SaudiAramco plans to double crude oil, oil products exports to China, say senior executives at the state-owned oil giant.

@Plattsoil

Schlumberger Ltd. cut another 10,000 jobs to cope with a crude market collapse that’s forced its customers to slash spending for two consecutive years.

The world’s largest oilfield service provider reported a loss of $1.02 billion, or 81 cents a share, compared to profit of $302 million, or 23 cents, a year earlier, the Houston- and Paris-based company said in a statement Thursday. Excluding charges, Schlumberger earned 65 cents a share, 2 cents more than the average 63 cents estimated by 37 analysts in a Bloomberg survey.

Schlumberger, which has fallen 44 percent since the downturn began 19 months ago, will launch a new $10 billion stock buyback program as its current repurchase plan of the same amount wraps up.

"It’s always nice to know the company is investing in itself," Matt Marietta, an analyst at Stephens Inc. in Houston, who rates the shares the equivalent of a buy and owns none, said in a phone interview. "All things considered, I think their cost-savings program can be viewed positively."

The company took $2.1 billion in charges to account for the latest layoffs and restructuring. That exceeded the $1.77 billion in charges from a year ago as the company completed its first major round of restructuring amid plunging oil prices. Total job cuts for the company since the third quarter of 2014 now add up to 34,000 -- 26 percent of its workforce, according to Joao Felix, a spokesman.

Schlumberger’s revenue dropped 39 percent in the quarter to $7.74 billion, the lowest in five years.

"The decrease in land activity was the sharpest seen since 1986," Chief Executive Officer Paal Kibsgaard said in the statement. With the rig count dropping so steeply, "the massive over-capacity in the land services market offers no signs of pricing recovery in the short to medium term."
 
The company’s operating profit margin could slip to as low as 5 percent in North America by the first quarter, after it was 8.9 percent in the third quarter, Lemoine said. It may not be until late 2017 that Schlumberger and its peers will gain the ability to push prices back up for some of their highly competitive services such as hydraulic fracturing, he said.

http://www.bloomberg.com/news/articles/2016-01-21/schlumberger-beats-estimates-as-oil-rout-forces-deeper-cuts

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Attached Files

                                           Last Week   Week Before   Last year

Domestic Production '000..... 9,235            9,227             9,186

http://ir.eia.gov/wpsr/overview.pdf

U.S. crude oil refinery inputs averaged 16.2 million barrels per day during the week ending January 15, 2016, 233,000 barrels per day less than the previous week’s average. Refineries operated at 90.6% of their operable capacity last week. Gasoline production increased last week, averaging about 9.5 million barrels per day. Distillate fuel production decreased last week, averaging about 4.6 million barrels per day.

U.S. crude oil imports averaged 7.8 million barrels per day last week, down by 409,000 barrels per day from the previous week. Over the last four weeks, crude oil imports averaged over 7.8 million barrels per day, 9.6% above the same four-week period last year. Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 512,000 barrels per day. Distillate fuel imports averaged 185,000 barrels per day last week.

U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 4.0 million barrels from the previous week. At 486.5 million barrels, U.S. crude oil inventories remain near levels not seen for this time of year in at least the last 80 years. Total motor gasoline inventories increased by 4.6 million barrels last week, and are well above the upper limit of the average range. Finished gasoline inventories decreased while blending components inventories increased last week. Distillate fuel inventories decreased by 1.0 million barrels last week but are near the upper limit of the average range for this time of year. Propane/propylene inventories fell 1.9 million barrels last week but are well above the upper limit of the average range. Total commercial petroleum inventories increased by 6.6 million barrels last week.

Total products supplied over the last four-week period averaged over 19.3 million barrels per day, down by 1.8% from the same period last year. Over the last four weeks, motor gasoline product supplied averaged 8.8 million barrels per day, down by 2.8% from the same period last year. Distillate fuel product supplied averaged 3.3 million barrels per day over the last four weeks, down by 15.4% from the same period last year. Jet fuel product supplied is down 3.1% compared to the same four-week period last year.

CUSHING STOCKS +0.2M TO 64.2M BARRELS IN JAN 15 WK

http://ir.eia.gov/wpsr/wpsrsummary.pdf

Russia's top oil producer Rosneft has the resources to meet its 2016 debt obligations of $13.7 billion in full this year, the company told Reuters on Thursday, as the value of the rouble against the U.S. dollar and euro has plummeted.

Rosneft, under Western sanctions over Moscow's role in the Ukraine crisis which limit its ability to borrow on global markets, bought TNK-BP, its smaller competitor, for $55 billion in 2013.

Rosneft said on Thursday it had a total of around $23 billion in free cash and short-term financial assets as of Sept-end, 2015, enough to meet its debt obligations this year.

Rosneft, which accounts for 40 percent of Russian oil output, said last year it had paid international banks $7.9 billion in the third quarter of 2015.

The company's net debt was down by 40 percent to $24.5 billion in the third quarter, quarter-on-quarter, thanks to the forward payments by its clients worth more than 1 trillion roubles ($11.9 billion).

Rosneft did not elaborate on Thursday whether it expected more such forward payments this year.

The company raised 625 billion roubles in rouble bonds at the end of 2014, in a deal described later by the central bank governor Elvira Nabiullina as "non-transparent, unclear to the market and... an additional factor of volatility."

Rosneft said at the time it did not use the funds raised to buy foreign currency.

http://www.reuters.com/article/russia-rosneft-debt-idUSL8N1551P5

Southwestern Energy Co said it would lay off 1,100 employees, or nearly 40 percent of its workforce, as it slows down drilling activity in response to a prolonged slump in oil prices.

Oil futures dropped to their lowest levels since 2003 this week on worries of a growing crude glut amid slowing demand due to economic weakness, especially in China.

Southwestern had no drilling rigs in operation at the start of 2016 and is yet to finalize its capital budget and operating plan for the year.

The company said on Thursday it expects to record a pre-tax charge of about $60 million to $70 million related to the job cuts in the first quarter.

Southwestern also said the latest round of job cuts along with the 102 layoffs in August would lower its annual costs by $150 million to $175 million.

http://www.reuters.com/article/southwestern-redundancies-idUSL3N15542R

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China's December diesel exports rose 264 percent from a year earlier to 980,000 tonnes, the country's General Administration of Customs said on Thursday, the second-highest month in 2015.

Full-year diesel exports rose 74.6 percent in 2015 to 7.16 million tonnes.

http://www.reuters.com/article/china-fuel-exports-idUSB9N0Y200S

Norwegian oil firms Statoil and Det norske are looking at more acquisitions after recent deals, their chief executives told Reuters, hunting for bargains after a plunge in energy prices.

Statoil last week bought an 11.9-percent stake in Sweden's oil firm Lundin Petroleum for $540 million, increasing its dominance on the Norwegian continental shelf where it already operates more than 70 percent of Norway's oil and gas output.

"We have done a transaction with Lundin, and we are of course monitoring other possibilities closely," Statoil CEO Eldar Saetre said in an interview, adding that Statoil has no current plans to raise its stake in Lundin.

"It is most likely that this (mergers and acquisitions) will increase," he said, speaking generally about the sector.

Last year saw a flurry of deals in Norway's biggest industry, with private equity investors buying up assets, betting on a recovery in crude prices, from energy firms happy to generate some cash.

The price of Brent crude is down 77 percent since June 2014, putting pressure on the budgets of energy companies but offering scope to pick up assets at attractive prices for those bold enough to bid.

Norway's Det norske, controlled by Norwegian billionaire Kjell Inge Roekke, has been another active buyer.

The exploration and production company bought the Norwegian units of Marathon Oil, Svenska Petroleum and Premier Oil's over the past 18 months.

"We want to play an active role in this market," Det norske CEO Karl Johnny Hersvik told Reuters on the sidelines of a company investment seminar. "We are looking for further opportunities."

Smaller player OKEA, a private-equity backed Norwegian newcomer which this month took over a 60 percent stake in a North Sea oilfield from Repsol of Spain, said it was looking at more deals this year.

"We think we can bring in more money as we make more good deals ... I hope that we can make one or two more deals in 2016," OKEA partner Erik Haugane told Reuters.

"Changes like this (in the oil price) is a catalyst for action. Some will buy more resources like we do, while others will clean out their portfolio to focus their business."

http://www.reuters.com/article/us-norway-m-a-oil-idUSKCN0UZ1I9

European companies and trading houses are not rushing to buy Iranian oil because of legal uncertainties over the lifting of sanctions that are likely to take weeks to clarify.

A lack of dollar clearing, the absence of an established mechanism for non-dollar sales, insufficient clarity on ship insurance and the reluctance of banks to provide letters of credit to facilitate trade are all giving cause for caution.

Iran used to sell as much as 800,000 barrels per day (bpd) to European refiners in Italy, Spain and Greece before sanctions over its nuclear programme were imposed. European markets have since then been inundated with extra oil from Saudi Arabia, Russia and Iraq.

Iran ordered a 500,000-bpd increase in oil output, of which 200,000 bpd will go to Europe, after the nuclear-related international sanctions were lifted on Saturday. But many European firms are wary of violating other sanctions that were imposed by the United States and have not been lifted.

Russian oil major Lukoil's chief executive, Vagit Alekperov, said it was still not clear whether the company's refineries in Italy or the Netherlands were free of legal risks to buy Iranian oil.

"It is all clear on the petrochemical side. We can transfer the money and buy and sell their products. On the crude side, our lawyers are looking into this," he told Reuters Television on the sidelines of the World Economic Forum in Davos.

Marco Dunand, chief executive of Swiss trading house Mercuria, also believes Iranian oil imports into Europe remain complicated.

"As a European citizen, I can probably trade it again provided I don't use U.S. dollars. But then if you use a euro-dollar conversion, does it become a grey (uncertain) zone?" he said.

Dunand said a lot of additional explanatory work needed to be done by European governments on how ship insurance and banking would now work before imports to Europe resume.

An executive from a European firm which was a big buyer of Iranian oil before the sanctions were imposed said it could take weeks to clear up many aspects.

"Up until Monday, banks and ship insurers were simply refusing to have any conversations about this," he said.

Another senior oil executive at the Davos meeting said his firm would eventually resume imports from Iran but was still exercising caution due to a lack of clarity.

Market players, however, expect that companies which bought Iranian crude before the sanctions - such as Royal Dutch/Shell , Total, Eni, Hellenic Petroleum and traders such as Vitol and Glencore - will resume purchases at some point later this year.

http://www.reuters.com/article/oil-iran-exports-idUSL8N1542EC

A Saudi-Jordan-Israel oil and gas pipeline is the only answer.  It’s the shortest distance between the two points of Saudi Arabia and the Eastern Mediterranean.  That was the historical path of the westward oil pipeline before Israel was created in 1948, and the Arabs declared endless war.  Egypt is too unstable to protect and control its own pipeline through the Sinai, let alone anything grander.  Therefore, the Sunni oil kingdoms have one and only one choice: a pipeline through Israel.

Israel is the perfect hub for all the non-evil-axis (though far from democratic) regional players: Turkey, Egypt, Cyprus/Greece, and Saudi Arabia.  The reason is that they all trust Israel not to attack each of them, whereas they all believe each would attack the other if they gained a contiguous border.  In short, Israel keeps all of the major players honest.  Therefore, Israel is the perfect buffer state for them. 
Israel is the military glue that not only acts to protect all the parties but acts as the key middle transit area connecting all the players.  For all of the players this is a key element.  Israel has the necessary military power projection for all the players without the usual threat projection that comes from the power projection. Israel can play a key role in protecting the pipeline from attack.
Such a pipeline will be an economic boom for Jordan and other Arabs in the area.  They will hopefully come to see Israel as the enabler of their economic base, and not an enemy.  For, if Israel were harmed, the pipeline would be doomed for destruction along with their economies.  In this regard, Turkey would be the greatest beneficiary because it would be guaranteed a secure source of gas and oil for its own use as well as for piping through to Europe.
Israel is not only an ally of Saudi Arabia and the Arab Sunnis in the military struggle against the waxing Persian Safavidic hegemon Iran, it is also a vital partner in the economic war against the ayatollah's regimeilo.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

The next scheduled OPEC meeting is not until June.

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

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

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

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

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

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

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

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

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

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

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

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

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

GAZPROM SALES OUTSIDE EX-USSR

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Some have already applied the lessons learned last year.

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

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

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

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

MARGIN BOOST?

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

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

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

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

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

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

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

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

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

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

South Korean state-owned Korea Gas Corp.'s LNG sales in December dropped 22.8% from a year earlier to 3.49 million mt, compared with 4.52 million mt a year earlier, the company said Tuesday.

@OilandGasInvest  

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British oil and gas company BG Group expects to post full year E&P production volumes at an average of 704 thousand barrels of oil equivalent per day in 2015, around 16% higher than 2014.

In its operational update on Wednesday, the company said the growth in production, ahead of guidance of 680-700 kboed, reflected growth primarily in Australia, Brazil and Norway.

Volumes in Australia more than doubled to 88 kboed and in Brazil, almost doubled to 146 kboed. In Norway, Knarr came onstream in March and has produced an average of 12 kboed during 2015. This growth was partially offset by the expected decline in Egypt, down 18 kboed to 44 kboed, combined with lower volumes in Trinidad & Tobago, down 13 kboed to 52 kboed.

Helge Lund, BG Group’s Chief Executive, said:

“Our excellent operational performance in 2015 is expected to deliver results in line with, or ahead of, our guidance for the year. Ramp up of both LNG trains at our QCLNG project in Australia and the start-up of our sixth FPSO in Brazil drove a strong E&P operational performance while our LNG Shipping & Marketing business delivered 282 cargoes, an increase of 58% on 2014, in difficult market conditions.”

The company expects to post total results earnings of at least $2.3 billion, which are expected to include a post-tax gain of at least $0.6 billion in respect of disposals, re-measurements and impairment.  Capital investment on a cash basis of around $6.4 billion, lower than guidance of around $6.5 billion.

BG Group explained that expected total results for the year does not include the impact of future transaction fees and other financial implications of the completion of the recommended cash and share offer for BG Group plc by Royal Dutch Shell plc.

http://www.shalemarkets.com/bg-group-production-grows-16-in-2015/

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Husky Energy cut C$800 million ($549.07 million) from its 2016 capital budget and slashed production guidance by 15,000 barrels of oil equivalent per day on Tuesday in the latest sign that Canadian producers are scrambling to cope with low oil prices.

The company also scrapped its fourth-quarter dividend, just a few months after surprising investors by switching to a stock dividend from cash payments.

Calgary-based Husky said it will spend between C$2.1-2.3 billion this year, down 27 percent from its original capital budget, and produce between 315,000-345,000 boepd.

The company said savings would be achieved primarily through deferring discretionary activities in Western Canada, but its Sunrise oil sands plant and three new heavy oil thermal projects in the Lloydminster region on the Alberta-Saskatchewan border will not be affected.

Spokesman Mel Duvall said about half the reduced production impact would be felt in Alberta and was mostly gas, with the rest being spread across Husky's portfolio.

"Deferral of capital is in those areas that can be quickly switched on as commodity prices recover," Husky's chief executive, Asim Ghosh, said in a statement.

Husky, controlled by Hong Kong billionaire Li Ka-shing, produces oil and natural gas in Canada and Southeast Asia, and holds numerous exploration licenses offshore of Atlantic Canada.

The company said it had adjusted the schedule for deploying an offshore drilling rig in the Atlantic region and was deferring select drilling in Western Canada.

Despite the cut in production and spending forecasts, Husky still plans to add 29,500 barrels per day through its heavy oil thermal projects and the Sunrise oil sands plant, a joint venture with BP Plc, which will ramp up to 60,000 barrels per day by the end of 2016.

The company's overall earnings breakeven point is expected to be below $40 U.S. crude by the end of 2016, and Husky said it expected further gains through reduced operating and sustaining costs.

http://www.reuters.com/article/husky-energy-spending-idUSL2N1532Q4

Petroliam Nasional Bhd (Petronas) plans to cut spending by up to 50 billion ringgit ($11.4 billion) over the next four years and review its business structure in response to the profit-sapping slump in oil prices.

The state-owned Malaysian company brings in nearly half of the Southeast Asian country's oil revenue and its woes are bound to add pressure to an economy already reeling from a slide in the ringgit and political uncertainty after a scandal surrounding state investor 1Malaysia Development Bhd (1MDB).

Petronas said in November that it would cut its 2016 dividend to the government by nearly 40 percent after a 91 percent drop in profit, with analysts suggesting the payout could be trimmed back again in future.

Petronas made its announcement on spending cuts in an internal memo, a copy of which was seen by Reuters.

"We will go through another round of CAPEX (capital expenditure) and OPEX (operating expenditure) review to target cuts up to RM50 billion over the next four years. This means that we are going to have to defer some of our projects," CEO Wan Zulkiflee Wan Ariffin said in the memo dated Monday.

In February last year Petronas said it planned to cut capital spending by 10 percent and operating expenses by up to 30 percent in 2015. It also said at the time that it would cut 2016 capital spending by 15 percent. Its 2014 capital expenditure was about 65 billion ringgit.

"We have also made a strategic decision to begin a review of Petronas' businessoperating model for better efficiency in response to the external environment," Wan Zulkiflee said in the memo. The review will result in a change to the organization's structure, details of which will be disclosed in March.

Contract jobs in the company's non-core businesses will be affected, he said.

In an emailed statement late on Tuesday, Petronas said it has circulated an internal communication on its efforts to cut costs to address the impact of the continuous fall in crude oil prices, but it did not provide details.

http://www.reuters.com/article/petronas-spending-idUSL3N15325I

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Foreign oil tanker owners are expected to make a slow return to Iran despite the lifting of many sanctions as insurers tread carefully, leaving shipping players unwilling to pick up cargoes as quickly as Tehran has wanted.

A nuclear deal between world powers - known as the P5+1 - and Iran led to the removal on Saturday of international oil export prohibitions as well as restrictions on banking, insurance and shipping for Tehran.

With U.S. sanctions still in place, which exclude U.S. persons, banks and insurers from trading with Iran including dollar business, shipping and marine insurance sources say many foreign companies are likely to take their time.

They are also mindful of sanctions being reimposed in a "snap back" if Iran reneges on commitments.

"In shipping terms, we think the impact will be a slow development. The initial oil sales will be the oil currently stored on (Iranian) ships in the Persian Gulf," said Paddy Rodgers, chief executive of oil tanker company Euronav .

"It will take time for this increase in production to be transported on the commercial tanker fleet given the financial sanctions still in place and reluctance of insurance providers to cover given the snapback provisions in the P5+1 agreement."

"So, any additional increase in Iranian barrels being produced will be shipped on Iranian vessels."

Securing international insurance cover as well as reconnecting with the internationalbanking system will be key to determine how quickly Iran can ramp up oil exports and re-engage with the foreign shipping sector.

Third-party liability insurance and pollution cover for vessels is provided by P&I clubs - marine insurers owned by shipping clients and reinsured internationally.

"There will be a time period whilst all financial services and businesses sit there and work out what the opportunities are, what the risks are before re-engaging," said Mike Salthouse, deputy global director with ship insurer North of England P&I Association.

"Some of the teething issues will need to be worked through."

Salthouse said since the 2008 financial crisis, the financial services industry had become more focused on compliance, which included sanctions regulations.

"There is probably less appetite for risk in the world today than in 2010 and we are all much more aware of the risks presented by any jurisdiction that presents compliance-type issues," he said.

Washington slapped new sanctions on companies accused of supporting Iran's ballistic missile programme, drawing an angry response from Iranian officials.

"There will also be a continuing issue of having to take care about not supporting transactions with sanctions targets where designations remain in place," a separate ship insurance source said.

"And one suspects that banks might prove to be slow to be willing to support transactions involving Iran again, especially any transactions in U.S. dollars, with continuing irritant effects for all doing business there."

Another ship insurer, Swedish Club, said the continued U.S. sanctions could mean "U.S. insurers and reinsurers in various global marine reinsurance programs may be unable to meet their obligations and pay a claim with an Iranian nexus".

Industry association Intertanko, whose independent members own the majority of the world's tanker fleet, said the removal of sanctions opened up opportunities for owners.

"We foresee a cautious return, given U.S. domestic sanctions may well still limit reinsurance," said Intertanko's general counsel, Michele White.

"It will also mean a return from storage to regular trade of the Iranian tanker fleet, both increasing available tonnage and oil onto an already saturated market."

http://www.reuters.com/article/iran-nuclear-shipping-idUSL8N1532BM

Iran said it will cut crude prices to Europe next month in line with similar reductions by Saudi Arabia, signaling that it wants to compete with its largest rival but without making deep discounts after international sanctions were lifted on its oil.

In a price list published on its website in recent days, the National Iranian Oil Company said it will reduce its official prices in North West Europe by $0.55 a barrel for its light crude and by $0.15 a barrel in the Mediterranean for delivery next month.

By contrast, NIOC increased its prices in Asia by $0.60 a barrel.

The changes come after Saudi state-owned Saudi Aramco said earlier this month that it was deepening the discount for its light crude by $0.60 a barrel to Northwest Europe and by $0.20 a barrel in the Mediterranean for February delivery. It also increased prices in Asia by $0.60 a barrel for the same grade.

An end to sanctions on Iranian oil—including the lifting of a European Union embargo—over the weekend has led to speculation Iran may carry a deep rebate against its rivals. But officials from the Islamic Republic have said they favor carrying crude-for-goods swaps or investing in oil refineries that will use Iranian oil rather than selling the commodity at a discount.

NIOC and Aramco prices are set every month at a discount or premium to various regional benchmark prices, which go up and down based on supply, demand and other factors considered by the market.

http://www.wsj.com/articles/iran-cuts-oil-prices-in-north-west-europe-mediterranean-in-february-1453216532

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Highlights from operations include:

Record production of 5.4 million barrels of oil equivalent reported by Sanchez Energy for an average production of 58,115 barrels of oil equivalent per day ('BOE/D') during the fourth quarter of 2015
Better than expected production results during the fourth quarter of 2015 were driven by Catarina production of 46,030 BOE/D, the highest quarterly production level recorded to date from the asset, as well as strong performance from new wells in the Cotulla area
Record quarterly average daily production of 58,115 BOE/D
Average well costs at Catarina for the fourth quarter of 2015 were $3.5 million per well
Completed the 50-well annual drilling commitment at Catarina for the period July 1, 2015 through June 30, 2016, which provides the Company with significant financial flexibility in 2016
Closed the Western Catarina Midstream Divestiture during the fourth quarter of 2015 for approximately $345 million in cash
Entered a joint venture with Targa Resources Partners LP (NYSE: NGLS) ('Targa') during the fourth quarter of 2015 to construct a cryogenic processing plant and high pressure gathering pipelines near Catarina, which is expected to provide a path to improved yields, lower processing fees, and significant marketing benefits
2016 Capital Budget guidance lowered to $200 - $250 million that is expected to maintain nearly flat year-over-year average production, a reduction of $50 million from prior estimates resulting from improved well results and cost efficiencies

Management Comments

'2015 was a strong year for Sanchez Energy,' said Tony Sanchez, III, Chief Executive Officer of Sanchez Energy. 'Record-high production and improved well economics, including efficiency gains leading to as much as 60% lower well costs, in addition to two pivotal midstream transactions have positioned us with the financial flexibility and tailwinds for our expected continued success in 2016's commodity price environment and beyond.'

'During the fourth quarter of 2015, we continued to realize significant operational success, which resulted in higher production levels and declining well costs,' he continued. 'Production for the fourth quarter of 2015 averaged approximately 58,115 BOE/D, significantly above the high end of our guidance range of 48,000 to 52,000 BOE/D for the quarter. Results were driven by Catarina production of 46,030 BOE/D, the highest quarterly production level recorded to date from the asset, as well as strong performance from new wells in the Cotulla area. Our fourth quarter of 2015 record production represents an increase of approximately 32% when compared to fourth quarter of 2014 production. For the full year, our 2015 average production was approximately 52,560 BOE/D, an increase of approximately 72% over 2014 average daily production.'

'At Catarina, well performance continues to exceed our initial expectations as we have extended the efficiency gains realized since acquiring the asset in 2014. We are now routinely drilling and completing wells at Catarina for approximately $3.5 million per well, which represents a reduction of almost 60% when compared to average well costs around the time of our acquisition.'

'As of January 1, 2016, we have successfully met the 50 well drilling commitment at Catarina for the period July 1, 2015 through June 30, 2016. Since we can bank up to 30 wells drilled during the remaining term of this commitment period towards the next annual drilling commitment period, which runs from July 1, 2016 through June 30, 2017, we have significant financial flexibility to execute our plans in 2016. At the same time, efficiency gains and cost reduction efforts continue to deliver positive results, which improve our well economics and should promote continuing success in today's commodity price environment.'

'Based on the strength of our 2015 operating performance, we are reducing our 2016 upstream capital spending guidance to a range of $200 million to $250 million, a $50 million reduction from our previous estimates. Our 2016 upstream capital budget is expected to maintain production roughly equal to that of 2015.'

http://www.oilvoice.com/n/Sanchez-Energy-announces-Q4-2015-operating-results-and-updated-2016-capital-budget/e04e23d5165c.aspx?utm_source=twitterfeed&utm_medium=twitter&utm_campaign=Feed%3A+OilvoiceHeadlines+%28OilVoice+Headlines%29

Iraq wants foreign oil companies to cut spending as the nation seeks to narrow a budget gap caused by lower crude prices, oil minister Adel Abdul Mahdi said in a statement on Tuesday.

"The ministry is discussing reducing financial spending by foreign companies," he told a meeting of the oil fields' joint management committees in Baghdad.

Iraq, OPEC's second-largest producer, has service agreements with companies including BP, Shell, Eni, Exxon Mobil and Lukoil to boost output at its ageing fields.

http://www.reuters.com/article/iraq-spending-idUSL8N1532P2

China's 2015 natural gas production rose by 2.9 percent from the previous year - the slowest growth in at least 10 years - official data showed on Tuesday, amid ample supply and weak domestic demand for the cleaner-burning fuel.

Production reached 127.1 billion cubic metres (bcm) in 2015, the National Bureau of Statistics said. In 2014, production was roughly 123.5 bcm, up about 7 percent, Reuters calculations derived from the official data on Tuesday shows.

The statistics bureau typically revises its data on a monthly basis and the percentage change for 2015 output indicates that the previously provided 2014 figure will be revised.

In 2013, natural gas production rose by 11.5 percent from the previous year to 115.4 bcm, the NBS said. The 2015 output growth was the slowest since Reuters began collecting the data in 2005.

Chinese gas consumption has been hit by slowing domestic economic growth and by state policies that kept prices high for most of the year, even as the global oil prices that underpin long-term gas supply contracts slumped to less than half their 2014 peaks.

Chinese gas consumption grew 3.7 percent in the first 11 months of 2015, according to the latest data from China's National Development and Reform Commission (NDRC). For full-year 2014, gas usage climbed 5.6 percent and 12.9 percent in full-year 2013.

"Gas production growth is constrained by demand," said Zhu Chen of SIA Energy in Beijing, and "also impacted by the contracted piped gas and LNG imports."

Excess contracted LNG supplies from Qatar and Papua New Guinea as well as piped gas imports from Central Asia have left China with surplus fuel that it has tried to sell off abroad after domestic demand slowed.

China's economic growth in 2015 was the slowest in 25 years, data also showed on Tuesday, while oil demand grew 2.5 percent.

Chinese regulators cut wholesale gas prices by about 25 percent in November, the second reduction of the year, to boost domestic demand after previously raising prices to spur domestic production.

China's supply of natural gas in the first eleven months outstripped demand by anywhere from 4.2 bcm to 8.4 bcm according to Reuters calculations using NBS and NDRC data respectively.

Gas imports grew 4.7 percent in the first eleven months to 54.4 bcm, data from the NDRC showed in December. LNG imports, which includes spot purchases, fell 1.6 percent over the same period, according to Customs data from last month.

http://www.reuters.com/article/china-economy-output-gas-idUSL3N1532HZ

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The Company's net production target for 2016 is in the range of 470-485 million barrels of oil equivalent (BOE), of which approximately 66% and 34% are produced in China and overseas respectively. The net production targets set for 2017 and 2018 are around 484 and 502 million BOE respectively. The estimated net production for 2015 was approximately 495 million BOE.

There will be 4 new projects coming on stream, including the Kenli 10-4, Panyu 11-5, Weizhou 6-9/6-10 oilfield comprehensive adjustment and Enping 18-1. Currently, nearly 20 projects are under construction.

Within the year, we plan to drill around 115 exploration wells and acquire approximately 10 thousand kilometers of 2-Dimensional (2D) seismic data as well as approximately 14 thousand square kilometers of 3-Dimensional (3D) seismic data.

The Company's total capital expenditure for 2016 will be no more than RMB60.0 billion. Of that amount, the capital expenditures for exploration, development and production will account for around 19%,64% and 13% respectively. The Company expects to achieve the whole-year targets by cost control and efficiency enhancement despite the lower capital expenditure.

Mr. Zhong Hua, CFO of the Company, commented:

'In response to the continued challenge posed by low oil prices, we will maintain prudent financial policy and further strengthen cost-control measures in order to make steady progress in the overall business, including exploration, development and production.'

Mr. Li Fanrong, CEO of the Company, commented:

'Faced with an increasingly complicated operating environment in 2016, the Company will fully utilize market mechanisms and combine innovations in technology and management in order to reduce costs and enhance efficiency. In addition, the Company will ensure an appropriate balance between short-term returns and long-term growth to promote a steady and healthy development.'

http://www.oilvoice.com/n/CNOOC-Limited-announces-2016-business-strategy-and-development-plan/57e0080f6c32.aspx?utm_source=twitterfeed&utm_medium=twitter&utm_campaign=Feed%3A+OilvoiceHeadlines+%28OilVoice+Headlines%29

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Unseasonably warm weather and rising supply will keep the crude oil market oversupplied until at least late 2016, the International Energy Agency said in its monthly report on Tuesday.

Warm winter weather around the world cut global oil demand growth to a one-year low of 1 million barrels per day in the fourth quarter of 2015, down from a near five-year high of 2.1 million bpd in the third quarter.

The IEA left its estimate of growth in global demand for 2016 unchanged from its previous monthly report at around 1.2 million bpd.

Brent crude futures LCOc1 have fallen to their lowest level since late 2003, tumbling below $30 a barrel, after OPEC said in December it would not cut output to arrest the price slide despite global oversupply.

"We conclude that the oil market faces the prospect of a third successive year when supply will exceed demand by 1 million bpd and there will be enormous strain on the ability of the oil system to absorb it efficiently," the IEA said.

With the world economy slowing, the IEA said it had cut its forecast for 2016 OPEC crude oil demand by 300,000 bpd to 31.7 million bpd.

Iran has said it will raise output by an initial 500,000 bpd now that international sanctions have been lifted, but the IEA said it believes the increase will be of a more modest 300,000 bpd by the end of the first quarter of 2016.

The IEA is sticking with its forecast for a decline of around 600,000 bpd in non-OPEC output, which it said had been surprisingly resilient in the face of tumbling crude oil prices.

http://www.reuters.com/article/us-oil-iea-idUSKCN0UX0VJ

The US oil and gas giant has signed a non-binding Heads of Agreement with China’s ENN Energy to receive 0.5 million metric tonnes of LNG a year for 10 years, with deliveries starting in 2018, or the first half of 2019.

Chevron Midstream and Development executive vice president Mike Wirth said it was one more step in the development of the company’s Australian gas business and its global LNG portfolio.

“As first LNG production from the Gorgon project draws near, we welcome ENN as a new customer,” Chevron Australia managing director Roy Krzywosinski said.

“This deal shows the competitiveness of LNG supply from Chevron’s Australian projects.”

The new deal follows the recently announced non-binding HoA with China Huadian Green Energy Co.

ENN Energy is one of the biggest natural gas distribution companies in China.

https://au.news.yahoo.com/thewest/wa/a/30605897/new-gorgon-deal-for-chevron/?cmp=st

Concho Resources announced Monday three deals that will rearrange the company’s acreage in the Permian Basin through a swap, an acquisition and a sale.

Combined, the transactions will bring down the Midland-based producers’ net debt without affecting its 2016 capital budget or production outlook, executives said in an announcement describing the deal.

In the first part of the deal, Concho said it would buy roughly 12,000 net acres near the company’s North Harpoon prospect in Ward and Reeves counties. Concho will pay an unnamed private operator a combination of cash, stock and joint-venture interest in the acreage.

The second deal is an exchange with Clayton Williams Energy that will consolidate 21,000 net acres where Concho doesn’t operate drilling into a concentrated position adjacent to company’s Big Chief prospect in Reeves County, Texas.

The third deal will have Concho sell about 14,000 net acres in Loving County to Silver Hill Energy Partners II for $290 million in cash. Silver Hill is a closely held oil and gas company backed by private equity group Kayne Anderson Capital Advisors, which has raised $4.5 billion in capital.

The assets Concho is selling produced about 2,500 barrels of oil equivalent per day in the third quarter from a total of 5 million barrels of oil equivalent in proved reserves, according to the announcement. Concho said the sale will free it from about $100 million in drilling costs through 2016.

“The combined effect of these transactions not only strengthens our portfolio, but also frees up capital to develop higher returning properties while improving our leverage metrics,” said Tim Leach, Chairman and CEO of Concho in a prepared statement.

http://fuelfix.com/blog/2016/01/18/concho-shakes-up-permian-holdings/?utm_source=twitterfeed&utm_medium=twitter

China's implied oil demand fell 1.3 percent in December from a year earlier to 10.46 million barrels per day (bpd), according to Reuters' calculations based on preliminary government data.

Preliminary oil demand for full-year 2015 was 10.32 million barrels per day, up 2.5 percent from a year ago.

Preliminary implied oil demand is the sum of domestic refinery throughput and net imports of refined products, on a bpd basis.

Refinery throughput

China's refinery throughput rose 2.7 percent in December from a year earlier to 45.38 million tonnes, or a record 10.79 million barrels per day (bpd), data from the National Bureau of Statistics showed on Tuesday.

The daily run rate is up 1.0 percent compared with 10.69 million bpd in November, the previous record.

Refinery throughput for full-year 2015 reached 522 million tonnes, or 10.44 million bpd, up 3.8 percent over the previous year.

.http://www.reuters.com/article/china-economy-oil-demand-idUSB9N0Y2008

http://www.reuters.com/article/china-economy-throughput-oil-idUSENNG1F0SX

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@ReImagineGas

Saudi Arabia, the world’s largest crude exporter, shipped the most oil in seven months in November in a sign that overseas refineries were getting prepared to put plants back on line after seasonal maintenance.

Saudi shipments rose to 7.72 million barrels a day, the highest since April, from 7.364 million in October, according to data on the website of the Joint Organisations Data Initiative based in Riyadh. JODI is an industry group supervised by the Riyadh-based International Energy Forum.

“This is exactly what they’ve been doing for the last year and a bit, whenever there is demand for their crude they will export,” Amrita Sen, chief oil market analyst at Energy Aspects Ltd. in London, said by phone.

Refineries are usually taken off line for repairs in September and October. Refined products exports from Saudi Arabia rose in November, to 1.18 million barrels a day from 1.09 million, according to JODI.

“You would expect to see refinery buying in November ahead of their return from maintenance in December,” Sen said. “You are seeing more oil going into Europe.”

Poland’s PKN Orlen bought three cargoes of Saudi crude, the company said this month. “The Mediterranean we think is going to be the new battle ground among Saudi, Iran and Iraq, which is why Saudi is focusing on Europe ahead of Iran’s return,” Sen said.

The Organization of Petroleum Exporting Countries couldn’t agree on production limits at its Dec. 4 meeting amid Iran’s plans to boost exports following the end of international sanctions on its economy. Brent crude prices dropped 10 percent in November.

The global oil surplus will persist at least until late 2016 as demand growth slows and OPEC shows “renewed determination” to maximize output, the International Energy Agency said last month.

The oversupply is probably 2 million barrels a day, even before more supply from Iran, Louis Besland, head of the Europe, Middle East and Africa oil and gas practice at AlixPartners management consultants, said by phone from Dubai. “This imbalance has been mainly created by the North American shale oil and gas in the past four or five years. That’s why Saudi Arabia believed from the beginning it’s not up to them to cut back.”

http://www.bloomberg.com/news/articles/2016-01-18/saudi-oil-exports-climb-to-seven-month-high-as-refineries-return

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OPEC forecast on Monday that oil supply from non-member countries will post a larger-than-expected decline this year due to the collapse in prices, boosting the need for crude from the producer group.

Supply outside the Organization of the Petroleum Exporting Countries (OPEC) would decline by 660,000 barrels per day (bpd) in 2016, led by the United States, OPEC said in a report. Last month, OPEC predicted a drop of 380,000 bpd.

"The analysis indicates that 2016 will be a supply-driven market. It will also be the year when the rebalancing process starts," OPEC said.

"Non-OPEC marginal barrel production in the next six months will be sensitive to sustained low oil prices."

A drop in non-OPEC supply would reduce a supply glut which has prompted oil prices to collapse to below $28 a barrel, the lowest since 2003. OPEC's 2014 strategy shift to defend market share and not prices helped deepen the decline.

The price drop has started to slow the development of relatively expensive supply sources such as U.S. shale oil and forced companies to delay or cancel billions of dollars worth of projects, putting some future supplies at risk.

U.S. output will average 13.50 million bpd this year, the report said, down 380,000 bpd from 2015 and the largest drop outside OPEC. Output is also vulnerable in places such as the North Sea, Latin America and Canada, OPEC said.

But OPEC's report makes no mention of the supply impact of the lifting of Western sanctions on member-country Iran, which on Monday said it was increasing output by 500,000 bpd - which would fill most of the hole left by non-OPEC members.

The United Arab Emirates' energy minister, in the first comment by a Gulf OPEC member about Iran since most sanctions were lifted on Tehran, said anyone increasing output during the current oversupply would worsen the situation.

For now, OPEC said it pumped less oil in December, reducing the excess in the market. Production including returning OPEC member Indonesia fell by 210,000 bpd to 32.18 million bpd in December, the report said, citing secondary sources.

The report points to a 530,000-bpd supply surplus this year if the group keeps pumping at December's rate, down from 860,000 bpd implied in last month's report.

OPEC left its 2016 global oil demand growth forecast little changed, predicting global demand would rise by 1.26 million bpd, marking a slowdown from 1.54 million bpd in 2015.

http://www.reuters.com/article/opec-oil-idUSL8N15227O

An Israeli exploration consortium may have uncovered a further major gas deposit based on a new resource estimate for a pair of finds off the Mediterranean country (Daniel East and West), according to a report.

http://www.upstreamonline.com/live/1421478/israeli-pair-eye-big-gas-find?utm_source=twitterfeed&utm_medium=twitter

Canadian oil and gas producer Suncor Energy Inc said on Monday it had reached an agreement to buy Canadian Oil Sands Ltd after raising its all-stock offer, valuing the deal at about C$4.24 billion ($2.93 billion) excluding debt.

The deal came days after Suncor's hostile bid for the company fell short of support from Canadian Oil Sands shareholders.

Alberta oil sands producers have been struggling with tumbling global crude oil prices, which slid to their lowest levels since 2003 on Monday over worries of a global supply glut.

Suncor will now offer Canadian Oil Sands shareholders 0.28 of a Suncor share for each Canadian Oil Sands share they hold, more than the initial bid of 0.25 shares offered in October.

The raised offer values Canadian Oil Sands at C$8.74 per share, which represents a premium of nearly 17 percent over the closing price of both stocks on the Toronto Stock Exchange on Friday.

Suncor made a bid for Canadian Oil Sands in October and later extended the offer until Jan. 8, promising shareholders improved operating efficiencies and a higher dividend.

In response to the hostile bid, Canadian Oil Sands adopted a shareholder rights plan that acted as a poison pill, and urged investors to reject what it called a substantially undervalued Suncor bid.

Seymour Schulich, a major Canadian Oil Sands investor, urged his fellow shareholders on Jan. 5 to reject the bid, saying Suncor was offering "an unacceptable price for an irreplaceable asset."

Suncor Chief Executive Steve Williams said on Monday the company was "pleased to have the support of the COS Board of Directors and shareholders, including Seymour Schulich, and have been advised of their intent to tender their shares."

Including Canadian Oil Sands' estimated debt of C$2.4 billion, the new deal is valued at about C$6.6 billion, the companies said in a statement on Monday.

Canadian Oil Sands has a 36.7 percent stake in Syncrude, the oil-sands mining consortium in northern Alberta that is Canada's largest single source of crude oil.

Suncor currently owns 12 percent of Syncrude, a stake that would rise to 49 percent with the takeover.

http://www.reuters.com/article/canadian-oil-ma-suncor-energy-idUSL2N1520F3

Iran has issued an order to increase crude oil production by 500,000 barrels a day, the deputy oil minister was quoted as saying on Monday, implementing its policy to boost production as soon as sanctions were lifted.

Oil prices hit their lowest since 2003 on Monday as the market braced for additional Iranian exports, but later turned positive. Benchmark Brent crude was trading at around $29.25 at 1220 GMT.

"Iran is able to increase its oil production by 500,000 barrels a day after the lifting of sanctions, and the order to increase production was issued today," Deputy Oil Minister Rokneddin Javadi, who also heads the National Iranian Oil Company, was quoted as saying by Iran's Shana news agency.

The United States and European Union on Saturday revoked sanctions that had cut Iran's oil exports by about 2 million barrels per day (bpd) since their pre-sanctions 2011 peak to little more than 1 million bpd.

The following day, Iran said it was ready to increase its exports by half a million barrels per day, pouring more supply into a market glut that has routed global crude prices. Tehran has pledged to boost production further in the coming months.

Nevertheless, analysts say Iran may struggle to rapidly boost its production because its infrastructure, harmed by years of inactivity, needs foreign investment that will take time to arrive.

On Sunday, the head of Italy's Eni SpA said Iran would need to attract $150 billion to become a major producer, and that "is not something that can be done in a second".

http://www.reuters.com/article/iran-nuclear-oil-idUSL8N1522AF

#1

Exxon has cut total shareholder payments 50% since the peak.
Shell -10%, BP, 50%.

#2


Shell has MORE rigs contracted at LONGER duration than Exxon. BP has one rig out at 1yr.

Shell has debt: $50bn. Worst bond is 284bp over libor.  
Exxon has debt $32bn. Worst bond is 185bps over libor.
BP has debt $30bn. Worst bond is 214bps over libor.

Contractual liabilities:


Shell claims this outsize figure is due to the LNG business, but comparison with other big LNG operators leaves uncomfortable questions. 

BP's disclosure is superb. We'll pick of the comparable capex commitments and score them as $35bn, but other analysts may be harsher.

Exxon contractual obligations + debt =$86bn or 26% of mcap.
Shell contractual obligations +debt= $530bn or  420% of mcap.
BP contractual obligations +debt $65bn or 73% of mcap

#3
Corrected for working capital changes:
Exxon operating ($39bn) exceeds capex ($29bn) by almost precisely the dividend ($11bn)
Shell operating ($15) is less than capex ($17) and the dividend ($10bn) has no funding.
BP operating ($17) is less than capex ($19), and the dividend ($7bn) has no funding.

Statoil ASA and partners have cut costs to develop the giant Norwegian Johan Sverdrup oilfield by more than 10 percent as a devaluation sweeps through the offshore industry of western Europe’s largest crude producer amid a collapse in prices.

Total investments on the North Sea field are now seen at 160 billion kroner ($18 billion) to 190 billion kroner, down from an earlier estimate of 170 billion kroner to 220 billion kroner, Det Norske Oljeselskap ASA, one of the field’s owners, said Monday. The estimate for the first phase was cut to 108.5 billion kroner from 123 billion kroner in nominal terms.

“The development costs of the field are expected to decrease further,” the company said in a statement.

The Sverdrup field, which holds 1.7 billion to 3 billion barrels of oil and is due to start producing in 2019, is Norway’s biggest offshore development in decades. The development is going ahead as oil companies are delaying and canceling projects to counter a deepening slump in crude prices. Benchmark Brent is now trading below $30 a barrel compared with about $115 in June 2014.

The owners of the field, which also include Lundin Petroleum AB, are taking advantage of of lower rates from suppliers squeezed by spending cuts. The Sverdrup project represents a lifeline as investments in Norway are set to drop for a third consecutive year and won’t rise again until 2019, according to the Norwegian Petroleum Directorate.

About 60 percent of capital expenditure on Sverdrup’s first phase are in kroner, a currency that has slumped against the dollar as oil fell, Det Norske said, citing estimates from Statoil.

Statoil spokespeople didn’t immediately reply to an e-mail seeking comment on the new estimates.

http://www.bloomberg.com/news/articles/2016-01-18/statoil-trims-costs-on-giant-sverdrup-field-amid-oil-collapse

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Just one oil rig went dark this week, slowing the pace of oil patch losses that have been mounting in recent weeks as crude prices remain stuck in dismal territory.

The number of rigs drilling for oil in the United States has now fallen to 515, down more than two-thirds from its peak of 1,609 in October 2014 during the heydays of the domestic drilling renaissance.

Drillers idled another 13 rigs hunting for gas, bringing the total number down to 135, according to weekly data released by oil field services firm Baker Hughes.

The oil-soaked Permian Basin in West Texas, which had remained a favorite among U.S. exploration and production companies despite the prolonged crude slump, showed continued signs of weakness this week, with producers sidelining seven more rigs. Another sweet spot shale play, the Eagle Ford in South Texas, also saw a retreat, with the rig count tumbling by three. Losses were also seen in some gas-rich shale plays, including the Barnett, the DJ Niobrara, the Utica and the Williston.

Texas, the nation’s number one drilling destination, posted the steepest drop this week, losing 7 more rigs and bringing the state’s total rig count to 301. That’s down 61 percent from the same time last year. Colorado, Louisiana, New Mexico, North Dakota, Ohio and Wyoming also lost rigs.

The modest rig count declines fueled traders’ concerns that the world remains oversupplied with oil at a time when demand growth appears to be slowing. Fears of Iranian oil hitting the market spurred a dramatic sell-off in oil that pushed oil below $30 early Friday morning, and that decline continued following the rig count release.

http://fuelfix.com/blog/2016/01/15/permian-eagle-ford-combine-for-10-shut-down-rigs/

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The Port of Rotterdam has reported a 91.3% increase in LNG throughout in 2015. In total, the port received 2.3 million t of LNG.

The sharp increase has been attributed to falling LNG prices in the Far East. These prices are now comparable to those in Europe, which has increased the trade and shipping volume of gas in the region.

In total, goods throughput in Rotterdam increased by a total of 4.9% to 466.4 million t in 2015. The growth was attributed almost entirely to the increased throughput of crude oil and oil products.

http://www.lngindustry.com/regasification/15012016/LNG-throughput-increases-at-Port-of-Rotterdam-1877/

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Cnooc Ltd.’s Nexen Energy unit is halting work at its Long Lake oil sands operations in Canada after an explosion killed a worker and injured another.

The Nexen 72,000 barrel-a-day upgrader has been shut and pumping stopped on oil sands production wells, Vice President Ron Bailey said Saturday at a press conference in Calgary. The blast occurred Friday in the upgrader’s hydrocracker unit while it was undergoing maintenance.

The shutdown adds to the strain on Nexen from plunging oil prices and a pipeline leak that caused an oil spill in July. The Alberta Energy Regulatory ordered the company to shut operations for part of September after that incident.

Oil closed below $30 a barrel Friday for the first time since 2003, bringing bigger losses to oil sands producers. The industry may burn through about C$12 billion ($8.4 billion) of cash a year as revenue fail to cover costs, analysts at Calgary-based investment bank Peters & Co. wrote in a report this past week.

http://www.bloomberg.com/news/articles/2016-01-16/cnooc-s-nexen-stops-long-lake-oil-sands-work-after-fatal-blast

Suncor Energy Inc, which recently extended its hostile bid for Canadian Oil Sands Ltd , is now in talks with its target and a friendly deal could be clinched as early as Monday, according to a source familiar with the matter.

Suncor, Canada's largest oil producer, is contemplating improving the exchange ratio around the all-stock offer in an attempt to sweeten the deal, said the source, who asked not to be named as the talks are private.

The two Canadian companies have been working on a revised bid since Friday, the Wall Street Journal reported earlier on Sunday, citing a source, who said talks were still ongoing.

Suncor is currently offering Canadian Oil Sands shareholders 0.25 of a Suncor share for each Canadian Oil Sands share they hold.

The offer, launched in early October, initially valued the company at about C$4.3 billion ($2.96 billion). The recent oil price rout has hurt the value of Suncor's shares, so the bid currently values Canadian Oil Sands at C$3.8 billion.

Canadian Oil Sands has a 36.7 percent stake in Syncrude, the oil-sands mining consortium in northern Alberta that is Canada's largest single source of crude oil.

Suncor extended its bid for Canadian Oil Sands earlier this month after its target's poison pill expired with it failing to find a white knight.

At the beginning of last week Suncor had received more than 40 percent of the votes in favor of its bid for Canadian Oil Sands, a source familiar with the situation told Reuters. It was however, still short of the two-thirds majority it required in order to clinch a deal.

http://www.reuters.com/article/canadian-oil-suncor-energy-wsj-idUSL2N15202J

The Russian Energy Minister Alexander Novak has said coordinated oil production cuts with OPEC to help support falling oil prices would be unlikely.

The politician said he felt it was unlikely all countries within OPEC would be able to agree on how to prop up prices.

The comments come after some countries called on Russia to cut its own output.

Novak said: “From our point of view, it is unlikely that all the countries within OPEC can agree on production cuts, let alone those countries which are not in the OPEC coalition.

“Such consultations have been underway for the past year and a half since oil prices started to fall in mid-2014.

“(But) we see that in 2015 countries like Saudi Arabia in OPEC have increased total production by 1.5 million barrels per day.”

Novak said the critical oil price level for domestic oil producers was $5-$15 per barrel, which amounted to the cost of production.

https://www.energyvoice.com/oilandgas/98816/russia-rules-out-coordinated-oil-output-cuts/

Gazprom PJSC’s third-quarter loss was lower than expected as rising export sales and lower costs offset foreign-currency losses.

The world’s biggest natural gas producer reported a net loss of 2 billion rubles ($26.1 million), compared with a profit of 105.7 billion rubles a year earlier. That was better than the average estimate of a loss of 17.6 billion rubles from 10 analysts surveyed by Bloomberg News. Earnings before interest, taxes, depreciation and amortization rose 3 percent year-on-year to 491 billion rubles, beating the estimate by 7 percent.

“Gazprom pleased the street with better than expected results,” said Maxim Moshkov, an energy analyst at UBS Group AG in Moscow, also highlighting a 10 percent cut in operational costs in rubles, “which saved the company’s bottom line.”

Russia’s falling currency supported Gazprom’s ruble-denominated revenue, helping to offset export prices that fell to near the lowest in a decade. Most of the company’s costs are in rubles while most of the profit is from abroad, with a majority of its gas-export contracts linked to oil. Brent slumped 35 percent last year.

Gazprom shares fell 0.7 percent to 129.98 rubles in Moscow at 1:05 p.m. after rising as much as 1.2 percent earlier.

Currency Loss

The quarterly loss was the first since the fourth quarter of 2014 as it revalued its dollar and euro-denominated loans and borrowings. Gazprom reported a foreign currency loss of 400 billion rubles as the Russian currency fell 16 percent against the dollar in the third quarter.

While revenue from gas supplies to its key European marketdropped more than 25 percent last year to about $38 billion, full-year sales may hit a record in ruble terms. The third-quarter revenue increased 14 percent to 1.29 trillion rubles, according to the report. Gazprom’s export gains were higher than expected, Moshkov said.

Brent has extended declines to 20 percent this year and is trading at $29.76 a barrel, which means Gazprom’s gas prices in Europe will fall further. The company’s third-quarter results reflect oil price that was $55 to $60 a barrel, so the “key question is what happens with Gazprom’s profitability at $30,” said Renaissance Capital analyst Ildar Davletshin.

‘Tougher’ 2016

There’s still not much certainty with commodities prices in 2016 although it’s clear that this year would be “tougher” for Gazprom than the previous, Moshkov said.

The state-controlled company had positive free cash flow of 29.4 billion rubles in the third quarter, after a negative result in the previous three-month period. It may be between of $4 billion to $5 billion for the full year, according to Moshkov’s estimate.

Gazprom still plans to keep dividends at no less than 7.2 rubles per share, the payout in 2014 and 2015, despite the market situation, deputy head Andrey Kruglov said last month.

http://www.bloomberg.com/news/articles/2016-01-15/gazprom-swings-to-quarterly-loss-on-weaker-prices-ruble-slump

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Brazil's state-led oil company Petroleo Brasileiro SA said on Friday it had canceled plans to sell as much as 3 billion reais ($744 million) of local-market bonds after being unable to sell the debt at rates acceptable to both the company and investors.

Petrobras, as the company is commonly known, had interrupted its plan to sell the debt in October in the hope that market conditions would improve.

http://www.reuters.com/article/brazil-petrobras-bond-sale-idUSL2N14Z0JV

Russia's second-largest oil producer Lukoil is leaving projects in Ivory Coast, Interfax news agency reported on Friday, citing a source.

Lukoil has been operating in the Gulf of Guinea offshore Ivory Coast since 2006 and is operator of the offshore exploration projects at the CI-401, CI-205 and CI-504 blocks, according to website of its subsidiary www.lukoil-overseas.com.

http://www.reuters.com/article/russia-lukoil-idUSR4N14X016