Petroleum Intelligence Weekly articles from September 2008

Petroleum Intelligence Weekly archives from September 2008

Oil-dollar link not as strong as it seems.
September 1, 2008... The sharp downturn in oil prices in July coincided with a strengthening of the US dollar against the euro and other currencies, providing further confirmation of the new financial dimension to oil markets as well as the close inverse...

Carbon capture no silver bullet, industry warns.
September 1, 2008... The oil industry has done something of a volte face in its attitude toward climate change in recent years. As former BP boss John Browne told last week's Offshore Northern Seas (ONS) conference in Norway: "Ten years ago, to have talked in the...

Brazil looks to Norwegian revenue model.
September 1, 2008... As Brazil ponders how to develop its potentially massive subsalt oil and gas reserves, it is scanning the globe from Venezuela to Russia for an appropriate model for how to use future petroleum revenues to benefit the country. The government is...

Drilling plans show task facing Abu Dhabi.
September 1, 2008... The challenges facing Abu Dhabi in raising oil output capacity to 3.5 million barrels per day from its current 2.7 million b/d are well known, with the timetable for reaching that target shifting several times in recent years. But the latest...

Asian buyers struggle with LNG price rise.
September 1, 2008... While leading LNG producers such as Australia's Woodside Petroleum and the UK's BG are toasting their bumper first-half profits, groans are being heard across the Pacific, with Japanese LNG buyers Osaka Gas and Tokyo Gas both issuing profit...

Russia banks on boosting Urals quality.
September 1, 2008... In the first quarter of next year, Russia plans to introduce a quality bank mechanism for its crude pipeline network, a system that will penalize producers shipping low-quality crude while rewarding those pumping higher-quality grades. The plan...

Africa finally finds role for stranded gas.
September 1, 2008... Africa is dotted with natural gas discoveries that have defied development for decades due to the lack of a market. Now the soaring cost of imported fuel oil, kerosene and gas oil is making development of the continent's stranded gas...

Corporate.(GENERAL)
September 1, 2008... CORPORATE -- The board of US independent Anadarko Petroleum has authorized a $5 billion share buyback program, equivalent to around 18% of the company's outstanding stock at current market prices. The new stock repurchase program extends...

Industry Restructuring.(GENERAL)(Brief article)
September 1, 2008... INDUSTRY RESTRUCTURING -- Canada's largest drilling firm, Precision Drilling Trust, is buying its US rival Grey Wolf for US$2 billion in cash and stock. The combined company will be one of the largest onshore oil and gas rig operators in North...

Brazil.(COUNTRIES)(Brief article)
September 1, 2008... BRAZIL -- State-controlled Petrobras has taken an important step forward in the development of its giant subsalt Tupi discovery, signing a letter of intent with Japan's Modec for the supply, charter and operation of a floating production,...

China.(COUNTRIES)(China Petroleum and Chemical Corp.)(PetroChina Company Ltd.)(Financial report)(Brief article)
September 1, 2008... CHINA -- The country's integrated state oil firms saw their earnings plunge sharply in the first half of 2008, with losses in refing outweighing gains in the upstream. PetroChina and Sinopec saw their overall net profit eroded by over 34% and...

China.(COUNTRIES)(Brief article)
September 1, 2008... CHINA -- Crude oil imports fell to 3.26 million b/d in July, down 7% from the same month last year, most likely due to high inventory levels. But imports were still up over 8% to 3.59 million b/d from January to July, with the Middle East...

Ireland.(COUNTRIES)(Brief article)
September 1, 2008... IRELAND -- Protests continue to dog Royal Dutch Shell's long-delayed Corrib natural gas development, undermining Dublin's plans for boosting domestic gas production and reducing reliance on imports. With work set to start last week on laying a...

Kazakhstan.(COUNTRIES)
September 1, 2008... KAZAKHSTAN -- Mounting uncertainty over proposed tax changes has prompted the republic's leading oil and gas companies to write a letter of protest to the prime minister and other senior officials. "If the government reneges on [its tax]...

Mexico.(COUNTRIES)(Brief article)
September 1, 2008... MEXICO -- Oil production fell in July compared with June, as output at the giant Cantarell field continued to decline, according to data from state Pemex. Oil production averaged 2.782 million b/d in July, down from 2.839 million b/d in June...

Nigeria.(COUNTRIES)
September 1, 2008... NIGERIA -- The government of President Umaru Yar'Adua has approved long-awaited draft legislation on oil and gas sector reform and sent it to congress, where it is likely to face months of debate, horse trading and attempted dilution by key...

Russia.(COUNTRIES)
September 1, 2008... RUSSIA -- India's state Oil and Natural Gas Corp. (ONGC) has finalized a $2.59 billion all-cash takeover of UK-listed East Siberian producer Imperial Energy. Imperial's managers have said they will recommend unanimously that shareholders accept...

Russia.(COUNTRIES)(reginations of)(TNK-BP)(Brief article)
September 1, 2008... RUSSIA -- BP is steadily losing its grip on its TNK-BP joint venture, with the company's Russian managers taking greater control over operations. In the latest senior management departure, TNK-BP's vice president for downstream operations,...

Saudi Arabia.(COUNTRIES)
September 1, 2008... SAUDI ARABIA -- The frustrations continue for Royal Dutch Shell's joint venture exploring for gas in the kingdom's Rub al-Khali desert. The latest well drilled by the Shell-led South Rub al-Khali (Srak) consortium has found hydrocarbons, but...

United States.(COUNTRIES)
September 1, 2008... UNITED STATES -- ConocoPhillips is joining the majors' exodus from the retail business by shedding its network of company-owned gasoline stations, which have been a drag on otherwise robust oil industry profits in recent years (PIW Jul.28,p3)....

Venezuela.(COUNTRIES)
September 1, 2008... VENEZUELA -- The state's grip on the oil sector is set to tighten further, with the national assembly debating a new law aimed at nationalizing the country's wholesale gasoline distribution business (PIW Feb. 18,p1). The pro-government national...

Georgian flows resume, tensions remain high.(What's New Around the World)
September 1, 2008... The flow of Caspian oil and gas through the Georgian corridor to Turkey and ports on the Black Sea is slowly returning to normal, but the outlook for much of the region remains uncertain amid extended tensions over Russia's continued military...

Bottoming out.(Marketview)
September 1, 2008... SINGAPORE -- The outlook for Asian refiners is improving, with market watchers expecting refining margins to climb back from recent lows by the fourth quarter. At the moment, Asian margins are still "getting hammered," according to Sonia...

IEA chief sees spare capacity tightening again.(International Energy Agency)(Brief article)
September 1, 2008... The world's spare oil production capacity should increase in the next two years, but will likely become tight again through to 2013, according to International Energy Agency (IEA) Executive Director Nobuo Tanaka. "While we see improvement...

PIW market indicators.(Statistical table)
September 1, 2008... PIW Market Indicators ($/barrel) Aug. 25- Aug. 18- Jul. 28- Spot Crude Aug. 27 Aug. 22 Aug. 1 Opec Basket $110.97 $111.08 $121.87 UK Brent...

Brent usurps Asia's ailing benchmarks.
September 8, 2008... Asia's long-standing physical crude benchmarks are in trouble. A range of problems, including declining output, low liquidity and high volatility, are coming to a head, persuading producers of new heavy, sweet Australian crudes to eschew...

Opec faces decision on oil price floor.
September 8, 2008... With the oil price falling fast from its $145 per barrel peak in July and threatening to drop below $100/bbl, Opec ministers will try to decide on a price they are willing to defend when they meet in Vienna on Sep. 9. Iran, Venezuela, Libya and...

Saudi gas ventures may need better terms.
September 8, 2008... With Royal Dutch Shell dismissing reports of a hydrocarbon discovery in Saudi Arabia as "premature," good news remains elusive for the joint ventures exploring for gas in the kingdom's Rub al-Khali desert. The matter is becoming more urgent for...

Complications ahead for European diesel.
September 8, 2008... European motorists' enthusiasm for diesel passenger vehicles has been a key factor in the surge in the region's diesel consumption over the past few years. But that enthusiasm may soon be on the wane, thanks to a mix of rising retail prices and...

Angola gives Nigeria a run for its money.
September 8, 2008... Angolan and Nigerian crude exports have been running neck and neck this year, even though Nigeria should, in theory, be far ahead. Its production capacity of between 2.6 million-3.2 million barrels per day well exceeds Angola's, and its...

Refining, LNG show signs of project slowdown.
September 8, 2008... Is the construction boom in the global refining and processing sector coming to an end? Not if the backlogs facing international oil and gas engineering companies are any indication, which have full order books out to 2015, at least. But a...

August supply dips, but still beats demand.
September 8, 2008... Global oil supply slipped back in August as normal summer maintenance work and other upstream disruptions pared more than 600,000 barrels per day off production compared with July. Nonetheless, global output of 86.6 million b/d last month...

Corporate.(GENERAL)
September 8, 2008... CORPORATE--Ratings agency Standard & Poor's (S&P) has sent contrasting messages to BP and Royal Dutch Shell, cutting BP's rating by one notch from "AA+" to "AA," but raising Shell's from "AA" to "AA+." For BP, the shareholder row at its...

Formula prices.(GENERAL)(Brief article)
September 8, 2008... FORMULA PRICES--Saudi Arabia mainly followed refining trends by offering better crude pricing terms for all grades to the US and lighter grades to Asia, although Asian refiners were very unhappy with a $1.50/bbl narrowing of Arab Heavy's...

LNG.(GENERAL)
September 8, 2008... LNG--Total aims to ink an LNG sales and purchase agreement (SPA) with state China National Offshore Oil Corp. (CNOOC) by the end of the year. The French major had signed a heads of agreement to sell 1 million tons/yr of LNG to CNOOC in July...

Brazil.(COUNTRIES)
September 8, 2008... BRAZIL -- State-controlled Petrobras is planning to increase its refining capacity in order to add value to potentially huge subsalt oil reserves off the country's south-eastern coast (PIW Aug.11,p6). Petrobras was studying possible new...

China.(COUNTRIES)
September 8, 2008... CHINA -- State upstream giant China National Offshore Oil Corp. (CNOOC) continues to advance downstream, unveiling plans to spend $6.6 billion increasing the capacity of its new Huizhou refinery in Guangdong province from 240,000 b/d to 440,000...

Iraq.(COUNTRIES)
September 8, 2008... IRAQ -- The oil ministry will hold a road show in London on Oct. 13 to present nearly three dozen international oil companies with data and details of its first bid round, a ministry official has told PIW. Iraq in April prequalified 35 of the...

Japan.(COUNTRIES)(Brief article)
September 8, 2008... JAPAN -- Crude imports averaged 4.31 million b/d in July, down just 0.3% year-on-year, according to official data. Mideast volumes rose 5.9% to 3.9 million b/d, or 90% of the total, but imports from top supplier Saudi Arabia fell 2.7% to 1.11...

Russia.(COUNTRIES)
September 8, 2008... RUSSIA -- The country's oil firms sharply curtailed crude exports to destinations outside the former Soviet Union in August following the introduction of new record-high export duties on crude and refined products. Exports via the pipeline...

Russia.(COUNTRIES)(British Petroleum Company PLC)(TNK-BP )(Brief article)
September 8, 2008... RUSSIA -- BP and its Russian partners in the TNK-BP joint venture have agreed to changes in the company's corporate governance structures that they hope will end the bitter shareholder row of the past few months (PIW Aug.4,p1). In a bow to the...

South Korea.(COUNTRIES)(Brief article)
September 8, 2008... SOUTH KOREA -- Crude imports slipped to 2.31 million b/d in July, down 1.6% year-on-year, according to the latest official data. Imports from largest supplier Saudi Arabia jumped almost 20% to 705,000 b/d, and volumes also increased from other...

UAE.(COUNTRIES)
September 8, 2008... UAE--Abu Dhabi's International Petroleum Investment Co. (Ipic) is to take a majority stake in Aabar Investments. Sources say the move will strengthen Abu Dhabi-listed Aabar, bringing in a strong government partner, after the company lost its...

United States.(COUNTRIES)
September 8, 2008... UNITED STATES -- BP and independent Chesapeake Energy have agreed their second shale gas deal in less than two months, underlining the majors' growing interest in the potential of North America's unconventional oil and gas plays (PIW...

Iraq follows China deal with shell gas agreement.(What's New Around the World)
September 8, 2008... It's been a busy few days for the Iraqi oil ministry, which has in short order signed and ratified with state China National Petroleum Corp. (CNPC) the country's first upstream oil deal since the overthrow of Saddam Hussein in 2003, and...

Storm clouds.(Marketview)
September 8, 2008... WASHINGTON -- Oil markets may have dodged a bullet last week when Hurricane Gustav came ashore on the US Gulf Coast and caused less damage than expected. Oil prices plunged, falling more than $6/bbl on Sep. 2 to dip below $110/bbl in New York...

PIW market indicators.(Statistical table)
September 8, 2008... PIW Market Indicators ($/barrel) Sep. 1- Aug. 25- Aug. 4 - Spot Crude Sep. 3 Aug. 29 Aug. 8 Opec Basket $105.70 $111.20 $115.89 UK...

India secures asset pact with China.
September 15, 2008... National oil companies from China and India have been among the most aggressive bidders for international oil and gas assets in recent years, often going head-to-head in pursuit of the same target. But a new era of harmony may be about start...

Opec prepares ground for real cuts ahead.
September 15, 2008... Opec is getting nervous about a crude supply overhang that could send fast-falling oil prices plunging even further. Its Sep. 9 meeting in Vienna set the scene for a change in policy from quietly tweaking output to aggressive formal production...

Oil price fall could hit majors' plans.
September 15, 2008... Does the recent slide in oil prices have serious financial implications for the majors? The conventional wisdom is that Big Oil plays it safe and stress-tests new projects against very conservative oil price planning assumptions, and has only...

Conoco pays big for Australian CBM foothold.
September 15, 2008... ConocoPhillips has become the latest big industry name to recognize the LNG potential of Australia's coalbed methane (CBM) resources, agreeing an $8 billion joint venture deal with local gas producer and utility Origin Energy and wrecking UK...

Questions remain after TNK-BP deal.
September 15, 2008... The feud between TNK-BP shareholders BP and Alfa and Access Renova (AAR) may be at an end, but the long-term impact of the caustic battle over the 1.57 million barrel per day joint venture is far from clear. With the peace pact signed earlier...

Ecuador hopes cash will follow contracts.
September 15, 2008... After nearly two years of grueling negotiations, foreign operators in Ecuador are close to signing new service contracts in line with President Rafael Correa's efforts to increase the state's share of oil revenues. Correa imposed a 99% tax on...

Russia's new crude offers light relief.
September 15, 2008... Lukoil and ConocoPhillips have begun marketing a new Russian crude, provisionally named Arctic Light, following the start of commercial production from their South Khylchuyu field in the northern province of Timan-Pechora and the commissioning...

Where Venezuela goes next.
September 15, 2008... It's been more than a year now since the government of Venezuelan President Hugo Chavez squared up to the country's foreign oil investors and took control of four heavy oil projects in the country's Orinoco Basin (PIW Jul.2'07,p1). This...

Changing under Chavez: Venezuela's oil sector since 2001.(Calendar)
September 15, 2008... Nov. 2001: The pro-Chavez National Assembly passes a new Hydrocarbons Law, effectively ending the 1990s opening of the oil sector to private investment. The new law sets the rules for a return to state control of the country's oil operations....

Corporate.(GENERAL)(Eni S.p.A. acquired First Calgary Petroleum Ltd.)(Brief article)
September 15, 2008... CORPORATE -- Eni has agreed a C$923 million (US$863 million) takeover of Canada's First Calgary Petroleums (FCP), boosting the Italian major's upstream profile in Algeria. The agreement will pave the way for the development of up to 4 Tcf of...

Formula prices.(GENERAL)(Brief article)
September 15, 2008... FORMULA PRICES -- Mexico widened the adjustment factor for October loadings of Maya crude destined for the US to minus $4.15/bbl from minus $2.60/bbl in September. State Pemex left unchanged the differential for its lighter Isthmus grade to the...

IEA.(GENERAL)(International Energy Agency)
September 15, 2008... IEA -- Changes in oil demand patterns represent a significant structural shift rather than a mere temporary adjustment to the run-up in oil prices over the past four years, the International Energy Agency (IEA) argues in its latest monthly Oil...

Bolivia.(COUNTRIES)
September 15, 2008... BOLIVIA -- Demonstrators in the country's main gas-producing provinces staged street protests and blocked roads last week, posing a threat to gas exports as discontent mounts over President Evo Morales' decision to snatch a bigger share of the...

China.(COUNTRIES)
September 15, 2008... CHINA -- State-owned China National Petroleum Corp. (CNPC) is planning the country's third West-East gas pipeline in anticipation of more gas imports from Central Asia and Russia. China is slated to start importing 30 Bcm/yr of Turkmen gas by...

Indonesia.(COUNTRIES)
September 15, 2008... INDONESIA -- China's state PetroChina has submitted a development plan for the country's huge but technically challenging Natuna-D Alpha gas block, joining the lengthening queue of interested companies; Malaysia's state Petronas and Thailand's...

Iran.(COUNTRIES)
September 15, 2008... IRAN -- Tehran plans to step up gas imports from Turkmenistan to help meet rising domestic demand and ensure it meets its export commitments to Turkey, a top Iranian gas official tells PIW. Reza Kasaeizadeh, deputy oil minister in charge of...

Iraq.(COUNTRIES)(Royal Dutch-Shell PLC signed a deal with South Gas Co.)(Brief article)
September 15, 2008... IRAQ -- The country's cabinet has approved a preliminary gas deal between Royal Dutch Shell and state South Gas Co. (SGC), giving the green light for detailed negotiations on a final deal expected next year, according to Iraqi and industry...

Nigeria.(COUNTRIES)(Brief article)
September 15, 2008... NIGERIA -- President Umaru Yar'Adua has restructured the government's energy portfolio and created a new ministry for the Niger Delta, paving the way for energy sector reform and a new drive to bring peace to the Delta region, where militant...

Russia.(COUNTRIES)
September 15, 2008... RUSSIA -- The energy ministry has given state Zarubezhneft approval to buy a 20% stake in the Kharyaga oil field operated by Total under a production sharing agreement (PSA), giving the project the Russian partner it has awaited for years....

Russia.(COUNTRIES)(Brief article)
September 15, 2008... RUSSIA -- In a surprising debut as his country's observer to Opec, Deputy Prime Minister Igor Sechin has proposed greater cooperation with the oil producers' group. Sechin said Moscow will soon ink a memorandum of understanding on cooperation...

Saudi Arabia.(COUNTRIES)(Brief article)
September 15, 2008... SAUDI ARABIA -- Saudi Aramco produced first oil from its massive Khursaniyah project late last month, but the state oil giant is flaring associated gas and is still months away from hitting full capacity of 500,000 b/d, industry and Aramco...

South Korea.(COUNTRIES)
September 15, 2008... SOUTH KOREA -- Seoul may decide later this month whether to liberalize its domestic wholesale gas sector and allow more companies to import and sell LNG--effectively breaking the stranglehold of state Korea Gas (Kogas), at present the only firm...

Vietnam.(COUNTRIES)
September 15, 2008... VIETNAM -- State-owned Petrovietnam is looking for foreign investors that can provide stable long-term crude supplies for its first refinery, at Dung Quat. Petrovietnam Chairman Dinh La Thang is seeking the government's endorsement for selling...

Time running out for US energy bill.(What's New Around the World)
September 15, 2008... Democratic leaders are promising to include provisions for an increase in offshore leasing in compromise energy legislation currently being knocked together in both chambers of the US Congress, but drilling advocates remain skeptical that...

Hello, $100, again.(Marketview)
September 15, 2008... NEW YORK -- The bears now seem to have come fully to the fore in oil markets. Neither Opec's efforts last week to fight them off nor the hurricane season is likely to prevent a further slump in oil prices. Attempting to pull off a delicate...

Saudis approve Chevron Neutral Zone extension.
September 15, 2008... The Saudi Council of Ministers has approved the extension of Chevron's concession in the Neutral Zone, which the kingdom shares with Kuwait, although the deal still requires the final approval of King Abdullah. "The cabinet decided to...

PIW market indicators.(Statistical table)
September 15, 2008... PIW Market Indicators ($/barrel) Sep. 8 - Sep. 1- Aug. 11- Spot Crude Sep. 10 Sep. 5 Aug. 15 Opec Basket $98.79 $104.39 $109.73 UK Brent...

Speculators hit exits as bank crisis bites.
September 22, 2008... The US Commodity Futures Trading Commission (CFTC) continues to assert that speculation by institutional investors is not driving oil prices, an argument that looks harder to sustain after last week's financial market turmoil. Benchmark US...

Market turmoil makes Saudis tread carefully.
September 22, 2008... With financial markets reeling and divisions within Opec on what oil price to defend, the group's de facto leader, Saudi Arabia, is treading carefully. Since the precarious economic environment creates a highly uncertain oil outlook, the Saudis...

Bargains could emerge from slump in equities.
September 22, 2008... The global credit crisis may be bad news for banks and other financial institutions, but will the sharp decline in equities produce any bargains for potential predators? A number of takeovers have already gone through this year and analysts are...

Angola faces battle to sustain volumes.
September 22, 2008... Angola has earned plaudits for its consistent production growth this decade, with oil output doubling since 2004 to an expected average of 1.9 million barrels per day this year. It will, however, need to sustain the pace of development and...

Moscow urged to clarify output policy.
September 22, 2008... The presence at this month's Opec meeting of a high-profile Russian delegation led by Deputy Prime Minister Igor Sechin came as a surprise to many observers, even inside Russia, and raises the prospect of a possible change in Moscow's policy...

Foreign affairs threaten statoil's domestic bliss.
September 22, 2008... Last year's merger of Statoil and Norsk Hydro was intended to create a Norwegian champion capable of competing successfully for international assets and opportunities. The thinking was that with Norway's oil and gas production reaching a...

Asian NOCs see power in a union.(national oil companies )
September 22, 2008... Faced with increasingly stiff competition from their bigger and richer neighbors, some of Asia's second-tier national oil companies (NOC)--Indonesia's Pertamina, Thailand's PTT Exploration and Production (PTTEP) and Petrovietnam--are joining...

Pipelines.(GENERAL)
September 22, 2008... PIPELINES -- Oman has agreed to sell its 7% stake in the Caspian Pipeline Consortium (CPC) to the Russian government, already the biggest shareholder in the 660,000 b/d oil pipeline, which runs from Kazakhstan's giant Tengiz field to the...

Australia.(COUNTRIES)(Brief article)
September 22, 2008... AUSTRALIA -- Canberra's proposed cap-and-trade emissions trading scheme (ETS) could double operating costs at LNG projects and drive away investment, according to local independent and leading LNG developer Woodside Petroleum. As part of plans...

Brazil.(COUNTRIES)(Petroleo Brasileiro S.A.)(Brief article)
September 22, 2008... BRAZIL -- State-controlled Petrobras is now completing drilling on Jupiter, another potentially huge subsalt field in the offshore Santos Basin, and expects to announce a reserves estimate soon, according to Chief Executive Jose Sergio...