OPEC will stick with the strategy of favoring market share over prices when it meets next month because rival producers are already starting to buckle.

All but one of the 34 analysts and traders surveyed by Bloomberg said the Organization of Petroleum Exporting Countries will maintain its daily production target of 30 million barrels when it meets in Vienna on June 5.

Saudi Arabia, the biggest of OPEC’s 12 members, shaped the strategy at the last meeting in November, arguing that the usual response of cutting output to boost prices would not address the threat from shale and other higher-cost suppliers. Prices rose 46 percent since mid-January as producers cut spending plans and the number of active U.S. drilling rigs fell by the most ever.

“Dramatic cuts in spending and drilling are finally having an impact, so why on earth would Saudi Arabia change course now their strategy is just starting to bear fruit,” Mike Wittner, head of oil research at Societe Generale SA, said by phone . “Anyone who expects anything to happen at this meeting is going to be sorely disappointed.”

Brent crude, an international benchmark, traded at $66.37 a barrel at 12:26 p.m. Singapore time. While that’s 43 percent below last year’s high, it’s 47 percent more than the low reached Jan. 13.

OPEC’s 12 members pumped about 31.2 million barrels a day of crude in April, almost 3 million a day more than the average amount the world requires from the group this quarter, according to the Paris-based International Energy Agency.

While some members, such as Iran and Venezuela, said they opposed the Nov. 27 decision to maintain production, several OPEC officials have signaled this month that the group will continue with its current course. Iranian Deputy Oil Minister Roknoddin Javadi said on May 18 that that the existing production target is appropriate.

U.S. oil producers idled more than half of the country’s drilling rigs since October, according to data from Baker Hughes Inc. The nation’s crude production fell 1.2 percent to 9.3 million barrels a day last week, the biggest drop since July, Energy Information Administration data show.

Global investment in oil production might fall by $100 billion this year, according to the IEA.

Demand growth will accelerate to 1.3 million to 1.4 million barrels a day this year, Chris Bake, an executive director at Vitol Group, the world’s largest independent oil trader, said at a conference in London on May 20. Lower prices and economic growth increased demand in Europe, the Middle East and India, he said. Global oil demand rose 700,000 barrels a day last year, according to the IEA.

“OPEC doesn’t really have a need to change course,” Francisco Blanch, Bank of America Corp.’s head of commodities research, said by phone . “The strategy has achieved its goal of reining in supply and stimulating demand.”

http://www.bloomberg.com/news/articles/2015-05-21/opec-seen-unyielding-in-battle-with-shale-for-oil-market-share

Chinese trader Unipec has sold 2 million barrels of crude held for months on one of the world's largest tankers, industry sources said, as rising oil prices prompt commodity firms to offload cargoes from floating storage.

Storing crude on unused tankers re-emerged as a trading strategy towards the end of last year when weak demand and strong supply weighed on prices for delivery in the near future, while contracts for later delivery rose to a premium, a market structure known as contango.

But with a narrowing contango in benchmark Brent crude , traders are trying to sell oil they have stored, re-injecting fuel into an already oversupplied market.

Unipec, the marketing arm of Chinese oil giant Sinopec , sold 2 million barrels of Nigerian Qua Iboe crude for delivery in July to Indian refiner Hindustan Petroleum Corp , three trading sources said. They declined to be identified as they were not authorised to speak with media.

Unipec did not respond to requests for comment, while an HPCL spokesman said he could not immediately comment.

The crude will be delivered from the TI Europe, an Ultra Large Crude Carrier (ULCC) off Singapore. The ship, one of only two remaining ULCCs in the world as they are too big for most ports, is capable of carrying over 3 million barrels, more than 3 percent of daily global crude demand.

Unipec chartered the vessel last September, just as Brent crude fell below $100 a barrel, the beginning of a dramatic rout in prices.

Reuters ship-tracking data suggests it has stored crude since January 2015.

More than 30 tankers were put on long-term charter early this year to trade contango, although most were later used for regular deliveries as prices recovered.

"Everyone is trying to exit from storage," said a trader with a large trading house.

At least two Very Large Crude Carriers (VLCC), slightly smaller than ULCCs, have been storing crude off West Africa since February, other traders said.

http://www.reuters.com/article/2015/05/22/oil-storage-idUST9N0NH05120150522

Japanese oil company Inpex has announced that its $34bn Ichthys project is set to open in late-2016.

Inpex chief executive Toshiaki Kitamura told the West Australian that the Ichthys project was 68% complete.

Industry speculation is that the project may face potential delays and would fall short of budget in addition to timetable blowouts.

Inpex is forging ahead with the project development with its 30% project partner Total.

The Ichthys project, which secured development approval in January 2012, started the deepwater pipelay for its 889km-long gas export pipeline in February.

The remaining 718km offshore section of the 42in diameter GEP will be laid by Saipem's deepwater installation vessel Castorone.

As part of the project's ongoing offshore installation campaign, mooring installation works have started in May at the Ichthys Field in the Browse Basin, 220km offshore Western Australia.

The first of 49 foundation piles, each 66m long and weighing more than 450t, was deployed and driven into the seabed at a depth of 250m.

According to the company, the Ichthys LNG project had installed 47km of flowlines, more than 30 flowline sleeper structures and a 6,500t riser support structure in the Ichthys Field as of May 2015.

http://www.offshore-technology.com/news/newsinpexs-34bn-ichthys-lng-project-track-open-late-2016-4582632

When famed short seller Jim Chanos described the liquefied natural gas market last month as "a disaster waiting to happen", investors around the world took note.

Fronting Woodside Petroleum's investor briefing on Thursday,  head of marketing and shipping Reinhardt Matisons told a different story.

He put the flatlining of LNG demand over the past three years down to a lack of new supply entering the market. That is set to dramatically change, with more than 100 million tonnes of new supply - representing more than 40 per cent of the existing market - set to come on from new projects by 2020.

Matisons acknowledged those lumpy chunks of new capacity would mean "volatile" prices as they are absorbed. But the longer-term picture still showed the need for major new investment, with demand more than doubling to about 500 million tonnes in 2030 from 240 million now.

While there's no shortage of prospective LNG ventures aiming to capture that market, depressed oil prices will see off many of them, according to Woodside.

In the world's biggest importer, Japan, demand is on the decline, but the expiry of several long-term contracts later this decade opens up a major opportunity for new sales. Meanwhile, the proliferation of new LNG importers, from Thailand to the Middle East, means plenty of untapped markets to target.

Woodside is rounding out its emerging LNG trading business to take advantage, with boss Peter Coleman looking to sign up for capacity at LNG import terminals around Asia.

Asia's tally of LNG import terminals, currently at 60, is set to surge, with 40 more under development. Access to capacity in a few of those is the missing piece in Woodside's trading division, which already involves a dedicated LNG tanker, LNG available for sale from within its expanding portfolio and through gas from a third-party plant in Texas.

That US deal brings geographic and pricing diversity into Woodside's LNG portfolio, improving marketing prospects for projects like the Browse floating LNG venture in Western Australia.

Woodside isn't the only local LNG player thinking of new ways to do business, with revelations from Santos this week that floating LNG may be back on the table for its Bonaparte gas resource off Australia's north. Costs could be halved to $US5 billion using the new design, which would use a plant mounted on a barge within Darwin Harbour, rather than on a larger vessel out in open seas, offering a lifeline to the otherwise stranded gas resource.

http://www.afr.com/business/energy/gas/lng-players-think-afresh-in-face-of-market-disaster-20150521-gh6a0d

GMB Strike Ballot Goes Ahead After Talks Fail To Resolve Dispute Over Changes To Terms For Offshore Workers In UK Waters

We did make some progress today but sadly not enough to enable us to go back to members with proposals to resolve this dispute says GMB.

GMB and Unite officials held further talks on 20th May on the dispute over unilateral changes to working conditions for workers covered by the Offshore Contractors Agreement (OCA) in UK waters.

David Hulse, GMB National Officer, said 'We did make some progress today but sadly not enough to enable us to go back to members with proposals to resolve this dispute.

We will now have to proceed with organizing an official ballot for industrial action as the members asked us to do in a consultative ballot earlier this year.

We will concentrate now on making the necessary arrangements to enable us to go ahead with EBRS for independent ballot for action. We remain available for talks should the employers want to pull back from going ahead with the unilateral changes to working practices that has provoked this dispute.'

Bill Murray, chief executive of the Offshore Contractors' Association, said: 'We are extremely disappointed by today's decision by trade union officials to go to an industrial ballot.

'The industry as a whole recognises the need to make efficiencies and increase productivity in order to extend the life of the UK North Sea and maintain jobs in the sector. The offer we put on the table today - worth between an extra £1,600 and £8,000 per annum per individual - can only be paid for through productivity increases.

'In its World Economic Outlook the International Monetary Fund highlighted that the UK has the highest operating costs of any oil producing country in the world. Even as the barrel price recovers there are other parts of the world that will be better placed to take advantage of this if we don't manage our costs.'

http://www.oilvoice.com/n/UK-offshore-workers-to-strike/30da2f43b0bf.aspx

Emirates National Oil Co (ENOC) went public with an offer to buy out minority shareholders in Dragon Oil, saying talks with a committee set up by the Turkmenistan-focused oil explorer had not yet produced the endorsement it believed its "full and fair" bid warranted.

ENOC, which already owns 54 percent of Dragon Oil, had made an approach to buy the remainder on March 15, set at an undisclosed premium to Dragon's closing price of 509.5 pence on March 13.

ENOC said its latest proposal, which values Dragon Oil at 735 pence a share or 3.6 billion pounds ($5.6 billion) in total, was made to the company's independent committee, set up after ENOC made its first proposal, on May 14.

It said the offer represented a substantial increase on its opening gambit and it believed it was fit to recommend to shareholders. Dragon Oil said it had received the offer and its committee was still considering it.

"There is great uncertainty in the sector and we believe, as a long term and supportive shareholder, that Dragon Oil has achieved as much as is possible through its existing upstream strategy," ENOC Chief Executive Saif Al Falasi said in a statement issued shortly before Thursday's London stock market close.

"Moreover, Dragon Oil stands to benefit significantly from being part of the integrated platform that ENOC offers. To that end, we want to ensure that all of Dragon Oil's shareholders have the opportunity to evaluate the proposal on its merits."

ENOC said buying Dragon Oil would help it become a fully-integrated global oil and gas company, by adding the target's upstream operating experience.

http://www.reuters.com/article/2015/05/21/dragonoil-ma-enoc-idUSL5N0YC4G520150521

Although some US oil companies are struggling with low oil prices, a new wave of innovation is hitting the oil patch, allowing for a significant reduction in drilling costs.

Now, one small Denver-based oil company has come up with a whole new model for producing in order to further drive down costs. Described as an 'oil factory,' Liberty Resources LLC and its CEO Chris Wright have developed a novel method for extracting oil. The firm is starting out by doing everything it can to eliminate the need for trucks traveling to and from its site. The company notes that trucks are often an irritant with local residents and more importantly, they add significantly to the cost of producing oil.

To do that Liberty will build a series of pipelines to its massive 10,000 acre Bakken site. The firm has pipelines that carry water and gas produced by wells, as well as other pipelines to carry oil. This technique is called 'centralized resources' and while other firms like Continental have explored it to some extent, Liberty is pioneering the process. In essence, the firm is trying to bring the efficiency focus of industrial engineering to the production focus of petroleum engineering.

In addition, like Statoil and a few other larger oil firms, Liberty is also focused on creating a production process than can be stopped and started based on optimal production times, costs, and oil prices. This could be an invaluable capability. Take Russia for example. Russian oil wells will freeze if they are shut down, and the country lacks significant storage capacity. As a result, Russian oil producers cannot respond to price downturns.

Moreover, Liberty is developing the entire 10,000-acre site to be fracked at once with nearly a 100 oil wells operating simultaneously. By drilling multiple wells at once and controlling inputs and output supply, the firm has significant cost advantages versus traditional ad hoc production methods. Even employee costs are lower, with Liberty citing the use of a third less workers than a conventional production process.

So what is the combined result of all these efficiency improvements? Liberty says it will still make money even with oil at $50 a barrel. And the firm expects costs to keep falling as oil service companies become more efficient and lower their own prices. At these prices and efficiency levels, US production becomes competitive with virtually any other oil source. And if efficiency gains continue at this pace, the US may weather the onslaught of Saudi oil much better than many expected.

http://www.oilvoice.com/n/This-Innovation-Will-Help-US-Companies-Win-The-Oil-Price-War/fd123efa651c.aspx

A U.S. energy consultant doubts a planned liquefied natural gas facility in Cape Breton will ever be built.

The province has approved construction of a $4 billion plant in Richmond County.

Barbara Shook, bureau chief of the Houston-based Energy Intelligence Group, says the region is competing with massive LNG projects in the U.S. that are ready to go

"I just don't see how the Nova Scotia project can compete with somebody who actually has money, who actually has a contractor, who actually has customers, who actually has supply," she said.

John Godbold, the project director for Bear Head LNG Corporation, sees big potential for exporting.

The company wants to build a plant that would export eight million tonnes a year of liquefied natural gas.

He says they're getting ahead of other projects in the region.

"This final approval provides tremendous credibility in the global LNG market and really sets us apart from the others in terms of which project is really going to go ahead first," he said.

Godbold says the company, with its Australian parent, is investing millions.

The provincial approval means the company can now move to engineering design, look for customers and secure a source of natural gas.

The company will make a final decision on going forward next year. Operations could start by 2019.

Bear Head purchased the Point Tupper site from Anadarko Global Holdings Company in August for $11 million.

http://www.cbc.ca/news/canada/nova-scotia/bear-head-lng-facility-might-not-make-it-off-the-ground-1.3081633

Canadian Pacific Railway Ltd. cut its forecast for moving crude by rail for a second time in four months because of production delays and lower demand for the commodity.

This year’s total will probably be 100,000 to 140,000 carloads, Chief Operating Officer Keith Creel said Wednesday. Canadian Pacific had forecast 140,000 in January, a reduction from its original outlook of 200,000.

“The 140,000 number is a question mark, I’ll just be honest about it,” Creel said at a Wolfe Research conference in New York. “We thought we were being conservative when we went from 200 to 140. The world has changed around all of us.”

The prospect of an even steeper slide in oil shipments showed the widening fallout from the rout in crude prices, which have tumbled 45 percent since a 2014 peak of $107.26 a barrel. In the U.S., first-quarter oil carloads fell 14 percent from the fourth quarter, the Association of American Railroads said Wednesday without giving a tally for the Canadian carriers.

Two customers, Exxon Mobil Corp. and Plains All American Pipeline LP, will send less crude by rail than first expected, Creel said. Exxon’s facility in Edmonton, Alberta, will rely more on pipelines, while shipments from Plains’ Kerrobert facility probably won’t start until September or October, rather than July or August, he said.

“With those two headwinds, is 140 possible? Maybe,” Creel said. “It’s not, to me, going to be south of 100, based on the run rate that we see and with some of that business coming on line. So somewhere in between is what I would guesstimate.”

http://www.bloomberg.com/news/articles/2015-05-20/oil-rout-spurs-canadian-pacific-to-cut-shipments-forecast-again