Painted Pony Petroleum Ltd. is pleased to announce that production volumes, based on field estimates, averaged over 240 MMcfe/d (40,000 boe/d) during the month of December 2016 with liquids making up approximately 9% of total production volumes or more than 3,600 bbls/d.  Exiting 2016 with production volumes at these levels was a significant goal for Painted Pony and one which, in conjunction with the commissioning of the AltaGas Townsend Facility (the “Townsend Facility“), marked a significant milestone for the Corporation.

Mr. Pat Ward, President and CEO of Painted Pony said, “The production growth we achieved during 2015 and 2016 was generated solely through drilling on our industry-leading Montney property.  Between the fourth quarter of 2013 with production of 9,312 boe/d and our fourth quarter exit production volumes in 2016 of more than 40,000 boe/d, we have organically grown our production by 330%.” Mr. Ward continued by saying, “When Painted Pony first introduced the concept of growing to 240 MMcfe/d or 40,000 boe/d in the third year of our initial five-year plan, we believed it to be a very ambitious but achievable goal. However, when you carefully plan the development of a world class asset, and have a great group of dedicated people, you can accomplish exceptional things.”

http://boereport.com/2017/01/05/painted-pony-achieves-2016-exit-production-of-more-than-240-mmcfed-40000-boed-announces-operational-update-and-attendance-at-the-td-securities-london-energy-conference/

Royal Dutch Shell Plc shut the Trans Niger oil pipeline after a fire, threatening to worsen a drop in Nigerian output due to unplanned disruptions.

The line can transport about 180,000 barrels a day to the Bonny Export Terminal in the Niger Delta was halted Tuesday due to a blaze at Kpor in Ogoniland, Precious Okolobo, a company spokesman in Lagos, said Thursday by phone. Shell declined to comment on the impact on production.

Nigeria’s daily output dropped by 200,000 barrels to 1.45 million in December, ending three months of gains as the African nation struggled to restore capacity after a year of militant attacks on oil infrastructure. Production fell to 1.39 million barrels in August, the lowest level since 1988, according to data compiled by Bloomberg.

https://www.bloomberg.com/news/articles/2017-01-05/shell-pipeline-fire-threatens-to-deepen-nigerian-oil-output-drop

Saudi Arabia cut oil output in January by at least 486,000 barrels per day (bpd) to 10.058 million bpd, fully implementing OPEC's agreement to reduce output, according to a Gulf source familiar with Saudi oil policy.

The Organization of the Petroleum Exporting Countries in late November agreed to cuts that take effect in the first half of 2017 to curb a global supply glut and prop up prices.

Under the deal, Saudi Arabia agreed to cut output by 486,000 bpd, or 4.61 percent of its October production of 10.544 million bpd.

OPEC agreed to output cuts as of Jan. 1 that would bring production to 32.50 million bpd, in the first such decision since 2008. In December, no production target was in effect.

http://www.reuters.com/article/saudi-oil-output-idUSL1N1EV1GM

As we do every month, MDN tracks how many rigs oilfield services company Patterson-UTI Energy reports operating–as a proxy for when/if the drop in rig counts for the Marcellus/Utica will turn around.

Patterson operates a number of rigs in the northeast, as well as other areas of the continental United States (and Canada). Month by month Paterson’s rig count has declined over the past year plus–until June.

June was the first time in over a year that Patterson’s rig count reversed and began to climb once again. Since June the count has steadily risen. The latest count, for December, saw the biggest month over month increase since the trend reversed. In December, Patterson’s rig count hit 71, up 6 from 65 in November. That’s a big 9% jump!…

http://marcellusdrilling.com/2017/01/patterson-uti-dec-rig-count-big-9-jump-up-from-nov/

Ladies and gentleman: Start your drill bits! Yesterday Antero Resources, one of the biggest drillers in the Marcellus/Utica, released their road map for what lies ahead in 2017 for the company.

Among the gems: The company plans to do a serious amount of drilling. They will have drilled 170 new wells, bringing them online, by the end of the year, with another 30 drilled but not completed.

Antero will spend $1.3 billion to do it–with another $200 million spent on land deals. Daily production is forecast to average somewhere around 2.1 to 2.2 billion cubic feet (Bcf) per day, up 20-25% over production in 2016.

Observation: Antero will spend about what it spent last year, but still goose production by nearly a quarter more than last year. Talented folks! Antero, as we’ve previously highlighted, has what we consider to be the best hedging in the business.

They announced two-thirds of their production for 2017 is hedged at $3.68/Mcf (thousand cubic feet). In fact, all of their production for this year is hedged, at various price points. The spot price of natural gas today, as this was being written, was $3.27/Mcf.

http://marcellusdrilling.com/2017/01/antero-resources-pulls-curtain-back-on-plans-for-2017/

U.S. crude oil refinery inputs averaged 16.7 million barrels per day during the week ending December 30, 2016, 132,000 barrels per day more than the previous week’s average. Refineries operated at 92.0% of their operable capacity last week. Gasoline production decreased last week, averaging about 9.5 million barrels per day. Distillate fuel production increased last week, averaging over 5.3 million barrels per day.

U.S. crude oil imports averaged 7.2 million barrels per day last week, down by 984,000 barrels per day from the previous week. Over the last four weeks, crude oil imports averaged 7.8 million barrels per day, 0.5% above the same four-week period last year. Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 722,000 barrels per day. Distillate fuel imports averaged 99,000 barrels per day last week.

U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased by 7.1 million barrels from the previous week. At 479.0 million barrels, U.S. crude oil inventories are near the upper limit of the average range for this time of year. Total motor gasoline inventories increased by 8.3 million barrels last week, and are near the upper limit of the average range. Both finished gasoline inventories and blending components inventories increased last week. Distillate fuel inventories increased by 10.1 million barrels last week and are above the upper limit of the average range for this time of year. Propane/propylene inventories fell 2.7 million barrels last week but are in the upper half of the average range. Total commercial petroleum inventories increased by 6.1 million barrels last week.

Total products supplied over the last four-week period averaged 19.6 million barrels per day, down by 0.5% from the same period last year. Over the last four weeks, motor gasoline product supplied averaged 9.0 million barrels per day, down by 0.2% from the same period last year. Distillate fuel product supplied averaged over 3.8 million barrels per day over the last four weeks, up by 8.1% from the same period last year. Jet fuel product supplied is up 4.0% compared to the same four-week period last year

Cushing up 1.1 mln bbls

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

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Crew Energy Inc. is pleased to announce that our Board of Directors has approved a 2017 capital expenditure program of $200 million designed to achieve production growth to over 30,000 boe per day in the fourth quarter of 2017. This growth represents a greater than 40% increase in Montney production, funded through a combination of internally generated funds from operations and draws on our credit facility leading to an exit 2017 debt to trailing fourth quarter 2017 annualized funds from operations ratio of less than 1.5 times.

With over 300,000 net acres of Montney rights and over 110 Tcfe of Total Petroleum Initially in Place (“TPIIP”), Crew has access to a massive resource for development and significant long-term growth potential. To date, the Company has focused on the Upper Montney at our Septimus and West Septimus areas (“Greater Septimus”) and continued development at our Tower light oil area. Our 2017 capital program will be predominantly focused on West Septimus development, including further delineation of the ultra liquids-rich region and includes approximately $40 million of infrastructure investments highlighted by the doubling of our West Septimus facility’s capacity to 120 mmcf per day. Production additions will be back end loaded with the West Septimus plant expansion expected to be completed in the fourth quarter. Further delineation of Upper and Lower Montney stratigraphic intervals at West Septimus and Tower will further support our growth plan designed to achieve production of over 60,000 boe per day by the end of 2019.

Highlights:

Invest $140 million into Montney drilling, completions, equip and tie-in activities, including the planned drilling of 28 (26.3 net) and the completion of 39 (37.3 net) Montney wells through the year;
Direct $40 million of capital into key infrastructure projects including expansion of Crew’s West Septimus facility to 120 mmcf per day of gas processing capacity that in aggregate with Septimus and Tower will provide Crew with 45,000 boe per day of processing capacity for Montney gas and liquids production. Pipeline construction will also begin to provide physical access to the Trans-Canada Pipeline (“TCPL”) system by the second quarter of 2018, further diversifying Crew’s marketing strategy and to support our three year growth plan to over 60,000 boe per day;
Forecast Q4 2017 exit Montney production greater than 26,000 boe per day achieving year-over-year exit growth of over 40%;
Target annual corporate production growth of approximately 15% with volumes averaging between 25,000 and 27,000 boe per day (weighted 72% to natural gas) with a corporate exit rate of greater than 30,000 boe per day;
Continue to focus on cost control with corporate operating costs per boe in 2017 expected to be between $5.50 and $6.00 per boe, transportation costs of $2.25 to $2.50 per boe, and G&A costs of between $1.25 and $1.50 per boe. At our Greater Septimus area, Crew anticipates continued low operating costs of between $3.50 and $4.00 per boe; and
Preserve balance sheet strength and maintain a conservative 2017 year end debt to trailing 2017 funds from operations ratio of approximately two times, and debt to annualized fourth quarter 2017 funds from operations of 1.5 times.

http://boereport.com/2017/01/05/crew-energy-announces-a-2017-capital-budget-of-200-million-targeting-montney-production-growth-of-over-40/

U.S. oil and gas major ExxonMobil revealed on Thursday a new technology that dehydrates natural gas, which could be deployed at both land-based and offshore natural gas production operations.

The company announced its development of cMIST technology, which dehydrates natural gas using a patented absorption system inside pipes and replaces the need for conventional dehydration tower technology. This “in-line” technology could be deployed at both land-based and offshore natural gas production operations, the company noted.

According to Exxon, the new technology, developed and field-tested by the company, more efficiently removes water vapor present during the production of natural gas. Removing water vapor through the use of dehydration technology, typically accomplished using large and expensive dehydration towers, reduces corrosion and equipment interference helping to ensure the safe and efficient transport of natural gas through the supply infrastructure and ultimately to consumers, the company explained.

Exxon also claimed that cMIST reduces the size, weight and cost of dehydration, resulting in reductions of surface footprint by 70 percent and the overall dehydration system’s weight by half, which has significant added benefits on offshore applications.

“By leveraging our industry-leading experience with upstream applications, our researchers were able to create this advanced natural gas dehydration technology, which represents a step-change in operational efficiency and a significant reduction in footprint,” said Tom Schuessler, president of ExxonMobil Upstream Research Company.

ExxonMobil’s cMIST technology relies on a proprietary droplet generator to break up conventional solvent into tiny droplets that become well dispersed in the gas flow thereby increasing the surface area for the absorption of water from the gas. This is followed by an inline separator that coalesces the water-rich glycol droplets and moves them to the outside wall of the pipe for effective separation from the dehydrated natural gas. The water-rich glycol is regenerated using a conventional system and is sent back to the droplet generator to be used again. The droplet generator uses the energy from the flowing natural gas to create droplets of the right size.

New tech licensed to Sulzer

ExxonMobil has licensed cMIST technology to the Chemtech division of Sulzer, a player in separation technologies, to facilitate deployment across the oil and gas industry.

http://www.offshoreenergytoday.com/exxonmobil-reveals-new-technology-to-dehydrate-natural-gas/

China's apparent oil demand surged more than 4% year on year in November, the fastest pace of growth in 15 months, buoyed by a sharp expansion in manufacturing activity, which helped to drive the country's appetite for gasoil to a year's high and LPG consumption to record levels.

The surprise acceleration in manufacturing to hit the highest level in a year lifted demand for goods transport, pushing up gasoil consumption. LPG demand was driven by consumption by propane dehydrogenation plants. Together, it more than offset a 5% year-on-year drop in apparent demand for gasoline.

"The positive growth momentum should continue on the back of fiscal support. With the economy having just emerged out of deflation, and with the recovery still looking quite uneven, policy support should remain in place until the recovery becomes more broad-based," HSBC said in a research note.

The 4.1% year-on-year growth in total apparent oil demand to 11.44 million b/d in November was the second consecutive monthly increase since October when demand rose 1.1%, data compiled by S&P Global Platts using official numbers showed.

November demand was also up 2.8% from October, and higher than the average of 11.07 million b/d over the first 11 months.

Manufacturing investment grew at the fastest pace in a year at 8.4% in November, with broad-based recovery becoming increasingly visible in heavy industries, machinery and auto, data from the National Bureau of Statistics showed.

Industrial production grew 6.2% year on year in November, compared with 6.1% in October. PMI also climbed to 51.7 in November from 51.2 in October. All this improved the outlook for oil demand.

A slight decline in oil product stocks also supported actual demand. Total oil product stocks -- gasoline, gasoil and jet fuel/kerosene -- edged down 0.07% month on month at the end of November, data from state-owned news agency Xinhua showed.

Beijing does not release official data on oil demand and stocks. Platts calculates apparent or implied oil demand by taking into account official data on monthly throughput at Chinese refineries and net product imports. But the official data fails to reflect some of the crude throughput increases from the new crude oil consumers, the independent refineries. 

GALLOPING GASOIL DEMAND

November apparent demand for gasoil rose to a 12-month high to 3.43 million b/d, up 0.9% from October, although it fell 2% year on year. Gasoil accounts for around 30% of the country's overall oil products demand.

Transportation accounts for nearly 70% of gasoil demand, while agriculture and construction sectors account for the rest.

Gasoil demand recovery was also supported by a draw in stocks for the fourth consecutive month. Gasoil stocks at the end of November were 3.9% lower month on month, following decreases of 2.88%, 12.81% and 16.81% in the previous three months, respectively, data from Xinhua showed.

The high apparent demand was also a result of lower supply from the blending pool, which pushed up production at refineries to make up for the loss.

Blended barrels, with imported light cycle oil and domestic kerosene as the main components, are not included in gasoil apparent demand calculations because of the absence of official data.

China's imports of light cycle oil remained relatively low at 384,549 mt in November, compared with an average of 445,906 mt over July-September. Blending with 1 mt of LCO could get 2-2.5 mt of off-spec gasoil, which is mainly used in the construction and fishing sectors. 

GASOLINE CONSUMPTION FALLS

Apparent demand for gasoline fell 4.7% year on year in November after a 5.2% increase in October. It was 3.3% lower from the previous month. Gasoline stocks at the end of November edged up for the second consecutive month by 0.87% from October.

However, market sources said the actual fall in demand would probably not be that sharp if blended barrels were taken into consideration.

No official data reflects the blended gasoline barrels. But sales of imported mixed aromatics, which are used mainly as a blending material for gasoline, provide an indication of demand.

Data from the General Administration of Customs showed that China's imports of mixed aromatics jumped 23.7% month on month to 868,190 million mt, suggesting a rise in blending activity.

The fall in gasoline demand was also capped by a 17% year-on-year rise in gasoline-fueled vehicle sales in November, data from the China Association of Automobile Manufacturers showed. Sales of gasoline-guzzling sport utility vehicles surged 42% year on year. 

LPG, NAPHTHA DEMAND

LPG demand surged to a historical high of 1.8 million b/d in November, up 38.5% year on year and 12.3% month on month. The previous high of 1.66 million b/d recorded in March last year. Over the first 11 months of 2016, demand for LPG averaged 1.55 million b/d.

Market sources attributed the growth to plentiful volumes imported to feed the country's propane dehydrogenation plants, which increased their run rate significantly to meet incremental industrial demand.

Seven major PDH plants in China were estimated to have run at an average of 77% of their capacity in November, up from around 67% in October, a Platts survey showed earlier. In addition, two new PDH plants -- the Hebei Haiwei and Oriental Energy's Ningbo Fuji Petrochemical -- started operations, respectively, in October and November.

As a result, propane imports in November jumped 95% year on year and 30% from October.

Apparent demand for naphtha in November fell 4.9% year on year but it was up 7.6% from October at 980,000 b/d in November. It was higher than the average of 964,000 b/d over the first 11 months.

China's ethylene production from naphtha-fed crackers edged down 1.4% from October and 0.5% year on year to 1.45 million mt in November. 

JET FUEL, FUEL OIL DEMAND

Apparent demand for jet fuel in November rose 29% year on year to 800,000 b/d, the highest in 21 months. Month on month, it rose 8.2%.

Actual consumption in November should be lower because of a month-on-month rise in stocks of 9.89%, data from Xinhua showed.

Latest data from the Civil Aviation Administration of China showed that aviation traffic rose 12.7% year on year in October, although it slowed from the 14% growth in September. In the first 10 months, turnover increased 12.6% year on year.

Apparent demand for fuel oil recovered to a five-month high of 687,000 b/d in November, rising 7.3% from October despite falling 1.2% year on year.

Customs data showed that imports of bitumen blend -- which refers to heavy residual blends such as 380 CST fuel oil, bitumen or heavy gasoil -- surged 286% from October. The grade is used as feedstock by independent refineries.

Consumption of bitumen blend at Shandong, home of most of the independent refineries, rose 55% month on month in November.

Imports of fuel oil in November rose 6.1% month on month because of high demand from the bunkering sector.

http://www.platts.com/latest-news/oil/singapore/analysis-manufacturing-helps-china-oil-demand-27743751

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Attached Files

As OPEC starts to make its production cuts work, the true impact of its actions is perhaps most in evidence in an obscure part of the physical oil market.

While Brent futures, a benchmark based on North Sea supply, are trading $4 a barrel higher than in June, the price of cheaper Middle East crude is rising faster still. The gap between the two varieties -- now the smallest in 15 months -- reveals where buyers are experiencing the greatest supply restrictions. It also has the potential to influence where oil flows.

Saudi Arabia and its neighboring countries mostly pump lower quality oil, known in the industry as heavy crude. So when production from Organization of Petroleum Exporting Countries drops, the price difference -- or spread -- between those grades and higher quality light crude such as Brent and West Texas Intermediate typically gets smaller.

“Heavier crudes have always been the first to get cut so that looks like the spread to watch,” said Warren Patterson, a commodity strategist at ING Bank NV.

The best sign of how prices are converging is in the so-called Brent-Dubai exchange of futures for swaps, which lets refiners better manage their exposure to the relatively illiquid heavy crude market by allowing them to use the larger liquidity of the Brent market for hedging. The Brent-Dubai EFS spread fell to an 15-month low of $1.70 a barrel this week, down from $3.75 a barrel in June, according to data from brokerage PVM Oil Associates.

Out of Sight

Although oil traders such as Vitol Group and some specialized hedge funds actively trade light-heavy crude spreads, the market is relatively out of sight for mainstream oil investors, who focus on Brent and WTI. As such, the light-heavy spread usually reflects demand from refiners and physical buyers and sellers affected by OPEC cuts, rather than speculative trades.

“The physical market pricing in OPEC cuts is probably the main driver at the moment,” Giovanni Staunovo, commodity analyst at UBS Group AG in Zurich, said. “If OPEC target the higher cost barrels, that will remove heavier crude from the market.”

Prior Cuts

In 2009, the previous time OPEC cut output, Dubai traded intermittently at a premium to Brent, despite the fact the Middle East crude is normally viewed as being lower quality. At its peak, Dubai traded at a premium of 71 cents to Brent. In 2011, it traded at a discount of almost $8 a barrel.

OPEC pumped 33.1 million barrels a day last month, down 310,000 barrels a day from November, according to a Bloomberg News survey of analysts, oil companies and monitoring of ship-tracking data.

The decline comes as OPEC, which controls around 40 percent of global oil supply, is planning to curb output in a bid to boost prices. The organization reached a historic deal last month with Russia and other non-members to cut global production by about 1.8 million barrels a day for six months starting January.

Saudi Arabia, Kuwait and the United Arab Emirates, whose supplies are dominated by heavy grades, will shoulder the bulk of the cuts. At the same time, supply of lighter crude oil grades, such as those produced in Libya, is increasing as the country was exempted from the OPEC deal. North Sea and U.S. output, which traditionally tends to be lighter than OPEC’s, is also increasing.

Cargo Flows

The global nature of the oil market means that refiners often source crude depending on prices of individual grades. Relatively cheap Brent or West Texas Intermediate crude could potentially serve as an incentive to buy more of the grades and others produced in the Atlantic Basin.

Oil traders and analysts anticipate that heavy-light crude differentials are likely to narrow further this year, although the full extent of the tightening wouldn’t occur until late spring in the Northern Hemisphere, when refinery processing picks up after seasonal maintenance.

“Clearly, light-heavy differentials will have to do a lot of work to entice refiners to buy light grades, although there are limits to how much of this can be done,” said Amrita Sen, chief oil analyst at consultant Energy Aspects Ltd.

https://www.bloomberg.com/news/articles/2017-01-05/the-oil-trade-that-shows-where-opec-s-cuts-are-starting-to-bite

Turkey's state pipeline operator Botas will cut supply to gas-fired power plants by 50 percent as of Friday due to increased household demand in cold weather, energy industry sources said on Thursday, in a bid to free up more gas for households.

Three industrial sources said private gas-fired power plants were informed of Botas' measures, before a cold wave, expected to cause heavy snow, hits Turkey over the weekend.

http://www.reuters.com/article/turkey-energy-gas-idUSA4N1D102W

A Saudi Aramco employee sits in the area of its stand at the Middle East Petrotech 2016, an exhibition and conference for the refining and petrochemical industries, in Manama, Bahrain, September 27, 2016. REUTERS/Hamad I Mohammed

Saudi Aramco has started talks with customers globally to discuss possible cuts of 3 percent to 7 percent in February crude loadings to comply with OPEC production cuts, four sources with knowledge of the matter said on Thursday.

The Organization of the Petroleum Exporting Countries (OPEC) agreed in late November to cut production in the first half of 2017 to reduce global oversupply and prop up prices.

Under the deal, Saudi Arabia, the world's biggest oil exporter, agreed to cut output by 486,000 barrels per day (bpd), or 4.61 percent of its October output of 10.544 million bpd.

"Aramco is approaching all its customers for possible cuts from February and discussing likely (supply) scenarios," one of the sources said.

"Nothing is confirmed yet," he said, adding that the scenarios were for 3 percent to 7 percent cuts.

State oil giant Saudi Aramco will be receiving nominations for February crude supplies from its customers and is assessing which grades it could cut, a second source said.

Saudi oil buyers will be notified by Jan. 10 of their respective crude allocations for February.

http://www.reuters.com/article/us-saudi-oil-opec-int-idUSKBN14P18X

China's Iranian crude oil imports may rise to a record this year as state-owned oil firms lift more crude through their upstream investments while extending their current supply contracts, senior industry and trading sources said.

Chinese firms were expected to lift between 3 million to 4 million barrels more Iranian oil each quarter in 2017 than last year, four sources with knowledge of the matter estimated. That would be about 5 percent to 7 percent higher than the 620,000 barrels per day (bpd) of Iranian crude the country has imported during the first 11 months of 2016, according to the customs data.

Iran, a member of the Organization of the Petroleum Exporting Countries (OPEC), won an exemption from the group's production cuts agreed to on Nov. 30 and may raise output slightly.

China's demand for foreign crude could touch new highs as state-run refiners start up new plants and as Beijing allows more independent refiners to import crude, with the country forecast to remain a key driver of 2017 demand growth.

State refiner Sinopec Corp and state-run oil trader Zhuhai Zhenrong Corp, the two biggest Chinese lifters of Iran's oil, are set to roll over annual supply agreements with National Iranian Oil Co (NIOC), with combined volumes of about 505,000 bpd, two sources with knowledge of the agreements said.

Additionally, China National Petroleum Corp (CNPC) and Sinopec expect to lift more oil this year from two oilfields they operate under service contracts, the sources said.

A press official with Sinopec said the company does not comment on operational matters. CNPC and NIOC did not immediately respond to requests for comment.

Sinopec signed a development deal for the Yadavaran field in late 2007 with CNPC signing a deal for the North Azadegan field in 2009, after Japanese and European companies pulled out of the projects, both in the southwestern Iranian province of Khuzestan, due to sanctions over Iran's nuclear program.

Both fields started pumping oil in early 2016, with North Azadegan reaching full production in the third quarter and Yadavaran in the fourth quarter, and they are currently pumping at around 160,000 bpd.

"The terms of return on investment are still being finalised ...but it's safe to say Sinopec is going to lift more from Yadavaran this year than last," said a Beijing-based oil executive familiar with Sinopec's operations on Yadavaran.

A separate senior trading source estimated that Sinopec could lift about 4 million barrels of Yadavaran crude, considered a heavy grade with an API gravity rating of about 25, every quarter this year. The person did not give an earlier comparison.

After first shipments last October, CNPC is expected to lift an average of about 3 million barrels from North Azadegan each quarter, said a second senior trader with knowledge of CNPC's Iranian production.

http://www.reuters.com/article/us-china-iran-oil-idUSKBN14P15W

OPEC’s crude production fell by 310,000 barrels a day in December, as unplanned disruptions in Nigeria reduced the group’s supply before deliberate cuts take effect this month.

Nigeria’s daily output dropped by 200,000 barrels to 1.45 million in December, ending three months of gains as the African nation struggled to restore capacity after a year of militant attacks on oil infrastructure. Saudi Arabia’s production fell by 50,000 barrels a day while Venezuela declined by 40,000.

“Crude production in Nigeria in December was once again severely impacted, mostly due to a field maintenance as well as a strike of port workers,” Amrita Sen, chief oil analyst at London-based consultant Energy Aspects Ltd., said by e-mail.

The decline in December comes as OPEC, which controls around 40 percent of global supply, is planning to curb output in a bid to boost oil prices. The organization reached a historic deal last month with Russia and other non-members to cut global production by almost 1.8 million barrels a day starting this month.

Brent crude, the global benchmark, advanced 52 percent last year, the biggest annual gain since 2009. Prices were down 0.3 percent at $56.31 a barrel as of 6:39 a.m. London.

Overall, the Organization of Petroleum Exporting Countries -- excluding Indonesia which suspended its membership on Nov. 30 -- pumped 33.1 million barrels a day in December, according to a Bloomberg News survey of analysts, oil companies and ship-tracking data. That compares with a November total of 33.41 million barrels a day for the 13 continuing members of the group, or 34.14 million including Indonesia’s daily output of 730,000 barrels.

Under the terms of last month’s agreement, OPEC’s total output including Indonesia would fall to 32.5 million barrels a day. Compliance with that target will be judged against independent estimates compiled by OPEC, which can vary from the Bloomberg News survey.

Nigeria Disruption

In Nigeria -- which along with Libya is exempt from making cuts because of conflict -- maintenance on the Erha field and strike action by workers at Exxon Mobil Corp.’s operations in the country disrupted both exports and production, Sen said. A year ago, the country was pumping almost 2 million barrels a day.

No cargoes of the Agbami crude grade were shipped in first half of December, while three out of the four Erha cargoes originally scheduled to load were deferred, with two of those moved into January, according to loading programs obtained by Bloomberg.

Iran, Kuwait and Angola each reduced output by 20,000 barrels a day while Algeria and Iraq dropped by 10,000, the survey showed.

Libya pumped an extra 50,000 barrels a day last month as the Northern African nation reopened two of its biggest oil fields and loaded the first cargo in two years from its largest export terminal.

https://www.bloomberg.com/news/articles/2017-01-04/opec-oil-output-drops-in-december-as-nigeria-suffers-disruptions

Cape said on Thursday that its full-year results for 2016 are likely to be “materially ahead” of current market expectations, as it announced the award of additional work packages on the Chevron-operated Wheatstone natural gas project.

The company, which provides critical industrial services to the energy and natural resources sectors, said it has seen strong trading across its three regional businesses in the last two months of the year, with a particularly strong performance in Asia Pacific driven by high levels of project activity across the region.

As a result, it now anticipates that the-full year performance for 2016 will be materially ahead of current market expectations.

“This improvement in performance is supported by strong cash generation with a consequent positive impact on net debt,” Cape said, adding that it remains confident that the outlook for 2017 is encouraging.

In addition, the group said it has been awarded additional work packages on the Chevron-operated Wheatstone natural gas project, near Onslow, Western Australia.

Cape is now providing access, painting, insulation and fire proofing services to the project until completion and the additional packages will see Cape extending its scope of services to include outside battery limits, the domestic gas plant and commissioning support.

“The award reflects the group's performance on the contract to date, including safety (over 2 million man hours to date Lost Time Incident free), operational excellence, innovation in project management and cost savings through productivity and workforce management,” Cape said.

http://www.digitallook.com/news/news-and-announcements/cape-sees-fy-results-materially-ahead-of-current-views--2421436.html

Europe is set to retain numerous gas supply options throughout 2017 as traditional pipeline suppliers continue their market share offensive and LNG imports to the continent rally from their unexpected lows in 2016.

With demand -- especially in the key power sector -- seen continuing its recovery from the past two years, much focus will again be placed on declining domestic European production and the subsequent need for increased imports.

EU gas demand is expected to have increased by some 6% in 2016 to around 447 Bcm, according to industry group Eurogas, following a rise of around 4% in 2015, and according to Platts Analytics' Eclipse Energy could rise further in 2017 driven by the arrival of more LNG.

The demand recovery from the lows of 2011-14 has been a result of increased gas consumption for power generation and signs of revival in industrial activity in Europe.

Gas demand for power generation in the UK rose 50% to 19.8 Bcm in the year to December 15, while Italian gas-for-power demand jumped 12% to 20.9 Bcm, according to data from Platts Analytics.

Demand in France also rose sharply towards the end of 2016 as parts of the French nuclear fleet were taken offline for safety checks.

From January 1 to December 15, 2016, French gas demand for power generation more than doubled to 3.8 Bcm.

The situation around the availability of French nuclear capacity in 2017 is still uncertain and coal prices are expected to remain volatile after their late-2016 rally, so the level of gas demand for power generation will be dependent on numerous interlinked factors.

There was some coal-to-gas switching in Northwest Europe in 2016 given the divergence in coal prices to the upside and gas prices to the downside, while in the UK coal use in power generation slumped due mostly to the continued impact of the carbon price support mechanism and the retirement of a big chunk of coal-fired power generation capacity.

But no new UK coal plant retirements are expected in 2017, according to Platts Analytics.

Industrial demand will likely have been boosted by the weaker euro in 2016, benefiting Europe's export-oriented industries.

But with demand expected to be relatively robust in 2017, there is a risk of a price spike at the start of the year in the event of a cold snap given gas storage constraints at the Rough facility in the UK and historically low stocks in NWE.

On the other hand, a milder winter would lead to less storage injection demand in the summer 2017 and subsequent pressure on prices.

According to the latest forecasts from Platts Analytics, NWE storage stocks are expected to return to the top of their three-year range by the end of September 2017 as higher LNG sendouts are absorbed into storage facilities.

SUPPLY DYNAMICS

The biggest shift on European gas markets is expected to be in the volume of LNG supply.

According to Platts Analytics, in the latter part of the first quarter there will be a "substantial" year-on-year increase in LNG deliveries to NWE, reducing the need for overall storage withdrawals by 42 million cu m/d on the year.

In the UK, Netherlands, Belgium and France, Platts Analytics assumes 80 million-90 million cu m/d of LNG sendouts in Q1, 2017 compared with 58 million cu m/d on average in February-March 2016.

The increase in imported LNG volumes could put pressure on prices and increase demand for coal-gas switching.

LNG imports into Europe surprised to the downside in 2016 due to higher demand in the Middle East and several trips at liquefaction plants including Gorgon in Australia and Angola LNG.

But the picture is set to shift in 2017 as high counter-seasonal demand in the Middle East dissipates and Qatari production returns to around 300 million cu m/d.

Global LNG supply will be boosted further as US and Australian volumes ramp up, although there is the possibility that many cargoes will be swallowed up by the key north Asian markets given the rally in spot LNG prices in December to close to $10/MMBtu.

While LNG is expected to stage a European recovery in 2017, the traditional pipeline suppliers to Europe -- Russia, Norway and Algeria -- will continue to fight to retain, or even grow, market share.

In 2016, Russia smashed its record for deliveries to Europe and Turkey with exports hitting an all-time high of an estimated 180 Bcm.

Norway, meanwhile, was expected to have exported close to its record high from 2015 of 115 Bcm, and Algeria saw its exports to Italy rise threefold to some 18 Bcm.

RENEGOTIATION

The reason for the rise in Italian imports from Algeria was an increase in Algerian production, a shift in the volume terms for Eni's import contract with state-owned Sonatrach and a competitive oil-indexed price given low crude prices in 2016.

At the end of 2016, Eni CEO Claudio Descalzi said it had made a "very important achievement" by again reworking its Algerian import contract for Gas Year 16 (October 2016-September 2017).

The contract, which expires in 2019, is now aligned to the Italian PSV hub, Descalzi said.

"That will allow us to get the break-even for gas and power in 2017 as promised," he said at an investor day in New York in December.

Eni was not the only company to renegotiate long-term gas contracts in 2016 -- Engie and RWE were among those to rework their Gazprom supply contracts to "de-risk" their Russian gas purchases.

Russian gas supplies to Europe are expected to be strong again in the first months of 2017 as buyers look to max out their take-or-pay volumes ahead of a likely rise in oil-indexed contracts, especially in southern Europe, following the recent oil price rally stemming from OPEC's decision to cut production from the start of January.

Oil indexation does seem to be losing its influence in long-term contracts -- even in southern Europe -- but the oil price still matters.

The head of Gazprom Export, Elena Burmistrova, said in May that hub pricing was not a "panacea" for the gas industry and the ideal way to price gas in Europe was still a regime based on oil indexation with only elements of hub pricing.

But given that global oil prices are currently in contango, oil-linked gas prices become more expensive further down the curve in 2017.

Gazprom has also said it is not "dumping" gas in Europe and the entire boom in supplies is due to buyer-led nominating behavior to meet demand.

SUPPLY OUTLOOK

Russia has said it expects to export in 2017 similar volumes to Europe as in 2016, while the European Commission decision in October to allow Gazprom more access to the OPAL gas link in Germany could mean increased flows of Russian gas.

It is not yet clear whether Gazprom will choose to divert flows to Nord Stream and OPAL away from the Ukrainian route, or use the extra OPAL capacity to flow more gas.

Whichever way it falls, the key is that OPAL is a cheaper option for Gazprom than Ukraine.

Tensions between Moscow and Kiev remain heightened, with the anticipated result of the multiple arbitration cases between Gazprom and Naftogaz in March an added pressure.

The state of relations between Russia and Ukraine is always a matter of concern for European gas buyers.

Disruption to flows via Ukraine -- as always -- cannot be entirely ruled out especially in an extreme cold winter scenario.

Norway, meanwhile, is forecasting gas output at 107.3 Bcm in 2017 while the UK has been buoyed by the startup of three new fields in 2016 -- Laggan-Tormore, Alder and Cygnus.

Algeria too expects to bring on a number of new gas fields in 2017, including the major Engie-operated Touat field.

Closer to home, the Groningen field quota has been reduced to 24 Bcm from 27 Bcm for Gas Year 16, although a number of appeals are being heard currently that could see the quota fall further.

The drop in Dutch gas production is a worry for European gas supply security, with increased dependence on imports the result.

Also in the Netherlands, the expiry of long-term capacity contracts for the BBL pipeline to the UK has shifted European gas market dynamics significantly.

The TTF/NBP spread and whether it goes above full-cycle BBL costs (including entry-exit) could become a new key pricing point.

Current geographical spreads are so poor there is no incentive to move gas given the high cost of pipeline capacity.

http://www.platts.com/latest-news/natural-gas/london/outlook-2017-european-gas-supply-demand-to-remain-26631430

Oil prices were firm on Thursday, buoyed by data showing a fall in U.S. crude inventories and by record car sales in the United States.

Traders said that WTI had been lifted by a report by the American Petroleum Institute (API) stating that U.S. crude inventories fell 7.4 million barrels in the week ended Dec. 30 to 482.7 million, compared with analyst expectations for a decrease of 2.2 million barrels.

"We expect Asia to trade on the positive-side today, supported by the API number," said Jeffrey Halley, senior market analyst at OANDA brokerage in Singapore.

Prices were also lifted by U.S. car and truck sales, which were up 3.1 percent in December from the same month last year, and hit a record 17.55 million overall in 2016.

http://www.reuters.com/article/global-oil-idUSL4N1EV03T

Two members of Eclipse Resources’ top management team are playing musical chairs as part of the company’s plan to “accelerate growth” in 2017.

Tom Liberatore, currently executive VP and COO is dropping the COO title and becoming executive VP of corporate development and geosciences. Meanwhile, Oleg Tolmachev, currently senior VP of drilling and completions is becoming executive VP and COO.

Tolmachev’s star is clearly rising and he is now the man running the Utica/Marcellus drilling program for the company.

In the same press release, the company said it has now completed and brought online five Utica wells in Monroe County, OH. The wells are the first dry gas Utica wells to use Eclipse’s new “Gen-3” completion design.

http://marcellusdrilling.com/2017/01/mgmt-musical-chairs-at-eclipse-gen-3-utica-wells-go-online/

PDC Energy, Inc. today announced that on December 30, 2016, it closed the acquisition of approximately 4,500 net acres in Reeves and Culberson Counties, Texas, from Fortuna Resources Holdings, LLC, for approximately $118 million in cash, subject to certain post-closing adjustments. PDC’s working interest in the acquired leasehold is 100 percent and PDC expects to operate 100 percent of the properties. The acquired properties are concentrated in the Company’s Central acreage block contiguous with the Company’s acreage from the recently closed acquisition of approximately 57,000 net acres in Reeves and Culberson Counties. Current net production associated with the acquisition is approximately 300 barrels of oil equivalent per day. Also included is a drilled, but uncompleted (“DUC”) horizontal well, and a salt water disposal well.

The Company estimates the acquired acreage contains 75 gross one-mile horizontal drilling locations, based on four wells per section in each of the Wolfcamp A, B and C zones. This estimate is based on the assumptions utilized by the Company in its prior Delaware Basin acquisition. The Company plans to integrate the newly acquired acreage into its development drilling plans for its Central acreage block.

President and Chief Executive Officer Bart Brookman commented, “This bolt-on acquisition is a great example of our strategy to both expand and block up our Core Delaware Basin position. Our net acreage, drilling inventory and estimated reserve potential in the basin are expected to increase by approximately ten percent with this transaction. Additionally, by creating a large, contiguous acreage block, we have the opportunity to focus on longer lateral development while optimizing our operational efficiencies.”

Fortuna Resources Holdings, LLC, is a Permian Basin focused independent oil and natural gas producer sponsored by certain affiliates of Och-Ziff Capital Management Group LLC (NYSE:OZM).

For a map related to this transaction, visit ‘Newsroom’ on the ‘Investor Relations’ page on PDC’s website at www.pdce.com.

http://boereport.com/2017/01/04/pdc-energy-announces-bolt-on-acquisition-of-approximately-4500-net-acres-in-the-core-delaware-basin/

Libya is re-opening its last major oil-export terminal that shut amid the conflict hobbling output in the country with Africa’s largest crude reserves.

The Zawiya terminal is preparing to resume exports after the pipeline supplying it was re-opened, an official at the state-run National Oil Corp. said Wednesday, asking not to be identified for lack of authorization to speak to news media. With Zawiya shipping, all nine of Libya’s main oil ports would be exporting. The country is revving up its oil industry just as most of its OPEC peers are cutting production to counter a glut.

Libya currently pumps 700,000 barrels a day of oil, the NOC official said. That’s up from 580,000 barrels a day in November and 520,000 in October, data compiled by Bloomberg show.

The North African country plans to almost double output in 2017. Last month it re-opened two of its biggest oil fields and began loading the first crude cargo in two years from its largest export terminal, Es Sider. Libya’s comeback will put pressure on the Organization of Petroleum Exporting Countries and the other major producers that agreed to start cutting output this month in a drive to shore up crude prices.

Libya in December re-opened the Sharara oil field, which supplies Zawiya, allowing for exports to resume from the terminal in western Libya. Almost 1.9 million barrels are set to load from Zawiya this month, according to a loading program obtained by Bloomberg. That compares with a pumping rate from Sharara of almost 9 million barrels a month as recently as late 2014, before the country’s internal conflict halted flows.

Libya pumped about 1.6 million barrels a day before an uprising in 2011 toppled the nation’s leadership. International oil companies pulled out as rival governments and militias struggled for control of Libya’s energy assets, and oil output plunged to as little as 45,000 barrels a day in August that year.

With production rising, NOC Chairman Mustafa Sanalla said on Dec. 21 that output would reach 900,000 barrels a day early this year and 1.2 million barrels a day by the end of 2017

http://boereport.com/2017/01/04/libya-oil-export-terminal-said-to-re-open-as-crude-output-rises/

Chevron-led 5.2 million tons per year Angola LNG plant in Soyo has restarted production following the latest shutdown during late December.

The December shutdown was due to engineers performing “minor intervention”.

“I confirm that Angola LNG’s plant has restarted production,” Angola LNG spokeswoman said in an emailed statement to LNG World News.

To remind, the $10 billion Angola LNG project, restarted operations in May last year after it was closed for more than two years due to a major rupture on a flare line that occurred in April 2014.

At the end of October, Chevron chief financial officer Pat Yarrington, told that such short duration shutdowns are often experienced as facilities are ramped up to their full capacity.

Angola LNG is a joint venture between Sonangol (22.8%), Chevron (36.4%), BP (13.6%), Eni (13.6%), and Total (13.6%).

http://www.lngworldnews.com/angola-lng-back-online/

 

Oil trader Gunvor Group is suing Cerberus Capital Management alleging that the private equity firm is refusing to pay its share of costs incurred when the two companies made a failed $650 million bid for Chevron Corp. assets in South Africa.

While a relatively small amount of money is at stake, the suit sheds light on the acquisition campaign now under way after Gunvor sold the bulk of its Russian assets following the 2014 U.S. sanctioning of its co-founder, billionaire Gennady Timchenko.

Gunvor claims it entered into an agreement with Cerberus in September to prepare a joint bid for the Chevron assets and that Cerberus agreed to pay half the cost of evaluating an offer, according to the documents filed in New York Supreme Court.

Gunvor said it spent about $1.6 million hiring advisers and consultants to help it perform due diligence on the assets, which include a refinery in Cape Town, a lubricants plant in Durban and about 800 service stations. Gunvor provided all of its due diligence materials to Cerberus and the two companies teamed up to make a bid “approaching $650 million,” according to the claim. The offer, which was submitted to Chevron’s banker on Cerberus letterhead, was rejected by Chevron soon after it was made, Gunvor said.

Cerberus has refused to “honor its obligations” under a September written agreement to pay for half of the due diligence costs, Gunvor said in the claim, which alleges breach of contract and is seeking $829,020.

Seeking Partners

The claim confirms that Gunvor, one of the world’s largest independent oil traders, is looking to partner with outside investors such as private equity to fund deals in much the same way that larger rivals Vitol Group and Trafigura Group have structured transactions in the Middle East, Africa and Brazil.

Gunvor spokesman Seth Pietras in Geneva declined to comment on the matter. Cerberus’s London office referred media inquiries to its New York office, which didn’t respond to e-mailed questions outside normal office hours.

After initially claiming that the cost-sharing provisions were not binding, Cerberus has now taken the position that the parties did not submit a joint bid as defined by their agreement, Gunvor said in the claim.

No statement of defense has been filed and none of the allegations have been proved in court.

Vitol Group and China Petroleum & Chemical Corp. are the two final bidders competing to buy Chevron’s South African assets, people familiar with the matter said last month.

French oil major Total SA was also involved in the process, according to the same people. Chevron plans to make a decision in coming weeks, though sale talks could still falter, the people said.

https://www.bloomberg.com/news/articles/2017-01-04/oil-trader-gunvor-suing-cerberus-over-failed-chevron-africa-bid

Jan 4 Canadian oil and natural gas producer Encana Corp said on Wednesday it expects its margins in 2017 to exceed its previous target on lower costs and an expected rise in output in the second half of this year.

The company also said it expects production from its core assets to be in the upper range, or exceed its previous forecast of 15-20 percent growth, between the fourth quarter of this year and the corresponding period last year.

Encana has downsized operations to focus on four core North American plays - the Montney and Duvernay in Western Canada, and the Eagle Ford and Permian in the United States.

The company said it expects its corporate margin to be above $10 per barrel of oil equivalent (boe) in 2017, higher than the $8 per boe it had forecast at its investor day in October.

Encana is scheduled to report its fourth-quarter results and 2017 budget on Feb 16.

http://www.reuters.com/article/encana-outlook-idUSL4N1EU34V

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Arab separatist militants in Iran said on Tuesday they had blown up two oil pipelines in coordinated attacks in the western Khuzestan region two days earlier, though this was subsequently denied by Iran's Interior Ministry.

The group, the Arab Struggle Movement for the Liberation of al-Ahwaz, said on its website its armed wing had caused major damage and fuel losses in the attacks on Jan. 3 near the town of Omidiyeh and the port of Deylam.

However, a spokesman for the Interior Ministry told state television the reports were untrue.

Ahwazi Arabs are a minority in mainly ethnic Persian Iran, and some see themselves as under Persian occupation and want independence or autonomy. Separatist groups have carried out intermittent attacks for decades, including on oil installations.

Tehran denies there is discontent among its Arab minority and has blamed suggestions of there being any separatist sentiment on a foreign plot to seize the oil that lies beneath Iran's Gulf coastal territory.

In a statement posted on their Ahwazna.net website, the group said the first attack targeted the "Maroun" pipeline of the state-owned Aghajari Oil and Gas Production Company, while the second attack targeted pipelines from the Baharkan oilfield to Kharg Island.

http://www.reuters.com/article/us-iran-energy-attack-idUSKBN14O1C7

Norwegian state-owned oil giant Statoil plans to drill around 30 exploration wells in 2017, an increase of around 30 percent compared to 2016.

More than half of the wells will be drilled on the Norwegian Continental Shelf (NCS), Statoil said on Wednesday.

“Taking advantage of our own improvements and changed market conditions, we have been able to get more wells, more acreage and more seismic data for our exploration investments in later years,” says Tim Dodson, Executive Vice President for Exploration in Statoil.

“This allows us to firm up a strong drilling program for 2017, totaling around 30 exploration wells as operator and partner. The upcoming well program is balanced between proven, well-known basins and new frontier opportunities,” says Dodson, underlining that the exploration drilling plans are dependent on permitting, rig availability, and partner approvals.

In 2016, Statoil completed a total of 23 exploration wells as operator and partner – 14 of them on the NCS. The company stated that the total exploration activity, also including a.o. licensing, access and seismic data acquisitions, was completed well below the original forecast due to efficiency improvements and market effects.

According to the company, in Norway, the 5-7 well exploration campaign in the Barents Sea is at the core of the activity plan. In the Norwegian Sea and the North Sea, the ambition is to prove near field volumes to prolong the productive lifetime of existing infrastructure and determine the growth potential, Statoil said.

In total, Statoil expects 16-18 NCS exploration wells to be completed in 2017. The company noted that new discoveries are crucial to counteract decline om the NCS.

“The Barents Sea has yielded several of Norway’s most significant oil discoveries in recent years. We are looking forward to test new targets, both in the relatively well-known geology around in the Johan Castberg and Hoop/Wisting area, as well as some new frontier opportunities with greater geological uncertainty but also high impact potential. This campaign can provide us with crucial information about the long term future of the Norwegian shelf,” says Dodson.

Internationally, Statoil’s 2017 exploration drilling activity will comprise growth opportunities in basins where Statoil already is established with discoveries and producing fields, as well as new frontier opportunities.

“Following our take-over as operator for the Carcara discovery last summer, Brazil has become even more important in Statoil’s portfolio, not least on the exploration front. We are stepping up exploration also in the UK, with plans for three Statoil-operated exploration wells in 2017,” says Dodson.

Elsewhere, partner operated wells are planned to be spudded in established basins like the US Gulf of Mexico and in new frontier areas like Indonesia and Suriname. Statoil is also partnering in onshore exploration drilling planned in Russia and Turkey.

“The 2017 exploration plans demonstrate our long-term commitment to the NCS, while we continue to position the company for global opportunities. If everything goes to plan, we will this year have exploration drilling activity in 11 countries on five continents,” says Dodson.

http://www.offshoreenergytoday.com/statoil-to-drill-more-wells-in-2017/

Asia’s finally becoming a prime destination for U.S. shale gas cargoes.

Nine of the 12 tankers that have left Cheniere Energy Inc.’s Sabine Pass terminal in Louisiana -- the only one sending U.S. shale gas overseas -- since the beginning of December are headed for Asian countries, shipping data compiled by Bloomberg show.

That’s a big shift for the U.S. LNG market, which has been dominated by cargoes to Latin America since exports began in February. Asia’s emerging as a bigger buyer as winter’s chill stokes demand for the heating and power-plant fuel, fulfilling analysts’ predictions that the region would eventually become a major importer of U.S. supply. Global demand has the U.S. on course to become a net exporter of gas this year, a turnaround from just a decade ago when it was facing shortages.

Asia is “probably the most economic destination to ship to right now," Het Shah, an analyst at Bloomberg New Energy Finance in New York, said in a phone interview Tuesday.

Spot LNG prices in northeast Asia have jumped 79 percent since July, according to Energy Intelligence’s World Gas Intelligence report.

More than half of the 42.9 million tons a year of U.S. LNG export capacity over the next three years is contracted by Asian buyers, a July analysis by Bloomberg New Energy Finance showed.

Cheniere wasn’t immediately available for comment.

https://www.bloomberg.com/news/articles/2017-01-03/asia-becoming-destination-of-choice-for-u-s-lng-exports

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China's independent refiners face uncertain times in 2017 as the government comes down hard on them for compliance and tax evasion, and has rowed back from allowing them to export refined products.

Beijing allowed independent refiners access to imported crude oil in early 2015 and to export oil products in late 2015. Their emergence, which came at a time of excessive oil supply, made them the darlings of oil suppliers.

But 2017 is going to be fraught with challenges, which may undermine their profitability and slow their crude import growth.

Below S&P Global Platts examines the effect these challenges will have on independent refiners and on the country's overall crude oil imports.

CRUDE OIL QUOTA ALLOCATIONS

China's National Development and Reform Commission is expected to issue crude import quotas of around 20 million mt/year to new independent refiners for 2017, down 19% from 2016, according to Platts estimates.

A total of 14 refineries have applied for a combined quota volume of 30.89 million mt/year for approval in 2017, but around 20 million mt/year, or two-thirds of the total amount requested, are likely to be approved.

The downtrend has been clear. In 2016, the NDRC approved 24.58 million mt of new crude import quotas to eight independent refineries, only half of the 49.19 million mt/year the commission allocated to 11 refiners in 2015.

"The government will definitely continue to approve new quotas to independent refineries, but the slow reviewing process means fewer quotas will be allocated," a refinery source in Shandong said.

The NDRC has said it will tighten supervision to ensure independent refiners are adhering to all rules before awarding them quotas.

EFFECT ON CHINA'S CRUDE IMPORT GROWTH

China's crude oil import growth is likely to slow down to a pre-2016 level of around 8% in 2017 as independent refineries are faced with lower quota allocations and uncertainty over their ability to export products.

Independent refiners are estimated to have imported 45.96 million mt of crude oil in 2016, according to Platts estimates based on shipping data.

This compares with an estimated total imports of around 10 million mt/year of crudes by 11 quota holders in 2015.

Crude imports by the independent refiners pushed up China's imports in 2016 to an estimated 378 million mt/year, up 12.8% year on year, according to Platts China Oil Analytics.

However, crude import growth is likely to slow down to a pre-2016 level of around 8% in 2017, according to COA.

The government has tightened supervision of the sector to prevent illegal re-selling of crude and tax evasion, a COA analyst said.

This along with not allowing them to export oil products will impact overall imports by independent refiners, the analyst added. MOVE TOWARDS SWEETER CRUDES

With China moving towards a cleaner fuel standard from January 1, some independent refineries have started to buy crudes with lower sulfur content.

Hengyuan Petrochemical, an independent refiner in Shandong, prefers to import crudes with sulfur content below 0.8%, according to a company source.

The refinery in 2016 imported over 1.4 million mt of crudes, with most grades sourced from Angola.

The portion of Angola crudes, typically grades with sulfur below 1%, in the crude basket has increased to around 10%, according to Platts estimates based on shipping data. This compares with an estimate of around 1% in 2015.

"Crudes with lower sulfur content usually have lower carbon residue and metal contents, so they are pretty good feedstock," said the source.

In November and December, cargoes of Brent crudes, as well as Forties blend, arrived into Shandong ports for the independent refineries, setting a new trend.

While the price of crudes with lower sulfur is higher, their greater quality can translate into higher refinery returns, depending on the cost of desulfurization of crudes with higher sulfur content.

"On average, refineries this year have been making a good profit of around Yuan 200/mt," said a refinery source, encouraging the purchase of more costly crudes with lower sulfur content.

More crude diversification can also be expected in 2017 as some independent refineries have increased their ability to adapt to crudes with higher sulfur content in recent years, after setting up desulfurization units.

EXPORT UNCERTAINTY

Removal from the oil product export quota allocation in 2017 is perhaps the biggest blow dealt to independent refiners who were all set to invest in infrastructure to facilitate exports.

China recently awarded export quotas for the first quarter of 2017 and independent refiners were not given any quotas under the processing trade route, which allows direct exports with no applicable taxes on the product. While the share of exports among independent refineries in 2016 was relatively small -- they exported around 700,000 mt of gasoline, less than 8% of the country's total, according to COA -- it did help reduce surplus and competition in a weak domestic market.

"Direct exports from independent refineries are not much in terms of volume, but the sharp increase in output from independent refineries have eaten into oil majors' domestic market share, forcing them to export more oil products into the overseas market," said a trading source.

Independent refiners may still be allowed to export oil products through the so-called general trade route by asking stated-owned trading companies to export products on their behalf, but this option has not attracted much enthusiasm.

"Firstly, we need to pay the agency fee if we are to export through other companies," a source with Dongming Petrochemical said. "What price we supply oil products at and who takes the profit are also critical questions."

"Secondly, it is time-consuming and inefficient, as more communication is required if exports take place through external companies," the source said.

"Thirdly, if we export through Chinaoil, for example, we're just a domestic supplier, instead of an international supplier that can respond quickly to market changes, so we will have less negotiating power in future, not only with international buyers, but also with those domestic agents."

PRODUCTS OUTPUT

Fewer quota allocations, heightened government supervision and no export quotas have all rendered the outlook on products output uncertain.

But one Shandong-based source pointed out that output will likely continue to rise following the higher crude throughput supported by more crude quotas to be allocated.

China's total output of oil products was estimated at around 438.16 million mt in 2016, up 5% year on year, slightly higher than the 4.3% growth registered in 2015, according to COA.

This was largely driven by the higher output from independent refineries, according to COA.

Data provided by energy information provider JYD suggested that total output of gasoline and gasoil from Shandong independent refineries increased by around 81% to 54 million mt over January-November.

http://www.platts.com/latest-news/oil/singapore/outlook-2017-chinas-independent-refiners-face-27742462

The world's largest oil trader, Vitol, has clinched a deal with the National Iranian Oil Co. (NIOC) to loan it an equivalent of $1 billion in euros guaranteed by future exports of refined products, four sources familiar with the matter said.

The pre-finance deal is the first such major contract signed between Iran and a trading house since sanctions were lifted in early 2016. Vitol and NIOC declined to comment.

It highlights the speed of the oil industry recovery in Iran just a year after lifting of sanctions, which is allowing Tehran to claw back oil market share from arch-rival Saudi Arabia.

It also re-establishes some old dealings with Western firms as Tehran is benefiting not only from easing of EU sanctions but also from reduced U.S. restrictions on its access to dollars, which Iran needs to reignite its economy.

Foreign companies still tread carefully for fear of breaking a myriad of complex laws, and oil majors such as Shell, BP and Eni have been slow to return as regular crude lifters.

Executives who are U.S. citizens are often ring-fenced from negotiations with Iran, notably BP's CEO Bob Dudley and even those working for non-U.S. companies.

U.S. president-elect Donald Trump has also been outspoken about reviewing the nuclear deal brokered under Barak Obama's administration, adding fresh uncertainty.

But privately held trading houses are more flexible and can negotiate deals quicker than listed firms.

Traders have increasingly turned to pre-finance in recent years to secure long-term access to large volumes of oil and products - the system of pre-finance by large traders including Vitol has for example kept the Iraqi region of Kurdistan afloat during its war with Islamic State in the last two years.

The Vitol Iranian deal was signed in October and will come into effect this month, one of the sources who is based in Tehran said.

"It is in euro...with the interest rate of around 8 percent in exchange for oil products," the source said, adding that some products could be supplied by the private sector rather than NIOC.

Major crude producers in the Middle East, including Iran, remain reluctant to sell crude oil to traders as they prefer to control pricing and destination themselves.

Traders have also been looking at restarting the Caspian crude and product swaps with Iran but the process has been slow to pick up.

OPEC's third-largest oil producer, Iran, exports more than 500,000 bpd of refined products, mainly fuel oil, petroleum gas and naphtha to Asian markets, according to OPEC.

http://uk.reuters.com/article/iran-vitol-oil-idUKL5N1EN2T2

Energy giant Chevron resumed production at the first liquefaction train of its US$54 billion Gorgon LNG project on Barrow Island in Western Australia.

“Gorgon LNG Train 1 operation resumed earlier this week,” Chevron’s spokesperson told LNG World News in an emailed statement.

According to the statement, production was halted in late November 2016 to assess and address some performance variations.

Production at Chevron’s Gorgon LNG project has been hit several times last year since it shipped its first cargo of the chilled fuel on March 21.

“Train 2 production was unaffected and we continued to produce LNG and load cargos during this time,” the statement reads.

Once in full production, the three-train plant on Barrow Island is expected to have a capacity of 15.6 million mt/year.

The Gorgon LNG project is operated by Chevron that owns a 47.3 percent stake, while other shareholders are ExxonMobil (25 percent), Shell (25 percent), Osaka Gas (1.25 percent), Tokyo Gas (1 percent) and Chubu Electric Power (0.417 percent).

http://www.lngworldnews.com/chevron-resumes-production-at-gorgon-lng-train-1/

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The Advertising Standards Authority has been conducting an investigation into Friends of the Earth's wild stories about unconventional oil and gas in recent weeks. Today it was announced that our green friends have decided that a hasty retreat is in order. Rather than fighting the allegations against them they have decided to promise to stop telling said porkie pies rather than wait for an official ruling that they are, in fact, wholesale purveyors of baked meat products.

Iraq Prime Minister Haider al-Abadi said the autonomous Kurdish region was exporting more than its allocated share of oil as the country seeks to comply with an OPEC output cut.

In November, OPEC agreed to cut output by 1.2 million barrels per day from January 2017 to support prices. Iraq, OPEC's second largest producer, agreed to reduce output by 200,000 bpd to 4.351 million bpd.

"The region is exporting more than its share, more than the 17 percent stated in the budget,” Abadi said.

Oil exports from the Kurdish region have long been a point of contention with Baghdad, which claims sole authority over sales of all the country's crude.

Kurdish regional authorities have yet to publish oil export figures for December, but the Ministry of Natural resources said it had pumped an average of 587,646 bpd to Turkey's Ceyhan port in November.

Under the terms of the 2017 budget, which passed despite a boycott from a key Kurdish party, the autonomous region is allocated 250,000 bpd exports from oilfields under its control. That does not include the disputed Kirkuk fields, which Kurdish forces control but are run by Iraq's North Oil Company (NOC).

The Kurds built their own oil pipeline to Turkey and began exporting oil via Turkey without Baghdad's approval in 2013.

http://www.reuters.com/article/us-iraq-oil-kurds-idUSKBN14O03E?feedType=RSS&feedName=GCA-Commodities&utm_source=dlvr.it&utm_medium=twitter

Russian gas group Gazprom has committed to change its business practices to settle an EU antitrust case focused on central and eastern European natural gas markets, a European Commission spokeswoman said Tuesday.

"The commission will now carefully assess if they address, in a forward looking manner, the commission's competition concerns in line with EU antitrust rules," the spokeswoman said, without giving details of the commitments.

"To be effective, the commitments would have to ensure the free flow of gas in central and eastern Europe at competitive prices," she said.

The EC formally charged Gazprom in April 2015 with alleged market abuse in central and eastern Europe.

The charges focused on Gazprom restricting gas resales across borders and allegedly charging unfair prices.

Gazprom has since been negotiating with the EC on commitments to address these concerns in order to settle the case informally and avoid fines.

The EC said it received Gazprom's formal commitments on December 27.

There is no legal deadline for concluding antitrust cases.

If the EC decides Gazprom's commitments address the antitrust concerns, then it will publish them in the EU's Official Journal and seek market players' views.

If the results of this market test are positive, then the EC will make the commitments binding.

If Gazprom then breaks its commitments, the EC can fine it up to 10% of its total worldwide turnover without having to prove the original antitrust concern.

This is the standard procedure for EU antitrust cases settled with commitments.

Other major gas companies which have settled EU antitrust cases with commitments in the past 10 years include Belgium's Distrigas (now rebranded and part of Italy's Eni), France's GDF Suez (now rebranded as Engie), Germany's E.ON (now split into E.ON and Uniper) and RWE, as well as Eni itself directly.

RESTRICTED RESALES

The EC's charges included that Gazprom was restricting gas resales by customers in Bulgaria, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland and Slovakia to companies in other countries.

This means that wholesalers with access to cheaper Russian gas in the region were unable to resell it to those paying higher prices for Russian gas, the EC said in April 2015.

This may have enabled Gazprom to charge unfairly high prices in Bulgaria, Estonia, Latvia, Lithuania and Poland, the EC said.

Gazprom is the dominant supplier in the region, with national market shares ranging from well above 50% to 100%.

The EC also challenged Gazprom's formulae for indexing gas prices to oil prices, saying at the time that they "unduly favored Gazprom" and contributed to unfair prices.

http://www.platts.com/latest-news/natural-gas/brussels/ec-mulls-gazproms-proposals-to-end-eu-gas-market-26630235

Bidweek prices across the US rose in January, pushing the national natural gas average price up $1.12/MMBtu to $4.29/MMBtu, with the largest increases occurring in the Northeast, where the regional average jumped $4.18/MMBtu, or 105%, month on month.

Algonquin city-gates jumped $7.34/MMBtu to reach $12.07/MMBtu, almost double the previous January price, while deeper into the Appalachian production basin, Dominion South increased 93 cents to $3.33/MMBtu, an increase of nearly 39%.

Similarly, Chicago city-gates increased 92 cents to $4.17/MMBtu as the Upper Midwest market moves into January after experiencing the highest December demand levels in the last five years, driven by temperatures in Chicago averaging 2.7 degrees below seasonal norms, National Weather Service data showed.

The weather service projected a high probability of below-average temperatures over much of the Upper Midwest into mid-January, providing support to the region's bidweek prices.

Along the Gulf Coast, Houston Ship Channel rose 67 cents and Henry Hub climbed 71 cents to settle around $3.65/MMBtu and $3.94/MMBtu, respectively. Despite trading closely through much of 2016, January bidweek increased the spread to 29 cents -- the largest spread in the last 12 months -- from the 25-cent spread established in December.

In the Southwest, the Southern California city-gate rose 29 cents to $3.92/MMBtu, while AECO jumped 50 cents to $3.49/MMBtu, the highest price in over two years as Platts Analytics data showed net exports to the US were up 150 MMcf/d in fourth-quarter 2016, reaching 5.3 Bcf/d.

http://www.platts.com/latest-news/natural-gas/houston/inside-ferc-henry-hub-january-index-rises-71-21489941

Houston-based Apache Corporation recently announced the discovery of an estimated 15 billion barrels of oil and gas in the area of Balmorhea and plans to drill and use hydraulic fracturing on the 350,000 acres surrounding the town.

The investment community is torn on Apache Corp.’s new find in West Texas.

Plenty are unconvinced that Alpine High, as the Houston company is calling it, will produce as advertised.

Apache has announced finds before that petered out, said Andy McConn, a senior analyst at the energy research firm Wood Mackenzie. It pushed fields in the Texas panhandle and in South Texas’ Eagle Ford. “Both those plays really fell out of favor,” McConn said. “I’m a bit skeptical, just because of that history.”

More wells need to be drilled to prove the field, agreed Hassan Eltorie, an analyst at energy research firm IHS Markit. Pipelines need to be built. “We’ll get a lot better vision six months to a year from now,” Eltorie said.

But some insist Apache has found something other exploration and production companies couldn’t.

“I think Apache has done some of the best homework of any E&P I’ve followed in some time,” John Herrlin, head of oil and gas research for the investment bank Societe Generale, told me recently.

“Next year, once the pipeline is in place,” Herrlin said, “Wall Street will have a different appreciation.”

http://fuelfix.com/blog/2017/01/03/will-alpine-high-pan-out-analysts-weigh-in/

Energy companies in the Middle East reduced their borrowing by 26 percent in 2016 as an increase in oil prices late in the year provided revenue needed for exploration and production.

Bonds and loans issued by energy producers in the six-nation Gulf Cooperation Council declined 26 percent to $17.5 billion from a record $23.7 billion in 2015, data compiled by Bloomberg show. Oil trader BB Energy Gulf DMCC in Dubai was the only borrower in the final six months last year, taking out $200 million to refinance debt.

Crude oil rallied 16 percent in the final three months of 2016 as oil producers from OPEC and 11 non-OPEC nations agreed to cut output this year. Before the rally, lending had surged as energy companies turned to banks and investors for cash as borrowing costs fell and oil prices declined. The drop in lending later in the year was a boon to those who did borrow, with BB Energy increasing its refinancing from $175 million as the deal was oversubscribed.

“If oil prices go up a few notches, it will help them rely less on international borrowing,” John Sfakianakis, director of economics research at Jeddah-based Gulf Research Center, said by phone Monday from Athens. “There’s more money available for oil companies to keep within rather than go out and borrow.”

Borrowers also held back as costs increased. The J.P. Morgan Middle East Composite Index of the region’s debt yield, an indication of borrowing rates, averaged 4.7 percent last year compared with 4.43 percent in 2015. The gauge had dropped to a 16-month low in late August. In December, the U.S. Federal Reserve raised interest rates and forecast a steeper path for 2017 increases.

For more about first-half borrowings in 2016 led by Saudi Aramco, click here.

In contrast to industry, governments in the Gulf region increased borrowing following a halving of oil prices since 2014, forcing some of them to use foreign cash reserves. Saudi Arabia led sovereign issues, raising $17.5 billion in the biggest emerging-market bond sale in October. Qatar sold $9 billion in May and Abu Dhabi raised $5 billion in April.

"If oil prices continue to improve, producers will rely less on international borrowing, especially as costs increase as the Fed hikes rates," Sfakianakis said. "This year could be a repeat of 2016. More government borrowing, and not as much by oil companies."

https://www.bloomberg.com/news/articles/2017-01-02/gulf-energy-companies-reduce-borrowing-26-as-oil-prices-surge

Blockades of fuel storage terminals by protesters angered by a double-digit increase in gasoline prices has led to a "critical situation" in at least three Mexican states, state oil company Pemex said on Tuesday.

There were distribution problems in northern Chihuahua and Durango states, as well as Morelos state just south of the Mexican capital, due to the blockades affecting key terminals, Pemex said in a statement.

The company added that if the blockades continue, the operations of nearby airports could also be affected.

One association of gas stations with a large presence in Mexico City, Grupo Gasolinero G500, said in a statement late on Tuesday that it would shut some of its stations on Wednesday where it has identified insufficient security.

The finance ministry's decision last week to raise fuel prices by between 14 and 20 percent effective Jan. 1 has been widely criticized across the oil-rich country, prompting numerous street protests and criticism of the government.

The gasoline and diesel price spikes, derided by locals as "gasolinazos" in Spanish, follow plans the government announced last month detailing a gradual, year-long region-by-region price liberalization for 2017.

http://www.reuters.com/article/us-mexico-pemex-idUSKBN14O0A1

RANGE RESOURCES CORPORATION  issued the following statement in response to the press release issued by Chapter IV Investors, LLC dated January 3, 2017:  While Range does not typically comment on market speculation, in this instance the company wanted to make clear that it has not been contacted by EQT Corporation regarding a potential merger of the two companies nor does Range plan to initiate any such discussions.  If EQT or any other entity were to contact Range regarding a potential transaction, Range’s Board will evaluate any such potential transaction considering the best interests of its stockholders given the circumstances at the time.

Range does not expect to comment further regarding this matter.

http://boereport.com/2017/01/03/range-issues-statement-in-response-to-the-press-release-issued-by-chapter-iv-investors-llc-dated-january-3-2017/

Genscape Cushing inventory: +1.038MM bbl in week ended Dec. 30

@zerohedge

Marathon Petroleum Corp (MPC.N), under pressure from activist investor Elliott Management, said a special committee of its directors would review its retail business, including considering a tax-free separation.

Elliott unveiled a 4 percent stake in Marathon Petroleum in November and urged the company to consider spinning off just Speedway, a chain of gasoline stations and convenience stores, or all three of its retail, refining and pipeline businesses.

Marathon Petroleum said it expects to provide an update on the review by mid-2017.

http://www.reuters.com/article/us-marathon-pete-elliott-speedway-idUSKBN14N128

Oil companies are hiring in the Bakken, and more jobs are expected to open up next year.

Job Service North Dakota announced six oil companies are looking for workers to man fracking crews in the new year, said Cindy Sanford, customer service office manager of Job Service’s Williston branch. She said she couldn’t reveal the names of the companies due to confidentiality clauses, but she said the companies are looking to hire 45 to 65 workers per crew. On the low end, that could bring 300 hires to the Bakken, she said.

“It’s getting busier in our offices, as far as not only with job seekers but also the companies,” said Phil Davis, the agency’s western area director. “We are seeing more of the service rigs — not so much the drilling rigs — but our service rigs and workover rigs, jobs are coming back there, which is a great thing.”

Oil companies announced in October they would post positions for workers in the Bakken as oil prices climbed to an 18-month high in December. Oil on the New York Mercantile rang out Thursday at $53.83, almost a 50 percent increase over last year. That’s down from an all-time high of $136.29, which was set July 3, 2008, but almost double the 10-year low — barrels of oil went for less than $27 in early 2016.

After peaking in June 2014, oil prices started to fall off, causing oil companies to lay off workers and take rigs offline. As of Thursday, North Dakota’s rig count was 39. That’s down from its all-time high of 218 in May 2012, but the count has been on a slight increase over the past several months.

The recent job postings in western North Dakota mostly are for service or workover rigs, which are used to complete a well and install the pump after drilling is done.

As of Thursday, almost 500 jobs posted on Job Service North Dakota mentioned oil.

November’s increase from October for all job openings for Stark County, where oil jobs once were abundant before the bust, was 140, while Williams County, the heart of fracking, saw a 50-job increase.

The December numbers are expected to come out Wednesday, Davis said. He added companies are looking for workers who have more skills than the crews hired when the oil boom began in the early 2010s, which saw a lot of “greenhorns” come to North Dakota, he said.

Davis couldn’t say whether the job openings meant the oil industry could turn around since it went bust in recent years, but he did say it was exciting to see the jobs come back.

“I’m kind of excited to see what the December numbers bring us,” he said. “I’m expecting a little bit of an increase.”

http://www.prairiebusinessmagazine.com/energy/4189523-oil-companies-hiring-fracking-crews-bakken#.WGu1zaQGtog.twitter

Oil services company Halliburton has announced plans to bring about 200 jobs to the Permian Basin, an area which covers southeast New Mexico and parts of western Texas.

The Current-Argus reports that Halliburton spokeswoman Emily Mir says in a Wednesday statement there will be job opportunities in various parts of the basin, including in Artesia.

The announcement comes as local officials say there’s been growth in the energy market in recent weeks, with more companies looking to expand in the region.

Shannon Carr with the Department of Development says an increase in oil and gas production will be good for the local economy.

Industry experts say oil prices need to be around $45 to $50 per barrel to be profitable.

http://fuelfix.com/blog/2016/12/30/halliburton-to-hire-200-workers-in-permian-basin/

Livesquawk reporting comments from a senior official at the Libyan state-owned National Oil Corp, as cited by Platts, noting that Libya's crude oil production hits 690,000 b/d, highest in two years.

https://www.fxstreet.com/news/libyas-crude-oil-production-hits-highest-in-two-years-platts-201701030318

China National Petroleum Corp., Royal Dutch Shell Plc and Total SA are among the companies that will be invited to bid in tenders, according to a list published Monday on the website of state producer National Iranian Oil Co. Total, along with Lukoil PJSC and the oil unit of Gazprom PJSC, are some of the companies on the list that have already signed preliminary agreements with Iran to study oil fields for potential future development.

Iran aims to attract more than $100 billion in foreign investment to speed growth in its energy industry after sanctions cut international companies’ involvement in developing the world’s fourth-largest oil reserves. Since sanctions eased in January, the Persian Gulf producer has doubled exports as crude prices rallied. Brent crude gained 52 percent last year and traded at $57.08 a barrel at 11:48 a.m. in Dubai.

The country boosted oil production last year by 870,000 barrels a day to 3.67 million by November, according to data compiled by Bloomberg. While the country has reached several preliminary agreements with international companies, it has yet to sign any concrete deals to boost crude production since Oil Minister Bijan Namdar Zanganeh outlined more than 50 potential projects at a Tehran conference in November 2015. Zanganeh said at the time the country was targeting about 5.7 million barrels a day of crude and condensate production early in the next decade.

Companies from Italy, Spain, Japan and India also made the list. U.S. oil services provider Schlumberger Ltd. was among those identified, according to the NIOC website. U.S. sanctions legislation prevents companies based in that country from investing in Iran’s energy industry, while foreign subsidiaries of American entities are allowed to operate in the Persian Gulf country.

https://www.bloomberg.com/news/articles/2017-01-02/iran-qualifies-cnpc-to-total-for-bidding-on-oil-and-gas-projects

The U.S. oil rig count ended 2016 just below year-ago levels as drillers added rigs this week as part of the biggest recovery since a global oil glut crushed the market over two years.

Drillers added two oil rigs in the week to Dec. 30, bringing the total count up to 525, the most since December 2015 and 11 shy of the 536 rigs seen at the end of 2015, energy services firm Baker Hughes Inc said on Friday. RIG-OL-USA-BHI

Since crude prices recovered from 13-year lows in February to around $50 a barrel in May, drillers have added a total of 209 oil rigs in 28 of the past 31 weeks, fueled by prices climbing to near 17-month highs.

The Baker Hughes oil rig count plunged from a record 1,609 in October 2014 to a six-year low of 316 in May as U.S. crude collapsed from over $107 a barrel in June 2014 to near $26 in February 2016.    

U.S. crude futures were trading at $53.60 a barrel on Friday, on its way to over 40 percent growth for the year, the largest annual percentage growth since 2009.

Futures for both calendar 2017 and 2018 were trading around $56 a barrel.

Analysts said they expect U.S. energy firms to boost spending on drilling and pump more oil and natural gas from shale fields in coming years now that energy prices are projected to keep climbing.

The total oil and natural gas rig count ended 2016 at 658, down 6 percent from the 698 at the finish of 2015.

http://www.reuters.com/article/usa-rigs-baker-hughes-idUSL1N1EI0VB

Oil production in Russia grew by 2.5% in 2016 year on year reaching 547.49 mln tonnes, according to the data provided by the Central Control Administration of the Fuel and Energy Complex.

In December, oil production was 47.4 million tonnes (3.5% growth compared to December 2015).

Novatek was the leader in terms of oil production growth in Russia last year with the 37.6% growth year on year, its oil production grew to 12.46 mln tonnes. Gazprom Neft was the best oil company in terms of oil production dynamics. The company produced 57.79 million tonnes of oil, which is 6.7% more than in the previous year.

A growth in oil production was also demonstrated by Bashneft - 6.3%, 20.8 mln tonnes - and Tatneft - 5.3%, 28.69 mln tonnes. Rosneft increased oil production by 0.5% to reach 209.96 mln tonnes, and Surgutneftegaz - by 0.4% to reach 61.85 mln tonnes.

On the other hand, Lukoil reduced oil production by 2.8% to 83.57 mln tonnes, RussNeft - by 5.2% to 7 mln tonnes and the Independent Oil Company - by 1.3% to 2.3 mln tonnes.

http://tass.com/economy/923680

Brazil's state-run oil company, Petroleo Brasileiro SA, announced the sale of ethanol and petrochemicals assets for $587 million, but said it would still fall $1.5 billion short of its divestment target for the 2015-2016 period.

Among the assets sold were its 46 percent stake in ethanol producer Guarani SA, which was acquired for $202 million by its French partner Tereos SA, which will now own all of the company.

Petrobras, as the company is known, said it will also sell its two petrochemical units in the northeastern state of Pernambuco - Petroquimica Suape and Citepe - to Mexican group Alpek SAB de CV subsidiaries Grupo Petrotemex SA de CV and Dak Americas Exterior SL for $385 million.

Even after a flurry of asset sales this month, Petrobras failed to meet its two-year divestment target of $15.1 billion.

The state oil company said in an emailed statement that a court injunction this month blocking its negotiations to sell the Tartaruga Verde and Bauna oilfields was to blame for missing the goal. The company announced in October Karoon Gas Australia Ltd was interested in these fields.

Petrobras said its 2017-2018 asset sale target would be automatically raised to $21 billion to compensate for the shortfall.

Petrobras is selling off noncore assets in a bid to reduce its $125 billion debt, the largest in the global oil industry.

Last week, the company said it would sell $2.2 billion worth of assets to France's Total SA, including stakes in oilfields and two thermal power stations.

That announcement came a week after Petrobras sold its 49 percent stake in sugar and ethanol joint venture Nova Fronteira Bioenergia SA to partner Sao Martinho SA for $133 million in shares.

Petrobras said the recent deals were exempted from the ruling by Brazil's audit court on Dec. 7 that temporarily suspended its asset sale program. These sales were allowed to proceed because they were in advanced stages, the company said.

http://www.reuters.com/article/petrobras-divestiture-idUSL1N1EN13T