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Sanctions, Oil Slump Delay Russian Offshore Drilling 2-3 Years

Russia’s state-run energy giants Rosneft OJSC and Gazprom PJSC are delaying some offshore drilling by two to three years because of sanctions and weaker oil prices, according to the country’s Ministry of Natural Resources. The nation will drill two offshore wells in 2017, down from an original plan for 14, Denis Khramov, deputy minister, said Tuesday at a conference in Russia’s Far East. The delay means 28 wells will be drilled in 2019 instead of 19, he said U.S. and European Union sanctions prompted by Russia’s role in the Ukraine crisis have cut access to offshore-drilling technology and equipment, Khramov said. Russia’s efforts to tap its offshore resources, which are estimated at 14 billion to 15 billion metric tons of oil equivalent, are lagging other countries, Khramov said. Russia drilled 11 subsea wells last year, compared with 57 in Norway, he said. The ministry this year approved drilling delays […]

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EU Publishes Details of Tough New Commodity Trading Regulations

LONDON—After months of delays, the European Union on Monday published details of tough new financial regulation for commodities markets, ending more than a year of uncertainty over how the rules will apply. The commodities changes are part of broad legislation conceived in the wake of the financial crisis that is intended to extend regulatory oversight of fixed-income and commodity markets and move more financial instruments onto exchanges. The plans have drawn criticism from national governments and market participants, concerned that the new rules could push up costs and drive out key players, making it harder for airlines and utilities to manage their risks. Commodity-market participants have been particularly concerned about position limits—or curbs on the volume they are able to trade—and whether the new legislation will require them to be authorized as financial firms, making them hold capital in a similar way to banks. According to the technical standards […]

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Gazprom Responds to EU Charges of Hindering Competition, Unfair Pricing

BRUSSELS—OAO Gazprom on Monday sent its response to European Union charges that the Russian energy firm hindered competition and charged unfair prices in Eastern Europe, arguing the case was “economically and legally unfounded.” The response, which was expected by Monday, “shows why we believe the European Commission’s allegations are based on an incorrect methodology,” Gazprom said. It comes a week after Gazprom said it proposed a settlement with EU regulators , a move that could help the company avoid billion-dollar fines. The European Commission, the bloc’s top antitrust authority, said it had received Gazprom’s response and would consider it “carefully…before taking any decision on how to proceed.” The regulator said it was assessing Gazprom’s settlement proposals “in parallel.” The commission in April filed formal charges against Gazprom , saying the state-controlled company broke EU antitrust law in eight countries where it is the dominant gas supplier—Bulgaria, Czech Republic, Estonia, […]

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Report: British North Sea won’t rebound until 2017

British oil and gas sector planner Ian Wood said low crude oil prices will endure through at least 2018. File photo by A.J. Sisco/UPI LONDON, Sept. 28 (UPI) — The British oil and gas sector is in a short-term decline with no chance of recovery for at least two years, an industry planner told the Financial Times. Low crude oil prices, down about 50 percent from last year, has forced energy companies to cut spending on exploration and enact layoffs in an effort to reserve capital. Ian Wood, a retired businessman who last year charted a North Sea recovery, told the Financial Times crude oil prices would likely stay low for at least two more years. "Oil at $35 to $55 [per barrel] is the likely scenario into 2017, and I think the best guess right now for a recovery in the North Sea is 2017-18," he said. Operating […]

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Bearish Ruble Bets Increase as Currency Slides on Crude, Economy

The ruble weakened for the first time in three days as falling crude oil and concern about Russia’s contracting economy prompted hedge funds and other speculators to bet on currency declines for an 11th week. While the ruble has recovered from a record-low close a month ago, it’s still the worst performer among emerging markets this quarter after Brazil’s real with a drop of 16 percent. Natural-gas producers Gazprom PJSC and OAO Novatek pulled the benchmark equities gauge lower on speculation the government will increase taxes on the industry as it seeks to plug the widest budget deficit since 2010. Speculators were net short the ruble for the eleventh week, the longest bearish streak this year, U.S. Commodity Futures Trading Commission data showed on Sept. 25. They increased net ruble short positions to negative 2,543 futures in the week ended Sept. 22, the data, which are reported with a […]

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Russia Reconsiders Tax Proposals to Ease Oil Producer Fears

Russia will weigh lowering oil-export duties at a slower rate than planned instead of raising an extraction tax as the government seeks to plug its budget deficit without hurting the prospects for the country’s biggest crude producers. “The government is considering the variant where the export duty is reduced more slowly,” Natalya Timakova, a spokeswoman for Prime Minister Dmitry Medvedev, told reporters on Monday at his residence outside Moscow. Medvedev decided that Russia won’t make changes to an oil-extraction tax, she said. Finance Ministry plans to raise more than 600 billion rubles ($9.1 billion) of additional tax revenue next year prompted concerns that a higher extraction levy would curb Russian oil production. The collapse in crude prices sees Russia facing its widest budget gap this year since 2010, forcing the government to choose between deeper austerity, tax increases and a freeze on pension-fund contributions. The government had originally planned […]

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Britain’s oil demand is growing again: Kemp

UK petroleum consumption is growing at some of the fastest rates for a decade, as strong economic growth and cheaper fuel prices spur increased use. Consumption of petroleum products rose by 1.6 percent in the first six months of 2015 compared with the same period a year earlier, according to the UK Department of Energy and Climate Change (DECC) ( link.reuters.com/zud75w ). Consumption has been growing consistently since the third quarter of 2014, coinciding with a maturing economic recovery and a sharp drop in oil prices ( link.reuters.com/wud75w ). Like most of the other advanced industrial economies, Britain’s consumption of petroleum products peaked in 2005, then declined sharply as oil prices climbed to more than $140 per barrel in 2008. The recession took another big chunk out of oil consumption, but even as the economy recovered between 2010 and 2014, demand mostly continued to fall as high prices encouraged […]

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Volkswagen Scandal Highlights European Stalling on New Emissions Tests

Photo A Volkswagen factory building in Wolfsburg, Germany. The company installed software in 11 million diesel vehicles to provide false information about emissions. Credit Michael Sohn/Associated Press BRUSSELS — European legislators got a jolt this month in their long-running effort to update auto-emissions standards when a German member of the European Parliament suddenly proposed exempting a whole class of vehicles. “This was a huge loophole, and everyone was asking: Where does this idea come from?” recalled Bas Eickhout, a member of the Dutch Green party who sits on the committee on the Environment, Public Health and Food Safety. It did not take long to discover the origin of the contentious proposal: Volkswagen Group. What had seemed a proposal by a legislator was in reality the work of the German carmaker. This was just one particularly brazen example of how European automobile manufacturers have for years sought to thwart or […]

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Oil prices fall on slowing global economic growth outlook

A gas station worker fuels a vehicle in Tokyo August 26, 2015. Oil prices dropped in early trading in Asia on Monday despite a fourth weekly fall in U.S. drilling activity, with analysts pointing to the weak economic outlook as the main reason for low crude prices. The International Monetary Fund is likely to revise downwards its estimates for global economic growth due to slower growth in emerging economies, IMF head Christine Lagarde said in a newspaper interview. In line with bearish sentiment, Brent crude futures LCOc1 were at $48.27 per barrel at 0024 GMT, down 33 cents from their last close. U.S. West Texas Intermediate (WTI) futures CLc1 were at $45.34 a barrel, down 36 cents. Crude futures are now down over 10 percent since the beginning of the month, and rating agency S&P cut its Brent and WTI forecasts late last week by $5 to $50 per […]

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Oil Declines as Chinese Industrial Data Signal Weakening Demand

Oil halted its advance near $45 a barrel as lower Chinese industrial profits signaled demand may be weakening in the world’s second-biggest consumer. West Texas Intermediate futures fell as much as 1.3 percent after climbing 2.3 percent last week. China’s industrial-company profits dropped 8.8 percent in August, the most in at least four years, while measures of its factory output and U.S. non-farm payrolls data are due later this week. Crude’s rally from a six-year low in August is sputtering on speculation a global glut will persist as Chinese economic growth slows and Iran prepares to boost exports should sanctions against the country be lifted. Oil rose the past two weeks as crude supplies in the U.S. fell while production slipped in six of the past seven weeks with low prices forcing drillers to idle rigs. “The focus has been on weak economic data from China today and apprehension […]

Posted On : Published By : Tom Whipple