Iraqi Oil Minister Jabar Ali al-Luaibi on Tuesday asked foreign oil companies to increase oil and natural gas production and exports in order to maximise the OPEC nation's revenue, ministry spokesman Asim Jihad told Reuters.

Luaibi, who took over the ministry earlier this month, held a meeting in Baghdad with oil companies operating in Iraq.

"The minister reaffirmed support for the operations of international companies in order to increase the production and export rates of crude oil and natural gas," Jihad said.

http://www.reuters.com/article/us-iraq-oil-foreign-idUSKCN10Y0XI?utm_campaign=trueAnthem:+Trending+Content&utm_content=57bc2dde04d301708f405888&utm_medium=trueAnthem&utm_source=twitter

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The ExxonMobil-operated US$19 billion PNG LNG project is looking at multi-year contracts for spot sales of the chilled fuel as the project is producing above the nameplate capacity, according to Oil Search that has a 29 percent share in the JV.

The PNG LNG project is producing 7.7 million tonnes per annum (mtpa), 12 percent above the nameplate capacity of 6.9 mtpa. It is currently in the recertification process for all of the PNG LNG fields, which according to Oil Search will result in a larger reserve base that could underpin long-term contracts for future spot LNG cargoes.

“At the moment, as we go to the recertification process for all of the PNG LNG fields, those are relatively short-term type of spot sales that we are looking at which may cover four to eight cargoes,” Julian Fowles, Oil Search’s executive general manager for PNG, told analysts on a conference call on Tuesday after the company announced its first-half results.

However, with a positive outlook on the recertification, the JV would “certainly be looking at longer term strips of sales – contracts that would be potentially a number of years that would cover a substantial portion of the spot volumes that we have since we are currently producing above nameplate capacity,” Foyles said.

PNG LNG sold eight spot cargoes in the first half of this year, out of which six were delivered to Japanese customers, Fowles said,  adding that this reflects the “desire of our premium customer for our high heating value gas.”

“We have also been selling spot cargoes to other customers beyond our long-term contract customers that have traditionally been our primary buyers of spot cargoes. We have other customers now becoming used to PNG LNG product, and that is also good for future marketing of longer-term spot cargoes.”

The PNG LNG project commenced production of LNG in April 2014 and since then it had delivered 205 cargoes of the chilled fuel.

The LNG project includes gas production and processing facilities in the Southern Highlands, Hela, Western, Gulf and Central Provinces of Papua New Guinea.

There are over 700 kilometres of pipelines connecting the facilities, which includes a gas conditioning plant in Hides and the two-train liquefaction facility near Port Moresby.

According to Oil Search, there is enough gas for two more LNG trains, and also a third one if the next drilling campaign is successful.

Besides ExxonMobil and Oil Search, other JV participants are Santos, National Petroleum Company of PNG, JX Nippon Oil and Gas Exploration, Mineral Resources Development Company, and Petromin PNG Holdings.

http://www.lngworldnews.com/png-lng-eyes-multi-year-spot-contracts/

Oil Search Ltd. said development of a second standalone liquefied natural gas export terminal in Papua New Guinea is unlikely with Exxon Mobil Corp. and Total SA expected to favor cooperation to expand the existing PNG LNG project.

The Sydney-based company owns 29 percent of the Exxon Mobil-led PNG LNG project and a 22.8 percent stake in the Papua LNG development operated by Total and co-owned by explorer InterOil Corp. Exxon Mobil, after prevailing over Oil Search in the $2.5 billion battle for control of InterOil Corp. in July, said it will funnel gas from the Papua project into an expansion of PNG LNG.

“A greenfields development for Papua LNG is highly unlikely based on the share of equity that will reside across the various projects at completion of the InterOil transaction with Exxon Mobil,” Oil Search Managing Director Peter Botten said on an earnings call.

Botten was speaking Tuesday after Oil Search posted a 89 percent fall in first-half net income to $25.6 million as a drop in energy prices offset increased output. The result compared with expectations for $38 million, according to the average of three analysts surveyed by Bloomberg.

The price Oil Search received for oil and condensate fell 27 percent from the year before while liquefied natural gas prices dropped 40 percent. Oil Search slashed its interim dividend to 1 cent from 6 cents a share.

Oil prices have likely bottomed and the company is in the midst of an eight week strategy review after losing out in its battle for InterOil, according to Botten. The study, which will be completed by the fourth quarter, will focus on cooperation between the PNG LNG and Papua LNG projects to determine what strategies hold the most value for all stakeholders, Botten said in a statement.

The company delivered a higher than expected dividend, Macquarie Group Ltd. said in a note. “Based on the increasing volumes and revenue as well as further lowering of costs at PNG LNG, we anticipate this higher dividend will be the first of many,” according to the note.

Oil Search last month said revenue fell 33 percent even as production climbed 4 percent. Brent oil averaged about $41.20 a barrel for the first half, more than 30 percent less than the corresponding period in 2015.

Oil Search’s realized price of $5.23 per million British thermal units for its gas in the second quarter is lower than rival Woodside Petroleum Ltd., according to data compiled by Bloomberg.

http://www.bloomberg.com/news/articles/2016-08-23/oil-search-profit-plunges-89-after-slump-in-energy-prices

China's crackdown on alleged tax evasion in the oil industry will target independent refineries and follows complaints by state energy giants, in the first major sign of growing tensions between established players and their upstart rivals.

In a statement on Tuesday, the National Development and Reform Commission (NDRC) said it will ban crude imports for up to a year or, in certain cases, cancel import licenses for any companies found guilty of tax fraud.

It did not give any further details, identify which companies it was targeting or provide the reason for the announcement.

But industry sources in China familiar with the matter say the government launched an investigation earlier this year into complaints by government-owned firms that the nation's independent refiners, known as teapots, are not paying enough sales taxes.

Officials from the NDRC and the State Administration of Taxation have visited some teapots, they said.

"(The probe) was triggered by strong complaints from state oil companies that local refineries were paying much less fuel tax compared to them," said a senior official with the China Petroleum & Chemical Industry Federation, a semi-official agency. He declined to be named due to the sensitivity of the issue.

Inspectors from the NDRC are also looking into allegations that refineries with import licenses are selling foreign crude oil to companies without, breaking rules set by Beijing when it started granting the quotas a year ago, according to four industry officials with knowledge of the inspections.

The complaints illustrate how the rapid rise of the teapots, which are mainly privately owned and nimbler than their state-run rivals, like Sinopec and PetroChina, has roiled the domestic industry since Beijing granted the import permits a year ago.

Any steps to curb their imports would be a major blow to this small but fast-expanding group, which have grabbed a growing slice of the domestic market by selling diesel and gasoline at discounts to state-run majors, and forcing them in turn to sell their excess into a saturated global market.

"Previously, state refiners have been (turning) a blind eye on teapots, because they are not a big enough threat. Now things have changed. Big SOEs are quite sensitive over teapots' business practices," Lin Boqiang, energy researcher with Xiamen University.

When asked about the probe last week, Sinopec spokesman Lu Dapeng said he had no knowledge of the government's inspections, and would not comment further.

Rancor over taxes has been brewing for months, according to local media reports and traders.

Before they had access to foreign crude, teapots mainly refined fuel oil and whatever excess crude they could pick up from the state-owned players.

"A (teapot) plant of five million tonnes of annual capacity pays less than half of that of a state-owned refinery," Li Tianshu, a PetroChina refinery manager was quoted as saying by the 21st Century Business Herald in July.

"Competition from teapots forced us to lower operations, they are now the biggest challenge to our profitability," the paper cited a second state refinery official as saying.

In an apparent response to growing criticism, Shandong Dongming Petrochemical Group, the country's largest teapot operator, last week said via a social media post that it paid a record amount of taxes totaling nearly 1.28 billion yuan ($193 million) between January and April to the government of Heze, where it is headquartered.

That's nearly 40 percent of total tax revenue for the city of 9.6 million people, it said on wechat.

An executive with a leading teapot refiner said independents were paying lower taxes because many were configured to treat heavier crude oil that yields a smaller amount of gasoline and diesel versus more sophisticated plants.

Many produce heavier products like bitumen that are not subject to consumption levies, he added.

http://www.reuters.com/article/china-teapot-tax-idUSL3N1B0213

China's oil refining, petrochemical and chemical companies will propose a plan to benchmark their carbon dioxide (CO2) emissions as the first step toward setting up an emissions market for the sector, the group's industry association said on Tuesday.

The China Petroleum and Chemical Industry Federation (CPCIF), China's oil industry lobbying group, plans to make a proposal by September on how to set benchmarks for the CO2 produced while manufacturing products ranging from diesel fuel to benzene, it said in its China Chemical Industry News newsletter.

The benchmarks will be used to set CO2 emissions caps for nearly 2,400 companies in the sector under the national carbon market that will start next year, the CPCIF said.

China, the world's second-largest oil consumer, will need to benchmarks to help create reduction targets for its large petrochemical and chemical factories that are responsible for up to 70 percent of the sector's CO2 emissions, the CPCIF said.

The number of the petrochemical and chemical companies participating in China's domestic carbon market will account for one-third of the total number of companies participating nationally, said Li Yongliang, a CPCIF official, as cited by China Chemical Industry News.

China plans to bring in up to about 8000 companies in eight industries into its national carbon trading programme, including from the power, steel, cement and transportation sectors.

The CPCIF will propose benchmarks for 23 products including refined oil products, ethylene and aromatic hydrocarbons such as benzene. The final cap will be set based on the benchmarks at the best-performing facilities.

Sinopec Group, China's biggest oil refiner, said earlier this month that it would cut its carbon intensity 51 percent below 2005 levels by 2020 as a part of the company's five-year plan.

China's oil companies have been trading carbon in the seven local carbon exchanges since the start of the pilot trading phase in 2013.

http://www.reuters.com/article/china-carbon-oil-idUSL3N1B42QY

A total of 12 onshore oil and natural gas blocks will be on offer in the second auction of Round Two of Mexico's energy reform, the energy ministry announced Tuesday.

The blocks include 39 fields that have already been explored. In all cases, licenses will be on offer.

A total of nine of the blocks lie in the Burgos Basin, across the US border from Texas, and the nation's main source of non-associated gas.

Production of gas from Burgos has fallen below 1 Bcf/d in recent months. The remaining three blocks comprise two in the Chiapas Fold Belt, and one in the southeastern basins in the states of Tabasco and Campeche. All three have potential for both oil and natural gas.

Speaking at a press conference, Pedro Joaquin Coldwell, the energy secretary, said that the main objective of Round 2.2 is to "extract both wet and dry gas so as to produce more ethane, propane and butane in order to benefit the petrochemical industry."

Mexican gas demand has averaged just over 8 Bcf/d over the past three months, peaking at 8.05 Bcf/d in June, according to Platts Analytics' Bentek Energy data. This represents a year-on-year build of 330 MMcf/d or 4%.

A substantial proportion of that demand is now being satisfied by a growing network of pipelines linking the US to Mexico.

Joaquin Coldwell said the Round 2.2 blocks are, at 340 to 480 square km, much bigger than those of similar blocks in Round One. He added that the ministry hopes to attract $5 billion from investment in 2.2.

Bids on Round 2.2 are to be placed on April 7, 2017. Results will be announced two days later.

Round 2.1 consists of 15 shallow-water southern Gulf of Mexico blocks on production sharing contracts, the ministry recently announced. Bids on 2.1 are to be presented on March 22.

Round One will be completed on December 5, when 10 blocks in the 1.4 auction are being auctioned in the deepwater Gulf of Mexico, including the Perdido Fold Belt. A total of 26 companies, including the majors, have applied to bid and the government expects to bring in $44 billion in investment.

http://www.platts.com/latest-news/natural-gas/mexicocity/mexicos-round-22-auction-features-12-blocks-gas-21329669

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Argentina's government may consider raising natural gas bills on households by less than a previously proposed 400% as it seeks to rebuild gas production to reduce imports, Cabinet Chief Marcos Pena said.

The government will pursue "the best scheme for gradualism" in raising gas tariffs, Pena said Saturday on Cadena 3, a radio broadcaster.

The government called the public consultation last week after the Supreme Court annulled its 400% hike implemented April 1, on grounds that hearings must come first to allow users a chance to voice their concerns before changes are made in what they are charged.

This was a blow for the right-of-center government of President Mauricio Macri, only nine months in office. His government wants to rebuild gas production and end chronic energy shortages, helping to reel in foreign investment to pull the economy out of recession.

To encourage drilling, Macri has doubled the wellhead price to an average of $5.20/MMBtu and kept in place an incentivized price of $7.50/MMBtu for output from new developments, like in shale and tight plays.

With higher gas distribution and transport tariffs, the government wants to cover more of the wellhead price from consumers, helping to reduce the strain on public finances through subsidies.

With more gas production, the government is seeking to cut imports, which hit a record of nearly 50 million cu m/d in June. The goal is to end purchases of liquefied natural gas -- half of total imports -- by 2021-22, the government has said.

Argentina's gas production rose 6.8% to an average of 121.4 million cu m/d in the first five months of 2016 from a 10-year low of 113.7 million cu m/d in 2014, according to Energy Ministry data.

http://www.platts.com/latest-news/natural-gas/buenosaires/argentina-to-consider-less-than-400-natural-gas-21315572

The American Petroleum Institute reported a 4.464 million barrel increase in U.S. crude oil inventories in the biggest build in crude supplies in four months.

These figures are in stark contrast to a survey by Reuters earlier today, which showed an expert consensus for a 0.5 million-barrel draw in crude oil inventories. Similarly, Zero Hedge’s sources expected an 850,000 barrel draw this week, while analysts polled by S&P Global Platts expecteda 200,000-barrel rise in U.S. crude inventories. No estimates expected the massive increase in inventory.

Gasoline inventories decreased by 2.2 million barrels – and if confirmed by tomorrow’s EIA figures, this would be the fourth weekly draw for the energy source in a row. Distillates also experienced an 834,000 barrel draw.

West Texas Intermediate prices fell lower after the release of the new data, in light of the high inventory build-ups. However, the actual supply numbers will be released tomorrow in a report by the federal Energy Information Administration.

In light of the new energy supply configuration, analysts at Goldman Sachs predict that even if the Organization of Petroleum Exporting Countries (OPEC) agree on a production freeze next month, the move will be self-defeating as net energy importer nations begin buying energy supplies en masse to hedge against higher prices.

This week, supplies at the storage facilities at Cushing increased by 417,000 barrels according to the API figures, against a more conservative expected 200,000-barrel build. In the week prior, crude inventories at the site were down by 680,000 barrels according to actual EIA data.

http://oilprice.com/Latest-Energy-News/World-News/Oil-Tanks-After-API-Reports-Massive-Build-In-US-Crude-Stocks.html

U.S. EPA links Texas quakes to oil work, echoing research

Federal regulators have concluded that recent earthquakes in North Texas are likely linked to wastewater disposal wells used by the oil and gas industry, echoing findings from researchers at Texas universities.

EPA officials made the comment in a letter to the Texas Railroad Commission, which regulates the oil industry in the top crude-producing state.

Quakes have been tied to the injection of saltwater, a normal byproduct of oil and gas drilling, into deep disposal wells and underground caverns.

The Railroad Commission has in the past questioned the causal link found in university studies.

"EPA believes there is a significant possibility that North Texas earthquake activity is associated with disposal wells," said the Aug. 15 letter reported by the Texas Tribune on Tuesday.

The EPA said it was concerned about seismic activity in the Dallas-Fort Worth area because of its potential to affect underground sources of drinking water.

On Tuesday, the Railroad Commission said it has subjected new disposal well applications to greater scrutiny, participated in technical hearings about so-called induced seismicity, and supported installation of more earthquake monitoring stations so more data can be collected to better understand seismic activity in Texas.

Regulators in Oklahoma have ordered dozens of disposal wells to be shut in to curb a spate of quakes in that state.

The use of disposal wells intensified during the fracking boom, although U.S. oil and gas drilling has slowed recently on the worst price crash in years.

http://www.reuters.com/article/fracking-quakes-texas-idUSL1N1B41RN

U.S. LNG player Cheniere Energy has shipped the first cargo produced from the second train at its Sabine Pass export facility in Lousiana, according to gas shipping giant BW.

“BW GDF Suez Everett loaded the first cargo from Sabine Pass Train 2 last week,” BW LNG, a unit of the Singapore-based company said in a short statement through its social media channels.

The 2003 built 138,028-cbm LNG tanker left the Sabine Pass facility on August 18 and is currently located in the Caribbean Sea, according to AIS data provided by the vessel tracking website, MarineTraffic.

LNG World News contacted both Cheniere and BW seeking comment on the matter. We will update the article once we receive a response.

Cheniere said in the latest Sabine Pass construction update it expects first Train 2 cargo late August, with completion of the second liquefaction unit expected at the end of September. Train 2 started producing the chilled fuel on July 27.

Cheniere’s Sabine Pass plant in Louisiana, first of its kind to ship U.S. shale gas overseas, started exporting LNG from Train 1 in February this year.

The majority of these exports went to South America, followed by the Middle East, Asia, and Europe.

Cheniere is developing and constructing up to six trains at Sabine Pass. Each train is expected to have a nominal production capacity of about 4.5 mtpa of LNG.

http://www.lngworldnews.com/cheniere-ships-first-cargo-from-sabine-pass-train-2/

PDC Energy Joins Permian Oil Rush With $1.5 Billion Acquisition

PDC Energy Inc. joined the parade of companies buying into the U.S.’s biggest oilfield, announcing a $1.5 billion purchase of two companies with holdings in Texas’ Permian Basin.

PDC agreed to buy two closely held companies with a combined 57,000 acres in the Permian, the Denver-based explorer said in a statement Tuesday. The driller will pay $915 million in cash and give about 9.4 million of its shares to Kimmeridge Energy Management Co., a New York-based private equity fund that manages the two Permian companies.

Drillers including Pioneer Natural Resources Co., Parsley Energy Inc. and Concho Resources Inc. have all announced deals in the Permian this year, expanding their presence in one of the few North American oil regions where production is profitable at current prices. Until now, PDC has concentrated on wells in Colorado and Ohio, according to its statement.

The privately negotiated transaction includes about 57,000 acres in Reeves and Culberson counties in Texas, which currently produce the equivalent of about 7,000 barrels of oil a day. The company intends to fund the cash portion of the purchase though “potential equity and debt financings," PDC said. The deal is expected to close in the fourth quarter.

http://www.bloomberg.com/news/articles/2016-08-23/pdc-energy-joins-permian-oil-rush-with-1-5-billion-acquisition

In the rolling country of central British Columbia, Michael LeBourdais’s Whispering Pines Indian Band is looking forward to a cash injection from a new pipeline proposed by Kinder Morgan Energy Partners LP. He’ll be seeking compensation for his band if it doesn’t go through.

Meanwhile, 400 kilometers (250 miles) away near the pipeline’s terminus in Vancouver, the Tsleil-Waututh First Nation is battling the expansion, saying it will lead to oil spills on their tribal land and in the waters of Burrard Inlet.

Into this breach will step Prime Minister Justin Trudeau, who must decide on the C$6.8 billion ($5.4 billion) Trans Mountain pipeline expansion, which oil companies say is vital to get increased output from Canada’s oil sands to global markets via the Pacific Coast.

The conflicting native views underscore the delicate balance Trudeau must strike as he seeks to fulfill his promises of upholding aboriginal rights and responsible resource development while sparking growth in an economy reeling from plunging oil prices.

Trans Mountain brings together “in one file” the biggest priorities for Trudeau and his Liberal Party government, with political implications that set environmental issues against the “cold, hard facts” of economic development, said pollster Nik Nanos, chairman of Ottawa-based Nanos Research Group. The scale of the decision may even force the prime minister to slow down the process and delay a ruling, currently set for the end of the year, he said.

This is “very tricky because of some of the conflicting priorities,” Nanos said. The decision will “be a big signal nationally and internationally and indicative on how the Liberals convert talk on the environment.”

Pipeline Expansion

Kinder Morgan plans to triple Trans Mountain’s capacity to 890,000 barrels a day by twinning the existing 1,150 kilometer line that runs through the mountainous Canadian province. The system, in operation since 1953, is the only pipeline from Alberta to the Pacific Coast and connects the oil sands directly to a port with reach to markets outside North America.

Input from stakeholders during Kinder Morgan’s 159 workshops and open houses as well as other feedback has “improved” the project, the company said in an e-mailed response to questions. The Houston-based pipeline operator has changed the route to avoid sensitive areas and made the pipeline thicker in some locations, it added.

In deciding Trans Mountain’s fate, the government is adding its own review of the project following the National Energy Board’sgreen light in May, subject to 157 conditions. The expansion probably won’t add to the climate impact of the country’s oil production, the Canadian Environmental Assessment Agency said in a separate report.

Still, even with the conditions and additional review, opposition to the pipeline remains stiff, especially near Vancouver with its beaches and environmentally-conscious residents. Mayor Gregor Robertson in June submitted a request for judicial review of the NEB’s decision. The expansion is “not in Vancouver or Canada’s economic or environmental interest,” the mayor said.

Chief LeBourdais at Whispering Pines, meanwhile, says he wants compensation if Robertson and other opponents succeed in blocking the pipeline, which would provide his band with a “very large sum of money” following years of negotiation with the company.

“If you’re going to say no, that’s ok, but then somebody owes me the value of that negotiated agreement,” he said.

And at a recent public meeting in Burnaby earlier this month as part of the federal government’s review on Trans Mountain, Burnaby Mayor Derek Corrigan summed up the challenges for Trudeau -- using the prime minister’s own words.

“Justin Trudeau said governments give permits but communities give permission,” Corrigan told the panel. “Well, we don’t.”

Canada’s oil companies have struggled to win new outlets for their increasing volumes of petroleum, especially from the oil sands where output may rise 50 percent to 3.7 million barrels a day by 2030, according to the Canadian Association of Petroleum Producers. With Enbridge Inc.’s permit for Northern Gateway recently revoked by a federal court and TransCanada Corp.’s Keystone XL approval rejected last year by President Barack Obama, the industry has pinned its hopes on Trans Mountain after years of disappointments.

“There is no question that a decision on the Trans Mountain pipeline is of significant national impact,” said Jeff Gaulin, vice president at the Canadian Association of Petroleum Producers, an industry lobby group in Calgary. “It will be a watershed moment for the development of Canada’s energy resources to reach more international markets.”

Trans Mountain will be the first test of Trudeau’s approach to Canada’s resource-heavy economy and highlights how the government is unprepared with policy to support decisions on individual energy projects, said Monica Gattinger, a University of Ottawa professor and director of the school’s Institute for Science, Society and Policy. A policy framework that provides direction on climate, aboriginal relations and cumulative effects is needed to help resolve opposition to such projects, she said.

“We have a number of policy gaps around energy that frankly extend well beyond the remit of any individual energy project decision-making processes,” she said. “Are governments really trying to make climate policy one pipeline at a time? That’s putting the cart before the horse.”

Trudeau wants to remake Canada into a low-carbon society while balancing natural resource development in an economy that relies on commodity exports, making the country more dependent on resources for economic growth than other large wealthy nations. His government is currently developing a climate strategy, including a national price on carbon, in coordination with the provinces.

“All projects are reviewed individually based on science, evidence and the traditional knowledge of indigenous peoples,” Natural Resources Canada said in an emailed response to questions about the Kinder Morgan pipeline.

http://www.bloomberg.com/news/articles/2016-08-24/trudeau-faces-split-aboriginal-groups-in-kinder-morgan-ruling