Petroleum Intelligence Weekly articles from November 2008

Petroleum Intelligence Weekly archives from November 2008

Opec expects (and needs) good cut compliance.
November 3, 2008... Opec producers are expected to show a high level of compliance with the 1.5 million barrel per day output cut agreed on Oct. 24, thanks to a combination of growing Opec maturity and the ongoing impact of the credit crunch. Already, a number of...

Rocky road ahead for NOC finances.
November 3, 2008... Many national oil companies (NOC) have enjoyed unprecedented growth and prosperity in recent years. But how are they positioned to survive the current global financial crisis and falling oil prices? With access to credit tighter than ever, cash...

Price fall casts doubt on Libya's expansion.
November 3, 2008... Libya's bullish plans for increasing oil output to 3 million barrels per day by 2012 from a current level of 1.8 million b/d may need to be adjusted if the deterioration in oil prices sets in, Shokri Ghanem, the head of state National Oil Corp....

Non-Opec surge complicates Opec's task.
November 3, 2008... With most market attention focused on sliding global oil demand and the viability of Opec's recent output agreement, the potential impact of a sharp rebound in non-Opec supply in the fourth quarter is in danger of being overlooked. Yet there is...

Offshore may rescue oil services sector.
November 3, 2008... As US oil services and drilling companies come off a solid third-quarter earnings performance, executives across the sector have highlighted the importance of their offshore portfolios as a means to offset the expected downturn in the North...

New price reality could aid Nigeria's reforms.
November 3, 2008... Falling oil prices should in theory strengthen the case for reforming Nigeria's ailing oil and gas sector, and for making state Nigerian National Petroleum Corp. (NNPC) self-financing--that, certainly, was the view of Nigerian energy officials...

Downturn threatens Asia's splitter plans.
November 3, 2008... With financial markets in turmoil, a global recession looming and the region's petrochemical sector in the doldrums, Asia's plans for a massive expansion of its condensate splitting capacity are starting to look a little shaky. Robust Asian...

Libya's NOC reassesses the future.(National Oil Corp.)(Interview)
November 3, 2008... For the last year, Libya's state National Oil Corp. (NOC) has pressed hard on growth plans, forging new development contracts with producers aimed at underpinning a targeted 1.2 million barrel per day increase in oil output. But falling oil...

Schlumberger's Gould takes downturn in his stride.(Andrew Gould)(Interview)
November 3, 2008... When it comes to enduring boom and bust cycles in the oil-field services sector, Schlumberger Chairman and Chief Executive Andrew Gould has "been there, done that." In fact, the current looming slowdown will be his third in a career that dates...

Corporate.(GENERAL)
November 3, 2008... CORPORATE -- The supermajors reported bumper third-quarter results last week, but with oil prices off record highs, these will be the last such numbers for a while. Exxon Mobil again led the pack, but BP and Royal Dutch Shell reported stronger...

Industry restructuring.(GENERAL)(Wintershall AG's plans to acquire Revus Energy AS)(Brief article)
November 3, 2008... INDUSTRY RESTRUCTURING -- Wintershall, the oil and gas subsidiary of German chemical giant BASF, has launched a $740 million recommended bid for Norwegian independent Revus Energy, whose share price has come under pressure amid the global...

People.(GENERAL)(Rio Tinto Ltd's Paul Skinner may become chairman of British Petroleum Company PLC)(Brief article)
November 3, 2008... PEOPLE -- Former Royal Dutch Shell downstream chief Paul Skinner has emerged as the front-runner to replace Peter Sutherland as chairman of BP next year. UK press reports suggested that Skinner, who is currently chairman of Anglo-Australian...

People.(GENERAL)(Royal Dutch-Shell PLC to appoint Peter Voser as chief executive officer)(Brief article)
November 3, 2008... PEOPLE -- Royal Dutch Shell has thrown investors a major surprise with the announcement that Chief Financial Officer (CFO) Peter Voser will replace Jeroen van der Veer as the company's chief executive on Jul. 1 next year. Voser had hardly rated...

Australia.(COUNTRIES)
November 3, 2008... AUSTRALIA -- Undeterred by its recent failure to buy local gas producer and utility Origin Energy, the UK's BG looks set to acquire Queensland Gas Co. (QGC) for US$3.4 billion (PIW Sep.15,p3). BG has agreed to buy all of QGC's outstanding...

Canada.(COUNTRIES)(oil prices)(Brief article)
November 3, 2008... CANADA -- Current oil prices do not threaten existing production from Alberta's oil sands, as operating costs remain comfortably low, but future investments might be hit by the price collapse, according to Rick George, chief executive of the...

China.(COUNTRIES)
November 3, 2008... CHINA -- State-owned Sinopec and PetroChina have reported mixed results for the third quarter. Hit by high crude costs, Sinopec's profit fell 39% year-on-year to $1.19 billion, while PetroChina saw earnings rise 30% to $5.83 billion as high oil...

China.(COUNTRIES)(crude oil imports)(Brief article)(Statistical data)
November 3, 2008... CHINA -- Crude imports rose 10% year-on-year in September to 3.67 million b/d. Saudi Arabia was the top supplier with 994,000 b/d, up a staggering 64% from last year, as additional volumes went to the new Qingdao and Fujian refineries, where...

Neutral zone.(COUNTRIES)(Kuwait and Saudi Arabia to boost offshore production capacity )(Brief article)
November 3, 2008... NEUTRAL ZONE -- Kuwait and Saudi Arabia will boost offshore production capacity in the Khafji field to 350,000 b/d by 2013, some five years later than expected, an official from the Kuwaiti-Saudi Khafji Joint Operations (KJO) company has told...

Nigeria.(COUNTRIES)(TOTAL S.A's operations at Niger Delta)(Brief article)
November 3, 2008... NIGERIA -- Total has launched a project to boost onshore oil and gas output in the troubled Niger Delta. The French major is to boost gas output by 50% to 550 MMcf/d and raise oil and condensate output by around 15,000 boe/d to 140,000 boe/d by...

Russia.(COUNTRIES)
November 3, 2008... RUSSIA -- State gas giant Gazprom is preparing to take greater control of the massive Sakhalin-2 oil and gas development, which is scheduled to begin production of LNG from the country's Pacific shelf in early 2009. A Gazprom representative...

Russia.(COUNTRIES)
November 3, 2008... RUSSIA -- Moscow and Beijing have inked a number of oil and gas accords that guarantee energy supplies to the Asian power in exchange for billions of dollars in loans for Russian firms struggling with the global financial crisis. Russian state...

South Korea.(COUNTRIES)(Petroleum imports)(Brief article)(Statistical data)
November 3, 2008... SOUTH KOREA -- Crude imports averaged 2.3 million b/d in September, up 1.3% from a year earlier, according to the latest official data. Imports from top supplier Saudi Arabia dipped 2% to 685,000 b/d, while volumes from the UAE, Iran and Qatar...

Industry urged to maintain investment.(What's New Around the World)
November 3, 2008... International oil companies have been urged to avoid repeating the mistakes of the 1980s and 1990s and maintain investment in finding new reserves and increasing production through the current slump in oil demand and oil prices. Speaking...

Insecurity rules.(Marketview)(global oil demand )
November 3, 2008... NEW YORK -- The oil market is deeply confused over where crude prices are heading. Many industry leaders expect the global economy to slide into recession, taking global oil demand down with it. As a result, oil demand growth might be zero or...

Russian producers slash oil price assumptions.
November 3, 2008... Russia's leading oil producers are dramatically reworking their investment scenarios for 2009 to reflect the sharp recent fall in crude prices. With Russia already battling dipping production from West Siberia, the planning revisions likely...

PIW market indicators.(crude oil prices)(Statistical table)
November 3, 2008... PIW Market Indicators ($/barrel) Oct. 27- Oct. 20- Sep. 29- Spot Crude Oct. 29 Oct. 24 Oct. 3 Opec Basket $56.94 $61.53 $90.01 UK Brent...

Economy won't wreck Obama's green plans.
November 10, 2008... The election of Barack Obama as the new US president and the expanded Democratic majority in Congress are likely to add momentum to efforts to curb greenhouse gas emissions, reduce the nation's dependence on foreign sources of oil and create a...

Mexico could be net importer of oil by 2016.
November 10, 2008... With both production and reserves declining, Mexico is set to become a net oil importer in less than a decade--a remarkable reversal for a country that is still the US' third-biggest crude supplier. The country's energy ministry is warning...

Pertamina prepares for a bumpy ride.
November 10, 2008... These are trying times for Indonesia's state Pertamina, which is facing up to change and challenge on three fronts: the threat of credit drying up, the country's first fuel price hike in three years, and Jakarta's decision to leave Opec....

Oil price fall no reason to cut capex.
November 10, 2008... Producers are complaining that oil prices are now too low to support investment in new capacity. From Opec oil ministers to corporate chiefs, industry leaders have rushed to predict that this will cause a supply crunch when demand picks up...

Credit crisis complicates LNG finance.
November 10, 2008... The global credit crunch will make financing LNG projects more difficult and more expensive in the short term, but most new projects with blue-chip backers should go ahead, while those sponsored by independents may have to rethink the timing of...

PIW Scorecard: Asian premium returns.
November 10, 2008... Asian refiners paid a hefty $8 more per barrel of Arab Light in the third quarter than their counterparts in Europe and the US as a result of hefty price volatility, according to PIW's latest Quarterly Scorecard. These same price gyrations had...

October starts fourth-quarter supply surge.(Statistical data)
November 10, 2008... What could turn out to be a substantial surge in global oil supply in the fourth quarter got off to a solid start in October. Average output jumped 1.77 million barrels per day from September to 87.618 million b/d, according to preliminary...

Pertamina's Soemarno: preparing for change.(Interview)
November 10, 2008... Cutting subsidies, leaving Opec--big changes are taking place in Indonesia's oil and gas industry. At the heart of all this is state-owned Pertamina, which is attempting to chart a course through this upheaval while also trying to double oil...

People.(GENERAL)
November 10, 2008... PEOPLE -- Khalid al-Falih will take over as president and chief executive of state oil giant Saudi Aramco in January 2009, replacing Abdallah Jumah (PIW Aug.13'07,p5). Jumah is retiring after more than 40 years with Aramco, including nearly 14...

Brazil.(COUNTRIES)(partnership of BG PLC, Galp Energia, Petroleo Brasileiro S.A.)(Brief article)
November 10, 2008... BRAZIL -- Drilling success on the Guara and Iara discoveries has prompted the UK's BG and partners--operator Petrobras, Portugal's Galp and Spain's Repsol YPF--to fast-track planning of two 100,000 boe/d off-shore pilot schemes, with the...

Indonesia.(COUNTRIES)
November 10, 2008... INDONESIA -- The government has awarded a further nine exploration blocks as part of its 2008 bid round, with acreage going to Exxon Mobil, smaller US rivals Hess and Murphy Oil, and Thailand's state PTT. Royal Dutch Shell's attempt to return...

Japan.(COUNTRIES)(crude imports)(Brief article)(Statistical data)
November 10, 2008... JAPAN -- Crude imports averaged 4.03 million b/d in September, up 13% year-on-year, according to the latest data from the Ministry of Economy, Trade and Industry. Imports in September 2007 had been unusually low at just 3.57 million b/d....

Kazakhstan.(COUNTRIES)(Brief article)
November 10, 2008... KAZAKHSTAN -- The international consortium developing the Kashagan field has finally forged an agreement ending the long-standing dispute with the government over the field's development and provided a "new way forward" for the giant project,...

Nigeria.(COUNTRIES)
November 10, 2008... NIGERIA -- Activists are filing a lawsuit against Royal Dutch Shell in the Netherlands over alleged environmental negligence by its Nigerian joint venture, Shell Petroleum Development Co. (SPDC). The suit has been brought by fishermen and...

Russia.(COUNTRIES)
November 10, 2008... RUSSIA -- In a move boosting Gazprom's drive to expand overseas, the state gas giant has signed new accords with Eni and Enel to cooperate in developing the Siberian fields that the Italian firms acquired from bankrupt former oil producer Yukos...

Russia.(COUNTRIES)(crude oil exports)(Statistical data)
November 10, 2008... RUSSIA -- Moscow has unexpectedly cut its crude export duty to $287/ton ($39.15/ bbl) from Nov. 1 from the previous level of $372.20/ton ($50.78/bbl), easing the financial pressure on the country's oil producers. The cut is the second...

Saudi Arabia.(COUNTRIES)
November 10, 2008... SAUDI ARABIA -- Concerns about high development costs and future oil demand are prompting state Saudi Aramco to rethink several long-planned upstream projects, including multibillion-dollar developments at the Manifa, Karan and Shaybah fields,...

UAE.(COUNTRIES)
November 10, 2008... UAE -- ConocoPhillips is moving ahead with its Shah sour gas project in Abu Dhabi, but concerns about falling oil prices and high costs mean it will postpone a final investment decision until the middle of 2009, a top Conoco official has told...

Venezuela.(COUNTRIES)
November 10, 2008... VENEZUELA -- Caracas has formally launched its long-awaited Carabobo bid round to develop four blocks in the vast Orinoco heavy oil belt. Energy Minister Rafael Ramirez said 47 companies, including Russia's Gazprom and Lukoil, Repsol YPF,...

Strong crude and easing refining margin pressures lift Q3 earnings.(What's New Around the World)(Financial report)
November 10, 2008... In an earnings season mired by underperformers and weakened outlooks amid the global credit meltdown, the leading integrated oil majors recorded uniformly strong third-quarter profits, with four of the five companies tracked by PIW beating...

Taking a pounding.(Marketview)(oil prices)
November 10, 2008... WASHINGTON -- Every time oil prices attempt to rebound, the markets just take another pounding. US benchmark West Texas Intermediate (WTI) received a US election day bounce Nov. 4 following a rise in equities based on the expectations of a...

BP reopens pipeline closed by Georgia conflict.
November 10, 2008... BP has reopened the Baku-Supsa pipeline across Georgia, which has been closed since the Russian incursion in August. The 100,000 b/d capacity pipeline from Azerbaijan to the Georgian Black Sea coast was operating around 90,000-95,000 b/d when...

PIW market indicators.(Statistical table)
November 10, 2008... PIW Market Indicators ($/barrel) Nov. 3- Oct. 27- Oct6- Spot Crude Nov. 5 Oct. 31 Oct. 10 Opec Basket $58.58 $57.64 $77.98 UK Brent...

Updated price scorecard for key world grades.
November 10, 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.(Statistical table)
November 10, 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...

Majors put the brakes on share buybacks.
November 17, 2008... The majors are reevaluating share buybacks in light of the impact of lower oil prices and tighter financing on their revenues and balance sheets. The leading majors have spent huge sums on stock repurchase programs since the start of this...

Economy, high prices cut IEA demand forecast.(International Energy Agency)
November 17, 2008... In its latest annual World Energy Outlook, the International Energy Agency (IEA) has maintained the tone of its recent long-term forecasts in painting a bleak picture of global energy prospects. But it has also slashed its forecast for oil...

Canada's Suncor ready for another downturn.
November 17, 2008... Canada's Suncor has weathered multiple up-and-down cycles since what was then a unit of Sun Oil began developing Alberta's first oil sands project in 1967. Since then, the price of benchmark WTI crude has swung between $3 and $147 per barrel,...

Mideast NOCs turn the screw on contractors.
November 17, 2008... National oil companies (NOC) in the Middle East are trying to turn falling oil prices and bleak projections for global oil demand to their advantage to bring down the inflated cost of upstream and downstream megaprojects. Saudi Arabia and the...

Cost phasing key to Brazil's subsalt plans.
November 17, 2008... Brazil's emerging subsalt play seems to embody the tensions in today's upstream market. The UK's BG, a minority partner in several subsalt discoveries including the giant Tupi field, recently flagged up the likely accelerated development of not...

Credit crunch hammers OTC energy trading.
November 17, 2008... Trading has been one of the areas of the energy industry most affected by the global financial crisis, but its impact is being felt mainly in the forward markets for crude and products rather than the physical trade, with a sharp fall already...

Chinese, Indian NOCs set to keep buying.
November 17, 2008... The current financial crisis is causing problems for oil firms large and small in terms of gaining access to credit, but not everyone is suffering to the same extent--China and India's national oil companies (NOC), for example, are flush with...

Suncor's George: living within our means.(Interview)
November 17, 2008... Less than six months ago, Canada's oil sands developers were proceeding at full speed to take advantage of oil prices close to $150 per barrel. Now, all but one has indicated it will slow down in response to $60 oil. Rick George, chairman and...

Formula prices.(GENERAL)(Statistical data)
November 17, 2008... FORMULA PRICES--Saudi Arabia has sharply tightened December term-contract differentials for its lighter grades heading to Europe and the US, but has taken account of deteriorating naphtha prices in Asia and cut premiums and widened discounts...

IEA.(GENERAL)(International Energy Agency )(Statistical data)
November 17, 2008... IEA--The International Energy Agency has slashed its estimates for world oil demand to reflect new, more pessimistic economic forecasts from the IMF, this time by 330,000 b/d for 2008--including a whopping 1 million b/d adjustment for the...

Opec.(GENERAL)
November 17, 2008... OPEC--An additional 1 million b/d output cut is expected to be agreed when Opec ministers gather for a "consultative" meeting in Cairo Nov. 29 in an effort to mop up a growing crude overhang and arrest falling prices. The Opec reference basket...

Argentina.(COUNTRIES)
November 17, 2008... ARGENTINA -- Buenos Aires has announced tax incentives that it hopes will reverse years of decline in its oil reserves and also boost the nation's refining capacity. Under the Petroleum Plus and Refining Plus programs, the government will grant...

Czech Republic.(COUNTRIES)
November 17, 2008... CZECH REPUBLIC -- Crude oil supplies from Russia should rebound in November after Gazprom Neft joined fellow exporters Lukoil, Tatneft and Bashneft in striking a direct supply deal with the country's refiners. None of the deals extend beyond...

Egypt.(COUNTRIES)
November 17, 2008... EGYPT -- It's been a good week for Indian upstream efforts in the country, with Gujarat State Petroleum Corp. (GSPC) securing three offshore exploration blocks in a bid round organized by state Ganoub El Wadi Petroleum (Ganope) and ONGC Videsh...

Iraq.(COUNTRIES)
November 17, 2008... IRAQ -- State-owned China National Petroleum Corp. (CNPC) is set to start work immediately on its 20-year service contract to develop the central Al-Ahdab oil field following a formal Nov. 10 signing ceremony in Baghdad, making it the first...

Kazakhstan.(COUNTRIES)
November 17, 2008... KAZAKHSTAN -- As BP prepares to exit the Central Asian republic, the supermajor has signed an agreement to sell a stake in the Caspian Pipeline Consortium (CPC) to state Kazmunaigas (KMG). BP signed an agreement with KMG to sell its stake in...

Kuwait.(COUNTRIES)
November 17, 2008... KUWAIT -- Companies that were awarded contracts for the construction of the planned Al-Zour refinery might have to review the project timelines they offered state Kuwait National Petroleum Co. (KNPC) if a final agreement is further delayed by...

Mexico.(COUNTRIES)
November 17, 2008... MEXICO -- In an unprecedented move, the country has sold forward its entire export volume of around 1.4 million b/d for 2009 at a price of $70/bbl to guarantee $35 billion in oil income. Industry sources say the deal was structured by Goldman...

United States.(COUNTRIES)
November 17, 2008... UNITED STATES -- StatoilHydro has struck a $3.4 billion deal with Chesapeake Energy to buy a 32.5% interest in its Marcellus Shale gas acreage, giving the state-controlled Norwegian company a significant foothold in the promising unconventional...

United States.(COUNTRIES)
November 17, 2008... UNITED STATES -- Alaska's North Slope holds an estimated 85.4 Tcf of undiscovered, technically recoverable natural gas in the form of gas hydrates, which could substantially increase supply for a proposed gas pipeline to the US Midwest,...

Output fears prompt Russia to overhaul taxes.(What's New Around the World)
November 17, 2008... Fears of falling oil production have prompted Moscow to tackle its punitive tax system. Russia plans from December to begin recalculating its export duties on crude oil and refined products every month, effectively cutting in half the time lag...

Bad news, good news.(Marketview)
November 17, 2008... NEW YORK -- First the bad news. Unemployment is rising, house prices are falling, companies are losing billions and consumer spending is tanking. The credit crisis is crippling business, and the world is sliding into recession as it absorbs...

Saudi Arabia cuts December allocations to Asia.(Brief article)
November 17, 2008... Opec kingpin Saudi Arabia has announced 5%-6% cuts in crude allocations to Asian term buyers for December-loading cargoes, providing the strongest evidence yet that the producer is taking steps to implement the 1.5 million b/d Opec supply cut...

PIW market indicators.(Statistical table)
November 17, 2008... PIW Market Indicators ($/barrel) Nov. 10- Nov. 3- Oct. 13- Spot Crude Nov. 12 Nov. 7 Oct. 17 Opec Basket $52.32 $56.83 $67.88 UK Brent...

Credit crunch contributes to M&A slowdown.(merger and acquisition)
November 24, 2008... With crude prices down 60% from their summer peak, many oil company shares down 40% or more since mid-August and some of the international oil companies (IOC) sitting on huge cash piles, the time looks ripe for a new wave of industry...

Hedging coup masks Mexico's output woes.
November 24, 2008... The Mexican government looks to have moved boldly and swiftly to avoid a potential budget shortfall next year by hedging what amounts to its entire oil export volumes for next year, tying up a $1.5 billion put option package that gives it the...

New Kashagan deal offers cause for optimism.
November 24, 2008... After a series of production delays and spiraling cost overruns, the Kashagan project in Kazakhstan appears to have finally turned the corner. Barring any unforeseen mishaps, the supergiant field with recoverable reserves of at least 9 billion...

China's refining expansion pauses for breath.
November 24, 2008... The global financial crisis is hitting China hard. Manufacturers have gone bust as export orders have dried up, domestic car sales have plunged, local stock markets have taken a pounding and oil product sales have slumped. Top refiner Sinopec...

Budget cuts spell trouble for Russian output.
November 24, 2008... As the global economic downturn takes its toll on crude prices, many of Russia's oil majors are planning significant cuts in spending in 2009. With production from Russia's oil heartland in West Siberia already faltering, a drop in spending on...

Investors on shaky ground in Algeria.
November 24, 2008... As a prospect for oil and gas investors, Algeria is starting to look a little shaky. The outlook began deteriorating in late 2006 with the government's introduction of a windfall profits tax and its restoration of state Sonatrach's right to a...

Lower oil price raises the bar for Uganda.
November 24, 2008... Falling oil prices are not helping frontier oil projects. Take Uganda, Africa's newest and hottest inland exploration play. When the oil price was soaring, it reduced the volume of oil that needed to be proved up for a viable commercial...

Corporate.(GENERAL)
November 24, 2008... CORPORATE -- UK independent Premier Oil is considering the future of its West African interests after setbacks offshore Mauritania and could sell its upstream assets in the region when oil prices recover. For now, Premier has farmed in a...

Canada.(COUNTRIES)(Petro-Canada Inc.)(Brief article)
November 24, 2008... CANADA -- Petro-Canada has joined the ranks of companies delaying investment decisions on new oil sands developments in Alberta with a view to securing a reduction in project costs. The company has said it will defer a final investment decision...