Oil workers at Kuwait’s oil production facilities extended their strike for a third day over an unresolved pay dispute, slashing the OPEC member’s output by about 1.7 million barrels a day, an amount exceeding the current global surplus.

The “strike is on,” Kuwait National Petroleum Co. spokesman Khaled Al-Asousi said in a text message Tuesday. Attempts to reach a settlement failed after talks with the union broke up at 3 a.m., said a government official who asked not to be identified because the negotiations are private.

Oil production plunged 60 percent to 1.1 million barrels a day when the strike began on Sunday, while the state refining company slowed operations at its three oil-processing plants to less than 60 percent of their combined capacity. Kuwait Petroleum Corp.’s oil-production and refining units are working to restart units and raise fuel-processing rates to full capacity, officials said Monday.

Oil pared declines, with Brent crude dropping 0.4 percent to $42.74 a barrel by 8:45 a.m. in Dubai, after falling as much as 0.7 percent. Kuwait pumped 2.81 million barrels a day last month, making it OPEC’s fourth-largest producer, while worldwide supply surpassed demand by 1.6 million barrels in the first quarter, according to the International Energy Agency.

“If the Kuwaiti strike persists, it re-balances the market,” Robin Mills, chief executive officer at consultant Qamar Energy in Dubai, said by phone on Monday. “So far it looks like Kuwait is meeting demand and supplying their commitments out of storage.”

Oil workers in Kuwait are striking to protest cuts in pay and benefits as Middle Eastern crude exporters, reeling from lower oil income, cut subsidies and government handouts. The walkout is the first by oil workers in Kuwait since at least 1996, according to Middle East Economic Digest.

“The substantial impact of the Kuwait strike has added significantly to the various short-term shut-ins around the world,” consultants FGE said in a note on April 18. The Kuwaiti cuts are “pretty well trebling the shortfalls” from unplanned disruptions in countries including OPEC members Nigeria, Iraq and Venezuela, it said.

The strike may last 10 to 15 days, because the government set up a joint committee to negotiate with the union over 10 days, said Virendra Chauhan, a London-based oil analyst at Energy Aspects Ltd. “Assume a bit of time to return to work and ramp up,” he said. “Basically we are not expecting months of delay.”

KPC, the main national oil company, is able to meet its supply commitments to clients in spite of the walkout, the official Kuwait News Agency reported Monday, citing the oil industry’s spokesman, Sheikh Talal Al-Khaled Al-Sabah. Refiner Kuwait National Petroleum Co. was processing about 520,000 barrels of oil a day, the same amount as Sunday, and all three of its plants were operating, Al-Asousi said Monday. Union officials haven’t been responding to requests for comment since the strike began.

http://www.bloomberg.com/news/articles/2016-04-19/kuwait-oil-workers-strike-over-pay-dispute-enters-third-day

---

Attached Files

After his comments thwarted supply negotiations in Doha, oil traders are weighing another implied warning from the Saudi deputy crown prince: the threat of an intensifying clash with Iran over market share.

It was Mohammed Bin Salman’s repeated assertions that the kingdom wouldn’t join an output freeze without Iran that derailed talks between 16 producing countries on April 17. In interviews with Bloomberg News, the prince cautioned that if other producers increased output, Saudi Arabia could respond in kind. Iran is restoring exports after international sanctions over its nuclear program were lifted in January.

“It was an indication to Iranians that, look guys, if you’re not joining the table we have enough power to crank up production,” Abhishek Deshpande, an analyst at Natixis SA in London, said in a Bloomberg Television interview Monday. “You can question how much more they can crank it up by, but the chances are that, now there’s no freeze, the Saudis will go ahead and increase their production as they were planning.”

Oil prices dropped on Monday after Saudi Arabia resolved that an oil-supply freeze was possible only with the support of all OPEC members, including Iran, causing talks in the Qatari capital to unravel. Tensions between the two regional antagonists have flared as they take opposite sides in bloody conflicts in Yemen and Syria.

In an interview published on April 1, Prince Mohammed said that while Saudi Arabia was ready to cap production in concert with other countries, "if there is anyone that decides to raise their production, then we will not reject any opportunity that knocks on our door.”

The world’s largest oil exporter could increase output by more than 1 million barrels a day, or about 10 percent, to 11.5 million if there was demand for it, the prince, chairman of the Supreme Council of Saudi Arabian Oil Co., said on April 14. It could increase further to 12.5 million in six to nine months, he added. The country pumped 10.2 million a day last month, according to data compiled by Bloomberg.

“This just shows how central the tensions and the rivalry in the region between Iran and Saudi Arabia are,” Dan Yergin, vice chairman at IHS Inc. said in a Bloomberg Television interview. “There’s zero trust between these two countries right now.”

Iran plans to boost output to 4 million barrels a day in the Iranian year through March 2017, Oil Minister Bijan Namdar Zanganeh said April 6. That would be an increase of about 800,000 barrels a day from March production. Its crude shipments have risen by more than 600,000 barrels a day this month, according to shipping data compiled by Bloomberg.

http://www.bloomberg.com/news/articles/2016-04-18/saudi-s-other-warning-makes-oil-traders-sweat-after-doha-failure

Iran urged other oil producers on Monday to continue talks on an output freeze to prop up crude prices, but insisted it was justified in not freezing its own output.

Iranian OPEC Governor Hossein  Kazempour Ardebilli was speaking to his oil ministry's Shana news agency after talks on Sunday between producers in Doha collapsed when Saudi Arabia demanded that Iran join a freeze. Iranian representatives were not present at the talks.

"We support cooperation between OPEC and non-OPEC member countries and efforts to bring stability to the oil market, and we urge all producers to continue their negotiations," Ardebilli said.

But he also said Iran had made it clear that it wanted to regain its share of the oil market lost when it was hit by economic sanctions, and that "its position is supported by most OPEC and non-OPEC members around the world".

The sanctions were lifted in January after Iran and the group of world powers known as the P5+1 agreed on curbs to Tehran's nuclear programme.

Ardebilli said that if Iran participated in the proposed output freeze, it would in effect be maintaining sanctions on itself.

"Those who opposed the nuclear deal between Iran and the P5+1 and the lifting of cruel sanctions on the Islamic Republic... proposed the oil output freeze in January 2016, having the illusion that Iran has no other choice but to accept," he said, in an apparent reference to Saudi Arabia.

http://www.reuters.com/article/oil-meeting-iran-idUSL5N17L2B7

Brazil's corruption-battered state oil company Petrobras could be a big beneficiary if the country's opposition parties impeach President Dilma Rousseff, investors and analysts said on Monday.

Vice President Michel Temer, who would take power if Rousseff were impeached, is considered open to industry calls for changes to oil rules brought in by her Workers' Party over the past decade.

Rousseff's critics have said the policies, aimed at boosting state control of huge offshore discoveries, drove up costs, limited output and built up Petrobras' crippling $126 billion debt, the largest of any oil company.

"First off, Petrobras will no longer be used as a tool for monetary policy," said Edwin Gutierrez, head of emerging market sovereign debt at Aberdeen Asset Management in London, pointing to a longtime policy of keeping gasoline prices artificially low to keep a lid on inflation.

Many have said Rousseff's policies left Brazil's oil industry and Petroleo Brasileiro SA, as Petrobras is formally known, with few options but layoffs, cutbacks and asset sales when oil prices plunged and a giant corruption scandal was uncovered over the last year and a half.

With Brazil's offshore oil among some of the world's most expensive to extract, any new government would have to make changes to attract a shrinking pool of investment capital away from other oil producers, he added.

Brazilian oil unions, some of the biggest opponents of Rousseff's impeachment, are also convinced changes are afoot if Temer takes over, said Deyvid Bacelar, an oilworkers' union leader and employee representative on Petrobras' board of directors.

Likely changes would include an end to strict local purchasing laws for ships and oil platforms, new layoffs to add to the tens of thousands already imposed nationwide, an end to minimum Petrobras involvement in key offshore oil developments and a wholesale selloff of Brazilian oil assets to foreigners.

Temer's PMDB party and the opposition PSDB, that would likely partner with him if he became president, agree that Petrobras' role in new offshore development should be reduced and foreign investment encouraged, said Adriano Pires, a long-time PSDB advisor.

Still, Petrobras is likely to remain a symbol of nationalist pride, limiting the potential for real change, said John Baur, global income portfolio manager who handles some of the $306 billion of assets held by Eaton Vance Investment Managers in Boston.

"One of the reasons Rousseff was so unpopular was because she was slowly starting to make some of the changes that needed to be made," he said. "With many of the same people still around, big change in Brazil seems far-fetched."

Even a hands-off policy, avoiding the political interference that led to corruption, massive writedowns and a plunging share price, could be a big improvement, some experts said.

"I imagine that whomever takes over the government will look at Petrobras in a more careful way than they did only a short time ago" said Nelson Narciso, a former director of Brazil oil agency ANP.

http://www.reuters.com/article/us-brazil-politics-petrobras-idUSKCN0XF2UI

 As liquefied natural gas (LNG) producers despair over a supply glut, two projects in Papua New Guinea are pressing on in a bid to sign off on new developments by 2018 to take advantage of a drop in construction costs and high quality gas.

France's Total SA said this week it could build the country's second LNG plant for $10 billion, well below industry estimates, while Australia's Oil Search Ltd, which aims to expand in the region, said it expected new projects would have no trouble attacting lenders.

The push is in stark contrast to moves by rivals to shelve or delay LNG projects from Australia to Canada following an 80 percent slump in prices amid a flood of new supply just as demand has slowed.

Papua New Guinea has an advantage over Australian and U.S. gas as it is liquids rich, which creates extra revenue, it is closer to the world's biggest LNG markets in Japan, South Korea and China, and the gas has a higher heating value.

ExxonMobil Corp is already weighing an expansion of its PNG LNG plant, which has been exporting for two years and is now producing at an annual rate of 8 million tonnes.

In its first public comments on cost, rival Total said a second plant, dubbed Papua LNG, could be built for $10 billion, at least 25 percent below analysts' estimates.

"We intend to build our own facilities. It will be a big project - about $10 billion and 10,000 people will have jobs," Chief Executive Patrick Pouyanné was quoted saying in two PNG newspapers on Monday following talks with PNG Prime Minister Peter O'Neill.

Oil Search, a partner in both Papua LNG and ExxonMobil's PNG LNG, said on Tuesday it expects to be able to fund its share of any new PNG developments.

"Based on soundings with financial institutions ... significant debt funding appears to be available for good quality projects such as these potential developments, despite the weaker oil price," it said in its quarterly report.

For a 7-million-tonnes-a-year project using gas from the Elk and Antelope fields, $10 billion would imply a cost of around $1,425 a tonne, compared with previous estimates from Papua LNG partner InterOil Corp of a cost of around $2,000 to $2,100 a tonne.

"That is low," Neil Beveridge, a senior analyst at Bernstein Research, said in an email, adding: "We certainly believe that project could be one of the lowest cost in the region."

Oil Search declined to comment, deferring to Total as operator of the project. A Total spokesman told Reuters the cost estimate referred to the entire project, not just Total's share.

Pouyanné said last week now is the time to invest in new LNG plants, as projects will be able to negotiate cheaper construction costs with contractors as a raft of ongoing projects are completed over the next two years.

"Frankly for a major company like Total, the best strategy is to invest when prices are low because then the costs are low," he told reporters at a conference last week.

Oil Search wants the Papua LNG and PNG LNG projects to work together, to prevent wasting money the way LNG producers have on the east coast of Australia building three competing projects side by side.

UBS analyst Nik Burns estimates a stand-alone Papua LNG project would cost $15 billion and an expansion of PNG LNG would cost $9 billion, while tying them together could cut the combined costs by at least 10 percent.

"The size of the prize is potentially quite large," Burns said.

http://www.reuters.com/article/lng-papua-idUSL3N17L58M

---

Attached Files

Italian gas imports from Russia and northwest Europe hit new lows on Sunday, as flows from Algeria continued to defy expectations, remaining at a steady high since the start of April, according to data from Eclipse Energy, an analytics unit of Platts, Monday.

The rise in Algerian gas exports to Italy since the start of the second quarter has seen a slump in supplies from Italy's other core gas suppliers.

Italy is Europe's third biggest gas market with consumption of some 66 Bcm in 2015, and it is reliant on imports for as much as 90% of its demand.

Russia was Italy's largest single gas supplier last year, delivering 49% of all Italian imports, or 30 Bcm.

On Sunday, gas supplies from Russia to Italy fell to just 48 million cu m, the lowest level since the end of January, according to the Eclipse data.

And supplies via Switzerland from northwest Europe on Sunday hit their lowest point since October last year at just 6 million cu m.

By contrast, Algerian gas exports to Italy on Sunday totaled 63 million cu m, in line with the average since the start of the month, the Eclipse data showed.

That is significantly higher than the 16 million cu m/d average in March.

Russian exports to Italy in the first quarter averaged 77 million cu m/d, so the drop to less than 50 million cu m/d at the weekend is significant.

A theoretical continued rate of 50 million cu m/d for the rest of the year would see Russia supply just 21 Bcm to Italy in 2016.

The slowdown in Russian supplies to Italy is surprising in some ways after Eni agreed with Russia's Gazprom in January this year to "maximize" the sale of Russian gas under the partners' long-term contract supply agreements.

However, Eni CEO Claudio Descalzi also said in March that Eni had re-negotiated in 2015 its long-term gas import contract with Algeria's Sonatrach to include increased gas volumes.

The sudden hike in Algeria exports could be attributed to a number of factors, including lower LNG production and customers nominating higher volumes because of favorable prices under long-term, oil-indexed contracts.

Algerian pipeline exports to Spain are also well up so far in April, supplies averaging 41 million cu m/d compared with a March average of just 29 million cu m/d, the Eclipse data showed.

http://www.platts.com/latest-news/natural-gas/london/italys-gas-imports-from-russia-hit-new-low-algerian-26420896

---

Attached Files

Keppel Corp., the world’s largest builder of oil rigs, reported a 41 percent decline in first-quarter profit as weak oil prices led to delivery delays of offshore projects.

Net income dropped to S$211 million ($156 million) from S$360 million a year earlier, Keppel said in a statement Monday. Sales slumped 38 percent to S$1.7 billion from S$2.8 billion. The higher contribution from its property business at 47% helped to partially offset lower profits from offshore and marine sectors, the company said in the statement.

Oil companies and rig operators face rising debt and spending cuts, and have abandoned orders or asked shipyards to delay deliveries of offshore drilling rigs and production facilities. That’s caused shipyards to post losses or smaller profits after writing off costs from projects under construction, and demand has fallen with crude prices still less than half of what they were three years ago.

"The sustained low oil price environment continues to take a toll on the global oil and gas industry, which is in the midst of one of the most severe downturns in recent years," Chief Executive Officer Loh Chin Hua said in the statement.

Keppel fell 2 percent to close at S$6 Monday before the earnings announcement. The stock has fallen 7.8 percent this year.

Keppel and its smaller rival Sembcorp Marine Ltd. also face risks from Brazil, where debt-ridden Sete Brasil Participacoes SA accounts for a combined $10.5 billion in orders for semi-submersibles and drill ships at the two companies. Sete Brasil fell into financial distress after it was unable to secure long-term financing and its only client state-run oil producer Petroleo Brasileiro SA, or Petrobras, faced allegations of kickbacks.

Keppel wrote off S$230 million in the fourth quarter over delinquent projects.

Brazil, which has traditionally been one of the company’s key markets, "continues to be mired in economic and political challenges," Loh said.

Keppel stopped construction work for Sete Brasil and won’t resume until payment commences, Loh said.

http://www.bloomberg.com/news/articles/2016-04-18/keppel-profit-drops-as-oil-price-slump-delays-offshore-projects

---

Attached Files

A new report has said UK onshore discovery, Horse Hill, could create up to 5,500 jobs and be worth up to £52.6billion.

UK Oil & Gas Investments (UKOG) commissioned EY to produce a report on the Gatwick site’s potential.

The EY report read: “The development of Kimmeridge Limestone Oil in the Weald Basin, assuming it can be extracted from a development site at the volumes projected by UKOG, has the potential to generate significant economic value to the UK economy, partially off-set the decline in oil production from UK fields, support employment, and generate significant tax benefits to the exchequer.

“These benefits will be maximised via the development of a UK-based supply chain, and through a series of targeted policies and initiatives to appropriately mitigate potential barriers to development.

“Conceptual studies and oil in place estimates previously conducted suggest a significant opportunity for the UK to secure a proportion of its energy from the Weald Basin.”

Future peak oil production could provide approximately 4% to 27% of 2014 UK daily oil demand over the life of the project, according to the report.

The Gross Value Added to the UK economy could range from £7.1billion to £52.6billion, the project will generate between 1,000 to 5,600 jobs in the UK and lifetime tax revenues of between £2.1billion to £18.1billion, according to key findings.

Stephen Sanderson, UKOG’s chairman, said: “This report confirms UKOG’s view that the development of Kimmeridge Limestone oil in the Weald Basin can make a very significant contribution to the economy, employment and energy security of the UK.

“The report’s conclusions are given credence by the recent results of the highly successful Kimmeridge Limestone flow tests at the Horse Hill-1 oil discovery. The tests demonstrate that significant volumes of high-quality light oil exists within the Kimmeridge Limestones and can flow naturally to surface at commercial rates.

“The unexpectedly high aggregate flow rate of over 1365 barrels per day (“bopd”) from Horse Hill’s two Kimmeridge Limestones far exceeds the study’s modelled peak flow rate of 400 bopd per horizontal well. It is, therefore, possible that the overall economic impact of Kimmeridge Limestone oil could be significantly higher than this initial report describes.”

It comes after UKOG bought Angus Energy’s remaining 7.8% interest in the Horse Hill-1 oil discovery.

The £1.8million transaction increases UKOG’s stake in the onshore Weald Basin from 19.9% to 27.3%.

http://www.upstreamonline.com/incoming/1429934/horse-hill-could-bring-billions-to-uk-economy?utm_source=twitterfeed&utm_medium=twitter

Chevron has agreed to sell 20 petajoules a year of gas from its Wheatstone project to Alinta Energy in Western Australia starting in 2020, securing a customer for more than a quarter of the domestic gas output from Wheatstone.

The contract, lined up at a tough time for producers looking to seal long-term deals amid a gas supply glut, is for seven years, Chevron said on Tuesday.

"This agreement is an important step in Chevron's rapidly expanding domestic gas business in Western Australia," Chevron Australia managing director Roy Krzywosinksi said in a statement.

The $29 billion Wheatstone project is due to start producing liquefied natural gas (LNG) for export in 2017 and start supplying the Western Australian domestic market from 2018.

At full tilt, the project will have a capacity of 8.9 million tonnes a year of LNG and 200 terajoules a day of domestic gas, with the gas being marketed separately by each of the project partners.

Chevron has a 64 percent stake, with the remainder owned by Kuwait Foreign Petroleum Exploration Co (KUFPEC), Woodside Petroleum and Japan's Kyushu Electric Power Co and Tokyo Electric Power Co (TEPCO).

Chevron already supplies about 10 percent of the Western Australian market with gas from its share of the competing North West Shelf project.

http://www.reuters.com/article/chevron-australia-wheatstone-idUSL3N17M16P

Monday turned out to be a different sort of Tax Day for Energy Transfer Equity LP and Williams Cos., two U.S. energy pipeline giants seeking a multibillion-dollar merger.

While Americans were filing their annual tax returns, Energy Transfer revealed in its own filing that it has yet to obtain a tax opinion needed to close its takeover of Williams. Latham & Watkins LLP told the company that, if the deal had closed Monday, the law firm wouldn’t have been able to deliver a so-called “721 opinion” -- deeming the transaction an exchange that frees shareholders from tax liabilities.

Williams disagrees with that position and the two companies are discussing how it may affect the deal’s closing, according to the filing. It’s the latest in a series of twists for the troubled pipeline merger. Since Energy Transfer offered in September $43.50 for each Williams share, the collapse in oil prices has cut the market value of both companies by roughly half, casting doubt on whether the takeover will happen.

“We view the current uncertainty over the opinion as yet another impediment to the ETE-WMB merger,” said Selman Akyol, an equity analyst at Stifel Nicolaus & Co. “The latest transaction update from ETE muddies the waters.”

The deal’s arbitrage spread, traded by those betting on whether it’ll close, widened Monday to the biggest since January, reflecting growing doubt about its prospects.

The spread is “blowing out,” Timm Schneider, an analyst at Evercore ISI, said in a note to clients. “The stocks are certainly reacting to the speculation around a potential completion (or not) of this transaction.”

Energy Transfer shares jumped as much as 22 percent Monday before settling at $9.85. Williams slid as much as 13 percent and closed at $16.68.

Both companies are required to cooperate and make “commercially reasonable efforts” to obtain the tax opinions necessary for the deal, based on their merger agreement. Lance Latham, a spokesman for Williams, declined to comment on Monday’s filing. Vicki Granado, a spokeswoman for Energy Transfer, declined to comment beyond the statement.

Energy Transfer also indicated in Monday’s filing that future dividend payouts from its Energy Transfer Corp. unit, a limited partnership created for the Williams merger, may be in jeopardy.

Owing in part to “more challenging business conditions,” Energy Transfer’s management is forecasting that Energy Transfer Corp., shares of which would be exchanged for existing ones in Williams, will issue payouts of 57 cents a share in 2016 and 46 cents in 2018 -- but nothing in 2017.

The proposed deal has already spurred disagreements between the two companies. In March, Energy Transfer completed a private unit offering that it may use to help pay down debt associated with the purchase of Williams. Williams had earlier blocked its proposal to hold a public offering and wasn’t involved in the private one.

Williams filed suit against Energy Transfer and its chief executive officer, Kelcy Warren, over the exchange earlier this month. In its challenge against Warren, Williams said its would-be leader “maliciously” orchestrated the offering to guarantee himself more than $200 million a year in payments at the expense of other investors.

http://www.bloomberg.com/news/articles/2016-04-18/energy-transfer-surges-williams-slides-on-tax-opinion-hang-up

Cox Oil Offshore, L.L.C., an established, privately owned, independent oil and gas company today announced they have successfully completed a transaction in which Cox Oil acquired a number of assets in the Gulf of Mexico from Chevron. The acquisition includes 19 fields and associated assets located primarily on the GOM Outer Continental Shelf and in Louisiana state waters.

'Today's closing further demonstrates Cox Oil's dedication to the Gulf of Mexico and the Outer Continental Shelf. We look forward to welcoming the more than 100 Chevron employees that will be joining our team,' said Brad E. Cox, Chairman and Founder of Cox Oil.

'This transaction contributes to our long term, strategic focus in the oil and gas industry. We are grateful to Chevron and their professional staff for their dedication and efforts in this process,' said Craig Sanders, CEO of Cox Oil.

The asset acquisition package includes 170 active wells, 70 platforms, 70 caissons and other offshore structures. The financial aspects of the deal will not be disclosed. The closing date for the transaction is April 15, 2016.

http://www.oilvoice.com/n/Cox-Oil-Offshore-acquires-Gulf-of-Mexico-assets-from-Chevron/3fca0f77130d.aspx?utm_source=twitterfeed&utm_medium=twitter&utm_campaign=Feed%3A+OilvoiceHeadlines+%28OilVoice+Headlines%29

---

Attached Files

Oregon LNG has announced that it has ceased operations on the Oregon LNG Project.

Oregon LNG confirmed that the owner of the LNG project, Leucadia National Corp., has decided to cease funding the project.

In a short statement released on its website, Oregon LNG said: “Oregon LNG thanks all those in the project area who supported its 12-year effort to bring good jobs and tax revenues to Warrenton and Clatsop County by building a LNG terminal and associated pipeline. Oregon LNG will have no further comment.”

The proposed US$6 billion project would have included an LNG export terminal located in Warrenton, Oregon, US, at the mouth of the Columbia River, and a natural gas connector pipeline to bring largely Canadian natural gas from an existing pipeline in Washington State to the terminal site. Oregon LNG hoped that the LNG project would have produced up to 9 million tpy of LNG.

http://www.lngindustry.com/liquefaction/19042016/Oregon-LNG-project-ceases-operations-2304/