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Friday, October 31, 2008

Venezuela To Open Bidding Soon

31.10.2008 - [Neftegaz.RU] - Venezuela announced Thursday that it will open up bidding next month for contracts to exploit four areas of its heavy-oil-producing Orinoco River belt — soon expected to jointly produce 400,000 barrels of crude per day. Foreign oil companies have been invited to bid for a minority stake in the projects run by state oil company Petroleos de Venezuela SA, or PDVSA. Prospective partners include Chevron Corp. of San Ramon, California, China's National Petroleum Corp. and Colombia's Ecopetrol SA, Oil Minister Rafael Ramirez said at a ceremony to introduce the plan in Caracas. Ramirez said oil-producing nations must follow through with development plans even as OPEC announced production cuts of 1.5 million barrels per day last week to stem falling prices. Prices for light sweet crude fell to $65.96 a barrel on the New York Mercantile Exchange Thursday — 55 percent below July's record highs. "If we suspend projects, there won't be sufficient production capacity five years from now," Ramirez said. But independent Venezuelan economist Abelardo Daza said PDVSA is encouraging foreign participation in the recently nationalized Orinoco belt because it's struggling to increase production. PDVSA has been putting its resources toward non-oil commitments such as social programs and government slush funds rather than making the investment necessary to boost production, he said. While Venezuela says it is producing 3.2 million barrels per day, international monitors including the Paris-based International Energy Agency put output at around 2.4 million. Still, the invitation represents no broad policy shift: PDVSA will keep a 70 percent stake in the new projects, the Energy Ministry reported. Under Venezuelan law, PDVSA must maintain a 60 percent stake in all oil endeavors. Ramirez said the projects should recover at least 20 percent of some 61 billion barrels of oil in the area's deposits. Each of the four fields is expected to produce 100,000 barrels of oil per day by 2011, he said. Participating companies will also help build two US$6 billion upgraders that can lighten Venezuela's heavy crude to make it refineable, to be completed in 2014, Ramirez said. The bidding is closed to companies involved in litigation against Venezuela, Ramirez said. This would exclude U.S.-based companies Exxon Mobil Corp. and ConocoPhillips, both of which chose to leave the country and file for arbitration rather than accept a minority stake in four major oil projects nationalized by President Hugo Chavez's government last year. Interested companies will begin the bidding process next month, and the winners are expected to sign contracts with PDVSA in June 2009.

Kazakhstan and Turkmenistan Could be Energy Suppliers of the Future

kazakhstanturkmenistan31.10.2008 - [Neftegaz.RU] - After living in Russia’s shadow since the 19th century, the countries of central Asia have in the past decade been increasingly able to assert themselves in their own right, thanks to their energy resources. Kazakhstan and Turkmenistan have become increasingly important as producers of oil and gas respectively, and great hopes are invested in them as future suppliers to the world. Kashagan in Kazakhstan is the biggest new oil field to be discovered for 30 years. Turkmenistan’s gas production has quadrupled over the past decade to reach 67bn cubic metres in 2007, according to the BP statistical review of world energy, making it a more important gas producer than the Netherlands. At the same time, the eastward shift of the world’s economic centre of gravity has enhanced central Asia’s influence. Once seen as prohibitively distant from the important markets, the region is now strategically located between the trad­itional customers of Europe and the fast-growing econ­omies of Asia. Oil and gas will increasingly be able to flow not only north to Russia but east to China, and possibly west across the Caspian through the Caucasus to Turkey and the European Union. Central Asia’s newly raised significance is reflected in the recent attempt by Gazprom, Russia’s state-controlled gas company, to court Kyrgyzstan, a country with no real oil and gas production or proved reserves to speak of. As is often the case, it took a crisis to wake the world up to the importance of central Asian energy supplies. In January, Turkmenistan cut gas supplies to Iran because it had not been paying its bills. Hit by a bitterly cold winter, Iran cut its gas supplies to Turkey, which in turn cut its supplies to Greece. A commercial dispute in the Caspian region that most Europeans would never have noticed became an important issue in the EU. The Caspian Sea still presents a daunting barrier to oil and gas exports to the EU. Building pipelines across the sea is unlikely to be possible while Russia and Iran object, and the suggestion that platforms in offshore Azerbaijan and Turkmenistan could be connected across the border in the Caspian are not generally seen as practicable. Oil can be shipped across in barges and put into the Baku-Tbilisi-Ceyhan pipeline for export to the coast of Turkey, but capacity is limited and that method is economically viable only at fairly high oil prices. However, European gas markets have had a powerful effect on central Asian suppliers because of the link through Russia. Gazprom, which has a monopoly on Russia’s gas exports, buys gas in central Asia and sells it in the EU. One result of the dispute between Russia and Ukraine in the winter of 2005-06 was that Ukraine’s gas purchases were put on a normal commercial basis, albeit at prices still well below market levels. That gave Turkmenistan the cue likewise to shift away from the traditional payment in kind it had received from Gazprom, and more recently it has been negotiating hard with the Russians to push up its prices. The price of Turkmen gas to Gazprom has almost quadrupled in four years, from about $42 per thousand cubic metres in 2004 to $150 today. Andrew Neff of IHS Global Insight, a consultancy, says: “For all that everyone complains about Russia sticking it to its neighbours, the central Asians have been sticking it to the Russians as well.” Even so, the same gas has been selling in the EU in recent weeks at more than $500 per cubic metre. With a real export alternative to Russia available – most likely China – central Asian export prices could rise closer to international levels. The combination of a rich resource base with growing export opportunities is sustaining interest in the region, even as the falling oil price casts a shadow over the global industry. Under Gurbanguly Berdymukhammedov, the president who took over in 2007 following the death of his autocratic predecessor Saparmurat Niyazov, Turkmenistan has been opening up its oil and gas industry. Kazakhstan has been tightening the screws on foreign companies in recent years, particularly at Kashagan, where the government forced a restructuring of the consortium to compensate for huge cost overruns. More recently, however, there have been indications it is taking a more accommodating stance. Alexander Gladyshev of KMG Exploration and Production, the listed arm of Kazakhstan’s national oil company, says: “A new tax code is expected by the year end. So, within the next few weeks, the uncertainty over tax, which was a major issue for investors and companies, is expected to be removed.” That expected boost to confidence may not be enough to outweigh the damage done by the financial crisis. But however turbulent the next few months and years turn out to be, the fundamental forces of development seem set to deliver a bright future for central Asian oil and gas.

Czech Republic seeks direct oil deliveries from Russia

czech republicMOSCOW, October 31 (RIA Novosti) - The Czech Republic is ready to sign contracts for oil deliveries from Russia without intermediaries, the country's industry and trade minister said on Friday. Russia has been reducing oil supplies to the Czech Republic over the past four months. The chairman of state oil giant Rosneft, Igor Sechin, earlier said the decline was due to a lack of direct contracts between Russian suppliers and Czech customers. After a meeting of the bilateral intergovernmental commission on economic, industrial and research cooperation, Czech Industry and Trade Minister Martin Riman said he hoped oil supplies would soon be resumed in previously approved volumes. Russian Deputy Prime Minister Alexander Zhukov told reporters on Friday that Moscow is seeking to build nuclear reactors in the Czech Republic jointly with Czech companies. "I would like to reiterate that we are interested in cooperation, and that Russia is interested in building new nuclear reactors in the Czech Republic," he said. The Czech energy company CEZ earlier said it was considering announcing a tender for the construction of new reactors for the Temelin nuclear power plant. Atomstroyexport, Russia's nuclear power equipment and service export monopoly, is likely to bid.

Wednesday, October 29, 2008

Peter Voser to Step Up As Shell's Next Chief Executive

Peter VoserOctober 29, 2008 - Rigzone News - The Board of Royal Dutch Shell has announced that Peter Voser will succeed Jeroen van der Veer as Chief Executive, effective 1 July 2009. Voser (50) is Chief Financial Officer and a Director of the Board since October 2004. "I am delighted to announce Peter Voser as the next Chief Executive of Royal Dutch Shell," said RDS plc Chairman Jorma Ollila. "Peter has the experience, qualities and personal leadership to drive Shell forward, building on the strong position established by Jeroen van der Veer. "Voser's selection came after a comprehensive assessment and review of internal and external candidates led by the Board Nomination and Succession Committee," Ollila added. Voser joined the Royal Dutch/Shell Group of Companies in 1982 and has held a number of finance and business roles in Switzerland, Argentina, Chile and the UK until March 2002. He then joined Asea Brown Boveri (ABB) Ltd as Chief Financial Officer, returning to Shell four years ago. Voser, a Swiss citizen, was born in Baden, Switzerland. He is married and has three children. Voser graduated in business administration from the University of Applied Sciences, Zurich, Switzerland, in 1982.

Iraq loses $20-30 billion over global financial crisis

IRAQBAGHDAD, October 28 (RIA Novosti) - Iraq has already lost $20 - $30 billion over the current global financial crisis, a government daily quoted the deputy chairman of the Iraq's oil and gas committee as saying on Tuesday. According to the Al-Sabah newspaper, Abdul-Hadi al-Hassani said the losses had been caused by plummeting oil demand and prices. Daily oil output in Iraq currently stands at 2.7 million barrels.

Friday, October 24, 2008

OPEC cuts oil production by 1.5 mln barrels a day

OPEC cuts oil production by 1.5 mln barrels a dayVIENNA, October 24 (RIA Novosti) - Ministers of the 13 OPEC member states, who gathered in the Austrian capital Vienna earlier on Friday, announced oil production cuts of 1.5 million barrels per day amid a global financial crisis and falling oil prices. The oil production cuts will come into effect from November 1. Chakib Khelil, OPEC president and Algeria's oil minister, said that further oil cuts were possible. "The decision should not leave the producer countries in the situation where they will be joining the group of countries which are already suffering from the financial crisis," he said prior to the meeting. The announcement of oil cuts was followed by further falls as the price of Brent crude dropped over $4 to $61.08. Global oil prices have plummeted from their high point of $147 a barrel in July to the current rate of under $70. Khelil said earlier that an ideal oil price was between $70 and $90 a barrel, but stressed that any move should be in the interest of oil-producing states. The Organization of the Petroleum Exporting Countries comprises Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates, and Venezuela.

Thursday, October 23, 2008

'Gas Opec' on the cards

21 October 2008 - Upstream OnLine - World gas powers Russia, Iran and Qatar pledged today to strengthen co-operation, as Tehran said there was a consensus to form an Opec-style gas grouping. Iran's Oil Minister Gholamhossein Nozari said he and Qatar's Energy Minister Abdullah al-Attiyah and Gazprom boss Alexei Miller agreed to establish a high-ranking natural gas committee. Unlike Nozari, Miller did not refer to a "gas Opec" at a joint news conference but said the three sides had set up a "major gas troika" that would help implement joint projects. Russia, Iran and Qatar are ranked the first, second and third biggest holders of natural gas reserves in the world and together boast more than half of the global total. "We have made major decisions," Nozari told Reuters after talks in the Iranian capital. "There is a demand to form this gas Opec and there is a consensus to set up gas Opec." Major gas exporters have met informally for several years at the annual Gas Exporting Countries Forum, a grouping including also Venezuela, Nigeria, Algeria, Egypt, Indonesia and Libya. Iran wants to turn it into a more formal organisation akin to Opec. Qatar's Attiyah said: "God willing, in the next meeting of the gas exporting countries, they will affirm the establishment of the organisation." Europe and the US have warned against such a gas export body, saying it could pose a danger to global energy security and create room for price manipulation. Russian gas giant Gazprom has previously played down the idea of a gas Opec, saying it was not feasible. But Miller told today's news conference: "We have decided to be in close contact and we can say that today a major gas troika was formed." Some analysts have said gas Opec could be expected to share insights on upstream contract terms with investors rather than act on restricting gas supply. "Surely this gathering of gas exporting countries is to give assurances over gas supply to the world," the news agency quoted Miller as saying. Nozari hailed today's talks as a "turning point" in expanding co-operation between Iran, Qatar and Russia and said senior officials from the three states would form the committee. Miller said the new body would "review projects and implement joint projects. This will range from exploration, refining and selling gas". It would hold its first meeting in Qatar's capital Doha in a few days time, he said.

Wednesday, October 22, 2008

Europe wants new global financial order

10-21-2008 - MOSCOW - RIA Novosti political commentator Andrei Fedyashin - America is losing Bretton Woods, the global financial system formed at the UN Monetary and Financial Conference, commonly known as the Bretton Woods conference. In July 1944, 730 delegates from all 44 Allied nations gathered at the Mount Washington Hotel, in Bretton Woods, New Hampshire, to regulate the international monetary and financial order after the conclusion of WWII. They signed agreements to set up the International Bank for Reconstruction and Development (IBRD), the General Agreement on Tariffs and Trade (GATT), and the International Monetary Fund (IMF). At this point, nobody wants this system, which is why the top European leaders - French President Nicolas Sarkozy and Jose Manuel Barroso, president of the European Commission - came to Camp David on October 18 to inform President George W. Bush of the demise of the Bretton Woods principles. Sarkozy said Barroso and he "have a mandate from the 27 members of the European Union to come here and say first and foremost that this is a worldwide crisis and, therefore, we must find a worldwide solution." He said they needed to discuss a revision of the global financial system to "build together the capitalism of the future." Barroso did not "beat about the bush." "We need a new global financial order," he said. This European vision apparently conflicts with U.S. wishes. To cushion the heavy blow, the two European officials allowed Bush to say that the global financial summit would be held in the U.S. The summit, to be held after the November 4 presidential election in the U.S. but not later than December, will convene the leaders of the expanded G8, which also includes China, India and Brazil, and possibly Australia, South Korea and Saudi Arabia. According to the U.S. Constitution, the new Chief Executive will assume office in January next year, and therefore Bush will still be president at the time of the summit. Bush said he looked forward to hosting this meeting in the near future, but Sarkozy reminded him that, "insofar as the crisis began in New York, then the global solution must be found to this crisis in New York." Some say the summit will be convened in the UN, which is not good for President Bush, because the UN complex on the Hudson River is officially a territory of the international community. A Camp David meeting would have been utterly boring and unpleasant for the Americans, if not for Sarkozy's compatriot, Managing Director of the IMF Dominique Strauss-Kahn. Shortly before the Camp David meeting, newspapers reported that Strauss-Kahn, age 59, had an affair with Piroska Nagy, an employee of the IMF's African department. According to Times Online, the case began in January when Mario Blejer, a senior Argentine-born economist, alleged that Piroska Nagy, his wife, had been seduced by her boss at the Davos international forum. When their transgression was uncovered, Strauss-Kahn allegedly helped transfer the beautiful Hungarian to a post in London at the European Bank for Reconstruction and Development (EBRD). The financial official's romantic fling, which would have gone unnoticed in France, has made breaking news in the U.S. Some say it was done on purpose. British newspapers write that Paris knew about the romantic troubles of Strauss-Kahn, who was living up to his old name as un grand seducteur, but regarded them as nothing out of the ordinary. Some politicians say "the case had been leaked to the U.S. media to undermine the French effort," because Sarkozy has been working with Strauss-Kahn "to form a new Bretton Woods pact on financial regulation." Sarkozy was reportedly furious because Paris had hoped no news would break until Strauss-Kahn was cleared later this month. Allies of Strauss-Kahn and some commentators dismissed the affair as another episode of hysteria by puritanical U.S. institutions. However, even Strauss-Kahn's indiscretion cannot seriously influence the current situation. Europe has snatched the initiative of creating a new global financial order from the U.S. and President Bush. The U.S. will be a part of the new order, but it will not play first violin in the new financial orchestra. And Bush will leave the White House as a man who attended the burial of the Bretton Woods system. Those who have undertaken the creation of a new financial system are facing a challenging task. The trouble is that nobody, not Sarkozy, nor the EU, China or Japan, knows what it should look like, as proposals and ideas refuse to merge into a clear picture. Everyone knows that the old system is not good. It is rooted in the greediness of banks and their clients, which cannot be eradicated overnight, and in the mystical belief in a markets' talent for self-regulation. Everyone also knows that to change this system the world must toughen control over global currency and finances and introduce state regulation of the economy, banks, exchanges, dealers, loans, etc. Everyone knows that the global currency and financial organism cannot function properly without clearly defined rules, but nobody knows what the new model should be. World leaders must clearly outline the new financial rules, or else they will fail just as the Bretton Woods principles did. The Bretton Woods rules have not stopped markets and financial institutions from misbehaving, even though the disease was diagnosed long before. Many economists and experts say the system must be overhauled because crisis phenomena are growing exponentially, especially in the last 40 years. Evidence of Bretton Woods' inadequacy is central banks' interventions to support national currencies, investment in gold instead of the U.S. dollar, regular convulsions and cramps on the exchanges, tough currency regulation (currency baskets), and regular loans taken from the IMF to cover budget deficits (the IMF's main task seems to be to lend money to make up for budget deficit), devaluation, revaluation, currency fevers, and trade wars. It would be wrong to lay all of the blame at the door of that system's authors. It was designed in the last years of WWII, and the authors had to make do with what little was at their disposal at the time. At the end of WWII and for a long period after, the dollar and the U.S. were the two strongest entities in the world. The world was comfortable with the dollar, but the situation has changed, though the U.S. tried to convince the world it could still be comfortable with the dollar. Americans were indeed comfortable with it, because Bretton Woods ensured the demand for the dollar and its stability. But the comfy time is over, although the White House still insists that the liberal market system can be saved through reform. I don't think so.

Gas exporters' group to be formed

10-21-2008 - BBC News - Russia, Iran and Qatar have taken the first tentative steps towards the creation of an organisation of gas exporting countries. The three countries have agreed to form "a higher technical committee" that could lead to a gas equivalent of Opec. "We can say that today witnessed the birth of a major gas troika," said Alexei Miller, chief executive of Russian oil giant Gazprom. He said other countries would be encouraged to join the consortium.
Technical committee: At a meeting in Tehran, Iran's oil minister Gholamhossein Nozari, Qatar's energy minister Abdullah al-Attiyah and Mr Miller agreed to establish a high-level natural gas committee. The committee will meet for the first time in Doha in the next few days. Mr Nozari said: "Our three countries have reached a consensus on forming a common gas organisation... on accelerating its implementation and on preparing its statutes." A formal announcement on the establishment of the organisation has not been made. Mr al-Attiya said: "The next meeting in Russia will witness the birth of this organisation."
Western fears: Russia, Iran and Qatar hold the largest reserves of natural gas in the world. Fears over energy security and the price of natural gas mean a formal organisation of gas exporting countries would be deeply unpopular in Europe and the US. Such an organisation could hold a monopoly on world supply and could set prices to suit its own needs.

Monday, October 20, 2008

OPEC to Cut Supply

20.10.2008 - [Neftegaz.RU] - Output will be cut by OPEC for the first time in almost two years as the worst financial crisis since the 1930s sends crude toward $50 a barrel. Options contracts to sell oil at $50 by December soared 28- fold in the past two weeks on the New York Mercantile Exchange. Goldman Sachs Group Inc. and Merrill Lynch & Co. analysts say crude, which fell more than 50 percent from a record high in July to a 14-month low last week, may drop another 44 percent should the world economy slip into a recession. OPEC is facing the weakest growth in demand since 1993 just as new fields come on line from Angola to the Gulf of Mexico. The organisation will meet on 24 October in Vienna, three weeks earlier than planned, Members may cut daily output by as much as 2 million barrels, President Chakib Khelil said yesterday. “OPEC is going to try to prevent some of the price decline,” Francisco Blanch, head of global commodities research at Merrill in London, said in a Bloomberg television interview. “It's going to be very difficult to stem a price fall.” Options contracts that allow holders to sell 1,000 barrels of oil for $50 each by December closed at $280 on the Nymex on 17 October, up from $10 on 3 October. Oil rose a second day today, gaining 0.8 percent to $72.45 a barrel at 7:50 a.m. in Singapore. Even at today's prices, Venezuela and Iran, two of the organization's 13 members, may struggle to balance budgets because they rely on energy sales for more than half of their revenue, according to estimates compiled by the U.S. Central Intelligence Agency. “Some countries like Venezuela and Iran need prices above $80 a barrel,” said Leo Drollas, deputy director of the Centre for Global Energy Studies, a London-based consulting company. “The Saudis have a bottom price of about $65 a barrel, but they might go ahead with a cut to keep solidarity within OPEC.” Gross domestic product in the six-member Gulf Cooperation Council of Saudi Arabia, United Arab Emirates, Kuwait, Oman, Qatar and Bahrain would shrink 25 percent if oil averaged $50 next year, ING Bank NV estimates. Ministers from Algeria, Libya, Iran and Venezuela already called for a reduction in supplies from the current quota of 28.8 million barrels a day. Khelil, also Algeria's oil minister, said that while there is consensus for a cut, there is no agreement on its size. It may be necessary to make the cuts in two stages to ensure price stability, he told Algerian state television yesterday. Qatari Oil Minister Abdullah bin Hamad al-Attiyah told Al Jazeera TV the cut will likely be 1 million barrels a day, or 14 percent more than his nation pumps. Saudi Arabia, which dominates OPEC proceedings as the group's largest producer, has yet to comment on its intentions. Attempts to support prices when the Standard & Poor's 500- Index is down 36 percent this year may sour relations between OPEC and its customers. Both U.S. presidential candidates, John McCain and Barack Obama, have called for greater energy independence to limit reliance on foreign oil. U.K. Prime Minister Gordon Brown described potential supply cuts as "absolutely scandalous'' on 17 October Agence France- Presse reported. The world's industrialized economies will expand next year at the slowest pace since 1982, the International Monetary Fund said Oct. 8. Growth will weaken to 0.5 percent in 2009, from 1.5 percent this year, sending U.S. unemployment to its highest level in 16 years, the agency said. While OPEC already agreed to curb production by observing output quotas after a Sept. 10 meeting to lower supplies by 500,000 barrels a day, members routinely pump more than their allocation, according to data compiled by Bloomberg. Since that session, Credit Suisse Group pared its forecast for oil next year by 32 percent to $75 a barrel. Deutsche Bank AG cut its 2009 assessment by 23 percent to $92.50 on Sept. 29. BNP Paribas SA lowered its outlook by 18 percent to $92.50 on Oct. 10. At the same time, Exxon Mobil Corp.'s Saxi-Batuque fields off Angola's shore started pumping in August, while BP Plc's Thunder Horse field in the Gulf of Mexico is scheduled to increase supplies by the end of the year. World oil capacity will rise 1.45 million barrels a day in 2009, twice the rate of growth in demand, according to the International Energy Agency. “Prices could fall as low as $50 a barrel during the fourth quarter if OPEC can't find a way to offset the financial meltdown,” said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. The prospect of OPEC cuts, slowing economic growth and falling prices drove the Dow Jones Europe Stoxx Oil & Gas Index down 25 percent in the past five weeks. Irving, Texas-based Exxon Mobil, the world's biggest oil company, fell 37 percent this year, while The Hague-based Royal Dutch Shell Plc, the second-biggest, lost 33 percent. OPEC lowered its forecast for demand in 2009 last week, saying consumption will be 450,000 barrels a day less than expected at 87.21 million a day. The Paris-based International Energy Agency shaved its 2009 outlook the previous week and said this year's demand growth of 0.5 percent will be the weakest since 1993. U.S. motorists are driving less after gasoline pump prices topped $4 a gallon in July. Vehicle-miles traveled on all U.S. roads that month were 3.7 percent lower than a year earlier, Federal Highway Administration data show. Prices fell to an average of $3.21 a gallon last week, according to the Department of Energy. As demand declined, OPEC trimmed supplies 3.8 percent to 31.8 million barrels a day in September, according to Geneva- based tanker-tracking service PetroLogistics Ltd. Saudi Arabia's volume fell 520,000 barrels a day to 9.18 million, PetroLogistics said. “This may be OPEC's toughest balancing act in their history,” said Tetsu Emori, the fund manager at Astmax Co. in Tokyo, Japan's biggest commodities asset manager with $200 million under management. “By the time OPEC announces a cut, they would be hoping to have seen the bottom of the price”. The last time OPEC slashed quotas was at a December 2006 meeting in Abuja, Nigeria. That 500,000 barrel-a-day cut took effect in February 2007 and followed an earlier, 1.2 million- barrel reduction in October 2006. Those actions were reversed later in 2007 as prices rallied. “The situation has gotten dire enough that they're willing to move and even become a topic of conversation” during the U.S. election campaign, Ronald Smith, chief strategist at Alfa Bank in Moscow, said in a Bloomberg television interview. OPEC will cut by 1 million barrels a day “at the very minimum” and potentially “wait until after the election, then add another million on top of it, or half a million,” he said.

CNPC and Uzbekneftegaz Sign Agreement

  UZBEKNEFTEGAZ 20.10.2008 - [Neftegaz.RU] - China National Petroleum Corp (CNPC), parent of PetroChina, said it has signed an agreement with Uzbekistan's state-owned Uzbekneftegaz to explore for oil there. The exploration area, located on the north rim of the Fergana Basin, was discovered in 1992, and has reserves of over 30 mln tons, CNPC said. Annual capacity of the field is expected to reach 2 mln tons, CNPC said. China, the world's second largest energy consumer, has been seeking oil and gas resources overseas to meet rising domestic demand. It has intensified energy cooperation with Central Asian countries, which are viewed as having favorable logistics and costs. CNPC has started building the Central Gas Pipeline, designed to ship gas from Turkmenistan through Uzbekistan and Kazakhstan to western China. The pipeline's gas transmission capacity is 30 bln cubic meters a year, with an option for increasing it to 40 bln cu m.

Wednesday, October 15, 2008

Huge Turkmen Gas Field Found

15 October 2008 - Moscow Times - ASHGABAT, Turkmenistan -- An independent audit has found that Turkmenistan may hold the world's fourth-largest gas field, state-run media reported Tuesday. The audit by Gaffney, Cline and Associates is the first outside analysis to be released publicly by the government and appeared aimed at quashing concerns that the country will not be able to satisfy its huge supply obligations. The Yolotan field near the border with Afghanistan likely holds around 6 trillion cubic meters of gas, company official Jim Gillett told ministers in Ashgabat on Monday. "It is now clear ... there is more than sufficient gas to fulfill Turkmenistan's current contract commitments," Gillett said. Yolotan may hold up to 14 trillion cubic meters, he added. Turkmenistan has committed to exporting 50 bcm per year to Russia under a 25-year contract and it also has agreed to provide China with 40 bcm annually beginning late next year.

Turkmenistan Gas Reserves Revealed

turkmenistanOct. 15, 2008 - Kommersant - An international auditor has announced it determination of the natural gas reserves of Turkmenistan fields. The British Gaffney, Cline & Associates has stated that the reserves of the South Iolotanya and Osmana fields are comparable to Russia’s largest fields. The company’s audit has confirmed statements made by Turkmen officials that had been initially met with skepticism. If all of the company’s findings are confirmed Turkmenistan will have reserves just 20 percent lower than those of Russia and will be able to sell its gas to Gazprom and European countries simultaneously. The British company found that the South Iolotanya and Osmana fields in southeast Turkmenistan contain five times the reserves at the Dovletabad field, the resource base for Gazprom purchases that had previously been considered the country’s largest field. According to Gaffney, Cline spokesman Jim Gillett, under the international estimation and classification system, the low estimate is 4 trillion cu. m. of gas, the optimal estimate is 6 trillion cu. m. and the high estimate is 14 trillion cu. m. It is, therefore, the fourth or fifth largest gas field in the world. Gaffney, Cline and DeGolyer and MacNaughton made estimates of Turkmenistan’s gas reserves in 2004, but their findings were not made public. Turkmenistan President Saparmurat Niyazov stated two months before his death that the country’s reserves were sufficient to export 150 billion cu. m. for the next 250 years, but no one outside the country took his statement seriously and the country was suspected of selling the same gas to Russia and China. Now Turkmenbashi has been vindicated. A source in Gazprom said yesterday that the agreement the Russian monopoly signed on July 25 with Turkmengaz does not involve South Iolotanya or Osmana. Another Gazprom executive said in 2006 that gas from that field was “high in sulfur and easily accessible.” Analysts say the estimate is good news for the European Union. The Nabucco pipeline project, considered the main challenge to Gazprom’s position on the European market, has not had a resource base. Now it is likely to find one.

Liberalization of the Energy Market in EU

15.10.2008 - [Neftegaz.RU] - The third energy package is more democratic than the proposal presented by the European Commission in September 2007, which strictly separated the production of oil, gas or electricity from their transportation. All the large European energy companies opposed that idea. Now the same company is allowed to control the production and transport of gas. The old rules would also have severely limited Gazprom’s opportunities for expansion in Europe. The document was amended under the pressure of France and Germany (which receive 15 and 40 percent of their natural gas from Russia, respectively). As Russian business paper Kommersant reports, an important point in the new agreement is the so-called division of activities, under which an energy producer can buy assets in an EU country and own a distribution network in the same country, but the network has to have an independent operator. Energy companies will not have to sell their distribution companies in neighboring companies if production and distribution are carried out by different divisions of the company. Energy producers will not be able to buy companies that only distribute energy, such as in The Netherlands. Foreign companies operating in the European Union will be subject to the same rules as local companies. An energy company from a third country will need the permission of one EU and European Commission member to operate. Individual countries will be able to decide whether or not to allow foreign companies access to their energy assets. The new proposals should be approved by the European Parliament by the end of the year or beginning of next year.

BP Make Third Oil Discovery in Gulf of Mexico

15.10.2008 - [Neftegaz.RU] - BP America Inc. have made their third oil discovery in the area in the deep waters of the Gulf of Mexico. The discovery at BP's Freedom Prospect is about 70 miles southeast of the Louisiana coast in about 6,100 feet of water. The well was drilled to a total depth of 29,280 feet. BP said an appraisal will be necessary to determine the size and commerciality of the discovery. The announcement follows discoveries by BP at its Tubular Bells and Kodiak wells. BP Exploration & Production Inc., a subsidiary of BP America, operates the well with a 25 percent working interest. Both are owned by London-based BP PLC. Noble Energy Inc. has a 37.5 percent working interest in the site, Samson Offshore Co. a 25 percent working interest and Marathon Oil Co. a 12.5 percent working interest. Noble Energy and Samson Offshore acquired the lease for the site in March 2006. BP shares fell 64 cents to $45.86 in late morning trading, while Marathon Oil declined $1.74, or 6 percent, to $29.79. Nobel Energy shares gained $4.84, or 12 percent, to $45.96.

Oil Loiters Just Above $78

15.10.2008 - [Neftegaz.RU] - Oil has fallen to just above $78, as fears of a global recession just about outweighed optimism for an economic recovery spurred by bank rescue schemes. Plans by the United States and European powers to infuse trillions of dollars into ailing financial houses sparked a brief rally in global markets this week, before prevailing bleak economic sentiment resurfaced. U.S crude fell 53 cents to $78.10 a barrel by 0152 GMT, while London Brent crude slipped 23 cents to $74.30. Oil settled more than 3 percent lower on Tuesday after having climbed more than $3 a barrel earlier in the session, in line with Wall Street's weaker close following its biggest one-day gain ever. "I can't see anything really to drive prices higher in the short-term. At the moment, prices are just taking their time and trading in a tight range," said Peter McGuire, managing director of Commodity Warrants Australia. Slumping demand in the United States and other major consumers, the financial crisis and a flight of investors into safe haven investments have dragged crude off record peaks over $147 a barrel hit in July. While No. 2 consumer China saw September crude imports grow by double-digit percentages for the second month, the impact of the financial turmoil and delays to some new refinery projects may mean slower consumption in coming months. "It's not all doom and gloom...with prices coming down tremendously from the highs of July, money can now feed other parts of people's consumption instead of going straight to the petrol pumps," McGuire said. In the United States, average retail gasoline prices fell 33.3 cents over the last week to $3.15 a gallon, the biggest price decline ever recorded by the government, the Energy Department said on Tuesday. Some price support came from news that OPEC's seaborne oil exports, excluding Angola and Ecuador, fell 600,000 barrels per day (bpd) in September, Lloyd's Marine Intelligence Unit (LMIU) said on Tuesday. The U.S. National Hurricane Center said Tropical Storm Omar was likely to reach hurricane strength in the Caribbean Sea as early as Tuesday night. The storm has disrupted activity at Venezuela's 200,000 barrel-per-day Puerto La Cruz refinery, knocking out power to some units and forcing authorities to suspend tankers' movements at the facility's port, the state oil company said. On Thursday, traders will watch for weekly U.S. inventory data, with analysts calling for a 1.9 million barrel build in crude stocks, a 600,000 barrel build in distillates and a 2.9 million barrel rise in gasoline inventories.

Monday, October 13, 2008

Bidding led by Iraq in London

13.10.2008 - [Neftegaz.RU] - The first round of bidding for new contracts in the country since the U.S.-led invasion in 2003 will commence on Monday when Iraq's oil minister will meet in London with representatives of international oil companies. Iraq chose 35 oil companies out of the 120 that applied last April, to participate in the bidding round to develop six major oil fields and two gas fields. Topping the list of companies are the world's oil giants: Royal Dutch Shell PLC, BP PLC, ExxonMobil Corp., Chevron Corp. and Total. Six state-run oil companies were later added to the list and a British company was dropped since it did not submit the required documents. Iraq sits on more than 115 billion barrels of oil, but decades of wars, U.N. sanctions, violence and sabotage have battered its oil industry. As security improves, Iraq is trying to bring in foreign companies to help increase crude output from the current 2.5 million barrels a day to 4.5 million barrels a day by the end of 2013. Ministry spokesman Assem Jihad said the purpose of London's meeting with Oil Minister Hussain al-Shahristani is to present the international oil companies with the forms of the contracts and with data and details for fields being offered. "In light of this information, the companies will be in a better position to submit their bids which are planned to be approved by next summer," Jihad told The Associated Press. The ministry will give the companies a six-month timetable from the receipt of data and other details to submit bids for a 20-year contract, another Oil Ministry official said. The official, who spoke only on condition of anonymity as he was not authorized to publicize information before Monday's meeting, said the ministry plans to announce winners in June 2009.

Friday, October 10, 2008

US bank bailout doesn’t help oil prices

10/3/2008 - Oil Marketer by Elaine Frei - Crude oil prices slid slightly Friday as many investors doubted that the US bank bailout plan will keep the US economy from recession. Labor Department data showing that the US economy lost 159,000 jobs in September and Commerce Department numbers revealing that US factory orders were down 4 percent in August, much more of a decline than was expected, added strength to the argument that demand is not going to recover anytime soon. Prices for West Texas Intermediate crude for November delivery was down 12 percent this week, dropping 8 cents on the session to $93.89 per barrel on the New York Mercantile Exchange, while November contracts for Brent crude dropped 64 cents to $89.92 per barrel on the ICE Futures Europe exchange in London. In afternoon trade, Nymex November gasoline was down 3 cents to $2.23 per gallon while November heating oil fell 5 cents to $2.66 per gallon and November natural gas dropped 12 cents to $7.36 per million British thermal units

OPEC’s Emergency Meeting is Likely to Cut Oil Supply

10.10.2008 - [Neftegaz.RU] - OPEC is “very likely'' to decide at an meeting being held in November to cut oil production at its as prices have fallen “dramatically," Chakib Khelil, the group's president has said. OPEC announced that the emergency meeting is to be held in Vienna after the global financial crisis sent crude prices below $90 a barrel. “The decision will very likely be to cut production,” Khelil revealed. OPEC's meeting will "discuss the global financial crisis, the world economic situation and the impacts on the oil market," the statement issued by the group's Vienna headquarters said. It reiterated OPEC's "determination to ensure that oil market fundamentals are kept in balance and market stability is maintained." Nigeria, Qatar, Libya and Iraq, all members of the Organization of the Petroleum Exporting Countries, have this week floated the idea of a cut in the group's oil output. Oil prices have plummeted 41 percent from their July record of $147.27 a barrel as the worsening credit crunch threatens to restrain economic growth and curtail energy demand. Oil for November delivery fell $2.36, or 2.7 percent, to settle at $86.59 a barrel today on the New York Mercantile Exchange. It touched an 11-month low of $84.19 a barrel. Qatari Oil Minister Abdullah bin Hamad al-Attiyah and Shokri Ghanem, chairman of Libya's National Oil Corp., had earlier told Bloomberg that they backed such a summit next month. OPEC was scheduled to next meet on Dec. 17 in Algeria. The “reasons for the fall of oil prices will be considered in this meeting," Iranian Oil Minister Gholamhossein Nozari said earlier today, according to the Islamic Republic News Agency. OPEC resolved at its most recent meeting in Vienna last month to stick more closely to official quotas, implying a cut of about 500,000 barrels a day. The official production quota for 11 of OPEC's members is 28.8 million barrels a day. Collectively, those members exceeded that target by 390,000 barrels a day in September, according to Bloomberg estimates. Those 11 nations do not include Iraq, which has no quota, and Indonesia, set to leave OPEC next year. Saudi Arabia, the organization's biggest producer, has yet to comment on the summit. “The Saudis don't want to meet at all,'' said Leo Drollas, deputy executive director at the Center for Global Energy Studies in London. "They weren't happy to meet in Vienna and didn't want to announce any output restrictions. But they have the others around their necks and have to go through the motions." Saudi Arabia would need a minimum oil price of $65 a barrel this year to meet its infrastructure spending and debt obligations if it pumped at a rate of 9 million barrels a day, Drollas said. The kingdom produced about 450,000 barrels a day more than this last month, according to Bloomberg data. “There's no way the Saudis need prices of $80 a barrel" to meet their budget requirements, Drollas added. While the kingdom may overtly agree to a cut if pressed by other members, “they won't implement it.'' OPEC may need to “intervene” to “balance the fundamentals of the market,” Nigerian Energy Minister Odein Ajumogobia also said by telephone yesterday. In its statement, OPEC reiterated its “determination to ensure that oil market fundamentals are kept in balance and market stability is maintained.'' “The price is getting near to $80 and they're getting nervous,'' Johannes Benigni, chief executive officer of Vienna- based consulting firm JBC Energy, said yesterday. “OPEC is going to send the signal that they'll do what it takes to defend $80. This range they want between $80 and $100 has been well-known for some time.” Venezuelan President Hugo Chavez said yesterday that he was aware of calls for the November meeting, adding that the country's oil minister, Rafael Ramirez, would use such an occasion to push for the creation of an oil-producers bank.

Thursday, October 09, 2008

ConocoPhillips pens Kazakh offshore pact

Caspian offshore Timan Oil and GasOct 7, 2008 - Scan Oil&Gas - KazMunayGas, ConocoPhillips and Mubadala Development co.have agreed to develop the offshore Kazakhstan “N” Block offshore Kazakhstan, and penned a memorandum of understanding under laws affecting the country’s subsoil. The companies gave themselves a New Year’s Eve deadline to agree terms for the “world class” asset’s development by which KMG could assign 49 percent of the license to ConocoPhillips and Abu Dhabi oilfield player Mubadala. The highly prospective “N” Block lies 30 kilometers offshore Aktau, Kazakhstan in the Caspian Sea and covers 8,100 square kilometers. While the Kazakhs said they welcomed the new technology that would develop the field, a ConocoPhillips statement said the company was out to establish a “major new exploration presence in Kazakhstan”.

Wednesday, October 08, 2008

Occidental to Develop Oil and Gas Fields in Abu Dhabi

Occidental - www.youroilandgasnews.comLOS ANGELES, Oct. 8, 2008 (GLOBE NEWSWIRE) -- Occidental Petroleum Corporation (NYSE:OXY) announced today the signing of a preliminary agreement with Abu Dhabi National Oil Company (ADNOC) to appraise and develop Jarn Yaphour and Ramhan oil and gas fields in the Emirate of Abu Dhabi. Oxy will operate both fields and hold a 100 percent interest in newly created concessions. "We are pleased to have been chosen to develop these fields in Abu Dhabi," said Dr. Ray R. Irani, Chairman and Chief Executive Officer of Occidental. "This is an important step in the implementation of our growth strategy and in our relationship with the Emirate of Abu Dhabi. The development of these two fields provides an exciting opportunity to create value for the people of Abu Dhabi and for our stockholders." The Jarn Yaphour field is located onshore near the capital city of Abu Dhabi. Development activities at the field will commence immediately and first production from the field is expected in 2009. Gross production from the initial development is anticipated to be around 10,000 boepd. The Ramhan discovery, located in very shallow water near the Abu Dhabi refinery, was tested in 1992 and flowed at a combined rate of 1,750 barrels of oil and 14 million cubic feet of gas per day from one well. Appraisal activities will commence immediately and, if technically and commercially successful, production from the Ramhan initial development is also expected to be in the 10,000 boepd range. First production from the field could commence as early as 2011. Total capital investment in both development projects is expected to be in the range of $500 million over the next three to four years. In addition to the initial field developments, this investment will include further field appraisal activities to determine the full upside potential of each area.

Monday, October 06, 2008

Ecuador may expel foreign oil companies

equador06.10.2008 - [Neftegaz.RU] - President Rafael Correa of Ecuador has threatened to expel foreign oil companies operating in the country and to nationalise installations at an oil field operated by Petrobras, the Brazilian state oil company. The new threats add to tensions with Brazil over the expulsion last month of Odebrecht, a Brazilian construction company that built a hydroelectric dam in the country, and seizure of its assets by the Ecuadorean army. Many in Brazil were alarmed by Mr Correa's decision to send troops to occupy Odebrecht's plant while negotiations were still in progress. Mr Correais angry at slowing production at oil fields operated by foreign oil firms such as Petrobras, Repsol-YPF of Spain and Andes Petroleum of China. "Do not play with fire. Either increase production or you will have to leave the country," news agencies reported him as saying.

Friday, October 03, 2008

Crude Oil could drop to $50

03.10.2008 - [Neftegaz.RU] - Merrill Lynch & Co. have warned that crude futures could fall below $50 US in the event of a massive global recession. On Thursday, the investment bank, itself a victim of the credit disaster shadowing American markets, slashed its 2009 oil forecast to $90 saying prices could fall harder and faster if the troubles spill out beyond the U.S. into the broader world economy. Oil pries have averaged $113.24 so far in 2008, compared with $72.36 for all of 2007. The financial crisis has harshly intensified showing clear signs of spreading outside the United States. A plunge in leading indicators in the U.S, Europe and parts of Asia suggests that the global economy is weakening significantly faster than expected," the report said. Benchmark oil prices fell about five per cent Thursday, losing $4.56 to close at $93.97 in New York. Futures are down more than $50 since reaching a peak of $147 in July. Merrill Lynch noted U.S. demand will fall about seven per cent this year, the fastest rate since the oil price shocks of the 1970s and '80s. In Calgary, economists said the depth of a global recession depends on the outcome of the U.S. government's proposed $700-billion US bailout, which goes in front of American lawmakers Friday after being soundly defeated earlier this week. According to Philip Verleger, a world-renowned oil expert who has advised several U.S. presidents on oil policy, the Congress has no choice but to pass the bailout to avoid a deep and painful economic contraction. Verleger says if U.S. legislators fail to resolve the financial crisis, there will likely be more bank failures and a freezing of credit markets and investment. "And that's the prescription for a really ugly recession of at least two to three quarters." Speaking from Colorado -- where he is in the process of moving to Calgary to assume a role at the Haskayne School of Business -- Verleger said tightening credit markets would affect the subcontractors of oilsands developers that perform the construction work more than the producers themselves. That in turn could exacerbate an already tight market for materials and services, driving costs higher even as commodity prices fall. "I'm certain that many of the subcontractors are already in dire straits, even if the producers come out of this OK," he said in an interview. "These are serious adverse impacts to come out of the credit crisis." With oil prices brushing up against the marginal cost of supply -- estimated to be $80-$90 a barrel in the oilsands -- Verleger said the Canadian and provincial governments have to come up with a mechanism to allow big new megaprojects to proceed through periods of low prices to avoid shut-ins and delays. Deferring or delaying spending to develop new reserves will only result in even higher oil prices in the future, he noted. "There's a real need to sit down and build a system of supports for these projects to continue through thick and thin," he said. "The problem is that the periodicity of the oil price is longer than the periodicity of the investment cycle. There has to be some mechanism so these cash flows are more stable." But others questioned what they see as a panic mentality gripping the market. Frank Atkins, an economist at the University of Calgary, doubted that oil prices would fall to $50 without a major global depression that he says just isn't in the cards. "In this volatile environment, anything could happen. But I attach a very low probability to that (a depression)," he said. Atkins said the Canadian economy remains healthy despite the troubles in the nation's largest trading partner and biggest customer for Alberta's oil. He noted the Canadian banking sector is strong and the housing market remains on an even keel compared to the wave of foreclosures south of the border. "We are going through our version of a housing slowdown, but you could hardly call it a 'crunch.' It's more like a price adjustment. Balance sheets on the financial side in Canada are a lot better than the States. I'm not wearing rose-coloured glasses, but I just don't see it happening here." In a research note, commodities analyst Martin King was sanguine after lowering his own forecast numbers. "It's always darkest before the dawn, every cloud has a silver lining, and other ridiculous allegedly uplifting statements come to mind . . . when it is this dark before the dawn, groping around in the dark is not much fun." Earlier this week, First Energy lowered its 2008 forecast to $111.50 and $115 in 2009 and 2010. In his report, King argued that demand numbers are being skewed by one-time factors including the credit crisis. "No doubt that demand is definitely down, but lower prices and some settling of the credit crisis waters (we hope), should help to generate some bounce back for U.S. petroleum demand," he noted. "Sunrise is still a few hours away, but at least we have a reading light."

Natural gas output regardless of storms' damage

03.10.2008 - [Neftegaz.RU] - Despite the damage inflicted by hurricanes Gustav and Ike to operations in the Gulf of Mexico, natural gas production this year is expected to reach the highest level seen since the mid-1970s. Wholesale prices should remain stable this winter as a result of high production, combined with a stagnating U.S. economy and a winter similar to last year the Natural Gas Supply Association said. "Federal forecasters anticipate this will be a slightly warmer than normal winter" with temperatures expected to be fairly comparable to last year, noted Patrick Kuntz, the Gas Supply Association's chairman. "However, this is the most difficult factor to predict, and the severity of winter weather may likely have the biggest single impact on the market," Kuntz said. 750 more wells are expected to be drilled this year than last year and twice as many as in 2002, the Gas Supply Association said. Gas production is expected to increase nearly 8 percent, in part due to large-scale development of "unconventional" gas production from shale and tight sands formations, according to a study conducted by Fairfax, Va.-based ICF International. Those expansions have helped offset production losses in the Gulf of Mexico, where the U.S. Minerals Management Service reports 46 percent of the gas production remained shut in, three weeks after Ike blew through. Gas demand this winter is expected to rise about 2 percent according to Energy Ventures Analysis. The nation will enter the heating season with a healthy 3.5 trillion cubic feet, the Gas Supply Association said, down 3 percent from last year's all-time high.

Thursday, October 02, 2008

Victoria wins Kemerkol licence battle

02 October 2008 - Upstream OnLine - Victoria Oil & Gas has won court decisions in the UK and Canada relating to a rival claim to its Kemerkol licence in Kazakhstan. The rulings follow a claim bought against its regional subsidiary by the previous Kemerkol licensee and information received by the company that an application had been made to the Kazakh Ministry of Energy & Mineral Resources for permission to sell the licence. Victoria said the claim has no merit, and said it expects damages of at least £8.5 million ($15.2 million) for breach of warranties under the sale and purchase agreement it signed with the previous licensee.

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