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Nigeria’s Government to Run Down Oil Savings Account to Pay Debt

Nigeria’s government plans to run down its oil savings to offset revenue shortfalls and pay debt, such as salaries for state workers. The Excess Crude Account, which has a balance of about $2 billion, will be drawn down by $1.7 billion to allocate to the federal, state and local arms of the government, Accountant-General Ahmed Idris told reporters on Monday in the capital, Abuja. Nigeria accumulates revenue in the ECA when the oil price exceeds the benchmark estimated in the budget. Those savings have dwindled from $21 billion in 2008, according to estimates from the International Monetary Fund. A lack of savings and an almost 50 percent slump in oil prices in the past year is putting pressure on the government of Muhammadu Buhari to deliver on promises that helped to sweep him into office on May 29. Buhari, 72, said last month his government is facing severe financial […]

Posted On : Published By : Tom Whipple
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‘Perfect storm’ causing gasoline shortages in Mexico: analyst

Pemex said Monday it has planned "additional volumes of gasoline imports in order to regularize supplies" in several states following what one analyst described as a "perfect storm" of shortages involving red tape and crime. The state company traditionally prides itself in ensuring supplies of all fuels to industry and consumers. But long lines have formed in recent weeks at the pumps of the service stations that still have gasoline on sale. The problems have arisen in at least half a dozen states, though not in Mexico City, with its population of 20 million. Pemex cited several factors for the shortages, including a new billing system that has failed to register the orders made by service stations for new supplies. Another reason, in the area around the northern industrial capital of Monterrey, is that the Cadereyta refinery there is undergoing major maintenance. And in northern border states as Coahuila, […]

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Report: Brazil’s Petrobras wading dark waters

Brazilian oil ambitions may be larger than reality, a survey from British energy consultant group Douglas-Westwood finds. File Photo by UPI/Shutterstock/project1photography LONDON, July 6 (UPI) — British energy consultant Douglas-Westwood said the prospects of turning 16 billion barrels of potential Brazilian barrels of oil into reality may be dubious. Douglas-Westwood said it was questioning whether Brazilian energy company Petrobras can turn ambition into reality in deepwater prospects. "Brazil’s huge deepwater potential remains constrained with Petrobras having to revise their production target for 2020, which now forecasts domestic oil output to increase to 2.8 million barrels per day – 40 percent lower than its projection 12 months ago," a forecast published Monday read. Petrobras last week published a management plan through 2019 that reflects the downturn in crude oil prices. The Brazilian company cut overall spending plans by 40 percent, but allocated 84 percent of that to exploration and production, […]

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Eni starts production at giant Venezuelan gas field

Italian energy company Eni announces start to gas production at field in Venezuela said to be among the largest in the world. File Photo by UPI/Shutterstock/James Jones Jr. CARACAS, Venezuela, July 6 (UPI) — Italian energy company Eni said Monday it started production at the Perla gas field, the largest field of its kind found off the coast of Venezuela. "Perla was for Eni one of the most significant start-up projects of 2015, and the today result confirms the validity of our development model that allowed us to reach production in an industry-leading time to market," Eni Chief Executive Officer Claudio Descalzi said in a statement. Considered among some of the largest gas discoveries in the world, Eni said the Perla field off the coast of Venezuela holds an estimated 17 trillion cubic feet of natural gas. It’s situated about 30 miles offshore in the Cardon IV reserve area, […]

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China Woes Sink Commodities

Commodities are on track for their worst day since November as a steep sell off in China’s stock market takes a toll on investors outlook for raw-materials demand. The S&P GSCI, an index that tracks a broad basket of commodities, was recently down 4.3% at 415.42 with oil and copper futures leading the declines. The losses come after China’s government halted new companies from selling shares to the public and announced plans to establish a fund to stabilize the country’s stock market over the weekend. The Shanghai Composite has lost more than a quarter of its value since setting a high on June 12. China’s crumbling stock market is another symptom of the transformation that is underway in the country’s economy. Beijing spent years tightening access to credit and cutting government spending in an effort to reform China’s economy away from export-led growth to internally-driven demand. But China’s economy […]

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China stocks fall again despite support measures

SHANGHAI Chinese stocks fell on Tuesday, taking little comfort from a slew of support measures unleashed by Beijing in recent days, and unnerved by Chinese Premier Li Keqiang’s failure to mention the market chaos in a statement on the economy. Before the market opened, Li said in comments posted on a government website that China had the confidence and ability to deal with challenges faced by its economy, but had nothing to say on the three-week plunge that has knocked around 30 percent off Chinese shares since mid-June. After a brief pause in the slide on Monday, the CSI300 index .CSI300 of the largest listed companies in Shanghai and Shenzhen ended down 1.8 percent on Tuesday, while the Shanghai Composite Index .SSEC lost 1.3 percent. [.SS] The ChiNext growth board .CHINEXTC, home to some of China’s giddiest small-cap valuations, fell 5.1 percent. Qi Yifeng, analyst at consultancy CEBM, said […]

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CNOOC’s new output to lift China’s oil production from 2014 record

BEIJING China’s crude oil output looks set to rise this year from a record in 2014 as new production from third largest producer CNOOC helps to counter reductions from its two bigger rivals. Output growth from China would add to a global glut even as exporters such as the Organization of the Petroleum Exporting Countries (OPEC) and Russia produce at near record highs and U.S. shale producers keep ramping up output. With the global oversupply as much as 2.6 million barrels per day (bpd), international crude prices have been nearly cut in half over the past year. While there is no official Chinese production outlook, information from the biggest state oil companies indicates the nation’s output will rise slightly in 2015, largely due to increased production from CNOOC Ltd, the listed unit of state-owned China National Offshore Oil Corporation. "What we have spent in the last few years has […]

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Loonie Storm Alert Is Sounded With Oil Poised to Swamp Demand

One of Wall Street’s favorite short bets looks ready for a comeback after the Canadian dollar plunged to its lowest point in more than two months. The currency’s fall Monday undoes all its gains since the Bank of Canada first expressed hope at its April interest-rate decision the economic fallout from crude oil’s price collapse would be short-lived. Crude prices had stabilized in recent months and helped the currency recover, but Brent crude fell below $60 a barrel Monday for the first time since April. The renewed pressure on crude prices comes after signs the fallout from their first leg down wasn’t as short-lived as the Bank of Canada thought. A report last week showed the economy contracted for a fourth straight month in April, bringing annualized growth to the slowest in two years. That’s raised doubts about the central bank’s forecasts for a strong rebound in the second […]

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Refracking Is the New Fracking

The technique itself is nothing new. Oil crews across the world have been schooled on its simple principles for generations: Identify aging, low-output wells and hit them with a blast of sand and water to bolster the flow of crude. The idea originated somewhere in the plains of the American Midwest, back in the 1950s. But as today’s engineers start applying the procedure to the horizontal wells that went up during the fracking boom that swept across U.S. shale fields over the past decade, something more powerful, more financially rewarding is happening. The short life span of these wells, long thought to be perhaps the single biggest weakness of the shale industry, is being stretched out. Early evidence of the effects of restimulation suggests that the fields could actually contain enough reserves to last about 50 years, according to a calculation based on Wood Mackenzie Ltd and ITG Investment […]

Posted On : Published By : Tom Whipple