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Nigeria Audit Urges Revamp of ‘Unsustainable’ State Oil Company

Lamido Sansusi (Bloomberg) — Nigeria’s state oil company operates an “unsustainable model” and should refund a minimum $1.48 billion to the government, a PricewaterhouseCoopers LLP audit recommends. The Nigerian National Petroleum Corp. spends 46 percent of domestic oil proceeds on operations and subsidies, according to highlights of an 18-month review between January 2012 and July 2013 released by the office of Nigeria’s Auditor General. The NNPC can’t sustain monthly remittances to government or meet operational costs from crude revenue and incurs third-party liabilities to fund the gap, according to the statement. “PwC therefore recommended that the NNPC model of operation must be urgently reviewed and restructured,” according to Auditor General Ukura Samuel’s statement. “The current model which has been in operation since the creation of the corporation cannot be sustained.” The audit came after the former central bank governor of Africa’s largest oil producer, Lamido Sanusi, wrote to President […]

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Nigeria Says It Has Budget Plans for Oil Price as Low as $45

(Bloomberg) — Nigeria’s Finance Ministry isn’t wedded to an oil benchmark price of $65 per barrel estimated in this year’s budget and has plans on how it will respond if crude drops lower. The government has a “scenario-based approach with accompanying adjustment measures, given the uncertainty as to where the oil price would eventually settle,” Paul Nwabuikwu, spokesman for the ministry, said in an e-mail on Thursday. “The scenarios developed go as low as $45 per barrel.” Crude prices have plunged by more than half since June, cutting revenue in Africa’s biggest oil producer and forcing the government to tighten its budget. The currency has slumped 17 percent against the dollar in the past six months, the most of more than 30 African nations tracked by Bloomberg. The government will introduce additional measures to protect capital expenditure in the budget if oil prices remain below $65 a barrel, Nwabuikwu […]

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Nigeria: Jonathan Receives NNPC Audit Report

Lamido Sanusi Photo: Leadership Abuja — PRESIDENT Goodluck Jonathan yesterday received the report of the forensic investigation into the Nigerian National Petroleum Corporation (NNPC) with a pledge to ensuring that all aspects of the reports would be implemented to move the industry forward. The submission of the report is coming barely 24 hours after Sanusi’s predecessor in office, Prof. Charles Soludo, raised fresh allegation against the Co-ordinating Minister of the Economy and Minister of Finance, Dr. Ngozi Okonjo-Iweala, that no less than N30 trillion had been mismanaged under her tenure. But receiving the report at the new Banquet Hall Presidential Villa, Abuja, Jonathan admitted that there had been so much of controversy over this NNPC and expressed the hope that with the submission of the reports, all the issues generated would be put to a final stop. Though details of the reports were not made public, the President has […]

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U.S. Drivers’ $2 Gas Dream Interrupted by Refinery Shutdowns

(Bloomberg) — The drive to $2 gasoline has hit a roadblock. Retail gasoline in the U.S. has risen 8.4 cents in the past two days, according to Heathrow, Florida-based AAA, the largest two-day increase since March 2011. The national average hasn’t fallen since Jan. 25, when it broke a 123-day losing streak. The spike at the pump follows a 14 percent gain in oil prices and maintenance shutdowns at refineries. Demand for gasoline is at the highest seasonal level since 2008. “Drivers had a great run of steadily declining gas prices, but that trend is over for now,” said Michael Green, a Washington D.C.-based spokesman for AAA. “The market has been volatile, but it’s a safe bet that drivers will pay more in March than they are today.” The average retail price was $2.151 a gallon Wednesday, AAA said, after sinking to $2.033 on Jan. 25, the lowest level […]

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Weatherford Cuts Jobs Amid ‘Once-in-Lifetime’ Industry Change

(Bloomberg) — Weatherford International Plc became the latest energy company to announce job cuts from falling crude prices as the oilfield-services industry bears the brunt of slashed spending plans. “We’re now confronted with an unusually severe market contraction and concurrently a once-in-a-lifetime industry change,” Chairman and Chief Executive Officer Bernard Duroc-Danner told analysts and investors on a conference call Thursday. “It is much easier to make efficiency leaps than in a strong market. This is the one silver lining to the violent downturn in oil in our market.” Weatherford will cut 8,000 workers in the first half of the year. When added to 6,000 firings from last year, the Geneva-based company’s total workforce will shrink 25 percent from the start of 2014, Chief Financial Officer Krishna Shivram said on the call. Weatherford’s announcement brings the number of job cuts among oilfield-services companies to 25,000, with more promised. The industry, […]

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Alberta’s premier stumps for Keystone XL

Alberta’s premier says U.S.-Canadian energy partnership about more than just Keystone XL. Photo courtesy TransCanada WASHINGTON, Feb. 5 (UPI) — While clearly in the region’s interests, the energy relationship between the United States and Canada is about more than Keystone XL, Alberta’s premier said. Submitted for approval more than six years ago, TransCanada’s planned Keystone XL oil pipeline from Alberta has become a scapegoat for the politics surrounding the debate over North American energy. Alberta Premier Jim Prentice told members of the U.S. Chamber of Commerce of his long-standing support for the pipeline. "I have long been a vocal advocate for the Keystone pipeline and for its approval by the U.S. government," he said in prepared remarks sent to UPI. From vetting of public comments on a State Department review, to delays because of legal challenges over the pipeline’s route in Nebraska, the White House has been accused of […]

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Clock Starts Ticking On $5.3B Tax Break For North Dakota Oil

Tumbling crude oil prices have started the clock ticking on a potential $5.3 billion, two-year tax break for North Dakota’s oil producers. WILLISTON, N.D., Feb 5 (Reuters) – Tumbling crude oil prices have started the clock ticking on a potential $5.3 billion, two-year tax break for North Dakota’s oil producers. The countdown, which started this week, holds the promise of a silver lining of sorts for oil producers and their contractors in the No. 2 oil-producing U.S. state, many of whom have struggled with a roughly 50 percent drop in oil prices since last June. North Dakota officials designed the tax waiver in 1987 to encourage drilling. Here’s how it works: North Dakota waives its 6.5 percent oil extraction tax if the monthly price of benchmark West Texas Intermediate (WTI) crude at the Cushing, Oklahoma, transport hub falls below $52.59 per barrel for five consecutive months. For January 2015, […]

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Deloitte: Low Oil Prices Creating Need for More Efficient Operations

Upstream oil and gas companies will have to learn how to operate differently in order to weather the low oil price environment, Deloitte officials said Wednesday. Unlike the downstream sector, which has been forced to operate efficiently because it doesn’t have the ebbs and flows that upstream does, costs on the exploration and production side have spiraled upwards, said Rick Carr, principal and leader of Deloitte LLP’s oil & gas operations and supply chain, at a media briefing in Houston.    The North America shale market is “still pretty embryonic”, with nobody really having cracked the nut of running a lean, efficient operation, said Carr. In the case of North America shale operations, prices for oilfield services have not been dictated by the actual cost of the service, but what people are willing to pay to get a well done. Companies have been willing to pay 30 to 50 […]

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Midland: Weathering the Downturn in Crude Oil Prices

The West Texas city of Midland has yet to be affected by the downturn in crude oil prices, but a prolonged energy slump would eventually be felt. Midland, Texas’ downtown. Source: City of Midland Chamber of Commerce With crude oil prices at their lowest levels in years, municipalities that depend primarily on the oil and gas industry for their economic vitality are suddenly at risk of seeing drastic slowdowns in the local economy, and possibly some red ink. One such city is Midland, Texas, an oil and gas town like few others. Oil is its lifeblood, and throughout its history, the Tall City has experienced many up-and-down cycles in the energy industry. So, how is it weathering the current one? The short answer is that months after oil prices first began to slump, the city itself is doing fine – so far. In fact, a relatively short-term slowdown would […]

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Texas Swagger Fades Fast as Oil Town Squeezed Hard by OPEC

A floor hand signals to the driller to pull the pipe from the mouse hole on a drilling rig near Encinal, Texas. Shale wells, like those in the Eagle Ford, deplete as much as 50 percent in their first year, faster than conventional ones, putting pressure on companies to find new wells. Photographer: Eddie Seal/Bloomberg (Bloomberg) — Back in October, Jill Potts waved off concerns about falling crude prices, pointing to the long lines of trucks forming outside her oil field supply store in South Texas as evidence that the shale boom was still going strong. But then oil kept plunging — from $82.70 a barrel back on that sunny mid-October day to $70, then $60, and ultimately touching as low as $43.58 before settling at about $50 Thursday. Potts’s mood has changed. Standing inside her shop in Cuero, Texas, surrounded by industry wrenches the size of T-Rex femurs, […]

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Statoil Deepens Spending Cuts as Oil Price Rout Saps Profits

“Our financial position is robust, and we maintain a stable dividend,” Eldar Saetre, Statoil ASA’s chief executive officer, said in a statement. Photographer: Krister Soerboe/Bloomberg (Bloomberg) — Statoil ASA deepened cost cuts and halted dividend growth as Norway’s biggest energy company struggles to withstand a plunge in oil prices. The company will raise spending cuts by 30 percent to $1.7 billion from 2016 and lower capital expenditure to $18 billion this year from earlier targeting $20 billion, the Stavanger-based company said. Statoil reported fourth-quarter net operating income of 9 billion kroner ($1.2 billion), down from 43.9 billion kroner a year earlier. That missed an estimate of 26.3 billion kroner in a Bloomberg survey of analysts. Statoil followed competitors including Royal Dutch Shell Plc and Chevron Corp. in cutting billions of dollars in investments. They are seeking to protect profits after oil prices slumped by more than 50 percent in […]

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London pressed to ban fracking

British government out of step with regional trends to place a moratorium on hydraulic fracturing. UPI/Kevin Dietsch LONDON, Feb. 5 (UPI) — An environmental advocacy group said it’s time for the British government to follow its peers and enact a moratorium on hydraulic fracturing. The Welsh parliament voted in favor of a measure proposed by Liberal Democrat assemblyman Aled Roberts to ban the shale drilling practice known commonly as fracking. The measure calls on the Welsh government to prevent fracking operations "unless it is proven to be safe for the environment and public health." Donna Hume, a campaigner with the regional Friends of the Earth, said the British government needs to follow suit . "It’s time the government stopped trying to get this damaging and unpopular industry off the ground and started prioritizing energy efficiency and renewable energy," she said in a statement Wednesday. The Scottish government in late […]

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Drilling company Maersk cuts staff

Danish oilfield services company Maersk cuts top staff to adjust to low oil price climate. Photo by Kyle Waters/Shutterstock COPENHAGEN, Denmark, Feb. 5 (UPI) — It would be "irresponsible" not to react to the low oil price climate and keep staffing levels in place, Danish oilfield services company Maersk Drilling said. Lead energy companies, from BP to Royal Dutch Shell, have announced plans to cut capital spending in 2015 as oil prices continue trading in a bear market. Though rising in recent days, the price of crude oil is about 50 percent less than June highs of about $100 per barrel. Maersk Drilling said market conditions meant there was a lower demand for offshore rigs, which meant it was forced to cut 90 positions from its head office. Chief Executive Officer Claus Hemmingsen said staff reductions were part of the effort to cut costs and improve corporate efficiency. "It […]

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Oil Traders Seen Storing Record Amounts of Fuel in European Hub

(Bloomberg) — Oil traders are keeping record amounts of fuel in independent storage tanks in Amsterdam, Rotterdam and Antwerp, the continent’s oil-shipment hub, according to a firm that monitors the terminals. A total of 5.799 million metric tons of gasoline, diesel and other processed fuels are being stored, according to data on Thursday from PJK International. That’s the most since the firm began collating the information in 1995, Pieter Kulsen, the Breda, Netherlands-based firm’s founder said by phone. A 48 percent plunge in Brent crude in 2014 helped create what’s called a contango oil-price structure, where immediate fuel prices are cheaper than those in later months. Gasoline and gasoil, a product near identical to diesel, both cost about $30 more in December than they do in February, according to data from exchanges compiled by Bloomberg. Such a gap can create an financial incentive to store. “Those two products have […]

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Russian exploration spending to decline

Moscow expects to spend less on the upstream sector of the oil and gas business this year, resources minister says. (UPI/Shutterstock/ekina) MOSCOW, Feb. 5 (UPI) — The amount of money geared toward the exploration side of the Russian energy sector is expected to decline, a resource minister said Thursday. Low oil prices and pressure from Western economic sanctions imposed in response to the Kremlin’s stance on crises in Ukraine are diminishing government finances. Russian Natural Resources Minister Sergei Donskoy said government support for exploration may be 15 percent less than last year. "The exploration funding from the state budget is exactly in question, rather than exploration expenditures of private companies," he said. Analysis produced in 2011 by Ernst & Young finds the existing network of fields in Russia is such that there isn’t a "pressing need" for extensive exploration programs . Russia is among the world leaders in oil […]

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S&P downgrades several Russian oil and gas companies

Moscow (Platts)–5Feb2015/813 am EST/1313 GMT Standard & Poor’s Thursday announced a number of downgrades to Russian oil and gas companies, following its downgrading of Russia’s sovereign ratings to junk last week. S&P, which like Platts is a unit of McGraw Hill Financial, lowered ratings on gas giant Gazprom and its oil arm Gazprom Neft, as well as Rosneft, Transneft and Novatek. In line with S&P’s criteria, companies which have strong links to the government cannot be rated higher than the sovereign. This is because it assumes that the government could use its power to intervene negatively, which could include burdening the company with additional taxes, dividends or other liabilities, S&P said. Article continues below… Oilgram News brings you fast-breaking global petroleum and gas news on and including: Industry players, upstream and downstream markets, refineries, midstream transportation and financial reports Supply and demand trends, government actions, exploration and technology Daily […]

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Ruble Set for World’s Best Weekly Rally on Ukraine Optimism, Oil

(Bloomberg) — The ruble headed for the strongest weekly currency rally worldwide and Russian stocks surged as oil climbed and investors wagered Ukraine talks in Moscow on Friday will ease the crisis. The currency of the world’s biggest energy exporter is shaking off its weakness at the start of the year after crude oil rebounded 27 percent from a Jan. 13 low. Oil’s earlier slump and sanctions over Ukraine have dragged the economy toward its first contraction since 2009. Talks between President Vladimir Putin and his German and French counterparts fueled bets spreading bloodshed in Ukraine can be staunched. The negotiations encourage “cautious optimism,” Tom Levinson, foreign exchange and interest rates strategist at Sberbank CIB in Moscow, said in e-mailed comments. “While Ukraine-related risks seem as great as ever, the ruble has this week been underpinned by a 15 percent rise in oil prices.” The ruble advanced 1.1 percent […]

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U.S. and Europe Working to End Ukraine Fighting

KIEV, Ukraine — With fighting intensifying in eastern Ukraine and the White House weighing whether to send arms to bolster the government’s forces, Western leaders embarked on a concerted diplomatic effort on Thursday aimed at ending a conflict that has strained relations with Russia. Despite the burst of activity, the prospects of achieving a new peace plan have been clouded by deep suspicion of Moscow’s aims in Ukraine. At the same time, the arrest in Kiev on Wednesday of a senior officer on charges of spying for Russia has raised concerns that the Ukrainian military has been infiltrated, complicating any plans for sending arms to Kiev. While the United States has provided weapons to allies in similarly unstable circumstances, including in Afghanistan and Iraq, Russia’s long historical ties to the Ukrainian military and security apparatus present an unusual challenge. “Very often one cannot tell where the F.S.B. stops and […]

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Oil Prices Slightly Higher After Heavy Losses

By Georgi Kantchev and Eric Yep LONDON–Oil prices were a touch higher on Thursday following heavy losses in the previous session as U.S. supplies continued to add to the global oil glut. Data on Wednesday showed that U.S. crude supplies had climbed to their highest level in 80 years sending oil prices down by almost 9% for the day. On Thursday, Brent crude rose 0.4% to $54.41 a barrel on London’s ICE Futures exchange. On the New York Mercantile Exchange, light, sweet crude futures traded at $48.64 a barrel, up $0.20 from Wednesday’s settlement. Oil futures had surged 19% within a span of four trading sessions since late last week, raising hopes among oil market bulls that prices have bottomed. But on Wednesday U.S. weekly oil stockpiles rose more than expected, by 6.3 million barrels, and are currently at the highest level for this time of year in at […]

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Oil Prices Slump as Inventories Rise Near 80-Year Highs

Oil prices tumbled 8.7% on Wednesday, the largest one-day drop in two months, after data showed that U.S. crude supplies had climbed to their highest level in about 80 years. U.S. crude oil for March delivery sank $4.60, or 8.7%, to $48.45 a barrel on the New York Mercantile Exchange, the largest one-day decline since Nov. 28, 2014. Brent, the global benchmark, declined $3.75, or 6.5%, to $54.16 a barrel on ICE Futures Europe. U.S. crude-oil supplies rose by 6.3 million barrels in the week ended Jan. 30 to 413.1 million barrels , the U.S. Energy Information Administration said Wednesday. Analysts surveyed by The Wall Street Journal had expected a gain of 3.7 million barrels. Stockpiles are at the highest level ever in EIA weekly data going back to August 1982. In monthly data, which don’t line up exactly with the weekly data, inventories haven’t been this high since […]

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Natural Gas Hits Multi-Year Low Ahead of Inventory Data

By Timothy Puko and Nicole Friedman Natural-gas prices slid to a more-than-two-year low Wednesday ahead of weekly inventory data, which is expected to show that inventories shrank last week by a smaller amount than is typical for this time of year. Natural gas for March delivery settled down 9.2 cents, or 3.3%, at $2.662 a million British thermal units on the New York Mercantile Exchange, the lowest settlement price since Aug. 29, 2012. The market has tumbled in five of the past six sessions, bringing a quick end to a rally that took off after weather updates at noon on Tuesday. Half of U.S. homes use natural gas for heat, and severe winter cold can push demand for gas to record levels. But production has been so strong in the past year that consumption has failed to prop up prices. Analysts and traders expect the U.S. Energy Information Administration […]

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DNO Says Loss Widens on Price Impairment as Kurdish Output Jumps

(Bloomberg) — DNO ASA, a Norwegian oil producer focused on northern Iraq, said its fourth-quarter loss more than doubled after higher output from the autonomous Kurdistan region failed to counter impairments due to lower crude prices. A net loss of $252.5 million came after an impairment of the same amount on oil and gas assets, the Oslo-based company said in a statement on Thursday. That compared with a $98.1 million loss a year earlier, and missed the average estimate for a $4.8 million loss of nine analysts surveyed by Bloomberg. “Our focus in 2015 is to align our spending with our earning,” Executive Chairman Bijan Mossavar-Rahmani said in the statement. “We are targeting operating efficiencies, cutting back on discretionary expenditures and high-grading our portfolio.” The loss comes as DNO continues to build up production, especially from its flagship Tawke field, after the semi-autonomous Kurdish and central Iraqi governments reached […]

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Most Volatile Oil Market Since ’09 Seen Persisting on Oversupply

(Bloomberg) — The most volatile oil market in almost six years is forecast to continue seesawing as a global glut that drove prices lower last year persists for at least the first half of 2015. The CBOE Crude Oil Volatility Index, which measures price fluctuations using options of the U.S. Oil Fund, ended at 62.73 on Wednesday, the highest level since April 2009. Another measure shows West Texas Intermediate, the benchmark U.S. crude contract, is fluctuating the most in almost 3 1/2 years. “There is a clash between future expectations of where oil may end up in terms of fundamentals and what we’re seeing on the ground right now,” Daniel Hynes, a senior commodity strategist at Australia & New Zealand Banking Group Ltd. in Sydney, said by phone. “That’s why you’re getting that whipsaw affect in prices at the moment. This is something that we’re going to have to […]

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Deloitte studies oil supply growth for 2015-16

HOUSTON, Feb. 4 02/04/2015 A Deloitte MarketPoint analysis suggested large-field projects, each producing more than 25,000 b/d, could bring on 1.835 million b/d in oil supply this year of which 635,000 b/d would be from members of the Organization of Petroleum Exporting Countries and the rest from non-OPEC productions. In 2014, new non-OPEC large-field projects collectively brought on 2.3 million b/d in new supply. These efforts spanned diverse geographies and production methods, ranging from Brazil’s offshore projects in the Roncador, Parque, Iracema, and Sapinhoa fields to Mars B in the Gulf of Mexico, and to Russian and Canadian oil sands projects. Notably, these 2014 supply additions excluded the numerous US shale oil fields being developed. OPEC also contributed to the expanding large-field supply picture, adding another 1.4 million b/d of new oil production capacity in 2014, Deloitte said. Researchers forecast that large-field projects to bring on a total 1.835 […]

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Kemp: Does Oil’s Rally Put Rebalancing At Risk?

The decline, although larger than anticipated, was not really news. The number of active rigs had been falling steadily for the previous seven weeks, so the trend was well understood. The size of the move was wholly unrelated to the significance of the information that triggered it. Instead, the rig news sparked a classic short-covering rally, as hedge funds with significant positions betting on a further price fall found themselves losing money as oil rose, and rushed to reduce their exposure, pushing prices up even more. "Is the falling U.S. oil rig count really driving an oil price turnaround?" analysts at Citigroup wondered in a research note of the same title published on Wednesday. Productivity gains and more careful selection of drilling targets will reduce the impact of rig cuts, they predicted. But markets are not precision weighing machines. They are voting machines – subject to whims, crazes and […]

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Citi: The oil (and gas) plunge isn’t over yet

The oil crash — and cheap gas bonanza — probably isn’t over yet. For a few days, oil was showing real signs of life following last year’s meltdown. Prices spiked above $54 a barrel on Tuesday after oil’s best three-day performance in six years. Drivers may have even noticed a little pop in gas prices. The national average price of gasoline jumped nearly five cents a gallon on Wednesday, according to AAA. The oil bounce also caused stock prices to surge on Tuesday. But the rebound is already looking like it may be short lived. Oil plummeted nearly 9% on Wednesday to settle at $48.45 a barrel. That’s the commodity’s worst day since November 28 when OPEC rattled the market by deciding to keep production steady. What’s going on? It all goes back to simple supply and demand. The world is awash in oil — more than it needs, […]

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Iraq financial crisis prompts emergency action

Iraqi Prime Minister Haider al-Abadi addresses the session ‘A Vision for Iraq’ at the World Economic Forum in Davos, Switzerland, on Jan. 23, 2015. (RUBEN SPRICH/Reuters) Recommend 4 people recommend this. Sign Up to see what your friends recommend. Iraq is pursuing a series of emergency measures to finance its 2015 budget, following years of poor governance and unchecked spending that led to a financial crisis now made worse by low oil prices and high military spending demands.The government is planning to indirectly borrow from the country’s foreign currency reserves, in a plan described Wednesday in Baghdad by Central Bank Governor Ali al-Alaq. The move could create a risk to the credibility of the Central Bank of Iraq (CBI) and the …

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12 Are Killed in Attack on Libyan Oil Field

TRIPOLI, Libya — Attackers killed 12 people, among them two Filipinos and two Ghanaians, after storming a remote Libyan oil field, a Libyan official said Wednesday. “Most were beheaded or killed by gunfire,” said Abdelhakim Maazab, commander of a security force in charge of protecting the Mabruk oil field, about 100 miles south of the Mediterranean city of Surt. Mr. Maazab added that his men had regained control of the field, which used to pump 40,000 barrels a day but is not operating now. The French energy company Total has a stake in the site, but it is contracted to a Libyan company. The Filipinos worked for an Italian company, Sogepi S.r.l., according to a statement earlier Wednesday by the Philippines Department of Foreign Affairs. It reported three of its citizens as among seven foreigners who had been “abducted by unidentified armed men.” With Libya in turmoil, details of […]

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Iran’s President Accuses West of Distorting Atomic Plans

Portraying himself to be as tough as his domestic critics, President Hassan Rouhani of Iran criticized nuclear-armed powers on Wednesday, singling out the United States and Israel for what he described as false and hypocritical warnings about Iranian atomic ambitions. In a speech, Mr. Rouhani repeated his government’s claim that it neither covets nuclear weapons nor aspires to have them. That is a central issue in the prolonged international negotiations over Iranian nuclear activities, which Iran asserts are for purely peaceful purposes. “They tell us, ‘We don’t want Iran to make atomic bombs’ — you who have made atomic bombs,” Mr. Rouhani said sarcastically. He also asserted that the nuclear weapons amassed by the United States and, he said, possessed by Israel, have done little to ease their worries about vulnerability to attack. “Have you managed to bring about security for yourselves with atomic bombs?,” Mr. Rouhani asked rhetorically […]

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Petrobras Executives Quit Amid Scandal

BUENOS AIRES — The leadership of Petrobras, the Brazilian national oil giant grappling with a sprawling graft scandal, abruptly resigned on Wednesday amid accusations of a bribery scheme involving kickbacks to President Dilma Rousseff ’s governing Workers Party and its allies. The shake-up included the departure of Maria das Graças Foster, the chief executive handpicked in 2012 by Ms. Rousseff, after months of tumult at the state-controlled oil company. Skepticism had grown over Ms. Foster’s capacity to deal with the scandal at a time when low oil prices are also forcing the company to slash spending on costly projects. Ms. Rousseff had recently decided to replace Ms. Foster and other senior executives this month, according to news reports, fueling a surge in Petrobras shares. The newspaper O Globo reported on Wednesday that Ms. Foster insisted on resigning after meeting on Tuesday with the president in Brasília. Reflecting a low […]

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Weatherford International Laying Off 5,000 Employees in First Quarter

Weatherford International , one of the biggest oil-field service companies in the world, will lay off 5,000 employees during the first quarter as it tries to cope with a sharp downturn in energy prices. The company said late Wednesday that 85%, or 4,250 of the jobs lost, will come in the Western Hemisphere. The move is expected to save the company $350 million annually, Weatherford management said late Wednesday while announcing financial results for 2014. “We are ready to react swiftly to a dramatically changing landscape,” Chief Executive Bernard J. Duroc-Danner said. In addition, the company is offering voluntary buyouts to certain eligible employees to further reduce its head count. Weatherford’s extensive job cuts amount to 9% of its global workforce. Oil prices have plunged more than 50% since June, putting Weatherford and its peers on the ropes. Oil-field service companies help energy companies drill new oil and gas […]

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Chinese oil company cutting spending

Chinese oil company trims spending for 2015, but expects production to move forward. (UPI/Shutterstock/num_skyman) BEIJING, Feb. 4 (UPI) — China National Offshore Oil Corp. is working to control costs in its 2015 development plan in response to falling oil prices, its financial officer said. CNOOC said in its fourth quarter report it was cutting its capital expenditure budget by around 30 percent from last year to around $12 billion, with development expenses taking the biggest hit. "In response to challenges from falling oil prices, we will control our costs and strive for the effective implementation of our capital expenditure plan in order to improve the overall performance of the company," Chief Financial Officer Zhong Hua said in a statement Tuesday. The company in late 2014 put 33 blocks totaling 48,691 square miles on the auction block . CNOOC tried last year to reverse sagging production from mature fields. During […]

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Why Oil-Hungry China Isn’t Reaping Benefits From Low Prices

A smoking chimney is seen at a PetroChina oil factory in Dalian, Liaoning province January 20, 2015. Reuters China – which gets 60% of its oil from abroad — is on its way to becoming the world’s largest petroleum importer , and is already there by some measures . So in theory it stands to be a huge beneficiary of plummeting oil prices. However, as The Wall Street Journal reports, the benefits of cheap oil for several major economies are far less clear , as governments from Europe to Japan battle fears that falling prices—in part a result of cheap energy—will deter spending by consumers and new investment by companies. In China, cheap oil hasn’t been nearly the boon many may have thought. That is the result of several factors. Advertisement The government controls prices, meaning the drops for Chinese businesses and consumers lag those of international oil markets. […]

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Beijing’s public transit on the “smart” way

BEIJING, Feb. 5 (Xinhua) — Functions of Beijing’s public transportation card will soon be incorporated in a wearable device, as local authorities aim to adapt to the "smart" era. Working with a local technology company, the Beijing Municipal Transportation Card Co. Ltd, which issues the city’s transit cards, will allow the card functions to be incorporated in a wrist strap, which can be connected to mobile phones wirelessly. Passengers can charge their cards and inquire about their card balance via their mobile phones, saving them the time spent waiting in long queues at ticketing offices. In addition to public transit, the device’s paying function will extend to supermarkets, convenience stores, restaurants, vending machines and restaurants. The strap, which will be available following the Chinese Lunar New Year, will also help monitor the user’s health status, and provide suggestions based on the statistics it obtains. The strap will be priced […]

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S&P: Kern County, Calif., Outlook Negative After Fiscal Emergency

Feb 3 (Reuters) – Standard & Poor’s Ratings Services revised the outlook for Kern County, California, to negative, after the county declared a fiscal emergency last week, citing lower oil prices. The rating agency said it was concerned with a projected $27 million budget shortfall in fiscal 2016. By declaring a fiscal emergency, the county can access $40 million general fund reserve to cover the gap. The third largest county in California, with a total population of nearly 900,000, Kern’s pension obligations, already high, will "continue to rise for a number of years," said Standard & Poor’s credit analyst Li Yang. "The county is going to need to address that deficit going forward." Kern forecasts that its pension costs will increase through 2022 and has set aside portions of its reserves to account for the rising costs, said Yang. "That will translate into spending down reserves," he said. The […]

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Many Oil Firms Plan No North Dakota Layoffs Despite Cheap Oil

WILLISTON, N.D., Feb 4 (Reuters) – Halliburton, Statoil ASA, Hess Corp and other North Dakota energy companies have decided, for now, not to lay off staff in the No. 2 U.S. oil producing state, hoping to be prepared for any prolonged rebound in crude prices. Many oil producers and their contractors are trying to strike a balance between cutting costs and maintaining workforce reserves after a more-than 50 percent drop in oil prices since last June. The drop has made some oil patch investors anxious that North Dakota could experience a third oil bust after slumps in the 1950s and 1980s. Local business leaders, though, say they’re confident the state’s economy can abide the slowdown. Indeed, oil prices are nothing if not volatile, up about 19 percent in the past four trading days after plunging for months. Whiting Petroleum Corp, the largest North Dakota oil producer, has no plans […]

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Oil, gas infrastructure investments essential, House panel told

WASHINGTON, DC, Feb. 4 02/04/2015 Investments in oil and gas transportation and storage should move ahead because they are essential in continuing the US economic recovery and North American energy renaissance, witnesses told a US House Transportation and Infrastructure subcommittee. “There is a growing awareness that this is a unique American moment,” American Petroleum Institute Pres. Jack N. Gerard said during the Pipelines, Railroads and Hazardous Materials Subcommittee’s Feb. 3 hearing. “It is a moment that marks the transition from endemic energy dependence to energy security and global energy leadership—both of which have been public policy goals of every president and every Congress since the 1970s. Gerard’s testimony continued, “But to be clear, to secure this unique American moment will depend heavily on our ability to build the necessary infrastructure to achieve our nation’s full energy potential.” The unexpected collapse of crude oil prices has altered the outlook for […]

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The EIA’s Great Expectations

The EIA, in their INTERNATIONAL ENERGY OUTLOOK 2014  publishes what they call “World crude and lease condensate production by region and country, 2009-2040, (Table A5). Since I only track C+C, or Crude Only in the case of OPEC, I thought it would be interesting to see where they thought C+C production was headed in the next 25 years. An note about the charts below. The EIA data in this report only uses historical data for 2009 thru 2011. However I extended that historical data through 2014. The data for 2014 is the average C+C production January through September. Also note that the historical data is yearly but the projected data is in 5 year intervals, 2020 through 2040. All data is in thousand barrels per day. EIA Proj. World The EIA is expecting world C+C production to be over 99 million million barrels day in 2040, or about 22 […]

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California Rains on Gas Drillers

ENLARGE Rain is forecast for drought-stricken California this week. That will help fill the West’s hydropower reservoirs and weigh on natural-gas prices. Photo: Associated Press Shivering New Yorkers will no doubt be pleased to hear that San Francisco, after its driest January on record, is due a spot of rain this week. One group that won’t be happy: natural-gas producers. A year ago, the combination of a frozen New York and a parched Bay Area was a boon to struggling gas drillers. When the West’s hydropower reservoirs are depleted, the region burns more gas to keep the lights on. If Northeasterners are simultaneously firing up the heating (and their own power stations) to fend off the cold, this boosts gas demand. Throw in the bottlenecks created by kinks in the country’s pipeline network, and you end up with regional price spikes. On some days in January 2014, gas delivered […]

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Analysts Blow Calls on Oil

ENLARGE A worker at a Southwestern Energy Co. site in Pennsylvania in 2011. Raymond James analysts didn’t downgrade the company’s shares until January, months after the stock–and oil prices–had begun to slide. Photo: Bloomberg News In late November, as collapsing oil prices pummeled energy-company shares, a Raymond James & Associates analyst told investors that energy stocks were still a good bet. With a barrel of crude having dropped nearly 30% since June, Pavel Molchanov reasoned, the worst of the selloff was likely history. He issued a report contending oil prices and energy stocks were “within weeks of bottoming.” He and his colleagues maintained the equivalent of a “buy” recommendation on Houston energy producer Southwestern Energy Co. , also down about 30% since June. More than two months after Mr. Molchanov made that call, it is clear he and many other analysts were wrong. Nymex crude prices and Southwestern Energy’s […]

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End of an Era as CME to Close Almost All Floor Trading for Futures

ENLARGE Traders work in the corn options trading pit of CME Group’s Chicago Board of Trade in 2012. Photo: Tim Boyle/Bloomberg News One of the last vestiges of the swashbuckling era of commodities floor trading is fading away. CME Group Inc., the world’s largest futures-market operator, said Wednesday it is closing most of its futures trading pits in Chicago and New York as electronic trading has become the overwhelmingly dominant way futures contracts are bought and sold. The move, which will take effect by July 2, brings to a close nearly 150 years of barking and jostling over the price of grain, oil and interest-rate contracts. “The time has finally come,” said Leo Melamed, chairman emeritus at CME and a former chairman who helped the exchange develop its electronic trading platform in the late 1980s. “It’s a historic moment, but one that I think was always out there and […]

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Hess to Reduce Bakken Spending by 18%

Hess’ Bakken Acreage Map Hess Corporation recently announced revisions to its 2015 capital and exploratory budget that includes a big cut in the Bakken. The company plans to reduce spending in the region by 18% from 2014 numbers, hoping to allow the company to remain flexible in the face of an extreme pricing environment. The company has revised its budget several times in response to the sharp decline in crude prices throughout 2014. The company reduced 2014 capital expenditures below its planned capital budget of $5.8 billion and the capex budget for 2015 is is $4.7 billion. Related:  Hess Increases Bakken Production Guidance Through 2020 Greg Hill, President and COO, stated that “We are reducing our 2015 spending in the Bakken to $1.8 billion, compared with $2.2 billion in 2014. In 2015, we plan to operate an average of 9.5 rigs and bring approximately 210 new operated wells online, compared […]

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EPA wants further review of Keystone XL

Oil and gas lobby group says EPA’s latest comments on Keystone XL another example of unnecessary delays. (courtesy TransCanada) WASHINGTON, Feb. 4 (UPI) — A statement from the EPA on how low oil prices may influence decisions on Keystone XL pipeline ruffled feathers, with the industry crying foul. The Environmental Protection Agency said assessments made to date on the pipeline meant to cross the U.S.-Canadian border should be re-evaluated because crude oil prices are about 40 percent lower than when most recent considerations were made. Pipeline planner TransCanada submitted an application to the U.S. government to build Keystone XL more than six years ago. Louis Finkel, executive vice president for the American Petroleum Institute, said the EPA’s decision is another example of bureaucratic delays . "Suggesting that the drop in oil prices requires a re-evaluation of the environmental impact of the project is just another attempt to prolong the […]

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U.S. refinery strike not impacting operations

Situational normal at U.S. refineries despite labor strikes, monitoring group says. Photo by Kodda/Shutterstock AUSTIN, Texas, Feb. 4 (UPI) — A strike at U.S. refineries by the United Steelworkers union isn’t curbing operations at the affected plants, a monitoring group said. Labor talks between USW and refineries, represented by Shell, broke down during the weekend, prompting the union to call for a work stoppage at seven U.S. refineries. Union officials said they had "no choice" but to call a strike, blaming the industry itself for the stalemate. Genscape, which monitors refinery operations, said it’s seen no major operational changes at refineries impacted by the strike. "Barring any surprises, normal operations are expected to continue at the refineries where workers are striking," the group said in a Tuesday briefing on the industry impacts. Genscape said strikes at refineries usually don’t impact operations because refining companies have contingency plans in place […]

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Suncor to Push Ahead With Fort Hills Oil Sands Amid Oil Rout

(Bloomberg) — Suncor Energy Inc., Canada’s largest oil company, will push ahead with its planned Fort Hills oil sands project even as the price of oil hovers around $50 a barrel. Suncor will spend C$1.6 billion ($1.3 billion) this year as it advances construction of the project, the Calgary-based company said in a statement Wednesday. The operation will begin producing oil at the end of 2017, the company added. Last month Suncor announced 1,000 job cuts, lowered its 2015 capital budget by $1 billion and delayed projects to weather collapsing prices. The company and its competitors are squeezing spending in oil sands, among the most expensive reserves to develop. “Our commitment to capital discipline has put us in a better position to weather the price downturn,” Steve Williams, Suncor’s chief executive officer, said in the statement. On Wednesday, oil traded below $50 a barrel amid the most volatility since […]

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Kremlin denies it’s in oil talks with Riyadh

Russia denies its in talks with Saudi Arabia on oil for use as a diplomacy tool in the Syrian conflict. Photo by Denis Larkin/Shutterstock MOSCOW, Feb. 4 (UPI) — There’s no validity to reports Saudi Arabia may be discussing oil production cuts with Russia in exchange for concessions on Syria, an official said Wednesday. A report published Tuesday by The New York Times says the government in Riyadh is using its leverage in the global oil market to pressure the Kremlin to reconsider its long-standing alliance with Syrian President Bashar Assad. Alexei Pushkov, head of the international affairs committee in the Russian State Duma, said there was nothing behind the Times’ report, which cited "an array of diplomatic, intelligence and political officials." "There have been no negotiations on cutting oil production by the Saudis in exchange for Moscow’s refusal to support Assad," he said. "[The report is] a canard." […]

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Sechin Says Rosneft to Cut Spending 10 Percent After Oil Slump

(Bloomberg) — OAO Rosneft, Russia’s largest oil producer, will cut spending 10 percent this year after oil prices slumped. “For the past year and a half we have cut spending by 10 percent annually, and this year this tendency will continue,” Rosneft Chief Executive Officer Igor Sechin told Russian President Vladimir Putin outside Moscow. The company has set its plans for this year based on an average oil price of $50 a barrel, Sechin said. Russia’s largest oil and gas producers, Rosneft and OAO Lukoil, have both cut spending plans after oil prices halved over the past six months. The price squeeze has hit Rosneft particularly hard as it seeks to repay debts raised for the $55 billion acquisition of TNK-BP in 2013. Rosneft was able to maintain oil and gas output growth even as it cut spending, Sechin said. Hydrocarbons output grew 4.6 percent to 252 million tons […]

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Why Cheaper Oil Doesn’t Always Lead to Economic Growth

ENLARGE Tumbling oil prices were supposed to boost growth in a host of major oil-importing economies. It isn’t necessarily working out that way. Some governments have moved already to shore up their revenues by raising gasoline taxes or cutting fuel subsidies. At the same time, falling oil costs have pumped up deflation fears across Europe and Japan, adding to the risk that consumers and businesses will hold back on spending and investment, dragging on growth. China has raised fuel-consumption taxes by 50% since November. Gasoline prices have soared in Indonesia as the authorities eliminated subsidies altogether. High taxes in Japan mean pump prices have fallen only 15% in the past six months, compared with a 40% decline in the U.S. Taxes also blunt the fall in Europe: premium gasoline prices have fallen 29% in the U.K. and 32% in France. Brazil has trimmed subsidies and raised taxes to shore […]

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Cheap Oil Does Not Mean That Peak Oil Is a Myth

Cheap Oil Does Not Mean That Peak Oil Is a Myth thumbnail Peak oil is a fundamental tenet of the Transition Towns concept, but the current return of “cheap oil” has muddied the waters about how to discuss it. At a recent meeting of Transition Town Reading (U.K.), we discussed the prevailing low oil price, and the group asked me to put together some salient points on the subject, set within the context of whether or not we can now dismiss peak oil, e.g. as it is currently being contested   here and here . The following points are based on an article that I wrote on this blog which was re-posted on Resilience.org here. Most of the references that I have drawn from are in the links posted there, with a few more added into the text below. Some of the points overlap with each other, but hopefully […]

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