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RE: OPEC, for some quiet moments.. - admin - 02-20-2016

Russian oil production may slump 14% in the next five to 10 years under a worst-case scenario prepared by the Energy Ministry. Crude output may drop to 460 million metric tons (9.2 MMbpd) by 2020-2025 from 534 million tons last year, before starting to show slight growth, the Energy Ministry’s press service said by email Thursday, in response to a report in Vedomosti newspaper. The worst case, prepared for the nation’s long-term energy strategy, envisages oil prices remaining at about $31–33/bbl in 2016-2017 with a rebound to $42 in 2020, it said.

Russia sees oil output slump in worst case amid OPEC talks

Explorers in U.S. oil fields stung by the quick rise and fall in the market last year are expected to move cautiously when crude prices begin to climb again. Bill Thomas, chief executive at EOG Resources Inc., the largest landholder in Texas’s Eagle Ford shale formation, told attendees at an industry conference in Houston on Wednesday that his company won’t start boosting output the first time oil hits $60/bbl.

It’ll take more than an oil rally to restart shale boom

The latest blow to the energy industry's collective psyche has been inflicted by National Oilwell Varco Inc, with the giant oilfield equipment maker warning the pace of drilling and fracing will only slow more as 2016 drags on. A 70% drop in crude prices since mid-2014 has affected not only NOV, but dozens of others throughout North America's oil patches, prompting tens of thousands of layoffs, eroding profits, depleting state and local tax revenue and, in a handful of cases, causing bankruptcies.

Shale industry's health expected to worsen

The Saudis may go public, OPEC’s in disarray, the U.S. is suddenly a global exporter, and shale drillers are seeking lifelines from investors as banks abandon them. Welcome to oil’s new world order, full of stresses, strains and fractures.

The Stressed-Out Oil Industry Faces an Existential Crisis - Bloomberg Business

RE: OPEC, for some quiet moments.. - admin - 02-23-2016

Drillers in the U.S. pulled 26 oil-directed rigs from the field this week as the count declined for the ninth straight week. Baker Hughes reported 514 rigs turning to the right on Friday. Of these, 413 were seeking oil and 101 were seeking natural gas.

Drillers idle 26 more oil rigs for ninth straight week of decline

Russia increased its dominance in Europe’s gas market last year, where it met 31% of demand as crude’s plunge made oil-linked prices more attractive. While the battle for customers is expected to intensify on rising LNG supplies, including from the U.S., Gazprom said earlier this month it saw no need to change policy and start a “price war.”

Russia has room to play Saudi oil game with EU gas, VEB says

It is no surprise that OPEC has had extreme difficulty coordinating a response to the latest price drops in the oil market. OPEC as a political and economic organization has largely been unable to achieve its central goals since inception in 1960. OPEC certainly never had the capability to prevent rapid price drops in crude when the market is flooded by alternate, non-OPEC sources, and over the past few decades, the organization has been degraded even further. Even now, supposed attempts to stabilize the market by maintaining January output levels ring quite hollow when compared to all the excess supply in the market.

OPEC Has Never Had As Much Power As People Think |

Despite the obvious pain in the energy sector for the last 18 months, major asset sales have been few and far between in the sector. The problem has been a classic one in markets – sticky prices leading to a wide gap between supply and demand in assets. Oil companies looking to shed assets either to become more efficient or because of financial distress have been holding out for higher prices under the expectation that oil prices would bounce back soon, creating significant option value in underwater assets. Buyers like private equity firms have been considerably less sanguine though, and have essentially only been willing to pay fire sale prices for most assets.

Firesale In Energy Assets |

RE: OPEC, for some quiet moments.. - admin - 02-24-2016

The world’s most powerful oilman brought a harsh message to Houston for executives hoping for a rescue from low prices: high-cost producers—many of them sitting in the room—need to either “lower costs, borrow cash or liquidate." For the thousands of executives attending the IHS CERAWeek conference, the message from Saudi Arabia oil minister Ali al-Naimi means deeper spending cuts, laying off more roughnecks and idling drilling rigs.

Saudi Arabia to U.S. oilmen: Cut costs or get out of business

Mark Papa, the former EOG Resources Inc. chief executive officer who helped create the shale industry more than a decade ago, said drillers are “grievously wounded” as crashing crude prices exact their toll. Shale explorers will be “decimated” in coming months amid a wave of restructurings and bankruptcies, fallout from the 70 percent drop in oil prices since mid-2014, Papa, who is now a partner at private-equity firm Riverstone Holdings LLC, said during a panel discussion at the IHS CERAWeek event in Houston on Tuesday. Low prices probably will linger for another 16 to 24 months before supply cuts cause a rebound, he said.

Shale Oil Architect Predicts Doom for Some Drillers Amid Slump - Bloomberg Business

Iran called a proposal by Saudi Arabia and Russia to freeze oil production “ridiculous” as it seeks to boost its own output after years of sanctions constrained sales. The proposal by Saudi Arabia, Russia, Venezuela and Qatar for oil producers to cap output at January levels puts “unrealistic demands” on Iran, Oil Minister Bijan Namdar Zanganeh said Tuesday, according to the ministry’s news agency Shana.

Iran calls proposed Saudi-Russian oil-output freeze ‘ridiculous’

Rystad Energy’s latest research expects Iranian crude oil production to rise to 3.4 MMbpd in 2017, from approximately 2.8 MMbpd in 2015, reflecting the largest growth in oil production for almost a decade... However, Rystad Energy's analysis predicts that output will not reach the pre-sanction level, which is above 3.7 MMbopd, largely due to the country’s lack of new investment and declining production rates from maturing fields.

Iran seen producing 3.4 MMbopd in 2017 but falling short of pre-sanction levels

RE: OPEC, for some quiet moments.. - admin - 02-26-2016

The current crash in oil prices is sowing the seeds of a powerful rebound and a potential supply crunch by the end of the decade, but the prize may go to the US shale industry rather Opec, the world's energy watchdog has predicted.

Opec has failed to stop US shale revolution admits energy watchdog

The IEA forecasts in its "medium-term" outlook for the next five years that US production will fall by 600,000 barrels per day (b/d) this year and 200,000 next year as the so-called "fracklog" of drilled wells is finally cleared and the global market works off a surplus of 1m b/d. But shale will come back to life within six months - far more quickly than conventional mega-projects and offshore wells - once crude rebounds to $60. Shale output is expected to reach new highs of 5m b/d by 2021.

Opec has failed to stop US shale revolution admits energy watchdog

Come summer, the production freeze will amount to a cut in Saudi crude exports,” said Olivier Jakob, managing director of consultant Petromatrix GmbH in Zug, Switzerland. “By holding supply at January levels and not increasing when their domestic requirement for power generation is at its peak, there will be about 500,000 bpd less Saudi crude making its way to global markets.”

What a Saudi oil-supply freeze would really mean for markets

Cheniere Energy Partners, L.P. said Wednesday that the first commissioning cargo with LNG produced from the first liquefaction train of its Sabine Pass project in Cameron Parish, La., will depart imminently. The LNG is loading on the LNG carrier Asia Vision and will be heading to Brazil.

First LNG commissioning cargo set to depart Sabine Pass LNG terminal: Cheniere

RE: OPEC, for some quiet moments.. - admin - 02-26-2016

There are signs that sentiment may be shifting in regards to downtrodden emerging markets. A Pimco adviser says emerging market equities may be the "trade of the decade" and a "wonderful opportunity." The author of the argument, Christopher Brightman, points out that the Shiller P/E ratio (a measure which looks at cyclically adjusted earnings over the last decade) is now below 10 across the MSCI benchmark, and that this has only happened six times over the last 25 years.

Five Things You Need to Know to Start Your Day - Bloomberg Business

Iran's major fields are 70 years old and need sophisticated technology, yet foreign investors are wary of taking the plunge. Outside Opec, there will be a steady erosion of output in China, Mexico, Colombia, Egypt, Oman and the North Sea, all chipping away at global supply and leaving the world vulnerable as demand rises by an average of 1.2m b/d each year - hitting 100m b/d by 2020. China's demand will ratchet upwards by an accumulated 2.5m b/d even as its own output slips, a scissor effect likely to tighten the global market relentlessly from 2017 onwards.

Opec has failed to stop US shale revolution admits energy watchdog

Russia is perhaps the biggest casualty, given that it is trying to fund a superpower military status and cover half its budget comes from oil and gas revenues. Its output will fall by 275,000 b/d as the old Soviet fields in western Siberia go into decline. The Vankor, Uvat and Verkhnechonsk fields all boosted growth last year but there is little else new on the horizon. "Russia is expected to see the steepest output declines," said Mr Birol.

Opec has failed to stop US shale revolution admits energy watchdog

Strong demand should start to cut into an oil glut around the end of this year, even as new Iranian supplies enter the market and doubts persist over whether major oil producers will reduce output, BP's chief economist said on Wednesday. But a stock overhang could still linger for at least a year.

BP sees end in sight for oil glut, but impact will linger | Reuters

RE: OPEC, for some quiet moments.. - admin - 02-27-2016

U.S. oil drillers are finally beginning to buckle. For more than a year, American oil producers found a way to keep pumping despite a worldwide slide in crude prices. Like cartoon character Wile E. Coyote, U.S. drillers dashed off the cliff and somehow kept running in midair, maintaining volumes even as revenue plummeted. The companies’ latest projections, released in earnings reports in recent days, suggest gravity is finally taking hold.

U.S. Shale Oil Drillers are Finally Buckling - Bloomberg Business

Total has started up production at the offshore Vega Pleyade gas and condensate field in the Tierra del Fuego region of Argentina. Operated by Total, the project will have a production capacity of 10 MMcmgd (70,000 boed). "Vega Pleyade is Total's second start up this year and will contribute to our production growth in 2016 and for the years to come,” said Arnaud Breuillac, president of Total’s E&P division. “The project consists of the development of one of the largest offshore gas fields in Argentina and is the world's southern-most gas development.

Total starts production from Vega Pleyade field, offshore Argentina

Halliburton Co. said it’s cutting another 5,000 workers, or 8% of its global workforce, to cope with the worst crude market downturn in 30 years. The world’s second-largest oilfield services provider said last month it cut nearly 4,000 jobs in the final three months of 2015. With the latest layoffs, the company will have let go of nearly 29,000 workers, or more than a quarter of its headcount since staffing reached its peak in late 2014.

Halliburton cuts another 5,000 jobs to cope with downturn

"Even though LNG prices are depressed, Gorgon and other projects will run," said Neil Beveridge, senior analyst at Bernstein Research in Hong Kong. "But in terms of paying down that $54 billion capital charge, that's going to take an awful long time, if ever." Despite current low prices, Chevron Corp, the operator at Gorgon, remains confident the project will "create significant shareholder value" for the expected economic lifespan of more than 40 years.

As U.S. shale exports begin, Australia readies world's costliest gas project | Reuters

RE: OPEC, for some quiet moments.. - admin - 03-01-2016

Energy equities are unloved (institutional under-ownership is at an extreme level) and the sector's valuation, on some metrics, is at extreme lows. They are pricing in an oil price of around $55/bl long term, while the five-year-forward Brent oil price is around $65/bl. Energy equities will recover when sentiment towards crude oil improves. Given the poor sentiment currently, the recovery is likely to be significant. As it stands, we believe energy equities are fair value at a long-term oil price of around $55/bl, and offering 25% upside at $65/bl, 40% upside at $75/bl and 100% at a long-term oil price of $100/bl.

Q&A: When will oil prices rebound?

The recent winter months have been tough for oil, but a summer reprieve from plunging prices could be coming for the struggling energy markets. An expected fall in supply from producers outside of the Organization of the Petroleum Exporting Countries coupled with the just-announced four-nation agreement to freeze output should help the beaten down oil price find a bottom and jump around 50% by the of June, analysts at Bank of America Merrill Lynch said in a note on Friday.

Summer is coming for oil: 50% price spike ahead, says BofA - MarketWatch

U.S. oil drillers are finally beginning to buckle. For more than a year, American oil producers found a way to keep pumping despite a worldwide slide in crude prices. Like cartoon character Wile E. Coyote, U.S. drillers dashed off the cliff and somehow kept running in midair, maintaining volumes even as revenue plummeted. Drilling companies’ latest projections, released in earnings reports in recent days, suggest gravity is finally taking hold.

Shale drillers are finally buckling as OPEC pumps on

Russia has the capacity to target volumes over prices in its natural-gas sales, replicating Saudi Arabia’s oil strategy, according to state-owned Vnesheconombank’s chief economist. The Saudis compete with other crude suppliers by boosting oil production and cutting prices, Andrey Klepach of VEB, as the state bank is known, said Friday. “We could play the same role in gas, as we have the capacity for boosting gas exports and production,” he said in the Siberian city of Krasnoyarsk.

Russia has room to play Saudi oil game with EU gas, VEB says

RE: OPEC, for some quiet moments.. - admin - 03-02-2016

Crude advanced as Saudi Arabia said it would work with other producers to curb market fluctuations and as China’s central bank stepped up efforts to support the economy. WTI futures rose as much as 2.3%, trimming a fourth monthly decline. Saudi Arabia wants a stable oil market, according to state-run Saudi Press Agency. China reduced the amount of cash the nation’s lenders must lock away. Prices slipped in February as U.S. crude stockpiles climbed to the highest in more than eight decades.

Oil rises as Saudis to work with producers to stabilize market

Sempra Energy has announced that its Sempra LNG & Midstream unit has entered into a Project Development Agreement with a subsidiary of Woodside Petroleum Ltd. to further advance the development of the proposed Port Arthur LNG natural gas liquefaction facility in Port Arthur, Texas. The new agreement expands on the Memorandum of Understanding (MOU) previously signed by the parties in June 2015, and provides a framework regarding how Sempra LNG & Midstream and Woodside will contribute their experience and share the costs related to the development, technical design, permitting and commercial development of the liquefaction project.

Sempra Energy, Woodside sign agreement for Port Arthur LNG facility

Eni has announced the approval of the Plan of Development for the Coral discovery, offshore Mozambique. The approval has been granted by the Government of Mozambique’s Council of Ministers. The approval relates to the first phase of development of 5 Tcf of gas in the Coral discovery, located in the Area 4 permit. The discovery is located in water more than 2,000 m deep and approximately 80 km offshore of the Palma bay in the northern province of Cabo Delgado. The giant discovery, made in May 2012 and outlined in 2013, proved the existence of a high quality field of Eocenic age with excellent productivity. It is estimated to contain 15 Tcf of gas in place, wholly located in Area 4.

Eni's Coral FLNG development plan approved by Mozambique

Explorers parked more drilling rigs in U.S. oilfields as the rest of the world looks to shale producers to arrest the worst crude downturn in 30 years with more cutbacks. Rigs targeting oil in the U.S. fell by another 13 to 400, after more than 100 were idled since the start of the year, Baker Hughes Inc. said on its website Friday. The report marks the 10th straight week of declines in the number of working rigs. Natural gas rigs gained by 1 to 102, bringing the total down by 12 to 502. Texas took the brunt of the week’s cuts. The Eagle Ford Shale in South Texas idled 8 rigs, bringing the total working in the region to 41. One rig was idled in the Permian Basin. Rigcounts in the D-J Niobrara and Williston basin were both unchanged.

U.S. explorers idle rigs as world looks for shale cuts

RE: OPEC, for some quiet moments.. - admin - 03-05-2016

OPEC and U.S. shale may need a relationship counselor. After first ignoring it, later worrying about it and ultimately launching a price war against it, OPEC has now concluded it doesn’t know how to coexist with the U.S. shale oil industry. "Shale oil in the United States, I don’t know how we are going to live together," Abdalla Salem El-Badri, OPEC secretary-general, told a packed room of industry executives from Texas and North Dakota at the annual IHS CERAWeek meeting in Houston.

OPEC doesn’t know how it can ‘live together’ with shale oil

Origin Energy Ltd. has signed a non-binding heads of agreement with ENN LNG Trading Company Ltd. for the supply of 500,000 tonnes of LNG per year for a period of five years. By mutual agreement, the parties have the ability to extend the supply period by an additional five years. A binding LNG SPA is expected to be executed during the second half of calendar year 2016. Deliveries of LNG under the SPA would be expected to begin in calendar year 2018 or 2019 after completion of ENN’s Zhoushan receiving terminal in Zhejiang province, China.

Australia’s Origin Energy signs LNG supply deal with China’s ENN

The U.S. shale industry must come up with $1.2 billion in interest payments by the end of March as $30/bbl oil makes it harder for companies to scrape up the cash needed to stay current on their debts. Almost half of the interest is owed by companies with junk-rated credit, according to data compiled by Bloomberg on 61 companies in the Bloomberg Intelligence index of North American independent oil and gas producers. Energy XXI Ltd. said in a filing Tuesday that it missed an $8.8 million interest payment. The following day, SandRidge Energy Inc. announced that didn’t make a $21.7 million interest payment.

Shale faces March madness as $1.2 billion in interest comes due

Wall Street investors are throwing a lifeline to the embattled U.S. energy sector. U.S. oil and gas companies from Marathon Oil Corp. to Weatherford International Plc have announced plans to raise about $9.2 billion in new equity, the most year-to-date since at least 1999, according to data compiled by Bloomberg. "Billions of dollars of dilutive equity continue to roll in with seemingly no end in sight," Houston-based oil investment bank Tudor, Pickering, Holt & Co. said in a research note.

Battered U.S. oil firms raise most in equity sales since `99

RE: OPEC, for some quiet moments.. - admin - 03-06-2016

Even if Saudi Arabia wins its struggle with U.S. shale producers over market share, it will face a new billion-barrel adversary. It won’t be regional nemesis Iran, a resurgent Iraq or long-standing competitor Russia. The answer will be more prosaic: Even when overproduction ends, a stockpile surplus of more than 1 Bbbl built up since 2014 will remain, weighing on prices. Inventories will keep accumulating until the end of 2017, the International Energy Agency forecasts, and clearing the glut could take years.

Saudi Arabia faces new oil titan if it wins shale battle

Oil and gas investment has collapsed from $700bn in 2014 to nearer $400bn this year. IHS estimates that planned spending by 2020 will be $1.8 trillion less than forecast two years ago, almost guaranteeing an oil shortage as global demand keeps growing by 1.2m barrels per day (b/d) each year and existing wells deplete at an annual rate of 3m b/d.

US shale frackers eye world conquest despite bloodbath

Key members of the Organization of Petroleum Exporting Countries intend to meet with other producers in Russia on March 20 to renew talks on an agreement to cap oil output, Nigeria’s petroleum minister said. There will be a “dramatic price movement” when the meeting takes place, Nigerian Minister of State for Petroleum Resources Emmanuel Kachikwu said at a conference in Abuja, Nigeria’s capital, on Thursday. Saudi Arabia, Russia, Qatar and Venezuela agreed on Feb. 16 in Doha that they would freeze production, if other producers followed suit, in an effort to tackle the global oversupply.

OPEC to meet non-members in Russia on March 20, Nigeria says

Russia and Saudi Arabia’s agreement to cap oil output will help bring the market back into balance and trigger a rebound in prices in the second half of this year, said Daniel Yergin, vice chairman of energy consulting group IHS Inc. The world’s two biggest producers along with Venezuela and Qatar struck a tentative deal last month to cap production at January levels to stem a glut in supply that has seen prices tumble almost 70% in two years to below $35/bbl. With a freeze, prices could recover in the second half to $40–50/bbl, “but with a lot of volatility there,” Yergin told the Global Financial Markets Forum in Abu Dhabi Thursday.

Yergin sees output freeze restoring balance to global oil market