Dec 2016

Rig

Has The OPEC Rally Gone Too Far? (28 December 2016): By Nick Cunningham - Oil prices continue to edge up as 2016 comes to a close, a dramatic turnaround for the industry compared to the start of the year. In January, oil prices were melting down, dropping below $30 per barrel. The industry was panicking, slashing spending and jobs, and it was hard to see any evidence of a rebound. By December, things look much different. The industry is adding rigs back to the shale patch, oil prices are rising, the market is moving closer to balance, and the OPEC deal could accelerate that adjustment. The consensus is that oil prices will post further gains in 2017.

Oil IPOs seen ready to bloom across the U.S. By ALEX NUSSBAUM (28 December 2016): HOUSTON (Bloomberg) -- It may be time for a baby boom in U.S. oil. Rising crude prices and a deregulatory push in Washington may spur as many as 40 companies to hold initial public offerings over the next two years, potentially tripling 2016’s activity, according to Maynard Holt, CEO at Houston-based investment bank Tudor Pickering Holt & Co.

The Craziest Oil Price Predictions For 2017 (23 December 2016): Predicting where oil prices would go next month or next year has always been a game of hit and miss, all the more so in the past two years since the oil price crash began. Analysts have forecast prices in the range US$10 to US$70 at various points this year, and actual prices have also had a bumpy ride, with WTI Crude ranging from below US$30 in January 2016 to a 17-month high briefly touching over US$55 on December 12, 2016.

Upstream West Africa: 'moving projects forward in a low cost environment' (20 December 2016): Lagos, Nigeria is to host West Africa's top annual business to business upstream oil and gas event, which is to bring together decision makers from across the West African region.

Iraq says Kurds, IOCs agree to cut oil output - By WAEL MAHDI, GRANT SMITH (22 December 2016): CAIRO (Bloomberg) -- Iraq said most international oil companies working in the country, along with the nation’s semi-autonomous Kurds, have agreed to cut crude output to fulfill an OPEC accord. Iraq is fully committed to delivering on OPEC’s Nov. 30 agreement to reduce supplies, Oil Minister Jabbar al-Luaibi said Thursday in Cairo at a meeting of the Organization of Arab Petroleum Exporting Countries, known as OAPEC.

Petronas to cut output in 2017 - Written by  Melissa Sustaita (21 December 2016): Malaysia's Petronas said it will voluntarily cut up to 20,000 b/d of crude oil from the country's production beginning in 2017, stemming from a decision made by the Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC producers earlier this month. Following the pact made in Vienna, Austria on 10 December 2016 between OPEC and non-OPEC producers, Petronas will make a voluntary adjustment to Malaysia’s crude oil production starting from January of 2017, the company said.

Oil seen at $100 by year-end 2018 in lottery ticket options trade - By ALEX LONGLEY (21 December 2016): LONDON (Bloomberg) -- Call it a pre-Christmas lottery ticket, but someone in the oil market has been busy making a bold bet, buying contracts that will be profitable if oil surges again to $100/bbl. The $100 December 2018 call option -- a contract that gives the right to buy December 2018 futures at $100/bbl -- was the most traded contract on Tuesday across the whole ICE Brent market, the latest sign of resurgent optimism in oil.

Wison Engineering awarded contract for LNG plant in the Republic of Kazakhstan (20 December 2016): SHANGHAI -- Wison Engineering Services Co. Ltd., one of the leading chemical engineering, procurement and construction management service providers in China, announced that its non-wholly owned affiliated company, Wison Engineering Ltd., has been awarded an EPC contract for a new liquefied natural gas project by Astana Trans Oil LLP, which is the first LNG facility in Kazakhstan.

Photo Courtesy of Reuters.
Photo Courtesy of Reuters.

Asia set for biggest refining capacity jump in three years (20 December 2016): SINGAPORE (Reuters) -- Asia will post its biggest net refining capacity addition in three years in 2017, further boosting demand for crude in the world's biggest and fastest growing oil consuming region. New and expanded refineries from China to India will offset closures in Japan, adding a net 450,000 bpd of crude processing capacity in 2017, the highest since 2014, energy consultancy Wood Mackenzie says.

South African Money01
Image source: NJR ZA/Commons

Financing of infrastructure projects in Africa (19 December 2016): PrintBruce Johnston and Helena Guidolin at Morgan Lewis write for Oil Review Africa, looking at financing infrastructure projects in Africa, focusing both on the energy and local financial sectors and how they are funded. Financing infrastructure projects in Africa will undeniably help to unlock the economic potential of the continent. Finance for investment in African infrastructure is hindered however, by various factors relating to the complexity, size and viability of infrastructure projects generally.

Google Spin Off Could Become Tesla’s Biggest Rival (19 December 2016): 

Goldman Flip Flops Again, Now Sees High OPEC Compliance (16 December 2016): 

Photo Courtesy of Saudi Aramco.
Photo Courtesy of Saudi Aramco.

Tecnicas Reunidas wins Aramco Ras Tanura clean fuels contract (15 December 2016): KHOBAR, Saudi Arabia (Reuters) -- Spanish engineering and construction firm Tecnicas Reunidas has won a contract from Saudi Aramco to build a clean fuels unit at its Ras Tanura refinery in Saudi Arabia, three industrysources said on Thursday. Tecnicas Reunidas declined to comment. Saudi Aramco said by email it had no information available to release at this time. One of the sources told Reuters the contract was worth about $1.8 billion while another said it was $1.5 billion. The project was initially estimated to cost more than $2 billion. "They signed an LOI (letter of intent) already and they are expected to sign the contract after the final approval of Saudi Aramco," said a source familiar with the matter.

 

IEA oil market report shows oil price increase post OPEC talks (15 December 2016): The International Energy Agency (IEA) December 2016 report shows the difference from January 2016 when the cost of oil was at US$30 per barrel to today's >US$50 barrel and the ever-changing oil market. In the IEA report highlights, there has been a big emphasis on the OPEC talks and production cuts, and the global production cut backs in order to bring the oil price up. As the report states, 'OPEC has agreed to cut output by 1.2mn bpd from January 2017 and secured a reduction of 558,000 bpd from non-OPEC.' 

Solar plant

U.S. Solar Boom Continues: 1MW Installed Every 32 Minutes (14 December 2016): By Nick Cunningham - Renewable energy policy faces a future of uncertainty with a new fossil fuel-friendly administration set to take office, but the U.S. solar industry just marked its best quarter to date. In the third quarter, the U.S. saw 4,143 megawatts of new solar PV installations, blowing past the previous record set in 2015, according to new data from GTM Research and the Solar Energy Industries Association.


Image from Shell.

Shell online at Malikai off Sabah (14 December 2016): Written by  AOG Staff - Supermajor Shell has achieved first oil at its deepwater Malikai field, offshore Sabah, Malaysia. The project marks Shell's second deepwater project offshore Malaysia, and its first tension leg platform (TLP) in the country. Malikai follows Gumusut-Kakap, which came online in 2014. 

G20 task force wants companies to come clean on climate risk (14 December 2016): LONDON (Reuters) -- A global task force set up to try to prevent market shocks from the warming of the planet will ask companies to disclose how they manage risks to their business from climate change and greenhouse gas emission cuts. Although the measures recommended by the Task Force on Climate-Related Financial Disclosures (TCFD) are voluntary, some of its members argue they should become mandatory.

Leaked report says slack management exposed BP to high safety risk (13 December 2016): LONDON (Reuters) -- BP's refining operations are exposed to high safety risks that can lead to deadly accidents and pollution as a result of slack management and a lack of investment, according to a leaked internal report from 2015.

OPEC: Has The Cheating Already Begun? (13 December 2016): 

Black & Veatch awarded Kuwait Oil Company Jurassic gas field contract (12 December 2016): ABU DHABI, UAE -- Black & Veatch has secured a contract for the licensing technology and related services for sulfur recovery units (SRU) and Acid Gas Removal Units (AGRU) to support natural gas processing on the Jurassic field, a project central to Kuwait Oil Company's (KOC) strategy to increase gas production.

Oil Surges as Saudis Eye Deeper Cuts While Non-OPEC Joins Deal (12 December 2016): by Mark Shenk and Grant Smith - Oil rose to the highest since July 2015 after Saudi Arabia signaled it’s ready to cut output more than earlier agreed and non-OPEC countries including Russia pledged to pump less next year.

Non-OPEC Said to Join OPEC in First Global Cut in 15 Years (10 December 2015) by Grant Smith, Angelina Rascouet, and Elena Mazneva: Russia and several other non-OPEC nations pledged to curb oil production next year by more than 600,000 barrels a day at a meeting in Vienna on Saturday, joining forces with the Organization of Petroleum Exporting Countries to end a global glut, a delegate familiar with the situation said.

DSME, Kongsberg to develop LNG FSRU system (9 December 2016) Written by AOG Staff: DSME and Kongsberg Maritime entered into an agreement that will see the duo team up to develop a new liquefied natural gas (LNG) floating storage and regasification unit (FSRU) control system

Photo Courtesy of Bapco.
Photo Courtesy of Bapco

Bahrain's Bapco gets bids for $5-B refinery expansion (9 December 2016): KHOBAR, Saudi Arabia (Reuters) -- State-run Bahrain Petroleum Company (Bapco) has received bids from international construction companies to expand its Sitra oil refinery, industry sources said. It aims to boost the processing capacity of the Gulf country's only oil refinery to 360,000 bpd from 267,000 bpd under its BAPCO Modernization Program (BMP), which is expected to cost about $5 billion. Companies that submitted bids and that have formed consortia are: Japan's JGC Corp and South Korea's GS/ Technip, Tecnicas Reunidas and Samsung Engineering/ Fluor, Hyundai Engineering and Construction and Daewoo Engineering and Construction/ CB&I, Petrofac and Japan's Mitsui and Co.

Trader who called price slump sees OPEC deal boosting crude to $70 (9 December 2016): By DAVID MARINO LONDON (Bloomberg) -- Hedge fund manager Pierre Andurand expects the combined output cut agreed to by OPEC and Russia will boost oil to $70/bbl in the first half of next year. Andurand, who correctly called the slump to the mid-$20s in the first quarter of this year and the subsequent recovery, said the agreement will lead to large inventory declines sooner than anticipated, spurring higher prices. Andurand’s fund gained 6.1% in November and is up 14.4% so far this year, according to an investor letter.

JGC awarded facilities contract at Algerian gas plant (8 December 2016): YOKOHAMA, Japan – JGC Corporation has announced that its wholly owned subsidiary, JGC Algeria, S.p.A., has been awarded the contract for "creation of inlet boosting separation and compression facilities of Hassi R’Mel" by Sonatrach to feed the gas processing plant located in the Hassi R’Mel gas field, Algeria.

Chevron sets 2017 budget (7 December 2016): Written by  Audrey Raj US oil and gas major Chevron announced on Wednesday a US$19.8 billion capital and exploratory investment program for 2017, down 42% from 2015 outlays. The 2017 budget is expected to be at least 15% lower than the projected 2016 capital investments.

CLG’s biofuels technology fuels US Navy test flight (7 December 2016): RICHMOND, CA – Chevron Lummus Global (CLG) announced the deployment of its Biofuels ISOCONVERSION technology in a US Navy test flight. The US Navy EA-18G Green Growler test flight recently took place at the Naval Air Station Patuxent River, Maryland, and used ReadiJet (CHCJ-5) technology for fuel—a product derived from CLG’s Biofuels ISOCONVERSION process.

Oil Falls As OPEC Euphoria Abates (7 December 2017) As the meeting of NOPEC fast approaches this weekend, the mood in the oil market has shifted from euphoria to skepticism, as questions remain around the intent of key producers. With that in mind, hark, here are five things to consider in oil markets today: 1) Oman is a key producer in the NOPEC clan, and is expected to cut production by ~46,000 bpd to help the cause. At this juncture, it seems that Russia is the only other NOPEC member that is willing to cut (no Brazil, Azerbaijan attending the NOPEC meeting).

Eia British Pipelines

New England natural gas pipeline capacity increases for the first time since 2010 (6 December 2016): Spectra Energy Corporation has almost completed the first two natural gas pipeline projects in New England since 2010. On Nov. 1, Spectra placed part of the Algonquin Incremental Market (AIM) project into service, following the late-October approval from the Federal Energy Regulatory Commission (FERC).

Oil Prices Retreat As OPEC, Russia Bump Up Output Ahead Of Cuts (6 December 2016): Having rallied to 16-month-highs on the back of OPEC’s deal to cut oil supply, oil prices dipped on Tuesday after figures showed that November output at both OPEC and Russia had reached record highs in November. As of 7:46 AM (EST), WTI Crude had dipped 1.49 percent at US$51.02, while Brent Crude was trading down 1.04 percent at US$54.37.

American Shale Companies' Rush to Hedge Is Turning the Oil Market Upside Down (5 December 2016): Bloomberg - U.S. shale oil companies are using the post-OPEC rally to hedge their oil price risk for next year and 2018 above $50 a barrel, bankers, merchants and brokers said, pushing the forward oil curve upside down. The rush to hedge -- locking in future cash flows and sales prices -- could translate into higher U.S. oil production next year, offsetting the first output cut by the Organization of Petroleum Exporting Countries in eight years. As such, the producer group could end up throwing a life-line to a sector it once tried to crush

Electric Cars Could Take an OPEC-Sized Bite From Oil Demand (3 December 2016): by Jessica Shankleman - A boom in electric vehicles made by the likes of Tesla Motors Inc. could erode as much as 10 percent of global gasoline demand by 2035, according to the oil industry consultant Wood Mackenzie Ltd.

OPEC Deal Can Work, But ‘We Tend to Cheat,’ Al-Naimi Says (2 December 2016): by Catherine Traywick - OPEC’s agreement to cut production for the first time in eight years has the potential to balance the oil market, as long as everyone sticks to it, former Saudi Arabia Oil Minister Ali al-Naimi said. "The only tool they have is to constrain production," al-Naimi said of OPEC at an event in Washington, D.C. "The unfortunate part is we tend to cheat."

Samsung Heavy says $776.8-MM order for LNG facility cancelled (2 December 2016): SEOUL (Reuters) -- Samsung Heavy Industries Co Ltd said on Friday that a $776.8 million order for a substructure for a liquefied natural gas (LNG) floating production, storage and offloading (FPSO) unit has been cancelled. The South Korean shipbuilder said in a regulatory filing that the order, which came from an unspecified European firm, was cancelled as the firm did not issue a work order by a deadline agreed upon.

Oil price rally likely short-lived as OPEC deal not enough to reduce glut (1 December 2016): (Reuters) -- The oil price rally sparked by an OPEC-Russia deal to cut output is likely to be short-lived, say traders in Asia, because the agreement may only draw more supplies from storage tanks and more crude shipments from the United States. And even without increased supplies from elsewhere, if the Organization of the Petroleum Exporting Countries (OPEC) and Russia do reduce production by 1.5 million bpd as pledged, the cuts would not be deep enough to shrink a glut that began to build in mid-2014, traders said.

India to invest US$20 billion in gas development (1 December 2016): Written by  Melissa Sustaita - India is gearing up to invest some US$20 billion in deepwater gas  development in the next five to seven years, the country’s Oil Minister Dharmendra Pradhan said this week, according to news reports.

Shale cheers former enemy as OPEC cut ends years of starvation (1 December 2016): By JOE CARROLL, ALEX NUSSBAUM, DAVID WETHE - HOUSTON (Bloomberg) -- The U.S. shale industry, gutted by 2 1/2 years of bankruptcies, writedowns, credit downgrades and layoffs, is poised to step back from the brink, thanks to an old enemy: OPEC. Abandoning a policy that sought to starve shale explorers and other high-cost drillers into submission, the Organization of Petroleum Exporting Countries relented on Wednesday and agreed to curb output by 1.2 MMbopd. Other producing nations that aren’t cartel members also signaled plans to cut back by as much as 600,000 bopd, OPEC said.

Exclusive: How Putin, Khamenei and Saudi prince got OPEC deal done (1 December 2016, Reuters - By Rania El Gamal, Parisa Hafezi and Dmitry Zhdannikov) Russian President Vladimir Putin played a crucial role in helping OPEC rivals Iran and Saudi Arabia set aside differences to forge the cartel's first deal with non-OPEC Russia in 15 years. Interventions ahead of Wednesday's OPEC meeting came at key moments from Putin, Saudi Deputy Crown Prince Mohammed bin Salman and Iran's Supreme Leader Ayatollah Ali Khamenei and President Hassan Rouhani, OPEC and non-OPEC sources said.