European diesel premiums at four-month low amid heavy imports, poor margins
By Grant Smith and Nayla Razzouk May 28, 2014 6:00 AM GMT+0700 0 Comments Email Print
Production forecasts for 2014 are getting less optimistic. The Oil Ministry’s official target is 4 million barrels a day by the end of the year. More likely it will be 3.75 million, Thamir Ghadhban, an adviser to the prime minister, said in an interview May 14. Or perhaps 3.4 million, about the same as last month, according to the average of six analyst estimates compiled by Bloomberg News.
Violence and conflict are pinching growth for OPEC’s second-biggest member. While Iraq added about 2 million barrels to daily production since 2003, the year of Saddam Hussein’s ouster, attacks on pipelines and an oil-revenue dispute with the semi-autonomous Kurdish region are diminishing the country’s dependability as a supplier. They’re also contributing to making oil more expensive, VTB Capital said.
“Iraq always seems to be the producer of the future,” Mike Wittner, head of oil market research at Societe Generale SA in New York, said by phone May 13. “The entire world has been upbeat on Iraq’s prospects for the last couple of years. But it’s not steady growth. They have to get the security situation sorted out, or that’s going to continue to hamper them.”
Iraq’s exports to Europe have been curbed since early March because of sabotage on its northern pipeline to Turkey. New supplies from the Kurdish region are mostly halted because of the dispute with the central government. Prime Minister Nouri al-Maliki may need to form a broad coalition to remain in power after last month’s parliamentary elections, potentially slowing oil-policy decisions.
Global Benchmark
Brent crude, a global benchmark, is trading above $100 a barrel for a 23rd consecutive month, the longest stretch in data starting in 1988. Prices will average more than $100 this year and in each of the next three years, according to analyst estimates compiled by Bloomberg.
Iraq’s production contracted 7 percent since reaching a 35-year peak of 3.6 million barrels a day in February, according to the International Energy Agency. Growth in shipments from the south, the only region exporting regularly, will probably stall after reaching a record 2.5 million barrels a day in April, unless work on storage tanks, pumping stations and other infrastructure is completed, the Paris-based IEA said in a report May 15.
“There are still lots of uncertainties regarding deliveries,” B.K. Namdeo, refineries director at Hindustan Petroleum Corp., said in Mumbai on May 13. “If the situation continues or worsens, we may have to cut Iraqi oil imports next year and switch to countries like Iran.”
Overtaking Iran
Iraq overtook Iran in 2012 to become the second-largest producer in the Organization of Petroleum Exporting Countries. It would need to produce about another 6 million barrels a day to top Saudi Arabia.
Iraq is seeking to overcome the constraints on exports, Ghadhban, the prime minister’s adviser, said in an interview in Dubai. That includes adding a third mooring point at the southern Basra oil terminal by July, which will increase capacity by 900,000 barrels daily, he said. Companies have been shortlisted to build a pipeline to Jordan’s Aqaba port, the government said in April. Another link crossing Iraq from north to south is under construction, providing an alternative route for crude from northern fields.
Iraqi crude is still sought after because the country is offering 60-day credit terms, compared with the 30 days typically available from Middle Eastern suppliers, according to Namdeo of Hindustan Petroleum. (HPCL) The refiner is increasing purchases by 8 percent this year to 3.25 million metric tons.
Huge Potential
More than 1 million barrels from Iraq’s Kurdish region were shipped from Turkey to Europe last week, according to Turkish Energy Minister Taner Yildiz and Kurdish authorities. Iraq’s government, which says the Kurds have no right to sell oil independently, tried to stop the shipment and asked the International Chamber of Commerce to intervene.
“Iraq has a huge amount of potential, and yes, there will be delays, but they will deliver,” Amrita Sen, chief oil market strategist at Energy Aspects Ltd. in London, said by e-mail on May 6. The consultant forecasts production of 3.3 million barrels a day this year, rising to 3.65 million in 2015.
Oil Exports
Even with the extra loading facilities at Basra, a lack of pumping capacity and onshore storage tanks will keep production growth in check, Miswin Mahesh, an analyst at Barclays Plc in London, wrote in a report April 30. Iraq can boost exports from West Qurna-2 or another of the fields being developed only by scaling back flows elsewhere, he wrote.
Some Asian refiners have complained about the presence of too much water in some cargoes from Iraq, the result of inadequate oil-treatment facilities, according to Mahesh. High sulfur content in the main Basrah Light grade has also been an issue, R.K. Mehra, head of international trade at Bharat Petroleum Corp., an Indian refiner, said in Abu Dhabi on May 7.
“We don’t see significantly more export capacity” this year, Alexander Poegl, an analyst at JBC Energy GmbH in Vienna, said by phone on May 13. “The volumes we’ve seen earlier in the year are kind of the maximum we would expect to happen. It’s a healthy development in Iraq, but we don’t see the big numbers others might sometimes suggest.”
To contact the reporters on this story: Grant Smith in London at gsmith52@bloomberg.net; Nayla Razzouk in Dubai at nrazzouk2@bloomberg.net
To contact the editors responsible for this story: Alaric Nightingale at anightingal1@bloomberg.net Bruce Stanley
By Daryna Krasnolutska, Daria Marchak and Jake Rudnitsky May 28, 2014 4:01 AM GMT+0700 333 Comments Email Print
Ukraine’s government said it will press on with military operations against pro-Russian rebel fighters after its forces retook Donetsk airport and inflicted “significant” losses on the separatists.
Troops killed “dozens” of rebels in Donetsk without suffering any losses, Interior Minister Arsen Avakov said yesterday, while the mayor’s office in the eastern city said 40 people died and 31 were wounded.
President-elect Petro Poroshenko has vowed to wipe out the rebels and re-establish order across Ukraine after winning office May 25. He must stabilize a shrinking economy and confront separatists who’ve captured swaths of the Donetsk and Luhansk regions. They’ve declared themselves independent and are fighting to join Russia, which annexed Ukraine’s Crimea peninsula in March.
“The elections showed that the voters are tired of ongoing violence, giving the new president a mandate to act in a forceful way to put an end to this,” Arkady Moshes, head of the European Union’s Eastern Neighborhood and Russia research program at the Finnish Institute of International Affairs, said by phone from Helsinki. Ukraine has the “resources to deal with a local insurgency, and its security services are getting better organized.”
The government’s “anti-terrorist operation is in an active phase,” First Deputy Prime Minister Vitaliy Yarema told reporters in Kiev. “We’ll continue this operation until there are no terrorists on Ukraine’s territory.”
Micex Drops
The violence weighed on Russia’s Micex stock index, which lost 2.2 percent in Moscow, the steepest decline since April 24. The ruble slid 0.5 percent against the central bank’s target basket of dollars and euros, and the yield on 10-year government ruble bonds jumped 18 basis points to 8.80 percent.
Ukrainian Eurobonds, though, are set for the best monthly rally in four years. The yield on debt due April 2023 fell 23 basis points to 8.79 percent.
President Barack Obama called Poroshenko yesterday to congratulate him and offer “the full support of the United States as he seeks to unify and move his country forward,” the White House said in an e-mailed statement. They agreed to continue talking when Obama visits Europe next week, it said.
An EU summit in Brussels last night was set to focus on aiding Ukraine’s economy and helping Poroshenko to stabilize the country rather than expanding sanctions against Russia.
Europe ‘Ready’
“No one will opt to impose new sanctions right away but we should unanimously say that Europe is ready for further sanctions if Russia doesn’t give up its policy to support separatists,” Polish Prime Minister Donald Tusk, whose country shares a border with Ukraine, told reporters before the talks.
Poroshenko said two days ago Ukraine would intensify operations to defeat the separatists, saying “they won’t last two or three months; they’ll last a few hours.”
Putin told Italian Prime Minister Matteo Renzi in a phone call yesterday that the military operation must stop, the president’s office said in a statement.
Streets in Donetsk were virtually empty yesterday. Stores around the city were closed and stalls at the usually bustling Radio Rynok, a central market, were shuttered. Few drivers ventured out on Artema Street, the city’s central avenue.
“The airport is fully controlled” by government forces, Avakov told journalists in Kiev. “We did not have any casualties among our troops, while the terrorists lost dozens.”
Road Block
Separatists abandoned a road block on the highway between Donetsk and Krasnoarmiysk to the northwest as fighting continued in the city for a second day. Government forces blocked all major roads heading north of Donetsk to the rebel stronghold of Slovyansk as fighting went on there and in the port of Mariupol.
Donetsk Mayor Oleksandr Lukyanchenko urged citizens to stay at home and go out only if absolutely necessary. He said on his website the authorities in Kiev had assured him that there were no plans for air strikes on residential areas of the city.
“It’s extremely important for Kiev now to regain control over eastern cities like Donetsk, Mariupol and most importantly Slovyansk as soon as possible,” Volodymyr Fesenko, the head of the Penta Political Analysis Center in the Ukrainian capital, said by phone. “That’s why I expect the offensive by government troops in the east to intensify.”
Second Battalion
The government will send a second battalion of the volunteer National Guard to join the operation in the east, Deputy Interior Minister Serhiy Yarovy said, according to the Interfax news service.
The U.S. is monitoring the situation in eastern Ukraine and is “concerned” about the actions of the separatists, State Department spokeswoman Jen Psaki told reporters in Washington.
The Organization for Security and Cooperation in Europe said it lost contact two days ago with four monitors from an international team based in the city. The team was on a routine patrol east of Donetsk, the OSCE said in a statement.
“A mounting death toll in the conflict in eastern Ukraine may yet provoke a more forceful response from Russia,” Tatiana Orlova, a senior economist at Royal Bank of Scotland Group Plc in London, said in a research note. “The fighting also reduces the chances of President Putin recognizing Poroshenko as Ukraine’s legitimate president.”
Poroshenko said May 25 he’d seek to end the “war, chaos and disorder” by visiting the east and working with Russia.
“The Kremlin hope that the east would rise against the center, against the interim government in Kiev and now Mr. Poroshenko, has proved to be a false hope because the people of eastern Ukraine want to be part of a unitary Ukraine, they do not want to be part of Russia,” John Herbst, a former U.S. ambassador to Ukraine and now director of the Eurasia Center at the Atlantic Council in Washington, said on a conference call.
“As long as there’s not major collateral damage in a military operation against these people, I don’t see Mr. Poroshenko having a problem with the people of the east,” Herbst said.
To contact the reporters on this story: Daryna Krasnolutska in Kiev at dkrasnolutsk@bloomberg.net; Daria Marchak in Kiev at dmarchak@bloomberg.net; Jake Rudnitsky in Donetsk, Ukraine at jrudnitsky@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
By Indira A.R. Lakshmanan and Ewa Krukowska May 28, 2014 3:07 AM GMT+0700 17 Comments Email Print
European leaders, while calling Ukraine’s May 25 presidential election a success, are still facing a deeper dilemma: how to free their countries from an addiction to Russian energy.
Pro-European billionaire Petro Poroshenko’s victory has relieved the immediate pressure on the U.S. and the European Union to impose tougher sanctions against Russia. Swedish Prime Minister Fredrik Reinfeldt said he didn’t expect the 28-nation bloc’s leaders to discuss punitive measures at a summit in Brussels today.
“I think we are going to welcome the fact that Petro Poroshenko has a very clear mandate from the Ukrainian people, that we foresee respect on the Russian side,” he told reporters before the evening gathering.
At the same time, Polish Prime Minister Donald Tusk urged further pressure on the government in Moscow.
“No one will opt to impose new sanctions right away, but we should unanimously say that Europe is ready for further sanctions if Russia doesn’t give up its policy to support separatists,” he told reporters.
The European and American reluctance to escalate in the wake of an election that was at least a partial success, a U.S. official said yesterday, suggests that by finally tempering his actions and rhetoric, Russian President Vladimir Putin may have achieved much of what he sought in Ukraine.
Changing Mix
Russia’s ever-changing mix of covert action, economic threats and the annexation of Crimea, followed by soothing words, the official said, has exposed the divergence of U.S. and European Union views on Russia and the EU members’ conflicting interests there, especially on energy.
“The energy crisis is a test of what the EU really is,” Tusk said on May 21, calling it “a duel” over what’s more important: “bilateral relations with Russia or relations within the EU.” The only way to be “an equal partner to big suppliers” is to form a united front.
Europe’s energy dependence “ties the EU’s hands a great deal -- you really have widely divergent views,” said Charles Ebinger, director of the energy security initiative at the Brookings Institution in Washington, in an interview. Fears about losing Russian natural gas have made sanctions “very weak and, in the end, fairly meaningless.”
The European Commission will publish an energy security road map tomorrow that EU leaders will consider at a June 26-27 summit.
Russia’s Threat
Russia’s threat to cut off gas supplies to Ukraine if the country doesn’t pay its back bills and agree to prepay for future supplies at a higher price presents problems for the EU, which gets half its Russian gas -- 15 percent of its total supply -- through Ukraine’s Soviet-era pipelines.
Russia cut the flow to Ukraine over price disputes in 2006 and 2009, and other European nations suffered when state-backed OAO Gazprom (GAZP) accused Ukraine of using gas meant for other nations, with some countries temporarily losing electricity during the winter.
Europe’s reliance on Russian energy has made it difficult to reach the necessary consensus on how to respond to Putin’s actions stoking unrest in eastern Ukraine and annexing the Crimean peninsula, EU diplomats said.
Russia provides 30 percent of the European Union’s natural gas, and the 28-nation bloc has few options to replace a cutoff by Russia this winter, according to a draft energy security document seen by Bloomberg News.
Russian Dependents
Twelve EU member states get more than 50 percent of their gas from Russia, including four -- Lithuania, Estonia, Finland, and Latvia -- that depend on Gazprom as their sole supplier, according to Eurogas, a Brussels-based lobby group. Europe also imported 32 percent of the continent’s total crude oil consumption last year from Russia, according to the Paris-based International Energy Agency.
The chief executive officer of Germany’s largest power producer, RWE AG’s Peter Terium, said in a May 23 interview that it’s “sensible” to hold back on punishing Russia. “We’re treading on eggshells. You need to maneuver very carefully in order not to escalate.”
While tacitly acknowledging that Russia would suffer from cutting off energy supplies to the rest of Europe, Economy Minister Alexei Ulyukayev said last week that industrywide sanctions will never happen because “our partners will suffer also, especially when it comes to Europe, which is very much dependent on the energy supply from Russia.”
Struggling Economy
Russia is struggling to steady its $2 trillion economy in the face of dramatic capital outflows, market instability and a ruble that’s more than 4 percent down against the dollar this year.
Oil and gas account for 70 percent of Russia’s annual exports and more than half its federal budget, according to the U.S. Energy Information Administration. The country exports 80 percent of its oil and more than 70 percent of its gas to the EU, and that revenue keeps Russia’s economy afloat, the European Commission’s Barroso said in Brussels.
European diplomats acknowledge that the symbiotic energy relationship makes punitive measures unpalatable. “We have stressed very firmly over the last months that energy must not be abused as a political weapon,” Barroso said last week.
Many of the EU’s members strongly oppose sanctions that would limit energy deliveries from Russia. Instead, they favor efforts to engage Russia in dialogue and boost stability and democracy in Ukraine, according to several European diplomats in Washington and Brussels who weren’t authorized to be quoted.
‘Security Threat’
“The farther east you go -- Poland, Slovakia, Bulgaria, Romania, Hungary, the Baltic states -- you have a much higher dependence on Russian energy,” and those nations see over-reliance “as a direct security threat,” said Ebinger, who has advised European governments on energy policy.
While the EU in the last two months has frozen assets of scores of Ukrainians and Russians accused of fueling unrest and two energy companies that were expropriated by Russia when it annexed Crimea, Europe hasn’t imposed any sanctions that would block trade with Russia.
Slovak Premier Robert Fico last week said his government, which agreed to transport gas from Western Europe to Ukraine under a reverse flow deal, “isn’t inclined” toward more sanctions. Europe, he said, shouldn’t be “pushed into some global conflict. It would be a suicide for the economy.”
Price Impact
Irish communications, energy and natural resources Minister Pat Rabbitte said in an interview that while he thinks Russia is unlikely to cut supplies, if it did, “It’d almost inevitably have an impact on price” across Europe.
As Europe pulls out of a recession, gas shortages would hit heating, electricity and industrial production, and rattle confidence. Again, though, the effects would be uneven and potentially divisive.
Some countries, including Latvia and Germany, have stored many months of supplies and could withstand a short-term shutoff more easily, officials say; others have few reserves.
Still, the Ukraine crisis has added urgency to proposals for greater European energy security, a movement that in the long term would reduce Russia’s leverage. Expanding inventories, developing reverse flows, expanding renewable energy sources, improving efficiency and forming a common reserve could reduce the short-term shock from any Russian cut-off as the EU sets its energy and climate policies for the decade starting in 2020.
Divided Europe
Here, too, Europe is divided. A group of predominantly eastern and central EU nations led by Poland argue that the crisis shows Europe should invest in domestic energy, such as coal and shale gas.
Many western states, including Germany and Denmark, say that stricter emissions standards, more renewable energy and higher efficiency would cut imports and accelerate a shift to a low-carbon economy.
If Russia makes good on its threat to cut off gas to Ukraine, the Nord Stream pipeline between Vyborg, Russia, and Greifswald, Germany, is an alternate route to get Russian gas to the rest of Europe, and interconnectors would allow gas to flow among neighbors.
While Norwegian, Algerian or British gas could replace some losses from Russia, prices are higher, and those nations have existing customers. Developing a southern corridor from the Caspian Sea region and Iraq, and increased liquefied natural gas imports from Qatar and the U.S. are longer-term fixes.
LNG Terminal
Poland, with its history of tense relations with Russia, has invested in an LNG terminal to wean itself off Russian gas, and Lithuania has said it will do the same. Investing in infrastructure for LNG from Qatar or the U.S. is costly, however, and other EU members have balked at the price.
The divisions within the EU over the costs to member states’ economies extend beyond the energy sector. The U.K. and Cyprus are among those concerned about financial sanctions that would imperil capital flows between their banks and Russian institutions; in the first three quarters of 2013, $16 billion flowed to Russia from British banks and $12.9 billion from Cypriot banks, according to data compiled by Bloomberg. In the same period, $61 billion flowed from Russia to the British Virgin Islands, and $7.5 billion went to Cyprus.
French Ships
French officials are worried about a $1.6 billion sale of two Mistral helicopter carriers to Russia that would be imperiled by an arms ban. Greece, Italy and other Southern European states profit from Russian tourism and luxury-goods purchases, and are advocating more diplomacy and less punitive action.
Whenever there’s a crisis with Russia, especially over energy, “suddenly it’s all hands on deck,” Amanda Paul, an analyst at the European Policy Centre in Brussels, said in an interview. “Frenzy lasts for a short period of time, and then we get back into our usual way of doing things: very slowly, not necessarily united.”
To contact the reporters on this story: Indira A.R. Lakshmanan in Washington at ilakshmanan@bloomberg.net; Ewa Krukowska in Brussels at ekrukowska@bloomberg.net
To contact the editors responsible for this story: John Walcott at jwalcott9@bloomberg.net Larry Liebert
By Maher Chmaytelli and Saleh Sarrar May 27, 2014 11:36 PM GMT+0700 0 Comments Email Print
The disruption of Libyan crude exports worsened as rebels shut down a recently re-opened oil port after protesting over the appointment of the country’s new prime minister.
Petroleum Facilities Guards members aligned with federalist rebels stopped loadings at the Hariga oil port in eastern Libya, Oil Ministry Director of Measurement Ibrahim Al Awami said by telephone from Tripoli. The guard has also banned flights operated by state-run National Oil Corp. to Zueitina, another oil port in the east, he said.
The eastern rebels’ leader Ibrahim Al-Jedran “seems to have given instructions for this protest to happen because he’s unhappy with the new government,” Awami said.
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 from nations including Libya.
Brent crude futures for July traded at $109.99 a barrel at 4:49 p.m. on the ICE Futures Europe Exchange in London. The front-month Brent contract has averaged about $108 a barrel this year on ICE.
The shutdown of Hariga may reduce Libyan crude output by around 40,000 barrels a day, Richard Mallinson, analyst at Energy Aspects Ltd., said by e-mail. The eastern rebellion, coupled with protests for jobs and political rights that shut down western oilfields, cut Libya’s oil output to 160,000 barrels a day, or a 10th of its 1.6 million installed capacity, Libyan National Oil Corp. spokesman Mohamed Elharari said by phone today from Tripoli.
Illegal Appointment
Al-Jedran was a former commander in the Petroleum Facilities Guards before setting up the Executive Office for the Barqa Region, which seeks self-rule for the eastern region known as Cyrenaica. Ali al-Hasy, spokesman for the Executive Office for the Barqa Region, couldn’t be reached for comment today.
The federalists are objecting to Ahmed Maiteg’s appointment as prime minister because of alleged Islamist ties. They threatened yesterday to reoccupy the Hariga and Zueitina oil export terminals, which were returned to government control last month.
“Maiteg’s appointment is illegal,” al-Hasy said by phone yesterday. “There was no quorum to convene a voting session. If the Congress doesn’t backtrack on this, we will consider canceling the April 6 agreement” that allowed Zueitina and Hariga to resume exports, he said.
Two more crude export terminals seized last July, including Es Sider, Libya’s largest, remain in rebel hands.
Hostile Factions
General Khalifa Haftar, whose self-proclaimed National Army has been battling Islamist groups in eastern Libya, respects the Barqa rebels’ demand for more autonomy, Colonel Mohammad Hijazi, a spokesman for the general, said by phone from Tripoli today.
“They are children of the nation too, and we respect their demand for a federal system,” said Hijazi, speaking of the Barqa rebels. The Barqa group voiced support for Haftar’s fight against the Islamists on May 20.
Haftar suggested that Libya’s Supreme Council of Justice resolve the dispute over Maiteg’s appointment by selecting a caretaker government that would rule until the June 25 parliamentary elections, said Hijazi. “That would be a way out of the crisis,” he said.
Many Flashpoints
The shutdown of Hariga “is just one of the many potential flash points for armed clashes between forces loyal to Maiteg and those that are siding with Haftar,” said Mallinson of Energy Aspects. “It is now two well-armed and hostile factions confronting one another, which is bringing Libya closer to civil war than at any time since the overthrow of Qaddafi.”
Haftar started on May 16 an offensive against Islamist groups accused of killing civil servants, journalists, and members of the military and police in eastern Libya. Fighters aligned with Haftar also stormed Libya’s parliament in Tripoli on May 18 and declared it dissolved.
Extremist groups Haftar is fighting in the east “could attack anything, including the oil facilities,” Hijazi said. The National Army, which has received support from units of the regular army and air force, is “committed to ensuring the safety of the oil facilities,” he said.
To contact the reporter on this story: Maher Chmaytelli in Dubai at mchmaytelli@bloomberg.net
To contact the editors responsible for this story: Alaric Nightingale at anightingal1@bloomberg.net James Herron, Dan Weeks
By Maher Chmaytelli May 27, 2014 9:53 PM GMT+0700 0 Comments Email Print
Libyan crude exports may be disrupted further by a dispute over the appointment of a new prime minister or attacks against oil infrastructure by Islamists, a retired general leading the fight against militant groups said.
Separatist rebels objecting to Ahmed Maiteg’s appointment as prime minister may reoccupy Zueitina and Hariga, two oil export terminals returned to government control last month, Colonel Mohammad Hijazi, a spokesman for General Khalifa Haftar’s self-proclaimed National Army, said today. Haftar respects the rebels’ demand for more autonomy for Libya’s regions, Hijazi said.
“The crisis is worsening and it’s a possibility that the two oil ports that have re-opened close again,” Hijazi said by phone from Tripoli. Extremist groups Haftar is fighting in the east “could attack anything, including the oil facilities,” he said.
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 from nations including Libya.
Brent crude futures for July traded at $110.06 a barrel at 2:53 p.m. on the ICE Futures Europe Exchange in London. The front-month Brent contract has averaged about $108 a barrel this year on ICE.
“Nation’s Children”
Rebels seeking self-rule for Libya’s eastern Barqa region yesterday threatened to re-occupy the Hariga and Zueitina oil ports in protest at the new prime minister’s alleged ties to Islamist groups.
“Maiteg’s appointment is illegal,” Ali al-Hasy, spokesman for the Executive Office for the Barqa Region, said by phone. “There was no quorum to convene a voting session. If the Congress doesn’t backtrack on this, we will consider canceling the April 6 agreement” that allowed Zueitina and Hariga to resume exports, he said.
Two more crude export terminals seized last July, including Es Sider, Libya’s largest, remain in rebel hands.
“They are children of the nation too, and we respect their demand for a federal system,” said Hijazi, speaking of the Barqa rebels. The Barqa group voiced support for Haftar’s fight against the Islamists on May 20.
Haftar suggested that Libya’s Supreme Council of Justice resolve the dispute over Maiteg’s appointment by selecting a caretaker government that would rule until the June 25 parliamentary elections, said Hijazi. “That would be a way out of the crisis,” he said.
Eradicate Extremists
Haftar started on May 16 an offensive against Islamist groups accused of killing civil servants, journalists, and members of the military and police in eastern Libya. Fighters aligned with Haftar also stormed Libya’s parliament in Tripoli on May 18 and declared it dissolved.
The former general promised to “to eradicate terrorism and extremist groups,” which he blamed for the growing chaos in the oil-rich North African country three years after the overthrow of Muammar Qaddafi, in a statement broadcast on national television May 21. The National Army, which has received support from units of the regular army and air force, is “committed to ensuring the safety of the oil facilities,” said Hijazi.
The seat of Africa’s largest oil reserves, Libya has a total of nine oil exports terminals, of which five are operating: three in the east and two offshore.
The eastern rebellion, coupled with protests for jobs and political rights that shut down western oilfields, cut Libya’s oil output to 160,000 barrels a day, or a 10th of its 1.6 million installed capacity, Libyan National Oil Corp. spokesman Mohamed Elharari said by phone today from Tripoli.
To contact the reporter on this story: Maher Chmaytelli in Dubai at mchmaytelli@bloomberg.net
To contact the editors responsible for this story: Alaric Nightingale at anightingal1@bloomberg.net James Herron, Bruce Stanley
By Romy Varghese May 27, 2014 7:00 AM GMT+0700 6 Comments Email Print
An unprecedented drop in gasoline use as more Americans drive fuel-efficient vehicles and choose mass transit is undermining a revenue stream for repairing crumbling roads and bridges.
Lawmakers from New Hampshire to Wyoming are moving to either raise fuel taxes or overhaul them as Congress is stalled on how to fund a federal pot for highway projects. Delaware may raise a rate that has been flat for almost two decades.
Declining fuel consumption is a caution flag for $36 billion in state gasoline-tax debt, Moody’s Investors Service says. The challenge of finding ways to pay for commuting arteries is only going to increase, said Paul Mansour, head of municipal research at Conning, which oversees $9 billion in local-government debt in Hartford, Connecticut.
“The needs are growing at or above the rate of inflation for new projects and to repair existing projects,” Mansour said. “Where’s the money going to come from for growth? It’s very concerning.”
The U.S. Energy Information Administration has ratcheted down its forecast for motor-fuel usage. This month it said consumption will fall about 1.2 percent annually through 2040, compared with a projection last year of a 0.9 percent average drop, said Moody’s analysts led by Julius Vizner in New York. A drop that size would be unprecedented, Vizner said in an e-mail.
Less Traveled
The annual distance a licensed resident drove in a personal vehicle fell to about 12,500 miles (20,100 kilometers) in 2012 and may sink to 12,200 miles in 2020, which would be the lowest since 1996, said Patricia Hutchins, an analyst at the EIA.
Fuel-efficiency gains, inflation and higher construction costs have eroded the ability of state gasoline taxes to keep pace with needs, said Carl Davis, an analyst at the Institute on Taxation and Economic Policy, a Washington-based research group.
States received $38 billion from those taxes in 2012, down from $51 billion a decade earlier, according to inflation-adjusted data from Pew Charitable Trusts.
Voters Decide
Officials will increasingly turn to voters with requests to raise taxes, said David Goldberg, a spokesman for Transportation for America, a Washington-based group that supports changing federal funding to better reflect inflation. The federal gasoline levy hasn’t increased since 1993.
“They’re going to have to go to voters much more frequently and with much more specific plans,” Goldberg said.
That’s already happened in Missouri, where the legislature this month passed a bill that would ask voters in November to raise the state sales tax by 0.75 percentage point for 10 years, with proceeds going toward transportation.
In Delaware, Governor Jack Markell, a Democrat, is pitching a 10-cent-per-gallon hike in the state motor-fuels tax to pay for road projects. The levy hasn’t risen since 1995. Michigan legislators are considering whether to replace a fixed-rate gasoline tax with one that depends on the average wholesale price.
“We must act to make our roads safer, put thousands of Delawareans to work and promote economic development,” Kelly Bachman, a spokeswoman for Markell, said in an e-mail.
Northeast Decisions
This year, New Hampshire approved its first fuel tax increase since 1991, dedicating an additional 4.2 cents per gallon for infrastructure starting in July. Last year, six states and the District of Columbia enacted legislation overhauling gasoline taxes, according to Jaime Rall, senior policy strategist at the National Conference of State Legislatures.
While Wyoming raised the tax by 10 cents a gallon, the others -- Maryland, Massachusetts, Pennsylvania, Vermont and Virginia -- have implemented or adjusted levies that track the economy through inflation or fuel prices, she said. Maryland, for instance, pegs its tax to the consumer price index.
While drivers have seen higher costs, “over time, such increases are absorbed and prices at the pump level out,” Jana Tidwell, a spokeswoman for AAA Mid-Atlantic, said in an e-mail.
Fuel economy and alternative commuting methods are on the upswing. Fuel-efficiency standards adopted by the Obama administration will achieve 54.5 miles per gallon by 2025, from 35.5 miles in 2016. Meanwhile, the number of U.S. workers traveling by bicycle swelled by about 60 percent over the past decade, the largest increase among commuting modes tracked by the Census, the agency said this month.
Capital Corral
As driving declines, states may need to tap general funds to pay for transportation projects, said Conning’s Mansour.
The new landscape can be seen even in Washington, where Congress is working on a plan to keep the U.S. Highway Trust Fund solvent at least through year-end. The fund, which pays for projects through gasoline and diesel-fuel taxes, may dip below $4 billion by July, which means slower reimbursements to states and a halt in some construction.
Fifty-five percent of commutes into downtown from the Washington metropolitan region don’t rely on autos, according to the DowntownDC Business Improvement District. The agency aims for 75 percent of commutes to be non-auto by 2032. This year, officials plan to remove five parking spots to create corrals that could hold 50 bikes, said Ellen Jones, the district’s director of infrastructure and sustainability.
At Risk
Municipal bonds that are most at risk depend entirely on a gasoline tax or have low levels of debt-service coverage, such as Rhode Island motor fuel-tax revenue bonds, Moody’s Vizner said. Moody’s grades those bonds A3, four levels above junk.
Rhode Island bonds due in June 2021 that are insured by Ambac Assurance Corp. and backed by fuel taxes traded May 5 at an average yield about 1.4 percentage points above benchmark munis, data compiled by Bloomberg show.
Thomas Mullaney, the state’s budget officer, said if funds for debt service fall below required amounts, officials could allocate more gasoline taxes to cover the obligations.
“I don’t have any concern making the payments,” he said. The state doesn’t plan to issue new debt for highways, he said.
To contact the reporter on this story: Romy Varghese in Philadelphia at rvarghese8@bloomberg.net
To contact the editors responsible for this story: Stephen Merelman at smerelman@bloomberg.net Mark Tannenbaum, Mark Schoifet
By Isis Almeida and Anna Shiryaevskaya May 28, 2014 6:01 AM GMT+0700 0 Comments Email Print
The European Union still faces the threat of natural gas disruptions this winter after helping forge a draft deal to settle a debt dispute between Russia and Ukraine, which carries about 15 percent of the bloc’s gas needs.
The premium of U.K. winter gas over the day-ahead contract widened 3.1 percent yesterday, its biggest increase in more than 10 days in a sign that supply concerns remain, broker data compiled by Bloomberg show. The risk of transit interruption, as in previous disputes between the eastern European nations in 2006 and 2009, persists as long as no definite agreement is signed between the parties, according to Societe Generale SA.
Ukraine’s state energy company NAK Naftogaz Ukrainy would pay Russia’s OAO Gazprom (GAZP) $2 billion by May 30 and a further $500 million by June 7, the European Commission, the 28-nation bloc’s regulatory arm, said May 26 after talks between the three parties. Ukraine will give its answer on the commission’s proposal today, Energy Minister Yuri Prodan said.
“As long as we haven’t solved the situation for the start of the winter, you have a risk,” Thierry Bros, a European gas and LNG analyst at Societe Generale, said yesterday by phone from Paris. “We still have a big unknown, which is how much Ukraine can pay back.”
Gas for delivery in the six months from October in the U.K., Europe’s biggest market, was 16.8 pence a therm (28 cents a million British thermal units) more expensive than next-day fuel, up from 16.3 pence on May 23, the previous trading day, according to broker data. The premium rose to 17.5 pence on May 16, the highest since March 2012, as warmer-than-usual weather reduced near-term demand. U.K. markets were closed May 26 for a holiday.
Next-month U.K. gas, the benchmark contract, fell 4 percent yesterday to 42.74 pence a therm, its lowest close since September 2010 on the ICE Futures Europe exchange in London.
Gas Debt
Ukraine’s overdue gas debt is $3.5 billion from November through April, according to Gazprom. Russia is seeking about $1.7 billion in advance payments for June supplies by the second of that month and will only ship volumes paid for from the next day, Gazprom said earlier this month. The prepayment requirement may be canceled and the cost for Naftogaz may be lowered if Ukraine settles its debt, Russian Energy Minister Alexander Novak said after the three-party talks.
Ukraine is ready to pay for Russian gas at fair market prices, close to the $268.50 per thousand cubic meters it paid for the fuel in the first quarter, according to Prodan. The government in Kiev wants the future price to be set before starting payments, Ukrainian Finance Minister Oleksandr Shlapak said May 27, according to RIA Novosti news service.
Newly-elected Ukrainian President Petro Poroshenko has set his nation on a collision course with Russia, vowing to step up operations to rein in pro-Russian separatists in the east. Any escalation would be a “colossal mistake,” Russian Foreign Minister Sergei Lavrov said May 26, the day after the Ukrainian election.
Increased Tensions
“The security situation in the east will remain precarious” until planned talks next month between Poroshenko and his Russian counterpart, Vladimir Putin, Alisa Lockwood, head of Europe, CIS analysis at IHS Country Risk, said yesterday in an e-mailed statement.
While rebels increased tensions in eastern Ukraine, sending a “strong signal” on their refusal of Poroshenko’s electoral victory, they aren’t numerous enough to resist the Ukrainian military for an extended period without external support, IHS’s Lockwood said. Russia looks unlikely to intervene at this point and satellite images point to Russian troops withdrawing from border regions near Ukraine, she said.
“Even if the Ukrainians don’t pay, nobody thinks that Russia will reduce overnight the volumes,” Bros said. “The question isn’t going to be solved in June, and the question is going to be asked in July, in August and with the start of winter -- then it starts the risk of transit interruption.”
To contact the reporters on this story: Isis Almeida in London at ialmeida3@bloomberg.net; Anna Shiryaevskaya in London at ashiryaevska@bloomberg.net
To contact the editors responsible for this story: Lars Paulsson at lpaulsson@bloomberg.net Rob Verdonck
By Tsuyoshi Inajima and Emi Urabe May 28, 2014 4:00 AM GMT+0700 0 Comments Email
Japanese lawmakers are renewing the push for a 600 billion yen ($5.9 billion) natural gas pipeline from Russia, which last week signed a supply deal with China, in a bid to cut energy costs after the Fukushima nuclear disaster.
A group of 33 lawmakers is backing the 1,350-kilometer (839 miles) pipeline between Russia’s Sakhalin Island and Japan’s Ibaraki prefecture, northeast of Tokyo, Naokazu Takemoto, the secretary general of the group, said in an interview on May 23. He plans to propose the project to Prime Minister Shinzo Abe as early as June so it’s on the agenda when Russian President Vladimir Putin visits in autumn, he said.
The shutdown of Japan’s nuclear reactors after the 2011 Fukushima disaster has spurred renewed interest in the Russia-Japan pipeline link, which has been discussed for more than a decade, Takemoto said. The effort also highlights Russia’s expanding role as a energy supplier to Asia after the country signed a $400 billion deal last week to sell China 38 billion cubic meters of gas annually for 30 years.
Japan spent a record 7 trillion yen last year on liquefied natural gas imports, more than double the cost three years ago, according to the Ministry of Finance. The country could lower its energy bill by getting gas directly by pipeline rather than more-expensive LNG, which is shipped by tankers, Takemoto said.
“Building an LNG plant requires a lot of money and makes the per unit cost of gas very expensive,” said Takemoto, who serves in the House of Representatives as a member of the ruling Liberal Democratic Party. “Japan would be better off” buying gas via pipeline, he said.
Post-Fukushima
The proposed Russia-Japan pipeline is designed to transport as much as 20 billion cubic meters of natural gas annually, according to proposals by the group consisting of lawmakers from ruling parties LDP and New Komeito. That’s equivalent to about 15 million metric tons of LNG, or 17 percent of Japan’s imports.
All of Japan’s 48 reactors are shut for safety checks after the magnitude-9 quake and ensuing tsunami in March 2011 caused a triple meltdown at Tokyo Electric Power Co.’s Fukushima Dai-Ichi plant, shaking public confidence in nuclear energy. Power companies have applied for the Nuclear Regulation Authority’s safety review of 18 reactors.
About half of Japan’s reactors may never be restarted because of the nation’s tougher safety standards, Yuji Nishiyama, a Tokyo-based analyst with JPMorgan Securities Japan Co., said in a May 26 phone interview. That means the utilities would have to keep importing a large amount of natural gas to fill the gap left by the shutdown, he said.
Japan, the world’s biggest LNG importer, bought 87.49 million metric tons of the fuel in 2013, according to finance ministry data. Russia accounted for 9.8 percent of the country’s gas and was the fourth-biggest supplier after Australia, Qatar and Malaysia.
To contact the reporters on this story: Tsuyoshi Inajima in Tokyo at tinajima@bloomberg.net; Emi Urabe in Tokyo at eurabe@bloomberg.net
To contact the editors responsible for this story: Pratish Narayanan at pnarayanan9@bloomberg.net Ramsey Al-Rikabi
By Elena Mazneva, Ewa Krukowska and Olga Tanas May 27, 2014 3:22 PM GMT+0700 2 Comments Email Print
Russia, Ukraine and the European Union sketched out a tentative deal on part of the transit nation’s gas debt to Moscow-based OAO Gazprom that would help avert gas cutoffs, the European Commission said.
Ukraine’s state energy company, NAK Naftogaz Ukrainy, would pay Russia’s gas exporter $2 billion by May 30 and a further $500 million by June 7, the commission said in a statement after trilateral talks in Berlin yesterday. The bills will partially cover Ukraine’s outstanding debt for fuel deliveries from November 2013 through May this year, it said.
Ukraine will give its answer on the “proposal for discussion” by the evening of May 28, the country’s Energy Minister Yuri Prodan told reporters in Berlin yesterday. The draft agreement is subject to approval from the governments in Kiev and Moscow.
Ukraine depends on Russia for about half its gas, making energy a battleground in the wider political struggle between the two countries. About 15 percent of Europe’s annual gas demand crosses Ukraine in pipelines from Russia and is vulnerable to disputes between the former Soviet allies.
“Both sides need to talk with their prime minister or president and with their company boards,” EU Energy Commissioner Guenther Oettinger said after the Berlin talks. “We have set a deadline for an answer that further talks are acceptable by Wednesday evening.”
Cut Warning
Negotiators haven’t reached a deal yet on gas prices, according to Russian Energy Minister Alexander Novak. Russia increased the bill for Ukraine by 81 percent starting from the second quarter, canceling two gas discounts in place since 2010 and 2013 because of Ukraine’s mounting debts and annulled agreements over Crimea.
“We are ready to continue talks on price settlement of future gas supplies to Ukraine if we get payments this week, until Friday,” Novak told a press conference in Berlin.
Ukraine’s overdue gas debt is $3.5 billion from November through April, according to Gazprom. Russia is also seeking about $1.7 billion in advance payments for June shipments. Payment is due by June 2, and starting from the following day, Ukraine will only get what it pays for, Gazprom said earlier this month.
The prepayment requirement may be canceled and the cost for Naftogaz may be lowered if Ukraine settles its debt, Novak said yesterday.
Price Dispute
“Gas price is settled by contract between Gazprom and Naftogaz,” Novak said. “No changes are considered. The question can be only on discounting on export duties.”
Ukraine is ready to pay for Russian gas at fair market prices, close to the $268.50 it paid for the fuel in the first quarter, according to Prodan. There is still no debt agreement yet, he said.
The government in Kiev wants the future price to be set before starting payments, Ukrainian Finance Minister Oleksandr Shlapak said today, according to RIA Novosti news service.
Naftogaz and Gazprom must clinch a gas deal by May 29 or they’ll meet in Stockholm arbitration as planned earlier, Ukrainian Prime Minister Arseniy Yatsenyuk told reporters in Kiev today.
“I was somewhat surprised by the position declared by the Ukrainian side,” Gazprom CEO Alexey Miller said in an interview with Russian state TV late yesterday. “It shows simply that the risks of Ukraine not paying by Friday still remain. Of course, hope dies last.”
Subject to endorsement of the Berlin’s draft debt agreement and the first payment, a third round of political talks between Russia, Ukraine and the EU could take place on May 30, the European commission said.
To contact the reporters on this story: Elena Mazneva in Moscow at emazneva@bloomberg.net; Ewa Krukowska in Brussels at ekrukowska@bloomberg.net; Olga Tanas in Moscow at otanas@bloomberg.net
To contact the editors responsible for this story: Lars Paulsson at lpaulsson@bloomberg.net Torrey Clark, Todd White
By Linda Sandler May 27, 2014 11:50 PM GMT+0700 0 Comments Email Print
SaveAn adviser to Energy Future Holdings Corp. said Fidelity Investments has an option to fund $500 million of a $5.4 billion loan for reorganizing its regulated power business, while Pacific Investment Management Co. has committed to backing almost $1.5 billion of the financing.
In a court filing this week, the adviser, David Ying, head of Evercore Group LLC’s restructuring group, also responded to junior lenders who object to incentives proposed for senior creditors, saying a 1.75 percent fee was reasonable and necessary to secure their support for the loan.
“It is the product of extensive, virtually nonstop, good-faith negotiations that spanned the first four months of 2014 between interested parties,” he said. The Fidelity deal helped talks with Pimco, he said.
The Texas power provider last week agreed to delay until June 30 a court fight over an agreement it struck with some creditors before filing for bankruptcy last month. Today, it extended the time for junior lenders to opt into the bankruptcy deal until July 3, also delaying the date when they can receive a premium for agreeing to its plan until June 11.
Pimco may withdraw its backing if certain deadlines aren’t met, Ying said in the May 25 filing in U.S. Bankruptcy Court in Delaware as part of the company’s request for a judge’s approval of the $5.4 billion loan.
‘Privileged’ Lenders
Some creditors have opposed splitting the company into regulated and deregulated entities, as Dallas-based Energy Future plans to do, as well as the fees to what they call “privileged” lenders.
Pimco, together with another investor, which also will back the $5.4 billion loan, owned 32 percent of the company’s senior, or first-lien, notes when they signed the restructuring agreement, according to Ying. As of April 29 they held 21 percent of the senior notes outstanding, he said.
Fidelity, an 11 percent holder of senior notes as of the bankruptcy filing, also owned about 73 percent of Energy Future’s unsecured debt and 30 percent of the regulated unit’s junior, or second-lien, notes, he said.
To cut its interest costs, Energy Future plans to pay about $4 billion of senior notes and $2.2 billion of junior notes. By May 19, holders of 42 percent of senior notes had agreed to exchange their securities for bankruptcy loans, Ying said.
Alternate DIP
Rothschild Inc., an adviser to junior lenders who were asked to join in a $1.9 billion cash loan to the regulated unit, said in a filing this month that it helped devise an alternate debtor-in-possession, or DIP, loan to be arranged with JPMorgan Chase & Co. It would cut out preferential payments such as Fidelity’s and give lenders more time to decide whether they want to participate in the exchange, among other benefits.
The proposed reorganization plan will almost wipe out the equity of former owners KKR & Co., TPG Capital and Goldman Sachs Capital Partners. The firms took the former TXU Corp. private in a record leveraged buyout seven years ago.
Energy Future set a goal of leaving court protection in 11 months when it filed for bankruptcy April 29, listing $49.7 billion in liabilities. It’s borrowing about $10 billion of so-called debtor in possession money for two years.
The case is Energy Future Holdings Corp., 14-bk-10979, U.S. Bankruptcy Court, District of Delaware (Wilmington).
To contact the reporter on this story: Linda Sandler in New York at lsandler@bloomberg.net
To contact the editors responsible for this story: Andrew Dunn at adunn8@bloomberg.net Fred Strasser
By Indira A.R. Lakshmanan and Ewa Krukowska May 28, 2014 3:07 AM GMT+0700 17 Comments Email Print
While tacitly acknowledging that Russia would suffer from cutting off energy supplies... Read More
European leaders, while calling Ukraine’s May 25 presidential election a success, are still facing a deeper dilemma: how to free their countries from an addiction to Russian energy.
Pro-European billionaire Petro Poroshenko’s victory has relieved the immediate pressure on the U.S. and the European Union to impose tougher sanctions against Russia. Swedish Prime Minister Fredrik Reinfeldt said he didn’t expect the 28-nation bloc’s leaders to discuss punitive measures at a summit in Brussels today.
“I think we are going to welcome the fact that Petro Poroshenko has a very clear mandate from the Ukrainian people, that we foresee respect on the Russian side,” he told reporters before the evening gathering.
At the same time, Polish Prime Minister Donald Tusk urged further pressure on the government in Moscow.
“No one will opt to impose new sanctions right away, but we should unanimously say that Europe is ready for further sanctions if Russia doesn’t give up its policy to support separatists,” he told reporters.
The European and American reluctance to escalate in the wake of an election that was at least a partial success, a U.S. official said yesterday, suggests that by finally tempering his actions and rhetoric, Russian President Vladimir Putin may have achieved much of what he sought in Ukraine.
Changing Mix
Russia’s ever-changing mix of covert action, economic threats and the annexation of Crimea, followed by soothing words, the official said, has exposed the divergence of U.S. and European Union views on Russia and the EU members’ conflicting interests there, especially on energy.
“The energy crisis is a test of what the EU really is,” Tusk said on May 21, calling it “a duel” over what’s more important: “bilateral relations with Russia or relations within the EU.” The only way to be “an equal partner to big suppliers” is to form a united front.
Europe’s energy dependence “ties the EU’s hands a great deal -- you really have widely divergent views,” said Charles Ebinger, director of the energy security initiative at the Brookings Institution in Washington, in an interview. Fears about losing Russian natural gas have made sanctions “very weak and, in the end, fairly meaningless.”
The European Commission will publish an energy security road map tomorrow that EU leaders will consider at a June 26-27 summit.
Russia’s Threat
Russia’s threat to cut off gas supplies to Ukraine if the country doesn’t pay its back bills and agree to prepay for future supplies at a higher price presents problems for the EU, which gets half its Russian gas -- 15 percent of its total supply -- through Ukraine’s Soviet-era pipelines.
Russia cut the flow to Ukraine over price disputes in 2006 and 2009, and other European nations suffered when state-backed OAO Gazprom (GAZP) accused Ukraine of using gas meant for other nations, with some countries temporarily losing electricity during the winter.
Europe’s reliance on Russian energy has made it difficult to reach the necessary consensus on how to respond to Putin’s actions stoking unrest in eastern Ukraine and annexing the Crimean peninsula, EU diplomats said.
Russia provides 30 percent of the European Union’s natural gas, and the 28-nation bloc has few options to replace a cutoff by Russia this winter, according to a draft energy security document seen by Bloomberg News.
Russian Dependents
Twelve EU member states get more than 50 percent of their gas from Russia, including four -- Lithuania, Estonia, Finland, and Latvia -- that depend on Gazprom as their sole supplier, according to Eurogas, a Brussels-based lobby group. Europe also imported 32 percent of the continent’s total crude oil consumption last year from Russia, according to the Paris-based International Energy Agency.
The chief executive officer of Germany’s largest power producer, RWE AG’s Peter Terium, said in a May 23 interview that it’s “sensible” to hold back on punishing Russia. “We’re treading on eggshells. You need to maneuver very carefully in order not to escalate.”
While tacitly acknowledging that Russia would suffer from cutting off energy supplies to the rest of Europe, Economy Minister Alexei Ulyukayev said last week that industrywide sanctions will never happen because “our partners will suffer also, especially when it comes to Europe, which is very much dependent on the energy supply from Russia.”
Struggling Economy
Russia is struggling to steady its $2 trillion economy in the face of dramatic capital outflows, market instability and a ruble that’s more than 4 percent down against the dollar this year.
Oil and gas account for 70 percent of Russia’s annual exports and more than half its federal budget, according to the U.S. Energy Information Administration. The country exports 80 percent of its oil and more than 70 percent of its gas to the EU, and that revenue keeps Russia’s economy afloat, the European Commission’s Barroso said in Brussels.
European diplomats acknowledge that the symbiotic energy relationship makes punitive measures unpalatable. “We have stressed very firmly over the last months that energy must not be abused as a political weapon,” Barroso said last week.
Many of the EU’s members strongly oppose sanctions that would limit energy deliveries from Russia. Instead, they favor efforts to engage Russia in dialogue and boost stability and democracy in Ukraine, according to several European diplomats in Washington and Brussels who weren’t authorized to be quoted.
‘Security Threat’
“The farther east you go -- Poland, Slovakia, Bulgaria, Romania, Hungary, the Baltic states -- you have a much higher dependence on Russian energy,” and those nations see over-reliance “as a direct security threat,” said Ebinger, who has advised European governments on energy policy.
While the EU in the last two months has frozen assets of scores of Ukrainians and Russians accused of fueling unrest and two energy companies that were expropriated by Russia when it annexed Crimea, Europe hasn’t imposed any sanctions that would block trade with Russia.
Slovak Premier Robert Fico last week said his government, which agreed to transport gas from Western Europe to Ukraine under a reverse flow deal, “isn’t inclined” toward more sanctions. Europe, he said, shouldn’t be “pushed into some global conflict. It would be a suicide for the economy.”
Price Impact
Irish communications, energy and natural resources Minister Pat Rabbitte said in an interview that while he thinks Russia is unlikely to cut supplies, if it did, “It’d almost inevitably have an impact on price” across Europe.
As Europe pulls out of a recession, gas shortages would hit heating, electricity and industrial production, and rattle confidence. Again, though, the effects would be uneven and potentially divisive.
Some countries, including Latvia and Germany, have stored many months of supplies and could withstand a short-term shutoff more easily, officials say; others have few reserves.
Still, the Ukraine crisis has added urgency to proposals for greater European energy security, a movement that in the long term would reduce Russia’s leverage. Expanding inventories, developing reverse flows, expanding renewable energy sources, improving efficiency and forming a common reserve could reduce the short-term shock from any Russian cut-off as the EU sets its energy and climate policies for the decade starting in 2020.
Divided Europe
Here, too, Europe is divided. A group of predominantly eastern and central EU nations led by Poland argue that the crisis shows Europe should invest in domestic energy, such as coal and shale gas.
Many western states, including Germany and Denmark, say that stricter emissions standards, more renewable energy and higher efficiency would cut imports and accelerate a shift to a low-carbon economy.
If Russia makes good on its threat to cut off gas to Ukraine, the Nord Stream pipeline between Vyborg, Russia, and Greifswald, Germany, is an alternate route to get Russian gas to the rest of Europe, and interconnectors would allow gas to flow among neighbors.
While Norwegian, Algerian or British gas could replace some losses from Russia, prices are higher, and those nations have existing customers. Developing a southern corridor from the Caspian Sea region and Iraq, and increased liquefied natural gas imports from Qatar and the U.S. are longer-term fixes.
LNG Terminal
Poland, with its history of tense relations with Russia, has invested in an LNG terminal to wean itself off Russian gas, and Lithuania has said it will do the same. Investing in infrastructure for LNG from Qatar or the U.S. is costly, however, and other EU members have balked at the price.
The divisions within the EU over the costs to member states’ economies extend beyond the energy sector. The U.K. and Cyprus are among those concerned about financial sanctions that would imperil capital flows between their banks and Russian institutions; in the first three quarters of 2013, $16 billion flowed to Russia from British banks and $12.9 billion from Cypriot banks, according to data compiled by Bloomberg. In the same period, $61 billion flowed from Russia to the British Virgin Islands, and $7.5 billion went to Cyprus.
French Ships
French officials are worried about a $1.6 billion sale of two Mistral helicopter carriers to Russia that would be imperiled by an arms ban. Greece, Italy and other Southern European states profit from Russian tourism and luxury-goods purchases, and are advocating more diplomacy and less punitive action.
Whenever there’s a crisis with Russia, especially over energy, “suddenly it’s all hands on deck,” Amanda Paul, an analyst at the European Policy Centre in Brussels, said in an interview. “Frenzy lasts for a short period of time, and then we get back into our usual way of doing things: very slowly, not necessarily united.”
To contact the reporters on this story: Indira A.R. Lakshmanan in Washington at ilakshmanan@bloomberg.net; Ewa Krukowska in Brussels at ekrukowska@bloomberg.net
To contact the editors responsible for this story: John Walcott at jwalcott9@bloomberg.net Larry Liebert
By Bryan Bradley May 27, 2014 9:04 PM GMT+0700 1 Comment Email Print
Lithuania chose Statoil ASA (STL) as a supplier for a new liquefied natural gas terminal, expecting the Norwegian company to help develop the Baltic nation’s LNG business projects, Prime Minister Algirdas Butkevicius said.
“It’s foreseen to work with them on a list of plans related to transporting LNG, bunkering and so on,” Butkevicius said today on LRT radio in Vilnius, the capital. “That would bring added revenues” for state-owned terminal operator Klaipedos Nafta AB and gas trader Litgas AB, he said.
Lithuania plans in January to start importing fuel via a floating regasification terminal at the Baltic Sea port of Klaipeda to reduce reliance on deliveries from Russia. The government yesterday said it picked Statoil over other unnamed participants in an international tender for a base supplier.
Statoil intends “in the shortest time possible” to sign a five-year agreement with Litgas on the supply of 0.55 billion cubic meters per year to the Lithuanian terminal, Morten Eek, a spokesman for the company, said by phone today. Contract documents are “almost completed,” he said.
Energy Security
Lithuania will pay Statoil a price that’s lower than the average on the global LNG market, Butkevicius told reporters earlier today. He declined to say whether it would be less than the utility Lietuvos Dujos pays OAO Gazprom for supplies.
“What’s most important is ensuring energy security, which we’ll have at the end of this year, diversifying our gas market and getting an alternative supplier,” Butkevicius said.
Litgas plans to sign agreements with other suppliers from whom it could buy additional LNG, as needed, at spot-market terms, according to the company’s website.
Qatar Liquefied Gas Co., the world’s biggest LNG producer, is a “serious candidate” for a contract, Lithuanian Energy Minister Jaroslav Neverovic said in an interview on May 8.
The terminal, with annual capacity of 3 billion cubic meters a year, plans to regasify about 1 billion cubic meters during 2015, according to its website.
To contact the reporter on this story: Bryan Bradley in Vilnius at bbradley13@bloomberg.net
To contact the editors responsible for this story: Balazs Penz at bpenz@bloomberg.net Pawel Kozlowski, Michael Winfrey
Germany and Russia confirm their intention to maintain and increase the existing energy dialogue, through cooperation between companies like Gazprom and Verbundnetz Gas, for work together on projects for underground storage.
“This issue is most relevant today given the relations with Ukraine in the gas sector. There is no doubt that cooperation with Verbundnetz Gas will allow us to create new gas storage capacities in Europe and therefore to increase the reliability and stability of gas supply to our European consumers in the autumn-winter period,” said Gazprom’s Alexey Miller in a note released on Monday.
Miller, Chairman of the Gazprom Management Committee, met Karsten Heuchert, Chairman of the Verbundnetz Gas (VNG) Executive Board. VNG is the first company to supply Russian natural gas to Germany.
‘In a manner of speaking, Gazprom and Verbundnetz Gas are the originators of the Russian-German energy dialogue. Today more than ever the issues of energy security are especially crucial for the European gas market,’ added Miller.
In January 2013, senior officials of Gazprom updated a science and technology co-operation pact with Verbundnetz Gas, renewing he cooperation between the two companies.
Gulf Coast Western Controls Blowout on Louisiana Gulf Coast Well Previously Drilled by Conoco
Confirms Significant Flow Rates and Reserve Potential of More Than Two Million BOE
May 27, 2014 04:19 PM Eastern Daylight Time
DALLAS--(BUSINESS WIRE)--Dallas-based Gulf Coast Western and its operating partner, Dallas-based Alpine Exploration Companies, Inc., confirmed that they have controlled a well blowout located in the Mallard Bay marshlands along the Southern Coast of Louisiana. They have resumed completion activities and expect to start production of their Mary O. Long #1 well, located in Cameron Parish, Louisiana in the next two weeks. Gulf Coast Western explores, develops, and acquires domestic oil and gas reserves primarily in the Gulf Coast region of the United States.
“We have very high expectations for this well and are extremely pleased with the initial test results”
The Mary O. Long #1 well was a re-entry of a proven oil/gas well drilled by Conoco nearly 30 years ago with multiple logged zones, but abandoned due to several factors at the time including low commodity pricing and the need to construct a production platform and pipeline. On March 3, 2014, the Mary O. Long #1 well experienced a blowout during completion activities in the Lower Alliance Sand at 12,420-60 feet. The well tested at extrapolated rates as high as 14,496 MCFGPD and 545 BOPD prior to the well being brought under control. In the future, Gulf Coast Western also expects to produce from the Planulina Sand located above the Lower Alliance, bringing the total production potential for the well to more than two million barrels of oil equivalent.
“We have very high expectations for this well and are extremely pleased with the initial test results,” said Gulf Coast Western CEO Matthew H. Fleeger. “Upon re-entering the well, we encountered even greater pressures than those experienced by Conoco 30 years ago, and lost control of the well. We are pleased that Alpine was able to successfully get the well back under control and look forward to placing the well into production in the near future.”
Gulf Coast Western maintains a strategy focused on acquiring interests in prospects and properties that have excellent geological and geophysical attributes in well-developed structures, which provide significant return potential with quantified downside risk for our participating partners.
About Gulf Coast Western
Gulf Coast Western, a Dallas-based company founded in 1970, is focused on the exploration, development, and acquisition of domestic oil and gas reserves in the Gulf Coast region, and has activities in Texas, Louisiana, Mississippi, Oklahoma, and Colorado. Gulf Coast Western serves as the Managing Venturer of Oil & Gas General Partnerships otherwise known as Joint Ventures. For more information, visit www.gulfcoastwestern.com.
Contacts
Granado Communications Group
Vicki Granado, 214-599-8785
vicki@granadopr.com
By Alex Lawler
LONDON, May 27 (Reuters) - Oil exports from Iraq's southern terminals are on track for a record high in May, according to loading data and industry sources, reflecting its efforts to accelerate supply growth in 2014 after a slowdown last year.
But shipments of Kirkuk crude from northern Iraq have stayed offline since a bomb blast halted the oil flow along the pipeline on March 2, industry sources said, keeping total Iraqi exports below their potential.
Exports from Iraq's southern terminals have averaged 2.60 million barrels per day (bpd) in the first 27 days of May, according to shipping data tracked by Reuters. Two industry sources, who also monitor the exports, had a similar estimate.
If that is sustained for the rest of May, southern exports this month would top April's level of 2.51 million bpd, the highest since 2003.
Repairs are underway on the northern pipeline, a step towards boosting exports even higher, but traders do not expect a rapid return of Kirkuk to the market.
"I am a bit cautious," a trader of Iraqi crude said, referring to Kirkuk. "It does not look like things are going smoothly there."
Iraq has expanded its southern export capacity, easing bottlenecks that had kept a lid on shipments, and is aiming to lift exports to 3.4 million bpd in 2014, including 400,000 bpd from the autonomous Kurdish region.
Helping lift southern output, Russia's Lukoil started commercial production from a new oilfield, West Qurna-2, in March. Its output is eventually expected to reach 1.2 million bpd, 10 times higher than the initial rate.
Without exports from northern Kirkuk fields via pipeline to Turkey, however, Iraq's overall shipments are still set to be below February's rate of 2.8 million bpd, which Deputy Prime Minister for Energy Hussain al-Shahristani had described as a record high.
There are signs that northern flows may resume in the next few weeks.
An Iraqi oil official said last week that engineers had reached some damaged sections of the northern pipeline, which was attacked by an al Qaeda-offshoot cell and that repairs could be finished in 10 to 15 days from May 20 if all went well.
Kurdistan last week started loading oil from its new pipeline for shipment from Ceyhan, defying the central government. The first shipment of 1 million barrels may go to Italy or Germany, Turkey's energy minister said. (editing by Jane Baird)
By Simon Warburton | 27 May 2014Font size Email Print
"People do not like energy sector": Gazprom chairman, Alexander Dyukov
"People do not like energy sector": Gazprom chairman, Alexander Dyukov
Russian energy giant, Gazprom Neft, says it will continue to work on developing new power sources, despite their entry to market remaining "considerably shorter than political and electoral cycles."
Addressing this year's St Petersburg International Economic Forum (SPIEF), against a backdrop of tensions surrounding Russia's annexation of Crimea and potential sanctions, Gazprom chairman, Alexander Dyukov, outlined the producer's commitment to new energy development.
"There have been problems caused by political events, but...industry has responded in a timely fashion and has recovered," he said. "As [an] oil industry, we keep working on development of new reserves and plan for new technologies of production and will continue as long as there is a demand for oil.
"Political and electoral cycles are considerably shorter than investment cycles. People do not like [the] energy sector - they dislike it even more than the banking sector. Why? There is a belief this industry is dangerous and creates space for additional regulations and taxation."
The Gazprom chairman added there was nonetheless general agreement concerning the need for a push surrounding renewable energy sources and new technologies, noting it would be appropriate "to spend government funds on supporting R&D of [the] commercialisation of technology."
However, the oil chief cautioned: "The wind does not always blow and the sun does not always shine. We need to tune the system.
"Unfortunately, if you get carried away with green energy production, regulators may miss problems that may exist in the traditional sector and this can bring problems.
"The world economy can rest in peace - sources of traditional power and new sources are available and there is an industry capable of supplying the world economy."
Addressing the same Forum, GDF Suez president, Jean-Francois Cirelli, highlighted the current political tensions between Russia and Europe, noting the importance of energy security.
"Security of supply may be tested in the weeks and months to come," said Cirelli. "Particularly between Russia and Europe, which will be tested...certainly.
"There is no economic development without energy security. The first mission of our companies is to ensure secure supply to our customers - this
By Nick Cunningham | Tue, 27 May 2014 22:26 | 0
Benefit From the Latest Energy Trends and Investment Opportunities before the mainstream media and investing public are aware they even exist. The Free Oilprice.com Energy Intelligence Report gives you this and much more. Click here to find out more.
In what could prove to be an historic turning point for Iraq, the government of Kurdistan – the semi-autonomous region in the country’s north – has delivered its first shipment of oil to the international market, in defiance of the central government in Baghdad.
The move could mark the beginning of greater geopolitical and economic power for Kurdistan and presage a move towards eventual independence.
It comes after years of political deadlock between Kurdistan and the government of Iraqi Prime Minister Nouri al-Maliki’s over how to manage and share the nation’s oil wealth. The Kurdish Regional Government (KRG) has always objected to political meddling from Baghdad, and has been charting its own path towards developing oil within its borders, an area estimated to hold 45 billion barrels.
The stage for a showdown was set in 2011, when the KRG signed a deal with ExxonMobil that offered much more generous terms than Baghdad offered in its own deals. The KRG went to sign deals with Chevron, Gazprom and Total.
Baghdad maintains that the deals are illegal. It wants any oil exported from Iraq to do so under the banner of the government-owned State Oil Marketing Organization (SOMO), which is charged with distributing all revenues to regional governments. Maliki’s government also wants oil exported from Kurdistan to travel through pipelines owned by the central government.
Kurdistan began doing this in 2009, sending oil to Ceyhan, a Turkish port on the Mediterranean. However, shipments were inconsistent and often interrupted, which the KRG says was caused by inadequate payment from Maliki’s government.
Fed up, Kurdistan built its own pipeline to Turkey in 2013 and began exporting oil in January of this year. But deliveries have been piling up in storage tanks in Ceyhan while the Turkish government delayed its export, awaiting negotiations between the KRG and Baghdad.
Ankara finally relented after months of little progress, and on May 23, the first oil tanker left Ceyhan carrying more than 1 million barrels of Kurdish crude to Europe. “This is the first of many such sales of oil exported through the newly constructed pipeline in the Kurdistan Region,” the Kurdish Ministry of Natural Resources said in a statement.
After the announcement, according to the AP, Iraq’s Oil Ministry filed an arbitration request with the Paris-based International Chamber of Commerce, accusing the Turkish government of assisting Kurdistan in carrying out the illegal sales.
The Iraqi government has long threatened to cut off Kurdistan’s share of national revenues if it began exporting on its own. Earlier this year, budget allocations to Kurdistan dried up; the KRG received just $1.3 billion out of the $4.25 billion it was expecting. Workers have gone unpaid as a result.
To make up the shortfall, Kurdish officials have set up a bank account in Turkey into which oil export revenues will be deposited. Those funds “will be treated as part of the KRG’s budgetary entitlement under Iraq’s revenue sharing and distribution, as defined under the 2005 Constitution of Iraq.” It’s another way Kurdistan is loosening the ties that bind it to Baghdad and moving toward self-sufficiency.
The situation is further complicated by the recent Iraqi election, which Maliki won but without the number of votes needed to form a government. He will have to haggle with other political factions to build a coalition government. If he puts together a Shia-dominated government and takes a hard line against the Kurds, it could push the KRG into taking a more aggressive approach to independence.
Alternatively, Maliki could offer concessions to gain Kurdish support for a coalition government, which could stave off a Kurdish push for independence, but would likely result in greater autonomy for Kurdistan to export its own oil.
Either way, Kurdistan is headed for greater independence from Baghdad.
By Nick Cunningham of Oilprice.com
By Daniel J. Graeber | Tue, 27 May 2014 22:19 | 0
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Two bills working their way through state legislatures more than 2,000 miles apart show that, although it’s the envy of much of the world, the U.S. shale industry is a house divided.
Production from shale natural gas deposits in the United States is expected to outpace conventional types of natural gas through at least 2040. In an annual energy review published by the Energy Information Administration (EIA), shale gas production is actually expected to accelerate for the next 25 years, where most other resources show a decline.
But the picture looks less clear when you look at the situation state-by-state.
Illinois state lawmaker John Bradley doesn't want to wait for his state to finish drafting new rules governing its hydraulic fracturing operations. He’s introduced a bill to eliminate the rulemaking portion of a law passed a year to regulate fracking. The state’s department of natural resources has until November to finish drawing up the rules but lawmakers like Bradley and oil and gas industry officials believe the delay is bad for business.
Illinois ranks 27th in the nation in natural gas production, just five states from the bottom in terms of measured output. While it has the largest crude oil refining capacity in the region, it has few wells and what the EIA describes as "minimal production" of natural gas.
Lawmakers like Bradley think more legislative delays will push the state even further down the natural gas production rankings.
Two thousand miles away in California, it’s a completely different story. Shale oil may be coming out of the ground fast enough to make OPEC nervous, but State Senator Holly Mitchell thinks it's time to apply the brakes.
She introduced a bill to do so after an EIA report dramatically lowered the estimate of how much recoverable oil there is in the Monterey shale play -- from 1.3 billion barrels to just 600 million barrels.
But that's still more than some states. Despite Mitchell’s contention there's "no ocean of black gold" in California, the EIA ranks the state third in the nation in terms of overall crude oil production.
So in Illinois, which has few resources, there are lawmakers who want to fast-track the shale industry development.
Meanwhile, in California, even with the lowered EIA estimate, the industry is pumping along at a rate just behind behemoths Texas and North Dakota, but policymakers there say it's time to slow things down.
And overseas, the United States is the envy of an international community scratching its head on all matters related to energy security. Though some Eastern European countries are swimming in shale oil and gas, it's been difficult so far for them to replicate the U.S. success story. And that's the prevailing opinion from North Dakota, a state at the heart of the U.S. narrative.
It's easy to be dazzled by the pure numbers of the U.S. shale story. But on the margins, divisions reveal themselves. And the protests and acts of civil disobedience against the industry are another story all together.
By Daniel J. Graeber of Oilprice.com
[ 27 May 2014 17:34 ]
Baku. Agshin Rafigoglu - APA-Economics. “Azerbaijani gas will not be delivered to Europe before 2021”, said the editor at Platts information agency William Powell.
“Azerbaijan must do much works to start gas transportation to Europe. These works include development of several fields in the Caspian Sea, construction of pipelines and etc. All these need a large amount of money. Taking all these into consideration, we can say that Azerbaijani gas will not be delivered to Europe before 2021”.
Powell noted that at the first stage, the gas to be transported to Europe will not at a large volume: “Naturally, the volume of transport gas can be increased through development of other fields. Consequently, annual volume of transported gas can be reached 50 bcm. Therefore, this volume is down twice from the gas Norway transports. This is also less than Russia transports to Europe”.
April Demand Contracted from March, Reflecting Slower Industrial Activity
SINGAPORE, May 27, 2014 /PRNewswire/ -- China's apparent oil demand* in April rose 1.4% compared with the same month last year to 39.92 million metric tons (mt) or an average 9.75 million barrels per day (b/d), a just-released Platts analysis of Chinese government data showed.
The year-over-year growth in apparent oil demand in April was greater than the 0.5% recorded in the previous month.
On a month-over-month basis, apparent oil demand in April fell 0.7% from March. This was the third consecutive year that apparent oil demand has contracted in April from March and is counter to prior years, when demand traditionally accelerated in the second quarter. Analysts have said this is mainly because of muted pick-up in industrial activities this spring.
China's refinery crude throughput volumes in April rose 3.8% from a year earlier to 9.67 million b/d, data from China's National Bureau of Statistics showed May 13.
Net crude imports for April were up 21.2% from the same period a year ago. But the country's net oil product imports plunged 72% year over year to 340,000 mt versus 1.22 million mt in April 2013, as oil product inflows fell 34.7% from a year earlier to 2.54 million mt. Exports of oil products also slumped 17.6% to 2.2 million mt last month.
"On a year-over-year basis, China's oil products imports have been significantly lower since the second half of 2013 as demand growth remains sluggish amid stagnant economic recovery," said Song Yen Ling, Platts senior writer for China.
"However, it is possible that actual oil consumption was higher than 9.75 million b/d in April, as gasoil and jet/kerosene stocks were drawn down during the month," Song noted.
Over the first four months of the year, China's apparent oil demand was essentially flat, rising just 0.2% from the same period of 2013 to 9.94 million b/d. This is an improvement on the first quarter, when overall apparent oil demand fell 0.6% year over year.
In China's individual oil products markets, gasoil apparent demand in April showed positive growth, edging up 0.9% year-over-year to 3.38 million b/d. Domestic production rose 1.1 % year over year to 13.92 million mt. Net exports rose 10.3% from a year earlier to 320,000 mt.
Gasoline apparent demand surged 16.1% last month to 2.4 million b/d, on continued auto sales growth. Domestic output of the fuel by refiners gained 11.8% year over year to 8.77 million mt, while net exports fell some 34% year over year to 310,000 mt.
Fuel oil apparent demand slipped 9.7% year over year to 659,000 b/d last month, on the back of a 37% decline in net imports to 920,000 mt.
Domestic production of fuel oil last month was up 10.4% to 2.2 million mt, but this was not sufficient to offset the lower net imports. Consumption of imported fuel oil - used significantly as a raw material for the manufacturing of refined petroleum products by small, independent refiners known as "teapots"- has been hit in the last two years as the refiners have gained more access to domestic crude oil, which is an alternate feedstock.
MONTHLY TRADE DATA IN MILLION METRIC TONS:
| Apr '14 | Apr '13 | % Chg | Mar '14 | Feb '14 | Jan '13 | Dec '13 | |
| Net crude imports (million mt) | 27.88 | 23.00 | +21.2 | 23.52 | 22.88 | 28.07 | 26.69 |
| Crude production (million mt) | 16.98 | 17.05 | -0.4 | 17.64 | 16.11 | 17.58 | 17.90 |
| Apparent demand (million mt) | 39.92 | 39.37 | +1.4 | 41.55 | 40.56 | 40.11 | 42.76 |
| Apparent demand ('000 b/d) | 9,754 | 9,619 | +1.4 | 9,825 | 10,618 | 9,484 | 10,111 |
Sources: China's General Administration of Customs, National Bureau of Statistics, Platts
Month-to-month demand in China is generally viewed to be subject to short-term anomalies which are of interest and important to note, but which often fail to reveal the country's underlying demand trends. Year-to-year comparisons are viewed by the marketplace to be more indicative of the country's energy profile.
*Platts calculates China's apparent or implied oil demand on the basis of crude throughput volumes at the domestic refineries and net oil product imports, as reported by the National Bureau of Statistics and Chinese customs. Platts also takes into account undeclared revisions in NBS historical data.
The government releases data on imports, exports, domestic crude production and refinery throughput data, but does not give official data on the country's actual oil consumption figure and oil stockpiles. Official statistics on oil storage are released intermittently.
Platts releases its monthly calculation of China's apparent demand between the 18th and 26th of every month via press release and via its website. Any use of this information must be appropriately attributed to Platts.
Platts uses a conversion rate of 7.33 barrels of crude per metric ton, the widely-accepted benchmark for markets East of Suez.
For more information on crude oil, visit the Platts website at www.platts.com. For Chinese-language information on oil and the energy and metals markets, visit http://www.platts.cn/.
About Platts: Founded in 1909, Platts is a leading global provider of energy, petrochemicals, metals and agriculture information and a premier source of benchmark prices for the physical and futures markets. Platts' news, pricing, analytics, commentary and conferences help customers make better-informed trading and business decisions and help the markets operate with greater transparency and efficiency. Customers in more than 150 countries benefit from Platts' coverage of the biofuels, carbon emissions, coal, electricity, oil, natural gas, metals, nuclear power, petrochemical, shipping and sugar markets. A division of McGraw Hill Financial (NYSE: MHFI), Platts is based in London with approximately 900 employees in more than 15 offices worldwide. Additional information is available at http://www.platts.com.
About McGraw Hill Financial: McGraw Hill Financial (NYSE: MHFI), a financial intelligence company, is a leader in credit ratings, benchmarks and analytics for the global capital and commodity markets. Iconic brands include: Standard & Poor's Ratings Services, S&P Capital IQ, S&P Dow Jones Indices, Platts, CRISIL, J.D. Power and McGraw Hill Construction. The Company has approximately 17,000 employees in 29 countries. Additional information is available at www.mhfi.com.
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