Friday, January 28, 2011

JPMorgan Says OPEC Acts to Slow Oil, May Raise Later

OPEC will have to raise oil prices in coming years to maximize revenue even as it acts to quell crude’s rally toward $100 a barrel in the short term, according to JPMorgan Chase & Co.

Indications that members of the Organization of Petroleum Exporting Countries are raising output unilaterally are the first signs of a response to rising prices, said analysts at the second-largest U.S. bank by assets. Crude fell to a five-week low Jan. 24 after Ali al-Naimi, the oil minister of OPEC’s biggest member, Saudi Arabia, said the 12-member group will boost supply this year.

“The producer group does not want oil prices to rise too high, too quickly,” JPMorgan analysts, led by New York-based Lawrence Eagles, said in a monthly report dated yesterday. “But we believe the group has little option but to incrementally raise prices over the coming years to maximize the revenue from each barrel of oil produced.”

Brent crude has increased 3.4 percent this year on the London-based ICE Futures Europe exchange amid speculation strengthening global economic data signals a recovery in fuel demand. Futures reached $99.20 a barrel on Jan. 14, the highest since October 2008. Prices, trading near $98 today, are up 0.4 percent this week.

Tightness Subsides

OPEC, which pumps 40 percent of the world’s oil, is moving to cool oil prices just as “physical tightness looks set to subside from mid-February,” according to JPMorgan. Refiners on the U.S. Gulf and West Coast have started shutting plants for seasonal maintenance and will be joined by operators in Europe in the coming weeks, it said.

While the group acts to cap oil’s rise now, it will have to increase prices in years ahead if it wants to protect its revenue, according to the bank. End-user prices will rise regardless of OPEC’s actions, as governments in consuming countries raise taxes for a greater share of revenue, it said.

“A large tax take is a long-standing thorn in OPEC’s side,” the analysts said.

Gasoline prices in the U.K. are about $320 a barrel and diesel near $330, leaving OPEC with “less than a third” of sales revenue, according to JPMorgan. China, the world’s largest energy user, has also imposed some oil taxes and introduced policy to reduce energy intensity, it said.

OPEC, next scheduled to review production policy at a meeting in June, agreed at its last gathering Dec. 11 to maintain formal output targets at levels set two years earlier. Current prices are in a “comfortable zone,” said the group’s Secretary-General Abdulla El-Badri.

Demand Forecast

JPMorgan increased its forecast for global oil demand growth next year by 300,000 barrels a day to 1.7 million barrels. It estimates consumption will average 89.4 million barrels a day in 2011, higher than the 89.1 million predicted by the International Energy Agency. It also forecasts oil prices will increase $15, or about 19 percent, to $95 a barrel.

Goldman Sachs Group Inc. this week said oil’s rally from $75 a barrel since September has partially been driven by OPEC holding back supply. The group should boost supply to prevent prices threatening the global recovery, according to Bank of America Merrill Lynch.

OPEC’s members are Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates and Venezuela. Iraq is exempt from the quota system.

To contact the reporter on this story: Yee Kai Pin in Singapore at

To contact the editor responsible for this story: Clyde Russell at

Wednesday, January 26, 2011

Nigeria to Ship Three Amenam, Four Erha Oil Cargoes in March

Nigeria, a favored supplier of oil to U.S. refiners, plans to export three shipments of Amenam crude, the same number as in February, according to a loading schedule obtained by Bloomberg News.

Africa’s largest oil producer will also load three Antan, four Erha, two Okono, one Bonga and three Okwori crude cargoes, the program showed.

Including schedules released earlier, the country will export nine Qua Iboe, seven Bonny Light, six Forcados, three Yoho, eight Agbami, four Akpo, and three EA consignments.

Shipping plans for Brass River, Escravos, Abo and Pennington have yet to be announced. The West African state produced 2.22 million barrels of oil a day in December, according to data compiled by Bloomberg.

To contact the reporter on this story: Sherry Su in London at

To contact the editor responsible for this story: Stephen Voss on

Tuesday, January 25, 2011

How to Trade (or Dance) the Oil Contango

Kenneth D. Worth picture

There are two key issues in the oil market these days: 1) Why is the contango in WTI futures so persistent, and 2) Why is there an $8 premium of Brent crude relative to WTI, which is a lighter, sweeter (i.e. traditionally more expensive) oil? The usual discount of Brent to WTI ($1 to $2 per barrel) seems a thing of the distant past.

Various arguments are presented: Canadian pipelines coming on stream, a Valero refinery shutdown, full storage tanks in Cushing, Okla., (the delivery point for WTI) etc.

I'll offer a different view. Crude oil prices are high all over the world: Brent, Dubai, Indonesia, Nigerian Bonny Light. All are close to or already above $100 a barrel. Only WTI seems to lag. The Friday close on Nymex was $89.11 a barrel.

The common wisdom is that speculators can affect the price of oil. Indeed, speculators are often blamed for the run up in prices whenever they are high. But maybe it's the speculators who are to blame for the low price of WTI. Maybe all those institutions dumping the front month contracts to get out of having to take delivery are depressing the price of WTI delivered in Cushing, Okla., relative to other world crudes, to the benefit of Midwest refiners. Just a thought.

WTI has a significant contango that seems almost constantly stuck with us. And yet there is no contango in Brent, no contango apart from normal seasonality is wholesale gasoline, no contango apart from normal seasonality in heating oil.

What does this mean for investors? Well, first of all, avoid USO and OIL like the plague. These ETF's are being crushed by the continual need to roll over their contracts to the front month. Their performance over the past year relative to other oil investments has been very disappointing. Second, focus on the smaller less liquid instruments not favored by the big institutions. These include Brent crude (no contango), the ETF is BNO; wholesale gasoline (again no contango apart from normal seasonality), the ETF is UGA; and heating oil (again only normal seasonality), the ETF is UHN.

Sure, if you think oil is headed higher due to higher oil prices, you could buy drillers like Transocean (RIG), Baker Hughes (BHI), Noble (NE) and Ensco (ESV). You could buy the oil service companies Halliburton (HAL) and Schlumberger (SLB) or the ETF OIH. You could buy the smaller exploration and production companies (easiest done through the ETF XOP. There are always the majors: Exxon Mobil (XOM), Chevron (CVX), BP (BP), Shell (RDS.A) and Total (TOT). But these investment vehicles are stocks, and while they will benefit from higher oil prices, they will trend downward or sideways in a bear market, should this year give us another one, entirely possible given the pricey nature of the overall market and the uncertain economic outlook.

Investors wanting a pure commodity play on the oil market have options apart from the usual suspects, which have severely lagged crude oil prices, not to mention the prices you and I pay at the pump.

Disclosure: I am long XLE, XOP, OIH, UGA, BNO.

Oil reacts to UK contraction and OPEC production.


The UK Contracts and Oil Reacts

Maybe, just maybe there are still risks in this global economy of ours. Oil prices took a drop and the pound got pounded on news that the UK gross domestic product fell 0.5% in the three months through December. The number failed to meet expectations of 0.5 increase and shows that the UK economy may be sputtering.

If that was not enough to shake the oil bull's confidence, there are worries creeping up in Spain's bond market. A plan put through by their finance minster does not seem to be convincing investors that Spain can get a handle on their financial situation. Every time an issue of confidence has been raised in Europe oil prices have got hammered.

The IMF also failed to inspire confidence. Oh sure, they raised forecasts for global growth to 4.4%, mainly based on the extension of the Bush tax cuts. Still, they warn that the growth is not going to make a big dent in the employment picture and those global risks still exist. Do you think?

Now which is it? Is more OPEC oil bullish or bearish? Oil demand has been rising and there has been increasing pressure on the OPEC cartel to increase production. Words from Ali Naimi seem to suggest that they will indeed rise to the occasion so you might think that is bearish.

Well not in Goldman Sachs world. On the same day the Saudi oil minister broke the market it seems that Goldman sees an increase in OPEC production as wildly bullish. Why? Well, if OPEC raises production, they will have less spare capacity.

So let's get this straight, if OPEC does not raise production like the International Energy Agency are urging them to do then they say prices will go up. If they do raise production Goldman warns that the draw on spare capacity will cause oil to enter a structural bull market.

What's a poor cartel to do? Not to worry because the Goldman bulls do offer OPEC some advice. They say that it is still too early for OPEC to raise production because oil inventories remain above their five-year average. Just keep production steady so you don't use your spare capacity.

Or should they pump more oil to meet growing demand? Why don't we just say that if global demand rises by 6 million barrels a day, then OPEC will be out of spare capacity. Oil prices are hitting a seven-week low. Did you get caught up in all the bullish hype?!

Phil Flynn is senior energy analyst for PFGBest Research and a Fox Business Network contributor. He can be reached at (800) 935-6487

begin_of_the_skype_highlighting (800) 935-6487
end_of_the_skype_highlighting or at

Monday, January 24, 2011

API ANALYSIS: US crude stocks rise despite drop in imports

US crude stocks increased 3.533 million barrels for the week ending January 14 despite a drop in imports of 1.424 million b/d, an analysis of data released Wednesday by the American Petroleum Institute showed.

Analysts polled by Platts projected a draw of 2.2 million barrels in crude stocks.

Crude oil imports on the Atlantic and West coasts took a nosedive. Atlantic Coast crude imports fell 711,000 b/d, which given limited refining capacity in that region, could represent a decline of just one or two cargoes.

Crude imports to the West Coast dropped 553,000 b/d to 763,000 b/d, with Canadian imports falling to just 64,000 b/d, a decrease of 180,000 b/d.

Atlantic Coast crude stocks declined 516,000 barrels to 11.3 million barrels despite the drop in imports and with inputs to refineries at a steady pace.

West Coast crude stocks tumbled 2.823 million barrels to 50.436 million barrels, with Alaska North Slope crude waterborne transits dropping to 2.54 million barrels from 4.478 million barrels the week before, as the shutdown of the Trans Alaska Pipeline System took its toll on inventories.

Gulf Coast crude inventories surged 7.376 million barrels to 163.665 million barrels, with inputs falling more than imports in that region. Crude inputs declined 231,000 b/d to 7.62 million b/d on the Gulf Coast, while imports slipped 84,000 b/d to 5.534 million b/d.

Crude stocks at Cushing, Oklahoma -- home of the NYMEX delivery point for its benchmark contract -- declined 571,000 barrels to 36.867 million barrels.

In products, the API data showed a typical seasonal increase in gasoline stocks of 1.869 million barrels, despite a rise in demand and a drop in imports of 654,000 b/d last week. The inventory rise was due to increased US production of 144,000 b/d, to 9.017 million b/d. Analysts polled by Platts expected a build of 2.8 million barrels.

Stocks remain at a 3.351-million-barrel surplus from year-ago levels.

The East Coast garnered the bulk of the gasoline inventory rise where stocks rose by 2.743 million barrels, to 61.606 million barrels.

Demand for gasoline rose by 359,000 b/d to 8.980 million b/d, the API reported.

Stocks of middle distillates were in line with analyst expectations, rising 940,000 barrels to 167.437 million barrels, while demand dipped by 199,000 b/d to 4.036 million b/d. Stocks of ULSD were up 593,000 barrels to 108.529 million barrels, while heating oil stocks inched lower.

Imports of middle distillates dropped 99,000 b/d to 267,000 b/d with ultra low sulfur diesel stocks leading the decrease.

--Linda Rafield, --Alison Ciaccio,

Similar stories appear in Oilgram News. See more information at

ANALYSIS: Midwest WTI cracking margin rises as contango widens

US refining margins jumped last week in both the Gulf Coast and the Midwest, but while product price strength was primarily fueling Gulf gains, the Midwest gains were driven largely by a widening WTI crude contango.

The Midwest WTI cracking margin -- based on Platts spot crude and product prices, and Turner, Mason and Co. refining yield formulas -- rose to $11.41/b on January 21 from $7.03/b on January 18. The WTI cracking margin averaged at $8.49/b the week ending January 21, up from $7.27/b the week ended January 14.

In the Gulf, the Light Louisiana Sweet cracking margin averaged at $8.34/b last week, up from the prior week's $7.35/b, after climbing to $9.22/b on January 21.

But the two regions tell two different stories. Platts' margins are computed by subtracting a crude's spot price from its netback. A crude's netback value is determined by applying Platts' refined product assessments and transportation rates to that crude's yield formula.

The netbacks for both WTI and LLS have gained in recent weeks, reflecting stronger product prices in the Midwest and the US Gulf Coast. For instance, the Gulf LLS cracking netback ended last week at $106.55/b, up from $102.63/b on January 2. The Midwest WTI cracking netback climbed to $99.39/b from $96.73/b over the same period.

But the front-month spot WTI price ended last week almost $10/b under the front-month LLS price, reflecting the abundance of barrels stored at the Cushing, Oklahoma, delivery point.

And the LLS margin in the Midwest is much lower than the WTI margin. While the LLS cracking margin basis Cushing climbed to $5.03/b on January 21 from $2.93/b on January 18, it was more than $6/b below the WTI cracking margin, despite a higher netback for LLS.

That price spreads against WTI crude are being impacted by storage dynamics at Cushing is nothing new -- although most of the attention has focused on the WTI/Brent spread blowout. Cushing stocks have grown, as has capacity, causing the WTI contango to widen. The February/March spot WTI spread was assessed at minus $1.20/b on January 21, out from minus 92 cents/b on January 18.

Critics have correctly noted the comparative lack of spread volatility in the Brent intra-month spreads, and in Brent-linked crudes. While LLS traded at a record high $11.10/b over WTI Monday, such spreads are rarely if ever seen in Brent-linked North Sea and West African crudes.

But while the price of Brent is influenced by loadings and offshore storage in the North Sea, it is not, like WTI, a market driven by a large volume of onshore storage.

Volatile price spreads are not uncommon in the pipeline- and storage-centered US market, and are not exclusive to WTI. In mid-January, for instance, apportionments on the Enbridge pipeline system, which delivers crude to the US from Canada, caused Western Canadian Select price differentials to weaken dramatically.

WCS fell to $30.50/b under the WTI swap on January 14, from $19.50/b under on January 3, as barrels built up at the Hardisty, Alberta, pricing point. WCS has since rebounded to $21/b under the WTI swap.

--Jeff Mower,

Similar stories appear in Oilgram Price Report See more information at

NITC to be among top 3 tanker firms

National Iranian Tanker Company (NITC) will be among the top three largest oil tanker companies across the globe by 2013, an official of the company says.

Once NITC takes delivery of 22 Very Large Crude Carriers (VLCC) and expands its fleet by 72 percent by 2013, it will be among the top three, Area Manager Captain R. Qareh told Bloomberg on Sunday.

The official described the sanctions on Iran as ineffective, saying that NITC continues to carry crude produced by Royal Dutch Shell Plc and Total SA, in addition to oil from Saudi Aramco and other producers in Kuwait and the UAE capital Abu Dhabi.

"We have not faced any problems," Qareh said.

The NITC plans to have 74 ships of all sizes, including VLCCs and smaller vessels, he said, adding that the company will operate 50 VLCCs by 2013, which is nearly twice as much as the current number of 28.

He also underlined that the company is now the biggest tanker operator in the Middle East and the fourth-biggest worldwide with a total of 43 ships.

Norway's Frontline Ltd. is the world's largest operator of supertankers.

NITC is a subsidiary of the National Iranian Oil Company, which was privatized in 2009.

Its ships carried 104 million tons of crude last year, 51 percent of which went to Europe.


Trafigura Clears Floating Forties Crude It Kept Since November. Contango!

Trafigura Beheer BV, the third- largest independent oil trader, cleared the North Sea Forties crude it stored on board the supertanker Genmar Hercules, according to AISLive data on Bloomberg.

The very large crude carrier had anchored off Southwold, England, since loading the crude in mid-November at Hound Point, the terminal for Forties shipments in Scotland, AISLive data show. A London-based spokesman for Trafigura asked Bloomberg to e-mail its questions when reached by phone and hasn’t replied to the query. A VLCC can carry about 2 million barrels of oil.

The supertanker had a draft, or depth in the water, of 20.90 meters since leaving Hound Point before dropping to 10.3 meters on Jan. 21, suggesting the vessel emptied its cargo before embarking for Rotterdam yesterday, according to the data. The ship’s design draft, the maximum depth it can go to, is 22.5 meters, Lloyd’s Register-Fairplay data on Bloomberg show. That implies the vessel was fully loaded at Southwold.

“They don’t see prices going much higher so it’s time to sell at peak of winter demand,” Andrey Kryuchenkov, London- based vice president of commodities research at VTB Capital, said in an e-mail.

Forties crude was a discount of 5 cents to the Dated Brent benchmark compared with 56 cents on Jan. 6. At these prices “it is only logical to book profits,” he said.

In the last week of December, Trafigura offered Forties for loading from the supertanker on the trading window run by McGraw-Hill Cos.’ Platts pricing agency without finding a buyer, according a survey of traders involved in North Sea Oil transactions. The grade is one of four used to price the Dated Brent benchmark. The others are Brent, Oseberg and Ekofisk oils.

The Genmar Hercules has been chartered to load a cargo of either crude or fuel oil from the North Sea to Asia Jan. 30 at a cost of $3.1 million, according to tanker reports from agencies including Optima Shipbrokers Ltd. and Imarex Asia Ltd.

To contact the reporter on this story: Sherry Su in London at

To contact the editor responsible for this story: Stephen Voss on

Nigeria: Understanding the Political Economy and Rising Oil Prices. Great article!

Hugo Odiogor

The news that the global price of crude oil is hitting the $100 mark may seem to be good for free-spending politicians who must have been under pressure of how to rationalise their pillaging the external reserves and the excess crude account.

With more revenue coming from the nation's major export product, especially, in an election year, what else could the leadership ask for? But, those who are perceptive enough to cast their minds back to October 2008 will recall that the soar- away prices of oil at close to $100 mark, there were serious concerns about the possible impact on the world economy.

The 2009 global financial crisis, the worst since the Great Depression of 1929, was unprecedented in the history of the modern world and left a catastrophic effect on the financial well-being of millions of people around the world.

It exposed the vulnerability of Nigeria's over-dependence on crude oil exports as its major source of foreign exchange earnings. But, more importantly, it threw up some contemporary issues surrounding the use of fossil, especially the pressure from international environmentalists on climate change, as well the political dynamics in the demand and supply chain, has compelled the United States Congress to enact the American Clean Energy and Security (ACES) Act of 2009, with the aim of reducing the country's oil import and carbon emission by one-quarter in the next 25 years.

There is no doubt that oil is the lifeline of global industrial economy as well as domestic economy. This energy source is like blood in the vessel of the machines and homes in the industrialised world and the cost of energy has been rising steadily in recent months.

The unprecedented winter, the steady economic growth in China, India and Brazil has kept the prices of oil high. But, for the slowly recovering economies of Europe and the United States, the soaring cost of oil is a nightmare as it hinders the ability of industries to recover and create jobs. There is uneasy moments for Britain, Spain, Greece, Poland, France, Ireland even Tunisia in Africa, where austerity measures announced by governments to manage their wobbling economies have pushed them to angry citizens.

Apart from the rising energy cost there has been rises in food prices just as was experienced in 2008. In fact, the riots in Tunisia are linked to increases in food prices. While the American economy has recorded slow growth of three per cent, Germany remains the strongest economy in Europe with manageable inflation rate. As expected the fluctuating prices of oil has been a source of worry to member-nations of G-8 and Organisation of Economic Co-operation and Development (OECD), who are major trading partners of Nigeria.

As stated earlier, the United States is leading a crusade to cut down on their consumption of fossil fuel while it invests in alternative energies. The attempt to embark on its deepwater oil exploration has been a source of intense politicking which was worsened by the disaster of the coast of Louisiana where the BP oil platform collapsed and spilled millions of crude oil in the Gulf of Mexico.

International energy and diplomacy expert, Professor Kayode Soremekun, believes that as "the world's 10th largest exporter of crude oil, Nigeria must be sensitive to the economic development in the major destinations of its crude oil because the link between the suppliers and the consumers of oil is interlinked."

According to him, "the policies taken by the consumer-countries must have serious impact on Nigeria's economy, because these are countries whose multinational companies extract Nigeria's oil and determines the fate of producing countries. We can see from the Wikileaks revelation that Shell has such pervasive influence in Nigeria to the extent that Nigeria is Shell and Shell is Nigeria".

The ability of the industrialised nations to manipulate the political developments in the countries that produce oil is not in doubt as we saw in the 1980s when Margaret Thatcher and Ronald Reagan collapsed the global oil market using Saudi Arabia and Kuwait.

The impact of that action resurfaced in 1990 when the late President Saddam Hussain cited that as one of the reasons for invading Kuwait in August 1990. Western nations went to war gain in 2002 because of oil. Put differently, they can exploit such situations to their maximum advantage.
Relevant Links

Nigeria was unable to make maximum benefit from the increases of oil prices in 2008 because of the militancy crisis in the Niger Delta, but the situation has changed significantly. The rise in the price of crude oil may be seen as a good omen, but experience has also shown that the more money the country makes from oil, the more profligates and wasteful it becomes.

Nigeria is strategic to the global energy need, it is also crucial to the maintenance of security of the Gulf of Guinea region; the fear of the magnitude of the crisis and insecurity in that region forced the US to create the African Command.

Nigerian political leaders who believe that their pro-Arab policies is what the country need to develop must recognise that the dynamism of the global economy dictates that Nigeria must play its international politics right as Iran and Libya would support any policy that could lead to destabilising Nigeria, to give them advantage in the global oil market.

Nigeria on its part must take the issue of diversifying its revenue base seriously as the volatility of oil prices makes it difficult to benchmark its development on such a commodity.

Investors affirm confidence in Nigeria's economy

By Terfa Tilley-Gyado and Stanley Oronsaye

Last Friday, Nigeria made a successful debut at the international bond market with the 10 year $500 million Eurobond massive subscription. The issue was 2.5 times oversubscribed, translating to about $1.25 billion. This is coming after initial apprehension about the attractiveness of the bond on the back of mismanagement of huge income from oil over the last one year.

In an interview before the deal closed that day, the finance minister, Olusegun Aganga, said that he had spoken with over 40 investors and the response to the bond had been overwhelmingly assuring. Mr. Aganga dismissed reports that some investors had doubts about the viability of the issue. The report suggested that the alleged mismanagement of Nigeria's Excess Crude Account (ECA) had caused potential investors to shun the country's first bond issue.

Mr. Aganga, who was in New York as part of the road show to market the bond, said that the Excess Crude Account barely featured in the questions the investors were asking. "There is absolutely no correlation between the Excess Crude Account and what we have set out to achieve with the bond," he said. "In reality, 42 per cent of that goes into investment in power such as the NIPP project which has been allocated N8 billion."

Excess Crude Account

He said that the Excesss Crude Account was a necessity for states to invest in major capital projects but refused to comment on allegations that many states had not remitted the money accordingly.

"The investors were far more interested in economic and other fiscal factors. They were fairly consistent in their questions which were mostly about political stability, exchange rates, the budget, levels of production and the quality of our loan book."

He said that modern investors were extremely sophisticated and Nigeria represented a very attractive opportunity for those looking for healthy diversity in their portfolios.

The finance minister added that a large number showed interest in the Euro Bond.

"However it is not just anybody with money that will be able to invest. We need to vet each investor's suitability as well."

A highly elated Aganga, after the close of the book, said the issue was a major milestone for Nigeria. "More remarkable is the exceptional quality and diversity of investors from 18 countries spanning Europe, the US, Asia and Africa.

Investors are impressed by Nigeria's credit story and were very keen to participate in the offering."

Mr Aganga said Nigerian corporate can now more easily access well-priced long term financing from the international capital markets to fund economic opportunities such as infrastructural development.

"We now have a transparent and internationally observable benchmark against which international investors can accurately price risk. My expectation is for an increase in capital inflows and FDI (foreign direct investment) into the economy."

The accomplishment of the bond may not necessarily translate to much unless local corporate are able to latch on to the success recorded.

"We will commence the process of educating Nigerians on the benefits of this bond. It is a very good thing," the minister said in a text message.

William Wallace, the Africa Editor of the Financial Times said the massive investor interest in Africa has rubbed-off well on Nigeria.

"Some of the world's fastest growing economies are on the continent, which looks set to grow in coming years at double or more what the developed world is. Then there is a lack of supply of African sovereign debt. Nigeria as the second largest economy is obviously going to attract interest."

Fiscal prudence

Mr. Wallace said current mismanagement may be due to the elections and that fiscal prudence will improve after April. "Nigeria's debt profile is still far more favourable than it was a few years ago even if both domestic and external debt has been on the rise again."

Standard & Poor's Ratings Services on Tuesday assigned its ‘B+' long-term senior unsecured debt rating to the bond. At the same time, S&P assigned a recovery rating of ‘4' to the proposed bond, indicating its expectation of average (30 per cent to 50 per cent) recovery in the event of a payment default.

According to S&P, the ratings are also constrained by a low level of development and high dependence on the oil sector.

"Furthermore, we see residual risks in Nigeria's financial sector, although the Central Bank has addressed solvency and liquidity problems in the banking sector," it said.

S&P notes that even with mismanagement, Nigeria's oil revenues are such, with the price of oil rising, that over the 10 year period the country will always be able to pay.

Anglo’s FitzPatrick, ‘Easy and Loose,’ Dabbles in Africa (Nigerian Oil) : Books

Every financial drama needs a rascal. In “The FitzPatrick Tapes,” that role is played by Sean FitzPatrick, the former chief executive and chairman of Anglo Irish Bank Corp.

As recently as three years ago, the Dublin-based bank posted a net profit of almost 1 billion euros ($1.35 billion). Now, the lender’s collapse is set to cost the taxpayer as much as 34 billion euros. That’s more than the country’s entire tax take last year or, as FitzPatrick himself puts it, more than BP Plc has set aside to pay for the Gulf of Mexico oil spill.

FitzPatrick resigned as chairman in December 2008, after revealing that he hadn’t fully disclosed to investors and auditors loans he took from Anglo. Since then, he has largely kept his counsel amid probes into the bank. Now he has broken his silence in this book by two of Ireland’s most respected reporters, Tom Lyons and Brian Carey of the Sunday Times.

Drawing on 18 interviews with FitzPatrick, the authors present a detailed look at the rise and fall of Anglo and, by extension, Ireland. They also give us glimpses of the banker’s political connections, hands-off management and multimillion- dollar investments in Nigerian oil and Riviera real estate.

FitzPatrick, 62, ran Anglo for almost two decades before becoming chairman in 2005, and the book is already creating a political stir. He discloses, among other things, that he played golf with Prime Minister Brian Cowen in July 2008 and had previously called him to discuss the bank’s difficulties. Two months after their game, the government guaranteed the deposits and liabilities of all Irish banks.

Unhealthy Links?

The prime minister’s opponents cited the contacts as evidence of what they call unhealthy links between his government and the bankers who laid the nation low. Cowen denies any impropriety. This week, he defeated a challenge to his leadership during a secret ballot inside his Fianna Fail party.

In truth, the contacts aren’t much of a smoking gun. We don’t learn in any real detail what FitzPatrick and Cowen discussed -- or what the consequences of the contacts were. The authors are careful not to draw any conclusions.

More interesting are the insights into how FitzPatrick ran the bank. “I was a fairly fastidious guy, but it was easy and it was loose,” he says at one point. “I never read papers. If people weren’t good, I shot or fired them.”

Dotty Investments

Almost as intriguing is FitzPatrick’s dotty way of investing his own money, which may go some way to explaining the bank’s buccaneering lending. At one point, he sinks $12 million into an oil venture in Nigeria -- allegedly without first meeting his African business partners. Oil was an “interesting hobby,” he says. Then there was the 11.5 million-euro Saint- Jean-Cap-Ferrat rental property on the French Riviera that he invested in and then visited just once, the book says.

The clearest pattern that emerges is FitzPatrick’s absence during the crucial and most controversial moments of the crisis.

What about those deposit transfers to Anglo from Irish Life & Permanent Plc -- a practice that Finance Minister Brian Lenihan says may have created a “false impression” about Anglo’s deposit base? Not me, your honor.

How about Anglo’s heavy reliance on international money markets for its finance? Can’t help you there.

Though he accepts responsibility for the lender’s demise, FitzPatrick says blame needs to be spread more widely. He comes across as a somewhat bemused bystander, watching the carnage unfold around him. While police have questioned him -- an outing he describes in detail in the book -- no one has been charged in relation to Anglo and he denies any wrongdoing.

For now, bravo to Lyons and Carey. There are frustrations with this book, such as the absence of an index and, more significantly, a lack of on-the-record voices from other major players in the Anglo drama.

Still, in persuading FitzPatrick to speak, they’ve got a genuine scoop on their hands. While there’s no big revelation here, the mountains of detail they’ve extracted add up to a telling portrait of a man, a bank and a country in crisis.

“The FitzPatrick Tapes: The Rise and Fall of One Man, One Bank and One Country” is published by Penguin Ireland (264 pages, 18.99 euros, 16.99 pounds).

(Dara Doyle writes for Bloomberg News. The opinions expressed are his own.)

To contact the writer on the story: Dara Doyle at

To contact the editors responsible for this story: Mark Beech at

Wednesday, January 19, 2011

Growing supply to hit Mideast crude tanker rates

*VLCC availability still high despite firmer demand

*Market still struggling with end of floating storage

By Jonathan Saul

LONDON, Jan 17 (Reuters) - Crude oil tanker earnings on the key Middle East route were steady on Monday, although increasing tanker availability was set to keep earnings under pressure in the coming days.

The world's benchmark Very Large Crude Carrier (VLCC) export route from the Middle East Gulf (MEG) to Japan DFRT-ME-JAP reached W45.84 or $8,489 a day, from W45.32 or $8,111 a day on Friday and versus W48.59 or $13,515 a day last Monday.

"A slow start in the MEG following a couple of low fixtures from last week. With ample tonnage available, charterers are feeling no pressure for early February fixing," broker ICAP Shipping said.

VLCC rates have remained volatile in recent weeks due to the supply overhang.

"With more than 80 VLCCs available in (MEG) over the next four weeks and the February program in its early stages, we think the VLCC market will struggle to gain ground in the short-term," Arctic Securities said. "While demand appears to be decent, January being the fourth consecutive month exceeding 100 cargoes, the supply of vessels is weighing down on the market."

Average VLCC rates hit their highest in over four months on Nov. 2 last year at $42,517 a day, helped by a flurry of fixtures from Chinese crude oil buyers in particular.

VLCC rates plunged last October as the end of a speculative trading play, which at one point last year involved an estimated 100 million barrels of crude oil held on tankers at sea, meant the market was awash with tankers.

Dahlman Rose & Co said it expected crude tanker rates to be mostly flat this year relative to 2010, with vessel availability expected to limit upside potential.

"During 2010 VLCC rates averaged $37,000/day, improving from $32,000/day in 2009 but still averaging much lower than peak levels of $60,000 to $90,000/day from 2004 to 2009," Omar Nokta, head of research, said in a report last week.

"We believe the demand side drivers for tankers are generally improving this year, but the potential increased urgency to book cargoes seems likely to be offset by excess supply."

VLCC rates from the Gulf to the United States DFRT-ME-USG were at W31.04 on Monday from W30.18 on Friday and W30.04 last Monday. VLCC rates from West Africa to the U.S. Gulf were at W49.80 from W50.07 on Friday and W51.86 last Monday.

(Editing by Jonathan Saul)

Nigeria: Militants Threatens Fresh Attacks On Oil Installations

Wisdom Patrick And Olaolu Oladipo With Agency Report

Lagos — The Movement for the Emancipation of the Niger Delta (MEND) yesterday threatened fresh attack on key oil installations. The group said the renewed onslaught was in protest over the recent arrest of some of its members in the Delta creeks.

A release from the group made available to LEADERSHIP in Lagos yesterday, quoted spokesman of the group, Jomo Gbomo, saying "MEND will attack fuel depots, oil wells and flow-stations and vehicles transporting petroleum products in and out of the Delta region of Nigeria. This is in retaliation to recent killing and arrest of our members."

Some members of group were arrested on Monday by operatives of the Joint Task Force (JTF) deployed to the Niger Delta region to curb the restiveness in the area.

The group in the statement alleged that seven of its members were arrested at Otakpe creek, near Bonny Island by a detachment of men of the JTF for convening an unauthorized meeting and setting up militant camps.

According to the statement, MEND warned those who live close to oil installations, such as depots bearing products such as diesel, kerosene, petrol, propane gas and engine oil to steer clear of such facilities to avert being casualties in the impeding attacks.

"Advance warning for immediate evacuation is hereby issued to residents in close proximity to depots storing petroleum products such as aviation fuel, diesel, kerosene, petrol, propane gas and engine oil," the Movement for the Emancipation of the Niger Delta (MEND) said in an emailed statement.

Jomo Gbomo in the statement warned of a "ferocious attack on the downstream oil sector", if its members are not released by the Nigerian authorities.

MEND claimed responsibility for car bombings in the capital Abuja on Oct. 1, last year, but the group is divided, with many of its known commanders having accepted a 2009 government amnesty brokered by President Goodluck Jonathan.

Nigeria woos bidders for state-run power company

LAGOS, Nigeria

Nigeria has invited companies to bid for the nation's decrepit power grid in an offer that could be worth billions for private investors.

Nigeria held the first of five investors' forums Tuesday in the commercial capital of Lagos in a search to privatize the state-run Power Holding Company of Nigeria.

Other forums will take place in Johannesburg, London, New York and Dubai, United Arab Emirates. Bidding closes Feb. 18.

Bolanle Onagoruwa, the director general of Nigeria's Bureau for Public Enterprises, said: "Nigerians can no longer wait to have effective, reliable and sustainable electric power supply."

Oil-rich Nigeria remains beset by blackouts and problems with its aging power grid, forcing the population to rely on private generators to provide electricity.

Tuesday, January 18, 2011

Pirate Kidnappings Hit Record High in 2010

Pirates took a record 1,181 hostages in 2010 as ship hijackings increased off the coast of Somalia, a maritime watchdog organization reported today.

Attackers seized 53 ships last year -- all but four off Somalia -- according to the International Maritime Bureau's piracy reporting center in Kuala Lumpur, Malaysia. Across the world, there were 445 pirate attacks on ships last year, a 10 percent rise over 2009 and the fourth successive year that attacks increased.

"These figures for the number of hostages and vessels taken are the highest we have ever seen," Pottengal Mukundan, director of the IMB's Piracy Reporting Centre, which has monitored international piracy since 1991, said in a statement. "The continued increase in these numbers is alarming."

Somalia is the undisputed capital of international piracy. As well as boarding over 92 percent of all hijacked vessels last year, Somali gangs grabbed 1,016 of the hostages held for ransom throughout 2010. As of last December, the IMB reports that 28 vessels and 638 seafarers of various nationalities were being held captive in the country. Somali gangs killed eight crew members during raids last year.

The East African nation is the perfect pirates' nest. Somalia has lacked a functioning government since the collapse of its dictatorship in 1991, meaning pirates are free to set up bases along the country's long coastline. They can then easily set sail and intercept ships passing through the Gulf of Aden, one of the world's busiest shipping lanes.

The IMB notes that the recent deployment to the gulf of a multinational flotilla of warships -- including vessels from the U.S., U.K., Russia, France and many other countries -- helped halve the number of incidents in the busy shipping lane last year. However, pirates have responded by hunting for easy prey farther out to sea, targeting vessels in the Mozambique Channel and the Indian Ocean, a range the IMB says is "unprecedented."

Mukundan says the key to defeating these oceangoing criminals rests back on land. "All measures taken at sea to limit the activities of the pirates are undermined because of a lack of responsible authority back in Somalia, from where the pirates begin their voyages and return with hijacked vessels," he said.

In Bangladesh, bandits boarded 21 vessels, most of which were anchored in the port of Chittagong. And in Indonesia, which has successfully cracked down on maritime crime over the past decade, attacks on ships reached their highest levels since 2007, with 30 vessels boarded and one hijacked.

The South China Sea suffered 31 piracy incidents -- more than double the number in 2009 -- with 21 vessels boarded.

Monday, January 17, 2011

Nigeria’s Top Oil & Gas Producers & Investors to Meet in Abuja

Nigerian and international delegations will meet in February at the annual Nigeria Oil & Gas to discuss current developments and future opportunities in the Nigerian energy industry

PRLog (Press Release) – Jan 17, 2011 – Nigerian and international delegations will meet in February at the annual Nigeria Oil & Gas to discuss current developments and future opportunities in the Nigerian energy industry. Key decision makers from Nigeria will discuss legal and fiscal issues, current projects and how to maximize revenue and increase investment in the country.

Diezani Alison-Madueke, Honourable Minister for Petroleum Resources will lead the Nigerian delegation and deliver a Ministerial Address focusing on Nigeria’s energy industry in the new era. Dr Emmanuel Egbogah P Eng, OON, Special Advisor to the President on Petroleum Matters will follow up with a discussion on new oil and gas projects and unlocking further Nigerian potential.

Prof Yinka Omorogbe, NNPC’s Company Secretary and Legal Advisor is set deliver an update on the petroleum industry reforms and their implications for the industry and the country.

Ian Craig, Regional Executive Vice President of Shell is to speak about the role of the long-term international partner in Nigeria’s future and Wale Tinubu, CEO of Oando Plc will talk about transforming Nigeria’s economy through energy projects.

Almost one hundred distinguished speakers will gather at this leading industry meeting and discuss over three days the most important and topical matters in the Nigerian energy sector.
Nigeria Oil & Gas to be held on 21-24 February 2011 is a vital forum to gain insights into the current developments in Nigeria. Ministers, government and senior NNPC representatives will be present throughout the two days of the conference to network and discuss upcoming projects and contracts face to face. Delegates from International Oil Companies will be at hand to speak about possible collaborations and future opportunities.

The Nigeria Oil & Gas 2011 also comprises an international exhibition set out to be the biggest to date yet. Companies from around the world have already confirmed their participation as exhibitors and will showcase latest technological developments.

The event highlights will also include The Opening Ceremony, last year lead by President Goodluck Jonathan, Nigeria Content Seminar, 11th Annual Award Ceremony and a new feature for 2011 – Energy Finance Seminar to be led by Olusegun Aganga, Honourable Minister of Finance.

Other distinguished speakers will include:

Abiodum Arokodare, GED Finance & Accounting, NNPC
Abiona Usikalu, Chief Operating Officer, Moni Pulo Ltd
Ade Adeola, Managing Director, Project & Export Finance, Standard Chartered Bank Plc
Dele Kuti, Sector Head - Oil & Gas & Renewables, Stanbic IBTC Bank
Onno Rühl, Country Director, World Bank
Dr Alirio Parra, Senior Associate, CWC Group Ltd

Andrew Fawthrop, Chairman/Managing Director, Chevron Nigeria Ltd
Chima Ibeneche, Managing Director, Nigeria LNG Ltd
Dr Bright Okogu, Director General, Budget Office of the Federation
Mark Ward, Lead Country Manager, ExxonMobil Companies Nigeria
Aigboje Aig-Imoukhuede, Group Managing Director/CEO, Access Bank Plc
Philip Chukwu, Group Executive Director Exploration and Production, NNPC
Ledum Mitee, President, Movement for the Survival of the Ogoni People
Hon Timipre Sylva, Executive Governor, Bayelsa State
Tony Attah, Manager Social Performance & Community Affairs,
Shell Petroleum Development Company of Nigeria Ltd
Austen Oniwon, Group Managing Director, NNPC
Dr Tim Okon, Group General Manager Strategy, NNPC
Guy Maurice, Managing Director, Total E&P Nigeria Ltd
Engr Voka Mukoro, Coordinator Gas & Power Directorate, NNPC
Oyetola Oshobi, Partner, Babalakin
André van Niekerk, Chief Executive Officer, LADOL
Ifeanyi Patrick Ubah, Managing Director, Capital Oil & Gas Industries Ltd
Dr David Ige, GGM Special Advisor to the GMD, NNPC
Osten Olorunsola, Regional Vice President Gas, Sub-Saharan Africa,
Shell Exploration & Production Africa Ltd
Olubunmi Obembe, Executive General Manager, Gas & Power Business, Total E&P Nigeria Ltd
Ade Adeola, Managing Director, Project and Export Finance, Standard Chartered Bank Plc
W.A. Obaje, Director, Department of Petroleum Resources
Scott Aitken, CEO, Seven Energy
Egbert Imomoh, Chairman, Afren

For more information visit


1. Nigeria Oil & Gas is taking place in Abuja, Nigeria, on 21-22-23-24 February 2011
2. For more details about the conference, exhibition, speakers and guests including bios, please contact: Joanna Kotyrba on +44 20 7978 0092 begin_of_the_skype_highlighting +44 20 7978 0092 end_of_the_skype_highlighting or email
3. The event is organised by The CWC Group, an award-winning company which specialises in energy and infrastructure, developing knowledge, creating commercial opportunities and strategic solutions for government and industry by offering professional training, conferences and exhibitions.
4. For more information, please visit:

The CWC Group works with over 30 governments, OPEC, the World Bank and numerous non-profit making associations providing public relations events and publications to promote private-public co-operation.

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Political uncertainty may hinder Nigerian oil output

BARCLAYS Capital in a Dec. 30, 2010 report said that the resumption of political uncertainty and violence may hinder the recent growth in Nigerian oil output, which climbed to a two-year high of 2.3 million b/d after dropping to a low of 1.7 million b/d in mid-2009.

Deadly bombing and shootings over the holiday season served as reminder of the divisions the country faces as it heads into the 2011 elections in April, Barclays noted in a Jan. 6 report. While localized violence occurred prior to the 2003 and 2007 elections, the upcoming presidential election appears to be far more polarizing as there is no single elite consensus candidate and many prominent Northerners are adamantly opposed to the Jonathan presidency, Barclays said.

The Nigerian economy is heavily dependent on the oil sector which, according to the International Monetary Fund, accounts for over 95 percent of export earnings and about 65 percent of government revenues, the U.S. Energy Information Administration (EIA) reported in July of last year.

Since December 2005, Nigeria has experienced problems with increased pipeline vandalism, kidnappings and militant takeovers of oil facilities in the Niger Delta, one of the areas of Nigeria that holds the majority of the nation’s oil and gas reserves.

The Movement for the Emancipation of the Niger Delta is the main group attacking oil infrastructure for political objectives, claiming to seek a redistribution of oil wealth and great local control of the sector. Oil worker kidnappings have been common, and security concerns have led some oil services firms to pull out of the country and oil workers unions to threaten strikes over security issues.

The instability in the Nigeria Delta has caused significant amounts of shut-in production and several companies to declare force majeure on oil shipments. EIA estimates Nigeria’s nameplate oil production capacity to have been around 2.9 million b/d at the end of 2009 but as a result of attacks on oil infrastructure, monthly crude oil production ranged between 1.6 million b/d and 2.0 million b/d.

While the country holds the largest natural gas reserves in Africa, there is limited infrastructure in place to develop this sector. Gas associated with oil production is mostly flared but the development of regional pipelines, the expansion of liquefied natural gas infrastructure and policies to ban gas flaring are expected to accelerate growth in the sector, both for export and domestic use in electricity generation.

The Nigerian government has sought to remedy problems with oil theft, pollution, and limited infrastructure with the Petroleum Industry Bill; however, the bill is still being debated in Congress more than a year and a half after first being introduced.

Nigeria Arrests 12 in $100 Million Oil Bribery Probe. Not Dick Cheney.

By Joe Carroll and David Wethe

(Adds company names in first paragraph, Transocean spokesman’s comment in fifth paragraph.)

Jan. 13 (Bloomberg) -- Nigerian investigators arrested 12 oil-industry employees, including representatives of Transocean Ltd. and Noble Corp., as part of a probe into a $100 million bribery scheme.

The individuals were arrested on suspicion of “offering bribes worth $100 million to some Nigerian officials,” the West African nation’s Economic and Financial Crimes Commission said today in an e-mailed statement.

Two employees of Transocean, the world’s largest offshore oil driller, have been released, said Guy Cantwell, a spokesman for the Vernier, Switzerland-based company. Four Noble workers who were among the detained have since been released, John Breed, a spokesman for the Geneva-based company said.

Nigeria, Africa’s biggest oil producer, has been investigating bribery allegations against Swiss, U.S., French, Italian and Japanese companies involved in the nation’s $62 billion petroleum industry. Halliburton Co., Technip SA, Snamprogetti SpA are among the companies that last month agreed to pay tens of millions of dollars each to settle bribery claims.

“We’re in contact with the Nigerian authorities and are cooperating with them,” Cantwell said today in a telephone interview from Houston.

Last year, Noble agreed to pay $2.6 million in fines and $5.6 million in interest to settle a U.S. government investigation into reimbursement payments made in Nigeria. The probe stemmed from a May 2007 report by the company to the Justice Department and U.S. Securities and Exchange Commission that improper payments may have been made on its behalf by a customs agent in securing permits for drilling rigs in Nigeria.

--With assistance from Elisha Bala-Gbogbo in Abuja. Editors: Bill Banker, Charles Siler

To contact the reporters on this story: Joe Carroll in Chicago at; David Wethe in Houston at

To contact the editor responsible for this story: Susan Warren at

Shell to auction 4 more onshore oil blocks in Nigeria

Shell is putting up four Nigerian onshore oil blocks for auction as the oil major focuses on transferring some assets in Nigeria to local companies, Platts reported on Thursday, quoting sources close to the process.

Shell to auction 4 more onshore oil blocks in Nigeria

Shell is putting up four Nigerian onshore oil blocks for auction as the oil major focuses on transferring some assets in Nigeria to local companies, Platts reported on Thursday, quoting sources close to the process.

Bids for the four blocks closed on Wednesday and Shell could announce the potential buyers next week.

Nigerian onshore blocks are largely prone to militant attacks, and Shell had sold its 30 percent interest in three oil mining leases in the western Niger Delta, to Seplat Petroleum last year, a Platts release said.

Platts said Shell declined to comment while officials of the bidding companies involved said they were unable to comment because of the confidentiality clause in the negotiations.

According to Platts, local industry analysts have linked the Shell divestment to uncertainty surrounding Nigeria's new petroleum law.

Nigerian Oil Mafia Invades Ghana

Investigative report reaching the Ghanaian Eye has disclosed that groups of Nigerian oil, Niger Delta Militant are trooping into the West Coast of Ghana, Cape 3 point and other parts of the country to seek greener pastures in the jubilee oil fields.

Most of these people, according to our sources, started migrating from the Niger Delta ethnic tribes and has began regrouping themselves in cities like Takoradi, Cape Coast, Accra and Kumasi.

The Ghanaian Eye was reliably hinted that these immigrant gangsters, criminal and mafia groups are from Ogoni, Ijaw ethnic tribe and also part of Ibom state of Nigeria. However, we can recall that competition for oil in Niger Delta has fuelled serious violence between immovable ethnic groups causing militarization in the entire Nigeria Niger Delta area.

Our investigations also hinted that these influx of the Niger Delta gangs are not one organization operating under a common leadership but a loose eclectic mix harden criminal gangsters who are extremely dangerous and violent.

Ghanaian eye

Friday, January 14, 2011

Nigeria Arrests 12 in $100 Million Oil Bribery Probe

Nigerian investigators arrested 12 oil-industry employees, including representatives of Transocean Ltd. and Noble Corp., as part of a probe into a $100 million bribery scheme.

The individuals were arrested on suspicion of “offering bribes worth $100 million to some Nigerian officials,” the West African nation’s Economic and Financial Crimes Commission said today in an e-mailed statement.

Two employees of Transocean, the world’s largest offshore oil driller, have been released, said Guy Cantwell, a spokesman for the Vernier, Switzerland-based company. Four Noble workers who were among the detained have since been released, John Breed, a spokesman for the Geneva-based company said.

Nigeria, Africa’s biggest oil producer, has been investigating bribery allegations against Swiss, U.S., French, Italian and Japanese companies involved in the nation’s $62 billion petroleum industry. Halliburton Co., Technip SA, Snamprogetti SpA are among the companies that last month agreed to pay tens of millions of dollars each to settle bribery claims.

“We’re in contact with the Nigerian authorities and are cooperating with them,” Cantwell said today in a telephone interview from Houston.

Last year, Noble agreed to pay $2.6 million in fines and $5.6 million in interest to settle a U.S. government investigation into reimbursement payments made in Nigeria. The probe stemmed from a May 2007 report by the company to the Justice Department and U.S. Securities and Exchange Commission that improper payments may have been made on its behalf by a customs agent in securing permits for drilling rigs in Nigeria.

--With assistance from Elisha Bala-Gbogbo in Abuja. Editors: Bill Banker, Charles Siler

To contact the reporters on this story: Joe Carroll in Chicago at; David Wethe in Houston at

To contact the editor responsible for this story: Susan Warren at

Monday, January 10, 2011

Azeri Light / BP

Azeri Light

Crude Azeri Light (from Supsa)
Location Azerbaijan
Load Terminal FOB Supsa on the Georgian Black Sea Coast. Not blended with other crude oils
Parcel Sizes Up to 1 million barrels
API° 34.8
Sulphur %wt 0.15
Acidity mg KOH/gm 0.26

Distillation Yields (%wt)
C1 to C4 0.9
Naphtha (C5 to 149°C) 11.5
Kerosene (149°C to 232°C) 12.9
Gas Oil (232°C to 342°C) 24.6
Atmospheric Residue (342°C+) 50.1

Ni ppm wt 3
Va ppm wt <2

The information in this assay was prepared by BP Oil International Limited. It is for your private information and we are not soliciting or suggesting any action based upon it. While this material is based upon information that we consider reliable, nevertheless, despite our efforts, it may not be accurate, up to date or applicable to the circumstances of any particular case. In particular, (i) as the assay is based on a small sample only, it may not be wholly representative of the crude in question; and (ii) crude yield structures change over time and less recently dated assays are thus less representative of the crude in question. We cannot accept any liability for any inaccuracies or omissions in this assay. Should you require it, additional information is available on request.

This assay is © BP Oil International Limited, and may not be reproduced without our express permission. Users may forward this assay and view, print and download the contents for personal use only. The contents must not be used for any commercial purposes and the material in this assay or any part of it is not to be incorporated or distributed in any work or in any publication in any form without the prior written consent of BP Oil International Limited.

W.Africa Crude-Supported by Asian demand

* Qua Iboe valued at dtd plus $2.00; Bonny Light plus $1.95

* Angolan March loading programmes expected early next week

LONDON, Jan 10 (Reuters) - Nigerian crude oil differentials held steady on Monday, supported by strong Asian demand via tender and limited supplies.

"Qua Iboe values, in particular, are being held up by shorts into Asia," said a west African crude oil trader with a large U.S. oil company.


* As many as five benchmark Qua Iboe cargoes for Nigeria were still looking for homes potentially, traders said, with offers between dated Brent plus $2.15 and plus $2.25 but doable levels thought to be closer to plus $2.00. Taleveras was said to be sitting on two Qua Iboe cargoes, loading Feb. 7-8 and Feb. 19-20, while Aiteo was holding a cargo loading Feb. 23-24 and BP had the last two cargoes of the month, loading Feb. 26-27 and Feb. 27-28. Some of these cargoes were probably destined for IOC, traders said.

* Bonny Light: said to be at a discount to Qua Iboe of around 5-10 cents.* Forcadoes: Trafigura was reported to have a Forcados loading Feb. 12-13 while Vitol had a Jan. 19-20. Assessments of this trade were pitched around Qua Iboe plus $1.00, so close to dated Brent plus $3.00.

* Okwori: Glencore was reported to be indicating a mid-February loading Okwori cargo at around dated Brent plus $2.50, traders said.


* All Angolan cargoes for February have now been sold by equity holders, traders said.

* Traders expect the Angolan loading programme for March to emerge by next week.


* Petral, the trading unit of Indonesian state-run energy firm Pertamina, has issued a mini-term tender to buy a cargo each of Nigerian and Azeri crude oil each month from March to May, a trade source said on Monday. Petral specified it wished to buy one 950,000-barrel cargo each month of Nigerian Bonny Light and another cargo of Azeri Light, the source said. Offers are due by Jan. 12 and an award would be made on Jan. 13. Petral has previously bought a range of other crudes including Nigerian Qua Iboe and Escravos.

* India's largest state-owned refinery, Indian Oil Corp. (IOC), has tendered to buy sweet crude oil for March loading. Grade offers are due into the tender on Jan. 11 and news of an award should come out by Jan. 13, traders said.

* India's Bharat Petroleum Corp (BPCL) has open a tender to buy 1 million barrels of February-loading sweet crude. Grade offers were due by Jan. 7, with price offers by Jan. 10, and offers must remain valid until Jan. 11. Last month, the refiner bought 1 million barrels of Nigerian Agbami crude oil for February loading.

For a database of oil supply and demand fundamentals upstream and downstream, Reuters subscribers can click here

(Reporting by Christopher Johnson; editing by James Jukwey)

Sunday, January 9, 2011

Bidders flock to Shell's Nigeria sale: paper

LONDON (Reuters) - At least 18 consortia are working on bids for Nigerian oil rights being sold by Royal Dutch Shell and partners, the Sunday Times newspaper said, citing unidentified sources close to the process.

The newspaper said Nat Rothschild, scion of the banking dynasty, was backing one group of bidders, while Russian gas group Gazprom was leading a bid with Nigerian resources firm Equinox Group.

London-listed oil industry services group Petrofac has joined forces with Nigerian gas firm Seven Energy to bid for one of the blocks being sold, while London-listed oil group Afren also plans to make an offer, it added.

Another bidding group includes London-based oil firm Perenco, Nigeria's Oando and Addax & Oryx, which is controlled by billionaire Jean Claude Gandur, the paper said.

Sweden's Lundin family is also interested, and working with logistics firm Intels Nigeria, it said.

Shell, which is selling four onshore fields along with partners Total and Eni, declined to comment.

Shell has said it hopes local companies would bid and analysts think there could be a preference for local players.

Friday, January 7, 2011

Frontline announces VLCC sale for USD91.2m, enters time charter

3 January 2011 - Oslo-listed tanker operator Frontline Ltd (OSL: FRO | PowerRating) announced today an agreement to sell a very large crude carrier (VLCC) for USD91.2m and then charter back the ship for two years at a daily rate of USD35,000.

The 2006-built vessel Front Shanghai will be delivered to its new owner, whose name was not disclosed, in the second half of January. The time charter will start at the same time.

(EUR1 = USD1.3)

Comments on this story may be sent to

For full details on Frontline Ltd Adr (FRO) FRO. Frontline Ltd Adr (FRO) has Short Term PowerRatings at TradingMarkets. Details on Frontline Ltd Adr (FRO) Short Term PowerRatings is available at This Link.

Dubai shipper soars with tanker purchase

Farah Halime

Shares in Gulf Navigation Holding steamed ahead after it acquired a supertanker as part of its expansion strategy in the crude oil market.

Dubai's only publicly traded oil shipper jumped nearly 4.9 per cent during intra-day trading, the most since November 1, after it said in a statement on the Dubai bourse website on Sunday that it would buy a very large crude carrier (VLCC). Gulf Navigation closed 3.3 per cent higher at 44 fils.

The company bought the oil tanker at a "competitive rate", a spokesman said, without disclosing how much it had paid.

VLCCs are the most expensive type of oil tanker and can cost around $100 million each.

Gulf Navigation disclosed the purchase as oil prices rose to a 27-month high, touching $92 a barrel. The new crude carrier, called Gulf Eyadah, has a capacity of 2 million barrels of oil.

It is the second VLCC for the company and will be managed by Gulf Stolt Ship Management of Dubai, Gulf Navigation's joint venture with the Norwegian ship owner Stolt-Nielsen

But analysts were cautious about the impact of the purchase on the share price.

"People are perceiving they're back on track with the original plan during its initial public offering [in 2006].

"But in light of the latest release, there is nothing to read from it in terms of charter rates, vessel cost or financing," said Kareem Murad, a transport and logistics analyst at Shuaa Capital.

"Whether they bought it second-hand or brand new is not clear. They definitely tapped into debt to pay for it, but how much did they finance from the total amount?"

The ship is expected to be delivered next month and will be chartered the same day "to a reliable international firm for two years at an attractive rate".

Neither the name of the firm nor the rate was disclosed.

Net profit for Gulf Navigation fell to Dh8.29 million for the first nine months of last year compared with Dh11.61m for the same period in 2009.

Vessel repair costs and the redelivery of one vessel cut into its bottom line, the company said.

Seafood Safety Update: Local Louisiana Restaurant Owner Talks Safe Seafood

Thursday, January 6, 2011

Shell to be grilled over Nigerian oil tensions

Royal Dutch Shell will be questioned by politicians over its operations in Nigeria – two months after tensions over oil exploration in the region flared up again.

Dutch lawmakers have arranged a hearing, described as a "fact-finding session", after several MPs travelled to the troubled Niger Delta region.

A ceasefire between militants opposed to foreign oil exploration and the government broke down in November.

Pipeline bombings caused output to fall 40pc in Africa's top oil producer until a ceasefire in July 2009. However, this collapsed when 13 hostages were taken from Afren and ExxonMobil's oil installations this autumn.

Nigeria's army, navy and air force launched a large offensive six weeks ago, storming rebel camps and jailing insurgents.

Shell has been criticised by environmental groups for the high level of oil spills in Nigeria, which could be as much as 9m barrels since oil exploration began in the 1950s.

The company claims that these are mostly the result of sabotage by militants, but Amnesty International has claimed that 2,000 sites have still not been cleaned up.

It also emerged in US diplomatic cables released on the Wikileaks website that Shell's Nigeria head Ann Pickard claimed to have infiltrated the country's government.

She was quoted as saying in the leaked documents that "the GON [government of Nigeria] had forgotten that Shell had seconded people to all the relevant ministries and that Shell consequently had access to everything that was being done in those ministries." Shell said this statement was "absolutely untrue, false and misleading."

Shell has been trying to sell up to $4bn (£2.6bn) of onshore oil assets in the African country for more than a year.

Yesterday, the company declined to comment on the political hearings about its activities in Nigeria.

Nigerian oil exports set to slip

By Alex Lawler

London - Nigeria's oil exports are set to decline by 70 000 barrels per day (bpd) in February to an eight-month low because of reduced supplies from several crude streams in a short month, trade sources said on Tuesday.

Africa's largest exporter will ship around 2.06 million barrels per day (bpd) of crude, down from 2.13 million bpd in January, the sources said. February's total will be the lowest since June 2010, according to Reuters data.

The drop reflects the way cargoes are scheduled in the shorter month of February, rather than reduced supply due to oilfield maintenance or militant attacks on oil facilities, traders said.

“It's probably just a function of the number of days - end-January and early-March cargoes just squeezed out of the February programme,” said a West African crude trader.

Prices of Nigerian crude have risen since the lower export schedules for February began to emerge before the Christmas break, and reduced supply has played a part.

“If the programmes are down, that tends to give some support,” said another trader, who added that brisk demand before the holiday period had been a bigger factor in supporting the market.

The decline also follows signs that a resurgence in violence by militants in the Niger Delta region is curbing supplies.

US energy company Chevron said in December it had suspended production from a major pipeline after a sabotage attack. Shell's output was also hit because of damage to a pipeline caused by oil theft.

Oil loading programmes quoted by trading sources showed that Nigeria will ship 64 full or part cargoes in February, compared with 72 in January.

The biggest stream will be Qua Iboe, which will load 12 cargoes, one less than in January. Supply of other crude grades including Bonny, Forcados, Brass River and Bonga will also be lower in February.

Even so, supply is expected to remain far above the production target Nigeria is set through its membership of the Organisation of the Petroleum Exporting Countries. Nigeria's Opec output limit is 1.67 million bpd.

Shipments will also be higher than those of Angola, which briefly almost matched Nigeria's output in early 2010. Angola is scheduled to export 1.63 million bpd in February.

Nigeria also produces significant amounts of condensate, such as the Oso and Akpo streams, which are excluded from the crude export totals and from its Opec output target. - Reuters

Nigeria: Govt, States Shun Pipeline Monitoring Equipment - Engineer

With the hue and cry over the menace of pipeline vandalism in Nigeria, a Kano-based engineer, Ado Abdu, Technical Director, Geological Drilling Investment Ltd., has said that both the federal and state governments have not shown any interest in his newly developed device to check the incessant menace in the country.

Ado Abdu, had on November 24, 2010, made a second presentation of his prototype of system equipment to the Department of Petroleum Resources, DPR, of the Ministry of Petroleum Resources in Lagos to demonstrate that there is an existing technology developed by him that can be used to mitigate against pipeline vandalism in Nigeria.

The Nigerian National Petroleum Corporation (NNPC) estimates that that the country has lost over N175 billion to repair broken pipelines between 2000 and 2009 following a total 15,685 breaks in the fuel pipeline network. He said the technology, called Hi-Speed USB 9162, is a PC based software and hardware that uses a combination of modular hardware, application software, and computer to take measurements and data acquisition and instrument control applications to measure an electrical or physical phenomenon such as frequency, voltage, current, temperature, pressure or sound.

When contacted for comments by Daily Trust, the DPR's spokespersons, Mrs Balema Osibodu asked our reporter to send the details of the engagement with the inventor for her to make enquiries, which was done, but the following day she said she was unable to trace such file. Mrs Osibodu said she needs more time to find out from her technical department.

But Abdu said, being the only African to develop such a device, he had made paper presentation at the United Nations (UN) on non-destructive testing, NDT, an engineering field used to identify and solve problems without creating additional problem. He also said he had partnered with NASA in the USA, who supported his Phd programme, but wanted to divert the NDT project to the production of nuclear warhead that cannot be detected.

Having refused NASA's bidding, he said, he turned his project to something that will benefit Nigerians and improve humanity by developing the code and equipment for detecting vibration.

Ado Abdu said pipeline vandals who, according to him, operate like a cartel in Nigeria, have developed a device called hot tapping machine which they clamp on pipelines no matter the pressure and create a diversion without any spillage or explosion and thereafter create their own pumping station for the diversion of crude oil. He said if the authorities wish to monitor Nigeria's pipelines, the Hi-Speed USB 9162 device can be relayed to 150 monitoring stations and they would be able to see what is happening to the pipelines through sensors that can pick vibration and frequency.
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Each sensor can cover 10-20 kilometers and every activity along any of Nigeria's approximately 6,900 km pipeline, even scratching it can trigger the sensor and it could also be programmed to at least 50 GSM handsets to send text message alerts.

Abdu, who said he spent over five months in some of Nigeria's creeks, said the sensor, called Compact Rio, has a silicon chip, which on the first day in the creeks detected 38 points where oil was being siphoned. He said after NNPC decided to cut off the 38 points he started to receive death threats on his phone and that surprisingly the following day, 12 new points had sprung up overnight.

Ado Abdu said GPS is also used to give each unit a global clock time that allows phased analysis between units to be carried out when an attack happens and gives the exact location and image of the people touching your pipeline and you can have their photographs.

He said he wants stakeholders to avail themselves of this new means developed by an indigenous person because the petroleum ministry has confirmed that over 100,000 barrels are lost every day to vandals.

He wondered why after the initial interest shown by the DPR, there has been no response from it again, adding that two years ago, he also wrote to Kano State government requesting for assistance without yielding results.

Ado said some foreigners have already approached him expressing interest in the new device created by him and said he is ready to offer consultancy to any arm of government interested in the new product.