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Gunmen seize city council in Iraq’s Samarra

An armed group in military uniform has seized the city council headquarters in the Iraqi city of Samarra and taken employees hostage, the second such attack in recent months. Two fighters, possibly wearing explosives-rigged vests or belts, seized the Samarra city council building on Tuesday morning with an unknown number of employees inside, security officials said. "The gunmen are in the council building," Police Lieutenant Dhafir Ahmed said, according to Reuters news agency. "Local council employees and court employees are trapped inside." Clashes broke out between the fighters and security forces, and a suicide bomber detonated an explosives-rigged vehicle near police and militia forces when they arrived at the scene. The blast wounded 24 people, most of them police, a doctor and an officer said, according to AFP news agency. The doctor also said that the deputy head of the city council […]

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Saudi Arabia, UAE and Bahrain pull ambassadors from Qatar

Saudi Arabia, the United Arab Emirates and Bahrain have issued a joint statement withdrawing their ambassadors from Qatar. "The three states have decided to start taking measures they see fit to protect their security and stability, affirming that they are safeguarding the interests of the Gulf Cooperation Council (GCC) states, including neighbouring Qatar," the statement read. Qatar has failed to "stick to the principles of non-intervention in the internal affairs of other states and refraining from supporting all who threaten the security of the council states," the statement added. In response, Qatar said it "regrets" the move, but will not reciprocate, AFP reported Qatar’s emir Sheikh Tamim bin Hamad Al-Thani committed to a security agreement during a meeting with Kuwait’s emir and the Saudi monarch in Riyadh on 23 November 2013. Calls for Qatar to abide by the agreement were reiterated on 17 February in Kuwait and again during a […]

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Brazil Drought Jolts Commodities' Prices

Brazil’s worst drought in decades is decimating crops but breathing new life into battered commodity markets. It hardly has rained in some of the South American country’s top farming regions since the start of the year, a period when precipitation is usually the heaviest. Traders, analysts and government forecasters who were calling for record harvests in coffee, sugar and soybeans as recently as December are cutting production estimates, triggering a spike in futures prices that may translate into higher costs for consumers later in the year. Futures prices for the arabica coffee variety are up 67% since the start of the year. Raw-sugar prices have risen 8%. Soybeans, which have been affected by drought in some areas and too much rain in others, also are up 8%. The withered coffee trees and parched sugar-cane fields stand in contrast to the bumper crops that have weighed on commodities […]

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Brazil Drought Jolts Commodities’ Prices

Brazil’s worst drought in decades is decimating crops but breathing new life into battered commodity markets. It hardly has rained in some of the South American country’s top farming regions since the start of the year, a period when precipitation is usually the heaviest. Traders, analysts and government forecasters who were calling for record harvests in coffee, sugar and soybeans as recently as December are cutting production estimates, triggering a spike in futures prices that may translate into higher costs for consumers later in the year. Futures prices for the arabica coffee variety are up 67% since the start of the year. Raw-sugar prices have risen 8%. Soybeans, which have been affected by drought in some areas and too much rain in others, also are up 8%. The withered coffee trees and parched sugar-cane fields stand in contrast to the bumper crops that have weighed on commodities […]

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Ecuador January Crude-Oil Export Revenues Down 10% on Month to $1.06 Billion

Ecuador’s crude-oil export revenues totaled $1.06 billion in January, down 10% from December, the central bank said Wednesday. In terms of volume, Ecuador exported 11.57 million barrels of crude oil in January, a 12% decrease from the previous month. Crude oil is Ecuador’s main export, which the Andean country sends primarily to Asia, the U.S. and the Caribbean. The average price of crude oil in January increased 1% to $91.40 a barrel from the previous month. All of the oil was exported by Ecuador’s state-owned companies. The central bank also said Ecuador produced 17.05 million barrels of crude oil in January. Petroecuador, Petroamazonas and Rio Napo, the three state-run oil companies, produced 13.21 million barrels in January, while private companies produced the remainder. According to official projections, Ecuador could produce about 741,000 barrels of crude oil per day by 2019. Reaching this goal will require investments […]

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Venezuela's Maduro breaks diplomatic links with Panama

Venezuela’s President, Nicolas Maduro, has broken diplomatic relations and frozen economic ties with Panama. The decision comes after the Central American nation requested a meeting at the Organization of American States (OAS) to discuss Venezuela’s crisis. Mr Maduro was speaking to other Latin American heads of state at events to mark the first anniversary of the death of the Venezualan leader Hugo Chavez. At least 18 people have died in anti-government protests in the last month. "I’ve decided to break political and diplomatic ties with the current government of Panama and freeze all trade and economic relations from this moment on," Mr Maduro told the presidents of Cuba, Raul Castro, Uruguay, Jose Mujica, and Bolivia, Evo Morales, among other leaders gathered around the tomb of Mr Chavez. ‘Conspiracy’ Panama’s President […]

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Venezuela’s Maduro breaks diplomatic links with Panama

Venezuela’s President, Nicolas Maduro, has broken diplomatic relations and frozen economic ties with Panama. The decision comes after the Central American nation requested a meeting at the Organization of American States (OAS) to discuss Venezuela’s crisis. Mr Maduro was speaking to other Latin American heads of state at events to mark the first anniversary of the death of the Venezualan leader Hugo Chavez. At least 18 people have died in anti-government protests in the last month. "I’ve decided to break political and diplomatic ties with the current government of Panama and freeze all trade and economic relations from this moment on," Mr Maduro told the presidents of Cuba, Raul Castro, Uruguay, Jose Mujica, and Bolivia, Evo Morales, among other leaders gathered around the tomb of Mr Chavez. ‘Conspiracy’ Panama’s President […]

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Refiners Eye Better Oil Deal Terms on U.S. Boom: Corporate India

India, Asia ’s second-biggest energy user, is in talks with Saudi Arabia and Kuwait for better terms on oil contracts as surging U.S. output frees up supplies. Hindustan Petroleum Corp. (HPCL) , India’s third-largest state refiner, is seeking to at least double the interest-free credit period for crude purchases from Saudi Arabia and Kuwait to 60 days, B.K. Namdeo, the company’s refineries director, said in Mumbai. Mangalore Refinery & Petrochemicals Ltd. (MRPL) wants price discounts for agreeing to contracts that are more than 10 years long, according to Managing Director P.P. Upadhya. “Discussions are going on, and we expect the extended credit period to be reflected in the new contracts from April 1,” Namdeo said. “There is a surplus in the market, and India should take full advantage of the situation.” A shale-oil boom in the U.S., the world’s biggest consumer, has pushed crude production to […]

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Winter's Toll on Gas Inventories May Last

The polar vortex will soon be history, but its impact could linger for months in one vital industry. The U.S. natural gas market is entering the final month of "withdrawal season," when gas is taken out of storage to meet demand, with surprisingly low inventories. The government is expected to report Thursday that storage fell by about another 140 billion cubic feet last week. Citigroup estimates that the period from April through October, when gas stores are traditionally replenished, could start with inventories of 875 billion cubic feet—a little over half as much as a year ago. Some of the traditional levers for rebalancing gas supply and demand have become rusty after years of glut caused by the shale boom. For example, elevated prices between 2003 and 2008 forced industrial gas users to cut consumption. Today, gas-dependent industry is resurgent and gas-fired power plants have taken market share from […]

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Winter’s Toll on Gas Inventories May Last

The polar vortex will soon be history, but its impact could linger for months in one vital industry. The U.S. natural gas market is entering the final month of "withdrawal season," when gas is taken out of storage to meet demand, with surprisingly low inventories. The government is expected to report Thursday that storage fell by about another 140 billion cubic feet last week. Citigroup estimates that the period from April through October, when gas stores are traditionally replenished, could start with inventories of 875 billion cubic feet—a little over half as much as a year ago. Some of the traditional levers for rebalancing gas supply and demand have become rusty after years of glut caused by the shale boom. For example, elevated prices between 2003 and 2008 forced industrial gas users to cut consumption. Today, gas-dependent industry is resurgent and gas-fired power plants have taken market share from […]

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BP Splitter Refinery Seen Skirting U.S. Oil Export Ban

The oil industry is pressuring President Barack Obama to end the 41-year-old ban on most crude exports. BP Plc (BP/) isn’t waiting for a decision. The British oil giant has signed on to take at least 80 percent of the capacity of a new $360 million mini-refinery in Houston that will process crude just enough to escape restrictions on sales outside the country. Amid a flood of new U.S. oil, the demand for simple, one-step plants capable of transforming raw crude into exportable products such as propane is feeding a construction boom along the Gulf Coast . If the new processing units continue to multiply, they could render moot the politically sensitive debate over whether to ease the restrictions in place since the Arab oil embargo of 1973. “It’s a relatively inexpensive way around the export prohibition,” said Judith Dwarkin, chief energy economist for ITG Investment Research Inc. “You […]

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Chesapeake, Encana face criminal antitrust charges in Michigan

Oil and gas giants Chesapeake Energy and Encana Corp. were charged on Wednesday with colluding to keep oil and gas lease prices artificially low in the state of Michigan, the state Attorney General Bill Schuette said. The announcement follows a lengthy investigation by Schuette’s office into whether the firms — the biggest land leasers during a speculative oil and gas leasing boom in Michigan’s Collingwood Shale region during 2010 — colluded to avoid prices from rising as they acquired land leases from landowners. Michigan began looking into the companies’ activities in 2012 after a Reuters investigation found that executives from the two firms discussed proposals to divide bidding responsibilities in the state for nine private landowners and counties in Michigan. "I will aggressively prosecute any company who conspires to break the law," Schuette said in a statement. The companies were charged with one count each of antitrust […]

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North American LNG exports make sense, Chevron says

Chevron Corp. Chairman John Watson said there are more than enough reserves in North America to expand export options for liquefied natural gas. Watson told an audience at the CERAweek energy conference in Houston, Texas, the glut of natural gas in Canada and the United States suggested the economics of full LNG exports was "very straightforward." Canada’s National Energy Board last week gave Veresen Inc. consent for a 25-year license to send up to 1.5 billion cubic feet of natural gas per day from Western Canada into the United States. From there, the company would need U.S. approval to send gas overseas. A special permit is required from the U.S. government to send LNG to countries that don’t have a free trade agreement with Washington. Watson said Tuesday from Houston the debate over free trade was "won a long time ago," energy reporting website […]

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Weather restrains U.S. private hiring, services sector growth

U.S. private employers added fewer workers than expected in February and services sector growth slowed, the latest signs that severe weather continues to be a drag on the economy. The ADP National Employment Report showed on Wednesday that private payrolls increased by 139,000 jobs last month. January’s job count was revised sharply down to 127,000 from the previously reported 175,000. Last month’s increase was below economists’ expectations for a gain of 160,000 jobs. "Bad winter weather, especially in mid-month, weighed on payrolls. Job growth is expected to improve with warmer temperatures," said Mark Zandi, chief economist at Moody’s Analytics in West Chester, Pennsylvania. Moody’s Analytics jointly develops the report with payrolls processor ADP. The report was released ahead of the government’s comprehensive employment report on Friday. With unusually cold weather blamed for the weak private sector hiring, the report raised the prospect of a third straight […]

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TransCanada submits Energy East pipeline details to NEB

CALGARY, Alberta, March 5 (UPI) — Canadian energy company TransCanada submitted its project description for its Energy East oil pipeline, the nation’s energy regulator said. TransCanada submitted its project description to the National Energy Board for the so-called Energy East oil pipeline. It involves the construction of a new 930-mile segment and converting 1,800 miles of gas line for oil service, the company said. "Work on temporary construction-related infrastructure is anticipated to begin in first quarter 2016," the company said in a letter published Tuesday by the NEB. "The scheduled in-service date for the project is in fourth quarter 2018." The Energy East pipeline is designed to carry 1.1 million barrels of oil per day from Alberta and Saskatchewan to eastern Canadian refineries. Canadian Natural Resources Minister Joe Oliver said the project would help offset the estimated 700,000 bpd imported for eastern refineries from overseas markets. TransCanada said it […]

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Exxon Says Russian Projects Remain on Track

Exxon Mobil Corp. has more at stake in Russia than any other U.S. energy company but is confident its projects will remain on track despite recent tensions between the West and the Kremlin. "There has been no impact on any of our plans or activities at this point, nor would I expect there to be any, barring governments taking steps that are beyond our control," Chief Executive Rex Tillerson said Wednesday at the company’s annual meeting with analysts in New York. "We don’t see any new challenges out of the current situation." After years of investments, Exxon is supposed to start pumping oil and gas this year from a major field off Russia’s eastern coast and drill the company’s first well in Russia’s Arctic seas, which could hold billions of barrels of oil. Though Exxon said those endeavors will proceed on schedule, the company is putting plans on hold […]

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EU leaders meet in Brussels to address Ukraine crisis

Pro-European protests in Ukraine ©EPA Ukraine’s economic situation has been described as ‘catastrophic’ EU leaders on Thursday will lead the west’s diplomatic efforts to counter Russia’s takeover of Crimea after a day of multiple setbacks when the Kremlin refused to engage with the new Ukrainian government and the allies were at loggerheads over how tough to be with Moscow. The emergency summit in Brussels comes as the US issued a detailed 10-point rebuttal of Russia’s “false narrative” about Ukraine. In addressing Russian claims that it has no troops in Ukraine, that its actions are legitimate and the Ukrainian government is illegitimate, the state department said: “The world has not seen such startling Russian fiction since Dostoyevsky.” David Cameron, UK prime minister, said on arriving at the summit that there were three points to address: Russia and Ukraine must open talks, the EU must show strong support for the Ukrainian […]

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Scottish independence: Shell chief wants Scotland to remain in UK

Shell has waded into the debate over Scottish independence , saying it needed political stability in the UK to back up its investment decisions. Ben van Beurden, chief executive, said at the company’s annual reception in London on Wednesday night that it was important Scotland remain in the UK and that the UK remain in the EU. According to the BBC, Mr van Beurden said: “We’re used to operating in uncertain political and economic environments. But, given a choice, we want to know as accurately as possible what investment conditions will look like 10 or 20 years from now. That’s the chief reason we’re in favour of the UK maintaining its long-established place at the heart of the European Union: it provides greater investment stability and certainty. “It’s for similar […]

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IHS CERAWeek: Shale gas gives US competitive advantages

The US holds ample reserves of natural gas to help supply rising world gas demand, particularly for gas-fired electric power generation in Asia, speakers told the IHS CERAWeek energy conference during the Mar. 5 opening gas keynote speech and the global gas plenary. “It’s clear that no country has found greater opportunity in recent years than the United States,” said Joe Kaeser, Siemans AG president and chief executive officer. “The US will most likely become the world’s largest oil and gas producer this year. That’s affordability, availability, and sustainability all in one.” An abundance of shale gas has reshaped advantages that the US can offer the global economy, he said. “I believe we are witnessing, and participating in, the reindustrialization of the United States,” Kaeser said during the opening keynote speech. “And I think it’s fair to say that the development of horizontal drilling may have been the biggest […]

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ExxonMobil outlines 2014 production plans

ExxonMobil Corp. said it expects to start production at 10 major projects this year, adding 300,000 net boe/d of net capacity. The increased activity will come at a lower cost than last year, as the company’s capital spending will decline to $39.8 billion from a peak of $42.5 billion in 2013. Excluding potential acquisitions, capital expenditures are expected to average less than $37 billion/year during 2015-17. ExxonMobil in 2013 replaced more than 100% of production while adding proved oil and gas reserves totaling 1.6 billion boe, including a 153% replacement ratio for crude oil and other liquids. At yearend, proved reserves totaled 25.2 billion boe, comprised of 53% liquids and 47% natural gas. Major projects in 2014 involve the largest offshore oil and gas platform in Russia, heavy oil expansion in Canada, activity in deepwater Gulf of Mexico, and LNG in Papua New Guinea ( OGJ Online, Mar. 13, […]

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Kemp: BP Acknowledges US Shale Is Different

More LONDON, March 5 (Reuters) – Asking petroleum engineers and managers used to working offshore and on complex engineering megaprojects, the equivalent of building Ferraris, to start developing shale plays, the equivalent of building VW Golfs, was never going to work. BP’s decision to form a separate business to manage its onshore oil and gas assets in the U.S. Lower 48 states acknowledges shale production is more like a manufacturing process than traditional petroleum exploration. Shifting onshore assets into a separate business unit could pave the way for an eventual sale if their financial performance does not improve, as the Financial Times explains ("BP creates new U.S. onshore oil and gas business" March 4). The company’s chief executive insisted the assets would "remain a critical part of BP’s portfolio" though he admitted the reorganisation "creates optionality for us". But focusing too much on the possibility of an eventual sale […]

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The Changing Landscape of North American Gas is Regulatory Policies

The changing landscape of the North American unconventional gas is causing the industry and forcing the federal government to examine how to best regulate the business, a panel discussed Wednesday at IHS CERAWeek. “The economic benefits of natural gas is substantial,” stated Marvin Odum, president of Shell Oil Company, “the environmental benefits of creating natural gas is a topic that is often debatable between the industry and some communities.” As the production of natural gas increasingly plays a vital role in North America’s energy future, the environmental impacts and regulatory safeguards are viewed as major challenges and is a process that the industry fine tunes as it moves forward, commented Odum. Both state and federal government continue to develop and strengthen regulations to address some of these impacts, the panel stated, but the two major concerns from a citizen standpoint are air pollution and methane emissions, […]

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EU weighs Russia sanctions as Ukraine diplomacy falters

European Union leaders were set to warn but not sanction Russia on Thursday over its military intervention in Ukraine after Moscow rebuffed Western diplomatic efforts to persuade it to pull forces in Crimea back to their bases. Russian Foreign Minister Sergei Lavrov refused to meet his new Ukrainian counterpart or to launch a "contact group" to seek a solution to the crisis at talks in Paris on Wednesday despite arm-twisting by U.S. Secretary of State John Kerry and European colleagues. The two men will meet again in Rome on Thursday. Tension remained high in Ukraine’s southern Crimea region, where a senior United Nations envoy was surrounded by a pro-Russian crowd, threatened and forced to get back on his plane and leave the country. An emergency EU summit in Brussels is unlikely to adopt more than symbolic measures against Russia, Europe’s biggest gas supplier, because neither industrial […]

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EU to Weigh Ukraine Sanctions, Russia Spurns Diplomacy

European Union leaders will consider repercussions for Russia at an emergency meeting today on the Ukraine crisis, after Russia’s foreign minister fended off a U.S. effort to ease tensions in the Crimean peninsula. German Chancellor Angela Merkel and U.K. Prime Minister David Cameron will participate in today’s meeting in Brussels, a day after the 28-nation bloc offered 1.6 billion euros ($2.2 billion) in emergency aid to help the new Ukrainian government avert a default. The government is prepared to immediately sign the EU association agreement that ousted President Viktor Yanukovych rejected, precipitating the crisis, premier Arseniy Yatsenyuk said in an interview with newspaper Rzeczpospolita. Western nations including the U.S. are threatening Russia with sanctions over its military intervention in Crimea while pursuing diplomacy in an effort to defuse the crisis. Russia has accused the West of supporting a coup against Yanukovych and rejected EU proposals to broker a settlement. […]

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Europe Relies Less on Russian Gas Than Before

FRANKFURT—The Crimea conflict highlights anew Europe’s reliance on Russian gas, but compared with disputes of the past decade that cut fuel supplies, European countries are now better prepared to weather a showdown. Russia, which over the weekend sparked Western ire by occupying the Crimea region of Ukraine, supplies about 30% of the European Union’s gas by volume, according to Gazprom , the Russian state-controlled gas company. About half of Russia’s gas bound for Europe flows through Ukraine. But those flows halted in 2006 and 2009 amid financial disputes between Moscow and Kiev, with each side blaming the other. During that last spat, gas price soared across Europe and many countries faced shortages. Today, Europe is better prepared to withstand any supply disruptions, experts say. The Continent’s weak economy, new gas pipelines and changing energy policies have weakened demand for fuel and diversified supply routes. Europe today is awash with […]

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Ukraine to face consequences for unpaid gas debt

Russian Prime Minister Dmitry Medvedev warned Ukraine there would be "adverse consequences" should it not settle its outstanding gas debt. "[Anyone] who fails to pay for the supplied goods should be aware that it is fraught with adverse consequences, including those related to the revocation of previously reached agreements on beneficial terms of supplies," the former Russian president said Tuesday. In 2009, Russian energy company Gazprom cut gas supplies to Ukraine because of contractual disputes. That left European nations without a reliable source of natural gas as most of their supplies from Russia pass through the Soviet-era pipeline network in Ukraine. Ukraine last year secured relief from its debt obligations by way of a discount for purchased volumes. Gazprom Chairman Alexei Miller said the discount will be suspended in April unless Ukraine settles its outstanding debt from 2013. Miller said Ukraine paid "a little […]

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U.S. Effort to Broker Russia-Ukraine Diplomacy Fails

An effort by the United States to broker the first face-to-face diplomatic meeting between Russia and Ukraine over the Crimea crisis failed on Wednesday, but Secretary of State John Kerry and his Russian counterpart announced more discussions in the days ahead. Their remarks left open the possibility of progress toward a solution to de-escalate one of the most serious East-West confrontations since the Cold War. But while Mr. Kerry asserted Wednesday night that his deliberations here had yielded creative ideas and that he planned to resume talks with the Russian foreign minister in Rome on Thursday, there were also signs of how acute the crisis remained. Continue reading the main story In Crimea, unidentified armed men threatened the United Nations special envoy, Robert Serry, forcing […]

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U.S. Hopes Boom in Natural Gas Can Curb Putin

The crisis in Crimea is heralding the rise of a new era of American energy diplomacy, as the Obama administration tries to deploy the vast new supply of natural gas in the United States as a weapon to undercut the influence of the Russian president, Vladimir V. Putin, over Ukraine and Europe. The crisis has escalated a State Department initiative to use a new boom in American natural gas supplies as a lever against Russia, which supplies 60 percent of Ukraine’s natural gas and has a history of cutting off the supply during conflicts. This week, Gazprom, Russia’s state-run natural gas company, said it would no longer provide gas at a discount rate to Ukraine, […]

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Putin putting Europe in its place

How the situation in Ukraine may appear if viewed through the Russian leader’s eyes European leaders meet on Thursday to discuss their response to Russia’s effective invasion of Crimea . Vladimir Putin ’s closest allies were last night looking for a face-saving gesture that would allow Europe to end its preoccupation with Ukraine before the situation descends into violent gesture politics. The Russian leader is said to be deeply concerned at the sluggish and divided response of EU leaders and is now looking for ways to “de-escalate” the tension and allow them to back down while looking less hideously impotent than they currently do. Emissaries of the president are understood to be carrying a secret memo from him to Angela Merkel, David Cameron and François Hollande setting out some initiatives Mr Putin could accept in retaliation for his action: “First, I wish to apologise for any difficulty caused to […]

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Diplomats, business leaders urge new approach to Russian energy

Europe’s institutions should take a tough line on Russian energy, as Moscow’s intervention in Ukraine continues, a group of experts on the region said at a roundtable discussion at London’s Chatham House Wednesday. The expert group of former diplomats and business leaders suggested a series of short and medium-term responses to the tensions between the two former allies, pointing out that Russia’s energy interests are a major source of medium-term leverage for the EU and the West, owing to the revenues they bring in. "The EU should convey the message to Russian energy companies that ‘business as usual’ is not an option while intervention in Ukraine continues," the roundtable participants said in a statement following the event. They added that the EU should also consider alternatives to the South Stream pipeline, which would allow Russian gas giant Gazprom’s exports to bypass Ukraine altogether. "If […]

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Fossil fuel assets pose risk to world markets: UK lawmakers panel

World stock markets may be over-valuing companies with fossil fuel assets that may be unburnable, UK lawmakers warned Thursday. The UK’s Environmental Audit Committee released a report warning that over-priced fossil fuel assets pose a systemic risk to global markets. "The UK government and Bank of England must not be complacent about the risks of carbon exposure in the world economy," said committee chair and member of parliament Joan Walley. "Financial stability could be threatened if shares in fossil fuel companies turn out to be over-valued because the bulk of their oil, coal and gas reserves cannot be burnt without further destabilizing the climate," she said. "The record-breaking extreme weather events causing chaos across the globe should be a wake-up call," said Walley. "The transition to a low carbon economy will be much more painful if we wait until there is a climate crisis […]

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More On Peak Demand

An observation worth noting … and pondering, from Mark Lewis (links in original): Oil market commentators increasingly dismiss the very idea of supply-side constraints on the oil market, pointing to the recent surge in light-tight oil production from US shale deposits and the existence of vast shale formations elsewhere in the world…. But does this peak demand theory bear scrutiny? [F]rom data for 2013 released by the EIA recently, it is now clear that US demand not only increased last year, but accelerated rapidly over the course of the year. All of [the data reported by the author] implies that the reduction in US oil demand over 2008-12 was not so much structural as due mainly to the weakness of the US economy following the global financial crisis, and the tightness of the local oil market until recently. As the economy has started […]

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Peak oil demand: maybe here, but not there

For years, meaning until the arrival of U.S. shale production, much ink was spilled on the concept of "peak oil" — the argument that the world was fast approaching an absolute maximum of crude oil that can be produced on a  daily basis. Shale production has put the kabosh on that for the time being, but there’s another "peak" to argue about, and it’s peak demand. Oil consumption in Western Europe, Japan and the United States has  been declining since about 2005. Have we hit "peak demand?" Not hardly, at least not worldwide, agreed three panelists at the ongoing IHS/CERAWeek energy conference in Houston. Demand from Asia and the developing world will more than offset declines in OECD nations, said the panelists, all refiners. Bill Klesse, CEO of San Antonio-based Valero Energy, said world crude oil demand can be expected to grow about 1 million barrels per year through 2025. […]

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Schadenfreude and the Future of Energy Storage

Energy Storage and the Future I had the pleasure this past week of attending the ARPA-E Summit in Washington, D.C. The ARPA-E Summit is always for me one of the most interesting programs on the industry calendar. Although the Summit focuses primarily on highlighting new energy technologies, much of its program is devoted to discussing the future of energy and the future of the economy more generally. These discussions are often more interesting than the individual new technologies themselves. This year was no exception. Several speakers and panelists talked about the future of microgrids, distributed generation and distributed storage. Although there was plenty of good news about progress in those technologies and the market opportunities relating to them, the good news was tempered, as usual, by many bemoaning the high price of those new technologies and the need for utilities to move slowly in adopting them. A new insight […]

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Can we depend on a “Call on OPEC”, or has OPEC peaked?

Steve Kopits, in his recent presentation at Columbia University , ridiculed the IEA’s often used term a “ Call on OPEC “. That is, the IEA looks at the world oil supply and if they see a supply shortage looming on the horizon they then issue a “Call on OPEC” to supply x number of extra barrels and fill that gap. But the next time the IEA issues such a call can OPEC deliver? Or, is OPEC already producing every barrel they possibly can. One thing for sure, there are eight OPEC countries that are definitely producing every barrel they possibly can, those countries are Algeria, Angola, Ecuador, Iran, Libya, Nigeria, Qatar and Venezuela. The chart below is the combined production of those 8 nations. All charts in this post are “Crude Only” in kb/d with the last data point Jan. 2014. There can be no doubt […]

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EROEI: Economics Without the Money

“For some years now,” Tim Morgan writes in Life After Growth , “global average EROEIs have been falling, as energy resources have become both smaller and more difficult (meaning energy-costly) to extract.” You may have heard of this concept called energy return on energy invested (EROEI). It looks at how much energy we expend in relation to how much energy we extract. Some, like Morgan, think this is very important. Consequently, falling EROEIs have become the basis of a variety of dire forecasts… Be skeptical of anything that seeks to analyze our economy by taking money out. In these scenarios, we spend more and more energy just getting energy, and we have less and less for other discretionary items. As Morgan writes, “If EROEI falls materially, our consumerist way of life is over.” I’m writing to you today to slay this flawed EROEI concept. I have to say I […]

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CEO: Oil industry ‘no longer the deep pocket’ as costs soar

Oil industry costs are spiraling out of control, and it’s time to rein them in, Total CEO Christophe de Margerie insisted Tuesday. “Excellence cannot be an excuse for doing anything at any price,” de Margerie told oil and gas industry executives gathered at the IHS CERAWeek energy summit in Houston. “We cannot continue to swallow this huge inflation.” The French oil executive suggested that soaring capital expenditures are partly being driven by greedy subcontractors. He stopped short of naming names, but blamed “Asian countries (that) think we are ready to pay forever.” “We have to go to the sub-subcontractors and say: ‘We know what’s going on. We can no longer be the deep pocket,’” de Margerie said. Big oil cuts De Margerie’s comments came […]

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Energy Risks of the Ukraine Crisis

Russia’s intervention in the Crimean Peninsula poses few risks to Europe’s energy supplies, but escalation or Western sanctions could change that assessment. If the crisis expanded to mainland Ukraine, the integrity of that country’s pipelines and the natural gas they carry to EU members would be the most immediate energy concern. Although Ukraine’s energy assets don’t appear to be a major focus of Russia’s occupation of the Crimean peninsula, any escalation of the crisis could have serious energy consequences, regionally and globally. The initial reaction of energy markets has been cautious, with Monday’s jump of around  2% for Brent crude and nearly 10% for European gas futures largely erased in Tuesday’s trading . While some of Russia’s oil exports to Europe transit through Ukraine, the latter’s natural gas pipelines are the bigger worry, especially in light of Russia’s past use of the "gas weapon." It’s always dicey commenting on […]

Posted On : Published By : Tom Whipple
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WTI, Brent Crudes Stable After Biggest Loss in Two Months

West Texas Intermediate crude traded near $103 a barrel after falling the most in two months while Brent slipped on speculation the dispute in Ukraine poses little risk to oil supplies. Futures were little changed in New York, having lost 1.5 percent yesterday after President Vladimir Putin said he sees no immediate need to invade eastern Ukraine, while the Obama administration threatened sanctions. U.S. crude inventories rose by 1.17 million barrels last week, the American Petroleum Institute reported. Government data today may show stockpiles expanded by 1.3 million, according to a Bloomberg News survey . “The market is betting on a sort of diplomatic solution” in Ukraine, Hannes Loacker , an analyst at Raiffeisen Bank International AG in Vienna, said today by e-mail. “There should be no significant supply disruptions, as Ukraine is not a significant oil producer and the amount of Russian oil exported via Ukraine is small.” […]

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EIA: Historically stable crude oil prices seen in 2013

North Sea Brent crude oil—the most important global benchmark for waterborne light sweet crude—traded in the narrowest price range since 2006 last year, according to the US Energy Information Administration . Historical price volatility in 2013 also was at its lowest level in more than a decade. The minimum closing price for 2013 was $97.69/bbl on Apr. 17, and the maximum closing price was $118.90/bbl on Feb. 8, representing a trading range of $21.21 for the year. Brent oil price volatility was dramatically high during the fall of 2008 and early 2009. This was caused by rapid transitions from concerns over global oil supply and strong increases in emerging-market oil demand to concerns associated with a severe global economic downturn. Demand-side uncertainty sustained in 2010 as the European debt crisis emerged and the recovery from the economic downturn was not as robust as expected. In 2011, oil price volatility […]

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Iran stands firm on maintaining a nuclear program

Iran’s foreign minister pushed back Wednesday against calls for deeper cuts to its nuclear program. Mohammad Javad Zarif said the West "cannot entertain illusions" of Iran completely ending its uranium enrichment program. Speaking in Tokyo, he also reiterated that his country is not going to halt construction of a heavy-water nuclear reactor. "We’re not going to close it. We’re not going to dismantle it. We’re not going to close or dismantle anything, that is our red line," he said at a news conference before meetings with the Japanese prime minister and foreign minister. "But we will address proliferation concerns that people may have." His remarks came a day after Israeli Prime Minister Benjamin Netanyahu said in Washington, D.C., that Iran must dismantle its enrichment facilities and the reactor. Iran is trying to negotiate a deal with the U.S. and five other global powers to […]

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Iraqi Kurdistan crude at Ceyhan reaches 1 mil barrels: Turkish minister

The volume of crude from the northern Iraq region of Kurdistan being held in tanks at Turkey’s Mediterranean oil hub of Ceyhan has reached 1 million barrels, Turkish energy minister Taner Yildiz told reporters Wednesday in a press conference televised live on Turkey’s CNBCE business news channel. Yildiz stated that the crude is being held "in the name of Iraq," but did not mention how much storage space was available to hold crude from the Kurdistan region before it would become necessary to allow exports to start, nor whether Turkey will allow exports to start or will continue to store the oil until an agreement is reached between the Iraqi central government in Baghdad and the Kurdistan Regional Government (KRG) in Erbil. Replying to a question on the status of negotiations between Baghdad and the KRG over oil from the region which has since […]

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Post peak countries: the collapse of Yemen

  Image from " Our Finite World " When I saw for the first time the data about oil production in Yemen, I was so impressed that I wanted to know more. I found a news source in English – the " Yemen Times " and I placed the link in my feed. For several months, by now, I have been reading the news from a place where I have never been and, probably, will never go, but that I find incredibly fascinating. The stories in the Yemen Times read as a tragedy written by Shakespeare: for a taste of this feeling, you may read the article titled " Carrying out a death sentence ," but it is just an example of a never ending series of disasters taking place in the country, which include some 4000 people murdered every year, including a few  taken as target by American […]

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Artillery, machine gun fire rattle S Sudan capital

Heavy artillery and machine gun fire is echoing throughout the capital of South Sudan after violence broke out. Information Minister Michael Makuei Lueth said Wednesday that the fighting broke out over an administrative pay issue but that the problem had been contained. Fighting, however, could still be heard around the military barracks where violence first broke out in mid-December and escalated into country-wide conflict that continues today. Soldiers are being quickly ferried around the city on the backs of trucks. Shops on a main street in the city have closed amid a general increase in security personnel. In Ethiopia, a leader for opposition forces said that mutineers in the army on Wednesday had pledged their allegiance to the country’s former vice president, who commands rebel forces. © 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten […]

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Ruling Gives Oil Giant Boost in Fight Against $9.5 Billion Ecuadorean Judgment

A federal judge ruled that a record $9.5 billion environmental-damage award against Chevron Corp. was tainted by the misdeeds of a lawyer leading the lawsuit, giving the oil giant a boost in its battle against a global effort to seize its assets. In the latest twist in one of the longest-running legal battles in corporate history, U.S. District Judge Lewis Kaplan found that New York lawyer Steven Donziger and his litigation team engaged in coercion, bribery, money laundering and other misconduct aimed at securing a 2011 verdict against the company in Ecuador. The judge’s decision bars Mr. Donziger and his two Ecuadorean co-defendants from profiting from the award and excoriates the plaintiffs’ attorney, who has spent the bulk of his legal career pursuing the case. The judge concluded that Mr. Donziger and his team fabricated evidence, promised $500,000 to an Ecuadorean judge to rule in their favor, ghostwrote much […]

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China signals focus on reforms and leaner, cleaner growth

China sent its strongest signal yet that its days of chasing breakneck economic growth are over, promising to wage a "war" on pollution and reduce the pace of investment to the slowest in a decade as it pursues more sustainable expansion. In a State of the Union style address to an annual parliament meeting that began on Wednesday, Premier Li Keqiang said China aimed to expand its economy by 7.5 percent this year, the highest level among the world’s major economies, but stressed that this level of growth would not get in the way of reforms. In carefully crafted language that suggested Beijing had thought hard about leaving the forecast unchanged from last year, Li said the world’s second-largest economy will pursue reforms stretching from the environment to the financial sector, even as it generates sufficient growth to support incomes and employment. After 30 years of […]

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Li Says China Will Declare War on Pollution as Smog Spreads

Chinese Premier Li Keqiang said pollution is a major problem and the government will “‘declare war’’ on smog by removing high-emission cars from the road and closing coal-fired furnaces. Pollution is ‘‘nature’s red-light warning against the model of inefficient and blind development,’’ Li said today in his work report at the start of this year’s National People’s Congress in Beijing. ‘‘Fostering a sound ecological environment is vital for people’s lives and the future of our nation.” Li’s remarks, delivered in China’s equivalent of the U.S. president’s State of the Union address, reflect government recognition of public displeasure over pollution and its impact on people’s health. The weeks before the congress saw pollution stuck at unhealthy levels in much of northern China, prompting one government adviser to say smog had become “unbearable.” Choking China “It is a prolonged battle,” Environment Minister Zhou Shengxian told reporters at the National People’s Congress […]

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China Retains 7.5% Growth Target for 2014

ages China retained a target for economic growth of about 7.5 percent in 2014, signaling limits on the leadership’s efforts to curb pollution and credit expansion in the world’s second-largest economy. The goal was given in a work report that Premier Li Keqiang delivered to the annual meeting of the legislature today in Beijing. Li said the nation needs stable growth to ensure jobs. Inflation and money-supply targets also matched those of 2013. Maintaining a pace of expansion close to last year’s 7.7 percent would help sustain demand for oil and iron ore and support a global economy that’s forecast by the International Monetary Fund to accelerate. At the same time, analysts from UBS AG to Societe Generale SA say a lower goal would’ve been more in keeping with the government’s pledge to move away from growth at all costs. “It is going to be very […]

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China Sets Targets to Curb Pollution

China on Wednesday provided more details on how it plans to reform some of its tightly regulated resource prices this year and gave hard targets for reducing pollution in 2014. "The problems of consumption of resources and environmental pollution are prominent," the National Development and Reform Commission, the country’s top economic planning agency, said in an annual report. "In particular, smog frequently engulfs large areas of China and seriously affects people’s lives and health." The report was presented to the National People’s Congress, which opened on Wednesday. The NDRC said it would introduce tiered-pricing models for resources that would charge some users higher prices based on the amount they consume. The tiered model will be used for natural gas and water consumed by residential users and for electricity consumed by industrial users in sectors such as cement and electrolytic aluminum, the commission said. The NDRC added it would adjust" […]

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Beijing Signals New Worry on Growth

China’s leaders kept the growth target for their giant economy unchanged but signaled that they are more concerned than ever about reaching it, giving themselves the option of letting credit flow freely to keep from falling short. The suggestion of more lending to buoy growth—despite repeated recent efforts to rein in debt—is the latest sign of government unease that a slipping economy could trigger higher unemployment and corporate failures, aggravating already high social tensions. For years, China kept a growth target of about 7.5% but actually grew far faster; in the last two years the economy has barely cleared that figure, and many economists have said it would have a tougher time meeting the goal this year as its economy matures and global demand for its exports comes under pressure. That is a troubling trend for the rest of the world, which has increasingly depended on China to fuel […]

Posted On : Published By : Tom Whipple