Petroleum Intelligence Weekly articles from August 2008

Petroleum Intelligence Weekly archives from August 2008

Could US use SPR to manage market?
August 4, 2008... Debate has resurfaced in Washington about how the US should use its vast strategic oil stockpiles, with some lawmakers and market participants advocating deployment of oil from the 706 million barrel Strategic Petroleum Reserve (SPR) to ease...

BP draws on experience in TNK dispute.
August 4, 2008... In many respects, BP is having a pretty good year, with positive news on several operational fronts standing in stark contrast to the problems with pipelines, platforms and refineries that have dogged the UK supermajor in recent years. It's all...

Refiners prepare for age of uncertainty.
August 4, 2008... The "Golden Age" of refining may have ended in the US, but has the downstream industry really entered the "Dark Ages," as investment bank Credit Suisse recently argued? In the US, plummeting gasoline margins are causing a certain level of...

Colombia may follow bid round with tax hike.
August 4, 2008... It's amazing what a combination of high oil prices and an investor-friendly fiscal regime can do. Colombia hasn't seen a major discovery in almost a decade, but you would never have guessed that from the buzz of interest in the country's recent...

PIW Scorecard: sweet grades outleap sours.(Petroleum Intelligence Weekly)
August 4, 2008... Oil producers had few grounds for complaint in the second quarter as benchmark sweet crude prices soared more than $25 per barrel compared with the first three months of the year. But for term-contract sellers, prices for their mainly sour...

US needs political will to tap offshore.
August 4, 2008... The US Congress has spent the summer locked in a bitter partisan battle over how to respond to spiraling energy prices. Republicans are calling for more domestic drilling, especially off the Pacific and Atlantic coasts. Democratic leaders have...

Corporate.(GENERAL)(Brief article)
August 4, 2008... CORPORATE -- Stefano Cao has unexpectedly stepped down as upstream chief with Italy's Eni, officially "in order to take up new professional challenges." This also comes at a time of continued budget and scheduling problems that have hampered...

Angola.(COUNTRIES)
August 4, 2008... ANGOLA -- BP has received the green light for what is likely to be the first development in the country's ultra-deepwater. State-owned Sonangol has given BP and its partners the go-ahead to begin development of a series of ultra-deepwater...

Brazil.(COUNTRIES)
August 4, 2008... BRAZIL -- Petrobras has inaugurated its first biodiesel plant, marking another step in the state-controlled firm's expansion into alternative fuels. The plant, in the northeastern state of Bahia, has production capacity of 57 million liters/yr...

China.(COUNTRIES)(Brief article)
August 4, 2008... CHINA -- Beijing last week announced details of its National Energy Administration (NEA), the new energy bureau that will oversee all aspects of energy policy and regulation, inheriting the energy-related functions of the all-powerful National...

India.(COUNTRIES)
August 4, 2008... INDIA -- Reliance Petroleum will begin test runs at its giant 580,000 b/d Jamnagar export refinery in August or September, slightly later than anticipated, but is expecting the plant to be fully completed ahead of its December target date....

Iraq.(COUNTRIES)(Brief article)
August 4, 2008... IRAQ -- Oil exports bounced back to 1.899 million b/d in July, up 202,000 b/d from June as shipments picked up from the Basrah Oil Terminal in the south. At 1.51 million b/d, July shipments from Basrah in the Mideast Gulf were 179,000 b/d...

Japan.(COUNTRIES)(Statistical data)
August 4, 2008... JAPAN -- Crude imports fell 9.4% in June to 3.53 million b/d, leaving average imports for the first half of 2008 at 4.3 million b/d, up 6.8% year-on-year, according to official data. During the six-month period, volumes from its largest...

Kazakhstan.(COUNTRIES)(Brief article)
August 4, 2008... KAZAKHSTAN -- Astana is facing an uphill battle to achieve its goal of nearly doubling the country's oil production to 2.6 million b/d by 2015, as delays continue to plague the country's main projects--Tengiz, Karachaganak and Kashagan--and...

Nigeria.(COUNTRIES)(Brief article)
August 4, 2008... NIGERIA -- Royal Dutch Shell is to review security procedures at its offshore facilities after a militant attack on its deepwater Bonga field in June (PIW Jun.30,p1). "At our deepwater facilities we always thought an attack would be relatively...

Nigeria.(COUNTRIES)
August 4, 2008... NIGERIA -- The partners in the proposed 34,000 b/d Escravos gas-to-liquids (GTL) project are still evaluating the scheme in light of its hugely increased capital costs, according to South African synthetic fuels producer Sasol. Sasol said the...

Russia.(COUNTRIES)
August 4, 2008... RUSSIA -- State oil pipeline monopoly Transneft is slashing seaborne crude exports in August to only 2.664 million b/d from 2.903 million b/d in July as producers look to keep more barrels on the domestic market. The drop in global oil prices...

Russia.(COUNTRIES)
August 4, 2008... RUSSIA -- The Exxon Mobil-led Sakhalin-1 development on Russia's Pacific shelf looks set to officially delay development of the Odoptu field, which the consortium had planned to tap to prevent output from falling further below last year's peak...

Turkey.(COUNTRIES)
August 4, 2008... TURKEY -- Lukoil's international downstream expansion has continued with the $500 million acquisition of fuel retailer Akpet, which has a network of 693 service stations and a 5% market share in the Turkish retail fuel market. The Akpet network...

UAE.(COUNTRIES)
August 4, 2008... UAE -- Abu Dhabi's International Petroleum Investment Co. (Ipic) is in talks with European companies to replace ConocoPhillips as its partner in the stalled Fujairah refinery project, which the US major quit last year due to concerns over...

Stockpiling drives surge in Chinese demand.
August 4, 2008... China's apparent demand for crude and oil products rose 6% in the first half of the year to 7.9 million b/d. Imports in particular surged on the back of higher stockpiling requirements ahead of this month's Olympic Games, while refiners were...

Opec's impotence.(Marketview)
August 4, 2008... NEW YORK -- With oil prices falling amid disappointing summer demand, consumers are worrying whether there will be enough oil in winter to prevent prices from peaking again. Last week, the old game restarted, with consumers asking Opec for more...

PIW market indicators.(Petroleum Intelligence Weekly )(Statistical table)
August 4, 2008... PIW Market Indicators ($/barrel) Jul. 28- Jul. 21- Jun. 30- Spot Crude Jul. 30 Jul. 25 Jul. 4 Opec Basket $121.93 $124.82 $138.31 UK Brent...

Updated price scorecard for key world grades.
August 4, 2008... PIW's Price Scorecard is designed to sort through the complexities of crude oil pricing under term contracts, allowing a deeper understanding of market trends than is possible from tracking only spot grades. The scorecard aims to put all...

How term-contract prices are calculated.
August 4, 2008... Term-contract formulas generally have four basic components: the point of sale, a market-related benchmark, an adjustment factor for differences related to crude oil quality and point of sale, and a timing mechanism stipulating when the value...

NOCs take different paths to growth.
August 11, 2008... National oil companies (NOC) are on the march, but not all of them are marching in the same direction, as Jose Sergio Gabrielli de Azevedo and RS Sharma, the bosses of Brazil's state-controlled Petrobras and India's state Oil and Natural Gas...

Faltering US puts brakes on oil demand.
August 11, 2008... With growth in supply faltering, it has ultimately taken rising oil prices to smother demand and bring a degree of equilibrium to the world oil market. Global oil demand is still expected to rise in the second half of 2008, by 500,000-600,000...

Did big oil earnings peak in second quarter?
August 11, 2008... Another record-breaking quarter for Big Oil should have been a cause for celebration among executives and investors alike. But a significant portion of the uplift was due to the surging oil price, which now appears to be coming off its...

Mideast grades in favor with Asian buyers.
August 11, 2008... Record oil prices had little impact on crude imports into China, Japan and South Korea during the first half of 2008, with shipments averaging 10.4 million barrels per day, up 5.7% year-on-year and accounting for more than half of the...

Pipeline blast adds to BP's FSU woes.
August 11, 2008... While BP faces an uncertain future in Russia, where it is at war with the partners in the 1.4 million barrel per day TNK-BP joint venture, the UK supermajor is hoping for a smoother ride in Azerbaijan, which accounts for roughly 10% of its...

North American LNG demand hits the wall.
August 11, 2008... North America has prepared itself for an LNG-dependent future, with huge investments in import infrastructure. But at least for the next few years, the region's need for LNG imports is likely to be dampened by rising domestic production, driven...

July oil supply solidly ahead of demand.
August 11, 2008... Global oil supply began the second half of 2008 with a solid 613,000 barrel per day monthly gain in July to average 87.89 million b/d, according to preliminary soundings taken by PIW. Output is up nearly 2.4 million b/d year-on-year and well in...

Petrobras takes on the subsalt challenge.(Interview)
August 11, 2008... The recent exploration success enjoyed by Petrobras in Brazil's offshore subsalt basins has made the state-controlled firm the envy of the oil and gas industry. The company's chief executive, Jose Sergio Gabrielli de Azevedo, spoke to PIW in...

Sharma takes India's ONGC back to basics.(Interview)
August 11, 2008... Since taking over from the flamboyant Subir Raha in 2006, Oil and Natural Gas Corp. (ONGC) Chairman RS Sharma has refocused the Indian firm on its core business--the upstream. Refinery projects have been shelved and greater independence granted...

Corporate.(GENERAL)(OMV AG)(MOL Rt)(Brief article)
August 11, 2008... CORPORATE -- Austria's OMV has abandoned its year-long pursuit of Hungarian rival Mol. The move, ending a bitter takeover battle between two of Central and Eastern Europe's biggest oil and gas operators, was prompted by the European Commission,...

Formula prices.(GENERAL)(Brief article)
August 11, 2008... FORMULA PRICES -- Mexico widened the adjustment factor for September loadings of Maya crude destined for the US, effectively lowering the price by $1.55/bbl. Mexico kept the differential for its lighter Isthmus and Olmeca crudes to the US at...

Industry restructuring.(GENERAL)
August 11, 2008... INDUSTRY RESTRUCTURING -- BP and Royal Dutch Shell appear to have emerged as rivals to BG in its $13 billion attempt to take over Australian coalbed methane producer Origin Energy (PIW Jun.30,p6). Total has confirmed that it will sell its 13%...

Algeria.(COUNTRIES)
August 11, 2008... ALGERIA -- Sonatrach generated "record" export revenues in 2007, according to the state firm's annual report, even though total export volumes fell slightly--for the second year running--to 134 million tons of oil equivalent, from 136 million...

Australia.(COUNTRIES)(Apache Corp.)(Brief article)
August 11, 2008... AUSTRALIA -- Apache's Varanus Island oil and gas processing hub offshore Western Australia has resumed partial production after an explosion suspended operations in early June (PIW Jun.9,p5). Output is now at about 110 MMcf/d but will double...

Indonesia.(COUNTRIES)(Medco Energi Internasional)(Pertamina Humas P.T.)(Brief article)
August 11, 2008... INDONESIA -- Local independent Medco Energi has moved a step closer to the goal of streamlining its operations with the $42 million sale of its stake in the Tuban Block offshore Java to state Pertamina. It is looking to sell stakes in six other...

Malaysia.(COUNTRIES)(Brief article)
August 11, 2008... MALAYSIA -- The government has unveiled a new pricing formula that could lead to a lowering of retail fuel prices if benchmark oil prices remain below $125/bbl. Kuala Lumpur said it would base retail prices on average world oil prices during...

Nigeria.(COUNTRIES)
August 11, 2008... NIGERIA -- Proposals aimed at over-hauling the country's beleaguered oil industry--and transforming Nigerian National Petroleum Corp. (NNPC) into a stronger, more independent state oil company--have been submitted to President Umaru Yar'Adua....

Russia.(COUNTRIES)
August 11, 2008... RUSSIA -- Crude exports via the Transneft pipeline network to destinations outside the former Soviet Union dropped to a modest 3.708 million b/d in July, down 27,000 b/d from June, although a 33,000 b/d rise in transshipments from neighboring...

Russia.(COUNTRIES)
August 11, 2008... RUSSIA -- The contest to acquire Russia-focused independent Imperial Energy appears to be shaping up as a battle between India and China--both of which are on the hunt for overseas oil and gas assets to feed booming demand back home. The...

United States.(COUNTRIES)
August 11, 2008... UNITED STATES -- Responding to public dismay over gasoline prices still hovering around $4/gallon, Democratic presidential candidate Barack Obama has expressed support for opening limited portions of the US Outer Continental Shelf to offshore...

High oil price fuels record earnings, but hurts downstream.(What's New Around the World)(Statistical table)
August 11, 2008... The leading majors had no trouble turning in record-breaking second-quarter profits, thanks to oil prices averaging $120/bbl during the period. Such oil price strength, however, came at a cost on the downstream side. The rapid rise in oil...

Falling sensation.(Marketview)
August 11, 2008... NEW YORK -- The pressure on crude futures continued last week, sending oil prices to a three-month low. Crude futures on the Nymex have recently traded some 20% below the $147.27/bbl all-time high set on Jul. 11. But more importantly for the...

CFO resignation hits TNK-BP credit rating.
August 11, 2008... The fallout from the ongoing shareholder row at Russian oil producer TNK-BP has continued with the resignation, effective the end of this month, of the joint venture's chief financial officer, James Owen. Owen's announced departure...

PIW market indicators.(Statistical table)
August 11, 2008... PIW Market Indicators ($/barrel) Aug. 4- Jul. 28- Jul. 7- Spot Crude Aug. 6 Aug. 1 Jul. 11 Opec Basket $117.22 $121.87 $136.07 UK Brent...

Oil prices lose their head for heights.
August 18, 2008... The relentless fall in oil prices over the past four weeks has been helped by an abundance of physical oil. The double whammy of increased supply and creaking demand has rapidly loosened balances, to the extent that not even an explosion on the...

Georgia war harms viability of transit routes.
August 18, 2008... Oil prices may be falling, but the fragilities of global energy supply infrastructure could hardly be more apparent. In Nigeria, militants recently demonstrated their ability to hit offshore as well as onshore production. Now the conflict...

Marathon weighs benefits of separation.
August 18, 2008... After a strong 2007, the US' Marathon Oil has seen its share price tumble this year, leading it to consider going down the same path as Canadian rival EnCana and split itself into two companies. For both firms, the thinking is that a breakup...

GTL zeal flagging despite diesel's strength.
August 18, 2008... Soaring demand for ever-cleaner and more efficient fuels, especially distillates such as diesel and gas oil, would suggest that the Fischer-Tropsch-based natural gas-to-liquids (GTL) process should be a top contender. The significant premiums...

OMV thwarted by Brussels and Budapest.
August 18, 2008... OMV's ambitious takeover bid for Hungarian group and regional rival Mol has ended in failure, with the Austrian group forced to throw in the towel after European Union competition regulators indicated that the merged group would have to sell...

Jamnagar gets ready to make its mark.
August 18, 2008... Compared with rival Asian powerhouse China, India has a reputation less as the world's factory than as a low-cost provider of services. But that stereotype is being challenged by the expansion of the country's downstream oil sector, the...

Formula prices.(GENERAL)(Brief article)
August 18, 2008... FORMULA PRICES -- Saudi Arabia effectively increased its prices for Arab Heavy and Arab Medium for lifting in September in all of its key markets as prices for residual fuel oil improved globally. The US and Asia got a break on prices for...

Futures.(GENERAL)
August 18, 2008... FUTURES -- To give it a liquidity boost, the Dubai Mercantile Exchange (DME) has enlisted six international energy traders and investment banks as co-owners, including an unidentified Royal Dutch Shell subsidiary. The DME, a joint venture...

IEA.(GENERAL)(International Energy Agency)
August 18, 2008... IEA -- The International Energy Agency (IEA) is wary of declaring the recent correction a tipping point for oil prices, suggesting in its latest monthly report that it may represent more of an "ebb and flow" than a "sea change" in prices (p1)....

Angola.(COUNTRIES)
August 18, 2008... ANGOLA -- The country's oil production capacity now exceeds 2 million b/d following completion of the start-up of Exxon Mobil's deepwater Kizomba C project. Exxon has launched production from the Saxi and Batuque fields as part of Kizomba C,...

Bolivia.(COUNTRIES)(Brief article)
August 18, 2008... BOLIVIA -- A new standoff is looming between President Evo Morales and the country's two main oil- and gas-producing provinces, Tarija and Santa Cruz, after the president pledged to persevere with planned constitutional reforms in the wake of...

Brazil.(COUNTRIES)
August 18, 2008... BRAZIL -- State-controlled Petrobras has made a new light oil discovery in the same subsalt block containing the giant Tupi oil and gas field (PIW Aug.11,p6). The new discovery, Iara, is located in Block BMS-11 in the Santos Basin, which...

India.(COUNTRIES)(Brief article)
August 18, 2008... INDIA -- Crude imports for the 12 months ending in March averaged 2.44 million b/d, up 9.1% year-on-year, according to petroleum ministry data. Saudi Arabia was top supplier with 542,000 b/d, upping its volumes 9.6% from the previous year. Iran...

Jordan.(COUNTRIES)(Brief article)
August 18, 2008... JORDAN -- Four companies, including UK supermajor BP, have bid for a contract to explore and develop the Risha gas field in the west of the country near the Iraqi border, according to an energy ministry source. In addition to BP, Norway's...

Nigeria.(COUNTRIES)(Brief article)
August 18, 2008... NIGERIA -- Royal Dutch Shell will miss its 2009 target for ending gas flaring because of funding shortfalls and the security crisis in the southern Niger Delta, according to a source close to the company. The supermajor admitted in its recent...

Russia.(COUNTRIES)
August 18, 2008... RUSSIA -- Rosneft has failed to receive an extension to its license for the vast West Kamchatka Block in the Sea of Okhotsk, possibly providing another sign that gas giant Gazprom has gained an advantage over its state rival as a result of...

South Korea.(COUNTRIES)(Dongbu Life Insurance)(Brief article)
August 18, 2008... SOUTH KOREA -- The country's first private energy equity fund has paid an unidentified seller $30 million for an 8.5% stake in acreage in the prolific Barnett Shale gas play in North Texas, and is on track to buy a further 4% in the next couple...

Turkey.(COUNTRIES)(Turkish Petroleum Corporation)(Brief article)
August 18, 2008... TURKEY -- It could be 2010 before state TPAO's claim that the Turkish section of the Black Sea contains an estimated 10 billion bbl of oil is put to the test, with drilling on the Kirklareli and Sinop acreage by TPAO and Brazilian partner...

Yemen.(COUNTRIES)
August 18, 2008... YEMEN -- An International Chamber of Commerce tribunal has ruled in favour of the government in a dispute over a production sharing agreement (PSA) with US oil companies Exxon Mobil and Hunt Oil. The Paris-based tribunal threw out a case...

Exxon, Conoco up the ante in Iraq.(What,s New Around the World)
August 18, 2008... US majors are adopting a more aggressive approach toward Iraq. Jim Mulva, chief executive of ConocoPhillips, this month became the highest-ranking US company executive to visit the country since the war, while Exxon Mobil has submitted the...

Game over.(Marketview)
August 18, 2008... SINGAPORE -- Several of the pillars supporting oil prices have crumbled in recent weeks, and another may be just about to fall. Under orders from the government, China's state refiners boosted commercial stocks of transport fuels during the...

Asian governments cut retail fuel prices.(Brief article)
August 18, 2008... The slide of over $30/bbl in world oil prices since their early-July peak of $147/bbl has prompted several Asian governments to cut retail fuel prices, after hiking them in May and June in a bid to rein in ballooning subsidies. Taiwan, Thailand...

PIW market indicators.(Marketview)(Statistical table)
August 18, 2008... PIW Market Indicators ($/barrel) Aug. 11- Aug. 4 - Jul. 14- Spot Crude Aug. 13 Aug. 8 Jul. 18 Opec Basket $109.97 $115.89 $133.97 UK Brent...

Majors take Georgia crisis in their stride.
August 25, 2008... Georgia's status as a safe and friendly pipeline route from the Caspian to the West has been shattered--or has it? Moscow's military incursion showed that Russia cares not a jot for the West's opinion and that it wants the breakaway Georgian...

2009 balances offer little price support.
August 25, 2008... The slide in oil prices in recent weeks reflects not only the current balance between adequate supply and weakening demand, but also the growing perception that next year's balances are unlikely to be any more supportive of prices. The global...

Europe, Asia share pain of high gas prices.
August 25, 2008... Oil prices have fallen in the past month, as have natural gas prices in North America, where supply and inventories are ample. But in Europe and East Asia, the world's other main gas-consuming regions, wholesale forward prices are up to twice...

Fixing Pemex only a first step for Mexico.
August 25, 2008... While international oil companies (IOCs) may be disappointed with Mexican President Felipe Calderon's latest energy reform proposals, local analysts are focusing on how the measures could give a long-overdue boost to state Pemex. Calderon's...

Carbon costs pose threat to Australian LNG.
August 25, 2008... Australia's LNG developers could end up paying a heavy price for the environmental good intentions of the country's Labor government. Having ratified the Kyoto Protocol in December 2007, the government of Prime Minister Kevin Rudd plans to...

US shale gas development: an introduction.
August 25, 2008... While the US finds itself struggling to tap new sources of domestic oil, its natural gas resources appear more plentiful than anyone in the industry had previously thought. Advances in hydraulic fracturing and horizontal drilling technology...

LNG.(GENERAL)
August 25, 2008... LNG--The first spot cargo in almost four months arrived at the UK's Isle of Grain terminal near London last week, meaning that the facility has operated at only 12% capacity so far in 2008. Three cargoes arrived in January and one in late...

Opec.(GENERAL)
August 25, 2008... OPEC--Worried about the recent dramatic slide in oil prices, Opec may cut production in order to defend a price level of $100/bbl, according to the London-based Centre for Global Energy Studies (CGES). In its monthly report, the prominent think...

Australia.(COUNTRIES)(Queensland Gas)(Sunshine Gas)(Brief article)
August 25, 2008... AUSTRALIA -- The process of consolidation among companies planning LNG projects on the country's Queensland coast looks to have begun with the launch of a friendly $726 million bid for small coalbed methane (CBM) player Sunshine Gas by local...

Canada.(COUNTRIES)(Brief article)
August 25, 2008... CANADA -- Operator Chevron and its partners in the giant Hebron oil field offshore Newfoundland and Labrador have finalized an agreement on development with the provincial government some 27 years after the field's discovery (PIW Aug.27,p8)....

India.(COUNTRIES)(Brief article)
August 25, 2008... INDIA -- Echoing the crude feedstock strategy of leading private-sector player Reliance, the country's newest refiner, Essar Oil, aims to phase out processing of sweet crude by the end of 2010 as part of plans for improving its profitability...

Iraq.(COUNTRIES)
August 25, 2008... IRAQ -- Indonesia's Pertamina is mulling cooperation with fellow Asian national oil company Petrovietnam in exploration in Iraq. Both firms already have acreage in the country--Pertamina has an old contract for Block 3 in the Western Desert,...