Saudi Arabia Leads OPEC Crude Output Lower Before Meeting
OPEC said Saudi Arabia led declines in the group’s oil output last month, weeks before its 12 members meet to decide whether to trim a global supply glut that drove crude prices into a bear market.
Saudi Arabia’s production fell 69,900 barrels a day to a seven-month low of 9.603 million, the Organization of Petroleum Exporting Countries said in a monthly report. The data are based on estimates from sources including analysts and media organizations. OPEC’s members pumped 30.253 million barrels a day, a decrease of 226,400 barrels, the largest since March. There are signs of global economic recovery, it said.
Brent crude futures, used to price more than half the world’s oil, traded near a four-year low today on speculation that OPEC’s biggest members will refrain from paring output to drain a global surplus. Manufacturing indicators from the U.S., Japan, China and Germany show that the economic recovery is progressing, according to the organization.
Oil Prices
“The improvement in manufacturing activities is positively impacting oil consumption,” OPEC’s Vienna-based research department said in its monthly oil market report. “Any additional improvement in the economies of major oil-consuming countries should help the demand trend to pick up further.”
Saudi Submission
Saudi Arabia’s own submission showed a decrease of 13,700 barrels daily to 9.69 million barrels. The group didn’t publish an estimate for its total output in October based on countries’ own submissions because Venezuela didn’t provide one.
The organization’s forecasts for global demand, and the amount of crude it will need to supply this year and next, were unchanged from its last monthly report. World oil consumption will increase by 1.19 million barrels a day in 2015 to 92.38 million a day, it said.
OPEC’s production in October, while in line with the average amount the group considers needed in the fourth quarter, is about 1.8 million barrels a day higher than the 28.4 million it expects will be required in the first quarter of next year. The world will need an average 29.2 million barrels a day from the group in 2015, it said.
Libya Restart
Libya alone among OPEC members increased output in October, boosting production by 59,100 barrels a day to 842,000 a day. Testing is under way at Sharara, the country’s biggest oilfield, in order to resume production after an attack by gunmen last week, National Oil Corp. spokesman Mohamed Elharari said by phone today from Tripoli.
OPEC won’t cut its collective crude output at its Nov. 27 conference in Vienna, and global oil prices will stabilize once the surplus is absorbed by the market, Kuwait Oil Minister Ali Al-Omair said in Abu Dhabi Nov. 10.
Total oil inventories in the most-developed nations are 8.1 million barrels below their five-year average, at 2.7 billion barrels, while crude stockpiles in these nations are 18 million barrels above the five-year mean, according to the report.
The International Energy Agency, a Paris-based adviser to consuming nations on energy policy, will release its monthly market report on Nov. 14. In a longer-term outlook published today, the agency said that “the short-term picture of a well-supplied oil market should not disguise the challenges that lie ahead” to meet growing demand.
Pair of Keystone Votes Aim to Influence Louisiana Race
The Louisiana Senate runoff is playing out on Capitol Hill as both parties set votes to force approval of the Keystone XL pipeline, each designed to bolster their candidate in the contest.
The House scheduled a vote for tomorrow on a bill sponsored by Republican Representative Bill Cassidy of Louisiana, who is in a Dec. 6 runoff against Democratic Senator Mary Landrieu. Following a request by Landrieu, the Senate set a vote as soon as Nov. 18 on an identical proposal to bypass President Barack Obama and set the pipeline project in motion.
“I believe it is time to act,” said Landrieu, who polls show is trailing Cassidy ahead of the Dec. 6 Senate runoff. “I believe we should take the new majority leader at his word and stop blocking legislation that is broadly supported by the public and has been for some time.”
Landrieu spoke today as Congress convened for a lame-duck session after Republicans won control of the Senate in the Nov. 4 election. Republicans picked up eight seats so far, while her race goes to a runoff because neither she nor Cassidy, 57, won a majority.
Although supporters of TransCanada Corp. (TRP)’s Keystone project have fallen short of the 60 votes needed in the Senate to force approval, Landrieu said she was “confident that we have the additional votes necessary to pass it” this time.
The House has passed similar measures by broad majorities. Cassidy said that he hoped the Senate would “do the right thing” and pass the legislation. “After six years, it’s time to build,” he said in a statement.
Democratic Votes
A Senate Democratic aide said supporters had lined up 13 to 14 Democratic votes for the proposal. At least 15 Democrats would have to vote in favor of the bill if all 45 of the chamber’s Republicans support it.
Even if both chambers passed the measure, Obama still could veto it.
Senator Richard Durbin of Illinois, the chamber’s second-ranking Democrat, said the pipeline is “obviously an important issue” for Landrieu with the runoff election coming up.
Landrieu, 58, chairwoman of the Energy and Natural Resources Committee, in her campaign has sought to distance herself from Obama on energy issues, including his delay in approving the pipeline.
‘Most Ineffective’
The National Republican Senatorial Committee, the party’s Senate campaign arm, issued a statement calling Landrieu “the most ineffective energy chair ever.”
Senate Republican leader Mitch McConnell of Kentucky, who is poised to become majority leader in January, has said he would support giving Cassidy a seat on the energy panel if he wins the Louisiana runoff.
Political analysts said they doubted a vote on Keystone would provide much of a boost in Louisiana.
“The people she needs to turn out for her in the runoff will not be influenced by a token vote by a few of her colleagues,” said Ross Baker, political science professor at Rutgers University in New Brunswick, New Jersey.
Even if Landrieu is re-elected, she will lose her position as chairwoman of the energy committee when Republicans take control of the Senate in January.
Senator John Barrasso, a Wyoming Republican, said his party wouldn’t stand in the way of the measure.
‘Desperate Act’
“It seems to be a ‘Hail Mary’ pass in an effort to try to save Mary Landrieu’s Senate seat in Louisiana, and it seems like a desperate act,” Barrasso said in an interview.
McConnell and House Speaker John Boehner, an Ohio Republican, have said Keystone approval would be a top legislative priority in 2015.
Starting in January, there may be enough Keystone backers in both chambers of Congress to pass the measure. Supporters probably would fall short of the 67 Senate votes needed to overcome a veto by Obama.
It takes a two-thirds vote in each chamber to override a presidential veto.
In the lead-up to a possible vote on Keystone earlier this year, backers were targeting six Democrats who had previously supported the non-binding resolution. They didn’t reach the 60 votes necessary to overcome procedural hurdles and pass a bill.
Vote Switches
Senator John Hoeven, a North Dakota Republican who’s a co-sponsor of the pro-Keystone legislation, said before the election that he was three votes short of that threshold.
Some Democrats could conceivably switch to support Landrieu, though they’d be undercutting Obama who has said the administration’s review process on Keystone should be allowed to progress.
Landrieu, along with Senator Joe Manchin, a West Virginia Democrat, co-authored legislation that would let Calgary-based TransCanada build and operate the $8 billion Canada-to-U.S. oil pipeline. Landrieu’s panel approved the measure on June 18.
Although Democrats have already lost their Senate majority, they want to retain as many seats as possible, in part to aid their effort to regain control in two years. Republicans will be defending at least 22 seats in 2016, compared with nine for Democrats.
“It’s interesting when you see the price of the Keystone XL pipeline is a threatened Senate seat when Democrats have lost seats all across the country, and have already lost eight seats,” Barrasso said.
Obama Administration
A bipartisan group of lawmakers, including Landrieu, has been trying to force a vote by the Senate to approve the pipeline. Senate Majority Leader Harry Reid, a Nevada Democrat who sets the chamber’s agenda under Democratic control, has resisted bypassing the Obama administration, which is deciding whether to allow the project to move forward.
Allowing senators to vote to circumvent an administration study and approve the pipeline could antagonize the White House, and may draw an Obama veto.
In his news conference following the election, Obama said the independent process evaluating Keystone led by the State Department should “play out.”
Press Secretary Josh Earnest said Nov. 6 that the White House would consider legislation approving Keystone, though demurred on a question of whether a bill would prompt a veto.
One thing is more clear: Environmental groups that spent record amounts of money in a losing effort to protect the Democratic Senate majority likely would oppose any vote on a project they consider a threat to the climate.
The pipeline has been under review by the State Department for six years. The agency has jurisdiction because the project would cross an international border.
Keystone XL would transport Alberta’s heavy crude to refineries in the U.S. Gulf Coast. Environmental groups say it would encourage development of the carbon-heavy oil sands. Supporters say it would create thousands of jobs and increase North American energy security.
Russia to Fly Bombers to U.S. Gulf as Ukraine Worsens
The European Union and the U.S. will weigh further sanctions against Russia’s economy and Ukrainian separatists today, after Russian President Vladimir Putin’s reported movement of combat troops and heavy weapons into eastern Ukraine.
Representatives of the EU’s 28 member states and the U.S. are meeting today in Brussels to discuss imposing new penalties on individuals or on the Russian economy for the country’s interference in Ukraine, according to diplomats close to the talks.
While no consensus has been reached yet, officials will prepare options for an EU foreign ministers meeting in Brussels on Nov. 17, when the group could move to expand penalties, said the diplomats, who spoke on condition of anonymity because they weren’t authorized to be quoted.
“We have seen columns of Russian equipment, primarily Russian tanks, Russian artillery, Russian air-defense systems and Russian combat troops entering into Ukraine,” U.S. Air Force General Philip Breedlove, NATO’s top military commander, told reporters in Bulgaria. “We do not have a good picture at this time of how many. We agree that there are multiple columns that we have seen.”
Hours later, Russia’s defense minister announced yesterday that his country will send long-range air patrols as far as the Gulf of Mexico and the eastern Pacific Ocean.
Dueling Accusations
Despite a cease-fire agreement signed Sept. 5 in Minsk by both sides, Ukraine’s government and pro-Russian separatists in the country’s east accuse each other of preparing a fresh military assault. The conflict in Ukraine has claimed 4,000 lives since fighting began in mid-April, in what’s become the worst geopolitical standoff between Russia and its former Cold War foes since the Iron Curtain fell 25 years ago.
Ukraine, a former Soviet republic, says Putin is fueling unrest to thwart its efforts to deepen ties with the EU. Putin says he supports expanded rights for Russian speakers in Ukraine and denies that his country is involved militarily.
Nationalist sentiment has stoked the Russian leader’s popularity at home since the conflict began. Stephen Sestanovich, a former top Russia policy maker at the U.S. National Security Council and State Department, said it remains to be seen whether sanctions will persuade Putin to stop his interference in Ukraine.
‘Nervous’ Russians
“No one knows the answer to that question, but Russians are really beginning to ask it in a more nervous way because the impact of sanctions is becoming clearer and more real,” Sestanovich, now a professor at Columbia University in New York, said on Bloomberg Television yesterday.
At an emergency meeting of the United Nations Security Council meeting on Ukraine yesterday, U.S. Ambassador Samantha Power said Russia “talks of peace, but it keeps fueling war” in Ukraine. “What we need to do is keep ratcheting up the pressure” on Russia until it “chooses the path of de-escalation.”
When officials from the EU and U.S. meet in Brussels today, they’ll be considering options to tighten the economic noose, according to the diplomats close to talks. The likeliest first step, they said, is to blacklist Ukrainian separatists and Russians involved in the Nov. 2 elections in eastern regions, which the Ukrainian government considers illegitimate.
Broader Sanctions?
A second possibility is broadening the existing sanctions on Russia’s financial, defense and energy industries by banning business with additional companies or further tightening limits on EU or U.S. involvement in those sectors, they said. A third, though unlikely, possibility would be to expand sanctions to sectors that are as yet untouched, the officials said.
The aim of any new sanctions would be to pressure Ukrainian rebels and Russia to implement the Sept. 5 cease-fire, the diplomats say. Another issue officials will study is extending the EU sanctions beyond their scheduled expiration next year.
State Department spokeswoman Jen Psaki confirmed yesterday that the U.S. and its European allies are “prepared to broaden and deepen existing sanctions.”
“Every additional aggression action” by Russia “increases our focus and increases our level of discussion,” Psaki said.
As Ukraine’s leaders warned that the conflict in the east has returned to the brink of open war, Russian Defense Minister Sergey Shoigu said his country’s military will start conducting regular long-range air patrols along Russia’s borders and U.S. coasts and over the Arctic Ocean.
Open Skies
Army Colonel Steve Warren, a Pentagon spokesman, downplayed the significance of such Russian patrols, saying Russian Navy vessels have patrolled the Gulf of Mexico in the past. Warren said every nation has the right to conduct operations in international waters and international airspace. “We conduct operations in international waters, international airspace, as well,” he said.
“What’s most important is that nations who conduct these types of operations in international air and sea conduct them in accordance with international standards and that they conduct them safely,” he said.
In Moscow, Russian Defense Ministry spokesman Igor Konashenkov said there’s no evidence confirming the North Atlantic Treaty Organization’s assertion that Russia has sent troops into Ukraine, news service RIA Novosti said.
If Russia did move in troops “it would be another example of Russia’s blatant disregard for international law,” Warren told reporters in Washington.
Estonia Exercises
Warren said today that next month an Air Force F-16 fighter unit will be training with the Estonian air force in an exercise that practices close air support tactics.
With the conflict pushing the hryvnia weaker and spurring inflation, Ukraine raised its discount rate by 1.5 percentage point to 14 percent, the highest level since 2014, the central bank said in a statement yesterday.
The yield on Ukraine’s dollar-denominated note maturing July 2017 jumped 154 basis points to 17.67 percent by 7:14 p.m. yesterday in Kiev, bringing the eight-day increase to 4.28 percentage points. The hryvnia, which is down 18 percent this month in the world’s largest decline, was unchanged at 15.85 per dollar.
“Investors are voting with their feet -- they now expect further Russian military intervention, and expect the West to do nothing to help Ukraine,” Timothy Ash, London-based chief economist for emerging markets at Standard Bank (STAN) Group Ltd., said by e-mail yesterday. Bondholders are increasingly concerned a war could lead to the “collapse of a state” that would “not be able to pay” its debts, he wrote.
Russia’s ruble, which has fared worse than any other currency during the past three months, was 1 percent stronger at 46.2208 per dollar at 5:36 p.m. yesterday in Moscow.
EIA Reduces Crude, Gasoline Price Forecasts Through 2015
The U.S. Energy Information Administration cut 2014 and 2015 crude price forecasts amid rising global output and sluggish demand. The agency reduced its 2015 U.S. oil production outlook for the first time this year.
West Texas Intermediate will average $77.75 a barrel in 2015 versus the October projection of $94.58, the EIA said today in its monthly Short-Term Energy Outlook. The agency trimmed its Brent crude estimate for next year to $83.42 from $101.67.
“Continued growth in global oil supply in the face of weak oil demand will push crude prices lower in the near term,” EIA Administrator Adam Sieminski said in an e-mailed statement. “The average price for Brent oil is expected to be about $18 a barrel lower next year than previously forecast.”
The Energy Department’s statistical arm said U.S. production will rise to 8.57 million barrels a day this year and 9.42 million in 2015, the most since 1970, up from 7.46 million last year. This 2015 forecast was reduced from 9.5 million in last month’s report.
Horizontal drilling and hydraulic fracturing, or fracking, have unlocked supplies in shale formations in North Dakota, Texas and other states. The increase in global production and slower demand growth has pushed prices for both WTI and Brent down more than 20 percent from their June highs.
Rising Production
“Lower crude prices may curb drilling activity in some lower-producing U.S. basins, but total domestic oil production should continue to increase through next year as crude prices will be high enough to support most drilling in the major shale oil producing areas of Texas, North Dakota, New Mexico and Colorado,” Sieminski said.
WTI will average $95 a barrel this year, down from last month’s projection of $97.72, the report showed. Brent is forecast to average $101.04 this year, lower than the October estimate of $104.42.
Gasoline at U.S. pumps will average $2.94 a gallon in 2015, down 44 cents from last month’s estimate of $3.38. The average retail price dropped 0.3 cent to $2.923 a gallon yesterday, the lowest since December 2010, according to Heathrow, Florida-based AAA, the nation’s biggest motoring group.
The EIA cut its forecast for global oil consumption this year to 91.38 million barrels a day from 91.47 million last month. The forecast for 2015 demand was cut to 92.5 million from 92.71 million.
Oil production outside of the Organization of Petroleum Exporting Countries will rise 3.5 percent from 2013 to 56.03 million barrels a day this year, up 50,000 barrels from the September estimate. Non-OPEC output will climb an additional 1.7 percent to 56.98 million barrels in 2015.
OPEC members will produce 35.92 million barrels a day this year, the EIA said. Last month’s forecast was 35.78 million.
Saudi Arabia’s Naimi Denies Price War, Seeks Steady Oil
Saudi Arabia remains committed to seeking a stable oil price and speculation of a battle between crude producers “has no basis in reality,” the country’s Oil Minister Ali Al-Naimi said.
“Saudi oil policy has remained constant for the past few decades and it has not changed today,” al-Naimi said at a conference in Acapulco, Mexico, today. “We want stable oil markets and steady prices, because this is good for producers, consumers and investors.”
Al-Naimi hasn’t spoken publicly since Sept. 11, during which time Brent futures slumped 17 percent to a four-year low. Saudi discounts offered to Asian customers in October triggered speculation that the Organization of Petroleum Exporting Countries’ largest member had changed policy and was seeking to preserve market share, instead of supporting prices by curbing supply. OPEC ministers will meet Nov. 27 in Vienna.
“This is very Greenspan-like, an intentional lack of clarity,” Mike Wittner, head of oil market research at Societe Generale SA in New York, said by phone. “In OPEC it’s really only the Saudis that matter but I don’t think we got any clear direction here and I don’t think we will before the meeting. I can go through it point-by-point and find a bullish interpretation and a bearish interpretation.”
Analysts and traders were often unable to come to agreement about the meaning of comments of former Federal Reserve Bank Chairman Alan Greenspan, who resigned in 2006.
Oil plunged into a bear market last month, the result of a surge in shale drilling that has lifted U.S. production to a three-decade high as well as slowing growth in global demand. The drop has caused financial pain for some OPEC members, prompting Ecuador, Venezuela and Libya to call for action to halt the slide.
Price War
“Talk of a price war is a sign of misunderstanding -- deliberate or otherwise -- and has no basis in reality,” al-Naimi said at a natural gas forum. “Saudi Aramco prices oil according to sound marketing procedures -- no more, no less.”
Saudi Arabia’s official selling prices to Asia, which were reduced last month to the lowest in six years and increased this month, “take into account a host of scientific and practical factors, including the state of the market, refinery margins and long-term relationships with customers,” he said. Besides these adjustments, “Saudi Arabia does not set the oil price, the market sets the price.”
“There’s nothing from the headlines to give new insight on what to expect from OPEC,” said Olivier Jakob, managing director at Petromatrix GmbH in Zug, Switzerland. “Or anything that signals Saudi Arabia is getting ready to cut.”
Brent for December settlement declined 71 cents, or 0.9 percent, to $80.96 a barrel on the London-based ICE Futures Europe exchange at 1:46 p.m. in New York. West Texas Intermediate for December delivery dropped 72 cents, or 0.9 percent, to $77.22 a barrel on the New York Mercantile Exchange.
Saudi Arabia’s Naimi Says OPEC Not Engaged in Oil Price War
Ali Al-Naimi, Saudi Arabia’s oil minister, said OPEC isn’t engaged in a price war.
Below are al-Naimi’s comments about the oil market from a speech at a gas conference in Mexico today.
“Saudi oil policy has remained constant for the past few decades and it has not changed today.”
“First, Saudi Arabia does not set the oil price. The market sets the price. We do our best with other producers, to ensure price stability for the interests of producers, consumers and the industry at large.”
“Saudi Aramco prices oil according to sound marketing procedures. No more, no less. These take into account a host of scientific and practical factors, including the state of the market, refinery margins and long term relationships with customers. Talk of a price war is a sign of misunderstanding - deliberate or otherwise - and has no basis in reality. We do not seek to politicize oil, nor do we collude against anybody. For us, it is a question of supply and demand. It is purely business.”
“We want stable oil markets and steady prices, because this is good for producers, consumers and investors, and also helps long-term global economic growth, especially developing nations. It is therefore vital that OPEC and non-OPEC nations, producers and consumers, continue their dialogue.”
Adnoc Assessing Bids for 40-Year Oil Concessions as Prices Sink
By Anthony DiPaola Nov 12, 2014 8:39 PM GMT+0800
Abu Dhabi National Oil Co. is evaluating bids by foreign companies for stakes in the emirate’s biggest fields and has yet to recommend any offers to the government for approval.
BP Plc (BP/), Total SA (FP) and several companies based in Asia are among those seeking to participate with state-run Adnoc in its on-shore production of crude as early as January. Abu Dhabi holds most of the crude deposits in the United Arab Emirates, an OPEC member that holds about 6 percent of global reserves.
“We are in the process of evaluating,” Adnoc Director General Abdulla Nasser Al Suwaidi said today in Abu Dhabi. Adnoc hasn’t forwarded recommendations yet to the Supreme Petroleum Council, the country’s highest authority for energy policy, for final approval, he said. Al Suwaidi declined to specify the number of bids under review.
Abu Dhabi plans to boost production capacity for crude to 3.5 million barrels a day in 2017 from about 3 million barrels a day today and also raise output of natural gas. Middle Eastern states including the U.A.E. are expanding capacity to produce oil and gas partly to meet growing domestic demand for fuel to run power plants and for transportation.
Abu Dhabi’s planned 40-year concession agreement offers foreign companies access to one of the few places in the Persian Gulf where the largest U.S. and European producers still hold direct stakes in oil fields. Saudi Arabia and Kuwait, fellow members of the Organization of Petroleum Exporting Countries, don’t allow foreign investment in production of crude.
Price Slide
Adnoc sees the recent slide in oil prices as a sign of “temporary market instability” and won’t cut investment in projects because of it, Al Suwaidi said. Brent crude futures have dropped 29 percent since June 19, amid a supply glut.
The producer has been seeking a new line-up of partners to develop Abu Dhabi’s on-shore deposits after the expiration in January of a joint-venture agreement with BP, Total, Exxon Mobil Corp. (XOM), Royal Dutch Shell Plc (RDSA), and Partex Oil & Gas.
Abu Dhabi has pumped oil under concession deals with those companies or their predecessors since 1939. Adnoc became a partner in the 1970s, joining with them to form Abu Dhabi Co. for Onshore Oil Operations, or ADCO. That venture was responsible for extracting 1.5 million barrels a day of Murban grade crude, the U.A.E.’s main blend.
Adnoc invited 11 companies to bid for concessions, and all of them made offers, it said in November 2013 as the renewal process got under way.
Doing ‘Homework’
“If you are going to choose a partner, you must do all your homework, your due diligence, to make sure that the choice is right from the first time,” Al Suwaidi said. “We cannot make a wrong choice so we have to take time.”
Ali Khalifa al-Shamsi, Adnoc’s strategy and coordination director, said separately today that he expected the winners “to be announced before the end of the year or beginning of next year.” Adnoc has already finished evaluating the bids, he said in Abu Dhabi.
Neither al-Shamsi nor Al Suwaidi offered an explanation for their differing assessments of the status of Adnoc’s evaluation of the bids.
Bidders include four of the original international partners -- BP, Shell, Total and Exxon -- with the fifth, Partex, not invited. Others are China National Petroleum Corp., Korea National Oil Corp., Japan Oil Development Co., Norway’s Statoil ASA (STL), Occidental Petroleum Corp. (OXY) of the U.S., Russia’s OAO Rosneft (ROSN) and Italy’s Eni SpA. (ENI)
U.S., China Agree to New Cuts to Combat Climate Change
By Phil Mattingly and David J. Lynch Nov 12, 2014 8:12 PM GMT+0800
Nov. 12 (Bloomberg) -- President Barack Obama pledged deeper U.S. cuts in greenhouse-gas emissions and China will for the first time set a target for capping carbon emissions under a historic agreement the two countries announced today. Bloomberg's Stephen Engle has more on "Countdown." (Source: Bloomberg)
President Barack Obama pledged deeper U.S. cuts in greenhouse-gas emissions and China will for the first time set a target for capping carbon emissions under an agreement between the world’s two biggest economies.
Culminating months of behind-the-scenes negotiations between U.S. and Chinese officials, Obama and Chinese President Xi Jinping outlined the accord, which they said would help push other nations to negotiate a global pact next year in Paris.
“This is a major milestone in the U.S.-China relationship,” Obama said at a news conference with Xi in Beijing. The two nations, which account for more than a third of greenhouse-gas emissions, have a “special responsibility” to lead efforts to address climate change, he said.
A Global Push to Save the Planet
The climate deal capped two days of meetings and announcements of deals that Obama and Xi said marked a high point for U.S.-China cooperation. Officials from both countries also negotiated a breakthrough in talks to eliminate tariffs on communications and technology products from printer cartridges to magnetic-resonance imaging machines, vowed greater military coordination and extended the validity of visas for tourists and business travelers.
Obama is setting a new target for the U.S., agreeing to cut greenhouse gas emissions to 26 to 28 percent below 2005 levels by 2025. The current U.S. target is to reach a level of 17 percent below 2005 emissions by 2020.China’s Commitments
Xi committed China to begin reducing its carbon dioxide emissions, which have risen steadily, by about 2030, with the intention of trying to reach the goal sooner, according to a statement released by the White House.
China, the world’s largest greenhouse-gas emitter, also agreed to increase its non-fossil fuel share of energy production to about 20 percent by 2030, according to the White House.
Obama called the plan “an ambitious but an achievable goal.”
The agreement may signal an opening to the new relationship that both leaders said they sought after being at odds over computer hacking attacks that federal law enforcement officials suspect originated in China, territorial disputes involving two U.S. allies and probes by Chinese prosecutors of American companies such as Microsoft Corp.
Personal Involvement
Obama and Xi were personally involved in the discussions. Obama sent Xi a letter on the matter this year, according to administration officials, and the topic was a central theme during the more than five hours of meetings last night in Beijing after the Asia-Pacific Economic Cooperation summit.
One outcome may be fresh momentum for international negotiators in advance of the 2015 United Nations climate conference in Paris.
“These are big emitters, and these are very aggressive targets,” Martijn Wilder, head of global environmental markets at law firm Baker & McKenzie, said today by phone from Sydney. “This makes it very difficult for other countries to say we’re not going to do anything.”
European Union Parliament President Martin Schulz said the announcement shows that the drive toward the UN climate talks is “clearly growing.”
Big Impact
Jake Schmidt, director of international programs for the Natural Resources Defense Council, a Washington-based environmental group, said no other countries can have as big an impact on the climate debate as the U.S. and China.
“They shape how the market invests,” he said. “They’ve also been two of the most difficult players in the history of the climate negotiations so the fact that they are coming out and saying they are going to take deep commitments will be a powerful signal to the rest of the world.”
Obama, at a UN-sponsored climate meeting in New York in September, called on the more than 120 officials present to take action “not this year, or the year after, but right now, because no nation can meet this global threat alone.”
Chinese officials signaled at the same summit that the country would act on a carbon-dioxide cap soon. China has been taking steps to cut emissions, saying in September it plans to start a national carbon-trading market by 2016. China selected seven cities and provinces, including Shanghai, Beijing and Guangdong, to set regional caps and institute pilot programs for trading rights as part of its initiative to cut emissions by as much as 45 percent before 2020 from 2005 levels.
China’s Pollution
China has domestic political reasons to pursue emissions cuts. Pollution in Beijing reached hazardous levels for at least 10 days in October. To cut the haze while leaders from APEC nations were in Beijing, the government put limits on the number of cars on the roads and restricted industrial production and construction.
Obama has made climate change a central issue for his final two years in office, though his agenda is under attack by Republicans, who are set to take control of both chambers of Congress at the start of next year.
The administration officials, who briefed reporters before the announcement on condition of anonymity, said the new targets can be implemented without congressional action.
Republicans, who won control of the U.S. Senate in midterm elections on Nov. 4, are threatening to fight the administration’s efforts to cut greenhouse-gas emissions from U.S. power plants and his pledge to raise $100 billion to help poor nations combat climate change.
Saudi Arabia Leads OPEC Crude Output Lower Before Meeting
OPEC said Saudi Arabia led declines in the group’s oil output last month, weeks before its 12 members meet to decide whether to trim a global supply glut that drove crude prices into a bear market.
Saudi Arabia’s production fell 69,900 barrels a day to a seven-month low of 9.603 million, the Organization of Petroleum Exporting Countries said in a monthly report. The data are based on estimates from sources including analysts and media organizations. OPEC’s members pumped 30.253 million barrels a day, a decrease of 226,400 barrels, the largest since March. There are signs of global economic recovery, it said.
Brent crude futures, used to price more than half the world’s oil, traded near a four-year low today on speculation that OPEC’s biggest members will refrain from paring output to drain a global surplus. Manufacturing indicators from the U.S., Japan, China and Germany show that the economic recovery is progressing, according to the organization.
Oil Prices
“The improvement in manufacturing activities is positively impacting oil consumption,” OPEC’s Vienna-based research department said in its monthly oil market report. “Any additional improvement in the economies of major oil-consuming countries should help the demand trend to pick up further.”
Saudi Submission
Saudi Arabia’s own submission showed a decrease of 13,700 barrels daily to 9.69 million barrels. The group didn’t publish an estimate for its total output in October based on countries’ own submissions because Venezuela didn’t provide one.
The organization’s forecasts for global demand, and the amount of crude it will need to supply this year and next, were unchanged from its last monthly report. World oil consumption will increase by 1.19 million barrels a day in 2015 to 92.38 million a day, it said.
OPEC’s production in October, while in line with the average amount the group considers needed in the fourth quarter, is about 1.8 million barrels a day higher than the 28.4 million it expects will be required in the first quarter of next year. The world will need an average 29.2 million barrels a day from the group in 2015, it said.
Libya Restart
Libya alone among OPEC members increased output in October, boosting production by 59,100 barrels a day to 842,000 a day. Testing is under way at Sharara, the country’s biggest oilfield, in order to resume production after an attack by gunmen last week, National Oil Corp. spokesman Mohamed Elharari said by phone today from Tripoli.
OPEC won’t cut its collective crude output at its Nov. 27 conference in Vienna, and global oil prices will stabilize once the surplus is absorbed by the market, Kuwait Oil Minister Ali Al-Omair said in Abu Dhabi Nov. 10.
Total oil inventories in the most-developed nations are 8.1 million barrels below their five-year average, at 2.7 billion barrels, while crude stockpiles in these nations are 18 million barrels above the five-year mean, according to the report.
The International Energy Agency, a Paris-based adviser to consuming nations on energy policy, will release its monthly market report on Nov. 14. In a longer-term outlook published today, the agency said that “the short-term picture of a well-supplied oil market should not disguise the challenges that lie ahead” to meet growing demand.
(A previous version of this story corrected the comparative period of drop in Saudi supply in the second paragraph.)
Abu Dhabi’s Taqa Cuts 2014 Spending After Oil Prices Fall
Abu Dhabi National Energy Co. (TAQA), the U.A.E.-controlled utility, cut spending for 2014 after oil prices collapsed and it reported profit fell 27 percent.
Capital expenditures will be 6.8 billion dirhams ($1.85 billion) this year, down 2 billion dirhams from last year, and fourth-quarter spending is being reviewed, the state-owned company known as Taqa said in a statement to the Abu Dhabi stock exchange today. Third-quarter profit fell to 107 million dirhams and revenue dropped 6.3 percent from a year earlier.
Oil slumped into a bear market last month, prompting Ecuador, Venezuela and Libya to call for action to halt the slide. United Arab Emirates Energy Minister Suhail Al Mazrouei told reporters in Abu Dhabi that the collapse may deter investment in projects predicated on $100 a barrel crude.
Taqa’s efforts to cut costs and focus capital investments “are even more important now in today’s challenging commodity price environment,” Edward LaFehr, chief operating officer, said in the statement.
The shares fell 1 percent in Abu Dhabi trading, increasing the decline this year to 33 percent. Brent oil retreated 0.6 percent to $81.21 a barrel, extending its drop to 27 percent this year.
The company operates in Canada, Ghana, India, Iraq, Morocco, the Netherlands, Oman, Saudi Arabia, the U.K., U.S. and U.A.E. Last year, the company took over oil field operations in Iraq and energy deposits in the U.K. from BP Plc. (BP/) The utility reduced its debt by over 3 billion dirhams, partly by selling undeveloped land in Alberta, Canada.
Construction Revenue
Revenue from oil and gas dropped 7.8 percent in the quarter to 3.18 billion dirhams. Electricity and water sales declined 8.4 percent to 2.4 billion dirhams.
Taqa plans to start full commercial operations at its Bergermeer gas-storage facility in the Netherlands in April after the business began running with partial capacity earlier this year. Drilling at the company’s Atrush oil block in the Kurdish region of northern Iraq resumed after an interruption caused by increased regional instability in August, and the company expects to start producing oil on schedule late in 2015, it said.
Taqa plans to use cash flow and money from the sale of non-core assets to repay a $1 billion bond maturing in 2016, Chief Financial Officer Ryan Wong said on an earnings conference call. The security yielded 1.2 percent at 4:34 p.m. in Abu Dhabi, with a coupon of 5.875 percent.
Crude oil prices recoil after OPEC report
NEW YORK, Nov. 12 (UPI) -- U.S. and global crude oil price indices moved lower in Wednesday trading after OPEC raised its outlook for world oil production moving forward.
The Organization of Petroleum Exporting Countries said in its November market report output from its members declined by 230,000 barrels per day as production from North America cuts into imports.
The price for the 12 crude oil blends that make up the reference basket from OPEC members was $77.27 per barrel, down more than 10 percent from one month ago.
Though OPEC output declines, the organization said non-OPEC producers add another 1.68 million barrels per day this year, with the United States, Canada, Brazil and China contributing to the gains.
By next year, non-OPEC supply grows by another 1.24 million bpd.
"Demand for OPEC crude is estimated at 29.5 million bpd in 2014," the market report said. "In 2015, required OPEC crude is seen averaging 29.2 million bpd."
Brent, the global price benchmark, traded down more than 70 cents to $80.96 in early Wednesday trading.
Crude oil prices have shed more than 20 percent of their value since June. When announcing their third-quarter earnings, several energy companies focused on exploration and production have cut their investment forecasts because of declining oil markets.
West Texas Intermediate, the U.S. benchmark, was down 86 cents per barrel to trade near $77 for the December contract.
Low gas prices translate to high consumer confidence
ALEXANDRIA, Va., Nov. 12 (UPI) -- The National Association of Convenience stores said Wednesday less cash spent at the gas station should translate to more money going to holiday spending.
NACS found consumer sentiment was buoyed by lower retail gasoline prices in the United States. It said that, for every 1 cent gas prices decline, U.S. consumers are saving a collective $3.7 million per day at the pump.
In its survey of consumer optimism, the industry group found a high level of confidence going into the holiday season, which corresponds to the long trend downward for gasoline prices.
Jeff Lenard, vice president for strategic initiatives at NACS, found low gas prices usually correspond with an upbeat consumer outlook.
"However, declining gas prices alone may not take consumer sentiment much higher in the short term," he said in a statement. "It may take similarly positive news about the economy as a whole before the majority of Americans feel positive about the economy."
Gasoline prices in the United States passed below the psychological threshold of $3 per gallon during the first weekend in November, the first time that happened in nearly four years. The national average price of $2.923 is about 3 tenths of one cent less than Tuesday's, though it was Sept. 25 the last time gasoline prices increased.
EIA: 'Modest' benefits from LNG exports
WASHINGTON, Nov. 12 (UPI) -- An increase in natural gas production from U.S. shale basins should support export growth, but the economic benefits will be modest, the government said.
The U.S. Energy Information Administration said in a daily brief Wednesday the increase in U.S. natural gas production should support as much as 80 percent of the potential increase in demand resulting from the steady gains in exports of liquefied natural gas from the Lower 48 states.
EIA in an analysis found LNG exports reach 2 billion cubic feet by next year, and eventually surge to as high as 20 billion cubic feet per day.
In its study, EIA found the "effects on overall economic growth [from the emerging LNG market] were positive but modest."
Construction began in Louisiana for the Cameron LNG plant in October. Once completed, it will be able to export 12 million tons of LNG, or around 1.7 billion cubic feet per day.
In September, the Federal Energy Regulatory Commission gave its consent for the Dominion Cove Pont LNG project in Maryland, authorized to export up to 770,000 cubic feet of LNG per day to countries that don't have a free-trade agreement with the United States.
Supporters of LNG exports argue it would provide a source of economic stimulus, while detractors say it would lead to more hydraulic fracturing, the controversial drilling practice known also as fracking.
The International Energy Agency said U.S. exports of LNG are not the panacea "talked up by some" in Washington.
U.S. oil bubble bursts by 2020s, IEA warns
PARIS, Nov. 12 (UPI) -- "Breathing space" in global crude oil markets ushered in by U.S. shale oil output doesn't mean the glut will last forever, the IEA said in a Wednesday report.
The International Energy Agency said in its annual report oil supplies rise globally to 104 million barrels per day by 2040. The poles of demand, meanwhile, shift to Central Asia and the Middle East, which eventually take over after Chinese and U.S. demand levels out.
IEA Chief Economist Fatih Birol said there are challenges ahead in terms of meeting expected global oil demand despite recent trends from North America.
"The apparent breathing space provided by rising output in the Americas over the next decade provides little reassurance, given the long lead times of new upstream projects," he said in a statement.
The U.S. Energy Information Administration said in its latest monthly report that total crude oil production averaged 8.7 million barrels per day in September, the highest monthly level in more than a quarter-century. If realized, the 2015 forecast of 9.5 million bpd would be the highest annual average level since 1970.
That level of production has ushered in a sea change in a global oil market once swayed by the output from the Organization of Petroleum Exporting Countries. In its market report for November, OPEC said oil supply from producers outside the 12-member group grows by 1.24 million bpd next year, with North America in part leading the way.
"In October, OPEC crude oil production averaged 30.25 million bpd, according to secondary sources, a decrease of 230,000 bpd from the slightly upwardly revised September figure of 30.48 million bpd," the November report read.
IEA warns, however, the growth in U.S. shale oil production "levels off" by the next decade and Middle East producers once again take the lead as the major source of new oil supplies.
"A well-supplied oil market in the short-term should not disguise the challenges that lie ahead, as the world is set to rely more heavily on a relatively small number of producing countries," Birol said.
Tullow latest to cut back in bear oil market
LONDON, Nov. 12 (UPI) -- London-based energy company Tullow Oil said Wednesday it's joining the list of companies reviewing its cost base in response to lower crude oil prices.
"In light of current oil and gas sector challenges including the commodity price environment, we are reviewing our capital expenditure and our cost base to ensure that Tullow is well-positioned for future success," Chief Executive Officer Aidan Heavey said in a statement.
Crude oil prices have shed about 20 percent of their value since June to trade well below the $100 mark. Sustained prices at around $80 per barrel have raised questions as to whether or not some long-term investment projections were sustainable.
Austrian energy company OMV last week said it was reviewing its investment programs to respond to the "more challenging operating environment." The Norwegian Oil and Gas Association, an industry group in one of Europe's largest energy producers, said it too was trimming its forecast because of lower oil prices.
Tullow's chief said the short-term strategic focus for the company was in West Africa, where by 2017 it expects to be producing at net 100,000 barrels of oil per day.
In Ghana, the company said it was discussing with the government development plans for the giant Jubilee field, which Tullow estimates could eventually produce more than 125,000 barrels of oil per day.
The region's deepwater Tweneboa-Enyenra-Ntomme prospect should deliver its first oil by 2016. At its peak, it is expected to produce about 80,000 bpd.
"Tullow remains exploration-led and will continue to add further high quality frontier acreage so that, as conditions allow, we can return to drilling the types of prospects that have given us the development portfolio we have today," Heavey said.
British government funding so-called shale colleges
LONDON, Nov. 12 (UPI) -- The British government said Wednesday it was seizing the shale moment through the creation of university programs aimed at training the next energy generation.
British Energy Minister Matthew Hancock said new centers of excellence established at the best universities in the country will train the next generation of specialists for the fledgling shale industry.
"Shale gas is an enormous opportunity for the U.K. and one that we simply can't afford to miss out on," he said in a statement. "I am not prepared to pass up a once-in-a-generation economic opportunity, with the potential for industry to invest up to $52 billion in the next 15 years or so."
Hancock said the government is offering $1.1 million in development funds, which will be matched by the industry itself, to establish research and development programs for the emerging shale sector.
Long term, British investments in shale could reach $5.8 billion per year and support 74,000 jobs. Only by establishing the knowledge base now can the government capitalize on the expected shale future, the minister said.
The government in April offered $3.3 million to companies that come up with new ways to produce or explore shale gas, including environmental management and reservoir monitoring.
The emerging shale industry has been met with fierce opposition from environmental activists worried about the safety of hydraulic fracturing, the controversial drilling practice known also as fracking. Campaigners have expressed alarm over everything from land owner rights to groundwater contamination and drilling-related tremors.
Hancock said if the British government had taken a hesitant approach with prospects in the deep North Sea waters 50 years ago, the country would be in dire economic straits.
Last year, the British Geological survey estimated shale basins in the country may hold more than 1.3 quadrillion cubic feet of natural gas, a level the government said could help an economy with natural gas imports on pace to increase from 45 percent of demand in 2011 to 76 percent by 2030.
Low oil prices should boost world economic growth: IMF
In a report to the G20 group of leading industrial powers ahead of the leaders' summit in Brisbane this weekend, the IMF said the world economy still faces stiff headwinds from a number of areas, particularly sluggish growth in Europe.
WASHINGTON: The fall in oil prices to their lowest levels in more than three years should give a boost to the sagging world economy, the International Monetary Fund said on Wednesday (Nov 12).
In a report to the G20 group of leading industrial powers ahead of the leaders' summit in Brisbane this weekend, the IMF said the world economy still faces stiff headwinds from a number of areas, particularly sluggish growth in Europe.
But after a nearly 20 per cent fall in prices since September, the Fund said, "all else equal, the recent appreciable fall in oil prices, if sustained, will boost growth."
The report stuck to the IMF's 3.3 per cent pace of world growth for this year, and 3.8 per cent next year, citing weakness in the eurozone, more threats from geopolitical tensions and potential sharp corrections and volatility in financial markets.
It also noted that lower oil price is a double-edged sword, hurting countries dependent on crude exports which are already experiencing slower growth, especially Russia.
"Downside risks continue to be associated with geopolitical tensions, further corrections in financial markets, low inflation in some advanced economies, low potential growth globally, and secular stagnation in advanced economies, and US monetary policy normalisation," the report said.
On Wednesday, US Treasury Secretary Jacob Lew raised pressure on Europe's leaders ahead of the summit, criticising "status quo policies" and warning that "the world cannot afford a European lost decade." The world cannot "rely on the United States to grow fast enough to make up for weak growth in major world economies," he said in a speech.
- AFP/de
