Russian domestic May crude prices start high, but edge lower on weak demand
Prices of Russian domestic crude for May loading and delivery edged lower toward the end of the trading window due to weak demand, sources said.
Western Siberian crude finished trading around Rb14,600/mt ($412.10/mt) after starting around Rb14,900/mt. The price achieved toward the end of the trading window, was up around Rb600/mt from the previous month.
Ongoing maintenance at some refineries resulted in slightly weaker demand. In addition, not all refineries could receive the required volumes, which traders attributed to lack of pipeline capacity. But trading for May barrels started on a high note at Rosneft’s monthly tender on April 22, when the company sold 70,000 mt of Udmurtia crude in a Rb15,125-15,200/mt range, or some Rb1,000/mt higher than the previous month. Rosneft awarded its regular monthly tender for April volumes of Udmurtia crude at Rb14,250-14,350/mt.
“Sometimes there is a high price [at the start of trading], but it comes off later,” said a trader. Unlike Rosneft, the other sellers saw buying interest gradually dwindle and buyers were starting to shun the high offers. Usa crude from the Timan-Pechora region shed value slightly over the course of the trading window.
It started trading in excess of Rb14,700/mt to end around Rb14,500/mt, narrowing the spread from the previous month to around Rb600/mt. Usa crude changed hands around Rb13,800-13,900/mt during the trading of April barrels. “Refineries are not prepared to pay a big premium over the export alternative,” said a to normal following shortages of light crude last year which widened its premium over more sulfurous Urals crude, sources said.
While last summer the spread between light and more sulfurous crude widened to Rb1,000/mt on perceived shortages, recently the spread has narrowed with the two grades heard trading almost on a par for May loading and delivery.
Some said that the narrow spread is making trading of light crude less attractive and smaller independent producers are now feeding it instead into the Urals pipeline. Overall, May crude traded higher than April, which traders attributed to the lower export duty, higher international benchmarks and weaker ruble.
Brent was trading around $109-110/barrel during the May trading window for Russian domestic crude, which took place at the end of April, compared to $107/b a month earlier. Russia dropped the export duty on its main Urals crude export blend to $376.10/mt for May, down 2.82% from $387/mt in April. But the high prices, coupled with some, albeit diminishing, refinery maintenance have been putting off buyers, said traders.
N Sea Gullfaks crude Jun loadings set at 85,500 b/d down 107,565 b/d from May
Daily loadings of North Sea crude oil grade Gullfaks are set to more than halve in June, to average 85,500 b/d, compared with 193,065 b/d scheduled for May, according to a copy of the loading schedule seen by Platts Tuesday.
The total volume loading in June is down 3.42 million barrels from the previous month at 2.565 million barrels. This comprises three 855,000 barrel cargoes, compared to seven in May, with traders attributing the drop to planned field maintenance.
The main Gullfaks field lies in the northern part of the Norwegian North Sea and has been developed using three concrete production platforms. The complex also utilizes subsea tiebacks to three satellite fields Gullfaks South, Rimfaks, and Skinfaks and Gullveig.
Oil is loaded directly into shuttle tankers, while associated gas is sent via the Statpipe to Karsto, north of Stavanger. The partners in the field are Statoil (70%) and Petoro (30%), according to Statoil’s website.
EIA says 2014 US crude output to average 8.46 million b/d
Record-high US commercial crude oil stocks will put downward pressure on crude oil prices, the US Energy Information Administration said Tuesday, projecting that WTI will average $96.59/barrel and Brent will average $106.26/b in 2014.
The EIA, in its May Short-Term Energy Outlook, noted that total US commercial stocks at the end of April reached a record high of nearly 400 million barrels. Meanwhile, new pipeline capacity from the Midwest to the Gulf Coast reduced inventories at Cushing, Oklahoma, to 25 million barrels at the end of April, the lowest since October 2009.
The EIA estimated that US total crude production averaged 8.3 million b/d in April, the highest monthly average since March 1988. The agency expects US production to average 8.5 million b/d in 2014, a 13.6% increase over 7.4 million b/d in 2013. For 2014, US production will average 9.2 million b/d, the EIA estimated, which would make it the highest annual average since 1972.
Meanwhile, US liquid fuels consumption will rise slightly in 2014 to 18.92 million b/d from 18.89 million b/d in 2013. The growth in US imports, the EIA said. “The share of total US liquid fuels consumption met by net imports peaked at more than 60% in 2005 and fell to an average of 33% in 2013,” the agency said. “EIA expects the net import share to decline to 23% in 2015, which would be the lowest level since 1970.”
Canadian imports of US crude rebound in March
Canadian imports of US crude rebounded to 7.83 million barrels (253,000 b/d) in March, up from just 6.88 million barrels (246,000 b/d) in February, Statistics Canada data showed Tuesday.
Statistics Canada crude import data trends closely with US Energy Information Administration export data, though it is released nearly a month in advance. Thus it can act as an indicator to where the more closely watched EIA figure will be. EIA data for March is not scheduled to be available until May 29. That said, the two data sets are comparable for February, and have been going back as far as October.
February EIA data showed the US exported around 240,000 b/d of crude to Canada, which came in around 6.72 million barrels in total for the month, similar to the Statistics Canada figure of 6.88 million barrels. While negligible discrepancies clearly exist, they could be explained by the time lag for when a barrel considered a US export enters Canada, and thus is considered a Canadian import.
The latest Statistics Canada data shows Canada imported around 5.53 million barrels from Texas alone in March, up from 4.99 million barrels. Imports from North Dakota rallied to 2.07 million barrels, up from just 1.83 million barrels in the shorter February.
February imports from North Dakota were also likely impacted by well shut-ins due to cold weather. Imports from Louisiana, meanwhile, came in at zero for the second consecutive month. Louisiana had exported around 2.14 million barrels to Canada in January, Statistics Canada data shows.
On a province basis, Quebec took in around 3.21 million barrels from Texas in March, up from just 1.28 million barrels in February. Quebec is home to Valero’s 265,000 b/d Jean Gaulin refinery.
North Dakota sent around 1.42 million barrels to the province, up from around 898,000 barrels. Texas sent around 1.67 million barrels to New Brunswick, home to Canada’s largest refinery, Irving Oil’s 300,000 b/d Saint John facility, in March, down from the 3.68 million barrels it sent in February. North Dakota exports to the province more than halved in March, down to 325,000 barrels from 688,000 barrels.
Egypt raises most Apr crude OSPs from Feb, lowers Belayim, West Desert
Egyptian General Petroleum Corp. has increased the official selling prices for most of its crude grades loading April by $0.30-0.35/barrel compared with March, the company said Tuesday.
But EGPC lowered the OSP for its Belayim and West Desert crudes by $0.05/b to Dated Brent minus $9.36/b and minus $0.90/b, respectively. The OSPs for Gulf of Suez and Zeit Bay were raised $0.35/b to Dated Brent minus $4.55/b and minus $4.45/b, while the OSPs for Ras Budran and as Gharib rose $0.30/b each to Dated Brent minus $9.30/b and minus $9.35/b.
The company also raised the OSP for Ras al Behar by $0.35/b to Dated Brent minus $4.45/b.
By Colin McClelland May 7, 2014 6:00 AM GMT+0700 0 Comments Email Print
Angola, Africa’s second-biggest oil producer, probably won’t reach an output target of 2 million barrels a day next year because new projects will be too late to boost declining flows, Wood Mackenzie Ltd. said.
Sonangol EP, the state oil company, said in a statement May 5 that the target remains in place after government-run newspaper Jornal de Angola reported that the goal was deferred to 2017. The Organization of Petroleum Exporting Countries member pumped 1.54 million barrels a day last month, according to data compiled by Bloomberg.
“I don’t think 2 million barrels a day by next year is realistic,” David Thomson, a Wood Mackenzie analyst in Edinburgh, said in an e-mailed response to questions. “I am confident it will happen, but toward the end of the decade.”
Total SA’s CLOV fields in Block 17 and Eni SpA’s Western Hub in Block 15/06 are expected to start in 2014 and together may add 241,000 barrels a day while older fields off Angola slow. Drilling this year by BP Plc and Conocophillips among others marks the country’s most active exploration yet as it attempts to rival Nigeria, Africa’s leading producer.
“Angola’s oil production has barely managed to go above 1.8 million barrels a day in the last 15 months and has been declining month on month since November,” Abhisek Deshpande, lead oil markets analyst at Natixis SA in London, said by e-mail. “It looks highly uncertain if Angola will be able to meet its target.”
Mafumeira Sul
Chevron Corp., at one time Angola’s leading producer, is trying several projects to stem reduced flows. The San Ramon, California-based explorer plans to start pumping 110,000 barrels a day next year from the $5.6 billion Mafumeira Sul development in Block 0 Area A, while the $2 billion Nemba Enhanced Secondary Recovery project will add 13,000 barrels a day in Block 0 Area B, according to the company website. Paris-based Total is employing new pumps to increase output by 60 percent in 2015 at its Rosa field in Block 17.
“The decline rates at existing fields are just too high and project delays are crippling growth,” Amrita Sen, chief oil market analyst at Energy Aspects in London, said by e-mail. “I don’t think they will get to 2 million barrels a day next year.”
In 2016, Eni expects the Eastern Hub of the Cabaca Norte and Cabaca SE fields in Block 15/06 to start producing while Chevron is targeting first oil from N’Dola in Block 0 Area B. A final investment decision is due this year on the 28,000 barrel-a-day N’Dola project.
Production is expected to pick up in 2017 with the start of Houston-based Cobalt International Energy Inc.’s 100,000 barrel-a-day Cameia project in Block 21 and Total’s $16 billion Kaombo development. Total, the country’s largest producer, gave final approval April 14 for the 600-million-barrel Kaombo site in Block 32, which is expected to produce 200,000 barrels a day.
New projects will be enough to meet the 2 million barrel a day target by 2015, Petroleum Minister Jose Maria de Botelho Vasconcelos said in a November interview. Ministry spokesman Jose Miguel didn’t return phone calls and e-mails this week.
To contact the reporter on this story: Colin McClelland in Luanda at cmcclelland1@bloomberg.net
To contact the editors responsible for this story: Alaric Nightingale at anightingal1@bloomberg.net Alex Devine, Claudia Carpenter
By Dan Murtaugh May 7, 2014 5:42 AM GMT+0700 0 Comments Email Print
The Energy Information Administration wants to start collecting information about the density of oil produced in the U.S. to better inform the debate over lifting restrictions against crude exports.
The agency, which is the statistical arm of the Energy Department, would begin publishing the average API gravity and sulfur content of domestic crude oil on a state-by-state basis in December 2015, under a proposal published today in the Federal Register, according to Jim Kendell, who heads the EIA’s Office of Oil, Gas and Coal Supply Statistics.
Companies such as Exxon Mobil Corp. (XOM) have urged the U.S. government to ease restrictions against most exports of unrefined crude from the U.S. Others, such as Valero Energy (VLO) Corp., say the U.S. is benefiting from existing rules.
One issue at the center of the debate, the EIA said in its proposal, is the density of U.S.-produced oil. Proponents of lifting export restrictions argue that new U.S. production from shale plays in North Dakota and Texas is light crude, whereas many U.S. refineries are designed to handle lower-quality heavy oil.
“Collecting crude oil production by API gravity categories will inform the debate,” the agency said in the Federal Register notice.
U.S. crude production has grown 49 percent since the start of 2011, boosted by improved use of horizontal drilling and hydraulic fracturing in shale formations in North Dakota and Texas. Production from those formations tends to be low-density and low in sulfur content.
“Most knowledgeable observers see a glut of light oil coming out, but how big is that glut going to be?” said David Hackett, president of Irvine, California-based energy consultant Stillwater Associates. “To the extent the EIA can quantify for policy makers just how much light sweet oil is out there, I think that’s a good thing.”
To contact the reporter on this story: Dan Murtaugh in Houston at dmurtaugh@bloomberg.net
To contact the editors responsible for this story: Dan Stets at dstets@bloomberg.net Margot Habiby, Richard Stubbe
By Joao Peixe | Tue, 06 May 2014 21:03 | 0
The White House is discouraging business leaders from attending an economic summit in Russia later this month. The St. Petersburg International Economic Forum runs from May 22-24, and U.S. government officials are hoping to further isolate the Kremlin for its aggressive actions in Ukraine by keeping investors and capital away from Russia.
According to several reports, White House officials made personal telephone calls to leaders of some of the biggest companies that planned on attending. Some appear to be listening. The CEO of Alcoa Inc., Klaus Kleinfeld, agreed not to attend. “In light of the U.S. government's requirements, Alcoa has adjusted its attendance at the St. Petersburg International Economic Forum,” the company said in a statement. Other companies that agreed to skip the conference include Goldman Sachs, PepsiCo, Morgan Stanley, and ConocoPhillips.
Still, some business leaders are worried about a backlash from Russian President Vladimir Putin that could affect their business interests in Russia, according to The New York Times. Several companies are sending lower-level Moscow-based executives to the event, in an effort to please both the White House and Putin. Privately, many major companies expressed frustration at the difficult position the White House is putting them in.
The U.S. has also decided not to attend an energy forum that will be held in Moscow May 15 and 16. The biennial International Energy Forum, headquartered in Riyadh, Saudi Arabia, was formed following the Gulf War in the early 1990s after oil prices shot up. It is a regular meeting at the ministerial level and the 80+ member countries represent more than 90 percent of the world’s oil and gas reserves.
With violence between pro- and anti-Russian forces growing worse in eastern Ukraine, there is little hope that relations between Russia and the U.S. will improve anytime soon.
By Joao Peixe of Oilprice.com
By Charles Kennedy | Tue, 06 May 2014 21:09 | 0
The U.S. Global Change Research Program released a landmark report on climate change on May 6, put together by over 300 experts across multiple government agencies. The National Climate Assessment (NCA) finds that climate change is already affecting the U.S. – from changing weather patterns to increased floods, wildfires, droughts, pest outbreaks and more.
“Climate change, once considered an issue for a distant future, has moved firmly into the present,” the report concludes. The NCA draws a direct link between the burning of fossil fuels and the effects of climate change.
The report also offers details on how different regions of the United States are affected differently. For example, in the mountain west and southwest, reduced snowpack, rising temperatures, and drought will impact agriculture. On the other hand, in the northeast, hurricanes and other extreme weather events could lead to an increased frequency in flooding.
The Washington Post published a related article on U.S. President Barack Obama’s renewed determination to address climate change. He has been regularly briefed on climate science and now sees it as a major aspect of his legacy. In the article, he speaks in personal terms about how climate change will affect his daughters’ lives.
The NCA’s rollout will coincide with a reinvigorated White House strategy to address climate change, according to the Post.
The White House plans to use the NCA as the basis for how it will address greenhouse gas emissions in Obama’s remaining two-and-a-half years in office. The most ambitious of these measures will be the pending limits on greenhouse gas emissions from existing power plants, which the EPA plans to introduce in June.
The Obama administration has several other key environmental decisions to make in the coming months, including the fate of the Keystone XL pipeline and how to address methane emissions from oil and gas drilling.
By Charles Kennedy of Oilprice.com
Washington (Platts)--6May2014/726 pm EDT/2326 GMT
The reopening of the Es Sider and Ras Lanuf oil ports in eastern Libya remains in limbo as the government appears to be backing away from a deal with rebels negotiated by ousted Prime Minister Ali Zidan, the US ambassador to Libya said Tuesday.
"We have no way of knowing" if the ports would reopen, Ambassador Deborah Jones said in a conference call with US businesses considering investing in Libya. "I'm not terribly optimistic in large part because there was not a lot of buy-in in the General National Council, their parliament, for the terms of the deal."
Ras Lanuf and Es Sider, which have a combined capacity of 560,000 b/d, have been closed since rebels seeking more autonomy took over the ports last August.
Jones said a deal struck between Zidan and rebel leader Ibrahim Jathran to reopen four ports, including Ras Lanuf and Es Sider, included compensation payments to the former oil guards in Jathran's forces, payments that many Libyan officials have called tantamount to extortion.
The other two ports, Zuetina and Marsa al-Hariga, recently reopened.
Jones said she spoke Tuesday morning with newly named Prime Minister Ahmed Maiteeq about whether the deal would go through.
"He gave a nuanced answer suggesting he's going to seek a way to finesse the terms and conditions of the deal," Jones said. "Many people believe, whether fairly or not, that [Zidan's administration] botched the situation."
Libya produced 200,000 b/d in April, according to data released earlier Tuesday by the US Energy Information Administration. That's down from the 1.5-1.6 million b/d Libya was producing before the current spate of unrest began in May 2013.
--Herman Wang, herman.wang@platts.com
--Edited by Kevin Saville, kevin.saville@platts.com
By Daniel J. Graeber | Tue, 06 May 2014 21:50 | 0
A "new paradigm" shift in the economic model for Kazakhstan may suggest its hopes for a major windfall from the Kashagan oil field are fading.
The Asian Development Bank (ADB) announced it signed a framework agreement on May 4 in Astana to help the oil-rich Central Asian country with economic diversification. The bank said the “landmark agreement” establishes a "new paradigm partnership on the country’s development agenda."
ADB President Takehiko Nakao signed the co-financing framework agreement with Kazakh Prime Minister Karim Massimov.
Oil consumption in Kazakhstan is low, meaning the country can designate most of its production for exports. The energy sector accounts for about 40 percent of government revenue but well over half of its export earnings.
In April, a delegation from the International Monetary Fund visited Kazakhstan to get a first-hand look at its finances. Though its economy performed well in 2013, the IMF said its growth rate was losing momentum.
Growth projections from the IMF were lowered from an earlier estimate of 5.75 percent to 4.75 percent growth for 2014. Kazakhstan, the fund said, has fared well compared to other oil exporting nations, though diversification was essential for continued success.
"More broadly, it will be important to ensure that spending on development and diversification programs is transparent and in line with capacity and high standards of efficiency in order to guard against the resource curse," the IMF warned.
Oil production in 2013 averaged around 1.64 million barrels per day and most of that came from the Tengiz and Karachaganak onshore oil fields. Kashagan, the fifth largest oil field in the world, could provide a further boost to Kazakhstan's economy, though development has been curtailed by pipeline problems at the offshore field.
In April, Italian energy company Eni said pipeline problems associated with Kashagan were "worse than we considered." The entire pipeline network may have to be replaced with an alloy resistant to the corrosive hydrogen sulfide present in the field. Kashagan began operations very briefly in late 2013 and production isn’t expected to begin again until at least 2015.
For the IMF, the ongoing skirmish between Russia and Ukraine could add another layer of risk to Kazakhstan's economic development, given Astana’s strong financial ties to Russia. Midterm, the Fund said, stronger growth prospects are tied to the uncertainty surrounding Kashagan.
With the ADB agreement, Astana may be hedging its bets.
By Daniel J. Graeber of Oilprice.com
By Nick Cunningham | Tue, 06 May 2014 22:06 | 0
Brazil’s state-owned oil company, Petrobras, has become a world class producer of offshore drilling technology, which puts it in a good position for the future, as oil comes from increasingly difficult places to reach.
In the 1980s, Brazil’s oil production was negligible, but by 2010, it was pumping 2.7 million barrels of liquid fuels per day (bpd). By the mid-2000s, the trend line seemed to be inexorably rising upwards, and with the huge oil discoveries in 2007 in Brazil’s pre-salt basins – oil reserves that are trapped beneath a thick layer of salt – many observers believed Brazil was destined to become an oil superpower.
But then something happened. Since 2010, oil production has flattened out entirely. In 2013, Brazil averaged only 2.7 million bpd of oil production, which is where it was three years ago.
Petrobras’ performance over the last few years deserves some of the blame, and a steady stream of reports point to mismanagement within the company as why. A former executive was arrested in March for money laundering in connection with a gang. The company is conducting an internal investigation because of allegations that top company officials accepted bribes from a Dutch company in exchange for awarding contracts.
Local content rules are also hampering production. With Brazilian oil service companies booked up, there is a shortage of labor, leaving Petrobras and its partners struggling to find enough qualified contractors. Not only has this raised costs, but it has also delayed projects. Most recently, Brazil’s oil regulator ANP recommended a delay of further auctions for offshore blocks until 2015, so that local service companies could absorb all the demand.
Petrobras’ problems were perfectly summed up in an April mishap. According to Reuters, Saipem SpA, an Italian contractor working at a Petrobras-run oil field in the Atlantic Ocean, managed to drop a 2.3 kilometer steel pipe deep into the ocean. Saipem was trying to attach the pipe to a drilling rig, but it sank 1,800 meters (5,900 feet) to the ocean floor. Damaged and lost to sea, the $2 million pipe is not recoverable. That’s only the beginning – the lost pipe could set the project back by more than a month, costing Petrobras tens of millions more.
The incident fits a pattern – several other rigs in nearby oil fields are also behind schedule, including Parque da Baleias off the coast of the state of Espirito Santo, and Papa Terra near Rio de Janeiro.
But the problem is deeper than just bad management. The state-owned oil company is used as a tool to achieve policy goals by the government, such as subsidizing fuel prices for drivers, which has cost the company $37 billion since 2011.
All of these problems have caused Petrobras to claim the mantle of the world’s most indebted and least profitable major oil company. It has amassed $114.3 billion in debt, and according to Moody’s, Petrobras owes $11.50 for every barrel of oil it has yet to produce. Its share price has cratered, losing half of its value since 2010.
The stagnating oil industry is becoming a hotter political issue in Brazil. Whether true or not, it fits the narrative of how corruption at the highest levels is causing the economy to stagnate. And the angry protests in several major cities last year demonstrated voter frustration as Brazil heads into this fall’s presidential election.
Brazil’s political opposition is using Petrobras’ woes in an effort to unseat President Dilma Rousseff. But she continues to back the firm, which is a symbol of nation pride. “No one and nothing will destroy Petrobras,” she told a crowd of oil workers and supporters in April in the state of Pernambuco. “Petrobras is bigger than all of us. Petrobras is as big as Brazil.” Her fate, as well the country’s, hinges on the performance of Brazil’s largest company.
By Nick Cunningham of Oilprice.com
BY THE CANADIAN PRESS, POSTMEDIA NEWS MAY 6, 2014 5:03 PM
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CALGARY — New National Energy Board data shows oil-by-rail exports have risen ninefold in less than two years, but they’re still far eclipsed by what’s moving by pipeline — and by what the stalled Keystone XL alone aims to carry.
The Canadian energy regulator’s figures released Monday show more than 146,000 barrels per day were exported on trains in the last three months of 2013, compared with just under 16,000 in the first three months of 2012.
But in all of 2013, less than five per cent of Canada’s 2.6 million barrels per day of crude oil exports moved by rail — almost all to the U.S. — according to a separate NEB report released in March, which also showed pipeline exports growing much more dramatically than those moving by rail between 2012 and 2013.
“Obviously oil by rail is ramping up, but it’s still relatively small potatoes,” said Greenpeace campaigner Keith Stewart.
The U.S. State Department’s final environmental report on the Keystone XL oil pipeline took crude-by-rail growth into account when it determined that increased oilsands development — and its accompanying contribution to climate change — would not hinge on a single pipeline being built.
The U.S. report said rail loading facilities in Western Canada are expected to hit a capacity of more than 1.1 million barrels per day by the end of this year, most of which would be in heavy oil-producing areas. The State Department estimated about 180,000 barrels per day were already moving by rail when the report was released in January.
The NEB says of the crude that was exported by rail in 2013, 45 per cent — around 60,000 barrels per day — went to the U.S. Gulf Coast, the refining market coveted by backers of Keystone XL, which aims to ship 830,000 barrels per day of crude.
Rail plays a “complementary” role to pipelines, said Geraldine Anderson, with the Canadian Association of Petroleum Producers.
“We’ve always used rail in some capacity and going forward, we’re going to need all modes of transportation, be it rail, be it pipeline, be it tankers to complement each other and to get our product to market.”
Stewart said he finds it “alarming” that crude-by-rail continued to rise after July 2013, when a fiery wreck in Lac Megantic, Que., killed 47 people. According to the NEB, rail exports grew by around 18 per cent between the third and fourth quarters of last year.
“I don’t think this would have happened if oil companies were actually liable for damages,” he said, calling the way risk is divvied up “crazy.”
“The oil companies get the benefit. The rail companies and communities face the risk.”
Oil exports by rail rising, but still lag behind volume moved via pipeline
BY THE CANADIAN PRESS, POSTMEDIA NEWS MAY 6, 2014 5:03 PM
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CALGARY — New National Energy Board data shows oil-by-rail exports have risen ninefold in less than two years, but they’re still far eclipsed by what’s moving by pipeline — and by what the stalled Keystone XL alone aims to carry.
The Canadian energy regulator’s figures released Monday show more than 146,000 barrels per day were exported on trains in the last three months of 2013, compared with just under 16,000 in the first three months of 2012.
But in all of 2013, less than five per cent of Canada’s 2.6 million barrels per day of crude oil exports moved by rail — almost all to the U.S. — according to a separate NEB report released in March, which also showed pipeline exports growing much more dramatically than those moving by rail between 2012 and 2013.
“Obviously oil by rail is ramping up, but it’s still relatively small potatoes,” said Greenpeace campaigner Keith Stewart.
The U.S. State Department’s final environmental report on the Keystone XL oil pipeline took crude-by-rail growth into account when it determined that increased oilsands development — and its accompanying contribution to climate change — would not hinge on a single pipeline being built.
The U.S. report said rail loading facilities in Western Canada are expected to hit a capacity of more than 1.1 million barrels per day by the end of this year, most of which would be in heavy oil-producing areas. The State Department estimated about 180,000 barrels per day were already moving by rail when the report was released in January.
The NEB says of the crude that was exported by rail in 2013, 45 per cent — around 60,000 barrels per day — went to the U.S. Gulf Coast, the refining market coveted by backers of Keystone XL, which aims to ship 830,000 barrels per day of crude.
Rail plays a “complementary” role to pipelines, said Geraldine Anderson, with the Canadian Association of Petroleum Producers.
“We’ve always used rail in some capacity and going forward, we’re going to need all modes of transportation, be it rail, be it pipeline, be it tankers to complement each other and to get our product to market.”
Stewart said he finds it “alarming” that crude-by-rail continued to rise after July 2013, when a fiery wreck in Lac Megantic, Que., killed 47 people. According to the NEB, rail exports grew by around 18 per cent between the third and fourth quarters of last year.
“I don’t think this would have happened if oil companies were actually liable for damages,” he said, calling the way risk is divvied up “crazy.”
“The oil companies get the benefit. The rail companies and communities face the risk.”
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"Iran can export natural gas to Europe through three different ways, including via the Turkish pipeline which is considered the most cost-effective route under the current circumstances," Iranian Deputy Oil Minister for International Affairs Ali Majedi told FNA on Tuesday.
He underlined that export of Iran's gas to Europe will be a win-win deal as Europe has been looking for various gas resources and production of gas from the new phases of Iran's South Pars gas field will begin soon.
"The second route is a pipeline which passes through Iraq, Syria, Lebanon and (finally) the Mediterranean Sea," Majedi said, adding, "The third route is an undersea route passing beneath the Mediterranean Sea."
The plan to transit Iran's gas to Europe through Turkey came after the failure of negotiations on the construction of the Nabucco gas pipeline, which prompted some European companies to officially ask for importing Iran's natural gas.
The Nabucco pipeline is a proposed natural gas pipeline which starts from Turkey's Erzurum to end in Austria's Baumgarten an der March and aims to reduce Europe's gas dependence on Russia.
In September 2012, Iran announced that the necessary grounds have been paved for the export of the country's gas supplies to the European countries via Turkey, despite the new EU sanctions against Tehran.
"In addition to the agreement signed for the export of gas to Pakistan and Iraq, the permission to export gas to Europe via Turkey has also been taken," former Iranian Oil Minister Rostam Qassemi said at the time.
Last month, Iranian Minister of Industries, Mines and Trade Mohammad Reza Nematzadeh said Tehran is ready to supply natural gas to the European countries.
"Iran should be considered a reliable partner for natural gas supplies to Europe," Nematzadeh to the German business daily Handelsblatt.
He underlined that Iran has the world's largest natural gas reserves, and said, "Iran would be a reliable and long-term partner for Europe as the EU aims to decrease its dependence on Russian deliveries due to the ongoing Ukraine crisis."
The minister noted that the government was looking into a pipeline that would transport gas from Southern Iran to the Turkish border from which it could be pumped on to the West.
He added that before the sanctions went into force, there had already been concrete plans to deliver liquid gas to Spain, and feasibility studies for a separate pipeline to Europe were also under way.
Nematzadeh said that Europe's hunger for energy was strong enough to provide good business for both Tehran and Moscow.
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TEHRAN (FNA)- Iranian Oil Minister Bijan Namdar Zanganeh underlined on Tuesday that the ministry has started execution of its 4-year-long plan to extract one million barrels per day (bpd) more oil from joint fields with the neighboring countries.
"We have started our activity for a one-billion-barrel increase in crude oil production capacity from our joint fields in the coming four years. If this objective is realized, Iran’s petroleum industry will register its biggest eve bargaining chip,” Zanganeh said at the inauguration ceremony of Tehran Oil and Gas Show.
He said the planned increase will create proper conditions for drillers, manufacturers of wellhead and downhole equipment and other service providers.
Late in January, Deputy Oil Minister Roknoddin Javadi stressed the need for the development of the hydrocarbon fields Iran shares with the neighboring countries.
Javadi, who is also the managing-director of National Iranian Oil Company (NIOC), said the company is prioritizing the development of shared fields, which has been delayed due to certain restrictions.
He said that onshore and offshore joint fields are producing 252,000 b/d of oil and 283 mcm/d of gas.
Javadi said accelerating the development of joint fields for further production is the top priority of NIOC.
According to the managing-director of NIOC, Iran has adopted enhanced oil recovery methods in a bid to increase recovery from the shared fields.
“Using downhole pumps, gas lifting, slant drilling and acidizing are among methods used for enhanced recovery from joint fields.” Javadi said.
The official stated that exploration activities for assessing hydrocarbon potentials in offshore and onshore zones are among NIOC plans.
The St. Petersburg Times
Published: April 30, 2014 (Issue # 1808)
U.S. oil giant ExxonMobil and Russian state energy major Rosneft will continue to develop hydrocarbon reserves in the Arctic even as broader sanctions over the unrest in Ukraine may target the energy sector and its executives.
Rosneft approved the development of two oil fields jointly with ExxonMobil at a board meeting on Monday, the company said in a statement.
Both fields are located on the Arctic shelf, one in the Chukchi Sea north of the Bering Strait between Russia and Alaska, and the other in the Laptev Sea above the estuary of the Lena River.
ExxonMobil and Rosneft will also continue joint exploration of the northern part of the Kara Sea where Rosneft was granted exploration and development licenses in 2013.
Exxon and Rosneft already have a working relationship. In 2011 they signed an agreement to jointly develop oil fields in the southern part of the Kara Sea and in the Black Sea.
Exploration costs for both regions were at the time estimated at more than $3.2 billion with Exxon providing the majority of the funds.
Both companies also cooperate on developing hard-to-extract oil reserves in Western Siberia.
At the same time these plans may be endangered as Washington and Brussels are set to announce more sanctions against Russia over continuing unrest in Ukraine, which could target the energy sector and single out more people who are close to President Vladimir Putin.
Among them are likely to be Rosneft’s president Igor Sechin and Alexei Miller, the head of another state-owned energy giant Gazprom, U.S. officials said, The New York Times reported Monday.
HOUSTON, May 6, 2014 /PRNewswire/ -- Statoil (OSE: STL, NYSE: STO) executive vice president for its North American operations Bill Maloney said today that the company has set a goal of recovering an average of 70% of the oil in its Johan Sverdrup field in the Norwegian continental shelf.
"We've set a very large goal for oil recovery for Johan Sverdrup," says Maloney. "With the right technology and ingenuity, we believe 70% is achievable over the life of the field for this giant development in Norway."
As the world's largest offshore operator, Statoil has earned a worldwide reputation for its technical excellence, safety record and environmental performance, he adds. But by focusing its attention carefully on increasing oil recovery, the company has steadily improved the recovery rates and longevity of the large fields it develops.
"While every situation is unique, we believe that the right technology can shift the economics in the right way," said Maloney. He noted that Statoil has been able to change the economic picture in many of its international operations, including Brazil with the application of technology in its heavy oil offshore fields.
The typical expected recovery rate for Gulf of Mexico Paleogene Wilcox fields is 6-10%, although production in these fields is in early days and data is limited. Statoil believes that with both cost-efficient technology and policies that encourage long-term investment, operators may be able to double this rate to 20% or higher, which means longer field life and more efficient resource management.
Statoil is an international energy company with operations in 36 countries. Building on 40 years of experience from oil and gas production on the Norwegian continental shelf, we are committed to accommodating the world's energy needs in a responsible manner, applying technology and creating innovative business solutions. Statoil is headquartered in Norway with 23,000 employees worldwide, and is listed on the New York and Oslo stock exchanges. More information on www.statoil.com.
Media Contact: Jim Schwartz, +1 713 485 2589, jamsch@statoil.com
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By Golnar Motevalli and Anthony DiPaola May 6, 2014 7:02 PM GMT+0700
Iran, hampered by sanctions over its nuclear program, plans within four years to boost crude-output capacity by 1 million barrels a day at fields it shares with neighboring states, Oil Minister Bijan Zanganeh said.
“This will be the biggest achievement in the history of the oil industry in Iran,” he said today at the opening of an energy conference in Tehran.
The fourth-largest producer in the Organization of Petroleum Exporting Countries is also pressing ahead with work at South Pars, part of a gas deposit straddling the border with Qatar, Zanganeh said. Iran expects to complete several of the project’s 17 phases in about three years, he said.
The government is trying to attract foreign investment in crude, natural gas and chemicals production even as it seeks the removal of U.S. and European sanctions. The U.S. and allied states say Iran is working to develop atomic-weapons technology, a claim the government denies. An interim nuclear accord between the two sides expires July 20.
An increase in oil-production capacity on the scale Zanganeh described would boost Iran’s output by as much as 35 percent, according to data compiled by Bloomberg. The country pumped 2.84 million barrels a day in April, the data show.
European companies including Royal Dutch Shell Plc and Repsol SA previously had contracts to develop areas of the South Pars gas field. Their contracts expired in the last decade after sanctions blocked the companies from operating there.
Pipeline Plan
Iran expects to increase gas exports after making progress at South Pars, Ali Majedi, a deputy oil minister, said at the conference. A pipeline to export gas to Europe via Turkey could be ready in two to three years if Turkey and Iran can agree on the plan, Majedi said.
Iran’s petrochemicals industry needs investment of more than $70 billion, Zanganeh said. The country plans to start eight gas condensate refineries this year, each with a fuel-processing capacity of 80,000 barrels a day, he said.
Six hundred foreign companies are participating in the three-day conference this year, three times as many as in 2013, the oil ministry’s Shana news website reported, citing Akbar Nehmatollahi, a ministry spokesman.
To contact the reporters on this story: Golnar Motevalli in Tehran at gmotevalli@bloomberg.net; Anthony DiPaola in Dubai at adipaola@bloomberg.net
To contact the editors responsible for this story: Alaric Nightingale at anightingal1@bloomberg.net Bruce Stanley, Randall Hackley
By Andrew Frye and Ben Sills May 6, 2014 9:54 PM GMT+0700
A worker fits an OAO Gazprom branded protective end cap to a steel pipe destined for... Read More
The Group of Seven nations agreed to find new sources of energy to prevent Russia from using its oil and gas reserves as a “political weapon,” German Economy and Energy Minister Sigmar Gabriel said.
The world’s leading economies will expand their natural gas infrastructure, increase their efforts to save energy and use renewable power as part of the agreement, Gabriel said at a press briefing in Rome today where he attended a meeting of G-7 energy ministers. The group will also draw up a plan to deliver emergency supplies to countries like Ukraine that may face shortages, Italy’s Federica Guidi said.
“We’ve seen Russia use energy as a weapon on previous occasions,” U.K. Energy Secretary Ed Davey said at a news briefing after the talks. “In the past we let that happen and then we went back to business as usual. We’ve decided we’re not going to allow that this time. We have taken measures to start reducing Europe’s dependency on Russian gas.”
The European Union’s reliance on Russian oil and gas has hampered the global response to escalating violence in Ukraine and the worst standoff with Russia since the Cold War. Russia under President Vladimir Putin provides about a third of the EU’s oil and gas needs, mainly via state-controlled OAO Gazprom and OAO Rosneft (ROSN) through pipelines that cross Ukraine.
“We have moved to a common understanding that energy security is a collective issue,” U.S. Energy Secretary Ernest Moniz said at a briefing following the talks. The U.S. is focusing on diversifying energy supplies, he said.
‘Collective Security’
The ministers agreed to promote alternatives to burning hydrocarbons, including nuclear power, renewable generating technology and alternative forms of fuel, according to an e-mailed statement of their conclusions that didn’t mention Russia. They also cited the need to invest in power networks, building connections between nations and incorporating smart-grid technology. The U.K. is pushing European countries to expand the use of shale gas.
“At the core of the agenda is collective energy security,” Guidi, Italy’s minister for economic development, said in the statement. The ministers agreed they “need to support diversification of primary sources and of energy production and dispatching technologies.”
The conclusions will feed into a summit of G-7 leaders in Brussels in June. That meeting was called after Russia, this year’s Group of Eight host, was suspended from participating and the Sochi summit canceled followed Russia’s annexation of Crimea.
Energy Mix
In Europe, the review of the energy mix “will mean never being 100 percent dependent on Russia,” German Chancellor Angela Merkel said after meeting with President Barack Obama in Washington on May 2. Germany, Europe’s biggest economy and Russia’s biggest EU trading partner, is pushing domestic renewables and energy efficiency, mirroring a wider EU strategy to protect supplies and the climate.
“This is a wake-up call from the geopolitical standpoint to think globally,” said Stephen Schork, president of the Schork Group Inc., a consulting firm in Villanova, Pennsylvania.
The U.S., whose industry and consumers are benefiting from energy prices depressed by a domestic shale gas boom, can help with gas imports, Obama said in March during a visit to Brussels.
The EU’s overall energy dependency rate -- the percentage of imports from outside the bloc -- is set to rise to 80 percent by 2035 from the current 60 percent, according to the International Energy Agency.
Dependence Arc
One group of countries, which runs in an arc from Estonia in the northeast through Austria and down to Greece in the southeast, gets more than 75 percent of its gas imports from Russia, European Commission data show. Other major suppliers to Europe are Norway, Algeria and Qatar.
“No one expects that we can reduce Europe’s dependency overnight,” Davey said in an interview yesterday. “But I think if you see the links with the climate-change package that’s already well-developed, there’s clearly a lot of investment we can do in everything from energy efficiency to renewables to nuclear, as well as other forms of gas.”
To contact the reporters on this story: Andrew Frye in Rome at afrye@bloomberg.net; Ben Sills in Madrid at bsills@bloomberg.net
To contact the editors responsible for this story: Alan Crawford at acrawford6@bloomberg.net; Reed Landberg at landberg@bloomberg.net Kevin Costelloe
By Andrew Willis May 6, 2014 12:00 PM GMT+0700
Colombian crude production sank to a 20-month low in April as Marxist rebel attacks and community protests curbed output amid continuing peace talks in Havana.
Oil production last month averaged 935,000 barrels per day, according to a government statement yesterday, the lowest since August 2012. Output slumped as repairs to the country’s second-largest pipeline following a March 25 rebel attack were prevented by the indigenous U’wa group.
Paralysis at the Cano Limon-Covenas duct, which takes oil from eastern Colombia to the Caribbean coast, forced producers including state-controlled Ecopetrol SA (ECOPETL) to restrict output as storage ran out. Oil is Colombia’s biggest export and a key source of revenue for the government.
There were 33 pipeline attacks in the first quarter of this year and a total of 259 in 2013, as Colombia’s largest rebel group, the Revolutionary Armed Forces of Colombia, or FARC, seeks to strengthen its hand at the negotiating table. The smaller National Liberation Army, or ELN, active in the east of the country, is also seeking to underline its relevance.
Technicians are working to fix Cano Limon after the government reached a deal last week with the forest-dwelling U’wa who had demanded the pipeline be re-routed, citing environmental concerns.
To contact the reporter on this story: Andrew Willis in Bogota at awillis21@bloomberg.net
To contact the editors responsible for this story: James Attwood at jattwood3@bloomberg.net Madelene Pearson, Jason Rogers
