LIBYA'S OIL PRODUCTION DOWN
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LIBYA'S OIL PRODUCTION DOWN BY AROUND 70,000 BARRELS A DAY TO 630,000 BPD DUE TO FIELD MAINTENANCE - SOURCES

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Giant Leap in Iran's Gas Condensate Exports

The National Iranian Oil Company exported 24 million barrels of gas condensates in January to Asian and European buyers -- the outbound volume being over and above the average figures seen during the past several months.

Since the easing of international economic sanctions in January last year, Iran's gas condensates exports have risen nearly four times, reaching a daily average of 550,000 barrels from just around 150,000 barrels per day in 2012 when trade and financial restrictions were in place, Shana reported.

According to Ali Kardor, NIOC managing director, gas condensates output was around 300,000 bpd in 2013, but production capacity has since shot up by 50%, exceeding 600,000 barrels per day. Combined exports of crude oil and condensates have also climbed to 2.8 million bpd, said the official.

Condensates are in the twilight zone between crude oil and natural gas. They possess characteristics of both oil and gas, and have values and market drivers both similar to, and distinctly separate from, oil and gas.

Underscoring that the main buyers of Iranian gas condensates in Asia are its traditional oil customers, namely China, India, South Korea, Turkey, Taiwan and Japan, he noted, 'BP received its first gas condensates cargo from NIOC last year under single-shipment contracts and negotiations are underway for NIOC to sign long-term contracts with Shell.'

In related news, Iran had stored up 10 million barrels of condensates in China as part of efforts to expand its presence in the world's second-largest energy market, but the entire inventory has been sold, the Oil Ministry said earlier in the week.

Tehran turned to leasing oil storage tanks in China during the sanctions, making the country an export base for its petroleum products in the Far East as financial and trade restrictions had significantly curtailed Iranian oil trade and shipment.

'With each barrel at $40, export of 50 million barrels of condensates generates $2 billion in revenues, Kardor was quoted as saying by Shana on Saturday.

Condensate output is slated to reach 1 million barrels a day upon the launch of all phases of South Pars, the giant gas field shared by Iran and Qatar, the NIOC chief added.

But Tehran has said it wants to reduce the outbound shipments of condensates and instead use the fossil fuel for manufacturing goods with higher value added.

Condensate exports are set to decrease sharply upon the launch of several oil processing plants, including the Siraf and the Persian Gulf Star Refinery, the latter said to be the largest refinery project in the Middle East.

Export of petroleum products has also risen to record levels in the first 10 months of the current fiscal year as 450,000 barrels of oil derivatives such as naphtha, diesel, bitumen and sulfur, were exported in large volumes to Southeast Asian clients from Mahshahr, Asalouyeh, Lavan and Bandar Abbas ports in southern Iran.

http://tehrantelegram.com/story-z18353328

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Russia has been in talks of buying oil from Iran, Energy Minister Alexander Novak said on Monday, confirming earlier reports.

At the sidelines of a economic forum in the Black Sea resort of Sochi, Novak told reportes he expected the deal to be reached "within weeks." The purchases will be carried out via Promsirieimport, a trading unit of Russia's Energy Ministry, he said.

Last week, Iranian Students' News Agency (ISNA) reported that Iran will begin selling 100,000 bpd of to Russia within the next 15 days and receive payment half in cash and half in goods and services.

http://www.reuters.com/article/us-russia-iran-oil-idUSKBN1660RS

Iraq is planning to start offshore oil and gas exploration to boost the OPEC nation's reserves, Oil Minister Jabar al-Luaibi said in a statement on Monday.

Luaibi said he “gave guidance to the Oil Exploration Company about the importance of exploring territorial waters to assess the hydrocarbons reserves and to boost Iraq’s capacity".

Iraq last week announced an increase in its oil reserves to 153 billion barrels from a previous estimate of 143 billion barrels. Iraq has boosted output rapidly in recent years with the help of foreign oil companies to become OPEC's second-largest producer behind Saudi Arabia. It agreed at the end of November to take part in an OPEC agreement to cut global supply to help to lift oil prices.

http://www.reuters.com/article/iraq-oil-exploration-idUSL5N1GC39E

Algeria's state-owned Sonatrach is to revise down the duration of its long-term natural gas contracts at the request of "many customers," Sonatrach CEO Amine Mazouzi said on Saturday, underlining the company's commitment to safeguarding market share through customer-focused flexibility.

Sonatrach -- which supplies pipeline gas to southern Europe on term contracts and LNG to a worldwide customer base -- has been deliberate in its attempts to satisfy new customer requirements in the wake of a rapidly changing global gas market.

Last year, it agreed to alter the terms of its long-term gas supply deal with Italy's Eni for the period October 2016-September 2017, which Eni CEO Claudio Descalzi described as a "very important achievement."

Speaking on Saturday in Hassi Messaoud at a ceremony to mark the anniversary of Algeria's move to nationalize its hydrocarbon sector, Mazouzi said Sonatrach's flexible contractual approach was intended not only to retain its traditional markets in Europe, but also to win new customers.

"Sonatrach has the ability to adapt to the market, whose main driver is of course prices. We are going to have two strategies for both the long-term market and the spot," Mazouzi said, as reported by the government daily newspaper El Moudjahid.

"For the long-term market, contracts that were previously over a period of 25 years will be reviewed and reduced to 10-15 years," he said.

"Our strategy in this area is to reinforce our position in our traditional market -- the countries around the Mediterranean -- but also to conquer new markets."

Mazouzi said Sonatrach was targeting LNG sales to new customers, and at the beginning of February took ownership of a new LNG carrier through its shipping subsidiary Hyproc.

"This month we have just purchased a new LNG carrier for export operations to more distant countries," Mazouzi said.

The vessel, called Tessala, has a capacity of 112,867 cu m of LNG and arrived at Arzew in early February.

Prior to the acquisition, Sonatrach had eight LNG carriers to supply LNG from its two plants at Arzew and Skikda.

ITALIAN NATURAL GAS EXPORTS

While LNG supplies have been steady in the past two years, Algeria's gas supplies via pipeline to Europe are riding high.

Pipeline flows to Spain via two subsea pipelines and the TransMed line to Italy hit a five-year high in February, with deliveries to Italy and Spain averaging 120 million cu m/d since the start of the month, according to data from Platts Analytics' Eclipse Energy.

Algerian pipeline gas exports have been strong since the end of 2015 thanks mostly to a significant jump in supplies to Italy.

This was despite considerable doubt among industry commentators that Algeria would be able to raise gas exports given slow upstream developments and rampant domestic demand growth.

Flows to Italy in particular have soared -- last year they almost trebled to 18 Bcm from just 7 Bcm in 2015, according to Platts Analytics.

The high exports to Italy have continued into 2017, which is likely to be down to higher nominations by buyers, attributed to the fact that oil-indexed gas supply contracts remain in the money compared with European hubs.

Algerian pipeline exports have averaged 116 million cu m/d since the start of the year, the highest since February 2012.

Gas demand in southern Europe was boosted at the start of the year by an unusually cold winter, with temperatures well below seasonal norms, but Algerian supplies have continued at the high levels despite a return to more normal temperatures.

Flows to Italy have reached a four-year high since the start of 2017, regularly exceeding 70 million cu m/d, triggered also by the favorable renegotiation of the long-term supply contract between Sonatrach and Eni.

The last time Algerian pipeline flows to Italy were above 70 million cu m/d was back in February 2013.

Algeria expects to export a total of some 39 Bcm by pipeline to Italy and Spain in 2017, with an additional 17 Bcm of gas equivalent to be supplied by LNG, Sonatrach officials have said.

A total export level of 56 Bcm would bring Algeria closer to matching its all-time export record of some 62 Bcm in 2005.

http://www.platts.com/latest-news/natural-gas/algiers/algerias-sonatrach-to-revise-down-length-of-long-26672039

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Gabon's oil sector is likely to see more deals taking place this year after oil major Total agreed to sell its stake in some oil fields and infrastructure to Perenco, while Shell is currently looking to dispose of its onshore assets in the country.

Total and Shell dominate the central African country's oil sector and this is expected to have a major impact on the country as it seeks to repeal the decline of its oil production.

Total has agreed to sell interests in its mature oil fields in Gabon to Anglo-French company Perenco, which translates to a divestment of 13,000 b/d of oil output, the oil major said Monday.

The $350 million deal includes the sale of stakes and the transfer of operatorship in various mature assets in Gabon to Perenco, which is already active in the country, including the sale of the Rabi-Coucal-Cap Lopez pipeline network.

Total said this deal has come about in an environment where "reducing the breakeven of our operations is a top priority" due to oil price volatility.

"This agreement demonstrates our ability to capture value through the disposal of mature assets while benefiting from the synergies generated by the transfer of operatorship," said Arnaud Breuillac, president of Total Exploration & Production.

Total is currently the operator of the Capo Lopez terminal, from which the key export grades of Rabi Light and Mandji are exported.

Total Gabon's equity share of operated and non-operated oil production averaged 47,400 b/d in 2016, from 47,300 b/d the previous year.

The company's revenues amounted to $745 million in 2016, down 11% from $842 million in 2015, mainly due to the lower average selling price for Total Gabon's crude oil grades, partially offset by the 6% increase in volumes sold over the period due to the lifting schedule.

PRODUCTION STAGNATING

Shell also indicated recently that it is in ongoing talks related to the divestment of the company's assets there, which could affect oil output in the country.

Shell's production in Gabon is around 55,000 b/d of oil equivalent. It also operates the Gamba terminal from which a further 20,000 boe/d from other producers is exported.

Production reached a peak of 365,000 b/d in 1996 but has since steadily declined, mainly due to maturing fields and also because of a lack of any significant oil projects over the past decade.

Gabonese crude attracts a fairly broad and eclectic customer base, including refiners in Trinidad & Tobago, France, Malaysia and Australia.

Gabon rejoined OPEC in July after a gap of more than 20 years, and its current production is around 200,000 b/d, according to S&P Global Platts estimates.

Under the current OPEC output agreement, Gabon is expected to cut production by 9,000 b/d to 193,000 b/d during the first six months of this year.

Gabon, like its West African neighbors, has been hit hard by falling crude prices, with oil accounting for about half of government revenues and 80% of national exports.

Last year, Gabon postponed its 11th offshore oil licensing round due to reduced interest as oil companies have shelved and delayed billions of dollars in upstream spending since the oil price slump.

The high cost of deepwater developments in the current environment has put a dampener on such projects, especially in the West African region.

http://www.platts.com/latest-news/oil/abuja/gabons-oil-sector-braces-for-change-as-total-26672043

Total is in talks to buy a multi-billion dollar stake in Iran's partly-built liquefied natural gas (LNG) export facility, Iran LNG, seeking to unlock vast gas reserves.

The French oil major -- the first of its peers to strike deals in Iran after sanctions -- seeks entry into Iran LNG at a discount to the pre-sanctions price in exchange for reviving the stalled project, two sources with knowledge of the matter said. A third source confirmed Total was in the running for a stake, alongside several other oil majors, but any deal was still some way off.

Total declined to comment. Iran's National Gas Export Co. (NIGEC), a central stakeholder in the project, did not respond to requests for comment by email and phone.

"Iran is trying to revamp its oil and gas projects and the abandoned LNG plant is one of them," the third source added.

Iran shares the world's biggest gas field with Qatar, which has used the reserves to build over a dozen giant liquefaction plants to chill gas into a liquid for export on ships -- a move Iran is keen to replicate.

The Iranian part of the field, known as South Pars, contains over 14 trillion cubic metres of gas, according to the Pars Oil and Gas Company website.

Iran aims to grow gas output to 1 trillion cubic metres by 2018, up from 160.5 billion cubic metres in 2012, before the latest sanctions took effect.

But it currently has no ability to freeze its gas into LNG for tanker exports.

However, Total aims to commit $2 billion to develop the 11th phase of the South Pars field this summer - supplies from which could be used to feed Iran LNG - though that investment hinges on the renewal of U.S. sanctions waivers.

Any deal for a stake in Iran LNG would also likely face similar hurdles.

An Iranian industry source with ties to Iran LNG said Total moved several employees to the firm's offices in Tehran last year as part of the discussions.

Work on the 10.8 million-tonnes-per-annum (mtpa) plant hit a wall in 2012 when sanctions stopped Iran from bringing in specialist liquefaction technology from German contractor Linde (LING.DE).

The Munich-headquartered firm declined to say when it would ship the parts to Iran. At issue are reimbursements demanded by Linde for the cost of storing Iran LNG's liquefaction train, or production line, during the sanction years, industry sources said.

"Equipment was finished for the first production line (or train) of 5.4 mtpa, and about half finished for the second one," a second Iranian gas industry source said.

With $2.3 billion invested so far, Iran LNG is more than half-built with two storage tanks, a jetty and power plant, sources said -- but total costs to bring the plant on-stream may be as high as $10 billion.

NIGEC, which owns 49 percent of the joint venture, and Iran Oil Pension Fund, which holds the rest, have expressed willingness to sell down their stakes to attract a Western partner.

http://www.reuters.com/article/us-total-iran-lng-idUSKBN1661NM

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South Korean refiner Hyundai Oilbank has purchased a cargo of U.S. Southern Green Canyon crude oil, the country's first import of the grade, three trade sources said on Tuesday.

The country's smallest refiner by capacity has bought 1 million barrels of the U.S. heavy crude from a major oil company to arrive in May, according to the sources, who asked not to be identified as they were not authorized to speak with media.

A Hyundai Oilbank spokesman declined to comment on the issue.

The purchase comes as crude shipments to Asia from places such as the United States have jumped due to low shipping costs and as production cuts by the Organization of the Petroleum Exporting Countries (OPEC) drive up prices for Middle Eastern oil.

A source told Reuters in January that Japan's TonenGeneral Sekiyu KK had bought a 500,000-barrel Southern Green Canyon cargo. Green Canyon is an area of the Gulf of Mexico.

South Korea's top refiner SK Energy [SKENGG.UL] said this month that it had bought 1 million barrels of Russian Urals crude for the first time in 10 years.

http://www.reuters.com/article/us-southkorea-hyundaioilbank-idUSKBN1670DB

Exxon Mobil Corp. is pinning its fortunes closer to home as new CEO Darren Woods veers from the oil titan’s longtime focus on Asian and African riches.

After a two-year pricing rout erased 19 percent of Exxon’s untapped crude by making it unprofitable to extract, Woods faces a tough task in sustaining the company’s output. Woods’s ability to replenish the portfolio will rely heavily on regions the driller long avoided: the U.S. Great Plains and Latin America.

Woods’s first public appearance since becoming chief executive officer is Wednesday, when analysts will press him for operational details at Exxon’s yearly strategy session. Findings off South America’s Guyana coast and in the shale fields of Oklahoma, Texas and New Mexico could help him restore profits, recover from a $1 billion stillborn venture in the Russian Arctic, and replace aging supply sources in West Africa and Indonesia.

“Not a lot is known about him beyond his work history,” said Brian Youngberg, an analyst at Edward Jones & Co. in St. Louis who has a “hold” rating on Exxon’s shares. “People are going to want to hear what he plans to do about cash flow over the next few years, what kind of oil price they need, and the outlook for production.”

A Kansas-born electrical engineer by training, Woods, who is 52, joined Exxon as an analyst in 1992 and rose through the ranks on the refining and chemicals side of the business. He succeeded Rex Tillerson, who now serves as President Donald Trump’s secretary of state, as CEO and chairman on Jan. 1.

His leadership comes at a time when the largest U.S. oil producer is facing tough challenges in recovering from a market collapse that erased more than $154 billion in Exxon’s discounted future cash flows as fields that prospered during the oil bull market became money losers.

Reserves Reduction

At the same time, Woods removed the equivalent of 3.3 billion barrels of untapped crude from the books last week in the biggest reserves reduction since the company’s $88 billion takeover of Mobil Corp. in 1999. The huge African and Asian prospects acquired in that deal have mostly been exhausted, and the Irving, Texas-based company has been drifting back to the west ever since.

Exxon disputes the usefulness of discounted future cash flows, which it is required to file annually under U.S. Securities and Exchange Commission rules. And the company said the reduction in reserves is only a short-term setback since those barrels can be reclaimed as prices rise, and remain available to be pumped from the ground.

But as reserves and future cash flows evaporate, so has Exxon’s long-held reputation as the industry’s most efficient cash generator. The explorer’s return on capital plummeted to less than a nickel on the dollar last year from 36 percent as recently as 2008, according to data compiled by Bloomberg. The writing was on the wall in April when S&P Global Inc. stripped Exxon of the platinum credit rating it had held since the Great Depression.

‘Greatest Challenge’

“In our view, the company’s greatest business challenge is replacing its ongoing production,” the credit-rating company said at the time.

To that end, Exxon has fast-tracked development of the 1.5 billion-barrel Liza discovery 120 miles (193 kilometers) off Guyana’s shores. The company plans to formally greenlight the investment by the end of this year. Guyana President David Granger last month said it may begin pumping crude as soon as 2019. That would be breakneck speed for an industry that often takes as long as a decade to bring deepwater finds online.

As impressive as the Guyana discovery is, it won’t be enough on its own to rejuvenate Exxon’s portfolio, said Pavel Molchanov of Raymond James Financial Inc., one of just seven analysts who rate Exxon’s stock the equivalent of a “sell."

“It’s a good-sized deepwater project but nothing extraordinary,” Molchanov said. “If this was in Angola, the Gulf of Mexico or Norway, people wouldn’t be talking about it. It’s interesting only because Guyana is a brand-new frontier” oil region.

Permian Footprint

On its home turf, Exxon agreed last month to shell out as much as $6.6 billion in an acquisition that will more than double the company’s footprint in the Permian Basin, the most-prolific U.S. oil field.

In its biggest transaction in 6 1/2 years, Exxon agreed to spend $5.6 billion in shares, plus a series of contingent cash payments totaling as much as $1 billion over the next 15 years, on rights to Permian’s Delaware region. After acquiring the assets from the Bass family -- legendary Texas wildcatters -- Exxon plans to deploy 15 drilling rigs to expedite development.

When the transaction closes, Exxon’s Permian resource base will reach the equivalent of 6 billion barrels of crude, an asset that’s worth $324 billion at current oil prices. Wells drilled in the acquired area will generate “attractive returns” even if crude drops back down to $40 a barrel, Exxon said when the deal was announced on Jan. 17. West Texas Intermediate crude, the U.S. benchmark, has averaged about $50 for the past six months.

The three Bass tracts Exxon is buying will provide at least 20 years of drilling, according to the company.

Interoil Acquisition

To be sure, Woods hasn’t entirely abandoned the quest for bonanzas on the other side of the world. Just last week, Exxon completed a takeover of Papua New Guinea natural gas driller InterOil Corp. that may cost the U.S. company as much as $3.9 billion. The deal, launched six months before Woods’ ascension, will provide Exxon with additional sources of natural gas for a liquefaction and export facility it opened in the South Pacific nation in 2014.

“The challenge for Exxon is its size,” Youngberg said. “To make an acquisition that is any way material, they have to pursue something pretty big. And things of that size are hard to come by.”

https://www.bloomberg.com/news/articles/2017-02-28/exxon-s-post-tillerson-fortunes-closer-to-home-as-new-ceo-pivots

On Monday, Houston-based oil and gas company EOG Resources said it narrowed its losses during the fourth quarter of 2016 as oil prices rose and operations improved.

EOG’s revenues rose by 30 percent in the last three months to years, climbing to $2.4 billion from $1.8 billion in the same period in 2014. The company’s losses shrunk to $142.4 million, or $0.25 per share, compared to a $284.3 million loss, or $0.52 per share in fourth quarter of 2015.

For all of 2016, EOG lost $1.1 billion, or $1.98 a share, in 2016, compared to a loss of $4.5 billion, or $8.29 per share, in 2015. Revenues for the full year in 2016 were $7.65 billion, as compared to $8.7 billion in 2015.

The company attributed its improved performance to higher crude oil and natural gas prices and more efficient operations. For instance, the EOG produced nearly the same volumes of oil and gas in 2015 and 2016 but cut exploration expenses by 42 percent, the company said in a news release.

http://fuelfix.com/blog/2017/02/27/eog-resources-narrows-losses-as-oil-prices-rise-and-efficiency-improves/

Houston-based Hi-Crush Partners will buy the Permian Basin Sand Co. for $275 million to beef up its sand reserves to service rapidly growing drilling activity in West Texas.

Hi-Crush is one of the biggest oilfield services business in providing sand to the hydraulic fracturing, or fracking process. Massive amounts of sand are pumped into the wells to help fracture the shale rock and release hydrocarbons.

Virtually sold out of sand in the first quarter of this year because of increased activity, Hi-Crush is acquiring Permian Basin Sand’s 1,226-acre sand reserve with more than 55 million tons of sand.

“Location is critical, and nobody will be closer or better positioned to efficiently serve the Permian Basin,” Hi-Crush CEO Robert Rasmus said in a prepared statement.

Most of Hi-Crush’s existing sand reserves are focused on Northern White sand from Wisconsin. Rasmus said the Permian deal helps to diversify its mix. The deal is expected to close by the end of March.

The deal is seven-year-old Hi-Crush’s largest acquisition thus far.

http://fuelfix.com/blog/2017/02/24/houstons-hi-crush-partners-buying-permian-basin-sand-co/