Iraq will supply 5 million barrels of extra crude to its partners in June, industry sources familiar with the issue said, joining other Middle East producers by lifting market share ahead of an OPEC meeting this week.

Iraq, which is the second-largest producer in the Organization of Petroleum Exporting Countries, had already been targeting record crude export volumes from southern terminals next month of 3.47 million barrels per day.

Saudi Arabia, Kuwait, Iran and the United Arab Emirates, also plan to raise supplies in the third quarter.

A recovery in global oil prices from 12-year lows to above $50 a barrel and rivalry between Saudi Arabia and Iran have dampened expectations that OPEC will rein in supplies at Thursday's meeting.

While additional exports could make up for shrinking output and supply disruptions elsewhere, the new supplies also risk delaying a re-balancing of a global market still awash with oil.

"OPEC is indeed increasing supplies, practicing their market share first strategy," said Victor Shum, managing director of downstream energy consulting at IHS, referring to a Saudi-led drive to boost OPEC's production to take back market share.

He said that additional oil from Saudi and Iraq may slow down a re-balancing of the global market, although this could be countered by supply disruptions from other places and strong seasonal demand.

https://twitter.com/EINOilGasNews

Oil States Expected To Stick With Saudis: OPEC Reality Check

OPEC members gathering in Vienna June 2 are expected to go along with a Saudi Arabia-led policy focused on squeezing out rivals amid signs the strategy is working. That means the meeting may be less fraught than the previous summit in December, which ended with public criticism of the Saudi position from Venezuela and Iran.

By allowing prices to fall, high-cost producers are being forced out, easing the supply glut and spurring a rally of 80 percent since January to about $50 a barrel. All but one of 27 analysts surveyed by Bloomberg said the Organization of Petroleum Exporting Countries will stick with the strategy. An alternative proposal -- to freeze output -- was finally rejected in Doha last month.

The group may also choose a secretary-general to replace Abdalla El-Badri, whose term has been extended after members failed to agree on a successor. In recent months, three new hopefuls have emerged to try and break the impasse: Nigeria’s Mohammed Barkindo, Indonesia’s Mahendra Siregar and Venezuela’s Ali Rodriguez.

- See more at: http://www.rigzone.com/news/oil_gas/a/144790/Oil_States_Expected_To_Stick_With_Saudis_OPEC_Reality_Check?utm_source=GLOBAL_ENG&utm_medium=SM_TW&utm_campaign=ARTICLE#sthash.zcDpvxR0.dpuf

Russia’s oil sector has shown a surprising resilience to low oil prices and western sanctions over the past two years. The country’s output repeatedly hit new record highs despite various negative outlooks.

This surprising pattern could well be repeated both this year and next should certain projects overcome delays and greenfields ramp up output.

Independent research group Vygon Consulting, in its May study, said oil production in Russia is likely to continue growing not only this year — as was forecast by many market observers — but also next year.

On top of this, the consultancy sees Russian crude production hitting the 11.3 million b/d level next year. If so, it will get close to Russia’s all-time high, recorded in 1987. This is well above other most optimistic estimates.

A general consensus sees Russia’s crude production continuing to grow this year by around 100,000 b/d or even slightly above this figure. The growth is supported by investments made in previous years.

Next year, however, output is expected to remain flat or even drop by around the same 100,000 b/d, as greenfields no longer compensate for growing natural decline at mature fields in West Siberia. This view is shared by many market experts both in Russia and abroad, although forecasted figures do differ somewhat.

Russian and international estimates are not directly comparable due to use of different conversion factors for Russian crude and condensate volumes reported in mt.

The International Energy Agency, for example, has warned that while Russia’s oil resource base is weakening, the commissioning of new fields is likely to be delayed in the coming years due to capex constraints and rising fiscal pressures, making it increasingly challenging for oil producers to maintain crude output.

Vygon Consulting, however, believes that several new projects that are scheduled for commission both this and next year are unlikely to be delayed as they are ready to launch and key capital investments have already been committed to them.

These projects include the Filanovskogo field in the Caspian Sea and the Messoyakha field in northern Siberia, set to come online by the end of this year and a number of new fields expected to start in 2017.

In addition, already commissioned greenfields, including in the Arctic, could increase output to become drivers of crude production growth next year.
 
As a result, the consultancy estimates, crude production from greenfields is likely to jump to nearly 1.5 million b/d, or 85%, in 2017, from its 2015 level, which would fully compensate for the natural decline elsewhere.

Indeed, this outlook is much higher than the level of natural decline at old fields in Russia, with different estimates putting output at between 100,000 b/d and 400,000 b/d in 2015.

The problem is that crude production in West Siberia is falling by around 3.5-4% a year, despite the sharp increase in drilling and wider use of enhanced oil recovery technologies seen last year. If those operations are reduced due to companies’ financial constraints, the natural decline could accelerate drastically.

So far, however, production drilling — including the drilling of horizontal wells — is still on the rise as oil companies’ operations are supported by flexible taxation and the forex rate of ruble to dollar, mitigating cuts in oil prices.

But there is the risk that Russia’s authorities could opt to increase the tax burden on oil companies to resolve budget problems.

And while at present governmental officials have said there are no plans to raise these taxes, a different approach might prevail when the government considers how to meet the 2017 budget in the autumn.

If the tax burden is increased, the outlook for Russia’s crude production could be quite different from that of current forecasts.

http://blogs.platts.com/2016/05/27/russia-crude-oil-output-surprise/?hootPostID=ab5a8fa890a7e61770e544073b40e3b8

Gazprom has announced that a working meeting has taken place in Sochi, Russia, between the Chairman of the Gazprom Management Committee, Alexey Miller, and the Chairman of the Board of Directors of China National Petroleum Corp. (CNPC), Wang Yilin.

The meeting focused on planned gas supplies to China through both eastern and western routes. It also looked at possibilities regarding cooperation in underground gas storage and gas-fired power generation, as well natural gas vehicles (NGVs).

An additional meeting was held between Miller and the President of China National Offshore Oil Corp. (CNOOC), Liu Jian. This meeting looked at the possibility for cooperation in hydrocarbon exploration and production, as well as in the LNG industry.

http://www.lngindustry.com/liquefaction/31052016/Gazprom-explores-cooperation-possibilities-with-CNOOC-and-CNPC-2518/

In two simultaneous attacks late on Thursday, the Niger Delta Avengers (NDV) have targeted a state-run crude pipeline near the Batan oilfield.

The oil and gas pipeline is near the Batan oilfield in Warri, and is operated by the state-run Nigerian National Petroleum Corporation (NNPC).

African media suggest that the attack differed strategically from the series of attacks that preceded it because this pipeline was heavily guarded by state security forces and militants were demonstrating their reach and capabilities.

The NDA claimed responsibility for the attack via its Twitter feed, its established method.

"At 11:45pm on Thursday.@NDAvengers blew up other #NNPC Gas and Crude trunkline close to Warri. Pipeline that was heavily guarded by Military," the group tweeted.

The group rejected a meeting recently convened in Abuja by the federal government, warning of its readiness to carry out an attack that will "shock the whole world".

"The Niger Delta stakeholder's meeting is an insult to the people of Niger Delta. What we need is a Sovereign State not pipeline Contracts,” NDA said.

"To the IOC's, Indigenous Oil Companies and Nigeria Military. Watch out something big is about to happen and it will shock the whole world."

Related: Why Canada’s Oil Sand Producers Will Recover Quickly From The Wildfires

On Wednesday, the militant group blew up the main electricity feed pipeline at Chevron’s Escravos terminal, taking the terminal offline.

Nigeria’s oil production has plunged by 40 percent, falling to just 1.4 million barrels per day, the lowest level in decades

Last week, Italian oil giant Eni declared force majeure after another attack on its AGIP pipeline took oil offline. Earlier this month, Shell also declared force majeure on its exports of Bonny Light crude, evacuating staff from its Eja OML 79 production facility.

The first week of May saw militants attack one of Chevron’s offshore platforms, the Okan facility, disrupting 90,000 barrels per day of oil production. The Okan facility, which it operates in conjunction with the Nigerian National Petroleum Corp., is also a gathering point for production from several fields, so the attack knocked off output from all of them at once.

http://oilprice.com/Latest-Energy-News/World-News/Two-More-Militant-Attacks-on-Nigerian-Crude-Pipeline-More-Barrels-Offline.html?utm_source=twitterfeed&utm_medium=twitter&utm_campaign=Feed%3A+oilpricecom+%28Oil+Price.com+Daily+News+Update%29

Pipeline builder Arendal S de RL has become the latest casualty of Mexico’s state-owned oil producer.

The company defaulted on a $100 million bond that was due last week after Petroleos Mexicanos deferred plans to build two pipelines and delayed payments to suppliers. Arendal depends on Pemex, as the oil giant is known, for about 80 percent of its income. In February, Fitch Rating said that Pemex owed Arendal 1.8 billion pesos ($97.4 million).

Battered by low oil prices and sinking output, Pemex owed suppliers $7.2 billion at the end of the first quarter, more than any other company in Latin America. It has extended the amount of time it takes to pay suppliers to 180 days from 20 as it cuts costs in the wake of 14 straight quarterly losses. Pemex, which has $95 billion of debt, has also slashed the day rates it pays to rent rigs, a move that triggered a default by supplier Oro Negro last year. The notes of fellow rig operator Offshore Drilling Holding SA fell to a record 29.5 cents on the dollar May 23, signaling investors are concerned it will struggle to repay the debt.

“The delays in accounts receivable pressured their working capital,” Francisco Gutierrez, an analyst at S&P Global Ratings, said, referring to Arendal. “About 90 percent of Arendal’s projects are with Pemex, which shows how vulnerable they are.”

Pemex didn’t reply to a request for comment on Arendal’s default and its treatment of its suppliers. Arendal declined to comment.

On May 16, Pemex said it had cut its debt to suppliers by 92 billion pesos. The oil producer said it prioritized payments to companies it owed less than 85 million pesos each, which covered 90 percent of the companies it was indebted to.

http://www.bloomberg.com/news/articles/2016-05-30/pemex-turmoil-batters-bond-traders-again-as-supplier-defaults

Japan's LNG imports reached 6.4 million mt in April, down 3.3% from a year ago, led by lower supply from Qatar and Nigeria, data released Friday by the Ministry of Finance showed.

On a month-on-month basis, LNG imports also dropped 21.7% from March as the country entered shoulder months.

Shipments from Australia reached 1.8 million mt in April, up 23.2% from a year ago.

It was the largest LNG supplier with its volume representing 28% of Japan's overall imports.

Malaysia came in second, supplying 1.18 million mt in April, rising 7% from a year earlier.

Imports from Qatar plunged 30.6% year on year to 841,520 mt in April, making Qatar the third-largest LNG supplier for the month.

Shipments from Nigeria also fell 22.3% from a year earlier to 143,347 mt in April.

Japan received no reloads from Europe and the number of exporting countries to Japan shrank to 10 in April, from 14 a year ago, with Yemen LNG shut since April 2015 amid increasing security concerns around the facility.

The Japan Customs Cleared crude oil price was $36.957/b in April, down 34.1% from a year earlier but rose 15.5% from March.

Some of Japan's long-term LNG contracts are linked to the JCC crude price but with a lag of a few months, so fluctuations in oil prices typically take time to be reflected in LNG prices.

http://www.platts.com/latest-news/natural-gas/tokyo/japans-lng-imports-slip-33-on-year-in-april-qatar-27595284

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Hercules Offshore Inc said it planned to file for prepackaged Chapter 11 bankruptcy, just six months after the rig contractor emerged from bankruptcy protection.

The company said it had entered into a restructuring support agreement with some lenders, which will eventually allow it to place all its unsold assets into a wind-down vehicle until they can be sold.

Hercules Offshore said its international units would not be included in the bankruptcy filing, but would be a part of the sale process.

The company said in February that it was considering strategic options, including selling itself.

Hercules filed for Chapter 11 bankruptcy protection in August 2015 and emerged from bankruptcy in November.

"Since this time, the ongoing decline in oil prices, the consolidation of its U.S. customer base and the addition of new capacity have negatively impacted dayrates and demand for Hercules's services," the company said in a statement.

http://www.reuters.com/article/hercules-offshre-bankruptcy-idUSL3N18O422

The decline in domestic oil rigs resumed, with two rigs out of the count compared to last week. Total U.S. rig count remained flat with an increase of two natural gas rigs. The most interesting development was the appearance of new rigs in some of the lesser oil plays, which probably signals that producers are getting comfortable with $50/bbl oil as the baseline going forward.

But there are some new rigs in lesser plays, which probably signals that producers are getting comfortable with oil staying at the $50 level.

One new rig in Arkoma, Woodford, which went from zero rigs, to one rig.
Two new rigs in Granite Wash.

Conclusion:

The oil rig count resumed its decline, with the domestic oil rig count down by two. There's some newfound confidence by producers, consistent with $50/bbl oil, as displayed by the appearance of new rigs in some of the lesser plays, which goes against the long term trend of moving rigs to the most productive regions. Overall, however, not that much new information in this report.

http://seekingalpha.com/article/3978383-weekly-u-s-oil-rig-count-rig-repositioning

Suncor Energy Inc. restarted oil-sands operations in the Regional Municipality of Wood Buffalo, an area in Canada that includes wildfire-ravaged Fort McMurray. It’s a move that enables thousands to return to work.

Suncor and other oil-sands operators took offline this month more than 1 million barrels a day of output, as wildfires spread in the region and forced evacuations and the shutdown of pipelines and power supplies. “Cooler weather and several days of precipitation” have improved conditions, Canada’s largest energy company said in a statement on Sunday.

Alberta lifted mandatory evacuation orders for the last of the accommodation and production sites on Monday, which started the process of inspections by forestry and health officials to make sure they’re safe. Officials say industry facilities are no longer at immediate risk as firefighters take advantage of better weather to keep the flames at bay.

Suncor said 4,000 employees and contractors are back in the region, including Fort Hills workers, with an additional 3,500 people likely to return in the coming week.

The company also reported operations are under way at the base plant mine and MacKay River, with initial production expected by the end of this week, according to the statement. No timeline was given for the joint venture with Syncrude Canada Ltd.

http://www.bloomberg.com/news/articles/2016-05-29/suncor-resumes-oil-sands-operations-after-wildfire-shutdown

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