Saudi Arabia reduced crude oil exports in April as the world’s biggest producer used record supplies domestically for a burgeoning refining industry.

Shipments fell to 7.74 million barrels a day from 7.9 million in March, the Riyadh-based Joint Organisations Data Initiative said on its website Thursday. The nation processed 2.22 million barrels a day in domestic refineries in April, the most since at least January 2002 when JODI started collecting statistics from governments.

Saudi Arabia began operating a 400,000 barrel-a-day refinery at Yanbu on the Red Sea last year. Another plant with the same capacity is scheduled to begin operation in 2017 at Jazan in the country’s southwest. The kingdom’s oil-product exports rose 44 percent last year following the startup of a refinery in the Gulf port of Jubail, according to JODI data.

“Saudi needs more crude to stay at home,” Kamel al-Harami, an independent oil analyst in Kuwait, said by phone from Kuwait City on Thursday. “The Saudis want to put a cap on exports during summer and they are satisfied with anything around 7.7 million to 7.9 million barrels a day as they want to keep their market share.”

Saudi Arabia’s output rose to 10.31 million barrels a day in April from 10.29 million in March, according to JODI. The nation was the world’s largest producer for a second month in a row, displacing Russia which had been first in February.

Brent for August settlement traded at $63.81 a barrel, down 6 cents, on the London-based ICE Futures Europe exchange at 2:58 p.m. local time.

http://www.bloomberg.com/news/articles/2015-06-18/saudi-april-crude-exports-drop-as-more-supply-used-domestically

Russian and Saudi oil ministers plan to discuss a broad cooperation agreement on Thursday at an economic forum in Russia's second city of St Petersburg, two sources told Reuters.

One source said the agreement to be discussed between Russian Energy Minister Alexander Novak and Saudi Arabia oil minister Ali al-Naimi would not be about joint oil production or export strategy.

A spokeswoman for Russia's Energy Ministry confirmed the meeting but declined to comment on the agenda.

Saudi Arabia is the leading oil producer in OPEC and the world's top oil exporter, while Russia, which is not an OPEC member, is the second biggest oil supplier to the global markets.

http://www.reuters.com/article/2015/06/18/russia-crisis-forum-saudi-idUSR4N0YV01320150618

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Saudi Arabia is said to be in talks with Indian oil buyers to ship crude on the Middle East supplier’s own tankers, potentially cutting the cost of cargoes.

While the world’s biggest crude exporter won’t offer to sell its crude at a discount to its official selling price, it may pass on the benefit of lower shipping costs, four people with knowledge of the matter said, asking not to be identified because the talks are confidential. The use of vessels owned by Saudi Arabia may reduce the cost of its supplies by 25 to 30 cents a barrel, two officials at two Indian refiners said.

OPEC’s biggest member is seeking to defend market share amid competition from other suppliers and as refiners across Asia look for bargains from Europe to Mexico. Producers are vying for sales as a global glut is exacerbated by the highest U.S. output in more than three decades and as the Organization of Petroleum Exporting Countries pumps at the fastest pace since 2012.

“Everybody is trying to capture market share,” Ehsan Ul-Haq, an analyst at KBC Energy Economics in London, said by phone. “One of the things the Saudis can do is to provide better freight in order to somehow influence refiners to take more crude from them.”

Saudi Arabia may sell its supply to India on a delivered basis, meaning shipping costs are included in the price paid by the buyer for the cargo, the people said. The Middle East nation typically sells its crude on a free-on-board basis, where the buyer arranges freight.

The two sides are still discussing the plan, which would need government approval, said the people. Saudi Aramco, as the state oil company is known, sells its crude to Asia at a monthly differential to the average of the Dubai and Oman grades.

http://www.bloomberg.com/news/articles/2015-06-18/saudis-said-to-discuss-sweetening-india-oil-deals-with-own-ships

Russian gas producer Gazprom and Royal Dutch Shell have signed an agreement to expand the Sakhalin-2 LNG project.

Officials from both companies signed the agreement at an economic forum in Russia's second city of St Petersburg on Thursday.

The Sakhalin-2 project, Russia's sole LNG plant, has a current annual capacity of around 10 million tonnes. The third line would add another 5 million tonnes of liquefied natural gas a year.

http://www.reuters.com/article/2015/06/18/russia-crisis-forum-shell-idUSR4N0YV01D20150618

Russia’s Rosneft has signed a new gas supply pact with the country subsidiary of German energy giant E.ON as the state-owned company seeks to boost its gas business in competition with compatriot Gazprom.

The contract, signed at this week’s International Economic Forum in St Petersburg, entails the supply of 4.4 billion cubic metres of gas over a five-year period to E.ON Russia’s Surgut Power Plant-2 and is a continuaton of an existing supply deal that expires this year.

Rosneft said in a statement it is the leading gas producer among Russian oil companies, with output of 56.7 billion cubic metres last year and estimated gas reserves of 7.2 trillion cubic metres.

http://www.upstreamonline.com/live/1403607/rosneft-in-gas-supply-pact?utm_source=twitterfeed&utm_medium=twitter

UK-based Sequa Petroleum has reached agreement to buy a portfolio of Norwegian offshore field interests for $602 million from Wintershall, the oil and gas subsidiary of BASF, the companies said on Thursday.

Sequa said the transaction will be conducted by Oslo-based Tellus Petroleum Invest A/S, which it is also buying in a concurrent deal for $4 million plus 6 million shares in Sequa.

The agreement with Wintershall will give Tellus interests in five fields – 20 percent of Knarr, 15 percent of Maria, 10 percent of Yme, 6.5 percent of Ivar Aasen and 4.5 percent of Veslefrikk.

Wintershall will remain operator for the Maria development, retaining a 35 percent interest.

Proven and probable reserves being acquired are estimated to be a net 59 million barrels of oil equivalent, based on data from the Norwegian Petroleum Directorat, the company said.

https://uk.news.yahoo.com/wintershall-sell-package-offshore-norway-assets-602-mln-090506816--finance.html#dsfWTk9

Asset management company Baillie Gifford, oil producer Dragon Oil's largest independent investor, said an increased takeover offer from majority owner Emirates National Oil Co (ENOC) "materially undervalued" the company.

ENOC, which owns 54 percent of Dragon Oil, increased its bid to buy out minority shareholders to 750 pence per share on Tuesday, valuing the stock it does not already own at about 1.7 billion pounds ($2.7 billion).

Baillie Gifford, Dragon Oil's second-biggest investor after ENOC with a 7.2 percent stake, said the improved offer does not fully value the firm's growth potential.

Baillie Gifford said on Thursday that it had offered to discuss the possibility of ENOC including a contingent payment note to shareholders as part of the deal.

The note would pay out if production from Turkmenistan's Cheleken contract area, Dragon Oil's only producing field, hits certain milestones, Baillie Gifford said.

Dragon Oil said it expects production at Cheleken to plateau at 100,000 barrels of oil per day for the next five years.

A spokesman for ENOC maintained that the offer was a fair one.

"The offer price was derived based on extensive feedback from numerous shareholders, and the independent committee of Dragon Oil," the spokesman said.

The current round of bidding is ENOC's second attempt to buy Dragon Oil after failing to acquire the company in 2009.

http://www.reuters.com/article/2015/06/18/dragonoil-ma-enoc-idUSL5N0Z435B20150618

Two-thirds of North Sea oil and gas industry operators (67 per cent) have been forced to cancel projects because of the recent fall in oil price, according to an industry report published today.

The findings, from the 22nd Oil and Gas Survey, conducted by Aberdeen & Grampian Chamber of Commerce in partnership with law firm Bond Dickinson, reveal that half of operators (50 per cent) have been forced to reduce staff training for the same reason.

The fall in oil price has been a contributory factor to a fall in confidence and activity levels in the sector. Contractors' confidence in the UK Continental Shelf is at its lowest point since the survey began in 2004. Only 7 per cent of contractors are more confident about their UKCS activities than they were a year ago, compared to 76 per cent who are less confident.

The percentage of firms that report working at or above optimum levels in the UKCS has also fallen to its lowest level since the survey began in 2004. Just one in five contractors (21 per cent) is working at or above optimum levels, down from 47 per cent in the previous survey and just over half (52 per cent) report working at or above optimum levels in overseas markets, down from 72 per cent.

Exploration has been a big casualty of the challenges facing the oil and gas industry, with 70 per cent of all firms involved in exploration having seen the value of it fall in the past 12 months, and just 8 per cent of them expecting the value of exploration to increase in the coming year.

One respondent cautioned that although measures in the March 2015 Budget were welcome, further stimulus to exploration and investment is required: 'Allowances on producing fields were welcome, but more was needed to increase exploration drilling, without which there will be no new projects and decommissioning will accelerate, thus removing infrastructure and opportunity for good.'

http://www.oilvoice.com/n/Survey-reveals-bleak-picture-for-North-Sea-oil-and-gas-industry/ce971282d70b.aspx#.VYKcCW2QaWM.twitter

Russian gas giant Gazprom has agreed to build a new pipeline to Germany under the Baltic Sea with a trio of Western energy companies, bringing Europe closer into Moscow's energy orbit.

The Russian gas company is trying to find new ways to deliver gas to Europe bypassing conflict-stricken Ukraine.

"Since the commissioning of Nord Stream pipeline, Gazprom has been investigating potential extension of this export route. Now we are going to proceed with the implementation of this project together with our partners," Gazprom Chief Executive Alexei Miller said in a statement.

Gazprom's partners in the Nord Stream pipeline, a major gas supply artery feeding into western Europe, are Anglo-Dutch Shell , Germany's E.ON and Austria's OMV.

Gazprom would own 51 percent in the project to build stage 3 and 4 of Nord Stream, with capacity of 55 billion cubic metres per year, Gazprom spokesman Sergei Kupriyanov said on the sidelines of the St Petersburg International Economic Forum.

Gazprom wants to bypass Ukraine, its key gas export route to Europe, and plans to build the Turkish Stream pipeline beneath the Black Sea to ensure smooth transit of Russian gas when the transit contract with Kiev expires in 2019.

Despite plans to start laying pipes in coming weeks, Moscow and Ankara have no firm agreement on the project yet.

At the same time Gazprom's soured relationship with the European Commission over Russia's role in the Ukraine crisis means it may have a hard time convincing Europe to approve new pipelines that increase the region's dependence on Russian energy.

But Nord Stream partner E.ON argues that Europe's demand for Russian gas will grow as domestic production declines. European gas output is set to shrink to 185 billion cubic metres (bcm) by 2030 from 275 bcm in 2010, it said in a statement.

E.ON, Germany's biggest utility, said expanding Nord Stream was the most efficient and cheapest method of ensuring European energy security, pointing out that diversifying supply routes is was important as finding new suppliers.

The aim was to complete the first expansion strand in the fourth-quarter of 2019 and the second in the fourth quarter of 2020, E.ON said.

Nord Stream, which already consists of two lines, has an annual capacity of 55 billion cubic metres.

Gazprom is currently allowed only limited access to the pipeline under a European Union law which seeks to prevent energy suppliers from dominating infrastructure.

Kupriyanov told reporters that apart from E.ON, Shell and OMV there could be other shareholders in the expansion project.

http://www.reuters.com/article/2015/06/18/energy-gazprom-pipeline-idUSL5N0Z42OB20150618

The shale boom that’s reduced U.S. dependence on overseas crude is reverberating in Nigeria as Africa’s biggest oil producer cuts the pricing for its flagship grade to the lowest in a decade.

The country, part of the Organization of Petroleum Exporting Countries, will sell July supplies of its Bonny Light crude at 23 cents more than Dated Brent, according to an e-mailed statement from state-run Nigerian National Petroleum Corp. That’s the smallest differential since 2005 and compares with a 50 cent premium in June and $2.55 a year earlier, data compiled by Bloomberg show.

Surging output from U.S. shale formations contributed to a market glut that drove crude almost 50 percent last year, roiling global markets as producer nations lost revenue and foreign-exchange reserves. While oil has pared losses this year, prices are still below what some producers including Nigeria and other OPEC members need to balance their budgets, data from the International Monetary Fund and ING Bank NV show.

“Nigeria has no choice but to cut their price differential to fight for market share,” Hong Sung Ki, a commodities analyst at Samsung Futures Inc., said by phone from Seoul. “The U.S. was its key oil buyer in the past but imports have been shrinking with more shale output in an already oversupplied market.”

The slump in prices last year forced authorities in Nigeria, which relies on oil for about 70 percent of its income, to scale back budgeted spending and devalue the naira currency. The nation’s former finance minister, Ngozi Okonjo-Iweala, said earlier this month that her successor will face a “difficult” year because of plunging crude revenues.

The U.S. has bought an average 30,000 barrels a day of Nigerian crude this year, data from the Energy Department show. It shipped almost 1 million barrels a day from the African nation in 2010, according to the data.

http://www.bloomberg.com/news/articles/2015-06-19/nigeria-cuts-pricing-for-bonny-light-crude-to-lowest-in-a-decade

PTT of Thailand could cut on buying LNG in the second half of 2015 as gas consumption is expected to be lower.

Sources told Platts that gas consumption growth was lower than the expected 5% rise which cuts on PTT’s LNG requirements. The slow growth is due to a decline in domestic power demand.

The company is assessing its market position for September after it completely abandoned LNG purchases in August.

Although the gas consumption in 2015 is expected to grow slower than expected, a significant rise in LNG imports is predicted.

The company already secured six cargoes through tenders, amounting to 370,000 tons of LNG, while it is also expected to receive 2 million tons of the chilled gas from Qatar through the 20-year supply deal it signed with Qatargas in 2012.

http://www.lngworldnews.com/ptt-to-cut-on-lng-purchases/