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RE: OPEC, for some quiet moments.. - admin - 01-04-2016

Qatar’s RasGas Co. has reached a new pricing agreement for an existing 25-year contract with Petronet LNG Ltd., India’s biggest gas importer that lowers the price of the fuel by almost half starting Jan. 1. The pact will help Petronet reduce what it pays for RasGas supplies to $6 to $7 per million British thermal units from about $13, India’s Oil Minister Dharmendra Pradhan told reporters in New Delhi on Thursday. A penalty for taking less- than-contracted volumes this year amounting to about 120 billion rupees ($1.8 billion) on Petronet has been waived by the Qatari company, he said.

RasGas, Petronet revise LNG contract to lower Indian gas prices

Oil explorers shut down more rigs in U.S. fields to finish out the worst year for drilling cutbacks in almost three decades. Rigs targeting crude in the U.S. fell by 2 to 536 in the past week, Baker Hughes Inc. said on its website Thursday. Natural gas rigs were unchanged at 162, bringing the total of working rigs to 698. Drillers searching for oil this year idled the largest proportion of their rig fleet since at least 1988.

Worst year for rigs in quarter century closes with a whimper

Cheniere Energy Inc. began production at what will become the first terminal to export natural gas from America’s shale formations, according to ING Capital LLC, which helped finance the project. The company is receiving about 50 MMcfd of the fuel, chilling it into liquefied natural gas at the Sabine Pass terminal in Louisiana, and storing it in tanks before the first export, Richard Ennis, head of natural resources at ING, said by email on Wednesday. Ennis said he receives regular updates from the company and that he hadn’t been informed of a delay in the startup. Cheniere spokeswoman Faith Parker didn’t immediately respond to telephone and emailed requests for comment on Wednesday.

Cheniere starts producing at shale gas export terminal, ING says

Iran is trying to regain its lost share of global crude sales and has no intention of harming the oil market with its planned increase in production once sanctions are lifted from its economy, Oil Minister Bijan Namdar Zanganeh said. “The oil ministry intends to boost Iran’s crude oil exports by an aggregate of 1 MMbopdin two phases,” Zanganeh said, according to the official Islamic Republic News Agency. In the first phase, Iran will raise exports by 500,000 bopd within a week after the removal of international sanctions, he said. The country will add another 500,000 bopd in a second phase within six months after the curbs end, Zanganeh said.

Iran says its planned boost in oil exports won’t harm market

RE: OPEC, for some quiet moments.. - admin - 01-05-2016

Since last summer, Bob Dudley, the CEO of the British oil giant BP, has been cautioning that he expects oil prices to stay “lower for longer.” Now he believes he’s determined how much longer those prices may decline, and when they may start rising again. “A low point could be in the first quarter [of 2016],” Dudley said in an interview broadcast Saturday by the BBC. “But 2016’s third and fourth quarters could witness a more natural balance between supply and demand, after which stock levels could start to wear off.”

BP’s CEO Finally Sees Oil Prices Bottoming Out |

The available exploration information in the South China Sea is either limited or old. So, there are assumptions, but evidence is shaky. The EIA estimates there may be nearly 11 billion barrels of oil and 190 trillion cubic feet of natural gas in proved and probable reserves all based on 2013 estimates and of course, 2013 prices. Not only were these reserves thought to be somewhat inflated at the time, but given the lower pricing currently available, this is potentially far less. Much of these proved and probable reserves also reside in uncontested areas of the South China Sea, making for safer, albeit potentially difficult investments. This is an important distinction to make since we should be focusing on the contested areas of the South China Sea when referring to the current feasibility of oil and gas operations in the South China Sea. The core disputes in the South China Sea revolve around the Spratly and Paracel Islands, along with various shoals throughout the region typically located closer to the Philippines.

Oil Companies Shun South China Sea As Geopolitical Tensions Rise |

At almost any other time, an escalating diplomatic conflict between OPEC members Iran and Saudi Arabia would mean a spike in oil prices. That the rally this time couldn’t be sustained shows just how abnormal things are in the oil market. Brent crude is little changed this week as a global supply glut and the slowest Chinese growth in a generation trumped mounting strife between the nations on either side of the world’s busiest waterway for oil tankers.

Why Oil Prices Falling in Response to Saudi Iran Tensions - Bloomberg Business

In the aftermath of another inconclusive meeting of the Organization of Petroleum Exporting Countries, oil prices have been testing their lows from the 2008-9 financial crisis,  For all the attention and speculation devoted to OPEC-watching whenever they meet, the question we should be asking about OPEC is whether the current situation shares enough of the elements that defined those periods in the past when the cartel's actual market control lived up to its reputation.

Energy Outlook: Has OPEC Lost Control of the Price of Oil?

RE: OPEC, for some quiet moments.. - jft310 - 01-06-2016

By Nick Cunningham
Posted on Mon, 28 December 2015 23:48 | 5
OPEC says that $10 trillion worth of investment will need to flow into oil and gas through 2040 in order to meet the world’s energy needs.

The OPEC published its World Oil Outlook 2015 (WOO) in late December, which struck a much more pessimistic note on the state of oil markets than in the past. On the one hand, OPEC does not see oil prices returning to triple-digit territory within the next 25 years, a strikingly bearish conclusion. The group expects oil prices to rise by an average of about $5 per year over the course of this decade, only reaching $80 per barrel in 2020. From there, it sees oil prices rising slowly, hitting $95 per barrel in 2040.

Long-term projections are notoriously inaccurate, and oil prices are impossible to predict only a few years out, let alone a few decades from now. Priced modeling involves an array of variables, and slight alterations in certain assumptions – such as global GDP or the pace of population growth – can lead to dramatically different conclusions. So the estimates should be taken only as a reference case rather than a serious attempt at predicting crude prices in 25 years. Nevertheless, the conclusion suggests that OPEC believes there will be adequate supply for quite a long time, enough to prevent a return the price spikes seen in recent years.

Related: Top 10 Oil And Gas Stories Of 2015

Part of that has to do with what OPEC sees as a gradual shift towards efficiency and alternatives to oil. The report issued estimates for demand growth five years at a time, with demand decelerating gradually. For example, the world will consume an extra 6.1 million barrels of oil per day between now and 2020. But demand growth slows thereafter: 3.5 mb/d between 2020 and 2025, 3.3 mb/d for 2025 to 2030; 3 mb/d for 2030 to 2035; and finally, 2.5 mb/d for 2035 to 2040. The reasons for this are multiple: slowing economic growth, declining population rates, and crucially, efficiency and climate change efforts to slow consumption. In fact, since last year’s 2014 WOO, OPEC lowered its 2040 oil demand projection by 1.3 mb/d because it sees much more serious climate mitigation policies coming down the pike than it did last year.

Of course, some might argue that even that estimate – that the world will be consuming 110 mb/d in 2040 – could be overly optimistic. Coming from a collection of oil-exporting countries, that should be expected. Energy transitions are hard to predict ahead of time, but when they come, they tend to produce rapid changes. Any shot at achieving the world’s stated climate change targets will require a much more ambitious effort. While governments have dithered for years, efforts appear to be getting more serious. More to the point, the cost of electric vehicles will only decline in real dollar terms over time, and adoption should continue to rise in a non-linear fashion. That presents a significant threat to long-term oil sales.

Related: Oil Prices Charging Lower As Oversupply Concerns Plague Traders

At the same time, OPEC also issued a word of caution in its report. While oil markets experience oversupply in the short- to medium-term, massive investments in exploration and production are still needed to meet demand over the long-term. OPEC believes $10 trillion will be necessary over the next 25 years to ensure adequate oil supplies. “If the right signals are not forthcoming, there is the possibility that the market could find that there is not enough new capacity and infrastructure in place to meet future rising demand levels, and this would obviously have a knock-on impact for prices,” OPEC concluded. About $250 billion each year will have to come from non-OPEC countries.
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In a similar but more disconcerting conclusion, the Oslo-based Rystad Energy recently concluded that the current state of oversupply could be “turned upside down over the next few years.” That is because the drastic spending cuts today will result in a shortage within a few years. To put things in perspective, Rystad says that the oil industry “needs to replace 34 billion barrels of crude every year – equal to current consumption.” But as a result of the collapse in prices, the industry has slashed spending across the board and “investment decisions for only 8 billion barrels were made in 2015. This amount is less than 25% of what the market requires long-term,” Rystad Energy concluded. The industry cut upstream investment by $250 billion in 2015, and another $70 billion could be cut in 2016. The latter figure did not take into account the recent decision by OPEC to abandon its production target, which sent oil prices falling further.

Related: Oil Bankruptcies Mark Devastating End Of The Year For U.S. Drillers

So what are we to make of this? There could be plenty of oil supplies in the future, but as it stands, the industry is massively underinvesting? This illustrates a troubling tension within the oil industry. Oil prices will be set by the marginal cost of production, and recent efficiency gains notwithstanding, marginal costs have generally increased over time. Low-cost production depletes, and the industry becomes more reliant on deep-water, shale, or Arctic oil, all of which require higher levels of spending. In many cases, these sorts of projects are not profitable at today’s prices. The price spikes seen in 2011-2014 sowed the seeds of the current bust, but the pullback today could create the conditions of another spike in the future. OPEC could be a bit too sanguine with its call for $95 oil in 2040.

At the same time, future price spikes set up the possibility of much greater demand destruction, especially if alternatives become more viable. This is the difficult balancing act that the industry must pull off over the next few decades.

By Nick Cunningham of Oilprice

RE: OPEC, for some quiet moments.. - admin - 01-06-2016

["OPEC says that $10 trillion worth of investment will need to flow into oil and gas through 2040 in order to meet the world’s energy needs."]

Yes, probably. Old fields are declining, (by what? some 5% a year or so). However, Opec is also notoriously optimistic about future energy needs. They basically predict no influence from alternatives, energy savings, electric cars, climate agreements and future innovation which could drastically alter the picture.

The decline of battery cost is steep, for instance. That's bad for oil, but good for natural gas.

RE: OPEC, for some quiet moments.. - admin - 01-06-2016

Libya’s National Oil Corp. issued a “cry for help” as Islamic State militants attacked a second oil tank in the region of Es Sider, the country’s biggest oil port which has been closed for more than a year, according to the state-run National Oil Corp. Militants attacked an oil tank in Es Sider on Tuesday, setting it on fire, according to a statement on the NOC website. Islamic State had shelled a tank in the nearby Ras Lanuf oil terminal region on Monday during a clash with Petroleum Facilities Guard forces.

Libya issues ‘cry for help’ as Islamic State attacks oil tanks

Oil dropped to a two-week low on speculation that a government report will show U.S. crude inventories climbed last week. Futures fell as much as 1.9% in New York. Stockpiles probably rose the 13th time in 15 weeks, keeping them more than 130 MMbbl above the five-year average, a Bloomberg survey showed. The American Petroleum Institute will release its weekly data today while the Energy Information Administration will report on Wednesday. Supplies at Cushing, Oklahoma, the biggest U.S. storage hub, climbed to a record last month, according to the EIA.

Oil falls to two-week low as U.S. stockpiles seen nearing record

Energy investors got clobbered in 2015, and are hoping for things to turn positive as we head into the New Year. What can we expect in 2016? Here is a rundown of some key trends to watch for:

10 Key Energy Trends To Watch For In 2016 |

Europe is facing a new conflict - a potential gas price war between US LNG and Russian pipeline gas. Siobhan Hall, Nadia Rodova and Stuart Elliott look at the impact of US LNG prices on Russia's gas supply plans for Europe, as well as the EU's divided response to Russia's controversial Nord Stream 2 gas pipeline project. Are the EU and Russia ready for an open relationship on gas, or will the EU's fling with the US prove too much for its current biggest supplier?

EU bets on new US LNG imports to take on Russia's gas dominance

RE: OPEC, for some quiet moments.. - admin - 01-07-2016

The world's densest network of oil pipelines runs through Saudi Arabia's Shia heartland. It is now the epicentre of a deadly struggle... The risk for the Saudis is that the execution of Sheikh Nimr for what is essentially peaceful political protest ignites a long-simmering revolt by an aggrieved Shia minority, who make up 15pc of the population and are sitting on top of the giant Saudi oil fields in the Eastern Province. There were violent protests in the Sheikh’s home-town of Qatif on Monday, with at least one protestor shot dead by police. Ali al-Ahmed, director of the Institute for Gulf Affairs in Washington, said Qatif is the nerve-centre of the Saudi petroleum industry, the so-called “Grand Central Station” where 12 pipelines come close together to supply the huge oil terminals at Ras Tanura and Dharan. These pipelines are close to major roads and towns, making them hard to police against “hit and run” attacks.

Saudi showdown with Iran nears danger point for world oil markets - Telegraph

LNG Canada has announced that the BC Oil and Gas Commission (OGC) has issued an LNG Facility Permit for the project, one of the key permits required for the construction and operation of the proposed LNG Canada project. LNG Canada is the first LNG project in British Columbia to receive this permit, which focuses on public and environmental safety, and specifies the requirements the project must comply with when designing, constructing and operating the proposed LNG export facility in Kitimat.

LNG Canada receives BC Oil and Gas Commission permit

Cheniere Energy Inc. began production at what will become the first terminal to export natural gas from America’s shale formations, according to ING Capital LLC, which helped finance the project. The company is receiving about 50 MMcfd of the fuel, chilling it into liquefied natural gas at the Sabine Pass terminal in Louisiana, and storing it in tanks before the first export, Richard Ennis, head of natural resources at ING, said by email on Wednesday. Ennis said he receives regular updates from the company and that he hadn’t been informed of a delay in the startup. Cheniere spokeswoman Faith Parker didn’t immediately respond to telephone and emailed requests for comment on Wednesday.

Cheniere starts producing at shale gas export terminal, ING says

The Barnett shale contains estimated mean volumes of 53 Tcf of shale natural gas, 172 MMbbl of shale oil and 176 MMbbl of natural gas liquids, according to an updated assessment by the U.S. Geological Survey (USGS). This estimate is for undiscovered, technically recoverable resources. The previous USGS assessment of the Barnett shale, which is located in Texas, was released in 2003 as part of an assessment of conventional and unconventional reservoirs of the Bend Arch-Fort Worth Basin Province. That assessment estimated a mean of 26.2 Tcf of undiscovered natural gas and 1.0 Bbbl of undiscovered natural gas liquids within the Barnett shale. Potential oil resources were not quantitatively assessed for the Barnett at that time.

USGS doubles Barnett shale gas estimate on new study

RE: OPEC, for some quiet moments.. - admin - 01-08-2016

Saudi Arabia is considering an IPO of Saudi Aramco, the world’s biggest crude oil producer, deputy crown price Mohammed bin Salman says in an interview with The Economist.Saudi officials say the company is worth "trillions of dollars," which would make it worth at least double Apple's ~$555B market cap; in the energy sector, Exxon Mobil's current market cap is ~$324B.Aramco’s oil production is double its nearest rivals and accounts for more than 10% of global output, but the slump in crude prices to 12-year lows has squeezed revenue for oil producers including Saudi Arabia.Such a move would be an "epochal change in the oil industry,” says Bob McNally, founder of Washington-based consultant The Rapidan Group and a former senior oil White House official. “Saudi Arabia is getting ready to ride the oil-price roller-coaster, not control it."

Saudis considering IPO for Saudi Aramco, bin Salman says | Seeking Alpha

Daniel Yergin and other experts say that U.S. tight oil is the swing oil producer of the world. They are wrong. It is preposterous to say that the world’s largest oil importer is also its swing producer. There are two types of oil producers in the world: those who have the will and the means to affect market prices, and those who react to them. In other words, the swing producer and everyone else. A swing producer must meet the following criteria

Why The U.S. Can't Be Called A "Swing Producer" | Zero Hedge

Everyone knows that at $35/barrel oil, virtually every U.S. shale company is cash flow negative and is therefore burning through cash and other forms of liquidity such as bank revolvers and term loans, just as everyone knows that should oil remain at these prices, the U.S. shale sector is facing an avalanche of defaults. What is less known is who will be the next round of companies to default. One good place to get an answer is to find which companies' bankers are quietly tightening the liquidity noose (because they don't want to be stuck holding worthless assets in bankruptcy or for whatever other reason), by quietly reducing the borrowing base on existing credit facilities.

These Shale Drillers Could Soon Default As Credit Options Run Out - Yahoo Finance

U.S. shale explorers will be able to bring new supply to market this year even with most of the rig fleet idled and drilling budgets cut to the bone. Their secret: thousands of mothballed wells. Companies from Exxon Mobil Corp. to EOG Resources Inc. have 3,994 wells drilled between Jan. 1, 2014, and Aug. 31 with active permits that had not been completed as of Dec. 18, according to William Foiles and Andrew Cosgrove, analysts at Bloomberg Intelligence.

Shale explorers pump oil on the cheap from slumbering U.S. wells

RE: OPEC, for some quiet moments.. - admin - 01-11-2016

Drillers in the U.S. idled 20 oil-directed rigs this week, according to the latest data from Baker Hughes. The service provider reported 516 rigs seeking on oil Friday, with the Permian basin taking the biggest hit as drillers idled nine rigs. The Williston basin saw four rigs sidelined, while the Eagle Ford dropped three.

U.S. drillers idle 20 oil-directed rigs: Baker Hughes

Iran’s diplomatic rift with regional rival Saudi Arabia will stiffen the challenge it faces in attracting foreign investment once sanctions on its economy are lifted, according to analysts from IHS Inc., Energy Aspects Ltd. and Emirates NBD PJSC. The breakdown in ties stoked tensions just as Iran is preparing for the removal of sanctions. An international agreement to limit Iran’s nuclear program, when it takes effect, would free the country to seek more than $100 billion in investment it says it needs to rebuild its oil and natural gas industries.

Iran's bid for oil investment at risk from Saudi clash

Canada's National Energy Board (NEB) has approved the application of LNG Canada Development Inc. for a 40-year natural gas export license with a maximum term quantity of 1,494 Bcm. The issuance of this licence is subject to the approval of the Governor in Council.  This is the first 40-year natural gas export license approved by the NEB since the amendment to the National Energy Board Act in June 2015 as well as the corresponding regulations. Previously, the maximum term length was 25 years.

Canadian regulator approves LNG Canada export license

Saudi Aramco has confirmed that it is considering an initial public offering. According to a statement released Friday, the company has been studying various options to allow broad public participation in its equity through the listing in the capital markets of an appropriate percentage of the company’s shares and/or the listing of a bundle of its downstream subsidiaries.

Saudi Aramco confirms consideration of IPO

RE: OPEC, for some quiet moments.. - admin - 01-12-2016

Half of U.S. shale oil producers could go bankrupt before the crude market reaches equilibrium, Fadel Gheit, said Monday. The senior oil and gas analyst at Oppenheimer & Co. said the "new normal oil price" could be 50 to 100 percent above current levels. He ultimately sees crude prices stabilizing near $60, but it could be more than two years before that happens.

Half of US shale drillers may go bankrupt: Oppenheimer's Gheit

Crude declined to a 12-year low, confirming the view of hedge funds that cut bullish price bets to the lowest since 2010. WTI futures dropped in New York. Futures dropped as much as 4.7% in New York, adding to last week’s 10% decrease. Speculators’ net-long position in West Texas Intermediate declined 24% in the week to Jan. 5, U.S. Commodity Futures Trading Commission data show. Producer prices in China fell for a record 46th month, bolstering concern about the world’s second-biggest economy. A rapid appreciation of the U.S. dollar may send Brent oil to as low as $20/bbl, Morgan Stanley said.

Crude tumbles to 12-year low as hedge funds head for exit

The big drop in rig count for the week that ended last Friday points to capitulation by U.S. shale drillers. The total land rig count fell by 37 rigs and the horizontal rig count fell by 30 rigs (Figure 1). That’s the biggest drop since March 2015 and it suggests that drillers are out of cash. Until now, companies have been rationing dwindling funds from secondary share and bond offerings as well as equity capital.

As Rig Count Plunges, Has U.S. Oil Reached Its Capitulation Point? |

The EIA has just published its latest update to the Drilling Productivity Report (DPR), and soon we will get their update to the Short Term Energy Outlook. These are the two documents in which the EIA take a stab at estimating where US production is going, as opposed to where it has been. Weakness in the Chinese economy has hung like a pall on the oil market since the turn of the year and there is nothing putting a floor under the oil price just yet, but to my eyes the decline of US shale production is now well established and that will eventually feed through into some support for the oil price.

Crashing Oil Prices And Dropping Rig Count Take Their Toll On U.S. Output |

RE: OPEC, for some quiet moments.. - admin - 01-13-2016

The Bear Case — Ed Morse, global head of commodities research at Citigroup “It would take an unusual series of supply disruptions to change this course of price behaviour. In the short-run the market outlook for oil is fairly bleak. After a year in which inventories probably grew at a rate of 1.4m barrels a day, stockpiles are continuing to grow as demand remains sluggish against the backdrop of a global economy growing more slowly than anticipated amid flattening demand from China for petroleum products.

The bull and bear case for crude oil -

The Bull Case — Paul Horsnell, head of commodities research at Standard Chartered “The market is not trading on the basis of any fundamentals, so there is no solid short-term floor at all. It could trade all the way down to $10 a barrel. That should be silly enough for everyone. But there is a very low buffer of spare sustainable capacity — at around 1 per cent — and a high level of unexpected supply outages, of which Libya is the largest single piece. But the market seems more concerned about this supply coming back, so the geopolitical premium in prices is almost zero. We expect the speed and the size of the return from outages to disappoint.

The bull and bear case for crude oil -

The rift between Saudi Arabia and Iran has quickly ballooned into the worst conflict in decades between the two countries. The back-and-forth escalation quickly turned the simmering tension into an overt struggle for power in the Middle East. First, the execution of a prominent Shiite cleric prompted protestors to set fire to the Saudi embassy in Tehran. Saudi Arabia cut off diplomatic relations and kicked out Iranian diplomatic personnel. Tehran banned Saudi goods from entering Iran. Worst of all, Iran blames Saudi Arabia for an airstrike that landed near its embassy in Yemen.

War Between Saudi Arabia And Iran Could Send Oil Prices To $250 |

As 2015 drew to a close, many in the global energy industry were praying that the price of oil would bounce back from the abyss, restoring the petroleum-centric world of the past half-century. All evidence, however, points to a continuing depression in oil prices in 2016 -- one that may, in fact, stretch into the 2020s and beyond. Given the centrality of oil (and oil revenues) in the global power equation, this is bound to translate into a profound shakeup in the political order, with petroleum-producing states from Saudi Arabia to Russia losing both prominence and geopolitical clout.

How Low Oil Prices Are Transforming Global Politics In Startling Ways |