Wednesday, September 30, 2015

Jeb Bush Calls for Ending Ban on Crude Oil Exports

Jeb Bush introduced his energy proposals on Tuesday at Rice Energy, a natural gas and oil company in Canonsburg, Pa.

CANONSBURG, Pa. — Jeb Bush, keen to establish himself as the most policy-focused candidate in the Republican field amid a slide in the polls, introduced a package of energy proposals here on Tuesday, calling for the repeal of a four-decade ban on crude oil exports.

Speaking before employees of Rice Energy, with supporters seated on the flatbeds of two well-placed pickup trucks beside him, Mr. Bush also assailed President Obama and Hillary Rodham Clinton for opposing the Keystone XL pipeline, among other positions likely to be popular with the conservative base.

“Where’s the marching band, for crying out loud?” he said, accusing “radical environmentalists” of demonizing businesses like Rice, a natural gas and oil company. “This is what we should be doing.”

Mr. Bush’s discussion of crude oil exports seeks to inject a roiling congressional debate into the presidential race. Several Republicans in the House have pressed to repeal the ban, an effort that has been championed by the oil industry and has drawn the ire of environmental groups. Though other candidates, including Senator Ted Cruz of Texas, have expressed support for a repeal, the issue has not resonated on the campaign trail.

The oil industry has begun a lobbying campaign in Washington for the repeal of the ban, which was imposed during the 1970s energy crisis.

“It might have made sense then; I’m not sure it did,” Mr. Bush said Tuesday. “It makes no sense now.”

The Bush campaign estimated that retail gasoline prices would drop by 6 cents a gallon within three years of lifting the ban.

The White House opposes legislation to reverse the ban. Though stopping short of an explicit veto threat, that opposition could make it more difficult for supporters to attract Democratic votes. At a briefing this month, the White House press secretary, Josh Earnest, said the issue was a“decision that is made over at the Commerce Department, and for that reason, we wouldn’t support legislation like the one that’s been put forward by Republicans.”

In a statement on Tuesday evening, John D. Podesta, Mrs. Clinton’s campaign chairman, said that Mr. Bush’s proposal “reads like a Big Oil wish list, while apparently omitting clean energy and renewables.”

Mr. Bush, trumpeting his energy plan, said he was “sick and tired of people thinking that the Chinese are eating our lunch” — using phrasing his rival Donald J. Trump has used on several occasions.

Vowing to fight some regulations imposed by the Obama administration, Mr. Bush said he was “not suggesting unregulating the world,” merely “common-sense 21st-century rules.”

Critics moved quickly to tie Mr. Bush’s positions, which include calls for greater deference to states on energy issues, to those of the oil industry. “His dirty-oil-driven plan has been tried before, and it was disastrous for the American people,” said Christina Freundlich, a spokeswoman for the Democratic National Committee, invoking former Vice President Dick Cheney and other officials from the administration of George W. Bush.

At his Pennsylvania gathering, Mr. Bush referred to his relationship with his brother, and on happier terms. Spotting the second-oldest brother from the Rice family business, Mr. Bush allowed himself a detour from his energy pitch

“I always admired the second brothers in families; I don’t know about you,” he said. “I think the guy’s going places.”

Mr. Bush, still straining to shed the “low-energy” label supplied by Mr. Trump, tried to convey excitement about the civic arcana of energy policy. “Let’s unleash the American experience on permitting,” he said.
“Praise Jesus!” he shouted later, amid a discussion of Rice’s business. “I just get fired up when I see examples like this.”

Mr. Bush also issued an unsubtle jab on Twitter at Mr. Trump, who released a tax plan on Monday that has been described as similar to Mr. Bush’s.

“Finally saw Donald’s ‘tax plan.’ Looks familiar!” he wrote. “I’m flattered. But he should’ve stuck with growth & fiscal responsibility.”

Still, Mr. Bush had much to live up to Tuesday after an introduction from Dan Rice, the company’s chief executive.
“This presidency isn’t about choosing the smartest, the richest or the most charismatic candidate,” Mr. Rice said, moving on as audience members began to whisper.

Mr. Bush turned to the crowd, contorting his face a bit, and Mr. Rice backtracked for a clarification. “You’re all three of those,” he said.

Oil Exports Under Threat as Crude Carriers Shun Nigerian Waters

Hijacked in Lagos

The efforts by the federal government to curb crude oil theft by imposing strict conditions on Very Large Crude Carriers (VLCC) lifting the Nigeria’s crude oil is threatening the exports of the country’s crude oil, as Asian vessels have shunned the country’s territorial waters.

This latest development will potentially compound the country’s dwindling oil revenue caused by the slump in oil prices.

Reuters reported on Tuesday that oil traders and shipping brokers said the “letter of comfort” requirement under which vessel owners must sign a guarantee that their ships will not be used for theft has made it more difficult and expensive to load Nigerian crude oil, putting some buyers off.

A tanker owner, Heidmar, was said to have refused to lift Nigerian crude oil, for India’s Hindustan Petroleum Corporation (HPCL) due to insurance concerns over the letter of comfort being demanded by the Nigerian National Petroleum Corporation (NNPC).

In addition to Heidmar, it was also gathered that Asian companies, China Shipping and AMCL, as well as Greece’s Chandris have refused to call at Nigerian ports for the time being over the same issue.

With the refusal of Heidmar to lift the Nigerian crude oil for India’s HPCL, it was gathered that the Indian refiner plans to use two Suezmax vessels for the journey, and this will potentially add to costs.

MT Solana, which was sailing to West Africa for HPCL, was also said to have turned away and is now en route to the Bahamas without loading Nigerian oil.
An oil trader for one Mediterranean refiner was also quoted by Reuters as saying that they “will not touch a single drop of Nigeria crude oil until the matter on the letter of comfort is solved.”

It was also reported that some European buyers are also now treading carefully with Nigeria.

This development was said to have contributed to a marked rise in freight with the cost of booking a Suezmax tanker from West Africa to the United States rising by 80 cents late last week to $2.75 per barrel, according to JBC Energy.

Also, rates for Very Large Crude Carriers (VLCCs) from West Africa to Asia rose by 20 cents to around $3.40 per barrel, a development, which could deter buyers.

“It’s making the arbitrage less workable,” Eugene Lindell, JBC’s senior crude market analyst, said. “This ultimately means the crude prices would have to be depressed so you can shift the barrels.”

Head of Energy Research at pan-African lender, Ecobank, Mr. Dolapo Oni, told Reuters that the revenue impact on the country would be significant.

“Due to the expensive freight, we are likely to see differentials weaken considerably, which means we could have lower revenue than normal,” Oni added.

The federal government had asked vessel owners to “guarantee to indemnify” the government and NNPC against any illicit use of their vessels, which led some owners to reject pending bookings.

Industry sources said the banning of roughly 113 oil tankers in July, was too blunt an instrument to curb crude oil theft, adding that the “letter of comfort” requirement, which applied to all vessels, created a potentially bigger problem.
Oil tanker industry association INTERTANKO said the letter as drafted would give Nigerian authorities a “blank cheque” for any perceived violations.

“NNPC’s guarantee terms would allow the Nigerian authorities to impose an arbitrary penalty for breach of local law - of which owners might be unaware - and then demand an indemnity for their losses without the need to prove any loss,”  INTERTANKO’s General Counsel, Michele White said, adding that “owners’ insurance would not respond to that.”

Buhari Appoints Himself Nigeria's Petroleum Minister, Will Soon Name Cabinet

Muhammadu Buhari
Nigerian President Muhammadu Buhari is shown speaking during the Leaders Summit on Countering ISIL and Countering Violent Extremism at the United Nations in New York City, Sept. 29, 2015. The 72-year-old leader said he plans to keep Nigeria's oil portfolio for himself. Mandel Ngan/Getty Images 

Rather than trust anyone else with a key source of government revenue, Nigerian President Muhammadu Buhari said Tuesday he will keep Nigeria’s oil portfolio for himself. However, Buhari also said he will appoint a minister of state in his new Cabinet who would oversee the daily running of the petroleum sector, according to Reuters.

“I intend to remain the minister of petroleum resources,” Buhari reportedly said Tuesday in an interview on the sidelines of the United Nations General Assembly in New York City.

Having been head of the petroleum ministry under military rule, there was earlier speculation that Buhari might indeed appoint himself to the powerful post as he works to overhaul the oil sector, which provides the Nigerian government with about 70 percent of its revenue.

Buhari, who took office May 29, has vowed to drive out corruption from the lucrative industry and has already taken steps to do so. Most recently, he announced a new managing director to run Nigeria’s state oil company, sacked its eight executive directors and dissolved the entire corporate board. Buhari has split the company into two entities and said Tuesday he might divide it further to improve efficiency and eliminate graft, Reuters reported.

The scale of corruption within Nigeria’s state-run oil company was revealed in a report published in August by the National Resource Governance Institute, an international governance watchdog in New York City. The report found the Nigerian National Petroleum Corporation has increasingly stolen large sums of money from the Nigerian treasury. The company, which did not respond to requests for interviews, withheld about $12.3 billion from the sale of 110 million barrels of oil over 10 years. Buhari said he would trace and recover the “mind-boggling” sums of money stolen over the years from the opaque sector.
The 72-year-old Nigerian leader is expected to name the rest of his Cabinet Wednesday and submit the candidates to Nigeria’s National Assembly for approval. Buhari has received criticism for taking too long to appoint ministers in his new Cabinet, which remains largely vacant. He has vowed to announce his list in September and said “Nigerians should ask me questions after the 30th of September if I do not do so,” according to Nigeria’s Leadership Newspaper. His presidential aides, who accompanied him to New York City this week, said Saturday the Nigerian leader will not miss the deadline.

Monday, September 28, 2015

Shell says it will cease Alaska offshore Arctic drilling

ANCHORAGE, Alaska (AP) — Royal Dutch Shell will cease exploration in Arctic waters off Alaska's coast following disappointing results from an exploratory well backed by billions in investment and years of work.

The announcement was a huge blow to Shell, which was counting on offshore drilling in Alaska to help it drive future revenue. Environmentalists, however, had tried repeatedly to block the project and welcomed the news.

Shell has spent upward of $7 billion on Arctic offshore exploration, including $2.1 billion in 2008 for leases in the Chukchi Sea off Alaska's northwest coast, where an exploratory well about 80 miles off shore drilled to 6,800 feet but yielded disappointing results. Backed by a 28-vessel flotilla, drillers found indications of oil and gas but not in sufficient quantities to warrant more exploration at the site.

"Shell continues to see important exploration potential in the basin, and the area is likely to ultimately be of strategic importance to Alaska and the U.S.," Marvin Odum, president of Shell USA, said in The Hague, Netherlands. "However, this is a clearly disappointing exploration outcome for this part of the basin."

Shell will end exploration off Alaska "for the foreseeable future," the company said, because of the well results and because of the "challenging and unpredictable federal regulatory environment in offshore Alaska.
Margaret Williams of the World Wildlife Fund in Anchorage, called the news stunning.

"That's incredible. That's huge," she said. "All along the conservation community has been pointing to the challenging and unpredictable environmental conditions. We always thought the risk was tremendously great."
Environmental groups said oil exploration in the ecologically fragile Arctic could lead to increased greenhouse gases, crude oil spills and a disaster for polar bears, walrus and ice seals. Production rigs extracting oil would be subject to punishing storms, shifting ice and months of operating in the cold and dark. Over the summer, protesters in kayaks unsuccessfully tried to block Arctic-bound Shell vessels in Seattle and Portland, Oregon.

"Polar bears, Alaska's Arctic and our climate just caught a huge break," said Miyoko Sakashita, oceans program director for the Center for Biological Diversity, in a statement. "Here's hoping Shell leaves the Arctic forever."

Monday was Shell's final day to drill this year in petroleum-bearing rock under its federal permit. Regulators required Shell to stop a month before sea ice is expected to re-form in the lease area.

The U.S. Geological Survey estimates U.S. Arctic waters in the Chukchi and Beaufort seas contain 26 billion barrels or more of recoverable oil in total. Shell officials had called the Chukchi basin "a potential game-changer," a vast untapped reservoir that could add to America's energy supply for 50 years.

Shell had planned at least one more year of exploration with up to six wells drilled.

A transition to production could have taken a decade or longer.

Shell had the strong backing of Alaska officials and business leaders who want a new source of crude oil filling the trans-Alaska pipeline, now running at less than one-quarter capacity.

Charles Ebinger, senior fellow for the Brookings Institution Energy Security and Climate Initiative, said in an interview that a successful well by Shell would have been "a terribly big deal," opening an area that U.S. officials say contains 15 billion barrels of oil.

While oil prices have dropped significantly in recent years and nations have pushed for cleaner energy sources, analysts predict that the world between 2030 and 2040 will need another 10 million barrels a day to meet growing demand, especially in developing countries, Ebinger said.

"Areas like the Arctic are one of the areas that, if we're going to be able to do this, we need to examine," he said.

Shell in 2012 sent drill rigs to the Chukchi and Beaufort seas but was not allowed to drill into oil-bearing rock because the containment dome had been damaged in testing.

The company's vessels suffered serious setbacks getting to and from the Arctic.

One drill vessel broke loose from its towline in the Gulf of Alaska and ran aground near Kodiak Island. Owners of the leased Noble Discoverer, which drilled in the Chukchi and is back this year, pleaded guilty to eight felony maritime safety counts and paid a $12.2 million fine.

That was proof of Shell's Arctic incompetence, critics said.

Odum called drilling off Alaska's coast the most scrutinized and analyzed oil and gas project in the world and said he was confident Shell could drill safely.

Thursday, September 24, 2015

Oil Rig | Big Bigger Biggest| National Geographic HD Documentary

Nigeria Reconsiders Its Oil Contracts



Nigeria is in a quandary when it comes to energy. Its onshore and shallow-water oil reserves are maturing, and increasingly being eclipsed by the potential of the country's deep-water oil reserves. Yet, having neither the technological know-how nor the finances to develop deep-water wells, the Nigerian government relies on international oil and natural gas companies such as ExxonMobil and Shell to exploit its offshore fields. Nigeria has been trying since 2008 to renegotiate its archaic contractual terms with the companies it has come to depend on. There are deep-seated concerns that the Nigerian government in Abuja is missing out on billions in oil revenues. Though keen to maximize its revenue share, Nigeria has historically faced difficult market issues that have constrained its ability to negotiate the best terms. 
An announcement last week by the head of the Nigerian National Petroleum Company (NNPC) that contract negotiations were underway is revealing, but perhaps premature. Speaking at a Nigeria-France business forum in Paris, general managing director Ibe Kachikwu said that contractual terms with international oil and natural gas companies (IOCs) were under review, especially those relating to deep-water offshore fields. Nigeria has been in discussions for some time, but will have to tread carefully to avoid alienating the very companies it so desperately needs, which will take finesse.


Nigeria has long been considering how best to reform its contractual terms with IOCs. Yet, any previous attempt by the National Assembly in Abuja to push through legislation supporting new fiscal terms has resulted in political gridlock and opposition from IOCs. Unfortunately, the Nigerians are not in a position to delay. Like the majority of oil producing nations, Nigeria is suffering as a result of low oil prices. The price of a barrel of oil is almost at $40 and is unlikely to recover in the immediate future. The corporate finances of the NNPC as well as the coffers of the Nigerian treasury are increasingly depleted. This depletion has led to widespread austerity measures throughout the country and a reinvigorated desire to increase revenue from oil companies operating in Nigeria.
But first, parliament must agree on how best to proceed, which is problematic in itself. The ill-fated Petroleum Industry Bill floundered for over six years before it was effectively nullified as a result of former Nigerian President Goodluck Jonathan's polarization of Nigeria's key energy stakeholders. Now it is unlikely to be considered in its entirety because of the serious complications associated with reforming Nigeria's oil industry as a whole. The NNPC is the conduit through which the government regulates energy production and interacts with the global industry. It is far from a transparent organization. Nigeria has also come to depend on the same coterie of oil companies to handle the bulk of its energy extraction. These are the same IOCs that are expecting to be called upon to develop the new deep-water fields.
Abuja is aware that drastically modifying or cancelling existing contracts is a good way to alienate the companies that Nigeria desperately needs to access its enduring oil reserves. Still, low oil prices will likely force Abuja to proceed on the contract reform aspect of the Petroleum Industry Bill separately. Nigeria relies on oil for over 70 percent of its overall revenues and wants to ensure a greater return, but any renegotiation of contracts will not come quickly or easily.

The Difficult Road to Change

Nigeria's oil production can be loosely grouped into three areas: onshore production, shallow-water production and deep-water production. Each area produces roughly one third of Nigeria's oil. However, onshore production is waning as the most important fields reach the final stages of their lives. As a result, IOCs are starting to withdraw from the depleted onshore developments. Royal Dutch/Shell finalized a divestment plan in March, and Total completed a similar plan in the same month, to the tune of $1 billion. In July, Eni announced that it was considering a divestment of its onshore fields in Nigeria. In response, the Nigerian government has encouraged the development of its indigenous oil and natural gas operating environment. Increasingly, Nigerian operators are partnering with 2nd and 3rd tier international companies to take the place of the supermajors onshore in Nigeria.

Wednesday, September 23, 2015

Gulf Coast storage inventory reaches regional high

Oil storage in the US Gulf Coast reached a record high of 69.603 million barrels since July 2014.

The regional record high has been mostly attributed to a surge in storage at Beaumont-Nederland, Texas, which hit a record high of 25.838 million barrels. Additionally storage inventories at Corpus Christi, Texas and Houston, Texas have also increased in recent weeks.

The previous regional storage high was 69.602 million barrels during week ending May 15, according to Genscape, which began monitoring the region in July 2014.

Must of the recent storage increase was due to higher Gulf Coast pipeline flows. During the week ending September 11, 2015 a total of 75% of Genscape monitored incoming pipeline capacity in the Gulf Coast was used.

Storage demand

As new storage is being built, pipeline capacity is filling, indicating an increased demand for storage at the Gulf Coast.

Over the past five weeks, a total of 3.048 million barrels of tanks began operating after construction was complete across all three locations – Beaumont-Nederland, Corpus Christi and Houston, and more than 18 million barrels of capacity remains under construction in the region.

This new capacity is being built in anticipation of higher demand and continued elevated crude production rates in the near future.

US propane stocks hit 22 year high

Inventories of propane and propylene have reached a 22 year high in the US. 

As of September 11, 97.7 million barrels of propane and propylene were recorded by the EIA. 

In the first six months of 2015, US propane and propylene inventories were 24.3 million barrels higher on average compared to the same period in 2014. 

In the past year, nearly all of the increase in inventories occurred in the Gulf Coast region. 

Production of propane and other hydrocarbon gas liquids has grown and with it the ability to transport, store and export these commodities has also expanded. 

 Propane is mainly used for space heating and as a feedstock for petrochemical plants. 

It is this use that makes propane consumption highly seasonal and weather dependent. 

The EIA expects propane and propylene inventories to begin the October heating season at record levels, reaching a high of 99.1 million barrels at the end of September.

Tuesday, September 22, 2015

The booming business of oil tankers

With the world awash in oil and prices half their year-ago levels, there's one market that's benefited: crude tanker ships. 

In the first half of 2015, shipping rates for the some of the largest tankers transporting oil to Asia peaked at just above $90,000 a day, as countries like China stockpiled cheap crude. Tankers also became a means of floating storage, as some energy companies and traders stored their supplies in hopes of locking in on higher future prices from a market in contango, where the futures price is higher than the spot price. 

But by August, tanker rates, which tend to be very volatile, had plunged about 70 percent, as demand dried up ahead of refinery maintenance season. The industry benchmark, the Baltic Exchange Dirty Tanker Index, is now down more than 25 percent for the year. 

Still, analysts insist this sector is poised for its most profitable fourth quarter in years.

"We do think that the tanker market is going to see more upside as we move into Q4 of this year," said Christian Wetherbee, a senior transportation analyst at Citi Research. "We see stronger demand from a heating oil perspective and in terms of overall energy consumption. And we would expect, from a supply perspective, not a lot of incremental deliveries to the existing fleets."

Oil tankers are anchored near the Port of Long Beach, California.
Tim Rue | Bloomberg | Getty Images
Oil tankers are anchored near the Port of Long Beach, California.
Wetherbee pointed out that rates are already rebounding from that August low of about $27,000, creeping back toward $50,000 a day for some very large crude carriers (VLCCs) capable of transporting 2 million barrels in a single voyage.

Much of the demand is coming from Asia, particularly China which, despite its slowing economy, is expected to continue building crude reserves to take advantage of higher refining margins.

"China is a significant driver for tanker demand given its place as an oil importer," said Erik Broekhuizen, head of tanker research and consulting at Poten & Partners, a brokerage and consulting firm specializing in energy and maritime transportation. "As the U.S. has consumed less imported crude due to the shale oil boom now, that crude from West Africa or South America is going to Asia."

Voyages to Asia are longer hauls, and as such a big catalyst for rates. Wetherbee noted a round-trip voyage from West Africa to the U.S. Gulf is roughly 30 days, half that of West Africa to Asia.

These hauls mean ships are in use for longer, a pricing positive for a global fleet that has seen little new supply since the Great Recession. Broekhuizen estimates there are 730 VLCCs operating on the high seas, plus smaller ships and many product carriers that specialize in refined petroleum products such as jet fuel and diesel.

Adds Wetherbee: "We should start to see some of the fleet expansion pick up a bit in 2016, but over the course of the next couple of quarters that probably does not play as much of a role."

There's another positive for the global fleet: Cheaper oil drives up demand, but it also drives down fuel costs. Like other modes of transportation, fuel is a top expense for ship operators, and the current cheap fuel environment has translated into a tailwind for earnings.

"With the significant decline in oil prices, if growth rates stay pretty much the same, the ship owner is much more profitable," said Broekhuizen. "When oil was $100 last summer bunker prices were close to $700 per metric ton. Now it's closer to $250."

Ship owners don't impose fuel surcharges on their customers either, meaning when energy prices fall, surcharges don't adjust lower and cut into revenue. Instead rates are negotiated on a voyage-by-voyage basis with fuel among several factors folded into the spot price.

An additional factor to keep an eye on is Iran and whether sanctions get lifted. If that happens an estimated 500,000 to 700,000 additional barrels per day of crude could come to market, pressuring oil prices further and boosting demand for crude transport and storage. 

"This will be a double bonus," said Broekhuizen. "Some [Iranian] ships will hit the market, but it will be a net positive for tanker market."

All of this could bode well for stocks like Euronav, DHT Holdings and Nordic American Tankers—small cap names but stocks that represent pure plays in the crude tanker market. 

"Within this sector, we have two companies with a buy rating," said Wetherbee. " The first is Euronav, which is our top pick. The second is Gener8 Maritime. Both of these companies have great spot exposure to the very largest of the crude carriers that move oil around the world globally."

Other names that claim crude tankers within their broader fleets: Teekay Tankers, Frontline and Tsakos Energy Navigation.

Monday, September 21, 2015

Oil Speculators Most Bullish on U.S. Crude Price in Two Months

Hedge funds slashed their bets on falling oil prices, leaving them the most bullish on U.S. crude futures in two months.

Money managers’ net-long position in West Texas Intermediate rose by 14,821 contracts to 147,678 futures and options in the week ended Sept. 15, according to data from the Commodity Futures Trading Commission. That’s the highest level since July 7. In contrast, traders curbed their bullish positions in European benchmark Brent by the most in a month.

The Organization of Petroleum Exporting Countries assumes crude prices will rise to $80 by 2020 as output falls elsewhere. U.S. production could sink by the most in 27 years in 2016 as the price rout extends a slump in drilling. Speculators closed out short positions two days before the Federal Reserve decided not to raise key U.S. interest rates.

“The market’s not as oversupplied as we think it is,” David Pursell, a managing director at investment bank Tudor Pickering Holt & Co. in Houston, said in a phone interview. “The news out of OPEC is more bullish, U.S. production is falling and demand is great right now.”

The U.S. benchmark oil contract fell 2.9 percent in the report week to $44.59 a barrel on the New York Mercantile Exchange. Prices were up 2.1 percent at $45.62 at 10:06 a.m.

Production Drop

OPEC assumes crude prices will rise by about $5 a year through 2020. Production from nations outside the group will be 58.2 million barrels a day in 2017, 1 million lower than previously forecast, according to an internal report. The impact of low prices is “most apparent on tight oil, which is more price reactive than other liquids sources,” according to the report.
U.S. output could sink by 400,000 barrels a day next year after a prolonged period of low prices forced producers to idle more than half the rigs seeking oil, the International Energy Agency said in a monthly report. That would be the largest one-year decline since 1989, according to U.S. government data. 
“There is quite a discernible shift in sentiment because production declines are quite high,” Amrita Sen, chief oil market analyst for Energy Aspects Ltd. in London, said by phone. “There’s a realization that U.S. production is rolling over.”

Money managers reduced short positions, or bets that prices will fall, by 14,569 contracts, CFTC data showed. Long positions, or bets on rising prices, increased by 252.

Other Markets

In London, money managers reduced their net-long position in Brent crude by 6,612 contracts to 161,846 in the period to Sept. 15, data from the ICE Futures Europe exchange showed on Monday.

In other markets, net bullish bets on Nymex gasoline rose 3.5 percent to 16,562, CFTC data show. Futures fell 4.9 percent to $1.3329 a gallon. Net bearish wagers on U.S. ultra low sulfur diesel expanded by 12 percent to 28,057 contracts. Diesel futures dropped 5.9 percent to $1.50 a gallon.

The Fed decided not to increase rates for the first time in almost a decade as Fed Chair Janet Yellen said slower growth in China, the second biggest oil-consuming country after the U.S., contributed to volatility across markets and that overall financial conditions have tightened.

“By Tuesday, money managers were closing out their short positions because of the expectation that the Fed would leave rates unchanged, which they worried would mean the dollar stays weaker and commodity prices rise,” Andy Lipow, president of Lipow Oil Associates LLC, said by phone from Houston.

Friday, September 18, 2015

Q88 gets a makeover


INTERTANKO has released Version 4 of Questionnaire 88 (Q88). First issued in 1988, Q88 has been revised to include the most up-to-date information for assessing vessel suitability and risk when chartering tankers. 
It is the established industry standard for information on ships for commercial screening (vetting) purposes, the organisation claimed.

INTERTANKO’s Vetting Committee re-established its Q88 working group under the chairmanship of Capt Ashley Cooper, marine director of Scorpio Ship Management, which worked to ensure that the Questionnaire is kept topical.

Capt Cooper, commented; “This latest revision incorporates all the necessary information currently required for making a ship assessment and will ensure that the Questionnaire remains the industry standard for vetting/screening assessments.”

Q88 was last revised in 2008 and this latest update takes into account new questions and brings in changes, which address new regulations and industry requirements, such as MLC and EEDI certification.

It will continue to be transferable between various parties’ internal systems by publishing an XML version. All existing Q88 data will automatically be migrated to the new format; however, INTERTANKO urged all owners and operators to check their ships’ data to ensure that it is correct and up to date.

This revision was carried out with the assistance of Q88 LLC, which operates the website
Fritz Heidenreich, president of Q88 LLC, said; “This revision incorporates recommendations and feedback that we have had from our subscribers since the last revision in 2008, demonstrating that the revised Q88 is a collaborative effort for the benefit of our industry.”

Ongoing feedback and revisions will continue to keep it up to date and widely used as a risk assessment tool, the organisation said.

Tankers arrested for smuggling diesel


The Venezuelan navy has seized three tankers suspected of being involved in smuggling of diesel from the country’s Paraguana peninsula.
According to a Reuters report, the 1996-built MR ‘Negra Hipolita’, owned by PDVSA, the Venezuelan state-owned oil and natural gas company, was found to be loaded with an excess load of 50,000 barrels of diesel fuel at the Cardon refinery, Admiral Andres Gomez reportedly said.

The remaining two tankers, included the Panama-flagged 2010-built MR ‘Marios G’, chartered by PDVSA, and a tanker said to be called ‘Paola Valentina’, had in excess of 15,000 litres of fuel allegedly being smuggled.

Nine people were reported to have been detained by the navy. An investigation was said to be underway.
This move comes as the Venezuelan government tries to curb fuel smuggling and corruption activities in its oil and gas sector, Reuters said.

The charterer of a Russian-flagged tanker allegedly detained in Libya issued a statement dismissing oil-smuggling charges.

"Media allegations that the vessel was smuggling oil from one of Libya’s ports are groundless. The ship was empty. The arrest is illegal," Oil Marin Group said.

Late Wednesday, reports appeared that forces loyal to a Tripoli-based Libyan government detained 11 Russian crew members on the 1975-built 4,849 dwt tanker ‘Mekhanik Chebotarev’, allegedly attempting to smuggle oil from a northwest port city.

According to the company, the forces did not explain the reason for the detainment.

They turned off the tanker’s communication system, but the Master managed to report the situation to Russian emergency services.

The ship was then taken to Tripoli. The Libyan forces confiscated the crew’s documents and mobile phones. The authorities have not issued any official statements on the situation, the owner claimed.

The crew is currently still believed to be on board the tanker and, according to the company, have been threatened with detention.

"The Russian Foreign Ministry, Federal Security Service and Defence Ministry are taking all necessary measures to release the crew and the tanker," the statement said.

On Thursday, a Libyan Navy spokesman said that Libyan prosecutors will interrogate the crew members.

"The case has been assigned to the special prosecutor’s office, the crew has been detained. There will be interrogations to determine the purpose of the ship’s arrival," Colonel Ayub Kassem told the Russian newswire RIA Novosti.

Thursday, September 17, 2015

Ghana: Oil Output to Hit 500,000 Barrels Daily


Ghana's oil output could reach 500,000 barrels of crude oil per day by 2024. This follows the discovery of seven new oil blocks by US firm, Hess Corporation.

Hess is set to drill a new appraisal well in the last quarter of this year to assess the commercial viability of the block and estimate recoverable reserves.

A field development programme would be submitted in 2015 following the positive outcome from the new well which could give Ghana its fourth oil producing project. The well would be followed by a production test which will help Hess to also ascertain the level of production that would be targeted by the block.

Ghana currently produces about 100,000 barrels of crude a day. Daily oil production hit 115,000 barrels per day in June 2013, significantly higher than the projected average for that year.

Total oil revenue of GH¢1.15 billion also far exceeded the projected target by GH¢362.3 million.

The country began commercial production of oil in 2010. Meanwhile, the Volta River Authority is close to agreeing a new deal with three new gas production in Nigeria that could boost the country's gas supply by more than 100 million standard cubic feet per day. The agreement is to be signed with Nigerian independent firms, Network Oil and Gas, ND Western and Shara Oil.

Wednesday, September 16, 2015

US resumes crude oil imports from Nigeria

 US resumes crude oil imports from Nigeria

A few cargoes are said to be heading to US refineries from Nigeria, trading sources said at the weekend.

Two Nigerian grades, including at least two cargoes of flagship crude Qua Iboe as well as Bonga, were said to be heading to US east coast refineries as well potentially down to the US Gulf Coast, traders said.

“It is bits and pieces, not massive flows,” one crude trader told US-based energy publication, Platts.

Exports of Nigeria’s major crude grade, began declining rapidly from July 2014 to zero level by the end of last year following increased shale oil production by the US.

India and Europe have emerged as the largest markets for Nigerian crude, while the OPEC member still struggles to dispose of its oil to the US leading to a growing overhang of unsold Nigerian cargoes but there seems to be changing fortunes for the country’s crude.

One cargo of Nigerian crude is heading over regularly to the Delta Airlines refinery in Trainer, Pennsylvania, while Philadelphia Energy Solutions (PES) was also heard to have bought Nigerian crude, including an end-September loading cargo of Bonga and, potentially, a cargo of Qua Iboe.

Shipping fixtures seen by Platts showed PES, Exxon and Statoil chartering vessels to take West African barrels to the US for end-September loading cargoes, and traders have said Vitol’s October 3-4 loading Qua Iboe cargo was also heading to the US.

Traders cited the narrower Brent/WTI spread and good US refining margins as the main factor pulling Nigerian barrels.

“I think Qua works because of the arb and margins,” a crude trader said. “The arb is low enough for [refineries] with good jet margins to buy it.”

While flows of Nigerian crude to the US during June and July were partly driven by high prices for domestic light sweet crudes, such as Louisiana Light Sweets, that has not been the case for the recent moves.
“US grades have really been sideways all week,” said one US crude trader. “The biggest change has been in the arb.”

The spread between Brent and WTI has narrowed over the past week, with the October contracts’ spread as narrow as $2.96/b, the lowest since June 30.

European refiners have been the main buyers of Nigerian crude in October so far due to good refining margins on the continent but other light sweet crudes in the North Sea and Mediterranean are coming off and could compete, traders also told Platts.

As a result, Nigerian crude could continue to flow to the US, traders said, especially as values were starting to come under pressure again with November’s program likely due out next week and at least 30 million barrels still available for October.

Tuesday, September 15, 2015

Nigeria Lifts Tanker Ban


The almost two-month ban on loading crude on foreign flagged vessels in Nigeria has been lifted. An estimated 113 tankers were banned in mid-July.

According to a Bloomberg report, all incoming vessels into Nigerian waters must get a “Letter of Comfort” from export terminal operators and buyers of Nigerian crude as “guarantee that nominated vessels are free and will not be utilized for any illegal activity whatsoever,” MeleKyari, the NNPC’s group general of crude oil marketing, said in a letter dated September 8.

Monday, September 14, 2015

Gas price drops 27 cents over 3 weeks while crude oil strengthens

 In this Thursday, July 16, 2015 photo, a customer re-fuels her car at a Costco in Robinson Township, Pa.

The U.S. average price of gasoline dropped 27 cents over the past three weeks, to $2.44 a gallon.

Industry analyst Trilby Lundberg said Sunday that the pump price fell even though crude oil prices gained strength, as gasoline supply outweighed demand.

Further price drops are likely if crude oil prices don’t skyrocket, because the Sept. 15 change to winter grade gasoline comes with a cost cut in much of the country.

The cheapest price recorded in the continental United States was Charleston, South Carolina, at $1.94.
The highest was $3.31 a gallon in Los Angeles.

The national average price of diesel was down 9 cents over the past three weeks to $2.63 a gallon.

Friday, September 11, 2015

God Bless NYC!

Nigeria- proceed with caution

NNPC Disclaims Fraudulent Use of GMD’s Name and Office

Despite a letter issued by state-owned Nigerian National Petroleum Corp (NNPC), which has been interpreted as a lifting of the ban on the 113 tankers calling at Nigeria, INTERTANKO has advised its members not to sail any vessel on the list, either into Nigeria or into its EEZ.
According to Platts, the letter said; “The President has graciously approved the consideration of all incoming vessels into the Nigerian territorial waters subject to receipt of a Letter of Comfort from all terminal operators and off-takers of Nigerian Oil and Gas as guarantee that nominated ships are free and will not be utilised for any illegal activity whatsoever.”

INTERTANKO said; “We continue to advise members who have ships on the banned list to exercise extreme caution with their whole fleet. Any member who decides to trade to Nigeria should follow the practical advice we have given and make use of the INTERTANKO Nigeria Trade Clause in their fixtures.
“NNPC has sent a follow up to its letter of 15th July, 2015. We understand that this letter, dated 8th September, 2015, has been sent to local terminal operators and oil and gas traders.

“While some are interpreting this latest letter as a lifting of the ban, we continue to advise against trading to Nigeria any ship on the banned list. The penalties for any alleged contraventions of Nigerian law by these ships are draconian, including forfeiture of the ship and life imprisonment of the crew,” the organisation warned.

It further explained that the language contained in the letter was vague and INTERTANKO did not believe that it could be relied on by owners to clear the vessels on the banned list for trade to Nigeria.

NNPC officials indicated that the second paragraph of this letter ‘implies’ that the ban has been lifted, provided a satisfactory letter of comfort is received. However the letter goes on to say that the authorities will be reviewing the activities of those banned ships.

“We will endeavour to clarify this point with NNPC but in the meantime we believe that there is currently no mechanism whereby a ship can be removed from the list of banned ships or whereby an assurance can be given, eg for a ship in the same ownership. Unless and until the ban is actually lifted, we continue to strongly advise that any vessel on the list of banned ships should not trade Nigeria or sail into Nigeria’s EEZ. Nigeria should also be excluded from trading limits,” INTERTANKO stressed.

For other vessels not on the list of banned ships, the letter appears to require the terminal operator/shipper to submit a ‘letter of comfort’ to NNPC that the ship will not be used in any illegal activity. However, it is not clear what that letter of comfort might say; neither is it clear whether an owner might also be required to provide ‘comfort’ to the Nigerian authorities and/or to the terminal operator that it will not engage in any illegal activity in Nigerian waters.

INTERTANKO’s letters to the various Nigerian Authorities have thus far remained unanswered. It said that it will follow up with NNPC to achieve absolute certainty whether or not a banned ship may now trade there.
“In addition we will continue to press the Nigerian Authorities for information on the alleged contraventions committed by members’ banned ships,” the organisation concluded. 

Thursday, September 10, 2015

Saudi Arabia crude maintains high crude exports to Asia

 Guest Post: The Saudi Oil Problem

Increased crude oil production during 2014 and 2015 allowed Saudi Arabia to keep its export levels high to seven major trading partners in Asia.

Despite crude prices falling, this increased production enabled the country to maintain its market share in these countries.

According to a report from the EIA, in the first half of 2015, Saudi Arabia exported on average 4.4 million barrels per day of crude oil to seven major trading partners in Asia, making up more than half of Saudi Arabia's total crude oil exports over that period.

In 2014 and 2015, Saudi Arabia has focused more on maintaining its crude oil market share among its customers, particularly in Asia, where much of the recent growth in liquid fuels demand has occurred.

From January to June 2015, total crude oil imports reported for seven Asian countries averaged 19.1 million barrels per day, about 700,000 b/d higher than during the same period in 2014. Saudi Arabian crude oil import shares were nearly unchanged in China, Japan, India, South Korea, Taiwan, and Thailand, while declining in Singapore.

The country has invested heavily in its refining sector in an effort to reduce petroleum product imports, decrease its reliance on using crude oil for power generation, and shift towards exporting more petroleum products.

The commissioning of two major refineries has added 800,000 b/d of refining capacity in the past two years.

Wednesday, September 9, 2015

Nigeria's Stolen Oil Money In Ghana? Buhari Investigating Reports Nigerian, Ghanaian Firms Stealing Crude

US dollar bills 
Since taking office on May 29, Nigerian President Muhammadu Buhari has vowed to retrieve what he called "mind-boggling" sums of money stolen from Nigeria's opaque oil sector. REUTERS/Marcelo Del Pozo 

Since returning from Ghana, Nigerian President Muhammadu Buhari has been looking into reports that Nigerian crude oil firms may be scheming with Ghanaian oil companies to steal crude from Nigeria. During his one-day official visit to Ghana, Buhari said Monday he had received reports that Nigerian crude oil was entering Ghana’s industry, according to Nigerian newspaper Daily Trust.

"We are going to pursue this information and find out if it is legally done. We will try to get to the bottom of it and prosecute the companies or those persons who are involved," he said in Ghana’s capital city of Accra.

Buhari met with his Ghanaian counterpart, President John Dramani Mahama, for talks on bilateral relations, regional security, trade and other common issues Monday. But Buhari apparently had another agenda also atop the list: to persuade Mahama to track down and recover stolen Nigerian oil money suspected of being lodged in Ghanaian banks and real estate businesses. Over $1 billion of the Nigerian government’s looted oil funds is believed to have made its way into Ghana, which is facing a sinking economy despite the promise of an oil windfall, according to Ghanaian newspaper the New Statesmen.

Muhammadu Buhari
President of Nigeria Muhammadu Buhari walks down the steps of his aircraft following his arrival at the airport in Yaounde, Cameroon, on July 29, 2015. Buhari visited his counterpart in Ghana Sept. 7, 2015, where he apparently received reports that Nigerian crude oil was entering Ghana's industry.  Reinnier KAZE/AFP/Getty Images
Buhari, who took office May 29 after being elected on promises to tackle corruption, said his administration will retrieve what he called “mind-boggling” sums of money stolen from Nigeria’s opaque oil sector. Apart from seeking assistance from the international community, Buhari has not specified how his government will fulfill this task.

"250,000 barrels per day of Nigerian crude are being stolen and people sell and put the money into individual accounts," Buhari said in July, according to Reuters. "I assure you that we will trace and repatriate such money and use the documents to prosecute them.”

The United States has said it will offer its far-reaching powers to help oil-rich Nigeria trace billions of dollars in stolen assets. The lucrative oil sector provides the Nigerian government with about 70 percent of its revenue, and tumbling crude prices in the past year have hit Africa’s largest economy hard, Reuters reported.

Tuesday, September 8, 2015

US oil settles down 11 cents, at $45.94 a barrel

 Workers from Select Energy Services at a Hess fracking site near Williston, N.D.

Andrew Cullen | Reuters
Workers from Select Energy Services at a Hess fracking site near Williston, N.D.
Brent crude futures jumped as much as 4 percent on Tuesday as strong stock markets helped the global oil benchmark recover substantially from a 6 percent tumble in the previous session.

U.S. crude prices closed down 11 cents, at $45.94 a barrel. Brent futures were up $1.90, or 2 percent, at $49.50 a barrel.

Stocks on Wall Street on Tuesday headed for a third straight day of gains in four, building on the euphoria in European equity markets after bullish second quarter euro zone growth and stellar German exports data.

Read More Australia's Woodside approaches Oil Search with $8B bid

Futures extended gains as U.S. stocks rose more than 1 percent.

Brent's gains were capped earlier by China's mixed crude imports for August. The data showed a 6 percent gain year-on-year and 10 percent rise for the first eight months, but a 13 percent slide from July.

Also weighing on the market was the growing potential for Iran to flood the oil market with more supply as the Obama Administration gained further support to block Congress' disapproval of its aim to lift nuclear-related sanctions on Tehran crude exports. 

"There are random factors at play," said Scott Shelton, commodities specialist with brokerage ICAP in Durham, North Carolina. 

U.S. crude was at $45.27 a barrel, down 78 cents since Friday's close. It had fallen almost $2 at one point.
U.S. markets were closed on Monday for the Labor Day holiday. 

U.S. crude was weighed down by the closure of the largest crude distillation unit at ExxonMobil Corp's 502,500-barrels-per-day (bpd) Baton Rouge, Louisiana, refinery. 

On Monday, Phillips 66 shut down a fluid catalytic cracker at its 314,000 barrel-per-day refinery in Wood River, Illinois. The gasoline-making unit is expected to restart within 48 hours, a source familiar with the plant's operations said.

In China, crude oil imports fell 13.4 percent in August to 6.29 million bpd from the previous month. But they rose 5.6 percent from a year earlier. 

In the first eight months of 2015, China's crude imports were up 9.8 percent year-on-year at 6.63 million bpd, on still-solid demand for gasoline and kerosene as a growing middle class drives and flies more.
The dollar has also fallen against a basket of currencies since the end of last week, making oil less expensive for holders of other currencies. 

Oil prices have fallen almost 60 percent since June 2014 on a global supply glut driven by near-record pumping from the Organization of the Petroleum Exporting Countries and from near-record levels of U.S. oil production.

Saturday, September 5, 2015

'Spartan lifestyle' for Nigeria's anti-graft president

ABUJA (AFP) - Nigerian President Muhammadu Buhari, who won office pledging to fight the country's outrageous graft habit, claims to have no foreign accounts or oil concessions and only $151,000 at a local bank.

The 72-year-old military man who campaigned pledging to recover "mind-boggling" sums of stolen oil money enjoys "a spartan lifestyle", his spokesman said in a statement listing his assets late Thursday.

With five houses, several farms, varied livestock and "a number of cars", Buhari unquestionably is better-off than the average Nigerian.

But the new head of state is not as well-heeled as his deputy, Yemi Osinbajo, according to the statement.
Buhari, who took office May 29, marks 100 days in office on Saturday, and Nigerian law stipulates that the president and his deputy declare their assets with the Code of Conduct Bureau (CCB) within 100 days of taking office.

Though a former military head of state, an ex-military governor and ex-oil minister -- meaning he had ample opportunity in corrupt Nigeria to amass a fortune -- Buhari had less than 30 million naira ($151,000, 136,000 euros) in his sole bank account as of May 29, spokesman Garba Shehu said in the statement.
- 'Contrary to expectations' -

At the same date he had shares in three firms, a paint manufacturing company and two commercial banks, and five houses in Abuja and the northern cities of Kano, Kaduna and Daura, his hometown, the statement said.

He had farms, an orchard, a ranch, scores of cattle, 25 sheep and "a number of cars", some of which were gifts, it added.

Documents submitted by Buhari to the CCB "show that the retired general has indeed been living an austere and spartan lifestyle, contrary to what many might expect of a former head of state of Nigeria and one who has held a number of top government positions," Shehu said.

Buhari has made transparency and the fight against corruption cardinal policies of his administration.
In particular he came out against oil sector fraud and the non-payment of federal revenues into government coffers since 2011, though the country is Africa's top oil producer.

Showing from the start he was serious about ending graft, he sacked the entire board of state oil company NNPC, notorious for mismanagement and rampant theft, and installed a Harvard-educated lawyer to spearhead reforms as new managing director.

- 'People will see for themselves' -

The financial dealings of some officials who served under Buhari's predecessor, Goodluck Jonathan, are being investigated.

The assets statement showed that his deputy, Osinbajo, who was a successful lawyer before going into politics, had about 94 million naira ($473,000, 425,000 euros) in his local bank accounts, $900,000 and 19,000 pounds ($29,000) in other bank accounts and three cars.

A former Lagos attorney general, the pentecostal pastor owned four houses, including a two-bedroom mortgage property in Bedford, England. He also had shares in six private firms, including telecommunications giant MTN Nigeria, it said.

The documents are being vetted by the CCB, the state agency mandated by the constitution to receive asset declarations of top functionaries and verify them.

"As soon as the CCB is through with the process, the documents will be released to the Nigerian public and people can see for themselves," Shehu said.

A human rights and anti-corruption body in Nigeria, commended Buhari and his deputy for making public his assets.

Their publication of asset declarations "turns the page on transparency and accountability in Nigeria," Socio-Economic Rights and Accountability Project (SERAP) said in a statement.

"Nigerians will now be able to use the assets published as a baseline and thus a means for comparison at the end of the term of this government," it added.