Saudi’s Solution to Global Oil Glut: Pump Even More Crude

Saudi Arabia has a response to the global surplus of oil: Raise output to near-record levels and then pump even more.

The world’s biggest oil exporter, having abandoned last year its role of keeping global markets in balance, now has incentive to maximize output and undermine rival producers by using its reserve capacity, according to Citigroup Inc. and UBS AG. Just meeting its own domestic demand this summer will require a lot more fuel, others estimate.

Billions at Risk for Ghana Oil Firms on Ocean Boundary Ruling With Ivory Coast

Ghana's decision to seek arbitration in a dispute with Ivory Coast over an oil-rich basin in the Atlantic could prove costly for the country and a consortium led by Tullow if a court halts development there.

The International Tribunal for the Law of the Sea will rule on Saturday on Ivory Coast's February request for a moratorium on activity in the basin. The decision is part of legal proceedings on a maritime border dispute sought by Ghana's President John Dramani Mahama in September.

Although many expect the dispute to be ultimately settled in Ghana's favor, analysts say a ruling that prevented the $4.9 billion offshore TEN oil and gas field opening in mid-2016 would be a further blow to the battered Ghanaian economy.

Top Oil Traders Get Boost To Ramp Up Volumes

Some of the world's biggest oil trading houses say they expect increased volumes this year as a fall in oil prices ties up much less capital for trading than a year ago.

Trading oil is expensive and requires big players to have billions of dollars of credit lines with dozens of banks, but a steep drop in oil prices means the value of a mid-sized cargo of crude oil has fallen from $115 million to $60 million and has therefore become cheaper to finance.

The development has a slight downside, as traders are under-utilising banking lines and banks generally don't like maintaining unused credit lines.

Half of U.S. Fracking Companies Will Be Dead or Sold This Year

Half of the 41 fracking companies operating in the U.S. will be dead or sold by year-end because of slashed spending by oil companies, an executive with Weatherford International Plc said.

There could be about 20 companies left that provide hydraulic fracturing services, Rob Fulks, pressure pumping marketing director at Weatherford, said in an interview Wednesday at the IHS CERAWeek conference in Houston. Demand for fracking, a production method that along with horizontal drilling spurred a boom in U.S. oil and natural gas output, has declined as customers leave wells uncompleted because of low prices.

Oil Prices to Stay Low - Nigeria

Oil prices are likely to stay low for a long time after falling more than 40 percent in the past year, said officials from two OPEC nations.

Nigeria warned that oil prices, currently at around $60 a barrel, probably won’t recover to the 2011-2013 level of more than $100 a barrel.

“You forecast at your own risk, but it seems to me that we should be regarding this as a permanent shock,” Ngozi Okonjo-Iweala, the Nigerian finance minister, said on a panel discussion Sunday in Washington near the end of the International Monetary Fund’s spring meetings. “We should prepare our economies for that eventuality.”

CAMAC awaits Oyo well production. Changes name to Erin Energy

CAMAC Energy Inc. has informed that the Floating Production, Storage, and Offloading vessel (FPSO) Armada Perdana will be ready for production from the Oyo-8 well, offshore Nigeria, in one week’s time.

The owner of the vessel, Malaysia’s Bumi Armada Berhad, informed the company that the renewal of the FPSO’s class certification is now expected to be completed by April 24, 2015.

According to CAMAC, the Oyo-8 well, located in the Oyo field offshore Nigeria, is ready to start production into the FPSO upon the vessel’s class certificate renewal.

Looking Beyond Iran's Sanctions - Iran's Tantalizing Oil Dynamics

Iran contains some of the largest and most attractive petroleum resources in the world, so any easing of sanctions could have a major impact on oil and gas markets in the second half of the decade.

Iran's possible re-emergence as a major exporter would force a re-ordering of the world oil market both because of the country’s location on the cost-curve and the quality of its oil.

Iran’s proved oil reserves of 160 billion barrels, almost 10 percent of the world total, rank it fourth after Venezuela (300 billion barrels), Saudi Arabia (265 billion barrels) and Canada (175 billion barrels), according to BP.

Could OPEC See Individual Nation Quotas Re-installed

The then dominant quota system of per-country set margin output for OPEC member nations has since been put to sleep tracing back to 2008. But suprisingly it's one aspect member nations might have to re-consider following the happenings in the oil industry at the moment. This is fueled mostly for the recent developments arising from the Iran nuclear deal and a possible revoking of the supply embargo levied on it's oil export.

Definitely a proposal to reintroduce quotas would spark a fierce debate in the Organization of the Petroleum Exporting Countries as national prestige and market share are at stake. After refusing to cut output last year, OPEC is pumping much more than its overall output target of 30 million barrels per day (bpd) because of record Saudi Arabian output, higher Iraqi exports and a partial return of Libyan crude.

Today's Oil Industry: Sack the Bottom to Feed The Top

We all know that this year has been one of steadfastness as a worker in the oil and gas industry (exception being in the case of the executives of course). Job cuts to minimise cost has been the anthem on the lips of many following the slash in the oil prices coming into this year, with another eye keen on the creation of more efficient methods. As technology transition and innovation is never an immediate solution the industry has been pulled into what can be described as a massive scale downsizing of employees in other to stay afloat. Contracts are being scrutinized and re-scrutinized to ensure effective cost savings implementation strategies and only the best of hands are being "greased". 

Brent Crude Hits 2015 High as US Output Slows

Oil rose more than 3 percent on Thursday, pushing Brent crude to a 2015 high above $63 per barrel on increasing evidence that U.S. production is peaking, balancing a market that has been in heavy oversupply for more than a year.

Oil prices collapsed in the six months to January, pushing Brent down more than 60 percent to almost $45 a barrel.

But the market has gradually recovered this year as much lower prices have discouraged oil exploration and production, especially in the United States.

Shale Output Is Falling Faster Than Expected

Shale drillers will see production drop sooner than expected under a U.S. government forecast, a momentum change that hints at an eventual price rally.

Just five months after Saudi Arabia put the market into a tailspin by refusing to cut supply despite a global glut, the shale oil industry will record its first monthly dip since U.S. officials began weighing output in 2013.

The projected production drop is small, just 1 percent. Yet investors took note, pushing oilfield stocks to the top five spots in the Standard & Poor’s 500 Index on Tuesday, led by rig operators Ensco Plc and Diamond Offshore Drilling Inc. The decline lags the idling of rigs because of a backlog of already-drilled wells that have gradually been coming online.

OPEC Might Just be the Largest Growing Output Hub in the Next 4 Years

OPEC production climbed by the most in almost four years as Saudi Arabia, Iraq and Libya boosted output amid a stronger outlook for global oil demand, according to the International Energy Agency.

The Organization of Petroleum Exporting Countries raised output by 890,000 barrels a day to 31.02 million a day in March, the biggest monthly gain since June 2011, the IEA estimated. Preliminary data suggest output may rise further this month, it said. The agency cut its prediction for U.S. and Canadian oil supply growth in the second half of the year.

More Balanced Oil Market Expected in 2nd Half

Professional commodity traders watch spreads (differences between the prices for adjacent futures contracts) rather than spot prices as the best indicator of the balance between supply and demand.

In crude, the narrowing spreads for both Brent and West Texas Intermediate (WTI) indicate a closer balance between supply and demand in the second half of the year than in the first.

MILESTONE ALERT: World’s Longest Well Completed at Chayvo Field

Rosneft, as part of Sakhalin-1 Consortium, has completed drilling of the “world’s longest well” at the Chayvo field, off the coast of Sakhalin Island.

O-14 production well was drilled with Orlan drilling platform in direction of the field’s south-eastern point. According to Rosneft, the well has the world-record measured depth of 13,500 meters and a horizontal reach of 12,033 meters.

Can the Shale Oil Boom meet it's End in May?

The shale oil boom that pushed U.S. crude production to the highest level in four decades is grinding to a halt.

Output from the prolific tight-rock formations such as North Dakota’s Bakken shale will decline 57,000 barrels a day in May, the Energy Information Administration said Monday. It’s the first time the agency has forecast a drop in output since it began issuing a monthly drilling productivity report in 2013.

Deutsche Bank AG, Goldman Sachs Group Inc. and IHS Inc. have projected that U.S. oil production growth will end, at least temporarily, with futures near a six-year low. The plunge in prices has already forced half the country’s drilling rigs offline and wiped out thousands of jobs. The retreat in America’s oil boom is necessary to correct a supply glut and rebalance global oil markets, according to Goldman.

Nigerian States Look to Sell Bonds as Oil Income Dwindles - FBN

FBN Holdings Plc, owner of First Bank Nigeria, said it expects to benefit from a surge in sales of bonds by state governments to replace dwindling oil revenue and after peaceful elections bolstered investor confidence.

“We expect a lot of the state governments to go to the market to issue bonds to be able to fund their projects,” Chief Executive Officer Bello Maccido said in an interview. “It presents an opportunity for the investment-banking business.”

"We are likely to see more energy deals after Shell-BG" - Fitch

Royal Dutch Shell’s acquisition of BG Group agreed Wednesday could spark a wave of energy deals beyond the opportunistic ones already seen, Fitch Ratings says.

The deal signals that Shell has confidence in the sector and is positioning itself for the sector’s recovery. Shell’s competitors are likely to also look for partners, so they are not at a disadvantage when the cycle turns, Fitch Rating explains.

WorleyParsons Lands Deal for Ophir's Fortuna Project in Equatorial Guinea

WorleyParsons disclosed Friday the award by Ophir Equatorial Guinea (Block R) Limited of an agreement for provision of engineering and project management services for their Equatorial Guinea 

Oil Rises a Third Day as Iran Export Recovery Remains in Doubt

Oil advanced a third day as skepticism among U.S. lawmakers over a nuclear deal with Iran undermined prospects that the OPEC producer will bolster crude exports.

Futures climbed 1.3 percent in New York. President Barack Obama is dispatching three cabinet members to brief lawmakers as a Senate committee prepares to take up a bill that will give Congress 60 days to review any final agreement with Iran. Drillers in the U.S. reduced the number of active rigs seeking oil to the fewest since December 2010, according to Baker Hughes Inc.

Fracklog Gains More Acceptance In U.S Oil Production Deferment Strategies

Companies delaying the completion of wells that have been drilled are keeping 373,000 barrels a day of oil out of the market, energy intelligence firm Genscape Inc. said.

Six companies announced plans to defer completing a total of 845 drilled wells this year, Genscape said in a report Wednesday.

Some oil producers have responded to the 50 percent drop in crude prices since June by delaying the hydraulic fracturing of wells. This backlog of unfracked wells, known as a fracklog, can then be completed and brought online when prices have rebounded.

The Shell-BG Deal: Traces to Oil Market Low Positions

Oil companies have a knack for picking the bottom in crude prices, and history may be about to repeat itself.

Traders and analysts are speculating that Royal Dutch Shell Plc’s takeover of BG Group Plc for $70 billion announced Wednesday may be the first in a wave of acquisitions as Big Oil seeks to drive out costs following the rout in oil.

Ghana Oil Refinery Breakdown a Symbol of Economic Woes

When it opened in 1963, Ghana's oil refinery symbolized pride and hope for the first African country to escape colonial rule. Now the plant stands idle in a sign of the economic shadow that has crept over one of the continent's brightest stars.

The discovery of oil in Ghana in 2007, added to its gold and cocoa wealth and its other major asset, stable democracy, gave it a chance to start catching up with oil giant Nigeria and regional West African economic powerhouse Ivory Coast.

The year after oil began flowing in 2010 economic growth spiked to 14.8 percent, one of the highest rates in the world.

Hercules Inks 5-Year Contract with Eni in W. Africa

Hercules Offshore announced that it has signed a five-year contract with a subsidiary of Eni S.p.A. for use of the Hercules 260 (250' ILC) in West Africa. The dayrate under the contract will range from a minimum of $75,000 per day when the price of Brent crude oil is $86 or less per barrel, to a maximum of $125,000 per day when the price of Brent crude oil is $125 or more per barrel. Contract commencement is expected in early April 2015. Costs for contract specific upgrades will be reimbursed by the operator.

Saipem and Dangote Form JV to Tap Central/West African Market

Italy's Saipem S.p.A. disclosed Wednesday that it has entered into a Joint Venture with Dangote Group, one of Africa’s leading companies, to create a new company named Saipem Dangote E&C. Saipem Dangote E&C is a significant new player in the Nigerian and Central/West African market, with high technical and financial capabilities. It aims to secure complex Engineering & Construction projects and ensure a realization capacity focused on efficiency, in terms of costs and timing, and flexibility, in order to respond to different needs related to specific projects, to local content and to the Country’s context. 

Breakthrough in hydrogen-powered cars may spell end for petrol stations

Scientists have dramatically increased the efficiency of producing clean hydrogen fuel from plant waste in a breakthrough that could one day lead to petrol stations being replaced by a network of roadside “bioreactors” for refuelling cars.

A study funded by Shell Oil has shown that it is possible to convert all 100 per cent of the sugar stored in corn stover – the stalks, cobs and husks leftover in a harvested maize field – into hydrogen gas with no overall increase in carbon dioxide emissions to the atmosphere.

The researchers perfected the process by mixing the raw biomass with a watery solution containing a cocktail of ten enzymes that turned the plant sugars xylose and glucose into hydrogen and carbon dioxide, said Professor Percival Zhang of Virginia Tech in Blacksburg, Virginia.

Previously it has only been possible to convert between 30 per cent and 60 per cent of the plant’s sugars into hydrogen using either fermenting microbes or industrial catalysts. However, the latest technique converts 100 per cent of the plant sugars into hydrogen, Professor Zhang said.

Producing pure hydrogen gas from crop waste and biomass is seen as one of the most important goals of the green economy because of the need to produce clean alternatives to petrol. However, existing methods are inefficient, costly and are dogged by the problem of how to distribute the hydrogen once it is made.

“All the products produced by the process are gases so they can be separated and collected easily from the biomass substrate. Over its lifecycle, the process is carbon neutral and we have achieved a 17-fold increase in the rate of the reaction which makes it economically viable,” Professor Zhang said.

“This means we have demonstrated the most important step toward a hydrogen economy – producing distributed and affordable green hydrogen from local biomass resources,” he said.

One of the critical developments in the process is being able to directly use “dirty” biomass as the fuel rather than relying on highly processed sugars as the source of hydrogen. In addition to being more efficient, this means it should also be possible to build large bioreactors the size of petrol stations near to sources of biomass, so leading to a network of green re-fuelling stations distributed around the country, Professor Zhang explained.

Total's Divestments in 3 Onshore Blocks in Nigeria Reaches $1B

Total's recent divestment of its interests in three onshore Oil Mining Leases (OML) in Nigeria, inlcuding OML 18 and OML 24, crossed $1 billion Monday after the French major completed the sale of its stake in OML 29 to local firm Aiteo Eastern E&P for $569 million. 

“The sale of these non-operated onshore blocks in Nigeria is yet another example of our strategy of dynamic portfolio management, achieved at attractive valuations,” Total's chief financial officer Patrick de La Chevardiere said in a press release. “These transactions also reduce our exposure to non-operated blocks onshore Nigeria, and allow us to focus on our core, operated developments, such as the Egina project.” Total has divested its interests in 11 onshore blocks to Nigerian companies since 2010 in accordance with the Nigerian government’s objective of developing Nigerian companies in the sector.    

Total has a 10 percent stake in several onshore blocks in Nigeria via the Shell Petroleum Development Company (SPDC) Joint Venture alongside the Nigerian National Petroleum Corporation (55 percent), SPDC (30 percent, operator) and Nigerian Agip Oil Company Limited (5 percent).