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Saudi Arabia Said to Delay Contractor Payments as Oil Slumps

Saudi Arabia is delaying payments to government contractors as the slump in oil prices pushes the country into a deficit for the first time since 2009, according to three people with knowledge of the matter. Companies working on infrastructure projects have been waiting six months or more for payments as the government seeks to preserve cash, the people said, asking not to be identified as the information is private. Delays have increased this year and the government has also been seeking to cut prices on contracts, the people said. Saudi Arabia is tackling the slump in crude, which accounts for about 80 percent of revenue, by tapping foreign reserves, cutting spending and selling bonds. Net foreign assets fell by about $82 billion at the end of August after reaching an all-time high last year. The country has raised 55 billion riyals ($15 billion) from debt issuance this year. The […]

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Iran deal closer to reality as U.S. prepares sanctions waivers

U.S. Secretary of State John Kerry (L) at a negotiation session with Iran’s Foreign Minister Javad Zarif (R) over Iran’s nuclear program in Lausanne March 20, 2015. Also at the negotiating table is European Union Political Director Helga Schmid (rear C). The United States approved conditional sanctions waivers for Iran on Sunday, though it cautioned they would not take effect until Tehran has curbed its nuclear program as required under a historic nuclear deal reached in Vienna on July 14. "Today marks an important milestone toward preventing Iran from obtaining a nuclear weapon and ensuring its nuclear program is exclusively peaceful going forward," U.S. President Barack Obama said in a White House statement. In a memo, he directed the secretaries of state, treasury, commerce and energy "to take all necessary steps to give effect to the U.S. commitments with respect to sanctions described in (the Iran deal)." Several senior […]

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Iran Urges OPEC to Cut Oil Output to Lift Prices to $70-$80

OPEC member states should cut crude output to boost prices to a range of $70 to $80 a barrel, Iran’s Oil Minister Bijan Namdar Zanganeh said. “No one is happy” with prices at current levels, Zanganeh told reporters in Tehran. “OPEC should decide to manage the market by reducing the level of production.” Even so, Zanganeh said he doesn’t expect the Organization of Petroleum Exporting Countries to decide to reduce output when its ministers meet next in December. OPEC has produced more than its official target of 30 million barrels a day for 16 consecutive months as the group seeks to defend sales amid a global supply glut. Brent crude, a global benchmark, has slumped 41 percent in the last 12 months and was at $50.20 a barrel in London at 8:31 a.m. local time. OPEC plans to assess output when oil ministers from its 12 members meet Dec. […]

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Iran, P5+1 announce implementation of nuclear deal

TEHRAN, Oct. 18 (Xinhua) — Iran ‘s Foreign Minister Mohammad-Javad Zarif and European Union (EU) foreign affairs chief Federica Mogherini issued a joint statement on Sunday, announcing the start of the implementation of the nuclear deal reached between Iran and the six world powers in July, according to Iran’s Foreign Ministry website. Now, Iran will start implementing its obligations pertaining to the Joint Comprehensive Plan of Action (JCPOA), and the UN nuclear watchdog will prepare the means to monitor Iran’s measures, the statement read. The report did not specify where the statement was released. According to the nuclear agreement between Iran and the world powers reached on July 14 in the Austrian capital of Vienna, Iran would improve the transparency of its nuclear plan, downsize its capacity for uranium enrichment and do changes in the structure of its heavy water reactor in exchange for international and Western sanctions relief. […]

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Iran deal closer to reality as US prepares sanctions waivers

The United States was set to issue conditional sanctions waivers for Iran on Sunday, though it cautioned they will not take effect until Tehran has curbed its nuclear program as required under a historic nuclear deal reached in Vienna on July 14. Several senior U.S. officials, who spoke to reporters on condition of anonymity, said that despite Washington’s move on Sunday, actual implementation of the deal was likely several months away. That means the sanctions relief Tehran is looking forward to is unlikely to come this year. They said the timing of nuclear-related sanctions relief will depend on the speed at which Iran takes the steps needed to enable the U.N. nuclear watchdog to confirm Tehran’s compliance. “We cannot imagine it taking less than two months,” one of the U.S. officials said. Sunday was so-called “adoption day” for the deal, which came 90 days after Iran, the United States, […]

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Kenya has a billion barrels of oil that might not be going anywhere

Fidgety oil companies and investors heaved a sigh of relief in August when Kenya and Uganda announced they had picked a route for the world’s longest heated pipeline. Finally, there was a plan for getting the estimated 1 billion barrels in Kenya’s remote northwest out of the country. The proposed route cut from northern Uganda’s Albertine region, into Kenya, through the Lokichar Basin, and then southeast before terminating in Kenya’s coastal Lamu County. It would have allowed Kenya to share the cost of piping oil with Uganda, which has 6.5 billion barrels of its own oil that it wants to get to market. But this week Uganda turned around and announced it had instead signed an agreement with Tanzania and Total (which is exploring in Uganda) to consider a pipeline for Ugandan oil through Tanzania, bypassing Kenya altogether. Proposed oil pipelines in East Africa Proposed oil pipelines in East […]

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Venezuela’s Leaders Prepare for a Risky Election

Venezuelan President Nicolas Maduro speaks on national television in Caracas, Oct. 6. (JUAN BARRETO/AFP Photo/Getty Images) A political turnover could be in store for Venezuela, and the country’s leaders are doing their best to prepare for it. The Dec. 6 parliamentary elections are less than two months away, and the ruling United Socialist Party of Venezuela (PSUV) stands a good chance of losing its legislative majority. Faced with the possible erosion of their political power, the party’s key figures are taking steps to secure their own futures. Click here to continue reading… Stratfor provides global awareness and guidance to individuals, governments and businesses around the world. We use a unique, intel-based approach to analyze world affairs. Copyright © 2015 Stratfor Global Intelligence, All rights reserved. Our mailing address is: 221 West 6th Street Suite 400 – Austin, TX 78701, USA unsubscribe from this list update subscription preferences | forward […]

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China third-quarter economic growth cools to 6.9 percent year-on-year, but beats forecasts slightly

A boy plays on a disused sofa in the ruins of houses which were pulled down, in central Beijing, China, September 25, 2015. China’s economic growth eased to 6.9 percent in the third quarter from a year earlier, beating expectations but still the slowest since the global financial crisis, putting pressure on policymakers to roll out more support measures as fears of a sharper slowdown spook investors. Analysts polled by Reuters had predicted gross domestic product (GDP) for the world’s second-largest economy would come in at 6.8 percent, compared with 7 percent in the prior quarter. Quarter-on-quarter growth was 1.8 percent, the National Bureau of Statistics said at a news conference on Monday. The market had expected GDP growth to come in at 1.7 percent on a quarterly basis, compared to a revised reading of 1.8 percent the prior quarter. Fixed-asset investment growth eased to 10.3 percent year-on-year in […]

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China Economic Growth Falls Below 7% for First Time Since 2009

BEIJING—China’s once-world-beating economy sputtered further in the third quarter, decelerating to its slowest pace since the global financial crisis and adding to concerns about the world economic outlook . The 6.9% growth rate for the third quarter, announced on Monday, clouds China’s prospects for reaching the official targeted growth rate of about 7% for the year. It also renews pressure on Beijing to enact more pro-growth measures. “Overall it’s pretty disappointing,” said Société Générale SCGLY 0.94 % CIB economist Klaus Baader, who expects fourth-quarter growth of 6.8%. “Investment continued to slow pretty sharply despite efforts by the government to support the economy. It doesn’t seem to be sufficient.” The better-than-expected result—a Wall Street Journal survey of 13 economists forecast a median 6.8% gain—is likely to renew debate over the accuracy of China’s growth statistics. Other economic data released on Monday showed disappointing results in investment and industrial production. Earlier […]

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China’s Growth Slows to 6.9%

Photo A construction site in Beijing. Credit Kim Kyung-Hoon/Reuters HONG KONG — China ’s economy grew 6.9 percent in the third quarter from a year ago, as a deepening industrial rout and slumping stock market pushed growth to its slowest quarterly pace since the global financial crisis of 2009. The weak result in the July-to-September period compares with growth of 7 percent in each of the first two quarters of the year, but was slightly better than the 6.8 percent rate that economists had forecast. The government’s official target for the year is growth of around 7 percent. “ China was facing increasing downward pressure of domestic economic development” in the first nine months of the year, the official statistics agency said in a statement accompanying the data released Monday morning in Beijing. Still, it added, “the overall performance of the national economy was stable and moving in a […]

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In a Region Disturbed by Ethnic Tensions, China Keeps Tight Lid on a Massacre

BAICHENG, China — Armed with only knives, the assailants struck at the coal mine in the dead of night, first killing the security guards and then setting upon the miners as they slept in their dormitory beds. Before the Sept. 18 rampage was over, more than 50 people were dead, at least five of them police officers, and dozens more had been wounded, according to victims’ relatives and residents. Most of the victims were Han Chinese who had been lured to this desolate corner of the far west Xinjiang region by the prospect of steady work and decent pay. The wanted posters displayed later in Baicheng suggest the attackers were ethnic Uighurs , all of whom apparently escaped into the craggy foothills of the Tianshan Mountains, not far from China ’s border with Kyrgyzstan and Kazakhstan. Even as Baicheng County remains in a state of siege, with an enormous […]

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Occidental Petroleum Corporation and the Reminder That Timing and Location Are Everything

Source: Hess Corp. It was roughly one year ago when reports surfaced that Occidental Petroleum Corporation ( NYSE:OXY ) was seeking a buyer for its Bakken Shale assets. At that time, Wall Street pegged the value of those assets at as much as $3 billion. However, one year later, those same assets are reportedly being unloaded for a mere $500 million. What’s important to understand about that price is the fact that it is not the result of a fire sale by a company in desperate need for cash — Occidental is doing just fine — nor is it due to a huge disconnect in the M&A market. Instead, the low reported sales price boils down to two things: poor timing and a less-than-ideal location. Once upon a time When Occidental Petroleum first put its North Dakota oil assets on the market, it was right around what, in hindsight, […]

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Oakland Coal Terminal Becomes a Political Flash Point

A major commodities shipping terminal would be adjacent to the Port of Oakland, above. OAKLAND, Calif.—A proposal that could make this city a gateway for Utah coal to be shipped overseas has become a political flash point and put pressure on Gov. Jerry Brown, a former mayor known for his warnings on climate change, to come out against the project. The proposed deal would grant four coal-producing counties in Utah rail access to a major commodities shipping terminal under development on city land, adjacent to the Port of Oakland, in exchange for a $53 million investment. City officials hope the redevelopment plan, on an old Army base, would bring thousands of jobs to a city that still has pockets of poverty and violence even as the region’s tech sector booms and housing costs rise. California ports in Stockton, Richmond and Long Beach export coal, but because of climate change […]

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Once Hot, Master Limited Partnerships Reel From Sharp Selloff

Energy pipeline and storage companies were one of the hottest investments on Wall Street, offering steadily higher payouts, tax benefits and insulation from wild swings in oil prices. Now, investors are contending with a sharp selloff in master limited partnerships that has outpaced the fall in oil prices . Deal making in the sector has slowed and investors say they are calling into question the ability of MLPs to keep up the steady pace of payout increases as U.S. oil output finally starts to decline. The yearslong boom in U.S. oil production fueled the proliferation of MLPs. The companies transport, store, produce and refine energy, passing on the bulk of their earnings to shareholders. Income-starved investors flocked to the sector, lured by the companies’ assurances of steady payout increases and their tax advantages. Since 2009, MLPs have raised more than $100 billion from initial public offerings and follow-on stock […]

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Hauling crude oil may be causing train tracks to fail

The only sign of trouble aboard a Norfolk Southern train, hauling roughly 9,000 tons of Canadian crude in western Pennsylvania last year, was a moderate sway in the locomotive as it entered a bend on the Kiskiminetas River. The first 66 cars had passed safely around the curve when the emergency brakes suddenly engaged, slamming the train to a stop. The conductor trudged back nearly a mile through newly fallen snow to see what happened. Twenty-one cars had derailed, one slamming through the wall of a nearby factory. Four tank cars were punctured, sending 4,300 gallons of crude pouring out of the tangled wreckage. The cause of the accident in North Vandergrift was identified as a failure in the rails — not aging or poorly maintained tracks, but a relatively new section laid less than a year earlier. The February 2014 crash fits into an alarming pattern across North […]

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Goldilocks and the three prices of oil

We all know Goldilocks from the story of Goldilocks and the Three Bears in which the young maiden wanders into the home of the bears and samples some porridge that happens to be sitting on the dinner table. The first bowl is too hot, the second is too cold and the third is just right. Like a corporate version of Goldilocks, the oil industry has been wandering into the world marketplace in recent years often finding an oil price that is either too high such as in 2008 and therefore puts the brakes on economic growth undermining demand and ultimately crashing the price as it did in 2009. Or it finds the price too low as it is today therefore making it impossible to earn profits necessary for exploiting the high-cost oil that remains to be extracted from the Earth’s crust. Oil that hovered around $100 per barrel from […]

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Even BP admits, some existing oil reserves are unburnable

The idea of a carbon bubble — the scenario in which fossil fuel-related investments become “stranded assets” as the world moves away from fossil fuels — has been gaining mainstream credence in recent months. From coal communities seeking help to transition from fossil fuels to vastly improved renewables that are competing directly with carbon emitting fuels , there are good reasons to question the idea that fossil fuel demand will continue to grow in the coming decades. Still, I wasn’t expecting the latest development in the carbon bubble story. The new economics of oil As reported over at The Guardian, oil giant BP has just admitted that some existing fossil fuel reserves are unburnable , and that some oil will have to remain in the ground if we are to have any hope of keeping global climate change within “safe” (which, at this point, really just means “less dangerous”) […]

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Is Peak Oil Just A Myth?

As Niels Bohr famously said: “predictions are difficult, especially about the future.” And they are doubly difficult if you are talking about the future of oil. The more uncertain the future, the more vehemently each side presents its case. For years a debate has raged about peak oil, the dreaded moment when we start running out of accessible oil reserves, a debate made only more heated by suspicions of vested interests. So environmental campaigners have been crying out that modern society is about to be plunged into darkness, while oil industry experts have blithely assured us that the oil is there, and they will fetch it for us. Even if it lies several miles under the Arctic seabed or has to be stripped from tar in Canada. Down Dale Now BP chief economist Spencer Dale, a former Bank of England policymaker, has thrown his reputation into the fray by […]

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Oil Prices Recoup Some of Their Recent Losses

Oil prices recovered some ground Friday, buoyed by lower drilling activity in the U.S., drawdowns on gasoline and diesel, and by more speculation about Russia and major oil exporters meeting about supply cuts. Light, sweet crude for November delivery settled up 88 cents, or 1.9%, to $47.26 a barrel on the New York Mercantile Exchange. Brent, the global benchmark, gained 73 cents, or 1.5%, to $50.46 a barrel on ICE Futures Europe. About half of the market’s gains came late in the afternoon, after Baker Hughes Inc. BHI -4.20 % said the number of working U.S. oil rigs had fallen by 10 to 595 in the latest week, the seventh consecutive week of declines. Some view this as a proxy for estimating what might happen to production, and a sharp fall in the rig count during the year’s collapse in oil prices has led many to speculate that production […]

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Syrian army, Russian jets attack rebels in southern Aleppo

A frame grab taken from footage released by Russia’s Defence Ministry October 15, 2015, shows a Sukhoi Su-24M military aircraft landing on the tarmac at the Hmeymim air base near Latakia, Syria. Syrian troops and their allies, backed by Russian jets, attacked insurgent fighters south of Aleppo on Friday, a source in Syria and a monitoring group said, as the army expands a counter-offensive with support from Moscow’s two-week-old air campaign. "The military operation has started in rural southern Aleppo," a pro-government source in Syria said. Rami Abdulrahman, director of the Syrian Observatory for Human Rights, said there were heavy clashes near the Jebel Azzan region, about 12 km (8 miles) south of Aleppo city, control of which is divided between government forces and rebels. The area the army and Russian jets were targeting was close to a main road heading south towards the capital Damascus, Abdulrahman said. Since […]

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Regional Discord Fuels Islamic State’s Rise in Mideast

Pretty much everyone in the Middle East is supposed to be fighting against Islamic State. Yet, the Sunni extremist group retains large swaths of Syria and Iraq and is spreading elsewhere in the region. This isn’t because of its military might or strategic sophistication. The explanation is different: For most of the major players in the complicated conflicts ravaging the Middle East, the defeat of Islamic State remains a secondary goal, subordinate to more pressing objectives. For some of these powers, Islamic State’s existence and its barbarism are actually useful, for now, because they serve as a lever in conflicts with more immediate and dangerous foes. Though able to take advantage of sectarian fissures in Syrian and Iraqi societies to carve out a territory the size of the U.K., Islamic State, also known as ISIS or ISIL, isn’t strong enough to represent a conventional military threat to the region’s […]

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Green worries keep foreign banks away from $3.3 billion Coal India sale

Labourers work inside a coal ball factory in Kolkata November 4, 2010. India’s plan to raise as much as $3.3 billion from selling a 10 percent stake in Coal India Ltd could be thrown off course by global investment banks under pressure from environmental groups to steer clear of the share sale. Several senior executives at foreign investment banks in Mumbai said ‘green’ concerns had clouded Coal India since its listing five years ago, and few were keen to take on a deal that could tarnish their public image. The pressure in a country where economic growth frequently trumps environmental concerns comes at a convenient time for banks. Many operating in India are under pressure to be more selective when it comes to roles that are heavy on staff but light on returns. The government pays a fee of just 1 rupee ($0.015). Banks’ reluctance, say people directly involved […]

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EIA reviews Indonesia’s OPEC bid

U.S. Energy Information Administration expects Indonesia will still import oil even after it rejoins OPEC. File photo by project1photography/UPI WASHINGTON, Oct. 16 (UPI) — Despite its bid to reactivate its membership in OPEC, Indonesia will likely need to import more oil to meet its domestic demand, a U.S. analysis said. In September, Indonesia submitted a request to reactivate its membership in the Organization of Petroleum Exporting Countries, which it left in 2009 because it was no longer a net exporter. OPEC in a response statement said its members would "welcome [Indonesia’s] return." Analysis from the U.S. Energy Information Administration said geographical characteristics and a lack of refining capacity means the Indonesian economy will still need to import oil products , particularly gasoline. According to EIA, Indonesia produced about 790,000 barrels of crude oil and condensates, an ultra-light form of oil. That puts it above Ecuador and Libya, the two […]

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BP, China’s CNPC to unveil oil alliance: sources

A BP logo is seen at a petrol station in London January 15, 2015. BP Plc and China’s CNPC [CNPET.UL] will next week unveil a strategic alliance to develop oil resources in Iraq and other regions, industry sources said on Friday. The deal, one of several high profile deals to be signed during a visit by Chinese President Xi Jinping to London, will aim to bolster cooperation between the two companies in Iraq, where they are developing the giant Rumaila oilfield. Rumaila, in southern Iraq, is the world’s second largest oilfield and produced 1.34 million barrels per day in 2014, according to BP’s website. The two companies will also seek to expand into new joint ventures in other parts of the world, according to the sources. No clear production or investment targets are expected to be included in the deal, they said. State-owned China National Petroleum Corp is Asia’s […]

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U.S. oil drillers cut rigs for seventh week: Baker Hughes

U.S. energy companies cut oil rigs this week for a seventh week in a row, the longest streak of reductions since June, data showed on Friday, a sign low prices continued to keep drillers away from the well pad. Drillers removed 10 oil rigs in the week ended Oct. 16, bringing the total rig count down to 595, the least since July 2010. Over the prior six weeks, drillers had cut 70 rigs, oil services company Baker Hughes Inc said in its closely followed report. That total was less than half the 1,590 oil rigs in the prior year. Since hitting an all-time high of 1,609 in October last year, weekly rig count reductions have averaged about 20. While the total U.S. oil and gas rigs fell to another 13-year low, natural gas rigs were up three to 192. With that increase, gas rigs were just over the lowest […]

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U.S. Oil-Rig Count Drops by 10 in Latest Week

The U.S. oil rig count has dropped for seven consecutive weeks. The U.S. oil-rig count dropped by 10 to 595 in the latest week, the seventh consecutive week of declines, according to Baker Hughes Inc. The number of U.S. oil-drilling rigs, which is viewed as a proxy for activity in the oil industry, has fallen sharply since oil prices started falling last year. After a streak of modest growth, the rig count has now declined for seven consecutive weeks. U.S. oil prices recently were up 1.9% to $47.25. There are now about 63% fewer rigs from a peak of 1,609 last October. According to Baker Hughes, the number of gas rigs rose by three to 192. The U.S. offshore rig count was 33 in the latest week, up one from last week and down 24 from a year ago. For all rigs, including natural gas, the week’s total declined […]

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BHI: US rig count down 8 in 8th straight week of losses

Anchored by a 10-unit drop in oil-directed rigs, the US drilling rig count lost 8 units to settle at 787 rigs working during the week ended Oct. 16, according to data from Baker Hughes Inc. The overall count—at its new lowest level since May 3, 2002—has now fallen in 8 consecutive weeks, losing 98 units during that time. Compared with this week a year ago, a total of 1,131 units has gone offline. In its Oil Market Report for October, the International Energy Agency noted that US producers have pulled an increasing number of oil-directed rigs out of service since the brief recovery in active rigs over July and August ( OGJ Online, Oct. 13, 2015 ). “The sector could be tested further in October as banks reevaluate credit lines that are crucial to operators with little or negative free cash flow,” IEA explained. “For the time being, it […]

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US puts a plug on Arctic oil exploration

Sign up for quick access to a wealth of global business news, including: US puts a plug on Arctic oil exploration Newspaper + Premium online Newspaper + Premium online Premium Full FT.com subscription Premium Full FT.com subscription Standard Full news & archive Standard Full news & archive Trial Try Premium online Trial Try Premium online Price Monthly Annual $66.30 $11.77 per week $53.00 $9.25 per week $36.00 $6.45 per week $1.00 for 4 weeks $1.00 for 4 weeks FT Alphaville plus selected FT blogs yes yes yes yes Unlimited FT.com article access yes yes yes yes Unlimited mobile and tablet access yes yes yes yes Unlimited fast FT yes yes yes yes 5 year company financials archive yes yes yes yes The LEX column yes yes no yes ePaper access yes yes no yes Three exclusive weekly emails yes yes no yes Daily newspaper delivery yes no no For […]

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Interior Department curbing future Arctic offshore drilling

ANCHORAGE, Alaska (AP) — The Interior Department says it will not extend Arctic offshore leases held by Royal Dutch Shell and other companies in Arctic waters off Alaska’s northern coast. Interior Secretary Sally Jewell says she’s also cancelling new lease sales tentatively scheduled for the next two years. The decision significantly reduces the chances for future Arctic offshore drilling. Shell announced Sept. 28 it would cease exploration in the Chukchi (chuk-CHEE’) and Beaufort seas after spending upward of $7 billion on Arctic exploration. The company cited disappointing results from a well drilled in the Chukchi and the unpredictable federal regulatory environment. Federal leases in the Beaufort Sea are due to expire in 2017 and in the Chukchi in 2020. Jewell says that in light of Shell’s announcement, it doesn’t make sense to prepare for lease sales in the Arctic in the next year and a half.

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U.S. cancels Arctic offshore lease sale after Shell drops interest

The U.S. Interior Department on Friday said it would cancel two potential Arctic offshore lease sales after Royal Dutch Shell PLC ( RDSa.L ) said that it was not interested in those leases. "In light of Shell’s announcement, the amount of acreage already under lease and current market conditions, it does not make sense to prepare for lease sales in the Arctic in the next year and a half," Interior Secretary Sally Jewell said in a statement. Shell said last month it was giving up its Arctic search for oil after failing to find enough crude oil. (Reporting By Patrick Rucker; Editing by Sandra Maler )

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U.S. coal sector in downturn

Fitch Ratings finds regulatory policies in part behind a downturn in the U.S. coal sector. File photo by Debbie Hill/UPI NEW YORK, Oct. 16 (UPI) — The mineral mining sector in the United States is showing signs of serious decline brought on by bankruptcies in the coal sector, Fitch Ratings said. "A spate of coal defaults has resulted from unsustainably high debt leverage from past acquisitions amid an environment of weak coal pricing," Fitch said in an industry profile. "The low pricing and defaults were driven by over-supply of steam coal and metallurgical coal, burdensome regulations, and competition from low priced natural gas for electric generation business." A federal Clean Power Plan set a goal of cutting emissions of carbon dioxide, a potent greenhouse gas, by 32 percent of their 2005 baseline by 2030, 9 percent more than in the original proposal. States need to meet specific emission reductions […]

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United States importing more oil

United States imported more crude oil last week as net production declined, federal data show. File Photo by Gary C. Caskey/UPI WASHINGTON, Oct. 16 (UPI) — Total U.S. crude oil imports increased by more than 3 percent for the week ending Oct. 9, data from the U.S. Energy Information Administration show. Data from EIA for the week ending Oct. 9 show the total crude oil imports averaged 7.3 million barrels per day, up by about 247,000 bpd from the previous week. Total imports came at the same time that domestic production dropped. Crude oil production from Alaska increased for the week by 0.6 percent to 490,000 bpd, while output from the lower 48 states dropped 0.9 percent to 8.6 million bpd. Lower crude oil prices are starving energy companies of revenue needed to invest heavily in exploration and production. Data published last week from oil field services company Baker […]

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Schlumberger: Market looks challenging

Oil field services company Schlumberger said it expects market challenges to continue. File photo by ekina/Shutterstock HOUSTON, Oct. 16 (UPI) — Revenue from North American operations alone dropped 4 percent in the third quarter as the oil business environment declined further, Schlumberger said. "For oilfield services, the market outlook for the coming quarters looks increasingly challenging with activity expected to be reduced further," Schlumberger Chief Executive Officer Paal Kibsgaard said in a statement. Schlumberger said third quarter revenue fell 4 percent for North American operations and 7 percent internationally. Year-on-year, revenue for North American operations alone dropped 34 percent. In a September report, the U.S. Energy Information Administration said total upstream investments could stay below the 10-year average if crude oil prices remain depressed. West Texas Intermediate, the U.S. benchmark for crude oil prices, closed trading Thursday about 0.3 percent below the start of October despite a rally last […]

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Comerica Reports Profit Decline, but Tops Expectations

The Dallas-based lender said it classified about $480 million worth of energy loans as “criticized” in the quarter, meaning the bank had concerns about the borrowers’ financial condition. The bank said non-accrual loans and charge-offs, where the lender is uncertain the loan will be paid back on time or has given up on collecting, remained low. “Energy is still getting worse at a relatively quick pace,” John Pancari, an analyst at Evercore ISI, said of the bank’s results. But the bank “didn’t see losses spike and they didn’t have to add to their reserves in a big way.” More than $1 billion of the bank’s $3.2 billion in energy loans and $615 million worth of loans in other businesses that are closely tied to energy are now classified as criticized. That energy exposure, about 8% of the bank’s $49 billion in overall loans, was relatively high among big regional […]

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Stakes Could Get Higher for US E&Ps

Analyst predictions for cuts to fall base borrowing deepen for small and mid-cap exploration and production companies that depend on banker credit and support. Small and mid-cap exploration and production (E&P) companies have been bracing for the fall recalculation of their bank lines of credit since the post-spring markets continued to leave oil in the ground and commodity prices on the floor. And an industry brief from Raymond James and Associates suggests the cuts could be much deeper than those earlier this year. “We think fall borrowing base redeterminations will likely be more punitive this fall, leading to a 15 to 20 percent reduction in overall U.S. E&P bank credit facilities,” the analysts said in an Oct. 12 brief. Taking into account that company hedge books continue to fall off; proved undeveloped (PUD) reserves are likely to drop with the slowdown in drilling; the government is getting involved; and […]

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Devastating Chart Shows Why El Niño Won’t Fix the Drought

Click to Open Overlay Gallery The California Aqueduct in the Mojave Desert near Palmdale, CA. Steve Proehl/Corbis This story originally appeared on Mother Jones and is part of the Climate Desk collaboration. In California, news of a historically powerful El Niño oceanic warming event is stoking hopes that winter rains will ease the state’s brutal drought . But for farmers in the Central Valley, one of the globe’s most productive agricultural regions, water troubles go much deeper—literally—than the current lack of precipitation. That’s the message of an eye-popping report from researchers at the US Geological Survey. This chart tells the story: To understand it, note that in the arid Central Valley, farmers get water to irrigate their crops in two ways. The first is through massive, government-built projects that deliver melted snow from the Sierra Nevada mountains. The second is by digging wells into the ground and pumping water […]

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S&P Downgrades Six Canadian Energy Issuers on Decline in Oil

Cenovus Energy Inc. and Husky Energy Inc. and four other Canadian energy companies have seen their ratings or outlooks lowered by Standard & Poor’s as slumping commodities prices put pressure on their businesses. Cenovus’s grade was cut to two levels above junk to BBB from BBB+ with a stable outlook and Husky saw the outlook on its BBB+ ranking lowered to negative from stable, the rater announced Friday. "The rating actions taken on both Cenovus and Husky reflect our view of the changes to each company’s business risk and financial risk profiles caused by the persistent weakness of crude oil and natural gas prices, and the resulting downward revision of our hydrocarbon price assumptions," S&P said in its ratings rationale. Cenovus spokesman Brett Harris said in an e-mail that "nothing has changed" for Cenovus despite the credit rating downgrade. "We are still a solid investment-grade company with one of […]

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Schlumberger Cancels New Year: Liam Denning

Ladies and gentlemen, 2016 has been canceled. Thanks for coming. Schlumberger, the oilfield services giant, sure knows how to kill the mood — which wasn’t great in the oil patch anyway. Its third-quarter results, reported late on Thursday, were broadly unremarkable. The company beat earnings estimates slightly, largely at the tax line, and displayed the resilience that investors have come to expect, with margins holding up and $1.7 billion of free cash flow. Good for them. But the commentary that followed on Friday morning’s analyst call will take what little air there was out of the oil industry’s sails. Schlumberger effectively wrote off the idea of things getting better next year. It will take more charges in the current quarter as it cranks up efforts to cut costs again, and that will hit earnings. It expects first-quarter earnings next year to be lower still. It hopes that will mark […]

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Appalachian gas pipeline developers facing more challenges from environmentalists: execs

Pipeline developers looking to build infrastructure to move natural gas out of the Appalachian Basin face numerous challenges, from strengthening opposition from environmental groups to shifting market patterns and increased regulatory scrutiny, speakers at the Platts Appalachian Oil and Gas Conference in Pittsburgh said Friday. Doug Walker, vice president of business development at Tallgrass Energy Partners, said the company, which operates the Rockies Express Pipeline, has encountered more intense opposition to its expansion of the pipeline to create bidirectional flows, than it had faced with the original construction of the pipe from the Rocky Mountain region to the eastern US. The original pipeline was completed in 2009. The 1,700-mile pipeline recently began to offer firm service from Appalachian gas fields to Midwest markets, increasing its delivery capability into Ohio and Illinois from 1.8 Bcf/d to 3.6 Bcf/d. Walker said environmental groups, in expressing their opposition to the expansion project […]

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Russian anti-monopoly board says Gazprom could split

Federal antitrust group in Russia hears proposals to split gas company Gazprom into separate business entities. Photo courtesy of Gazprom. MOSCOW, Oct. 16 (UPI) — Russian natural gas company Gazprom could be divided into separate production and transportation groups, a federal anti-monopoly service said. The European community has looked to rival suppliers to advance its own energy security needs, expressing frustration with the monopoly Gazprom holds over transit and supplies. Russian Foreign Minister Sergei Lavrov said the country would remain the key energy supplier for Europe, however. Igor Artemyev, the head of Russia’s Federal Antimonopoly Service, said Igor Sechin , the chief executive officer at Russian oil producer Rosneft, initiated the talks for a Gazprom split . "It had been subject of discussion for a decade," Artemyev said. "The issue should be discussed within the respective program of gas market development." Sechin asked the Kremlin last year to use […]

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Norway’s oil production increases, but new investment is declining

Source: U.S. Energy Information Administration, based on Norwegian Petroleum Directorate Norwegian petroleum and other liquids production, which had been declining since 2001, increased in 2014 and will likely continue increasing in 2015. The production growth in 2014 was mainly the result of new fields coming online, but also included a small increase in output from existing fields. Production has continued to grow in the first half of 2015 and is expected to remain relatively stable over the next few years as growth from new fields balances declines from older fields. Petroleum development projects in the North Sea generally have long lead times, meaning that production from a new field occurs several years after the decision to develop that field. These lead times often increase for projects that are farther north or far from existing infrastructure. The decisions to develop many of the fields now coming online in Norway occurred […]

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Hedge Funds Bullish on Russia’s Ruble for First Time Since July

Hedge funds have started betting the Russian ruble will strengthen, turning bullish for the first time since July after the currency jumped the most in emerging markets in the last two months amid signs a rout in oil, the country’s main export, had been contained. Hedge funds and large speculators were net long 1,171 futures contracts on the currency in the week ended Oct. 13, wagering that the ruble will increase in value, according to U.S. Commodity Futures Trading Commission data published Friday. That compares with net short positions of 128 in the prior five trading days. Speculators turned bullish on the ruble as Brent crude stabilized around $50 a barrel while eased tension in Ukraine raised the prospect that sanctions imposed to punish President Vladimir Putin for supporting a rebellion there may be lifted. The ruble was the worst performer among the world’s major currencies from mid-May through […]

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CEOs of 10 major oil and gas companies commit to 2 degrees C climate target

* Call for effective climate deal at Paris summit * ‘Clear’ policies needed to meet 2 degrees target * Focus on efficiency, gas, CCS, renewables The CEOs of 10 major oil and gas companies on Friday made a joint declaration on climate change, calling for an effective global agreement at a United Nations climate summit in Paris in December. The 10 companies — which make up almost a fifth of all oil and gas production and supply nearly 10% of the world’s energy — declared their support for an effective agreement at the 21st Conference of Parties to the UN Framework Convention on Climate Change. Parties to the so-called Oil and Gas Climate Initiative (OGCI) are BG Group, BP, Eni, Pemex, Reliance Industries, Repsol, Saudi Aramco, Shell, Statoil and Total. Article continues below… Every Monday, Capitol Hill newshounds Brian Scheid and Herman Wang analyze, dissect and debate the key […]

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Norway Is a Model for Encouraging Electric Car Sales

Photo Norway has become a global model for how to persuade the public to embrace electric vehicles. Above, a Tesla S parked near a police horse stable. Credit Thomas Haugersveen for The New York Times OSLO — Berit Nordgarden and her husband, Eivind Tellefsen, loved their nonpolluting Nissan Leaf electric car . But they found its 85-mile battery life too short for weekend trips to their cottage with their two young children. So the outdoorsy couple took a deep breath and bought a second car: a Tesla Model S luxury sedan with three times the battery range, the best of any electric car on the market. Buying an $87,000 car was a stretch, requiring them to refinance their primary residence, a cozy wooden home in Oslo. But the Tesla would have been completely out of reach — costing perhaps double the price — without generous subsidies and incentives that […]

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Energy groups commit to tackling climate change

Sign up for quick access to a wealth of global business news, including: Energy groups commit to tackling climate change Newspaper + Premium online Newspaper + Premium online Premium Full FT.com subscription Premium Full FT.com subscription Standard Full news & archive Standard Full news & archive Trial Try Premium online Trial Try Premium online Price Monthly Annual $66.30 $11.77 per week $53.00 $9.25 per week $36.00 $6.45 per week $1.00 for 4 weeks $1.00 for 4 weeks FT Alphaville plus selected FT blogs yes yes yes yes Unlimited FT.com article access yes yes yes yes Unlimited mobile and tablet access yes yes yes yes Unlimited fast FT yes yes yes yes 5 year company financials archive yes yes yes yes The LEX column yes yes no yes ePaper access yes yes no yes Three exclusive weekly emails yes yes no yes Daily newspaper delivery yes no no For 4 […]

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Oil prices snap week-long fall on U.S. output decline, gasoline drawdown

A worker fills petrol on a vehicle at the petrol pump in in Kathmandu, Nepal September 28, 2015. Crude oil futures rose on Friday to snap a week-long decline as investors bet falling U.S. production would cut a global surplus, while the country’s gasoline and distillate inventories dropped more than expected. However, analysts cautioned the price recovery may not last, with more supply likely from Iran. Global benchmark Brent crude has fallen 4.5 percent so far this week, and has plunged more than a quarter since May. Brent’s new front-month December contract rose 40 cents, or 0.8 percent, to $50.13 a barrel by 0305 GMT, after ending up 4 cents at $49.73 a barrel. November Brent finished down 44 cents at $48.71 a barrel on Thursday before expiring. U.S. crude’s front-month November contract rose 47 cents, or 1.01 percent, to $46.85 a barrel, after settling down 26 cents, or […]

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Oil drops on U.S. stockpile build, global glut

A woman walking on a street is reflected on a switched off electronic board showing the Kazakhstan tenge’s exchange rate against the U.S. dollar and euro in Almaty, Kazakhstan, August 20, 2015. Crude oil futures extended their losses on Thursday after notching up declines every day so far this week, hit by growing U.S. stockpiles and an expanding global glut. U.S. crude CLc1 had fallen 25 cents, or 0.54 percent, to $46.39 a barrel as of 0130 GMT, after settling the previous session down 2 cents at $46.64. Front-month Brent LCOc1 for November delivery inched down 1 cent to $49.14 a barrel, having ended the last session down 9 cents at $49.15. "(U.S. oil) remained under pressure as the focus turns to U.S. crude inventories. The sustained period of lower crude oil prices has started to impact the credit profile of companies," ANZ said in a note on Thursday. […]

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Chance of oil falling below $20 is under 50 percent: Goldman Sachs

Goldman Sachs head of commodities research and commodities bear Jeff Currie said on Thursday that he does not see the price of oil breaking above $50 a barrel in the next year, but the chances of it dropping to $20 are below 50 percent. Persistent oversupply, along with slowing demand from China and other emerging-markets as well as a stronger dollar, will create enough of a headwind to keep the price of oil below $50 a barrel through the coming 12 months. Goldman is forecasting growth in oil demand of 1.62 million barrels a day this year and 1.28 million bpd next year, creating a surplus of some 400,000 bpd that will have to clear before the price can recover much beyond current levels. "A substantially oversupplied market makes it that much more difficult in terms of trying to complete the adjustment process going forward, but also reinforces our […]

Posted On : Published By : Tom Whipple