A community group is taking on Federal Environment Minister Greg Hunt’s approval of 6 100 coal seam gas (CSG) wells in Queensland, a move which the industry has slammed as “delaying tactics”. The Western Downs Alliance on Thursday started legal proceedings to challenge oil and gas major Santos’ Gladstone liquefied natural gas (GLNG) gas field development, which is related to the GLNG project and involved the progressive development of CSG resources in Surat and Bowen basins. 

The community group lodged a case in the Federal Court of Australia against the approval under the national environmental law, arguing that the Minister’s approval was unlawful because he ignored plans by Santos to discharge large volumes of CSG waste water into the Dawson river. 

“The Santos plan for 6 100 new CSG wells in Queensland is a recipe for disaster for the Great Artesian basin and for landholders who depend on it,” said Western Downs Alliance spokesperson Sarah Moles. She stated that the environmental-impact statement for the project predicted that it would impact on 73 water bores used by landholders in the area, and would extract 219-billion litres of water over the life of the project, producing 22-billion litres of salty brine as waste.

 “Minister Hunt assessed and approved this development under the Water Trigger that was put into the national environmental law in June 2013 specifically to protect our water resources from large coal and CSG development. “However, in this case it appears from the documents that Minister Hunt didn’t assess the impact that the inevitable release of large volumes of waste water from the CSG project into the Dawson river would have,” Moles stated.

http://www.miningweekly.com/article/federal-approval-of-santos-queensland-csg-well-expansion-challenged-2016-06-16

EU imports of ethylene in the first four months of the year surged 235% compared with the first four months of 2015, according to the latest Eurostat data.

Imports rose from 42,557 mt in January-April 2015 to 142,590 mt in the same four months of 2016.

This import figure is expected to rise further.

At the end of May a broker reported that a 6,700 mt ethylene cargo had been fixed for delivery from Houston into Europe, arriving in early June, with an open arbitrage window between the regions.

EU polyethylene imports in the first four months of the year rose 52% compared with Jan-April 2015, according to the latest Eurostat data released.

Imports rose to 1,181,435 mt in the first four months of this year from 777,961 mt over the same 2015 period.

High density PE imports rose to 528,475 mt from 365,554 mt. Low density imports rose to 248,620 mt from 180,202 mt. Linear low density polyethylene imports rose to 404,340 mt from 232,204 mt.

http://www.platts.com/latest-news/petrochemicals/london/eu-ethylene-imports-surge-235-pe-imports-up-52-26471797

Halliburton, Schlumberger and Weatherford are among nine companies that submitted bids to carry out hydraulic fracturing operations for Ukraine's largest natural gas producer UkrGazVydobuvannia (UGV), the company said Thursday.

UGV, a 100% owned subsidiary of state-owned Naftogaz Ukrayiny, plans to start using fracking techniques in 2016-2017 in order to boost domestic gas output as Ukraine seeks to eliminate gas imports by 2020.

"Service companies with well-known names, teams of experienced professionals and decades of accumulated experience in the most extreme conditions are willing to come to Ukraine," Oleksandr Romaniuk, the head of UGV, said in a statement. "They believe our company can make a breakthrough in the Ukrainian gas production."

UGV plans to buy 100 fracking jobs, but will increase the practice if the technique achieves good results.

Ukraine aims to increase gas output by 7.5 Bcm to 27.4 Bcm/year in 2020 that together with energy conservation measures would eliminate the need to import gas, energy and coal industry minister Ihor Nasalyk said last month.

UGV plans to invest Hryvnia 80 billion ($3.2 billion) in exploration and drilling during the next four years in order to increase output to 20 Bcm/year in 2020, up from 14.5 Bcm/year in 2015, the company said.

Russia’s Gazprom said it is looking the possibility of cooperating in the small-scale LNG market with Fluxys of Belgium.

Representatives of the two companies, Gazprom’s head, Alexey Miller, and Pascal De Buck CEO of Fluxys, discussed the cooperation at a meeting in St. Petersburg, Gazprom said in a statement.

Among other issues, Miller and De Buck discussed the possibility of jointly participating in the construction and operation of LNG receiving terminals, LNG filling stations and bunkering infrastructure in Europe.

Additionally, the two companies discussed the option of using LNG as an energy resource for autonomous gasification purposes.

The talks are a continuation of a framework agreement signed at the end of March, showing the two companies’ intentions to cooperate in the European small-scale LNG market.

http://www.lngworldnews.com/gazprom-fluxys-advance-talks-on-small-scale-lng-cooperation/

The world’s biggest oil importer. The title nobody wants.

For decades the U.S. held undisputed rights to the crown. Last year, China squeaked ahead for the first time amid growing demand and as rising U.S. shale production displaced overseas deliveries. The Middle Kingdom looked poised to become the center of the crude importing world.

Then $30 oil happened. U.S. drillers shut the most rigs in modern history, production began to fall and imports have rebounded. Chinese oil firms also shuttered output and kept demand growing. Now the two are neck and neck.

“I don’t think any country would want to boast about being the world’s largest importer of crude,” said John Driscoll, chief strategist at JTD Energy Services Pte in Singapore. “Who gets more nervous during OPEC meetings? Who’s more vulnerable to supply disruptions, geopolitics or resource nationalism?”

The one group with no reason for dismay is the Organization of Petroleum Exporting Countries, which needs buyers to soak up a supply glut that has cut prices in half from two years ago.

The U.S. imported 8.04 million barrels of oil a day in March, according to the Energy Information Administration, the most since August 2013 and about 330,000 more than China did in the same period. U.S. output has fallen 5.9 percent since peaking in April 2015, and drillers have idled 80 percent of the country’s oil rigs since October 2014.

The increase in U.S. imports comes after years of declines due to increased shale production. Meanwhile Chinese economic growth has boosted imports four-fold since the beginning of 2005, making the country the second-largest consumer in the world. China imported more oil than the U.S. in a month for the first time in April 2015 and again in February.

China’s crude production dropped by the most in 15 years in May as producers from PetroChina Co. to Cnooc Ltd. reduce drilling in unprofitable fields. Lower domestic output will increase the country’s dependence on imports from the Middle East and Russia, Gordon Kwan, head of Asia oil and gas research at Nomura Holdings Inc. in Hong Kong said in an e-mail. China also recently allowed smaller independent refineries, known as teapots, to begin importing oil directly, creating new buyers.

“I don’t see the U.S. overtaking China on a consistent basis,” said Amrita Sen, chief oil economist for Energy Aspects Ltd. in London. “Especially since China now has sustainably higher crude demand from teapot refineries.”

http://www.bloomberg.com/news/articles/2016-06-17/china-s-march-to-biggest-oil-importer-hits-u-s-shale-roadblock

Canada's energy regulator on Thursday officially launched its 21-month review of TransCanada Corp's Energy East pipeline, which would carry crude from Alberta's oil sands to refineries and export terminals in Eastern Canada.

The National Energy Board, which has faced public criticism over its reviews of major energy infrastructure projects, said its review of the C$15.7 billion ($12.1 billion) pipeline will be unique in that the general public will be given the opportunity to provide input.

The review will also consider upstream gas emissions, following new rules introduced by the ruling Liberals in January on the grounds that public trust needed to be restored in the process for assessing big energy projects.

Prime Minister Justin Trudeau, speaking to reporters on Thursday, said his government had revamped the review process to ensure that all voices were heard and that any decision would be in the best interest of the entire country.

A final recommendation to the federal government, including any proposed conditions on construction, is expected by March 2018, though the regulator said the legislated timeline could be extended if needed.

Canada's resource minister has asked for six-months to review the recommendation before a final federal decision. The pipeline is expected to be in service by 2021.

"This marks an important milestone for the project and is a culmination of TransCanada's efforts to actively communicate and seek input since announcing Energy East three years ago," TransCanada said in a statement.

The 4,500-km Energy East pipeline is supported by Canada's energy industry, which is eager to find new and more lucrative markets for its crude, but opposed by many aboriginal and environmental groups, who worry its construction will hasten the development of Alberta's oil sands.

The province of Quebec has also expressed concerns over the 1.1 million barrel-per-day pipeline, leading TransCanada to scrap plans for an export terminal on the St. Lawrence River and to agree to a provincial environmental review.

The NEB said it will also concurrently review TransCanada's 279 km (173 mile) Eastern Mainline natural gas pipeline, noting that the projects are connected and best served under a single review.

http://www.reuters.com/article/transcanada-neb-energyeast-idUSL1N1981LC

Pioneer Natural Resources Co. will increase its rig count for horizontal drilling in the northern part of its Midland basin Spraberry-Wolfcamp play to 17 from 12 after an acquisition from Devon Energy Corp. and in response to its “improving outlook for oil prices.”

Pioneer agreed to acquire 28,000 net acres, mostly undeveloped, from Devon for $435 million, subject to normal closing adjustments. The acreage is in Martin, Midland, Upton, Reagan, Glasscock, Andrews, Dawson, Gaines, and Howard counties. Net production is 1,000 boe/d, of which 70% is oil.

About 15,000 net acres is in the Sale Ranch area of Martin and northern Midland counties, where Pioneer is active. Combined with its existing acreage, the acquisition will add 70 locations targeting the Permian Wolfcamp B shale to Pioneer’s Sale Ranch drilling inventory in an area where lateral lengths average about 9,000 ft.

A separate 8,000 net acres in the Sale Ranch area and northern Midland County will add about 80 Wolfcamp B locations where lateral lengths are less than 7,500 ft.

Pioneer said it will use the remaining 13,000 net acres acquired from Devon and existing acreage in trades to consolidate its land positions in core areas.

It expects to add its first rig in the area in September, followed by two rigs each in October and November.

http://www.ogj.com/articles/2016/06/pioneer-to-expand-midland-basin-drilling.html

Mexico gas demand will increase 30% by 2021, underpinned by growing gas-fired generation in the power sector.

Wood Mackenzie

Suncor Energy Inc. is offering to repurchase about C$1.5 billion ($1.2 billion) of its own notes from bondholders as the company takes advantage of cash on hand to lower its debt load.

Suncor Energy Ventures Holding Corp. has offered cash for notes with maturities between 2019 and 2042 with coupons as high as 8.2 percent, the company said Thursday in a statement. The offer will expire on June 22. HSBC Securities and J.P. Morgan Securities LLC are the dealer managers.

Chief Executive Officer Steve Williams has focused on maintaining enough cash -- about C$3 billion at the end of the first quarter -- to get the company through the two-year long commodity downturn while allowing it to continue expanding projects, like the Fort Hills bitumen mine, and making purchases including the takeover earlier this year of Canadian Oil Sands Ltd. Suncor has about C$15 billion in total debt, according to data compiled by Bloomberg.

Companies offer to buy back bonds before they mature as a method of reducing overall debt. Borrowing costs for energy companies have fallen relative to similar maturity government debt, as the price of oil has surged since February while global economic concerns push sovereign yields to record lows.

Suncor’s debt-to-capitalization ratio was 29 percent, while net debt to cash flow was 2.5 in the first quarter, Chief Financial Officer Alister Cowan said during an April 28 conference call with analysts. The company has also identified as much as C$1.5 billion worth of assets it can sell.

“We are rigorously managing both our operating and capital expenses while maintaining the strength of our balance sheet,” Cowan said at the time.

The Calgary-based company’s widely traded 7.75 percent coupon notes due in 2019 were trading at 111 cents on the dollar with a 3.74 percent yield, according to data compiled by Bloomberg.

http://www.bloomberg.com/news/articles/2016-06-16/suncor-offers-to-buy-c-1-5-billion-of-notes-in-bid-to-cut-debt

Not long after Michael Krancer was appointed Secretary of the Pennsylvania Dept. of Environmental Protection in 2011, he “requested” (which was more order than request) that municipal sewage treatment plants still accepting and processing Marcellus drilling wastewater stop the practice.

At the time there were 15 plants accepting Marcellus wastewater. Under pressure from Krancer, they ended the practice in May 2011 . His prescience was rewarded. A year later there were far lower bromide levels in PA rivers .

That’s how things should work: the state looks after its own environment. But that means less power for the power-mad bureaucrats in Washington, DC. Right on cue, before Obama is ejected from office next January (thank God!), his out-of-control EPA has issued rules that do what Krancer did without a new law back in 2011.

The EPA has issued a new regulation (i.e. unlegislated law) that declares no municipal sewage treatment plant in any state (not just PA) can accept and process shale wastewater…

http://marcellusdrilling.com/2016/06/epa-bans-disposal-of-frack-wastewater-at-public-sewer-plants/

A wildfire spurred by strong canyon winds north of Santa Barbara has forced the evacuation of an ExxonMobil refinery.

The blaze broke out about 3:30 p.m. Wednesday in Los Padres National Forest and by nightfall surged to 250 acres.

Mandatory evacuations were ordered for Refugio Canyon, Venadito Canyon and Las Flores Canyon, which includes the refinery, the Santa Barbara County sheriff’s office said.

ExxonMobil spokesman Todd Spitler said the company has evacuated nonessential employees, and those that remain are there to help with fireprotection.

“Our primary concern is for the safety of our employees, contractors and the environment,” Spitler said.

http://fuelfix.com/blog/2016/06/16/exxonmobil-refinery-evacuated-in-california-as-wildfire-surges/?utm_content=buffere5543&utm_medium=social&utm_source=twitter.com&utm_campaign=buffer

Crude is stabilizing around $50 a barrel and may only average $55 next year as the global oversupply continues to cap prices, according to two of the world’s top oil executives.

The past few weeks have seen prices “more or less” steady at around $50, Rainer Seele, chief executive officer of Austria’s OMV AG, said Thursday in an interview in St. Petersburg. Central Europe’s largest oil company forecasts crude will average $40 a barrel this year and $55 in 2017, he said.

Benchmark Brent futures have rallied more than 70 percent from a 12-year low in January as the global glut is trimmed by unexpected outages and a slide in U.S. output. Yet the recovery remains “fragile” as disrupted supplies return to the market and OPEC members pump more than expected, Goldman Sachs Group Inc. said this week.

The kind of volatility that saw prices top $100 in 2014 and sink below $28 in January won’t be repeated in the “medium term,” Vagit Alekperov, CEO of Russia’s Lukoil PJSC, said at the St. Petersburg International Economic Forum. Oil will average $50 this year and $55 to $60 in 2017, he said in an interview.

That’s more optimistic than Russian Energy Minister Alexander Novak, who forecast next year’s price at an average $50 a barrel.

“It is very unlikely that the prices are going to be high in the forthcoming few years,” he said in an interview with Bloomberg Television. “There is a lot of oil in the world.”

For a QuickTake explainer on how oil prices are determined, click here.

Oil companies have sold assets, canceled projects and cut thousands of jobs to weather crude’s collapse over the past two years. BP Plc, which has long warned prices will stay “lower for longer,” now sees oil above $50 a barrel by the end of 2016.

The current level is “very sustainable,” CEO Bob Dudley told reporters in St. Petersburg. The market will be balanced by the end of the year, he said.

http://www.bloomberg.com/news/articles/2016-06-16/oil-bosses-see-volatility-easing-with-crude-around-50-a-barrel

It makes no sense now for Russia and Saudi Arabia, the world’s biggest oil suppliers, to work together to influence the market, even as U.S. shale production is poised to rebound next year, Russia’s Energy Minister said.

Without a “force majeure with prices,” there’s no point in talking about joint action, Alexander Novak said in an interview on Bloomberg TV on the sidelines of the St. Petersburg International Economic Forum. “The door is always open,” but there should be “a desire and a need” for cooperation, which is not the case now, he said.

The collapse in Brent crude prices to a 12-year low in January squeezed out high-cost producers, helping to reduce oversupply and ultimately boost prices. A tentative deal between Russia, Saudi Arabia and other major producers to freeze output in order to stem the glut was abandoned in April, in part because a Saudi-led OPEC policy of pumping without limits seemed to be paying off.

“We are in a global period of low oil prices now and such periods may last 10 to 15 years,” Novak said. Still, today’s price of about $50 a barrel is enough to proceed with investments, which suits both producers and customers, he said.

At current prices, U.S. shale production will probably start recovering early next year, Novak said. “Shale production can pick up quickly,” he said. “A recovery cycle may take six to nine months on a price increase.” There are also risks that prices will fall if crude production in Canada, Libya or Nigeria rebounds after supply disruptions in those countries. “We just should watch the market closely now,” he said.

Novak met Venezuela’s Oil Minister Eulogio Del Pino to discuss cooperation between members of the Organization of Petroleum Exporting Countries and non-members, including a Venezuelan proposal for an output “band” system, according to an e-mailed statement from the South American country’s oil ministry.

Novak was expected to meet new Saudi Minister of Energy and Industry Khalid al-Falih in Beijing this month at the G20 energy summit. While the meeting is possible, it’s not confirmed yet, Novak said.

While the government in Moscow prepares to draft the nation’s 2017 budget using an average oil price of $40 a barrel, Novak said it may reach $50. Brent crude this year has averaged about $40 a barrel.

In a later interview, Novak reiterated a plan to increase crude output to about 540 million metric tons this year and set next year’s target “somewhere in the range” of 525 million to 545 million tons. Crude exports may rise about 3 percent this year to roughly 252 million tons, and the trend is likely to continue next year, he said.

http://www.bloomberg.com/news/articles/2016-06-16/russia-s-novak-sees-no-need-now-to-cooperate-with-saudis-on-oil

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Attached Files

Nearly 300 employees on oil and gas drilling rigs off Norway could go on strike unless a wage deal is agreed by June 22, the country's state-appointed mediator said on Thursday.

Rowan Companies' Viking and Gorilla rigs will be affected, one of the unions involved in the wage talks said. It was not clear if other rigs would be affected.

The mediator said that around 3,000 workers could join a long-term strike.

Labour disputes on drilling rigs typically halt oil and gas exploration and drilling of new production wells at existing fields, but do not affect current production at wells.

One of the unions, Safe, said 79 of its members working on Rowan Companies' Viking and Gorilla rigs would go on strike if no agreement is reached.

Unions and the rig owners are due to meet to negotiate an annual wage deal on June 20 and have set a deadline to reach an agreement by midnight on June 21. They have not publicly disclosed the terms demanded.

The Viking rig currently does work for Swedish oil firm Lundin, while the Gorilla works for oil major ConocoPhillips, Rowan said recently.

In addition to the 79 Safe members, another 190 workers represented by the Industri Energi union and 14 members of DSO would be part of the first wave of a strike, the state mediator said.

A spokesman for ConocoPhillips said on Thursday that the Gorilla rig is currently engaged in the plugging of abandoned wells on its Ekofisk field in the North Sea, and that oil output would be unaffected by a strike.

http://www.reuters.com/article/norway-oil-rowan-idUSL8N1981LL

Just as drivers hit the road for summer holidays, refiners are turning the taps down on gasoline as a global excess cuts into their profits.

Refiners in Europe, Asia and the United States, from the mighty ExxonMobil down to smaller players such as Italy's Saras, amped up the proportion of gasoline they churned out to cash in on record driver demand.

But now they are moving back to the diesel, jet fuel and heating oil that for more than a year had become a "by-product" they did not want.

"The pendulum of profitability between gasoline and diesel is set to swing back toward the latter during the next 12 months," ESAI analyst John Galante said in an annual forecast. "Tightness in the global gasoline market has run its course."

Already, Europe's refineries are moving towards diesel, traders said, while Asian units are maximising jet fuel. In the United States, Husky Energy in Lima, Ohio, is making more diesel, while Delta Air Lines is considering switching its Trainer, Pennsylvania refinery to maximise diesel.

The shift is due in part to the success of their own efforts to do everything they could - from choosing different crude oil to tweaking the way they ran their units - to capitalise on booming gasoline and naphtha demand.

Most can only shift a small amount of production from one product to another - less than 5 percent, even in a best-case scenario - but the worldwide effort had a big impact.

Physical supply of so-called light-end products built quietly on ships, at refineries and in storage tanks, with even China exporting gasoline to the United States. The figures are now showing up in official data.

According to Euroilstock, gasoline inventories in Europe clocked a counter-seasonal build of 3 million barrels from April to May, while even the U.S. Energy Information Administration has shown some builds in gasoline stocks despite record demand from drivers.

"It has become clear that this is really not 2015 anymore and that the effects of yield-shifting exercises across the globe have more or less taken care of what we assume to still be strong demand growth for gasoline," analysts at JBC wrote.

At the same time, an unexpected shortfall in diesel and jet fuel crept in, buoyed by strikes that closed four French refineries and extreme heat from El Nino that boosted distillates burned in power generators in India, Pakistan and Vietnam.

Last week, premiums for gasoline over ultra-low-sulphur diesel fell to flat on a per-barrel basis for the first time since March, in Europe, and November, in Asia, according to JBC. U.S. gasoline traded at a discount to diesel on Wednesday for the first time seasonally in three years 1RBc1-HOc1.

Still, the shift could prove to be only a short-term profit aid. One trader said the change "makes little sense historically", while analysts warned it could simply crush diesel margins.

"If they are forced to make more diesel it will undermine those economics, particularly as August is typically a slow period for demand," said Robert Campbell, head of oil products with Energy Aspects.

http://www.reuters.com/article/refineries-switch-idUSL8N19825H

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Attached Files

Pioneer Natural Resources Company today announced that it has priced an underwritten public offering of 5.25 million shares of its common stock for gross proceeds of approximately $827 million. The Company has granted the underwriters an option for 30 days to purchase up to an additional 787,500 shares of the Company’s common stock. Credit Suisse, J.P. Morgan, Deutsche Bank Securities and Morgan Stanley are acting as joint book-running managers for the offering. The underwriters may offer the shares from time to time in one or more transactions on the New York Stock Exchange, in the over-the-counter market, through negotiated transactions or otherwise at market prices prevailing at the time of sale, at prices related to prevailing market prices or at negotiated prices. The offering is expected to close on or about June 21, 2016, subject to customary closing conditions.

The Company expects to use a portion of the proceeds from the offering to fully fund its recently announced pending acquisition of oil and gas properties in the Midland Basin (the “Pending Acquisition”) and the remaining portion of the proceeds for general corporate purposes, including funding the drilling program on the acreage to be acquired in the Pending Acquisition and continuing to develop its acreage position in the Spraberry/Wolfcamp play in West Texas. The offering is not conditioned on the consummation of the Pending Acquisition, and if the Pending Acquisition is not consummated, the Company intends to use the proceeds from the offering for general corporate purposes, including continuing to develop its acreage position in the Spraberry/Wolfcamp play in West Texas.

The offering is being made pursuant to an effective shelf registration statement filed with the Securities and Exchange Commission (the "SEC"). The offering may be made only by means of a prospectus supplement.

http://www.businesswire.com/news/home/20160615006616/en/Pioneer-Natural-Resources-Company-Announces-Pricing-Common

At 4:00am @NDAvengers blow up NNPC Pipeline in Oruk Anam Local Government Area in Akwa Ibom.

@NDAvengers

Liquefied Natural Gas Limited’s unit, Bear Head LNG, received Governor in Council approval for its licence to import natural gas from the United States and export LNG from the plant to be located on the Strait of Canso in Richmond County, Nova Scotia.

Bear head LNG was granted a licence to import and export natural gas in August last year, however that licence was subject to the approval of the Governor in Council, LNg Limited’s statement reads.

Commenting on the approval on Thursday, Greg Vesey, managing director and CEO of LNG Limited and president of Bear Head LNG said the approval positions the Bear Head LNG to become a major LNG supplier.

According to the licence, Bear Head LNG can import up to 14.2 billion cubic metres of natural gas per annum, which would be sufficient to export up to 12 mtpa of LNG from Canada, both licences are for a period of 25 years.

The project has already secured approval from the United States Department of Energy to export US-sourced natural gas to countries that have and those that do not have a free-trade agreement with the US.

http://www.lngworldnews.com/bear-head-lngs-licence-approved-by-governor-in-council/

Iran's Oil Comeback May Already Be Over

Iran easily beat expectations with its speed in boosting oil exports after the lifting of sanctions. Without an injection of cash and the easing of remaining trade barriers, the recovery may have run its course.

When restrictions on Iran’s oil exports were relieved in January following a nuclear pact with world powers, analysts from Goldman Sachs Group Inc. to Barclays Plc doubted it could return to previous levels this year. The Persian Gulf state defied the skeptics with a 25 percent surge in production and aims to reach an eight-year high of 4 million barrels a day by year-end.

“They have surprised most market participants with the speed they’ve been able to resume production,” said Antoine Halff, a senior fellow at the Center on Global Energy Policy at Columbia University in New York. “But to exceed pre-sanctions levels would require investment and technology and that’s a much longer-term proposition.”

Returning to world markets after more than three years of isolation, Iran is seeking more than $100 billion of investment from international partners to rehabilitate its oil industry and ultimately reclaim its position as OPEC’s second-biggest producer. Still, companies are still waiting for Iran to approve the contract model to be used in deals and for clarity on remaining U.S. sanctions before re-entering the country.

Iranian Wins

Since limits on crude sales were lifted, exports have doubled to about 2 million barrels a day, flowing again to previously prohibited markets in Europe, where Royal Dutch Shell Plc and Total SA resumed purchases. Production reached pre-sanctions levels of 3.6 million barrels a day in April and maintained that level in May, the Paris-based International Energy Agency estimates.

Iran’s own figures have output climbing to 3.8 million barrels a day in May, with plans to hit 4 million by the end of the year and ultimately reaching 4.8 million within five years, Oil Minister Bijan Namdar Zanganeh said June 3 in Vienna. With Total, Eni SpA and BP Plc having expressed interest in developing Iran’s resources, Zanganeh predicts the first deals with foreign companies will be signed within three months.

While oil analysts concede that Iran surpassed their initial forecasts, they aren’t convinced its greater ambitions will be realized soon. Qamaar Energy Chief Executive Officer Robin Mills and independent consultant Peter Wells, who both have experience working in Iran, say that sustaining a level of 3.6 million to 3.8 million a day is more realistic.

New Investment

Iran will need billions of dollars of investment and foreign technology to boost reservoir pressure to expand capacity at its aging, cash-starved wells, which were already suffering output declines before sanctions hit, the Paris-based agency estimates. Even with an influx of investment, returning to 4 million barrels a day won’t happen before 2021, the IEA predicts.

“They are doing everything they possibly can on their own while waiting to bring in foreign partners,” said Bjornar Tonhaugen, an analyst with Rystad Energy AS in Oslo, an oil consultant that advises more than 600 clients. “The risk now is that it’s not sustainable.”

Iran can boost capacity by 300,000 barrels a day in the next several years from deposits in the West Karoun area near the Iraqi border, said Tushar Tarun Bansal, an energy analyst at consultants FGE in Singapore. Zanganeh, in an interview with Iranian magazine Seda Weekly published June 11, said the country can add 700,000 barrels a day from these fields over five years.

Model Contract

However, attracting foreign capital will be a struggle when a model contract for oilfield investment isn’t ready and as a range of U.S. sanctions remain in place, said FGE’s Bansal.

Even after dropping sanctions on Iran’s oil sales, the U.S. still prohibits transactions related to the Islamic Republic from being conducted in dollars, restrictions imposed because it accuses Iran of human rights abuses and sponsoring terrorism. Zanganeh acknowledged last week that the oil contract models need further revisions.

“The big question for the Iranians is: ‘Are they going to get all the investment they want?’” Daniel Yergin, vice chairman of consulting firm IHS Inc., said in a Bloomberg television interview. “Companies are going to be very cautious about making new commitments to Iran. No one wants to run afoul of U.S. sanction law. ”
A series of output disruptions from Nigeria to Canada and Venezuela has meant that the extra Iranian oil has been easily absorbed by the market rather than depressing prices, said Mike Wittner, head of oil market research at Societe Generale SA in New York. Crude futures recovered to more than $50 a barrel last week, nearly double the 12-year low reached in January. With Iran’s comeback almost complete and global demand rising, traders are starting to wonder how much world markets will tighten in 2017, he said.

“By the end of this year Iran will be maxed out,” said Wittner. “Is it bullish? Yeah. When I look around the world and I need a bit more OPEC crude, I ask myself where it’s going to come from.”

http://www.bloomberg.com/news/articles/2016-06-15/iran-oil-comeback-that-startled-doubters-approaches-roadblock

U.S. shale oil producer Devon Energy Corp said on Wednesday it would sell Texas acreage to Pioneer Natural Resources Co and an undisclosed buyer for $858 million, as the pace of asset sales picks up on recovering oil prices.

The sale is part of a push by Devon to shed up to $3 billion in noncore assets as it tries to strengthen its balance sheet after the worst price crash in a generation.

"We anticipate our total noncore asset sales to be at or above the top end of our $2 billion to $3 billion guidance," CEO Dave Hager said in a statement.

Devon also increased its 2016 capital budget by $200 million, saying it now plans to spend $1.1 billion to $1.3 billion this year, and slightly raised its 2016 production guidance for core operations to between 540,000 and 560,000 barrels of oil equivalent per day (boepd).

Devon said the acreage it sold to Pioneer for $435 million is mostly undeveloped and currently produces around 1,000 boepd.

Current production from acreage sold to an undisclosed buyer for $423 million is about 22,000 boepd.

Pioneer said it was issuing 5.25 million common shares to help pay for the purchase of 28,000 acres from Devon's Midland Basin acreage for $435 million.

Pioneer, known for its aggressive hedging program, also said it would add five drilling rigs in Texas starting in September, bringing its total rig count to 17 as oil prices recover to $50 a barrel.

These rig additions will add about $100 million to the company's capital budget for 2016, lifting it to $2.1 billion.

http://www.reuters.com/article/us-devon-energy-divestiture-idUSKCN0Z12LE

Brazil’s troubled state-run oil company Petrobras is close to selling a 81 percent stake in a natural gas pipeline network in Brazil for nearly $6 billion to a consortium led by Brookfield Asset Management Inc, said three people with direct knowledge of the matter.

The Singapore sovereign-wealth fund GIC Pte, the Chinese sovereign-wealth fund China Investment Corp. and the Greenwich, Connecticut-based private equity firm First Reserve Corp are also part of the group of buyers, said two of the people, asking not to be identified because the discussions are private. The deal is expected to be signed as soon as next month, one of the people said.

Petrobras is trying to sell the network of gas pipelines, called Nova Transportadora do Sudeste SA, as it struggles to reduce the largest debt load in the oil industry amid crude prices that stand at half the levels seen just three years ago. The transaction, if closed, could be the only divestment in Brazil for the Rio de Janeiro-based firm this year, one of the people said, given the current pace of other deals.

BR Distribuidora and Transpetro, two subsidiaries the company is considering selling, are complex deals and are currently not moving fast enough to be concluded this year, one of the sources said.

Brookfield and First Reserve declined to comment on the deal. Petrobras, CIC and GIC didn’t immediately reply to requests for comment.

Petroleo Brasileiro SA, as the oil giant is formally known, said May 12 it had entered a 60 day period of exclusive talks with Brookfield, the largest alternative asset manager in Canada, for the sale of the gas pipelines, a period which could be extended by 30 more days.

Pedro Parente, who took over as the company’s chief executive officer this month, has vowed to reduce leverage at the world’s biggest deep-water oil producer and said he would focus on divesting assets outside of its core activities to focus investments on mega-projects in deep waters of the South Atlantic. The company has already sold about $2.1 billion in assets since last year, mainly from unloading its operations in Chile and Argentina -- part of a two-year, $15.1 billion asset sale program.

Petrobras wouldn’t cash in immediately the money as it would still need approval from regulatory bodies such as the oil regulator known as ANP, and the antitrust body Cade.

http://www.bloomberg.com/news/articles/2016-06-15/petrobras-said-close-to-6-billion-sale-of-brazil-gas-pipelines

Oil producer Canadian Natural Resources Ltd sharply raised its cash-flow forecast for the year as it gains from a rally in crude oil prices.

The company said on Wednesday that it now expected free cash flow of C$670 million ($519 million) in the fourth quarter, nearly double the C$338 million it forecast previously.

The oil producer also said it expected the final part of the second phase of its Horizon oil sands project, located north of Fort McMurray in Alberta, to start in four months, with estimated initial production of 45,000 barrels per day.

Canadian Natural plans to start the third phase of the project in the fourth quarter of 2017.

http://www.reuters.com/article/cdn-natural-rsc-outlook-idUSL4N1974A9

Rex Energy has always been one of our favourite smaller drillers in the Marcellus/Utica region. Yes, we know you’re not supposed to love some of your drilling children more than others–but we do!

We’ve often called Rex “the little energy company that could, and does.” Like most E&Ps (exploration and production companies), Rex has had a tough time coming through the recent crash in the price of gas and oil;

Rex Energy 1Q16: Lost $62M, but Still Drilling in the Marc/Utica; and Rex Energy Swapping $631M in Private IOUs for Public IOUs.

Rex has always concentrated on two regions: the Marcellus/Utica, and the Illinois Basin. No more. Rex is now a “pure play” driller after announcing it will sell all of its Illinois Basin assets–for $40 million to Campbell Development Group…

http://marcellusdrilling.com/2016/06/rex-energy-selling-illinois-basin-assets-focus-100-on-marcellus/

A rare tour of the Strategic Petroleum Reserve

The world’s largest emergency stockpile of crude oil is quickly falling apart.

The stockpile’s infrastructure, which currently stores 695.1 million barrels at four sites along the US Gulf Coast, is nearing the end of its design life and in need of a roughly $2 billion makeover, US Department of Energy officials claim.

“We’ve had several significant equipment failures over the last couple years that have affected our operational capability,” said Bob Corbin, the DOE deputy assistant secretary who oversees the stockpile, formally known as the US Strategic Petroleum Reserve.

In April, a water pipe at the DOE’s Big Hill site in Winnie, Texas failed, less than a year after a crude oil storage tank failed at the Bryan Mound SPR site near Freeport, Texas.

Throughout the system, pipes are corroding, tank floors need to be replaced, wells are failing mechanical integrity tests and pump motors, after decades of dealing with harsh weather and salty air off the Gulf of Mexico, are breaking down beyond repair, DOE officials claim.

Corbin said these issues complicate the ability of DOE to both drawdown and distribute crude oil at times of severe supply distributions, which is the primary reason the SPR was created more than four decades ago. They also complicate US’ ability to meet obligations under international agreements and could endanger energy security.

http://blogs.platts.com/2016/06/15/rare-tour-strategic-petroleum-reserve/

Malaysia’s state-owned oil corporation and Saudi Arabian Oil Co. are asking banks for proposals to finance about $7 billion for a planned refinery and a petrochemical complex in the Southeast Asian nation, according to people familiar with the matter.

The lenders would provide financing for the two projects worth a total of $12 billion to be constructed by Petroliam Nasional Bhd. and Saudi Aramco under a memorandum of understanding that the two firms have signed, according to the people, who asked not to be identified as the process is private. The banks are expected to submit proposals by later this month, the people said.

A Petronas’s spokesman couldn’t immediately be reached for comments by phone. Saudi Aramco’s media officials at its headquarter in Dhahran, Saudi Arabia, declined to comment.

Long-Term Projects

While Petronas announced in January that it would cut its capital and operating expenditures by 50 billion ringgit ($12.2 billion) over four years, it also gave commitment to invest in long-term projects. The planned projects with Saudi Aramco are part of the $27 billion Refinery And Petrochemicals Integrated Development that it is building for future growth and will come onstream in 2019.

Petronas reported a 71 percent decline in net income of 2.7 billion ringgit in the first quarter from 9.3 billion ringgit a year earlier due to lower product prices and reduced sales volume, according to May 18 statement. Its total assets decreased to 567.6 billion ringgit as at end March compared to RM591.9 billion as at Dec. 31. The company raised $5 billion by selling dollar bonds and Islamic debt in March last year.

Saudi Aramco, the world’s biggest oil exporter, already has refining and petrochemical partnerships in the U.S., China, South Korea and Japan, as well as in Saudi Arabia, giving it a share in plants capable of processing 5.4 million barrels a day. It is also looking to develop more joint ventures in countries including the U.S., China, Indonesia, India, Vietnam and South Africa, Chief Executive Officer Amin Nasser told reporters on May 10.

Saudi Arabia is seeking to reduce its reliance on oil sales amid lower prices for its most lucrative export. As part of that effort, the Middle Eastern nation wants to sell stock in Saudi Aramco for the first time, creating what could be the world’s largest listed company.

http://www.bloomberg.com/news/articles/2016-06-15/petronas-saudi-aramco-said-seeking-pitches-for-7-billion-loan

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U.S. crude oil refinery inputs averaged over 16.3 million barrels per day during the week ending June 10, 2016, 100,000 barrels per day less than the previous week’s average. Refineries operated at 90.2% of their operable capacity last week. Gasoline production decreased last week, averaging 9.7 million barrels per day. Distillate fuel production increased last week, averaging 5.0 million barrels per day.

U.S. crude oil imports averaged over 7.6 million barrels per day last week, down by 83,000 barrels per day from the previous week. Over the last four weeks, crude oil imports averaged over 7.6 million barrels per day, 9.8% above the same four-week period last year. Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 747,000 barrels per day. Distillate fuel imports averaged 123,000 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 531.5 million barrels, U.S. crude oil inventories are at historically high levels for this time of year. Total motor gasoline inventories decreased by 2.6 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 increased by 0.8 million barrels last week and are well above the upper limit of the average range for this time of year. Propane/propylene inventories rose 1.1 million barrels last week and are near 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 about 20.4 million barrels per day, up by 3.6% from the same period last year. Over the last four weeks, motor gasoline product supplied averaged over 9.6 million barrels per day, up by 2.9% from the same period last year. Distillate fuel product supplied averaged over 3.8 million barrels per day over the last four weeks, down by 2.6% from the same period last year. Jet fuel product supplied is up 5.3% compared to the same four-week period last year.

Cushing oil storage up 900,000 bbl

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

                                                       Last Week       Week Before    Last Year

Domestic Production '000....... 8,716               8,745              9,589

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

Italy's Snam, one of Europe's biggest gas pipeline operators, is looking to lift about 4 billion euros ($4.5 billion) off its balance sheet as part of plans to spin off its domestic gas business, sources familiar with the matter said.

In a refinancing to be carried out by a dozen or so banks, the debt would end up with Snam's Italgas unit, which will be spun off by distributing Italgas shares to Snam investors and listing them, six sources familiar with the refinancing said.

That would leave Snam more focused on its goal of becoming a prime mover in integrating Europe's patchwork of grids and making Italy a European gas hub, in line with the European Union's desire to wean itself off Russian gas imports.

Snam, which has 13.5 billion euros of debt, is investing more than half its 3.6 billion euro revenues in transmission and would benefit from cutting domestic distribution commitments.

While Snam will raise no money from the listing, the deal will cut leverage, making it easier to tap funds on the market.

"Snam could go for acquisitions in Europe in order to get more control over the South European gas corridor," Macquarie analysts said.

Three of the sources said around 12 banks, including Mediobanca (MDBI.MI), UniCredit (CRDI.MI) and Banca Imi (ISP.MI), were being lined up for a 3.5-4.0 billion euro refinancing package that would see as much as 2 billion euros of group debt being transferred to Italgas on top of its own 1.9 billion euro debt pile. The refinancing is expected to be wrapped up by the summer with a listing of Italgas likely towards the end of the year, the sources said.

Snam is controlled by state lender Cassa Depositi e Prestiti (CDP) through a vehicle that also includes State Grid Corporation of China STGRD.UL.

Four sources said Snam would keep a minority stake in Italgas of up to 15 percent with one source saying it could be as low as 10 percent.

A banker with knowledge of the matter said the idea of a shareholder pact between Snam and CDP to allow the state lender to keep a firm grip on Italgas when it is on the market was being discussed.

Goldman Sachs (GS.N) is advising Snam on its options, the sources said, adding the structure of the demerger was still under discussion and some of the details could change.

The company, which has a strategic alliance with Belgium's Fluxys, already controls French grid TIGF and Austrian pipeline TAG and recently bought a 20 percent stake in the Trans Adriatic Pipeline that will bring Azeri gas into Europe.

It is interested in German gas grid Thyssengas and Austria's Gas Connect Austria as well as a stake in Greece's DESFA.

In March Snam launched a feasibility study on demerging all or part of Italgas but gave no further details.

Earlier this year the group, under new CEO Marco Alvera, delayed its strategy plan which will now be unveiled on June 29.

New rules in Italy's fragmented gas distribution sector cutting concession areas to just 177 from almost 7,000 are expected to trigger consolidation, favoring companies with strong balance sheets. In January sources told Reuters CDP was mulling the idea of merging Italgas with No 2 distributor 2i Rete gas in which CDP is also a shareholder.

http://www.reuters.com/article/us-italgas-m-a-snam-it-idUSKCN0Z11N7

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The oil and gas industry will cut $1 trillion from planned spending on exploration and development because of the slump in prices, leading to slower growth in production, according to consultant Wood Mackenzie.

Malcolm Dickson, Principal Analyst at Wood Mackenzie said: “The impact of falling oil prices on global upstream development spend has been enormous.

“Companies have responded to the fall by deferring or cancelling projects and costs have also fallen.

“Our 2015-2020 forecast for capital investment has been reduced by 22% or US$740 billion since Q4 2014. In the nearer term the impact is even more severe: compared to pre-oil price fall expectations, capex will be down by around US$370 billion or 30% in 2016 and 2017.”

Wood Mackenzie expects to see further cuts throughout the year and investment levels continue to shrink as more projects are dropped and companies struggle to breakeven.

“Virtually every oil producing country has seen some form of capex cuts. The deepest are in the US Lower 48, where forecast capital investment has halved in 2016-17, falling by US$125 billion. This is mainly down to a big drop-off in drilling, with the onshore rig count dropping by 53% from 2015 to 2016,” says Dickson.

A global supply glut caused by the increase in shale oil production in the US, coupled with OPEC’s decision to keep pumping to preserve market share, triggered the collapse in oil prices in 2014.

While Brent crude, the international benchmark, has rebounded more than 75 percent from a 12-year low in January, the current price of about $49 a barrel is still less than half the level two years ago and has led to loss of hundreds of thousands of jobs around the world, with an estimated 120,000 lost in the UK North Sea alone.

The U.S. has experienced the steepest cuts in spending. Forecast capital investment there is down by half for this year and next, a drop of around $125 billion, mainly due to a decline in drilling, Dickson said in the report.

The Middle East is the region least affected, with no drop in investment expected in Saudi Arabia — the world’s largest crude exporter — for this year and next. That’s because several countries in the region are spending to maintain their market share, the report said.

The investment cuts are taking a toll on production. Compared with expectations before the slide in oil prices, output this year will be 5 million barrels of oil equivalent a day lower, with the deficit widening to 6 million next year, Wood Mackenzie estimates.

Part of the reduction in spending stems from a drop in the cost of doing business. Costs in the U.S. unconventional oil and gas industry were a quarter lower on average compared with their peak in 2014, Wood Mackenzie said. In Russia, the 40 percent reduction in investment in dollar terms anticipated over the next two years is due in large part to the depreciation of the ruble, it said.

Dr Andrew Latham, Vice President of exploration research at Wood Mackenzie said: “Although exploration investment has more than halved since 2014, and the figure is expected to be around US$42 billion per annum for 2016 and the same in 2017, costs have not been cut as much and as quickly as we expected. Some deepwater exploration spend has been protected by long rig contracts, but as these unwind we expect sharper cuts than in non-deepwater.”

On a more positive note for operators, cost deflation has played a major role in driving down spend. For example, costs in the US unconventional sector in 2015 fell by 25% on average from peak in 2014. Wood Mackenzie’s models show 2016 is likely to yield another 10%.

“For now, the select few projects that are progressed will do so because costs have been cut substantially to hit economic hurdle rates. But kick-starting the next investment cycle will require more cost deflation and project scope optimisation along with confidence in higher prices and arguably fiscal incentives.” says Dickson.

https://www.energyvoice.com/oilandgas/112310/global-upstream-investment-slashed-1trillion-since-oil-price-fall-says-wood-mac/

Ultra Petroleum Corp. was a shale success story. A former penny stock that made the big leagues, it was worth almost $15 billion at its 2012 peak.

Then came the bust. Almost half of Ultra’s reserves were erased from its books this year. The company filed for bankruptcy on April 29 owing $3.9 billion.

Ultra’s rise and fall isn’t unique. Proven reserves -- gas and oil resources that are among the best measures of a company’s ability to reward its shareholders and repay its debts -- are disappearing across the shale patch. This year, 59 U.S. oil and gas companies deleted the equivalent of 9.2 billion barrels, more than 20 percent of their inventories, according to data compiled by Bloomberg. It’s by far the largest amount since 2009, when the Securities and Exchange Commission tweaked a rule to make it easier for producers to claim wells that wouldn’t be drilled for years.

Wider Effort

The SEC routinely questions companies about their reserves. Now, agency investigators are also on the hunt for inflated reserves estimates, according to a person familiar with the matter.

“Reserves make up a large share of the value of these companies, so it really matters,” said David Woodcock, a partner at Jones Day in Dallas who served as the SEC regional director in Fort Worth, Texas, from 2011 to 2015. “They’re looking even more closely at how companies are booking reserves, how they’re evaluating the quality of those reserves and what their intentions really are. They’re not accepting pat answers.”

Drillers face pressure to keep reserves growing. For many, the size of their credit line is tied to the measure. Investors want to see that a company can replace the oil and gas that’s been pumped from the ground and sold.

There are two ways to increase reserves: buy more or find more. Fracking made it easier to do the latter, and the industry lobbied the SEC to count more undeveloped acreage as proved reserves, arguing that shale prospects are predictable across wide expanses.

The SEC agreed, with two key limits. First, the wells must be profitable to drill at a price set by an SEC formula. The companies got a temporary reprieve for 2014 because the SEC number was about $95 a barrel even though crude had plummeted to less than $50 by the time results were reported in early 2015.

That advantage has disappeared. When companies reported their 2015 reserves this year, the SEC price was about $50. Wells that vanished this year may return if prices rise.

The SEC also requires that undeveloped wells be drilled within five years of being added to a company’s books. The five-year plan can’t just be wishful thinking. “The mere intent to develop, without more, does not constitute ‘adoption’ of a development plan,” the SEC explained in 2009.

Despite those limitations, reserves surged 67 percent in the five years after the 2009 rule change, according to 53 companies that have records going back that far. Almost half the gains came from wells that existed only on paper.

Fix Estimates

By the end of 2014, undeveloped properties accounted for 39 percent of proved oil and gas reserves, up from 33 percent at the end of 2009, an increase of nearly 8 billion barrels.

In its first letter to Ultra, in July 2014, the SEC said it would take about 13 years for the company to drill its backlog. About two months later, Ultra raised $850 million in debt. The SEC letters weren’t yet public. Over the next 19 months, the regulator twice told the company to revise its estimates.

Falling Prices

Ultra responded that its drilling plans changed due to falling prices and the shrinking availability of financing. The company sometimes delayed or canceled certain wells in favor of more profitable locations, the company wrote.

Ultra ultimately agreed to a small revision to its 2011 reserves booking. It was disclosed in a footnote to its 2015 annual report, after the SEC completed its review in February. In the same report, Ultra deleted all of its undeveloped reserves because of uncertainty about financing.

The letters were made public in mid-March. By then, Ultra’s shares had plummeted to 58 cents, and the bonds issued less than two years before were selling for about 8 cents on the dollar. Prices have since rebounded.

Sandi Kraemer, Ultra’s director of investor relations, declined to comment. So did Judith Burns, an SEC spokeswoman.

Other companies have also drawn SEC scrutiny. The agency said in correspondence with Goodrich Petroleum Corp. that the company drilled only 4 percent of its undeveloped reserves each year, a slower pace than necessary to comply with the five-year rule. Linn Energy LLC kept undeveloped reserves on its books at the end of 2014 even after cutting its drilling budget by 61 percent. Both companies have gone bankrupt in recent months owing a combined $8.1 billion. Neither would comment for this story.

For many drillers, “development plans weren’t realistic,” said Julie Hilt Hannink, head of energy research at CFRA, an accounting advisory firm in New York.

Rising Bankruptcies

Penn Virginia Corp., a company in which billionaire George Soros had a stake, booked paper wells in natural gas prospects where it hadn’t drilled in years, according to letters from the SEC.

“Your actual drilling has consistently failed to follow schedules,” the SEC wrote in an April 2015 letter. Penn Virginia responded that it had intended to get to the wells within five years but its plans changed when prices fell.

That’s not what company executives told investors, according to conference call transcripts. H. Baird Whitehead, Penn Virginia’s chief executive officer, said in a November 2012 call that “under almost no scenario” would the company resume gas drilling. Yet, when Penn Virginia filed its report with the SEC three months later, the prospects accounted for more than 40 percent of its reserves.

During an April 2013 call, Whitehead said, “We don’t plan on drilling natural gas wells.” Still, the undeveloped natural gas wells comprised 19 percent of the company’s reserves at the end of that year. Patrick Scanlan, a spokesman for Penn Virginia, declined to comment.

The company intended to follow the SEC’s five-year rule, according to a person familiar with Whitehead’s thinking.

Penn Virginia erased most of its undeveloped reserves this year. The company filed for bankruptcy May 12 with $1.2 billion in debt. Records show Soros sold his six million shares in the first quarter.

http://www.bloomberg.com/news/articles/2016-06-15/shale-drillers-paper-wells-draw-sec-scrutiny-before-vanishing

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Exxon Mobil Corp and BHP Billiton Ltd said on Wednesday that they are considering selling depleting energy assets in Australia, including Kingfish, the country's largest ever discovered oil field.

The resource giants are looking to market 13 fields, licenses and associated infrastructure held in the Gippsland Basin Joint Venture. The venture in Australia's Victoria state began operations in 1969, according to BHP's website.

"We are seeking to identify interested parties with proven experience and strength to operate and capture the remaining potential in these licenses," a spokesman for Esso Australia, which operates the venture, told Reuters.

BHP and Esso Australia each hold a 50 percent share of the joint venture.

http://world.einnews.com/article/331029759/avapmI6jh78vgd0O

Rosneft OJSC is mimicking the strategy of its biggest global competitor to expand in India as the world’s top oil exporters vie for business in the fastest-growing crude-consuming nation.

The Russian energy giant’s plan to buy a stake in Essar Oil Ltd.’s Vadinar refinery echoes proposals by Saudi Arabian Oil Co. to invest in India’s refining industry and secure new outlets for its crude.

“We do believe in the upside potential of the Indian market,” Rosneft First Vice President Pavel Fedorov said last week. "There’s some chance you’ll see our progress with respect to tapping opportunities in the Indian market mid- and short-term.”

The company has said it hopes to acquire as much as 49 percent of the 405,000-barrel-a-day Vadinar refinery in the western state of Gujarat by the end of June. That deal would come with a 10-year contract to supply 100 million metric tons of crude to the Indian market, marking a significant expansion in a country where Russia is currently barely present.

Officials from the two countries are due to attend the St. Petersburg International Economic Forum later this week.

Competition for market share around the world has increased as supply continues to swamp demand. While Russia in recent months has overtaken Saudi Arabia in oil exports to China, Riyadh last year took the rare step of selling crude into Moscow’s backyard of eastern Europe, prompting Rosneft Chief Executive Officer Igor Sechin to accuse the Saudis of “actively dumping” their oil.

The fight for customers only intensified with Iran’s return to the market following the end of sanctions, while West African exporters have sent more barrels to Europe and Asia after the U.S. shale boom trimmed their sales across the Atlantic.

Saudi Aramco has squared up to rivals, outlining plans for an expansion of refining capacity in countries including Indonesia, Malaysia, Vietnam and India. The Dhahran-based company, which already ships about 70 percent of its crude to Asia, has forged refinery partnerships in Japan, South Korea and China.

Saudi Aramco’s joint ventures “allow it to secure demand for oil in the region that has a huge potential," said Sushant Gupta, director for Asia Pacific refining at industry consultants Wood Mackenzie Ltd. "Russia’s interest in such projects is also based on these fundamental drivers."

http://www.bloomberg.com/news/articles/2016-06-14/rosneft-mimics-saudi-strategy-to-get-foothold-in-indian-market

Igor Sechin, head of Russia's largest oil producer Rosneft and the country's most influential energy executive, said in an interview that he expects the fight for global energy market share to intensify.

In the interview with Il Sole 24 published on Wednesday, Sechin questioned the rationale of Russia's plans to sell almost 20 percent of Rosneft as part of a wider privatization scheme, saying the company's share price did not match its fundamentals.

"The main challenge for Russia's energy sector is a sharp increase in competition on global energy markets. In future, a tenacious competition is expected for keeping a share of traditional markets and to increase the share of new energy markets," Sechin was quoted as saying.

Russia has been muscling in on Asian markets, where Saudi Arabia was once the unchallenged dominant supplier. For its part, Riyadh has retaliated with aggressive discounting in Moscow's backyard of Europe.

Last year, Sechin said Saudi Arabia had started supplying ex-communist Poland at "dumping" prices, while Russian Energy Minister Alexander Novak said Saudi's entry into eastern European markets was the "toughest competition".

Sechin, a staunch critic of the Organization of the Petroleum Exporting Countries, said the global market may face an oil shortage in three to five years and producers might need a deal to share output increases and release strategic reserves.

"The market is reaching its balance quicker than analysts had predicted," he said.

In comments about the state's plans to sell almost 20 percent of Rosneft, Sechin said that as weaker oil prices and international sanctions over Ukrainian crisis had hit the company's share price, wider options should be considered.

"We believe that it would be prudent to consider different options, including inviting a strategic investor, in the current difficult conditions," he said.

Sechin also did not rule out the possibility that Italy's Eni might participate in upstream projects in Russia.

http://www.reuters.com/article/us-russia-rosneft-competition-idUSKCN0Z02U5

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Suncor Energy Inc has told employees the massive wildfire that struck northern Alberta in May will cost the company nearly C$1 billion ($777.91 million), two sources at Canada's largest crude producer said on Tuesday.

The wildfire, which forced the evacuation of the oil sands hub of Fort McMurray, also shuttered operations at facilities owned by Suncor and other producers in the region for weeks, at one point cutting Canada's crude output by more than a million barrels a day.

The Suncor number is the first concrete figure to emerge from oil sands companies on the scale of their wildfire costs. With some companies still ramping up production, the overall cost of the natural disaster has not been determined.

Analysts pegged oil companies' pre-tax profit loss at $45-$50 million a day during the wildfire shutdowns.

Husky Energy and Cenovus Energy Inc said on Tuesday wildfire costs would not be substantial, though the companies declined to provide an estimate.

Barclays analyst Paul Cheng said Suncor's pre-tax losses were probably close to C$1 billion, although the long-term impact would be limited.

"It's going to be a really messy and very difficult second quarter in the case of Suncor," Cheng said. "But everyone is quite confident by the end of the month they should be up to normal operations, and if that's the case this is a one-quarter event and investors will not put too much weight on that."

At Suncor, one worker, who declined to be named because he was not authorized to speak to reporters, said an executive told employees on Monday that the company expects fire-related losses "just shy" of C$1 billion.

A second employee, also speaking on condition of anonymity, said workers were told that direct costs related to the fire and the loss of production would cost nearly C$1 billion.

A Suncor spokeswoman declined to comment on wildfire-related losses.

Suncor has several oil sands facilities, including the main mining site which has the capacity to produce up to 350,000 barrels per day.

Last week Suncor said it expected to have its base plant operations back to pre-fire production rates within a week and all operations in the region producing at normal, pre-turnaround rates by the end of June.

The sources said they were told that the company's thermal operations were not coming back online as quickly as hoped because of blockages, likely stemming from the shutdown of steam injections that melt the tarry bitumen in reservoirs.

But they were also told Suncor had as much as six months' worth of available inventory at its main mining site, more than the typical amount of roughly two months.

A third Suncor employee, who also declined to be named, said by email that he was told the company saw "significant losses" that could stretch beyond the nearly C$1 billion disclosed at Monday's meeting, a large portion of which was due to flying workers to and from facilities, and employee lodging.

"We have lost major production but we do have four to five months of ore and we are slowly ramping back up operations," the employee said.

Suncor spokeswoman Sneh Seetal declined to comment on specifics of operations but said the broader effort to bring production online was on track.

"Our return to operations is going as planned," she said. "We are bringing these operations back."

http://www.reuters.com/article/us-suncor-energy-wildfire-idUSKCN0Z026Y

Data from the American Petroleum Institute showed U.S. crude inventories rose by 1.2 million barrels in the week to June 10 to 536.7 million, compared with analyst expectations for a decrease of 2.3 million barrels.

http://www.reuters.com/article/us-global-oil-idUSKCN0Z1027

Iraq's Kurds are ready to strike an agreement with the central government in Baghdad on a deal to increase oil exports, if it guarantees them a monthly revenue of $1 billion, a spokesman for the Kurdistan Regional Government (KRG) said.

Iraq's central government in March stopped oil exports through a Kurdish pipeline to pressure the local authorities to resume talks about an oil revenue sharing agreement.

Iraq's state-run North Oil Company normally exported 150,000 barrels a day through the pipeline that comes out at the Mediterranean port of Ceyhan, in Turkey. The pipeline also carries oil produced in the Kurdish region in northern Iraq and sold independently from the central government.

KRG spokesman Safeen Dizayee said in an interview in the Iraqi Kurdish capital Erbil on Tuesday that the Kurdish authorities would be willing to sell the oil through Baghdad if they get a share from the federal budget amounting to a $1 billion a month.

"If Baghdad comes and says ok, give me all the oil that you have and I'll give you the 17 percent as per the budget, which equals to one billion, I think, logically it should be the thing to accept," he told Reuters, specifying later that the amount referred to a monthly payment in dollars.

"Whether this oil goes to the international market or first to Baghdad and then to the market, it doesn't make any difference," he said. "We are ready to enter dialogue with Baghdad."

The KRG stopped delivering crude oil to the central government a year ago, a decision taken when Baghdad's payment fell under $400 million a month, according to Dizayee.

The Kurdish region exported an average of 513,041 barrels in May through the pipeline to Turkey, generating about $391 million, of which about $75 million was paid to oil companies that produce the crude, according to KRG official estimates.

"The companies have been assured that certain amounts will be made on a monthly basis," said Dizayee, referring to the three foreign oil producers in the KRG region - DNO, Gulf Keystone and Genel.

"We have started to pay some of it, at least it has rebuilt that confidence between the government and the IPCs (oil companies," he said, referring to arrears owed to the companies.

The KRG in February said it will be paying international oil companies in 2016 according to the terms of their contracts, after making ad-hoc payments last year.

The foreign operators have been reluctant to invest and further develop assets in the region without the promise of regular payment, while the cash-strapped KRG needs production to increase as it struggles to avert an economic collapse.

http://www.reuters.com/article/us-iraq-oil-kurdistan-idUSKCN0Z10CY

Yesterday MDN’s favorite government agency, the U.S. Energy Information Administration (EIA), issued our favorite monthly report–the Drilling Productivity Report (DPR).

The DPR is the EIA’s best guess, based on expert data crunchers, as to how much each of the U.S.’s seven major shale plays will produce for both oil and natural gas in the coming month.

One observation from the June report: The worm has turned for natural gas production in the Utica Shale. Until this report, the Utica has stood alone among nation’s seven major plays in a trend of producing more natgas month over month. The EIA now predicts next month that trend will reverse and the Utica will begin to produce less natgas month over month. Not a lot less! Just 4 million cubic feet per day (Mmcf/d). But still, it’s worth noting.

Another observation:When you combine all of the plays for both oil and natgas production, the rate of decrease for both is picking up. That is, month over month we’re now producing less and less of both oil and natgas from our shale plays. Which will likely be good for prices.

http://marcellusdrilling.com/2016/06/eia-june-dpr-the-worm-turns-for-utica-natgas-production/

Anglo-Dutch supermajor Shell is expected to sign a deal with Gazprom this week concerning the Russian gas giant’s planned Baltic liquefied natural gas project at the Baltic Sea port of Ust-Luga, according to a report.

http://www.upstreamonline.com/live/1435473/shell-eyes-gazprom-baltic-lng-deal-report?utm_source=twitterfeed&utm_medium=twitter

The Niger Delta Avengers militant group has threatened to sink oil tankers and "review" its stance of not taking lives in its latest warning to oil and gas companies operating in the Niger Delta.

The Niger Delta Avengers (NDA) militant group has threatened to sink oil tankers and “review” its stance of not taking lives in its latest warning to oil and gas companies operating in the Niger Delta.

Niger Delta Avengers @NDAvengers

PRESS STATEMENT http://www.nigerdeltaavengers.org/2016/06/press-statement.html …

In a press statement released on the group’s official website, the NDA also restated its intention to attack the interests of oil corporations if they repaired any facilities damaged by the group.

“They should not undertake any repair of pipeline, oil and gas facilities that is damaged or attacked by our forces,” said General Mudoch Agbinibo in an NDA statement.

The NDA has carried out several attacks on oil and gas firms in the region since the start of the year, blowing up Chevron’s Escravos terminal and the company’s RMP 24 and RMP 23 wells in the process.

The Escravos attack followed NDA’s warning to Chevron that no repair works should be carried out to facilities previously targeted by the group, until NDA’s demands are fully met. NDA claimed on its official website May 11 that it suspected Chevron was preparing to carry out repair works at the Okan Valve platform, which was blown up by the group at the start of the month.

http://www.rigzone.com/news/oil_gas/a/145071/NDA_Threatens_to_Sink_Oil_Tankers_Review_Its_Stance_of_Not_Taking_Lives?utm_source=GLOBAL_ENG&utm_medium=SM_TW&utm_campaign=ARTICLE

Output in the country, which has the world's largest oil reserves, dropped to 2.37 million barrels per day in May, according to OPEC data published on Monday.

That's down some 5 percent from April and off nearly 11 percent from 2015, adding to the woes of oil-dependent Venezuela as it wrestles with a brutal economic crisis. The drop could also help erode a supply glut that has weighed on prices.

Amid a cash crunch, Venezuela's oil fields are suffering from shortages of spare parts, the retreat of oil services companies due to unpaid bills, maintenance issues, and crime, according to workers, union leaders, foreign executives, and industry experts.

Oil workers earn only a few dozen dollars a month at the black market rate due to the bolivar currency's rapid tumble on the parallel market, sparking malaise and a brain drain.

"Workers' moods are in the dumps," said Francisco Luna, a union leader and technician who works in the oil-producing area of Lake Maracaibo. "Every day it's worse. Maintenance is lacking, equipment is lacking."

Officials at state-run oil company PDVSA, the sole operator of the country's oil fields, did not respond to a request for comment.

The Caracas-based company has blamed problems on saboteurs and international smear campaigns.

As Venezuela's recession appears set to worsen, many wonder how much further output could tumble and whether social issues could eventually encroach on output.

Energy consulting firm IPD Latin America caused waves earlier this year when it predicted production could slip to 2.35 million bpd this year, a figure on par with last month's output.

Beyond production, Venezuela's refineries and ports have also suffered problems due to equipment failures and power cuts.

Supermarket lines and worsening scarcities mean many Venezuelans' lives now revolve around the quest for food, and there has been an increase in worker absenteeism, according to union leaders and foreign executives.

Still, Venezuela's economic crisis may provide a silver lining for global oil consumption.

"My sense is domestic demand is also lower, so the impact on net exports may be less than the production decline," said Ben Ramsey, an analyst at J.P. Morgan.

http://www.reuters.com/article/venezuela-oil-idUSL1N195196

Total and Lampiris, the third-largest supplier of natural gas and renewable power to the Belgium residential sector, have signed an agreement under which Total will acquire all of the shares in Lampiris. The agreement is subject to customary regulatory approvals.

The transaction will have no impact on the companies' relationships with their customers or their suppliers, whose contracts will not be affected, and no jobs will be lost.

http://www.oilvoice.com/n/Total-acquires-Lampris/9c5fbe5b5f88.aspx?utm_source=twitterfeed&utm_medium=twitter&utm_campaign=Feed%3A+OilvoiceHeadlines+%28OilVoice+Headlines%29

Iran's oil exports are on track to hit the highest in almost 4 1/2 years in June, as shipments to Europe recover to near pre-sanctions level, according to a source with knowledge of the country's crude lifting plans.

Tehran's oil sales have nearly doubled since December, the last month before sanctions targeting its disputed nuclear programme were lifted, and the increase in sales should help offset some of the current global supply outages.

Iran is regaining market share at a faster pace than analysts had projected since sanctions were lifted in January, helped by securing more tankers through a temporary shipping insurance fix.

June loadings of crude and condensate are up by about 100,000 barrels per day (bpd) from last month to 2.31 million bpd in June, the source said.

The overall figure is more than a double the same month a year ago, and the highest since January 2012, before Western sanctions were introduced, based on U.S. Energy Information Administration data.

Exports to Europe in June recovered to about 580,000 bpd, up from 530,000 bpd in May and nearly six times greater than prior to sanctions being lifted, the source said.

Before sanctions were enforced in mid-2012, Iran was exporting about 2.2 million bpd of crude, with Europe taking about 600,000 bpd, according to the International Energy Agency.

Tehran's re-entry into the oil market has heightened tensions with arch-rival Saudi Arabia and helped thwart efforts by OPEC to limit output to boost oil prices.

Iran has resisted Saudi Arabia's calls to cap output, while Riyadh aggressively expands sales ahead of an IPO for its state firm.

Iran's loadings to Asia were 1.62 million bpd in June, up slightly from May but down from this year's high of 1.71 million bpd in April, according to the source.

Loadings for China, Iran's biggest customer, were nearly 610,000 bpd in June, a three-month low. India's loadings were about 406,000 bpd, while South Korea is at a multiple-year high of 323,000 bpd. Japan is loading about 290,000 bpd, the highest since April.

Greece, Italy, Spain and Turkey are all loading Iranian oil, according to the source. Poland is also lifting about 67,000 bpd this month, the first purchase since last August.

Greece and Spain will take 67,000 bpd each this month, while Italy is lifting half that.

Royal Dutch Shell resumed loading Iranian oil at the end of May, lifting about 1.1 million barrels and becoming the second major oil firm after Total to buy from Tehran.

http://www.reuters.com/article/iran-oil-exports-idUSL4N1962LE

Russia's top gas producer Gazprom expects China's gas consumption to more than double, deputy CEO Alexander Medvedev said on Tuesday, suggesting the company is still counting on robust growth in demand in China even as the economy slows.

As part of Russia's strategic shift eastwards prompted by rows with the West, Gazprom will supply China with gas via the Power of Siberia pipeline to be built in eastern Russia, raising volumes gradually to make China one of the biggest customers for Russian gas.

Gazprom's officials said on Tuesday they still aimed to start those supplies in 2019.

China has pledged to reduce its coal dependence, a major source of air pollution and greenhouse gas emissions, and aims to raise gas consumption to 360 billion cubic metres by 2020 from 193.2 bcm in 2015.

Sources close to Gazprom told Reuters in January that Russia is likely to scale back the volume of gas it plans to ship to China later this decade, due to the dive in globalenergy prices and uncertainty hanging over the Chinese economy.

Medvedev, however, sounded more optimistic.

"Gas consumption (in China) will double and rise further," Medvedev told reporters, without giving a timeframe.

China expects its domestic output of gas to reach only 190 bcm by 2020, meaning it will need to boost imports or find alternative sources.

"Russian gas sees no rivals," Medvedev said, when asked about competition in all its markets from an expected influx of seaborne liquefied natural gas from the United States and other countries.

Gazprom has signed a deal to supply 38 billion cubic metres a year of gas to China over 30 years via the Power of Siberia pipeline, although initially the volumes would be less than that. So far, Gazprom has supplied gas via pipelines only to Europe.

The company believes that its gas will be highly competitive on global markets due to the weakening of the rouble which makes gas production cheaper.

Companies worldwide have invested billions of dollars in plants to produce LNG in countries such as Australia and the United States. However, growth in demand for gas is slowing, prices are falling and the LNG volumes that those companies are set to produce will exceed what major buyers such as China and Japan can absorb.

Gazprom also plans to sell 3 million tonnes of LNG from its portfolio in 2016 on the global market, unchanged from 2015.

http://www.reuters.com/article/russia-gazprom-china-idUSL8N1961IM

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Attached Files

Monaco-based oil services company Unaoil said on Tuesday it was launching legal action against Australia's Fairfax Media group, publisher of the Sydney Morning Herald, over reports linking it to corrupt practices involving big oil companies.

Fairfax Media and the Huffington Post said in a joint report in April that the U.S. Department of Justice and anti-corruption police in Britain and Australia had launched a joint investigation into the activities of Unaoil.

Unaoil denied the allegations and said that it had been the victim of an extortion attempt by unidentified criminals.

It did not say what information the extortionists had threatened to pass to the media but said it had been their victim for four months.

"Unaoil has instructed its lawyers to commence legal action against Fairfax Media and its partners in relation to the malicious and damaging allegations negligently published by these media organisations and repeated by other media organisations globally," Unaoil said in a statement.

"Unaoil estimates its damages to be over $100 million and intends to hold Fairfax Media and its partners to account for their irresponsible and injurious reporting."

Unaoil did not say when it would sue and it has not said what its legal claim is, other than to refer to theft of company data and harm to reputation.

A spokesman for Fairfax Media could not immediately be reached for comment by Reuters by telephone or email.

Unaoil provides services to oil companies in the Middle East, Central Asia and Africa.

Fairfax and the Huffington Post, citing leaked documents, reported that unidentified government contracts worth billions of dollars were awarded on the basis of bribes, many of which were organised by Unaoil.

Authorities in Monaco subsequently raided Unaoil's offices and the homes of its directors.

A spokeswoman for The Huffington Post could not immediately be reached for comment by telephone or email. The outlet has previously said it stood by its reporting.

The reports led Iraqi Prime Minister Haider al-Abadi to direct the country's highest corruption watchdog to investigate suspicion of graft in the awarding of oil contracts and urged the courts to prosecute.

It also prompted a number of companies, including Italy's Eni, to disavow publicly any contact with Unaoil.

http://www.reuters.com/article/oil-corruption-idUSL4N1962YJ

Liquefied natural gas for spot delivery near Singapore rose 4 percent in the week to June 13 to $4.808 per mmBtu, the highest level since Feb. 15, according to an assessment by Singapore Exchange Ltd.

http://www.bloomberg.com/news/articles/2016-06-14/u-s-natural-gas-steady-as-spot-lng-in-asia-reaches-4-month-high

Petroleo Brasileiro S.A.’s sale of its Japanese unit on the tropical island of Okinawa is drawing interest from several companies, including JX Holdings Inc. and TonenGeneral Sekiyu K.K., according to people with knowledge of the matter.

At least seven companies, including Japanese refiner Cosmo Energy Holdings, have indicated an interest in participating in the first round of the auction for Nansei Sekiyu K.K., said the people, who asked not to be identified because the information is private. Petroleo Brasileiro is the Brazilian state-run oil company better known as Petrobras.

Petrobras, which is at the center of a corruption scandal, is joining Exxon Mobil Corp. and Royal Dutch Shell Plc in exiting Japan, where demand for oil products is forecast to fall 8.4 percent in the next five years.

The Brazilian oil giant bought an 87.5 percent stake in the Japanese company from TonenGeneral for 5.5 billion yen ($52 million) in April 2008, followed by a purchase of the remaining 12.5 percent stake from Sumitomo Corp. in 2010. Petrobras has been considering the sale of a stake in its Japanese business since at least 2011.

The Brazilian company shut a 100,000 barrel-a-day refinery on Okinawa operated by Nansei Sekiyu last year as part of its plan to withdraw from Japan.

http://www.bloomberg.com/news/articles/2016-06-14/petrobras-japan-unit-sale-said-to-draw-interest-from-jx-tonen-ipf2yi8i

Japanese refiners shut a combined 596,000 b/d, or 16%, of refining capacity as of Saturday, hitting the highest point of the peak turnaround season this spring, S&P Global Platts' analysis of industry information showed Monday.

Idemitsu Kosan, which shut the sole 160,000 b/d crude distillation unit at its Hokkaido refinery Saturday, was the latest to join the peak refinery turnaround season. Maintenance at the CDU will be carried out for around a month.

Japan's refining capacity closures this peak turnaround season represents around 16% of the country's total installed capacity of 3.82 million b/d. But the refinery outage will ease to 12% of total capacity, when Japan's largest refiner JX Nippon Oil & Energy restarts the sole 136,000 b/d CDU at its Oita refinery in the southwest on June 18, after completing scheduled maintenance.

Cosmo Oil also plans to restart the 120,000 b/d No. 2 CDU at its Chiba refinery on June 24 after completing maintenance, while TonenGeneral aims to restart the 180,000 b/d CDU at its 258,000 b/d Kawasaki refinery in Tokyo Bay late June after completing the turnaround.

Taiyo Oil will shut the 88,000 b/d CDU at its sole 118,000 b/d Kikuma refinery in western Japan on June 30 for scheduled maintenance. The restart is scheduled for July 30.

http://www.platts.com/latest-news/oil/tokyo/japan-shuts-596000-bd-or-16-of-refining-capacity-21692942

Korea Development Bank said it has agreed to provide US$1.5 billion for the proposed Delfin FLNG project, 50 miles off the coastline of Cameron Parish, Louisiana.

Delfin LNG, a wholly-owned subsidiary of Fairwood Peninsula Energy, is looking to develop a deepwater port and floating liquefaction facility, as well as the associated pipeline, including about 1.1 mile of onshore pipeline and aboveground facilities.

According to Delfin LNG, this would be the first floating liquefaction vessel to operate off the coast of North America.

LNG engineer Bechtel has been selected to perform the front-end engineering and design for the floating LNG vessel which will be able to disconnect from the port facility and move to protected waters during a hurricane.

http://www.lngworldnews.com/kdb-bankrolls-u-s-flng-project/

China's estimated oil and natural gas reserves have risen markedly in the past few years as prospecting has increased, the latest official assessment showed.

Potential oil resources now reach 126 billion tonnes, with an extractable amount of 30 billion tonnes, the Ministry of Land and Resources announced Monday, citing results of a national assessment completed in 2015.

The numbers are up 64 percent and 42 percent, respectively, from the the last such assessment in 2007, the ministry said.

The country is estimated to have 90 trillion cubic meters of natural gas resources, 50 trillion of which can be exploited, up 158 percent and 127 percent from the last assessment.

The ministry attributed the growth to increased exploration and better technology.

China is thought to be rich in unconventional oil and gas resources, with 122 trillion cubic meters of shale gas no more than 4,500 meters underground, 22 trillion of which is exploitable, according to the ministry.

http://en.chinamining.com.cn/News/2016-06-14/1465869576d76557.html

Penn West Petroleum Ltd. is getting a new lease on life, and investors welcomed the news with the biggest stock rally since 1992.

Shares of the Calgary-based energy producer jumped as much as 64 percent on Monday after Teine Energy Ltd.’s agreement to buy oil-producing properties in Saskatchewan for C$975 million ($762 million) in cash eased debt concerns. The stock, up 41 percent at C$1.63 as of 2:22 p.m. in Toronto, is still worth a fraction of its peak price of more than C$47 in 2006 as its elevated debt was made worse by an industry downturn.

“They’ve made it off the Titanic onto a boat,” Rafi Tahmazian, a fund manager at Canoe Financial LP in Calgary, said in a phone interview. Long-term survival depends on oil prices staying high enough for the company to be profitable and how next year’s spring bank line review goes, he said. “What you have driving against them is that they have had to -- going from darling to very troubled -- dispose of extremely good assets.”

Penn West, a consolidator of oil properties in Western Canada a decade ago, has spent the last two-and-a-half years selling assets to bring down debt and make it through a market rout. The company had long avoided parting with the Saskatchewan properties seen as crown jewel assets important to its strategy. However, analysts in recent weeks had forecast that Penn West would have to resort to disposing of them and earlier this month the company was said to have hired Royal Bank of Canada to advise it on a sales process.

Saskatchewan Properties

In the deal announced Friday, Teine, the energy company backed by Canada Pension Plan Investment Board, will buy all of Penn West’s properties in Saskatchewan, including its Dodsland Viking light-oil assets in the east and the medium and heavy crude assets in the west. Penn West now expects to stay within credit covenants through 2016 with the deal, which reduces its debt by more than half, executives said on Monday. The company had previouslyforecast potentially breaching the covenants in the second quarter.

“The sale is a definitive step which will help to change the narrative from constant discussions around its debt toward constructive conversations around Penn West’s recent performance in its remaining Cardium area,” Jeremy McCrea, an analyst at Raymond James Ltd. in Calgary, wrote in a note. He upgraded his stock recommendation to the equivalent of a buy from a sell. “The Penn West that ends 2016 will be very different than the Penn West that entered 2016.”

Attractive Price

Penn West got an attractive price for the properties, reflecting closely held Teine’s ability to pay up, Kristopher Zack, an analyst at Desjardins Capital Markets in Calgary, wrote in a note. Teine is paying about 15 times the debt-adjusted cash flow of the assets, compared with recent transactions of about 7 times, Zack said.

“In our view, this reflects the deep pockets and long-duration strategy of the CPPIB, Teine’s largest shareholder -- a luxury that, quite frankly, would not be available to most publicly listed producers,” Zack said.

Penn West will now target growing its Cardium and Viking positions in Alberta and plans to sell another C$100 million to C$200 million of mostly gas-producing assets outside its primary areas of focus by the end of the year to reduce expenses further, executives said. The company expects to start growing production again in 2017 by about 10 percent a year well into next decade, said Dave Roberts, chief executive officer of Penn West.

Penn West is among producers that have been challenged by credit concerns that aren’t going away for the industry with U.S. crude below $50 a barrel, Tahmazian said, pointing to bank line reductions announced in recent days by Paramount Resources Ltd. and Journey Energy Inc. Penn West’s challenge will be to increase production without the highly prized assets it’s chosen to sell in the market rout, he said.

RBC advised Penn West on the deal, while JPMorgan Chase & Co. advised Teine and Canadian Imperial Bank of Commerce advised Canada Pension Plan Investment Board.

http://www.bloomberg.com/news/articles/2016-06-13/penn-west-jumps-most-since-1992-after-teine-agrees-to-buy-assets

U.S. shale oil output is expected to fall in July for the seventh consecutive month, according to a U.S. government forecast on Monday, despite a recent rally in crude prices to an 11-month high over $51 a barrel.

Total output is expected to fall 118,000 barrels per day (bpd) to 4.723 million bpd in July, according to the U.S. Energy Information Administration's (EIA) drilling productivity report.

Bakken production from North Dakota is forecast to fall 32,000 bpd, while production from the Eagle Ford formation is expected to drop 63,000 bpd.

Production from the Permian Basin in West Texas is expected to drop 7,000 bpd, according to the data, representing its third consecutive monthly decline.

The U.S. shale oil and gas industry, led by upstart drillers who upended the global energy order after starting the shale revolution in 2005, has been under siege, pushed to the brink - or beyond it - by enormous debt loads and the largest, longest price rout in a generation.

U.S. crude futures fell from over $107 a barrel mid-2014 to a near 13-year low around $26 in February. Since then, prices have almost doubled, breaking through $51 last week as U.S. inventories declined and on supply worries in Nigeria.

http://www.reuters.com/article/us-usa-oil-drilling-idUSKCN0YZ291

TransCanada Corp said on Monday that it won a contract with a joint venture partner to build and operate a $2.1 billion natural gas pipeline in Mexico.

The company's joint venture with IEnova, a unit of Sempra Energy, won the bid for the Sur de Texas-Tuxpan project, in which TransCanada will own 60 per cent, with IEnova owning the rest.

TransCanada expects to invest about $1.3 billion in the partnership to build the 800 km (497 mile) pipeline, which is expected to come into service by late 2018.

http://www.reuters.com/article/transcanada-mexicopipeline-idUSL4N1953J2

As MDN told you in May, Halcon Resources, a Utica Shale driller that “guessed wrong” by leasing 140,000 Utica Shale acres in the northern part of the play (in Ohio) and currently doesn’t drill on any of that acreage, is preparing to file for bankruptcy.

The company is still preparing. On Friday Halcon outlined how they will go about filing–converting some $1.8 billion of debt into shares of stock/ownership in the company.

Halcón Resources Corporation announced the Company has executed a restructuring support agreement (the “RSA”) with select holders of its 13.0% 3rd Lien Notes due 2022 (“3L Notes”), its three tranches of senior unsecured notes comprised of its 9.75% Senior Notes due 2020, its 8.875% Senior Notes due 2021, and its 9.25% Senior Notes due 2022 (together, the “Unsecured Notes”), its 8.0% Convertible Note due 2020 (the “Convertible Note”) and its 5.75% Perpetual Convertible Preferred Stock (the “Preferred Equity”, and together with the 3L Notes, Unsecured Notes and Convertible Note, the “Affected Stakeholders”).

As previously announced, the restructuring plan, if implemented, will result in the elimination of approximately $1.8 billion of net debt and approximately $222 million of Preferred Equity, and will reduce the Company’s ongoing annual interest burden by more than $200 million. Under the terms of the RSA, all current stakeholders, including common equity holders, will receive cash and/or common equity in the restructured Company. As of June 9, 2016, holders representing 80% of the aggregate principal amount of 3L Notes outstanding, 57% of the aggregate principal amount of Unsecured Notes outstanding, 100% of the aggregate principal amount of Convertible Note outstanding and holders of 63% of the outstanding shares of Preferred Equity have executed the RSA.

http://marcellusdrilling.com/2016/06/halcon-resources-strikes-deal-to-file-chapter-11-bankruptcy/

http://www.streetinsider.com/Corporate+News/Halcon+Resources+(HK)+Enters+RSA+with+Certain+Note,+Preferred+Stockholders/11729261.html

Statoil ASA may seek to partner with Petroleos Mexicanos in Mexico’s deepwater fields as the producer looks to gain a foothold in the country’s recently opened energy market.

“We see opportunities to bid on deepwater farm-out agreements with Pemex if the terms and conditions are right," said Tore Loseth, vice president of Statoil Exploration in the U.S. and Mexico, on the sidelines of an oil conference in Monterrey on June 10. "But we need to know more about how the process will run before we can properly evaluate these.”

Pemex and Mexico’s energy ministry announced plans last week to farm out the Trion field in the Gulf of Mexico -– an area believed to contain about 485 million barrels of reserves and estimated to cost $11 billion to develop. While the agreement will be in the form of a license, the details of the contract have yet to be spelled out.

Loseth declined to say whether Statoil plans to bid on the Trion field. The companies involved in the farm out should be announced in December, Pemex said.

Trion is the first in a series of long-delayed farm-out agreements for areas that Pemex was assigned in Mexico’s so-called “Round Zero” auction, the results of which were announced in 2014. That non-competitive bidding round was the result of landmark energy reforms that opened the doors to private investment.

In December, Mexico also plans to hold its first auctions for deepwater blocks -- another way for Statoil to potentially enter Mexico’s oil market.

Olso-based Statoil, which failed to win areas in Mexico’s shallow-water auctions last year, is among 23 companies that have registered to pre-qualify to participate in the deepwater oil auction on Dec. 5. The list includes deepwater operators such as Chevron Corp., Exxon Mobil Corp. and Total SA, all of whom are now in talks to secure partnership deals with Pemex. The Mexican company said in May that it might also start discussions with Statoil.

Blocks up for grabs in Mexico’s deepwater auction are “potentially attractive” in spite of low oil prices, said Statoil’s Loseth. “The Mexican side of the Gulf of Mexico is very attractive because it is relatively under-explored."

http://www.bloomberg.com/news/articles/2016-06-13/statoil-may-consider-pemex-partnerships-in-deep-waters-vp-says

China’s crude production dropped by the most in 15 years in another sign that OPEC’s strategy of flooding markets to drive out higher-cost suppliers is working in the world’s biggest energy consumer.

The Asian nation reduced oil output in May by 7.3 percent from a year ago to 16.87 million metric tons, according to data from National Bureau of Statistics released on Monday. That’s the biggest decline since Feb. 2001.

Shrinking Chinese output may help balance oil markets and sustain a more than 75 percent rebound in crude from a 12-year low earlier in 2016. The rally has also made the Organization of Petroleum Exporting Countries more confident its two-year Saudi Arabia-led strategy of trying to win market share from higher-cost producers is succeeding. The glut shows signs of ending as companies shut unprofitable fields and cut investments, according to forecasters from the IEA to Goldman Sachs Group Inc.

“It’s certainly an important indicator that global oil markets are rebalancing,” Michal Meidan, an analyst at industry consultant Energy Aspects Ltd., said by e-mail. “The Saudi strategy is starting to yield results.”

Lower domestic output reflects spending cuts by the country’s oil drillers amid low prices, Gordon Kwan, head of Asia oil and gas research at Nomura Holdings Inc. in Hong Kong said in an e-mail. PetroChina Co., the nation’s biggest producer, said in March it expects oil and gas output to fall the first time in 17 years as it shuts fields that have “no hope” of turning a profit, while Cnooc Ltd. sees output slipping as much as 5.2 percent this year.

“Lower domestic oil production means that China will rely more and more on imports from Middle East and Russia,” Kwan said in the e-mail. The slump in output “is worse than our forecast,” he said.

http://www.bloomberg.com/news/articles/2016-06-13/china-cuts-oil-output-by-most-in-15-years-coal-production-slows

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Attached Files

OPEC predicted that the global oil market will be more balanced in the second half of this year as demand rises and rival supplies falter, echoing views expressed by ministers at the group’s meeting this month.

The Organization of Petroleum Exporting Countries kept estimates for world supply and demand in 2016 unchanged in its monthly market report. Disruptions in Nigeria reduced the group’s output to 32.36 million barrels a day last month, a little below the 32.6 million average required to satisfy estimated demand in the second half.

“The expected improvement in global economic conditions should result in a more balanced oil market toward the end of the year,” the organization’s Vienna-based research department said in a report. “The excess supply in the market is likely to ease over the coming quarters.”

Oil has surged about 80 percent from a 12-year low in February as the global glut is trimmed by unexpected disruptions and a slide in U.S. output. OPEC didn’t set any output targets when its 13 members met on June 2 as the organization sticks with Saudi Arabia’s strategy of pumping without limits to squeeze rival producers.

Output from the 13 nations slipped by 99,800 barrels a day last month as militant attacks curbed supplies from Nigeria. Membership will swell to 14 countries in July with the re-admission of Gabon, which pumps about 200,000 barrels a day.

http://www.bloomberg.com/news/articles/2016-06-13/opec-sees-global-oil-market-balancing-toward-the-end-of-2016

Commercial operations at France’s fourth LNG import terminal in the port of Dunkirk will begin in September, with the first cargo for commissioning purposes expected on July 8.

The first commissioning cargo of about 135,000 cbm of LNG will be brought by France’s energy giant EDF, who owns a 65 percent stake in Dunkirk LNG (Dunkerque LNG). A second ship will follow in August to complete testing of the import facility, according to Dunkirk LNG.

To remind, LNG World News reported last week that the first commissioning cargo was expected between 04th and 08th July.

The first ship will “call at the LNG terminal wharf for seven days (rather than the normal 24 hours). As the equipment will still be at ambient temperature, the LNG (at -160°) will need to be unloaded much more slowly than normal so the process gradually enters its ‘cool state’,” Christophe Liaud,Commercial Director of Dunkerque LNG said in a statement.

“Additionally, the LNG load must come from a liquefaction plant and have a sufficiently low pressure. The methane tanker must also be less than 15 years old to ensure it has the specific equipment required for the start-up of the terminal. Last but not least, the client must accept the risk of cancelling the call if the terminal is not in fact ready on the planned date.”

“It’s a lot of limitations,” said Liaud, adding that EDF has managed to find an LNG supplier who can “meet these limitations while guaranteeing a competitive price“.

The Dunkirk LNG terminal will have an annual regasification capacity of 13 billion cbm of gas, enough to cover about 20% of France and Belgium’s annual gas consumption.

EDF booked 8 bcm of the LNG terminal’s capacity, while Total reserved 2 bcm of gas. The remaining gas quantities will be sold on the market after the LNG terminal has been commissioned.

Besides EDF, Fluxys of Belgium has a 25% share in the LNG terminal. French gas and oil giant Total owns the remaining 10 percent.

http://www.lngworldnews.com/first-dunkirk-lng-cargo-to-arrive-on-july-8-commercial-ops-to-start-in-sep/

Analysts expect prices to rebound slightly in coming years as a result of the government's policy to encourage cleaner energy

Asia's largest oil and gas producer, China National Petroleum Corp, is betting big on natural gas, aiming to boost both its supplies and transportation capacity in the next five years.

The state-owned company, which provides more than two-thirds of the country's natural gas, plans to sell in excess of 750 billion cubic meters of the fuel between now and 2020, a 40 percent increase on the past five years, says Zhao Zhongxun, deputy director of CNPC's planning department.

CNPC technicians check natural gas facilities in Yinchuan, capital of the Ningxia Hui autonomous region. Xinhua

"Our top priority is to boost domestic supplies of natural gas, then adjust imports based on demand, and at the same time expand our pipeline network and capacity of LNG terminals," he says, detailing the energy giant's new five-year plan for natural gas, during a "green development" forum held in Beijing.

That blueprint suggests that by 2020, the company's pipeline network is expected to exceed 60,000 kilometers with an annual transport capacity of 180 billion cubic meters.

Also planned are 12 more gas storage sites, with the receiving capacity of its three liquefied natural gas terminals expanding from 13 million to 19 million tons.

Oil majors have all cut their spending on future projects as plummeting crude oil prices have slashed their profits, but CNPC will secure the production of natural gas and maintain its exploration, a source told China Daily, without giving further details on the budget for natural gas.

CNPC spokesman Qu Guangxue says there will be greater promotion of gas-fired power plants and the use of natural-gas-powered vehicles.

CNPC imports a third of its natural gas from major countries in Central Asia such as Kazakhstan and Turkmenistan, and Zhao says it will begin imports from Russia in 2019 on completion of the Chinese section of Sino-Russia pipeline.

PetroChina, CNPC's listed unit, posted its first quarterly loss in April amid falling global crude prices and shrinking domestic demand.

Its profit on natural gas and pipelines slumped nearly 36 percent to 4.7 billion yuan ($714 million; 640 million euros) in the first four months of 2016.

Zhao says during the first three years of its 12th Five-Year Plan (2010-15), the company grew its natural gas supplies 13 percent.

But demand for the fuel shrunk last year from many industrial sectors including smelting, construction and glass production.

Analysts expect gas prices to rebound slightly over the coming years as a result of the government's policy to encourage cleaner energy to combat air pollution.

"Natural gas is a practical choice for China," says Gao Jian, a senior analyst at commodities consultancy Sublime China Information Co Ltd, "as the country increases its share of nonfossil fuel in its energy mix, and relies more on alternatives."

The share of natural gas in the country's total primary energy mix will be raised to above 10 percent by 2020, double the current level, he says.

http://en.chinamining.com.cn/Companies/2016-06-12/1465700095d76528.html

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Teine Energy Ltd., the energy company backed by Canada Pension Plan Investment Board, has agreed to buy oil-producing properties from Penn West Petroleum Ltd. for C$975 million ($763 million) in cash.

The deal involves all of Penn West’s properties in the Canadian province of Saskatchewan, including its Dodsland Viking light-oil assets in the east and the medium and heavy crude assets in the west, Calgary-based Penn West said in a statement late on Friday. The agreement helps highly-leveraged Penn West stay in compliance with debt covenants it had forecast potentially breaching in the second quarter, which ends June 30. Penn West now expects to remain within those covenants through 2016, it said in Friday’s statement.

Penn West is fighting to stay afloat as the crude market rout approaches two years. The company, while selling other assets to reduce its debt, had long sought to avoid parting with the Viking properties that were important to its strategy. Analysts in recent weeks had forecast that Penn West would have to resort to selling the Viking properties, and Bloomberg reportedlast week that the company had hired hired Royal Bank of Canada to advise it on the sale of the assets.

“Saskatchewan is a coveted asset amongst many of our competitors and with this transaction we have capitalized on the demand for high-quality oil assets of scale,” David Dyck, chief financial officer of Penn West, said in the statement. “This is a pivotal transaction for the company.”

The sale of the Saskatchewan assets is expected to close in the second quarter, according to the statement. Penn West has also agreed to sell Alberta properties for proceeds of about C$140 million, the company said, without identifying any buyers. Penn West has agreed to sell assets fetching a total of C$1.3 billion in cash in 2016, the company said.

Penn West’s share price has fallen 90 percent since U.S. crude’s price peak in mid-2014, to close at C$1.16 in Toronto on Friday. The company had total debt of C$1.86 billion at the end of the first quarter, according to data compiled by Bloomberg.

http://www.bloomberg.com/news/articles/2016-06-11/teine-energy-agrees-to-buy-penn-west-oil-assets-for-763-million

Crude fell a third day after the number of rigs drilling for oil in the U.S. rose for a second week.

Futures fell as much as 1.8 percent in New York after dropping 4.2 percent in the previous two sessions. Rigs targeting crude in the U.S. rose by 3 to 328 last week, capping the longest run of weekly gains since August, Baker Hughes Inc. said Friday. Iran is seekingto boost output by 600,000 to 700,000 barrels a day over five years from fields in an area west of the Karoun River along the Iraqi border, Oil Minister Bijan Namdar Zanganeh said.

“The increase in rigs means U.S. production may increase in the latter half of 2016, and that creates a bearish mentality in the market,” said Takayuki Nogami, chief economist at Japan Oil, Gas and Metals National Corp., a state-run company that helps secure energy supplies. “With oil over $50 a barrel, there is a deep-rooted view that American shale producers may return.”

While the number of active oil rigs in the U.S. rose for a second week the nation’s output is still well below last year’s peak, and explorers have idled more than 1,000 drilling machines since the start of last year. The $50-to-$60 a barrel area is the “sweet spot” as more U.S. producers are expected to return at $60, according to Mark Watkins, Utah-based regional investment manager for The Private Client Group of U.S. Bank.

http://www.bloomberg.com/news/articles/2016-06-12/oil-extends-losses-as-u-s-rigs-drilling-for-crude-rise-2nd-week

Forces aligned with Libya's unity government said on Friday they had taken control of the port of Sirte, making further gains in Islamic State's North African stronghold.

Brigades largely composed of fighters from Misrata advanced this week to the perimeter of Sirte's city center, after launching a counter attack against Islamic State last month and driving the militant group back along the coastal road between the two cities.

The brigades are part of an operation backed by Libya's U.N.-backed Government of National Accord (GNA), which arrived in Tripoli in March and has been gradually working to establish its authority.

Western powers see it as the best bet for trying to unite Libya's political and armed factions against Islamic State and for restoring some stability to the oil-rich North African country.

A source from the operations room in Misrata said fighters from the front line in the south of Sirte had looped round to the seafront to capture the port, which lies about 5 km (3 miles) east of the city center.

The brigades have advanced more swiftly than many expected, though their progress has been hampered by suicide bombers, mines and snipers.

Clashes in Sirte on Friday left 11 brigade members dead and 35 wounded, the operations room source said. More than 100 fighters from the GNA-backed brigades have been killed and more than 500 wounded since the campaign to recapture Sirte began in early May.

Islamic State started expanding into Libya in 2014 as the political turmoil and conflict in the country worsened. It took full control of Sirte last year, but has struggled to retain territory or win support elsewhere in Libya.

As the brigades based in Misrata have advanced on Sirte from the west, a separate force that controls some of Libya's key oil terminals and is also aligned with the GNA has pushed Islamic State back from the east. They reached Harawa, a town about 70 km from Sirte, on Thursday.

http://www.reuters.com/article/us-libya-security-idUSKCN0YW2GS

China's crude oil runs fell 0.1 percent in May from a year earlier to 44.23 million tonnes, the statistics agency said on Monday.

http://www.reuters.com/article/china-economy-output-oil-idUSB9N18N05F

Southwestern Energy Company announced today that it has entered into a definitive agreement with Antero Resources Corporation to sell approximately 55,000 net acres in West Virginia for $450 million. The cash proceeds from the transaction are expected to be used to reduce the principal balance of the company's $750 million term loan due in November 2018.

The properties are located in Doddridge, Harrison, Marion, Monongalia, Pleasants, Ritchie, Tyler and Wetzel Counties and are currently producing from the Marcellus Shale. Net production from this acreage is approximately 14 MMcfe per day, primarily from non-operated wells, and proved reserves on this acreage were 11 Bcfe as of December 31, 2015. The Company has no current plans to drill on these properties before 2023.

'This transaction is one step on delivering on the commitment we made to strengthen our balance sheet in 2016,' remarked Bill Way, President and Chief Executive Officer of Southwestern Energy. 'We are bringing forward the value of acreage that is much longer dated in our development plans, enabling us to take action and proactively reduce outstanding debt. Together with the progress we are making on margin enhancement, this sale further strengthens both the Company's financial flexibility and our bridge to value-added growth for shareholders.'

The transaction is expected to close in the third quarter of 2016, subject to customary closing conditions and purchase price adjustments.

http://www.oilvoice.com/n/Southwestern-Energy-sells-portion-of-Southwest-Appalachia-acreage/995abf57c0dd.aspx

For the first five months of 2016, Europe has seen a slow down in deliveries of Qatari LNG.

Surprisingly, this decline in imports was not lead by Europe's largest importer of Qatari gas, namely the UK.

Desmond Wong explains how arrivals of Qatari volumes into the UK have remained largely stable compared to the same period last year, with declines from Belgium, Turkey, Portugal, France and Italy, cumulatively forming the bulk of the decline, with increased volumes heading into the Middle East and South Asia.

http://www.platts.com/videos/2016/june/lngw-qatar-lng-europe-061016?hootpostid=bacd2cc3076f47bba11701271f3d62f8

The leader of a Russian liquefied natural gas project targeting the Asia-Pacific market said it received its first tranche of a loan from national lenders.

Two Russian lenders delivered $1.13 billion for the Yamal LNG project. Novatek, the largest private natural gas company in Russia, leads the project aimed at sourcing the markets in the Asian-Pacific. The funding is part of a broader finance effort steered from the Russian National Wealth Fund with help from Chinese banks.

Yamal LNG CEO Evgeny Kot was quoted by Russian news agency Itar-TASS as saying some tankers were already tested for LNG deliveries and the funding should help spur further developments.

"Readiness of the first stage of the LNG plant is over 70 percent," he said.

Russia's economy is hobbled by dual strains of economic sanctions related to crises in Ukraine and the low price of crude oil. Liquefied natural gas, meanwhile, offers for maneuverability outside the geopolitical constraints associated with conventional pipeline arteries, like those running to Europe through Ukraine.

In a market characterized by tight spending trends, Novatek said the costs of development are low enough to compensate for higher maritime shipping costs to the Asian-Pacific markets.

Novatek controls 60 percent of the Yamal LNG project in the arctic north of Russia, alongside French energy company Total and the China National Petroleum Corp.

The Yamal LNG project has the capacity to produce about 16.5 million tons of natural gas and exports could target consumers in the Far East. As many as 16 ice-class carriers will be designated to ship LNG year-round to global consumers.

Yamal could start full operations as early as next year.

http://www.upi.com/Russian-LNG-gets-financial-support/2451465552762/

The $1.3 billion deal to merge the Norwegian business of BP with Det Norske Oljeselskap was borne out of the hugely competitive nature of today’s industry and the UK supermajor’s unwillingness to letting its assets in Norway go, according to BP’s chief executive Bob Dudley.

http://www.upstreamonline.com/live/1435216/dudley-quitting-norway-was-not-an-option?utm_source=twitterfeed&utm_medium=twitter

Chinese independent oil companies are luring traders, marketers and risk managers away from dominant state behemoths, offering better pay and perks in a hiring spree triggered by the freeing up of China's crude import trade.

Global oil firms and commodity houses have also been raiding state giants such as Sinochem and CNPC for staff to help handle up to $50 million a day in new crude flowing into China this year, and the cherry-picking of talent is likely just getting started.

China's independent "teapot" refiners, so called due to their small size, could be processing by the end of this year as much as a fifth of the crude imports of the world's No.2 oil consumer. Already, in the first five months of 2016 - the first full year of a dozen of them being granted crude import licences - they have captured about 10 percent of the inbound shipments.

Shandong Dongming Petrochemical Group, China's largest independent refiner, has built a Singapore-based trading team of 11 to handle this new business, including trading and shipping managers hired from CNPC Fuel Oil Company and the CNOOC group.

"A team of this size is far from enough for our scale of 10 million tonnes a year (200,000 bpd) crude demand," said Zhang Liu Cheng, vice president of Shandong Dongming.

"We'll need more to cover products, chemicals and market analysis," Zhang said.

Awarding crude import quotas of up to 1.2 million barrels per day (bpd) to China's teapots has started a tussle for talent as the refiners - and the oil majors and trading houses that aim to supply them - dive into an activity previously restricted to state-owned enterprises (SOEs).

This year, use of the quotas has made up most of a 16 percent or around 1 million bpd rise in China's crude imports, even with several underused and more awaiting approval.

Those angling for a slice of this market have already hired more than 40 traders and others, mostly from state companies, say colleagues and acquaintances of people who have moved jobs.

"We have a big but not totally motivated team," said a senior trader with a state oil company, noting that offers often beat SOE employment, particularly at smaller firms.

"Certainly we're going to see more talent outflows as the teapots have just begun hiring," the senior trader said.

Most of the hires are in their mid-thirties, having honed their craft at Chinese state companies such as Sinochem Corp, China National Offshore Oil Corp and China National Petroleum Corp, sources said.

"Our traders are very popular," said a source from one of the state oil trading companies. "Most of those who moved from our company are going to trading houses and majors because the perks are definitely better."

"We are looking for people who have systematic training, good relationship skills, and people who understand how China markets work," said a Beijing-based executive with a global trading house.

Also, with teapots concentrated mostly in the eastern province of Shandong, an ability on plant visits to withstand drinking bouts could also be critical as official at some refineries there are renowned for their large capacities for alcohol.

"Sometimes I'm scared to visit our refinery in Shandong as they drink too much," said a Chinese trader who buys crude on behalf of one of the teapots.

http://www.reuters.com/article/us-china-teapots-jobs-idUSKCN0YW0FN