Saudi Arabia and its main Middle East OPEC partners are turning down Chinese requests for extra oil as they hold back fuel for their own refineries just as demand from the world's biggest crude importer hits new records.

While the Saudi and other refusals for additional crude supplies may not be part of a new pricing strategy, the rejections to their biggest client help explain a 40 percent rise in oil prices this year as Chinese importers have had to seek more oil from other suppliers in what analysts say is still an oversupplied market.

Senior Chinese oil traders told Reuters the Saudis have turned down requests from Chinaoil and Unipec - the respective trading arms of PetroChina and Sinopec - for extra cargoes of crude for May and June loadings, forcing them to seek supplies from producers in West Africa, Oman and Russia.

Saudi Arabia "used to provide as and if we asked for extra cargoes on top of contract during the first four months of the year, but not for May and June," said a trader with one of China's biggest oil importers on condition of anonymity as he had no permission to talk to media.

Another source with a Chinese refinery that takes Saudi oil said Saudi heavy crude was "a bit tight" in May and June.

Reuters pricing and trade flow data show a 40 percent rise in Brent crude since January has coincided with a more than 10 percent fall in overall Middle East supplies to China C-CN-ME-FZ, although in historical terms they remain high.

"Our analysis shows that Saudi flows to China have fallen quite a bit in May and their overall market share in China has also fallen," said Yan Chong Yaw, Director of Thomson Reuters Oil Research and Forecasts in Asia.

The research group's latest China crude report shows Saudi Arabia's share of Chinese imports dropped to just over 30 percent in May from 36.5 percent in April.

Saudi Aramco, which was not available for comment, had already reduced contractual supplies to some Japanese and South Korean customers in April.

The trader with one of China's big importers said requests for more crude to Kuwait and the United Arab Emirates - Saudi Arabia's closest partners in the Organization of the Petroleum Exporting Countries (OPEC) - were similarly turned down.

Behind the stingier responses to requests for more oil lie mostly domestic factors. Saudi Arabia has traditionally been an exporter of crude oil but an importer of refined products.

That's changing. Its new 400,000 bpd Yasref refinery became fully operational in April, taking in Saudi heavy crude oil to produce and export petroleum coke, diesel and gasoline.

Saudi Aramco started up its Jubail refinery of the same size last year and also plans to build a third 400,000 bpd facility by 2018.

Other Middle Eastern producers such as the UAE's Abu Dhabi National Oil Co are also ramping up refineries, and the region is entering its peak burning season in which it uses more crude to generate power for air-conditioning.

"Over the summer, Middle East producers, particularly Saudi Arabia and Abu Dhabi, will have limited additional barrels for sale as new refineries continue their ramp up and increased summer burn absorbs supply," said U.S.-based research and analysis provider Pira Energy.

http://www.reuters.com/article/2015/05/20/saudi-china-oil-idUSL5N0Y918W20150520

Total SA has started production of gas and condensate from onshore Termokarstovoye field in the Yamalo-Nenets autonomous district in the Russian Arctic. The field will produce 6.6 million cu m of gas and 20,000 b/d of condensate, or a combined 65,000 boe/d, the company said.

Total’s Arctic-adapted infrastructure in the field includes a gas gathering network, a gas treatment plant, a gas condensate de-ethanization plant, and export pipelines.

Total developed Termokarstovoye field under a joint venture with OAO Novatek, Russia’s largest independent gas producer (OGJ Online, June 25, 2009). The JV company, Terneftegas, operates the field with Novatek holding 51% and Total 49%.

http://www.ogj.com/articles/2015/05/total-stars-gas-condensate-production-from-russian-arctic-field.html

ExxonMobil recently discovered hydrocarbons offshore Guyana, while drilling the Liza-1 exploration well at the Stabroek block, located approximately 120 miles offshore Guyana. The oil discovery is significant, Exxon said.

According to Exxon, the well was drilled to 17,825 feet (5,433 meters) in 5,719 feet (1,743 meters) of water with the Deepwater Champion drillship. Stabroek Block is 6.6 million acres (26,800 square kilometers).

It was drilled by ExxonMobil affiliate, Esso Exploration and Production Guyana Ltd., and encountered more than 295 feet (90 meters) of high-quality oil-bearing sandstone reservoirs.

“I am encouraged by the results of the first well on the Stabroek Block,” said Stephen M. Greenlee, president of ExxonMobil Exploration Company. “Over the coming months we will work to determine the commercial viability of the discovered resource, as well as evaluate other resource potential on the block.”

The well was spud on March 5, 2015 and the well data will be analyzed in the coming months to better determine the full resource potential, the company said in the press release.

Esso Exploration and Production Guyana Ltd. holds 45 percent interest. Hess Guyana Exploration Limited holds 30 percent interest and CNOOC Nexen Petroleum Guyana Limited holds 25 percent interest.

http://www.offshoreenergytoday.com/exxonmobil-encouraged-by-oil-discovery-offshore-guyana/

Woodside Petroleum expects the long-delayed Browse gas project off Australia to be commissioned in late 2021 at the earliest, after pushing out a final investment decision to the second half of 2016, its chief executive said.

Browse is one of four key growth projects for Woodside alongside the Kitimat LNG project in Canada and Wheatstone LNG off Australia, which it bought with some oil assets from Apache Corp this year for $3.6 billion.

Woodside and its partners last December postponed a decision on the Browse floating liquefied natural gas (FLNG) to mid-2016. On Thursday it said a sign-off is now expected in the second half of next year.

Some costs on Browse, previously estimated at $45 billion when it was designed as a land-based project, have been cut by between 15 and 30 percent, the company said.

Chief Executive Peter Coleman said Woodside was well positioned to pounce on opportunities like the Apache deal in contrast to most companies in the industry that are reining in spending and selling assets to cope with an oil price slump.

"We're in a great situation here at Woodside with our balance sheet and the activities in front of us to put some real distance between ourselves and our peers over the next couple of years," Coleman said.

Alongside Browse, Kitimat and Wheatstone, Woodside is speeding up work on its Greater Enfield project, a development of some oil fields off Western Australia that were previously seen as uneconomic, but which can now be developed more cheaply as rig and subsea hardware costs have fallen.

The company now aims to make a final investment decision on Greater Enfield in 2016.

It is also stepping up exploration, with drilling off South Korea, Myanmar and Cameroon, to help rebuild its reserves and improve the balance of oil and gas in its portfolio, which is heavily skewed to gas.

"We've got lots of choices in front of us," Coleman said.

http://www.reuters.com/article/2015/05/21/woodside-lng-idUSL3N0YB08R20150521

BP Plc has settled with oilfield services provider Halliburton Co and contract driller Transocean Ltd cross claims related to the 2010 Gulf of Mexico oil spill, the worst offshore disaster in U.S. history.

BP still faces a potential fine of up to $13.7 billion under the U.S. Clean Water Act.

Transocean, which owned the Deepwater Horizon rig, had settled its Clean Water Act liability for $1 billion. The U.S. government never sued Halliburton under the Act, one person familiar with the case said.

"We have now settled all matters relating to the accident with both our partners in the well and our contractors," BP spokesman Geoff Morrell said in an email.

Transocean said BP would pay the company $125 million in compensation for legal fees it incurred, adding the companies will mutually release all claims against each other.

The company added BP will also discontinue its attempts to recover as an "additional insured" under Transocean's liability policies that will accelerate the company's recovery of about $538 million in insurance claims.

Transocean also said it would pay about $212 million to a fund set up to pay out claims to people and businesses harmed by the spill, subject to the approval by U.S. District Court for the Eastern District of Louisiana.

"We applaud Transocean for adding to the settlement funds established in the Halliburton settlement to help compensate people and businesses for their losses," said co-lead plaintiffs' attorneys, Stephen Herman and James Roy.

Transocean said it intends to make the payments using cash on hand.

In September, a U.S. judge ruled that BP was mostly at fault and that Transocean and Halliburton were not as much to blame.

Halliburton, which did the cementing work for BP's well, had earlier blamed BP's decision to use only six centralizers for the blowout that spilled millions of barrels of oil for 87 days.

Halliburton said in September that it reached a $1.1 billion settlement for a majority of claims related to its role in the oil spill.

London-based BP has already taken $43.8 billion in pretax charges for clean-up and other costs.

http://www.reuters.com/article/2015/05/21/halliburton-bp-oilspill-idUSL3N0YB5AA20150521

A group of Venezuelan investors known as the O’Hara Administration say they may buy additional shares in Pacific Rubiales Energy Corp. to block a bid for the company by Alfa SAB and Harbour Energy Ltd.

“In opposing the proposed acquisition, O’Hara may take any and all actions it considers advisable, including acquiring additional common shares of Pacific Rubiales, communicating with other shareholders, soliciting proxies and retaining its own financial, legal and proxy solicitation advisers,” the group said Tuesday in a statement released on Marketwired.

O’Hara and its partners, who own about 19.5 percent of the issued and outstanding common shares of Pacific Rubiales, said it doesn’t currently plan its own bid for the company. The group opposes the C$6.50 a share bid from Alfa and Harbour, which it says is too low.

Pacific, which trades in both Toronto and Bogota, said May 5 that Alfa and Harbour had offered to buy all of the issued and outstanding common shares not owned by Alfa for about C$2.1 billion ($1.7 billion).

The two sides have held exclusive talks as Alfa, a San Pedro Garza Garcia, Mexico-based conglomerate, seeks to expand its oil business as its home nation opens production to foreign investment.

http://www.bloomberg.com/news/articles/2015-05-20/venezuelan-investors-seek-to-block-alfa-bid-for-pacific-rubiales

Wintershall is ceasing its activities in Qatar and is returning Block 4 North near the North Field off the Qatari coast on 25 May 2015. Wintershall's office in Doha will be closed. In 2013, Wintershall made the 'Al Radeef' gas discovery off the cost of Qatar.

'During the development planning, it was always clear to us and our partners that an economic development of the discovery, including the processing of the gas, would only be possible if we have access to local infrastructure. This access was not granted. That is why we have decided to take this step', explains Wintershall Board Member Martin Bachmann, who is responsible for exploration and production in Europe and the Middle East.

Further activities in the Middle East region are not affected by the withdrawal from Qatar. The current focus of Wintershall is on the United Arab Emirates. 'We are also closely following the developments in other countries in the region', explains Bachmann. 'The challenges in the region are increasing with local energy consumption growing rapidly. In order to maintain production in the long term, fields must be exploited more efficiently and technically more complex fields need to be developed.'

Wintershall has considerable experience in deploying 'Enhanced Oil Recovery' (EOR) technology, which is used to increase the yield from complex reservoirs, especially in mature fields in Germany and Europe. 'In combination with modern exploration techniques, it is precisely this experience that we want to increasingly utilise in the Middle East region.'

http://www.oilvoice.com/n/Wintershall-ceases-activities-in-Qatar-due-to-lack-of-access-to-local-infrastructure/d4fb285ddaa9.aspx

With petroleum prices down 50 percent over the past year, many analysts and pundits are predicting the end of America’s shale oil boom.

It is true that the oil-price collapse was caused by the astonishing, unexpected growth in U.S. shale output, responsible for three-fourths of new global oil supply since 2008. And as lower prices roil operators and investors, the shale skeptics’ case may seem vindicated. But their history is false: the shale revolution, “Shale 1.0,” was sparked not by high prices—it began when prices were at today’s low levels—but by the invention of new technologies. Now, the skeptics’ forecasts are likely to be as flawed as their history. Continued technological progress, particularly in big-data analytics, has the U.S. shale industry poised for another, longer boom, a “Shale 2.0.”

John Shaw, chair of Harvard’s Earth and Planetary Sciences Department, recently observed: “It’s fair to say we’re not at the end of this [shale] era, we’re at the very beginning.” He is precisely correct. In recent years, the technology deployed in America’s shale fields has advanced more rapidly than in any other segment of the energy industry. Shale 2.0 promises to ultimately yield break-even costs of $5–$20 per barrel—in the same range as Saudi Arabia’s vaunted low-cost fields.

Shale’s spectacular rise is also generating massive quantities of data: the $600 billion in U.S. shale infrastructure investments and the nearly 2,000 million well-feet drilled have produced hundreds of petabytes of relevant data. This vast, diverse shale data domain—comparable in scale with the global digital health care data domain—remains largely untapped and is ripe to be mined by emerging big-data analytics.

Shale 2.0 will thus be data-driven. It will be centered in the United States. And it will be one in which entrepreneurs, especially those skilled in analytics, will create vast wealth and further disrupt oil geopolitics. The transition to Shale 2.0 will take the following steps:

1. Oil from Shale 1.0 will be sold from the oversupply currently filling up storage tanks.

2. More oil will be unleashed from the surplus of shale wells already drilled but not in production.

3. Companies will “high-grade” shale assets, replacing older techniques with the newest, most productive technologies in the richest parts of the fields.

4. And as the shale industry begins to embrace big-data analytics, Shale 2.0 begins.

In recent decades, developed nations have spent hundreds of billions of government dollars trying, and failing, to invent a cost-effective replacement for petroleum. Yet without taxpayer largesse, American entrepreneurs invented a new method to extract astounding quantities of oil from rock, upending the global hydrocarbon trade in the process. In a world where oil still powers 95 percent of air and ground miles and will remain dominant for decades, this represents a very positive development.

http://economics21.org/commentary/shale-2.0-big-data-revolution-america-oil-fields-05-20-2015

 U.S. crude oil refinery inputs averaged over 16.2 million barrels per day during the week ending May 15, 2015, 245,000 barrels per day more than the previous week’s average. Refineries operated at 92.4% of their operable capacity last week. Gasoline production decreased last week, averaging about 9.7 million barrels per day. Distillate fuel production decreased last week, averaging over 4.8 million barrels per day.

U.S. crude oil imports averaged 7.2 million barrels per day last week, up by 318,000 barrels per day from the previous week. Over the last four weeks, crude oil imports averaged over 7.0 million barrels per day, 0.4% above the same four-week period last year. Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 542,000 barrels per day. Distillate fuel imports averaged 227,000 barrels per day last week.

U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased by 2.7 million barrels from the previous week. At 482.2 million barrels, U.S. crude oil inventories are at the highest level for this time of year in at least the last 80 years. Total motor gasoline inventories decreased by 2.8 million barrels last week, but are above the upper limit of the average range. Both finished gasoline inventories and blending components inventories decreased last week. Distillate fuel inventories decreased by 0.5 million barrels last week and are in the lower half of the average range for this time of year. Propane/propylene inventories rose 2.6 million barrels last week and are well above the upper limit of the average range. Total commercial petroleum inventories decreased by 2.1 million barrels last week.

Total products supplied over the last four-week period averaged about 19.7 million barrels per day, up by 3.9% from the same period last year. Over the last four weeks, motor gasoline product supplied averaged over 9.0 million barrels per day, up by 1.1% from the same period last year. Distillate fuel product supplied averaged over 4.1 million barrels per day over the last four weeks, up by 1.6% from the same period last year. Jet fuel product supplied is up 6.5% compared to the same four-week period last year.

http://ir.eia.gov/wpsr/wpsrsummary.pdf

U.S. motorists drove a record number of miles in March, continuing a surprising road renaissance that has now spanned more than a year, newly released U.S. government data shows.

Motorists logged 261.7 billion miles on U.S. roadways in March, the most ever for the month and a 3.9 percent bump over the year-ago month, according to data released Wednesday by the Federal Highway Administration.

March marks the 13th consecutive month of year-on-year growth.

The surge in vehicle miles traveled comes amid a growing U.S. economy and a drop in U.S. gasoline prices, which averaged $2.40 per gallon in March, about $1 dollar cheaper than the year prior.

Americans' driving habits are watched closely by oil traders, since U.S. gasoline demand accounts for about one-tenth of global oil demand.

http://www.reuters.com/article/2015/05/20/gasoline-demand-united-states-idUSL1N0YB20J20150520