The government of South Korea is reportedly considering merging Korea National Oil Corporation 9KNOC0 and Korea Gas Corporation (KOGAS) in an attempt to boost the profitability of the two companies.

Four reform measures have been suggested in a report that will be presented by the energy ministry, according to news site Pulse.

The plan most likely to succeed is the merger of the two companies that would allow for the combination of overlapping sectors such as exploration and production. It is regarded as the most viable option to improve overseas resource development and overall profit structure, according to the report.

However, concerns remain over a possible transfer of KNOC’s losses to KOGAS, the report said.

The other options are selling KNOC’s resources development unit to a private company, but the government fears the asset could be sold undervalued.

Two more options include transferring KNOC’s resource development unit to KOGAS or spinning off the state-owned oil company’s overseas resources development business by creating a new company, the report said.

According to the report, the fourth option would not resolve the inefficiencies in promoting resource development projects.

Deloitte Anjin has been selected by the South Korean ministry of trade, industry and energy to look into the options of improving the profitability of the two state-owned energy businesses.

http://www.lngworldnews.com/report-south-korea-mulling-knoc-kogas-merger/

Downeast LNG, that is proposing to build an LNG export terminal in Robbinston, Maine, said that its board and shareholders have decided to put the company up for sale as of July 1.

Downeast LNG’s majority shareholder is private equity manager Yorktown Partners, which manages approximately $7 billion in energy investments.

The company is proposing to build a 3 million ton per annum (450 MMCF/Day) liquefied natural gas export facility on Passamaquoddy Bay near the Canadian border. The project would also have the capacity to regasify up to 100 mmcfd.

“We have reviewed our strategy and decided that an industrial player or a specialized investor such as an infrastructure fund is better suited to continue the permitting process and eventual build-out of the project,” said George Petrides, Chairman of the Board of Downeast LNG.

Petrides also said that although global LNG pricing has been low recently, there are two developments in the last few weeks that could help attract potential buyers.

“With the cancellation of the controversial Kinder project that would have gone east from Schoharie County, New York to Boston, we believe it is very likely that the Algonquin expansion will happen and will facilitate natural gas going from the Marcellus in Bradford County, Pennsylvania to our project in northern Maine,” he said.

“Secondly, we noted the successful capital raise by Venture Global last month and see that as continued interest by investors in US-based projects,” Petrides added.

The Downeast LNG terminal would consist of one storage tank, a liquefaction train, a small regasification plant, marine facilities, and a natural gas pipeline that will connect the facility to the existing Maritimes and Northeast Pipeline. The project would access both unconventional US gas reserves and conventional western Canada gas reserves.

http://www.lngworldnews.com/usa-downeast-lng-puts-itself-up-for-sale/

Firefighters made progress against a wildfire in the Fort McMurray region of northern Alberta on Thursday as a shift in winds pushed it away from communities and oil sands facilities.

The massive blaze has charred 505,000 hectares (1.2 million acres), up from 483,000 on Wednesday. On Thursday, it moved to the neighboring province of Saskatchewan, but Alberta wildfire officer Chad Morrison said cooler weather and rain would aid efforts to get it under control.

"We saw a trace of rain this morning, so that's actually helped our firefighting efforts," he added.

The blaze, which hit Fort McMurray in early May, surged north on Monday. It forced the evacuation of 8,000 oil sands workers, destroyed a work camp and prolonged a shutdown that has cut Canadian oil output by a million barrels a day.

Morrison said the fire burned near Suncor Energy's base plant and the Syncrude facility on Wednesday, but fire breaks held and the threat has diminished.

The joint-venture Syncrude project told customers to expect no further crude shipments for May, trading sources said on Thursday, extending a force majeure on crude production from earlier in the month.

Syncrude spokesman Will Gibson declined to comment on deliveries.

"We are not making any oil and will not have forecasts for some time," he said.

Still, in an encouraging sign, Imperial Oil said on Thursday it had restarted limited operations at its Kearl site, which was unaffected by the fires. The return to full operations depends on a number of factors, including safety and air quality, it said.

The latest round of evacuations suggest production may be suspended for longer than companies and analysts had previously anticipated.

http://www.reuters.com/article/us-canada-wildfire-idUSKCN0YA0Z1

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Numerous lapses in safety measures, judgment and planning by Plains All American Pipeline LP led to and worsened a major oil spill last year that fouled miles of shoreline and ocean near Santa Barbara, California, the U.S. Transportation Department said on Thursday.

The agency said it would focus next on "enforcement options" against the Houston-based company for the rupture of an underground petroleum pipeline that federal inspectors have found was severely worn by corrosion.

In their final report on the spill, federal investigators concluded that Plains "failed on multiple levels to prevent, detect and respond to this incident," said Marie Therese Dominguez, head of the Transportation Department's Pipeline and Hazardous Materials Safety Administration.

While the immediate cause of the rupture was external decay, the company was at fault for failing to protect the pipeline from corrosion beforehand and to promptly detect and respond to the spill once it occurred, the agency said in a statement.

The report came two days after Plains was indicted in California on 46 state criminal charges stemming from the spill, which environmental groups seized on to warn of hazards posed by an aging U.S. oil and gas industry infrastructure.

By the company's own estimate, as much as 3,400 barrels of crude gushed onto the shore and into the Pacific Ocean when the company's 24-inch Line 901 burst along a coastal highway about 20 miles (32 km) west of Santa Barbara on May 19, 2015.

The spill, linked to the deaths of hundreds of sea birds and marine mammals, forced closure of two state beaches and left slicks that stretched over 9 miles of the ocean.

It ranks as the largest spill to hit the ecologically sensitive but energy-rich coastline northwest of Los Angeles since 1969's 100,000-barrel blowout in the Santa Barbara Channel.

http://www.reuters.com/article/us-california-oilspill-plains-all-amer-idUSKCN0YA2V5

Australia's Oil Search Ltd  agreed a $2.2 billion deal to acquire InterOil Corp on Friday, aiming to pave the way for two rival liquefied natural gas projects led by global majors to work together in Papua New Guinea.

In the face of weak oil prices, PNG is considered one of the best locations for LNG projects, thanks to its high quality gas and low costs. The country has the existing PNG LNG project, run by ExxonMobil Corp, and the proposed Papua LNG project, run by Total SA.

For Total, which will boost its stake in Papua LNG as part of the deal, Oil Search's move will open opportunities for collaboration and possible integration with ExxonMobil's project, said CEO Patrick Pouyanné.

"It was a deal waiting to happen, a consolidation of the joint venture," said RBC analyst Ben Wilson. "Conceptually, it makes a lot of sense and should allow them to go forward to the development phase a lot faster than otherwise would be the case."

Oil Search co-owns Papua LNG and PNG LNG and has been pushing them to cooperate in order to avoid wasting money on duplicating infrastructure as happened on Australia's east coast, where three LNG plants were built next to each other at a cost of $64 billion. The takeover of InterOil will give it a bigger stake in Total's project.

"The days of industry profligacy are past with these sorts of oil and gas prices that we're experiencing and are likely to experience for some years to come," Oil Search Chief Executive Peter Botten told Reuters.

ExxonMobil said it was "open to discussing infrastructure sharing opportunities with other operators where it is technically feasible and commercially attractive for both parties," in an email to Reuters.

InterOil is coveted for its stake in the Elk-Antelope fields, which could hold at least 6.2 trillion cubic feet of gas, more than enough to fill one LNG processing train. Drilling of one more well this year could prove it holds much more.

InterOil CEO Michael Hesson said the company had received a number of other proposals, but declined to give details.

"I can also tell you this was the best proposal," he told a conference call.

Oil Search is offering 8.05 of its shares for each InterOil share plus a contingent value right tied to the size of the eventual reserves in Elk-Antelope. Oil Search said the offer valued InterOil at $40.25 a share up front, a 27 percent premium to its close on Thursday.

Oil Search said the deal could see it double its output by 2023.

"We think it's a very smart deal. It should be well supported," said Ric Ronge, a portfolio manager at Pengana Capital, which owns shares in Oil Search and Total.

As part of the plan, Oil Search has agreed to sell more than half of Interoil's stake in Papua LNG to Total. As a result, Oil Search will end up with a 29 percent stake in the Papua LNG project, complementing its 29 percent stake in PNG LNG.

Total's stake in Papua LNG will increase to 48 percent.

http://www.reuters.com/article/interoil-ma-oil-search-idUSL3N18G5J5

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Colombia’s second-largest oil pipeline has been taken offline by a rebel attack which spilled crude oil into the Bojaba river, this is the fourteenth such attack this year.

While no group has claimed responsibility for the attack, the authorities suspect the ELN (National Liberation Army) rebel group.

The Cano-Limon Covenas pipeline, run by state-owned Ecopetrol, was bombed at a 485-kilometer section that runs near the border with Venezuela in Arauca province, Reuters reported. Pumping of crude into the pipeline has been halted, according to Ecopetrol.

The pipeline has a 210,000 barrel per day capacity, and transits crude produced by U.S.-based Occidental Petroleum to the port of Covenas in the Caribbean, which is the country’s main export facility. The Cano Limon oilfields, operated by Occidental, account for 30 percent of Colombia’s total oil output.

http://oilprice.com/Latest-Energy-News/World-News/Rebel-Bombing-Shuts-Down-Key-Colombian-Oil-Pipeline.html?utm_source=twitterfeed&utm_medium=twitter&utm_campaign=Feed%3A+oilpricecom+%28Oil+Price.com+Daily+News+Update%29

In a matter of a week, Kuwait has simultaneously said it was seeking to boost production, called for an output freeze to rebalance the market glut, and—most recently—praised OPEC’s strategy for pushing out US shale as successful.

Now that oil is near US$50 per barrel, the Saudi-led OPEC strategy to hang onto market share doesn’t seem so bad.

As told by Kuwait’s acting oil minister, Anas Al-Saleh, in a Wednesday interview with media in Kuwait, the Gulf country will stick by the Saudis as OPEC defends its market share by pumping more to win customers, rather than targeting price.

It’s a strategy, he said in comments carried by Bloomberg, that is working. Crude prices are rising along with demand, and output from non-OPEC countries is declining. Some 3 million barrels per day of supply has left the market due to either the disruption of conflicts (Nigeria, Libya) or natural disasters (Canadian wildfires) or price (US shale).

“Now we see better prices in the market, demand has been increasing […],” al-Saleh was quoted as saying.

So the “theory has been working well,” and Kuwait will be “sticking to the market share strategy.”

It’s not the same line Kuwait was taking last week, before all the supply disruptions started to reverberate through the market.

http://oilprice.com/Latest-Energy-News/World-News/Kuwait-Changes-Tune-at-50-Oil.html?utm_source=twitterfeed&utm_medium=twitter&utm_campaign=Feed%3A+oilpricecom+%28Oil+Price.com+Daily+News+Update%29

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Crude output in Iraq, OPEC’s second-largest producer, has probably peaked and is likely to fall short of the country’s target over the next two years, according to an official with Lukoil PJSC, operator of one of the country’s biggest fields.

Iraq needs more investment to maintain production at current levels, according to the official, who asked not to be identified when discussing company matters. Yet output can’t keep up because the government is requiring companies to reduce spending, the person said. The oil ministry has reached agreements in principle with most international oil companies to reduce their 2016 budgets by about 50 percent, and final accords may be reached in about two months, the person said.

The Persian Gulf nation has boosted oil output as companies such as BP Plc, Royal Dutch Shell Plc and Lukoil are developing some of the largest deposits in its oil-rich southern region. They’ve been physically insulated from fighting against Islamic State militants in the country’s north, though the war effort and lower oil prices have strained the government’s finances and diverted its attention from developing new projects the companies are seeking to implement.

Lukoil may spend about $1.3 billion on the West Qurna 2 field, the company official said, down from about $3 billion the year earlier. Lukoil is pumping about 400,000 barrels a day at West Qurna 2 and plans to raise capacity to 1.2 million barrels daily in the next decade.

Iraq pumped a record 4.51 million barrels a day in January and 4.31 million in April, according to data compiled by Bloomberg. Its total production capacity is 4.8 million barrels a day, and increasing that to a target of 5 million will depend on oil prices, Deputy Oil Minister Fayyad Al-Nima said in a May 12 interview.

The government is negotiating with oil companies on production targets after asking them to reduce 2016 spending because of lower oil prices and cuts in government revenue, Falah Al-Amri, chairman of Iraq’s state Oil Marketing Organization, said in February. The talks may affect Iraq’s target to have crudeproduction capacity of 6 million barrels a day by 2020, Al-Amri said.

Iraq needs Brent crude at about $55 a barrel to break even on government spending, the Lukoil official estimated. Brent is trading this week near $50 a barrel, about half the 2014 average. Lukoil has suggested linking compensation for work done at the fields to the market price of oil rather than basing payments on a flat fee as is the case now, the official said.

http://www.bloomberg.com/news/articles/2016-05-19/iraq-s-oil-output-seen-by-lukoil-at-peak-as-government-cuts-back

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Qatargas Operating Company Ltd (Qatargas) has announced that it has reached an agreement with JERA Co. Inc. on the first spot LNG cargo purchase under the newly executed Master Sales and Purchase agreement between the two companies.

The spot cargo was delivered onboard the Q-Flex LNG carrier, Al Ruwais, to the Futtsu LNG terminal in Tokyo Bay, Japan, on 13 May 2016.

JERA is a recently formed joint venture between Chubu Electric Power Co. Inc. and TEPCO Fuel & Power Inc, both of who are Qatargas foundation buyers. With JERA’s inception, Qatargas will deliver a total of nearly 7 million tpy of LNG under a long-term supply contract to this new entity.

Last year, Qatargas delivered a total of 14.6 million t of LNG to Japan.

http://www.lngindustry.com/regasification/19052016/Qatargas-and-JERA-agree-first-spot-LNG-cargo-deal-2472/

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Operators have accumulated ~3,900 drilled, but uncompleted horizontal oil wells ('DUCs') across the US shale, with more than 90% of these located within the major liquids plays, shows Rystad Energy's latest analysis.

The largest DUC inventory is spread over the Permian Basin with 1,200, Eagle Ford with ~1,000, and Bakken with ~850 wells awaiting completion services. The remainder of oil DUCs are located in Niobrara (~620 wells) and other plays (~270 wells).

http://www.oilvoice.com/n/90-of-US-DUCs-are-located-within-Permian-Eagle-Ford-Bakken-and-Niobrara/36b5460b1d5f.aspx?utm_source=twitterfeed&utm_medium=twitter&utm_campaign=Feed%3A+OilvoiceHeadlines+%28OilVoice+Headlines%29

The government of British Columbia (B.C.), Canada, has announced that it has signed the Coastal First Nations LNG Benefits Agreement. The agreement commits the Canadian province to helping address economic benefits and environmental impacts of the LNG industry.

B.C. has committed to work with the groups on environmental safety and stewardship, air-shed impacts, greenhouse gas (GHG) emissions, renewable energy, skills training and employment projects. The agreement will deliver a base of CAN$1.5 million/yr for three years, with further funding available based on how many LNG projects in the region are established.

Coastal First Nations have previously offered their input on benchmarks for emissions from LNG plants and two air-shed studies related to proposed LNG facilities in the Kitimat and Prince Rupert areas. They also continue to be involved in the discussions on marine shipping in B.C.

http://www.lngindustry.com/liquefaction/19052016/BC-signs-Coastal-First-Nations-LNG-Benefits-Agreement-2474/

Oil exports are set to resume Thursday from the port of Hariga in eastern Libya, easing a bottleneck and allowing for crude production to increase after competing administrations of the state-run National Oil Corp. reached an agreement in the divided country.

The tanker Seachance is loading 650,000 barrels of crude at Hariga for the U.K., Omran al-Zwai, a spokesman for NOC unit Arabian Gulf Oil Co. known as Agoco, said by phone on Thursday. The cargo would be the first international shipment from Hariga since the United Nations blacklisted a tanker last month following complaints from authorities in the west of the country. NOC’s competing leaderships reached an agreement to resume exports from Hariga earlier this week.

Agoco will be able to boost crude output to 120,000 barrels a day from 90,000 before the shipment, Al-Zwai said, as the company’s production has been limited by a lack of storage at the port. Libya produced a total of 310,000 barrels a day in April, data compiled by Bloomberg show.

Libya, with Africa’s largest proven crude reserves, split into two separately governed regions in late 2014, one based in the western city of Tripoli and the other run by an internationally recognized government in the east. The political divisions were mirrored by rival NOC administrations in the east and west of the country. Libyans are currently working to set up a Government of National Accord, with the support of the U.S. and European nations.

The competing NOC administrations agreed to restart shipments from Hariga after holding talks in Vienna earlier this week, Elmagrabi said Monday. Officials at the western NOC administration in Tripoli couldn’t immediately be reached for comment. The shipment from Hariga comes after Agoco reached an agreement on Wednesday with the NOC’s eastern administration to restart international exports from the port, said Nagi Elmagrabi, chairman of the eastern NOC.

http://www.bloomberg.com/news/articles/2016-05-19/east-libya-oil-exports-to-resume-thursday-after-diplomatic-deal

Russian gas producer Gazprom will raise production this year but has slowed construction of its Power of Siberia pipeline set to serve China from 2018, Deputy Chairman Vitaly Markelov said on Thursday.

Gazprom plans to produce 452.5 billion cubic metres (bcm) of natural gas in 2016, up from 418.5 bcm last year, Markelov said.

It plans to increase gas condensate output to 15.8 million from 15.3 million tonnes in 2015.

Demand fell last year as a conflict with Ukraine over Moscow's annexation of Crimea and other differences saw Kiev turn to Europe for gas. Kiev has said it may not buy any Russian gas this year.

Gazprom has also faced increased competition in Russia from Novatek and Rosneft, with its pricing policy constrained by government-imposed tariffs.

With the European Union looking to curb its reliance on Russian energy imports, Gazprom has begun work on a pipeline to China with a view to shipping 38 bcm of gas per year, which would make China its second-largest customer after Germany.

Gazprom currently only pipes gas to Europe.

Markelov said of Power of Siberia's approximately 3,000 km of pipeline to be built, 115 km was complete and another 400 km was planned for this year.

Gazprom had earlier said it aimed to complete around 800 km of the link this year.

"We have cut back expectations of construction due to costs optimisation," Markelov said, but added that the pipeline's 2018 launch had not been altered.

http://www.reuters.com/article/russia-gazprom-output-idUSL5N18G1MX

France's Technip announced an all-stock merger with U.S. rival FMC Technologies to create an oil services group with combined revenue of $20 billion.

The transaction is expected to deliver annual pretax savings of at least $400 million as of 2019 and boost earnings per share significantly, the companies said in a statement on Thursday.

"We have complementary skills, technologies and capabilities," Technip Chairman and Chief Executive Thierry Pilenko said. "Together, TechnipFMC can add more value across Subsea, Surface and Onshore/Offshore, enabling us to accelerate our growth."

Lower energy prices are driving consolidation in the oil services sector as companies seek savings to boost profits amid an oil supply glut that has been weighing on exploration and production.

Reuters reported in December that Technip had held talks with FMC.

Under the terms of the deal, each Technip share will be converted into two shares of TechnipFMC, and each FMC Technologies share will be exchanged for one share of TechnipFMC, with each company's shareholders owning close to 50 percent of the combined company.

Pilenko will serve as executive chairman of TechnipFMC, while FMC Technologies’ President and Chief Operating Officer Doug Pferdehirt will be CEO, the companies said. The transaction is expected to close early in 2017.

Last year, the two companies formed a joint venture, Forsys Subsea, aimed at reducing the cost of subsea oilfield exploration, a sector that has been badly hurt by the drop in the price of oil.

Technip has a market value of about $6.2 billion, compared with $6.5 billion for FMC Technologies. Technip has annual revenue of $13.5 billion, more than double that of FMC Technologies.

Goldman Sachs and Rothschild are acting as financial advisers to Technip. Evercore and Societe Generale are acting as financial advisers to FMC Technologies.

http://www.reuters.com/article/us-technip-m-a-fmc-tech-idUSKCN0YA0N5

Chinese companies will develop the second phases of two giant Iranian oil fields, Russian news portal sputniknews.cn reported, citing Iranian Minister of Petroleum Bijan Zangeneh.

Sinopec will develop the Yadavaran oil field, and China National Petroleum Corp (CNPC) will develop the North Azadegan one, Zangeneh said on Monday, following a meeting with Zhang Yuqing, deputy head of China's National Energy Administration.

Sinopec and CNPC are two of three State-owned oil giants in China. Once the second phase of the Yadavaran oil field is developed, its output will be 180,000 barrels per day, up 95,000 barrels from the current production level, the Cihan News Agency in Turkey reported on Tuesday, citing Abdolreza Hoseininejad, CEO of Petroleum Engineering and Development Co (PEDEC).

CNPC and Iran's PEDEC have already signed a deal to produce 25,000 barrels per day in the second phase of the North Azadegan oil field, according to the Cihan News Agency.

Early in 2009, CNPC signed contracts with Iran to develop the North Azadegan oil field, but work was interrupted by Iran's nuclear crisis.

http://en.chinamining.com.cn/Investment/2016-05-19/1463625931d76385.html

Halcón Resources Corp, which produces oil in Texas and North Dakota, said on Wednesday it plans to file for a prepackaged bankruptcy that would wipe out $1.8 billion in debt and help it survive the drop in crude prices.

Shares of the Houston-based company fell 55 percent to 44 cents in after-hours trading.

The bankruptcy marks a setback to Halcón Chief Executive Floyd Wilson's long-running goal to build and then sell the company to the highest bidder, a plan that mimicked Wilson's 2011 sale of Petrohawk to BHP Billiton for more than $12 billion at a 65 percent premium to its shares.

Yet almost from the beginning, Halcón was saddled by high costs and high debt, despite having some quality acreage. Indeed, the value of Halcón's holdings in North Dakota's Bakken shale formation have long eclipsed the market value of the company.

Halcón's restructuring plan will eliminate about $222 million of preferred equity, and reduce the company's annual interest payments by more than $200 million.

Debtholders will hold most of Halcón's shares after it emerges from bankruptcy protection, the company said in a statement, with existing common shareholders getting 4 percent of the new equity and existing preferred shareholders receiving $11.1 million.

In a prepackaged bankruptcy, companies and their creditors agree on a reorganization plan prior to the bankruptcy filing.

Wilson did not immediately respond to a request for comment.

Together with several former colleagues from Petrohawk, Wilson pooled $55 million to form Halcón in 2011. EnCap Investments LP, a private equity firm, together with a subsidiary of Liberty Mutual Holding Co, invested $550 million.

In a 2013 interview with Reuters he boasted: "We will be successful. I've been doing this a long time. Nothing keeps me up at night."

A near-60 percent fall in crude prices has eroded cash flows at oil producers, forcing them to restructure to cut debt and reduce interest payments. More than 60 U.S. oil producers have so far sought bankruptcy protection, though most are not prepackaged.

http://www.reuters.com/article/us-halcon-resources-bankruptcy-idUSKCN0Y92WQ

Continental Resources, Inc. today announced the completion of an industry record well in the over-pressured oil window of Oklahoma's STACK play. The Verona 1-23-14XH flowed at an initial 24-hour test rate of 3,339 barrels of oil equivalent per day, comprised of 2,345 barrels of oil, or 70% of production, and 6.0 million cubic feet of 1,370-Btu natural gas (British thermal units). The Verona is producing from the Meramec reservoir through a 9,700-foot lateral at a flowing casing pressure of approximately 2,400 psi, on a 34/64-inch choke.

'The Verona is another example of the exceptional results we are getting from wells drilled in the over-pressured oil window of STACK,' said Harold Hamm, Chairman and Chief Executive Officer. 'We couldn't be more pleased with the performance of our wells in STACK and the addition of this outstanding asset to our portfolio. Our STACK team also completed the Verona at a cost of approximately $9.0 million, which is $500,000 less than our year-end 2016 target cost for two-mile lateral wells in the over-pressured oil window. This is the Company's lowest cost completion in STACK to date.'

The Verona is the Company's ninth well completed in the over-pressured oil window of STACK, and all have been strong producers. The Company is in the process of completing four additional Meramec wells. Continental currently has 11 operated rigs drilling in STACK, with six targeting the Meramec zone and five targeting the Woodford zone.

Located in Blaine County, Oklahoma, the Verona is immediately east of the Company's Ludwig unit, where Continental is currently drilling an eight-well density pilot, its first in the STACK play. The density pilot consists of seven new wells in the Upper and Middle Meramec reservoirs, as well as an additional well in the Woodford reservoir underlying the Meramec. Results from the Ludwig density pilot are expected to be announced by the Company's third quarter 2016 earnings release.

As announced earlier in the month, at March 31, 2016 Continental had approximately 171,000 net acres of leasehold in the STACK play, 95% of which is in the over-pressured window.

http://www.oilvoice.com/n/Continental-Resources-announces-record-STACK-oil-well/df1486dffa91.aspx

A pipeline owned by Italian player Eni has been attacked by a militant group in the Niger Delta.

The pipeline bombing is the latest in a string of attacks on major oil and gas companies operating projects in the area.  

The Eni gas pipeline was blown up on Tuesday in Ogbembiri in Bayelsa state, according to local media reports. As a result, Eni's production is said to have been affected.  

It is not clear yet who was responsible for the attack, but reports indicate it was a group calling itself the Niger Delta Avengers, which previously claimed responsibility for similar attacks on Chevron and Shell project.  

Eni was unavailable for immediate confirmation when contacted by Upstream.

http://www.upstreamonline.com/live/1432887/eni-pipeline-blown-up-in-nigeria?utm_source=twitterfeed&utm_medium=twitter

Cheniere’s Sabine Pass LNG export terminal in Louisiana, the first of its kind to ship US shale gas overseas, has exported its ninth cargo of the chilled fuel since start-up in February.

The 155,000 cbm GasLog Shanghai LNG tanker left the Sabine Pass facility on Monday and is currently located in the Gulf of Mexico, according to AIS data provided by the vessel tracking website, MarineTraffic.

The liquefied natural gas tanker is chartered by BG’s Methane Services, now part of Hague-based LNG giant Shell.  Shell has a 20-year offtake agreement with Cheniere for 3.5 mtpa of LNG from Train 1.

http://www.lngworldnews.com/cheniere-ships-ninth-sabine-pass-export-cargo/

Cabot Oil & Gas is a great company that focuses most of its shale efforts in the Marcellus. And every single Marcellus well they drill is located in a single northeastern Pennsylvania county–Susquehanna County. Susquehanna County has been good for Cabot, and conversely, Cabot has been good for Susquehanna County–providing jobs and pumping millions into the local economy.

So it was no surprise to learn that Cabot is the main sponsor of a county event being held tomorrow: the Susquehanna County Business Expo. The purpose of the expo? To lure companies to locate or relocate in a relatively rural but rapidly growing county–where the air is good, the people are nice, the taxes are LOW and the gas is plentiful.

The not-so-subtle message to businesses located nearby in Broome County, NY (where MDN is written) is that they ought to consider relocating over the border.

Specifically in their sights are manufacturers who can leverage the cheapest natural gas in the world! The sad truth is that businesses have been, and continue to, leave the Empire State in droves. Cuomo is driving them out with his obtuse policies.

The Expo will be held tomorrow in Montrose, PA. MDN encourages Broome businesses (and business from other areas) to consider attending.

http://marcellusdrilling.com/2016/05/susquehanna-cnty-uses-natgas-to-attract-new-business-may-19-expo/

U.S. crude oil refinery inputs averaged about 16.4 million barrels per day during the week ending May 13, 2016, 192,000 barrels per day more than the previous week’s average. Refineries operated at 90.5% of their operable capacity last week. Gasoline production decreased last week, averaging 10.0 million barrels per day. Distillate fuel production increased last week, averaging about 4.8 million barrels per day.

U.S. crude oil imports averaged about 7.7 million barrels per day last week, up by 22,000 barrels per day from the previous week. Over the last four weeks, crude oil imports averaged over 7.6 million barrels per day, 8.8% above the same four-week period last year. Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 691,000 barrels per day. Distillate fuel imports averaged 52,000 barrels per day last week.

U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 1.3 million barrels from the previous week. At 541.3 million barrels, U.S. crude oil inventories are at historically high levels for this time of year. Total motor gasoline inventories decreased by 2.5 million barrels last week, but are well above the upper limit of the average range. Both finished gasoline inventories and blending components inventories decreased last week. Distillate fuel inventories decreased by 3.2 million barrels last week but are well above the upper limit of the average range for this time of year. Propane/propylene inventories rose 1.0 million barrels last week and are above the upper limit of the average range. Total commercial petroleum inventories decreased by 0.7 million barrels last week.

Total products supplied over the last four-week period averaged 20.2 million barrels per day, up by 2.7% from the same period last year. Over the last four weeks, motor gasoline product supplied averaged about 9.6 million barrels per day, up by 5.7% from the same period last year. Distillate fuel product supplied averaged 4.1 million barrels per day over the last four weeks, down by 0.9% from the same period last year. Jet fuel product supplied is up 3.8% compared to the same four-week period last year.

Cushing inventories rise 500,000 bbl

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

                                                Last Week    Week Before    Last Year 

Domestic Production '000........... 8,791            8,802              9,262

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

Apache +9.8% premarket following a report from OilAndGasPeople.com that the company may be acquired by Occidental Petroleum in a deal thought to be worth at least $25B.

APA has called a town hall meeting today where it may announce the takeover to staff, according to the report.

APA is a "perfect fit" for OXY, the report says, as the companies have a similar production profile in terms of liquids production.

http://seekingalpha.com/news/3184178-report-apache-set-bought-occidental-petroleum.

OCCIDENTAL SAYS IT HAS NO KNOWLEDGE OF APACHE TAKEOVER REPORT. But a website said so.

@zerohedge

India sustained crude oil imports at a record and purchased more diesel than it has in the previous three years combined.

The South Asian nation imported 17.96 million metric tons of crude last month, according to data released Wednesday by the oil ministry’s Petroleum Planning and Analysis Cell. That’s roughly equivalent to 4.39 million barrels a day, little changed from a record in March. A surge in diesel buying to a five-year high pushed net exports of the fuel to the lowest since May 2015. Total product imports at 3 million tons were the highest ever.

India is becoming the center of global oil demand growth as an expanding economy translates into more goods being transported and increasing consumer spending. Water shortages and disputes between government-owned refiners and their private rivals has further boosted the need for overseas supplies.

“The water shortages have led to run cuts at some refineries, while growing demand continues to result in Indian state-owned refiners importing products in the spot market,” said Virendra Chauhan, an oil market analyst at Energy Aspects Ltd.

Bharat Petroleum Corp., Indian Oil Corp. and Hindustan Petroleum Corp. are turning to fuel imports because of an ongoing dispute over freight costs and taxes with private refiners Reliance Industries Ltd. and Essar Oil Ltd. Mangalore Refinery and Petrochemicals Ltd. last month shut a crude distillation unit with an annual capacity of 3 million metric tons at its facility in southern India because of water shortages.

A strong monsoon season -- which runs from June to September -- should ease diesel imports as water levels improve, Chauhan said.

The country imported 508,000 tons of diesel in April while exporting 2.1 million tons. That left the country’s net exports -- a measurement which strips out inbound shipments -- at the lowest in 11 months. Gasoline exports slipped to 1.37 million tons, the lowest since September.

http://www.bloomberg.com/news/articles/2016-05-18/india-sustains-crude-buying-at-record-boosts-diesel-imports

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Saudi Arabia’s crude oil stockpiles fell in March for the fifth month in a row reaching the lowest level in 18 months as the kingdom kept shipping crude to meet customer demand while keeping a lid on production.

Stockpiles dropped to 296.7 million barrels in March from 305.6 million barrels in February, according to data published on the website of the Riyadh-based Joint Organisations Data Initiative. Stockpiles peaked at 329.4 million barrels in October and have been in decline since then, the data showed.

Saudi Arabia, Russia, Venezuela, and Qatar had an initial agreement in February to freeze production at January levels to curb a global glut and shore up prices. Negotiations between OPEC members and other producers on April 17 in Doha ended without a deal to limit output after Saudi Arabia and allies in the Gulf Arab region wouldn’t agree to any accord unless all members of the Organization of Petroleum Exporting Countries joined, including Iran.

"The Saudis were pushing for a freeze deal since February so they needed to rely on stocks to meet any rise in customers demands at home and abroad while keeping their output flat,” Mohamed Ramady, an independent analyst and former economics professor at King Fahd University of Petroleum and Minerals, said by phone from London. “The Saudis also wanted to give some rest to fields after 12 months of production above 10 million barrels a day.”

The world’s biggest crude exporter kept its oil production almost flat since January at about 10.2 million barrels a day. It exported more in the first quarter this year compared to the same quarter last year, the data showed. Daily exports in March were at 7.54 million barrels, little changed from February. They reached 7.84 million barrels a day in January, the highest since March 2015 when it shipped 7.89 million barrels a day.

Saudi Arabia’s own refineries produced 2.85 million barrels daily of different products in March, an all-time high and up from 2.84 million barrels a day in February, according to the initiative known as JODI. Gasoline production rose to 569,000 barrels a day in March, the highest since December 2013 when Saudi refineries produced at a record of 613,000 barrels a day, according to JODI.

http://www.bloomberg.com/news/articles/2016-05-18/saudi-oil-stockpiles-hit-18-month-low-in-march-as-output-capped

Exxon Mobil is expected to ramp up its production of Nigeria's Qua Iboe crude oil this week.

The company declared force majeure on exports of the grade late last week after a drilling rig damaged a pipeline. Sources said the issue cut the company's production by as much as 250,000 barrels per day (bpd).

Traders said that Exxon is expected to increase production as early as Tuesday and issue a new loading programme later in the week. Traders expect exports to be delayed by about 10 days.

Exports of Qua Iboe were scheduled at roughly 306,000 bpd for May. Nigeria's oil production has fallen by almost 40 percent to 1.4 million bpd because of militant attacks on pipelines and other facilities, its oil minister said on Monday.

http://finance.yahoo.com/news/exxon-mobil-expected-ramp-nigerias-165523392.html

Malaysia's Petroliam Nasional Bhd warned that lower oil prices will continue to hurt its earnings on Wednesday after its first quarter profit fell by 60 percent.

The state-owned company has been hit hard by a tumble in oil prices that has forced it to slash costs and reduce dividends to the government. It detailed plans this year to cut spending by up to 50 billion ringgit ($12 billion) over the next four years.

"Concerns on moderate demand outlook and persistent oversupply will continue to pressure crude oil prices," Petronas said. "Petronas expects performance to be affected by the volatility of oil prices and foreign exchange rate."

It added that it will continue with its cost cutting.

In February, Petronas said it may have to borrow or tap into reserves to meet its dividend commitment to the government.

Crude oil prices have risen by about 30 percent this year and are near their 2016 highs, but prices are nevertheless down 60 percent since mid-2014, plagued by a global supply glut.

Petronas said lower prices across all products and higher net impairment on assets had also reduced profitability.

First-quarter net profit fell to 4.6 billion ringgit ($1.14 billion) from 11.4 billion ringgit in the year-ago quarter, while revenue slid 26 percent to 49.1 billion ringgit, it added.

http://www.reuters.com/article/petronas-results-idUSL3N18F3MV

Oil demand in 2016 will stay strong, supporting prices, but the market is unlikely to rebalance by the year end, the Chief Executive of French oil and gas major Total, said on Wednesday.

Patrick Pouyanne told a French Senate committee that oil demand rose sharply in 2015 to 1.8 million barrels per day (bpd), increasing at about 2 percent in a single year.

"This year, experts see demand at about 1.2 million barrels per day," Pouyanne said.

"Me and my team see it at about 1.4 million barrels per day, which is still strong and means the market is rebalancing, but will not rebalance completely by the end of the year, however, it will somehow support prices," he added.

Oil futures have rebounded in the past days, hitting 2016 highs of nearly $50 per barrel due to supply disruptions in Nigeria and Canada, from as low as $26 per barrel in January on a global supply glut.

The Paris-based International Energy Agency, said in its May forecast that global oil demand growth was broadly unchanged at 1.2 million bpd for this year, but said the risks to future forecasts lay to the upside.

Pouyanne said the market was still being supplied and major projects that were decided by oil companies some three to four years ago when prices were high at about $100 per barrel, are expected to enter into production around the year 2020.

"However, investments have fallen sharply and we are not preparing production for the years 2019-2020," he said, adding that investments have fallen from about $700 billion in 2014 to $400 billion this year.

"At this rhythm, there could be a shortfall of supply and a counter shock. There could be a shortfall of about 5 million barrels in that horizon, which is a lot. All of this because volatility has been extreme," Pouyanne said.

http://www.reuters.com/article/us-total-ceo-oil-market-idUSKCN0Y91E6

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Attached Files

Iran's oil exports are set to surge in May, climbing nearly 60 percent from a year ago, with European shipments recovering to about half of pre-sanction levels, according to a source with knowledge of the country's crude lifting plans.

This shows Tehran is regaining market share at a faster pace than analysts had projected as it battles with Saudi Arabia for customers by cutting its prices. April loadings at 2.3 million barrels per day (bpd) were around 15 percent higher than the International Energy Agency estimated earlier this month.

May shipments are set to jump to 2.1 million bpd from 1.3 million bpd during the same month in 2015, when Iranian exports were constrained by Western sanctions imposed because of the country's nuclear programme. The April loadings were the highest since January 2012.

The increase in loadings suggests that Iran has overcome a tanker shortage that threatened to derail attempts to regain market share after the sanctions were lifted in January.

Saudi Arabia will feel the surge in Iranian exports most keenly as it struggles for regional supremacy with Iran, with the oil market becoming a key battleground.

Saudi Arabia plans to boost production in the coming months to squeeze the Iranians, said Ian Bremmer, the president of political risk consultancy Eurasia Group, who spoke recently with executives and a member of the ruling family.

The production increase could also boost returns for the planned Saudi Aramco share sale and help ensure a smooth succession for deputy crown prince Mohammed bin Salman, Bremmer told Reuters on Wednesday.

Increases of as much as 1 million bpd were mentioned, Bremmer said, though he was sceptical about the higher targets.

"The challenge against Iran will mean an expanded effort to work with Asian economies," he said.

That will mean investing in refineries in the Asian market, "something the Iranians can't do, given both their resource limitations and the remaining sanctions environment," he said.

In the meantime, Iranian exports are rapidly returning to near pre-sanctions levels. Loadings to Asia were 1.7 million bpd in April, about a third higher than a year ago and the most since 2011, according to the source.

Loadings will stay near that level for May, with 1.6 million bpd scheduled.

Loadings for China, Iran's biggest customer, were nearly 840,000 bpd in April and more than 620,000 bpd are planned for May.

http://www.reuters.com/article/iran-oil-exports-idUSL3N18E2ZH

Hit hard by an El Nino-induced drought, some Asian countries are witnessing an unusual spike in gasoil demand for power generation with water shortage severely curtailing hydro power generation, especially when the crop season is drawing near.

Analysts said that while India, Pakistan and Vietnam are witnessing a spike in demand, Malaysia is also facing dry weather in many areas but has not yet boosted gasoil imports. The market, though, is keeping a close eye on any additional demand from Malaysia.

"Across Asia, we have seen a significant switch to diesel in the power sector due to the drought. We have also seen air conditioning demand soar, supporting gasoil demand further," said Amrita Sen, Chief Oil Analyst at Energy Aspects.

In India, state-run oil firms have been issuing rare gasoil import tenders to tide over the crisis. Some Vietnamese importers have also sharply raised their gasoil imports. And Pakistan State Oil, or PSO, recently stepped into the international market, in an unusual move, to import gasoil.

"The El Nino conditions have meant that India has had two successive years of below-normal rainfall. If weak rainfall persists for a third year, agri-based diesel demand may continue to accelerate," Macquarie said in a recent research report on India's oil sector.

The agriculture sector contributes to about 13% of India's overall diesel demand. It is heavily dependent on rainfall, and diesel pumps supplant irrigation supply. A fall in hydro-electricity generation has also meant more diesel is needed to run gen-sets in times of electricity shortage at homes and commercial establishments.

All this implies that weak rainfall almost always results in boosting diesel demand growth, Macquarie added.

Under the El Nino weather phenomenon, warm water spreads from the west Pacific and the Indian Ocean to the east Pacific, causing extensive drought in the western Pacific and rainfall in the normally dry eastern Pacific.

In India, gasoil imports have gone up significantly over the past few months, partly triggered by water scarcity in the country that led state-owned refiner Mangalore Refining and Petrochemicals Ltd. to idle some units, and partly due to state-owned refiners switching to imports instead of buying from private refiners Essar Oil and Reliance Industries, market sources said.

http://www.platts.com/latest-news/oil/singapore/analysis-drought-triggers-unusual-thirst-for-27581582

Chevron has reportedly started work in order to begin the pipe cooling and pre-start activities in order to resume production at its $54 billion Gorgon LNG plant on Barrow Island in Australia.

The facility halted production soon after the first cargo was shipped in March due to a mechanical issue in the propane refrigerant circuit on Train 1.

Chevron’s spokeswoman told The West Australian, the start-up activities on Train 1 are under way with the production set to resume in the coming weeks.

Additionally, the spokeswoman noted construction activities on the second and third production train continued without effects on the timing.

Chevron did say, following the refrigerant circuit failure, the repairs would last 30 to 60 days, and Joe Geagea, the company’s executive vice president for technology, projects and services, at the end of April said the restart could be expected in May.

Prior to the mechanical failure, Train 1 production peaked at nearly 90,000 barrels of oil equivalent and Chevron still expects the ramp-up to full capacity over the next six to eight months, despite the issue.

Chevron did not comment on the costs of the repair works tipped to be up to $200 million.

According to the report by The West Australian, the project’s second LNG cargo, destined for LNG giant Shell, is expected to leave Barrow Island by the end of this month.

At full capacity, the plant on Barrow Island will have the capacity to produce 15.6 mtpa of LNG using feed gas from the Gorgon and Jansz-Io gas fields, located within the Greater Gorgon area, between 80 miles (130 km) and 136 miles (220 km) off the northwest coast of Western Australia.

http://www.lngworldnews.com/report-chevron-close-to-restarting-gorgon-lngs-train-1/

Brazilian petroleum regulator ANP said on Tuesday that it extended state-run oil company Petroleo Brasileiro SA's concessions to explore and produce oil from the Marlim and Voador offshore fields for 27 years, to 2052.

The extensions were made to help facilitate new investment in the fields, which require new wells, production equipment and other capital spending to help maintain their declining output, the ANP said in a statement.

Petrobras is struggling with low oil prices, nearly $130 billion of debt and stagnant output.

The ANP, though, has pressured the company to use more of its shrinking investment budget to improve output in Marlim and other Campos Basin offshore fields near Rio de Janeiro.

These fields have been declining nearly as fast as Petrobras can add new output. Their decline has also deprived the state of royalties and other taxes in the midst of a recession.

To cut debt and increase its investment budget, Petrobras is seeking to sell $14 billion of asset this year, including stakes in existing fields or prospects. Extending the rights to the fields and their oil and gas could make selling them, or raising debt to finance improvements, easier for Petrobras.

Marlim, Brazil's fifth-most-productive field in March, has output of about 150,000 barrels of oil a day and about 2 million cubic meters (70.8 million cubic feet) a day of natural gas, the ANP said.

Voador, which will soon reconnect its wells to a new floating production platform in Marlim, produces about 1,520 barrels a day of oil and 38,000 cubic meters of gas.

- See more at: http://www.rigzone.com/news/oil_gas/a/144568/Brazil_Regulator_Renews_Two_Petrobras_Offshore_Leases_For_27_years#sthash.o8BIPaoT.dpuf

China appears to be stockpiling crude oil at a faster pace than the market had expected, taking advantage of low prices but perhaps also pulling forward its demand for imported crude.

While China doesn't disclose the amount of crude flowing into strategic storage, an estimate can be made simply by subtracting refinery runs from the total amount of oil available from both imports and domestic output.

Domestic crude production dropped 5.6 percent in April from a year earlier to 16.59 million tonnes, equivalent to about 4.04 million barrels per day (bpd), the National Bureau of Statistics said on May 14.

This was the lowest rate on a daily basis since July 2013, and it brought the decline in the first four months of the year to 2.7 percent from the same period in 2015, with about 4.11 million bpd being produced.

While lower domestic output in the world's fourth-largest producer shows China's oil firms aren't immune to the pressures of low prices, the shortfall has been more than made up by sharply higher imports.

Crude imports for the first four months of the year were 123.7 million tonnes, equivalent to about 7.46 million bpd, and 11.8 percent higher than for the same period last year.

Taking imports and domestic output together, total crude availability in China for the January to April period was 11.56 million bpd.

Total refinery throughput was 2.9 percent higher in the first four months at about 10.69 million bpd.

This means that there was about 870,000 bpd of crude available that wasn't processed through refineries, meaning it most likely made its way into commercial and strategic storages.

This means that China is filling storages at a considerably faster pace than had been expected in a Reuters poll of analysts conducted in December.

According to the poll, China was seen adding 70 to 90 million barrels to its Strategic Petroleum Reserve (SPR) in 2016, or about 245,000 bpd at the upper end of that range.

If all the surplus crude has indeed flowed into storage, it implies that about 105 million barrels were added in the first four months alone, more than what analysts had expected for the entire year.

It is worth noting that some analysts had expected greater flows into the SPR, with Energy Aspects predicting 150 million barrels for the year.

It would now seem that even optimistic forecasts may be exceeded, if China maintains the rate of crude imports directed for storage.

China is currently filling its second phase of SPR, which has a capacity of 244.8 million barrels, and Thomson Reuters Oil Research and Forecasts expects this process will be completed by the end of the year.

A planned third phase of undisclosed capacity is due for completion by 2020 as China works toward the goal of reserves equal to 90 days of imports.

It would appear that China still has the capacity to add more oil to its SPR in the coming months, but questions must be asked whether it can do so at the same pace seen in the first four months.

It's possible that storage flows may ease back in coming months, resulting in slower growth in crude imports.

This may already be happening, with Thomson Reuters Oil Research and Forecasts provisionally assessing May imports at 29.47 million tonnes, down from the 32.58 million reported by customs for April.

Higher oil prices may also help dissuade the Chinese from importing for storage, with Brent crude closing on Tuesday at $49.28 a barrel, some 77 percent higher than the lowest close of 2016 of $27.88 on Jan. 20.

Certainly, history suggests the Chinese tend to buy more when they deem prices to be cheap, and ease back when they believe prices have risen too far, too quickly.

http://www.reuters.com/article/column-russell-crude-china-idUSL3N18F23B

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State-controlled Petróleo Brasileiro SA raised $6.75 billion on Tuesday from a sale of five- and 10-year dollar-denominated bonds, in a closely watched return to global debt markets after the suspension of Brazilian President Dilma Rousseff.

The sale is the first by any Brazilian company since June and the first to test investor sentiment toward Brazil since Rousseff was ousted last week to face an impeachment trial. Petrobras, as the firm is known, will also buy back up to $3 billion of debt maturing in 2018.

Investors have said Petrobras, which for years was Rousseff's main tool to enact policies that helped drive Brazil into a recession not seen in eight decades, could gain most from the change in Brazil's leadership. Rousseff forced Petrobras to borrow beyond capacity to bolster her Workers Party's political agenda. The company is the world's most indebted oil firm.

In a strong sign of backing for a company that has been the largest emerging market corporate borrower in recent decades, investors placed more than $20 billion worth of bids for the new securities, according to three sources directly involved with the transaction. They asked to remain anonymous because terms of the deal are private.

The deal could help pave the way for other Brazilian companies to raise money in a "very gradual" reopening of debt markets, as optimism mounts that Rousseff's exit may usher in the implementation of more business-friendly policies, said Eduardo Vieira, an analyst with Deutsche Bank Securities in New York.

"Petrobras needed to tap the market, since one of the company's pressing issues was liquidity," he said.

The sale is Petrobras' first attempt to place global bonds since a $2.5 billion offer of bonds maturing in 2115 last June. The company borrowed from Chinese lenders in recent months to counter the impact of plunging oil prices, restricted access to capital markets and fallout from the sweeping corruption scandal that accelerated Rousseff's fall.

The company sold $5 billion in five-year notes at 8.625 percent and $1.75 billion in 10-year notes at 9 percent. Petrobras had last sold similar debt in March 2014, bearing interest of 4.875 percent and 6.256 percent, respectively.

"It may turn out to be a costly deal, even if the market response turns out to be very positive," Vieira said.

Yields on Petrobras' shorter-termed bonds had surged in recent months on concern the company could have trouble refinancing $18 billion in notes maturing between next year and 2019, one of the sources said.

Last week, Chief Financial Officer Ivan Monteiro said on a conference call to discuss Petrobras' first-quarter results that an eventual market reopening could help the company pay down debts coming within the next five years.

Petrobras has $33 billion of bonds coming due within the next five years, or about 60 percent of outstanding bond debt.

"We need to adjust to the fact that we are no longer an investment-grade company," Monteiro said last week. "The cost has risen."

http://www.reuters.com/article/us-petrobras-bonds-idUSKCN0Y82NG

Royal Dutch Shell plc is divesting US$40 billion in non-core assets in its attempt to cut capital expenditures and raise cash in a desperate attempt to right its balance sheet wrongs after its takeover of BG Group plc earlier this year left it strapped for cash and laden with nearly US$81 billion worth of debt.

The costly merger at a time of depressed oil prices has rendered Shell the largest published owned company in the UK and the largest producer of liquefied natural gas (LNG) in the world.

Shell’s massive debt rose from US$43.84 billion to US$80.87 billion from Q1FY15 to Q1FY16, while free cash flow fell from US$.53 billion to -$5.06 billion over the same period.

Unfortunately for Shell, as far as oil assets go, it’s a buyer’s market, with drilling rigs and the like selling for 10 percent of their value during “normal” times. But divest it must, so it’s quite possible that Shell will be forced to take drastic measures and issue an initial public offering (IPO) to lighten its load.

Simon Henry, Shell’s CFO, confirmed that an IPO was a possible solution, and that he expected this move would help to lower Shell’s net debt by over $50 billion over the next four years. “There are no prima facie reasons why we would not look at such a monetization route, if that was the best way to create value.”

An IPO of Shell’s mature assets would allow Shell to still benefit from any future oil recovery, if there is indeed an oil recovery on the horizon.

A decision on how to implement the divestment is not expected anytime soon, although analyst Aneek Haq of Exane BNP Paribas believes that an IPO announcement could be made within a year.

http://oilprice.com/Latest-Energy-News/World-News/Shell-Looks-to-Offload-40B-In-Non-Core-Assets.html?utm_source=twitterfeed&utm_medium=twitter&utm_campaign=Feed%3A+oilpricecom+%28Oil+Price.com+Daily+News+Update%29

Williams has pre-filed an application with the Federal Energy Regulatory Commission for the the Northeast Supply Enhancement project–a project to expand the Transco pipeline to increase pipeline capacity and flows heading into northeastern markets.

Yesterday Williams announced an official, “binding” open season for the project–to sign customers to long-term contracts to use the expanded capacity…

http://marcellusdrilling.com/2016/05/williams-announces-open-season-for-northeast-supply-enhancement/

Five countries in south-east Europe formally signed off on the construction of a pipeline which will transport Caspian gas to European markets in an attempt to ease their reliance on Russia.

The 870-km (540-mile) Trans-Adriatic Pipeline (TAP) is part of the so-called "Southern Corridor" that will link Azerbaijan's giant Shah Deniz II field with Italy, crossing through Georgia, Turkey, Greece, Albania and the Adriatic Sea. It is the largest endeavour to bring new supply sources to European consumers.

"The energy map of south-east Europe is being redefined and this turns Greece into an energy hub of the region," Greek Prime Minister Alexis Tsipras said at an inauguration ceremony in the northern Greek city of Thessaloniki on Tuesday.

The 5-billion-euro project will cross through Georgia, Turkey, Greece, Albania and the Adriatic Sea. European regulators cleared the project in March as part of Europe's drive to secure energy supplies.

Around 10 billion cubic metres (bcm) per year of Azeri gas should reach Europe by 2020 through TAP as well as the South Caucasus Pipeline through Georgia and the Trans-Anatolian Pipeline (TANAP) through Turkey.

"We are inaugurating an important part of one of the largest and most complex projects in the history of energy industry," said Georgian Prime Minister Georgy Kvirikashvili.

"Georgia, as a transit country, reiterates its commitment to the diversification of energy supplies to Europe."

TAP is owned by BP, Azeri state energy firm SOCAR, Italy's Snam, Belgian company Fluxys, Spain's Enagas and Axpo. Construction is expected to begin this summer.

The European Bank for Reconstruction and Development is considering financing of up to 1.5 billion euros ($1.7 billion) for TAP, which would be the largest loan it has granted.

Total project costs - which include drilling, offshore platforms and terminals as well as pipelines - are $45 billion and the entire pipeline route will span 3,500 km, with TAP the final link into Europe.

Cash-strapped Greece has been seeking to boost its role as a regional energy hub and has said that TAP fitted well with another gas pipeline scheme, Interconnnector Greece-Bulgaria (IGB), and a planned liquefied natural gas (LNG) project off the northern Greek city of Alexandroupolis.

Government officials say the project is expected to create some 8,000 direct jobs in country with a record unemployment of 24 percent and will mean hundreds of millions of euros in contracts for Greek firms which will take part in construction works.

http://www.reuters.com/article/azerbaijan-pipeline-greece-idUSL5N18D1HW

An independent audit showed that the best estimate of contingent resources -- also known as 2C resources -- at the Sea Lion complex came in at 517 million barrels, of which London-based Rockhopper’s share is 258 million barrels, it said Tuesday in a statement.

Today’s announcement is higher than the 482 million barrels Bank of Montreal was expecting.

“It adds to confidence on the prospectivity of the region,” David Round, an analyst at BMO, said by e-mail. “But there remain a number of hurdles, namely the oil price, before the resources can be commercialized.”

Shares in Rockhopper gained as much as 6.2 percent to trade at 38.75 pence a share in London, the highest in two weeks. They were 3.4 percent higher as of 9:17 a.m. Premier Oil Plc, a London-based explorer with a 60 percent stake in Sea Lion, gained 2.9 percent to 79.75 pence a share.

“The current size of Sea Lion at over 500 million barrels is good to see, helping confirm a significant second phase beyond the current development,” Daniel Slater, research director at Arden Partners Plc, said in a note.

The 2010 Sea Lion oil discovery was the first off the Falklands, the south Atlantic archipelago which Margaret Thatcher fought to keep British in 1982. No discovery there has yet been commercially productive.

http://www.bloomberg.com/news/articles/2016-05-17/rockhopper-confirms-potential-of-falklands-basin-oil-discovery

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Rival factions have agreed in principle to have one oil organization for strife-torn Libya, the foreign minister in the new U.N.-backed, national unity government said on Tuesday.

The West is counting on the unity government to gradually end armed anarchy in the OPEC member state, tackle Islamic State militants and stop new flows of migrants across the Mediterranean to Europe, though the new leaders still lack effective control over the capital city Tripoli.

"These institutions can only be managed centrally. That's why it was agreed that both institutions from east and west be united, so that there is only one oil company, one investment company and one central bank," Foreign Minister Mohammed Siyala told reporters in Vienna.

"The first steps to achieve this are being taken now, there is an agreement on the basic points and principles and now we're waiting for the implementation."

Libya, an OPEC member, will resume oil shipments from the port of Marsa El Hariga after a deal reached at talks in Vienna between rival oil officials representing the east and west of the country, Libyan oil sources said on Monday.

Exports from Marsa El Hariga have been blocked for two weeks due to a standoff between the rival national oil corporations in the east and west of the vast OPEC member state.

Asked on Tuesday about the time frame for the first oil exports, Siyala said:

"You know that sanctions against Libya existed... Now it's up to us. There is already a shipment from the official ports and with international agreement and under international rules and I believe that oil exports, be they from the eastern or western ports, will return to what they used to be."

http://www.reuters.com/article/us-libya-security-minister-idUSKCN0Y814E

Producer/merchants massively boosted their total holdings in crude futures for the reporting week ended May 10, data from the Commodity Futures Trading Commission showed Friday.

This brings their total holdings in NYMEX crude -- the sum of longs and shorts -- to 702,586 contracts, the most since October 2013, the CFTC data showed.

The group added 25,041 longs and 20,180 shorts, which effectively left them net short by an unremarkable 283,534 contracts. However, the action comes amid a rather large increase in total open interest for December crude futures, which rose 8,511 contracts to 212,925 contracts.

With December crude touching $49.26/b last week, crude producers -- a substantial portion of the producer/merchant category -- were likely attempting to help lock in a floor through the traditionally very liquid December contract.

This week, a number of crude producers said they were more actively hedging. Devon Energy said it would look at more "opportunistic" hedges while keeping crude production around 50% hedged. And Marathon Oil said it was looking at a $40/b floor for its 2016 oil hedges. Pioneer Natural Resources said it was 50% hedged for 2017 and 85% hedged this year.

ConocoPhillips, too, may start to hedge, CEO Ryan Lance said Tuesday. The company currently does not hedge any of its roughly 800,000 b/d of global crude and bitumen production, Lance said.

Money managers, meanwhile, piled headlong back into short positions. The group added 20,367 shorts and cut 659 longs, pulling their net long position lower by 21,026 contracts to just 191,731 contracts.

This marks the second straight week the group has trimmed its net long position, and comes as prompt crude futures rose just over $1 to $44.46/b over the reporting week.

Money managers had built up a substantial net long position between the beginning of the calendar year through mid-March, a period that saw crude prices hit bottom in mid-February before rising steadily ever since. That net long has proven difficult to maintain, however, having drifted below 200,000 contracts both last week as well as in early April.

Swap dealers were also very active last week, adding 12,868 longs and cutting 5,857 shorts, leaving their net short position 18,725 contracts leaner at 8,087 contracts. Other reportables were less busy, but still cut their net long by 5,558 contracts to 100,229 contracts.

http://www.platts.com/latest-news/oil/newyork/producermerchants-total-holdings-in-nymex-crude-26443952

Iraq’s oil industry is on a roll. Production has jumped more than 40 percent since mid-2014 and exports are at near-record levels.
 
It probably won’t last. Plunging government revenue is hampering the state’s ability to invest, while OPEC’s second-biggest crude producer is reaching the limits of its capacity to store and export oil, according to analysts at Energy Aspects Ltd. and FGE. Spending on the country’s biggest fields may shrink to as little as $7 billion this year from about $13 billion in 2015 and $20 billion in 2014, Richard Mallinson of Energy Aspects said Monday.

Iraq has boosted output after decades of sanctions, war and under-investment, with international companies such as BP Plc and Lukoil PJSC developing some of the largest deposits in its oil-rich southern region. The country is exporting 3.3 million barrels a day of crude this month from the southern port of Basrah, and it targets keeping shipments at that level for the rest of the year, Deputy Oil Minister Fayyad Al-Nima said in a May 13 interview. Without more investment, these exports are sure to slide, the analysts said.

“We’re going to see production growth flatten and then start to decline by late this year and into 2017,” Mallinson said by phone from London. “What does that mean if Iraq doesn’t deliver growth this year? If you were expecting a big increase from Iraq and we don’t see that, it will add to bullish sentiment in the market.”

While crude continues to flow from Rumaila, West Qurna and other fields in the south, parts of northern Iraq are a battleground for forces trying to dislodge the Islamic State militants who have occupied swathes of territory since 2014. The conflict has prevented the government from exporting oil through its northern pipeline to Turkey, and the collapse of a plan to share oil revenue with the self-ruling Kurds in northeastern Iraq has limited sales from fields in the region.

Iraq pumped a record 4.51 million barrels a day in January and 4.31 million in April, according to data compiled by Bloomberg. Its total production capacity, including in Kurdish areas, is 4.8 million barrels a day, and increasing that to a target of 5 million will depend on oil prices, Al-Nima, the deputy minister, said. Domestic demand for oil as fuel for power plants is also a constraint on exports, Al-Nima said.

Investment in Iraq’s southern fields may fall by 30 percent to 40 percent this year as the government, which gets most of its income from oil sales, delays payments to foreign companies and limits future spending, said Tushar Tarun Bansal of FGE in Singapore.

“Investment in new wells isn’t getting done, and that will show up in reduced production later in the year,” Bansal said. “The market is yet to account for the impact that will have, and it could lead to higher prices.”

http://www.bloomberg.com/news/articles/2016-05-16/iraq-oil-surge-seen-losing-steam-just-as-markets-need-more-crude

A massive wildfire burning around the oil sands hub of Fort McMurray was growing and moving rapidly north late on Monday, forcing firefighters to shift their focus to protecting major oil sand facilities north of the city, officials said.

The sudden movement of the fire prompted the evacuation of some 4,000 people from work camps outside Fort McMurray, with all northbound traffic once again cut off at the city, the Regional Municipality of Wood Buffalo said.

Suncor Energy Inc and Syncrude Canada confirmed they had evacuated workers from the affected area. Their major facilities were under a precautionary notice with the fire still some 15 to 20 kms (10-12 miles) away, officials said.

A dozen work camps south of the major projects faced mandatory evacuation notices.

"The urgency we're looking at is with regards to the oil gas infrastructure," Scott Long, executive director of the Alberta Emergency Management Agency, told reporters in Edmonton, adding Fort McMurray itself appeared to be safe for now.

The entire population of Fort McMurray, about 90,000 people, was forced to flee nearly two weeks ago as the uncontrolled wildfire raged through some neighborhoods and destroyed about 15 percent of structures.

On Monday, the blaze continued to burn uncontrolled, now covering 285,000 hectares (704,000 acres), officials said. By Monday evening it was moving 30 to 40 meters (98 to 131 feet) every minute and had jumped a critical firebreak north of the city to push into the oil sand camp areas.

"When you have this type of extreme fire behavior, it doesn't matter what tankers you put in front of it, or how many helicopters, mother nature is going to continue to move that fire forward," wildfire manager Chad Morrison said.

Morrison said the blaze was expected to slow into the evening and that it was unclear if it would reach the major oil sand facilities, though responders were preparing for that eventuality.

A Suncor spokeswoman said 120 people were evacuated from its MacKay River plant and camps as a precautionary measure Monday afternoon, adding the facilities were not at risk from the fire.

Syncrude, a joint venture among numerous energy companies operating in the region, said on Twitter that it was relocating its workers to safety.

The fire also threatened Enbridge Inc's Cheecham crude oil tank farm south of Fort McMurray. The blaze, about 1 km (1,094 yards) away from the tank farm, was under control with the wind cooperating as the company's industrial firefighters tackled the fire, officials said earlier in the day.

Enbridge said a firebreak around the terminal was being widened and that crews were assessing other fire suppression tactics like spraying down facilities. It said some pipelines in and out of the terminal were operating, and the situation was being monitored.

Roughly a million barrels per day of oil sands crude production was shut in as a precaution and because of disruptions to regional pipelines, and much of that production remains offline.

http://www.reuters.com/article/us-canada-wildfire-enbridge-idUSKCN0Y71ZT

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Japan's upstream oil and gas investment to tumble in 2016/17

Investment by big Japanese firms in upstream oil and gas developments is set to fall by around 40 percent to about 1.2 trillion yen ($11 billion) in 2016/17 due to current low prices, a government Energy White Paper showed on Tuesday.

The upstream investments by 10 firms including Inpex Corp, JX Holdings, Mitsubishi Corp and Mitsui & Co had already slipped from 2.1 trillion yen in 2014/15 to 1.9 trillion yen in the year ended in March, the trade ministry said.

The other firms surveyed are Japan Petroleum Exploration (Japex), Cosmo Energy Holdings, Idemitsu Kosan, Itochu Corp, Marubeni Corp and Sumitomo Corp.

Globally, top oil companies have struggled to cope with a roughly 55 percent decline in oil prices since their 2014 peak, triggering a wave of spending cuts on new wells and projects to conserve cash.

International Energy Agency (IEA) Executive Director Fatih Birol said last month that global upstream investment fell by 24 percent in 2015 and is set to fall by 18 percent in 2016.

This would be the first time that the upstream investment has fallen for a second straight year since the 1980s, he said.

Birol said annual global upstream investment needs to be at about $630 billion a year to compensate for declining output at existing fields and maintain current production levels.

http://www.reuters.com/article/us-oil-investment-japan-idUSKCN0Y808D

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May 16 Libya will resume oil shipments from the port of Hariga after an agreement was reached at talks in Vienna between rival oil officials representing the east and west of the country, Libyan oil sources told Reuters.

Exports from the port have been blocked since early this month due to a standoff between the rival eastern and western National Oil Corporations (NOC).

The NOC in Benghazi, which is loyal to Libya's eastern government, has prevented the loading of a tanker sent by the NOC in Tripoli, since the former tried unsuccessfully last month to export a cargo of crude for the first time.

http://www.reuters.com/article/libya-oil-exports-idUSL5N18D46D

State oil giant Saudi Aramco IPO-ARMO.SE has awarded a $1 billion-plus contract to India's Larsen & Toubro (L&T) and Singapore-based Emas AMC for the expansion of the offshore Hasbah sour gas field, industry sources said.

Increasing its supply of gas is a top priority for Saudi Arabia. Many industrial firms have complained about a shortage crimping expansion plans, while the kingdom is trying to use more of the fuel for power generation and water desalination instead of burning crude oil, which it wants to export.

Work on the expansion scheme includes building platforms and pipelines, with the field's supply feeding the Fadhili gas plant, a $6 billion complex that will include a gas processing unit and sulphur recovery.

Saudi Aramco declined to comment. L&T did not respond to emailed requests for comment, while Emas was not available for immediate comment.

It is the second major contract win for the duo in recent months: Emas AMC, a unit of Ezra Holdings, also teamed up last year with the Indian firm to secure a long-term contract with Aramco to work on offshore facilities.

The expansion of Hasbah will supply 2 billion standard cubic feet per day (scfd) of gas to the Fadhili plant, for which Aramco awarded a construction contract last year. The remaining 500 million scfd of supply for the plant will come from the onshore Khursaniyah field.

Hasbah already feeds Wasit, another major gas plant. Aramco said in March it had started producing natural gas from the offshore field ahead of peak summer demand in the world's largest oil exporting country.

An industry source told Reuters the Wasit plant would reach full capacity in July of processing 2.5 billion scfd of gas.

http://www.reuters.com/article/saudi-aramco-gas-idUSL5N18C05U

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Canadian oil and gas producer Penn West Petroleum Ltd said on Monday it may default on its financial covenants at the end of the second quarter and raised doubts about its ability to continue as a going concern.

Penn West had long-term debt of C$1.86 billion as of March 31, or $1.44 billion at current exchange rates.

The company said it was in talks with lenders on amending its financial covenants, which if successful would reduce the risk of default.

Penn West said it would try to raise money by selling more assets and would seek funding from investors.

The Calgary-based company, like other oil and gas companies, is suffering from a near-60 percent slump in global crude prices since mid-2014.

The plunge has pushed at least 28 publicly traded North American oil and gas producers to seek bankruptcy protection since early 2015, according to a Reuters review of regulatory filings.

Penn West, which reported a smaller first-quarter loss on Monday due to lower expenses, said total production fell 18.9 percent to 77,010 barrels of oil equivalent per day in the three months ended March 31.

The company slashed its budget by as much as 90 percent in January. It also cut about 35 percent of its workforce in September and stopped paying dividend from the next month in an effort to reign in spending.

http://www.reuters.com/article/penn-west-debt-idUSL3N18D3XM

SandRidge Energy Inc and master limited partnership Breitburn Energy Partners LPfiled for bankruptcy protection on Monday, the latest U.S. oil and gas companies to fall victim to weak oil prices.

A plunge in global crude prices LCOc1 has now pushed at least 28 publicly traded North American oil and gas producers to seek bankruptcy protection since early 2015, according to a Reuters review of regulatory filings.

SandRidge said in a court filing that it had total assets of $7.01 billion and total debt of $4 billion as of March 31. 

Breitburn listed assets and liabilities of $1 billion to $10 billion.

SandRidge, which has been in talks with creditors on a restructuring deal, said on Wednesday it would not be able to file financial results for the quarter ended March 31 on time.

Small oil and gas producers have largely exhausted funding alternatives after issuing more equity and debt, tapping second-lien loans and shedding assets over the last two years to stay afloat as banks trim credit lines.

http://www.reuters.com/article/us-sandridge-bankruptcy-idUSKCN0Y718Y

- Average daily hydrocarbon production of 5.21 mmboe, an increase both compared to Q1 2015, and for two consecutive quarters (+2.5% compared to Q3 2015)
- Production drilling grew by 52% with maintaining in-house OFS share above 50%
- Gas production grew by 6% to 16.72 bcm against Q1 2015
- Refining throughput optimization with refining depth up to 68.9%
Euro-5 motor fuel production increased by 1.7 times against Q1 2015

Upstream

Hydrocarbon production continued to grow in Q1 2016. The level of production reached 5.21 mmboed (64.0 mmtoe), up by 0.2% against Q1 2015 and by 2.5% over the last two quarters.

In Q1 2016 the Company increased its production drilling by 52% against Q1 2015 to 2.08 million meters as established by the targets for the year. The share of in-house services in the total drilling footage consistently exceeds 50%. New wells put into operation grew by 59% compared with Q1 2015 (with horizontal wells share of 30%).

Liquid hydrocarbon production in Q1 2016 returned to the level of Q1 2015 and amounted to 50.2 mmt. The largest contribution to these positive production dynamics was provided by: RN-Uvatneftegaz (+13.2%), RN-Severnaya Neft (+17.6%), Sakhalin-1 project (+23.1%), Samaraneftegaz (+6.0%), as well as the Northern tip of the Chayvo field (+39.4%).

RN-Uvatneftegaz started commercial oil production at a new field of the Uvat project - the West Epasskoe (crude oil ABC1+C2 recoverable reserves exceed 17 mmt). The technological targets of the West Epasskoe field are included in the Eastern Hub in the south of the Tyumen region enabling to gain synergies through the use of existing fields' infrastructure.

In March 2016, the Company produced 120 mmt of oil at the Vankor field since its commissioning in 2009. The project of drainhole well completion is being successfully implemented at the field. Experience in operating such wells has shown a significant increase in their productivity.In Q1 2016, Rosneft in cooperation with Statoil successfully completed a pilot project on the selection of efficient technologies PC1 reservoir development in the North-Komsomolsk field (Yamalo-Nenets Autonomous District, operator - RN-Purneftegas LLC). Total ABC1+C2 recoverable reserves of the North-Komsomolsk field amount to 203 mmt of oil and condensate and 197 bcm of gas. We were able to conduct pilot operation of 2 horizontal wells in different operating modes, and perform a number of well tests to update the geological and hydrodynamic field models. The average flow rate during the operation exceeded initial expectations and reached more than 75 tpd. Production potential is estimated at more than 100 tpd per well. Over 7,000 tons of oil was produced during the period of pilot operation.

In Q1 2016, the Company started production drilling at the Tagul field (ABC1+C2 recoverable reserves stand at 286 mmt of oil and condensate and 228 bcm of gas), which is part of the Vankor cluster. The drilling is directional with primarily horizontal completions. During 2016, it is planned to complete drilling about 9 wells and continue with field infrastructure development.

In Q1 2016, gas production amounted to 16.72 bcm, which is 1% above the level of Q4 2015 and 6% above Q1 2015. One of the key factors in gas production growth for the periods indicated is the startup of the 2nd stage of Rospan's Novo-Urengoi comprehensive gas and condensate processing plant in a comprehensive testing mode in Q4 2015. This facility will enable to increase the actual performance of the GPP to 11 million cubic meters of gas per day and 1,700 tons of condensate per day. Another significant factors of the gas production growth are the start of the third and fourth wells at the Northern tip of the Chayvo field and commissioning of the gas processing plant at RN-Purneftegaz's Barsukovsky field in December 2015.

The utilization of associated gas in Q1 2016 grew to 91% compared with 87% in Q1 2015. The improvement of APG utilization is an important element of environmental policy.

Much more information: http://www.oilvoice.com/n/Rosneft-announces-first-quarter-2016-operating-results/d76191ef527d.aspx?utm_source=twitterfeed&utm_medium=twitter&utm_campaign=Feed%3A+OilvoiceHeadlines+%28OilVoice+Headlines%29

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China's April preliminary oil demand rose 1.7 percent from a year ago as refining throughput rose as independent refiners increased their processing runs and as fuel exports dropped.

China consumed about 10.62 million barrels per day (bpd) of oil in April, a record daily consumption volume, according to Reuters calculations based on preliminary government data published on Friday.

The gain in demand, which excludes adjustments of oil stocks, was mainly due to an increase in refinery throughput in part at independent plants.

In April, Chinese refiners processed 10.89 million bpd of crude oil, up 2.4 percent year on year, data from the statistics bureau showed. The figure compared to March's runs at 10.58 million bpd.

Throughput for the January to April period rose 2.9 percent on year to about 10.69 million bpd.

China's refined fuel exports fell to 3.68 million tonnes in April from 3.75 million tonnes in the previous month. A year ago, China was a net importer of refined oil products.

The implied oil demand is the sum of domestic refinery throughput and net imports of refined products. Reuters will publish a more detailed demand calculation later in April, broken down by products and amended for changes in fuel stocks based on data yet to be released.

http://www.reuters.com/article/china-economy-oil-demand-idUSL3N18D356

Range Resources Corp., a Fort Worth, Texas, natural-gas producer, on Monday said it agreed to buy rival energy company Memorial Resource Development Corp. in an all-stock deal valued at $3.3 billion.

The agreement also calls for Range to take on $1.1 billion in debt owed by Memorial. Range will absorb the smaller driller, adding its Louisiana operations to existing acreage and wells across Pennsylvania, Texas and Oklahoma.

Once it closes, the transaction will rank as one of just a handful of deals executed between sizable independent U.S. energy producers during the oil-and-gas downturn.

When Whiting Petroleum Corp. announced its acquisition of Kodiak Oil & Gas Corp. in mid-2014, the deal was valued at $3.8 billion, plus $2.2 billion in debt. Noble Energy Inc.’s acquisition of Rosetta Resources Inc., announced a year ago, was valued at $2.1 billion, plus $1.8 billion in debt.

Jeff Ventura, chief executive of Range, said integrating Houston-based Memorial’s assets will give Range a strategic position on the East and Gulf coasts, and more exposure to natural gas demand. Gas accounted for 71% of the Range’s production last year, while oil and other liquids accounted for 29%, company filings show.

Both Range and Memorial have seen the value of their shares cut in half during the energy bust, as the price of oil has dropped from more than $100 to under $50 today. In that time, the benchmark U.S. natural gas price has fallen from more than $4.50 per million British thermal units to just over $2. Range shares closed at $42.01 Friday, down from more than $90 just before oil prices peaked in late June 2014. Shares of Memorial have fallen from nearly $30 in September 2014 to $13.45 a share as of Friday.

Range will issue 0.375 shares, worth $15.75 based on Friday’s closing price, for each share of Memorial, a 17% premium to the Memorial’s closing price on Friday. Memorial shareholders will own 31% of the combined company, and Memorial will have the right to nominate one of its independent directors to Range’s board.

The companies expect the deal to close in the second half of the year.

http://www.wsj.com/articles/range-resources-to-buy-memorial-resource-development-for-3-3-billion-1463394029

Oil prices have rallied lately, but not enough to convince U.S. oil producers that hard times may be over soon.

That’s evident in shale regions like North Dakota that have driven a resurgence in U.S. oil and natural gas production over the last few years.

Lynn Helms, the director of the North Dakota Department of Mineral Resources, told reporters the other day that producers won’t begin to ramp up activity until they see oil prices holding steady at more than $40 a barrel for 90 days or so.

http://www.usatoday.com/story/money/columnist/2016/05/15/oil-industry-problems-prospects-keenly-felt-n-dakota/84336332/

An executive at Japan's top LPG supplier Astomos Energy said Friday the company's VLGC will be the first commercial tanker to transit the expanded Panama Canal June 27, for a delivery to Japan, marking the start of regular commercial operations through the new locks.

Speaking to reporters, Kaname Ichima, managing director and COO of Astomos' international business division said the company had not yet picked a VLGC from its fleet for the maiden expanded Panama Canal transit but had two possible candidates.

To date, Astomos Energy, 51%-owned by Japanese refiner Idemitsu Kosan and 49% by Mitsubishi, currently has 21 VLGCs in its fleet -- six that it owns and 15 on time charter.

Of these nine VLGCs -- three new tankers and six converted vessels -- are equipped to transit the expanded Panama Canal, according to a company official.

For Astomos, using the expanded Panama Canal would be its "strategic" option not only to diversify its supply sources but also to reduce its dependency on supplies from the Middle East, using US cargoes from its supply portfolio, Ichima said.

Over 2014-21, Astomos has term contracts to procure a total of 5.8 million mt of US LPG, all of which are propane. The company is now looking at a possibility of buying US butane in the future, he said.

But Ichima said the company would need to clear "such issues as specifications" before sealing any deals to buy US butane, of which the company is looking at supplying to Southeast Asia.

With steady demand for US propane in Japan, Astomos intends to supply its US propane cargoes to the country via transiting the expanded Panama Canal, Ichima said.

Astosmos reiterated Friday that it still aims to expand its total purchase and trade LPG volumes to 12 million by 2017. This will be up from its planned volumes of around 10.5 million mt in 2016, steady from 2015.

To expand its total LPG handling volumes, Astomos intends to expand its sales to Vietnam, Thailand and Indonesia, as well as looking at how it can cultivate its demand in China and India indirectly through its partners, Ichima said.

Of its planned 10.5 million mt purchase and supply plan in 2016, Astomos intends to supply about 3.2 million mt of LPG to Asia, the company said.

In Japan, Astomos sold a total of 3.653 million mt of LPG in its fiscal year ended December 31, up 3.7% from a year ago, led by increased sales to households, industries, city gas and cars, the company said Friday.

Astomos' domestic LPG sales for petrochemicals use and for power generation, however, dropped 18% and 34% respectively to 134,000 mt and 147,000 mt in 2015, the company said.

http://www.platts.com/latest-news/shipping/tokyo/astomos-vlgc-to-be-first-commercial-tanker-to-26443524

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Iran has managed to pump more of its oil back into Asia and Europe than it originally promised, surprising skeptics and laying the groundwork for a Mideast market-share clash — or a truce.

Iran’s crude exports climbed to 2.35 million barrels a day in April, according to consulting firm Genscape, more oil than U.S. drillers pump in South Texas’ Eagle Ford Shale and North Dakota’s Bakken Shale put together.

The sharp increase of 660,000 barrels a day compared to March — and 1.2 million barrels a day since January — puts Iran above its planned export target just three months after western powers lifted strict economic sanctions against Iran.

“Iran has been waiting for this moment for years and they made the best of it,” said Amir Bornaee, an analyst at Genscape who tracks oil vessels.

Many analysts had said Iran would fall short of its goal because its oil fields fell into disrepair in the three years that the West had sanctioned Iran’s oil exports.

Some attribute the recent rise in Iran’s exports to a collection of vessels kept near the country’s coastline, but Bornaee says many of those tankers are still there, storing oil.

Still, it is not clear how much of Iran’s oil came from the more than 30 million barrels it had stored onshore, and how much came from its oil fields.

Iranian officials have been courting western oil companies and amending drilling contracts in a push to attract investments in its fields, so it’s possible Iran is selling its stored oil in an effort to reach its export goal quickly.

That way, Iranian officials could be ready to call a truce in the ongoing market-share war by the time the Organization of Petroleum Exporting Countries meets in early June.

“There’s a lot of posturing going on ahead of the OPEC meeting,” said Andy Lipow, president of Lipow Oil Associates in Houston.

OPEC, Russia and others failed to reach an agreement last month to cap their production levels when Saudi Arabia balked at Iran’s refusal to join the freeze.

One reason Iran’s surge in crude exports hasn’t sent oil prices down is because other countries like Canada, Nigeria and Libya have recently suffered production outages.

The International Energy Agency on Thursday said Nigeria’s output has fallen to a two-decade low amid attacks on its energy infrastructure, and Canada has shut in 1.2 million barrels a day of production amid devastating wildfires, though the outage is expected to be temporary.

Global oil demand is growing faster than anticipated at 1.4 million barrels a day, and production outside of OPEC is expected to fall 800,000 barrels a day, the IEA said, in a sign there are many market forces offsetting Iran’s return to the oil market.

According to Genscape, Saudi Arabia lowered its oil exports by 700,000 barrels a day last month to 6.9 million, its first decline in exports this year. But Saudi officials have recently signaled the world’s largest oil-producing nation is gearing up to ramp up its output.

“Until everyone freezes (oil production), these two countries (Iran and Saudi Arabia) aren’t likely going to slow down,” Bornaee said.

http://fuelfix.com/blog/2016/05/12/iran-oil-export-surge-adds-another-bakken-to-the-global-glut/

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Fifteen New York towns that are upset at Democratic Gov. Andrew Cuomo’s decision to ban fracking have threatened to secede from the state and join neighboring Pennsylvania, where fracking is allowed.

The towns, all members of the Upstate New York Towns Association, have expressed interest in secession, Conklin Town Supervisor Jim Finch told The Huffington Post. The association is compiling a report to assess the feasibility of joining Pennsylvania.

“We’re in the Southern Tier of New York,” Finch said, referring to localities in Broome, Tioga, Sullivan and Delaware counties. “There are no jobs. The economy is terrible. There’s nothing going on.”

He decried Cuomo’s recent decision not to bring a casino to the region, and noted that Conklin and the 14 other towns in the Southern Tier sit on the Marcellus Shale, which is rich in natural gas. Permitting drilling in the region would provide an avenue for new jobs and a way to raise money for local schools and governments, as it has across the border in Pennsylvania, Finch said.

Leaving New York and joining the Keystone State, he added, would also mean lower taxes for businesses and lower insurance payments.

Finch conceded that secession is “far-fetched” — it would require the approval of the New York legislature, the Pennsylvania legislature and the federal government — but said raising the idea helps highlight the region’s discontent with New York’s government, and Cuomo in particular.

Oil producers are taking advantage of the rebound in crude markets to lock in protection against another slump.

They increased their bets on falling prices to the highest level in 4 1/2 years as U.S. inventories of stored oil remained near an 87-year high, while a natural disaster in Canada and militant attacks in Africa curtailed output. Negative sentiment among the group expanded for a third consecutive week, the longest streak since February.

Energy companies from EOG Resources Corp. to Chesapeake Energy Corp. used financial instruments such as futures, swaps and collars to guard against another fall in prices. West Texas Intermediate oil, the benchmark U.S. crude, has gained more than 75 percent since hitting a 12-year low in mid-February.

“They’ve been getting more and more active in hedging ever since the first initial jump,” said John Kilduff, a partner at Again Capital LLC in New York. Oil producers “appear to be drawn to this market as everyone tries to stay alive through the downturn,” he said.

Producers and merchants increased their short position in WTI by 3.8 percent for the week ended May 10 to the highest since September 2011, according to data from the Commodity Futures Trading Commission.

In western Canada, raging forest fires closed in on Alberta’s vast oil sands, prompting tens of thousands of residents to flee and interrupted shipments of the thinning agent used to help move the extra-heavy crude produced there through pipelines.

http://www.bloomberg.com/news/articles/2016-05-15/oil-drillers-betting-three-month-crude-rally-is-nearing-the-end

China processed record crude on a daily basis in April as the nation’s independent plants boosted operations amid a surge in oil imports.

Crude refining in the world’s second-largest oil consumer increased 2.4 percent from a year earlier to 44.75 million metric tons last month, or about 10.93 million barrels a day, according to data released by the National Bureau of Statistics on Saturday. That’s up 1.2 percent from the previous record of 10.8 million barrels a day in December.

Independent refineries, known as teapots, have been increasing runs after they were allowed to import crude oil. The utilization rate at the plants in eastern Shandong province increased to 53 percent of capacity as of April 29, according to industry website Oilchem.net. That’s the highest since at least August 2011, when Bloomberg started compiling the data.

“Teapot refineries have raised operation rates significantly this year,” Amy Sun, an analyst with ICIS China, a Shanghai-based commodity researcher, said by phone. “This has resulted in much higher oil processing than we expected in recent months.”

China’s inbound oil shipments in April rose 3.2 percent from the previous month to 7.96 million barrels a day and near the February high. Crude imports through Shandong’s Qingdao port surged to a record in March and accounted for about 30 percent of the country’s total.

China’s crude output fell 5.6 percent from a year earlier to 16.59 million tons (4.05 million barrels a day), Saturday’s data showed. Natural gas production climbed 5.6 percent to 10.6 billion cubic meters and coal output declined 11 percent to 268 million tons.

http://www.bloomberg.com/news/articles/2016-05-14/china-processes-record-crude-on-boost-from-independent-refiners

Asia's refined product markets are being swamped by a wave of gasoline as a long-lasting crude oil glut spills into the one fuel market refiners had hoped would save them, ruining margins and dragging down share prices across the region.

Singapore's benchmark gasoline margins - long the bright spot for Asia's oil processors amid rock-bottom profits earned on diesel, jet and shipping fuel - have more than halved since the beginning of 2016, when they were near at least a seven-year high for first-quarter values. 

With gasoline's slump, overall refining margins in Singapore have dropped nearly 60 percent since the beginning of the year, buckling under the weight of the fuel products pumped out of oil plants as refiners feasted on crude prices that were as low as three-quarters of their mid-2014 levels.

Besides dragging down crude refiners' share prices, this drop in margins could also undercut global oil prices that have struggled up from 12-year lows hit early this year, and refiners say the situation will not improve anytime soon.

"We don't expect 2016 refining margins to improve. In fact, the situation could worsen from second-half of 2016 as the peak maintenance season in Asia will be over," said KY Lin, spokesman for Formosa Petrochemical Corp, meaning that more fuel would hit the market once shutdown refineries restart.

In a sign of just how bloated the market has become, Singapore's light distillate stocks, which includes gasoline, hit nearly 16 million barrels late last month, the highest on record, according to government figures. The stocks have dropped back since, but there's still enough gasoline in the tanks to fill up almost 50 million average-sized vehicles.

Lin said some of the main contributors to the gasoline glut have been private Chinese refiners, known as "teapots", that have started exporting their surplus petrol, overwhelming demand.

The collapsing margins are a sharp reversal from expectations of a few months ago. Just in February South Korea's SK Innovation, a major Asian refiner, said its margins would remain strong as demand for gasoline and naphtha offset weaker markets for other fuels.

Formosa Petrochemical operates a 540,000 barrels per day (bpd) refinery in Mailiao, Taiwan, the island's largest and one of the 10 biggest in Asia. Formosa produces about 3 million barrels of gasoline a month, over half of which it usually exports.

http://www.reuters.com/article/oil-refinery-glut-idUSL3N18A3HL

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The 13 nations of the Organization of Petroleum Exporting Countries pumped 32.44 million barrels a day in April, slightly less than will be required in the the third quarter. Production rose as gains in Iran and Iraq compensated for losses in Nigeria and Kuwait. Investment by the global oil industry through 2018 will slump to less than half the amount spent from 2012 to 2014 following the collapse in prices, OPEC said.

Oil prices have rebounded more than 75 percent from the lows reached in February as U.S. shale production falters, signaling that Saudi Arabia’s strategy to re-balance oversupplied world markets is taking effect. OPEC, which failed to complete an accord with non-members last month on capping output, has no current plans to revive supply limits when ministers meet on June 2, six delegates said on May 4.

“It is widely recognized that an adequate return on investment is needed to maintain production levels, as well as to allow for the growth,” the group’s Vienna-based research department said in the monthly report. “A return to balance is a shared interest among consumers and producers alike.”

While the group’s supply has typically exceeded the required amount in recent months, April output is about 380,000 barrels a day below the 32.8 million that OPEC estimates will be needed in the third quarter. That potential shortfall is a further indication the organization’s policy is working.

Global oil demand will increase by 1.2 million barrels a day, or 1.3 percent, this year to 94.18 million a day, according to the report. Supplies from outside the group will shrink by 740,000 barrels a day to 56.4 million.

http://www.bloomberg.com/news/articles/2016-05-13/opec-keeps-oil-market-outlook-unchanged-before-june-meeting

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The world’s biggest oil companies are borrowing record amounts of money to cope with a slump in crude prices. Luckily, there’s rarely been a better time to go on a debt binge.

Exxon Mobil Corp., Royal Dutch Shell Plc, Chevron Corp., Total SA, BP Plc and Eni SpA have together sold the equivalent of $37 billion of bonds this year, about double the amount issued in the period before oil prices plunged, according to data compiled by Bloomberg. While this is stretching their balance sheets and even resulting in credit-rating downgrades, the lowest debt costs in a year are softening the blow.

“They’re making hay while the sun shines,” benefiting from improved investor sentiment as oil prices have recovered, said Alex Griffiths, a London-based managing director at Fitch Ratings Inc. “Treasurers are making use of good market conditions to maintain liquidity buffers.”

Even though oil has increased from the lows of January as a global surplus diminished, prices are still less than half their level two years ago. The world’s biggest companies have sought to keep investors happy through the downturn by maintaining dividend payouts and investing for the future at the same time. With profit and revenue sharply down, the only way to do that is borrow more money.

Debt markets are opening up for companies worldwide as central banks in the U.S. and Europe keep benchmark borrowing rates low. Investors currently demand a return of 3.09 percent to hold dollar-denominated debt of companies with an investment-grade rating, the lowest level in a year, according to data from Bank of America Merrill Lynch. For euro securities, they seek 1.01 percent, close to the record low of 0.93 percent in March 2015, the data show.

At the same time, the premiums for credit default swaps for the biggest U.S. and European oil companies, which investors use to protect against defaults, have dropped from the highest level in at least five years.

“The majors still have strong balance sheets to raise debt at competitive rates so they can manage their capital agenda, for example, to maintain dividends and strategic capital investments,” said Jon Clark, leader for oil and gas transaction-advisory services in Europe, the Middle East and Africa at Ernst & Young LLP. “It’s also a good opportunity to refinance more expensive debt.”

Oil’s slide has forced companies to cut billions of dollars of spending, delay or cancel projects and renegotiate contracts, yet they continue to make dividends their top priority. Shell hasn’t cut its payments to investors since at least the Second World War. Exxon even increased its payout a day after losing its coveted AAA credit rating last month.

http://www.bloomberg.com/news/articles/2016-05-13/big-oil-gobbles-up-record-levels-of-debt-as-borrowing-costs-fall

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China's independent refiners have switched to buying more oil from Africa and Latin America instead of large volumes of Russia's ESPO crude as they have struggled to cope with the excess light fuels that come with processing the grade.

The change in preference shows the transient nature of crude purchases from the new Chinese buyers, also known as teapots, who are still trying out different crude grades to identify suitable types for their refineries.

The teapots' tapering demand for the Russian grade pushed spot premiums for June-loading cargoes to as low as $2 a barrel from as high as $5.60 a barrel for April loaders, catching some traders who sell to teapots off guard.

Lured by the short shipping distance and six-year low crude prices, teapots paid strong premiums to secure Russian ESPO oil in the first quarter.

Spurred by the strong teapot demand, Russia overtook Saudi Arabia as the biggest crude exporter to China for four months in late 2015 and again in March.

Nearly half of the Russian ESPO exports landed at the port of Shandong, where most of the teapots are located, each month between February and April, data from Reuters Trade Flows showed.

But Shandong's imports may fall in the coming months as some refiners found the crude too light, several trade sources said. High crude inventories and large supplies waiting to offload at congested ports also reduced teapots' appetite for ESPO, they said.

"ESPO produces too much naphtha. The oil wasn't economical to us as the ship size was too small and premium was high," a trader from one of the teapot refiners said.

The independent refiners, which had relied on residual fuel as a feedstock before Beijing opened up crude imports last year, were mostly designed to maximise production of middle distillates such as diesel and jet fuel instead of light products like naphtha and gasoline.

ESPO has an API gravity of 35.57 degrees, much lighter than Oman oil, a favourite among teapots. Refiners would typically draw about 20 percent of naphtha from a barrel of ESPO after processing versus about 15 percent from an Oman barrel.

The naphtha cannot be processed further at teapots' facilities, four sources said. A consumption tax of 40 yuan ($6.16) per tonne for selling the naphtha as a petrochemical feedstock has deterred the teapots from selling the fuel, sources said.

Still, the teapots' ESPO demand may improve as several of them are building new units to further process the naphtha, including the largest, Shandong Dongming Petrochemical, the sources said.

Dongming will complete a 24,000 barrels-per-day reformer at its Lianyungang refinery in eastern Jiangsu province by the end of 2016 that will process the naphtha to produce aromatics for gasoline blending or domestic sales, sources close to the matter said. Qirun Chemical Industries Co will also bring online a new reformer next year, a company official said.

In the meantime, teapots are seeking alternatives, with West African crude arrivals to Shandong rising 35 percent in April from December and deliveries from South America increasing 50 percent over the same time frame, Reuters Trade Flows data showed.

http://www.reuters.com/article/russia-china-oil-idUSL3N17W3NJ

Oil and gas producer Exco Resources Inc said on Friday it formed a special committee to evaluate strategic alternatives, including in-court or out-of-court restructuring.

Exco joins dozens of U.S. shale companies forced to restructure debt after a near-60 percent slump in oil prices since mid-2014 eroded cash flows.

The Dallas-based company had long-term debt of $1.32 billion as of March 31, according to a regulatory filing.

The Special Committee will also evaluate options such as divestitures and restructuring of its gathering, transportation and certain other contracts, the company said.

Exco has retained Akin Gump Strauss Hauer & Feld LLP as its legal adviser.

http://www.reuters.com/article/exco-resources-strategicalternatives-idUSL3N18A48C

Oil and gas producer InterOil Corp's former chief executive, Phil Mulacek, and other shareholders nominated five independent directors to the company's board.

The shareholders, who collectively own about 7.6 percent of InterOil, said in a statement "the incumbent board has presided over a massive destruction of shareholder value."

Up to Thursday's close, the company's shares had fallen more than 38 percent in the last 12 months.

InterOil on Friday reported a smaller net loss for the first quarter ended March 31, helped by lower exploration and finance costs.

http://www.reuters.com/article/us-interoil-board-idUSKCN0Y41HV