Archive | Oil & Petroleum

Oil Prices Ignore OPEC News

NEW YORK, March 18 (UPI) — Crude oil prices were little changed Thursday morning after oil ministers in Vienna said current production quotas would remain intact.

The meeting of the Organization of Petroleum Exporting Countries, the world’s largest oil cartel, ended with a statement that said “continued positive signs” in the global economy were threatened by “mounting and potentially unsustainable public debt in the most advanced economies.”

OPEC also said trade was threatened by “rising protectionism,” and further noted that the “marginal” rise in demand expected this year would be “more than offset” by increased production among non-OPEC countries.

On balance, “2010 is likely to witness a decline in the demand for OPEC crude oil for the third consecutive year,” the statement said.

On the New York Mercantile Exchange, April delivery light sweet crude prices swung down from a recent peak of $82.93 per barrel to $82.29 per barrel, off 64 cents.

Heating oil prices lost 0.0186 cents to $2.1209 per gallon. Reformulated gasoline blendstock prices shed 0.0177 cents to $2.292 per gallon. Henry Hub natural gas futures lost 0.054 cents to $4.249 per million British thermal units.

At the pump, the national average price for unleaded gasoline rose to $2.789 per gallon from Wednesday’s $2.776, AAA said.

Copyright 2010 United Press International, Inc. (UPI). Any reproduction, republication, redistribution and/or modification of any UPI content is expressly prohibited without UPI’s prior written consent.

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China Enters Latin Energy Market with Deal

BUENOS AIRES, March 15 (UPI) — China has taken the first major step toward securing an energy foothold in Latin America with the purchase of a 50 percent stake in Argentinian oil firm Bridas Corporation.

China National Offshore Oil Corporation said it would pay $3.1 billion for a 50 percent stake in Bridas, which is controlled by Argentine businessman Carlos Bulgheroni and has oil assets in Argentina, Chile and Bolivia.

The CNOOC acquisition in Argentina comes after many months of Chinese exploratory visits and negotiations in Latin America. Analysts said the purchase was in line with the Chinese government strategy to secure energy assets abroad as a cushion against China’s rising demand and as a future source of revenue.

With crude oil at more than $80 a barrel, the purchase signals the start of formal Chinese entry into the Latin American energy market, after similar approaches made to acquire metals and raw materials to feed the Chinese industry’s growing demand.

CNOOC President Yang Hua said Bridas represents “a very good beachhead for us to enter Latin America” and a culmination of efforts begun last year to secure that position.

With galloping industrial growth and rising consumption among the country’s newly rich, China has become the world’s second largest energy consumer, after the United States.

The Argentine deal is the largest single CNOOC transaction since the company paid $2.7 billion for a stake in a Nigerian oil field nearly five years ago.

In between China has been buying energy assets in Asia and Africa. Industry estimates suggest China spent about $13 billion on energy asset buying worldwide in the past two years. However, most of the buying involved canny scrutiny of the assets, with an eye on securing not only the best possible deal but also assurance of energy supplies for the coming generations.

The Bridas buyout will add 318 million barrels, an increase of about 12 percent, in CNOOC reserves and boost its average daily production by 46,000 barrels.

Bridas owns a 40 percent stake in Pan American Energy LLC, Argentina’s largest crude oil exporter and has oil and gas reserves in Chile and Bolivia. BP Plc, Europe’s largest oil company, owns the remainder of Pan American shares.

Demand for oil in China rose 28 percent in January compared with the same month a year earlier, the International Energy Agency in Paris said. The agency called the rise “astonishing,” indicating information from China’s energy industry was still threadbare in some areas.

Copyright 2010 United Press International, Inc. (UPI). Any reproduction, republication, redistribution and/or modification of any UPI content is expressly prohibited without UPI’s prior written consent.

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World Oil Production Might Peak in 2014

SAFAT, Kuwait, March 15 (UPI) — Kuwaiti scientists say they have calculated the world’s conventional crude oil production will peak in 2014 — nearly a decade earlier than predicted.

The researchers, led by Associate Professor Ibrahim Nashawi at Kuwait University, said their finding might speed efforts to conserve oil and intensify the search for alternative fuel sources.

Nashawi and his team said scientists have developed several models to predict when oil production will reach a maximum and then decline. Some models put the date at 2020 or later. One of the most famous forecast models, called the Hubbert model, accurately predicted U.S. oil production would peak during 1970.

That model has since gained in popularity, but recent studies show it is insufficient to account for more complex oil production cycles of some countries. Those cycles can be heavily influenced by technology changes, politics and other factors, the scientists say.

In their recent research, Nashawi and his colleagues describe a new version of the Hubbert model that follows production trends of 47 major oil-producing countries that supply most of the world’s conventional crude oil.

They said it predicts worldwide conventional crude oil production will peak in 2014. The scientists also showed the world’s oil reserves are being depleted at a rate of 2.1 percent a year.

The research is presented in the journal Energy & Fuels.

Copyright 2010 United Press International, Inc. (UPI). Any reproduction, republication, redistribution and/or modification of any UPI content is expressly prohibited without UPI’s prior written consent.

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BP Buys Interest in Brazilian Oil Fields

LONDON, March 11 (UPI) — British oil giant BP said Thursday it had purchased rights to oil fields in Brazil for $7 billion from Devon Energy, a company based in Oklahoma.

The purchases include interest in eight offshore oil fields in the Campos and Camamu-Almada basins, The Times of London Online reported. Two other fields are in the Parniaba basin, inland.

Brazil’s state-owned oil company Petrobras is said to have discovered fields containing 80 billion barrels of oil.

The deal includes a partial swap. Devon will buy 50 percent of BP’s Kirby oil sands interests in Alberta, Canada, a deal worth $500 million.

“This strategic opportunity fits well with BP’s operating strengths and key interests around the world, offering us significant additional long-term growth potential with an emphasis on high-margin oil,” BP Chief Executive Officer Tony Hayward said.

“As well as giving us a broad portfolio of assets in the exciting Brazilian deepwater, it will strengthen our position in the Gulf of Mexico, enhance our interests in Azerbaijan and enable us to progress the development of our Caspian assets,” he added.

Copyright 2010 United Press International, Inc. (UPI). Any reproduction, republication, redistribution and/or modification of any UPI content is expressly prohibited without UPI’s prior written consent.

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East Africa is Next Hot Oil Zone

NAIROBI, Kenya, March 10 (UPI) — East Africa is emerging as the next oil boom following a big strike in Uganda’s Lake Albert Basin. Other oil and natural gas reserves have been found in Tanzania and Mozambique and exploration is under way in Ethiopia and even war-torn Somalia.

The region, until recently largely ignored by the energy industry, is “the last real high-potential area in the world that hasn’t been fully explored,” says Richard Schmitt, chief executive officer of Dubai’s Black Marlin Energy, which is prospecting in East Africa.

The discovery at Lake Albert, in the center of Africa between Uganda and the Democratic Republic of Congo, is estimated to contain the equivalent of several billion barrels of oil. It is likely to be the biggest onshore field found south of the Sahara Desert in two decades.

Tullow Oil, the British exploration company backed by a $1.4 billion loan from the Royal Bank of Scotland, says its Ngassa field in Uganda may be the biggest find in the Lake Albert Basin to date with up to 600 million barrels.

Tullow has discovered reserves equivalent to around 2 billion barrels of oil in Uganda in the last four years. Most of the initial finds in East Africa were made by independent wildcatters like Tullow and another British firm, Heritage Oil, run by former mercenary Tony Buckingham.

Now the majors are moving in. Heritage recently sold its 50 percent share in two Lake Albert Basin fields to Eni of Italy for $1.5 billion.

Eni said the two blocks have the potential to produce 1 billion barrels and is fighting it out with Tullow for control of the reserves on the Ugandan side of Lake Albert.

The Italian company is busy expanding in sub-Saharan Africa and has interests in Angola, Nigeria, Gabon, Mozambique and the Republic of Congo.

The Ugandan government is negotiating with several majors with the financial clout to handle the enormous investment required to develop these emerging fields.

Front-runners reportedly include China’s state-run CNOOC, Total of France and Exxon Mobil of the United States.

Andarko Petroleum Corp. of Texas says it has hit a giant natural gas field off the coast of Mozambique, a former Portuguese colony that became independent in 1975. Norway’s Statoil is drilling in Mozambique’s Rovuma Basin.

Since the 2006 find at Lake Albert, one of the Great Lakes of Africa strung out along the Great Rift Valley, there have been at least 15 confirmed major strikes in the region.

The Indian Ocean island of Madagascar contains “enormous reserves,” according to Tiziana Luzzi-Arbouille of IHS Global Insight consultancy of London.

“What happened in Uganda made it easier for smaller companies to raise funding,” said Tewodros Ashenafi, head of Southwest Energy, an Ethiopian company exploring in the Ogaden Basin in the east of the country.

This is a vast 135,000-square-mile territory in landlocked Ethiopia that is believed to contain sizable reserves of oil. It is estimated to hold 4 trillion cubic feet of natural gas as well.

Malaysia’s Petronas, which recently acquired major blocks in Iraq, signed an exploration agreement with Addis Ababa in August 2007.

The main problem for the oil industry is that the Ogaden, like many parts of Africa, is a conflict zone, as it has been pretty much since the Cold War in the 1970s. This is one reason why exploration has been so tardy.

Separatist rebels of the Ogaden National Liberation Front have warned oil companies to keep away and in April 2007 attacked a Chinese exploration group, killing 74 people.

Petronas is also exploring in the Gambella Basin of western Ethiopia.

Somalia has been torn by wars between feuding militias and clans since dictator Siad Barre was toppled in 1991 but it is also considered to hold considerable oil reserves.

A 1993 study by Petroconsultants of Geneva concluded that Somalia has two of the most potentially interesting hydrocarbon-yielding basins in the entire region — one in the central Mudugh region, the other in the Gulf of Aden.

That was one of 10 such basins across Somalia, southeast Ethiopia and northeast Kenya.

More recent analyses indicate that Somalia could have reserves of up to 10 billion barrels.

But exploration remains an extremely hazardous undertaking. And it’s likely to become more so as the country becomes a major focus for U.S. counter-terrorism operations against al-Qaida and its affiliates who are dug in there.

Copyright 2010 United Press International, Inc. (UPI). Any reproduction, republication, redistribution and/or modification of any UPI content is expressly prohibited without UPI’s prior written consent.

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Sunoco Sells One Plant, Closes a Refinery

PHILADELPHIA, Feb. 1 (UPI) — Oil giant Sunoco Inc. said it would sell a portion of its chemical business to a Brazilian firm, Braskem S.A. for $350 million.

In a statement, Sunoco Chief Executive Officer Lynn Elsenhans said the benefits of the deal included “monetizing a business that has not been able to meet its cost of capital, and provides us with capital to redeploy for future growth.”

The sale involves a polymer plant in Marcus Hook, Pa., the Philadelphia Inquirer reported Monday.

The company also said it would shutter an idled refinery in Westville, Pa., at the cost of 400 jobs.

“This provides some closure to employees. They’re not wondering if we’re going to restart the refinery,” Sunoco spokesman Thomas Golembeski said.

Copyright 2010 United Press International, Inc. (UPI). Any reproduction, republication, redistribution and/or modification of any UPI content is expressly prohibited without UPI’s prior written consent.

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Europe's Gas Storage Set to Expand

BERLIN, Jan. 18 (UPI) — Europe’s gas storage capacity is set to increase dramatically over the next decade.

Gas storage capacity in Western Europe is expected to be nearly doubled by 2025, according to auditor PricewaterhouseCoopers.

The boom in storage is fueled mainly by supply security concerns, rising imports from the Middle East and an increasing popularity of gas-fired power stations, Reinhard Ruemler, Robert Senger and Stefan Tenner from PWC’s energy team write in the magazine European Energy Review. Moreover, the liberalization of the European gas market and a functioning regulatory regime made it easier for players to invest in new storage, they write.

Western Europe’s gas storage capacity will be nearly doubled from the current 66 billion cubic meters to 125 bcm until 2025.

Germany, which already is the largest storage market in Europe, is due to see yearly investments of around $430 million in the coming years and increase its capacity from 20 bcm to 28 bcm. Italy will boost its storage capacity by 79 percent to 25 bcm, with Britain even planning to triple its capacity by 2020 to 13.5 bcm. Austria, Spain and the Netherlands are all planning to roughly double their storage capacity.

Only France is lagging a bit behind, the experts say.

“In the French market storage capacity is allocated by the storage systems operator only to companies that have access to end customers,” Ruemler, Senger and Tenner write. “While this regime meets mandatory public obligations such as security of supply, it limits third party access to storage and hence the development of a liquid and liberalized market.”

But elsewhere, the market is healthy, despite the hit it took from the financial crisis.

In Germany, “storage capacities have proven to be attractive to a wide customer base ranging from international gas suppliers to supra-regional, municipal utilities and energy traders,” the experts write.

Some experts have called for an increased regulation of the gas storage market, but PWC argues this would scare off investors.

“The EU and member state governments should resist the temptation of introducing additional legislation that would increase uncertainty for operators and investors: the market is working,” they write.

Copyright 2010 by United Press International

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OPEC Likely to Leave Production Unchanged

LUANDA, Angola, Dec. 21 (UPI) — Oil ministers arriving in Luanda, Angola, and industry researchers said the world’s dominant oil cartel would leave production levels unchanged for now.

Representatives of the Organization of Petroleum Exporting Countries are set to begin a summit meeting Tuesday. While arriving in Luanda, OPEC’s Secretary-General Abdalla El-Badri said there was “consensus that there is no change. If you look at the price, it is very comfortable.”

Representing OPEC’s largest exporter, Ali Naimi of Saudi Arabia said, “the current prices is wanted by all. We are not alone … but also those with alternatives and oil difficult to extract,” The Financial Times reported Monday.

Consultants at PFC Energy in Washington said production would remain steady “for the moment,” while warning a drop in demand and high supplies in 2010 might trigger a production cut of up to 1 billion barrels a day.

OPEC members last cut production in December 2008 by 2.2 million barrels a day to prop up prices that had fallen from $147 per barrel in July to lower than $40 per barrel by January 2009.

Prices have since risen steadily, reaching a peak for the year above $80 per barrel and hitting $75.14 per barrel on the New York Mercantile Exchange Monday morning.

Copyright 2009 by United Press International

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