NEWS

[SPAIN] Oil leaders meet again after Jeddah failure

2008-06-30T00:14:00.002+02:00

A week after failing to deflate record oil prices at a summit in Saudi Arabia, the world's biggest crude producers and consumers will get another chance to tackle the problem at a meeting this week.

More than 3,000 delegates, including leading corporate and political figures, are to meet at the 19th World Petroleum Congress (WPC) in Madrid, which runs from Monday to Thursday after an official opening reception on Sunday.

"It's the Olympics of the oil and gas industry," director of the World Petroleum Congress, Pierce Riemer, told a press conference last week.

The gathering follows a surge in oil prices Friday that took both New York light sweet crude and Brent North Sea crude to record levels beyond 142 dollars a barrel.

The president of the Organization of Petroleum Exporting Countries, the head of the International Energy Agency and ministers from Nigeria, Russia, Venezuela, India, France and the Netherlands are expected to be present.

They are to be joined by the bosses of major international oil groups ExxonMobil of the United States, CNOOC of China, Britain's BP and Shell, Rosneft of Russia and Total of France.

Saudi Arabia convened a hastily arranged meeting of consumers and producers in Jeddah last weekend to tackle the problem of record oil prices, which are forecast by Organization of Petroleum Exporting Countries,'s president to touch 150-170 in the coming months.

Most experts agreed afterwards that the only concrete result was Saudi Arabia's announcement that it would increase daily production by more than 200,000 barrels to 9.7 million -- and that it could significantly step this up if necessary.

The gathering pitted consumer nations, which are calling for an increase in production, against producers.

Most OPEC members remain firmly against any increase in their production and blame speculators and the fall in the dollar for the remarkable run up in prices, which have doubled in the last 12 months.

Jorge Segrelles, the head of the organising committee of the WPC, says the meeting is intended to be "a forum for actively finding solutions."

Given the differences in assessment of the situation between consumer and producer countries, the head of energy at consultancy Capgemini, Colette Lewiner, sees little chance of an agreement.

"There might be declarations of intent, but there will not be a consensus in the short term," she said.

The main event, which will take place in Madrid's Ifema conference centre, also faces competition from a rival meeting of environmentalists called to promote alternatives to crude oil as an energy source. The main event, which will take place in Madrid's Ifema conference centre, also faces competition from a rival meeting of environmentalists called to promote alternatives to crude oil as an energy source.

Source: Agence France Presse

[OIL PRICES] OPEC Leader Khelil Says Dollar Will Drive Oil to $170

2008-06-29T23:55:00.002+02:00

Organization of Petroleum Exporting Countries President Chakib Khelil predicted that the price of oil will climb to $170 a barrel before the end of the year, citing the dollar's decline and political conflicts.

``Oil prices are expected to reach $170 as demand for fuel is growing in the U.S. during the summer period and the dollar continues to weaken against the euro,'' Khelil said today in a telephone interview. The leader of the Organization of Petroleum Exporting Countries also serves as Algeria's oil minister.

Political pressure on Iran and the depreciation of the U.S. currency have caused a surge in oil prices, Khelil said. New York- traded crude has more than doubled in a year and touched a record $142.99 a barrel yesterday on the New York Mercantile Exchange.

Organization of Petroleum Exporting Countries ministers generally say that oil output is sufficient, even as Saudi Arabia, the biggest producer, pledged to pump an extra 200,000 barrels a day next month to calm the market. ``The market is completely supplied,'' Venezuelan Oil Minister Rafael Ramirez said yesterday. Libya announced possible production cuts, calling the market oversupplied.

The rising cost of crude is not linked to supply, Khelil said today. ``There is more than enough oil in the market to meet the international demand,'' added the Organization of Petroleum Exporting Countries president, who will take part June 30 in an international energy forum in Madrid.

Prices, which are up 38 percent this quarter, are heading for the biggest quarterly gain since the first three months of 1999, when oil traded between $11 and $17.

Declining Dollar

``The decisions made by the U.S. Federal Reserve and the European Central Bank helped the devaluation of the dollar, which pushed up oil prices,'' Khelil said.

Oil may extend gains if the European Central Bank boosts rates on July 3, further weakening the U.S. currency. The dollar has declined 15 percent against the euro in 12 months.

European Central Bank President Jean-Claude Trichet reiterated June 25 that policy makers may increase the main refinancing rate by a quarter-percentage point next month to contain inflation. The Federal Reserve left the benchmark U.S. rate at 2 percent on June 25. On Sept. 18 the Fed began cutting rates to bolster an economy already reeling from the credit crisis.

Source: Bloomberg|By Ahmed Rouaba

[SAUDI ARABIA] Asian workers rush to get Saudi oil oasis ready

2008-06-26T04:04:00.001+02:00

Deep in the Saudi desert, 28,000 Asian workers are racing to get a giant oil processing complex ready to help King Abdullah keep a vow to meet world demand for crude.

In a year's time, the Al Khurais field will be supplying 1.2 million barrels a day of Arab light crude to thirsty global markets, under a tight schedule set by Saudi Aramco. The king, and other top Saudi officials, promised at an oil summit they hosted in Jeddah on Sunday to increase current production by 200,000 barrels a day to 9.7 million barrels and to supply any further increase in global demand.

In temperatures that seldom fall under 100 degrees Fahrenheit during the day, workers from Indonesia, Bangladesh, India, the Philippines and other nations wear hoods against the sun as they finish the hundreds of kilometres of pipelines, three 600,000 barrel storage tanks, 15,000 horsepower pumps and a bomb proof control centre that make up the $10 billion complex.

Al Khurais is city-sized but can only be reached up a seemingly endless desert road, with truck tyres and carcases of burned out cars strewn along the sides and black camels roaming in the dunes.

The company calls it "the largest industrial project in the world." Together the three fields have estimated reserves of 27bn barrels and their joint daily production of 1.2m barrels will be more than OPEC's three smallest members Indonesia, Qatar and Ecuador, according to Aramco.

World demand is growing by about 1pc a year and Saudi Arabia has vowed to invest tens of billions of dollars to take production capacity to 12.5m barrels by the end of next year and eventually 15m if the demand is there.

Aramco vice-president for production Amin Al Nasser said 500,000 barrels a day will start coming out of its Khursaniyah field in August, and by the end of the year 250,000 barrels will be coming from the Shaybah field and 100,000 barrels a day from the Nuayyim field.

The Saudi firm has embarked on a huge operation to find new fields to add to its estimated 260 billion barrels of crude oil reserves.

Aramco research chief Muhammad Saggaf said that over the next 20 years the company's overall resource base could grow to 900bn barrels from the current level of 735m.

Source: Gulf Daily News

[NUCLEAR] Middle East nuclear renaissance?

2008-06-24T23:08:00.004+02:00

A comprehensive and well detailed report by the International Institute for Strategic Studies, released last week, sheds a pile of information on the state of nuclear proliferation in one of the world's most volatile regions -- the Middle East.

Indeed, as John Chipman, director general and chief executive of International Institute for Strategic Studies, points out in a publication entitled "Nuclear Programs in the Middle East: in the Shadow of Iran," the worrying factor lies in the sudden awakening of several Middle Eastern countries that, now feeling threatened by Iran, see the urge to jump onto the nuclear bandwagon.

"In the span of the 11 months between February 2006 and January 2007, at least 13 countries in the Middle East announced new or revived plans to pursue or explore civilian nuclear energy," said Chipman.

As the International Institute for Strategic Studies director pointed out, this sudden interest by Middle Eastern countries in nuclear energy is "remarkable" in view of the region's abundance of traditional energy sources -- such as natural gas and crude oil.

With the exception of Israel, in the rest of the region, from Morocco in North Africa to the southern tip of the Arabian peninsula, "There is not a single nuclear power plant in operation today," said Chipman.

The other exceptions are those being built in Iran -- the Bushehr facility being built with Russian assistance. It is this facility, as well as the gas-centrifuge plant at Natanz and the heavy water reactor at Arak, against which the Bush administration and the Israelis are threatening to take military action, unless Iran complies with the international community's request that it put a stop to its nuclear program.

These sites, and others scattered throughout Iran, were kept secret by the Islamic Republic and were revealed to the world by the Iranian resistance, the People's Mujahedin of Iran.

Past attempts by Arab countries to develop nuclear power plants have been thwarted before they could reach completion. Such was the case with the Osirak nuclear power plant that Saddam Hussein was hoping to build with French assistance, until the facility and his dreams were shattered in an Israeli air raid on June 7, 1981.

A more recent effort to develop nuclear capability was an attempt by Syria, allegedly with North Korean help, and it too was destroyed by Israel last September. Syria denies it was building a nuclear facility, but a high-ranking European diplomat told this reporter "there was no doubt Syria was building a facility to develop a nuclear program."

The danger stemming from Iran's pursuit of its nuclear ambition, besides the fact it could launch a regional conflict should Israel decide to take military action, is further amplified by the risk of nuclear proliferation throughout the region.

The International Institute for Strategic Studies report states, "Each of the new nuclear-aspirant states announced its decision in terms of electricity needs, energy diversification and the economic benefits of nuclear power." The reality, however, may be somewhat more macabre. As Chipman points out, "Promotion of nuclear energy is one way in which Sunni states are trying to counter the rising sense of Shia empowerment following the 2006 Lebanon war."

Such is the case in Egypt, where President Hosni Mubarak, and more specifically his son Gamal, are seizing upon nuclear power as a national project upon which to promote the son's campaign to succeed his father. Again Chipman: "If Tehran's nuclear program is unchecked, there is reason for concern that it could in time prompt a regional cascade of proliferation among Iran's neighbors."

Already, besides Egypt, Saudi Arabia and Turkey have voiced interest in going nuclear.

The good news, if one can be optimistic enough to find good among reports of numerous countries wanting to arm themselves with nuclear weapons, is that the danger of proliferation in the Middle East, says Chipman, "while real, is not imminent."

What appears to be playing out in the Middle East today is the positioning of the region's powers so they can, if they find the need to move ahead into the nuclear field, arrive there without additional delay. Saudi Arabia, for example, is unlikely to develop its own nuclear program but, as several reports have indicated, it would rely on a defense pact with nuclear-powered Pakistan.

Chipman predicts that over time the Islamic Republic's nuclear program could become a powerful regional proliferation driver. In other words, the result would be, on the one hand, a race between Sunni and Shia and, on the other, between the region's political powers -- that is, assuming the United States and/or Israel would refrain from intervening militarily.

Source: United Press International|by Claude Salhani

[OIL PRICES] Global Oil Summit Addresses Issues But Produces Few Solutions

2008-06-23T18:35:00.006+02:00

The global energy summit held to discuss rising oil prices explored leaders' different agendas and opinions but offered few concrete results. A summit held June 22 in Saudi Arabia to discuss spiraling oil prices concluded in an ambiguous fashion as attendees left the meeting with largely different opinions and agendas.

Although he blamed increased oil consumption and taxes on fuel, King Abdullah of Saudi Arabia used the meeting attended by leaders and ministers from 36 nations to blast speculators, claiming the spike in oil prices can be greatly attributed to their "selfish interests." With the current price of a barrel of oil now at a high of roughly 130 US dollars, he urged the summit participants to "rule out biased rumors" and to "reach the real causes for the increase in price."

Saudi Oil Minister Ali al –Nuaimi also used the summit in the Red Sea city to quell any fears about depleted oil reserves, claiming that there is enough crude to last "many decades." With Saudi oil output currently at 9.7 million barrels a day, Abdullah vowed to increase oil production should this become necessary. Kuwait and the United Arab Emirates similarly signaled their readiness to up production in the future.

Oil producers say production hike unnecessary

Other Organization of Petroleum Exporting Countries (OPEC) members such as Algeria and Venezuela, however, rejected this idea, as did Chakib Khelil, Organization of Petroleum Exporting Countries president and Algeria's Oil Minister. Khelil insisted that increasing production is unnecessary, stating that the 13-nation Organization of Petroleum Exporting Countries would only consider a production increase at a meeting in September. "We believe that the market is in equilibrium," he said. "The price is disconnected from fundamentals. It is not a problem of supply."

Glos calls for increase in production

German Economy Minister Michael Glos was one leader who had positive feedback to offer regarding the summit. "I view this conference as sending a clear signal to the oil market, which can contribute to an easing of the recent price developments," he said.

Glos also agreed with Abdullah that an increase in production is in order, claiming it would be "a strongly needed signal to the financial markets to not gamble any more on an increasing oil price."

US Energy Secretary Samuel Bodman echoed Glos' sentiments, warning that "in the absence of additional crude supply, for every one percent increase in demand we would expect a 20 percent increase in price in order to balance the market."

Referring to the staggering oil prices as "the biggest of all three oil shocks" in recent decades, British Prime Minister Gordon Brown called for an analysis of production shortages, as well as the speculation aspect cited by King Abdullah.

Brown however disagreed with the King's assessment of the causes for rising prices, pointing to the economic scenario of "oil demand rising faster than supply" as the root of the problem. Bodman similarly dismissed Abdullah's claim that higher prices are connected to speculation, stating that "there is no evidence we can find that speculators are driving future prices."

UK's Brown advocates nuclear as alternative to oil

Brown placed an emphasis on diplomacy as he called for a "new global deal" that would enable a "greater commonality of interest" between oil consumers and producers.

He also underlined the need for more investments in nuclear and renewable energy, calling for the construction of 100 new nuclear power plants and an additional 700,000 wind turbines worldwide by the year 2050.The price of a barrel of oil ten years ago was at ten US dollars.

Source: DW News

[OIL PRICES] Crude Oil Declines as China to Increase Fuel Prices Tomorrow

2008-06-19T18:21:00.003+02:00

Crude oil fell more than $4 a barrel on speculation demand will decline, after China said it will raise fuel prices starting tomorrow.

China, the second-biggest fuel consumer after the U.S., will increase gasoline and diesel prices by 1,000 yuan ($145.50) a ton, the National Development and Reform Commission said. The increases represent a 17 percent gain for gasoline and 18 percent for diesel. Oil has almost doubled in the past year, partially because of growing demand from China.

``The announcement of the Chinese fuel price increase sent the market sharply lower,'' said Michael Fitzpatrick, vice president for energy risk management at MF Global Ltd. in New York. ``This should have a big impact on demand.''

Crude oil for July delivery fell $4.10, or 3 percent, to $132.58 a barrel at 12:15 p.m. on the New York Mercantile Exchange. Futures climbed to a record $139.89 on June 16. Prices are 94 percent higher than a year ago.

Brent crude oil for August settlement declined $3.13, or 2.3 percent, to $133.31 a barrel on London's ICE Futures Europe exchange. Prices climbed to a record $139.32 on June 16.

China will also raise jet-fuel prices by 1,500 yuan a ton, or 25 percent, tomorrow, the top policy planner said. On July 1, China will increase electricity prices by an average 0.025 yuan a kilowatt-hour, or 4.7 percent. China will impose temporary caps on thermo-coal prices until the end of this year.

The government is considering a so-called environmental tax, a new levy on auto fuels and changes to existing taxes on natural-resource use, Fu Jing, deputy director of policy and legislation at the State Administration of Taxation, said at the Energy Efficiency Asia conference in Beijing today.

Developing Countries
``The developing countries, in particular China, have been driving demand growth,'' said Eric Wittenauer, an analyst at Wachovia Securities in St. Louis. ``Subsidies and price caps insulate consumers from the full impact of higher prices. By rolling them back, some of the insulation is reduced and we can expect to see a demand response.''

Oil demand will fall 240,000 barrels to 48.71 million barrels a day among the 30-member Organization for Economic Cooperation and Development, the U.S. Energy Department said in a report on June 10. The OECD doesn't include developing countries such as China.

Chinese consumption is expected to rise 440,000 barrels to an average 8.02 million barrels a day this year, according to the report.

India, Malaysia, Indonesia and Taiwan have increased fuel prices and reduced subsidies this year, a move that may cut Asian demand and slow global oil-consumption growth.

Oil rallied for the first time in four days yesterday as U.S. President George W. Bush said he doesn't expect pledges of higher supplies to emerge from a June 22 meeting of producers and consumers in Jeddah, Saudi Arabia. Prices also rose because a government report showed that U.S. crude-oil inventories fell for a fifth week.

Source: Bloomberg|By Mark Shenk

[OIL PRICES] Markets ignore Saudi oil concession

2008-06-17T23:29:00.001+02:00

Saudi Arabia's offer of a further increase in production to halt the oil price spiral failed to have any impact yesterday on markets more preoccupied with the shutdown of a North Sea oil and gas field, the weakness of the dollar and the renewed surge in product prices.

Futures contracts in New York hit a new intra-day peak of $139.89 a barrel at one stage, before closing down 25 cents at $134.61, while North Sea Brent jumped more than $2.40 to $137.52 in London, on the back of the Statoil decision to cut output from the Oseberg field by 150,000 barrels a day follow

More on oil

Sterling jumped to its highest level for two weeks on a trade weighted basis in anticipation that the Bank of England's Monetary Policy Committee will be pressured into increasing interest rates because of inflation worries, while the dollar continued to lose ground against the euro.

Figures out today are expected to show consumer price inflation in Britain is running at an annual rate of 3.1pc, well above the 2pc target level agreed with government. Mervyn King, Governor of the Bank, will have to write what analysts feel will be first of a series of letters to the Chancellor explaining why the target has been missed.

Saudi Arabia's decision to increase production by another 500,000 barrels a day followed a meeting with Ban Ki-moon, the United Nations secretary-general, in Jeddah. The increase, the second in a month, will push Saudi output to 9.7m daily barrels and comes as Saudi prepares for a meeting of oil producers and consumer governments in Jeddah to try to put a brake on rising prices.

Malcolm Wicks, energy minister, welcomed the Saudi decision but failed to get the United Arab Emirates to follow suit.

Source: The Telegraph|By Roland Gribben

[OIL PRICES] Crude Oil Drops for a Third Day Amid Economic Slowdown Concern

2008-06-17T14:14:00.001+02:00

Crude oil declined for a third day amid concerns that slower economic growth will curb consumption of oil products.

Oil has retreated more than $7 from yesterday's record of $139.89 a barrel. German investor confidence dropped to the lowest in more than 15 years in June as surging inflation hit Europe's largest economy. The U.K. inflation rate rose to the highest since at least 1997 in May, paving the way for higher interest rates.

``Worries about economic inflation on both sides of the Atlantic are bearish for oil,'' said Rob Laughlin, senior broker at MF Global Ltd. in London.

Crude oil for July delivery fell as much as $2.11, or 1.6 percent, to $132.50 a barrel on the New York Mercantile Exchange and traded at $132.92 at 12:31 p.m. London time. Yesterday, the contract touched a record $139.89.

StatoilHydro ASA, Norway's largest oil and natural-gas producer, said its North Sea Oseberg field may resume operations this week after a fire on platform A halted production June 15.

Brent crude oil for August settlement was at $132.78 a barrel, $1.93 lower, on London's ICE Futures Europe Exchange at 11:29 a.m. local time. Prices reached a record $139.32 a barrel yesterday.

Saudi Arabia, hosting a forum in Jeddah this weekend to address the impact of record prices on importers, will raise output 200,000 barrels to 9.7 million barrels a day next month, King Abdullah told United Nations Secretary-General Ban Ki-Moon, according to a UN spokesman.

`Moving Supply'
``With the pressure OPEC has seen from the Western world that they need to respond, they've been taking the tack that demand is strong,'' said Mark Pervan, a commodity strategist at Australia & New Zealand Banking Group Ltd. in Melbourne. ``That gives them a reason to start moving supply upward.''

The kingdom has called a meeting in Jeddah on June 22 to help stabilize prices. Crude oil fell 2.7 percent in New York last week as Saudi Oil Minister Ali al-Naimi described the surge in the commodity as ``unjustified'' and called a meeting of producers, major industrial nations and banks.

U.S. crude stockpiles probably dropped 1.5 million barrels in the week ended June 13 from 302.2 million barrels, according to a Bloomberg survey before tomorrow's Energy Department report. Gasoline stockpiles probably climbed 1 million barrels from 210.1 million barrels the prior week, according to the median of responses.

Source: Bloomberg|By Grant Smith

[OIL PRICES] Oil hits new all-time high

2008-06-16T16:13:00.003+02:00

The oil price spiralled to a new all-time high today of almost $140 a barrel after worse-than-expected manufacturing data for the world's biggest economy weakened the dollar.
A barrel of US crude for delivery in July hit $139.89 in US trading, breaking through the previous high of $139.12 set last week. The sharp rise startled traders, who had expected the promise of increase production from Saudi Arabia to keep a lid on the oil price.

Brent crude also hit a record high today, touching $139.32 a barrel. The jump was sparked by the latest New York State manufacturing index, which fell for the fourth time in five months. This pushed the US currency down against other major currencies, affecting the oil price, which is quoted in dollars. Oil has more than doubled in value in the last year, driven by rising demand, weakness in the dollar and traders betting that the price will keep rising. This has pushed up motoring costs for business and consumers, fuelling inflation fears.

This has caused blockades in Spain, and protests in South America and Indonesia. In the UK, drivers have also been hit by the ongoing strike action between Shell and hundreds of its drivers.

Saudi Arabia is OPEC's largest oil producer, and yesterday it tried to take some of the heat out of rising fuel prices with plans to increase production next month. The Saudi move followed a weekend of talks between the UN secretary general, Ban Ki-moon; the Saudi ruler, King Abdullah, and the country's oil minister Ali al-Naimi.

Source: The Guardian| by Graeme Wearden

[MIDDLE EAST] The Kingdom of Saudi Arabia may be getting nervous about the effects of high oil prices

2008-06-15T07:46:00.002+02:00

Saudi Arabia, the world's biggest oil exporter, is planning to increase its output next month by about a half-million barrels a day, according to analysts and oil traders who have been briefed by Saudi officials.

The increase could bring Saudi output to a production level of 10 million barrels a day, which, if sustained, would be the kingdom's highest ever. The move was seen as a sign that the Saudis are becoming increasingly nervous about both the political and economic effect of high oil prices. In recent weeks, soaring fuel costs have incited demonstrations and protests from Italy to Indonesia. Saudi Arabia is currently pumping 9.5 million barrels a day, which is an increase of about 300,000 barrels from last month.

While they are reaping record profits, the Saudis are concerned that today's record prices might eventually dampen economic growth and lead to lower oil demand, as is already happening in the United States and other developed countries. The current prices are also making alternative fuels more viable, threatening the long-term prospects of the oil-based economy.

President Bush visited Saudi Arabia twice this year, pleading with King Abdullah to step up production. While the Saudis resisted the calls then, arguing that the markets were well supplied, they seem to have since concluded that they needed to disrupt the momentum that has been building in commodity markets, sending prices higher.

Last week, King Abdullah also took the unprecedented step of arranging on short notice a major gathering of oil producers and consumers to address the causes of the price rally. The meeting will be on June 22 in the Red Sea town of Jiddah.

Oil prices have gained 40 percent this year, rising to nearly $140 a barrel in recent days and driving gasoline costs in the United States above $4 a gallon.

Some analysts have predicted that prices could reach $200 a barrel this year as oil consumption continues to rise rapidly while supplies lag.

The growing volatility of the markets, including a record one-day gain of $10.75 a barrel last week, has persuaded the Saudis that they need to step in, analysts said.

Tony Fratto, a White House spokesman, said, "We would welcome any and all increases in oil production, including from Saudi Arabia."

But the measure carries some risks to the kingdom and is not guaranteed to bring down prices, analysts said. Some investors doubt that Saudi Arabia has the capacity to increase its production beyond its current levels.

"This clearly represents the biggest test for them," said John Kilduff, a senior vice president at the brokerage firm MF Global, who said the move could backfire if investors failed to respond to the extra Saudi supplies. No other producer has the capacity to quickly expand production.

Source: The New York Times |By Jad Mouawad

[GEOPOLITIC] Russia is biggest oil producer. International Energy Agency

2008-06-11T00:56:00.003+02:00

The International Energy Agency says Russia has turned into the biggest crude oil producer, a title traditionally belonged to Saudi Arabia.

The International Energy Agency declared on Tuesday that Russia has been the biggest crude oil producer in the first quarter of 2008, extracting 9.5 million barrels per day, ahead of Saudi Arabia at 9.2 million barrels, AFP reported. The International Energy Agency ranks the United States as the third-biggest producer with 5.1 million barrels per day, followed by Iran, pumping 4 million barrels per day

China is in fifth place with output of 3.8 million barrels per day. In principle, Russia's oil bonanza could continue for years: it has the world's seventh-biggest oil reserves, at 80 billion barrels, according to BP, a British oil firm.

And oilmen reckon there are 100 billion more barrels to find--"the biggest exploration prize in the world", in the words of Robert Dudley, the boss of TNK-BP, BP's Russian joint venture.

Source: PressTV

[NOTH AMERICA] Environmental group worried about effects of production. Report decries oil sands waste

2008-06-06T11:58:00.003+02:00

Refinery expansions in the U.S. focused on processing crude from Canadian oil sands show an entrenched reliance on fossil fuels even as concerns grow about the effects of oil sands production, an environmental group said Wednesday. Such multibillion-dollar investments illustrate a long-term shift in refining toward so-called heavy oil, which requires more energy-intensive production and prompts worries about emissions and waste runoff, the report's authors said.

"The first step is to start with awareness of what it means," said Eric Schaeffer, a former Environmental Protection Agency lawyer who is director of the Washington-based Environmental Integrity Project, an advocacy group that produced the report.

"This is an intensely wasteful way to feed an oil habit," Schaeffer said.

Canada is the biggest exporter of oil to the U.S., sending more crude than Mexico, Venezuela and Saudi Arabia. And with an estimated 173 billion barrels of reserves, Canada's bounty is second only to Saudi Arabia's.

The oil sands now produce 1.3 million barrels a day, which could ramp up to 3 million barrels a day by 2015, according to the Canadian Association of Petroleum Producers.

More and more companies have jumped into the oil sands game as high oil prices have made its costly production economical. The world's five largest oil companies, as well as Canadian producers and some independent explorers and producers, have sands operations or joint ventures.

But as oil sands production has increased, so have concerns about increases in emissions and possible releases of toxic waste into waterways.

Emissions from oil sands production far exceed those from conventional crude production. Waste in some operations sits in so-called "tailing ponds" visible from space, the report said.

In late April, nearly 500 migrating ducks died after landing in a Syncrude Canada tailing pond. Such ponds are required to have noise devices to scare off birds, but Syncrude's devices weren't working in the aftermath of a snowstorm. The Canadian government is investigating.

Schaeffer acknowledged that pushing to cease oil sands production isn't practical.

The report noted that refinery expansions and new construction are long-term investments, indicating that the U.S. intends to receive and refine Canadian crude for many years to come.

So instead of recommending an end to production and refining of oil sand crude, the report calls for the U.S. to reduce oil consumption by improving efficiency standards for vehicles; raise emissions control standards; consider alternatives to oil derived from the sands in Clean Air Act reviews of proposals for refinery expansion and construction; and account for sulfur, nitrogen, and other impurities in heavy oil when issuing construction permits.

Expansions are expected to add 800,000 barrels a day of refining capacity by 2011, according to the American Petroleum Institute.

A new refinery hasn't been built in the U.S. since 1976. A proposal to build one is under consideration in Arizona. Another proposal for a plant was approved this week by voters in Union County in South Dakota.

Bill Holbrook, spokesman for the National Petrochemical & Refiners Association, said 22 expansion projects are ongoing, though not all are related to adding Canadian oil capacity.

Cindy Schild, manager of refinery issues for the American Petroleum Institute, said Canada is stable, friendly and open to outside producers. It stands apart from resource-rich countries like Venezuela or Russia that have squeezed access, or ones in the Middle East and West Africa that are vulnerable to geopolitical tensions or civil violence.

"We view the Canadian oil sands as a reliable source of energy," she said.

She added that refiners have little choice but to revamp plants to handle heavy oil like that produced in Canada and other countries, including Venezuela. Heavy oil contains more impurities than light, sweet crude from the Middle East, and requires more complicated processing to turn it into gasoline and other fuels.

Also, Schild said, if U.S. refineries eschew Canadian oil, China and other energy-hungry emerging countries will take it.

"Do you want it to be processed in a country with standards in place to address environmental impacts maybe more stringently than others? It's going somewhere," she said.

Source: Houston Chronicle|By KRISTEN HAYS

[OPEC] Indonesia quits Organization of Petroleum Exporting Countries

2008-05-28T22:56:00.002+02:00

Declining oil reserves and investment have forced Indonesia to quit the Organization of Petroleum Exporting Countries even as other members cash in on soaring global prices, the energy minister said Wednesday. Susilo Bambang Yudhoyono, said Southeast Asia's only Organization of Petroleum Exporting Countries member no longer belonged among exporting heavyweights like Saudi Arabia, Venezuela and Kuwait.

"Indonesia is pulling out of OPEC," he told reporters, days after his government slashed fuel subsidies that have long protected the poor, forcing prices at the pump to jump by nearly 30 percent. "We are not happy with the high oil price."

Indonesia is the region's largest oil producer, but the nation of 235 million people has had to import for years because of aging wells and disappointing exploration efforts. A weak legal system and red tape has scared foreign investors away, even as consumption rises.

Purnomo said the decision to leave Organization of Petroleum Exporting Countries was made by the Cabinet of President Susilo Bambang Yudhoyono, who said earlier this month the country needed to concentrate on increasing domestic production.

Indonesia, which was among the first to join after Organization of Petroleum Exporting Countries was founded in 1960, will remain a member until the end of the year. It will leave open the option of returning if it can build up a surplus. But right now, the energy minister said, we "are a consuming country."

The nation's oil production of roughly a million barrels a day is at its lowest level in 30 years.

Victor Shum, an energy analyst with Purvin & Gertz in Singapore, said pulling out of Organization of Petroleum Exporting Countries will save Jakarta the $3.1 million annual fee, but cost it some prestige on the international scene.

"I don't see any substantive loss, other than on the prestige," he said. "They have been an oil importer ... they really have not had much influence within the OPEC organization."

Former Organization of Petroleum Exporting Countries Secretary General Subroto, who like many Indonesians goes by only one name, said giving up the seat on the 13-member body would strip the country of its ability to influence global oil prices during times of crisis.

"If we remain in Organization of Petroleum Exporting Countries there is some obligation from other members, if problems arise, to assist us," he said, adding that in his mind there was "no benefit" to leaving.

Indonesia, which has heavily subsidized fuel for decades, was facing a deficit with global oil prices now hovering at around US$130 a barrel. Its 2008 budget was drafted using an average price of US$85 a barrel for the whole year — a figure later revised to US$95.

The government began reducing fuel subsidies in 2000, but still spends billions of dollars to help consumers cover the costs of gasoline, diesel, and kerosene, which is used by low-income families for cooking.

Even after last week's hike, the rich and poor alike still pay just US$2.80 for a gallon of gas.

Purnomo said the long-term policy was to eliminate subsidies altogether, because they undermine market forces and encourage smuggling to other countries. But he said another increase was not expected this year.

Last week's subsidy cut triggered small but rowdy protests by students and workers, but was hailed by economists who said Susilo Bambang Yudhoyono, had taken the biggest step he could without threatening economic growth.

Others argued that with the government still subsidizing 57 percent of retail transport and cooking fuels, it did not go far enough.

Indonesia joined Organization of Petroleum Exporting Countries two years after it was founded. An oil boycott by Arab members of the cartel against Western countries in 1973 was responsible for sparking an oil crisis, which quadrupled world crude prices to previously unknown levels.

Source: Associated Press|By ANTHONY DEUTSCH

[MIDDLE EAST] Oil production meets demand. Saudi Arabia

2008-05-20T13:22:00.002+02:00

The current level of oil production is fulfilling market demand, Saudi Arabia's Oil Minister Ali Al-Naimi said in remarks carried by the state news agency.

"Saudi Arabia is permanently seeking to take into consideration the interest of consumers and producers and to achieve a balance between supply and demand," SPA quoted Ali Al-Naimi as saying at a cabinet meeting chaired by King Abdullah.

"The kingdom sees that quantities produced at the present time fulfil the market needs ... and that the production capacity can meet any additional and real energy needs," he added.

Saudi Arabia, the world's largest oil exporter and the Organization of the Petroleum Exporting Countries' most influential member, said on Friday it had raised output by 300,000 barrels per day.

Al-Naimi announced the increase while US President George W. Bush was visiting Riyadh.

Bush said on Saturday that he was pleased with the Saudi decision to boost output but that it was insufficient to solve problems in the world's largest energy consumer.

High oil prices are weighing on a US economy already hit hard by a housing slump and credit crisis.

Source: Reuters

[OPEC] Organization of Petroleum Exporting Countries crude output increase ruled out

2008-05-18T07:16:00.004+02:00

Iran's oil minister yesterday rejected any idea of Organization of Petroleum Exporting Countries raising production, saying it would fail to ease record prices as the market was already "saturated" with oil. Gholamhossein Nozari also dismissed as a "political move" Saudi Arabia's announcement on Friday of a modest hike in output after an appeal from visiting US President George Walter Bush.

"No, the market is saturated with oil and a hike in production does not have an impact on the price," Nozari told reporters when asked whether the Organization of Petroleum Exporting Countries would increase production.

Oil prices have risen six-fold since 2002 and doubled since last year as rising demand from China and other developing nations cinched spare production capacity, adding pressure on the US economy already hard hit by a housing slump.

Organization of Petroleum Exporting Countries's smallest producer, Ecuador, said on Friday that members should consider raising output to stem the oil rally because high prices are hurting the poor.

But Iran, Organization of Petroleum Exporting Countries's second-largest producer after Saudi Arabia, says the market is well-supplied with oil and blames the price rise on a weak US dollar, speculation and other factors outside the control of the 13-member cartel.

Oil shot to a record high near $128 a barrel on Friday as a bullish price forecast from investment bank Goldman Sachs drowned out the offer of more supply from Saudi Arabia.

George Walter Bush said yesterday he was pleased with a boost in Saudi oil output but it did not solve problems in the US.

Asked whether he was satisfied with the Saudi oil output boost, Bush said King Abdullah summoned his energy minister. "It's something but it doesn't solve our problem," Bush said. "Our problem in America gets solved if we expand our refining capacity, promote nuclear energy and continue our strategy for the advancement of alternative energies."

Source: Gulf Daily News

[NORTH AMERICA] U.S. Congress votes to stop stockpiling oil

2008-05-14T21:29:00.005+02:00

The House and Senate demanded on Tuesday that President George W. Bush halt the shipment of oil to the country's strategic petroleum reserve as long as oil prices remain high.

"Sticking oil underground is wrong at this point in time," Senator Byron Dorgan, Democrat of North Dakota, said as he urged approval of a measure offered by Senator Harry Reid of Nevada, the Democratic majority leader.

The Senate voted, 97 to 1, to tell Bush to halt the shipments to the strategic reserve, the supply of just over 700 million barrels that is stored in salt caverns along the Gulf Coast. The reserve is meant to protect the United States of America against a disastrous sudden cutoff of oil supplies, like the Arab embargo of the 1970s.

Tuesday evening, by a vote of 385 to 25, the House passed legislation that would suspend deliveries to the stockpile while the price of oil was above $75 a barrel, a measure that is similar to the Senate's.

The Bush administration has opposed the measures. Given the sentiment in the two legislative chambers, any veto of the measure by Bush would probably be overridden. But the Senate measure is part of another bill, while the House version is a stand-alone item, so there are some procedural hurdles that must be overcome before the oil-cutoff move can emerge from the full Congress.

Bush has argued that the 70,000 barrels a day now being added to the reserve is insignificant, compared with the country's overall consumption of oil. On that point, even some supporters of Reid's measure agreed. The United States consumes just under 21 million barrels of oil a day, according to the Energy Department.

Senator Pete Domenici of New Mexico, the ranking Republican on the Energy and Natural Resources Committee, conceded that stopping the shipments to the reserve might be largely a symbolic step. Even so, he said, "this is one little thing we can do, and I think we should go ahead and do it."

The president has argued that shipments to the reserve, which is now about 97 percent full, should be continued until the stockpile reaches its capacity of 727 million barrels. But most lawmakers said the 70,000 barrels a day, while only a tiny fraction of America's daily consumption, would be better used to add supplies to the overall market, especially with oil now trading for more than $120 a barrel in the spot and futures markets.

Bush was preparing to depart for the Middle East on Tuesday, and there was no immediate word from the White House about whether Bush would definitely veto the oil measure.

Only Senator Wayne Allard, a Colorado Republican who is not seeking re-election, voted against the measure, which took the form of an amendment to a flood insurance bill that was approved by a vote of 92 to 6.

Reid called the petroleum-reserve cutoff "a good first step" and said Republicans "must abandon their shortsighted strategy of 'drill, drill, drill.' "

Shortly after the vote, Senate Democrats introduced legislation, timed to coincide with the president's trip to the Middle East, to stop a scheduled arms sale to Saudi Arabia unless that country steps up its oil production.

"When the President meets with King Abdullah on Friday, we cannot settle for a smile, or a handshake, or even a glimpse into his soul," said Senator Charles Schumer of New York. "We need a commitment to pump more oil. If Saudi Arabia and other OPEC countries do not substantially increase production, we in Congress will block their lucrative arms deals."

Both the president and Vice President Dick Cheney have called on the Saudis to increase their output of oil.

Earlier Tuesday, the Senate rejected an amendment offered by Senator Mitch McConnell of Kentucky, the Republican minority leader, that would have opened part of the Arctic National Wildlife Refuge for oil exploration. That proposal, which needed 60 yes votes on a procedural motion to move ahead, got only 42, while 56 Senators voted no, effectively killing the amendment.

Senators Hillary Rodham Clinton of New York and Barack Obama of Illinois interrupted their campaigns for the Democratic presidential nomination to vote to halt shipments to the petroleum reserve. Senator John McCain of Arizona, the presumptive Republican nominee, was not present.

Source: International Herald Tribune| By David Stout
Published: May 14, 2008

[OIL MAJORS] As Gazprom's chairman moves up, so does Russia's most powerful firm

2008-05-11T14:59:00.008+02:00

On a frigid evening in February, the hottest place to be here was the Kremlin Palace theater. The draw inside the towering hall wasn't Tina Turner or Deep Purple — rock icons well past their prime — but Gazprom, Russia's most powerful corporate leviathan, which was celebrating its 15th anniversary.

Gazprom certainly had reason to party: its chairman, Dmitri Medvedev, was riding high on the Russian campaign trail as the hand-picked successor of President Vladimir Putin. Although Gazprom forked over a handsome sum to book Turner and Deep Purple, Medvedev's favorite band, the opportunity for the company, the world's biggest producer of natural gas, to have its own man installed as Russia's next leader was priceless.

"The gig at the Kremlin was fun, but it wasn't wild," Ian Gillan, Deep Purple's frontman, wrote in an article for The Times of London after the show. "The young guys and more junior staff were all up on their feet, although they were looking nervously over at their bosses to see whether they could loosen their ties. It was as if they were asking, 'How much fun are we allowed to have?' "

Medvedev was sworn in as president on Wednesday, after winning the election in early March, and his ascent confirms that in today's Russia, the line separating big business and the state is becoming so fine that it's almost nonexistent.

Gazprom and the government have long had a close relationship, but the revolving door between them is spinning especially fast this year: Medvedev, 42, replaces Putin as president; Putin becomes prime minister, replacing Viktor Zubkov; and Zubkov is expected to take Medvedev's place as Gazprom's chairman at a general shareholders meeting in June. Medvedev and Putin "are as close to a dream team as Gazprom could ever hope for," said Jonathan Stern, a British energy analyst and author of "The Future of Russian Gas and Gazprom."

It's hard to overemphasize Gazprom's role in the Russian economy. It's a sprawling company that raked in $91 billion last year; it employs 432,000 people, pays taxes equal to 20 percent of the Russian budget and has subsidiaries in industries as disparate as farming and aviation.

The company is a major supplier of natural gas to Europe, and it is becoming an important source of gas to fast-growing Asian markets like China and South Korea. In 2005, at the urging of the Kremlin, it bought Russia's fifth-largest oil company from the tycoon Roman Abramovich. If crude oil and natural gas are considered together, Gazprom's combined daily production of energy is greater than that of Saudi Arabia.

With energy prices continuing to hit record highs, Gazprom is more influential than ever, both at home and abroad. Gazprom says that before 2014 it will surpass ExxonMobil as the world's largest publicly traded company — a goal that Medvedev himself endorsed before he became president.

When Putin was still president, he used Gazprom's wealth and economic might to fight political enemies inside Russia, to reassert influence over former Soviet republics, to gain leverage over West European countries by increasing their dependence on Russian gas, and to wrest Russian energy assets back from foreign companies.

Now that Russia is seeking to reclaim the geopolitical clout it had in Soviet days, it is wielding its vast energy resources, rather than missiles, to reassert itself. More often than not, its most potent artillery is Gazprom itself.

In a news conference last year, Putin denied that Russia uses its economic might to achieve foreign policy goals. But others disagree. "Energy should not be used for a policy tool, but it is," said Vladimir Milov, president of the Institute of Energy Policy, an independent research organization in Moscow, and a former deputy minister of energy. Gazprom, he said, has at times been a "tool of punishment for neighboring countries."

At a Gazprom worksite in the Yuzhno-Russkoye field in Siberia one day last winter, it was so cold that two dozen diesel engines were left roaring day and night, lest they would freeze until spring. Every winter, some Russian roughnecks get frostbite.

"Your skin just peels a little," said Sergei Koshel, a drilling supervisor, dismissing the dangers. Another burly man, taking a break from the rig, pantomimed the issue more graphically, reaching up to his ear, pinching off a phantom piece and flicking it away like a cigarette butt.

The Yuzhno-Russkoye field alone has proven reserves of 800 billion cubic meters of natural gas, or enough to meet the gas demand in the United States for more than a year, and it is only the first of half a dozen huge developments that are planned in the north. Over the next two years, Gazprom plans to triple its capital outlays in its core business of exploring, extracting and transporting gas — just to maintain its current production levels. Investments will rise to 969 billion rubles, or $45 billion, in 2010 from 330 billion rubles, or $14 billion, last year.

To help finance a heady expansion into the Arctic, Gazprom is working on ways to push up natural gas prices in Russia and in the export market.

Last year, it floated the idea of creating a cartel for natural gas, similar to OPEC's oil cartel. Iran supports the idea, but Algeria, Qatar and others are uncommitted. A gas cartel would allow Russia to increase its influence in global energy markets, but at this point it's unclear how hard it will push the concept.

Gazprom's ties to the government are already paying dividends in the domestic market. Under a policy championed by Medvedev when he served as deputy prime minister, Russian consumers are going to have to pay starkly higher prices for natural gas. Prices are set to rise about 25 percent a year, starting this year, with the goal of reaching parity with world energy prices by 2011.

Policies like this mean that average Russians won't continue enjoying their traditional access to cheap energy, and they offer a stark example of the government's willingness to give Gazprom a leg up — regardless of the social fallout. Just as Gazprom's riches make it a proxy for Russia's newfound power and prestige around the world, the company also epitomizes the risks of state capitalism: waste and inefficiency.

Back in the 1990s, Gazprom was the archetype of the unreformed Soviet enterprise. While oil companies were being privatized and sold to Russian, and even foreign, investors, Gazprom stayed intact and under government control. It bankrolled many of the Kremlin's pet projects and the high-rolling lifestyle of a generation of company executives.

Gazprom says that many of the investments that critics once labeled political, such as the purchase of television stations and newspapers, have in fact turned out highly profitable.

Now Russian leaders consider Gazprom the template for a new industrial policy. In a globalized world, their thinking goes, strategic Russian companies should be controlled by the government, yet open to the capital and skill of Western investors — just as Gazprom is. It's a throwback to the Soviet economic model, with an emphasis on gigantism and economies of scale and faith in the pricing power of monopolies.

Under Putin, oil companies were brought back under the Kremlin's control, and dozens of state-controlled but publicly listed corporations sprung up in industries like energy, metals, aviation and auto manufacturing. It won't end there. A former first deputy prime minister, Sergei Ivanov, who is also chairman of the state-owned Unified Aircraft Corporation, has proposed forming state corporations for radio electronics, optics and space ventures.

Rich as it is, Gazprom faces big challenges in the Medvedev era.

Rising prices for steel, equipment and labor have caught the company at the outset of its largest capital program in two decades. Like other Russian companies, it invested little money maintaining or upgrading equipment in the 1990s. But the days of coasting on Soviet-era infrastructure are over, as output declines from fields first tapped in the 1970s.

To meet export commitments in Europe, as well as growing demand at home, Gazprom will have to spend at least $75 billion to bring its two largest fields in the Arctic into production within the next decade, according to Cambridge Energy Research Associates.

Yet exploring and extracting gas in a region where temperatures dip to 50 degrees below zero is technologically challenging, as well as expensive. Gazprom must build pipelines, gas processing plants, liquefied natural gas factories and a full panoply of supporting infrastructure like roads, railroads and ports. And to accomplish those feats, it moves thousands of tons of steel and heavy equipment to the middle of a vast, frozen swamp.

"The complexity and the size of it is what creates a huge challenge for Russia and for Gazprom," said Vitaly Yermakov, director of research for the Russian and Caspian region at Cambridge Energy Research Associates.

Critics say that Gazprom muscled its way into the ranks of the world's energy giants with blatant and often ham-handed tactics, particularly during the Putin years. The Yuzhno-Russkoye field, which Gazprom points to as an example of its resurgence, is a case in point. Richard Moncrief, a Fort Worth oilman, says he is the rightful owner of 40 percent of the field, which he says he bought in a series of agreements with Gazprom about a decade ago. But he says that Gazprom didn't recognize his contract, instead granting BASF, a Germany company, a 35 percent stake in the field. Moncrief is suing Gazprom in Berlin, contending that his stake is now worth $12 billion.

Gazprom maintains that the agreements were not binding: "The company denies any obligations toward Moncrief Oil in relation to the Yuzhno-Russkoye field," the company said in a statement.

Moncrief disagrees, but is pessimistic about his legal position. "Nobody has ever gotten a Russian company into a court that could enforce a contract," he said in a telephone interview. "In the end, the Russians are going to do exactly what they want to, and they're going to ride the back of Western commerce to fund their country."

Western executives say that the Kremlin is always on call whenever Gazprom needs a boost.

Last year, TNK-BP, a Russian joint venture involving BP and the Alfa Group, Access Industries and the Renova Group, agreed to sell Gazprom a vast Siberian gas field after Russian authorities threatened to cancel the venture's license to operate there. Gazprom offered $700 million to $900 million for TNK-BP's stake in the field and a local gas distribution company. It is a complex deal that has yet to close. Whatever its terms, analysts say, they would hardly compensate BP for the field, Kovykta, which is thought to hold immense gas supplies — and for the millions of dollars that the venture had already invested there.

Gazprom's spokesman, Sergei Kupriyanov, says that Gazprom is not responsible for TNK-BP's regulatory troubles and that the terms reflect market conditions.

Other deals involving Gazprom have followed similar patterns. In transactions involving both Shell and BP, Putin met directly with corporate executives. For a time, Kremlinologists thought that he might segue into the chairman's job at Gazprom; executives say Putin, a former spy, shows a keen interest in the oil and gas business.

"The president clearly knows as much about BP's business in Russia as I do," Anthony Hayward, BP's chief executive, said after a meeting last spring, during negotiations to sell the Kovykta gas field to Gazprom. "I stopped being surprised by his attention to detail some time ago."

A Kremlin spokesman, Dmitri Peskov, said at the time that the government's role in these talks was limited to regulatory issues.

In the first year of his presidency, Putin turned to Gazprom to buy out an opposition television station, NTV. Since then, the company's politically tinged media business has ballooned, but its finances are often opaque because of complex partnership agreements.

When Gazprom raised prices on newly democratic countries ringing Russia, like Ukraine, the Kremlin's foreign policy and Gazprom's commercial interests were symbiotic; punishing the Kremlin's opponents also brought the company revenue.

With Gazprom contractually bound to export to European customers far into the future, the pain of any production lapses will be borne by average Russians in the form of gas shortages, analysts say.

Kupriyanov denied that Gazprom faces a production shortfall. The company, he said, is developing fields specifically to meet the needs of customers in Europe holding long-term contracts.

He added that the company is shedding many of the sideline businesses that had been a target of criticism for financial analysts, to focus on its capital investment program. Just in 2007, for example, the company sold noncore assets worth 38 billion rubles, or $1.6 billion.

Such assurances, though, have not quieted critics of Aleksei Miller, a Putin appointee expected to stay on under Medvedev as chief executive of Gazprom.

Mikhail Delyagin, a former economic adviser to President Boris Yeltsin, is skeptical of Gazprom's ability to deliver the new gas on time or on budget. Gazprom's resources have been tapped for so many political and sideline business ventures that it has become a financial company more than an energy company — threatening its capacity to continue pumping gas, Delyagin said.

"Miller turned Gazprom into the Kremlin's wallet," he said. "You cannot drill a hole with a wallet."

And yet, with oil at more than $125 a barrel, Gazprom's wallet is becoming fatter every year. After Medvedev's inauguration last week, Gazprom's value surpassed those of General Electric and China Mobile, making Gazprom the world's third-largest company by market value.

"If they can bite the bullet and raise domestic prices, this company has a real shot at becoming the world's largest," said James Fenkner, the managing partner at Red Star Management, a hedge fund that holds Gazprom stock. "It is not that far off."

Source: International Herald Tribune| by By Andrew E. Kramer

[OIL PRODUCTION] OPEC pumps 31.87 million barrels per day of crude oil in April, down 350,000 b/d., Platts survey

2008-05-11T14:48:00.002+02:00

The 13 members of the Organization of Petroleum Exporting Countries (OPEC) pumped an average 31.87 million barrels per day (b/d) of crude oil in April, a 350,000 b/d decrease from March, according to a Platts survey of Organization of Petroleum Exporting Countries and oil industry officials released Friday. The sharp drop was largely the result of steep output losses in Nigeria.

Excluding Iraq, the 12 members which participate in output agreements pumped an average 29.49 million b/d, 360,000 b/d down from an estimated 29.85 million b/d in March.

“Organization of Petroleum Exporting Countries production has been relatively steady in recent months, but the sharp fall in Nigerian output shows how vulnerable overall supply from the group can be to developments in one country,” said John Kingston, Platts global director of oil. “Given that spare capacity is also relatively tight, any disruption has a bigger impact on markets.”

Ongoing losses in Nigerian supply as a result of continuing strife in the Niger Delta were exacerbated by a week-long pay strike at ExxonMobil, which shut down most of the company’s 800,000 b/d of production and forced it to declare force majeure on exports from the 400,000 b/d Qua Iboe terminal. Other smaller decreases came from Angola, Iran, Qatar, Saudi Arabia and Venezuela.

Iraqi volumes were a shade higher at 2.38 million b/d, with a slight dip in exports offset by slightly higher internal supply. Libyan output also edged up, to 1.75 million b/d from 1.74 million b/d in March.

The latest estimates show the OPEC-12 missing their 29.673 million b/d output target by 183,000 b/d.

Source: Fox Business