Libya is re-opening its last major oil-export terminal that shut amid the conflict hobbling output in the country with Africa’s largest crude reserves.

The Zawiya terminal is preparing to resume exports after the pipeline supplying it was re-opened, an official at the state-run National Oil Corp. said Wednesday, asking not to be identified for lack of authorization to speak to news media. With Zawiya shipping, all nine of Libya’s main oil ports would be exporting. The country is revving up its oil industry just as most of its OPEC peers are cutting production to counter a glut.

Libya currently pumps 700,000 barrels a day of oil, the NOC official said. That’s up from 580,000 barrels a day in November and 520,000 in October, data compiled by Bloomberg show.

The North African country plans to almost double output in 2017. Last month it re-opened two of its biggest oil fields and began loading the first crude cargo in two years from its largest export terminal, Es Sider. Libya’s comeback will put pressure on the Organization of Petroleum Exporting Countries and the other major producers that agreed to start cutting output this month in a drive to shore up crude prices.

Libya in December re-opened the Sharara oil field, which supplies Zawiya, allowing for exports to resume from the terminal in western Libya. Almost 1.9 million barrels are set to load from Zawiya this month, according to a loading program obtained by Bloomberg. That compares with a pumping rate from Sharara of almost 9 million barrels a month as recently as late 2014, before the country’s internal conflict halted flows.

Libya pumped about 1.6 million barrels a day before an uprising in 2011 toppled the nation’s leadership. International oil companies pulled out as rival governments and militias struggled for control of Libya’s energy assets, and oil output plunged to as little as 45,000 barrels a day in August that year.

With production rising, NOC Chairman Mustafa Sanalla said on Dec. 21 that output would reach 900,000 barrels a day early this year and 1.2 million barrels a day by the end of 2017

http://boereport.com/2017/01/04/libya-oil-export-terminal-said-to-re-open-as-crude-output-rises/

OPEC’s crude production fell by 310,000 barrels a day in December, as unplanned disruptions in Nigeria reduced the group’s supply before deliberate cuts take effect this month.

Nigeria’s daily output dropped by 200,000 barrels to 1.45 million in December, ending three months of gains as the African nation struggled to restore capacity after a year of militant attacks on oil infrastructure. Saudi Arabia’s production fell by 50,000 barrels a day while Venezuela declined by 40,000.

“Crude production in Nigeria in December was once again severely impacted, mostly due to a field maintenance as well as a strike of port workers,” Amrita Sen, chief oil analyst at London-based consultant Energy Aspects Ltd., said by e-mail.

The decline in December comes as OPEC, which controls around 40 percent of global supply, is planning to curb output in a bid to boost oil prices. The organization reached a historic deal last month with Russia and other non-members to cut global production by almost 1.8 million barrels a day starting this month.

Brent crude, the global benchmark, advanced 52 percent last year, the biggest annual gain since 2009. Prices were down 0.3 percent at $56.31 a barrel as of 6:39 a.m. London.

Overall, the Organization of Petroleum Exporting Countries -- excluding Indonesia which suspended its membership on Nov. 30 -- pumped 33.1 million barrels a day in December, according to a Bloomberg News survey of analysts, oil companies and ship-tracking data. That compares with a November total of 33.41 million barrels a day for the 13 continuing members of the group, or 34.14 million including Indonesia’s daily output of 730,000 barrels.

Under the terms of last month’s agreement, OPEC’s total output including Indonesia would fall to 32.5 million barrels a day. Compliance with that target will be judged against independent estimates compiled by OPEC, which can vary from the Bloomberg News survey.

Nigeria Disruption

In Nigeria -- which along with Libya is exempt from making cuts because of conflict -- maintenance on the Erha field and strike action by workers at Exxon Mobil Corp.’s operations in the country disrupted both exports and production, Sen said. A year ago, the country was pumping almost 2 million barrels a day.

No cargoes of the Agbami crude grade were shipped in first half of December, while three out of the four Erha cargoes originally scheduled to load were deferred, with two of those moved into January, according to loading programs obtained by Bloomberg.

Iran, Kuwait and Angola each reduced output by 20,000 barrels a day while Algeria and Iraq dropped by 10,000, the survey showed.

Libya pumped an extra 50,000 barrels a day last month as the Northern African nation reopened two of its biggest oil fields and loaded the first cargo in two years from its largest export terminal.

https://www.bloomberg.com/news/articles/2017-01-04/opec-oil-output-drops-in-december-as-nigeria-suffers-disruptions

The world's largest oil trader, Vitol, has clinched a deal with the National Iranian Oil Co. (NIOC) to loan it an equivalent of $1 billion in euros guaranteed by future exports of refined products, four sources familiar with the matter said.

The pre-finance deal is the first such major contract signed between Iran and a trading house since sanctions were lifted in early 2016. Vitol and NIOC declined to comment.

It highlights the speed of the oil industry recovery in Iran just a year after lifting of sanctions, which is allowing Tehran to claw back oil market share from arch-rival Saudi Arabia.

It also re-establishes some old dealings with Western firms as Tehran is benefiting not only from easing of EU sanctions but also from reduced U.S. restrictions on its access to dollars, which Iran needs to reignite its economy.

Foreign companies still tread carefully for fear of breaking a myriad of complex laws, and oil majors such as Shell, BP and Eni have been slow to return as regular crude lifters.

Executives who are U.S. citizens are often ring-fenced from negotiations with Iran, notably BP's CEO Bob Dudley and even those working for non-U.S. companies.

U.S. president-elect Donald Trump has also been outspoken about reviewing the nuclear deal brokered under Barak Obama's administration, adding fresh uncertainty.

But privately held trading houses are more flexible and can negotiate deals quicker than listed firms.

Traders have increasingly turned to pre-finance in recent years to secure long-term access to large volumes of oil and products - the system of pre-finance by large traders including Vitol has for example kept the Iraqi region of Kurdistan afloat during its war with Islamic State in the last two years.

The Vitol Iranian deal was signed in October and will come into effect this month, one of the sources who is based in Tehran said.

"It is in euro...with the interest rate of around 8 percent in exchange for oil products," the source said, adding that some products could be supplied by the private sector rather than NIOC.

Major crude producers in the Middle East, including Iran, remain reluctant to sell crude oil to traders as they prefer to control pricing and destination themselves.

Traders have also been looking at restarting the Caspian crude and product swaps with Iran but the process has been slow to pick up.

OPEC's third-largest oil producer, Iran, exports more than 500,000 bpd of refined products, mainly fuel oil, petroleum gas and naphtha to Asian markets, according to OPEC.

http://uk.reuters.com/article/iran-vitol-oil-idUKL5N1EN2T2

China's independent refiners face uncertain times in 2017 as the government comes down hard on them for compliance and tax evasion, and has rowed back from allowing them to export refined products.

Beijing allowed independent refiners access to imported crude oil in early 2015 and to export oil products in late 2015. Their emergence, which came at a time of excessive oil supply, made them the darlings of oil suppliers.

But 2017 is going to be fraught with challenges, which may undermine their profitability and slow their crude import growth.

Below S&P Global Platts examines the effect these challenges will have on independent refiners and on the country's overall crude oil imports.

CRUDE OIL QUOTA ALLOCATIONS

China's National Development and Reform Commission is expected to issue crude import quotas of around 20 million mt/year to new independent refiners for 2017, down 19% from 2016, according to Platts estimates.

A total of 14 refineries have applied for a combined quota volume of 30.89 million mt/year for approval in 2017, but around 20 million mt/year, or two-thirds of the total amount requested, are likely to be approved.

The downtrend has been clear. In 2016, the NDRC approved 24.58 million mt of new crude import quotas to eight independent refineries, only half of the 49.19 million mt/year the commission allocated to 11 refiners in 2015.

"The government will definitely continue to approve new quotas to independent refineries, but the slow reviewing process means fewer quotas will be allocated," a refinery source in Shandong said.

The NDRC has said it will tighten supervision to ensure independent refiners are adhering to all rules before awarding them quotas.

EFFECT ON CHINA'S CRUDE IMPORT GROWTH

China's crude oil import growth is likely to slow down to a pre-2016 level of around 8% in 2017 as independent refineries are faced with lower quota allocations and uncertainty over their ability to export products.

Independent refiners are estimated to have imported 45.96 million mt of crude oil in 2016, according to Platts estimates based on shipping data.

This compares with an estimated total imports of around 10 million mt/year of crudes by 11 quota holders in 2015.

Crude imports by the independent refiners pushed up China's imports in 2016 to an estimated 378 million mt/year, up 12.8% year on year, according to Platts China Oil Analytics.

However, crude import growth is likely to slow down to a pre-2016 level of around 8% in 2017, according to COA.

The government has tightened supervision of the sector to prevent illegal re-selling of crude and tax evasion, a COA analyst said.

This along with not allowing them to export oil products will impact overall imports by independent refiners, the analyst added. MOVE TOWARDS SWEETER CRUDES

With China moving towards a cleaner fuel standard from January 1, some independent refineries have started to buy crudes with lower sulfur content.

Hengyuan Petrochemical, an independent refiner in Shandong, prefers to import crudes with sulfur content below 0.8%, according to a company source.

The refinery in 2016 imported over 1.4 million mt of crudes, with most grades sourced from Angola.

The portion of Angola crudes, typically grades with sulfur below 1%, in the crude basket has increased to around 10%, according to Platts estimates based on shipping data. This compares with an estimate of around 1% in 2015.

"Crudes with lower sulfur content usually have lower carbon residue and metal contents, so they are pretty good feedstock," said the source.

In November and December, cargoes of Brent crudes, as well as Forties blend, arrived into Shandong ports for the independent refineries, setting a new trend.

While the price of crudes with lower sulfur is higher, their greater quality can translate into higher refinery returns, depending on the cost of desulfurization of crudes with higher sulfur content.

"On average, refineries this year have been making a good profit of around Yuan 200/mt," said a refinery source, encouraging the purchase of more costly crudes with lower sulfur content.

More crude diversification can also be expected in 2017 as some independent refineries have increased their ability to adapt to crudes with higher sulfur content in recent years, after setting up desulfurization units.

EXPORT UNCERTAINTY

Removal from the oil product export quota allocation in 2017 is perhaps the biggest blow dealt to independent refiners who were all set to invest in infrastructure to facilitate exports.

China recently awarded export quotas for the first quarter of 2017 and independent refiners were not given any quotas under the processing trade route, which allows direct exports with no applicable taxes on the product. While the share of exports among independent refineries in 2016 was relatively small -- they exported around 700,000 mt of gasoline, less than 8% of the country's total, according to COA -- it did help reduce surplus and competition in a weak domestic market.

"Direct exports from independent refineries are not much in terms of volume, but the sharp increase in output from independent refineries have eaten into oil majors' domestic market share, forcing them to export more oil products into the overseas market," said a trading source.

Independent refiners may still be allowed to export oil products through the so-called general trade route by asking stated-owned trading companies to export products on their behalf, but this option has not attracted much enthusiasm.

"Firstly, we need to pay the agency fee if we are to export through other companies," a source with Dongming Petrochemical said. "What price we supply oil products at and who takes the profit are also critical questions."

"Secondly, it is time-consuming and inefficient, as more communication is required if exports take place through external companies," the source said.

"Thirdly, if we export through Chinaoil, for example, we're just a domestic supplier, instead of an international supplier that can respond quickly to market changes, so we will have less negotiating power in future, not only with international buyers, but also with those domestic agents."

PRODUCTS OUTPUT

Fewer quota allocations, heightened government supervision and no export quotas have all rendered the outlook on products output uncertain.

But one Shandong-based source pointed out that output will likely continue to rise following the higher crude throughput supported by more crude quotas to be allocated.

China's total output of oil products was estimated at around 438.16 million mt in 2016, up 5% year on year, slightly higher than the 4.3% growth registered in 2015, according to COA.

This was largely driven by the higher output from independent refineries, according to COA.

Data provided by energy information provider JYD suggested that total output of gasoline and gasoil from Shandong independent refineries increased by around 81% to 54 million mt over January-November.

http://www.platts.com/latest-news/oil/singapore/outlook-2017-chinas-independent-refiners-face-27742462

Arab separatist militants in Iran said on Tuesday they had blown up two oil pipelines in coordinated attacks in the western Khuzestan region two days earlier, though this was subsequently denied by Iran's Interior Ministry.

The group, the Arab Struggle Movement for the Liberation of al-Ahwaz, said on its website its armed wing had caused major damage and fuel losses in the attacks on Jan. 3 near the town of Omidiyeh and the port of Deylam.

However, a spokesman for the Interior Ministry told state television the reports were untrue.

Ahwazi Arabs are a minority in mainly ethnic Persian Iran, and some see themselves as under Persian occupation and want independence or autonomy. Separatist groups have carried out intermittent attacks for decades, including on oil installations.

Tehran denies there is discontent among its Arab minority and has blamed suggestions of there being any separatist sentiment on a foreign plot to seize the oil that lies beneath Iran's Gulf coastal territory.

In a statement posted on their Ahwazna.net website, the group said the first attack targeted the "Maroun" pipeline of the state-owned Aghajari Oil and Gas Production Company, while the second attack targeted pipelines from the Baharkan oilfield to Kharg Island.

http://www.reuters.com/article/us-iran-energy-attack-idUSKBN14O1C7

Europe is set to retain numerous gas supply options throughout 2017 as traditional pipeline suppliers continue their market share offensive and LNG imports to the continent rally from their unexpected lows in 2016.

With demand -- especially in the key power sector -- seen continuing its recovery from the past two years, much focus will again be placed on declining domestic European production and the subsequent need for increased imports.

EU gas demand is expected to have increased by some 6% in 2016 to around 447 Bcm, according to industry group Eurogas, following a rise of around 4% in 2015, and according to Platts Analytics' Eclipse Energy could rise further in 2017 driven by the arrival of more LNG.

The demand recovery from the lows of 2011-14 has been a result of increased gas consumption for power generation and signs of revival in industrial activity in Europe.

Gas demand for power generation in the UK rose 50% to 19.8 Bcm in the year to December 15, while Italian gas-for-power demand jumped 12% to 20.9 Bcm, according to data from Platts Analytics.

Demand in France also rose sharply towards the end of 2016 as parts of the French nuclear fleet were taken offline for safety checks.

From January 1 to December 15, 2016, French gas demand for power generation more than doubled to 3.8 Bcm.

The situation around the availability of French nuclear capacity in 2017 is still uncertain and coal prices are expected to remain volatile after their late-2016 rally, so the level of gas demand for power generation will be dependent on numerous interlinked factors.

There was some coal-to-gas switching in Northwest Europe in 2016 given the divergence in coal prices to the upside and gas prices to the downside, while in the UK coal use in power generation slumped due mostly to the continued impact of the carbon price support mechanism and the retirement of a big chunk of coal-fired power generation capacity.

But no new UK coal plant retirements are expected in 2017, according to Platts Analytics.

Industrial demand will likely have been boosted by the weaker euro in 2016, benefiting Europe's export-oriented industries.

But with demand expected to be relatively robust in 2017, there is a risk of a price spike at the start of the year in the event of a cold snap given gas storage constraints at the Rough facility in the UK and historically low stocks in NWE.

On the other hand, a milder winter would lead to less storage injection demand in the summer 2017 and subsequent pressure on prices.

According to the latest forecasts from Platts Analytics, NWE storage stocks are expected to return to the top of their three-year range by the end of September 2017 as higher LNG sendouts are absorbed into storage facilities.

SUPPLY DYNAMICS

The biggest shift on European gas markets is expected to be in the volume of LNG supply.

According to Platts Analytics, in the latter part of the first quarter there will be a "substantial" year-on-year increase in LNG deliveries to NWE, reducing the need for overall storage withdrawals by 42 million cu m/d on the year.

In the UK, Netherlands, Belgium and France, Platts Analytics assumes 80 million-90 million cu m/d of LNG sendouts in Q1, 2017 compared with 58 million cu m/d on average in February-March 2016.

The increase in imported LNG volumes could put pressure on prices and increase demand for coal-gas switching.

LNG imports into Europe surprised to the downside in 2016 due to higher demand in the Middle East and several trips at liquefaction plants including Gorgon in Australia and Angola LNG.

But the picture is set to shift in 2017 as high counter-seasonal demand in the Middle East dissipates and Qatari production returns to around 300 million cu m/d.

Global LNG supply will be boosted further as US and Australian volumes ramp up, although there is the possibility that many cargoes will be swallowed up by the key north Asian markets given the rally in spot LNG prices in December to close to $10/MMBtu.

While LNG is expected to stage a European recovery in 2017, the traditional pipeline suppliers to Europe -- Russia, Norway and Algeria -- will continue to fight to retain, or even grow, market share.

In 2016, Russia smashed its record for deliveries to Europe and Turkey with exports hitting an all-time high of an estimated 180 Bcm.

Norway, meanwhile, was expected to have exported close to its record high from 2015 of 115 Bcm, and Algeria saw its exports to Italy rise threefold to some 18 Bcm.

RENEGOTIATION

The reason for the rise in Italian imports from Algeria was an increase in Algerian production, a shift in the volume terms for Eni's import contract with state-owned Sonatrach and a competitive oil-indexed price given low crude prices in 2016.

At the end of 2016, Eni CEO Claudio Descalzi said it had made a "very important achievement" by again reworking its Algerian import contract for Gas Year 16 (October 2016-September 2017).

The contract, which expires in 2019, is now aligned to the Italian PSV hub, Descalzi said.

"That will allow us to get the break-even for gas and power in 2017 as promised," he said at an investor day in New York in December.

Eni was not the only company to renegotiate long-term gas contracts in 2016 -- Engie and RWE were among those to rework their Gazprom supply contracts to "de-risk" their Russian gas purchases.

Russian gas supplies to Europe are expected to be strong again in the first months of 2017 as buyers look to max out their take-or-pay volumes ahead of a likely rise in oil-indexed contracts, especially in southern Europe, following the recent oil price rally stemming from OPEC's decision to cut production from the start of January.

Oil indexation does seem to be losing its influence in long-term contracts -- even in southern Europe -- but the oil price still matters.

The head of Gazprom Export, Elena Burmistrova, said in May that hub pricing was not a "panacea" for the gas industry and the ideal way to price gas in Europe was still a regime based on oil indexation with only elements of hub pricing.

But given that global oil prices are currently in contango, oil-linked gas prices become more expensive further down the curve in 2017.

Gazprom has also said it is not "dumping" gas in Europe and the entire boom in supplies is due to buyer-led nominating behavior to meet demand.

SUPPLY OUTLOOK

Russia has said it expects to export in 2017 similar volumes to Europe as in 2016, while the European Commission decision in October to allow Gazprom more access to the OPAL gas link in Germany could mean increased flows of Russian gas.

It is not yet clear whether Gazprom will choose to divert flows to Nord Stream and OPAL away from the Ukrainian route, or use the extra OPAL capacity to flow more gas.

Whichever way it falls, the key is that OPAL is a cheaper option for Gazprom than Ukraine.

Tensions between Moscow and Kiev remain heightened, with the anticipated result of the multiple arbitration cases between Gazprom and Naftogaz in March an added pressure.

The state of relations between Russia and Ukraine is always a matter of concern for European gas buyers.

Disruption to flows via Ukraine -- as always -- cannot be entirely ruled out especially in an extreme cold winter scenario.

Norway, meanwhile, is forecasting gas output at 107.3 Bcm in 2017 while the UK has been buoyed by the startup of three new fields in 2016 -- Laggan-Tormore, Alder and Cygnus.

Algeria too expects to bring on a number of new gas fields in 2017, including the major Engie-operated Touat field.

Closer to home, the Groningen field quota has been reduced to 24 Bcm from 27 Bcm for Gas Year 16, although a number of appeals are being heard currently that could see the quota fall further.

The drop in Dutch gas production is a worry for European gas supply security, with increased dependence on imports the result.

Also in the Netherlands, the expiry of long-term capacity contracts for the BBL pipeline to the UK has shifted European gas market dynamics significantly.

The TTF/NBP spread and whether it goes above full-cycle BBL costs (including entry-exit) could become a new key pricing point.

Current geographical spreads are so poor there is no incentive to move gas given the high cost of pipeline capacity.

http://www.platts.com/latest-news/natural-gas/london/outlook-2017-european-gas-supply-demand-to-remain-26631430

Energy giant Chevron resumed production at the first liquefaction train of its US$54 billion Gorgon LNG project on Barrow Island in Western Australia.

“Gorgon LNG Train 1 operation resumed earlier this week,” Chevron’s spokesperson told LNG World News in an emailed statement.

According to the statement, production was halted in late November 2016 to assess and address some performance variations.

Production at Chevron’s Gorgon LNG project has been hit several times last year since it shipped its first cargo of the chilled fuel on March 21.

“Train 2 production was unaffected and we continued to produce LNG and load cargos during this time,” the statement reads.

Once in full production, the three-train plant on Barrow Island is expected to have a capacity of 15.6 million mt/year.

The Gorgon LNG project is operated by Chevron that owns a 47.3 percent stake, while other shareholders are ExxonMobil (25 percent), Shell (25 percent), Osaka Gas (1.25 percent), Tokyo Gas (1 percent) and Chubu Electric Power (0.417 percent).

http://www.lngworldnews.com/chevron-resumes-production-at-gorgon-lng-train-1/

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Attached Files

Chevron-led 5.2 million tons per year Angola LNG plant in Soyo has restarted production following the latest shutdown during late December.

The December shutdown was due to engineers performing “minor intervention”.

“I confirm that Angola LNG’s plant has restarted production,” Angola LNG spokeswoman said in an emailed statement to LNG World News.

To remind, the $10 billion Angola LNG project, restarted operations in May last year after it was closed for more than two years due to a major rupture on a flare line that occurred in April 2014.

At the end of October, Chevron chief financial officer Pat Yarrington, told that such short duration shutdowns are often experienced as facilities are ramped up to their full capacity.

Angola LNG is a joint venture between Sonangol (22.8%), Chevron (36.4%), BP (13.6%), Eni (13.6%), and Total (13.6%).

http://www.lngworldnews.com/angola-lng-back-online/

 

Asia’s finally becoming a prime destination for U.S. shale gas cargoes.

Nine of the 12 tankers that have left Cheniere Energy Inc.’s Sabine Pass terminal in Louisiana -- the only one sending U.S. shale gas overseas -- since the beginning of December are headed for Asian countries, shipping data compiled by Bloomberg show.

That’s a big shift for the U.S. LNG market, which has been dominated by cargoes to Latin America since exports began in February. Asia’s emerging as a bigger buyer as winter’s chill stokes demand for the heating and power-plant fuel, fulfilling analysts’ predictions that the region would eventually become a major importer of U.S. supply. Global demand has the U.S. on course to become a net exporter of gas this year, a turnaround from just a decade ago when it was facing shortages.

Asia is “probably the most economic destination to ship to right now," Het Shah, an analyst at Bloomberg New Energy Finance in New York, said in a phone interview Tuesday.

Spot LNG prices in northeast Asia have jumped 79 percent since July, according to Energy Intelligence’s World Gas Intelligence report.

More than half of the 42.9 million tons a year of U.S. LNG export capacity over the next three years is contracted by Asian buyers, a July analysis by Bloomberg New Energy Finance showed.

Cheniere wasn’t immediately available for comment.

https://www.bloomberg.com/news/articles/2017-01-03/asia-becoming-destination-of-choice-for-u-s-lng-exports

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Attached Files

Norwegian state-owned oil giant Statoil plans to drill around 30 exploration wells in 2017, an increase of around 30 percent compared to 2016.

More than half of the wells will be drilled on the Norwegian Continental Shelf (NCS), Statoil said on Wednesday.

“Taking advantage of our own improvements and changed market conditions, we have been able to get more wells, more acreage and more seismic data for our exploration investments in later years,” says Tim Dodson, Executive Vice President for Exploration in Statoil.

“This allows us to firm up a strong drilling program for 2017, totaling around 30 exploration wells as operator and partner. The upcoming well program is balanced between proven, well-known basins and new frontier opportunities,” says Dodson, underlining that the exploration drilling plans are dependent on permitting, rig availability, and partner approvals.

In 2016, Statoil completed a total of 23 exploration wells as operator and partner – 14 of them on the NCS. The company stated that the total exploration activity, also including a.o. licensing, access and seismic data acquisitions, was completed well below the original forecast due to efficiency improvements and market effects.

According to the company, in Norway, the 5-7 well exploration campaign in the Barents Sea is at the core of the activity plan. In the Norwegian Sea and the North Sea, the ambition is to prove near field volumes to prolong the productive lifetime of existing infrastructure and determine the growth potential, Statoil said.

In total, Statoil expects 16-18 NCS exploration wells to be completed in 2017. The company noted that new discoveries are crucial to counteract decline om the NCS.

“The Barents Sea has yielded several of Norway’s most significant oil discoveries in recent years. We are looking forward to test new targets, both in the relatively well-known geology around in the Johan Castberg and Hoop/Wisting area, as well as some new frontier opportunities with greater geological uncertainty but also high impact potential. This campaign can provide us with crucial information about the long term future of the Norwegian shelf,” says Dodson.

Internationally, Statoil’s 2017 exploration drilling activity will comprise growth opportunities in basins where Statoil already is established with discoveries and producing fields, as well as new frontier opportunities.

“Following our take-over as operator for the Carcara discovery last summer, Brazil has become even more important in Statoil’s portfolio, not least on the exploration front. We are stepping up exploration also in the UK, with plans for three Statoil-operated exploration wells in 2017,” says Dodson.

Elsewhere, partner operated wells are planned to be spudded in established basins like the US Gulf of Mexico and in new frontier areas like Indonesia and Suriname. Statoil is also partnering in onshore exploration drilling planned in Russia and Turkey.

“The 2017 exploration plans demonstrate our long-term commitment to the NCS, while we continue to position the company for global opportunities. If everything goes to plan, we will this year have exploration drilling activity in 11 countries on five continents,” says Dodson.

http://www.offshoreenergytoday.com/statoil-to-drill-more-wells-in-2017/

Oil trader Gunvor Group is suing Cerberus Capital Management alleging that the private equity firm is refusing to pay its share of costs incurred when the two companies made a failed $650 million bid for Chevron Corp. assets in South Africa.

While a relatively small amount of money is at stake, the suit sheds light on the acquisition campaign now under way after Gunvor sold the bulk of its Russian assets following the 2014 U.S. sanctioning of its co-founder, billionaire Gennady Timchenko.

Gunvor claims it entered into an agreement with Cerberus in September to prepare a joint bid for the Chevron assets and that Cerberus agreed to pay half the cost of evaluating an offer, according to the documents filed in New York Supreme Court.

Gunvor said it spent about $1.6 million hiring advisers and consultants to help it perform due diligence on the assets, which include a refinery in Cape Town, a lubricants plant in Durban and about 800 service stations. Gunvor provided all of its due diligence materials to Cerberus and the two companies teamed up to make a bid “approaching $650 million,” according to the claim. The offer, which was submitted to Chevron’s banker on Cerberus letterhead, was rejected by Chevron soon after it was made, Gunvor said.

Cerberus has refused to “honor its obligations” under a September written agreement to pay for half of the due diligence costs, Gunvor said in the claim, which alleges breach of contract and is seeking $829,020.

Seeking Partners

The claim confirms that Gunvor, one of the world’s largest independent oil traders, is looking to partner with outside investors such as private equity to fund deals in much the same way that larger rivals Vitol Group and Trafigura Group have structured transactions in the Middle East, Africa and Brazil.

Gunvor spokesman Seth Pietras in Geneva declined to comment on the matter. Cerberus’s London office referred media inquiries to its New York office, which didn’t respond to e-mailed questions outside normal office hours.

After initially claiming that the cost-sharing provisions were not binding, Cerberus has now taken the position that the parties did not submit a joint bid as defined by their agreement, Gunvor said in the claim.

No statement of defense has been filed and none of the allegations have been proved in court.

Vitol Group and China Petroleum & Chemical Corp. are the two final bidders competing to buy Chevron’s South African assets, people familiar with the matter said last month.

French oil major Total SA was also involved in the process, according to the same people. Chevron plans to make a decision in coming weeks, though sale talks could still falter, the people said.

https://www.bloomberg.com/news/articles/2017-01-04/oil-trader-gunvor-suing-cerberus-over-failed-chevron-africa-bid

Cape said on Thursday that its full-year results for 2016 are likely to be “materially ahead” of current market expectations, as it announced the award of additional work packages on the Chevron-operated Wheatstone natural gas project.

The company, which provides critical industrial services to the energy and natural resources sectors, said it has seen strong trading across its three regional businesses in the last two months of the year, with a particularly strong performance in Asia Pacific driven by high levels of project activity across the region.

As a result, it now anticipates that the-full year performance for 2016 will be materially ahead of current market expectations.

“This improvement in performance is supported by strong cash generation with a consequent positive impact on net debt,” Cape said, adding that it remains confident that the outlook for 2017 is encouraging.

In addition, the group said it has been awarded additional work packages on the Chevron-operated Wheatstone natural gas project, near Onslow, Western Australia.

Cape is now providing access, painting, insulation and fire proofing services to the project until completion and the additional packages will see Cape extending its scope of services to include outside battery limits, the domestic gas plant and commissioning support.

“The award reflects the group's performance on the contract to date, including safety (over 2 million man hours to date Lost Time Incident free), operational excellence, innovation in project management and cost savings through productivity and workforce management,” Cape said.

http://www.digitallook.com/news/news-and-announcements/cape-sees-fy-results-materially-ahead-of-current-views--2421436.html

Oil prices were firm on Thursday, buoyed by data showing a fall in U.S. crude inventories and by record car sales in the United States.

Traders said that WTI had been lifted by a report by the American Petroleum Institute (API) stating that U.S. crude inventories fell 7.4 million barrels in the week ended Dec. 30 to 482.7 million, compared with analyst expectations for a decrease of 2.2 million barrels.

"We expect Asia to trade on the positive-side today, supported by the API number," said Jeffrey Halley, senior market analyst at OANDA brokerage in Singapore.

Prices were also lifted by U.S. car and truck sales, which were up 3.1 percent in December from the same month last year, and hit a record 17.55 million overall in 2016.

http://www.reuters.com/article/global-oil-idUSL4N1EV03T

Jan 4 Canadian oil and natural gas producer Encana Corp said on Wednesday it expects its margins in 2017 to exceed its previous target on lower costs and an expected rise in output in the second half of this year.

The company also said it expects production from its core assets to be in the upper range, or exceed its previous forecast of 15-20 percent growth, between the fourth quarter of this year and the corresponding period last year.

Encana has downsized operations to focus on four core North American plays - the Montney and Duvernay in Western Canada, and the Eagle Ford and Permian in the United States.

The company said it expects its corporate margin to be above $10 per barrel of oil equivalent (boe) in 2017, higher than the $8 per boe it had forecast at its investor day in October.

Encana is scheduled to report its fourth-quarter results and 2017 budget on Feb 16.

http://www.reuters.com/article/encana-outlook-idUSL4N1EU34V

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Attached Files

PDC Energy, Inc. today announced that on December 30, 2016, it closed the acquisition of approximately 4,500 net acres in Reeves and Culberson Counties, Texas, from Fortuna Resources Holdings, LLC, for approximately $118 million in cash, subject to certain post-closing adjustments. PDC’s working interest in the acquired leasehold is 100 percent and PDC expects to operate 100 percent of the properties. The acquired properties are concentrated in the Company’s Central acreage block contiguous with the Company’s acreage from the recently closed acquisition of approximately 57,000 net acres in Reeves and Culberson Counties. Current net production associated with the acquisition is approximately 300 barrels of oil equivalent per day. Also included is a drilled, but uncompleted (“DUC”) horizontal well, and a salt water disposal well.

The Company estimates the acquired acreage contains 75 gross one-mile horizontal drilling locations, based on four wells per section in each of the Wolfcamp A, B and C zones. This estimate is based on the assumptions utilized by the Company in its prior Delaware Basin acquisition. The Company plans to integrate the newly acquired acreage into its development drilling plans for its Central acreage block.

President and Chief Executive Officer Bart Brookman commented, “This bolt-on acquisition is a great example of our strategy to both expand and block up our Core Delaware Basin position. Our net acreage, drilling inventory and estimated reserve potential in the basin are expected to increase by approximately ten percent with this transaction. Additionally, by creating a large, contiguous acreage block, we have the opportunity to focus on longer lateral development while optimizing our operational efficiencies.”

Fortuna Resources Holdings, LLC, is a Permian Basin focused independent oil and natural gas producer sponsored by certain affiliates of Och-Ziff Capital Management Group LLC (NYSE:OZM).

For a map related to this transaction, visit ‘Newsroom’ on the ‘Investor Relations’ page on PDC’s website at www.pdce.com.

http://boereport.com/2017/01/04/pdc-energy-announces-bolt-on-acquisition-of-approximately-4500-net-acres-in-the-core-delaware-basin/

Two members of Eclipse Resources’ top management team are playing musical chairs as part of the company’s plan to “accelerate growth” in 2017.

Tom Liberatore, currently executive VP and COO is dropping the COO title and becoming executive VP of corporate development and geosciences. Meanwhile, Oleg Tolmachev, currently senior VP of drilling and completions is becoming executive VP and COO.

Tolmachev’s star is clearly rising and he is now the man running the Utica/Marcellus drilling program for the company.

In the same press release, the company said it has now completed and brought online five Utica wells in Monroe County, OH. The wells are the first dry gas Utica wells to use Eclipse’s new “Gen-3” completion design.

http://marcellusdrilling.com/2017/01/mgmt-musical-chairs-at-eclipse-gen-3-utica-wells-go-online/