Russia’s Rosneft PJSC could be worth as much as $130 billion, Chief Executive Officer Igor Sechin said as President Vladimir Putin is reported to consider selling a stake in the state oil giant to China and India.

The producer is “not afraid” of Chinese partners, including China Petroleum & Chemical Corp. and China National Petroleum Corp., Sechin told state television station Rossiya-24, citing existing partnerships with both companies. Rosneft is not currently talking to Chinese or Indian companies about a stake sale though, he said. The company’s current market value is about $55 billion.

Selling a stake in Rosneft, which pumps more crude than Exxon Mobil Corp., would help Putin raise cash to plug a deficit in the nation’s budget as a collapse in oil prices has the country facing a second year of recession. Sechin has voiced a preference for selling a stake to a strategic partner as opposed to a public share offering that would be more susceptible to political instability. Rosneft is among companies sanctioned by the U.S. over Russian support for an insurgency in Eastern Ukraine.

Russia has been seeking buyers for 19.5 percent of Rosneft and has indicate it would prefer a joint deal with China and India, the two nations driving growth in global energy demand, two people familiar with the matter said. There’s “no single preferred option” for the deal, Kremlin spokesman Dmitry Peskov told reporters on Monday.

Rosneft would like to avoid any attempt by the state to raise funds via taxation, Sechin said. The industry requires the opposite, easing taxation, especially with regards to refining inside Russia, he said.

https://www.energyvoice.com/marketinfo/112781/sechin-says-rosneft-worth-130bn-putin-mulls-sale/

Russia's biggest oil producer Rosneft sees its position in the European market stable despite concerns on growing competition from Middle East crude producers for market share, while it pushes more actively for a greater role in new Asian markets where the competition is much higher.

The company continues to show solid operational and financial results despite the tough economic situation and is aiming at strengthening its positions on the markets, Rosneft CEO Igor Sechin said in an interview with the state-run Russia 24 TV network broadcast Wednesday.

He estimated the crude price was likely to remain volatile in the near future, although growing to around $50-$55/b by the end of this year and possibly to $65/b by end-2017.

"We are glad that we've managed to maintain our positions on traditional markets, primarily in Europe," Sechin said pointing out to recent agreements with PKN Orlen to increase deliveries to Poland and the Czech Republic.

"Despite some concerns, we consider our positions [in Europe] quite stable because we've linked with the consumers by the infrastructure, including southern and northern branches of the Druzhba pipeline, which provide a competitive advantage for us," he added.

Some Russian officials raised concerns late last year over maintaining market share as low oil prices and rising production by some key competitors was threatening Russian supplies to Europe. Sechin said then Saudi Arabia was actively dumping to win new markets in Europe.

PKN's refineries primarily refine sour Russian Urals crude, which is delivered through the Druzhba pipeline, but the Polish company recently started looking more actively for alternative grades, including from Saudi Arabia and Iraq.

In May, PKN Orlen signed a deal with Saudi Aramco to receive 200,000 mt/month of crude oil through December 31 this year, saying this was "the first direct long-term contract with a supplier from the Gulf region in the history of our company" which demonstrated the company's efforts to diversify its energy sources.

But Rosneft also signed a number of new deals in late 2015 and early this year with European refineries to send additional volumes to Germany, Poland and the Czech Republic in 2016 and 2017.

Due to those deals, Rosneft estimated in March its oil deliveries to European consumers via the Druzhba pipeline would rise by 3-5% from 2015 up to about 28.7 million-29.0 million mt -- 574,784 b/d-580,790 b/d on average.

Rosneft and PKN Orlen agreed last week to extend a contract on crude supplies for a period of three years to June 30, 2019.

http://www.platts.com/latest-news/oil/moscow/rosnefts-crude-oil-market-share-in-europe-steady-26476320

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A Dutch advisory body has advised the government to make additional cuts to production at the Groningen gas field to reduce the risk of earthquakes in the northern province, local media reported on Wednesday.

The Netherlands' National Mines Inspectorate has advised the government to cap production at 24 billion cubic meters (bcm) of gas annually, De Telegraaf newspaper said in its overnight edition, citing a recommendation to Economy Minister Henk Kamp.

The Cabinet is expected to announce its production plans for the field for the period after Oct. 1, 2016 on Friday, after several cuts in the past year have left it at the rate of 27 bcm on an annualized basis.

The final decision will be based on the recommendations from the agency, Groningen's operator NAM, a joint venture of Royal Dutch Shell and Exxon, and six other parties.

A majority of lawmakers Dutch parliament have called for production to be cut as far as possible to reduce earthquakes in the northern province caused by the gas extraction.

Groningen gas has supplied almost 10 percent of demand in the European Union and announcements to cut production have led to short term spikes in gas prices.

http://www.reuters.com/article/netherlands-energy-groningen-idUSL8N19E0XN

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Australia is in pole position to capture a bigger piece of the growing Asian condensate market, with producers pumping new supplies of the ultra-light oil as natural gas output soars to feed the nation's mega LNG projects.

An Australian wave of liquefied natural gas supply has helped pull Asian LNG prices down by 75 percent since 2014, so selling more lucrative condensate to Asian buyers could give a lifeline to less profitable projects.

Australia's Ichthys LNG export project, for instance, operated by Japan's Inpex Corp, could produce more than 100,000 barrels per day (bpd) of condensate when it starts up next year.

"The fact that the project is liquid-rich is one of the reasons that this project is economically in good standing," an Inpex spokesman said, adding that the company has started marketing its condensate, primarily to customers in Asia.

Condensate is a light oil produced in association with natural gas, and its consumption is rising across Asia as new refineries or splitters come online to meet strong demand for it to be used to make the chemical feedstock naphtha.

The circle of condensate suppliers is small, though, and Australia has the inside track on selling to Asia, especially with some Middle East producers building their own splitters.

"The outlook is quite pessimistic (for buyers) as sweet condensate supplies are very limited," said an Asian oil buyer who declined to be named due to company policy.

Qatar, a traditional exporter to Asia, plans to divert a third of its output to its own splitter by January.

Rival producer Iran could fill some of that shortfall, and it has stepped up exports to South Korea following the lifting of sanctions against Tehran, hitting a record in June.

Quality issues with Iran's condensate, however, limit its attraction to buyers. The outlook on its supplies is also murky on delays in the start-up of its splitter projects and a ramp-up of production from its South Pars field.

Premiums for Qatari condensate loading in February hit a record, but have since fallen back on weak naphtha margins. The rise in condensate use as splitters start up from September could drive premiums higher again, traders said.

Combined condensate supplies from Ichthys and Gorgon of almost 140,000 bpd will initially meet a rise in Asian splitter capacity of 160,000 bpd in Taiwan and South Korea between late 2016 and early 2017.

http://www.reuters.com/article/australia-oil-condensate-idUSL4N1952KA

Liquefied natural gas (LNG) from the United States is set to do battle in Europe but Russia's Gazprom is setting the stage, preparing a cold reception for the super-cooled gas set to cross the Atlantic.

A weakened rouble has lowered Gazprom's production costs by a fifth while its profits on dollar-denominated gas sales to Europe last year doubled in rouble terms.

Gazprom has managed to increase sales despite a push by the European Union to curb Russian energy imports, using discounts, renegotiation of unpopular oil-linked contracts and gas sales via auctions.

Spurring Gazprom's charm offensive is a looming showdown as a wave of U.S. gas is set to reach Europe's shores beginning next year.

U.S. exporters led by Cheniere Energy are expected to have 83 billion cubic metres (bcm) of gas ready for sale by 2019. That's about 20 percent of Europe's current annual gas needs.

That threatens to exacerbate already significant global gas oversupply, with new producers squaring up against established players for market share and driving prices lower.

"We are at the start of a new chapter in European gas markets," Fatih Birol, executive director at the International Energy Agency said recently, as U.S. and other supplies fight to gain access.

But Gazprom, for now, appears confident it can see off the challenge and even raise its European market share, which stood at 31 percent in 2015, helped by declining output in Europe, primarily in the Netherlands and Britain.

As U.S. producers crank up exports, more than a dozen LNG cargoes have been exported, yet so far just one has reached Europe as other markets offer better returns.

"Longer term, Asia will remain more attractive for U.S. gas. No U.S. businessman in the right state of mind - being already heavily indebted and having put all his assets as collateral with banks - will deliver gas to Europe at a loss," Gazprom's Deputy Chief Executive Alexander Medvedev told Reuters last week.

Gazprom has looked to bolster demand in Europe through discounting and renegotiating its 25-year, oil-linked supply deals.

After years of tough negotiations, it has reached deals with long-term buyers including France's Engie and Germany's Uniper, a unit of E.ON.

Cheaper oil prices have helped lower Russian gas prices, and that has spurred demand, with Gazprom deliveries to Europe and Turkey up 20 percent in the first quarter.

"Russian gas is low cost and will remain below U.S. gas prices," said Claudio Descalzi, chief executive of Italy's Eni , the biggest buyer of Russian gas in Europe.

And Gazprom seems willing to fight for greater share of the EU market given dwindling sales in former Soviet states and still distant prospects of piping gas to China, according to Poland's Centre for Eastern Studies.

European gas hub prices stand at around 35 pence/therm currently. A fall to 21 pence would hurt Gazprom's margins but more critically would make it unprofitable for U.S. supplies to cross the Atlantic.

As much as half the production capacity of U.S. LNG players could be shut-in during the summer and at other times if Gazprom simply keeps flowing gas to Europe at current rates, said analyst Stephen O'Rourke at consultancy Wood Mackenzie.

Gazprom has 100 bcm per year of spare production capacity at its disposal, or roughly a quarter of Europe's annual needs, according to the Oxford Institute of Energy Studies.

And like Saudi Arabia has done in oil, Gazprom has shown it can use its market dominance to squeeze its competitors.

After Lithuania opened its Independence LNG import terminal at the end of 2014, for example, Gazprom cut prices to Lithuania and has held an auction for the Baltic states in a bid to boost consumption.

"We have such low production costs that we will always be able to cut the selling price by a dollar or two when it comes to fighting off a rival," said a senior source at Gazprom.

http://www.reuters.com/article/europe-gas-gazprom-idUSL8N19D37B

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Noble Energy, the operator of the giant Leviathan Gas field in Israel, has been given a nod by its partners to enter into a front-end engineering design contract for work for the offshore production platform for the field.

Delek Drilling and Avner Oil Exploration on Wednesday said they have authorized Noble Energy to enter into a $120 million deal for the production platform FEED, as approved in the previously announced development plan.

While the partners did not say who the FEED contractor was, it has been reported that Wood Group Mustang has been selected for the job.

The approved Plan of Development (POD), submitted earlier this year, envisions a subsea system that connects production wells to a fixed platform located offshore with tie-in onshore in the northern part of Israel. The fixed platform’s initial capacity is anticipated to start at 1.2 billion cubic feet of natural gas per day (Bcf/d) and is expandable to 2.1 Bcf/d.

Noble’s partners also said on Wednesday that the partnership is working to close other agreements for the purchase of equipment and/or services related to the Development Plan, as approved, and they expect to sign off on them in the near future.

“In this way, the Leviathan Partners are continuing to work to complete the required actions in order to obtain a Final Investment Decision (FID), based on the Development Plan, in Q4 2016 and for that purpose are advancing negotiations at various stages with potential customers, both in the local market and for export, to sign contracts for the supply of natural gas from the Leviathan field,” the Israeli partners said.

First gas from the Leviathan field is expected to start in the fourth quarter of 2019.

Noble Energy operates Leviathan with a 39.66 percent working interest. Other interest owners are Delek Drilling with 22.67 percent, Avner Oil Exploration with 22.67 percent, and Ratio Oil Exploration (1992) Limited Partnership with the remaining 15 percent.

http://www.offshoreenergytoday.com/leviathan-partners-approve-120m-for-production-platform-feed/

Iran's condensate exports in July are expected to fall to the lowest in five months as major buyer South Korea scales back purchases of the ultra-light oil, trade sources said on Thursday.

Robust demand for condensate, from South Korea in particular, helped drive a recovery of Iranian oil exports to a 4-1/2-year high in June, although the volume is expected to dip in July.

Loadings of Iranian condensate in June rose to about 408,000 barrels per day, the highest volume since sanctions on Iranian oil exports were lifted in January.

For July, Iranian condensate exports are expected to fall by 38 percent to about 252,000 barrels per day (bpd), the sources said citing loading data, as Asian refiners replace the ultra-light oil with cheaper naphtha.

The volume destined for South Korea in July is expected to fall by nearly two-thirds to 84,000 bpd from a record high in the previous month, as key buyer SK Energy switched to process cheaper naphtha, they said.

Condensate is processed at splitters to produce mainly naphtha, a petrochemical feedstock.

Benchmark Singapore naphtha refinery margins from refining a barrel of Brent crude have already tumbled more than 60 percent since the beginning of the year to around $53 per tonne on June 22.

Still, the start-up of new and existing splitters in Asia and the Middle East is expected to drive demand for Iranian condensate later in third quarter.

"There could be a rebound (in condensate prices) in September because naphtha cracks are showing some signs of a rebound," a trader with a North Asian firm said.

South Korea's Hyundai Chemical will also need to buy more condensate from September onwards for its new splitter, which could come into operation in October, he said.

The petrochemical joint venture between Hyundai Oilbank Co [INPTVH.UL] and Lotte Chemical has already purchased Qatari condensate and is in talks with the National Iranian Oil Company for long-term supplies.

A planned restart of Singapore's Jurong Aromatics complex and the commissioning of Qatar's new splitter could tighten Qatari condensate supplies and drive demand for Iranian oil, traders said.

http://www.reuters.com/article/us-iran-oil-condensate-idUSKCN0Z90C7

Petroleos Mexicanos and private-equity firm First Reserve Corp. are finalizing terms on a sale and leaseback agreement intended to provide the beleaguered state-owned oil producer with much needed capital, according to two people with knowledge of the discussions.

Pemex and First Reserve are set to sign an agreement valued at more than $500 million as soon as this week, according to one person familiar. As part of the agreement, First Reserve will buy midstream assets from Pemex and then lease them back to the Mexican producer, which will continue to operate the sites, according to the people, who asked not to be identified because they were not authorized to speak publicly.

The person also said Pemex has closed its similar $1.2 billion sale-leaseback deal with KKR & Co. and that the funds entered Pemex’s accounts as of last week. Reuters had reported Thursday that the KKR deal was close but not yet finalized. The KKR deal was also mainly for midstream assets, as well as a non-drilling oil platform in Tabasco, the source said, declining to name other specific facilities included in either agreement.

The two deals come as Pemex looks to raise immediate capital to pare debt during a difficult period. Pemex has recorded 14 straight quarterly losses, seen oil production decline for 11 straight years and had $93 billion in debt excluding pension liabilities as of the first quarter.

The company has said for several months it plans to sell assets and form joint ventures with private partners to generate cash and boost declining crude production. Pemex Chief Executive Officer Jose Antonio Gonzalez Anaya said in an April 19 interview at Bloomberg’s New York office that the company was looking at possible deals with KKR and First Reserve, saying at the time the potential sale and leaseback agreement with First Reserve would be worth "a bit more" than $500 million.

A spokesman for Pemex declined to comment on the status of the reported agreements. Greenwich, Connecticut-based First Reserve, which announced a $1 billion agreement with Pemex in April to mutually invest in Mexico energy infrastructure, did not return phone calls or messages seeking comment. New York-based KKR also did not immediately respond to a request for comment.

http://www.bloomberg.com/news/articles/2016-06-22/pemex-first-reserve-said-to-near-500-million-asset-deal

                                             Last Week       Week Before     Last Year

Domestic Production '000........ 8,677               8,716               9,604

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

U.S. crude oil refinery inputs averaged 16.5 million barrels per day during the week ending June 17, 2016, 188,000 barrels per day more than the previous week’s average. Refineries operated at 91.3% of their operable capacity last week. Gasoline production increased last week, averaging 10.3 million barrels per day. Distillate fuel production decreased last week, averaging about 5.0 million barrels per day.

U.S. crude oil imports averaged over 8.4 million barrels per day last week, up by 817,000 barrels per day from the previous week. Over the last four weeks, crude oil imports averaged 7.9 million barrels per day, 13.6% above the same four-week period last year. Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 876,000 barrels per day. Distillate fuel imports averaged 146,000 barrels per day last week.

U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased by 0.9 million barrels from the previous week. At 530.6 million barrels, U.S. crude oil inventories are at historically high levels for this time of year. Total motor gasoline inventories increased by 0.6 million barrels last week, and are well above the upper limit of the average range. Finished gasoline inventories increased while blending components inventories decreased last week. Distillate fuel inventories increased by 0.2 million barrels last week and are well above the upper limit of the average range for this time of year. Propane/propylene inventories rose 1.2 million barrels last week and are near the upper limit of the average range. Total commercial petroleum inventories increased by 5.2 million barrels last week.

Total products supplied over the last four-week period averaged over 20.2 million barrels per day, up by 2.1% from the same period last year. Over the last four weeks, motor gasoline product supplied averaged over 9.7 million barrels per day, up by 3.9% from the same period last year. Distillate fuel product supplied averaged 3.8 million barrels per day over the last four weeks, down by 1.6% from the same period last year. Jet fuel product supplied is up 2.6% compared to the same four-week period last year.

Cushing inventory drops 1.3 mln bbl's

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

A federal judge struck down the Obama administration’s signature effort to regulate hydraulic fracturing on public lands, putting another of the president’s environmental initiatives in legal limbo months before he leaves office.

The ruling, issued by Wyoming-based District Court Judge Scott W. Skavdahl late Tuesday, blocks the Interior Department’s Bureau of Land Management from enforcing a 2015 rule that set detailed standards for the construction of oil and gas wells drilled into some 700 million acres of federal land. While the new ruling is almost certain to be appealed, it follows similar setbacks for other pieces of President Barack Obama’s environmental legacy, including a Supreme Court stay of the Clean Power Plan that forces states to slash carbon dioxide emissions from power plants.

The decision also presages a tough path ahead for another regulation still on the horizon: a Bureau of Land Management proposal to block energy companies from venting or burning natural gas from wells burrowed into public land.

The Interior Department in a e-mailed statement called the ruling "unfortunate," because "it prevents regulators from using 21st century standards to ensure that oil and gas operations are conducted safely and responsibly on public and tribal lands."

The regulation has never gone into force, amid a legal challenge from oil industry groups and four states -- Colorado, North Dakota, Utah and Wyoming -- that argued the measure duplicated local drilling requirements and boosted the cost of extracting oil and gas from federal lands.

On Tuesday, Skavdahl said the fracking rule exceeded the Bureau of Land Management’s powers.

The legal question is “not whether hydraulic fracturing is good or bad for the environment," Skavdahl said, but whether Congress gave the Interior Department the power to regulate it.

“Congress has not delegated to the Department of Interior the authority to regulate hydraulic fracturing," Skavdahl wrote. "The BLM’s effort to do so through the fracking rule is in excess of its statutory authority and contrary to law."

Independent Petroleum Association of America spokesman Neal Kirby said the decision reaffirms the group’s view that "states are -- and have for over 60 years been -- in the best position to safely regulate hydraulic fracturing."

The Bureau of Land Management faces similar questions about its authority as it moves to block companies from burning natural gas or sending it unchecked into the atmosphere as a less-valuable byproduct of crude at oil wells on federal land. The agencyproposed new limits on that practice of venting and flaring in January, and has been aiming to make them final later this year, even as the EPA separately moves to throttle the release of methane from oil and gas sites nationwide.

"BLM is extremely vulnerable as it overreaches well beyond its public lands mandate and into EPA’s jurisdiction," Sgamma said by e-mail. "With the venting and flaring rule, BLM is attempting to assert Clean Air Act authority without following any of the constraints of the Clean Air Act. "

http://www.bloomberg.com/news/articles/2016-06-22/federal-judge-strikes-down-obama-s-effort-to-regulate-fracking

In August 2013, Moxie Energy of Vienna, VA sold the permits/rights to build a new Marcellus gas-powered electric generating plant in Bradford County, PA to Panda Power Funds of Dallas, TX.

The project was renamed from Moxie Liberty to Panda Liberty.

A few months later, in December 2013, Moxie sold a second Marcellus-gas fired electric plant project to Panda, this one slated to be built in Lycoming County, PA.

That project was renamed from Moxie Patriot to Panda Patriot.

Panda contracted with Gemma Power Systems (Connecticut) to build both 829-megawatt plants. We have some terrific news to share: Gemma reports completing both facilities and has turned them over to Panda to begin operation!…

http://marcellusdrilling.com/2016/06/panda-powers-2-pa-marcellus-fired-electric-plants-complete/