OPEC signaled a falling oil supply surplus in 2017 on Wednesday as the producer group's output declines from a record high and outside producers show positive initial signs of complying with the first joint supply-reduction deal since 2001.

The Organization of the Petroleum Exporting Countries, excluding Indonesia, pumped 33.085 million barrels per day (bpd) last month, according to figures OPEC collects from secondary sources, down 221,000 bpd from November, OPEC said in a monthly report.

The November OPEC production figure was the highest since at least 2008.

As well as reporting lower output from its own members, OPEC cut its forecast of supply in 2017 from non-member countries following pledges by Russia and other non-members to join OPEC in limiting output.

OPEC now expects non-OPEC supply to rise by 120,000 bpd this year, down from growth of 300,000 bpd last month, despite an upwardly revised forecast of U.S. supply.

http://www.reuters.com/article/us-opec-oil-idUSKBN1521JR

OPEC REPORT IMPLIES GLOBAL OIL MARKET WILL SEE 985,000BPD AVERAGE SURPLUS IN 2017, VERSUS 1.24 MILION BPD SURPLUS IMPLIED IN PREVIOUS REPORT

@DeItaOne

Russian oil producer Lukoil will adjust its oil output plan for 2017 to conform with a global deal on cutting production, TASS news agency quoted Lukoil Chief Executive Vagit Alekperov as saying on Wednesday.

"How can we maintain (current production plans) if we are taking part in the curbing of output?" Alekperov was quoted as saying. "We will abide by all the decisions that the energy ministry passed on to the oil companies."

Alekperov did not give any forecasts for output volumes, TASS reported.

http://www.reuters.com/article/us-russia-oil-opec-lukoil-idUSKBN1521FZ

Russia's Rosneft has sold its 12 percent stake in Italian refiner Saras for 1.53 euros a share, three market sources said on Wednesday, raising around 175 million euros ($187 million).

Rosneft started reducing its stake in Saras in October 2015, selling a 9 percent holding.

"Since October 2015 there had been an overhang risk on the (Saras) stock ... which Rosneft's exit is now removing," broker ICBPI said.

At 0933 GMT, Saras shares were down 4 percent at 1.584 euros. Traded volumes were more than six times the past month's daily average.

The price range for the share placing with investors was between 1.5 euros and Tuesday's closing price of 1.651 euros a share, one of the sources said.

ICBPI said it would raise its recommendation on Saras shares to "neutral" from "sell" if the share price fell to the bottom end of the range.

Russia's biggest oil producer agreed in 2013 to buy 21 percent of Saras, which is 50-percent owned by Italy's Moratti family, in a move that was set to strengthen Rosneft's commitment to the Mediterranean area.

A source familiar with the matter said the stake in Saras was now not deemed strategic for Rosneft because there were no real industrial synergies.

The source said the Russian giant was streamlining its various shareholdings in light of a reorganisation after commodities trader Glencore and the Qatar Investment Authority bought a 19.5 percent stake in the company from the Russian state.

http://www.reuters.com/article/rosneft-saras-price-idUSL5N1F820L

Argentina and Bolivia's state oil companies are to push forward on plans to explore and produce natural gas together in eastern Bolivia, helping to boost supplies for exporting to Argentina.

Argentina's YPF and Bolivia's YPFB plan to explore Charagua, a 99,250 hectare block with an estimated 2.7 Tcf of gas resources in the department of Santa Cruz, the companies said.

YPF chairman Miguel Gutierrez and his YPFB counterpart, Guillermo Acha, signed a 40-year oil services contract for the project in La Paz.

If a commercial find is made, the companies will form a consortium to invest more than $1.1 billion developing the block, with expectations of reaching production of 10.2 million cu m/d, YPFB said.

YPF said the production would help meet demand in Argentina, which ran a 30% deficit in 2016.

"For YPF, exploration is strategic and fundamental for creating new investment projects to sustain the supply of natural gas to Argentina," Gutierrez said.

Argentina imported an average 30.8 million cu m/d in the first 11 months of 2016, split between deliveries from Bolivia and the global LNG market, plus five million cu m/d in regasified supplies from LNG terminals in Chile, between May and August, according to data from Argentina's energy ministry.

Argentina could not import more because of a lack of regasification capacity, and because of slower-than-expected production growth in Bolivia.

Argentina plans to reduce gas imports as soon as 2021, starting with LNG, as it puts into development is huge unconventional resources in plays like Vaca Muerta. Even so, Argentina's energy minister, Juan Jose Aranguren, has said imports from Bolivia would likely continue for longer, given the lower price compared with LNG and the ease of supplying its northern provinces from Bolivia instead of Vaca Muerta, in southwestern Argentina.

Argentina produced an average 123.2 million cu m/d in the first 10 months of 2016, according to the Argentine Oil and Gas Institute, an industry group.

http://www.platts.com/latest-news/natural-gas/buenosaires/argentina-bolivias-state-oil-companies-push-ahead-21624990

Avg Buy Price: $41.28/barrel 
Imports: 7.627Mbpd 
Spent: $114.681B 
Production: 3.995Mbpd 
Added To Storage: 231MB

@TankerTrackers

Australian LNG player Woodside said its production of the chilled fuel reached a record high in 2016 rising 6 percent from the year before.

Woodside’s 2016 LNG production hit 63.7 MMboe (million barrels of oil equivalent), the company said in its full-year report on Thursday.

Production of LNG is expected to rise to 63–66 MMboe in 2017, helped by the anticipated start-up of Chevron’s $US34 billion Wheatstone LNG project in Western Australia.

Woodside said it expected an increase in LNG contract prices in the first three months of this year due to “the strengthening oil price and lag in oil-linked pricing formulas for existing LNG contracts.”

Woodside CEO Peter Coleman said the company begins 2017 in a strong position.

“Our business margins have improved through 2016 and our 2017 budget is free cash flow neutral at US$35 per barrel.”

According to Coleman, the company’s production performance was “outstanding.”

“LNG production system reliability has now exceeded ninety-nine per cent for a second consecutive quarter,” Coleman said

“The Wheatstone project is approaching LNG Train 1 construction completion, all modules are on-site and final hook-up and commissioning has commenced. We look forward to adding production from Wheatstone in the middle of this year.”

Wheatstone is a key component of Woodside’s near-term growth strategy and would contribute more than 13 MMboe of annual production once both trains are fully operational, Coleman said.

Uncommitted cargoes

Woodside noted in the report that five uncommitted 2017 LNG cargoes were contracted under a mid-term sales agreement during the fourth quarter of 2016.

According to the company, negotiations for a further 13 cargoes in 2017-18 are currently underway.

http://www.lngworldnews.com/woodside-posts-record-annual-lng-production/

Höegh LNG on Wednesday signed shipbuilding contracts with Samsung Heavy Industries and Hyundai Heavy Industries for two FSRUs.

The contract with SHI follows the letter of intent signed December 7, 2016, for one FSRU and three optional units. The FSRUs will have a storage capacity of 170,000 cubic meters and a regasification capacity of 750 MMscf/day, with full trading capabilities.

According to Höegh LNG’s statement, the firm FSRU is scheduled for delivery in May 2109, while the optional units would be delivered with six months intervals from the delivery of the firm vessel.

In addition to firming up the deal with SHI, Höegh LNG signed a shipbuilding contract with Hyundai Heavy Industries for an FSRU for delivery in the fourth quarter of 2018.

The unit will have a storage capacity of 170,000 cubic meters and a max regasification capacity of 1,000 MMscf/day and with full trading capabilities.

Höegh LNG reminded that it has signed two 20-year FSRU charter deals in December, one with Quantum Power for the Tema LNG project in Ghana and the other with Global Energy Infrastructure Limited (GEIL) for the LNG import project in Port Qasim near Karachi, Pakistan. Both projects are planned to begin operations in the second quarter of 2018.

Further to the orders, the company decided to allocate its FSRU #7 (hull number 2909) currently under construction at HHI to serve the QP charter in Ghana. The FSRU #9 (hull number 2909) also under construction at HHI is set to serve the GEIL charter in Pakistan.

The initial period for the GEIL charter commencing in the second quarter of 2018 would be covered by an interim FSRU from Höegh LNG’s portfolio until the new FSRU is delivered, the company said.

Commenting on the events, Höegh LNG’s president and CEO, Sveinung Støhle said, “with this order, Höegh LNG now has 10 large size newbuilt FSRUs in operation or under construction.”

http://www.lngworldnews.com/hoegh-lng-orders-new-fsrus-at-south-korean-shipyards/

Oil-price gains will trigger a “significant” increase in U.S. shale output as OPEC and other producers rein in supply, according to the head of the International Energy Agency.

“U.S. shale-oil production will definitely react strongly,” Executive Director Fatih Birol said Wednesday in a Bloomberg Television interview in Davos, Switzerland. At $56 to $57 a barrel, “a lot of shale plays in the United States would make perfect sense to produce.”

Birol’s comments suggest that the IEA has become more optimistic about the outlook for U.S. production. Last month, the Paris-based agency said it expected U.S. tight oil -- as shale is also known -- to rise only “marginally” in 2017. The policy adviser to 29 nations will release its next short-term oil outlook on Thursday.

Oil prices have risen about 20 percent since the Organization of Petroleum Exporting Countries reached a deal to curtail supply last year. The Nov. 30 agreement prompted a surge in activity in the U.S. -- not an OPEC member -- where oil and gas producers increased drilling the most since April 2014. Benchmark Brent crude traded at $54.65 a barrel at 10:06 a.m. in London on Wednesday.

The oil industry is becoming more cost-efficient and a “big chunk” of global output is now profitable at $50 to $55 a barrel, Birol said in a later interview, citing Brazil, Mexico and China as countries that will also boost production. There’ll be “lots more” supply in late 2017 or early 2018, he said.

“This will make it more difficult for OPEC to achieve its goal of restoring the balance on the oil market by means of production cuts,” said analysts at Commerzbank AG led by Eugen Weinberg in Frankfurt.

In the first week of January, U.S. crude production rose to 8.95 million barrels a day, the highest level since April. Oil-rig use expanded to 529 in the prior week, a 67 percent increase from the 2016 low of 316.

“At $50, $55, we’ve already seen a lot of activity,” Birol said. “U.S. oil production will continue to increase in significant terms.”

https://www.bloomberg.com/news/articles/2017-01-18/iea-sees-significant-increase-in-u-s-shale-oil-as-prices-rise

API Reports Huge Gasoline Build crude fall

The American Petroleum Institute (API) reported a larger than expected draw in commercial crude supplies in its Wednesday report.

Analysts expected a one-million-barrel draw overall, although the API reported a 5.042 million barrel decline in inventories.

“Following last week's surge in crude and product inventories, API reported a much bigger than expected drawdown in crude inventories ( versus -1mm expectations),” the economics blog said. “While this spiked WTI prices, they fell back amid massive builds in gasoline (9.75mm) and distillates.”

Supplies at Cushing, Oklahoma declined twice as much as expected, with a one million barrel decrease in ready crude levels.

Gasoline inventories saw a significant 9.75 million barrel increase – almost as much as the one year high reported two weeks ago.

Distillates saw a 1.17 million barrel drop from last week’s levels.

Last Tuesday, API showed a 1.5-million-barrel build in its data release. The crude inventory build sent oil prices downward, even though a modest 1.2 million barrel build had already been expected. Still, this is the first increase to crude inventories in over 8 weeks.

http://oilprice.com/Latest-Energy-News/World-News/Oil-Stuck-After-API-Reports-Huge-Gasoline-Build.html

Plains All American is expanding its Cactus Pipeline to 390,000 b/d, increasing takeaway capacity for Permian Basin crude into the port of Corpus Christi, Texas, the midstream company said Wednesday.

Rising production of light, sweet Permian crude is at odds with the needs of US Gulf Coast refineries, which prefer heavier crude, making it a candidate for export. Increased takeaway capacity of Cactus also expands the crude's reach to local refineries.

The expansion is expected to be completed by the third quarter of 2017, the company said in a statement.

The 310-mile Cactus line currently carries 250,000 b/d of crude from McCamey, Texas, southeast to Gardendale, where it connects with the Eagle Ford Joint Venture pipeline. That pipeline is jointly owned by Plains and Enterprise Product Partners.

Crude output from the Permian Basin is forecast to rise by 53,000 b/d in February to 2.18 million b/d, Energy Information Administration data shows. Platts Analytics Bentek Energy projects volumes to rise by 244,000 b/d in 2017 to reach 2.27 million b/d, assuming a the rig activity stays constant.

"There is risk of [the rig count] moving higher with prices," said Jenna Delaney, Bentek senior analyst.

Current pipeline takeaway capacity from the Permian to the Gulf Coast is 750,000 b/d. The expansion of the Cactus combined with the startup of Enterprise's Midland-to-Sealy pipeline in mid-2018 will increase the region's pipeline away capacity by 440,000 b/d to 1.19 million b/d at that time.

Besides access to the Eagle Ford pipeline, crude oil delivered on the Cactus has access to dock facilities in Corpus Christi and neighboring Ingleside, facilitating export of the crude if the economics work to ship the crude out of the country.

Access to joint venture's dock facility in Corpus Christi and Ingleside, as well as dock capacity at other regional export facilities is available, including two 200,000 b/d Ingleside facilities owned by Occidental and Flint Hills, respectively.

Crude exports from the US Gulf Coast averaged 245,000 b/d in October, according to most recent data from the EIA. This is down from the 470,000 b/d peak export level in September. The spread between West Texas Intermediate and Brent futures prices narrowed to average $1.45/b in October from September's average spread of $2.02/b.

Some of the rising production of light, sweet crude oil from the Permian, Midland and San Juan basins of the Permian will push out imports of light, sweet crude by USGC refiners, replacing dwindling volumes of imports.

Imports of light, sweet crude into the USGC averaged 2.2 million barrels in 2015, down from 100 million barrels in 2012, EIA data shows.

At a disadvantage are land-locked Midland refiners, who have seen higher crude prices as takeaway capacity increases.

WTI at Midland averaged $53.38/b so far this year, putting it at 76 cent/b premium over WTI at Cushing, Oklahoma, the price point of the NYMEX crude futures contract, S&P Global Platts price assessment data showed. Last year, WTI Midland traded at an average 7 cent/barrel discount to Cushing barrels.

However, refiners in Corpus Christi and Three Rivers have benefited. The Eagle Ford JV Pipeline has a capacity of 660,000 b/d and serves the Three Rivers and Corpus Christi markets, which includes 835,000 b/d of refining capacity at four refineries.

http://www.platts.com/latest-news/oil/newyork/plains-increases-permian-crude-takeaway-with-21640087

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Kinder Morgan Inc reported lower-than-expected quarterly revenue for the ninth straight quarter as its pipelines transported lower volumes of oil and gas.

Pipeline companies, once seen as insulated from commodity price swings due to fixed-fee contracts, were hit hard by a more than 60 percent slump in oil prices since mid-2014 as cash-strapped oil and gas companies renegotiated contracts.

Kinder Morgan said natural gas transport volumes fell 2 percent in the quarter, however it expects future natural gas infrastructure to grow due to higher demand from gas-fired power generators, exports to Mexico and growth in the U.S. petrochemical industry.

The company reported a net profit attributable to shareholders of $170 million, or 8 cents per share, in the fourth quarter ended Dec. 31, compared with a loss of $721 million, or 32 cents per share, a year earlier.

Kinder Morgan said it paid $988 million lesser in charges in the fourth quarter compared to a year earlier. The year-ago quarter included a $1.15 billion impairment charge.

According to Thomson Reuters I/B/E/S, the company earned 18 cents per share on an adjusted basis, in line with analysts' average estimate.

Revenue fell to $3.39 billion from $3.64 billion, missing analysts' average estimate of $3.54 billion.

http://www.reuters.com/article/us-kinder-morgan-de-results-idUSKBN1522ZH

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Energy Transfer Partners has filed a motion to bar the U.S. Army Corps of Engineers from initiating an environmental study for its controversial Dakota Access pipeline crossing at Lake Oahe in North Dakota.

Energy Transfer Partners requested on Monday that a U.S. District Court judge for the District of Columbia stop the Corps from initiating the environmental impact statement process until a ruling has been made on whether the company already has necessary approvals for the pipeline crossing.

The Corps said it would publish a notice in the Federal Register on Wednesday stating its intent to prepare an environmental impact statement for the requested easement at Lake Oahe. The notice will invite interested parties to comment on potential issues and concerns, as well as alternatives to the proposed route, which should be considered in the study.

The Corps in December denied Energy Transfer Partners an easement to drill under Lake Oahe, a water source upstream from the Standing Rock Sioux reservation that has been the focus of protests. Members from the Standing Rock Sioux and others say the line could damage drinking water and desecrate sacred grounds.

In July 2015, the Corps had granted Energy Transfer Partners permission for its proposed pipeline crossing at Lake Oahe.

A representative from Energy Transfer Partners did not immediately respond on Tuesday to a request for comment.

The 1,172-mile (1.885 km) Dakota Access Pipeline will transport 570,000 barrels per day of crude from the Bakken shale of North Dakota to the Midwest.

The Standing Rock Sioux said the tribe was confident the environmental impact statement would support its claim that the pipeline cannot cross under the lake, adding that the best way to analyze new routes is through an environmental impact statement.

Comments on the scope of the environmental impact statement will be due no later than Feb. 20, the Army Corp said.

http://www.reuters.com/article/us-north-dakota-pipeline-environment-idUSKBN15137P