Oil Industry Analysis
>>EIA estimates that members of OPEC earned $673 billion in net oil export revenues in 2007, a 10 percent increase from 2006. Saudi Arabia earned the largest share of these earnings, $194 billion, representing 29 percent of total OPEC revenues. On a per-capita basis, OPEC net oil export earning reached $1,140, a 8 percent increase from 2006. Through May, OPEC had earned an estimated $423 billion in net oil export
earnings in 2008. Based on projections from the EIA June 2008 Short Term Energy Outlook (STEO), OPEC net oil export revenues could be $1,178 billion in 2008 and $1,214 billion in 2009.
WHAT IS BIODIESEL?
Biodiesel is the name of a clean-burning alternative fuel, produced from domestic, renewable resources. Biodiesel contains no petroleum, but it can be blended at any level with petroleum diesel to create a biodiesel blend. It can be used in compression-ignition (diesel) engines with little or no modifications. Biodiesel is simple to use, biodegradable, nontoxic, and essentially free of sulfur and aromatics.
TECHNICAL DEFINITIONS
Biodiesel - a fuel composed of mono-alkyl esters of long chain fatty acids derived from vegatable oils or animal fats, designated B100, and meeting the requirements of ASTM (American Society for Testing & Materials) D 6751.
IS BIODIESEL USED AS A PURE FUEL OR IS IT BLENDED WITH PETROLEUM DIESEL?
Biodiesel can be used as a pure fuel or blended with petroleum in any percentage. B20 (a blend of 20 percent by volume biodiesel with 80 percent by volume petroleum diesel) has demonstrated significant environmental benefits with a minimum increase in cost for fleet operations and other consumers.
Biodiesel is the only alternative fuel to have fully completed the health-effects testing requirements of the Clean Air Act. The use of biodiesel in a conventional diesel engine results in substantial reduction of unburned hydrocarbons, carbon monoxide, and particulate matter compared to emissions from diesel fuel. In addition, the exhaust emissions of sulfur oxides and sulfates (major components of acid rain) from biodiesel are essentially eliminated compared to diesel.
Of the major exhaust pollutants, both unburned hydrocarbons and nitrogen oxides are ozone or smog-forming precursors. The use of biodiesel results in a substantial reduction of unburned hydrocarbons. Emissions of nitrogen oxides are either slightly reduced or slightly increased depending on the duty cycle of the engine and testing methods used. Based on engine testing, using the most stringent emissions-testing protocols required by the EPA for certification of fuels or fuel additives in the U.S., the overall ozone-forming potential of the speciated hydrocarbon emissions from biodiesel was nearly 50 percent less than that measured for diesel fuel.
>>Bio-fuel technology tops Brasil Tech 2008
As South Africa, like the rest of the world, battles to deal with sky-high crude oil prices, a business delegation from Brazil is attempting to offer their knowledge and expertise to the country.
The delegation are attending Brasil Tech 2008, where they will offer the country strategic trade and co-operative partnerships in areas such as energy, Information Communication Technology (ICT), machinery and nano technology.
Brazil is the world’s leader in bio-fuel research.
The exchange between South Africa and Brazil follows a natural path of growth experienced by both economies.
Consultant to the Brazilian government on Technology Affairs, Eduardo Tadao Takarashi said: “The Brazilian company Petrobras is the greatest producer of oil in deep waters, and this has resulted in Brazil not being dependent on external sources of oil.
“Petrobras have gone from operating at a depth of 2 000 meters to a depth of 5 000 meters.”
This is far beyond what other companies can do and has allowed Brazil to move towards becoming an energy producing country.
With regard to bio-fuels and the production of bio-ethanol, Mr Takarashi said Brazil produced bio-ethanol from sugar-cane and not maize like other countries, and could therefore be excluded from a global debate on the link between famine and the production of bio-fuels.
The usage of bio-ethanol to power motor-vehicles has been adopted in Brazil and 80 percent of manufactured vehicles are able to use either regular fuel or bio-fuel.
Global and geo-political instability in the Middle East affecting the price of crude oil has not affected Brazil in such a big way, said Mr Takarashi.
He said this was because of the wide use of bio-fuels in Brazil and the country’s vast knowledge of deep water oil production has largely buffered it from price shocks.
Inflation in Brazil stood at 3.2 percent in 2006, with 70 percent of Brazil’s exports being manufactured goods, and not commodities, as is commonly thought, said Mr Takarashi.
Brazil is the 5th largest country in the world and has the 7th largest economy with the 4th largest telecommunications sector globally.
The South American economic giant has strong monetary and fiscal policies in place, institutional stability, decreasing public and foreign debt, decreasing interest rates, and the Brazilian government has invested heavily in development and research.
However, despite all the gains that have been made by Brazil in growing its economy, there are some 40 million people out of the 190 million population that live in poverty.
“We still have many challenges. However, we do have about 10 000 new graduates entering the market every year, so highly skilled jobs are being filled,” said Mr Takarashi.
Brazilian Ambassador to South Africa José Vicente de Sá Pimente told the conference that bilateral trade has grown substantially between the two countries and trade agreements such as the India, Brazil, South Africa (IBSA) agreement is an example of their strengthening relationship.
“Our doors are always open, so let us use the opportunity of your embassy in Brazilia and our embassy here in Pretoria to further build and strengthen business relations between our two countries,” said the Ambassador. - BuaNews
>>PetroSA increases capacity at Coega plant
The Petroleum Oil and Gas Corporation of South Africa (PetroSA), the country’s state-owned oil company, has increased the size of a planned refinery at Coega near Port Elizabeth. The plant, which will cost about $11 billion, will have a capacity of 400 000 barrels a day, rather than the previously proposed 250 000 barrels a day (kbpd).
The board approved this increase on Thursday, after evaluating the conclusions of a recently completed pre-feasibility study undertaken by a leading US-based refinery engineering company, KBR.
The Coega refinery (known as Project Mthombo) will be the lowest cost producer in sub-Sahara Africa.This is due to economies of scale, proven world-class technologies and crude processing flexibility. “This will enable it to accomplish a balancing role and sustain a competitive advantage in open market conditions within both local and export environments while meeting the highest global standards of product quality and environmental responsibility,” PetroSA Vice-President of New Venture: Midstream, Joern Falbe, said on Thursday. “The design configuration to process a wide spread of feedstock, with prominence given to lower-cost heavy, sour and acid crudes, is the primary driver in maximising commerciality as well as security of supply.” By 2014, when the refinery is due to be commissioned, South Africa will already be experiencing a shortfall of locally-refined product of about 200 000kbpd.
This will be due to its projected economic growth and low investment in existing refineries.
This shortfall will be met by importing product - an expensive solution that has a major impact on foreign exchange and increases potential supply vulnerability.
PetroSA’s original base case of a 250kbpd crude refinery on the east coast of South Africa proved robustly attractive to meet the country’s medium term fuel growth requirements. However, acknowledging the National Oil Company’s mandated role to reduce external dependency in national energy security requirements, combined with input from potential international partners who recognise the flexibility of Coega to supply diverse markets and mitigate risk, the Board of PetroSA has approved expanding the planned refining capacity to 400kbpd. “After evaluating all operational, logistical and environmental considerations, 400kbpd was deemed the most suitable configuration,” said Mr Falbe.
He added that this increase from 250 to 400kbpd increased project funding. “However, due to the economies of scale, the investment cost per barrel reduces by 20 percent and operating costs improve by 30 percent, boosting the original project economics substantially.
“A recently-completed logistics study has confirmed that crude supply in ‘VLCCs’ [very large crude carriers] via a SPM [Single Point Mooring] is technically and operationally feasible, and PetroSA now awaits the outcome of an environmental and engineering analysis to determine the most suitable location for the facility,” said Mr Falbe.
The positioning of this highly competitive, world-class mega refinery will help to diversify crude and product supply structures in South Africa by providing an essential strategic supply alternative to the country’s main inland markets.
A future product pipeline from Coega to Gauteng, commercially viable, becomes a justifiable reality in the medium term.
Fast track project projections indicate that the streaming of Coega remains on target for 2014.
Source - BuaNews
>>Accra,GNA - President John Agyekum Kufuor on Thursday announced the Government’s decision to reduce Excise Duty and Recovery Levy on gas oil, kerosene and marine gas oil as part of a package deal to bring relief to Ghanaians in the midst of the global challenges, resulting from crude oil and food price hikes.
Additionally, debt recovery levy and excise duty on premix fuel as well as import duties on staples including rice, wheat, yellow corn and vegetable oil are to be removed.
In a nationwide broadcast, President Kufuor said the Government would also increase its support for the production cost of electricity, subsidize the cost of fertilizer and ensure effective distribution to farmers. He said he had directed the Finance Minister to urgently seek parliamentary approval for these to help to reduce transportation fares and food prices. President Kufuor warned that it would be criminal for anyone to attempt to re-export items declared tax-exempt purposely for the benefit of the local market.
The measures come at a time the nation’s crude oil import bill has been mounting. From 500 million dollars in 2005, it rose to 2.1 billion dollars at the end of 2007 and now heading towards 2.5 billion dollars.
The country’s current budget was prepared on an estimated crude oil price of 85 dollars per barrel but within the first quarter of the year, it had overshot beyond 125 dollars per barrel with experts projecting that the price could hit an all time record high of 200 dollars per barrel. President Kufuor acknowledged that the trend was throwing the budget out of control and said although the measures would involve cutting down on some of the Government’s development projects, there was not going to be any cut back on policies designed to protect the vulnerable in the society. Among these are the school feeding programme; the capitation grant; National Health Insurance Scheme; the Metro Mass Transport; National Youth Employment Programme and the micro-finance and small loans scheme.
President Kufuor said to help to enhance the national food security the Government was in consultation with the country’s development partners to import and stockpile additional supplies of rice and wheat. He further outlined a number of policy interventions to strengthen the performance of the agricultural sector of the economy, saying, the Government was stepping up attention and investment and had directed the Reforestation Programme to increase the planting of foodstuff in the “Tunja” demarcated areas around the country. Again there had been a re-launch of the Aveyime Rice Project with the local farmers being encouraged to go into satellite farming in cooperation with the nucleus farm to boost local rice production. Besides, the supply of tractors to farmers at subsidized rates and provision of small irrigation dams, improved seeds and ensuring best practices would be intensified while the implementation pace of the Millennium Challenge Account Programme in selected districts are accelerated.
President Kufuor said these needed the support of all sections of the society for effective and successful implementation. He, therefore, asked all to rally solidly behind the Government to ensure that the country went through the difficult times with minimal stress. The rising crude oil and food prices had led to dislocation of economies, rioting and strikes in some countries. President Kufuor said Ghana’s economy had managed to withstand the terrible shocks of the market so far because of its strength and resilience and gave credit to the disciplined and far-sighted management of the economy over the past seven years by the Government backed by the Central Bank.
Debt cancellation through the highly Indebted Poor Countries (HIPC) Initiative freed the nation of indebtedness to the tune of about eight billion dollars from both bilateral and multi-lateral creditors.
Source: GNA TMA/BDB
22 May 08
>>Dubai Gold and Commodities Exchange (DGCX), Middle East’s leading derivatives exchange, has announced the launch of West Texas Intermediate Light Sweet Crude (DWTI) and Brent Crude oil (DBRC) futures trading from May 27.
The launch of WTI and Brent Crude Oil futures on DGCX makes the world’s two most significant crude oil benchmarks available to market participants in Dubai, WAM news agency reported Wednesday.
‘The growing need of market participants to access viable risk management and investment tools and increased recognition from our international clients of the benefits of transacting and clearing business from within the UAE makes our offering of WTI and Brent Crude Oil contracts an extremely attractive proposition,’ said DGCX CEO Malcolm Wall Morris.
‘Making the world’s crude oil benchmarks available directly to the world’s premier oil producing region and allowing regional participants to maintain business within the Middle East has benefit beyond measure,’ said Chairman of DGCX Ahmed bin Sulayem.
Crude oil is one of the world’s most widely used commodities and is amongst the most liquid futures contract.
Crude oil refers to petroleum in its raw form. After refining it is converted into numerous component products such as diesel, petrol and asphalt.
Brent crude oil is named after the Brent oil field in the North Sea, off the coast of Britain.
WTI, also known as Texas Light Sweet is a type of light crude, lighter and sweeter than Brent Crude. Its properties as well as production site make it ideal for being refined in the US.
(IANS)
>> The Wall Street Journal reports
The Nigerian government is demanding $1.91 billion from Royal Dutch ShellPLC and Exxon Mobil Corp. as it reviews contracts governing growing offshore energy production, a spokesman for the country’s president said Tuesday.
The office of President Umaru Yar’Adua said he had ordered the state oil company NNPC to take “immediate steps” to recover the money from the two oil majors. A presidential adviser, Olusegun Adeniyi, said the funds were due to the government under production-sharing contracts governing two big offshore oil fields, Bonga and Erha.
Mr. Adeniyi said Nigeria is seeking $850 million from Shell, which operates Bonga, and $646 million from the Exxon-operated Erha. NNPC and the government are also seeking to recover $414 million they say are owed from sales of natural gas from Bonga.
“This matter is the subject of ongoing discussions between NNPC, SNEPCO [Shell Nigeria Exploration and Production Co, which operates Bonga] and other partners” in the offshore block, a Shell spokesman said.
Exxon Mobil said its affiliates “fully comply with all laws and regulations and have paid taxes and royalties to Nigeria accordingly.” It said it was in ongoing discussions with a number of Nigerian government agencies on issues such as taxes but would not comment on the talks.
The claim comes at a critical time for Shell in Nigeria, Africa’s biggest crude exporter. Militant attacks on its operations in the Niger Delta have forced it to shut down a big chunk of its onshore production. The company has also complained that the Nigerian government is failing to meet its funding obligations for the joint venture it runs with Shell, known as the Shell Petroleum Development Company or SPDC.
Shell isn’t the only company to suffer from such funding shortfalls. French oil major Total SA reached an agreement with NNPC on Tuesday to resolve its own funding crisis in Nigeria, concluding a deal on “financial assistance” that would cover three joint-venture projects in the west African country.
The outlook for big Western oil companies operating in Nigeria became even more uncertain last year when Mr. Yar’Adua said he wanted to renegotiate contracts governing offshore fields to better reflect soaring oil prices.
Bonga and Erha are covered by production-sharing contracts, which allow oil companies to recoup more of their costs before having to share substantial profits with the government. But the steep rise in crude prices has encouraged many oil-producing countries to rewrite such contracts so they get a bigger share of income from big oil and gas projects.
http://online.wsj.com/article/SB121131828596508245.html?mod=googlenews_wsj
>> European protests against soaring fuel prices spread across the continent Wednesday, as fishermen, truckers and other groups called for government action as crude-oil prices hit yet another high.
The protests are creating conflicts for European policymakers, who have used every tool available to governments — taxes, congestion charges, public-transport incentives and even bicycle rentals — to reduce their countries’ reliance on cars and trucks to cut fuel consumption and protect the environment. It’s unlikely that a few protests will reverse that unified goal, although temporary rescue plans are expected.
France’s politically powerful fishing unions want the government to increase a $480 million rescue plan aimed at offsetting a doubling in the cost of diesel fuel since November. The fishing fleet also has been blockading French ports and oil terminals on the Atlantic and the Mediterranean coasts for more than a week.
A clash in Paris between around 200 protesting fishermen and police Wednesday came as Brent crude oil futures for July delivery, the benchmark contract for Europe, jumped more than $1 to hit an all-time high of $129.70, driven by robust demand and reluctance among oil producers to increase output.
European governments are under pressure to cut excise taxes on fuel to provide relief. Rising oil and gas prices already pose an inflation conundrum for central banks and impose higher costs for businesses and commuters that could put economic growth at risk. Now fuel prices risk triggering strikes and roadblocks that could wreak havoc in Europe’s largely fragmented transport industry.
Hefty sales, environmental and excise taxes on fuel mean prices are already far higher in Europe than they are in the U.S. A gallon of unleaded gasoline costs around $9.00 a gallon in most of Europe, more than double the nearly $4.00 currently paid by U.S. drivers.
Governments have so far been reluctant to cut these taxes, seeking instead to shift the blame on oil producers.
Germany’s lobby group for car drivers, the ADAC, wants to see cuts in the “eco tax,” used to help finance the state pension program. “The threshold of pain has been reached for car drivers,” said Otto Saalmann, a spokesman for ADAC.
But some analysts say lower fuel taxes would only magnify demand.
“A one-off cut in excise taxes could even worsen the situation in the all-too-likely case of oil prices rising further,” said Enrico D’Elia, a senior economist at Italian think-tank ISAE. Excise taxes are levied on volume, not price, and so actually dampen price volatility, he noted.
Italy’s new industry minister, Claudio Scajola, called the price Italians pay for fuel “intolerable.” He met with oil-industry leaders last Friday and warned he might take “structural measures” if the companies didn’t bring their prices more in line with the rest of Europe.
People who don’t own cars are also hit by rising fuel prices as businesses try to pass the higher costs they incur on to their consumers.
“We’re already talking about raising prices, because at current fuel price levels we can’t operate,” Roman Smidbersky, head of sales at the Czech Republic’s largest trucking and logistics operator, CS Cargo AS, told a local newspaper Wednesday. He estimated that logistics companies will have to lift their rates by as much as 10% just to keep their trucks on the road.
In Bulgaria, around 1,000 truckers besieged roads leading into Sofia earlier this week to protest the rise in diesel prices. They are particularly incensed that the price of diesel is now above that of regular gasoline, and note excise taxes on diesel have been hiked fourfold in only a few years. Those tax hikes were largely designed to comply with European Union rules and eliminate previous subsidy schemes.
Up to a thousand British truckers coordinated by protest group TransAction 2007 plan to drive their rigs into London next Tuesday, snarling traffic as they deliver demands for relief on fuel taxes to Prime Minister Gordon Brown’s Downing Street residence. The action marks an escalation from a protest last month, when 65 trucks blocked traffic in some of London busiest thoroughfares.
U.K. haulers claim rising oil prices now mean that fuel represents over 40% of their total operating costs, up from 30% just six months ago. “The haulage industry is on its knees, it’s unable to recover all these price increases,” said Mike Presneill, a haulage contractor from Kent, England, who will take part in the protest.
Write to Andrea Thomas at andrea.thomas@dowjones.com
http://online.wsj.com/article/SB121140824369312241.html?mod=hps_us_whats_news
ISSUERS OF NEWS RELEASES AND NOT OILANDGASPRESS.COM ARE SOLELY RESPONSIBLE FOR THE ACCURACY OF THE CONTENT
>>The UAE’s temporary power sector is expected to grow by 25 per cent year-on-year with major demand coming from Dubai, according to experts in the industry.
With the growing population and mega scale industrial and real estate developments, demand for power is estimated to rise considerably. “Currently, the Gulf has more than 2,000 major projects in sectors such as oil and gas, infrastructure, power and water and petrochemicals, valued at an estimated US$1 trillion (Dh3.6trn) and we expect temporary power sector to grow by 25 per cent until 2015,” Colin Cave, General Manager - Northern Gulf of Rental Solutions and Services, told Emirates Business.
“The UAE alone has 743 major construction projects. Each project has several buildings, facilities and utilities. Let us presume that each major project requires 400 amps of power. Even if we consider this on the very conservative side we will need 297,200 amps of power – approximately 240MVA,” said Cave. “It is difficult to answer the exact size of the temporary power sector in the region as there are no official independent figures to verify this against. However, our estimate of the total rental market in Middle East would be in the order of US$300 million to US$400m of which we have an estimated 50 per cent to 60 per cent share. Globally, we estimate the energy rental market to be valued at up to US$3 billion,” Julian Ford, business development director of Aggreko International, said.
Aggreko has provided power to a number of Dubai-based developments, such as Dubai Festival City, during the construction phases and until the national power distribution lines are set up.
“In Dubai, Dewa currently has a generating capacity of around 5,500 MW, with a further 1,800 MW of capacity being added this year alone. As we all know, the power supply in the UAE, and Dubai in particular, is highly reliable. The issue in Dubai is the availability of power connections for new building projects,” he said.
- Emirates Business 24|7
>>Petrochemical capacity to expand in UAE: Already a global force to be reckoned with, the Middle East’s chemical and petrochemical sector is on the brink of a new era of investment and expansion. The GCC already produces 30 of the most common intermediate petrochemical products, representing 7 per cent of worldwide production. This is set to increase to 20 per cent of global output by 2010, with Saudi Arabia accounting for almost half of that increase.
The UAE is investing heavily in its petrochemical industry, and will see capacity increase threefold, opening up new opportunities in the downstream and end-use processing sector.
An estimated US$40 billion in new investments is expected in the GCC chemical and petrochemical sector, including non-oil products such as polymer resins, polystyrene and liquid industrial chemicals, by 2010.
According to Abdul Rehman Falaknaz, President of International Expo Consults (IEC), organisers of CHEM Middle East exhibition, this is just the start of a period of rapid growth for the region’s chemicals sector.
“With petrochemical facilities in Europe and the US facing cutbacks due to increasingly high prices and shortage of feedstock, the Gulf countries have emerged as the world’s first choice for new facilities and best choice for investment in this industry”, Falaknaz says.
The decision of where to locate a new complex is an important one for petrochemical companies. The major staging ground in recent years has been the Middle East, and there seems to be valid reason for international companies to locate facilities in this area.
“The continuing expansion and growth in the Middle East has resulted in a need for more sophisticated logistics and supply chain processes to distribute more than 40 million tons of petrochemicals and plastics to over 70 countries on a plant-to-customer basis,” Falaknaz explains.
“For the next 10 years at least the Middle East will continue to have an edge over others. Beyond that, new technologies may change the way we produce polymers and petrochemicals. Economics will ultimately decide the future,” he adds.
CHEM Middle East exhibition takes place May 18-20 at Dubai World Trade Centre. The international trade event for the chemical, petrochemical and chemical process industries will feature leading international companies and associations from over 20 markets, including China, Korea and Germany.
- The Gulf Today
UPI Energy Correspondent, EU eyes Gazprom’s Nigeria play
BERLIN, April 11 (UPI) — Russia’s Gazprom is making sure it keeps its dominance of the European gas market, observers say, by trying to influence a potential alternative supplier to Europe — Nigeria.
Europe’s dependence on Russian gas has worried officials in Brussels ever since Russia in 2006 temporarily shut off Ukrainian gas supplies until the country agreed to pay higher prices. What followed were a string of strategies to diversify Europe’s energy imports, including a pipeline bypassing Russia and greater use of liquefied natural gas.
Western officials say they hope West Africa, though it has less reserves than the Middle East, may turn into a viable alternative supplier to Europe; already, the area is one of the fastest growing producers of LNG.
In West Africa, Nigeria is the uncut diamond: Boasting on- and offshore oil reserves of 35 billion barrels (twice as much as Mexico’s) and 176 trillion cubic feet of natural gas (as much as the United States’), it’s no surprise Nigeria’s energy sector has been courted by U.S. and European officials.
There are problems, however. Violence in the oil-rich Niger Delta and widespread government corruption have cut production, according to some estimates, by as much as a third. Becoming a viable source of supply to Europe will require the reduction of violence to an acceptable level. Still, with most of the world’s easy energy gone, Nigeria could be an attractive prospect — a fact not lost on the Europeans.
Yet since last year, another player has entered the race: Gazprom is in talks with the Nigerian government about investing in the West African country’s gas industry.
“We made a decision to go global in terms of acquiring assets and developing strategy outside Russia. Africa is one of our priorities,” a Gazprom spokesman said.
It’s also one of Europe’s top priorities: A 2,700-mile pipeline linking the Niger Delta to existing gas transmission hubs to the EU in Algeria has already been proposed, a development that hasn’t been exactly met with excitement in the Kremlin. While no specific Russia-Nigerian project has been mentioned yet, observers in Europe are worried that Gazprom’s planned investments are of geopolitical, rather than economic interest: Gaining influence in Nigeria means keeping the ball in Russia’s court when it comes to Europe’s exports, observers say.
“A deal between Gazprom and Nigeria will increase Europe’s dependence on Russian gas,” Rob de Wijk, of the The Hague Center for Strategic Studies, a Dutch policy research institute, told the new energy magazine European Energy Review. “Russia has a deliberate policy aimed at controlling the whole gas market that is meant for Europe.”
Yet while some observers fear Russia aims to block an alternative import route, others argue that by exploring gas fields in Nigeria, more gas will eventually get on the market, benefiting consumers in Europe in the long run. And Gazprom’s decision, of course, makes absolute sense in business terms.
Others say European companies and governments simply need to do more to strike new contracts in Africa, where not only Russia, but also China has been very active — and successful — recently, scoring most of the important business deals connected to sub-Saharan oil resources.
Rather than speaking with one voice when it comes to investing in the continent’s energy sector, European governments still act as a bunch of lone warriors in Africa. A disunited and thus “weak” Europe will not beat Gazprom to the table, however. And that may have far-reaching consequences.
“Europe wants to diversify its energy supplies away from the Middle East. When the Russians gain clout in Nigeria and elsewhere in the region as well, Europe risks exchanging OPEC for Gazprom,” Cyril Widdershoven, energy expert at the Institute for the Analysis of Global Security, told the European Energy Review. “Which in my view is bad news. I fear an Arab camel less than I fear the Russian bear.”
By STEFAN NICOLA
UPI Energy Correspondent
BERLIN
© 2008 United Press International. All Rights Reserved.
>> Nymex crude for May delivery fell 44 cents a barrel to $109.70 in Globex electronic trading by 2213 GMT after having gained three cents on Friday. Prices hit a record high $112.21 a barrel on Wednesday after US government data showed a big drop in US crude and fuel stocks, Reuters reported
March’08 >>Saudi Arabia is keeping its word that it would boost production and ease global oil prices, U.S. Vice President Dick Cheney said in Jerusalem.
Cheney said the Saudis promised three years ago to raise production, investing $90 billion in the process and increasing production capacity from 10.5 million barrels a day in 2005 to 11.8 million barrels today, reaching 12.5 million barrels by 2009, The Wall Street Journal reported Monday.
Cheney spoke about oil production and other topics in a meeting with reporters in Israel before he departed for Turkey during his visit to the Middle East. When summarizing his talks with Israeli leaders, Cheney said Iran and Syria are “doing everything they can to torpedo the peace process” by supplying and supporting Hamas and Hezbollah.
Emerging as an area of concern is arms smuggling into the Gaza Strip, rocket attacks from Hamas-controlled Gaza into Israel and stymieing the Israeli-Palestinian peace negotiations, he said.
Cheney called the mounting U.S. military death toll in the Middle East a “tragedy” but today’s world is violent and “we do live in that kind of world.”
Copyright 2008 by United Press International
>>Chinese demand for West African crude for April rose 45 percent to a record high, pushing overall Asian demand higher despite the expensive cost of crude oil at around $100, trading sources said. China, the world’s second-largest oil consumer, bought 38 cargoes, mostly Nigerian and Angolan crude oil, for April, amounting to about 1.2 million bpd, the sources said. This is a 45 percent increase from March. The previous high was November 2007, when China bought 30 cargoes, or about 919,000 bpd. “Asian demand is strong. We do not see a sign of weakening,” a crude oil trader in Singapore said. Some industry officials said a new Sinopec Corp.’s refinery might be behind the strong demand. The 200,000 bpd refinery in Qingdao is set to start test operation in April and is likely to run on West African grades, mostly light-sweet, before moving on to heavier, sour crude.
Earlier in March, Nobuo Tanaka, the International Energy Agency’s head told Reuters that global oil demand was holding up despite the recent high oil prices at around $100 due to robust demand from emerging markets, such as India and China. India also increased its April purchases of West African crude. It has bought 11 cargoes, or 348,000 bpd, compared with 7 cargoes for March. Overall Asian demand for West African crude totalled about 1.62 million bpd for April, which was a 28 percent increase from the previous month, the highest volume since March 2006. The rise in Chinese and Indian purchase volumes were greater than that of slowdown in demand from the Far East. South Korea and Japan did not buy any cargoes, traders said. The increase in exports to Asia also came as Royal Dutch Shell lifted a force majeure on Nigerian Forcados and Bonny Light shipments. Despite expectations they would be depressed because of larger supplies, spot Nigerian crude oil barrels traded at record high premiums for April due to strong demand. The following table gives the latest breakdown of April, March and February-loading West African crude cargoes sold into Asia, according to trade sources. www.upstreamonline.com
>>>> 25/3/08, US light crude for May delivery stood 79 cents lower at $100.07 a barrel by 0955 GMT, up from an earlier low of $99.66, but sharply down from a record high $111.80 a barrel touched on 17 March.
London Brent crude was down 37 cents to $99.49 a barrel, recovering from an earlier $98.70 low. http://www.upstreamonline.com/live/article151090.ece
Crude oil futures prices for delivery until 2016 have surged above $100 a barrel as investors bet that oil costs will remain high in the long term even if they weaken in the short because the impact of the US economic slowdown.
Every futures contract until December 2016 finished last week above $100 a barrel for the first time after a strong rally in long-dated futures prices. The Nymex December 2016 future settled on Friday at $103.59 a barrel according to the FT.
http://www.ft.com/cms/s/0/d821c5aa-f387-11dc-b6bc-0000779fd2ac,dwp_uuid=f2b40164-cfea-11dc-9309-0000779fd2ac.html
January’08
Angola is the third largest oil producer in Africa behind Nigeria and Libya and is expected to have significant oil production increases in the short-term as new offshore projects come online. On January 1, 2007, Angola became the 12th member of the Organization of Petroleum Exporting Countries (OPEC) and in December of that year, received an oil production quota of 1.9 million barrels per day (bbl/d) effective January 1, 2008. /www.eia.doe.gov
>>>> Posted by Royal Dutch Shell Plc.com at December 23rd, 2007
23 December 2007
LAGOS (AFP) — Despite being the world’s eighth petroleum exporter and sitting on huge gas reserves, Nigeria will not have it easy over the next two years, between peristent unrest in the Niger Delta and strained relations with the major oil companies.
“In view of the current problems, their goal of 4.0 million barrels per day in 2010 seems inaccessible in the current situation,” said the head of one multinational company operating in the delta, the oil region where violence and insecurity are endemic.
This absence of security means that Nigeria, which ranks fifth among suppliers of crude oil to the United States, lost one quarter of its production in 2006 and 2007. Production is currently estimated at 2.1 million barrels per day.
Oil from the Niger Delta continues to bring in 90 per cent of Nigeria’s foreign currency earnings and, thanks to the recent rise in crude prices, the country’s foreign reserves are close on 50 billion dollars (73 billion euros).
Nevertheless the government is pleading poverty and is trying to reduce its share in investments in the sector, asking oil majors to look for alternative forms of financing.
“Nigeria is supposed to fund part of the onshore activity but hasn’t actually put any money in for three years now,” one foreign oil executive said.
Oil Minister Odein Ajumogobia said recently that of the 15 billion dollars of projected total investments in the sector in 2008, the government was supposed to shoulder 8.8 billion but that it had in fact allocated only araound 5.0 billion.
The government has asked the oil companies to find the missing 3.8 billion.
Shell, Chevron, Exxon Mobil, Total and ENI/Agip point out that Nigeria’s 2008 budget was based on an oil price of 53 dollars per barrel, when it is currently close to 100 dollars and looks set to continue its rise.
The majors are also worried about the Nigerian government’s intention to renegotiate the oil revenue sharing agreement.
“Given the massive investments entailed, notably in the deep offshore, our margins are already very narrow,” the chairman of one oil group said.
Another complained that when oil was at 80 dollars a barrel, his company was making a profit of 3.0 dollars, with the remainder all going to the Nigerian government.
“We were all in difficulty in 2007,” said an executive at Shell, Nigeria’s biggest producer.
This past year Shell Nigeria (SPDC) spent one billion dollars on pipeline maintenance alone. The company had initially been looking at a total budget of 6.6 billion dollars but pruned it drastically, first to 4.5 billion, then to 2.7 billion.
In November the company announced one thousand job cuts.
“We’re operating in an extremely difficult environment where production levels have been hard hit by the unrest,” Director General Basil Omiyi said.
In 2003 SPDC was producing one million barrels per day. By 2007 that had fallen to 460,000.
Another European operator noted that numerous projects have been postponed or put on hold because of the restructuring at Nigerian National Petroleum Corporation (NNPC), the partner with whom foreign companies are obliged to set up joint ventures if they want to operate in Nigeria.
To complicate matters further Nigeria is now telling the oil companies to stop gas flaring in early 2008, on pain of sanctions.
“They want everything tomorrow but in this industry we count in decades,” said one oil executive.
For Shell, oil-producing zones are one of three colours, depending on the level of risk: red, yellow or green.
Most of the Middle East is “red.” Nigeria, despite all the difficulties, is still “green”. But for how long?
Hosted by Copyright © 2007 AFP. All rights reserved
http://afp.google.com/article/ALeqM5gMf2I0-zqSEdPRIkPhawGcNn5sgw
>>>> Shell finance chief sees continuing high oil prices
Energy prices will remain high next year, driven by demand from developing countries, but energy companies face massive cost pressures, Royal Dutch Shell chief financial officer Peter Voser was quoted as saying. Voser told Swiss newspaper Finanz und Wirtschaft he did not expect a global recession next year, but growth would slow down, and the credit crisis would weigh on the economy in the United States and Europe, although less so in Asia. “Energy prices will remain high … Our concern is the development of costs. Financial spending for modernising our production plans is rising rapidly and cost inflation reduces profits,” he said. Voser said costs rose at Shell by 10 percent this year against an industry average of 20 percent.
Oil rose 2.4 percent on Monday after a report showing a jump in U.S. personal spending relieved some concerns about the economic health of the world’s top oil consumer. U.S. crude traded up $2.19 to $93.25 a barrel by 1850 GMT. London Brent crude gained $1.53 to $92.41. Shell expects to get a green light to drill for oil in Alaska next year, despite resistance from environmentalists, he said. “We are very interested in the Alaska project because we expect to find large reserves there and the United States is the biggest market,” he said. Voser said Shell’s liquefied natural gas and crude project in Sakhalin, in Russia’s far east, would start to contribute to the company’s production growth in 2009. The project was originally led by Shell but last year Shell agreed to sell control to Russia’s Gazprom after Russia’s environmental watchdog agency threatened to strip it of production licences for breaking ecological rules. In September, the project, Sakhalin Energy, said it would delay year-round exports of crude to 2008 from the end of 2007. It said on Monday it would complete its LNG plant in late 2008, effectively delaying supplies to Asia by at least few months. Industry sources said the delay, arising from slow construction work could be extended to spring 2009.
>>> According to current estimates, more than three-quarters of the world’s oil reserves are located in OPEC countries. The bulk of OPEC oil reserves is located in the Middle East, with Saudi Arabia, Iran and Iraq contributing 56% to the OPEC total. OPEC countries have made significant contributions to their reserves in recent years by adopting best practices in the industry. As a result, OPEC proven reserves currently stand well above 900 billion barrels. www.opec.org
>>> According to Ernst & Young’s Global Oil & Gas Center, demand is expected to drive industry transformation for 2008 in the following ways:
… Increased activity on the part of National Oil Companies;
… Unprecedented competition for reserves;
… Increased emphasis on enterprise-wide risk management;
… High-volume and high-priced transaction activity; and
… Expanded use of International Financial Reporting Standards.
Ernst & Young’s Global Oil & Gas Center works with companies throughout
the world, helping them succeed in the ever-evolving oil and gas business.
Drawing from industry experience gained from working with our oil and gas
clients, the center’s practitioners offer the following assessment of the oil and gas industry in the year ahead.
Upstream E&P
The cost of exploration and production (E&P) continues to rise sharply.
Heightened resource nationalism and geopolitical issues are increasing costs and decreasing access to reserves for International Oil Companies.
Investment opportunities are becoming less lucrative, and returns are decreasing. On a positive note, access restrictions may be lifted in the Gulf of Mexico, creating new opportunities for upstream activity. Ernst & Young anticipates that companies will take a slower, more cautious approach
to upstream spending in 2008.
Midstream
New midstream opportunities are emerging in support of the Canadian oil
sands, Rocky Mountain natural gas, Barnett Shale, and liquefied natural gas
(LNG). New technologies, like carbon sequestration, may prompt major changes in the way midstream companies conduct business in the coming year.
Downstream
This segment of the industry continues to walk a tight rope, balancing capacity and margins. Global refining capacity continues to be tight, and margins are expected to remain volatile. Ernst & Young expects that margin averages may fall from recent highs, but remain above longer-term historical levels until new capacity is added. Upgrades later this decade should alleviate the strain.
Enterprise Risk Management
Despite healthy revenues in recent years, energy companies face a growing number of business risks ranging from uncertain energy and environmental policies, to talent shortages, and supply interruptions. In years past, these risks were often managed independently, but there is a growing recognition of the value to capturing and weighing all risks across the enterprise and understanding the relationships they may have to each other and the combined impact on the business.
Transactions
Investors seeking attractive growth and high margin acquisition opportunities will look to the oil and gas industry’s significant, sustained, and growing cash flows. Just as outside investors are investing in oil and gas, large oil and gas companies flush with cash will look for opportunities to enhance technology capabilities and reserve bases through acquisition. Smaller E&P companies will be of particular interest to this investor.
In the United States, Master Limited Partnerships (MLPs) have emerged as the dominant deal structure in oil and gas and will gain more ground in the coming year, according to a recent Ernst & Young survey. The MLP structure, however, is creating companies with unbalanced portfolios as specific areas or divisions of a company are bought up and developed as stand-alone entities. Private Equity continues to have a keen interest in energy, with a particular focus in refining.
International Financial Reporting Standards (IFRS)
European Union countries have all adopted IFRS, almost 100 other countries require or allow the use of IFRS, and other countries - including the United States - are moving to do the same. If implemented by the US Securities and Exchange Commission, IFRS could transform global financial operations. IFRS standards, which could go into effect as early as the first half of 2008, would streamline financial operations by creating one set of international accounting rules. IFRS could be a watershed event for global oil and gas companies.
Looking Ahead
Ernst & Young is constantly evaluating and assessing oil and gas industry trends in order to better determine the impact for their clients.
The oil and gas industry is subject to many unpredictable factors. While forecasts can be useful for planning and strategy, hindsight is the only true measure of industry performance.
About the Global Oil & Gas Center
The Ernst & Young Global Oil & Gas Center brings together the people and ideas that help you successfully address the complexities of today’s global oil and gas business. We bring together a global network of energy professionals that can work closely with you to develop coordinated approaches to managing risk, optimizing performance, and increasing your operational effectiveness, while bringing you insights into the major trends that impact your business - both now and in the future.
About Ernst & Young
Ernst & Young is a global leader in assurance, tax, transaction and advisory services. Worldwide, our 130,000 people are united by our shared values and an unwavering commitment to quality. For more information, please visit http://www.ey.com.
Ernst & Young refers to the global organization of member firms of
Ernst & Young Global Limited, each of which is a separate legal entity.
Ernst & Young Global Limited, a UK company limited by guarantee, does not
provide services to clients.
This news release has been issued by EYGM Limited, a member of the
global Ernst & Young organization that also does not provide any services
to clients.
SOURCE Ernst & Young
Major Developments
In this section, you will find information on Major Developments in the Oil and Gas Industry Worldwide.
>>The North Sea is set for a second oil boom as record prices open up reserves previously regarded as too expensive to exploit.
Aberdeen is set to be the new Dallas as the second North Sea oil boom gets underway, Oil & Gas UK (O&GUK), which represents North Sea operators, estimates that there are still about 25bn barrels of crude under the seabed, paving the way for producers to earn billions of pounds in profit.
In the 35 years since crude was first recovered from the North Sea, about 37bn barrels of oil and gas have come ashore, giving the UK self-sufficiency in energy and making the industry the biggest single contributor to tax revenues.
Matthew Farrow, head of energy and environment at the CBI, said: “Our members keep saying that there is still plenty of stuff out there. The tricky thing is that they’ve got all the easy stuff. But how do they get to the hard stuff?”
To make the exploration and production economical, the industry needs a high oil price. And it has certainly got that. At $130 a barrel a number of projects became worthwhile, sparking a surge in activity.
O&GUK’s Sally Fraser: said “You can’t get a hotel room in Aberdeen these days. You have to book far in advance.”
But it could take a further rise in the oil price to make some of the more complicated projects profitable.
Ms Fraser said: “There is already a lot of technology around to get into difficult places, but it is used onshore. The problem is trying to utilise this technology in the North Sea, where the technical challenge is far more difficult.”
The organisation estimates that about £30bn of investment in the North Sea is needed over the next 10 years to satisfy the oil and gas industry’s existing plans for exploration and production.
Along with rises in the oil price, the cost of support services is soaring. The major oil companies have suffered a surge in equipment and labour costs.
For a North Sea operator, the cost of hiring a semi-submersible rig in 2005 was $13,000 a day. The costs this year are averaging $435,000 a day.
Analysts say that if the Government wants to encourage the North Sea operators to exploit the remaining reserves, it must do more to cushion these rising costs. And that means changing the tax regime.
The Treasury takes about 75p in the £1 off the oil companies operating on most fields. Petroleum Revenue Tax is 50 per cent, leaving firms with 50p. On this they are charging 30 per cent in corporation tax and a 20 per cent supplementary charge. The Government has already altered the tax structure to encourage investment in new fields. But it will not be enough to make it worthwhile to exploit a lot of the remaining oil.
Fraser said that a lot of the current oil wells are abandoned once about 50 per cent-60 per cent of the crude has been pumped. “A bit more technology and a bit more incentive, and these wells might still have life.”
Professor Peter Odell, of Erasmus University in the Netherlands, believes that there could be 300 fields that remain undeveloped in the North Sea.
His most optimistic assessment is that these will contain 30bn barrels, a higher estimate than O&GUK. “There are still parts of UK continental shelf that have never been examined at all in any great depth,” said the professor.
But for analysts, dealing in the day to day realities of the oil price, speculation about what “could be” are irrelevant. News that there could more oil left in the North Sea than first thought will have no impact on the market.
Damian Cox, senior energy analyst said: “The oil is out there, but is it really likely they can pump it at a profit? I’ll believe it when I see it.”
http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/06/08/cnboom108.xml
>> China’s April crude oil imports fell by 3.9% from a year ago to 3.47 million barrels per day, and were also down from the record of 4.07 million bpd in March, official Chinese data showed.
The market has kept a close watch on oil demand in China and India, whose economic booms have helped send prices up six-fold since 2002.
US light crude for June delivery lost 83 cents at $123.40 a barrel by 0701 GMT, after earlier falling to as low as $123.10. It had settled down a hefty $1.73 yesterday after striking a new intraday record high of $126.40.
London Brent crude fell 73 cents to $122.18.
World demand for biofuels will expand at a nearly 20 percent annual pace to 92 million metric tons in 2011, despite recent concerns about the impact of biofuels on the environment and food supplies, according to Freedonia Research.
http://seekingalpha.com/article/76991-world-market-for-biofuels-expected-to-double?source=d_email
>> EIA estimates that members of the Organization of the Petroleum Exporting Countries (OPEC) earned $674 billion in net oil export revenues in 2007, a 10 percent increase from 2006. Saudi Arabia earned the largest share of these earnings, $194 billion, representing 29 percent of total OPEC revenues. On a per-capita basis, OPEC net oil export earning reached $1,143, a 8 percent increase from 2006. Based on projections from the EIA May 2008 Short Term Energy Outlook (STEO), OPEC net oil export revenues could be $1,060 billion in 2008 and $990 billion in 2009.
OPEC Net Oil Export Revenues
Country Nominal ($B) Real (2000$B)
2007 2008 2009 2007 2008 2009
Algeria $50 NA NA $50 NA NA
Angola $44 NA NA $44 NA NA
Ecuador $8 NA NA $8 NA NA
Indonesia -$4 NA NA -$4 NA NA
Iran $57 NA NA $57 NA NA
Iraq $38 NA NA $38 NA NA
Kuwait $55 NA NA $55 NA NA
Libya $41 NA NA $41 NA NA
Nigeria $56 NA NA $56 NA NA
Qatar $26 NA NA $26 NA NA
Saudi Arabia $194 NA NA $194 NA NA
UAE $63 NA NA $63 NA NA
Venezuela $48 NA NA $48 NA NA
OPEC $674 $1,060 $990 $558 $861 $788
http://www.eia.doe.gov/emeu/cabs/OPEC_Revenues/Factsheet.html
>>LAGOS (Reuters) - Royal Dutch Shell shut down more of its production in Nigeria after a fresh militant attack on Saturday on a flowstation in the restive Niger Delta, where local militants have stepped up a campaign of violence.
The bombing of the Shell facilities in Nigeria’s southern Bayelsa state, the fifth militant attack in just over a month, came a day after a federal court ruled that one of the leaders of the rebel Movement for the Emancipation of the Niger Delta (MEND), Henry Okah, should be tried in secret.
The ruling prompted a threat of reprisals from MEND, which has already knocked 164,000 barrels a day off Shell’s production in Nigeria with a pipeline bombing last month.
“A few oil delivery lines are affected and some oil has spilled into the environment,” a Shell spokesman said. “We are mobilizing containment booms to stop the spread of oil and have also shut in some production volumes.”
Security sources said that three wells had been blown up in the attack, as well as other equipment.
The MEND attacks and an eight-day strike by Exxon Mobil workers which ended on Thursday had temporarily halved oil production from Nigeria — the world’s eighth largest exporter — helping to push prices to record highs on Monday around $120 a barrel.
Exxon Mobil is returning production to normal levels of around 800,000 bpd, but has not yet announced the end of a force majeure declared on Monday.
For full Reuters Africa coverage and to have your say on the top issues, visit: africa.reuters.com
Rebels in Nigeria’s oil-rich Niger Delta blew up three oil wells operated by Royal Dutch Shell on Saturday, their fifth attack in recent weeks against the petroleum industry, security sources said
LAGOS (AFP) — Niger Delta militants on Saturday attacked facilities belonging to Anglo-Dutch oil group Shell in southern Bayelsa state leading to a cut in output, company and security sources said.
The anonymous security source said the attack by a previously unknown armed gang led by a “Commander Douglas” affected Shell oil wells and the Diebu creek flowstation at Peremabiri in southern Ijaw area of Bayelsa.
The security source said the oil wells and the inlet manifold and delivery lines of the flowstation were blown up during the attack.
Shell confirmed the attack, the latest to hit Nigeria’s largest oil operator in recent weeks. It however said the incident happened Friday night.
“A few oil delivery lines are affected and some oil has spilled into the environment,” Shell spokesman Precious Okolobo told AFP, adding that the company was mobilising its workers to control the spillage.
Shell, which accounts for around half of Nigeria’s 2.1 million barrels per day output, has been forced to cut production because of an upsurge in militant attacks on its facilities.
Niger delta militant groups, the most prominent among which is the Movement for the Emancipation of the Niger Delta (MEND) has sabotaged several supply pipelines owned by Shell and other oil operators in the restive region.
MEND has also promised more attacks on oil targets in the restive region.
The group emerged in early 2006 as the leading group calling for a greater share of Nigeria’s oil revenue for the producer region. As well as attacks on facilities it has been responsible for the seizure of local and expatriate workers as hostages.
Overall, violence in the Niger Delta has reduced Nigeria’s total production by a quarter in the past two years.
http://afp.google.com/article/ALeqM5iKEiq3QMNgyDd9DTJhPyrDX04h5g
>> Wednesday, April 30, 2008 Iran Dumps U.S. Dollars in Oil Transactions
Iran had totally removed U.S. dollars in the country’s oil transactions, an Oil Ministry official said on Wednesday.
“The dollar has completely been removed from our oil trade…. Crude oil customers have agreed with us to use other currencies (in the trade),” Oil Ministry official Hojjatollah Ghanimifard was quoted as saying by the state television.
“We make our transactions with euros in Europe, but yen in Asia, ” he added.
Due to the tensions with Washington in the past years over the nuclear disputes and the latest depreciation of dollars, Iran has vowed to decrease the greenback in its foreign trade. Iran central bank also has reduced dollars in the country’s foreign reserves.
In last November’s summit of the Organization of Petroleum Exporting Countries (OPEC) in Saudi Arabia, Iran proposed that it was necessary to replace the U.S. dollar with other major hard currencies in oil trading.
But some Arab allies of the United States showed few support to Tehran’s advice.
However, Iran’s Oil Minister Gholam Hossein Nozari has already declared in last December that Tehran had completely stopped selling its oil in dollars, according a report by the semi- official ISNA news agency at that time.
“In line with the policy of selling crude oil in nondollar currencies, currently selling our country’s oil in U.S. dollars has been completely stopped,” Nozari was then quoted as saying.
Right now it’s not clear why there seems to be a contradiction between comments by the two officials over the exact time to stop dollars in Iran’s oil trade.
Copyright 2008 XINHUA NEWS AGENCY.
>> 30/04/2008 UAE to sign US$10bn gas deal
A long delayed contract to develop big new natural gas reserves will be signed within a week, according to a senior official from the Abu Dhabi National Oil Company (Adnoc). The US$10bn (Dh37bn) Shah gas project, which is key to providing new fuel needed for power plants to meet soaring domestic electricity demand, has been in limbo for eight months.
“There are no delays, no problems,” said Omair Suwaina, a senior Adnoc official, who was speaking yesterday while attending an industry conference in Abu Dhabi. “We expect to sign within a week,” he told the Reuters news agency. Suwaina declined to confirm the identity of the contract winner, widely expected to be ConocoPhillips, the US energy company. Once under way, the project will produce up to one billion cubic feet a day of gas at the Shah field near Abu Dhabi’s southern border with Saudi Arabia. This will be the first of a series of similar projects that the Government wants to undertake.
The Shah project is scheduled to start in 2012. It was first tendered in April 2007 as part of a larger project, but no winning bidder was selected. Adnoc invited four foreign companies including ConocoPhillips to bid again on the Shah development in July of that year. It has since been evaluating the bids.
Deborah Algosaibi, a ConocoPhillips external affairs co-ordinator said Adnoc’s long delay in formally announcing the development could be related to smoothing out contract details. “Perhaps they are dotting an ‘i’,” she said.
Craig McMahon, an analyst with Wood Mackenzie, a British research and consulting company, suggested the delay could be related to the size and complexity of the project, which could involve the parties crafting a detailed commercial agreement. “The devil is always in the details,” he said.
The Shah project is the largest Abu Dhabi upstream development in the past year open to bids by international companies. The gas involved is known as “sour gas” because it contains high levels of acidic and toxic hydrogen sulphide, which makes the project costly and dangerous. Cost projections by analysts have doubled within a year in line with global inflation in the industry. Last April, when Adnoc was proposing the simultaneous development of Shah and Bab, another sour gas field, they pegged the cost for both developments at US$10bn.
Suwaina, who declined to disclose Adnoc’s cost projection for Shah, told the conference that rising costs for energy development worldwide had pushed up the investment required for sour gas projects. He said the UAE would go ahead with plans to develop several sour gas fields to supply its power needs. “There will be more developments. It is necessary and we have to do it,” he said.
However, sensitivities surround the proposed Bab field and are more pronounced than that of Shah because the toxic gas deposit is close to residential settlements. Bab, and the offshore Hail sour gas field, are next in line for development.
While costs for Abu Dhabi’s technically challenging sour gas projects could be four or five times higher than the emirate has traditionally paid for gas, the rising price of sulphur could sweeten the deal. Hydrogen sulphide stripped out of the gas stream can either be pumped back into the ground for storage or, with favourable economics, processed to yield sulphur. This month, the price of sulphur exported from Abu Dhabi surpassed US$600 a tonne, a stunning increase from about US$20 a tonne just a few years ago. Suwaina said estimates for sulphur contracts were based on spot prices of US$700 to $800 a tonne.
The UAE holds the world’s fifth-largest gas reserves at nearly 214 trillion cubic feet, much of it “ultra-sour” with a hydrogen sulphide content of 30 per cent or higher. Although deposits with a similar composition have been developed in other countries, safety concerns, technical challenges and rising costs have held back exploitation here.
Source: – The National
April 29th > > In the UK record petrol prices have driven record profits for BP and Shell…
BP and Shell made an eye-watering combined profit of £7.2bn in the first three months of the year, as the surging cost of oil drove petrol prices to almost £5 per gallon Shell’s profits were up 12% to a record £3.9bn, while BP’s profits were up 48% to £3.3bn – both well above market expectations. They’re now planning to ramp up their dividends to shareholders (by 11% and 31% respectively).
It’s certainly been a good time to be in the oil business. The price of oil broke through the $100-a-barrel mark in January and has kept on climbing – it nearly hit $120 yesterday due to supply concerns following the Grangemouth strike and unrest in Nigeria (OPEC boss Chakib Khelil now thinks it might eventually top $200). And for beleaguered drivers across the country, that means that every time we get to the pumps, the price seems to have ticked up a little further.
All of which is handy if your name’s Tony Hayward. The new BP CEO has been busy overhauling the organisation since taking over from Lord Browne last year, cutting costs and stripping out management layers – so he’ll probably be grateful that margins are shooting up without any input from him (the profitability of BP’s North Sea operations has rocketed by a quarter, for example). Of course he’s been playing down the impact of his reforms today, suggesting that they’re unlikely to bear fruit until the end of this year. But one thing’s for sure: the oil price is making his overhaul a lot easier than it could have been….
It’s fair to say that a four-year-old could probably make money running an oil company at the moment. But there were some encouraging signs from two of our biggest corporate behemoths (albeit we have to share Shell with the Dutch). Hayward is starting to see margins improve at BP’s US refineries, while Shell is seeing an increase in new production – it’s now churning out the equivalent of 3.52m barrels a day, up from 3.51m last year.
Naturally, there’s bound to be outrage about the oil companies posting massive profits when we’re paying record prices. But at least BP and Shell shareholders are raking it in, right?
Source: www.managementtoday.co.uk
April 24, 2008>> New legislation for major oil firms in Nigeria
Nigeria is planning legislation to oblige international oil companies to refine a proportion of their crude in the, a Nigerian state oil official said on Wednesday. “Everybody producing in the country will be mandated to refine a percentage in Nigeria,” said Sola Alabi, Group General Manager for refinery projects at the Nigerian National Petroleum Corp. (NNPC). Alabi said the legislation had been under discussion for two years and was due for approval soon. Nigeria is proposing the move as a way to reduce its dependence on imported fuel.
The country’s four state-owned refineries have frequent production problems and proposals to award investors oil blocks if they build refineries have failed to lead to the construction of new plants. Speaking at a refinery conference in Barcelona, Alabi said there would be no direct requirement for oil majors to take a stake in the new refineries as a condition for upstream activity.
NNPC hopes to build two new refineries, each with a capacity of 200,000-300,000 barrels per day (bpd) to narrow a gap between output and demand for products, which is expected to widen with projected annual economic growth of 5-10 percent a year through 2020. The corporation plans to take a stake of 30-49 percent in each refinery, and hopes oil majors will take 21-30 percent. One of the fiscal incentives to be offered will be pricing crude at international market levels, Alabi said. Alabi said Nigeria can only produce 445,000 bpd of crude equivalent in products while demand is currently 600,000. In Nigeria, the world’s eight-biggest crude oil exporter.
April 23 08>> Downturn in market capitalization at the stock market
Market capitalization on the floor of the Nigerian Stock Exchange (NSE) dropped Tuesday to 11.810 trillion naira from the previous day’s figure of 11.854 trillion naira. Similarly, the All-Share Index dropped from 61,478.46 recorded Monday to 61,249 85 points at the close of transactions Tuesday. In all, investors staked 12.5 billion naira on 634.6 million shares in 18,164 deals. On Monday they placed a total of 7.23 billion naira on 398.1 million shares in 12,730 deals. The banking subsector came first on the activity chart, measured in turnover volume, with 287.1 million shares worth 8.26 billion naira traded in 8,377 deals. PlatinumHabib Bank Plc, Access Bank Plc and Intercontinental Bank Plc shares boosted the activity in the subsector.
Insurance subsector which led the activity chart Monday came second with 189.0 million shares valued at 895.25 million naira traded in 3,581 deals. The shares of Universal Insurance Company Plc, N.E.M. Insurance Co. (NIG) Plc and Goldlink Insurance Plc boosted the activity in the subsector. Food/Beverages and Tobacco subsector followed on the activity chart with a turno ver of 45.7 million shares worth 812.14 million naira in 996 deals. Big Treat Plc, Dangote Sugar Refinery Plc and Dangote Flour Mills Plc were most traded stocks which boosted the activity of the subsector. PlatinumHabib Bank Plc led the gainers’ table with N1.46 to close at N30.68, Bet a Glass Nig Plc followed with a gain of N1.25 closing at N26.25 and LongMan Publ i shing Co. Plc with N1.19 to close at N25.18. On the losers’ side, Mobil Nig Plc lost N9.99 to close at N270.00, Nestle Nig Plc followed with a loss of N7.24 closing at N230.00 and Oando Plc closed at N228.00 losing N2.91 in the process.
April 21 08 >> Abu Dhabi Customs records 37 per cent growth in non-oil external trade
Abu Dhabi Department of Finance (DoF) Customs Administration has recorded an increase in non-oil sector external trade by 37.5 per cent in 2007 compared to 2006. The export, re-export and import volume grew to AED 74. 763 billion in 2007 from Dh54. 366 billion in 2006. “The growth in external trade reflects the developmental dynamic of Abu Dhabi,” said Saeed Al Muhairi, vice director of the Abu Dhabi Customs Administration He added that the accurate figures presented with clarity will be a valuable source of reference for governmental institutions, private establishments, economic research centres and individuals, who are interested in external trade figures of Abu Dhabi. Al Muhairi noted that the initiative to compile the CD featuring all statistics pertaining to external trade is in line with the UAE leadership’s instructions to employ the latest technologies and create a robust economic database, adding that the CD had been prepared through using the latest IT systems and standards, and would greatly assist researchers by offering customised search and documentation. –
Source: Emirates News Agency, WAM
April 08 >> China, India to build Nigeria oil refineries
China and India have agreed to build oil refineries in Nigeria rather than buying crude from it for export, a Nigerian official said on Tuesday 15th April.
“What we have agreed with the Chinese is that we will now have a greenfield refinery located in the Niger delta,” head of Nigeria’s Department of Petroleum Resources, Tony Chukwuemeke, said in the federal capital Abuja according to reports by AFP.
Three prominent Chinese companies operating in Nigeria — CNPC, Sinopec and CNOOC — “have together committed themselves to make available a refinery” in the southern delta region, Chukwuemeke said.
“I cannot tell you its capacity but it’s in the neighbourhood of 450,000 barrels per day,” he said. “We are just beginning a discussion.”
Chukwuemeke said Nigeria has a similar cooperation agreement with India to establish another export-oriented refinery.
Indian oil and gas group ONGC, teamed with steel giant Mittal, “have some oil blocks from Nigeria in the deep offshore and for that they have committed to build a refinery in Nigeria,” Chukwuemeka said.
“Why will the Indians, renowned for having the best refinery in the world, not be happy to replicate the same thing here rather than asking us to give them crude oil to take to India to refine there?” Chukwuemeka said.
Nigeria currently has four refineries which recently resumed operations after a year of closure, but are still inadequate to meet the demands of the domestic market.
The Nigerian government licensed 18 new investors two years ago to build more refineries but virtually all of them have been reluctant to commit their resources to the projects for fear of running at a loss.
Nigeria, with a population of about 140 million, ranks as Africa’s largest oil producer but depends on imports for her domestic fuel consumption.
AFP
>>>> 19/3/08 Switzerland Iran deal condemed by Israel
Israel on Wednesday slammed Switzerland for signing a deal with Iran’s state gas firm, branding the move an “unfriendly act” hampering efforts to halt its arch foe’s nuclear programme.
The foreign ministry summoned the new Swiss ambassador, Walter Haffner, on the same day he presented his credentials, to express the Jewish state’s “regret” over the deal, it said in a statement according to AFP
“Switzerland and the international community are aware of the danger from Iran. Israel expects Switzerland to adhere to the international efforts on this issue,” the ministry said.
“While the international community works to make Iran abandon its nuclear programme, Israel believes this is not the right moment for economic deals with Iran.”
Swiss Foreign Minister Micheline Calmy-Rey signed the agreement with her Iranian counterpart Manouchehr Mottaki in Tehran on Monday.
Financial details were not disclosed but the contract between Iran’s state gas firm and Switzerland’s Elektrizitaets-Gesellschaft Laufenburg reportedly envisages Iran supplying 5.5 billion cubic metres (194 trillion cubic feet) of gas annually from 2011.
>>> RUSSIA: A gas cartel similar to the Organisation of Petroleum Exporting Countries (OPEC) could form as soon as June, Russian daily newspaper Kommersant reported.
A meeting of the Gas Exporting Countries Forum will take place in Moscow that month and could pave the way for the organisation to become a cartel, with a charter akin to that of OPEC. Among its members would be Algeria, Bolivia, Brunei, Egypt, Equatorial Guinea, Indonesia, Iran, Libya, Malaysia, Nigeria, Oman, Qatar, Russia, Trinidad and Tobago, the United Arab Emirates and Venezuela, if all current forum members sign up. Norway has been a keen observer of the gas forum in the past, while Turkmenistan has taken part in some meetings of the group, which was first formed in 2001.
At present the forum does nothing more than act as a go between for producers, consumers, governments and others energy sector bodies. If the Iran-spearheaded change goes ahead, then it would grasp control of supply and pricing. Both the European Union and the United States will strongly oppose such a cartel, with the possibility that political repercussions could be threatened.
The exact date of the June meeting has not been set, but members agreed to the month when they met in Cairo earlier this week.
source: www.energycurrent.com
Nigeria Briefs:
Federal government warns on oil contracts
Nigeria has warned energy companies it wants to complete its planned renegotiation of contracts covering offshore oilfields in the next three months, saying record prices mean western groups are having “a ball”. It is the first time Nigeria has come up with a timeframe for renegotiating the complex agreements, which the government signalled it would review late last year in an effort to secure a greater share of profits from offshore production. The urgency will put the oil majors under greater pressure. The Nigerian move reinforces a global trend of oil-exporting countries demanding better terms to reflect surging prices. Oil executives say the government’s decision to follow the example of countries such as Russia, Algeria and Venezuela could deter investment in Nigeria, where militant violence has shut in a fifth of output since 2006.
But Emmanuel Egbogah, special adviser on oil to President Umaru Yar’Adua, said it was only fair that the government wanted to renegotiate contracts signed when prices were a fifth of the record levels of $100 a barrel touched last month. “We don’t intend to sit around, we’re settling to business, and therefore we’re going to deliver on this as quickly as possible,” Mr Egbogah said. “It is really a ball for the oil companies … There’s a lot of room for everyone to share, and the Nigerian government is not the exception.” The review forms part of wide-ranging reforms for the energy sector in Nigeria, Africa’s biggest crude exporter, launched by Mr Yar’Adua after he came to power last May. Nigerian officials say they are hoping to hold preliminary discussions with oil companies in the next few weeks to begin renegotiating deals known as production sharing contracts signed in 1993 and 2000.
The PSCs cover giant offshore fi
