Mubadala unit takes 20% stake in Shell’s oil venture

Posted on April 2, 2008

Mubadala unit takes 20% stake in Shell’s oil venture Staff Report GULF NEWS Published: April 01, 2008, 15:36

Dubai: Mubadala Development Company (Mub-adala) yesterday said its wholly-owned subsidiary Liwa Energy has purchased a 20 per cent stake in Shell’s current exploration and production ventures in Algeria.

Shell holds two production sharing contracts in the Reggane Djebel Hirane and Zerafa permits in Algeria where it is conducting an exploration and appraisal campaign in partnership with Sonatrach, the Algerian national oil and gas company.

The revised interests in the Reggane Djebel Hirane and Zerafa Production Sharing Contracts give a 25 per cent share to Sonatrach (carried interest during exploration), 60 per cent to Shell affiliates and 15 per cent to Liwa Energy.

The new agreement highlights Mubadala’s increasing interest in Algeria, where the company has already made a number of significant investments in the energy sector, including several power stations and oil and gas projects.

Among these is the Hadjret Independent Power Project, which represents over a fifth of today’s generation capacity in Algeria with initiatives including a natural cycle gas fired power station in Tipaza. Mubadala is also involved in the construction of the first Algerian aluminium smelter at Beni Saf.

The exploration agreement is part of a strategic alliance formed in 2005 between Mubadala and Shell to cooperate in the economic development of new and existing hydrocarbon resources, pursue research and development of economically viable and environmentally acceptable energy solutions in the Middle East and North Africa.

The agreement also provides Mubadala learning and development opportunities with Shell.

India will shift focus to Angola

Posted on April 2, 2008

India will shift focus to Angola
Bloomberg Published: April 01, 2008, 00:41

New Delhi : India, Asia’s third-largest consumer of oil, will focus on obtaining energy assets in Angola after failing to secure supplies closer to home.

“Angola is the next country where we are going to concentrate,” Indian Oil Minister Murli Deora said in an interview in New Delhi. “We lost because our bid wasn’t good enough” in previous auctions, he said. “We have learned from this,” the minister said.

State-run explorers from India and China have submitted bids for oil blocks in Angola as the world’s two most populous nations need imports to sustain economic growth. India’s oil shortage has spurred Deora to turn to Angola, Opec’s fastest-growing member with reserves equivalent to 11 years of India’s imports, after losing out to China in $10 billion of auctions.

India’s energy independence has been threatened because it hasn’t been able to increase production at home, where output from three-decade-old fields is declining. India will also compete for oil in Nigeria, Africa’s biggest producer, and Sudan.

“India has to acquire assets overseas. There is no other way,” said Prashant Periwal, an analyst at B&K Securities in London. “China has slowly and steadily spread across most of Africa and is sitting on huge resources. For fuel security, you have to take control of supplies.”

India has been beaten by China to auctions for energy assets in Kazakhstan and Myanmar in the past three years. India has offered to build ports and railways in Nigeria and Sudan, copying tactics used by China.

The South Asian nation hosted a two-day India-Africa conference in Nov-ember to discuss oil cooperation, where Deora offered to build refineries and pipelines.

India sought stakes of as much as 32 per cent in two fields in Sudan, R.S. Butola, managing director of ONGC Videsh, said during the November conference in New Delhi.

Deora will travel to Venezuela next month to complete an agreement to acquire a stake in fields in the biggest crude-exporting nation in the Americas.

The bidding has been delayed after Angola extended the deadline indefinitely.

Statistics: Growing demand

– India, the fastest-growing economy after China, estimates demand for oil will rise 62 per cent over the next five years to 241 million tonnes a year.

– ONGC Videsh Ltd., the overseas exploration unit of Oil & Natural Gas Corp, India’s biggest producer, will invest up to $356 million in a venture with state-owned Petroleos de Venezuela SA, to operate the San Cristobal area.

– ONGC Videsh and China Petroleum & Chemical Corp., Asia’s largest refiner, are among 43 companies that will bid to explore for oil in Angola, according to state-run Sonangol SA.

– The African nation is offering 11 licences for fields with a potential of 9.6 billion barrels of oil reserves, Sonangol said on its website.

There seems to be a good chance oil prices are going to stay hot

Posted on April 2, 2008

There seems to be a good chance oil prices are going to stay hot By Leah Bower, Special to Gulf News Published: April 01, 2008, 00:41

Summer is just around the corner, along with that seasonal hike in energy prices.

And since the traditional lull in oil prices that comes between winter’s cold and summer’s heat failed to, er, lull this year – we’ve seen record highs throughout the last month when the price per barrel should be at its lowest. And there seems to be a good chance that prices are going to stay hot, hot, hot.

We’ve heard it all before, but Opec and analysts are continuing to beat the “weak fundamentals” drum while prices shoot through the stratosphere.

For now, we can thank the unwelcome combination of the weak dollar and institutional investors searching for a safe haven as stock markets around the world fluctuate.

Commodities have become increasingly attractive as the United States economy officially slips closer to recession and the dollar continues to lose steam.

Witness gold spiking to an all-time high of $1,030.80 an ounce on March 17, and oil following suit with a record high of $111.80 a barrel at about the same time.

Even corn is seeing some record numbers. And with every price dip, talk surfaces that the bubble is bursting and prices will once again stabilise at reasonable levels.

However, if you watch the dips carefully they never go very low and are pretty short-lived.

Sure, oil is down a little at the start of the week. It has dipped a couple of times this year, but never very low and it has always shot back up.

Those investors who’ve been crowding into commodities also decided to shift gears a little on speculation that the US Federal Reserve might crack down on inflationary pressures, which could subdue the growth in commodity prices.

But all it took was a damaged pipeline in Iraq to send prices soaring last week, despite the fact that an insignificant – compared to overall Opec output – of black gold flows out of the war-torn nation.

There is no question that oil’s price is confounding, and even angering, everyone from Opec oil ministers to analysts who keep revising price projections downward, only to see their predictions pushed aside by what many are seeing as irrational investors.

Ali Al Yabhouni, the UAE Opec governor, pointed the finger at speculators earlier this week, telling an energy conference in Dubai that the market has sufficient supply of crude oil, and that Opec is not in the habit of catering to the appetites of investors.

Regardless of how you feel about Opec, and its current policy of keeping oil production at current levels, Al Yabhouni has a pretty strong point.

Why should Opec pump more oil when every indicator points to lower demand in the near future?

Reserves are rising and despite US President George W. Bush’s push for more crude on the market, the general consensus is that there is enough oil to go around despite strong demand from India and China.

Every indicator is also pointing to a recession in the United States. Studies show that American consumers are increasingly choosing to spend less as the housing market continues to head downwards, and eventually that will mean spending less at the pump.

Despite these factors, we’ve already seen the market climb towards and maintain what most analysts have considered an unreasonable price level, ignoring traditional fundamentals in the process.

Energy analyst Stephen Schork even vented to the Wall Street Journal that oil’s rise proves “once again that markets can remain illogical far longer than you or we can remain solvent.”

– The writer is a freelance journalist based in Alaska, USA.