Oil and Gas News

Oil News from around the web, Crude oil for August 2009 delivery up 1.2%, to $60.86 a barrel ;London Brent up 1%, to $61.31 on London’s ICE Futures Europe Exchange ; Saudi Aramco and Total have awarded engineering, procurement and contracting

Posted on July 17, 2009 – 5:34 pm | by oilandgaspress.com

China National Petroleum Corporation (CNPC) has announced production figures of 51.04 million tonnes, or 2.06 million bpd of crude in the first half of this year.

The company processed 58.76 million tonnes during the same period while crude output at overseas wells totalled 31.39 million tonnes.

Gas production hit 3.9 billion cubic metres, according to state news agency Xinhua, citing CNPC’s general manager and chairman of listed PetroChina Jiang Jiemin.

Jiang has also been quoted as saying that Chinese oil companies and consumers were increasingly affected by the international oil futures market.

CNPC plans to double its oil and gas output to 400 million tonnes of oil equivalent in eight to ten years and raise oil and gas production in overseas fields it operates to half that level.

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StatoilHydro has announced a gas discovery in production licence 159D in the Norwegian Sea.

The wildcat well 6507/3-7, which is currently being completed, is located 2km north-west of the Idun find and 12km north of the Skarv find.

The size of the discovery is estimated at between 600 million and three billion cubic metres of recoverable gas, according to the Norwegian Petroleum Directorate.

StatoilHydro said there is potential for additional volumes beyond the proven gas volumes. Further delineation of the discovery will also be considered.

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United Industrial Corporation (OPK) and Hyundai Heavy Industries (HHI) have undertaken an agreement to work together on the development of ship machinery and building and design projects aimed mostly at the oil and gas market.

HHI, as a partner of OPK, will help manage its shipyards, erect new shipbuilding facilities and construct vessels for the oil and gas industry.

OPK runs the Severnaya Verf shipyard, Baltiysky Zavod plant and design bureau Iceberg and is aiming its operations at shipbuilding programs for the Arctic shelf development.

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The world’s largest oil companies had an “ugly” second quarter, with earnings hit by a halving of oil and gas prices, sharply lower refining margins and stubbornly high costs, reports Reuters.

The oil and gas sector is expected to report a 62% drop in second-quarter earnings compared to 2008, and a 27% decline compared to the first quarter of 2009, according to analysts at Citigroup.

The quarter-on-quarter decline comes despite a recovery in crude prices to almost $60 a barrel from around $44 in the first quarter.

The decline also reflects continued weakness in gas prices and crude processing margins and, for many, lower production, writes Reuters.

Exxon Mobil, the world’s largest non-government controlled oil company by market capitalisation, is expected to report second quarter net income of $4.75bn, down 59% on April-June 2008, according to Reuters Estimates.

Chevron is forecast to post a 70% drop in net income to $1.82bn.

Europe’s largest oil company, Royal Dutch Shell, is predicted to report a 70% fall in current cost of supply net income, excluding one-off items, with an average forecast of $2.55bn in a Reuters poll.

BP was forecast to report a replacement cost net income, a 67% drop on the year.
offshore-technology.com
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Neptune Marine Services has secured a range of new projects in the North Sea, Australia, Brazil and Iran valued at about $25m.

All projects are scheduled for completion in the first half of 2010.

The projects include a NEPSYS repair project for a customer operating in the North Sea, fabrication works out of the company’s Aberdeen workshops for an offshore project in Brazil and a range of diving and repair projects for several oil and gas projects in Australia.

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China’s economy is expected to have expanded 7.8% in the second quarter of 2009 as record lending and surging investment drove a rebound, according to a Bloomberg News survey.

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Minister of Petroleum Resources, Dr. Rilwanu Lukman, yesterday said the Petroleum Industry Bill (PIB) would eliminate confidentiality which, he said, encourages corruption.
He also tacitly gave the reason why multinational oil companies have been seriously campaigning against the PIB, and affirmed that Nigeria would not allow foreigners to write the laws of the country for the citizens.
The international oil companies (IOCs) have been crying out that they were not properly consulted and that their interests should have been better reflected in the new legislation.
They were reported to have taken some Nigerian lawmakers to Ghana on a retreat in what was interpreted as an attempt to stall or water down the bill.
But in what might be a final nail in the coffin of their drive, Lukman declared: “We consulted extensively. What we didn’t do and couldn’t have done was to let somebody else write the law for Nigeria… It is not possible to please each and every stakeholder. Some will benefit more than others.”
He said in the long run, Nigerian investors in the industry stood to benefit more as the international oil companies in the joint venture partnership with NNPC would have to give up some acreages under the relinquishment clause in the PIB.
Such relinquished acreages, he pointed out, would likely go to local investors.
The minister spoke at a consultative meeting by the Minis-try of Petroleum Resources and Nigerian National Petroleum Corporation (NNPC), with stakeholders in the oil and gas industry from the IOCs to labour, marginal field operators, the media and National Association of Road Transport Owners (NARTO).
“The bill has gone out of its way to take care of the interests of indigenous producers,” he said. “It provides for giving up acreages through the relinquishment clause. This will benefit the local investors. Some acreages given up by the local investors. We’ve done so much to encourage local producers.”
Nevertheless, Lukman said the law would be also beneficial to foreign investors as they crafted the law with the aim of retaining foreign and local investors and attracting new ones.
On corruption, he said: “The best way to fight corruption is to remove confidentiality for all procedures, contracts and payments. Every Nigerian, including all stakeholders, should have the right to know what is going on. The bill removes confidentiality on a scale not seen in the world before.”
When the bill becomes law, he said: “Nigeria will move one step from [being] one of the most opaque petroleum nations in Africa to one of the most open and transparent in the world.”
To illustrate how far the proposed law would go in this direction, Lukman explained that the texts of all licences, leases and contracts and any of the changes to such documents would no longer be confidential while payments to the government would be public information.
He also said from now on, petroleum prospecting licences and petroleum mining leases could only be granted by the Minister through a “truly competitive” bid process which would be open and accessible to all qualified companies.
“Every company involved in the upstream petroleum industry will be subject to the same system of rents, royalties and taxes, depending on whether they operate in the onshore, shallow or deep offshore or inland areas. This means it will not be possible under the bill to treat certain companies more favourably than others,” he said.
In addition, Lukman reaffirmed the Federal Government’s determination to go on with the deregulation of the downstream sector of the oil and gas industry, saying government would pursue it to its logical conclusion.
According to him, Nigeria’s long term energy security depended on its ability to deliver petroleum products in the domestic market at cost reflective prices, which could only be attained in an environment where clear ground rules were set and oligolistic market distortions were removed.
“For effective and competitive domestic petroleum products market to be developed in Nigeria, the downstream petroleum sector must be deregulated,” he said. “This will encourage investment in refining and marketing infrastructure.”
He said the bill contained one of the strongest and most far reaching provisions in the world with respect to the promotion of the Nigerian Content, as it is mandatory that no project could be approved without a comprehensive Nigerian Content Plan.

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Finance Minister, Dr Kwabena Duffuor, says the IMF Board’s approval of US$597 million as balance of payment support to the country is a sign of renewed confidence in the economy.
“So far, this is the largest financing package in Africa and it shows a strong expression of the IMF’s support to Ghana’s programmes and policies,” the Minister told a press briefing in Accra.
The government inherited a difficult economic situation shown in high fiscal and current account deficits, high inflation and depreciation of the cedi against major international currencies.
In response to the challenges, government announced an austere budget and pledged to reduce the fiscal deficit of about 14 per cent to 9.5 per cent this year.
He said in addition to the loan, US$425 million would also be made available to shore up foreign reserves as a result of the G-20 decision to increase the IMF’s special drawing rights by US$250 billion.
The Minister explained that the release of the amount was not dependent on having a programme with the Fund and was not based on any conditionality.
“In all, the loan based programme with the IMF (US$597 million) and the additional allocation based on Ghana’s quota (US$425 million) is therefore US$1,022 million,” Dr Duffuor said.
Of the total amount, Ghana will receive US$625 million before the year’s end while the remaining amount will be disbursed between 2010 and June 2012.
The World Bank two weeks ago approved US$535 million. Of the amount US$300 million is for general budgetary support, US$225 million transport sector support and US$10 million for Natural Resource and Environmental Governance support.
Dr Duffuor said the inflows would significantly increase the level of the country’s reserves, strengthen the cedi and increase confidence in the economy. Besides the inflows would also lead to higher financing of the budget from external sources, thereby reduce domestic borrowing by government and dampen inflationary expectations. “The result will be lower domestic interest rates,” Dr Duffuor added.
GNA

The term of the loan is 10 years, with a grace period of five years and an interest rate of 0.5 percent.

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Saudi Aramco and Total have awarded engineering, procurement and contracting (EPC) contracts worth $9.6bn, Arab News reported.

The contracts have been awarded to 13 companies for the construction of the 400,000bpd Jubail export refinery.

The project, which is to be fully operational by the second half of 2013, will process Arabian heavy crude. The project was postponed as the two companies looked to capitalise on lower construction costs and bring the total cost to less than $10bn.

The agreements were signed by Saudi Aramco Total Refining and Petrochemical Company (SATORP), a joint venture between Saudi Aramco and Total.

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Seven contractors are said to be running for five transportation and installation packages offered by Petronas on behalf of 11 PSC operators in Malaysia.

The contenders include SapuraCrest’s affiliate, TL Offshore, Bumi Armada-J Ray McDermott, Saipem, Sigurros and PBJV.

TL Offshore and the partnership between Bumi Armada and J Ray McDermott are likely to go for all five packages, according to local reports.

Work will be carried out using full marine equipment, diving support vessels and anchor handling tug supply vessels.

Bids are due for submission in July and contracts could be awarded as early as November.

Tags: Bumi Armada-J Ray McDermott, CNPC, Natural Resource, Neptune Marine, PBJV., PetroChina, public information, Saipem, SapuraCrest’s affiliate, Saudi Aramco, Sigurros, StatoilHydro, TL Offshore, transport sector, upstream petroleum, World Bank