Petroleum Intelligence Weekly articles from February 2007

Petroleum Intelligence Weekly archives from February 2007

Oil exploration has fallen out of favor.
February 5, 2007... Has the oil and gas industry lost its appetite for exploration as leadership has passed from the wildcatting entrepreneurs of yesteryear to a new breed of risk-averse technocrats? There is certainly no lack of statistical evidence to support...

US raises the pressure on Iran.
February 5, 2007... European oil companies Royal Dutch Shell, Repsol YPF and Total run the serious risk of incurring US sanctions if they press ahead with multibillion-dollar upstream and LNG projects in Iran. That's the message coming loud and clear from...

Big oil faces ups and downs in SE Asia.
February 5, 2007... Despite average recovery costs of under $10 per barrel, Southeast Asia does not figure hugely as a big growth prospect or future profit center for Big Oil. Legacy assets are plentiful, yet start-up projects are few. That said, Chevron, Royal...

Forward curve signals shift in sentiment.(crude oil prices )
February 5, 2007... Recent trends in crude oil prices signal an emerging break between a volatile front and a serene back along the forward price curve. This split suggests that despite near-term uncertainty, the long-term market is finding a new floor above $60...

Kazakhs go west for new export route.
February 5, 2007... Tired of waiting for Russia to sanction the expansion of the Caspian Pipeline Consortium (CPC) export route, US major Chevron has turned to a new cross-Caspian system to handle sales of its rising crude oil production in Kazakhstan. The new...

Shell struggles in Canadian buyout battle.
February 5, 2007... Three months after its initial approach, Royal Dutch Shell doesn't appear any closer to clinching a deal to buy out the minority interests in Shell Canada. Shareholders were unimpressed by the parent company's opening gambit, and an improved...

The multiple faces of resource nationalism.(Petroleum Comment)
February 5, 2007... In response to a PIW Petroleum Comment on resource nationalism, Nordine Ait-Laoussine and John Gault expand on the original observations and develop an alternative perspective on the issue (PIW Jan.8, p5). The authors are independent petroleum...

Corporate.(GENERAL)(Norsk Hydro ASA)(Brief article)
February 5, 2007... CORPORATE -- Norway's Norsk Hydro has taken a $549 million post-tax writedown on Gulf of Mexico assets acquired in the takeover of US independent Spinnaker Exploration in 2005. The move mainly involves the Front Runner field, and means Hydro...

Industry restructuring.(GENERAL)
February 5, 2007... INDUSTRY RESTRUCTURING -- BP has announced the $1.4 billion sale of its last UK refinery, the 172,000 b/d Coryton unit near London, to Swiss-based Petroplus Holdings, which already owns 295,000 b/d of refining capacity in the UK, Belgium and...

People.(GENERAL)
February 5, 2007... PEOPLE -- BP has appointed Andy Inglis to its board as a group managing director. He also succeeds Tony Hayward as chief executive of its upstream business. Hayward was named last month to succeed Chief Executive John Browne from Aug. 1 (PIW...

Angola.(COUNTRIES)
February 5, 2007... ANGOLA -- BP and Chevron have announced new oil discoveries in Blocks 31 and 14, two of the country's most prolific offshore areas. BP's new ultra-deepwater Terra find is its 12th discovery on Block 31 and the third in less than a year from the...

Bolivia.(COUNTRIES)
February 5, 2007... BOLIVIA -- President Evo Morales has nominated his close associate Manuel Morales Olivera as the new head of state oil and gas company YPFB in a move that could spell trouble for foreign investors. Morales Olivera replaces Juan Carlos Ortiz,...

China.(COUNTRIES)(rankings)(Brief article)(Company rankings)
February 5, 2007... CHINA -- Crude imports rose 14.2% to 2.9 million b/d in 2006, led by deliveries from Saudi Arabia and Angola, according to customs data. Saudi Arabia remained the largest source, shipping 479,000 b/d, up 7.6% from 2005. Angola was second, with...

Japan.(COUNTRIES)(rankings)(Brief article)(Company rankings)
February 5, 2007... JAPAN -- Crude imports slipped 0.9% in 2006 to 4.19 million b/d, according to new government data. The Mideast continued to account for around 90% of supplies, despite a 2% drop to 3.74 million b/d. Imports from Africa rose by 30.5% to 183,000...

Kenya.(COUNTRIES)
February 5, 2007... KENYA -- Australia's Woodside Petroleum has shelved a planned second offshore exploration well just a few days after revealing that its first in the country, Pomboo, was unsuccessful. Woodside had decided not to drill the Sokew South...

Nigeria.(COUNTRIES)(Brief article)
February 5, 2007... NIGERIA -- A new report from Human Rights Watch has blamed much of the Niger Delta's violence on frustration with corrupt local governments, which have squandered hundreds of millions of dollars in oil revenues from the central government--and...

Norway.(COUNTRIES)
February 5, 2007... NORWAY -- The Petroleum and Energy Ministry has awarded 48 production licenses covering 85 blocks or part blocks to 33 companies in the 2006 Awards in Predefined Areas (APA) round for mature acreage. It offered operatorships to 19 companies,...

Russia.(COUNTRIES)(Brief article)
February 5, 2007... RUSSIA -- The belated arrival of winter has forced Moscow to cut back its seaborne crude exports, which will dip by 115,000 b/d in February to 3.004 million b/d (11.475 million metric tons) from 3.12 million b/d in January. The drop is still...

Russia.(COUNTRIES)(Brief article)
February 5, 2007... RUSSIA -- Mikhail Gutseriev, the founder and majority owner of 330,000 b/d oil producer Russneft, has been questioned over alleged tax underpayments of some $30 million resulting from Russneft's trading practices. The company could also face a...

Russia.(COUNTRIES)
February 5, 2007... RUSSIA -- Gas giant Gazprom wants to resume talks this month with companies previously short-listed but rejected for a role in the giant Shtokman gas development in the Barents Sea. Gazprom is now looking at hiring some of the five short-listed...

United Kingdom.(COUNTRIES)(oil and gas permits have been awarded for companies)(Brief article)
February 5, 2007... UNITED KINGDOM -- Matching the previous record, 150 oil and gas permits have been awarded across the UK continental shelf to 104 companies in the 24th upstream round. The round covered 246 blocks featuring new areas and relinquished acreage...

United States.(COUNTRIES)(acquisitions)(Brief article)
February 5, 2007... UNITED STATES -- Independent refiner Tesoro is raising its West Coast profile with plans to spend $1.6 billion buying Royal Dutch Shell's 100,000 b/d Wilmington refinery in Los Angeles. The deal, expected to close around May 1, will increase...

Venezuela.(COUNTRIES)(Brief article)
February 5, 2007... VENEZUELA -- The National Assembly has granted special powers to President Hugo Chavez that will allow him to rule by decree for 18 months. The special powers are part of the president's plan to deepen his leftist revolution through a series of...

Global oil supply ticks up.(What's New Around the World)
February 5, 2007... Global oil supply rose by a modest 200,000 b/d last month to 85.5 million b/d, but there was a major shift in Opec/non-Opec balances as Angola joined the producer group from Jan. 1. As a result, Opec added 1.3 million b/d, rising to 29.9...

Excitment returns.(Marketview)
February 5, 2007... NEW YORK -- A recovery in oil prices excited the market last week, with March crude oil futures prices in New York gaining around $4 and breaking back through the $58/bbl level. The rally was based primarily on cold weather, short covering and...

US military splurges on Mideast jet supply.(Marketview)(Brief article)
February 5, 2007... The US Defense Department is ramping up its jet fuel purchases in the Mideast with the arrival of thousands of new troops in Iraq and amid rumors of fresh military action outside the country. Marketers at national oil companies in the region...

PIW market indicators.(Table)
February 5, 2007... PIW Market Indicators Last 2 Weeks 4 Weeks Spot Crude Week Ago Ago Opec Basket $51.48 $50.42 $50.27 UK Brent (Dtd.) $55.34 $54.88 $51.96 UK...

Big Oil spends more to grow less.
February 12, 2007... It's clear from the latest crop of corporate results that surging investment is not producing nearly as much oil and gas as expected. Despite huge increases in spending over the past few years, most of the majors are lowering expectations for...

Putin cracks the whip, Europe pays.
February 12, 2007... Russia is quickening the pace of change in the way it exports crude and products. More export oil is to be shipped directly from the Russian port of Primorsk, bypassing pipelines across the Baltic states and raising the cost to European...

Sliding Iraqi output confounds project claims.
February 12, 2007... Despite chalking up revenues of more than $31 billion last year, Iraq's oil sector is buckling under accumulated administrative, financial, logistical and security problems. That's the stark conclusion to be drawn from the latest report of the...

Mixed record leaves Nigeria lagging potential.
February 12, 2007... Ahead of elections in April, Nigerian Oil Minister Edmund Daukoru detailed the progress under President Olusegun Obasanjo at an oil conference in Abuja last week. It's a mixed record, for sure. Joint venture finances are in better shape,...

Oil balances cause pause for thought.
February 12, 2007... Oil market balances are likely to trace a tricky course this year as demand adjusts to the run-up in prices from 2004 to mid-2006 and non-Opec supply makes up ground lost to special circumstances over the same period. This combination of weaker...

Price cap, few big finds slow Egypt's gas race.
February 12, 2007... Raising the cost of subsidized natural gas and fuel is never going to be a vote-winner, but the day of reckoning is fast approaching for Egypt. Consumers there enjoy bargain basement fuel prices, courtesy of a gas price cap imposed on producers...

China leads Asia's drive for diversity.
February 12, 2007... Asia's Big Three oil importers are pulling in different directions when it comes to crude sourcing. While all seek diversity and less reliance on the Mideast, fast-growing China is proving the most dynamic, exploiting arbitrages and tapping...

Europe.(GENERAL)(Brief article)
February 12, 2007... EUROPE -- The European Commission announced a proposal last week to impose mandatory carbon dioxide (C[O.sub.2]) emission limits for automobiles because its current voluntary approach has failed to deliver. The new proposal would limit...

Formula prices.(GENERAL)
February 12, 2007... FORMULA PRICES -- Saudi Arabia has tightened differentials across the board for its March crude exports, with US lifters, having recently enjoyed the biggest discounts, bearing the brunt of the adjustments. Asian lifters also saw their premiums...

Industry restructuring.(Aquila)(Abu Dhabi National Energy)(Endesa)(Brief article)
February 12, 2007... INDUSTRY RESTRUCTURING -- US utility Aquila is selling its natural gas and electric power operations to Great Plains Energy and Black Hills in two transactions valued at a combined $3.6 billion. UAE state-controlled Abu Dhabi National Energy...

Natural Gas.(GENERAL)
February 12, 2007... NATURAL GAS -- Protracted negotiations for Iran to supply Pakistan and India by pipeline have reached a milestone with the signing of a preliminary export deal between Iran and Pakistan. If a similar deal is signed with India, as mooted in New...

People.(GENERAL)
February 12, 2007... PEOPLE -- The Russian general prosecutors' office in the East Siberian city of Chita has brought new charges against Mikhail Khodorkovsky and Platon Lebedev, founders of oil company Yukos, accusing them of laundering over $20 billion in illegal...

Algeria.(COUNTRIES)(Brief article)
February 12, 2007... ALGERIA -- US independent Anadarko took a special charge of around $100 million on its fourth-quarter earnings last year and faces extra taxes of some $225 million this year--and possibly double that amount--due to the new windfall tax on...

China.(COUNTRIES)(Brief article)
February 12, 2007... CHINA -- Has Beijing got a new fuel pricing mechanism or not? The National Development and Reform Commission says there is a new pricing system for refined products that will bring retail prices a step closer to free-market levels. But market...

Kazakhstan.(Brief article)
February 12, 2007... KAZAKHSTAN -- Already erratic, production at the giant Karachaganak field could be heading for fresh disruption after a recent fire at Russia's Orenburg gas processing plant, BG Chief Executive Frank Chapman said last week. The plant in...

Kuwait.(COUNTRIES)
February 12, 2007... KUWAIT -- The giant Al-Zour refinery project is to be reoffered on new terms after construction bids came in at more than $15 billion, way over the budgeted sum. Contractors will now be invited to price the 615,000 b/d refinery on the basis of...

Libya.(Brief article)
February 12, 2007... LIBYA -- Concern is growing about the capacity of oil services companies to keep pace with exploration work which is piling up after three recent bid rounds, the country's Opec governor, Tarek Hassan-Beck, tells PIW (PIW Jan.1,p6). The backlog...

Russia.(COUNTRIES)(Brief article)
February 12, 2007... RUSSIA -- Exports of crude to markets outside the Commonwealth of Independent States slipped 1.7% in January, to 3.91 million b/d, largely due to the brief shutoff in supplies to the Druzhba pipeline early in the month. Druzhba handled only...

Big oil profits keep sliding in fourth quarter.(Financial report)
February 12, 2007... Oil company earnings continued to fall in the final quarter of 2006 with lower oil prices and a weaker downstream environment conspiring to push profits down. The five Western oil majors that have reported to date earned a combined $26.9...

Washington.(Changing hands)
February 12, 2007... WASHINGTON -- US benchmark West Texas Intermediate (WTI) briefly reached $60/bbl on Feb. 6, but could not pass the important psychological level despite the extremely cold weather in the US Northeast, the world's largest heating oil market. ...

PIW market indicators.(Statistical table)
February 12, 2007... PIW Market Indicators Last 2 Weeks 4 Weeks Spot Crude Week Ago Ago Opec Basket $54.22 $52.28 $48.45 UK Brent (Dtd.) $57.78 $55.95 $51.47 UK...

French dressing disguises Total's slimmer target.
February 19, 2007... Christophe de Margerie's reign as chief executive of Total got off to a near-perfect start last week, with analysts cooing over the company's robust fourth-quarter profits and praising the French major for its organic growth...

Spare capacity revives Opec leverage.
February 19, 2007... The oil price rally since mid-January has boosted Opec confidence that it has successfully navigated the first quarter and, barring surprises, prices should stay in a $50-$60 per barrel band if the group keeps production steady through the...

Asia's other NOCs raise their global game.
February 19, 2007... State-owned Petrovietnam and its Thai counterpart PTTEP both recently celebrated their first equity output from projects overseas, the former in Malaysia, the latter in Oman. While these represent modest steps in comparison with the giant...

US majors quietly back Kyoto, not Bush.
February 19, 2007... Major US oil companies--although not, notably, Exxon Mobil--have been voting with their feet on the Bush administration's climate change policy by registering Kyoto-based emission reduction schemes in the European Union. Thirty years ago, US...

Kinder Morgan rewrites script for MLPs.
February 19, 2007... The master limited partnership (MLP) business structure had been around for years before two former Enron executives decided they could use it in previously untried ways. An MLP typically consisted of fee-based assets with predictable cash...

Giant Kazakh field hit by further delays.
February 19, 2007... Problems are piling up at the supergiant Kashagan field offshore Kazakhstan which, with proven reserves of some 13 billion barrels and estimated peak production of 1.5 million barrels per day, will make up a significant chunk of non-Opec...

Chevron CEO takes lead in US energy debate.
February 19, 2007... When it comes to getting Americans to think about energy issues, nobody in the top ranks of the US oil industry does a better job than Chevron Chief Executive Dave O'Reilly. Two years ago, in a groundbreaking speech in Houston, O'Reilly...

Midstream is Child's play for Kinder Morgan.(Company overview)
February 19, 2007... Since putting together Kinder Morgan as a master limited partnership 10 years ago, Richard Kinder and his partners have transformed a bundle of neglected midstream assets into a multibillion-dollar business. In a conversation with Houston...

IEA.(GENERAL)(International Energy Agency)
February 19, 2007... IEA -- The International Energy Agency warned that Opec's planned 500,000 b/d Feb. 1 production cut might be "a cut too far," given dropping inventories and tightening supply-demand balances. In its latest monthly Oil Market Report, the IEA...

People.(GENERAL)
February 19, 2007... PEOPLE -- Christophe de Margerie has taken over as chief executive of Total, replacing Thierry Desmarest who will remain nonexecutive chairman. Yves-Louis Darricarrere, president of Gas and Power, will take over from de Margerie as head of...

Brazil.(COUNTRIES)(earnings of Petroleo Brasileiro S.A.)(Financial report)(Brief article)
February 19, 2007... BRAZIL -- Despite making the biggest full year profits in its history, state-controlled Petrobras reported a 36% plunge in its fourth-quarter 2006 earnings versus a year earlier, blaming lower oil prices and higher upstream costs. Petrobras...

Canada.(COUNTRIES)(securities)(Brief article)
February 19, 2007... CANADA -- Royal Dutch Shell's plans for taking full control of its local affiliate may not make much difference to the way the company manages big projects, according to Shell Canada Chief Executive Clive Mather. Shell has launched a C$45/share...

Cote D'Ivoire.(COUNTRIES)(Trafigura seeks finance from government agencies)(Brief article)
February 19, 2007... COTE D'IVOIRE -- Swiss-based oil trader Trafigura has struck a deal with the government to pay $198 million to fund a cleanup and an inquiry into a toxic waste incident that allegedly killed 10 people and poisoned thousands of others around...

Ecuador.(COUNTRIES)(production management)(Brief article)
February 19, 2007... ECUADOR -- Output is set to decline further at the fields once operated by US Occidental, which has filed an international arbitration claim seeking $1 billion in damages and the return of its assets. Energy Minister Alberto Acosta said the...

India.(COUNTRIES)
February 19, 2007... INDIA -- State-owned Oil and Natural Gas Corp. (ONGC) and Italy's Eni have inked a deal to exchange stakes in deepwater blocks offshore Congo (Brazzaville) and eastern India. ONGC Videsh, the overseas arm of ONGC, will take 20% of Eni's Mer...

Indonesia.(COUNTRIES)
February 19, 2007... INDONESIA -- Norway's Statoil has been touted as a potential partner for state Pertamina to develop the challenging Natuna D-Alpha gas block, potentially sidelining Exxon Mobil's involvement in the project, according to an Indonesian official....

Italy.(COUNTRIES)
February 19, 2007... ITALY -- Power giant Enel has contracted to buy an additional 1 Bcm/yr (97 MMcf/d) of gas from Algeria's state-owned Sonatrach, to be delivered once final upgrading of the Transmed subsea pipeline from Tunisia to Sicily is completed in October...

Nigeria.(COUNTRIES)(contracts of Nigeria LNG Ltd.)(Brief article)
February 19, 2007... NIGERIA -- Nigeria LNG (NLNG) has virtually sold out its proposed Train 7, currently the world's largest single-train LNG project, with the signing of five supply contracts. North America is the target market, but they remain subject to a final...

North Korea.(COUNTRIES)
February 19, 2007... NORTH KOREA -- After more than a year of talks, a denuclearization deal was finally brokered last week with international negotiators from China, Japan, Russia, South Korea and the US. In return for energy aid and promises by Tokyo and...

TNK-BP.(COUNTRIES)
February 19, 2007... RUSSIA -- Regulators have given TNK-BP subsidiary Rusia Petroleum three months to fix violations at the Kovykta natural gas development or potentially face losing its licenses to the massive East Siberian field. Kovykta is currently producing...

Pipeline.(COUNTRIES)
February 19, 2007... RUSSIA -- Pipeline operator Transneft could build a 1 million b/d pipeline spur from the Belarus border to the Russian Baltic Sea port of Primorsk in less than 18 months--much faster than previously expected, the company's president, Semyon...

Saudi Arabia.(COUNTRIES)
February 19, 2007... SAUDI ARABIA -- Russia's Lukoil used the occasion of a groundbreaking visit to the kingdom by Russian President Vladimir Putin to announce the first drilling results from its joint venture with state Saudi Aramco at the Tukhman structure in...

United Kingdom.(COUNTRIES)(Brief article)
February 19, 2007... UNITED KINGDOM -- US firm Excelerate docked the first LNG cargo at its new terminal at Teesside in northeast England on Feb. 12, the second to open in the UK since Isle of Grain in 2005. Unlike National Grid-owned Grain, the Teesside GasPort...

Saudis mull long-term growth options.(Saudi Arabian Oil Co.)
February 19, 2007... Saudi Aramco has started planning long-term expansions at three oil fields--Shaybah, Berri and Safaniyah--adding to its current slate of huge projects, according to details of internal plans obtained by PIW. Late last year Aramco declared...

Contrary views.(Marketview)
February 19, 2007... WASHINGTON -- Atlantic Basin benchmarks still couldn't convincingly pass the $60/bbl mark again last week, as traders sold off in three sessions, pushing West Texas Intermediate (WTI) and Brent below $57/bbl. With technical levels being...

PIW market indicators.(Statistical table)
February 19, 2007... PIW Market Indicators Last 2 Weeks 4 Weeks Spot Crude Week Ago Ago Opec Basket $53.63 $54.38 $50.42 UK Brent (Dtd.) $55.59 $57.31 $54.88 UK B-wave...

Reserves data conceals more than it reveals.(production statistics)(Statistical data)
February 26, 2007... Preliminary data appears to show that 2006 was a better year than 2005 for reserve replacement among the leading majors. The top six majors all replaced production, compared with only four in 2005, with the biggest improvement shown by Royal...

GTL takes one step forward, one step back.
February 26, 2007... The nascent natural gas-to-liquids (GTL) business took a great leap forward and an equally giant step back last week as Royal Dutch Shell and state Qatar Petroleum (QP) celebrated the laying of the ceremonial cornerstone for their 140,000...

Petroplus sets sights on top spot in Europe.
February 26, 2007... After this month's $1.4 billion purchase of BP's UK Coryton refinery, Swiss-based refiner Petroplus will be taking a breather from acquisitions, but that's all. There will be more deals in the future as the company looks to grow toward its...

2007 may offer brief respite for US motorists.
February 26, 2007... US motorists might not have to sweat it out at the pump as they've done over the past several summers. After rising for four straight years, gasoline retail prices could very likely ease in 2007. Domestic inventories are at a comfortable...

African refiners unite to quiz world bank.
February 26, 2007... While sub-Saharan African crude production powers ahead, its refining sector continues to struggle. Several of the region's 20 or so refineries are performing well below capacity, most lack the cash to meet tougher environmental specifications,...

CNOOC moves focus to Africa deepwater.
February 26, 2007... Regrouping after 2005's failed $18.5 billion bid for US' Unocal, the past 18 months have seen a change of direction for CNOOC Ltd., the listed affiliate of state-owned China National Offshore Oil Corp. (CNOOC). Out has gone the focus on large,...

Onboard LNG regas puts down roots.
February 26, 2007... The UK opening this month of the world's first dockside terminal capable of receiving regasified LNG focused attention not just on its promoters--US Excelerate Energy with shipowner Belgium's Exmar--but also on the wider economic impact of...

Tom O'Malley: turning Petroplus around.(Interview)
February 26, 2007... Tom O'Malley has an enviable reputation as a refining sector consolidator. Having built Tosco and then Premcor into US giants, he is now in the midst of a similar process in Europe as Chief Executive of Swiss-based Petroplus. The company has...

Corporate.(GENERAL)(economic aspects of Norsk Hydro ASA's acquisition)(Brief article)
February 26, 2007... CORPORATE -- Norway's Norsk Hydro has admitted it paid too much for its Spinnaker Exploration acquisition, and questioned whether more information might have been available earlier that would have saved it from taking a $549 million write-down...

Industry restructuring.(GENERAL)
February 26, 2007... INDUSTRY RESTRUCTURING -- Houston-based independent Pogo Producing is exploring strategic options which could include the sale of the entire company or large parts of it. Late last year New York-based hedge fund Third Point disclosed a 7.2%...