapter: one that will be richer and more rewarding, yet also be more complex and more demanding, and which will require more significant sustained investments in talent and technology.”
In his speech, a copy of which was posted on the company website, the CEO outlined what he termed as the formula for the enormous downstream investments of Saudi Aramco.
“Globally, these investments will exceed $100 billion during this decade alone, premised on our belief in the long-term sustainability of oil demand,” he said.
The CEO said: “As a result of both global demographic growth and rising standards of living in the developing world, we see global demand for oil growing by a quarter over the next 25 years. And since raw hydrocarbons must be converted into useful products before they are consumed, we are confident that the prospects for the downstream industry are similarly bright.”
He said: “In the years to come, Saudi Aramco will have 8-10 million barrels per day of participated refining capacity, primarily in the high demand-growth markets of the Far East and Middle East.”
He added: “That will make us one of the largest downstream players on the planet by volume, but for us that’s definitely not enough.”
Al-Falih said: “As I noted earlier, our refining capacity will also be linked to robust marketing networks with strong brands, and to world-scale petrochemical plants — in fact, a growing proportion of the hydrocarbon molecules we produce will go to chemicals, given that this sector is set to grow at multiples of global GDP.”
The CEO said: “We will therefore also be developing into a top tier chemicals firm with top line profitability — and will be doubling or even tripling the range of materials we produce to drive economic growth and diversification, besides greater differentiation and delivery of performance products that add substantially more value.”
Saudi Aramco’s downstream strategy is already becoming a reality, he said.
“In addition to our existing refining and chemicals capacity, we are in the midst of building not one, not two, but three 400,000 barrel-per-day, high conversion refineries: a wholly owned refinery and terminal in Jazan and our SATORP and YASREF joint venture facilities with Total and Sinopec, respectively,” said Al-Falih.
He said: “We are also building or expanding two world-scale, world-class integrated chemicals complexes, Sadara with Dow Chemical and PetroRabigh with Sumitomo Chemical, that will take our total chemicals participated production capacity to more than 15 million tons per day. Consistent with Saudi Aramco’s industrial cluster objectives, together with our partners we are developing two value parks, one in Rabigh and the other in Jubail, which have already attracted dozens of high value-added investors.”
He said: “We are also a founding shareholder in the new Saudi Arabian Company for Industrial Investment, which has capital of SR2 billion and focuses on manufacturing and conversion industries that rely on petrochemicals, plastics, fertilizers, steel and aluminum.”
The CEO said: “Overseas, we have also upgraded the chemicals production capacity at our Korean and Chinese joint ventures and expanded our JV refinery in Port Arthur, Texas, to be the largest refinery in the US — with the promise of more international portfolio developments still to come.”
He said Saudi Aramco’s downstream portfolio would undergo exciting changes as it continued its overall strategic transformation.
“We are also positioning Saudi Aramco to be a global leader in technology development all along the value chain, and have partnered with national and international research partners to create two major research clusters: one at the King Abdullah University of Science and Technology and the other at KFUPM’s Dhahran Techno Valley,” said the CEO.
He said: “And critically, we are bringing into our work force thousands of talented young men and women and investing in their education and development, to help deliver the bright future to which we aspire. Which is why, while I am very proud of our company’s downstream progress to date, I am even more energized by the achievements and developments that are still to come.”
The CEO said: “Saudi Aramco is part of a much larger regional industry and economic ecosystem, and I am similarly upbeat and optimistic about the Gulf as a whole. The opportunities are compelling, and go well beyond just the petroleum industry.”
He said: “In fact, the region’s downstream success will be magnified as the local business community invests in these new conversion parks and secondary and tertiary industries, petrochemical companies expand their offerings of specialty products to drive those industries, and the region’s academic institutions emphasize the science and engineering disciplines which will underpin the Gulf’s sustained leadership position.
He said: “That is why in the future, I believe this region will not be just an important hub for downstream activities; rather, the Arabian Peninsula will be the hub of the global downstream industry. “
The CEO: “This region is where the global downstream race will be won — and no success factors will be more important than human expertise and ingenuity, and the creation and application of innovative technologies. I am glad to see that our region’s downstream professionals are staying the course and winning the race.”
Top global oil exporter Saudi Arabia will step in to cover any potential shortage arising from the Ukraine crisis, its oil minister has said.
SEOUL:
Issue Date: May 19 - 25, 2014
Saudi Arabia, the only oil producer which can significantly alter output in response to changing demand, has in the past two years played the leading role in cushioning against supply disruptions from Libya, Nigeria, Iraq and South Sudan.
Russia, whose output has almost doubled over the past 15 years to more than Saudi Arabia’s, has always pumped at full stretch. It has irked Riyadh several times by first agreeing to cooperate in output policy, but then doing very little to reduce production.
Riyadh feels the need to trumpet its unique supply role at a time of soaring US output due to the shale boom, which has prompted politicians there to call for an end to the era of dependence on Middle East oil and the naval protection of sea routes in the region.
“We are willing to supply any shortage which may arise,” said Saudi Oil Minister Ali Al Naimi. He said the kingdom’s current output is around 9.6 million barrels per day (mbpd), while it has a capacity of 12.5 mbpd.
Russia’s annexation of Ukraine’s Crimean peninsula and violence in eastern Ukraine have rattled oil markets, keeping benchmark Brent futures near $108 a barrel after hitting $112.39 on March 3, the highest this year. Naimi said that both Saudi Arabia and the Organization of the Petroleum Exporting Countries would meet any additional demand for oil.
“Wherever demand is needed, we and other Opec members will supply,” he said.
Speaking on the sidelines of a conference in Seoul, Naimi also said $100 a barrel was a fair price for oil.
“One-hundred dollars is a fair price for everybody – consumers, producers, oil companies,” he said. “It’s a fair price. It’s a good price.”
Naimi said Opec should maintain its current output cap of 30 mbpd when it comes up for review at the group’s meeting on June 11 in Vienna.
“Supply is highly sufficient, demand is great and the market is fairly stable,” Naimi said.
“There is no reason for a change. Absolutely no reason.”
Opec faces the problem of accommodating rapidly rising oil output from Iran and Iraq, both aiming to restore full output after sanctions and civil strife.
(ANSA) - Rome, May 19 - Eni is monitoring the situation in Libya after an armed attack on Tripoli's parliament, and is working "with continuous attention to personnel safety," the Italian oil giant said Monday. On Sunday renegade anti-Islamist troops stormed the building and suspended the Islamist-dominated House, accusing it of empowering extremists.
On Monday an Eni spokesman told ANSA that "for the moment, Eni has not taken steps to evacuate employees (from the area), production activities are continuing in line with the first-quarter trend".
ALL RIGHTS RESERVED © Copyright ANSA
Mon May 19, 2014 7:30pm BST
May 19 (Reuters) - Norwegian energy firm Statoil shut oil production at its Snorre B platform in the North Sea and evacuated a quarter of the personnel there after detecting a soil shift under a drilling template and then oil leak, the company said on Monday.
The Snorre field in the northern part of the North Sea is Norway's fourth-biggest oil producer with output averaging 88,000 barrels of oil per day in 2013, data from Norwegian Petroleum Directorate (NPD) showed.
The field has two production platforms but Statoil declined to provide a breakdown between Snorre B and Snorre A, which is operating normally.
Production at Snorre B was first shut on Saturday after a subsea robot detected a pit under the drilling template, which helps to connect the underwater site to the semi-submersible platform at the water's surface.
"Production was shut again on Monday after detecting an oil leak, and as a precautionary measure the platform's manager has ordered to evacuate some of the people from the platform," a spokeswoman for the company told Reuters.
She said 33 out of 136 people had been evacuated from Snorre B to a nearby floating accommodation facility.
Statoil has 33.3 percent stake in the production license.
Its partners include state-owned Petoro with 30 percent, ExxonMobil with 17.4 percent, Idemitsu Petroleum with 9.6 percent, RWE with 8.6 percent and Core Energy with 1.1 percent. (Reporting by Nerijus Adomaitis, editing by David Evans)
05/19/2014
By Katya Golubkova and Denis Pinchuk
MOSCOW, May 16 (Reuters) - U.S. energy company ExxonMobil has no plans to pull out of an oil project off Russia's Pacific Sakhalin island, it said on Friday, denying a media report that it could do so due to tensions between Moscow and the West over the crisis in Ukraine.
The United States and the EU have imposed sanctions on Moscow and put some Russian officials and businessmen on sanction lists following Russia's annexation of Ukraine's Crimea peninsula in March.
Those included Igor Sechin, a close ally of President Vladimir Putin and the head of Russian state oil major Rosneft , which co-owns the Sakhalin-1 project with Exxon.
The fate of the partnership is being closely watched after Putin said last month Russia could reconsider the participation of Western companies in its economy, including energy projects.
Russian state news agency ITAR TASS quoted a Sakhalin region source as saying Exxon may leave the project and local authorities would buy its stake.
"These rumours are groundless. This situation (sanctions) has neither an effect on our activity in Russia, nor on our investment plans in Sakhalin-1. We have no other plans than to go ahead with the project," an Exxon official said.
Regional authorities declined to comment on Friday.
Asked about the TASS report Russian Energy Minister Alexander Novak said on Friday that he had not received "official information" that Exxon may leave the project.
"This needs to be rechecked," he said.
Rosneft said it was interested in developing "partnerships" with all global players but declined further comment.
ExxonMobil holds a 30 percent stake in Sakhalin 1, Japan's Sodeco has 30 percent, India's ONGC holds 20 percent and the rest is controlled by Rosneft.
Last year, the project produced 7 million tonnes of oil - 140,000 barrels per day.
Exxon and Rosneft are also partners in a yet-to-be-built liquefied natural gas plant in Russia's Far East and plan to jointly develop Russian Arctic fields and explore for unconventional oil in Siberia.
Russia, the world's largest energy producer, is hoping to repeat the success of the United States in shale oil as output is set to decline from conventional mature fields in West Siberia.
"ExxonMobil possibly exiting the project would be a significant negative scenario for Rosneft," Alfa Bank said in a note on Friday.
"That could seriously jeopardize Rosneft's partnerships with ExxonMobil in terms of Arctic shelf exploration and tight oil reserves...where Rosneft lacks the experience and technology, and relies heavily on international majors."
SANCTIONS
The United States has so far imposed tougher sanctions on Moscow than the European Union, which gets a third of its gas and oil from Russia.
Many global CEOs are cancelling their trips to Russia's main economic conference in St Petersburg next week - Russia's answer to the Davos World Economic Forum - after the White House said it would be inappropriate for heads of big U.S. firms to attend this year.
Exxon's boss Rex Tillerson has attended several forums in the past but is not featuring on the programme this year.
Royal Dutch Shell, which sold part of its stake in Sakhalin-2 project to Gazprom in 2006 after months of pressure, said in April it was unlikely to jump into new investments in Russia in the short term.
Energy Minister Novak said on Friday that foreign companies are still interested in working in Russia. "I know that many companies are contacting their governments to stop these talks about sanctions," he said. (Additional reporting by Olesya Astakhova in Moscow and Nidhi Verma in New Delhi; editing by Dmitri Zhdannikov and Susan Thomas)
Thu May 15, 2014 12:02pm BST
By Olesya Astakhova
May 15 (Reuters) - The consortium developing the giant Kashagan oilfield will have to replace the entire pipeline system at the deposit, Kazakhstan's oil minister said on Thursday, confirming that output there would not resume this year.
Asked by Reuters if the consortium developing the Caspian Sea oilfield was planning to replace all its pipelines, Oil & Gas Minister Uzakbai Karabalin replied: "Yes, we do plan to do so."
Referring to delayed output at Kashagan, he said Kazakhstan had been forced to lower its 2014 oil output forecast to 81.7 million tonnes from 83 million.
Production at Kashagan, the world's biggest oil find in 35 years, started last September but was halted in early October after the discovery of gas leaks in the $50 billion project's pipeline network.
The North Caspian Operating Company (NCOC) developing Kashagan said last month that it did not expect to produce oil this year due to the leaks.
NCOC includes Eni, Exxon Mobil, Royal Dutch Shell, Total, China's CNPC, Japan's Inpex and Kazakh state-run company KazMunaiGas .
Citing the results of an investigation, NCOC also did not rule out that oil and gas pipelines might have to fully replaced, a possibility raised by Reuters in April.
Kazakhstan is the second-largest post-Soviet oil producer after Russia. The government had originally hoped that Kashagan would produce 8 million tonnes of crude in 2014.
The field's oil is 4,200 metres (4,590 yards) below the seabed at very high pressure, and associated gas reaching the surface is mixed with some of the highest concentrations of toxic, metal-eating hydrogen sulphide (H2S) ever encountered.
NCOC has identified stress cracking due to sulphur-laden gases as "the root cause of the pipeline issues" at Kashagan.
Much of Kashagan is built on artificial islands to avoid damage from pack ice in the Caspian, which freezes for five months a year in temperatures that drop below minus 30 Celsius (-22F). (Reporting by Olesya Astakhova; Writing by Dmitry Solovyov; editing by Jason Neely)
