Iraq will not resume pumping crude through a Kurdish pipeline to Turkey unless it reaches a financial agreement with the Kurdish regional government, the Iraqi oil minister said on Tuesday.

Adel Abdul Mahdi confirmed on his Facebook page that the central Iraqi government had decided to stop pumping crude from fields under the management of its state-run company in northern Iraq through the pipeline.He said state-run North Oil Company previously fed 150,000 barrels a day into the pipeline that carries crude from the Kirkuk fields and other reservoirs managed by the Kurdish authorities to the Turkish Mediterranean terminal of Ceyhan.

"We have two options" in order to resume pumping, the minister said, demanding either a return to a previous oil agreement between Baghdad and the Kurdish Regional Government (KRG), or making a new agreement.

The previous agreement provided for the KRG to transfer to Iraq's central state oil marketing company 550,000 barrels a day of crude produced in the Kurdish region, in return for a 17 percent share in the federal budget, he said. The Kurds stopped all oil transfers to the government in September 2015, at which point they also stopped receiving government funding, he added.

http://www.reuters.com/article/iraq-oil-pipeline-idUSL5N16U33C

PetroChina Co. profit tumbled to the lowest since 1999 as falling crude prices crimped earnings at the country’s biggest oil and gas producer.

Net income at the Beijing-based explorer dropped 67 percent to 35.5 billion yuan ($5.46 billion) from 107 billion yuan, according to a statement sent to the Hong Kong stock exchange. That compares with a 34.3 billion yuan mean estimate from 11 analysts compiled by Bloomberg. Sales fell 24 percent to 1.73 trillion yuan. The company warned in January that 2015 profit may fall 60 percent to 70 percent.

Brent, the global benchmark, dropped to an average of about $54 a barrel last year, from roughly $99 the year before, prompting global oil energy companies to write down assets, slash earnings and cut capital expenditure plans. Despite the pain, PetroChina and its state-owned parent China National Petroleum Corp. won’t resort to laying off frontline oil and gas workers as a way to cut costs, Chairman Wang Yilin said this month.

“In 2015, the global economic recovery slowed down, the downward pressure on China’s economy continuously intensified, the overall supply in the oil and gas market was sufficient and the international oil prices kept dropping at a low level,” the company said in its earnings release.

Oil has climbed back from a 12-year low this year on speculation that stronger demand and falling U.S. output will ease a global surplus. The Organization of Petroleum Exporting Countries and other producers including Russia plan to meet in Doha next month to discuss limiting output to reduce a global oversupply.

China’s biggest explorers including PetroChina, China Petroleum & Chemical Corp. and Cnooc Ltd. all posted profit or revenue declines for the first nine months of 2015. PetroChina and CNPC sold pipeline assets in November to raise cash to meet their annual profit target. Capital spending this year will be 5 percent lower at 192 billion yuan, following a 31 percent cut last year.

The company rose 0.9 percent to HK$5.37 before the earnings announcement, compared with a 0.3 percent loss in the city’s benchmark Hang Seng Index. Shares are down 35 percent in the past year.

Parent company CNPC will be among the first state-owned companies to undergo government-guided reforms, transforming into a strategic holding company that will not manage day-to-day operations of its subsidiaries, according to people with knowledge of the situation. As part of the overhaul, China’s government islooking to spin off oil and gas pipelines from its energy companies into independent businesses.

http://www.bloomberg.com/news/articles/2016-03-23/petrochina-profit-falls-as-crude-s-plunge-punishes-earnings

China and Russia should accelerate construction of the Altai natural gas pipeline linking the two countries, vice premier Zhang Gaoli told Gazprom CEO Alexei Miller in Beijing on Tuesday, state television reported.

The two countries should also expand cooperation in upstream and downstream, natural gas supply services and energy sales, Zhang said, according to China Central Television.

Gazprom's Miller said Russia would be actively engaged in negotiations with China on the Altai project, according to the broadcaster.

Russia has been pushing for plans to sell China natural gas through the Altai project, also known as the western route. Analysts have estimated the cost of the Altai pipeline at up to $20 billion.

http://www.reuters.com/article/china-russia-pipeline-idUSL3N16U3SA

Woodside Petroleum and its partners have shelved plans to build the $30 billion Browse floating liquefied natural gas (LNG) project off Australia in the face of global oversupply, spelling the end of an era of mega LNG projects.

The shelving of the project follows an 80 percent plunge in Asian LNG prices over the past two years after a construction boom that is set to make Australia the world's top LNG exporter.

Browse is one of five projects now stuck on the drawing board in Australia amid a glut of new supply, including from Chevron's newly commissioned $54 billion Gorgon project and exports from the United States.

The move came as no surprise after Woodside Chief Executive Peter Coleman flagged last month that now was "not the time to be reckless" in spending capital and that the project had failed to line up any customers for Browse LNG.

Browse faced tough hurdles as its costs per tonne were higher than rival projects in places such as Papua New Guinea and North America and large-scale floating LNG was unproven technology.

"These factors, combined with the greatly reduced appetite for large-scale greenfield investments in the current market conditions, made it quite a herculean task to achieve partner alignment to sanction Browse," said Saul Kavonic, an analyst with consultants Wood Mackenzie.

This is the second time Browse has been sent back to the drawing board. The partners ditched plans in 2013 for an onshore project, that analysts estimated at $45 billion, at a site opposed by green groups and some Aboriginal landowners.

The partners then spent $100 million redesigning the project to floating LNG, slashing costs by 35 percent. Despite the savings, Coleman said Browse would not have been profitable at today's oil price around $41 a barrel.

"Unfortunately, with pricing falling away from us, that cost reduction doesn't get us to a breakeven price that's low enough for us to feel comfortable making an investment at this point in time," Coleman told Reuters in an interview.

"It's very disappointing in the scheme of things as this is a key part of our growth story."

Not only is it a blow to Woodside, but it's painful for its Japanese partners, Mitsui & Co and Mitsubishi Corp , which together paid $2 billion for a nearly 15 percent stake in 2012, and PetroChina, which paid $1.63 billion for an 11 percent stake in 2013.

Mitsui said on Wednesday it would book an impairment charge of about 40 billion yen ($356 million) on its Browse investment as a result of the postponed development. Mitsubishi had no immediate comment.

http://www.reuters.com/article/woodside-lng-idUSL3N16U5C4

Indonesia has decided against a proposal by Japanese oil and gas company Inpex Corp to build a floating liquefied natural gas project in eastern Indonesia and will proceed with plans to process the gas onshore instead, the president said on Wednesday.

"This is a long-term project that concerns hundreds of trillions of rupiah. From these calculations, we have decided to build it onshore," President Joko Widodo said in a recorded statement obtained from palace officials.

http://www.reuters.com/article/indonesia-inpex-c-lng-idUSJ9N15Y01C

The chief executive of Austrian oil and gas group OMV and Austria's finance minister will visit St. Petersburg on April 1, an OMV spokesman said, as the company seeks to reach a deal on an asset swap with Russia's Gazprom.

The companies have been working for months on a swap agreement under which OMV would take a stake in the Urengoy gas field in Siberia, but no details have emerged on what assets OMV -- central Europe's biggest energy group -- might offer in return.

OMV Chief Executive Rainer Seele, who said last month that due diligence for the deal would take several months, will be accompanied on his Russia trip by Finance Minister Hans Joerg Schelling, a spokeswoman for Schelling confirmed.

Seele is relying heavily on the swap to help OMV to lower production costs and has said he has no Plan B.

A source close to OMV said that the finance minister's attendance suggests that progress might have been made in the talks about future cooperation.

Russia's energy minister has said the swap could include OMV oil and gas fields "in third countries" or infrastructure or energy projects in Austria.

OMV has upstream operations in the North Sea, Romania, Austria, Australia, New Zealand, the United Arab Emirates, Tunisia, Gabon, Kazakhstan, Namibia and Madagascar, as well as idled operations in Libya and Yemen.

It is in the process of taking over gas trading company EconGas, has a majority stake in the Central European Gas Hub (CEGH) in Austria, owns gas storage facilities in Austria and refineries in Austria, Germany and Romania.

It wants to sell its Petrol Ofisi petrol station business in Turkey and is in the process of selling a minority stake in Gas Connect Austria, though it has ruled out Gazprom as a buyer.

OMV has said maximum output from the Urengoy area in which it is interested is expected to be 60,000 to 80,000 barrels of oil equivalent (boe) per day over the next 20 years. OMV's current total output is about 309,000 boe per day.

http://www.reuters.com/article/omv-russia-idUSL5N16U3UB

Qatargas is looking to Britain and the Netherlands in an effort to weather a looming global glut of gas supplies by expanding import deals into Europe's most liquid markets, industry sources said.

The world's biggest exporter of liquefied natural gas (LNG) must lock in buyers for its unsold supply just as new Australian and U.S. producers muscle into its prized Asian markets.

Slowing demand globally is only adding to producer woes, thrusting Europe's gas markets and dozens of under-used import terminals into the spotlight.

Qatargas has held talks with Petronas UK Ltd to gain greater access to the Dragon import terminal in Wales, as well as with Uniper, formerly known as E.ON Global Commodities, for the Gate terminal in Rotterdam, two sources said.

Uniper declined to comment, while Qatargas and Petronas did not respond to requests for comment.

Stefaan Adriaens, commercial manager at Gate, said he could not comment on whether Qatargas was interested in increasing capacity at the terminal either via Uniper or directly.

"They see competition in Asia, so if they are looking for capacity, then I presume it's to have an alternative to Asia," he said.

Dong Energy, EconGas, Uniper, Shell and Eneco hold Gate capacity but around 0.9 billion cubic metres remains available.

Unlike the last four years, import capacity at Gate and other northwest European terminals is becoming more valuable in response to the start of U.S. LNG exports.

"As more people are looking to Europe the capacity value has increased, whereas in other areas it's quite the contrary. Everybody was hoping for Asia demand but there demand was slower so I think capacity value has decreased there," he said.

TALKS

In 2013, Qatargas signed a five-year deal to supply 1.14 million tonnes a year (mtpa) to Petronas' half-share of the Dragon terminal at Milford Haven.

Qatargas 4, a joint venture between Qatargas and Royal Dutch Shell, signed the deal with Petronas, followed by a five-year agreement with E.ON Global Commodities to ship 1.5 mtpa to the Gate terminal.

Both deals are flexible, according to the original announcements, meaning Qatar is not obliged to ship any LNG to Britain or the Netherlands and can divert cargoes at will.

At the time, companies with import rights at Dragon and Gate were eager to drum up business and effectively gave Qatar free options to make use of their capacity.

While Qatari deliveries to Dragon/Gate have been rare up to now, weak Asian demand coupled with surging supply makes Europe an increasingly attractive destination for cargoes.

Talks between Petronas and Qatargas over expanding the existing deal at Dragon initially sought to double volumes and extend the duration of the deal by up to 10 years, one of the sources said.

A proposal was also made to commit Qatargas to delivering a third of the overall volume, he said.

At Gate, the choices boil down to exacting supply guarantees from Qatargas or making it pay for optional import slots, sources said.

https://au.news.yahoo.com/world/a/31165603/qatargas-eyes-expanded-lng-supply-deals-with-uk-dutch-terminals/?cmp=st

BG Egypt has suspended work at some Egyptian development projects after it failed to agree with the government on the price of gas, an Egyptian General Petroleum Corp (EGPC) official told Reuters on Tuesday.

"BG has stopped work at 9A+ and 9B after failure to reach an agreement on the fixed price to be paid for extracted gas, and it withdrew rigs working on the 9A+ wells on the seventh of March," the EGPC official said.

Egypt's Ministry of Petroleum denied BG Egypt had stopped development as a result of price disagreements and said in a statement that "negotiations over timelines for the projects" are ongoing.

The development areas include several deepwater wells in the West Nile Delta.

BG Egypt, a subsidiary of Royal Dutch Shell, is looking to raise the price it is paid for gas to $5.88 per million British thermal units from $3.95 currently, the official said.

Egypt has over the past year raised the price it pays many international oil companies for natural gas production in order to encourage more investment.

BG Egypt has worked out deals with Egypt's EGPC to earn the higher price of $5.88 at other development wells, which it is continuing work on.

Egypt, which is facing an acute foreign currency shortage, has delayed paying foreign petroleum companies their arrears, which reached about $3 billion at the end of December 2015.

BG Egypt has made setting a timetable for repayment of its arrears a condition for re-starting work at the suspended development wells, the EGPC official said.

Once an energy exporter, Egypt has turned into a net importer because of declining oil and gas production and increasing consumption. It is trying to speed up production at recent discoveries to fill its energy gap.

http://www.reuters.com/article/egypt-gas-prices-idUSL5N16U1W6

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Russia's No.2 natural gas producer Novatek expects its production of crude oil and gas condensate to increase by 30 percent this year, Chief Executive Leonid Mikhelson told Rossiya-24 TV channel.

In December, Novatek started commercial production at the Yarudeyskoye oil field in northern Russia.

http://www.reuters.com/article/russia-novatek-outlook-idUSR4N16N05E

Vitol Group, the world’s largest independent oil trader, said it handled a record volume of 6 million barrels a day of crude and refined products last year as it benefited from a market that “favors” traders.

At a time when oil-rich countries are suffering and major energy companies are retrenching, the closely-held trader’s net income was $1.25 billion in the first nine months of last year, up 59 percent from the same period of 2014, according to a person familiar with the company’s accounts.

The financial performance until the end of September and the record full-year trading volumes suggest Vitol is heading for one of its best years ever. The company, headed by Chief Executive Officer Ian Taylor, posted a record profit of $2.28 billion in 2009, according to data compiled by Bloomberg. The current market “favors a physical trader,” but is challenging for the wider industry, Taylor said.

“Whilst opportunities in the physical market continue to exist, we are increasingly vigilant in respect of counterparty risk as current price levels will inevitably test some market participants,” Taylor said in a statement on Tuesday. “The absolute price levels and market volatility are causes for caution” as the risk of defaults increases, he said.

Increased Volatility

While Vitol only releases publicly its traded volumes and revenue, it does provide financial information to its lenders and some other groups. The person familiar with the accounts asked not to be named, citing confidentiality clauses.

Oil traders such as Vitol and rivals Trafigura Group Ltd Pte, Glencore Plc, Gunvor Group Ltd., Mercuria Energy Group Ltd. and Castleton Commodities International LLC are profiting from the increase in price volatility. They are also filling storage to take advantage of contango -- a situation where future prices are higher than current levels, allowing investors to buy oil cheap, store it in tanks and lock in a profit for a later sale using derivatives.

In an interview in February, Taylor said that Vitol, which celebrates its 50th anniversary this year, would report net income for 2015 above the $1.35 billion it earned in 2014. However, he said the company wouldn’t match the record of 2009. The company, which is owned by its senior staff, planned to take writedowns in its exploration and production business and make provisions against customers defaulting on contracts, he said.

Cautious Approach

Vitol’s traded volumes of crude and oil products rose 13 percent from a year earlier to 303 million metric tons, equal to about 6.2 million barrels a day. That’s enough to meet the combined oil consumption of Germany, France, Italy and Spain. Revenue, which rises and falls in parallel to commodity prices, plunged 38 percent to $168 billion as oil fell.

The trading house, which is formally incorporated in Rotterdam but has its main operations in Geneva, London, Singapore and Houston, has experienced strong growth over the last 20 years on the back of rising oil trade, large price swings and, more recently, investment in storage and refining. In 1995, Vitol earned just $20 million.

Taylor said the current environment "vindicates the extremely cautious approach we have long taken towards risk and debt."

While the company’s refinery assets performed well in 2015, slowing global growth and a rebalancing of the Chinese economy are “likely to impact parts of the portfolio and we expect a slowdown in the rate of demand in some energy markets,” Taylor said. Stockpiles of crude and products will continue to build and weigh upon the market, he added.

Ship journeys conducted by Vitol rose 9.5 percent to 6,629 during the year. Natural gas sales fell 43 percent to 683 terawatt hours, while power sales declined 13 percent to 102 terawatt hours and coal sales slipped 41 percent to 20 million tons, the company said.

http://www.bloomberg.com/news/articles/2016-03-22/vitol-says-oil-rout-boosts-counterparty-risk-as-volumes-rise-13

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Chesapeake just produced an incredible risk-free trade.

This Friday an interesting Chesapeake Energy 8-K hit EDGARonline. It's a short 8-K so I'll transcribe the important part here:

Chesapeake Energy Corporation (the "Company") has entered into privately negotiated purchase and exchange agreements under which it has and will exchange (the "Exchanges") in reliance on Section 3(a)(9) of the Securities Act of 1933, as amended (the "Securities Act"), shares of the Company's common stock, par value $0.01 per share (the "Common Stock") for outstanding 2.5% Contingent Convertible Senior Notes due 2037 (with May 2017 put rights) and 6.5% Senior Notes due 2017 (collectively, the "Outstanding Senior Notes") of the Company. As of March 18, 2016, the Company has issued or agreed to issue an aggregate of 17,255,347 shares of Common Stock, representing approximately 2.6% of the Company's outstanding Common Stock, in exchange for $105.0 million aggregate principal amount of its Outstanding Senior Notes.

What do we have here? Given CHK's recent share and bond behavior, we have the description of what was a riskless trade for those taking it. The riskless trade consisted in:

Buying those 2017, 2037 bond issues.
Exchanging them for shares.
Selling the shares in the market.

Why was the trade riskless? Because:

Those 2017, 2037 bonds were trading at very depressed levels, like the rest of CHK's debt.
The principal amount retired/number of shares is the same as issuing shares at ~$6.09.
CHK stock traded over $5 per share on high volume 11 market sessions ago, and did so for 3 market sessions, including the market session on Friday.
$5/$6.09 = ~82.1 cents paid per dollar of principal on those bonds. Of course 82 cents is a high price for a CHK bond.

 http://seekingalpha.com/article/3959916?source=ansh

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Investors constantly sink money into, and pull money out of, oil and gas companies. Managers of those companies also buy and sell stock in their own companies.

From time to time we highlight such cases–but lately, we only highlight it if it’s a really big investment. This is one of those really big investments. Billionaire Steven Cohen, founder of Point72 Asset Management, has snapped up 5.6 million shares of Rice Energy during the first almost three months of this year–so far. Rice’s stock currently trades at $12.69 per share.

Over the past three months the price per share has varied from a low of $8.48/share to a high of $13.08/share. Let’s pick a number and say Cohen paid an average of $10 per share for his 5.6 million shares. That means he ponied up something on the order of $56 million–a sizable chunk of ownership in the company…

http://marcellusdrilling.com/2016/03/single-investor-buys-56m-of-rice-energy-stock-in-1q16/?utm_source=dlvr.it&utm_medium=twitter