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Oil Muddies U.S. Economic Picture

ENLARGE The sharp decline in oil prices and the drumbeat of energy companies laying off workers and cutting back spending ought to weigh on oil and gas output. But it could take some time for this to completely show up in Fed numbers. Work at a drilling rig in Texas. Photo: Getty Images U.S. industrial output is about to run out of energy. The same can’t be said for the U.S. economy. The Federal Reserve on Wednesday will release January figures on industrial production—the combined output of U.S. manufacturing, utility and mining sectors—and economists expect a gain of 0.4% from a month earlier. A pickup in manufacturing employment and hours, as well as auto-industry production schedules, suggest factory activity increased. There was a warm-weather downdraft in utility production in December that probably at least partially reversed itself last month. The problem area is mining. Although it conjures images of […]

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Libya’s oil economy at risk, envoy says

Libyan conflict may disrupt prime source of revenue, oil, says U.S. ambassador. UPITarek Alhuony. Internal conflicts in Libya may leave the country without a source of oil revenue in less than two years, the U.S. ambassador to Libya said Tuesday. The fire that resulted from the militant bombing of a pipeline at the Sarir oil field, the largest in Libya, was extinguished during the weekend. Sarir is in the same region as oil fields attacked last week by fighters claiming loyalty to the group calling itself the Islamic State. Libya before NATO forces intervened to protect civilians from attacks by forces loyal to former leader Moammar Gadhafi was producing around 1.2 million barrels of oil per day. In its monthly report for February, the Organization of Petroleum Exporting Countries said member-state Libya was producing around 343,000 bpd as of January, a 27 percent decline from December. Sarir was producing […]

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Iraqi Shiite cleric recalls militiamen from fight against Islamic State

Followers of Shiite cleric Moqtada al-Sadr attend open-air Friday prayers in the Shiite stronghold of Sadr City. (Karim Kadim/AP) BAGHDAD — Iraqi Shiite cleric Moqtada al-Sadr said Tuesday that he would freeze the activities of his militias, potentially pulling back thousands of fighters from the battle against Islamic State militants. Sadr claimed to have taken the decision as a “show of goodwill” following reports of atrocities by Shiite militia groups, many of which are not under his control. Analysts said, however, that other strategic motivations may have prompted the move. The cleric’s order covered the Peace Brigades and the Promised Day Brigade, both of which have their roots in the Mahdi Army, the notorious Sadr militia that was responsible for thousands of attacks on U.S. troops during the Iraq war. The Peace Brigades is among the largest of the Shiite militias that have proliferated since the Islamic State rapidly […]

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Iran prepared to impose oil, gas embargo if necessary: supreme leader

Tehran (Platts)–18Feb2015/601 am EST/1101 GMT Iran would be willing to impose a hydrocarbon embargo if there were a final deal in the nuclear talks with the West and international sanctions were not lifted, Supreme Leader Ayatollah Ali Khamenei said Wednesday. "If we do not resist, the enemy will put conditions on our nuclear program and impose sanctions," Khamenei was quoted as saying by the official IRNA news agency. "If it’s going to be sanctions, the Iranian nation will impose sanctions on them in future. Iran owns the biggest oil and gas reserves in the world." "Europe and the world need the gas. Iran can impose sanctions on them, if it becomes necessary," Khamenei said. "The enemy is using sanctions as much as possible. Their goal is to stop the [Iranian] people’s progress. I believe that even if the nuclear issue turns out the way they are dictating, the sanctions […]

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Pakistan Close to Agreement With Qatar Over LNG Supplies for Power Plants

ISLAMABAD—Pakistan is close to striking a long-term deal worth potentially $22.5 billion or more to import liquefied natural gas to help fuel the country’s power stations and ease its crippling electricity crisis, Pakistan’s top energy official said. “We are negotiating with Qatar and a few other sources,” said Pakistani Petroleum Minister Shahid Khaqan Abbasi in an interview with The Wall Street Journal. “The deal will be very competitive and very beneficial for Pakistan.” An agreement with Qatar is expected by early March, Pakistani officials say. Pakistani Prime Minister Nawaz Sharif came to office in May 2013 on a pledge to reduce the country’s electricity shortages, which see power regularly cut to homes and businesses for eight or more hours a day. Tackling the electricity deficit, however, has thus far largely eluded Mr. Sharif’s government. The government has promised to eradicate the electricity shutdowns, known as load shedding, by the […]

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World’s Largest Oil Exporter Said to Seek $10 Billion

A worker stands at a pipeline, watching a flare stack at the Saudi Aramco oil field complex facilities at Shaybah, in Saudi Arabia. Saudi Aramco, as it’s known, is in talks with international and local banks to replace an undrawn $4 billion loan, the people said, asking not to be identified as negotiations are private. Photographer:Reza/Getty Images (Bloomberg) — Saudi Arabian Oil Co., the world’s largest oil exporter, is in talks with banks to raise a $10 billion loan that could be used to fund acquisitions and other investments, according to four people with knowledge of the matter. Saudi Aramco, as it’s known, is negotiating with international and local banks to replace an undrawn $4 billion loan, the people said, asking not to be identified as the plans are private. Saudi Aramco told banks that it expects to make withdrawals under the new facility, two of the people said. […]

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Boko Haram Threatens to Disrupt Nigeria’s Elections in New Video

Abubakar Shekau, leader of Boko Haram. The insurgents distributed leaflets in the town advising residents not to vote in the presidential and legislative elections, which were delayed from Feb. 14. Source: AP Photo (Bloomberg) — The leader of the Islamist militant group Boko Haram vowed in a new video to disrupt Nigeria’s rescheduled general elections starting March 28. “This election will not hold even if we are dead,” Abubakar Shekau said in the video posted on Twitter, which couldn’t be independently verified. “Allah will not even allow it to happen.” Shekau claimed responsibility for a Feb. 14 attack on the northeastern state capital of Gombe, where detained militants were freed. The insurgents distributed leaflets in the town advising residents not to vote in the presidential and legislative elections, which were delayed from Feb. 14. Boko Haram has escalated its six-year-old campaign to impose Islamic law on Nigeria, Africa’s biggest […]

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Venezuela Squanders Its Oil Wealth

National Guard monitor a supermarket in Caracas, on Feb. 3, 2015. (Bloomberg) — By packing bags for $1 a day and with tips at a Caracas supermarket, Luis has managed to save up for a Japanese sports motorbike. His secret? Getting hold of scarce food before it hits the shelves. Luis offers preferential access to detergent, milk and sugar to his clientele of about 100 diplomats at a Centro Madeirense shop in the south of the capital. In return, they offer him occasional work as a handyman or courier and loan him money during dry patches. “Times are tough. We have to spin to survive,” Luis, 30, said in an interview in Caracas last month. “We have to be creative with the opportunities at hand to make ends meet.” Price controls have emptied stores of most goods, while the world’s highest inflation has pushed what is available beyond the […]

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China Considering Mergers Among Its Big State Oil Companies

ENLARGE Drivers wait to fill their tanks at a Sinopec gas station in Zhengzhou, Henan province, Feb. 9, before China was set to raise retail prices after global oil prices recovered some 20 percent in the past two weeks. Photo: Reuters BEIJING—China is considering forging megamergers among its big state oil companies, seeking to create new national champions able to take on the likes of Exxon Mobil Corp. and produce greater efficiencies at a time of low prices. At the request of China’s leadership, government economic advisers are conducting a feasibility study of options for consolidation, according to officials with knowledge of the research. One involves potentially combining the country’s largest oil companies, China National Petroleum Corp., or CNPC, and its main domestic rival, China Petrochemical Corp., or Sinopec, the officials said. Other options look at merging two other major energy companies, China National Offshore Oil Corp., or Cnooc, […]

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Beijing’s Step Back With Big Oil

Beijing is considering mergers for its state-controlled oil giants, such as the owner of PetroChina. ENLARGE Photo: Reuters If Exxon Mobil didn’t exist, would you invent it? China may be in the “yes” camp—which is a curiously retro position in today’s oil industry. Beijing is considering mergers for its state-controlled oil giants, such as China National Petroleum Corp., or CNPC, The Wall Street Journal reported Tuesday. PetroChina, CNPC’s listed arm, alone is worth north of $300 billion. Energy bankers will no doubt turn misty-eyed at the prospect of a late-1990s-style round of megamergers, exemplified by Exxon’s takeover of Mobil. But the world has moved on. While investors have sought refuge in Big Oil stocks amid the recent slump in prices, Small Oil has been much more in favor in recent years. Marathon Oil and ConocoPhillips split into separate upstream and downstream firms in 2011 and 2012, respectively. The resulting […]

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Study: Oil Price Downturn Creates Need for ‘Cost Culture’ in Industry

URL: http://www.rigzone.com/news/oil_gas/a/137267/Study_Oil_Price_Downturn_Creates_Need_for_Cost_Culture_in_Industry Companies across all sectors of the oil and gas industry will need to create a "cost culture" to survive the recent downturn in oil prices, according to a study by AlixPartners. Companies across all sectors of the oil, gas and chemicals industry will need to better plan and manage projects to ensure their survival during the recent downturn in oil prices, according to a recent study by global business advisory firms AlixPartners. Oil and gas companies not only need to improve their ability to plan and manage projects, but create a “cost culture” inside of their companies. Only 30 percent of respondents in a study of 250 high-level industry executives across the world said their companies had explicit return-on-capital targets for projects before the oil price collapse. Perhaps most surprising is that 12 percent of respondents believe their companies are any better than competitors at project execution, […]

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Chesapeake Energy Sues Ousted Founder

ENLARGE Aubrey McClendon, former chief executive of Chesapeake Energy, called the company’s lawsuit “baseless” and accused Chesapeake of trying to breach his severance agreement. Photo: Reuters Chesapeake Energy Corp. sued its ousted founder, Aubrey McClendon , claiming Tuesday that he stole sensitive data in the days before he left in 2013. The company alleges that Mr. McClendon, while still running the company, had his assistant print out maps and data about oil and gas prospects in Ohio and sent the same information to his personal email address. “Due to the concealed nature of McClendon’s conduct, Chesapeake did not discover McClendon’s misappropriation until long after he had separated from Chesapeake,” the company stated in a lawsuit filed in Oklahoma County District Court. Mr. McClendon, who founded rival American Energy Partners LP after leaving Chesapeake, called the lawsuit “baseless” and accused Chesapeake of trying to breach his severance agreement. American Energy […]

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Kinder Morgan Acquires Hiland

$3 Million Deal Moves Company into Bakken Contenental Resources CEO, Harold Hamm Kinder Morgan announced last week that it finalized the acquisition of Hiland Partners, a midstream firm founded by Harold Hamm, CEO of Continental Resources. The deal, reported at $3 billion, includes assuming almost $1 billion in debt. Hiland primarily serves production from the Bakken Formation in North Dakota and Montana and by operating crude oil gathering/transportation pipelines and gas gathering/processing systems including roughly 1,225 miles of pipeline. Company officials anticipate retaining nearly all of Hiland’s approximately 430 employees. “We are delighted to establish a substantial midstream footprint in one of the most prolific oil producing basins in the United States,” said KMI Chairman and CEO Richard D. Kinder. “Hiland’s systems serve some of the Bakken’s largest and most successful producers, including Continental. We look forward to continuing to provide high quality midstream services to these producers and […]

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U.S. gasoline prices following oil markets

Retail price for a gallon of regular unleaded gasoline on the rise, mirroring rally in crude oil prices. Photo by John Angelillo/UPI Crude oil prices have recovered more than 20 percent of their value since the end of January in part because the 2014 slump in prices left energy companies with less money to spend on exploration and production. Patrick DeHaan, a senior analyst at GasBuddy.com, said that increase is showing up at the pump . "Prices at the pump are starting to heat back up, mostly driven by a rebound in crude oil prices," he said in a statement Monday. "Nationally, almost 9 in 10 stations are selling over $2 per gallon, while a month ago, less than half of stations were selling over that price." GasBuddy.com shows a national average price Tuesday of around $2.26 for a gallon of regular unleaded gasoline, up about a penny from […]

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Ohio City Loses Fight for Control Over Oil and Gas Drilling

In this Wednesday, Jan. 4, 2011 file photo, a brine injection well in Youngstown, Ohio. (Bloomberg) — An Ohio city lost a battle for control over oil and gas drilling permits within its borders with the Ohio Supreme Court saying the authority belongs to the state. The ruling on Tuesday runs counter to decisions issued by New York’s top court last year and the highest Pennsylvania court in 2013 as local municipalities concerned over the effects of hydraulic fracturing seek to limit the practice. More than 400 measures to prevent or control fracking have been passed by U.S. cities and counties according to Food & Water Watch, a Washington-based environmental advocacy group. The process, which involves the injection of water, chemicals and sand below ground to extract oil and gas from shale formations, has been criticized as environmentally dangerous, even as its use has driven U.S. natural gas production […]

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CSX train hauling North Dakota oil derails, cars ablaze in West Virginia

BECKLEY, W.Va. (Reuters) – A CSX Corp train hauling North Dakota crude derailed in West Virginia on Monday, setting a number of cars ablaze, destroying a house and forcing the evacuation of two towns in the second significant oil-train incident in three days. One or two of the cars plunged into the Kanawha River, and “a couple are burning," said Robert Jelacic, night shift manager of the West Virginia Department of Homeland Security and Emergency Management. There were no injuries or deaths, he said. CSX said the train was hauling 109 cars from North Dakota to the coastal town of Yorktown, Virginia, where midstream firm Plains All American Pipelines runs an oil depot. It said one person was being treated for potential fume inhalation. West Virginia State Police First Sergeant Greg Duckworth, who was at the crash site, told Reuters that nine or 10 of the cars had exploded […]

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Oil-Train Fireball Seen Adding Pressure for U.S. Safety Decision

Derailed oil tanker train cars burn near Mount Carbon, West Virginia, on Feb. 16, 2015. Photographer: Marcus Constantino/The Daily Mail via AP Photo (Bloomberg) — Video images of a fireball boiling from the wreckage of a derailed train hauling Bakken crude are adding to pressure on federal regulators to act on new safety standards for oil shipments. While there were no fatalities in the CSX Corp. accident in rural West Virginia on Monday, the footage of flames and smoke rekindles public alarm over the prospect of tank cars rumbling through urban areas, according to a former U.S. Transportation Department official and a railroad consultant. “It weakens the railroad’s and the industry’s ability to argue on the merits” to shape the government’s decision, Brigham McCown, a former chief of the Pipeline and Hazardous Materials Safety Administration, said by phone Tuesday. “In Washington, D.C., perception is reality. Railroads have to get […]

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Russia expects prolonged economic slump

Russian economy to enter period of prolonged decline, Kremlin report says. File Photo by Denis Larkin/Shutterstock MOSCOW, Feb. 17 (UPI) — Russia’s economy is entering a period of prolonged retraction because of the dual strains of sanctions and weak crude oil markets, the Economy Ministry said. A forecast for 2015 by the Russian Economy Ministry expects export revenues to decline as Russian energy products wane from the world market. "Gross domestic product is expected to contract by 3 percent amid persistently strong geopolitical risks and the presumption that average annual oil prices will equal $50 per barrel," the document, released Monday, said. "Forecasts show that the Russian economy will enter a phase of a prolonged decline in 2015." Russia’s currency, the ruble, is contracting as the economy weakens. The ruble was trading near 63 to the U.S. dollar, close to a historic low. In December, the World Bank said […]

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EU gas security at risk, commissioner says

European markets need a more diverse supply of natural gas to reduce risks posed by Russia, commissioner says. UPI/Hamid Forotan. European markets get about 20 percent of their natural gas needs met by Russia, though most of that gas runs through the Soviet-era transit network in Ukraine. Simmering conflict, despite a recent cease-fire agreement, and ongoing debt rows between Kiev and Moscow expose a layer of vulnerability in the European economy. EU Climate Action and Energy Commissioner Miguel Arias Cañete said energy diversity means energy security for member states. "Without swift and decisive action, member states will remain dependent on a single supplier that views the sale of gas not simply as a commercial matter, but as a political weapon," he said in an address to policymakers in Brussels. Contractual rows between Kiev and Moscow resulted in gas supply disruptions for Europe in 2006 and 2009. In response, member […]

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UK approves world’s biggest offshore wind farm

Scroby Sands offshore wind farm in the North Sea off Norfolk, south of the planned superfarm The world’s biggest offshore wind scheme has been given the go-ahead off the coast of Yorkshire, in a move the government said was likely to create hundreds of jobs. The Dogger Bank Creyke Beck project is expected to be one of the UK’s biggest power stations, second only to the Drax coal-fired plant in North Yorkshire and capable of supplying about 2.5 per cent of the country’s electricity. More On this topic IN UK Politics & Policy The scheme’s developers have yet to take a final investment decision and the project will almost certainly have to secure backing under the government’s renewable energy subsidy system. But the government’s planning consent for such a large development was welcomed by the industry. “This is an awesome project,” said Nick Medic, director of offshore renewables at […]

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Canada Unveils New Sanctions Against Moscow, Sympathizers in Ukraine

Canada unveiled new sanctions Tuesday evening against Moscow and its sympathizers in Ukraine that includes among its highest-profile targets the chief executive of Russia state-owned defense company Rostec, Sergey Chemezov, and the state-run energy firm Rosneft. Canada said the latest round of sanctions would apply economic sanctions and travel bans against 37 Russian and Ukrainian individuals, and economic penalties against 17 Russian and Ukrainian entities. Besides Mr. Chemezov and Rosneft, others targeted by the new Canadian sanctions include lawmakers in the Russian legislature; military officials; the head of Russia’s largest motorcycle club, the Night Wolves; and members of the Donetsk and Luhansk separatist groups in Ukraine. An official at Russia’s embassy in Ottawa declined to comment when reached Tuesday night on Canada’s new round of sanctions. Canadian Prime Minister Stephen Harper said the measures were in response to “escalated acts of aggression” in recent weeks allegedly perpetrated by Russian-backed […]

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Eni Falls Deeper Into Red on Lower Oil Price

ENLARGE Eni SpA said its fourth-quarter net loss widened as lower crude prices hit revenue and triggered write-downs. Photo: Bloomberg News MILAN— Eni SpA has reported a wider net loss in the fourth quarter as the sharp drop in crude oil prices played havoc with the Italian oil and gas group’s performance, knocking revenue lower and triggering hefty write-downs. Eni said its net loss widened to €2.34 billion ($2.67 billion) in the three months to end-December, compared with a net loss of €647 million in same period the previous year, on a 10% drop in revenue to €26.83 billion. Adjusted profit, which strips out special items, dropped by two-thirds to €464 million, below a consensus analysts’ forecast €614 million. Showing similar strain to its bigger European rivals like Royal Dutch Shell NV, BP PLC, and Total SA, Eni said it marked down the value of its oil and product […]

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Putin Offers Hungary Natural-Gas Deal

ENLARGE Russian President Vladimir Putin, center, and Hungarian Prime Minister Viktor Orban, right, arrive to speak to the media following lengthy talks at Parliament Tuesday in Budapest. Photo: Getty Images Russian President Vladimir Putin offered Hungary’s Kremlin-friendly government more favorable terms for natural-gas supplies during a visit to Budapest that underscored Europe’s challenge in defying Moscow over Ukraine amid reliance on Russia for energy. Under a new deal, Hungary will pay Russia only for the gas it actually consumes, as opposed to the volume it contracts, lowering costs for Hungarian authorities. Hungary relies on Russia for 70% of its gas, supplied under a 20-year contract that expires this year. Hungarian Prime Minister Viktor Orban said a political agreement on the gas deliveries had been reached, though technical details needed to be completed. He made a joint appearance with Mr. Putin in Budapest, a public-relations victory for a Russian president […]

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Peak What?

Peak What? thumbnail I’ve been maintaining “radio silence” for a while—mostly on account of an overflowing plate and several new new hats I wear. All the while, I have received a steady stream of e-mail thanking me for Do the Math, asking if I’m still alive, and if so: what do I make of the changing oil situation? Do I still think peak oil is a thing? Let’s start with the big picture view. I was wrong about everything. Oil is not a finite resource: never was and never will be. We will employ new technologies and innovate our way into essentially perpetual fossil energy. We’ve only scratched the surface in exploration: there are giant deposits (countless new Saudi-Arabia-scale fields) yet to be discovered). The shale oil tells us so—and it won’t stop there. Shale first, then slate, marble, granite: just squeeze the frack out of rocks and we’ll […]

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Fooling peak oil one more time: can we find new sources of liquid hydrocarbons?

The world peak of conventional oil production took place in 2005-2006, but the supply of combustible liquids did not decline, mainly because of the contribution of the newly developed “shale oil” (or “tight” oil) fields. With the impending worldwide peak of “all liquids” it is likely that the industry will try a new, all out effort to squeeze out the last drops of liquid oil from whatever sources are available, no matter how dirty and expensive. It is not certain that the attempt will be successful, but it is likely that some new monstrosity will be created in Sauron’s satanic mills.  Peak oil is something referred to as a “theory,” intended in a derogatory sense. But the concept is not just a theory; production peaks are historically observed facts, occurring not just for oil, but for any natural resource which is exploited beyond its capability to reform (e.g. for […]

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Oil rises to $62, close to 2015 high

LONDON (Reuters) – Oil rose to $62 a barrel on Tuesday, close to its 2015 high, supported by threats to Middle East supplies and expectations lower prices may prompt a slowdown in U.S. output. Egypt on Monday bombed Islamic State targets in Libya, where violence has reined in most oil output, and Iraq’s semi-autonomous Kurdistan Regional Government threatened to withhold oil exports if Baghdad failed to send its share of the budget. "The low oil prices are forcing a reduction of drilling rigs in the U.S. but also of budgets in oil-exporting countries," said Olivier Jakob, oil analyst at Petromatrix. "Libya is already mostly out in terms of production. Libya and Yemen are getting closer to the day of outside military intervention." Brent crude LCOc1 rose 65 cents to $62.05 a barrel by 0949 GMT (04:49 a.m. EST). It reached a 2015 high of $62.57 on Monday. U.S. crude […]

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Crude oil markets extend rally

Rally for crude oil markets continues into the third week in February as exploration and production activity slows in the United States. Photo by John Angelillo/UPI Brent crude oil prices continued their trajectory above the $60 mark, gaining nearly a full percentage point from the previous close to trade near $62 for the April contract. The contract for March expired last week. Brent prices have experienced a steady increase as last year’s weakened crude oil market left most energy companies without the cash needed to continue spending heavily on exploration and production. Calls for international action in Libya , a once-major North African oil producer, weighed on the minds of investors worried Monday about the state of affairs in the Middle East. Egyptian airstrikes targeted Islamic State targets in Libya in response to mass executions of Coptic Christians. The government in Kuwait, a member of the Organization of Petroleum […]

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Hedge Funds Turn Most Bullish on Brent Oil in Seven Months

Crude prices slumped in part because of the U.S. oil boom, driven by a combination of horizontal drilling and hydraulic fracturing, which has unlocked supplies from shale formations including the Permian and Eagle Ford in Texas and the Bakken in North Dakota. Photographer: Brittany Sowacke/Bloomberg (Bloomberg) — Hedge funds and other money managers’ bets on Brent crude were the most bullish since July just days before prices rallied to a two-month high. Money managers’ net wagers on rising prices rose 13 percent to 158,974 contracts in the week ended Feb. 10, the highest since the early days of last year’s oil slump on July 8, according to figures from the London-based ICE Futures Europe exchange. The change was driven by a reduction in bearish positions, rather than fresh bullish bets, signaling traders remain cautious that the price recovery will endure, according to Saxo Bank A/S. Brent futures have climbed […]

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Iraq financial crisis hurts Kurds, but oil partnership remains

Iraqi Prime Minister Haider al-Abadi, left, discusses budgetary concerns with visiting Kurdish counterpart Nechirvan Barzani. Photo courtesy of Kurdistan Regional Government The Kurdistan Regional Government said a delegation led by Prime Minister Nechrivan Barzani met during the weekend with federal officials to discuss the status of a December agreement on oil exports and budgetary issues. "During the meeting, it became apparent that due to the financial crisis in Iraq and the lack of liquidity, the Iraqi government is unable to pay the Kurdistan region’s share of January and February from the federal budget," the KRG said in a Monday statement. "The two sides agreed to continue holding further talks in order to find an appropriate solution to the situation." A January report from the World Bank found the federal government’s efforts to redistribute oil revenues for the public good had mixed results. Though oil production is breaking pre-conflict records, […]

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Baghdad and KRG deadlocked over exports, payments

KRG Prime Minister Nechirvan Barzani at a press conference in Erbil on May 1, 2013. (SOURCE: krg.org) Published Monday, February 16th, 2015 Recommend 2 people recommend this. Sign Up to see what your friends recommend. Iraqi leaders have failed to jump-start a stalled oil export and revenue-sharing deal between the federal government and the autonomous Kurdistan Regional Government (KRG).KRG Prime Minister Nechirvan Barzani led a delegation to Baghdad on Sunday for talks aimed at reviving their cooperation. But neither side has met the terms of the deal, which is embedded in the 2015 budget law, and officials from both governments indicated the agreement is still essentially on hold.“There is an item…

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Egypt Launches Airstrike in Libya Against ISIS Branch

CAIRO — Egypt conducted an airstrike against an Islamist stronghold in Libya on Monday in retaliation for the beheading of at least a dozen Egyptian Christians by a local franchise of the Islamic State, in Cairo’s deepest reach yet into the chaos that has engulfed its neighbor. Hinting at possible further action, President Abdel Fattah el-Sisi of Egypt said in a statement that he had convened “a continuous session” of his National Defense Council to monitor events in Libya and to weigh additional measures. But the strike itself, hitting in the Libyan town of Derna at dawn, was a new turn in the breakdown of regional order in the aftermath of the Arab Spring revolts and the Islamic State’s emergence. Nearly three and a half years after the ouster of Col. Muammar el-Qaddafi, two rival coalitions of militias are battling for control over Libya and its vast resources, including […]

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Libya’s Chaos Puts Neighbors on Alert as Italy Weighs Action

Destroyed buildings seen after Egypt’s army warplanes carried out airstrikes in neighboring Libya against targets belonging to the Islamic State of Iraq and the Levant (ISIL) militant group in Derna, Libya, on Feb. 16. Photographer: Jawhar Ali/Anadolu Agency/Getty Images (Bloomberg) — The beheading of 21 Egyptian Christians by Islamic State’s affiliate in Libya is giving impetus to calls for broader military action against Islamist militants in the oil-rich country. Egyptian President Abdel-Fattah El-Sisi, whose air force bombed Islamic State targets in Libya on Monday, said his country will ask the United Nations Security Council to authorize intervention in the North African nation. Italy, Libya’s former colonial ruler, said it would consider sending a force under a UN mandate. The Egyptian military also deployed soldiers at home to “secure vital institutions and installations,” it said in a statement. Tunisia, Libya’s western neighbor, said helicopters and fighter jets were conducting reconnaissance […]

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Oil supply from Libya’s Sarir to Hariga halted after pipeline attack

London (Platts)–16Feb2015/747 am EST/1247 GMT Crude production at Libya’s major Sarir field has been halted following an attack by saboteurs on the pipeline linking the field with the port of Marsa el-Hariga in eastern Libya, bringing the country’s remaining onshore oil production almost to a complete standstill. The loss of Sarir output means Libyan production will now likely have fallen below 150,000 b/d and exports from its onshore terminals effectively halted. Production had already fallen to around 350,000 b/d in early 2014 — less than one third of the country’s capacity of around 1.5 million b/d — due to fighting near key oil infrastructure and attacks on fields, terminals and pipelines. Output continues from the offshore El Jurf and Bouri fields, which have been unaffected by the recent unrest across mainland Libya, at an estimated 100,000 b/d. The latest attack near Sarir occurred early Saturday and resulted in a […]

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Blaze extinguished at Libya’s largest oil field

Blaze at Libyan oil field extinguished, the terrorists concerns spreading in the country. UPI/Tariq AL-hun. Though flames are out at a pipeline from its largest oil field, the Egyptian bombing of Islamic State targets in Libya show terrorists are gaining ground. The fire that resulted from the militant bombing of a pipeline at the Sarir oil field, the largest in Libya, was extinguished during the weekend. Sarir is in the same region as oil fields attacked last week by fighters claiming loyalty to the group calling itself the Islamic State. Libya before NATO-led forces intervened during civil war in 2011 was producing around 1.2 million barrels of oil per day. The Organization of Petroleum Exporting Countries in its latest monthly report said member-state Libya was producing around 343,000 bpd as of January, a 27 percent decline from December. Sarir was producing around 185,000 bpd. Libyan production declines since the […]

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Italy Mulls Intervention in Libya to Halt Islamic State

A relative of one of the Egyptian Coptic Christians purportedly murdered by Islamic State group militants in Libya reacts after hearing the news in the village of Al-Awar in Egypt’s southern province of Minya, on Feb. 16, 2015. Photographer: Mohamed El-Shahed/AFP via Getty Images (Bloomberg) — Italy’s government will brief parliament this week on the deteriorating situation in Libya as Prime Minister Matteo Renzi considers military intervention to halt the advance of Islamic State on his Mediterranean doorstep. Italy is ready to send more than 5,000 soldiers under a United Nations mandate to stop Islamic State, “which is now 350 kilometers from our shores,” Foreign Minister Roberta Pinotti said in an interview published Sunday in newspaper Il Messaggero. “We’ve been discussing it for months, but now the need for intervention has become urgent.” A power struggle between Islamists and the elected Libyan government has divided the country, driving it […]

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Iran Oil Ministry Faces Cash Emergency Amid Crude-Price Drop

(Bloomberg) — The Iranian oil ministry won’t be able to pay staff or invest in boosting production if parliament proceeds with a plan to slash funding, according to Oil Minister Bijan Namdar Zanganeh. “The oil industry’s situation is deplorable,” Zanganeh said in comments reported by the state-run Islamic Republic News Agency. A draft bill reviewed by parliament Monday would cut the ministry’s budget to $3 billion in the Iranian year that begins March 21. That’s down from $13 billion a year earlier. “This ministry will face problems in meeting the salaries of its staff let alone investing in joint oil and gas fields,” Zanganeh said. “How are we to manage the oil industry with such an amount?” Iran, whose crude exports are banned in Europe because of a dispute over the country’s nuclear program, revised its budget last month to assume a base price for oil of $40 a […]

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Iran sees oil investments dwindling

Iran’s Supreme Leader Ali Khamenei allegedly reaching out to Western powers in a sign of thaw. File Photo by Leader.ir/UPI The minister addressed lawmakers Monday to discuss budgetary strains resulting in part from a weak crude oil market. Already, the Iranian oil sector saw investments fall from $21 billion in 2012 to $17 billion in 2013. "With this trend, investment from our own resources will be nil next year," he said. The budget for the current Iranian year, which ends mid-March, relies on oil for 39.3 percent of government revenues. Drafts for next year call for a 6 percent decline in oil dependency. The oil minister said lawmakers are preparing for oil priced at around $40 per barrel. When oil was around $100 per barrel, the oil ministry’s share of the budget was $13 billion, but the slump could mean a 75 percent decline. "The petroleum industry needs financial […]

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Saudi Aramco Sadara Chemical Plant Will Start Output in 2015

(Bloomberg) — Saudi Arabian Oil Co. and its partner Dow Chemical Co. plan to start production this year at their $20 billion Sadara chemicals joint venture as other projects being planned in the region face the obstacle of falling crude prices. Ethylene and polyethylene will be the first products of Sadara Chemical Co., Khalid Al Hamid, manager for engineering and technology, said in Dubai. Full output is set for late 2017. Saudi Arabia, the world’s largest crude exporter, started the petrochemical project in 2011 when oil averaged $111 a barrel. Prices have since slumped about 45 percent. Qatar Petroleum and Royal Dutch Shell Plc ended plans last month to build a $6.5 billion petrochemical plant, saying it was “commercially unfeasible” in the current energy market. “Middle East chemicals projects are facing stiff review,” Sanjay Sharma, vice president for Middle East and India at Englewood, Colorado-based IHS Inc., said in […]

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Oil’s Black Swans on the Horizon

ENLARGE Next week sees the one-year anniversary of Uber’s ride-sharing service arriving in Riyadh. Disruption is creeping up on Saudi Arabia and the global oil market on which it relies. So far, this has centered on supply: North America’s shale boom has upended expectations of ever-increasing dependence on Middle Eastern crude. But Saudi Arabia’s oil minister, Ali al-Naimi, is also worried about the other side of the equation. At a conference last month, he asked: “Is there a black swan that we don’t know about which will come by 2050 and we will have no demand?” Against the backdrop of oil’s recent plunge, Mr. al-Naimi was thinking of potentially disruptive trends including new technology and efforts to cut carbon emissions. This might seem overdone. Last week, the International Energy Agency released medium-term forecasts showing global oil consumption rising by 6.6 million barrels a day by 2020. Beneath the headline, […]

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Severe Drought Pushes Brazil’s Largest City Toward Water Crisis

SÃO PAULO, Brazil — Endowed with the Amazon and other mighty rivers , an array of huge dams and one-eighth of the world’s fresh water, Brazil is sometimes called the “ Saudi Arabia of water ,” so rich in the coveted resource that some liken it to living above a sea of oil. But in Brazil’s largest and wealthiest city, a more dystopian situation is unfolding: the taps are starting to run dry. As southeast Brazil grapples with its worst drought in nearly a century, a problem worsened by polluted rivers, deforestation and population growth, the largest reservoir system serving São Paulo is near depletion. Many residents are already enduring sporadic water cutoffs, some going days without it. Officials say that drastic rationing may be needed, with water service provided only two days a week. Behind closed doors, the views are grimmer. In a meeting recorded secretly and leaked […]

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Concerns raised as China steel enters ‘peak zone’

Zhang Guangning, who was elected chairman of the China Iron & Steel Association last month, did not mince his words when he gave his first speech. As China’s economy enters a “new normal”, the steel industry faces unprecedented challenges, said Mr Zhang, a life-long steel man who started his career working at an iron and steel factory in 1971. “China’s steel production has already hit a peak, or to put it another way, it has hit a turning point.” More On this topic IN Commodities He said the industry must shift its focus from expansion to quality and efficiency, adding that it is “currently in its most difficult period, it is the most optimal time for adjustment and upgrading”. After growing at an average rate of 15 per cent between 2000 and 2013, a peaking of China’s steel production would be a powerful symbol of a shift in the […]

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World Bank report highlights massive urban growth in East Asia over last 10 years; just getting started

New data and an accompanying report from the World Bank shows that almost 200 million people moved to urban areas in East Asia from 2000-2010—a figure that would be the world’s sixth-largest population for any single country. The Pearl River Delta in China—which includes the cities of Guangzhou, Shenzhen, Foshan and Dongguan—has overtaken Tokyo as the world’s largest urban area in both size and population, with more inhabitants than countries such as Argentina, Australia or Canada. At the same time, most of East Asia’s population is still non-urban, meaning the region will likely face decades of further urbanization. Urban extent in China’s Pearl River Delta, 2010 (gray) and urban extension by 2010 (red). Source: World Bank. Click to enlarge. Rapid urbanization is a significant challenge for East Asia, but we cannot manage what we cannot measure. We’re releasing this data so urban leaders can get a better picture and […]

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Oil Train Derails and Ignites Forcing West Virginia Evacuations

A fire burns after a train derailment near Charleston, West Virginia on Feb. 16, 2015. (Bloomberg) — A CSX Corp. train carrying Bakken oil from North Dakota derailed and ignited in West Virginia, forcing some residents to flee their homes in frigid weather while cutting power and threatening drinking water. Governor Earl Ray Tomblin declared a state of emergency for Kanawha and Fayette counties as the train’s operator worked with emergency responders at the scene. One person was treated for possible smoke inhalation and fire broke out on up to 15 of an estimated 27 derailed cars, said Lawrence Messina, a spokesman for the West Virginia Department of Military Affairs and Public Safety. There are about 85 people in local shelters and more may be in hotels following the derailment that occurred early Monday afternoon, according to Messina. Fire damaged power lines while the town of Montgomery shut an […]

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Thanks to Shale Production, Permian is the Economic Gift That Keeps Giving

URL: http://www.rigzone.com/news/oil_gas/a/137249/Thanks_to_Shale_Production_Permian_is_the_Economic_Gift_That_Keeps_Giving Even with the recent oil price decline, shale energy is helping spur economic opportunity throughout the Texas. This opinion piece presents the opinions of the author. It does not necessarily reflect the views of Rigzone. Over the past few years, two of the fastest-growing cities in the U.S. are Midland and Odessa, a pair of communities separated by a mere 20 miles of interstate roadway deep in the heart of Texas. These metropolises have not only seen their populations swell to previously unforeseen numbers, but Midland and Odessa also rank first and second, respectively, in terms of economic growth nationwide. The fact that these two areas have seen this type of expansion is no accident. Growing a city is like growing a business, and growing a business is all about location, location, location. Midland and Odessa have this advantage, as both sit atop the Permian Basin, one […]

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Bakken – Has The Bubble Burst?

Nolan 1 Nolan Disclamer Nolan 2 Nolan 3 Nolan 4 Nolan 5 Nolan 7 Nolan 9 Nolan 10 Nolan 11 Nolan 13 Nolan 15 Nolan 16 Nolan 17 Nolan 18 Nolan 19 Nolan 20 Nolan 21 Nolan 22 Nolan 23 Nolan 24 Nolan 25 Nolan 26 Nolan 27 Nolan 28 Nolan 29 Nolan 30 Nolan 32 Nolan 33 Nolan 34 Nolan 35 Nolan 36 Nolan 37 Nolan 38 Nolan 39 Nolan 40 Nolan 41 Nolan 42 Nolan 43 Nolan 44 Nolan 45 Nolan 47 Nolan 48 Nolan 49 Nolan 50 Nolan 51 Hi Tom, Keep in mind this is oil production per rig. Two things happen, as the wells are drilled to hold the lease, rigs need to be moved a lot which makes the rig less productive (a lot of time is spent moving in and putting the rig up (MIRU) and then taking the rig down and […]

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Rig count in North Dakota hits new low

The number of rigs in service in North Dakota hit low-water mark in response to weak market for crude oil. (UPI/Shutterstock/ekina) Though December oil production was at an all-time high, rig activity in North Dakota is on the decline, state data released Monday show. The North Dakota Industrial Commission reported 137 active drilling rigs in service in the state as of Monday, a 26 percent decline from the same date in 2014 and 31.5 percent less than the historic peak reached in 2012. The rig count for Monday is the lowest in five years. Oil prices have declined to the point that most energy companies have enacted staff reductions and cut back on spending plans for exploration and production for 2015. The slump in oil price is a reflection of a market skewed toward the supply side because of production from states rich in shale reserves, like Texas and […]

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Canada railway strike ends after government threatens bill

OTTAWA, Canada (AP) — Canada’s labor minister said Monday the Canadian Pacific Railway strike had ended, with both sides agreeing to resume discussions. News of the deal came after Canada’s Conservative government threatened to introduce legislation to force an end to the strike by more than 3,000 Teamsters members, saying the strike posed a threat to the economy. In a surprise news conference, Labor Minister Kellie Leitch welcomed the willingness by both sides to resume talks, a development that had seemed impossible just hours earlier. The strike by 3,300 locomotive engineers and other train workers began just after midnight Sunday after contract talks failed. Leitch had said the strike could cost the economy more than $200 million in lost GDP every week. Teamsters union president Douglas Finnson called the government’s intervention in the strike disappointing and premature. CP Rail supported the move. Leitch had said the strike would affect […]

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Kiev sued by shale natural gas explorer

Ukrainian government sued by early shale natural gas explorer. Photo by Calin Tatu/Shutterstock "JKX is seeking repayment of more than $180 million in rental fees that its Ukrainian subsidiary has paid on production of oil and gas in Ukraine since 2011," the company said in a statement. The company last year said new budget measures passed by the Ukrainian government meant higher taxes for the oil and gas industry in the country. The most significant, it said, was a move to nearly double the tax on gas production to close to 55 percent. JKX, which has headquarters in London, said the market available to private gas producers in Ukraine was contracting, noting the competition for industrial customers was becoming "intense." In January, the company said the economic climate in Ukraine is no longer conducive to continue investing in shale natural gas opportunities The company said Monday it started arbitration […]

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Sanctions Don’t Bar Oil-Service Giants Bidding in Arctic

Valve control wheels are seen on pipework near gas well site at Bovanenkovo gas field, Yamalo-Nenetsky region, Russia, on Tuesday, Oct. 23, 2012. (Bloomberg) — U.S. and European suppliers to the oil industry are still able to seek work in Russia’s Arctic despite sanctions designed to limit their involvement because the rules don’t apply to foreign subsidiaries. Schlumberger Ltd., based in Houston and the world’s largest oil services company, and Baker Hughes Inc. have used units based outside the U.S. to bid for business in Russia’s Arctic, according to a Russian government website. Offshore projects in the Arctic are among those targeted by U.S. and European sanctions against Russia’s oil industry. There’s no allegation either company broke the rules and none of the bids was successful. Nonetheless, the use of subsidiaries to legally skirt sanctions will raise questions about the effectiveness of measures imposed to punish Russia by limiting […]

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Ukraine Truce Fades in Fight for Key Town

ENLARGE A Ukrainian soldier strikes a victory sign on the road between the towns of Debaltseve and Artemivsk in Ukraine on Monday. Photo: Associated Press In the railway town of Debaltseve, Ukraine’s cease-fire lasted all of 40 minutes. “We were surprised when the firing stopped, and hoped it would be the cease-fire,” said Albert Sardaryan, a 22-year-old combat paramedic in the town, by telephone. “But then it started again.” Fighting for Debaltseve has become the biggest challenge to the cease-fire that went into effect at midnight Saturday and was supposed to end months of conflict between Ukrainian forces and Russia-backed militants in Ukraine’s east. A separatist advance supported , according to U.S. and Ukrainian officials, by Russian army units, has all but cut off thousands of Ukrainian soldiers in the town. German Chancellor Angela Merkel on Monday described the situation in Ukraine as “fragile” and called on all sides […]

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