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viernes, 22 de enero de 2016

The slump in the oil price that has lasted 18 months is now the worst in post-war history, says the Daily Telegraph.


The slump in the oil price that has lasted 18 months is now the worst in post-war history, says the Daily Telegraph.
After an initial dive to well below $28 a barrel on Monday, international benchmark Brent crude rose through the afternoon and settled overnight at close to $30. This bore out predictions that removing the uncertainty over the lifting of economic sanctions on Iran would spark a modest rally.
But the prevailing advice of most observers, articulated last week by Tyche Capital Advisors in New York, is to sell "any and all rallies" as a global glut continues to dominate sentiment. Traders appear to be taking that on board: in early trading in London, the price of Brent had slipped towards $29 a barrel and was heading lower.
The imminent removal of international sanctions on Iran is about to see a new flood of oil into an already oversupplied market. The Financial Times notes the head of the country's national oil company has already ordered an increase in output of 500,000 barrels a day and that 50 million barrels that had been held in reserve were already on tankers ready to be shipped to buyers in Europe.
This ramping up of output from a country with the fourth-largest proven oil reserves in the world is one reason cited by the International Energy Agency in its latest incredibly bearish forecast for prices this year. It said this would more than counter the fall in US production and keep supply 1.5 million barrels ahead of demand throughout 2016.
In short, it predicted that the world "could drown in oversupply" and that "enormous strain" on prices would be maintained, says FastFT. Predictions are for oil to fall to between $25 and $10 a barrel this year, before recovering.
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Oil price could still be as low as $25 in a year's time

18 January
Oil prices fell sharply overnight and touched a near 13-year low as the US and EU prepared to lift international sanctions on dormant oil power Iran earlier than expected.
In a market already flooded with excess supply that has pushed onshore reserves to record levels and driven prices ever lower, Iranian exports ramping up – it has pledged to add 500,000 barrels a day immediately and a million within six months – is seen as an extremely bearish signal. International benchmark Brent crude fell to $27.70 overnight, its lowest level since 2003.
This process could begin very shortly and perhaps as soon as the end of this month. A United Nations agency tasked with overseeing Iran's compliance with its deal to curtail its nuclear programme, a precondition to removing sanctions, said yesterday the country had met all of the required terms.
Ric Spooner, chief market analyst at CMC Markets, told the BBC Iran has "quite a large storage of oil at the moment" and can "increase supply quite quickly". Some reckon it already has buyers lined up in Europe, where a fierce price war with regional rival Saudi Arabia, one of the biggest oil producers in the world, is beginning to take shape.
However, several analysts were arguing there might be a price rise on Monday in a "sell the rumour, buy the fact" move that would reflect the removal of uncertainty on Iran. Some others predicted prices would at least hold steady. "The Iran deal should not be a surprise to the market and has been expected for a long time," Amrita Sen, of consultancy Energy Aspects, said.
After the fall overnight, Brent crude had recovered around $1 per barrel to $28.60 in London this morning.
Ultimately, though, the oversupply issue still dominates. New exports will add to global supplies that are one to two million barrels a day in excess of consumption, at a time when demand could be hit by a slowing of the global economy and oil producers in the Middle East and elsewhere are in discord on policies to stop the slump.
This had led to predictions of a short-term fall to $25, $20 or even $10 a barrel and prices could remain at painful lows for longer.
HSBC chief executive Stuart Gulliver said he expected the price of oil in a year's time to have settled between a high of $40 and a low of $25 a barrel, well below currently predicted averages for the next 12 months.

Oil price: sell 'any and all rallies' as Iran prepares to pump

15 January
The oil price fell below $30 a barrel for the third consecutive day today, as yet another rally that had taken hold on Thursday fell away.
International benchmark Brent crude was modestly below $30 as it continued a slide that set in yesterday afternoon in New York and overnight in Asia. Earlier on Thursday, the price had risen to well in excess of $31, still low by historical standards but welcome relief from the bearish run, before the prevailing negative trend set back in.
The market is still gripped by oversupply. The US's primary crude oil facility, in Cushing, Oklahoma, is stuffed with a record stockpile of 64 million barrels, The Economist notes, while in other areas around the world - including, critically, China - storage facilities are so full that millions of barrels are floating offshore in tankers.
And then there is Iran.
The United Nations' international nuclear agency is expected to confirm on Monday that the republic has met the conditions of its deal struck with the US last year, says The Times. This will lead to the removal of sanctions inhibiting oil exports coming perhaps as early as the end of this month and as many as a further 500,000 to one million barrels a day flooding the market within six months.
Amid a breakdown in relations with its regional rival Saudi Arabia, the largest oil producer in the world, this is likely to undermine any hopes of a deal to limit excess output.
"We feel the Saudis will pump even more and a price war between them and the Iranians will drive us well into the $20 levels. We are sellers of any and all rallies in days and weeks to come," Tariq Zahir, at New York's Tyche Capital Advisors, told Reuters.
The one bright spot on the horizon is a slowing of production in Russia, another of the world's largest producers, which has also been fuelling an export war with Saudi Arabia. "The oil-pipeline monopoly Transneft said Russian companies are likely to cut crude shipments by 6.4 per cent over the course of 2016," writes Ambrose Evans-Pritchard in the Daily Telegraph.
As the journalist adds, the key question is "whether the production cuts are purely driven by markets or whether it is in part a political move to pave the way for a deal with Saudi Arabia".

Oil price falls below $30 with no end to slump in sight

14 January
The oil price trend has been volatile for several trading sessions, with strong intra-day rallies typically giving way to late sell-offs that are contributing to a steady, cumulative decline.

Yesterday, after hitting a high close to $33 a barrel, the international benchmark Brent crude at one point fell below $30 a barrel in New York. It has since recovered slightly but at just 20 cents above $30, the price remains around the 12-year low reached last week and almost all predictions are for further steep falls to come.
Unsurprisingly, it was new data that evidenced the stubborn global oil-supply glut that precipitated the latest slide. The international energy watchdog reported that output around the world grew by 200,000 last week, the Daily Telegraph notes, even as the market is already producing one to two million more barrels a day more than is being consumed.
The International Energy Agency also revealed Russian exports reached a post-Soviet era high last year. The country is one of several major producers around the world - including the de facto leader of the powerful Opec cartel Saudi Arabia - locked in an internecine battle for market share.
Elsewhere, the US energy watchdog said the country's reserves of oil derivative products surged last week. An 8.6 million barrel rise in stockpiles of petrol in particular added to a 10.6 million barrel lift the week before, constituting whatCNBC describes as "an unheard of two-week build".
As important, the Energy Information Administration reported a second consecutive week of modest growth in shale oil output, taking overall US supply up to 9.23 million barrels a day. The production turf war was supposed to have clipped the wings of the sector and thus eventually prompted a rebalancing of the market.
All in all, the picture remains extremely bearish, especially when the political ructions in the Middle East, which will undermine any cohesive response to the glut, are factored in. Analysts have said prices will fall to $25, $20 or even as low as $10 a barrel in the coming months.
This will push petrol prices to ever lower levels in 2016, the RAC claims. If oil reaches $10, it expects the cheapest petrol in the UK to be sold for around 86p a litre, below the level of most supermarket bottled water.

Oil price slump: as BP cuts jobs, does North Sea oil have a future?

13 January
BP has announced plans to shed about 600 jobs from its operations in the North Sea, part of a new set of cutbacks that will see 4,000 staff go globally.
Blaming low oil prices, the company said it was taking the step in the face of "toughening market conditions", but added it remained committed to the North Sea.
So what does the news mean about the wider sector?
What is behind the move?
Oil prices have been hit by a combination of oversupply, weak global demand, Middle East unrest and the strong US dollar. Despite recovering from its latest slump yesterday and overnight, the international benchmark is near a 12-year low at $31.50 a barrel, a painfully unprofitable price for much North Sea production, where it costs an average of $50 to extract a barrel of oil.
This has had disastrous results for the sector, threatening an industry that employs more than 375,000 people and was, until recently, one of the richest sources of tax revenue for the Exchequer.
What are the current production levels in the North Sea
Despite "toughening market conditions", oil production in the UK Continental Shelf last year rose by 8 per cent on 2014, according to trade body Oil & Gas UK. This bucked a 15-year trend of falling oil and gas production in the North Sea, but Oil & Gas UK believes the news will do little to improve belief in the sector.
The increase is actually simply a function of investments made anywhere up to a decade ago, when prices were projected to be much higher. "The fact is, the value of our product has more than halved. Times are really tough for this industry and for the people working in it," said Deirdre Michie, chief executive of Oil & Gas UK.
How long will the increase last?
Brendan Warn, senior oil and gas analyst at BMO Capital Markets, said the increase in production was only a result of investment decisions taken years before prices plunged and that as they have fallen, investment in new wells has been withdrawn. This lag means "North Sea oil and gas production news headlines will be horrendous in the 2017-20 time period".
What does this mean for the future
Though BP says it remains committed to North Sea oil, companies are expected to drill just six exploration wells in the area this year, the lowest number since 1964, with the result that as decades-old fields run dry, there will be fewer new projects to replace them, pushing the North Sea closer to terminal decline, say experts.

Oil price: predictions of fall to $16 - and even $10

12 January
Oil prices have fallen sharply again – and the latest range of investment bank forecasts has them dropping as low as $10 a barrel before finally bouncing back.
Turmoil on the Chinese markets, a strong dollar and more evidence of global supply remaining high despite an already heavily overstocked market prompted oil to fall sharply yesterday to a 12-year low. International benchmark Brent crude touched a low of $30.43 a barrel before steadying - and it had pared losses to a little below $30.90 this morning in London.
At its nadir, overnight oil fell close to 8 per cent from where it had been in London earlier in the day.
Primarily to blame was the 14 per cent slump on China's markets this year, which is being driven by concerns over growth that could ultimately hit oil demand. The stronger dollar also makes oil more expensive in overseas territories.
Reuters notes that another key factor was leaked data suggesting Iraq's oil output from its southern territories has increased 8 per cent and that total exports could reach a record 3.6 million barrels a day in February. The country is now the second-largest producer in the powerful Opec cartel, adding to concerns the bloc will not make cuts to support higher prices.
With reserves at record levels, investment banks are revising their already pessimistic forecasts lower. The Financial Times says Morgan Stanley has become the latest bank to predict prices would fall to $20, while Royal Bank of Scotland credit analysts capped an ultra-bearish forecast for markets with a call for a low of $16 – and Standard Chartered said the market could reach $10.
"We think prices could fall as low as $10 [a barrel] before most of the money managers in the market conceded that matters had gone too far," the bank said.
It is hard to see how anything more than a brief relief rally will materialise in the near future to prevent further sharp falls. One possibility is the hint by Nigerian officials that there may be an emergency meeting of Opec that, if it yielded a production cut, could prompt a major bounce as fund managers "cover" heavy bets on prices going lower. This is, however, seen as unlikely.

jueves, 10 de diciembre de 2015

Oil dips below $37 as OPEC pumps most in three years (cnn money)

Oil fell below $37 a barrel on Thursday, after new data showed OPEC is still pumping like there is no tomorrow.

The mighty oil cartel produced 31.7 million barrels a day in November, its latest monthly report shows. That is the highest output in over three years and 1.7 million barrels a day over its former production ceiling.
OPEC production rose by 230,000 barrels a day last month, according to secondary sources that track OPEC's production levels.
The news pushed oil prices back below $37 a barrel for the second time this week. Last time oil was cheaper than that was in the depths of the Great Recession in February 2009. It reached a peak of nearly $108 per barrel in June 2014.
OPEC failed to agree on an official output quota last week, leaving production near record highs despite the massive global glut that is keeping oil prices low.
Saudi Arabia, the most powerful member of the cartel, is refusing to cut output in order to defend its market share. It is hoping to squeeze out higher-cost producers in the U.S. and elsewhere.
Less wealthy OPEC members Algeria, Angola, Nigeria and Venezuela, have been lobbying for production cut to lift prices.

domingo, 15 de noviembre de 2015

Canada: Higher Carbon Taxes (WSJ)




CALGARY, Alberta—Canadian oil producers, pummeled by the prolonged slump in oil
prices and a string of political setbacks, now face another challenge: higher carbon taxes.
The nation’s oil-sands developers have been hit particularly hard by lower oil prices,
because they are among the most expensive oil plays in the world. Already facing
a corporate tax hike and the possibility of higher royalty payments in Alberta
the province richest in oil sands—the industry was dealt another blow by
the Obama administration’s rejection last week of the Keystone XL pipeline,
which was designed to transport oil-sands output to Gulf Coast refineries.
All major oil-sands operators in recent weeks posted losses or steep declines in profit
for the most-recent quarter, as shrinking revenue outpaced cost cuts. Some global
giants are rethinking future development. Late last month Royal Dutch Shell PLC
shelved an 80,000-barrel-a-day project, following similar moves by
Total SA of France and Norway’sStatoil ASA.
Now, ahead of a United Nations climate-change conference in Paris starting Nov. 30,
oil companies await the details of moves—including possible new taxes on carbon
—pledged by new governments in Ottawa and Alberta to rein in greenhouse-gas
emissions, making the oil sands a global test case for climate policy.
“Canada’s years of being a less-than-enthusiastic actor on the climate-change file
 are behind us,” Prime Minister Justin Trudeau, who took office last week, said at a
news conference on Oct. 20, the day after his Liberal Party won national elections.
Mr. Trudeau promised to start working on a framework for regulating greenhouse-gas
emissions within 90 days of the Paris summit.
Within weeks of taking power in May, Alberta Premier Rachel Notley’s government
said it would double Alberta’s existing tax on carbon emissions by 2017, and has
committed to additional measures in time for the U.N. conference in Paris. Ms. Notley
is expected to release details of the proposals later this month. Alberta pioneered carbon
taxes in 2007 when it introduced a levy of 15 Canadian dollars ($11.37) a metric ton.
Oil sands are among the highest-intensity greenhouse-gas producers of any oil
fields in the world. Production from the oil sands has been growing at a steady clip in
recent years under previous provincial and federal governments that played down
climate-change risks and ignored calls from environmental groups and opposition
politicians for tougher rules on carbon-dioxide emissions.
Canada’s environment ministry says the country’s CO2 emissions have continued
to rise over the past five years and are expected to hit 781 million metric tons a year
by 2020 if no reduction measures are taken. While oil sands account for just a fraction
of that total, it is one of the fastest-growing contributors to the release of these gases.
The government’s latest estimate projects oil sands-related emissions to nearly double
to 103 million metric tons by 2020.
Mr. Trudeau’s stance is a direct challenge to Canada’s oil-sands industry, but the country’s
 oil producers are divided on how best to cope with the push for stricter environmental
regulations.
Some, including the nation’s No. 1 oil producer, Suncor Energy Inc., say they accept the
tougher rules as inevitable, and can use them to help burnish their environmental reputations.
Others, such as Canadian Natural Resources Ltd.—Canada’s biggest natural-gas producer
and a major oil-sands leaseholder—are pushing back, warning the rules would make
Canadian crude even less competitive.
The divide in the industry has surfaced in submissions by top energy companies to
a government advisory panel of experts that will recommend new climate-policy
 measures in Alberta.
“The time is right for a higher level of ambition in carbon policy stringency in Alberta,”
Suncor said in its submission to the provincial panel.
Suncor Chief Executive Steve Williams has publicly championed new taxes on retail sales of
energy such as electricity and gasoline, in addition to levies on large industrial emitters.
“Every indication is that, on the road to Paris, Canada will start to take positions” to combat
climate change, Mr. Williams told reporters late last month.
Canadian Natural said in its submission that it objects to higher carbon taxes and other
new government-mandated policies, and has called for allowing oil and gas producers
to focus on new technology to cut emissions.
Its 34-slide Power Point presentation to the Alberta panel lays out the competitive
challenges facing the industry and warns that tinkering with policies that directly
affect oil and gas producers “is very difficult and more often than not has
unintended consequences.” In a similar vein, oil-sands producer Husky Energy Inc.
 warns against making emission cuts deeper than in other countries such as the U.S.
“It would be politically suicidal for us to do a mea culpa and hang our neck out in a
way that disadvantages the industry here,” Husky CEO Asim Ghosh said on a recent
 conference call.
The main industry lobby, the Canadian Association of Petroleum Producers, is urging
regulators to offset any additional cost from climate-policy changes with a cut in
 royalties owed to Alberta’s government from oil and gas output from provincial
lands. Such a “revenue neutral” approach to reducing CO2 emissions has been
backed by multinational oil giants with exposure to Canada’s oil-sands,
such as Exxon Mobil Corp.and Shell.
Write to Chester Dawson at chester.dawson@wsj.com

sábado, 10 de octubre de 2015

Energy Storage: Canada



Canada has a chance to add a new dimension to its energy economy – one that is clean, profitable and globally groundbreaking.
The opportunity is electricity storage, which until now has been limited by technology to a relatively modest scale. That’s about to change. And it means that Canada – and specifically Ontario – can become an ideal seedbed for storage technology, because there are ready markets for both large- and small-scale storage systems.
First, the large scale. Ontario has a fleet of nuclear generators that operate around the clock, and come close to filling the demand for power at off-peak hours. In addition, Ontario has developed a large renewable energy sector of wind and solar generation (in addition to its traditional hydro stations.) Problems sometimes arise when the natural weather cycles that drive wind and solar production are out of synch with the market cycle. On a sunny, breezy Saturday afternoon in May, with the nuclear plants running flat out, the hydro stations churning out power with the spring runoff and solar and wind systems near peak production, Ontario may have more electricity than it needs.
Our electricity system operators have a solution, of course: Sell the excess electricity to our neighbours. But since our neighbours are often in the same boat, Ontario must cut the price close to zero – or in extreme situations, even pay neighbouring states or provinces to absorb our overproduction.
Wouldn’t it make far more sense to store that excess energy, knowing that it will be needed in a matter of days, or even hours? What’s been lacking is the technology to do the job.
That’s changing however, as Ontario’s current program to procure 50 megawatts of storage capacity demonstrates. Companies with a variety of approaches are working hard to bring their solutions to market – many of them clustered at the MaRS centre in Toronto. Some, such as Hydrogenics Corp., convert electricity into hydrogen, which can be used to supplement natural gas.
My own company, NRStor, has partnered with Temporal Power and is operating a flywheel storage system in Minto, Ont., that helps the market operator to maintain consistent voltage on the grid.
Of course, businesses around the globe are looking at the same opportunities as we are, and here lies the opportunity for Canada to rebrand its energy economy.
A recent report by Deutsche Bank calls battery storage the “holy grail of solar penetration,” and believes that with the current rate of progress in improving efficiency, mass adoption of lithium ion batteries at a commercial/utility scale could occur before 2020.
Analysis by Prof. Andrew Ford of Washington State University calculates that a 1,000-megawatt air storage system from U.S.-based General Compression Inc. could deliver $6- to $8-billion of value to Ontario – in the form of lower energy costs to local utilities – over a 20-year period. All this is of interest to large-scale electricity system operators, big utilities and their customers.
But there is another reason for us to pay attention to energy storage – a reason grounded on a much more human scale. There are still large rural areas around the globe where there is no reliable electrical grid – including Northern Canada.
There is great potential for these communities, including remote First Nations communities, to improve their standard of living by installing microscale renewable generation in combination with storage, and relying less on carbon-spewing diesel generators, powered by fuel that must be transported long distances at great expense.
Storage is the key to making renewable energy a fully competitive component of any electrical grid. It can make our grid cleaner and more efficient, for the benefit of all consumers – large and small, urban and rural. We have the chance, in Canada, to become world leaders in developing this technology. Let’s seize it.
Annette Verschuren is speaking at the Cleantech Canadian Innovation Exchange (CIX Cleantech) conference in Toronto on Oct. 15.

martes, 1 de septiembre de 2015

Shell on Alaska: 26 billion barrels of recoverable oil. (Elliot Hannon)



The U.S. government gave Royal Dutch Shell the final go-ahead on Monday to drill for oil in the Arctic Ocean off the northwest coast of Alaska. The Interior Department issued the Anglo-Dutch company a permit allowing it to explore deeper into the ocean floor after granting Shell conditional approval to drill in May. The drilling will be the first exploration in the U.S. region of the Arctic in more than two decades; the area is estimated to hold some 26 billion barrels of recoverable oil which could significantly boost U.S. domestic oil production from its current level of 9.5 million barrels per day.
Here’s more on what this means for the company from the Associated Press:
The Bureau of Safety and Environmental Enforcement announced that it approved the permit to drill below the ocean floor after the oil giant brought in a required piece of equipment to stop a possible well blowout. The agency previously allowed Shell to begin drilling only the top sections of two wells in the Chukchi Sea because the key equipment, called a capping stack, was stuck on a vessel that needed repair in Portland, Oregon. Because the vessel arrived last week, Shell is free to drill into oil-bearing rock, estimated at 8,000 feet below the ocean floor, for the first time since its last exploratory well was drilled in 1991 … Shell bid $2.1 billion on Chukchi Sea leases in 2008 and has spent upward of $7 billion on exploration there and in the Beaufort Sea off Alaska’s north coast.
“Environmental groups condemned the decision, arguing that it goes against Mr. Obama’s stated commitment to addressing climate change and shifting away from fossil fuels like oil and natural gas toward renewable energy resources,” the Wall Street Journal notes. Shell will have until late September to drill before weather conditions make it too difficult. The company plans on investing $1 billion on top of the $7 billion it’s already plowed into scouring the Arctic for oil and natural gas, according to the Journal. So far the company has yet to discover any oil or natural gas there.

miércoles, 29 de julio de 2015

Inti Lantauro on Lower crude prices (Total Scenery).


PARIS— Total SA said aggressive cost-cutting and an increase in oil output helped offset the fallout from lower crude prices on its bottom line, as its net profit fell by less than expected in the second quarter.
The French oil company’s strategy for stubbornly low oil prices has been similar to other major energy companies: extract as much oil and gas from current operations while cutting back aggressively on all costs and reducing investment in long-term projects. Along with boosted revenue from units like refineries and petrochemical plants—which do well when prices are low—Total, like other majors, has shown signs of resilience in the face of a historic market collapse.
Total said Wednesday its net profit fell 4% to $2.97 billion in the second quarter from a year earlier, while revenue contracted 29% to $44.72 billion. When adjusted to exclude the effect of inventories and other nonrecurring items, the company’s net profit fell to $3.09 billion from $3.15 billion in the same quarter a year earlier.
The adjusted profit data was higher than the $2.75 billion median forecast of eight analysts polled by FactSet.
Profit would have fallen much more if Total hadn’t scrambled to raise output to an average 2.3 million barrels of oil equivalent a day in the second quarter, from 2.05 million barrels a day in the same period a year ago, the company said.
The company now pumps more crude than the U.K. oil giant BP PLC, which said Tuesday that it produced an average of 2.1 million barrels of oil equivalent a day in the second quarter. Total’s results also compared favorably with BP, which posted a $6.3 billion loss in the second quarter, mainly because of a settlement for the 2010 Gulf of Mexico spill.
Total remains under pressure from crude prices that have fallen by more than half in the past year, down to the low $50s for a barrel of Brent crude, the global benchmark, from highs of $114 a barrel in 2014.
Total and others have responded with a regime of severe cost cuts and delays to big projects.
Known for his cost-cutting record when he was running the refining and petrochemical unit, Total’s Chief Executive Patrick Pouyanné focused on slashing spending when he took over in November after his predecessor died in a plane crash.
“It is a bottom-up exercise, every manager at every level has been incentivized,” Chief Financial Officer Patrick de la Chevardière said in a conference call.
There are no small savings for Total, Mr. de la Chevardière said. The company squeezed providers from Brunei to Congo, optimized logistics and supply chains and cut unneeded spending wherever possible. In Angola, for instance, the company has ordered its boats servicing offshore oil rigs to go slower and save fuel, the CFO said.
Total has said it is on track to cut its costs by $1.2 billion this year. The firm added it expects three projects to start production later this year.
Total was also helped by its refining business, one of the largest in Europe. Refineries had been a problem child for Europe’s major oil companies, but with crude prices so low, the plants now get cheap feedstock and higher profit.
Operating profit for refining and petrochemicals jumped fourfold in the second quarter compared with the same period a year ago.
“We are very happy to have the resilience that comes with being an integrated company,” Mr. de la Chevardière told investors in a conference call.