Wednesday, September 28, 2011

Opec not a constraint to produce 5m barrels of oil

AMMAN: Iraq can produce as much as five million barrels a day of oil without needing to ask for Organisation of Petroleum Exporting Countries’ (Opec) permission because this is a sovereign decision, the chairman of the Iraqi parliament’s oil and energy panel said.

“I don’t think Opec is a constraint” to output of such a level, Adnan Al Janabi said yesterday at the Iraq 2011: Future Energy conference organised by The Energy Exchange in Istanbul.

Iraq, the only member of the Opec not bound by a production quota, pumped 2.68 million barrels a day in August, according to data. Its crude output rose to 2.81 million barrels a day on September 18, the highest level since the United States-led invasion of 2003, according to the Oil Ministry.

Boosting production
The country has historically produced crude at a level comparable to that of Iran, which has a limit of 3.336 million barrels a day, according to data.

Production at Iraq’s West Qurna-1 oilfield has reached 350,000 barrels a day, compared to 268,000 barrels a day in March, according to Paul Dubetz, a vice-president at Exxon Mobil.
Further wells and sophisticated systems are needed to increase production at the field, he said in Istanbul. Exxon and Royal Dutch Shell hold rights to the field.

The nation seeks to boost output to 3 million barrels a day by the end of this year from 2.4 million barrels in 2010, Oil Minister Abdul Kareem Al Luaibi said on September 11. Hussain Al Shahristani, the deputy prime minister for energy affairs, said in July that Iraq hopes to boost production to 12 million barrels a day by 2017.

Tullow Oil: Enyenra-3A Well Has Successfully Encountered Oil
LONDON -(Dow Jones)- Tullow Oil PLC (TLW.LN), a independent oil and gas exploration group, Wednesday said the Enyenra-3A appraisal well, in the Deepwater Tano license offshore Ghana, has successfully encountered oil in high quality sandstone reservoirs.


-Pressure data indicates that the Enyenra-3A well has confirmed an up-dip extension of the Enyenra oil field.

-Well was drilled to test the up-dip extent of the Enyenra oil field.

-Results of drilling, wireline logs, samples of reservoir fluids and pressure data show that Enyenra-3A has intersected 17 meters of 35(o) API net oil.

-Pressure data confirms a continuous oil column of at least 365 meters and that the oil at Enyenra-3A is in static pressure communication with both the Owo-1 discovery well and the Enyenra-2A appraisal well.

-Deepwater Millennium drillship drilled Enyenra-3A to a total depth of 4,031 meters in water depths of 1,102 meters.

-Drillship will depart the Deepwater Tano block in late October having recently been replaced by the Sedco Energy drillship.

-Sedco Energy will later drill the Enyenra-4A well to further appraise the downdip extent of the field.

-Well will be located 6.8 kilometers, or km, south of Enyenra-2A and over 20km downdip from the Enyenra-3A well and a result is expected at the end of the year.

-Enyenra-5A well also is then likely to be drilled north of Enyenra-3A to test the ultimate updip extent of the field.

-Tullow (49.95%) operates the Deepwater Tano license and is partnered by Kosmos Energy (KOS) (18%), Anadarko Petroleum (APC)(18%), Sabre Oil & Gas (4.05%) and the Ghana National Petroleum Corporation (GNPC) (10% carried interest).

-Shares of Tullow on Tuesday closed at GBP13.20.

Read more:

Monday, September 26, 2011

Gold Poised for Steepest 3-Day Decline in 28 Years


Gold was set for its biggest three-day loss in 28 years on Monday, as investors fled commodity markets in a scramble to secure cash in the face of mounting fear over the impact of a potential Greek debt default on the rest of the euro zone.

European policymakers began working on new ways to stop fallout from Greece's near-bankruptcy from inflicting more damage on the world economy after stinging criticism for failing to stem the debt crisis.

European equities fell, while industrial commodities such as crude oil and base metals bore the brunt of investor desire for cash in the face of mounting uncertainty.

In the last three days alone, gold has fallen by nearly 10 percent in its largest three-day slide since February 1983 and implied volatility has risen to a 2-1/2 year high.

Spot gold was last down 3.0 percent on the day at $1,621.49 an ounce by 0903 GMT, having fallen earlier by as much as 7.4 percent, putting the difference between the intraday high and low at $128.40, the largest daily price swing on record.

"It shows you that at times of extreme stress, there is not a suitable substitute to liquidity and although gold is liquid by metal standards, in comparison to treasuries, when you get this kind of flight to cash, then it really is cash that counts and that means U.S. dollars," said Credit Suisse analyst Tom Kendall.

"The markets are going to continue to react this week to the political situation within Europe and I don't see any quick resolution or stimulus coming to the markets."

After a weekend of being told by the United States, China and other countries that they must get more aggressive in their crisis response, European officials focused on ways to beef up their existing 440 billion-euro rescue fund.

Deep differences remained over whether the European Central Bank should commit more of its massive resources to shoring up Europe's banks and help struggling euro zone member countries.


The lack of consensus on a lasting solution to the euro zone debt crisis has been a major driver in this year's rise in the gold price to record highs above $1,900 an ounce.

"The rise in volatility taking place in the gold price was clearly an indication that gold was no longer a low-risk asset. So there are a few signs there that would have given you pause for thought, but inevitably when the move happens, everyone is taken a little bit by surprise," said Natixis commodities strategist Nic Brown.

"I would suggest that part of what is happening is a collective move away from commodities by investors. The fact that there is carnage going on across the commodities spectrum indicates there are a fair few investors who are getting cold feet at this stage and that has hit some precious metals disproportionately," he said.

Last week's data on investment in U.S. gold futures shows specualtors cut their holdings to their lowest level in over two years, as reflected by the fall in net non-commercial open interest on COMEX. <0#CFTC>

Short-term interest rates on dollars and other major currencies, have shot up this month, as banks have become increasingly unwilling to extend funding to each other because of fears over their individual exposure to the debt of the peripheral euro zone nations.

Gold is often sold off as a means of raising dollars when funding conditions deteriorate, much as they did in late 2008 with the onset of the credit crunch that ensued from banks witholding lending because of their concern over counterparty exposure to toxic U.S. mortgage-backed assets.

"Gold is one of the few assets that remains in positive territory this year, in a sense it is one of the last assets standing, and because of this as investors head for cash they sell the assets that have performed. Essentially gold is a victim of its own success as liquidity trumps," wrote UBS analyts Edel Tully in a note.

Silver came under fire, falling by as much as 16 percent at one point in the day and set for its worst three-day fall on record, having lost more than 25 percent in this period.

The spot price was last down 4.9 percent at $29.54 an ounce, its lowest since last November.

Platinum fell by more than 3 percent to $1,543.75 an ounce, its lowest since May last year, while palladium fell 0.3 percent to $627.97 an ounce, its lowest since last October. (Editing by James Jukwey)

Read more:

Shell in Nigeria shuts in 25,000 bpd of oil

LAGOS — Anglo-Dutch oil group Shell said Monday it has shut in 25,000 barrels per day of crude in a southern Nigerian oil field due to spills caused by sabotage and theft.

"The Shell Petroleum Development Company of Nigeria Ltd (SPDC) has shut in production from Imo River Field due to a recent upsurge of illegal bunkering and refining activities which have impacted the environment," the company said in a statement.

"Some 25,000 barrels of oil per day is affected," Shell said, adding it took the action on August 28 "to starve the illegal bunkerers of crude oil in order to prevent further environmental pollution."

Theft of crude is commonly referred to as "bunkering" in Nigeria.

Shell said the field which straddles oil-producing Abia and Rivers states, has five flow stations, a gas compressor station and several kilometres of pipelines among other faculties.

The thefts were first noticed in the field two years ago, prompting government security forces to move in to dislodge the perpetrators and destroyed their barges and canoes.

The military deployed in the oil delta has in recent months reported busting hundreds of illegal refineries.

"But the criminal act has now resumed, with crude thieves inflicting hacksaw cuts on pipelines to siphon crude to waiting barges and canoes, some of which can hold as much as 40,000 barrels," it added.

Pipeline vandalism and associated spills are common in the Niger Delta, Nigeria's oil and gas producing region, to feed a lucrative black market.

Shell, one of Nigeria's major oil operators, has seen frequent shut-ins in recent years.

Last month, it was forced to shut down its Utorogu gas plant following a leak on its trunkline in western Niger Delta.

Activists say oil firms such as Shell have not done enough to prevent such incidents.

A UN report in August said decades of oil pollution in the Ogoniland area of the Niger Delta, located in Rivers state, may require the world's largest ever cleanup.

Nigeria is Africa's largest oil producer, accounting for 2.3 million barrels of crude per day according to the latest report of the International Energy Agency.

Friday, September 23, 2011

Two weeks to go until Tank Storage Canada expo & conference arrives in Calgary

Tank Storage Canada - 3 - 4 October 2011 - Telus Convention Centre, Calgary, Alberta, Canada

Tank Storage Canada expo & conference is being held on 3-4 October at the Telus Convention Centre in Calgary, Alberta.

The two-day conference attracts terminal and pipeline operators, traders, analysts, regulators, renewable energy producers and technical experts who come together to discuss key issues impacting the sector. These range from infrastructure development, market trends, new API standards, biofuel integration, changes in trade flows, terminal acquisitions, reducing risk at the terminal and updates on safety technology.

Hear from speakers including:
- Juan Morera, lead terminals engineering and tank specialist (consultant), TransCanada Pipelines
- Skin York, VP, Downstream Oil Wood Mackenzie
- Paul Paynter, Calgary Economic Development
- Murray Heap, compliance promotion officer, Environment Canada
- Philip Myers, PEMY Consulting
- Arun Bhargava, market manager for biodiesel, CN North America Railroad
- John Cornell, API Tank Trainer
- Gregg Manzione, Nationwide Consulting Company
- Adrian Pellen, VP, Aon Reed Stenhouse.

Visit for the complete conference programme.

Delegates will receive:
- Entry to the dual conference programmes for Tank Storage Canada and Biofuels International
- Entry to the Tank Storage Canada and Biofuels International expo
- Entry too all lunches and networking sessions
- Unlimited use of our networking software prior to the event
- Availability of all papers post conference
- Certificate confirming attendance.

Previous delegates include Vopak, Irving Oil, Servitank, Suncor, Cepsa, Pacific Coast Terminals, Canterm, Norcan Terminals, Shell, Westway, Simon Storage, IMTT, Peerless Oil, Valleytank

For more information about Tank Storage Canada expo & conference and to book your place today, please visit:

Play Nigerian Oil Through Chevron And Shell

The United States has excellent trade relations with our neighbors, Canada and Mexico. After all, they’re two of our largest economic trading partners. They’re the top two suppliers of foreign crude oil to the Unites States.
Saudi Arabia, our number three supplier, continually lies about its remaining reserves. And as the country that produced the terrorists who masterminded the 9/11 attacks, it’s not exactly on our top 10 list of most-favored nations.
In terms of oil, Canada is likely to remain our number one foreign supplier. The country continues to increase output from the Alberta oil sands (expected to reach three million barrels per day by 2020). New pipelines are being constructed to transport the oil to U.S. refineries.
Mexico will likely drop to number three in just a couple of years, as its Cantarell field – once the world’s third-largest – saw its output peak at 2.1 million barrels per day (bpd) back in 2004. Less than a decade later, that field’s annual production is a paltry 464,000 bpd. Most of Mexico’s foreign oil exports head north of the border to the United States. It provides us with about 1.25 million bpd.
As you can see from the graph below, courtesy of the Energy Information Administration, Saudi Arabia provides us with just over 1.2 million bpd.

So let’s review U.S. oil import dynamics:

Canada is stable politically and friendly to the United States, and its exports of oil are on the rise.

Mexico is also friendly, but its level of exports is continuing to drop.

We don’t care much for Saudi Arabia, but at 1.2 million bpd, they’re a key foreign supplier of crude.

But the real wild card in U.S. crude import supplies is supplier number four, and its future output could have a real impact on what you pay at the pump.
Nigeria: U.S. Crude Oil Supplier No. 4
Last year, Nigeria, our number four supplier of crude oil, exported just over 1 million bpd of crude and petroleum products to the United States. That amounted to about 9 percent of total U.S. crude imports, and about 40 percent of Nigeria’s 2010 exports.
Nigeria’s crude is especially desirable, since it’s of the light, sweet variety, which means it's easy to process into gasoline. Given the problems in Libya (also a light, sweet crude supplier), Nigeria’s crude prices have been on the rise. Oil exports are the main GDP generator for the country. Its oil is seen as a replacement for Libya’s until the latter can get its oil export act together again.
Nigeria is a member of OPEC, and as such is subject to production quota limits. Currently it is set at 1.673 million bpd. But the real problem with Nigeria’s production has nothing to do with production limits. The unrest in the Niger Delta is the real obstacle for Nigerian crude oil production and subsequent exports.

The country’s actual production capacity is about 2.9 million bpd. But constant attacks on oil infrastructure keep production well below that figure. This past July, output hit 2.17 million bpd. For all of 2010, it averaged 2.15 million bpd. Since 2005, oil production in Nigeria has been fraught with risk. Kidnappings of oil company workers for ransom, serious pipeline vandalism and military takeovers of oil facilities have been the norm.
The Gulf of Guinea has also experienced significant piracy activity. All this instability has an average of 800,000 bpd of capacity offline at any given time. In spite of all of this, exports to the United States have remained relatively constant over the past few years.
How to Invest in Nigerian Oil
One of the best ways to play the future oil boom in Nigeria is via Royal Dutch Shell plc (RDS.A). Shell is Nigeria’s largest oil producer, accounting for over 50 percent of its production. RDS has active exploration activities ongoing in the country as well as offshore, and its production comes from more than 80 oil fields.

The second-largest player in Nigeria is Chevron Corporation (CVX) through its Chevron Nigeria Limited subsidiary. It operates in the Warri region and in offshore shallow water areas.
Should we even care about Nigerian oil? You bet. As our number four supplier, Nigeria is a key component of the American crude oil supply chain. With an estimated 37.2 barrels of proven reserves, Nigeria is a big player in the world’s crude supply.

Nigeria has the potential to increase its output despite the ongoing political instability in the country. The two companies mentioned above are relatively safe ways to play the upside of Nigerian oil, while limiting downside risk.
Disclosure: none

This article is tagged with: Macro View, Commodities, Basic Materials, Major Integrated Oil & Gas

Shell Nigeria oil sales to end with operator deal

* Buyers, NNPC likely to reach operator compromise

* NNPC to "operate" but sub-contract - sources

* Stalled reforms holding back investment

By Joe Brock

ABUJA, (Reuters) - Shell's (RDSa.L) Nigerian oil block sales are heading for a messy conclusion due to a tussle over who operates the fields, sources close to the deals said, highlighting the complex nature of doing business in Africa's largest energy industry.

Shell along with foreign oil major partners Total and Eni have agreed to sell their share in four onshore oil blocks which Shell operates in the Niger Delta wetlands but they need ministerial approval.

Deals for the blocks, one of which attracted a bid of over $1 billion, have already been agreed and a 10 percent deposit paid. These payments triggered a 180-day window for the deals to be completed, the first of which expires at the end of this month, according to sources involved.

State-oil firm NNPC, which owns the majority stake in the blocks, is at loggerheads with the buyers because it says its subsidiary will take over from Shell as operator of the fields once the deals are completed.

But some buyers of the blocks are not willing to complete the deals if NNPC is the operator.

A consortium led by Poland's Kulczk Oil Ventures agreed a deal for Shell's block OML 42, while independent energy firm Eland Oil, in partnership with Nigeria's Starcrest, has agreed to buy OML 40. Niger Delta E&P and Petrolin won OML 34 and Conoil, owned by Nigerian billionaire Mike Adenugu, picked up the biggest block OML 30.

Financial backers will not want to lose their initial funding, in one case topping $100 million, while NNPC and Shell will want deals to go through to realise financial returns, so a compromise should be found.

The likely scenario is that NNPC becomes the "operator" of the blocks and then farms out the development of the fields to another firm. This could be the buyer of Shell's share or another contractor and potentially a host of other companies in between, sources close to the deals told Reuters.

"Just because you're the 'operator' doesn't mean the guys on the ground will have your logo on their shirt," a source with one oil company involved in the bidding process told Reuters.

"It would be a disaster for some of these companies if these deals don't go through and I'm sure a compromise will be made. There might be a few more layers and a bit less money at the end of the line but it will still be nicely profitable," he added.

The government says it wants NNPC to increase the amount of oil it operates and not give away rights to other companies.

But oil minister, Diezani Allison-Madueke, earlier this year signed off operating rights on three other onshore blocks OML 4, 38 and 41 shortly before leaving office. President Goodluck Jonathan re-appointed her after winning April's elections.

Operating rights for these blocks were given to Seplat Petroleum, a company owned by two other small Nigerian firms.

Seven Energy, partly-owned by British firm Petrofac , was brought in to help operate the blocks through its Nigerian subsidiary Septa Energy. The operation of the fields may eventually be done by Petrofac, industry sources said.

The process for allocating who operates blocks and selling stakes in fields is inconsistent and was unclear to the buyers of Shell's fields who have complained that they were led to believe they would run the projects.

Inefficiency and a lack of financing within NNPC has been acknowledged by Nigeria's government, which has ordered a comprehensive audit. International watchdogs, Transparency International and Revenue Watch Institute, rated NNPC as the least transparent out of 44 national and international energy companies, in a report earlier this year.

Nigeria's government says its ambition is to make NNPC a successful state-owned energy company like Brazil's Petrobras and Malaysia's Petronas but becoming operator in name, but not in practise, won't get them to that goal.

While the oil ministry and NNPC has spent months involving itself in asset sales between other companies, new investment in the energy sector has stalled, mainly due to political wrangling over the Petroleum Industry Bill.

Nigeria has assumed oil production of more than 2.4 million barrels per day next year but without investment in new projects to replace reserves, production will soon begin declining.

"The problem for the industry is it has found itself bogged down in opaque details at a time when it has failed to clarify the big strategic issues of how it is going to manage a sector of such critical importance for the country," said Antony Goldman, Nigerian oil and gas expert and head of PM Consulting. (Editing by James Jukwey)

Tuesday, September 20, 2011

Gold Price May Reach $2,300 in 2012, Newmont’s O’Brien Says

Gold may rise to $2,000 an ounce by the end of this year and $2,300 an ounce by the close of 2012 because of investors buying the metal as a haven amid turmoil in financial markets, Newmont Mining Corp. (NEM) Chief Executive Officer Richard O’Brien said.
“We’re going to continue to be in a bullish gold-price environment for the next five to seven years,” O’Brien said yesterday in an interview at the 2011 Denver Gold Forum in Colorado Springs, Colorado. “It’s going to take that long for people to get their fiscal house in order.”
Gold climbed to a record earlier this month and is in the 11th year of a bull market, the longest winning streak since at least 1920 in London. Gold for immediate delivery rose $23.95, or 1.4 percent, to $1,802.63 an ounce at 7:31 p.m. in London trading. It touched a record $1,921.15 on Sept. 6.
While the price of gold has advanced 25 percent this year, Newmont, the largest U.S. gold producer, has increased 7.9 percent. The company said in April that it would link its dividend to the gold price.
Newmont said yesterday it’s enhancing that policy and the full-year payout now has the potential to climb to $4.70 a share. The quarterly dividend will get an additional increase of 7.5 cents a share when the metal exceeds $1,700 and a further 2.5-cent boost if gold surpasses $2,000, the Greenwood Village, Colorado-based company said in a statement.

Rising Costs

The company said in July that second-quarter production costs advanced to an average of $588 an ounce, from $507 a year earlier. Capital and operating costs are increasing as gold- mining companies compete for a limited supply of workers and inputs such as energy and building materials, O’Brien said yesterday.
“Cost inflation is something we’re all going to have to deal with,” he said. “When you have $15 billion-plus of projects in Australia, of which our projects might be less than $1 billion, we have very little capacity to impact what it costs to produce steel.”
Newmont increased $3.60, or 5.4 percent, to $69.87 at 3:17 p.m. in New York Stock Exchange composite trading.
To contact the reporter on this story: Sonja Elmquist in Colorado Springs
To contact the editor responsible for this story: Simon Casey at

Monday, September 19, 2011

Kuwait budget surplus rises to $15 bln April-May

* Surplus accounts for 11.4 pct of GDP

* Revenue 4.8 bln dinars vs spending of 648 mln dinars

(Reuters) - Kuwait's budget surplus stood at 4.2 billion dinars ($15.3 billion) in the first two months of its 2011/12 fiscal year, larger than a year ago on higher-than-projected oil revenue and lower spending, finance ministry data showed on Sunday.

The surplus accounted for 11.4 percent of the OPEC member's gross domestic product, according to Reuters calculations. It reached 2.4 billion dinars in the same period a year ago.

Revenue of the world's sixth-largest oil exporter was 4.8 billion dinars in April-May, while spending was 648.3 million dinars, below a projected 3.2 billion for the first two months, the data showed.

Oil revenue reached 4.5 billion dinars in April-May, accounting for 92 percent of the total. The 2011/12 budget is based on an oil price of $60 per barrel.

Brent crude prices have been floating between $98 and $127 per barrel since the fiscal year started in April LCOc1.

Since 2004, Kuwait's budget spending has tripled to a record 19.4 billion dinars planned for the 2011/12 fiscal year, which started in April, with expenditure on wages rising almost as fast.

Revenue was set at 13.4 billion dinars in the 2011/12 budget, approved by parliament in June, bringing the projected deficit to 5.99 billion, or 16.2 percent of gross domestic product, according to Reuters calculations.

However, the 2011/12 revenue estimate is very conservative given this year's surge in the price of oil.

Last month, Kuwait's ruler said the misuse of budget surplus, including unproductive spending, has led to structural imbalances in the Gulf Arab economy.

The Arab country of 3.6 million people has no plans to boost budget spending in the next fiscal year, nor does it expect budget cuts in coming months, its finance minister said this month.

A Reuters poll in June forecast Kuwait's economy would grow 4.4 percent in 2011 and generate a fiscal surplus of 20.2 percent of gross domestic product in 2011/12, the largest among Gulf Arab oil exporters .

($1 = 0.275 Kuwaiti Dinars) (Reporting by Eman Goma; Editing by David Hulmes)

OPEC Head Sees Gulf Output Cut On Libya Return


DUBAI—Gulf oil producers, already facing a weakening demand picture in 2011 and 2012, are expected to cut their output once Libya resumes production, the Organization of the Petroleum Exporting Countries' top official said Monday.

OPEC Secretary General Abdalla Salem el-Badri, a Libyan, told a forum that Libya could reach pre-unrest production levels within 15 months, as few key facilities were damaged, and said he expects Saudi Arabia and other Gulf countries to cut output once Libya's production recovers, although he hasn't had confirmation of that from the individual producers.

The Source

Libya Restart May Not Increase Global Oil Supply
"When Libya will come to production, [Gulf] OPEC members will reduce their production ... no doubt about it," he said. "Right now I don't see anything, but as long as Libya starts to produce more and more I'm sure member countries will cut. It is in their benefits."

Mr. El-Badri's comments come amid renewed concerns about the global economy. On Monday light, sweet crude futures on the New York Mercantile Exchange for delivery in October were 1.6% lower at $86.58 a barrel in electronic trading. Brent crude was also lower.

Mr. El-Badri said Monday he sees rising negativity in the oil market amid greater concerns over weak U.S. growth, the European sovereign debt crisis and signs that the Chinese government will act aggressively to prevent overheating of its economy.

"There are a lot of precautions," Mr. El-Badri told the Gulf Intelligence energy forum. "Now we see that those negative elements are coming to the market."

Mr. El-Badri said he was surprised that crude oil prices are holding at current levels, which have a risk premium of $16-$20 a barrel priced-in due to the current conditions of the global economy and as Western stimulus packages fail to generate jobs and economic activity.

The International Energy Agency and OPEC last week reduced their forecasts for oil demand, although they differed on the outlook for Libyan crude. OPEC gave a more optimistic prognosis for Libya and suggested that individual producers could cut back.

Mr. El-Badri, a former Libyan energy minister and head of its National Oil Corp., said there is no answer yet as to whether he would return and work in Libya's oil industry after his term as OPEC secretary general ends, but said it was safe now for other oil experts to return to the country.

Ghana: Govt Gives Expression to Oil Revenue Law

Government has once again demonstrated its resolve to beat the resource curse in the exploitation of the country's hydrocarbons, by giving expression to a key transparency provision in the Petroleum Revenue Management Law it enacted six months ago: the inauguration of the Public Interest and Accountability Committee last Thursday in Accra. The Committee, established under Section 51 of the Petroleum Revenue Management Act, 2011, Act 815 is regarded as a novelty in the management of natural resource rents globally. It introduces an additional layer of public oversight (besides parliament) in the management of Ghana?s petroleum revenues.

Information reaching Public Agenda indicates that 11 of the 13 members were present for the inauguration, done by the Minister for Finance and Economic Planning at the Ministry of Finance and Economic Planning (MOFEP).

Confirming, Cecelia Isabella Akwetey, Head of Public Relations at MOFEP, said by telephone that the two absentees were the representatives of the Federation of Muslim Councils/Ahmadiyya Mission and the Ghana Academy of Arts and Sciences.

The 11 members who were present were representing independent policy research organisations / think tanks, civil-society groups and community-based organizations, the Trade Union Congress, National House of Chiefs, Association of Queen Mothers, Association of Ghana Industries and Chamber of Commerce.
The rest were Ghana Journalists Association, Ghana Bar Association, Institute of Chartered Accountants, Ghana Extractive Industries Transparency Initiative; and Christian groups, namely the National Catholic Secretariat, the Christian Council and the Ghana Pentecostal Council on a rotational basis.

Section 51 of the Act states: A Public Interest and Accountability Committee is hereby established.

The Objects of the Accountability Committee, as spelt out in Act 815, are (a) to monitor and evaluate compliance with the Act by government and other relevant institutions in the management and use of the petroleum revenues and investments as provided in the Act; (b) to provide space and platform for the public to debate whether spending prospects and management and use of revenues conform to development priorities as provided under section 21 (3); and (c) to provide independent assessments on the management and use of petroleum revenues to assist Parliament and the executive in the oversight and performance of related functions respectively.

Section 21 (3) provides a list, in no order of priority, 12 areas where oil revenues should be invested in the absence of a long term national development plan. These include: agriculture and industry; physical infrastructure and service delivery in education, science and technology; potable water delivery and sanitation; infrastructure development in telecommunication, road, rail and port; physical infrastructure and service delivery in health; and housing delivery.

Others are environmental protection, sustainable utilization and protection of natural resources; rural development; developing alternative energy sources; the strengthening of institutions of government concerned with governance and the maintenance of law and order; public safety and security; and provision of social welfare and the protection of the physically handicapped and disadvantaged citizens.

The PIAC will be performing two main functions, according to Act 815. ?(1) To achieve its objects, the Accountability Committee shall (a) consult widely on best practice related to management and use of petroleum revenues; and (b) determine the rules of procedure under which it will operate.

(2) The Accountability Committee shall have its own secretariat that will facilitate the performance of its functions.

Asia Naphtha-Gunvor expected to ship Tuapse lot to Asia

SINGAPORE,(Reuters) - Gunvor has provisionally booked around 75,000 tonnes of naphtha from Tuapse, Russia, to arrive in Asia between late October and early November to capitalise on healthy demand for heavy naphtha, traders said on Monday.

Another seller could also be working on moving Algerian volumes to Asia.

Strong buying interest for aromatics, especially for paraxylene which is used to make plastic bottles and clothing, pushed Asian petrochemical makers, especially those in South Korea, to look for heavy naphtha.

Western naphtha moving to Asia has been limited recently because European sellers were getting a better netback by selling barrels to Brazil which was buying cargoes as its domestic production lags demand.

"But if it is heavy naphtha, it can be more lucrative for the sellers to sell them to Asia," said a trader.

"Although the arbitrage window is technically closed, there have been deals done for heavy grades, but usually on a harsh-harsh basis."

The arbitrage window reflects mainly open-spec grade prices.

For the window to be technically opened, Asian open-spec prices have to be at least $27.50 a tonne higher than that of Northwest European prices.

The window has been technically closed for at least three months.

"Tuapse naphtha is of heavy grade, and that can fetch around $14.00-$15.00 a tonne premium from South Korea versus $5.00-$6.00 a tonne for open-spec grade," said a second trader.

Another company could be working on moving around 80,000 tonnes of Skikda splitter naphtha for October arrival in Asia, he added. (Reporting by Seng Li Peng)

Thursday, September 15, 2011

Oil Heads for Fourth Weekly Gain in New York on European Outlook

By Ben Sharples

(Bloomberg) -- Oil headed for a fourth week of gains in New York, matching the longest winning streak since July, as investors speculated that an international plan to lend dollars to banks may tame Europe’s credit crisis and support economic growth.

Futures were little changed after climbing 0.6 percent yesterday as the European Central Bank said it worked with the Federal Reserve, the Bank of England, the Bank of Japan and the Swiss National Bank to extend three-month loans to euro-area banks. The premium of Brent oil to U.S. futures widened.

“News about a boost to European bank funding eased concerns about a slowing global economy,” John Peters, a senior economist at Commonwealth Bank of Australia, said in a note.

Crude for October delivery was at $89.22 a barrel, down 18 cents, in electronic trading on the New York Mercantile Exchange at 8:58 a.m. Sydney time. The contract yesterday rose 49 cents to $89.40. Prices are up 2.3 percent this week and 20 percent higher the past year.

Brent oil for October settlement, which expired yesterday, gained $2.94, or 2.6 percent, to $115.34 on the London-based ICE Futures Europe Exchange. The European benchmark contract closed at a premium of $25.94 to U.S. futures, up from $23.49 on Sept. 14 and compared with a record settlement of $26.87 on Sept. 6.

--Editor: Paul Gordon

To contact the reporter on this story: Ben Sharples in Melbourne at

To contact the editor responsible for this story: Alexander Kwiatkowski in Singapore at

Ghana Economy May Grow 20% on Oil, Gold, Cocoa, World Bank Says
By Ekow Dontoh

Ghana’s economy may expand by 20 percent this year as the start of oil production for export, along with high prices for cocoa and gold, boost revenue, according to the World Bank.

“First-quarter growth was 23 percent and oil, gold and cocoa have since enjoyed very high prices on the international market,” Dante Mossi, senior operations officer of the World Bank’s office in the West African nation, said in an interview in Accra, the capital, on Sept. 9. “The trend will follow.”

The Washington-based lender’s forecast is higher than its earlier projection of 14 percent, which was made in June and was in line with the Finance Ministry’s own 14.4 percent estimate announced in July.

Ghana became Africa’s newest oil exporter in December, when production began at the offshore Jubilee oil field, which is operated by U.K.-based Tullow Oil Plc (TLW), the explorer with the most licenses in Africa. Gold reached a record $1,921.15 an ounce on Sept. 6 amid uncertainty over the global economic recovery and traded at $1,832.18 an ounce by 10:56 a.m. in London today. Cocoa for December delivery rose for a second day, adding 7 pounds ($11.05), or 0.4 percent, to 1,857 on the NYSE Liffe in London.

Ghana is the world’s second biggest producer of cocoa after Ivory Coast and trails South Africa as the continent’s top gold miner.


More revenue coming into the state’s coffers within 15 months of presidential and parliamentary elections raises concern about government spending, Mossi said. President John Atta Mills will face former Foreign Minister Nana Akufo-Addo, whom he defeated in 2008, in the December 2012 vote.

“It will be sad if the government will collapse all the sacrifices and strong economic confidence gained in four years,” Mossi said.

Ghana’s fiscal deficit widened to 14.5 percent of gross domestic product in 2008, “boosted by strong pre-election spending growth” including gas-price subsidies, infrastructure projects and wage increases for public workers, the International Monetary Fund said in July 2009.

The spending gap narrowed to 6.5 percent in 2010 before Finance Minister Kwabena Duffuor raised the target in July for this year to 5.1 percent from an earlier forecast of 4.1 percent amid plans for spending on roads, schools and agriculture.

To contact the editor responsible for this story: Antony Sguazzin at

Nigeria losing huge opportunities in oil & gas sector’
Thursday, 15 September 2011 Olusola Bello Energy, Editor

For sometime now, it has been a major concern that after many decades, contractors and multinationals that have done business worth several millions of dollars in Nigeria do not have appreciable footprint in the country. Instead, the trend has been to look to foreign countries for procurement of equipment, spares and technology in support of their operations in Nigeria and the Gulf of Guinea region.

The major operators have not helped matters by their reliance on the importation of goods and services from abroad without making provisions to develop sustainable capabilities within Nigeria that would support life cycle operations in the country. Instead, more emphasis has been placed on speedy achievement of first oil, generation of revenue without paying attention to actions that add value to the economy.

The cumulative effect of operating this model for so long is an industry that currently spends an average sum of 20 billion USD per annum, less than 2 billion dollars is retained in the national economy and over 300 billion USD has been lost through capital fight in this way. Of more significance is the fact that, this persistent practice has actually resulted in the export of millions of employment opportunities; opportunities for training, knowledge and technology transfer, opportunities for investment in facilities and infrastructure to support industry operations within Nigeria and denied indigenes of Nigeria the Nigerian Content Act and Petroleum Industry Bill when it is finally passed into law by the National Assembly.

These government initiatives introduced changes of a magnitude never seen in the industry, therefore, it is in our enlightened self-interest to provide clarity of vision, a roadmap for implementation, policy predictability, continuity and more importantly, assurances on peace and stability. I could not be more confident that I am today in telling you that Nigeria is firmly on course to meet each and every one of those conditions.
By way of providing background, I will dwell a bit on an overview of the Nigerian oil and gas industry.

It is important to emphasise at this juncture that the Nigerian Content Act is not intended to indigenise the industry or nationalise assets of investors in the Nigerian economy. Rather, it sets out provisions that guarantee that investments made in facilities within the country will be fully utilised and we will ensure that the rights of every investor are protected under the laws.

In order to address another major aspiration of the government to unlock the enormous potential of the Nigerian domestic gas sector and attract investments even ahead of the PIB, the President directed a structured accelerated implementation of the Nigeria Gas masterplan.

In this regard, we have implemented the most aggressive reform of the commercial framework for gas in Nigeria to address the observed inadequacies in the erstwhile commercial terms that stunted investment.
A more stringent and bankable contractual framework has been introduced for the gas sub-sector through the establishment and development of world class gas supply and purchase agreements, gas transmission agreements and more recently, the gas transmission network code.

We also addressed a major area of vulnerability in the system, which is the risk of payment for gas consumed, particularly by government-owned power companies. Consequently, we implemented the World Bank partial risk guarantee, which provides a triple - A bank guarantee for suppliers against payment risks.

In addition to the above, we established the gas aggregation company of Nigeria to manage access to gas in Nigeria for potential investors.
Recently, we achieved another milestone in our implementation, which is the formal launch of the gas revolution - a critical aspect of the gas masterplan that brings gas and industrialisation together. The gas revolution is focused on an industrial rebirth of Nigeria through the stimulation of gas-based industries such as fertilizer, methanol and petrochemicals. These help diversify the gas sector and jumpstart industrialisation as well as the attendant job creation.

To this end, President Goodluck Jonathan, launched three major investment programmes as part of the event, namely the development of Africa’s largest petrochemical complex by NNPC and its partner, the Saudi Arabian conglomerate - Xenel. This will cost about $6billion and is planned to be in place by 2015. The President also launched the development of 1 billion cubic feet per day gas Central Processing Facility which is expected to be built by a consortium led by Agip in partnership with NNPC and Oando. Two other CPF’s (Eastern and Western) are also in the process of being developed.

All these major initiatives fall within the principles and concepts enshrined in the PIB.
With continued active collaboration between the National Assembly and the oil and gas industry, a petroleum bill that will meet the long-term aspiration of Nigerians and the economic interest of all investors will be passed into law. We believe that a bill that ensures transparency, full accountability, responsible environmental stewardship, good corporate responsibility and above all a fair reward for all stakeholders including the oil producing communities will be passed into law.
The full impact of the PIB will introduce a new culture of competition, transparency and openness in the management of the oil and gas industry.

The new order will open new opportunities for investments in exploration & production, refining capacity, gas infrastructure, research, development & innovation and petroleum products distribution assets. These investments will come through domestic savings and foreign direct investment.

Passage of the PIB will certainly unlock investments currently being held back by perceived uncertainties and there’s a major link between the PIB and NC Act implementation and the lessons we are learning from our current efforts will certainly come in handy in the development of the post PIB structures and models.

As a government, our desire is to ensure that substantial proportion of these investments is retained in Nigeria and that explains the unique provision for Nigerian Content Development in the PIB.

TOR to swap crude oil with VRA

The Managing Director of TOR, Mr Ato Ampiah

The Tema Oil Refinery (TOR) is in negotiation with the Volta River Authority (VRA) to swap 50,000 metric tons of crude oil representing 500,000 barrels of the product to support the refinery in its operations to avoid a shutdown of its second plant in the next seven days.

The first plant, the Residual Fluid Catalytic Cracker (RFCC), was shut down on August 28, 2011 for shortage of crude for running it.

According to a source at TOR, the quantity expected to be swapped is already in the custody of TOR for safekeeping and will last for about 10 days during which an expected consignment of crude oil will arrive.

The source said the arrangement of TOR swapping crude oil with VRA in times of emergency had existed for many years, noting that the product was kept at TOR for VRA.

It stated that in times of shortage when VRA needed crude oil to fire its thermal, TOR had supported it and, therefore, the swap was nothing new between the two organisations.

The Managing Director of TOR, Mr Ato Ampiah, explained that arrangements were in place to lift crude from Nigeria in the shortest possible time and, therefore, allayed the fears of Ghanaians that the second plant, which is the Crude Distillation Unit, would be shut down.

On recent happenings at the refinery, a source said workers were agitating to go on strike to impress on the government to ensure constant supply of crude to the refinery.

They claimed that the erratic supply of the product had affected the plant and damaged parts of the CDU.

The workers claimed that the situation was also frustrating and confirmed the mass exodus of workers to foreign oil companies outside the country.

The Chairman of the Petroleum and Chemical Junior Workers Union at TOR, Mr Albert Kojo Pinto, confirmed the frustration of the workers but denied that they were agitating to demonstrate.

He said the workers' leaders had called on the workers to change their attitude to work and rather use the period to undertake maintenance in areas which needed to be repaired.

Mr Pinto said this had gone down well with the workers but expressed the hope that the government would take immediate steps to rectify the situation. He said workers were not happy about the neglect of the refinery while the country's fuel need was imported.

Mr Pinto confirmed that the refinery was expecting a vessel with crude oil by next week or it would close down the second plant.

Daily Graphic investigations revealed that there was sufficient stock of petrol, diesel, aviation kerosene and an insignificant quantity of kerosene.

The Public Relations Manager of the National Petroleum Authority, Mr Steven Larbi, when reached on phone, said the authority dealt solely with finished products which he stated were available for distribution.

He disclosed that a vessel carrying Liquefied Petroleum Gas (LPG) had docked at the jetty at Tema Port to discharge 12,000 metric tons of the product.

He said the LPG would last for four weeks.

Mr Larbi was of the view that there would not be shortage on the market once the products kept arriving on time.

Wednesday, September 14, 2011

Libya to seek larger OPEC quota in Dec.: official

By Benoit Faucon

BENGHAZI (MarketWatch)-Libya will seek a larger production quota at a December OPEC meeting and wants oil prices of no more than $100 a barrel in the long-run, a top oil official with the country said Tuesday, signaling the new Libyan regime could play a more moderate role within the producers' group.

"We will discuss the possibility of increasing our quota" at a meeting Dec. 14 in Vienna, the first time the TNC will represent Libya within the Organization of Petroleum Exporting Countries, said Mustafa el-Huni, a member of the National Transitional Council, or NTC, with responsibility for oil.

El-Huni didn't rule out requesting an absence of production allocation as OPEC has granted to Iraq following war, but he emphasized a higher quota first.

Libya's current quota stands at about 1.5 million barrels a day. It resumed production in recent days to 160,000 barrels a day after months of a virtual shutdown after the civil war erupted in February. Experts disagree on how long it will take Libya to resume output to pre-war levels.

El-Huni also said that the oil price "should not exceed $100 [a barrel] in the long term" to ensure the stability of the oil market. He added "between $80 to $100" a barrel is a good price, referring to the U.K. Brent contract, which his currently above $100.

More moderate members of OPEC, such as Saudi Arabia, are defending similar price levels, along with higher production when needed to balance the interests of both consumers and producers. Under Gadhafi, Libya was part of an OPEC faction that included Iran and Venezuela which defended higher prices and lower output.

El-Huni doesn't have an official ministerial position in the NTC. He declined to comment on reports that have said he would be oil minister when this position is created on a stand-alone basis.

The oil portfolio is currently combined with finance under the aegis of minister Ali Tarhouni.

Ghana: Increasing Oil Revenue Can Derail Monetary Targets - ISSER

Masahudu Ankiilu Kunateh

Ghana's total export of crude oil from January to July stood at 12.6 million barrels valued at $1.4billion. But the Institute of Statistical Social and Economic Research (ISSER) warns that increasing oil revenue can derail Ghana's monetary targets, especially the single digit inflation target (8.5%) for 2011, being espoused by the Mills-led government.

ISSER further stressed that, "The year 2011 is a precursor to election year 2012, and political expenditure will begin to rise. If these expenditures are not well managed, the single digit inflation target will be a mirage".

The Legon-based think tank further warns that efforts should be taken to sterilize oil revenue inflows through the creation of an oil revenue management fund.

A Senior Research Fellow of ISSER, Dr. Felix Asante gave the warning at the launch of the state of the Ghanaian Economy Report 2010, and mid-year review of 2011, in Accra, over the weekend.

According to him, unrest in oil producing countries like Libya may continue to drive up the world market price of oil, and this can have severe repercussions on the local economy.

Dr. Asante revealed that the 2011 fiscal outlook for Ghana seeks to continue with the government's policy of reducing the fiscal deficit in the medium term.

Additionally, statistics from the Bank of Ghana (BoG) indicate that overall fiscal operations from January to July 2011, has resulted in a narrow budget deficit of GH ¢1.12 billion, compared with a target deficit of GH ¢849.8 million.

This was financed by net domestic borrowing of GH ¢1.04 billion and net foreign inflows of GH ¢84.3 million. The net domestic financing represented 92.7 per cent of budgeted target for the period.

The key measures which have been outlined, with the aim of achieving this and other goals, include reforms in public financial management, improvement in tax collection and widening the tax

Giving a background of the reports, the Vice Chancellor of the University of Ghana, Prof. Ernest Aryeetey, a former director of ISSER, paid glowing tributes to all those who contributed in sustaining the economic reports for the past 20 years.

He told the large gathering that the reports have over the years given accurate analysis of the Ghanaian economy.

Prof. Aryeetey used the occasion to encourage corporate Ghana to help the publication of the annual reports, and thanked the World Bank and other civil society organizations for their support.

The President of the Association of Ghana Industries (AGI), Nana Owusu Afari, who chaired the launch, called on government to give more support to the private sector, so as to cushion Ghanaian industries from the effects of global economic challenges.

23 sailors kidnapped in tanker attack in W. Africa

LAGOS, Nigeria (AP) — Armed pirates raided a tanker off the West African coast and kidnapped 23 sailors Wednesday, sailing off with the vessel in waters increasingly at risk of piracy, an international monitoring group said.
The International Maritime Bureau, which tracks piracy worldwide, said pirates boarded the tanker as it idled about 62 nautical miles from Benin's capital of Cotonou. Pirates struck as the Cyprus-flagged vessel tried to transfer its cargo of crude oil to a Norwegian-registered ship, said Cyrus Mody, a manager at the the bureau.
The pirates sailed off with the crew to an unknown location, Mody said.
Meanwhile, the same group of pirates attacked the Norwegian ship, though the crew was able to lock themselves into a strong room and wait for the attackers to leave, Mody said.
Piracy in the Gulf of Guinea has over the last eight months escalated from low-level armed robberies to hijackings, cargo thefts and large-scale robberies, according to the Denmark-based security firm Risk Intelligence. Last month, London-based Lloyd's Market Association, an umbrella group of insurers, listed Nigeria, neighboring Benin and nearby waters in the same risk category as Somalia, where two decades of war and anarchy have allowed piracy to flourish.
West African pirates also have been more willing to use violence, beating crew members and shooting and stabbing those who get in the way. Analysts believe many of the pirates come from Nigeria, where corrupt law enforcement allows criminality to thrive.
Those operating in the region have been warned not to stay too close to the shoreline and work only during daylight hours, Mody said. However, the attacks keep happening, as pirates in the region seem to favor the oil vessels now sailing through the waters.
"This is an area of risk," Mody said. "There's no doubt about it."
Analysts believe some of those oil tankers carry crude stolen from Nigeria's oil-rich southern delta, where thefts run into the hundred of thousands of barrels of oil a day.
The maritime bureau says Nigeria and Benin reported 18 pirate attacks in the first half of 2011. While smaller than figures attributed to Somali pirates, shipping industry officials say the number of attacks off Nigerian waters is underreported because some ships carry the illegal oil cargo and others fear their insurance rates will rise.
A spokesman for the Nigerian navy did not immediately respond to a request for comment Wednesday. Authorities in Benin could not be immediately reached.
Jon Gambrell can be reached at

Europe Gasoline/Naphtha-Gasoline flatlines, trade thin

LONDON,(Reuters) - Gasoline barge prices in
northwest Europe flatlined on Tuesday, in quiet trade, as
refining margins were pinned lower by firmer crude.
With crude prices largely driven by traders playing the
spread between Brent and U.S. crude CL-LCOc1, Olivier Jakob
said crude oil prices would have to fall to push margins up.
"Crude oil today is still mostly a Brent/WTI trade, but
margins are starting to be poor all over...Brent has to weaken
to recreate some margins both for Europe and the US Gulf (LLS),"
he said.
Trade was also quiet in the Mediterannean with a trader
saying that the market was waiting for refiners to get October
programmes next week.
However the trader said that demand from north Africa and
the Middle Eastern Gulf was making up for a lack of arbitrage to
the United States.
"The market is pretty balanced," the trader said.

* There were no trades of benchmark Eurobob in the window,
but some 4,000 tonnes traded ahead of the window, with barges
changing hands at between $1004-$1005 a tonne fob ARA, at the
top end of the $1,001-$1,005 a tonne range on Monday.
* BP and Chevron sold to Gunvor, which contintued its buying
spree from the previous session.
* At 1527 GMT, Eurobob's crack to dated Brent BFO- was
down at around $5.344 a barrel after it slid to an 11 week low
of $3.806 the previous session. However it was still well below
the levels of over $11 seen last week.
* The slight recovery in the crack was helped by a slight
slip in the price of Brent crude LCOc1. It was trading around
49 cents lower at $111.76 around the same time.
* Three barges of premium unleaded gasoline changed hands at
prices between $1018 a tonne fob ARA and $1034 a tonne. Statoil
and BP were sellers while Trafigura and Total bought.
* U.S. RBOB gasoline futures RBc1 in New York were down
0.3 percent at $2.7310 a gallon.
* RBOB's crack to U.S. crude futures RB-CL1=R weakened to
$25.58 a barrel, from $27.64 a barrel on Monday, and was at its
lowest since late June.

* "There were no bids or offers in the window, let alone
trades," a broker said.
* Naphtha swaps for September delivery were trading at
$943.22 a tonne CIF NWE.
* In the previous session, Stasco made a bid at $944 a tonne
cif NWE and Gunvor made an offer at $949 a tonne cif NWE.
* Naphtha refining margins were down at about minus $6.97, a
trader said.

(Reporting by Simon Falush)

Pipeline explosion kills 100

A petrol pipeline explosion has killed more than 100 people in Nairobi, Kenya, after locals scrambled for free fuel when the pipeline began leaking.

The oil pipeline, which runs through the Sinai slum region situated between the city centre and the airport, ignited after a cigarette butt was thrown into an open sewer where the oil was collecting, reports have suggested.

Bodies were scattered up to 300m away from the blast area and some nearby shacks were burned to the ground in the blaze.

According to BBC reports, bodies were also seen floating in a nearby river after those burned tried to douse themselves after catching on fire.