Rosneft has agreed to sell 15 per cent of Vankor, one of its largest oilfields, to India's ONGC.

The Russian state-controlled oil group has been courting Asian investors as it struggles under the burden of hefty debts and falling oil prices, writes the FT's Jack Farchy.

Discussions with ONGC, India's state oil company, over Vankor began last year.

Vankor is one of the jewels in Rosneft's crown, producing 22m tonnes of oil last year to make it the company's third-largest production subsidiary. The Russian state-controlled oil company is also working to expand it by developing a cluster of nearby fields that could more than double overall production.

The price of the deal was not disclosed. Bloomberg last month reported that ONGC was seeking to pay $900m for a stake in Vankor, though it did not say what size of stake was under discussion.

Rosneft has also been discussing the sale of a stake in Vankor to China's CNPC since last year. However, a deal has not yet been concluded as falling oil prices and western sanctions against the Russian group complicate negotiations.

Commenting on the deal, which was signed on the sidelines of the Eastern Economic Forum in Vladivostok, Igor Sechin, Rosneft chief executive, said:

Collaboration in such a large-scale project will allow establishinga brand new level of strategic cooperation between Rosneft and ONGC Videsh. This will accelerate the development of our partnership, in other large-scale oil and gas upstream projects in the region.

http://www.ft.com/fastft/386941/rosneft-sells-15-stake-vankor-indias-ongc

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Canacol Negotiates New Gas Sales as It Triples Colombia Output

Canacol Energy Ltd., a natural gas explorer in Colombia, is negotiating new supply deals as it steps up drilling and expects to more than triple gas production in the Andean country by year-end.

The producer is on track to increase gas output to about 90 million cubic feet a day in December to meet existing contracts, up from about 25 million now, Chief Executive Officer Charle Gamba said in an interview. The company is in talks to supply a further 25 million daily cubic feet.

“We are currently working on a number of smaller contracts that we hope to bring on stream early next year,” Gamba said in a telephone interview from Bogota Wednesday. “We are hoping that we can produce right to our productive capacity, which will be 120 million cubic feet.”

Canacol has risen 14 percent in Bogota this year, making it the top performer on Colombia’s Colcap index and one of only two to post a gain. The Andean nation’s two largest oil producers -- state-run Ecopetrol SA and Pacific Exploration and Production Corp. -- are among the worst performers.

Canacol plans to add two more wells at its Clarinete discovery by December, further increasing productive capacity by approximately 35 million cubic feet a day, Gamba said.

Colombian demand for gas is starting to outstrip supply, especially on the Caribbean coast, amid economic growth and fast declining production at aging fields operated by Chevron Corp. in partnership with Ecopetrol.

“It translates into a very strong pricing environment for local gas producers,” Gamba said. “That puts us in a very unique position. Because those fields dominated the supply of gas to the coast for 25 years, nobody has really been exploring around there.”

Gas prices in Colombia are $4 to $8 per million British thermal units at the wellhead, more than double prices in North America, Gamba said.

Canacol has partnered with drilling services company Perfolat de Mexico to participate in Mexican bidding rounds. Officials there have eased several key components of its energy auction to encourage greater interest, in response to the tepid participation for the country’s first private auction earlier this summer.

http://www.bloomberg.com/news/articles/2015-09-03/canacol-negotiates-new-gas-sales-as-it-triples-colombia-output

The £47billion mega-merger between oil giants Shell and BG Group faces regulatory delay after authorities in Australia deferred a decision to let the deal go ahead.

Shell said it was “working closely” with the Australian competition regulator after the watchdog delayed a critical decision on clearance for the deal, signalling it has reservations about the potential impact on gas supply.

The deferral of the decision until September 17 leaves the clearance from the Australian Competition and Consumer Commission as one of three key approvals still outstanding, alongside China and the UK.

The Australian and Chinese approvals are seen as raising the most vexing competition issues.

The proposed mega-merger, which got the green light from the European Commission on Wednesday, has raised worries among industrial energy users along the east coast of Australia that the availability and choice of gas supplies will be further restricted.

Prices for local consumers are already increasing sharply, partly because so much gas is set to be shipped from Queensland to Asia as LNG.

UK-based BG owns the massive Queensland Curtis LNG project, which started exports early this year, while Shell owns 50% of the Arrow Energy venture, the holder of the largest chunk of known, undeveloped gas reserves on the east coast.

In a letter to interested parties in June, the ACCC focused on the potential impact of the takeover on the wholesale supply of gas in eastern Australia.

It asked how closely Arrow and BG competed with each other and others on gas supply and whether buyers believed a combined Shell-BG would change incentives to supply gas to domestic rather than export customers.

A Shell spokesman said the group was informed late on Wednesday by the delay in the decision from September 3 to September 17.

Canadian Oil Sands, the main owner of the giant Syncrude oil sands project in Alberta, said the venture won’t return to normal operations until at least the end of the month.

The project, the largest synthetic crude oil processing facility in Canada, was affected by a fire over the weekend. The incident, still under investigation, forced the company to halt productionat the 326,000 barrel-per-day mining and upgrading project.

Canadian Oil Sands said the project will operate with “minimal synthetic crude oil shipments and operating rates” for the next two weeks as part of a phased recovery.

“Affected units are planned to be subsequently restored to operation, with a return to more normal production rates anticipated towards the end of September,” it said.

The disruption means that Syncrude output this year will be “near the low end” of the current 96 million to 107 million barrel range for the year, the company said


COS confirmed the fire had destroyed “pipes, power and communication lines on a pipe rack between a hydrotreating unit and its associated amine unit.” However, it also said the incident did not cause damage to mining and extraction operations or other major upgrading units.

http://www.mining.com/canadian-oil-sands-project-to-operate-at-minimal-rates-until-end-of-the-month/?utm_source=twitterfeed&utm_medium=twitter

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Saudi Arabia, the world’s largest crude exporter, cut pricing for all October oil sales to the U.S. and Northwest Europe and reduced the premium on its main Light grade to Asia by 30 cents a barrel.

State-owned Saudi Arabian Oil Co. cut its official selling price for October sales to Asia of Arab Light crude to 10 cents a barrel more than the regional benchmark, the company said in an e-mailed statement. The discount for Medium grade crude for buyers in Asia widened 50 cents to $1.30 a barrel less than the benchmark.

Brent, a global oil benchmark, fell almost 50 percent last year as Saudi Arabia and other OPEC members chose to protect market share over cutting output to boost prices. Brent fell from over $100 a barrel in July 2014 to less than half that six months later. It traded at about $50 on Thursday.

The Organization of Petroleum Exporting Countries led by Saudi Arabia decided on June 5 to keep its production target unchanged to force higher-cost producers such as U.S. shale companies to cut back. The producer group has exceeded its target of 30 million barrels a day since May 2014.

Saudi Arabia reduced production in August to 10.5 million barrels a day, the first decline this year, according to data compiled by Bloomberg.

Middle Eastern producers are competing increasingly with cargoes from Latin America, North Africa and Russia for buyers in Asia. Producers in the Persian Gulf region sell mostly under long-term contracts to refiners. Most of the Gulf’s state oil companies price their crude at a premium or discount to a benchmark. For Asia the benchmark is the average of Oman and Dubai oil grades.

http://www.bloomberg.com/news/articles/2015-09-03/aramco-cuts-all-october-crude-pricing-to-u-s-northwest-europe

China National Offshore Oil Corp, the country's largest LNG buyer, has issued its first LNG supply tender, offering two cargoes for loading over October and November from the BG-operated Queensland Curtis LNG export plant in Gladstone, Australia, market sources said Thursday.

The sell tender -- widely regarded to be the first issued by a buyer in northeast Asia -- highlighted a radical shift to the supply and demand balance in the LNG industry, which has seen the Platts JKM fall from an historic high of $20.20/MMBtu in February 2014 to $7.50/MMBtu Thursday.

"CNOOC is snowed under with cargoes due to tepid downstream demand," one northeast Asian buyer said.

"Buyers are already struggling to absorb all the additional contract volumes that are coming to the market," another buyer said.

CNOOC offered the first cargo on an FOB basis for loading October 19-23, and the second cargo on a DES basis for loading November 18-19.

Interest in the tender would likely be limited, sources said, given weak demand in the Asia-Pacific region and the lean specification of the cargoes.

CNOOC was also planning to offer an additional two cargoes for loading in 2016 and an unspecified number of cargoes for loading from 2017 onward, all from QCLNG, they said.

The state-owned buyer has a 50% equity interest in QCLNG Train 1 and a contract with BG Group for the procurement of 5 million mt/year of LNG from the seller's portfolio.

http://www.platts.com/latest-news/natural-gas/singapore/chinas-cnooc-offers-two-oct-nov-cargoes-in-first-26199422

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Wood Mackenzie said that despite the outlook for global LNG demand looking increasingly subdued, the number of LNG projects proposed to take a final investment decision in 2015 and 2016 has not reduced significantly, in contrast to the 45 upstream oil & gas projects which have postponed FID so far in 2015.

Wood Mackenzie says in its new global gas analysis that if there are no postponements the market could see an additional 100 million tonnes per annum of LNG sanctioned in the next 6-18 months, extending the likelihood of an oversupply of LNG in Asia to 2025.

Noel Tomnay, Vice President Global Gas & LNG Research for Wood Mackenzie says: “With the LNG market facing a wall of new supply just as China’s gas demand growth has faltered, it is surprising how few new projects chasing a final investment decision have been postponed.”

Tomnay said that global LNG supply is presently around 250 million tonnes per annum and there is a further 140 mmtpa under construction. “Recognising that the global market will struggle to absorb such a large supply uptick, for some time now we’ve been forecasting a soft global market. However that bearish prognosis is now being exacerbated by a demand downturn,” he added.

Wood Mackenzie points to Asia and China, in particular, as being key to its revised outlook. Tomnay elaborates: “China’s LNG import commitments are set to rise by 17% year-on-year between 2015 and 2020, from 20 to 41 mmtpa but China will struggle to take all this LNG so quickly. In contrast, China’s LNG imports fell by almost 4% yoy in the first half of 2015, as a consequence of subdued industrial output and fuel competition, which was driven by relatively low-priced oil.”

The outlook for longer term incremental LNG demand growth in China is also being negatively affected. And with lower industrial output and power generation competition increasingly characterising other key Asian LNG markets, like South Korea, Asian buyers are not in a hurry to finalise new LNG contracts, adds Tomnay. Wood Mackenzie’s view remains that the market opportunity for new LNG into Asia does not open up significantly until after 2022, with the key implication being that new project FIDs are not required until 2017 at the earliest.

The question remains whether companies are reassessing investment decisions on LNG projects in light of reduced demand. Tomnay points to an example from February this year: “Recognising this oversupply BG deferred its proposed US LNG export project at Lake Charles. But BG’s postponement has been an exception.”

Wood Mackenzie says that thus far most companies are continuing to push ahead with their new LNG projects. “Major project operators including Shell, Petronas, Eni, Anadarko, BP, ExxonMobil and Woodside maintain that their projects will take FID before the end of 2016,” Tomnay qualifies.

WoodMac poses a question why haven’t more companies followed BG’s suit if the market is unlikely to be able to absorb new LNG in the medium to long term? Tomnay explains some of the drivers behind the decision to press ahead: “Postponement could invalidate contracts for the portion of project LNG sold so far, and jeopardise hard-won stakeholder support, including from local communities. Some developers may be worried that a loss of momentum could favour their competitors and that a project postponement may be tantamount to a cancellation.”

Wood Mackenzie warns that if company statements are to be believed we will see FID on some 50 mmtpa of LNG from the US and a further 50 mmtpa from outside the US within the next 6-18 months. “Development of even half of this proposed supply could prolong the Asian oversupply to 2025. Wood Mackenzie’s view is that the global LNG market does not need all this LNG at the pace proposed and, as companies confront this reality, a raft of project postponements will follow,”Tomnay offers in closing.

http://www.lngworldnews.com/woodmac-lng-projects-pushed-ahead-despite-oversupply/

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Royal Dutch Shell is in talks to lease India's new strategic oil caverns at Mangalore on the country's southwest coast, two sources said, giving it increased storage in a market where oil demand is increasing.

A decision on the Mangalore site, which has total capacity of around 11 million barrels of oil, depends on Shell winning relief from local sales tax, the sources said, while commissioning has been pushed back by two months to December.

India, the world's No.4 crude consumer and one of the few major economies which is still seeing strong demand growth, is building up strategic petroleum reserves (SPR) facilities at three locations in the country's south that will hold a total 36.87 million barrels of oil, enough to cover almost two weeks of its needs.

Under the proposal, Shell would use the Mangalore site for commercial storage, but in the event of an emergency would have to make supplies available to state-run refiners and keep the site filled at specified levels.

Shell would likely store oil grades used by a nearby 300,000 barrels per day (bpd) refinery owned by the state's Mangalore Refineries and Petrochemical Ltd (MRPL), the sources with direct knowledge of the matter said.

"It will be like a commercial storage for Shell, but in case of emergency the supplies will have to be made available to MRPL or any other (state-run) refiner," said one of the sources.

No decision had been made as to the origin of the oil to fill the facility, but it would most likely come from Africa where producers are looking for new buyers in the wake of the U.S. shale oil boom.

MRPL currentlly buys an average 2 million barrel of sweet African grades every month from spot markets.

The government expected to resolve the local tax issue, if a leasing deal was reached, the sources said.

Shell and Indian Strategic Petroleum Reserves Ltd (ISPRL), which is building the cavern, declined to comment.

ISPRL chief executive Rajan K. Pillai said the start-up of Mangalore's SPR, as well as sites at Padur further to the south, would be pushed back to December because of a delay in pipeline connections between the port and the storage sites.

Mangalore needed about 3 kms (1.9 miles) of pipelines, Pillai said. Padur, which has four divisions of about 4.6 million barrels each, lacked some 34 kms (21 miles) of pipeline.

India, the world's No.4 oil consumer, relies heavily on fuel imports, producing less than a third of its overall demand.

http://www.reuters.com/article/2015/09/03/india-oil-shell-idUSL4N1174UD20150903

As rollercoaster oil prices roil markets, Australian oil and gas producer Santos Ltd faces a tough task to raise the $2 billion it needs from asset sales to slash its debt and avoid having to swamp the market with new shares.

Santos put its assets up for sale just over a week ago, desperate to rescue its stock from a 15-year low due to sliding oil prices and worries it will sell new shares to cut A$8.8 billion ($6.2 billion) in net debt.

The company, which has stakes in oil and gas production in Australia, Papua New Guinea, Indonesia and Vietnam, said it had already been approached with offers and would consider any other proposals over coming months.

Santos faces having to give up the jewel in the crown - its 13.5 percent stake in Papua New Guinea LNG, sell off a string of assets, or resort to a share sale to raise the A$3 billion that investors believe it needs.

"It's going to be a tough call for that board room," said a banker in Singapore pitching for work with potential bidders.

Bankers and analysts say a full takeover offer for Santos, which has a market value around A$4.5 billion, is unlikely as bidders would be deterred by its 30 percent stake in the nearly completed Gladstone liquefied natural gas (GLNG) project.

http://in.reuters.com/article/2015/09/03/santos-ltd-ma-idINL4N1181FD20150903

Excelerate Energy has ended its LNG export project in south Texas because of falling oil prices and other economic factors.

Texas-based Excelerate today asked the US Federal Energy Regulatory Commission (FERC) to withdraw its application to build a floating LNG export project in Lavaca Bay, Texas, making it the first company to halt its FERC proceedings for US LNG exports.

It is unclear if Excelerate is the first company to stop development of a US LNG export project because of low oil prices, as a number of other proposed projects have not entered the expensive FERC construction approval process and have not announced any progress since oil prices started to plummet last summer. Dozens of projects have applied to export up to 48 Bcf/d ofn natural gas from the contiguous US, far more than the market will support.

"Following an internal evaluation of the economic value of the project, Excelerate has determined that it will no longer pursue the project proceedings in the captioned dockets," Excelerate said in a letter to FERC today.

Excelerate in December asked FERC to suspend its review of the project, saying, "Recent global economic conditions — including, among other things, a steep decrease in the price of oil — have created uncertainty regarding the economics of the project."

Excelerate, which pioneered the development of onboard LNG regasification vessels, did not return an Argus inquiry seeking additional comment.

The company told Argus in June 2014 that it had spent about $50mn in the FERC approval process and expected to spend more.

The economics of US export projects are based on a large differential between domestic gas prices and global oil prices, as most long-term LNG contracts to Asia are linked to oil prices at an indexation rate of about 15pc. That means at oil prices of $100/barrel, the delivered price to Asia oil-linked contracts would be about $15/mmBtu, but at oil prices of $50/barrel the oil linked price falls to about $7.50/bl.

http://www.argusmedia.com/News/Article?id=1097475

OPEC oil output fell in August from the highest monthly level in recent history, a Reuters survey found on Wednesday, as disruptions to flows on Iraq's northern pipeline halted supply growth from the group's second-largest producer.

Largely stable output from Saudi Arabia and other Gulf members of the Organization of the Petroleum Exporting Countries indicated they are not wavering in their focus on defending market share instead of prices.

OPEC supply fell in August to 31.71 million barrels per day (bpd) from a revised 31.88 million bpd in July, according to the survey, based on shipping data and information from sources at oil companies, OPEC and consultants.

Oil LCOc1 has weakened due to surging output and is trading below $50, not far from a more than six-year low close to $42 reached last month. OPEC's shift to the market-share strategy in 2014, led by Saudi Arabia, deepened the decline.

Despite calls from some members for an emergency meeting, even OPEC delegates who favour supply cuts do not expect any to be agreed, leaving a surplus which OPEC's own numbers indicate is at least 2 million bpd on the market.

"I really see no chance for holding a meeting before the scheduled Dec. 4 meeting, which will reach no concrete agreement to drastically cut production," said a delegate from one of OPEC's African members.

"We know that the present oversupply is more than 2 million barrels per day."

The decline in OPEC output from July's level was the first since February based on Reuters surveys. Even so, OPEC has boosted production by almost 1.5 million bpd since the November 2014 switch in policy to defend market share.

July's output from OPEC's current 12 members was revised lower but is still the highest since Reuters records began in 1997. OPEC output was above 32 million bpd in 2008 until Indonesia left the group at the end of the year.

The biggest drop in August came from Iraq, one of the main drivers of the rise in OPEC output this year.

Exports from southern Iraq edged about 40,000 bpd lower to just above 3 million bpd, according to Iraqi officials and shipping data seen by Reuters.

Shipments from Iraq's north via Ceyhan in Turkey by Iraq's State Oil Marketing Organisation and the Kurdistan Regional Government posted a larger fall because of halts in the flow along the pipeline from Iraq, shipping data showed. 

Top exporter Saudi Arabia kept output largely stable in August, sources in the survey said, following a decline in July. There was no significant change in the other major Gulf producers, Kuwait and the United Arab Emirates.

Nigerian exports rose in August according to loading schedules, although Royal Dutch Shell said on Aug. 27 it shut two pipelines and declared force majeure on Bonny crude exports, which could have a larger impact in September.

Algeria posted a small increase after starting production at two fields and output in Iran, eager to reclaim its traditional spot as OPEC's second-largest producer if and when sanctions are lifted, also edged up slightly.

Libyan production declined in August. Supply remains disrupted by unrest and negotiations to reopen closed oil facilities have yet to succeed.

http://uk.reuters.com/article/2015/09/02/uk-opec-oil-idUKKCN0R21QV20150902

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China's state-owned refiners could export up to 16.9 million mt (869,000 b/d) of refined products over August-December -- 44% more than the volume exported in the first seven months of the year, an analysis of latest information from industry sources and official data showed.

The Ministry of Commerce last week issued the fourth batch of export quotas for 2015 totaling 9.9 million mt of oil products -- triple the volume approved in the third batch and taking the total volume allocated so far for 2015 to 28.65 million mt, up 47% year on year, an industry source said.

The products covered under the export quota includes gasoil, gasoline, jet/kerosene and naphtha.

Chinese state-owned refiners need quotas or licenses from the government before they can export refined products.

In the first three batches, the ministry allocated 18.75 million mt, which when compared to the 11.75 million mt exported in the first seven months of the year -- based on data from the General Administration of Customs -- implies that the three state-owned refiners have 7 million mt of unused quotas still left.

Taking into account the unused and new quotas, Platts calculations show that the state-owned refiners can export up to 16.9 million mt of oil products for the rest of the year, 44% more than the volumes exported in the first seven months of the year.

Chinese refiners have been boosting oil product exports this year due to slowing domestic demand.

http://www.platts.com/latest-news/oil/singapore/china-oil-product-exports-could-see-big-jump-27763739

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AlphaValue's Pierre-Yves Gauthier explains why oil at $40 a barrel is a buy. He speaks with Bloomberg's Alix Steel and Scarlet Fu on "Bloomberg Markets." See video at:

http://www.bloomberg.com/news/videos/2015-09-02/alphavalue-s-gauthier-why-oil-at-40-a-barrel-is-a-buy

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Russia's Surgut will launch its Shpilman oil field in Siberia on Thursday, the Russian government said on its website, in the latest sign the weak rouble is helping the country offset the impact of low global oil prices.

Russia, one of the world's largest crude producers, has been pumping oil at a post-Soviet record of around 10.7 million barrels per day this year, thanks to new oil fields coming on stream and the use of modern technologies at existing fields.

Low oil prices have not yet hit Russian oil production hard because the weak rouble offsets losses and makes Russian energy firms among the most profitable globally.

In a statement, the government said that Prime Minister Dmitry Medvedev plans to hold a video conference later on Thursday during which Shpilman oil field will be officially launched.

In June, Russian news agencies quoted Surgut's CEO Vladimir Bogdanov as saying that Shpilman was expected to produce about 50,000 tonnes of oil in 2015.

Shpilman is expected to produce 2.5 million-3 million tonnes of oil per year at its full capacity, compared with Surgut's total extraction of 61 million to 62 million tonnes.

http://www.reuters.com/article/2015/09/03/russia-surgut-shpilman-idUSL5N1184AM20150903

The US president has secured the votes he needed for the passage of a historic nuclear accord with the Islamic Republic of Iran.

Barbara Mikulski, a Democratic Senator for the state of Maryland, will give her backing to the agreement brokered by US Secretary of State John Kerry and the other representatives of the so-called P5+1 nations, the Wall Street Journal reports.

Mikulski´s support means there are now 34 Democrats in the upper house of the US Congress, the Senate, who back the executive branch´s offer to lift sanctions on Iran in exchange for putting in place measures which are meant to curb the country´s nuclear ambitions.

That will allow Obama to veto any attempt by Congress to block an agreement.

Nonetheless, Obama will have to approve the deal despite the bipartisan majority which opposes it.

"No deal is perfect, especially one negitiated with the Iranian regime, [but it is] the best option available to block Iran from having a nuclear bomb," Mikulski reportedly said.

"The choice we face is ultimately between diplomacy or some form of War," the US president said in a 5 August speech.

- See more at: http://www.digitallook.com/news/international-economic/obama-secures-votes-needed-to-approve-iran-nuclear-deal--851481.html#sthash.BWUrw7Dq.GQ38BaLB.dpuf

Last October MDN told you about an exciting project from Boardwalk Pipeline Partners’ Texas Gas Transmission pipeline that will reverse the flow from the Louisiana Gulf Coast all the way to Ohio.

The $110 million project, called the Ohio-Louisiana Access Project, would turn Texas Gas Transmission’s pipeline bidirectional and will not involve any new pipeline construction. It will provide an important new way for Utica and Marcellus drillers to get their gas to markets in the Midwest, South, and even to other countries via exports of LNG.

As is typical, anti-fossil fuelers flooded the Federal Energy Regulatory Commission (FERC) with negative comments about the project because it will encouraging more fracking. Undeterred, FERC approved the project last week, responding to antis (as they have before) by telling them FERC’s charter does not allow it to consider the source of gas or “climate change” or any of the other cockamamie things antis are worry about. FERC decides on projects based on how a project will affect the people and environment where the project gets built…

http://marcellusdrilling.com/2015/09/ferc-approves-important-utica-to-gulf-coast-pipeline-reversal/?utm_source=dlvr.it&utm_medium=twitter

A court in the Netherlands ruled on Wednesday that a natural gas company, a joint venture by Royal Dutch Shell and Exxon Mobil, must compensate homeowners for declines in the value of their properties because of earthquakes linked to production at the Groningen field.

The ruling by the court in Assen could result in billions of euros of claims against the venture, known as NAM. Hundreds of thousands of homes and buildings lie in the affected area, which covers wide parts of the northern Netherlands.

The Netherlands has twice this year reduced production from the Groningen field, Europe’s largest, after the Dutch Safety Board, a government-financed but independent organization, said gas companies and regulators had failed to take the danger from gas production-linked earthquakes seriously enough.

“NAM is responsible for declines in the value of real estate that lies in the area where earthquakes are caused by gas production, and that damage is eligible for compensation,” said the judge, Ger Vermeulen, reading a summary of the ruling.

The judge added that homeowners must claim their losses on a case-by-case basis, and that the average decline in home values attributable to their location in the earthquake zone alone appeared to be no more than “several” percentage points, with some suffering a bigger drop and others none at all.

NAM has so far set aside 1.2 billion euros, or about $1.35 billion, to compensate for damage to buildings. But estimates of the cost of compensating homeowners for lost value and strengthening buildings in the affected region are far higher.

“We are going to study the considerations carefully and consider potential further steps,” Martijn Verwoerd, a NAM spokesman, said in a statement.

“We recognize the concern of inhabitants,” he said, adding that the company agreed that in some cases, earthquakes may reduce the value of homes.

The company has acknowledged responsibility for the damage caused by the quakes, but has maintained that it should compensate homeowners only if they sell their houses at a loss.

The court ruling specified that homeowners need not show that their property had suffered any physical damage, only that its value had been affected by its location in the quake area. It also found that homeowners could request compensation immediately, rather than waiting for a sale.

The case against NAM was brought by a group of 900 homeowners and 12 housing cooperatives.

http://www.nytimes.com/2015/09/03/business/international/dutch-court-says-gas-producer-must-compensate-ho

                                    Last Week     Week Before   Last Year

Domestic Production ......9,218             9,337             8,630

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

U.S. crude oil refinery inputs averaged 16.4 million barrels per day during the week ending August 28, 2015, 269,000 barrels per day less than the previous week’s average. Refineries operated at 92.8% of their operable capacity last week. Gasoline production increased last week, averaging 9.8 million barrels per day. Distillate fuel production increased last week, averaging over 4.9 million barrels per day.

U.S. crude oil imports averaged about 7.9 million barrels per day last week, up by 656,000 barrels per day from the previous week. Over the last four weeks, crude oil imports averaged about 7.7 million barrels per day, 0.2% above the same four-week period last year. Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 835,000 barrels per day. Distillate fuel imports averaged 77,000 barrels per day last week.

U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 4.7 million barrels from the previous week. At 455.4 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 decreased by 0.3 million barrels last week, and are in the middle of the average range. Both finished gasoline inventories and blending components inventories decreased last week. Distillate fuel inventories increased by 0.1 million barrels last week but are in the middle of the average range for this time of year. Propane/propylene inventories rose 0.6 million barrels last week and are well above the upper limit of the average range. Total commercial petroleum inventories increased by 5.7 million barrels last week.

Total products supplied over the last four-week period averaged 20.3 million barrels per day, up by 2.9% from the same period last year. Over the last four weeks, motor gasoline product supplied averaged 9.5 million barrels per day, up by 4.8% from the same period last year. Distillate fuel product supplied averaged 3.7 million barrels per day over the last four weeks, down by 5.3% from the same period last year. Jet fuel product supplied is up 2.3% compared to the same four-week period last year.

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

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BG Group Plc said the European Union's antitrust regulators had approved Royal Dutch Shell Plc's $70 billion takeover bid for the oil and gas producer.

The deal, which will help Shell compete better with world No. 1 oil major ExxonMobil, has already received the green light from regulators in the United States, Brazil and South Korea.

BG and Shell still require approvals from Australia's anti-trust and foreign investment bodies and clearance from the anti-trust authority in China.

Regulatory filings have been submitted for each of these approvals, BG said on Wednesday.

Shell agreed in April to takeover smaller rival BG at a hefty premium, as commodity companies react to a plunge in crude prices.

http://www.reuters.com/article/2015/09/02/bg-group-ma-shell-eu-idUSL4N1183T020150902

Schlumberger announced Wednesday that it has acquired Novatek Inc. and Novatek IP, LLC, U.S.-based companies that specialize in synthetic diamond technology primarily for the oil and gas industry.

The existing relationship between Schlumberger and Novatek has delivered leading technologies, such as the Schlumberger StingBlade conical diamond element bit, and has been an incubator of novel ideas that are being incorporated into Schlumberger’s newestdrilling technology offerings. Building on this collaboration, the acquisition provides a new platform for Schlumberger to pursue its vision of continuously improving drillingperformance for customers.  

“Novatek’s synthetic diamond manufacturing technology is already a key component of our drillbit offering,” said Khaled Al Mogharbel, president, Schlumberger Drilling Group. “With the addition of Novatek, we will enhance our research, engineering and manufacturing capabilities and continue to work with our customers to accelerate field adoption of these innovative drilling technologies.”  

Novatek boasts a 60-year history of product development with a portfolio of more than 600 patents. Core development of synthetic diamond technology and other technologies will continue at the company’s lab in Provo, Utah, where most of the employees are based.

http://www.worldoil.com/news/2015/9/02/schlumberger-acquires-synthetic-diamond-specialist-novatek

Columbus Business First reports that Chesapeake Energy Corp. is leading the way in Ohio in terms of natural gas production.

In Ohio’s Utica Shale, Chesapeake produced 83.2 billion cubic feet of the state’s total 222 billion cubic feet of natural gas during the second quarter. The company’s biggest well is located in Carroll County and produced 824.3 million cubic feet of natural gas during the second quarter.

During the second quarter, Chesapeake operated 491 of 978 total producing Utica wells in Ohio. However, Chesapeake is poised to sell some of its holdings, so its not clear how much longer the company will have the largest output of all of the Utica’s production companies.

http://shalegasreporter.com/news/chesapeake-producing-37-percent-ohios-utica-output/57347.html

Ohio’s Utica Shale wells continue to break all previous production for the last 100 years.

The state’s 978 horizontal wells produced 5.5 million barrels of oil and 221 billion cubic feet of natural gas in the second quarter of this year, the Ohio Department of Natural Resources reported Thursday.

Ohio’s oil volume grew by 20 percent from the first quarter, when wells statewide produced 4.4 million barrels.

The state’s natural gas climbed nearly 21 percent, increasing from 183 billion cubic feet.

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Cheniere cleared to export more LNG from Corpus Christi

The United States Department of Energy issued an order authorizing Cheniere to export LNG from its stage 3 project (Trains 4 and 5) of the Corpus Christi liquefaction facility, to be located in San Patricio and Nueces Counties, Texas.

Cheniere has been authorized to export equivalent to approximately 514 Bcf/yr of natural gas for a 20-year term, according to the order.

Cheniere’s Corpus Christi liquefaction project is currently under construction and presently consists of Trains 1-3, three LNG storage tanks, two marine berths, and associated facilities.

Under the Stage 3 expansion project, Cheniere intends to add two 5 mtpa liquefaction trains, as well as a fourth LNG tank, to expand the Corpus Christi project.

Cheniere anticipates that construction of the Stage 3 project will commence by 2017, with exports commencing as early as 2021.

http://www.lngworldnews.com/cheniere-cleared-to-export-more-lng-from-corpus-christi/

Russia's Aug #crudeoil exports outside the Commonwealth of Independent States jump 11% on year to 4.214 mil b/...Platts Oil

Slumping oil prices are spurring 4,000-mile (6,400-kilometer) diversions of tankers filled with diesel and jet fuel as the price of ship fuel plunges, opening up trading opportunities.

At least five tankers will deliver refined products to European ports in August and September, sailing around South Africa rather than using the normal shortcut through Egypt’s Suez Canal, ship tracking data show. The falling cost of fuel oil, used to power ships, has made longer voyages viable at a time when there are advantages for traders to keep cargoes at sea. Long-distance shipments between continents have increased this year, according to Torm A/S, world’s second-biggest publicly traded product-tanker owner.

Plunging oil opens up new trades as product tankers take the long route to Europe

Brent crude futures plunged about 50 percent since August last year as OPEC nations kept pumping more than the market needs. Across oil markets, the rout triggered what traders call contango, a price pattern that lessens the need for speedy oil deliveries because future fuel prices are higher than immediate ones.

“There’s massive demand to move oil products over very long distances,” Erik Nikolai Stavseth, a shipping analyst at Arctic Securities ASA in Oslo, said by phone Aug. 27. “These shipments tell me that there are very good times ahead for product-tanker owners,” he said, referring to ships that carry refined fuels like gasoline and diesel.

Rates for hauling these fuels are surging. The sort of long-range tankers being used to sail around Africa will earn $28,375 a day this year, according to a survey of shipping specialists compiled by Bloomberg. That’s the most since at least 2010 and 19 percent more than anticipated at the end of last year.

http://www.bloomberg.com/news/articles/2015-09-01/fuel-ships-take-4-000-mile-africa-detour-as-oil-prices-plunge

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China signs off on $5 bln loan to boost Venezuela oil output -Maduro

Venezuela and China have signed a deal for a $5 billion loan designed to increase the OPEC country's oil production, Venezuelan President Nicolas Maduro said.

Maduro, speaking from China in a show broadcast on Venezuelan state television on Tuesday night, said the loan was destined "to increase oil production in a gradual way in coming months," without providing further details.

A source at Venezuelan state-run oil company PDVSA told Reuters in March that China was set to extend a "special" $5 billion loan that would likely stipulate hiring Chinese companies to boost output in the company's mature oil fields.

Venezuela has borrowed $50 billion from China through an oil-for-loans agreement created by late socialist leader Hugo Chavez in 2007, which has helped Chinese companies expand into Venezuelan markets amid chronic shortages of consumer goods there.

That financing has been especially crucial for Caracas since last year's oil market rout, which aggravated the country's severe economic crisis.

Eulogio del Pino, the oil minister and president of PDVSA , and Finance Minister Rodolfo Marco Torres were among key Venezuelan figures present at the president's "In Contact with Maduro" show, which broadcast this week from Beijing.

Speaking in front of a huge portrait of Chavez, Maduro also said that Venezuela currently sends around 700,000 barrels-per-day of oil to the Asian giant.

During the show, which usually lasts for hours and often includes live music and folkloric dance, Maduro lauded traditional Chinese medicine and art.

http://www.reuters.com/article/2015/09/02/venezuela-china-oil-idUSL1N11801K20150902

Nexen Energy, the Canadian subsidiary of Chinese state-owned CNOOC Ltd, is shutting down its Long Lake oil sands operations in northern Alberta in response to an emergency regulatory order, a company spokeswoman said on Tuesday.

Nexen estimated the shutdown process would take up to two weeks as it suspends pipeline operations and attempts to demonstrate to the Alberta Energy regulator that its pipelines are safe.

The provincial regulator ordered Nexen to shut in 95 pipelines at the Long Lake facility last Friday as part of an investigation into one of the largest-ever oil-related pipeline spills on North American soil, discovered in July.

The incident dealt another blow to Canada's oil sands industry in northern Alberta, which is under fire from environmental groups for its carbon-intensive production process.

Long Lake was producing about 50,000 bpd of bitumen before the spill, which is upgraded on site into refinery-ready synthetic crude. The upgrader also processes raw bitumen from other oil sands projects.

Nexen declined to comment on Tuesday about the impact on production, adding that it does not typically disclose production information on an individual asset basis. Nexen spokeswoman Diane Kossman said the suspension order was not expected to have any material impact on CNOOC's operations or financial conditions.

Synthetic crude prices rallied hard on Monday after news of the Long Lake shutdown. A separate production outage at the Syncrude oil sands project sent traders scrambling to secure supply, and extended those gains on Tuesday.

The order came three days after Nexen gave the regulator an internal company audit that revealed it was breaking some pipeline safety rules related to maintenance.

"We're managing the risks associated with safely shutting down this complex and integrated facility," Kossman said in a statement.

Last week's order suspended 15 pipeline licences for 95 pipelines that carry a range of products including crude oil, natural gas, salt water, fresh water and emulsion, the regulator said. It is also requiring Nexen to demonstrate that its pipelines can be operated safely.

Nexen apologized for the spill in July, explaining that it would likely take months to find the root cause of the leak, which released more than 31,500 barrels of emulsion, a mixture of bitumen, water and sand.

The regulator said it would not lift the suspension order until the company demonstrates that it can operate its pipelines safely.

http://www.reuters.com/article/2015/09/01/nexen-pipeline-spill-idUSL1N1172BY20150901

China may launch a global crude oil futures contract as early as October to compete with the existing London Brent and the U.S. WTI benchmarks, three sources said, as it pushes ahead with reforms to open up its oil markets.

The long-awaited crude contract would better reflect China's growing importance in setting crude prices, as well as boost the use of the yuan in which it will be traded, although volatile global trading conditions and China's recent interference in stock markets have raised some concerns.

The Shanghai International Energy Exchange, also known as INE, circulated a draft of the futures contract to market participants last month, saying the launch could happen as early as October, the sources who saw the draft, told Reuters.

China, the world's second-biggest oil consumer, has already begun to loosen its grip on the physical oil sector this year by granting quotas for imported crude to privately-owned refiners for the first time, surprising market participants with the speed of reform.

"The development of a futures market is closely linked to the physical market," INE said in a statement issued to Reuters in response to questions about the new contract.

"The more physical players participate, the better the liquidity of the futures market will be."

The launch of Shanghai crude futures won state approval last year and would be the first Chinese contract that allows direct participation by international investors.

A Shanghai-based contract will compete in the crude futures market, which is worth of trillions of dollars and is dominated by two contracts, London's Brent, seen as the global benchmark, and WTI, the key U.S. price.

Oil traders said Chinese crude futures would eventually compete against Brent, which is priced off small and declining oil fields in the British North Sea, and can be affected by factors with no relationship to Asia.

INE said that it aimed to have overseas investors, oil companies, and financial institutions participating in its crude futures trading.

"If China's crude futures don't immediately attract enough liquidity and markets are still as volatile as now, then traders could get really burned and would quickly stop trading Chinese crude futures," said one oil trader, who would likely start dealing Chinese crude futures.

Recent market interference was also a concern, although he noted China's iron ore and coal futures markets were running smoothly despite similar price routs to oil.

For futures to work, traders need a widely traded physical market from which prices for futures contracts can be derived.

Granting independent refiners access to oil imports will put pressure on China's three state-owned oil majors, PetroChina, Sinopec and China National Offshore Oil Corp (CNOOC), which already face headwinds from collapsing oil prices, a stock market rout and corruption charges.

"These changes are coming much faster than we anticipated," said an official with one of the big three state-owned energy companies. "Reforming and opening up the oil market is the new fashion in Beijing."

The government has so far granted a total of seven independent refiners quotas for 715,800 bpd of imported crude, roughly 11 percent of the total crude imports, and more are likely to follow.

http://www.reuters.com/article/2015/09/02/china-oil-market-reform-idUSL3N10V1IB20150902

Second quarter production in Ohio’s Utica Shale was record-breaking, according to The Columbus Dispatch.

During the three month period, 5.6 million barrels of oil and 222 billion cubic feet of natural gas were produced. These numbers are up from 4.4 million barrels of oil and 184 billion cubic feet of natural gas produced during the first quarter of 2015.

The recent Ohio Department of Natural Resources report shows that the state’s top oil wells are located in Guernsey County and the top gas wells are located in Belmont County.

http://shalegasreporter.com/news/ohios-utica-shale-record-breaking-second-quarter/57362.html

An OPEC publication written by the exporter group's public relations team helped oil prices jump and prompted speculation over a possible shift in output policy - to the bafflement of some OPEC insiders.

The commentary on Monday in the OPEC Bulletin, a magazine issued by OPEC's Vienna headquarters, said downward pressure on prices due to higher production "remains a cause for concern" and OPEC "stands ready to talk to all other producers".

While the 799-word article helped add another 8 percent to oil's three-day surge, by Tuesday it seemed clear there was no sign of a significant shift in OPEC policy or any indication of a fresh push to shore up markets, analysts and OPEC insiders said.

A Gulf delegate said the Bulletin reflected genuine concern in the Organization of the Petroleum Exporting Countries about falling prices but it did not signal a policy shift or pending production cut.

"I see it as a message sent to the market that we are willing to talk to non-OPEC, we are concerned about prices and we are not closing our eyes to what's going on ."

Another OPEC insider said: "I found it surprising," referring to the jump in prices on Monday. "The Bulletin wasn't saying anything new."

The Bulletin, a glossy magazine, is written by OPEC's PR department based in Vienna and lists 12 editorial staff. It is reviewed by senior officials at the OPEC secretariat before publication.

In the magazine, the following disclaimer appears under the heading "editorial policy": "The contents do not necessarily reflect the official views of OPEC nor its member countries."

While the Bulletin has included similar commentaries on the market before - in April it criticised unidentified non-member countries for not cooperating in propping up prices - it does not tend to move oil prices.

Traders are wondering whether OPEC and its de-facto leader Saudi Arabia will stick with the policy adopted in 2014 of defending market share, even after the slide in oil prices to their lowest in more than six years last month.

While Saudi Arabia has not commented publicly, some had seen the Bulletin as indicating a shift.

"Yesterday the market got somewhat excited by the editorial of the OPEC Bulletin," said Olivier Jakob, oil analyst at Petromatrix. "This was read by some market participants as making a first overture for a change of policy."

http://www.reuters.com/article/2015/09/01/opec-oil-idUSL5N11737620150901

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Canada's Penn West Petroleum Ltd cut its 2015 capital budget and said it would suspend its dividend and reduce its workforce by 35 percent, helping it save about C$140 million ($106 million) as it copes with the slump in crude oil prices.

The oil and gas producer also said it would lower its well drilling and operating costs, and that its board had voluntarily cut the annual retainers payable to non-management directors to help shore up finances.

The company is the latest oil and gas producer to cut capital spending plans and find ways to lower costs as they struggle to cope with slumping crude prices, which have more than halved since June last year.

Lower costs had helped Penn West report a smaller-than-expected loss in the second quarter.

The company, which has been selling assets to reduce debt, will continue to look for more opportunities to reduce capital spending this year, it said in a statement on Tuesday.

Penn West, which has reserves in Alberta, British Columbia, and Saskatchewan, Manitoba and the Northwest Territories, lowered its 2015 capital spending forecast by 13 percent to C$500 million.

The revised forecast is 40 percent lower than the company's initial estimate of C$840 million set in November. Since then Penn West had cut its forecast twice, in December and in July.

Penn West said it would lay off about 400 employees and contractors, with most of the job cuts at its head office in Calgary, Alberta. It had about 1,120 employees as of Dec. 31.

The company said it expects to save about C$45 million per year due to the reductions, for which it will record a charge in the current quarter.

Penn West had in March slashed its quarterly dividend to 1 Canadian cent per share from 14 Canadian cents. It said on Tuesday that it expects to save about C$20 million by suspending the payout altogether from the quarter starting October.

The company said its board had voluntarily lowered the annual retainers for non-management directors. The chairman's retainer will be halved, while the retainers for the remaining non-management directors will be reduced by 40 percent.

Penn West said it had cut its absolute operating costs by more than 20 percent over the last 18 to 24 months. It expects to cut costs a further 10 percent and lower well costs by 10 percent.

The company cut its 2015 production forecast to 86,000 to 90,000 barrels of oil per day (boepd) from 90,000 to 100,000 boepd.

http://www.reuters.com/article/2015/09/01/penn-west-employment-idUSL4N1173VU20150901

ConocoPhillips has delivered first oil at its Surmont 2 in-situ oil sands facility in Canada, the company said Tuesday.

Construction of the Surmont 2 facility, the largest single-phase steam-assisted gravity drainage (SAGD) project ever undertaken, began in 2010.

Earlier this year, ConocoPhillips announced first steam, the initial step towardsproduction. Since that milestone, steam has successfully heated the reservoir to a point where the well pairs can be converted to a SAGD configuration and allows the oil to flow. Production was declared once the inspected product was successfully routed to sales tanks.

Production will ramp-up through 2017, adding approximately 118,000 bopd gross capacity. Total gross capacity for Surmont 1 and 2 is expected to reach 150,000 bopd.

“The oil sands are an important part of our portfolio,” said Ryan Lance, chairman and CEO. “We’re pleased to see a project of this magnitude move from the capital phase to theproduction phase, knowing that it will produce for decades to come.”

The Surmont project is located in the Athabasca Region of northeastern Alberta, Canada, approximately 35 miles southeast of Fort McMurray. Surmont is operated by ConocoPhillips under a 50/50 joint venture agreement with Total E&P Canada.

http://www.worldoil.com/news/2015/9/01/conocophillips-reports-first-oil-at-surmont-2-oil-sands-facility

Husky said it has started steam operations at the second of two processing plants at its Sunrise project, a joint venture with BP Plc that will reach full capacity of 60,000 bpd by the end of 2016.

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W&T Offshore, Inc. today announced that it has entered into a definitive agreement with Ajax Resources, LLC for the sale of all of its interest in its Yellow Rose field in the Permian Basin.  Gross pre-tax proceeds from the transaction are expected to be approximately $376,100,000, subject to customary closing adjustments.  W&T also reserved a one to four percent sliding scale overriding royalty interest in the field. The transaction is expected to close during the third quarter of 2015, with an effective date of January 1, 2015.

W&T's interest in its Yellow Rose field includes approximately 25,800 net acres in Andrews, Martin, Gaines, and Dawson counties in West Texas.  For the month of July 2015, net production from the Yellow Rose field averaged approximately 3,000 barrels of oil equivalent ("Boe") per day.

We will use the proceeds from the transaction to pay down the outstanding balance under our secured revolving credit facility and provide additional liquidity for future operations and acquisitions.

Tracy W. Krohn, W&T Offshore's Chairman and Chief Executive Officer, stated, "We are pleased to be monetizing our highly valued Permian Basin acreage. This sale will allow us to strengthen our balance sheet and improve our financial flexibility to pursue the acquisition of Gulf of Mexico assets while valuations are favorable.  We believe that current conditions are good for W&T to identify quality offshore producing assets that offer upside exploration and development opportunity. "

http://www.prnewswire.com/news-releases/wt-offshore-announces-sale-of-its-yellow-rose-field-in-the-permian-basin-of-west-texas-300135746.html

A strong Dubai price has again put top oil exporter Saudi Arabia in a dilemma over whether to raise the prices of crude it sells to Asia to match the benchmark’s strength, or to cut to stay competitive in an oversupplied market.

Record purchases of October-loading crude by Chinaoil during a mechanism that sets the price of Middle East crude in Asia strengthened the benchmark, even as other grades are being pressed lower by a global glut.

Saudi Arabia is due to release October crude prices later this week, setting the trend for Iranian, Kuwaiti and Iraqi crude bound for Asia.

“The Dubai market is acting very erratic and it’s been moving in such a way that’s not reflecting underlying fundamentals,” a source with a Gulf oil producer said.

“Producers are walking on a thin line, but they can change and might need to lower or soften the price a little bit.”

If state oil giant Saudi Aramco keeps to its monthly price formula, the official selling price (OSP) for Arab Light should edge up in October from a month ago, a survey of five refiners showed.

Still, it may opt to cut prices to defend its market share in Asia, traders said.

“I don’t think Saudi will raise Arab Light price,” a trader with a North Asian refiner said. “They may cut prices to stay competitive.”

Saudi Aramco has deviated from its pricing methodology before. Last month, it increased September prices by less than forecast as it defends market share in Asia.

The October OSP for Arab Extra Light should also get a boost if Saudi follows its formula, but any price hike may make the grade less competitive to Abu Dhabi’s Murban crude, a trader said.

Heavier Saudi grades – Arab Medium and Heavy – are expected to post price cuts in October on weaker fuel oil cracks, traders said.

The OSP for Arab Medium may fall by up to 50 cents, traders said, but its price cut could deepen if Saudi Arabia followed last month’s spot market.

Similar crude Banoco Arab Medium was traded at discounts of up to $1 a barrel last month against its OSP.

https://www.energyvoice.com/marketinfo/86479/saudi-arabia-in-dilemma-over-asia-crude-oil-prices-next-month/

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Russia will not deliberately cut oil production to prop up prices, however its output may decline if prices remain low, local news agencies quoted Deputy Prime Minister Arkady Dvorkovich as saying on Tuesday.

He also said that Russia was ready to discuss measures aimed at oil price stabilisation with the Organization of the Petroleum Exporting Countries (OPEC) and other key producers, TASS news agency reported.

"It's quite possible that if oil prices remain at the low levels for long, oil production could decline, as had been the case before. Anyway, we don't expect any significant cuts," Dvorkovich said according to TASS.

Oil prices almost halved from last year mainly due to oversupply.

OPEC kingpin Saudi Arabia, in a strategy designed to squeeze out rivals, such as U.S. shale oil firms, has been reluctant to cut oil output in order to support prices.

Russian President Vladimir Putin and his Venezuelan counterpart Nicolas Maduro will discuss "possible mutual steps" to stabilise global oil prices when both visit China this week.

OPEC and Russia, one of the world's biggest oil producers, have held regular meetings but have not agreed on any coordinated action to prop up falling prices.

Dvorkovich reiterated that it would be technically difficult to restore oil production in Russia if output is cut artificially.

Russia has been pumping oil at a post-Soviet high of more than 10.7 million barrels per day and expects to maintain high levels of output next year.

http://www.reuters.com/article/2015/09/01/russia-oil-opec-idUSL5N1171X520150901

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Canadian Oil Sands, the main owner of the giant Syncrude oil sands project, has halted production after the fire that damaged equipment at its synthetic crude oil processing facility in northern Alberta.

The company said the fire, which happened early Saturday and was extinguished without any injuries, affected pipes connected to a water treatment unit at Syncrude’s heavy oil upgrader on the site of its Mildred Lake oil sands surface mine. The cause of the blaze remains under investigation.

The operation is a 326,000 barrel-per-day mining and upgrading project, where oil sands bitumen is upgraded into refinery-ready synthetic crude.



Canadian Oil Sands holds a 37% stake in Syncrude Canada and six other companies own the rest, including Suncor Energy Inc, Imperial Oil Ltd, Nippon Oil subsidiary Mocal Energy Ltd, Murphy Oil Corp, China’s Sinopec, and CNOOC subsidiary Nexen.

Aside from plunging crude-oil prices, Canadian Oil Sands is facing a number of other challenges. It recently swung to a loss and was affected by unplanned equipment outages and Moody’s Investors Service’s decision to cut its credit rating last week.

http://www.mining.com/fire-damages-canadian-syncrude-equipment-forces-firm-to-halt-production/

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LNG carrier Echigo Maru, which was set to deliver a cargo from Indonesia's Bontang facility to Japan's Kyushu Electric, is heading south after idling around Japan as the utility has limited tank space to receive the cargo, market sources said Monday.

The vessel loaded the cargo from Bontang, Indonesia, on August 15 and had Oita, Kyushu, as its final destination. It sailed up the Sea of Japan coast and was now near Taiwan, Platts ship-tracking software cFlow showed Monday.

The LNG cargo it is carrying was due to arrive at Kyushu Electric's Oita terminal on September 14, cFlow showed. But the cargo will likely be diverted to another destination, pending permission from Bontang, a source said.

Kyushu Electric's 890 MW Sendai No 1 nuclear power unit has restarted and the output capacity reached 100% Monday, the company said earlier.

Power demand in Japan has been also falling.

Kyushu Electric said last week that its overall power sales fell 2.6% year on year to 6.53 billion kWh in July due partly to cooler temperatures depressing demand for air-conditioning.

The Sendai reactor connected to the electricity grid on August 14, making it Japan's first unit to come back online under stricter safety standards implemented by the country's Nuclear Regulation Authority following the Fukushima I accident in March 2011.

http://www.platts.com/latest-news/natural-gas/tokyo/lng-carrier-echigo-maru-heads-south-as-kyushu-21046241

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Glencore Plc’s Ivan Glasenberg has lamented the difficulty of reading China’s commodity demand. The nation’s oil traders aren’t helping.

State-run China National United Oil Corp., a unit of the country’s biggest energy company, bought 36 million barrels of Middle Eastcrude last month as part of a pricing process in Singapore used to determine commodity benchmarks around the world. While thepurchases by the trader known as Chinaoil were unprecedented, what’s more unusual is that the seller of most of those cargoes was another government-owned trading company called Unipec.

“It’s unsettling and confusing for other players, and defies market logic,” Victor Shum, vice president at IHS Inc., an Englewood, Colorado-based industry consultant, said by phone from Singapore.

The record buying in Singapore was part of the market-on-close price assessment process run by Platts, a unit of McGraw Hill Financial Inc., where bids, offers and deals are reported by traders through e-mails, instant messages and phone conversations in a fixed period each day. These are used to create end-of-day price assessments for various commodities and form benchmarks for transactions globally.

“Chinaoil and Unipec each have their own trading book and strategy,” Ehsan Ul-Haq, a senior market consultant at KBC Advanced Technologies, said by phone from London. “The Chinese government will not hinder free trading.”

The trading activity in Singapore sent prices of contracts used to hedge against Middle east benchmark Dubai crude cargoes loading in October above those for shipments sailing a month later, according to IHS’ Shum. This market structure called backwardation typically signals that demand is outpacing supply.

Meanwhile, other benchmarks including Brent are reflecting the current global glut because they’re in contango, where near-term supplies cost less than later deliveries. This disparity between the Middle East grade and the rest of the market makes it difficult to assess oil demand, according to Shum.

“It’s very odd that these two companies are up against each other, pushing front-month Dubai inter-month spreads into backwardation when other benchmarks like Brent are in contango,” said Shum.

Chinaoil purchased 72 crude cargoes for loading in October as part of the Platts pricing process last month, most of which were sold by Unipec, a unit of China Petroleum & Chemical Corp., or Sinopec, Asia’s biggest oil refiner. Swiss trader Mercuria Energy Group Ltd. was the only other buyer in August with 6 lots, according to data compiled by Bloomberg.

http://www.bloomberg.com/news/articles/2015-09-01/a-corner-of-the-oil-market-shows-why-it-s-so-tough-to-read-china

Brazil's state-led oil company Petrobras said late Monday that it would raise the wholesale price of liquefied petroleum gas (LPG) by 15 percent effective Tuesday, the first price adjustment for the essential cooking gas in 13 years.

Earlier on Monday Reuters reported that Petrobras had informed distributors of the gas-price increase, which is effective for delivery at the refinery gate at 0:00 a.m. (0300 GMT) Tuesday.

The move is part of efforts by Petroleo Brasileiro SA , as Petrobras is formally known, to reduce losses on fuel sales, a Petrobras source said, requesting anonymity because of a lack of authorization to speak to the press.

The increase also comes as Brazil's government struggles to cut spending, hold down inflation and restart an economy hamstrung by a plunge in world commodity prices and a corruption scandal that has partly paralyzed its oil industry and major construction firms.

"With retail prices uncontrolled, the market will have freedom to fix them and the increase at the refinery will increase pressure on the cost of LPG for consumers," Sindigas, a national association of LPG distributors, said in a statement.

The gas, sold in standard and ubiquitous steel bottles holding up to 13 kilograms of LPG, is essential for cooking and heating for millions in Brazil without access to piped natural gas or steady electricity supplies.

Because of its importance to many lower-income families and relatively large position in Brazil's benchmark consumer price index, the price of LPG for residential consumers has long been controlled by the government.

It is one of three fuels, along with gasoline and diesel, that Petrobras has long been forced to partly subsidize, causing losses for its refining division.

With Petrobras' refineries only able to supply 60 percent to 65 percent of the domestic needs for the fuel, which is essential to tens of millions of Brazilians, Petrobras must import much of Brazil's LPG at a loss.

The Petrobras source said the impact on consumers will be minimal, resulting in a final retail increase in the cost of gas of 3 percent to 4 percent, or about 2 reais (55 cents).

http://www.reuters.com/article/2015/09/01/brazil-petrobras-lpg-rise-idUSL1N11705920150901

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The federal government believes daily U.S. crude production fell to 9.3 million barrels in June, down by 100,000 barrels in the prior month, as low oil prices continue to discourage drilling.

The Energy Information Administration said Monday its monthly report on domestic oil supplies, slated to be released in full soon, will use a new approach to collecting production data. Instead of relying largely on state agencies to provide data, it has begun to survey oil companies that drill in 15 states including Texas and the Gulf of Mexico. It’s an effort to improve the accuracy of its monthly estimates of the nation’s oil output.

This has led it to revise its monthly production data for January through May downward by at least 40,000 barrels a day and up to 130,000 barrels a day, with the biggest declines coming from Texas. There was also an uptick in production from the Gulf of Mexico.

Texas’ daily oil production, the EIA said, were revised downward by 100,000 barrels to 150,000 for the first five months of the year. Producers in the Gulf put out 10,000 to 50,000 barrels a day more than the EIA had previously estimated from January to May. The overall average for the year came in at 9.4 million barrels a day.

The agency said it based its previous estimates on tax information and state agencies but “given the timetable for EIA’s data products, much of that information is lagged and incomplete at the time of publication.”

Surging domestic crude production from shale formations in Texas and North Dakota played a big role in the oil-market crash over the past year, but in recent weeks, economic weakness in China and increasing oil supplies from Saudi Arabia and Iraq have overshadowed U.S. crude production as narratives in the market.

The Organization of Petroleum Exporting Countries have put out 1.5 million barrels a day of additional crude into the market, according to Houston investment banking firm Simmons & Co. International, making any production declines in the United States largely negligible. But “we maintain U.S. oil supply still matters in the equation,” analysts at Houston investment banking firm Tudor, Pickering, Holt & Co. wrote in a note to clients Monday.

The EIA said its new oil-company surveys will account for more than 90 percent of U.S. output. Outside of the surveys it collects in 15 energy-producing states, it brings in data from the other 35 states as well through its old methodology.

http://fuelfix.com/blog/2015/08/31/eia-revises-us-oil-production-estimates-lower-june-output-sank/?utm_source=twitterfeed&utm_medium=twitter#30727101=0

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Fluxys-operated Zeebrugge LNG terminal is scheduled to receive its second cargo of the chilled gas in September from Qatar.

The 159,983 cbm Yari LNG carrier set off from Qatar’s Ras Laffan on August 27. As shipping data shows the vessel is scheduled to dock at the LNG terminal’s jetty on September 11.

The Zeebrugge LNG terminal has an annual throughput capacity of nine billion cubic meters of natural gas importing the liquefied natural gas mainly from Qatar. It can receive 110 carriers per year and serves as a gateway to supply LNG into Northwestern Europe.

The terminal consists of 4 LNG tanks totaling 380,00 cbm, a truck loading station, an existing jetty with one more jetty under construction and due to be completed this year.

https://twitter.com/LNGWN

In its most significant energy investment in two years, Berkshire has amassed a $4.5 billion stake in Phillips 66, making it the biggest shareholder in the largest U.S. oil refiner. Berkshire owns almost 58 million shares in Phillips 66, more than 10 percent of the total outstanding, up from the 7.5 million it reported at the end of the first quarter, according to a regulatory filing issued late Friday by the Omaha, Nebraska-based company.

Phillips 66 climbed 2 percent to $78.78 at 10:25 a.m. in New York, the best-performing energy company on the Standard & Poor’s 500 Index Monday. The bet on fuel processing is a wager that an unexpected and significant rally by refiners during the shale boom will continue as low oil prices spur demand for gasoline, diesel and other petroleum products produced by the so-called downstream sector. Since oil fell by half last year, gasoline demand in the U.S. has surged to an 8-year high, as drivers see per-gallon prices fall below $3 and take to the road.

“As oil prices have dropped, it’s obvious to people in the business that refiner stocks are your best bet,” Carl Larry, head of oil and natural gas for Frost & Sullivan LP, said by phone from Houston. “When people say the oil industry is failing -- well, upstream might be, but downstream has never been better.”

An index of four refiners on the Standard & Poor’s 500 is up 12 percent this year through Friday, compared with the larger energy index, which is down 18 percent. Phillips 66 closed at $77.23 on Friday in New York, up 7.7 percent this year. The increase at Phillips 66 has trailed the results of some other U.S. refiners -- Valero Energy Corp. has gained 19 percent this year and Tesoro Corp. has climbed 26 percent. Marathon Petroleum Corp. is up 4.6 percent for the year.

http://www.bloomberg.com/news/articles/2015-08-30/berkshire-wagers-that-americans-are-still-thirsty-for-gasoline

OAO Rosneft, Russia’s largest oil producer, said second-quarter profit fell less than analysts expected as a weaker ruble helped counter a slump in crude prices.

Net income declined to 134 billion rubles ($2 billion) from 171 billion rubles a year earlier, the Moscow-based company said Monday in a statement on its website. That beat the 95.5 billion-ruble estimate of five analysts surveyed by Bloomberg. Revenue dropped 8.6 percent to 1.31 trillion rubles.

Brent crude has fallen more than 50 percent in the past year after the Organization of Petroleum Exporting Countries chose to defend market share over supporting prices amid a production glut. Russian oil producers have benefited from lower service costs as crude, the country’s biggest export, weakens the ruble.

“Strong results,” Kirill Tachennikov, an oil analyst at BCS Financial Group, said by e-mail from Moscow. Spending cuts in dollar terms and a weaker ruble helped Rosneft to produce $3.6 billion in free cash flow, he said.

Capital spending in rubles rose almost 14 percent to 269 billion rubles in the first half, Rosneft said.

Rosneft increased drilling in the first half of the year as crude output fell 1.1 percent. Production at its largest unit, Yuganskneftegas, rebounded in the second quarter, but was still down 3.4 percent in the first half.

Natural gas output climbed 16 percent to 1.05 million barrels of oil equivalent a day, pushing total oil and gas production to an average 5.175 million barrels a day in the first half.

Net debt fell 7.9 percent in the second quarter to $39.9 billion, according to the statement. Rosneft reimbursed $1.3 billion worth of advance payments for supplies, which it accounts for separately from debt, in the first six months of the year.

http://www.bloomberg.com/news/articles/2015-08-31/rosneft-second-quarter-profit-falls-22-after-crude-prices-slump

Asian liquefied natural gas (LNG) prices could fall a further 25 percent in coming months as new supply, falling demand and weaker oil prices put it on par with iron ore and coal as the worst performing commodity of recent years.

Asia's LNG market has already fared worse than slumping oil markets, with spot prices LNG-AS down 60 percent since 2014 to $8 per million British thermal units (mmBtu), ending half a decade of high prices.

While crude demand remains strong, research group Energy Aspects estimates Asian LNG imports fell 8.5 percent in the first half of 2015 from the same time last year, as the region's economies slow.

Add to the mix El Nino, which usually means milder winters in northern Asia, and a unique cocktail for falling prices may appear.

"The traditional power houses in north Asia are all showing signs of (demand) weakness at a point when there is lots of supply coming on to the market," said Neil Beveridge of Bernstein Research.

China's LNG imports have slumped from double digit growth in recent years to a three percent fall in the first half of 2015 from a year earlier.

For Japan, the world's top LNG importer, the restart of its nuclear power plants is eating away at LNG's market share in an environment of generally falling energy demand.

Imports into South Korea have also fallen due to a slowing economy and rising nuclear power output.

The slowing demand comes just as output soars. Following $200 billion of investments into LNG projects, Australia's exports are soaring, tripling its capacity to 86 million tonnes before 2020, which would make it the world's biggest LNG exporter ahead of Qatar.

Australia's soaring output comes at the same time as the United States starts exporting for the first time towards the end of this year.

A 25 percent fall in oil prices since June is adding to LNG weakness.

"The latest leg down in oil prices is in the process of feeding through into gas prices," consultancy Timera Energy said, as oil-indexation in LNG contracts meant crude movements would be priced into LNG with several months delay.

http://www.reuters.com/article/2015/08/31/asia-lng-prices-idUSL5N11303420150831

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Alberta's oil and gas royalty framework will remain in place until the end of 2016, Energy Minister Marg McCuaig-Boyd said on Friday, as she gave details on a review of the scheme for the province's new left-leaning New Democrat government.

McCuaig-Boyd said royalty rates paid by oil and gas companies will not change until 2017, which will help companies budget for the important winter drilling season.

The review, an election campaign promise, has unsettled oil and gas industry representatives who warn it could lead to higher costs and job losses in Canada's energy heartland. The New Democrat government says it is needed to give Albertans a fair value for the resources.

"For 16 months companies and investors can operate with certainty, knowing there will be no changes in the royalty framework. If and when changes are made, any incremental revenues will go to the (province's) heritage fund," she told a news conference.

The government also announced that Leona Hanson, mayor of the town of Beaverlodge in northern Alberta, Peter Tertzakian, chief energy economist at energy-focused private equity company ARC Financial Corp, and Annette Trimbee, president and vice-chancellor of the University of Winnipeg and former senior Alberta bureaucrat, would join the panel leading the review.

Alberta appointed Dave Mowat, the chief executive of the provincially owned financial services agency ATB Financial, in June to lead the review and report to government by January.

McCuaig-Boyd said panel members needed to be "tough" in order to deliver effective solutions that do not stand in the way of a recovery during an economic downturn, but provide the full value of the resource during boom periods.

Oil and gas companies in Alberta, home to vast oil sands deposits and the largest source of U.S. crude oil imports, have laid off thousands of workers in recent months due to slumping global prices.

Canada's biggest oil and gas industry lobby group, the Canadian Association of Petroleum Producers, estimates recent government moves to increase carbon levies and corporate income tax rates would increase costs by about C$800 million ($618.33 million) over the next two years. Tim McMillan, the association president, said in an interview that the government should pursue policies that encourage more investment and development in Alberta.

Alberta's royalty rates can now vary between 5 and 40 percent depending on factors that include type of development, oil prices, crude volumes, well depths and speed of cost recovery.

http://www.reuters.com/article/2015/08/28/alberta-royalty-idUSL1N1131H320150828

U.S. energy firms added one oil rig this week, the sixth consecutive week of increases even as U.S. oil prices flirted with 6-1/2-year lows, signaling further pressure on a market awash with crude.

Reflecting plans announced in May and June, when U.S. crude futures averaged $60 a barrel, drillers added one oil rig in the week ending on Aug. 28, bringing the total count up to 675, the highest since early May, oil services company Baker Hughes Inc said on Friday in its closely followed report.

"It's getting real close to the end of the increases, given the drop in oil," Phil Flynn, an analyst with the Price Futures Group, said. "I would not bet that the increases will last."

After slashing their rigs by up to 60 percent in the first half of this year, some companies decided to begin drilling more in the second quarter as oil prices stabilized at around $60 a barrel.

U.S. oil prices were headed for their first positive week since mid-June, rallying from multi-year lows of below $40 hit earlier in the week.

U.S. crude oil futures have fallen by as much as 21 percent in the past month and were down this week by as much as 37 percent from their six-month high of $61.43 in early June.

U.S. crude futures fell from over $107 in June 2014 to near $42 in March due to oversupply worries and uninspiring demand growth.

In response to that 60 percent price collapse, U.S. drillers eliminated thousands of jobs and idled 60 percent of the record high 1,609 oil rigs that were active in October.

http://www.reuters.com/article/2015/08/28/energy-oil-rigs-baker-hughes-idUSL1N1131FR20150828

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Eni's "supergiant" gas find off the coast of Egypt bolsters its top-flight exploration credentials and gives the Italian energy group access to easy reserves that fit its strategy of seeking growth without sacrificing dividends.

Eni said on Sunday that its discovery ranked as the largest known gas field in the Mediterranean, covering an area of about 100 square kilometres (39 square miles) and containing a potential 30 trillion cubic feet (tcf) of gas.

Eni, already Africa's biggest oil and gas explorer, was the first oil major to cut its dividend after a plunge in global oil prices. It is looking to reduce its stake in its Mozambique gas discovery and does not rule out doing the same for its latest find, dubbed Zohr.

"It's an open door to give value and solidity to Eni's balance sheet," CEO Claudio Descalzi said of a potential Zohr stake sale in an interview published on Monday by Italian newspaper La Repubblica.

"But it will not be a necessary outcome. There is much less to spend than in Mozambique and the new gas is aimed at the local domestic market, with prices disconnected from those of oil, which today are at six-year lows."

In July Egypt raised the price it pays Eni for the natural gas it produces, part of its initiative to encourage investment in the energy-hungry country.

The company's initial investment in Zohr will be about $3.5 billion, an Egypt official said, though the country's state gas company said that the total could stretch to twice that figure.

"With the full completion of development for the field, investments will (reach) $7 billion," the head of EGAS, Khaled Abdel Badie, told Reuters on Monday.

The good quality of gas discovered at Zohr and the field's proximity to the shore and existing pipeline infrastructure makes it relatively easy and cheap to develop, especially compared with the more remote discoveries off Mozambique, which had to be developed from scratch.

The new African find could also help to meet Egypt's gas needs for decades and pose a challenge to other projects in Egypt, Israel and Cyprus. Falling production and rising gas demand has forced Egypt to become a net importer in recent years.

Key Israeli energy stocks Delek Group, Delek Drilling, Avner Oil, Ratio and Isramco Negev lost 4.5 billion shekels ($1.14 billion) off their combined market capitalisation on Monday.

http://www.reuters.com/article/2015/08/31/eni-gas-idUSL5N1163EP20150831

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Russian oil firms are increasing their rouble profits and raising production as a weak currency protects their business, which has turned into one of the world's most profitable.

Russia has kept its production, which includes gas condensate, near post-Soviet highs as its producers benefit from getting the bulk of their export revenues in dollars while most of their expenditure is in the domestic currency.

On Friday, Bashneft, a medium-sized Russian oil producer, posted a 13 percent increase in second quarter net profit to 17.9 billion roubles ($272.7 million), following strong results by Gazprom Neft earlier this month.

Bashneft, Russia's fastest growing oil firm by output, saw its average oil production at 387,500 barrels per day (bpd) in the second quarter, up from 350,900 bpd the same period a year ago.

Gazprom Neft, the oil arm of state gas producer Gazprom , had earlier reported a 47 percent increase in the second quarter net profit, also on the weak rouble, and its output jumped 25 percent.

Net profit at Surgut was flat in the first half of the year at 135 billion roubles.

"In our global energy universe, the Russian oils screen (rank) strongly versus global peers on most metrics: highest free cash flow yields, dividend yields, lowest leverage, and lowest sensitivity to changes in oil prices," Goldman Sachs said in a report earlier this month.

Goldman added that current valuations offer an attractive entry point into the sector, upgrading Bashneft, Gazprom Neft and Rosneft to 'buy' and forecasting Russian oil output to grow by 1.1 percent this year.

- See more at: http://www.rigzone.com/news/oil_gas/a/140340/Russias_Bashneft_2Q_Net_Profit_Up_13_YOY?rss=true#sthash.YI73pYd2.dpuf