Information – Oil Gas Future Energy
There seems to be a good chance oil prices are going to stay hot
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.
India will shift focus to Angola
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.
Mubadala unit takes 20% stake in Shell’s oil venture
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.
UAE Opec governor says oil market well-supplied
UAE Opec governor says oil market well-supplied
Reuters Published: March 31, 2008, 00:09
Dubai: Oil markets are well-supplied with inventories of crude oil and refined products over their five-year average, the Organisation of Petroleum Exporting Countries (Opec) governor of the United Arab Emirates said on Sunday.
The weakness of the US dollar has amplified the rise in oil prices, which was partly due to speculation, Ali Al Yabhouni told an energy conference in Dubai.
“The market is sufficiently well-supplied and what proves my argument are inventories; they are over and above the five-year average for crude and refined products,” he said.
“It is not only fundamentals that are driving prices. It is very complex and there are many different players contributing to oil price movements.”
Al Yabhouni said producers decide their output policy based on oil market fundamentals, but cannot cater for the appetite of financial speculators. “We are looking at supply of oil, we see demand and try to match it. Financial demand is something else,” he said.
Opec left its output steady at a meeting earlier this month despite calls from consuming countries for more oil to halt the record rally. The weak dollar and rising cash flows from hedge funds helped send crude oil prices to a record high of $111.80 a barrel in mid-March. US crude closed at $105.62 on Friday.
Al Yabhouni said earlier this month Opec would not react to speculative oil price movements when market fundamentals were balanced. Opec officials have long insisted factors beyond their control are fuelling oil’s rally.
“One reason the price is high is the weakness of the dollar,” said Al Yabhouni. “If you look at it in other currencies such as the yen and the euro oil is very affordable. So, yes, the price looks high in dollars but not in other currencies.”
Oil prices fall in Asian trade
Oil prices fall in Asian trade
20 Mar 2008, 1326 hrs IST,AFP
SINGAPORE: World oil prices continued to fall in Asian trade on Thursday, with more volatility expected as investors continue to assess the US economy, dealers said.
In early morning trade, New York’s main contract, light sweet crude for May fell 60 cents to USD 101.94 per barrel from its close of USD 102.54 during floor trading in the US on Wednesday.
The April contract had expired on Wednesday at USD 104.48 a barrel, after plummeting USD 4.94. The contract had hit a record peak of USD 111.80 on Monday.
London’s Brent North Sea crude for May dropped 60 cents to USD 100.12 a barrel, after settling at USD 100.72 on Wednesday.
The commodities market is in a situation where “investor sentiment is potentially shifting” as they reassess the outlook for the US economy, said David Moore, a commodity strategist at the Commonwealth Bank of Australia in Sydney.
“The market has been extremely volatile over the last week, and it is very difficult to say with any confidence when prices could bottom or turn around,” said Moore.
Traders continued to focus on the global credit squeeze amid concerns over the impact it might have on global economic growth and oil demand, and largely overlooked the headline US energy inventory data showing a smaller-than- expected rise in crude supplies.
The US Energy Information Administration (EIA) said crude stocks rose by just 200,000 barrels to 311.8 million barrels in the week ended March 14, about average for this time of the year.
Markets were expecting stocks to rise by around 2.3 million barrels.
IPIC, Uzbek companies sign MoUs to set up JVs
IPIC, Uzbek companies sign MoUs to set up JVs
(Wam)19 March 2008
ABU DHABI – The International Petroleum Investment Company (IPIC) signed two MoUs yesterday with Uzbekistan’s oil and gas and chemical companies to set up joint venture projects in the Republic of Uzbekistan.
The MoUs were signed in the presence of Elyor Ganiev, Minister of Foreign Economic Relations, Investment and Trade of Uzbekistan.
Opec expects stock to keep increasing
Opec expects stock to keep increasing
Bloomberg Published: February 28, 2008, 00:39
Dubai: Oil supply and demand are in balance, and a gradual rise in stockpiles will continue through the second quarter, a Gulf official familiar with Saudi Arabian oil policy said yesterday.
The oil price, which reached a record $102.08 a barrel in New York electronic trading yesterday morning, is higher than it should be and isn’t in line with supply and demand fundamentals, the official said in an interview on condition of anonymity.
Saudi Arabia is the largest influential producer within the Organisation of Petroleum Exporting Countries, scheduled to meet on March 5. “Opec is taking a cautious view of the supply and demand balance,” said Paul Horsnell, head of commodities research at Barclays Capital in London. “But it seems hard to justify a cut in production, even based on their numbers.”
Futures jumped in New York as the dollar fell to an all-time low against the euro. The UBS Bloomberg Constant Maturity Commodity Index rose to the highest ever, on gains for gold, silver, sugar, copper and coffee.
The dollar weakened to $1.5088 a euro, the lowest since the European single currency was introduced in 1999. Oil traded 38 cents higher at $101.26 at 11.54am London time.
Opec will consider all available supply, demand and inventory levels when it meets next week in Vienna, and recommendations from the group’s secretariat, the official said.
Position: Group firm on stand
A combination of economic slowdown in the US and a seasonal fall in consumption will hit oil demand and Opec will not increase output when it meets next week, the producer group’s president said on Tuesday.
“I can tell you they are not going to increase production because there are plenty of stocks,” Opec president Chakib Khelil told Reuters in the Nigerian capital of Abuja.
Adnoc to give full term crude to Asia in April
Adnoc to give full term crude to Asia in April Reuters Published: February 28, 2008, 00:39
Singapore: Abu Dhabi National Oil Co (Adnoc) told its Asian customers that it will supply them crude oil at full contracted volumes for April, unchanged from March as expected, refiner sources said yesterday.
Demand for additional supplies from Abu Dhabi, the main oil producer for UAE, were limited for April as Asia enters the refinery turnaround season and oil demand falls, refiners added, in line with Opec’s reasoning that no more oil is needed during the second quarter.
“We got full contracted volumes,” a trader with a term lifter said.
The full allocations, and limited additional volumes, come ahead of Opec’s March 5 meeting, where members are expected to refrain from raising output due to expectations of slower demand.
Dubai fuel retailers increase price of diesel to Dh12.80 per gallon
Dubai fuel retailers increase price of diesel to Dh12.80 per gallon By Nadia Saleem, Staff Reporter GULF NEWS Published: February 28, 2008, 00:39
Dubai: Dubai fuel retailers have again increased the price of diesel by 30 fils to Dh12.80 per gallon, making diesel in the emirate almost 50 per cent costlier than in Abu Dhabi.
A manager of a Dubai-based transportation company told Gulf News there had been an average 30-fils increase in the price of diesel every month and this had increased his business costs.
Last month diesel sold at Enoc, Eppco and Emarat filling stations at Dh12.50 per gallon, up from Dh11 in October.
“We have to spend time and resources informing commuters of price increases in transportation and then they become very upset and angry,” said the Dubai transport company manager, who did not wish to be quoted.
While Dubai fuel companies have been raising diesel prices for months, Abu Dhabi National Oil Company (Adnoc) has kept the price steady at Dh 8.60 per gallon.
Companies in Dubai have argued in the past that they are forced to revise their prices to match the rising crude prices in world markets.
Takreer plans to build new refining unit at Ruwais
Takreer plans to build new refining unit at Ruwais By Himendra Mohan Kumar, Staff Reporter GULF NEWS Published: February 25, 2008, 23:40
Abu Dhabi: The Abu Dhabi Oil Refining Company (Takreer), plans to build a new refinery with a capacity of 417,000 barrels per day (bpd) at Ruwais, 240 km west of Abu Dhabi, a senior company executive said on Monday.
“The project is in the front end engineering and design (FEED) phase. This phase will be completed in a year and then the construction of the unit will begin, subject to necessary approvals, with its completion planned for 2013,” Takreer general manager Jasem Ali Al Sayegh told delegates at the ongoing Middle East Refining Conference here.
He declined to comment on the estimated cost of the project.
“We will have an estimated cost one year from now,” said Al Sayegh, but admitted that Takreer is feeling the heat of project escalation costs, which is a global phenomenon.
Al Sayegh said the new refinery will complement Takreer’s present 400,000 bpd plant at Ruwais.
The Ruwais refinery currently processes 120,000 bpd of crude oil and 280,000 bpd of condensate.
In addition, Takreer operates the 85,000 bpd Abu Dhabi refinery located on the outskirts of Abu Dhabi.
Al Sayegh said Takreer’s future plans are driven by the demand growth for petroleum in the local and international markets.
The refiner’s green diesel project, which aims to reduce sulphur content in gasoil as mandated by the government, is planned for completion by the end of 2011.
In addition, Takreer is building an inter-refinery pipeline, which will connect both refineries with its Musaffah product dispatch terminal in the second quarter of 2008.
“This project, upon completion, will eliminate shipment of products between refineries,” said Al Sayegh.
Another senior Takreer executive said nearly 30 per cent of the refiner’s output constitutes gasoline and diesel.
“As of now, we don’t import any oil products. We meet all our domestic fuel requirements and export too. We are exporting diesel, jet fuel and naphtha, mainly to Japan and the Far East,” said the Takreer executive.
He said the Ruwais refinery, which at present is undergoing partial maintenance, will resume normal operations within the next 25 days.
Takreer was established in June 1999 to take over the responsibility of refining operations of the Abu Dhabi National Oil Company (Adnoc).
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