Petroleum Intelligence Weekly articles from January 2007

Petroleum Intelligence Weekly archives from January 2007

Shell's Sakhalin rout shines light on others.
January 1, 2007... Moscow has won control of the Sakhalin-2 LNG development on Russia's Pacific shelf. With the parallel collapse of a swap deal for Royal Dutch Shell to get involved in Gazprom's Zapolyarnoye gas field in West Siberia, the Anglo-Dutch...

Norway's new champion faces same old woes.(Norsk Hydro ASA, Statoil ASA)
January 1, 2007... The markets loved it, politicians endorsed it and even the unions supported it. So what's not to like about Statoil's merger with Norsk Hydro? Well, for a start, it lacks some of the obvious logic that has underpinned other big merger deals in...

Inventories are wild card in oil balances.
January 1, 2007... Inventories are center stage in the oil market discussion right now, but they are playing a quixotic role, as producers and consumers come to opposite conclusions. Opec thinks stocks are too high, indicating a loose market that requires further...

Fuel oil slows China's demand growth a bit.
January 1, 2007... In the wake of a sluggish year in 2005, Chinese oil demand growth rebounded in 2006 to 7%, sucking in 10.2% more crude imports than a year earlier, according to the Ministry of Commerce. The year ahead looks set to be slightly less frenzied,...

Tanking rates suggest lower Opec flows.
January 1, 2007... Amid the confusion about oil supply-demand balances, tanker rates suggest the oil market may tighten as the new year gets underway. Tanker demand has already eased back as oil shipments have fallen as a result of Opec cuts. This was apparent in...

Majors still cool to US ethanol boom.
January 1, 2007... Should the integrated oil and gas companies go into the ethanol business in a big way? Some consultants see it as an obvious move because fuels development and distribution comprise a core competency for the majors. The oil companies are taking...

Sparks fly over soaring project costs.
January 1, 2007... Soaring development costs have become a big source of friction between international oil companies and host governments, leading to unseemly squabbles over who should foot the bill when projects overrun their budgets. With the benefit of...

Natural gas.(GENERAL)
January 1, 2007... NATURAL GAS -- Russian President Vladimir Putin is embroiled in last-minute maneuverings over gas sales to Ukraine and Belarus in a bid to avert a potential cutoff of transit gas supplies to Europe, mirroring the crisis in Kiev in the first...

Opec.(GENERAL)
January 1, 2007... OPEC -- The producer group's December report makes the case for a lower call on Opec crude in 2007 as new non-Opec supply will exceed the projected growth in global demand. While total non-Opec supply is expected to increase by 1.8 million b/d...

Angola.(COUNTRIES)
January 1, 2007... ANGOLA -- Production has started on Total's deepwater Dalia field in Block 17, which is expected to reach plateau production of 240,000 b/d during the first half of 2007 and has estimated recoverable reserves of close to 1 billion bbl. Total...

Denmark.(COUNTRIES)
January 1, 2007... DENMARK -- Licenses for exploration offshore West Greenland have attracted bids from Exxon Mobil and Chevron, Canada's Husky and Denmark's Dong. Greenland's Bureau of Minerals and Petroleum (BMP) received a total of six applications for eight...

India.(COUNTRIES)
January 1, 2007... INDIA -- Oil and Natural Gas Corp. is boasting of two large deepwater gas discoveries in the Krishna-Godavari and Mahanadi Basins. The firm said its Mahandi find could hold in excess of 3 Tcf, while in the KG Basin its UD-1 well intersected a...

India.(COUNTRIES)
January 1, 2007... INDIA -- Steel firm Mittal looks set to enter the downstream oil business with an equity stake in Hindustan Petroleum's planned $3 billion, 180,000 b/d refinery at Bhatinda in Punjab. It is understood Mittal Investments and Hindustan plan to...

Libya.(COUNTRIES)
January 1, 2007... LIBYA -- Tatneft and Gazprom of Russia emerged as the big winners in the third Epsa-4 bid round, which was the first to include a minimum work program, in addition to the all-important production split and signature bonus. Tatneft picked up...

Mexico.(COUNTRIES)(crude oil)(Brief article)
January 1, 2007... MEXICO -- Liquids production slipped again in November to 3.552 million b/d, data from state Pemex showed. By contrast, higher nonassociated natural gas flows, mainly from southern onshore fields, lifted gas output to 5.563 Bcf/d. Output of the...

Russia.(COUNTRIES)(Financial report)(Brief article)
January 1, 2007... RUSSIA -- First-quarter crude exports look set to increase slightly year-on-year, but producers will face logistical headaches if Moscow uses deliveries to exert political pressure in the near abroad (PIW Dec.18,p6). Exports via the Transneft...

Saudi Arabia.(COUNTRIES)(petroleum revenues)(Financial report)(Brief article)
January 1, 2007... SAUDI ARABIA -- Oil export revenues shot to a new record last year, preliminary figures released in the 2007 budget statement showed. The kingdom was set to earn around $187.5 billion in petroleum revenues in 2006, up from the previous record...

United States.(COUNTRIES)(crude oil imports)(Brief article)
January 1, 2007... UNITED STATES -- Crude oil imports rose to 10.1 million b/d last October, which was 761,000 b/d million b/d more than in October 2005 when the US Gulf of Mexico was in chaos due to hurricane damage. Product imports totaled 3.3 million b/d,...

Saudi Aramco hikes 2007 development spend.
January 1, 2007... Saudi Aramco, the world's largest oil producer, is expanding its 2007 drilling budget for development wells to almost $4 billion. Industry sources say the original development budget--out of a total capital outlay of $15.8 billion for this...

Full circle.(Marketview)(petroleum industry forecasts)(Market overview)
January 1, 2007... WASHINGTON -- After sharp ups and downs in the oil markets over the past 12 months, futures prices were set to end 2006 very close to where they began. New York Mercantile Exchange (Nymex) crude futures settled above $63/bbl on the first...

PIW Market Indicators.(Statistical table)
January 1, 2007... PIW Market Indicators Last 2 Weeks 4 Weeks Spot Crude Week Ago Ago Opec Basket $56.81 $57.59 $57.59 UK Brent (Dated) $62.47 $62.46 $62.50 UK B-wave...

Investor plans are colored by new caution.
January 8, 2007... A pile of investment capital has parked itself in energy markets over the past several years, lending strong support to oil prices. Commodities are still a hot ticket and that pile was expected to grow further as 2007 gets underway. But all...

Iran looks to China as Europe turns away.
January 8, 2007... A challenging 12 months lie ahead for Iran as it strives to keep oil production capacity at the 4 million barrel per day mark, increase gas output from the giant South Pars reservoir and reduce its dependence on costly gasoline imports by...

Nuclear revival looks here to stay.
January 8, 2007... As high oil and gas prices encourage the quest for alternatives, nuclear rather than renewable energy has been the big beneficiary. The nuclear power revival, which gathered pace in 2006, looks set to continue this year, with an increasing...

India's refining ambitions rely on exports.
January 8, 2007... Set against its Asian counterparts, India has a relatively unsophisticated refining system. Yet, it still earned $10.5 billion from product exports in the last fiscal year and entertains big ambitions to ramp up capacity. Location, low costs...

Opec, non-Opec supply split gathers speed.
January 8, 2007... That global supplies were up only 0.6% on the year in December 2006 is not too remarkable given the mild winter weather in the Northern Hemisphere eating into demand, leaving only an incremental gain of 861,000 barrels per day for Opec and...

Resource nationalism: then and now.(Petroleum Comment)
January 8, 2007... This comment by Energy Intelligence on a hot-button issue for the oil industry is part of a series of opinion pieces that will feature in PIW on an occasional basis. Feedback to the PIW editor is most welcome (pkemp@energyintel.com). The...

Corporate.(GENERAL)
January 8, 2007... CORPORATE -- Exxon Mobil, Marathon and ConocoPhillips were among the star stock picks of 2006 but some analysts expect oil sector equity gains to be less uniform this year. "Performance in the oil and gas universe in 2007 is likely to be based...

Natural gas.(CENERAL)
January 8, 2007... NATURAL GAS -- A much-feared repeat of last year's Ukrainian stoppage of Russian transit supplies to Western Europe was averted by a late-hour deal between Russia's Gazprom and Belarus over gas supplies for this year (PIW Jan.9, p1). But the...

Pipelines.(CENERAL)
January 8, 2007... PIPELINES -- Medgaz, the first direct subsea gas pipeline from Algeria to Spain, has received a final investment go-ahead but will cost [euro] 900 million ($1.2 billion), rather than the original [euro] 630 million. Construction is due to start...

Trading.(Brief article)
January 8, 2007... TRADING -- Price reporting service Argus is trying to oust Platts as benchmark price provider in Rotterdam's fuel oil barge market as frustration with Platts' market-on-close pricing methodology swells once again in Europe's product markets....

Angola.(countries)(Brief article)
January 8, 2007... ANGOLA -- Total has notched up another oil discovery in ultra-deepwater Block 32, where a sixth exploration well tested at a rate of 3,700 b/d of oil from a Miocene reservoir in water depths of 1,806 meters. The latest find comes after the...

Azerbaljan.(countries)(Brief article)
January 8, 2007... AZERBAIJAN -- Technical problems with the first production well on the Shah Deniz gas field forced it to close within a week of its Dec. 15 start-up. No further volumes are expected in January and it is unclear when flows will resume. Shah...

Brazil.(countries)
January 8, 2007... BRAZIL -- In a new year boost, state-controlled Petrobras has declared 19 separate oil fields with combined reserves totaling about 2.1 billion bbl to be commercially viable. Petrobras said 16 of the fields are offshore in the Santos, Campos...

China.(COUNTRIES)(crude imports)(Brief article)(Statistical data)
January 8, 2007... CHINA -- Imports of crude in November 2006 surged over 30% to 3.3 million b/d, with Angola emerging as the top crude supplier at 550,000 b/d and Saudi Arabia slipping to second with 507,000 b/d. The Mideast accounted for over 42% of total...

India.(COUNTRIES)
January 8, 2007... INDIA -- A giant natural gas discovery in the offshore Krishna Godavari Basin is being hailed as the country's biggest ever and could be producing 50 MMcm/d (1.77 Bcf/d) by 2012, according to state Oil and Natural Gas Corp. (ONGC). In an upbeat...

Iraq.(countries)(Brief article)
January 8, 2007... IRAQ -- Norwegian independent DNO has raised its stake in oil fields in the Kurdish region in the north to 55% from 40% and announced its most successful well drilled to date. The Tawke-4 well flowed at 8,500 b/d of oil during testing, the...

Japan.(COUNTRIES)(crude imports)(Brief article)(Statistical data)
January 8, 2007... JAPAN -- Crude imports fell 2.6% to around 4.1 million b/d in November, according to data from the Ministry of Economy, Trade and Industry. Imports from Saudi Arabia fell by 17.2% to around 1.2 million b/d, while Qatar jumped about 30% to...

Kuwait.(COUNTRIES)
January 8, 2007... KUWAIT -- Soaring costs may sound the death knell for the proposed Al-Zour refinery after bids came in well over budget. Kuwait National Petroleum Co. (KNPC) received nine offers for the project's four packages by a Dec. 17 deadline but they...

Libya.(COUNTRIES)
January 8, 2007... LIBYA -- Exxon Mobil, India's Oil and Natural Gas Corp. (ONGC) and Japan's Inpex have joined the winners in the third Epsa-4 bid round, each picking up a single block for which they were the sole bidder. Exxon took Area 20 with a 22.3% share of...

Nigeria.(countries)
January 8, 2007... NIGERIA -- Oil companies hope to boost exports in February by 270,000 b/d to 2.08 million b/d as they restart Niger Delta facilities disrupted by militants in December. However, the plans, suggested in preliminary loading schedules, look...

South Korea.(COUNTRIES)(decline in crude imports)(Brief article)(Statistical data)
January 8, 2007... SOUTH KOREA -- Imports of crude declined 3% to 2.54 million b/d in November, compared with the same period of 2005. Imports from key Mideast countries fell, but there were big jumps from Iran and Iraq. Iranian supplies came in at 243,000 b/d,...

UAE.(COUNTRIES)
January 8, 2007... UAE -- International oil companies invited to bid for Abu Dhabi's sour gas opening have until Apr. 14 to present a detailed development plan, PIW learns. Abu Dhabi National Oil Co. (Adnoc) last month sent tender documents to a dozen companies...

Uzbekistan.(COUNTRIES)
January 8, 2007... UZBEKISTAN -- The third-largest natural gas producer in the FSU after Russia and Turkmenistan closed out 2006 with a flurry of exploration and development deals with Russian, Chinese and other Asian partners. Russia's Lukoil Overseas is part of...

Venezuela.(countries)(Brief article)
January 8, 2007... VENEZUELA -- Despite being strongly tipped for promotion, Oil Minister Rafael Ramirez stayed put in a limited government shake-up last week, in which President Hugo Chavez sacked Vice President Jose Rangel and Interior and Justice Minister...

Demand scare.(Marketview)(crude oil demand increases)(Market overview)(Statistical data)
January 8, 2007... NEW YORK -- Crude oil prices were sliding fast last week, led by declining refined product markets and signs that demand may be much weaker than anticipated. Fears of slumping demand knocked prices out of their comfort zone, ending several...

ICE trading goes through the roof.(IntercontinentalExchange )(Brief article)(Statistical data)
January 8, 2007... Futures trading on the electronic energy marketplace IntercontinentalExchange (ICE) reached record annual volume for the ninth consecutive year in 2006, with traded contract levels exceeding 2005's by more than 120%. Average daily...

PIW Market Indicators.(petroleum intelligence weekly)(Statistical table)
January 8, 2007... PIW Market Indicators Last 2 Weeks 4 Weeks Spot Crude Week Ago Ago Opec Basket $55.74 $56.50 $57.59 UK Brent (Dtd.) $57.69 $59.58 $62.46 UK...

Russia wins again by playing hardball.
January 15, 2007... Russia's latest energy feud with Belarus echoes last year's dispute with Ukraine and any number of showdowns Moscow has fomented with other former Soviet republics. Last year, European gas consumers were left in the lurch; this time it was oil...

US Gulf is back on an upswing.
January 15, 2007... With a bit of luck, oil production in the US Gulf of Mexico should finally claw its way back this year to the peak levels attained before the devastation wrought by Hurricanes Katrina and Rita in 2005. In addition to the restoration of volumes...

Low natural gas price hits oil use.
January 15, 2007... The common assumption that the fall in crude prices is the fault of exceptionally warm weather hammering down demand for oil products--especially heating oil--is only part of the story. The bigger loser is fuel oil, as power generators have...

China's spending spree takes aim at Africa.
January 15, 2007... While the Western oil giants poured money into shareholders' pockets with record buybacks in 2006, China's went shopping, spending over $10.5 billion on acquisitions abroad last year. The Big Three firms raised their overseas equity production...

Oil price drops out as stock driver.
January 15, 2007... The 2006 rise in oil prices propelled oil equities to new heights as investors flooded into one of last year's hottest sectors. With oil above $70 per barrel for much of the year, big companies ranging from top supermajor Exxon Mobil to Italy's...

Warm weather sinks US gas market.
January 15, 2007... Sunbathing in New York's Central Park in January? Such a scene would seem to defy logic, but this winter's weather in North America has been anything but logical as sunbathers bask in 70[degrees] Fahrenheit temperatures. The aberrant weather...

Carbon credits hold key to gas flaring.
January 15, 2007... The worldwide effort to eliminate natural-gas flaring is floundering. With the biggest offender, Russia, staying out of the Global Gas Flaring Reduction (GGFR) partnership that was set up in 2002, even the size of the planet's problem remains...

Corporate.(GENERAL)(Brief article)
January 15, 2007... CORPORATE -- In an ill-starred start to the year, BP has blamed Alaska, low gas demand and lower production entitlements due to Opec cuts for a 5% drop in fourth-quarter 2006 output. Output came in at 3.82 million boe/d, down from 4.02 million...

Formula Prices.(GENERAL)
January 15, 2007... FORMULA PRICES -- Saudi Arabia adjusted its term contract price formulas for February crude exports by easing differentials for light crude grades to both Asia and Europe, while tightening the differentials for heavier grades. However,...

Industry Restucturing.(GENERAL)
January 15, 2007... INDUSTRY RESTUCTURING -- US giant GE is acquiring Houston-based drilling and sub-sea systems provider Vetco Gray for $1.9 billion from equity funds Candover, 3i and JP Morgan Partners. The trio are retaining Vetco Aibel, which designs and...

People.(GENERAL)(Obituary)(Brief article)
January 15, 2007... PEOPLE -- Hubert Perrodo, the founder and owner of Perenco, Europe's largest independent oil company, died on Dec. 29, leaving the future of the $8 billion business in the balance. Nigeria's minister of state for petroleum, Edmund Daukoru, has...

Algeria.(COUNTRIES)
January 15, 2007... ALGERIA -- Companies and analysts are seeking further clarification from state Sonatrach of legislation detailing a new tax on windfall profits, to be applied to contracts held by foreign oil and gas companies when the price of Brent crude...

Azerbaijan.(COUNTRIES)
January 15, 2007... AZERBAIJAN -- After failing to agree with Russian giant Gazprom on gas import prices, the Caspian producer has halted exports of crude oil by pipeline to the Russian Black Sea port of Novorossiysk. Baku will process the crude for domestic use...

India.(COUNTRIES)
January 15, 2007... INDIA -- Downstream newcomer Essar Group, a steel-to-telecommunications conglomerate, is in talks with Iran to set up a $2 billion refinery in the Mideast Gulf country. Talks are being held with state-run National Iranian Oil Refining and...

India.(COUNTRIES)(Brief article)
January 15, 2007... INDIA -- Work is to start in April on 5 million tons (37 million bbl) of strategic oil storage facilities; others up to a similar capacity are being considered as a public-private partnership. The reserve will hold around 15 days of demand...

Iran.(COUNTRIES)
January 15, 2007... IRAN -- Little-known Malaysian power firm SKS Ventures has signed a $16 billion memorandum of understanding with state National Iranian Oil Co. (NIOC) to develop two large onshore gas fields for an LNG export project. SKS is owned by Syed...

Russia.(COUNTRIES)
January 15, 2007... RUSSIA -- US Chevron and state-run Gazprom's oil subsidiary, Gazprom Neft, have set up a joint venture targeting projects in resource-rich northwest Siberia, opening the way for Chevron's possible upstream entry. Chevron holds 70% of the...

Turkey.(COUNTRIES)
January 15, 2007... TURKEY -- Natural gas imports from Iran resumed on Jan. 7, rising to some 15 MMcm/d, after a four-day cutoff sparked by a cold snap straining domestic supply in Iran. More Iranian gas is now flowing than in December, when severe weather reduced...

Saudi Arabia.(COUNTRIES)(cabinet reshuffling)(Brief article)
January 15, 2007... SAUDI ARABIA -- Speculation is rife about the possibility that an imminent cabinet reshuffle may usher in a new oil minister at the helm of the world's top producer after 12 years of stability under incumbent Ali Naimi. No confirmation of...

Turkmenistan.(COUNTRIES)(analysis of petroleum exports)(Brief article)
January 15, 2007... TURKMENISTAN -- The search for new export outlets to reduce a reliance on Russia will be a key policy of the new leadership in Ashkhabad, according to acting president Gurbanguly Berdymukhamedov, who is widely expected to succeed the late...

United Kingdom.(COUNTRIES)(petroleum industry management)(Brief article)
January 15, 2007... UNITED KINGDOM -- The North Sea Buzzard field finally started production on Jan. 7 after a near two-month delay that was blamed on bad weather. Output of the 32[degrees] API crude will begin at around 65,000 b/d and ramp up over the next six...

United States.(COUNTRIES)
January 15, 2007... UNITED STATES -- The new Democratic-controlled Senate is planning to put global warming center stage at an open forum on Jan. 30. The initiative by Senator Barbara Boxer (D-California), the new chairman of the Environment and Public Works...

Chavez raises the stakes for Orinoco talks.(What's New Around the World)
January 15, 2007... Fresh off a pledge to nationalize major utilities, Venezuela's President Hugo Chavez has set the cat among the pigeons with nonspecific pledges to take national control of the four projects that produce heavy crude from the Orinoco region. ...

Party's over.(Marketview)(petroleum industry market research)
January 15, 2007... WASHINGTON -- West Texas Intermediate (WTI) and Brent continued their downward spiral last week, trading as low as $53.63/bbl and $53.26/bbl, respectively, on Jan. 10. The markets eventually closed below $55/bbl, breaching yet another key...

PIW market indicators.(Petroleum Intelligence Weekly )(Statistical table)
January 15, 2007... PIW Market Indicators Last 2 Weeks 4 Weeks Spot Crude Week Ago Ago Opec Basket $50.99 $53.99 $58.01 UK Brent (Dtd.) $52.46 $55.64 $62.34 UK...

BP's deal-maker makes way for team-builder.
January 22, 2007... An era will end in July when John Browne steps down after 12 years as chief executive of BP. Following a rash of recent problems in the US, Browne is leaving under something of a cloud. But nobody, least of all his successor, should be under...

No simple answer to sinking crude.
January 22, 2007... Selling by energy investment funds and similar investors has no doubt accelerated the downward spiral in oil prices so far this year, but numerous other factors are also at play. What's more, the market impact of the reduced exposures of energy...

Mideast upstream bar drives majors downstream.
January 22, 2007... International majors searching for upstream opportunities in the Mideast Gulf are a frustrated bunch these days. The likes of Exxon Mobil, BP and Chevron have all but given up on Project Kuwait, the plan devised more than 10 years ago to...

Price reporting seeks accuracy, finds controversy.
January 22, 2007... With roll out of its market-on-close (MOC) methodology for US crude and products--replete with a half-hour end-of-day trading window--Platts' oil pricing revolution is nearing completion. The changes were supposed to provide infallible...

Yemen pushes gas, oil sees more slippage.(production sharing contract )
January 22, 2007... As its oil production sags, Yemen is touting natural gas as a major part of its hydrocarbons future and aims to include a natural gas clause--the country's first--in final contracts for eight exploration blocks awarded late last year. But the...

Northern Plains enjoy modest oil boom.
January 22, 2007... Montana and North Dakota, in the Northern Plains region of the US, are enjoying a modest oil boom that provides a welcome contrast to the slow decline seen in most US onshore basins. Pioneered by a handful of small companies, the so-called...

Environment.(GENERAL)
January 22, 2007... ENVIRONMENT -- Supermajor BP is to start construction on five wind power projects in the US this year as it fleshes out plans to turn its fledgling alternative energy unit into a $6 billion/yr business. The projects in California, Colorado,...

Industry Restructuring.(GENERAL)
January 22, 2007... INDUSTRY RESTRUCTURING -- Abu Dhabi National Energy (Taqa) is to pay US$550 million for Canadian Talisman Energy's nonoperated Brae upstream interests in the UK North Sea. The deal follows Taqa's earlier acquisition of the Dutch upstream assets...

LNG.(GENERAL)
January 22, 2007... LNG -- By almost any reckoning, 2006 was a weak year for US LNG imports, which sank about 7% from 2005, according to Department of Energy data and estimates from US Waterborne LNG Report and others. In the absence of cold weather and the...

Opec.(GENERAL)
January 22, 2007... OPEC -- Saudi Arabia last week quashed calls from Iran and Venezuela for an emergency meeting to discuss output cuts. In its first response to the sharp fall in prices since Jan. 2, the kingdom said there was no need for a panic reaction and...

China.(COUNTRIES)(petroleum output)(Brief article)
January 22, 2007... CHINA -- State firms saw modest increases in domestic crude output last year, with Sinopec registering over 2% growth to 783,000 b/d and PetroChina's production rising 0.8% to 2.27 million b/d versus 2005. Higher gains were seen in natural gas...