Petroleum Intelligence Weekly articles from August 2007

Petroleum Intelligence Weekly archives from August 2007

'Gas Opec' may have real clout after all.
August 6, 2007... While ministers attending April's Gas Exporting Countries Forum (GECF) meeting in Qatar played down its potential for developing into a "gas Opec," the collective market power some members hope to wield may turn out to be as significant as, if...

Libya may be next to revise output targets.
August 6, 2007... Algeria's already done it, and Libya could be the next major producer to pull back from overambitious oil output targets. Algiers finally confirmed a reduction in its output target in July, but if Tripoli follows suit, it will come as much less...

Southeast Asia sweetens terms for exploration.
August 6, 2007... Bid rounds about to start, underway or just concluded in Indonesia, Thailand, Vietnam and Malaysia will provide a litmus test of the integrated majors' interest in Southeast Asia, where much of the action is now confined to Asian state players...

Ecopetrol flotation bucks regional resource trend.
August 6, 2007... In a region where most oil-producing nations are increasing state control over natural resources, Colombia is taking a contrarian position, announcing plans to float a 20% stake in state oil firm Ecopetrol to raise money for upstream...

US Refiners thrive despite dip in margins.
August 6, 2007... Independent refiners in the US have benefited arguably more than anyone from this decade's rise in oil prices, which has helped transform them from small unprofitable players into industry heavyweights--a status underlined by their impressive...

Majors struggle with output growth in Q2.
August 6, 2007... Second-quarter earnings reports from the leading majors offered very little in the way of output growth, reversing what had looked like a promising trend in the first quarter, when the group's collective oil and gas production rose by 2%. The...

Oil output jumps in July as maintenance ends.
August 6, 2007... Global oil supplies surged in July after a sharp maintenance-related drop in June, climbing to 85.5 million barrels per day, up more than 1 million b/d from a downwardly revised 84.4 million b/d the month before, preliminary PIW soundings...

Industry restructuring.(GENERAL)
August 6, 2007... INDUSTRY RESTRUCTURING--Marathon Oil is acquiring Canada's Western Oil Sands in a deal worth some $6.2 billion. Western shareholders will receive $3.6 billion in cash, plus Marathon stock worth roughly $1.9 billion. The US major is also taking...

Opec.(GENERAL)
August 6, 2007... OPEC--The producer group's 12 member countries generated combined oil export revenues of $649 billion last year, up 22% from 2005, despite actual export levels remaining unchanged at 23.3 million b/d, according to the organization's latest...

Australia.(COUNTRIES)
August 6, 2007... AUSTRALIA--Woodside Petroleum has raised a few eyebrows by announcing a final investment decision on its Pluto LNG project offshore Western Australia, despite the development's price tag doubling to A$11.2 billion (US$9.5 billion). Woodside's...

Canada.(COUNTRIES)(planning of oil sand producers)(Brief article)
August 6, 2007... CANADA--Two of the country's largest oil sands producers, Royal Dutch Shell and Suncor, are planning huge expansions that should deliver a significant boost to volumes. Shell Canada is seeking consent for a second upgrading facility at Scotford...

France.(COUNTRIES)
August 6, 2007... FRANCE--Royal Dutch Shell is exiting the French refining business after agreeing deals for the sale of its three facilities in the country. Shell is selling its 154,000 b/d Petite Couronne and 85,000 b/d Reichstett Vendenheim refineries to...

Iraq.(COUNTRIES)(oil exports)(Brief article)
August 6, 2007... IRAQ--Oil exports in July were on track to jump a hefty 300,000 b/d from June to a total of 1.78 million b/d, a record for this year, monthly loading schedules indicate. Two-thirds of the increase came from the Basrah Oil Terminal in the south...

Japan.(COUNTRIES)(Brief article)
August 6, 2007... JAPAN--Crude imports were up 12% year-on-year in June, averaging 3.89 million b/d. Volumes from Saudi Arabia were down 9%, but the country was still the top supplier with 1.05 million b/d, followed by the UAE with 924,000 b/d (PIW Jul.9,p6)....

Japan.(COUNTRIES)
August 6, 2007... JAPAN--Tokyo Electric Power Co. (Tepco) is counting the cost of shutting down its biggest nuclear plant after an earthquake last month, reckoning fuel and electricity procurement costs will climb to at least $3 billion in the year to March and...

Kazakhstan.(COUNTRIES)
August 6, 2007... KAZAKHSTAN--The Eni-led consortium developing the giant offshore Kashagan field appears headed for more trouble, with the government threatening to revise the terms of the project's production sharing agreement (PSA) following repeated delays...

Russia.(COUNTRIES)(Rosneft introduced changes to its export operations)(Brief article)
August 6, 2007... RUSSIA--State Rosneft is introducing revolutionary changes to its export operations, switching to a tender system for around one-third of its crude exports. BP, Royal Dutch Shell and Total are the only companies invited to take part in the...

Spain.(COUNTRIES)
August 6, 2007... SPAIN--Plans for a 110,000 b/d green-field refinery in the southwest Extremadura region have been greeted with skepticism, not least because the project's key developer is a steel and building materials manufacturer with no oil industry...

Downstream strength gives lift to Big Oil's Q2 earnings.(Financial report)
August 6, 2007... When are mammoth earnings not mammoth enough? Exxon Mobil's profits have topped $10 billion in four of the past five quarters, but second-quarter earnings of $10.26 billion weren't enough to impress Wall Street, as higher upstream costs, lower...

Performance enhancers.(Marketview)
August 6, 2007... NEW YORK--US benchmark West Texas Intermediate (WTI) has recuperated so fast from its recent bout of sluggishness--hitting a new record close of $78.21/bbl last week while racing ahead of rival marker Brent in Europe--that many wondered whether...

Global financial turmoil hits Russian firms.
August 6, 2007... With global credit markets in turmoil, Russia's leading oil firms may be forced to put their borrowing on hold for a few months, as investors are currently showing little appetite for the risk of Russian debt offerings. Trading volumes in...

Venezuela seeks answers to Chinese riddle.
August 13, 2007... Venezuelan leftist president Hugo Chavez has said many times that he wants to export less oil to the US and more to his political allies in China. Such threats have generally been met with skepticism, based on the high transportation costs and...

Majors forced to work in a $50/bbl world.
August 13, 2007... Oil companies used to be almost proud of their conservative planning assumptions, reassuring anxious shareholders that they were responsibly managing their capital and only investing in projects that had been stress-tested against oil prices of...

WTI's rebound masks underlying problems.(West Texas Intermediate)
August 13, 2007... West Texas Intermediate (WTI) may once again be trading at a premium to North Sea Brent, but as evidence of a long-term revival in the US benchmark's health, it's a false dawn. The basic issues--lack of pipeline and storage capacity, a...

Exxon told where to sell Sakhalin-1 gas.
August 13, 2007... With Russia's state Gazprom now safely in charge of both the former Royal Dutch Shell-operated Sakhalin-2 development and the giant Kovykta gas field previously controlled by TNK-BP, Moscow is turning its attention to Exxon Mobil. The Russian...

Opec keen to trim stocks, reassert control.
August 13, 2007... Opec members, on the face of it, have become price hawks, happy with record revenues and unwilling to pump the extra barrels needed, critics argue, to bring down oil prices. When Opec ministers meet on Sep. 11 in Vienna, they are expected to...

Chad struggles to meet great expectations.
August 13, 2007... Exxon Mobil appears to be struggling to maintain crude output from Chad's Doba Basin, a 30-year project that unexpectedly peaked within 18 months of its late 2003 start-up. As Chad moves to toughen terms for operators and create a national oil...

Aramco gets ready for a heavy future.
August 13, 2007... Last week's promotion of Khalid al-Falih to head Saudi Aramco's newly created "Operations" division--combining Aramco's upstream, downstream, marketing and international businesses under one umbrella--said as much about Falih's career path as...

Formula prices.(GENERAL)
August 13, 2007... FORMULA PRICES -- Saudi Arabia effectively increased its prices for September loading crude to Asia and Europe, and more so for sours than for sweets in a sign that the prompt market is getting tighter for sour grades as a result of ongoing...

Industry restructuring.(GENERAL)(Brief article)
August 13, 2007... INDUSTRY RESTRUCTURING -- US independent McMoRan Exploration has closed its $1.08 billion purchase of Newfield Exploration's Gulf of Mexico shelf properties, which are currently producing around 260 MMcfe/d. Germany's E.On is buying the Spanish...

Belarus.(COUNTRIES)
August 13, 2007... BELARUS -- State pipeline operator Beltrangas has paid the $456 million it owes to Russian state gas giant Gazprom, averting a cut in gas deliveries and possible supply disruptions to Europe. Gazprom had threatened to cut supplies by 45% after...

India.(COUNTRIES)(Brief article)
August 13, 2007... INDIA -- Ongoing rig shortages and a bubbling row over gas prices have led to a further postponement of the seventh bid round under the country's New Exploration Licensing Policy (Nelp). The round had originally been scheduled for March, but...

Indonesia.(COUNTRIES)(contracts)(Brief article)
August 13, 2007... INDONESIA -- State-owned Pertamina has inked a deal with Petrovietnam and Malaysia's Petronas to explore the Randu Gunting block in East Java, part of an earlier three-way agreement to jointly operate in each of the three respective countries....

Mexico.(COUNTRIES)(Brief article)
August 13, 2007... MEXICO -- The government has rejected the idea of a joint venture between state Pemex and Brazil's state-controlled Petrobras under a new energy cooperation agreement signed between the two countries, reiterating that it will not alter the...

Nigeria.(COUNTRIES)
August 13, 2007... NIGERIA -- Protracted violence, security risks and soaring costs have scuppered government plans to boost reserves to 40 billion boe by 2010, according to state Nigerian National Petroleum Corp. Managing Director Funsho Kupolokun. To meet the...

Norway.(COUNTRIES)(Brief article)
August 13, 2007... NORWAY -- Norsk Hydro's chairman has been forced to resign and the company's board and chief executive criticized in relation to their handling of a payout scheme for senior company executives, just weeks before the formal merger of Hydro's oil...

Crude exports jumped by more than 100,000 b/d in July to 3.828 million b/d, up from 3.276 million b/d in June.(COUNTRIES)
August 13, 2007... RUSSIA -- Crude exports jumped by more than 100,000 b/d in July to 3.828 million b/d, up from 3.276 million b/d in June (PIW Jul.9,p7). Greater demand from Russian firms caused transshipments from neighboring Kazakhstan, Azerbaijan and Belarus...

The European Bank for Reconstruction and Development.(COUNTRIES)
August 13, 2007... RUSSIA -- The European Bank for Reconstruction and Development (EBRD) has finalized its decision not to lend money for the $20 billion Gazprom-led Sakhalin-2 project on Russia's Pacific shelf. Although EBRD's loan represented only a fraction of...

Saudi Arabia.(COUNTRIES)(Brief article)
August 13, 2007... SAUDI ARABIA -- India's Reliance Industries has become the third Asian company to confirm an interest in the planned 400,000 b/d Jizan refinery project, which has so far been shunned by the Western oil majors. Malaysia's state Petronas, in...

Singapore.(COUNTRIES)
August 13, 2007... SINGAPORE -- Singapore Petroleum Co. (SPC) is stepping up its regional expansion, raising its stake in Australian explorer Cue Energy, scooping its first exploration acreage offshore China and investing in an Indonesian fuel oil trader in the...

Turkmenistan.(COUNTRIES)
August 13, 2007... TURKMENISTAN -- Royal Dutch Shell has joined the growing list of oil and gas companies looking for new opportunities following the February election of new president Gurbanguly Berdimuhammedov. Company officials recently visited Ashkhabad for...

Yemen.(COUNTRIES)(Brief article)
August 13, 2007... YEMEN -- Protracted discussions on securing gas supply have pushed back startup of the 6.7 million ton/yr, Total-led Yemen LNG (YLNG) project from December 2008 to at least early 2009. In order to meet targets to launch Train 1 by December...

Lukoil mulls Cuban refining investment.(What's New Around the World)
August 13, 2007... Finding no openings in the US refining sector, Russia's largest private oil producer Lukoil is looking at purchasing or building crude processing facilities in Cuba to help it reach a target of doubling its refining capacity to 2 million b/d...

Pop!(Marketview)
August 13, 2007... WASHINGTON -- Instead of high oil prices hurting the economy, it's the other way around. A slew of chilling news about the US economy sent shivers through oil traders, prompting them to sell off amid fears the problems could spill over and dent...

PIW market indicators.(Statistical table)
August 13, 2007... PIW Market Indicators 1 Week 2 Weeks 4 Weeks Spot Crude Ago Ago Ago Opec Basket $69.02 $72.37 $72.72 UK Brent (Dtd.) 71.36 76.33 78.44 UK B-wave...

Iraq bidders recognize the power of two.(Total)
August 20, 2007... In Iraq, it seems, two heads are better than one--certainly that is the conclusion reached by Chevron and Total, which have joined forces to bid for the Majnoon and Nahr bin Umar oil fields in southern Iraq. The alliance gives Chevron the...

Russia's state giants ride out credit crunch.
August 20, 2007... The US subprime mortgage crisis has had substantial fallout in global financial markets, but at least one theoretically vulnerable group--Russia's debt-laden state energy giants Gazprom and Rosneft--appear to be taking it in stride. They have...

2007 price peak may have been hit in July.
August 20, 2007... From the perspective of supply and demand fundamentals, the global oil market looks like it may have hit its price peak for the year in July. After a modest second-quarter inventory build, oil market balances tightened further in July despite a...

Will BP pay for saying no to oil sands?
August 20, 2007... Big money investments by Royal Dutch Shell, Total and Norway's Statoil over recent years have highlighted the importance European corporates attach to Canada's oil sands region. One company is notable by its absence, however--BP. The UK...

Nigeria begins long March toward reform.
August 20, 2007... After a slow start, Nigeria's President Umaru Yar'Adua has now finally named his cabinet and energy advisers, while also sketching out plans for reforming the country's ailing oil and gas sector. Policies and posts are still open to review,...

US Energy bill offers few real solutions.
August 20, 2007... Another US energy bill is making its way through Congress, but critics say the legislation is unlikely to take the necessary steps to have a significant impact on America's "addiction to oil." The separate House and Senate versions currently...

Slow start for Japan's new champion.
August 20, 2007... For the past two years, the gradual integration of Japan's top two explorers--Inpex and Teikoku--has been fashioning a new upstream champion to compete overseas with Asia's other national oil companies. With no energy resources of its own,...

Corporate.(GENERAL)(Brief article)
August 20, 2007... CORPORATE--Chevron is restructuring its global upstream operations, expanding from two regional operating companies to four to reflect the increasing internationalization of its portfolio. Until now, Chevron has had just two upstream operating...

People.(GENERAL)
August 20, 2007... PEOPLE--Naresh Nayyar has resigned as chief executive of ONGC-Mittal Energy Ltd. (Omel), the joint venture between India's state Oil and Natural Gas Corp. (ONGC) and local steel magnate Lakshmi Mittal. Though Omel was intended to exploit the...

Azerbaijan.(COUNTRIES)(Brief article)
August 20, 2007... AZERBAIJAN--The BP-led AIOC consortium has cut its 2007 oil output target from the Azeri-Chirag-Guneshli (ACG) complex of fields in the Caspian Sea by 22,000 b/d to 686,000 b/d. The group was working to stabilize output at the fields, which...

Brazil.(COUNTRIES)
August 20, 2007... BRAZIL--In contrast to regional peers such as Mexico's Pemex and Petroleos de Venezuela, state-controlled Petrobras is setting out plans for increased capital expenditure, unveiling a new five-year business plan which envisages a 30% jump in...

Canada.(COUNTRIES)(Brief article)
August 20, 2007... CANADA--Ottawa continues to press its claim to vast expanses of the Arctic that could hold huge oil and gas deposits, recently unveiling a three-way plan to beef up its military presence in the region. The plan, announced by Prime Minister...

China.(COUNTRIES)
August 20, 2007... >CHINA--Some provinces in the country's south are facing fuel shortages as summer demand peaks, while leading refiners PetroChina and Sinopec restrict supply to the unprofitable retail fuel market. Privately run service stations in parts of...

India.(COUNTRIES)(Reliance Industries Ltd. deploy deepwater drillships)(Brief article)
August 20, 2007... INDIA--Private-sector Reliance Industries is facing further delays at its giant KrishnaGodavari gas block off the country's east coast after failing to secure two drilling rigs on schedule. The deepwater drillship Discoverer 534 will be...

Iran.(COUNTRIES)
August 20, 2007... IRAN--In another sign of the troubles in the country's oil industry, Gholamhossein Nozari, managing director of state National Iranian Oil Co., has been named as the new acting oil minister following the dismissal of Kazem Vaziri Hamaneh, who...

Kuwait.(COUNTRIES)
August 20, 2007... KUWAIT--Japan's Arabian Oil Co. (AOC) has begun negotiations to renew its five-year sales agreement with Kuwait Petroleum Corp. (KPC) for 100,000 b/d of Neutral Zone crude that expires at the start of 2008, PIW learns. KPC subsidiary Kuwait...

Kuwait.(COUNTRIES)
August 20, 2007... KUWAIT--The launch of construction tenders for the 615,000 b/d Al-Zour refinery project has been delayed again until after the first week of September, when the country's Supreme Petroleum Council (SPC)--which still needs to approve the project...

Lithuania.(COUNTRIES)(PKN Orlen S.A.)(Brief article)
August 20, 2007... LITHUANIA--Poland's PKN Orlen is preparing to buy more heavy Latin American crude for its Mazeikiu Nafta refinery to help reduce its reliance on Russian supplies, despite a lack of success in processing Latin American grades in the past. A...

Papua new guinea.(COUNTRIES)
August 20, 2007... PAPUA NEW GUINEA--Local refiner InterOil is confident its onshore Elk discovery is big enough to support the country's first LNG project, following positive results from its Elk-2 appraisal well. The Toronto-listed company had said previously...

Russia.(COUNTRIES)(Royal Dutch-Shell PLC)(Brief article)
August 20, 2007... RUSSIA--Royal Dutch Shell has won the majority of crude offered by state Rosneft in its inaugural tender, which represents around one-third of Rosneft's current crude exports. Shell won the right to Rosneft's crude exports in September,...

Russia.(COUNTRIES)(Yukos Finance B.V.)(Rosneft)(Brief article)
August 20, 2007... RUSSIA--With the threat of legal repercussions looming, state Rosneft unexpectedly pulled out of the Aug. 15 auction of the international assets of bankrupt former oil major Yukos, leaving little-known Moscow realty firm Monte-Valle to claim...

Venezuela.(COUNTRIES)(Brief article)
August 20, 2007... VENEZUELA--President Hugo Chavez's display of energy largesse to his neighbors has continued with a commitment to meeting the future oil needs of countries in the Caribbean. "Venezuela puts its oil wealth at the disposition of our peoples of...

Druzhba customers seek new supply sources.(Brief article)
August 20, 2007... For those Central European countries connected to the Druzhba pipeline from West Siberia, an era of cheap and abundant Russian oil is finally coming to an end. As Russia expands the Primorsk terminal and aims to boost domestic refining...

Blowin' in the wind.(Marketview)
August 20, 2007... LONDON--Energy futures have not escaped the turmoil in financial markets, where tumbling equities and a global credit crunch are threatening to develop into a major crisis. Prices have also been pushed and pulled by weather forecasts predicting...

Markets brace for summer gales.(Marketview)(Brief article)
August 20, 2007... Conditioned by the devastation of Katrina and Rita two years ago, oil and natural gas markets on the US Gulf Coast are bracing for the worst in coming weeks. After a slow start, Hurricane Dean is signaling the start of a period of intense...

Oil still vulnerable to subprime fallout.
August 27, 2007... The liquidity crunch in international financial markets triggered by the US subprime mortgage crisis has so far left energy markets relatively unscathed. Some of the selling pressure that pushed oil prices below $70 per barrel last week was...

Russia mulls plan for new state oil giant.
August 27, 2007... The state-sponsored consolidation of Russia's petroleum sector could soon take another huge step forward with the establishment of a state oil giant to rival gas monopoly Gazprom. The planned oil company would be set up under the auspices of...

Gas supply a concern for Conoco's Mulva.
August 27, 2007... The world has "a natural gas problem," ConocoPhillips Chief Executive Jim Mulva believes--a problem with supply, particularly in North America. "The world has a great deal of natural resources," he tells PIW, "but the lack of development of the...

New realities await IOCs in Iraq.
August 27, 2007... For the international oil companies (IOCs) positioning themselves for upstream opportunities in post-Saddam Iraq, some new realities await. The first is that there may be many fewer giant field developments on offer than were at least nominally...

US slowdown wouldn't hit oil demand.
August 27, 2007... A possible economic slowdown in the US, which consumes one barrel in every four the world produces, has led to concerns over a possible knock-on effect on US--and by extension global--demand for oil. Recent history, however, shows there is no...

Early birds take fresh look at Somalia.
August 27, 2007... It's hard to imagine that oil could deliver Somalia from the chaos that has engulfed much of the country since the overthrow of the last national government back in 1991. But exploration drilling is being planned for early next year in the...

Gorgon struggles to keep pace with Pluto.
August 27, 2007... While Woodside While Woodside Petroleum is racing ahead with plans for its Pluto LNG development offshore Australia, Chevron's much larger Gorgon LNG project is still struggling to get off the ground. A research report earlier this month from...

CEO interview: ConocoPhillips' Jim Mulva.(Interview)(Company overview)
August 27, 2007... PIW spoke to ConocoPhillips Chief Executive Jim Mulva in June about his company's approach to mergers and acquisitions and its groundbreaking alliance with Russia's Lukoil (PIW Jun.25,p7). In a second interview in Houston earlier this month,...

Industry restructuring.(GENERAL)(briefs)(mergers and acquisitions)(Nymex Holdings)(Brief article)
August 27, 2007... INDUSTRY RESTRUCTURING--El Paso is paying $875 million in cash to acquire Peoples Energy as part of efforts to "highgrade" its domestic portfolio and become one of the US' leading upstream companies. Peoples, a subsidiary of Integrys Energy,...

Australia.(COUNTRIES)
August 27, 2007... AUSTRALIA--Woodside Petroleum is considering divesting its African assets to concentrate on LNG and core upstream projects at home and in the Gulf of Mexico. The Perth-based independent said it was considering a range of options for its African...

Canada.(COUNTRIES)(Newfoundland and Labrador Hydro-Electric Corp and Chevron Corp agreement to develop oil fields)(Brief article)
August 27, 2007... CANADA--The province of Newfoundland and Labrador has reached an agreement with Chevron to develop the Hebron-Ben Nevis oil field, ending a period of contentious negotiations and signaling a positive step forward in efforts to develop its...

China.(COUNTRIES)(crude suppliers)(Brief article)
August 27, 2007... CHINA--Crude imports jumped 39.4% year-on-year in July to hit a record high of 3.507 million b/d, according to customs data. Traditional top suppliers Saudi Arabia and Angola surged ahead to 551,000 b/d and 521,000 b/d, respectively, marking a...

Cyprus.(COUNTRIES)
August 27, 2007... CYPRUS--Amid continued tensions over the divided island's potential offshore resources, oil majors have passed on Nicosia's first international licensing round, which closed Aug. 16 with bids for only three of the 11 blocks on offer. BP and...

Ghana.(COUNTRIES)
August 27, 2007... GHANA--The West African country's prospects for joining the region's oil producers' club have improved following another significant discovery by UK independent Tullow Oil. The Hyedua-1 well, which found 130 feet of net oil pay, "more than...