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Resale Prices Tumble on Electric Cars

ENLARGE Pat Hoban, of Capitol City Nissan in Chamblee, Ga., expects a lot of late model Leaf electric cars to soon land in a weak market for used electric cars. Photo: Dustin Chambers for The Wall Street Journal Nissan Motor Co. ’s Leaf electric car has been a big seller for Atlanta car dealer Pat Hoban over the past three years, thanks to its low monthly lease price. But as those car leases are beginning to expire amid cheap gasoline, the vehicle is becoming a bit of a headache. Mr. Hoban expects between 100 and 150 of the leased vehicles to be returned to his Capitol City Nissan dealership on a monthly basis over the next two years as their leases expire. The problem: used Leafs aren’t attracting much demand. With gas prices down 33% from a year ago, and buyers cooling toward electric vehicles, some auto makers are […]

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Governor Dalrymple Commits to Infrastructure

SB 2103 to Fix Critical Infrastructure Governor Dalrymple of North Dakota signed legislation that grants massive emergency funding to counties and cities statewide in order to bolster the lagging infrastructure. On Monday, the ND Senate unanimously approved SB 2103 for roads and other critical infrastructure throughout the state with the bulk of the resources allocated to its oil producing counties. The $1.1 billion is in addition to a $2.3 billion infrastructure spending package that is already in place. The bulk of the money is targeted to fix roadways and bridges that have not been able to keep up with the increased traffic of heavy oil field equipment that the shale boom has brought to the Bakken area. Many of the region’s oil-producing counties still use hundreds of miles of gravel roads as main transportation routes often seeing as many as 1,000 vehicles a day, compared to fewer than 50 before […]

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U.S. crude oil production holding steady

U.S. crude oil production holding steady during weak market era, though rig deployment declining. UPI/Gary C. Caskey WASHINGTON, Feb. 26 (UPI) — U.S. crude oil production for the week ending Feb. 20 held steady amid rig count reductions and planned cuts in upstream spending, federal data show. The U.S. Energy Information Administration in a weekly status update said total oil production for the week ending Feb. 20 was 9.29 million barrels per day, relatively unchanged from the previous week but nearly 15 percent higher than the same week in 2014. Total production in the Lower 48 was 8.78 million bpd, unchanged from the previous week. Production from Alaska increased 1 percent from last week to 501,000 bpd. Total imports of 5.1 million bpd for the week was nearly 6 percent less year-on-year. Canada remains the top crude oil exporter to the U.S. market, sending around 3.1 million bpd across […]

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Whiting to cut Bakken rig deployments

Sign up for our daily Energy Newsletter Whting Petroleum plans rig reductions in North Dakota, but notes overall production should increase during the first quarter. Photo by David Gaylor/Shutterstock DENVER, Feb. 26 (UPI) — U.S. shale player Whiting Petroleum said it expects overall production to rise, though fewer wells are planned in areas like the Bakken play in North Dakota. Whiting said its fourth quarter total production average of 131,260 barrels of oil equivalent per day was 30 percent higher year-on-year and 13 percent above third quarter 2014 levels. First quarter production levels are expected to average 163,000 boe per day. Whiting, which has headquarters in Denver, acquired rival Kodiak Oil & Gas last year in an all-stock transaction valued at $6 billion. Whiting Chairman James Volker said the acquisition made his company the largest producer in the Bakken shale region in North Dakota, a basin at the heart […]

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Who’s to Blame for the Exploding Oil Trains?

Railroads and oil companies bicker over the cost of new rules The Feb. 16 explosion near Mount Carbon, W.Va. A week after a CSX train hauling crude oil derailed and exploded 30 miles southeast of Charleston, W.Va., on Feb. 16, its mangled, charred tank cars were still being hauled from the crash site. Of the 27 cars that derailed, 19 had been engulfed in flames. The wreckage burned for almost three days. “It’s amazing no one was killed,” says John Whitt, whose home is one of a handful clustered near the crash site, along the banks of the Kanawha River. Some were within 30 yards of the site. One home was destroyed. Exploding oil trains—this was only the latest in a series—have emerged as a dangerous side effect of the U.S. energy boom. A lack of pipelines connecting new fields in North Dakota and Texas to refineries and shipping terminals has led to […]

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Alberta Energy Drillers Pivot to Natural Gas as Oil Plunges

(Bloomberg) — Alberta’s energy producers are pivoting toward developing gas reserves rather than oil after crude lost half its value last year. The number of gas development rigs in Canada’s biggest energy producing province almost doubled in December to 157, the most for that month since at least 2010, the Alberta Energy Regulator said in data posted on its website late Wednesday. The number of crude development rigs fell by 4.3 percent to 134. Alberta’s gas prices dropped 35 percent last year while oil fell 46 percent. U.S. crude prices have plunged below $50 from last year’s high above $107 after the Organization of Petroleum Exporting Countries resisted calls to cut output amid a surge of U.S. crude production. While most conventional petroleum rigs in Alberta produce both gas and oil, the collapse of crude prices is prompting drillers to focus on wells with higher gas volumes, Mark Oberstoetter, […]

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Lower gasoline prices dampen U.S. consumer inflation

WASHINGTON (Reuters) – U.S. consumer prices in January posted their biggest drop since 2008 as gasoline prices continued to tumble and underlying inflation rose modestly, which could allow a cautious Federal Reserve more room to hold off on raising interest rates. Other data on Thursday showed a rebound in business investment spending plans, but probably not enough to change expectations of moderate economic growth in the first quarter. "It will be some time before the Fed gets the necessary confirmation that inflation will move back to target in the medium-term, and we continue to see September as the most natural starting point for the lift-off in rates," said Millan Mulraine, deputy chief economist at TD Securities in New York. The Labor Department said its Consumer Price Index fell 0.7 percent last month, the largest decline since December 2008, after slipping 0.3 percent in December. It was the third straight […]

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Wrench thrown in British shale gas gears

British shale pioneer Cuadrilla Resources denied permit for shale well operations, but says no fracking involved. Photo courtesy: Cuadrilla Resources LONDON, Feb. 26 (UPI) — British shale pioneer Cuadrilla Resources said it was "perplexed" by a regional council’s decision to deny a planning application for pioneer well developments. The company said it was denied a planning application to conduct seismic operations to get a better understanding of the resource potential at its Grange Hill site in Lancashire County, home to substantial potential reserves of shale natural gas. "We are perplexed and disappointed by the decision," the company said in a statement. There was no statement on the decision from Lancashire County itself on the permit application. Cuadrilla said the well operations did not involve any actual drilling or hydraulic fracturing operations. It received federal permits to move forward in Lancashire from the British Environment Agency earlier this month. Donna […]

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Ukraine Says It Will Pull Back Heavy Weapons as Situation in East Stabilizes

Ukraine’s army said it would begin pulling back heavy weapons from the front lines of the conflict in its eastern region on Thursday. WSJ’s Greg White reports. Photo: Getty MOSCOW—In the clearest sign yet that a cease-fire is taking hold, Ukraine’s army said it would start pulling back heavy weapons from the front lines of its 10-month conflict with Russia-backed militants. Ukraine announced the move Thursday after reporting two days of reduced shelling and no deaths among servicemen. The start of the withdrawal marks the second stage of an agreement struck two weeks ago, aimed at ending the fighting that has cost more than 5,000 lives and created the worst tensions between Russia and the West since the Cold War. Officials in Kiev said shelling was still taking place and expressed concerned that separatists want to continue recent advances and seize more territory, such as the industrial port city […]

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Ukraine’s Naftogaz Withheld Payment After Russia Cut Gas Supplies

ENLARGE Naftogaz Chief Executive Officer Andriy Kobolyev said Ukraine had the funds available to make the payment to Russia’s Gazprom for March gas supplies, but wouldn’t say how much money had been set aside. Photo: Bloomberg News BRUSSELS—The chief executive officer of Naftogaz, Ukraine’s state-owned natural gas company, said Thursday he couldn’t authorize paying Russia for March gas supplies because of a sharp drop in the amount of gas delivered by OAO Gazprom since Feb. 22. Russia has threatened to cut off gas supplies to Ukraine for nonpayment but Andriy Kobolyev said in a telephone interview from Kiev that Gazprom had been delivering 42 million cubic meters of gas daily to Ukraine, instead of 112 mcm as had been contracted. This was in breach of the gas-supply agreement signed on Oct. 30 in Brussels and meant he couldn’t responsibly authorize a prepayment to Gazprom for March gas deliveries. “There […]

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Ukraine says it pays for gas, Russia demands more

MOSCOW (AP) — Ukrainian gas company Naftogaz announced Friday that it had paid $15 million for another month of Russian gas, but Moscow says that the sum will only be enough for an additional day of deliveries. Interfax-Ukraine news agency quoted Naftogaz’s executive, Andrei Kobolev, as saying that the company had paid for gas supplies from Russia for the month of March. But a spokesman for Russian energy giant Gazprom said that the payment was only enough for one additional day of delivery if gas continues to be pumped to Ukraine at the current rate. Following a bruising dispute over prices and debt that raised fears of supply disruptions in Europe, Russia and Ukraine signed a deal in October requiring Kiev to pay in advance for gas shipments. President Vladimir Putin and other government officials warned earlier this week that Russia would cut off supplies to Ukraine by the […]

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Russian Sanctions Seen Entrenched as EU, U.S. Maintain Pressure

Vladimir Putin, Russia’s president. Photographer: Oliver Bunic/Bloomberg (Bloomberg) — The European Union will probably overcome internal divisions and extend economic sanctions against Russia that expire in July even as the conflict in eastern Ukraine shows signs of abating, according to a survey of economists. The punitive measures will remain in place, according to 13 of 24 respondents surveyed by Bloomberg. Analysts are evenly split over whether initial violations of a cease-fire negotiated in Belarus this month may trigger new and tighter curbs. The EU’s next planned leaders’ summits, which may include a debate on Russian sanctions, are on March 19-20 and June 25-26. The 28-member bloc, along with the U.S., has continued to raise the threat of more sanctions even as a cease-fire sealed this month in Belarus takes hold in eastern Ukraine following a flareup in fighting. The penalties are heaping further pressure on an economy sliding into […]

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Are We In The Midst Of An Epic Battle Between Interest Rates And The Oil Price?

What follows is the continuance of my research, discussions, observations and thoughts around the nexus of debts, interest rates and the oil price. I now believe these relations are poorly understood and with total global debt levels at all time highs (and growing), years of low interest rates, which are kept low (by concerted efforts by central banks) while the oil price in recent months has collapsed may hide a SIGNAL that struggles with attention from too much noise. A collapsing oil price while interest rates remain low is likely the proverbial canary. Global Crude Oil Supplies, The Oil Price And Interest Rates Figure 1: The green area [left hand axis] in the chart above shows the world’s development of crude oil and condensates supplies between 1980 and 2013. The pink line shows the development in the interest rate (yield) for US 10 Year Treasuries [right hand axis]. The […]

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Crude Oil: Abundance Wins Over Depletion Theory

While some observers, including oil giant BP, are now predicting a slowdown in U.S. shale oil production as wells are depleted at a faster rate, to be replaced by Middle Eastern output that has lost ground to U.S. sha.. In 2008, Canadian economist Jeff Rubin stunned the oil market with a bold prediction: With the world economy growing at 5 percent a year, oil demand would grow with it, outpacing supply, thus lifting the oil price from $147 to over $200 a barrel. The former chief economist at CIBC World Markets was so convinced of his thesis, he wrote a book about it. “Why the World is About to Get a Whole Lot Smaller” forecast a sea change in the global economy, all driven by unsustainably high oil prices, where domestic manufacturing is reinvigorated at the expense of seaborne trade and people’s choices become driven by the ever-increasing prices […]

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How correct were Colin Campbell and Jean Laherrère when they published “The End of Cheap Oil” in 1998?

End of Cheap Oil Scenario Desmond Smith posted a comment after my previous blog: “The crash in the price of oil may change the oil market – a look at the IEA’s “Oil Medium-Term Market Report 2015” and it requires a lengthy response. Therefore, I am giving it in this separate blog. End of Cheap Oil Scenario 17 years ago, in March 1998, Colin Campbell and Jean Laherrère published their now classic article, “The End of Cheap Oil” in the journal Scientific American. The figure above is copied from the 1998 article and shows curves fitted to oil production with the source of this information given as Jean Laherrère. It has been quite a long time since I read Colin and Jean’s article but after a comment by Desmond Smith below my blog, “The crash in the price of oil may change the oil market – a look at […]

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Oil rises above $62 after Saudi comments on demand

LONDON (Reuters) – Oil rose above $62 a barrel on Thursday as indications of a coming recovery in demand offset a further jump in U.S. crude stockpiles which underlined currently ample supplies. Crude benchmarks in the U.S. and Europe posted their largest percentage gains in nearly two weeks on Wednesday, supported by remarks from Saudi Arabia’s oil minister, Ali al-Naimi, and a slightly stronger-than-expected Chinese manufacturing survey. Brent crude LCOc1 rose 71 cents to $62.34 by 5.23 a.m. ET, after jumping more than 5 percent on Wednesday. U.S. crude CLc1 fell 40 cents to $50.59, following a more than 3 percent gain in the previous session. "The comments yesterday, the change of tone from Saudi Arabia, is still an element," said Olivier Jakob, analyst at Petromatrix, of Brent’s gain. "The market is still reacting to that." Brent collapsed from $115 in June on global oversupply, in a decline that […]

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Brent inches up toward $59 on Fed flexibility, China factory growth

SINGAPORE (Reuters) – Brent crude edged up toward $59 a barrel on Wednesday, helped by better-than-expected Chinese factory activity data, the Federal Reserve’s flexible stance on U.S. interest rates and the euro zone’s approval of reforms proposed by Greece. But U.S. crude was weaker after settling lower for the fifth consecutive session on Tuesday on the back of a bigger-than- anticipated crude stock build-up. Brent had climbed 11 cents to $58.77 a barrel by 0751 GMT (2.51 a.m. EST), while U.S. crude futures fell 17 cents to $49.11 a barrel. China’s factory sector showed marginal expansion, according to the flash HSBC/Markit Purchasing Managers’ Index, which inched to a four-month high of 50.1 in February, just above the 50 level that separates growth in activity from contraction. A Reuters poll of economists had forecast a reading of 49.5. "That’s good news (as it means) potential oil demand, but I think […]

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Saudi satisfaction with ‘calm’ oil markets signals $60 anchor

LONDON (Reuters) – OPEC kingpin Saudi Arabia is feeling vindicated after a strategy of allowing oil to flood the market has begun to achieve what it was aiming for. As a global oil glut pushed prices down 60 percent between June 2014 and January 2015, signs began to emerge that OPEC’s rivals, including North American producers, will have to curtail output of their expensive barrels. Two months into 2015, oil prices have recovered to around $60 per barrel from their January lows of $45 – much faster than Saudi Arabia had hoped for when it convinced fellow OPEC members in November not to cut output to defend market share against shale oil and other competing supply. In his first public comments since oil prices rebounded, veteran Saudi Oil Minister Ali al-Naimi signaled satisfaction with developments, saying he saw oil demand growing and that markets were "calm". A day earlier, […]

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Oil Demand Seen Rising by Saudi’s al-Naimi as Market Calm

Saudi Arabia’s Oil Minister Ali Al Naimi. The Organization of Petroleum Exporting Countries, led by Saudi Arabia, decided on Nov. 27 to keep its production target unchanged, leaving more expensive operators to reduce output. Photographer: Samuel Kubani/AFP/Getty Images (Bloomberg) — Oil demand is growing and the market has turned “calm,” Saudi Arabia’s Oil Minister Ali al-Naimi said. “We want to see calm markets,” al-Naimi told reporters after a speech at a conference in the Red Sea city of Jazan in the nation’s southwest. Saudi Arabia will remain the largest oil exporter, he said, without specifying dates. Brent crude futures, a benchmark for more than half of the world’s oil, has gained 3.6 percent this year after plunging 48 percent in 2014. The contract rose as much as 91 cents in trading Wednesday and was at $59.43 a barrel at 2:04 p.m. in London on the ICE Futures Europe exchange. […]

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Gulf Keystone paid for future Iraqi oil sale

Gulf Keystone Petroleum announces receipt of payment for future Iraqi crude oil sales, one day after said it was engaged with other parties on a possible sale of the company. Photo courtesy: Gulf Keystone Petroleum. The company said Thursday it received $20.8 million from an undisclosed third-party buyer for future sales of crude oil from its Shaikan development in the Kurdish north of Iraq. The company, which has headquarters in London, is producing oil from seven wells in the Shaikan development in the Kurdish north of Iraq. Total production was around 40,000 barrels of oil per day at the end of 2014. This week, it said it was engaged in talks with "a number of parties" about a possible sale of the company or transaction of assets. Earlier this month, it said it was owed an undisclosed amount of money from the Kurdish government. Company spokesman Mark Antelme said […]

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Kurdish peshmerga, IS reach stalemate

Kurdish peshmerga fighters walk with their weapons as they take control of an area on the outskirts of Mosul, Feb. 6, 2015. (photo by REUTERS/Ari Jalal) MULA ABDULA, Iraq — "How are the skies?" a gruff voice asks in Iraqi Arabic dialect. "The skies are clear," is the reply, after a crackle of static on the walkie-talkie through which a Kurdish major is listening to the conversation between two Islamic State (IS) militants on the other side of this front line, southwest of Kirkuk in Northern Iraq. An irrigation canal no wider than 10 meters (33 feet) separates the lightly armed Kurdish peshmerga forces from the extremist militants in Mula Abdula, where Maj. Aziz Ahmad stands behind a defensive berm, holding the walkie-talkie up to intercept the enemy’s communications. “They change the frequency regularly and it is not easy to intercept,” he told Al-Monitor. "IS is terrified of bomber aircraft, especially the French.” With the help of coalition […]

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Saudi Arabia Plans to Increase Refining Capacity

ENLARGE A storage tank at the Jubail refinery in Saudi Arabia. The country plans to become the world’s second-largest exporter of refined oil products in 2017. Photo: Associated Press JAZAN—Saudi Arabia plans to become the world’s second-largest exporter of refined oil products in 2017 as part of its drive to diversify its economy and increase its share of the global crude and petroleum products markets, the kingdom’s oil minister Ali al-Naimi said Wednesday. “We are no longer limited to exporting crude oil,” Mr. al-Naimi told a conference in this port city in southwest Saudi Arabia. The kingdom’s two new refineries will add 800,000 barrels a day in refining capacity this year. A planned 400,000-barrel-per-day oil refinery in Jazan will bring Saudi Arabia’s refining capacity to more than 3 million barrels a day, Mr. al-Naimi said. “That will make the kingdom one of the five largest countries in the world […]

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Shale Gas Project Encounters Determined Foes Deep in Algerian Sahara

ALGIERS — Deep in the Algerian Sahara, daily protests against a pilot hydraulic fracturing, or fracking, project are now well into their second month. The demonstrations have spread to several towns and have provided opposition parties with a new platform at an especially precarious moment for the government, as oil prices have slumped and the declining health of President Abdelaziz Bouteflika has removed him almost completely from public view. Hundreds of police officers sealed off streets to block an antifracking march in the capital, Algiers, on Tuesday as opposition groups held rallies around the country in solidarity with the southern protesters in the distant oasis town of Ain Salah. At first glance, Algeria might seem an unlikely place for the sort of popular movement against fracking, a method of tapping into deep deposits of shale gas, that has unfolded in many Western countries. Money from oil and gas accounts […]

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Downgrade of Brazil Oil Giant Stirs Wider Concern

The Petrobras logo is seen at a refinery in Cubatao, Brazil, on Tuesday. ENLARGE Photo: Reuters SÃO PAULO—A decision by a major credit-rating firm to downgrade to junk status the debt of Petróleo Brasileiro SA is stoking fears that Brazil’s sovereign rating could be next. Moody’s Investors Service late Tuesday slashed the debt of the company, known as Petrobras, two notches to Ba2, two steps below investment grade, on continued concern about the fallout from a corruption scandal and the state-run oil giant’s ability to pay down about $135 billion in debt. The downgrade was the third by Moody’s since October. Still, the size and timing of Tuesday’s cut surprised some analysts and sent the country’s leaders into a defensive crouch. Brazil’s largest company, Petrobras plays an outsize role in the nation’s economy, which is flirting with recession. Petrobras’s newfound junk status is “an unequivocal blow” to the administration […]

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Nigeria Cuts Forecasts for Oil Price, Currency for This Year

ABUJA, Nigeria—Nigeria on Wednesday cut its forecast for oil prices and the value of its currency this year, an acknowledgment of the pain tumbling energy costs are inflicting on Africa’s top crude producer. The senate voted to cut its benchmark expectation for oil prices this year to $52 a barrel, from $65 in December. Senators also pegged the average value of the local currency, the naira, this year at 190 to the U.S. dollar, well below the previous target of 165 to the greenback. Brent crude traded at about $59 a barrel on Wednesday and one dollar was worth about 200 naira. The currency has plunged to record lows this year as oil prices have lingered at about half their value just six months ago. Nigeria, Africa’s biggest economy, draws about 70% of government revenue and most of its foreign exchange earnings from its oil output. The plummeting value […]

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Tissue Paper-for-Venezuelan Oil Swap Offered by Trinidad

People queue up outside a supermarket in Caracas. Photographer: Federico Parra/AFP via Getty Images (Bloomberg) — Venezuela, plagued with shortages of basic goods, was offered a reprieve by the Prime Minister of neighboring Trinidad & Tobago: exchange oil for tissue paper. Prime Minister Kamla Persad-Bissessar suggested an oil-for-tissue swap in a news conference Tuesday following a meeting in Port of Spain with Venezuelan President Nicolas Maduro. She said the deal would benefit both countries. “The concept of commodity sharing is simple -– the Government of Trinidad and Tobago will purchase goods identified by the Government of Venezuela from T&T’s manufacturers, such as tissue paper, gasoline, and parts for machinery,” Persad-Bissessar said. In Venezuela, which has the world’s largest oil reserves, citizens line up outside supermarkets for hours seeking a bag of clothing detergent, toilet paper or cooking oil. Price controls and a lack of dollars for importers have emptied […]

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Venezuela Seeks Annulment of Exxon Award at World Bank Tribunal

CARACAS, Feb 25 (Reuters) – Venezuela has requested the annulment of a World Bank tribunal award that orders it pay Exxon Mobil Corp $1.6 billion in compensation for nationalizations, both sides said on Wednesday. George Kahale, Venezuela’s lawyer, said he did not know when the tribunal was likely to issue a decision on the request. "The first step is for the appointment of the committee to hear the annulment application, and that has not happened yet," said the lawyer with Curtis, Mallet-Prevost, Colt & Mosle LLP. "The schedule for the annulment process will not be determined until after the committee is appointed." Exxon said earlier on Wednesday the South American OPEC country had filed for an annulment of the International Centre for Settlement of Investment Disputes award on Feb. 2. "The application alleges that, in issuing the ICSID award, the Tribunal exceeded its powers, failed to state reasons on […]

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Kazakhstan expects oil production boom

Kazakh government expects oil boom once troubled Kashagan oil field resumes operations. (Photo: North Caspian Operating Co.) Kazakhstan’s government said Wednesday it expects oil production to increase by as much as 30 percent in part because of operations at its giant Kashagan field. Kashagan is among the largest oil fields in the world, with an estimated 16 billion barrels of oil reserves. Production was halted in October 2013, less than a month after it started, when a pipeline associated with the field cracked open. Kazakh Deputy Energy Minister Uzakbai Karabalin told reporters the government in Astana is determined to increase production despite a series of setbacks. "Oil output is expected to reach 630 million barrels in 2017 and 760 million barrels in 2020," he said. "This increase will be due to the expansion project at [onshore oil field] Tengiz and resumption of offshore oil production at Kashagan." Kazakh production […]

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Forecasting China’s Oil Buying Grows Harder

ENLARGE A tanker in eastern China. The country has snapped up oil in response to low prices. Photo: European Pressphoto Agency DALIAN, China—Just northeast of this coastal city, the highway ends where guards block entry to one of China’s strategic oil reserves. Behind a gate, mountains hide the site. As obscure as the view of Dalian’s oil-reserve tanks is the outlook for China’s oil demand. When benchmark oil prices tumbled last year—falling by more than half within six months—China rushed to buy. The drop in price suddenly made it more affordable to fill stockpiles that the government and oil companies have set up to increase energy security. The effort gave a boost to global demand, contributing to 9.5% growth in China’s crude-oil imports last year: tens of millions of additional barrels from the Middle East, Russia and elsewhere. That buying has made the task of assessing true Chinese demand […]

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China fuel oil: Shandong teapot refiners likely to further cut fuel oil demand

Singapore (Platts)–26Feb2015/301 am EST/801 GMT Demand for imported fuel oil as feedstock at teapot refineries in East China’s Shandong province remains weak after the week-long Lunar New Year holiday, with the market now watching out for the release of additional crude import quotas, sources said Thursday, February 26. "With the government [likely to] allocate more crude quotas to teapot refineries, demand for imported fuel oil as feedstock will probably continue to be squeezed," said a Shandong-based trader. Early last week, the National Development and Reform Commission released a circular outlining rules stating that qualifying refiners that want to apply for crude import quotas must permanently shutter small primary processing units. In the case of teapot refineries in Shandong, around 15 refiners have crude distillation units under 2 million mt/year (40,000 b/d) in size, while one refiner has a CDU larger than 2 million mt/year in capacity. These refiners would […]

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Yellen Says Oil Price Means Inflation Will Fall Before It Rises

(Bloomberg) — Federal Reserve Chair Janet Yellen told lawmakers the impact of lower oil prices means the U.S. inflation rate will decline before it eventually rises toward the central bank’s 2 percent target. “We think inflation is going to move lower before it moves higher,” she said in testimony today before the House Financial Services Committee. “Declining oil prices have had a very major influence.” The Fed chair reiterated that she expects the drag on inflation “will be transitory.” “Especially with an improving labor market we expect inflation in the medium term to move to our 2 percent target,” she said. Yellen said in December she and colleagues will want to be “reasonably confident” that inflation will move back to their target as they begin raising interest rates. The Fed’s preferred gauge of inflation, based on personal consumption expenditures, hasn’t touched 2 percent since April 2012, and rose just […]

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U.S. Oil Inventories Surge for Seventh Week

Photographer: Carlos Javier Sanchez/ Bloomberg Crude oil in storage in the U.S. jumped 2 percent, to 434 million barrels, according to EIA weekly data released today, Feb. 25. The increase of 8.43 million barrels was more than double the median estimate in a Bloomberg survey of analysts and was the biggest increase in a month. U.S. oil storage is bursting at the seams amid a global glut of supply that has driven prices down by half since last summer. U.S. inventories remain at their highest levels in at least 80 years, according to an analysis by Bloomberg Intelligence.  U.S. Oil Inventories Reach 80-Year High Oil prices fluctuated as the inventory news was tempered by slowing growth in production last week, rising a fraction of a percent to 9.29 million barrels a day, the EIA reported today. Production continues at the highest rate since 1972.  Winter weather and refinery outages have contributed to […]

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Bakken oil drillers retreat to the core

LONDON (Reuters) – North Dakota’s oil producers have pulled back to the core areas of the Bakken formation to cut costs and maximize output amid the slump in prices. The number of active rigs in the state has fallen to just 121, from 190 a year ago, according to an active rig list published by the state’s Department of Mineral Resources (DMR) on Wednesday. The rig count is now below the threshold of “at least 130” DMR Director Lynn Helms identified last month as needed to sustain output at the current level of just over 1.2 million barrels per day. But more important than the raw number is their distribution across the state, with drilling now increasingly concentrated in only the most promising areas. Of the 121 rigs active on Wednesday, 115 are drilling in just four counties at the heart of the Bakken – Dunn, McKenzie, Mountrail and […]

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Keystone shows environmental review process is broken

LONDON (Reuters) – "Because this act of Congress conflicts with established executive branch procedures and cuts short thorough consideration of issues that could bear on our national interest – including our security, safety and environment – it has earned my veto." With those words, the president returned the Keystone pipeline authorization act (S.1) to the Senate unsigned, and challenged lawmakers to find the two-thirds majorities in both houses needed to enact the law without his approval, something that remains unlikely. But by citing established procedures and the need not to short cut a thorough examination of the issues, after more than six years of environmental reviews, the president’s staff demonstrated they have absolutely no sense of irony and a deeply cynical approach to governing. The president’s advisers insist the administration has not yet taken a decision on the merits of the pipeline and is still waiting for the State […]

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U.S. crude stocks rise, distillates draw down to record low: EIA

NEW YORK (Reuters) – U.S. crude stocks rose last week to a seasonal record high for the seventh straight week as refineries cut output, while refined product inventories fell with distillates at seasonal record low levels, data from the Energy Information Administration showed on Wednesday. Crude inventories rose 8.4 million barrels in the week to Feb. 20, double analysts’ expectations for a 4 million-barrel rise, to 434.1 million barrels, their highest for the time of year since records began 80 years ago, the EIA said. Crude stocks at the Cushing, Oklahoma, delivery hub for U.S. crude futures rose 2.4 million barrels, EIA said. U.S. crude futures extended losses after the data but by 11:27 a.m., were up about 1 percent at $49.75 a barrel. "The report is relatively bullish, despite the large crude oil inventory build," said John Kilduff, partner at Again Capital LLC in New York. "The drawdowns […]

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CGG to Cut About 400 Jobs After Reporting $1.2 Billion Net Loss

(Bloomberg) — CGG SA, the oil field seismic surveyor that rejected a takeover approach last year by Technip SA, reported a net loss of $1.2 billion in 2014 after a writedown for restructuring costs and an impairment on marine assets. “We have faced a difficult environment last year which deteriorated brutally with the drop of oil prices in the last quarter,” Chief Executive Officer Jean-Georges Malcor said on a conference call Thursday. “Our focus is to generate cash this year through lower capital expenditure and restructuring.” Europe’s second-biggest oil-services provider Technip last year approached CGG about an offer that would have seen the combination of two French companies specialized in providing equipment and studies for energy companies. The surveyor, which has cut jobs and reduced its fleet, rejected the bid and said it was confident it could remain an independent company. Malcor said CGG will cut about 400 jobs […]

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How ‘Orphan’ Wells Leave States Holding the Cleanup Bag

ENLARGE Ed Presley stands by an idle well in Wyoming’s Powder River Basin, one of thousands that state regulators seized from his company, High Plains Gas, to ensure they didn’t pollute groundwater or soil. Photo: Ryan Dorgan for The Wall Street Journal GILLETTE, Wyo.—After a natural-gas boom in the Powder River Basin here petered out several years ago, few energy companies were interested in the leftover wells pockmarking the prairie. Then Ed Presley came along. The burly, bearded speculator acquired roughly 3,000 idle wells, many for a few dollars. With a salesman’s charm, he vowed to revive the wells with a contraption called the Gazmo. But Mr. Presley’s plan never produced any gas. He says he couldn’t raise enough money for his company, High Plains Gas Inc., to follow through. Last year, Wyoming seized most of his wells to ensure they didn’t pollute groundwater or soil, declaring them abandoned. […]

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Food Waste Is Becoming Serious Economic and Environmental Issue, Report Says

WASHINGTON — With millions of households across the country struggling to have enough to eat, and millions of tons of food being tossed in the garbage, food waste is increasingly being seen as a serious environmental and economic issue. A report released Wednesday shows that about 60 million metric tons of food is wasted a year in the United States, with an estimated value of $162 billion. About 32 million metric tons of it end up in municipal landfills, at a cost of about $1.5 billion a year to local governments. The problem is not limited to the United States. The report estimates that a third of all the food produced in the world is never consumed, and the total cost of that food waste could be as high as $400 billion a year. Reducing food waste from 20 to 50 percent globally could save $120 billion to $300 […]

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Chesapeake’s $4-4.5 billion capex down 37% vs. last year

HOUSTON, Feb. 25 02/25/2015 Chesapeake Energy Corp. , Oklahoma City, is budgeting total capital expenditures, including capitalized interest, of $4-4.5 billion for 2015. Using the midpoint of the range, it represents a 26% reduction compared with the company’s 2014 capital expenditures before acquisitions of $5.8 billion, and a 37% reduction from the company’s 2014 total capital expenditures of $6.7 billion. Chesapeake for 2014 reported net income available to common stockholders of $1.273 billion. The primary component of this increase was unrealized gains on the company’s oil and natural gas commodity derivatives, partially offset by the redemption of all the outstanding preferred shares of a subsidiary. Adjusting for these items, full-year adjusted net income available to common stockholders was $957 million, compared with adjusted net income available to common stockholders of $965 million in 2013. Notably during the fourth quarter, the company received $5.1 billion of net proceeds from asset […]

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Encana Cuts 2015 Budget After 85% Fall In Operating Profit

URL: http://www.rigzone.com/news/oil_gas/a/137400/Encana_Cuts_2015_Budget_After_85_Fall_In_Operating_Profit CALGARY, Alberta, Feb 25 (Reuters) – Encana Corp, Canada’s largest natural gas producer, slashed its 2015 capital budget by a quarter on Wednesday in response to a slump in global crude oil prices. The company joins a slew of other Canadian oil and gas producers, including Suncor Energy and Cenovus Energy , that have cut back spending as benchmark crude prices more than halved since June. Encana said it will spend between $2 billion and $2.2 billion in 2015, down from the original budget of $2.8 billion announced in December. Chief Executive Officer Doug Suttles also said Encana, which since 2013 has been selling off natural gas assets to concentrate spending on regions rich in high-value gas liquids and oil, will look to see if there are further opportunities to trim its portfolio. "We are well prepared to act … The lower points in the commodity cycles […]

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Ruble Poised for Record Month as Oil Gains Trump Ukraine Concern

The skyscrapers of the Moscow International Business Center on Oct. 28, 2014. (Bloomberg) — The ruble rallied for a second day, extending its biggest monthly increase on record, while Russian stocks and bonds gained as oil climbed and a cease-fire in Ukraine showed signs of holding. The currency rose 1.4 percent to 60.5470 per dollar by 12:08 p.m. in Moscow, taking its advance in February to 15 percent. Crude oil, Russia’s main export earner, is trading near its highest level this year, while Ukraine signaled that the cease-fire struck this month may endure. “Oil rallies and so does the ruble,” Dmitry Polevoy, chief economist for Russia and CIS at ING Groep NV in Moscow, said in e-mailed comments. “The geopolitical concerns have mostly been priced in, and to move the ruble considerably weaker, any new economic sanctions must be much tougher than what they are right now in reality, […]

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Seven Russian banks downgraded by Moody’s

Moody’s downgrades ratings for seven Russian banks, including the financial arm of energy company Gazprom. Photo by Denis Larkin/Shutterstock The downgrade for Sberbank, Bank VTB, Gazprombank, Russian Agricultural Bank, Agency for Housing Mortgage Lending, Vnesheconombank and Alfa-Bank follows a lowering by Moody’s of the government debt rating to Baa3, the lowest investment grade rating, last week. Moody’s said it also lowered the financial strength ratings of Sberbank, Bank VTB, JSC , Gazprombank and Alfa bank. "This is due to Moody’s expectation that the prolonged recessionary environment in Russia will produce a very challenging operating environment for the country’s leading banks and thereby impact their financial fundamentals," the ratings agency said in a Tuesday profile. Standard & Poor’s and Fitch Ratings each lowered their ratings for Gazprombank and others earlier this year. The financial arm of the Russian energy company is the subject of sanctions imposed in Russia in response […]

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EU Seeks Meeting on New Ukraine-Russia Gas Dispute

ENLARGE A man boils water on an open fire in the town of Svitlodarsk in eastern Ukraine, where shelling has destroyed gas supply infrastructure. Moscow and Kiev are quarreling about who is responsible for supplying and paying for gas to Ukraine’s rebellious east. Photo: Associated Press BRUSSELS—The European Union is trying to convene a three-way meeting with the Ukrainian and Russian energy ministers to resolve the conflict over gas supplies to the separatist-controlled areas in eastern Ukraine. Speaking at a news conference in Brussels on Wednesday, European Commission Vice President for Energy Union Maros Sefcovic said he has proposed that the issues of supplies and the cost of gas for the rebel-held Donetsk and Luhansk territories in eastern Ukraine be treated independently of a winter gas supply package. That agreement between Moscow and Kiev was brokered by the EU in late 2014. “I believe that this question, of course, […]

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The Siberian crater saga is more widespread — and scarier — than anyone thought

A member of an expedition group at the edge of a newly formed crater on the Yamal Peninsula in northern Siberia on Nov. 9, 2014. (Vladimir Pushkarev/Russian Centre of Arctic Exploration via Reuters) At the end of last summer came news of a bizarre occurrence no one could explain. It was a massive crater that just one day showed up. Early estimates placed it at nearly 100 feet in diameter, nestled deep in Siberia’s Yamal Peninsula, a place called “the ends of the Earth.” The saga deepened. The Siberian crater wasn’t alone. There were two more, ratcheting up the tension in a drama that hit its climax as a probable explanation surfaced. Global warming had thawed the permafrost, which had caused methane trapped inside the icy ground to explode. “Gas pressure increased until it was high enough to push away the overlaying layers in a powerful injection, forming the crater,” […]

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Is the US Overplaying Its Energy Hand?

Poker game image via shutterstock. Reproduced at Resilience.org with permission. In the grand poker game of geopolitics, energy is often the wild card. That’s why the Middle East is such a mess: Great Powers (first Britain, more recently the United States) have been installing, propping up, toppling, threatening, or bribing regimes in that region — almost always to the detriment of indigenous populations — ever since the first oil discovery there  prior to World War I . Oil and natural gas interests are clearly implicated in current turmoil in or around Libya, Iraq, Syria, and Iran—and also Ukraine. In each instance it requires some historical context to understand the peculiarities of the situation; let’s focus for a moment on the last of these countries. Ukraine has long been a transit route for Russian gas destined for Europe. The fact that Russia is an energy superpower is frustrating to Anglo-American […]

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Oil: Shocking how vital it still is

Oil: Shocking how vital it still is thumbnail The idea is a pretty simple one. Every now and again – amid all the swirling reports and breaking news – it is worth taking a pause and bringing together what we know about the most important resource in the world. As part of the Big Oil Drop project , I was asked a straightforward question. “Why is oil so important? And could you write about it.” It was so straightforward a question that it sounded faintly ridiculous. Well, of course oil is important, I blustered, erm, we need it to drive in our millions of cars, jobs depend on it, the supply of energy is at the heart of much of global politics (just look at Russia now), wars are fought over it, without oil the lights would go out… I tailed off, realising that yes, of course, I knew […]

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Brent inches up toward $59 on Fed flexibility, China factory growth

SINGAPORE (Reuters) – Brent crude edged up toward $59 a barrel on Wednesday, helped by better-than-expected Chinese factory activity data, the Federal Reserve’s flexible stance on U.S. interest rates and the euro zone’s approval of reforms proposed by Greece. But U.S. crude was weaker after settling lower for the fifth consecutive session on Tuesday on the back of a bigger-than- anticipated crude stock build-up. Brent had climbed 11 cents to $58.77 a barrel by 0751 GMT (2.51 a.m. EST), while U.S. crude futures fell 17 cents to $49.11 a barrel. China’s factory sector showed marginal expansion, according to the flash HSBC/Markit Purchasing Managers’ Index, which inched to a four-month high of 50.1 in February, just above the 50 level that separates growth in activity from contraction. A Reuters poll of economists had forecast a reading of 49.5. "That’s good news (as it means) potential oil demand, but I think […]

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Oil Prices Slip on Expected Rise in Supplies

ENLARGE The silhouette of pump jacks is seen on the site of an oil well outside Williston, N.D. Photo: Bloomberg News Oil prices slipped on Tuesday as traders fretted about the unrelenting growth in U.S. crude stockpiles. Analysts expect inventories to rise for a seventh straight week, extending their already record level. U.S. oil supplies likely rose by 4.7 million barrels last week, according to the consensus average forecast of 11 analysts surveyed by The Wall Street Journal. Light, sweet crude for April delivery settled down 17 cents, or 0.3%, to $49.28 a barrel on the New York Mercantile Exchange. Brent, the global benchmark, fell 24 cents, or 0.4%, to $58.66 a barrel on ICE Futures Europe. Prices had been higher for most the day, but a late-session decline made it a five-session losing streak for U.S. oil and back-to-back losses for Brent. “This crude market is like Sisyphus. […]

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Libya’s Largest Oil Field Shut Down Again on Power Failure

Libya’s largest oil field was shut down again Tuesday after heavy rain led to a power failure, a Libyan oil official said. The Sarir oil field had resumed oil flows on Sunday after repairs were made to a pipeline blown up by militants a week earlier. The field normally pumps 185,000 barrels a day to the eastern Libyan oil port of Hariga. The official estimated that the field would begin pumping again in a few days. Write to Benoît Faucon at [email protected]

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Kerry Defends Nuclear Talks With Iran

WASHINGTON—Secretary of State John Kerry defended international nuclear negotiations with Iran, saying the U.S. expects to know soon if Tehran is willing to agree to an “acceptable and verifiable plan” to curtail its nuclear program in exchange for sanctions relief. As a key deadline for a framework agreement nears and Israeli Prime Minister Benjamin Netanyahu is set to address Congress about his reservations next week, Mr. Kerry said the U.S. understands allies’ concerns and would explain an eventual agreement to them, should negotiators reach one. But he stressed there is no deal in hand and that no terms are final. “Anybody running around right now, jumping in to say, ‘Well, we don’t like the deal,’ or this or that, doesn’t know what the deal is. There is no deal yet,” Mr. Kerry said. The U.S. goal in the talks is to ensure “Iran will not get a nuclear weapon,” […]

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