The major Sharara oil field in the southwest of Libya restarted production late Tuesday, but output is not expected to ramp up quickly given how long the field was shut in, an industry source said Wednesday.
Sharara has a capacity of 340,000 b/d, so even a slow increase in output would give Libya’s crisis-hit oil sector a major boost. “But it won’t be a quick ramp-up this one,” the source said, adding: “It was down for a long time.” “It will not be at full capacity for weeks, or even months,” the source said.
Protesters have blockaded the pipeline linking Sharara to the export terminal of Zawiya on Libya’s western Mediterranean coast for much of 2014, causing production at the field to be shut down. Output has resumed before several times, but was quickly shut in again as the unrest across Libya continued to impact on field operations.
The Sharara field is operated by a joint venture between NOC and Spain’s Repsol. First exports of Sharara out of Zawiya may also take some time to organize, the source said.
On Tuesday, NOC said total Libyan crude oil production has risen further to an average of 326,000 b/d as hopes remain high of a recovery in both output and exports following the lifting of force majeure at the major eastern ports of Es Sider and Ras Lanuf.
Output is slowly ramping up from lows of just 150,000 b/d last month, though it remains well below the 1.5 million-1.6 million b/d Libya was producing before the current spate of unrest began in May 2013.
The premium that Western sweet crude benchmark cash Brent commands over the Middle Eastern sour crude benchmark cash Dubai has fallen to its lowest level since mid-December last year following a slump in the price of Brent on easing fears of supply disruptions from Iraq and news that oil exports from Libya will resume, trading sources said Wednesday.
The second-month (September) cash Brent premium over front-month (September) Dubai narrowed 36 cents/barrel day-on-day to $2.53/b. This is the smallest premium Brent has commanded over the Dubai since December 18, 2013 when the premium was $2.37/b.
In addition to falling outright crude prices, which have seen cash Dubai fall from a recent high of $111.16/b on June 23 to $106.10/b Wednesday, there has also been a narrowing of the spread between Brent and Dubai. June 23 also saw the premium of Brent to Dubai stand at $4.35/b. “Fundamentals are poor and the market is long,” a trader said.
The major Sharara oil field in the southwest of Libya restarted production late Tuesday, but output is not expected to ramp up quickly given how long the field was shut in, an industry source said Wednesday.
Sharara has a capacity of 340,000 b/d, so even a slow increase in output would give Libya’s crisis-hit oil sector a major boost. “But it won’t be a quick ramp-up this one,” the source said, adding: “It was down for a long time.” “It will not be at full capacity for weeks, or even months,” the source said.
Protesters have blockaded the pipeline linking Sharara to the export terminal of Zawiya on Libya’s western Mediterranean coast for much of 2014, causing production at the field to be shut down. Output has resumed before several times, but was quickly shut in again as the unrest across Libya continued to impact on field operations.
The Sharara field is operated by a joint venture between NOC and Spain’s Repsol. First exports of Sharara out of Zawiya may also take some time to organize, the source said.
On Tuesday, NOC said total Libyan crude oil production has risen further to an average of 326,000 b/d as hopes remain high of a recovery in both output and exports following the lifting of force majeure at the major eastern ports of Es Sider and Ras Lanuf.
Output is slowly ramping up from lows of just 150,000 b/d last month, though it remains well below the 1.5 million-1.6 million b/d Libya was producing before the current spate of unrest began in May 2013.
Russian commercial ports handled 167.4 million mt of crude and oil products in January-June, up 1.4% year on year, the Association of Russian Commercial Seaports said Wednesday.
Some 96.1 million mt was crude oil, down 7.6%, the association said, adding oil products accounted for 63 million mt, up 16.5%, and LPG for 6.4 million mt, up 13.9%.
At ports in Russia’s Far East, which include the main ESPO crude export terminal of Kozmino, liquid bulk exports during the six-month period rose 8.6% year on year to 32.9 million mt, the association said.
Russia’s Black Sea and Azov Sea ports handled 59.8 million mt of oil and products, up 8.8%. In the Black Sea, total volumes handled by Novorossiisk rose 8.8% and at Tuapse by 38.1%, although both ports saw a drop in crude volumes last year. Crude and products handled through ports in Northwest Russia were up 2.4% at 67.5 million mt.
At the Baltic Sea port of Primorsk, which used to be the main export terminal for crude and diesel, total throughput dropped 13.8% to 28.7 million mt. At the Baltic port of Ust-Luga, where new crude and product terminals were launched in 2012, overall throughput rose 24.5% to 36.3 million mt.
Throughput at the port of Vysotsk, also used for transporting oil products — mostly diesel as well as some fuel oil — rose 8.1%. Caspian Sea ports handled 2.4 million mt of liquid bulk, down 8.6%. At the port of Makhachkala, through which Kazakh crude is delivered via the Baku-Novorossiisk pipeline, there was a 7.7% drop in overall throughput.
In the Arctic, there was a 25.1% drop at the port of Murmansk, which is used for crude oil exports. Overall, the ports handled 4.8 million mt of liquid bulk, or less than half January-June 2013’s throughput. Only the port of Varandey, through which crude from Komi is exported, saw overall throughput rise 11.5% to 2.8 million mt.
By Jim Snyder Jul 10, 2014 3:22 AM GMT+0700
The oil industry’s largest lobbying group began a new effort to ease public fears about hydraulic fracturing after a legal setback in New York state and a voter push in Colorado to ban the drilling practice.
The American Petroleum Institute, a Washington-based group that includes Exxon Mobil Corp. (XOM) and Chevron Corp. (CVX), released guidelines for improving community relations as “fracking” extends to more towns, raising concerns about pollution risks.
The suggestions will help “raise the bar for the industry,” David Miller, director of standards for the group that has guided the industry on well design and preventing spills since 1924, said at a conference call with reporters today. The effort will help oil and gas companies develop “lasting relationships” with communities where drilling occurs, he said.
The document reads like an etiquette guide for producers moving into rural towns to start drilling. Companies are encouraged to distribute educational materials, introduce executives to community leaders, work with local schools to train residents to work at well sites and develop relationships with landowners sitting atop oil and gas reservoirs.
“Maintaining effective stakeholder relationships is a process of continuous proactive engagement, taking the form of informational sessions, one-to-one engagements, community meetings and everything in between,” the document states.
Record Production
Fracking has helped set records for natural gas production and turned the U.S. into the world’s largest oil producer. The technique, which shoots a watery mix of sand and chemicals underground to release gas and oil trapped in shale rock, has raised concerns about pollution of drinking water sources.
Deborah Nardone, who oversees campaigns to fight use of fossil fuels at the Sierra Club, a San Francisco-based environmental group, said she welcomed the industry’s pledge to be more transparent in the communities where they work.
She faulted the energy industry for withholding information about the specific chemicals used in the fracking fluid and fighting local efforts to restrict drilling.
“It’s important that the industry is trying to build better relationships with communities,” Nardone said in a phone interview. “The relationships that they have are not very good.”
API released its guidelines after New York’s highest court on June 30 let cities and towns block hydraulic fracturing within their borders.
The decision was a setback for companies that want access to the Marcellus Shale deposit that extends across the state’s border with Pennsylvania. Governor Andrew Cuomo, a Democrat, is weighing whether to lift a ban on fracking issued in 2008.
In Colorado, environmental groups are pushing for a referendum to ban the practice, which has put some wells closer to schools, parks and other community centers.
The issue has turned up in the Senate campaign between incumbent Mark Udall, a Democrat, and Representative Cory Gardner, a Republican.
To contact the reporter on this story: Jim Snyder in Washington at jsnyder24@bloomberg.net
To contact the editors responsible for this story: Jon Morgan at jmorgan97@bloomberg.net Steve Geimann
By Wael Mahdi Jul 9, 2014 9:10 PM GMT+0700
Libya, the north African country whose crude exports collapsed last year amid protests and political feuding, will seek to revive shipments in a way that avoids oil-market disruption, its governor for OPEC said.
Protesters in the east of the country with Africa’s largest oil reserves reopened two ports at the start of this month, ending a yearlong blockade that helped decimate the nation’s supplies. Brent crude, the global benchmark, slid about 3.3 percent since the rebels said the terminals would restart.
“Our return to the market will be gradual and in coordination with our fellow member countries,” Samir Kamal, the nation’s governor for the Organization of Petroleum Exporting Countries, said by e-mail yesterday. Libya will take the same gradual approach toward sales of oil it has stored at the two terminals, he said.
Crude surged last year when the protesters halted four Libyan ports in an attempt to change how the country’s oil wealth is distributed. Two of those terminals resumed earlier this year, and the rebels said at the start of this month that they halted a blockade of Es Sider and Ras Lanuf, the largest and third-biggest. Neither has so far shipped cargoes.
Libya is producing 325,000 barrels a day of crude as of today, National Oil Corp. spokesman Mohamed Elharari said by phone today from Tripoli. A pipeline from the Sharara oil field resumed, allowing the deposit that can pump 340,000 barrels a day to restart.
Output will rise toward 1 million barrels a day as Es Sider and Ras Lanuf terminals resume exports, according to estimates from Petromatrix GmbH, a Vienna-based consulting firm.
Libya ended force majeure at the ports on July. 6, according to National Oil. Operators have been instructed to evaluate their facilities in order to resume operations, Kamal said.
To contact the reporter on this story: Wael Mahdi in Manama at wmahdi@bloomberg.net
To contact the editors responsible for this story: Alaric Nightingale at anightingal1@bloomberg.net James Herron
(Reuters) - Iraqi Kurdistan threatened on Wednesday to take legal action against buyers of the country's oil unless the autonomous region is paid its share of revenue from any sales.
The Kurdistan Regional Government (KRG) said buyers of Iraqi oil were complicit in violating the constitution because the Baghdad central government has cut the region's 17 percent entitlement of the national budget.
It is unclear whether the threat will influence major buyers of Iraqi crude, but it nevertheless illustrates the KRG's increasingly assertive stance in a long-running dispute with Baghdad over control of its natural resources.
Baghdad has slashed the KRG's budget since January as punishment for the region's moves to export and sell oil directly on international markets, also threatening legal action against buyers of Kurdish crude.
"The KRG has the right, in circumstances where the Iraqi federal government is not sharing revenues in accordance with the Iraqi constitution, to take such action as the KRG considers appropriate to obtain all entitlements the Iraqi federal government is required to pay to the KRG under the Iraqi constitution," said a statement from the region's Ministry of Natural Resources in Arbil.
"Buyers who fail to make such payments to the KRG will be facilitating the Iraqi federal government’s breach of the KRG’s rights and passing to the Iraqi federal government monies that rightfully belong to the KRG."
Last week, the Kurds threatened to counter-sue the federal government for trying to block its sales in a strongly worded letter that reflects growing confidence as Baghdad struggles to counter insurgents that have overrun swathes of the country.
The dispute has intensified since the Kurds began exporting oil via a new pipeline to the Turkish port of Ceyhan earlier this year.
The autonomous region has been exporting around 125,000 barrels per day to Ceyhan and plans to double that number, but has so far struggled to sell some of the tankers as potential buyers have come under pressure from Baghdad.
Of the four tankers that have loaded the KRG's pipeline oil since May, only one has successfully delivered into an Israeli port after executing a ship-to-ship transfer in the Mediterranean. The buyer has not yet been revealed.
The destinations of the other 3 remain unclear. One has been sitting off the coast of Morocco, another is shown by tanker tracking data to have sailed through the Suez Canal this week with its destination listed as South Africa. Details about the third tanker are not known.
(Reporting by Isabel Coles and David Sheppard; Editing by Mark Heinrich)
Alison Ciaccio, Platts Markets Editorr
New York - July 9, 2014
U.S. crude oil stocks fell 2.4 million barrels the week ended July 4 to 382.6 million barrels on an uptick in refinery run rates, Energy Information Administration (EIA) data showed Wednesday.
The stock draw was just below analysts’ expectations of a 3 million-barrel decline.
U.S. Gulf Coast (USGC) crude oil stocks dipped 4.2 million barrels to 200.6 million barrels during the week ended July 4. This was partially offset by a 1.3 million-barrel build on the U.S. West Coast (USWC) and slight increases across the rest of the U.S.
Stocks at the New York Mercantile Exchange (NYMEX) delivery hub at Cushing, Oklahoma, rose 400,000 barrels to 20.9 million barrels. Still, stocks there are at a deficit of more than 40% to the five-year average, and have been since the May 2 reporting week.
Total U.S. refinery throughput rose above the five-year average of 16.12 million b/d to 16.3 million barrels per day (b/d), and was up 34,000 b/d on the week. That added to refinery utilization rates, which rose 0.2 percentage points to 91.6% of capacity, but were still below year-ago levels of 92.4% of capacity.
Refinery utilization rates on the USGC climbed 1.5 percentage points to 94.5% of capacity.
Tim Evans, commodity analyst at Citi Futures Perspective, said firm U.S. third-quarter refinery crude oil runs will translate into further stock declines "with the opening of the twin Seaway pipeline likely to mean new lows in Cushing, Oklahoma, inventories, at least as long as the Gulf Coast crude oil holds a sufficient premium over WTI (West Texas Intermediate) to cover the cost of the shipment."
Crude oil imports to the U.S. rose a slight 20,000 b/d to 7.29 million b/d the week ended July 4, and were below a year-earlier level of 7.53 million b/d.
U.S. GASOLINE STOCKS UP SLIGHTLY, JET FUEL INVENTORIES TIGHT
U.S. Gasoline stocks rose 600,000 barrels to 214.3 million barrels, counter to expectations of a 1 million-barrel draw.
Production of finished gasoline fell 11,000 b/d to 9.43 million b/d, while implied demand* for the fuel declined 233,000 b/d to 8.94 million b/d.
Demand for distillate fuel, however, rose 188,000 b/d to 3.97 million b/d. Total U.S. distillate stocks rose 200,000 barrels to 121.8 million barrels the week ended July 4, far less than expectations of a 1.2 million-barrel build.
USWC jet fuel stocks fell to a 10-year low of 6.83 million barrels the week ended July 4, putting stocks at a 24.6% deficit to the five-year average. On the USGC, jet stocks at 10.46 million barrels the week ended July 4 were at a 27.4% deficit to the five-year average.
The decline in stocks and subsequent rise in U.S. jet implied demand – which rose 136,000 b/d to 1.799 million b/d the week ended July 4 – suggest a rebound in the U.S. airline industry.
U.S. carriers were hit hard by bankruptcies even before the recession and merged in part to cope with rising jet fuel prices, which account for a third of an average airline's expenses. The latest merger produced the world's largest airline, American Airlines, which reported Wednesday that its June traffic rose 1% on 3.5% more capacity.
* Implied demand is the amount of product that moves through the U.S. distribution system, not actual end consumption.
Lagos (Platts)--9Jul2014/636 am EDT/1036 GMT
Crude oil production by indigenous Nigerian companies will increase to 500,000 b/d by 2018, on the back of aggressive acquisition of fields sold off by international companies, an industry official said Wednesday.
The output target, up from just over 200,000 b/d now, will account for 20% of Nigeria's total oil production of around 2.0 million b/d, Managing Director of Seplat Petroleum Austin Avuru said.
"The ongoing divestment by Shell, Chevron and other [international oil companies] is transferring significant asset holdings to Nigerians...and by 2018 local oil producers could account for 500,000 b/d or 20% of Nigeria's oil production," Avuru said at an industry seminar in Lagos.
Nigerian companies would also be producing 1.5 Bcf/d of gas for the domestic market by 2018, he said.
Currently, local Nigerian companies own more than 100 blocks across Nigeria's oil-producing regions, and own at least 30 marginal fields. Analysts have said those figures were likely to double over the next few years.
Nigerian Oil Minister Diezani Alison-Madueke said in May that the government was pursuing a deliberate policy of encouraging indigenous companies to become major players in the country's exploration and production sector, an opportunity presented by the divestment strategies of the IOCs.
Seplat, which is controlled by France's Maurel & Prom, is a major beneficiary of the divestment strategies, having snapped up three onshore oil blocks sold by Shell, Eni and Total in 2011, and has ramped up production to over 60,000 b/d.
Seplat is also finalizing a deal to buy Chevron's stakes in OML 53, 53 and 55.
However, these divestments are not viewed as a mass wave of IOC exits from Nigeria in the near future but rather represents a re-balancing of portfolios towards the offshore, which now accounts for at least 80% of Nigeria's total production.
--Staff, newsdesk@platts.com
--Edited by Jonathan Fox, jonathan.fox@platts.com
London (Platts)--9Jul2014/641 am EDT/1041 GMT
The major Sharara oil field in the southwest of Libya restarted production late Tuesday, but output is not expected to ramp up quickly given how long the field was shut in, an industry source said Wednesday.
Sharara has a capacity of 340,000 b/d, so even a slow increase in output would give Libya's crisis-hit oil sector a major boost.
"But it won't be a quick ramp-up this one," the source said, adding: "It was down for a long time."
"It will not be at full capacity for weeks, or even months," the source said.
Protesters have blockaded the pipeline linking Sharara to the export terminal of Zawiya on Libya's western Mediterranean coast for much of 2014, causing production at the field to be shut down. Output has resumed before several times, but was quickly shut in again as the unrest across Libya continued to impact on field operations. The Sharara field is operated by a joint venture between NOC and Spain's Repsol. First exports of Sharara out of Zawiya may also take some time to organize, the source said.
On Tuesday, NOC said total Libyan crude oil production has risen further to an average of 326,000 b/d as hopes remain high of a recovery in both output and exports following the lifting of force majeure at the major eastern ports of Es Sider and Ras Lanuf.
Output is slowly ramping up from lows of just 150,000 b/d last month, though it remains well below the 1.5 million-1.6 million b/d Libya was producing before the current spate of unrest began in May 2013.
--Stuart Elliott, stuart.elliott@platts.com
--Edited by Alisdair Bowles, alisdair.bowles@platts.com
Singapore (Platts)--9Jul2014/850 am EDT/1250 GMT
Asian refiners are seeing the worst average margins in four years, Platts data showed, because middle distillate cracks have plunged on waning demand and amid an excess of refining capacity.
The Singapore cracking margin for a plant producing oil products from Dubai crude, a proxy for Asian refinery profit margins, has averaged $1.917/barrel through the first six months of this year, according to Platts data, the lowest since the first half of 2010 when it averaged 35 cents/b.
The Singapore margin, which fell 4 cents/b Tuesday to 24 cents/b, has been below $1/b since May 30.
Collapsing middle distillate cracks have driven the slump in overall margins, with gasoil dropping to its lowest since November 2010 and jet fuel hitting a month low.
The premium of 0.05% gasoil basis Singapore over Dubai fell to $12.36/b Tuesday, the lowest since November 3, 2010.
The Singapore jet fuel crack tanked to its lowest level in a month, dragged down by prolonged weakness in the jet fuel market.
The FOB Singapore jet fuel crack was assessed at $11.89/b Tuesday, up 9 cents/b day on day. The last time it was lower was June 5 at $11.59/b.
The start-up of the Saudi Aramco Total Refining and Petrochemical Company's 400,000 b/d Jubail refinery in the fourth quarter of 2013 has increased the amount of distillate supply available.
At the same time, Russian and US refineries have increased their exports to Europe, closing the arbitrage for Asian refineries.
"Between Satorp and US exports [Asian refining is under pressure], distillates are still weak which is a concern," a trader said.
The top of the barrel is the only bright spot that refiners have seen in prompt margins.
Asian gasoline cracks have surged since mid-June as refinery glitches in the region have further tightened the market's demand-supply balance.
Unplanned shutdowns at refineries in India and Malaysia have boosted imports by both countries at a time when Indonesia, the region's largest gasoline importer, is going through its peak demand season.
Benchmark 92 RON gasoline cracks to front-month ICE Brent futures hit a year high of $13.51/b July 1. The crack was last higher at $13.55/b on July 19, 2013.
India's state-run refiners have bought nearly 125,000 mt of gasoline for July and sentiment has been supported recently with Indian Oil Corp. floating import tenders for August cargoes as well.
Indonesian demand going into August was expected to remain robust with total volumes likely similar to July. Indonesia had lined up nearly 10 million barrels of 88 RON gasoline in term contracts for July to meet peak demand during Ramadan.
The naphtha crack has also pushed higher, with Mean of Platts Japan naphtha at a $135.02/mt premium to ICE Brent futures Tuesday, the highest since April 28.
The market has received a boost from a combination of strong motor gasoline demand from Indian companies amid refinery issues there as well as a Formosa tender which traders took to be a sign petrochemical makers would delay their switch to LPG as an alternative feedstock.
However, the bottom of the barrel is weighing on the overall margin, with the 380-CST basis Singapore fuel oil price at a discount of $13.17/b to Dubai on July 8, down from $11.93/b on May 30.
The outlook for an improvement in cracks during the second half is mixed.
In 2011, the year with the best average margin in the past five years at $3.82/b, the first half recorded an average of $3.73/b, Platts data showed.
In 2010, the year with the worst yearly margin going back to 2009 at $1.09/b, the first-half margin was 35 cents/b.
That is somewhat undermined by margins in 2013, which posted the second highest level over the past five years at $3.48/b in the first half, only to drop during the second half to finish with an average of $2.29/b.
--Staff Reports, newsdesk@platts.com
--Edited by Dan Lalor, daniel.lalor@platts.com
New York (Platts)--9Jul2014/343 pm EDT/1943 GMT
NYMEX August crude settled Wednesday at its lowest level in five weeks, down $1.11 at $102.29/barrel, as a dip in US gasoline demand and the restart of a major Libyan oil field weighed on the complex.
ICE August Brent settled 66 cents lower at $108.28/b, also a five-week low. Front-month Brent has retraced all of its gains made since reaching a nine-month high on June 19 and flipped into a 12 cents/gal contango on Tuesday. The contango rose to 19 cents/gal at Wednesday's settle.
In products, NYMEX August RBOB settled 3.52 cents lower at $2.9377/gal. The contract traded to its lowest level in five weeks at $2.9350/gal during the session. August ULSD settled 25 points lower at $2.8711
US gasoline stocks rose 600,000 barrels to 214.3 million barrels last week, according to Energy Information Administration data.
Market estimates had been calling for a 1 million-barrel draw on expectations that demand rose. Instead, demand for the fuel declined 233,000 b/d to 8.94 million b/d last week.
BNP Paribas analysts Harry Tchilinguirian and Gareth Lewis-Davies noted that the gasoline stock build was also driven by a 97,000 b/d increase in imports.
"In addition, base effects were important with production remaining high and demand remaining weak," they said.
Petroleum futures were already under selling pressure earlier in the session as Libya continues to progress toward ramping up production and resuming crude oil exports.
The major Sharara oil field in the southwest of Libya restarted production late Tuesday (See story, 1323 GMT). The field has a capacity of 340,000 b/d.
"This alone is seen as allowing total Libyan output to climb from 300,000 b/d to 600,000 b/d in the weeks ahead," said Matt Smith, commodity analyst at Schneider Electric.
NYMEX futures were also under pressure as stocks at the NYMEX delivery hub at Cushing, Oklahoma, rose 400,000 barrels to 20.9 million barrels last week.
"In recent months, we have seen a slowing down in the rate of stock draw at Cushing and indeed had seen small weekly builds in June," Tchilinguirian and Lewis-Davies said.
Despite an unexpectedly large 1.3 million-barrel draw during the June 27 reporting week, that was thought to have been due to pipeline delivery issues into Cushing, the analysts said the latest build indicates that a degree of stasis is emerging at Cushing.
"This is consistent with our view that with ample stocks on the Gulf Coast, the incentive to move further barrels from Cushing will eventually abate," the analysts said.
--Alison Ciaccio, alison.ciaccio@platts.com
--Edited by Katharine Fraser, katharine.fraser@platts.com
EBR Staff Writer Published 09 July 2014
The Indian Government has paid the second installment for crude-oil imports of $550m in oil dues to Iran, two industry sources said.
The Indian refineries have settled the first installment of $550m on 26 June whereas the second was paid on 8 July, under an interim deal that enabled Iran access to $4.2bn in blocked funds globally, according to Press Trust of India.
India will pay its final installment of $550m for crude-oil imports to Iran by the end of July 2014, if Iran meets all of its commitments under the joint action plan.
Wall Street Journal cited one of undisclosed person as saying, "Indian refiners have paid two installments of $550 million each. A third installment of an equal amount will be paid later this month."
Since the US sanctions blocked payments to Iran from February 2013, India has been paying 45% of its oil dues in rupees through state-owned UCO Bank to Iran.
A leaked document obtained by The Washington Post suggests that the EU is pressing the US to lift its longstanding ban on crude oil exports.
In the document, the EU argues that instability on the Eastern flank threatens to cut off oil and natural gas from Russia: ‘The current crisis in Ukraine confirms the delicate situation faced by the EU with regard to energy independence’.
US crude oil has remained at essentially zero exports since 1975, when Congress banned its sale to preserve access if something like the Arab oil embargo were to occur again.
Europe is currently heavily reliant on imported oil, 39% of which comes from high risk regions like the Middle East and Africa, and 42% from the former Soviet Union. The US represents a huge alternative supply source. Furthermore, the Washington Post suggests, that while US refiners have retrofitted their operations to process heavier oil imported from the Canadian tar sands before the fracking boom delivered a flood of new supply, Europe’s refineries are well equipped to handle it.
The letter additionally emphasises that both parties, the US and the EU, support free trade, and America lifting its own violation of this principle would demonstrate to countries like China that the two economic superpowers are serious about tearing down barriers.
The letter reads: ‘Combatting resource nationalism, together vis-à-vis third countries, while at the same time allowing for export restrictions to exist between us sends the wrong message to our partners and offers some of these resource-rich countries a great opportunity to interpret trade rules in a way which is detrimental to our economies’.
Iana Dreyer, who edits the EU trade analysis service Borderlex, commented: “The Europeans really want to set a precedent, to make a point, that they want free trade and a more liquid market. After the oil shock in the 1970s, energy has been so scrutinised, that the mindset has really changed – now we need a big flexible global market so that nobody can control it”.
Against the law
The crude oil export ban might actually be illegal under international trade law, however nobody has ever challenged the US at the World Trade Organisation (WTO). Despite this, the American Petroleum Institute (API) last year suggested that it might do so if the restriction isn’t lifted by other means.
Jim Bacchus, a former chair of the WTO’s appellate body, said: “Generally speaking, WTO rules prohibit restrictions on exports of any kind, unless they take the form of taxes. There has always been this notion that somehow energy products are not products that follow the scope of the WTO treaty. There’s no legal basis for that view”.
To read more on the contents of the letter discussed in this article see also ‘EU encourages abolishment of crude oil export ban’.
Edited from various sources by Emma McAleavey.
Published on 09/07/2014
MOSCOW, July 9 (RIA Novosti) – Russia and Italy have confirmed their goal of completing the South Stream gas pipeline, Russian Foreign Minister Sergei Lavrov said Wednesday.
“Today we confirmed our goal on completing the construction project of the South Stream gas pipeline. We confirmed our intention to continue active work in order to remove all issues that may arise, including in regard to dialogue with the European Commission and taking into account intergovernmental agreements that have been signed by the participating countries in the project,” Lavrov said during a press conference in Moscow with his Italian counterpart Federica Mogherini.
The South Stream pipeline, expected to carry Russian gas across the Black Sea to Southern and Central European countries, is aimed at diversification of export routes for Russian gas.
South Stream construction began in late 2012. The first deliveries are expected in 2016, with the pipeline planned to become fully operational in 2018. South Stream is expected to have a total capacity of 63 billion cubic meters.
To implement the onshore part of the project, Russia has signed intergovernmental agreements with Austria, Bulgaria, Hungary, Serbia, Slovenia and Croatia.
The European Commission said Russia’s talks with transit countries violated the EU legislation. Moscow in turn initiated legal proceedings in the World Trade Organization (WTO) against the EU’s Third Energy Package, under which owners of pipelines located in the region cannot also be gas producers.
The latest alternative route of South Stream comes ashore in Bulgaria and continues to Serbia, where it splits, with the first branch going through Hungary to Austria and the second through Hungary and Slovenia to Italy. Branches are also expected to be constructed in Croatia and the Bosnian Serb Republic.
South Stream d.o.o. has entered into a contract with Centrgaz, which won the bidding for the South Stream gas pipeline construction in the Republic of Serbia.
Centrgaz will focus on design, procurement, construction and installation activities, personnel training and commissioning of South Stream in Serbia. The contract stipulates involving Serbian subcontractors in carrying out certain operations.
Taking part in the bidding procedure which started in March 2014 were four bidders, comprised of Russian and Serbian companies.
http://www.energyglobal.com/media/content/w350_map_u_potok_eng_serbia.jpg
Background
A part of Gazprom Group, Centrgaz is a versatile investment & construction holding fit with high performance equipment and powerful machinery. The company employs a sufficient number of skilled professionals involved in the construction and capital repairs of compressor stations, gas trunklines and gas distribution grids.
Centrgaz is well experienced in constructing gas trunkline facilities and gas industry systems. The company was engaged in the construction of gas industry processing facilities nearly across all the European area of the former Soviet Union and in Siberia as well as in regional gasification activities. During the 40 years of its business life, the holding successfully pre-developed gas fields in Yamburg, Urengoy, Strezhevoy and retrofitted the Central Asia – Center and Urals – Kuzbass gas trunklines. One of the company's most recent important projects is the participation in creating the Bovanenkovo – Ukhta gas trunkline system. At present, Centrgaz is involved in the construction of gas supply facilities in more than 10 Russian regions.
South Stream is Gazprom's global infrastructure project aimed at constructing a gas pipeline with a capacity of 63 billion m3 across the Black Sea to Southern and Central Europe for the purpose of diversifying the natural gas export routes and eliminating transit risks. The first gas will be supplied via South Stream in late 2015. The gas pipeline will reach its full capacity in 2018.
South Stream d.o.o. joint project company (Gazprom and Srbijagas holding 51% and 49% respectively) will construct and operate the South Stream gas pipeline in Serbia.
The South Stream project was awarded the special status by the resolution of the Serbian Parliament.In October 2012 the final investment decision was taken on the South Stream project in Serbia.
Adapted from press release by Hannah Priestley-Eaton
Published on 09/07/2014
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“From August 2014 to March 2015 Ukraine can ensure gas imports from the EU to the amount of about ten billion cubic meters
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KIEV, July 09, /ITAR-TASS/. Ukraine has all technical possibilities for replacing imports of Russian gas in the heating season with supplies from the European Union, a senior official from the Ukrainian Ministry of Energy and Coal Industry said on Wednesday.
“Our technical possibilities as to imports from countries of the European Union exceed the deficit that our consumers may face,” said Leonid Nesterov, head of the ministry’s department for diversification of oil and gas supplies.
“The situation is tense but not hopeless,” he added.
“From August 2014 to March 2015 we can ensure gas imports (from the EU) to the amount of about ten billion cubic meters,” he said. According to Nesterov, at the moment daily production of natural gas in Ukraine is about 50 million cubic meters, while possible gas deficit in the heating season, without taking into account reverse supplies, may amount to about seven billion cubic meters.
Russia’s state-controlled energy giant Gazprom on June 16 switched Ukraine’s oil and gas company Naftogaz to prepayment for gas supplies because Kiev failed to pay part of its gas debt by the deadline of 10:00 Moscow Time on June 16. Gas supplies to Ukraine were halted, but transit volumes were reportedly passing via Ukraine to Europe in line with the schedule.
In May, Ukraine imported 200 million cubic metres from Europe
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KIEV, July 09, /ITAR-TASS/. Ukraine imported 329.3 million cubic metres of gas from Poland and Hungary in June, which represents a 20% (67 million cubic metres) decrease from the same period of last year, Ukrtransgaz said on Wednesday, July 9.
In May, Ukraine imported 200 million cubic metres from Europe.
In the first half of the current year, gas supplies from Europe decreased 14% (100 million cubic metres) year on year to about 600 million cubic metres.
In 2013, Ukraine imported 2.1 billion cubic metres of gas from Europe.
Ukraine has been receiving natural gas in reverse flows from Europe since November 1, 2012. The gas is supplied across the Ukrainian border with Poland under a contract with German RWE.
The gas is supplied across the Ukrainian border with Poland. Last year Naftogaz Ukrainy imported 55 million cubic metres of gas using the reverse flow scheme.
On May 15, Ukraine began importing gas from Slovakia.
EU Energy Commissioner Guenther Oettinger confirmed that the European Union was committed to reverse-flow gas supplies to Ukraine but this gas would be sold at market prices to be determined by the companies that sign relevant contracts.
Ukrainian Energy and Coal Industry Minister Yuri Prodan said he was hopeful that “big reverse-flow supplies” would give Ukraine “up to 30 billion cubic metres a year”.
Oettinger’s spokesperson Sabine Berger said Ukraine could count on no more than 8 billion cubic metres of reverse-flow gas a year through Slovakia a part of the “minor reverse-flow scheme”. Gas will be supplied by the Vojany-Uzhgorod pipeline, not the transit pipeline.
As for the “big reverse-flow supplies” there is no concrete agreement yet as it would require Slovakia to agree to reverse the flow of gas by a trunk pipeline, which it is not prepared to do because this would run counter to its contract with Gazprom.
Oettinger said reverse-flow gas supplies from Slovakia to Ukraine by the trunk pipeline would be impossible without Gazprom’s consent as it would run counter to the Slovak company Eustream’s contractual obligations.
However he said such supplies by the Vojany-Uzhgorod pipeline would not require the Russian company’s agreement and would give Ukraine up to 10 billion cubic metres of a gas a year.
Oettinger believes that diversification of supplies will help to solve Ukraine’s gas problem in part. However reverse-flow supplies from Poland and Hungary by the Vojany-Uzhgorod pipeline will not be enough for Ukraine get through the coming winter comfortably.
The European Union has promised assistance to Ukraine in diversifying natural gas supplies.
Kiev is planning to buy about 290 million cubic metres of gas in Europe in reverse mode (about 140 million cubic metres will be delivered through Poland and the rest through Hungary).
Gazprom said it might impose restrictions on European companies which supply gas to Ukraine using reverse-flow mechanisms.
“A reverse flow is a semi-fraudulent mechanism whereby gas runs in circles. But this is Russian gas,” Gazprom CEO Alexei Miller said.
Miller said that the points where gas was delivered to and accepted by European consumers were located in Europe, but “Ukraine uses our gas [intended for Europe] on its territory any way it likes”.
“Reverse-flow gas supplies run counter to the contracts with European companies that buy Russian gas, and for that reason restrictions may be imposed on them,” Miller said.
In 2013, Ukraine consumed about 50 billion cubic metres of gas.
Ukrtransgaz is a leading 100% state-owned gas transportation and storage company in Ukraine. It has 14 subdivisions in all regions of the country. In 2013, the company transported 132 billion cubic metres of gas. The total length of its pipeline network is 38,900 kilometres. Ukrtransgaz has one of the biggest networks of underground storage facilities in Europe, with a combined capacity of 31 billion cubic metres.
By Jeff Siegel
Wednesday, July 9th, 2014
In 1982, most Americans were still pretty pissed off about the Iran hostage crisis.
There were certainly plenty of folks in my neighborhood who had little love for Iranians. I even remember hearing a song on the radio called “Bomb Iran,” which mirrored the song structure of the Beach Boys' hit “Barbara Ann.” Perhaps you remember it.
As an 11-year-old boy, I didn't know much beyond what I saw on television or heard from adults. So when I met Hossein, an immigrant from Iran, at the bus stop one morning, my defenses instantly went up. He was Iranian, so I was not supposed to like him. In fact, I was supposed to feel anger and violence towards him.
But I couldn't do it.
Hossein was one of the nicest people I had ever met. Very down to earth, great sense of humor, and extremely grateful for the opportunity to live in the United States.
His father was a doctor and, from what I understand, an outspoken critic of the Iranian government. I suspect this is why they were driven from their homeland.
In any event, over the course of the year, I got to know Hossein quite well. I met his family and even had dinner at his apartment one night. It was a small place — two bedrooms for six people. It wasn't fancy.
There were a few paintings on the walls, a very small black-and-white television, and a few scattered pieces of furniture. These were not wealthy folks, but they were good people.
So these days, when I hear people waxing poetic about bombing foreign lands in the name of democracy, I get pretty angry. Although there are certainly plenty of foreign dictators and warmongers happy to support the destruction of the Western world, I suspect most of the citizens in these foreign lands are just like the rest of us. They want only to live in peace, with limited government intervention and the right to enjoy life without the threat of violence.
U.S. Firm's $1 Billion Iran Deal
I'm a strong advocate of free market capitalism for many reasons, but perhaps the most important reason is that it can serve as a bridge to unite people of different faiths and ethnicities. It can detract from the call to war, it can help to thwart violence, and it can lift many out of poverty, which, as a result, lessens the threat of terror.
Educated people who can peacefully provide for themselves and their families rarely have a need or desire to spread terror.
So when I read the news this week that a U.S. company called World Eco Energy signed a preliminary deal to invest $1.175 billion to generate electricity in Iran — using solid waste as the fuel source — I was quite pleased.
As reported in the Tehran Times...
World Eco Energy has agreed to procure machinery and equipment, transfer technology, and employ 80 percent of the manpower from the local workforce.
The project will create 650 direct jobs and 2,000 indirect jobs, and will be implemented in four phases over the course of 24 to 36 months, Qorbanpour added.
The project has envisaged that about 250 megawatts (MW) of electricity will be generated per day from burning 1,500 tons of solid waste, he stated.
Iran plans to widely expand its use of renewable energy. On October 9, 2013, Homayoun Haeri, the managing director of the Iran Power Generation, Transmission and Distribution Management Company (TAVANIR), said Iran plans to construct three new wind farms, each with a power generation capacity of 350MW.
Economic Cooperation
Although there are clearly differences between the U.S. and Iranian governments, I'm quite certain that those who will gain from this project — both American and Iranian citizens — will be more than happy to allow the promise of mutual economic growth take priority over the promise of more violence... violence that often affects those who have no ill will towards the other side.
And for me, as a supporter of global alternative energy development, it's great to see how the industry is crossing barriers — both geographic and ideological — to enable the light of capitalism to shine.
Sure, there are those who maintain that we should not be doing business with the enemy. But the people of Iran are not my enemies.
In fact, the only enemies between the two countries are dictatorial lawmakers, religious zealots, and the nationalistic sheep that fall for the illusions the other two create.
09 July 2014 16:37 (Last updated 09 July 2014 16:38)
Iraq's Kurdistan region will continue to depend on Turkish supply of refined oil as its plans for building new refineries won't go online for years, oil analysts tell AA.
By Selen Tonkus
ANKARA
Iraq's Kurdish region's plans for building new refineries will not affect Turkey's refined product sales into the area in the near future, experts have claimed.
The Kurdistan Regional Government – KRG – announced Tuesday it will build two new refineries to cope with a fuel crisis caused by Islamic State of Iraq and Levant-led fighters seizing the roads in Mosul on the way to Iraq’s largest oil refinery at Baiji on June 13.
Ashti Hawrami, KRG minister of natural resources Tuesday said: “We have plans to launch two refineries in Dohuk and Garmiyan, but it will take two to three years," adding that the administration wanted to increase the capacity of two existing refineries.
- “Pie in the sky”
Shwan Zulal, Head of Carduchi Consulting and an energy expert, told the Anadolu Agency that the planned refineries are “pie in the sky” as they require subsidies and the KRG has little money for now.
“If oil exports via Turkey accelerate and more cash comes in, they may become a reality, but it will be at least two years before we see any significant increase in refining capacity”, he added.
Zulal noted that new plans would not affect sales from Turkey for now but could pose problems in the long term.
- Trade relations to grow
Dr. Fahrettin Sumer from the American University of Iraq, Sulaimani based in the Kurdish city of Sulaymaniyah said that, as everyone was caught unprepared for ISIL's capture of Baiji, Turkey is not currently able to supply the KRG’s fuel needs.
Fuel transportation capacity from Turkey to the KRG is limited and takes time given the current level of border infrastructure, Sumer adds.
As a result, the KRG is looking for long-term solutions and is aiming to increase its own refining capacity by building additional facilities, says Sumer.
He adds that this might affect fuel sales from Turkey to the KRG negatively in the future given the continuous increase of demand for fuel in both states.
"Nevertheless, Turkey's trade relations with the KRG will continue to grow in the foreseeable future," he emphasized.
The Kurdistan region already has refineries in each of its three governorates but in small capacities.
Kalak refinery near Erbil is operated by Kurdish company Kar Group and has a capacity of 80,000 barrels per day currently, with a planned capacity of 100,000 within this year.
Bazian refinery in Sulaymaniyah is operated by Kurdish company WZA Petroleum and has a capacity of 34,000 barrels per day currently, with a planned capacity of 80,000 within this year.
In addition, at the Tawke field in Duhok, Norwegian company DNO has a topping plant which prepares crude oil to meet export specifications, with a capacity of 5,000 barrels per day.
englishnews@aa.com.tr
Refining, production sector "normal," Oil Ministry says.
By Daniel J. Graeber | July 9, 2014 at 9:38 AM | 0 Comments (Leave a comment)
Read more: http://www.upi.com/Business_News/Energy-Resources/2014/07/09/Iraq-says-oil-sector-secure/6361404911571/#ixzz371fBdBa5
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BAGHDAD, July 9 (UPI) --The Iraqi Ministry of Oil said Wednesday it was dedicated to providing a safe environment for international companies working in the oil sector.
Sunni-led militants have declared an Islamist state in part of northwestern Iraq and have threatened to push south into the predominately Shiite areas of the country.
Iraqi Oil Minister Abdul Karim Luaibi said the government was dedicated to supplying the ideal safe environment for international companies working in Iraq.
"Work in oil refining facilities and oil fields is normal and the ministry has supplied the extra protection needed for those locations by coordinating with security authorities and energy officials," he said in a statement.
The U.S. Energy Information Administration said violence in Iraq has not reduced the availability of Iraqi oil on the global export market. Nevertheless, EIA said there was a degree of uncertainty in the Iraqi oil sector because of the Sunni insurgency.
EIA said it reduced its production growth forecast from Iraq by 300,000 barrels per day.
Southern Iraq produces around 2.8 million bpd and the semiautonomous Kurdish north produces about 200,000 bpd.
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Read more: http://www.upi.com/Business_News/Energy-Resources/2014/07/09/Iraq-says-oil-sector-secure/6361404911571/#ixzz371fGM5JX
Some time before Libyan oil sector returns to normal.
By Daniel J. Graeber | July 9, 2014 at 10:06 AM | 0 Comments (Leave a comment)
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Premature to declare a full rebound for Libyan oil, insider says. UPI/Amru Taha
HOUSTON, July 9 (UPI) --Energy industry watchers said Wednesday optimism over the rebound of Libyan oil production should be tempered.
Forecasts of the potential in Libya's oil sector have waxed and waned since the end of civil war in 2011. The country has yet to pass its pre-war peak of 1.4 million barrels per day and early 2014 output had plummeted to well below 500,000 bpd.
The National Oil Co. said late Tuesday production from the giant El-Sharara field had resumed. It has a capacity for 340,000 bpd, but an unidentified industry source told the Platts energy reporting agency it was too early to declare recovery.
"It was down for a long time," the source said. "It will not be at full capacity for weeks, or even months."
The pipeline connecting the field to export terminals has been blocked off by protests for most of the year.
In April, the Libyan government secured a deal with eastern rebels jockeying for more authority that opened two key oil export terminals. That partially ended an eight-month blockade that curtailed Libya's oil output potential dramatically.
More fields opened last week, prompting acting Prime Minister Abdullah al-Thani said to say his government has effectively solved its "oil crisis."
Eastern export terminals handle about half of Libya's oil export capacity.
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Read more: http://www.upi.com/Business_News/Energy-Resources/2014/07/09/Industry-watchers-cautious-on-Libyan-oil-rebound/3741404913083/#ixzz371fku38D
Iran, Russia "determined" to expand energy ties, deputy minister says.
By Daniel J. Graeber | July 9, 2014 at 9:57 AM | Updated July 9, 2014 at 10:50 AM | 0 Comments (Leave a comment)
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Iran anticipating Russian investments in its natural gas sector. UPI/Maryam Rahmanian
TEHRAN, July 9 (UPI) --Iran's deputy minister for gas affairs said Wednesday he was expecting Russia to start investing in the Iranian natural gas industry.
Deputy Minister for Gas Affairs Hamid-Reza Araqi said Russian companies may be interested in building natural gas pipelines in Iran.
Both sides, he said, "are determined to boost their cooperation" in the gas industry.
Iranian and Russian officials met in April to discuss upgrading Iran's power plants and electrical transmission lines.
The U.S. State Department has said direct energy cooperation between Iran and Russia "would be of concern."
Iran is under pressure for its controversial nuclear program, while the U.S. government and its allies have expressed frustration with Russia's stance on geopolitical issues in Syria and Ukraine.
Both sides already work together in the nuclear sector, with Russia supplying fuel for Iran's Bushehr nuclear facility.
Iran last year said it would to bring more foreign investors into its energy sector.
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Read more: http://www.upi.com/Business_News/Energy-Resources/2014/07/09/Iran-reviews-gas-relationship-with-Russia/6711404912713/#ixzz371fo7s73
Companies to work to reduce environmental footprint from oil sands production.
By Daniel J. Graeber | July 9, 2014 at 9:18 AM | 0 Comments (Leave a comment)
Alberta operators working to cut emissions, save water, at oil sands developments. UPI/Brian Kersey
CALGARY, Alberta, July 9 (UPI) --U.S. company GE and Canadian oil producer Suncor Energy announced plans to find ways to reduce emissions and lower water use from oil sands production.
Suncor said it signed two agreements with GE that open the door to as much as $18 million in environmental investments. Agreements signed under the so-called Canada's Oil Sands Innovation Alliance call for the development of new technologies meant to reduce greenhouse gas emissions and water usage from the production of oil sands in Alberta.
"We have a world-class resource in Canada's oil sands that will supply energy for decades to come," Steve Williams, Suncor president and chief executive officer, said in a statement Tuesday. "And, responsible development of this resource is as important to everyone in the industry as it is to our stakeholders."
The provincial government in Alberta says about 0.15 percent of the total greenhouse gas emissions in the world comes from oil sands development. Extraction is water-intensive, though the government says operators recycle as much as 80 percent of the water they use whenever possible.
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Read more: http://www.upi.com/Business_News/Energy-Resources/2014/07/09/Suncor-GE-work-to-make-oil-sands-cleaner/4491404910475/#ixzz371g592U5
Subsidiary Centrgaz will build pipeline through Serbia.
By Daniel J. Graeber | July 9, 2014 at 8:46 AM | 0 Comments (Leave a comment)
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Serbian subsidiary of Gazprom to build part of South Stream gas pipeline. UPI/Hamid Forotan/ISNA
BELGRADE, Serbia, July 9 (UPI) --Russian natural gas company Gazprom announced a Serbian subsidiary will be tasked with building the South Stream natural gas pipeline in the country.
"Centrgaz will focus on design, procurement, construction and installation activities, personnel training and commissioning of South Stream in Serbia," Gazprom said in a statement. "The contract stipulates involving Serbian subcontractors in carrying out certain operations."
Centrgaz is a subsidiary of Gazprom. The Russian parent company said the bid was secured during a March bidding process that involved four other companies.
South Stream is designed to add a layer of diversity to Gazprom's export strategy for European consumers. Most of the Russian gas bound for Europe runs through a Ukrainian transit system and geopolitical issues there expose that route to risk.
European leaders have balked over South Stream, saying it would strengthen Russia's grip on the energy sector. European energy regulations are meant to keep monopolies like Gazprom from having a major stake in transit networks.
Gazprom said Tuesday it expects first gas deliveries through South Stream by late 2015 and the entire route from the Black Sea through Central Europe should be in service by 2018.
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Read more: http://www.upi.com/Business_News/Energy-Resources/2014/07/09/Gazprom-subsidiary-awarded-South-Stream-deal/9611404908767/#ixzz371g9B5jY
U.S. company shuts offices, divests from joint venture.
By Daniel J. Graeber | July 9, 2014 at 8:37 AM | 0 Comments (Leave a comment)
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Chevron shuts down offices in Lithuania.
VILNIUS, Lithuania, July 9 (UPI) --U.S. supermajor Chevron announced it has shut down its offices in Lithuania and sold off half of its interests in the country.
"Chevron closed its office in Vilnius, Lithuania," a statement posted Tuesday on its website said. "The company has divested its 50 percent equity interest in [joint venture] LL Investicijos."
In a separate statement, Swedish energy company Tethys Oil said it increased its stake in the Rietavas license in Lithuania from 14 percent to 30 percent as part of the joint venture in the country with Chevron.
"The work program, focused on evaluation of the license area for conventional and unconventional hydrocarbon potential, continues as planned and is not affected by Chevron's exit," the Swedish company said.
Chevron in a 2013 annual report said three exploration wells had been drilled into the Rietavas block and results were under evaluation. No estimate of the reserve potential was given.
Britain, Poland and Lithuania are among the handful of members of the European Union said to be rich in shale natural gas deposits.
No value of the transaction was disclosed. Chevron gave no reason for the divestment.
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Read more: http://www.upi.com/Business_News/Energy-Resources/2014/07/09/Chevron-walks-away-from-Lithuanian-shale/2611404908393/#ixzz371gCPLUK
