Today, ESAI Energy released a new study, 'Balancing Act: China's Oil Demand and Energy Mix to 2030' that takes an in-depth look at China's oil demand trends to 2030, projecting energy mix and demand for thirteen oil and alternative fuel products The study shows in detail that the pace of oil demand from 2015 to 2030 will slow by almost 60% versus the 2000-2015 period.

The study examines China's efforts to balance the delicate relationship between coal, natural gas and oil and handle the dramatic changes in its oil products market. Beyond demand, the study looks at refining developments and estimates China's net trade position for each petroleum product. China will become an even larger supplier of gasoline to the world and will eventually export fuel oil while continuing to absorb significant quantities of LPG.

As the Chinese stock market continues to keep the global oil and financial markets on tender hooks, ESAI Energy's sector analysis of oil demand provides a road map for the future of the second largest oil consumer and largest oil importer in the world.

'Understanding China puts any player at an advantage in an increasingly competitive energy market,' says ESAI Energy's Megan Wu, 'especially in the current low oil price environment where almost every supplier is looking at China for market share.'

http://www.oilvoice.com/n/New-Study-Shows-Chinas-Oil-Demand-Slowing-Down-by-Almost-60/027edb953819.aspx?utm_source=twitterfeed&utm_medium=twitter&utm_campaign=Feed%3A+OilvoiceHeadlines+%28OilVoice+Headlines%29

Russia’s natural gas prices in Europe will probably slump 37 percent this quarter to levels not seen since 2005 because of the rout in oil.

The first-quarter price may drop to about $180 per 1,000 cubic meters compared with $284 a year ago, Gazprom PJSCchairman Viktor Zubkov said Wednesday at a conference in Vienna. Gazprom meets about 30 percent of the European Union’s gas demand.

Russia is still committed to oil-linked pricing in its long-term supply accords even as crude hovers near its lowest since 2003. The company in October forecast that its gas prices in Europe may drop to the lowest level in 11 years in 2016. That estimate was based on an average price of $50 a barrel set in the nation’s budget. So far this year, Brent crude has averaged $32 a barrel.

“It’s extremely dangerous to be guided by here-and-now profits in such a forward-looking industry as gas -- that may undermine” the market, Zubkov said.

The government in Moscow is now considering changes to the budget, possibly
using $40, according to the Finance Ministry. Gazprom gas prices in Europe may
then average $177 a thousand cubic meters in 2016, the country’s Economy Ministry said. That estimate would mean that the European price would be the lowest in 12 years, with export revenue shrinking by more than a quarter in dollar terms to about $28 billion, Bloomberg calculations based on company data show.

GAZPROM SALES OUTSIDE EX-USSR

While gas supplies to Europe will depend on the market, the company so far sees volumes stable at about 160 billion cubic meters this year, Zubkov said. Gazprom sees increasing demand for imported fuel in the region given the drop in production in the European Union, Gazprom export arm’s head Elena Burmistrova said at the same event.

“Europe will need a great deal of natural gas in the coming decades, and there will be room enough for all in the gas market,” Burmistrova said.

http://www.bloomberg.com/news/articles/2016-01-20/oil-s-plunge-drags-gazprom-s-gas-price-in-europe-down-by-37-

Kremlin-controlled energy giant Gazprom warned the European Union on Wednesday of a wide-scale gas market crisis and underinvestment amid falling commodity prices unless Brussels revises its "contradictory" energy policies.

Gazprom supplies Europe with a third of its gas needs. Its exports to the European Union and Turkey last year rose by 8 percent to 159.4 billion cubic metres as consumers took advantage of falling gas prices, which are pegged to those of oil with a six- to nine months lag.

Gazprom's chairman Viktor Zubkov told a conference in Vienna on Wednesday that Russian gas prices in Europe will likely fall by more than a third in the first quarter to $180 per 1,000 cubic metres and that exports this year will remain broadly the same.

However, he painted a gloomy picture for years ahead as oil prices have plummeted to 12-year lows and suppliers are facing financial constraints.

"There are actually only quite a few countries that can continue their investment when prices are as low as they are now. In the future, when there won't be enough investments for 2017-18 there might be huge problems on the gas markets," he told the conference.

Russian gas supplies to Europe have become increasingly politicised after Moscow's relations with the West dramatically worsened in 2014 following Russia's annexation of Ukraine's Crimea peninsula and introduction of sanctions by the EU and United States.

The EU had introduced new sets of regulations, known as Third Energy Package in 2009, which angered Gazprom and forced it to sell stakes in some assets in Europe.

The regulations, entered into force in the EU in 2009, also set a huge obstacles to Gazprom's plans to build the South Stream undersea gas pipeline to Bulgaria - a project eventually scrapped by President Vladimir Putin in 2014.

Zubkov, a close ally of Putin, told the conference that Russia "needs to understand the role the EU gives to Russian gas in its energy mix".

"We need to know clear rules of the game on the market because investments... will depend on this," he said.

"The situation is rather difficult now and it could be a great risk for security of supply. We need balanced cooperation with our partners," Zubkov said, reassuring that Russia will always be a reliable energy supplier.

"We call upon our European partners to keep up a long term balance of the interests of all participants of the market. We don't know how long the prices will be as low as they are now."

Last year, Gazprom agreed with a number of European companies to expand the Nord Stream pipeline which should double the existing capacity of the route and help Russia to avoid Ukraine as a transit country for some of its gas flows to Europe.

http://www.reuters.com/article/russia-gazprom-europe-idUSL8N1541Q9

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The world’s largest oil companies, grappling with lowest crude prices in 12 years, met behind closed doors at Davos in a push to cut costs by standardizing some of the equipment used in exploration and production, according to two people who attended.

The meeting, attended by the heads of Saudi Aramco, BP Plc, Statoil ASA and Repsol SpA, as well as senior executives from Royal Dutch Shell Plc, Total SA and Chevron Corp., is the latest sign the industry is moving away from the bespoke kit designed on a project-by-project basis that seemed affordable during the decade-long boom in prices.

As have prices have tumbled, reaching a 12-year low below $28 a barrel in New York on Wednesday, companies have taken an ax to spending. Investments in oil and gas fields worldwide probably dropped to $572 billion last year, 20 percent lower than the $715 billion spent in 2014, the International Energy Agency, said in November. Spending is likely to drop by a similar amount this year, Fatih Birol, executive director at the Paris-based agency said at the time.

The biggest oil companies believe they can reach a technical consensus with their suppliers so everyone in the industry uses the same kind of kit in some areas, including giant valves and submerged oil well equipment, the people said, asking not to be identified because the meeting was private.

Shell declined to comment. Saudi Aramco, BP, Repsol and Total didn’t immediately respond to requests for comment.

CEO Eldar Saetre participated at the Community Project Working Dinner for the Oil & Gas Industry in Davos yesterday, along with executives of more than 50 companies, Statoil spokesman Baard Glad Pedersen said by phone. He declined to provide details of what was discussed over dinner.

The share prices of oil-services companies that supply the industry have fared even worse than producers in the slump as projects are canceled and spending pared back. The Schlumberger Ltd., the world’s largest oil-services provider, has fallen 22 percent over the last year, while Exxon Mobil Corp. is down 16 percent over the same period.

http://www.bloomberg.com/news/articles/2016-01-20/in-private-davos-meeting-oil-chiefs-push-plan-to-reduce-costs

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Genel Energy, one of the main oil producers in Iraqi Kurdistan, forecast lower revenue and production for this year, hurt by weak oil prices, sending its shares down to a record low on Wednesday.

The company forecast revenue of $200 million-$275 million for 2016, assuming Brent oil price at $45 per barrel. Genel reported revenue of $342 million for 2015.

Genel also forecast this year's production at 60,000-70,000 barrels per day (bpd). The higher end of the range was 17.5 percent lower than the 84,900 bpd that it produced on average for 2015.

Oil producers across the globe are trying to deal with the financial fallout of a sharpdecline in crude prices.

Crude futures slumped again in Asian trade on Wednesday, with U.S. oil dropping more than 3 percent towards $27 a barrel and its lowest since 2003, on worries about global oversupply.

However, the company said it was well-positioned to weather the downturn in oil prices as its production cost was $2 per barrel and due to recent efforts at cutting capital expenditure and overhead expenses.

The London-listed company, which was owed $409 million by the Kurdistan Regional Government (KRG) for oil exported from the region as of October, said it received almost $100 million in four consecutive payments.

http://www.reuters.com/article/genel-energy-results-idUSL3N1542NA

Venezuela has requested that OPEC hold an emergency meeting to discuss steps to prop up oil prices, which have fallen to their lowest since 2003, two OPEC sources said on Wednesday.

But four other delegates from countries in the Organization of the Petroleum Exporting Countries said such a meeting was unlikely to happen. OPEC's Gulf members including Saudi Arabia have opposed earlier calls for emergency meetings.

"Venezuela has requested an extraordinary meeting," said an OPEC delegate from a Middle East member-country. Another OPEC source confirmed that such a request had been made.

The next scheduled OPEC meeting is not until June.

OPEC's statutes say support from a simple majority of the 13 members can trigger an extraordinary meeting. But delegates say that in practice, none will occur without support from Saudi Arabia and other top producers.

The last extraordinary meeting to discuss a price slump, in 2008, resulted in OPEC making its largest-ever production cut, paving the way for prices to double within a year.

http://www.reuters.com/article/opec-venezuela-idUSL8N154326

Brazil's state-run oil company Petroleo Brasiliero SA is in talks to sell its Argentine assets, it said on Wednesday in a filing, but added there was no assurance that a deal would be signed.

http://www.reuters.com/article/petrobras-argentina-divestiture-idUSE6N0Z901S

Woodside Petroleum Ltd., Australia’s second-largest oil and gas producer, expects writedowns of as much as $1.2 billion for 2015 after the slide in energy prices.

The charges will be finalized when it reports earnings next month, Perth-based Woodside said Thursday in its fourth-quarter production report. Sales in the quarter fell 37 percent to $1.11 billion from $1.76 billion a year earlier.

Woodside is among energy companies coping with worsening market conditions and oil prices that have fallen to the lowest levels since 2003. With a relatively strong balance sheet and new projects across the industry in doubt, Woodside may seek acquisitions after abandoning its pursuit of Oil Search Ltd. last month, according to Morgans Financial Ltd.

“Given that they walked away from their approach for Oil Search, perhaps they are in the hunt for additional acquisitions to fill that growth profile,” Adrian Prendergast, an analyst at Morgans in Melbourne, said by phone. “They certainly have the firepower.”

The Australian producer is weathering oil’s slump better than competitors, its shares sinking 22 percent in Sydney trading over the past year compared with a 33 percent slide in the MSCI AC Asia Pacific Energy Index and a 60 percent tumble for rival Santos Ltd.

http://www.bloomberg.com/news/articles/2016-01-20/woodside-sees-up-to-1-2-billion-in-writedowns-after-oil-rout

China National Petroleum Corp., the country’s biggest oil and gas producer, boosted overseas output in countries from Central Asia to Africa to a record amid tumbling oil prices and currency fluctuations.

CNPC raised its equity oil and natural gas production in countries including Iraq by 10.5 percent to record 72.02 million metric tons last year, it said in its online newsletter on Thursday. That’s nearly 1.45 million barrels a day. Equity output refers to the company’s share of production split between project partners.

“In 2015, the overseas operation was challenged by low oil prices, geopolitical instability and worsening security in some countries, as well as big currency fluctuations,” CNPC said in the statement. “The company has been coping with the difficult time through cutting costs.”

Oil collapse below $30 a barrel has forced global producers from Royal Dutch Shell Plc to CNPC’s state-run rival China National Offshore Oil Corp. to cut spending. CNPC last year cut investments in its Kazakhstan operations by 50 percent and lowered spending in Latin America by more than 60 percent, it said.

CNPC added 98.86 million tons of overseas recoverable oil and gas reserves last year, 29 percent above its target, in countries including Kazakhstan, Sudan and offshore Brazil. Total overseas output at projects it operates climbed 8.5 percent to 138 million tons, a figure that includes oil and gas owned by project partners.

http://www.bloomberg.com/news/articles/2016-01-21/china-s-cnpc-boosts-overseas-oil-gas-production-to-record-high

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U.S. refineries along the East Coast and the Midwest are facing their first major test of the winter season since last year's blistering cold set off a string of outages, sending gasoline and diesel prices soaring.

Freezing temperatures have descended upon the U.S. Northeast and Midwest ahead of a potentially historic storm that threatens to dump as much as 24 inches (61 cm) of snow in parts of the I-95 highway corridor running between Boston and Washington this weekend, according to the National Weather Service.

Temperatures are also expected to remain below 20 degrees Fahrenheit (-7 degrees Celsius), about 10 to 15 degrees below normal.

Marathon Petroleum's refinery in Catlettsburg, Kentucky emerged over the long weekend as the first victim of this year's freezing temperatures, shutting down several key units after pipes froze in single-digit temperatures. Workers were struggling to restart the units on Tuesday.

Although most refineries, particularly those in northern climes, are designed to operate throughout the winter, increasingly extreme weather conditions in recent years have tested their resilience. Last February more than a third of the East Coast's capacity was abruptly shut down due to glitches.

"At 30 degrees and 10 inches of snow, we're ok. At 15 degrees, and 10 inches of snow, there could be problems," said one East Coast refinery worker.

Operators are expected to call in additional workers later this week or at the weekend if the storm hits to help apply steam to pipes and gauges to prevent freezing, according to industry sources at the region's refineries.

Some have already applied the lessons learned last year.

At Delta Airlines' refinery outside of Philadelphia, among the hardest hit by the cold last year, workers spent a good portion of the last year identifying and eliminating idle sections of piping within the plant, known as "dead legs," a source familiar with the plant's operations said on Tuesday.

Those segments, which can explode or snap as the residual product in the line expands and contracts, were partly responsible for glitches that shut down much of the plant for nearly two weeks last year, the source said. Its supply of water used for coolant had also frozen.

"It was a big priority," the source said.

Monroe Energy, the subsidiary of Delta that runs the plant, did not respond to requests for comment.

MARGIN BOOST?

Additional refinery glitches could offer some relief to traders who have voiced fears that a rapidly growing surplus of diesel fuel - swollen by the lack of demand for heating fuel during the warmest fourth quarter on record - coupled with an emerging excess of gasoline could trigger a renewed slump in oil prices.

Gasoline demand, along with healthy margins, have been the one bright spot in the collapse in oil prices. The RBOB crack LRBc1-LCOc1, an indicator of profit margins for refining crude into gasoline, settled at $15.70 per barrel Tuesday, nearly double the $8.65 per barrel a year ago.

Gasoline inventories on the East Coast have risen the past four weeks to 62.9 million barrels, while distillate stocks are at the highest levels in the region for this time of year since 2007, according to the U.S. Energy Information Administration.

"We have plenty of product, so a disruption may not be a bad thing," John Auers, a vice president at Turner Mason, said. "Also, the cold weather is a welcoming thing from a distillate demand standpoint."

Last winter, freezing temperatures caused a spate of refinery problems, particularly on the East Coast.

During four weeks of February, when plants would normally have been running flat out due to robust profit margins and intense winter demand, output dropped 40 percent to 773,000 bpd REFCR-1-EIA, one of the lowest weekly rates ever recorded, according to Energy Information Administration data. It rebounded in March as they recovered.

For the moment, U.S. plants are still running at breakneck rates. The U.S. refinery utilization rate last week was 91.2 percent, among the highest levels ever for this time of year, EIA data shows.

At Phillips 66's 238,000-bpd Bayway refinery in Linden, New Jersey, the largest in the region, they're also bracing for the cold weather and potential storm. Last year it suffered delays in restarting a crude unit after planned work. Severe cold froze lines that fed the system.

http://www.reuters.com/article/refinery-operations-winter-idUSL2N1532FX

Wells with EURs averaging >1.3 MMBOE with an estimated cost of $8.0 MM generate IRRs >30% at current strip prices1

U.S. pipeline company Kinder Morgan Inc swung to a fourth-quarter loss after a $1.15 billion writedown on natural gas assets, and said weak commodity and stock markets could bring more trouble.

"Let me give you this warning, if commodity and equity prices continue to fall, then we may have impairments in future quarters," Chief Financial Officer Kimberly Allen Dang told analysts on a quarterly earnings call on Wednesday.

Kinder Morgan, the largest energy infrastructure company in North America, cut its 2016 capital budget to $3.3 billion from its previous estimate of $4.2 billion, based on West Texas Intermediate crude oil trading at $38 per barrel.

Kinder Morgan, which also disclosed a $285 million writedown mainly in its carbon dioxide segment, said it does not expect to access the capital markets to fund growth projects in 2016.

The Houston-based company, once resilient in the face of falling oil prices, last month cut its dividend, by 75 percent, for the first time since going public to maintain cash.

President and Chief Executive Steven Kean said the company shaved its capital budget largely by dropping acquisitions, which he did not identify, cutting costs and lowering carbon dioxide spending.

The company also delayed completion of $5.4 billion Trans Mountain Pipeline expansion by a year, to the third quarter of 2019, as it awaited regulatory approval. The capacity expansion, to 890,000 bpd from 300,000 bpd, has met fierce environmental and aboriginal opposition.

One shareholder on the conference call raised concerns about continued capital spending. "Now there's the fear that the dividend isn't even secure," he said.

"I'm the largest shareholder," Chairman Rich Kinder responded, noting that the company would use cash flow as it saw best given volatile market conditions. "I want to see all kinds of value derived by the common shareholders of this company."

Kinder Morgan posted a net loss of $637 million in the quarter ended Dec. 31, compared with a profit of $126 million a year earlier.

Excluding items, profit fell to $491 million from $664 million. Revenue dropped 8 percent to $3.63 billion.

http://www.reuters.com/article/us-kinder-morgan-de-results-idUSKCN0UY2R0

Range Resources’ ethane will start to flow through a “fully operational” Mariner East 1 pipeline to the Marcus Hook refinery in February, according to an announcement by Range.

Mariner East 1 has been up and running for some time, but has not, until now, flowed ethane. Yesterday’s announcement states the ethane will be loaded onto ships.

Range doesn’t say where the ethane on those ships will go, but we already know that part of the story. The ethane (at least some of it) is headed for Norway, Scotland and possibly Panama.

Fantastic news that the Mariner East 1 pipeline is about to be fully, 100% ethane operational, after a very long battle to complete it…

http://marcellusdrilling.com/2016/01/range-resources-ethane-heading-to-marcus-hook-beginning-february/?utm_source=dlvr.it&utm_medium=twitter