Platts - Libya eyes 200,000 b/d rudeoil output rise from 432,000 b/d in 'coming weeks'; increase to come from Waha fields, NOC chief Sanalla says

Deepwater oil projects and complex gas facilities worth around $200 billion have been cancelled or put on hold worldwide in recent months due to the sharp drop in oil prices over the past year, consultancy Ernst and Young said on Tuesday.

Further project cuts and delays are likely as the industry braces for an extended period of lower oil prices as a result of a supply glut.

"The mind set in the industry at the moment is that prices are unlikely to be bouncing up materially in the near term," the consultancy's Andy Brogan said in a presentation. "There is an expectation that volatility is with us for a reasonable period of time to come and companies need to cope with that."

International companies have responded rapidly to the near halving of oil prices since last June, slashing tens of billions of dollars in capital spending in order to boost their balance sheets and maintain dividend payouts to investors.

"A total of $200 billion of oil and gas projects have been deferred or cancelled," said Brogan, global oil and gas transactions leader at Ernst and Young.

"Portfolios reviews are happening more frequently and probably with more rigour," Brogan told the World National Oil Companies Congress. "There isn't anywhere for projects to hide."

The main 24 mega projects that have been put on ice or scrapped are spread across the globe, according to EY.

For oil, many of the projects are complex, deepwater fields in the Gulf of Mexico, the North Sea, West Africa and Southeast Asia with budgets of up to $20 billion.

Among the most expensive are liquefied natural gas facilities such as the Arrow liquefied natural gas (LNG) project in Australia, operated by Royal Dutch Shell's and PetroChina and BG Group's Prince Rupert LNG project in Canada.

Though often just as expensive, most oil mega-projects benefit from the advantage of returning value within 3 to 4 years from first investment, compared with up to 12 years for LNG projects, Brogan said.

"We have seen IOCs (international oil companies) already go through one rigorous review of their portfolio. We are now seeing them turning their attention to see how flexibility can be embedded in their portfolios and businesses"

http://www.reuters.com/article/2015/06/16/oil-delays-idUSL5N0Z22WR20150616

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Japan’s imports of liquefied natural gas dropped 11.4 percent in May, as compared to the same month a year ago, preliminary data from the Ministry of Finance reveals.

The world’s largest buyer of the chilled gas imported 5.75 million tonnes of LNG in May.

Japan paid 315,439 million yen for LNG imports in May, down 44.1 percent on year, according to the data.

LNG use by Japan’s ten independent regional electric power companies was lower 7 percent to 3.99 million mt in May.

Total electricity generated and purchased across the ten companies in May declined by 3 percent from a year earlier to 64.98 billion kWh, data from the Federation of Electric Power Companies of Japan showed.

http://www.lngworldnews.com/japan-lng-imports-down-11-4-pct-in-may/

Gazprom’s Baltic LNG project in the Baltic Sea port of Ust-Luga is estimated at 1 trillion roubles (around $18.5 billion), a port official told reporters at a conference, Reuters reports.

The plant capacity will amount to 10 million tons of LNG a year with the possibility of expansion to 15 million tons.

It will be supplied with gas from the Unified Gas Supply System of Russia, according to Gazprom.

In 2013, Gazprom signed the memorandum of understanding and cooperation with Leningrad region as part of the liquefied natural gas plant project.

http://www.lngworldnews.com/gazprom-baltic-lng-to-cost-over-usd-18-bln/

Brazil's state-run oil company Petrobras will likely delay details of major cuts to its $221 billion five-year spending plan until July, two sources said, when the government plans to announce a rescue program for the industry.

Petrobras, which is struggling with a corruption scandal, falling oil prices, stagnant output, and the largest debt of any oil company, had planned to announce deep spending cuts, expected to be about 30 percent of the proposed spending, by the end of June.

However, executives at Petroleo Brasileiro SA, as Petrobras is formally known, have run into internal and political resistance to cuts given the major role the company plays in Brazil's economy, a top Petrobras executive with direct knowledge of company discussions told Reuters.

The government is only coming to terms with Petrobras' economic fragility and how government efforts to increase control over the country's natural resources could make Petrobras weaker still, the senior coalition member told Reuters.

The government's July oil plan is likely to mimic a program announced earlier this month to bolster shrinking government funds for investment in ports, highways and other infrastructure with private capital, one of the officials said.

That will require changes to Brazil's 2010 oil law, the official said, most notably ending a requirement that Petrobras take a minimum 30 percent stake and serve as operator in any new development contracts in Brazil's most prolific oil areas.

Oliveira said the bill would likely substitute a Petrobras right of first refusal to operate and participate financially in new areas in place of its current obligation.

Despite growing Senate support, a change is unlikely to be made by July, the official said, adding that it could possibly win Rousseff's support. The official's opinion is backed by a third source, a senior government bureaucrat involved in day-to-day oil-planning talks.

Oil-industry officials, including some at Petrobras, also want Brazilian-content requirements, blamed for higher costs and project delays, eased. Rousseff has said she won't change them.

http://www.reuters.com/article/2015/06/16/brazil-petrobras-plan-idUSL3N0Z24ZU20150616

Hiranandani Group’s H-Energy is reportedly looking to sell a stake in its LNG terminal on India’s west coast in order to raise funds for the construction.

A 26% stake has already been sold in an LNG terminal on the east coast and talks for a similar deal are underway for a project on the west coast, Live Mint reports.

Darshan Hiranandani, director at H-Energy said the company signed a deal with Excelerate Energy for the east coast project that is set to cost $600 million. The project is based on an FSRU and will be set up off West Bengal.

The company is in similar negotiations with major oil and gas companies for its LNG terminal project on the west coast, as it needs funds before the construction on the 8 mtpa facility kicks off in August. This terminal will be the first to allow third parties to import LNG and regasify it for a fee.

The LNG terminal project is located at JSW Jaigarh Port near Ratnagiri, Maharashtra.

http://www.lngworldnews.com/h-energy-selling-stake-in-lng-gateway-project/

Germany's Wintershall is eyeing a stake in the Libyan oil assets of Occidental Petroleum, the chairman of Libya's National Oil Corp (NOC) said on Tuesday.

Mustafa Sanallah said NOC had given Wintershall, a subsidiary of BASF, access to confidential technical information at the request of Occidental.

He added that this did not signify that Occidental is looking to exit its business in Libya.

"This does not mean they are going to get out," Sanallah said. "It could be a joint venture."

https://en-maktoob.news.yahoo.com/wintershall-examining-stake-occidentals-libyan-oil-assets-noc-112036658--business.html

German oil and gas firm Wintershall announced Tuesday that the unmanned mini-platform, L6-B, has started producing natural gas off the Dutch North Sea coast.

The platform was built in just nine months and was brought to its offshore location in June 2014. Wintershall said that the advantage of the new generation of "Minimum Facility" platforms is that they can be deployed in particularly shallow waters and can economically produce even from very small natural gas fields. Another benefit is that the can help the firm cut down on costs thanks to the short time needed for construction and their simple installation.

The L6-B field is located in a restricted military zone, with Wintershall Noordzee being the first company allowed to operate in the area. Consequently, the installation needs to be as small as possible and Wintershall believes its topside may be the smallest in the world.

The facility is anchored to the seabed through suction piles. It rises about 60 feet above the sea and has three decks but no helideck. The facility can accommodate a maximum of two producing wells. The substructure weighs just 1,100 tons, with the topside weighing only 100 tons. A pipeline will transport gas produced by L6-B to the neighboring platform of L8-P4.

Wintershall sees the North Sea as a core region for it. The firm now operates 25 offshore platforms in Dutch, German and UK waters, and it expects natural gas production to be one of its main areas of activity in the Netherlands and in the southern North Sea.

- See more at: http://www.rigzone.com/news/oil_gas/a/139146/Wintershalls_Unmanned_North_Sea_Platform_Produces_1st_Gas#sthash.cxS5pmdm.dpuf

A fast-growing European oil venture between the world's top energy trader Vitol and private equity firm Carlyle Group is attempting to cash in where the industry's biggest companies have struggled for years.

European oil companies, or "majors", such as Total , BP and Royal Dutch Shell have significantly downsized their European refining and distribution businesses in recent years due to shrinking demand and an ageing, oversized refining industry.

But for Swiss-based venture Varo Energy, combining refining and other downstream assets with its central oil trading business makes sense: by offering products and services across the value chain on a smaller scale, it says it can reduce inefficiencies that have weighed on the big oil companies.

"The key is to build more downstream presence and to complement that with trading around the assets," said veteran Dutch oil entrepreneur Marcel van Poecke, 55, who is managing director of Carlyle International Energy Partners (CIEP) and the driver behind the Varo model.

Founded in 2012, Varo was renamed Varo Energy after merging last month with Dutch-based storage and trading company Argos. The merged company controls businesses from oil production to refineries to storage terminals and petrol stations, creating what van Poecke says is a "mini-major" focused on a strip of western Europe.

"You will see more coordinated trading around those assets because now it becomes one company from Rotterdam up to Switzerland," he said.

Trading houses like Vitol say that refineries and other businesses can become inefficient after decades under the ownership of big oil companies. By taking them over, traders can make them leaner and lift profit margins, they say.

As oil majors seek to get rid of refineries and focus on their more profitable upstream businesses, Varo Energy says it is scooping up downstream assets at cheap prices.

"Major oil companies have been selling refineries to free up capital for upstream ventures where they can make better margins ... (Traders) tend to get those refinery assets very cheap so they don't weigh heavily on their books as working capital," said Steve Sawyer, downstream consultant at FGE.

"For a trader, having a refinery gives a physical outlet for his oil to reduce his exposure in the market. It also gives him information he might not have access to so, all in all, he has better information that can help him make better decisions on what crude to buy."

http://www.reuters.com/article/2015/06/16/europe-refining-idUSL5N0Z23VW20150616

Democratic Republic of Congo lawmakers have adopted a new hydrocarbons code that the country hopes will allow it to draw more benefits from its expanding oil sector.

The Central African mining nation pumps 25,000 barrels per day, accounting for just 11 percent of its export revenues, although exploration off the Atlantic coast and near its eastern border with Uganda could increase that significantly.

Perenco, an Anglo-French oil and gas company, is Congo's only active producer of oil, but French company Total and a company owned by Israeli billionaire Dan Gertler are exploring near Lake Albert, straddling the border with Uganda.

"The implementation of this law will allow (Congo) to assure the security of investments and to put in place a fiscal regime that permits the Congolese state to profit from its hydrocarbon resources so that those contribute in particular to growth and the fight against poverty," Minaku said.

The code, which has not yet been made law by President Joseph Kabila, would replace a 1981 law widely considered to be obsolete. The final text of the bill was not immediately available.

Previous drafts have included a 40 percent capital gains tax on all contracts, although it was not clear if this clause remained in the version adopted by parliament.

One point of controversy among lawmakers was a provision in the National Assembly version that would require oil companies to cede at least 20 percent of shares in their operations to a "national society of commercial character."

The Senate called the provision "contrary to the principle of economic liberalism" and said it risked creating conflicts of interest.

http://www.reuters.com/article/2015/06/16/congodemocratic-oil-idUSL5N0Z24ET20150616

Exxon Mobil Corporation (NYSE:XOM) today announced that production at its Kearl oil sands expansion project in Alberta, Canada, started ahead of schedule and is expected to double overall capacity to 220,000 barrels of bitumen a day.

“Kearl’s bitumen was first processed in ExxonMobil refineries to help the company fully understand its properties before introducing it to the market”

The expansion project is ultimately expected to reach 110,000 barrels per day. Kearl will access approximately 4.6 billion barrels of resource for more than 40 years.

“The ahead-of-schedule startup of the Kearl expansion demonstrates ExxonMobil’s project management expertise and highlights our ability to safely and successfully execute complex projects,” said Neil Duffin, president of ExxonMobil Development Company. “The improved understanding gained from the initial Kearl development phase was applied to the expansion project to produce this outstanding result.”

The expansion project consists of three additional trains that use proprietary paraffinic froth treatment technology to produce bitumen. The process reduces energy requirements and environmental impacts by not requiring an on-site upgrader, which avoided a multi-billion dollar capital investment and associated operating expenses. Energy needs are further reduced through the installation of energy-saving cogeneration facilities.

The project produces blended bitumen with about the same lifecycle greenhouse gas emissions as the average crude oil refined in the United States. Other environmental innovations include on-site water storage to reduce water use, progressive land and tailings reclamation, and a state-of-the-art waterfowl deterrent system.

“Kearl’s bitumen was first processed in ExxonMobil refineries to help the company fully understand its properties before introducing it to the market,” Duffin said. “It is now processed in more than 25 refineries around the world.”

http://www.businesswire.com/news/home/20150616005224/en/ExxonMobil-Announces-Kearl-Expansion-Project-Starts-Production#.VYAc5flVhBc

Halliburton’s Completion Tools has introduced the Illusion fully dissolvable frac plug. The 10,000-psi rated frac plug eliminates the need to mill out a plug after fracing.

Halliburton says the plug can be installed anywhere in the wellbore for optimal placement of perforations to improved fracturing, without prepositioned locator subs or other equipment that remains in the wellbore post-frac. Illusion frac plugs dissolve completely to leave an unrestricted bore for production, and no intervention is required to clean the wellbore after the frac, Halliburton continues.



Halliburton’s new Illusion dissolvable frac plug.

Tropical Storm Bill headed further into central Texas with heavy rains and high winds on Wednesday but no serious injuries were reported, relieving officials and residents just three weeks after floods killed about 30 people in the state.

The second named tropical storm of the 2015 Atlantic hurricane season made landfall on Tuesday afternoon near the sportfishing town of Matagorda, then lost much of its punch, the U.S. National Weather Service said.

There were no reports of substantial damage, and oilfields in the Gulf of Mexico and near the coast were not impacted by the storm. Refineries and a nuclear power plant, the South Texas Nuclear Generating Station in Bay City, also operated normally.

"This is a rain event," Houston Mayor Annise Parker said at a news conference. "This is a normal rain event."

Flash flood watches were issued for six states. The watch area included Houston and central Texas, where floods over Memorial Day weekend last month swept away thousands of vehicles and damaged homes.

The storm was forecast to sweep over the Texas capital of Austin and then drive on to Dallas on Wednesday. It has maximum sustained winds of 45 miles per hour (70 kph).

Heavy rain had already drenched parts of Texas over the weekend, pushing high rivers closer to overflowing their banks.

The National Hurricane Center said the storm was expected to weaken into a tropical depression overnight, but it could bring up to 8 inches (20 cm) of rain to eastern Texas and Oklahoma and up to 4 inches (10 cm) to Arkansas and southern Missouri.

Flooding could snarl work in onshore oilfields, but producers including EOG Resources and ConocoPhillips said they were unaffected.

http://www.reuters.com/article/2015/06/17/storm-bill-idUSL1N0Z302G20150617