Tuesday, July 31, 2012


LONDON (AP) — Oil company BP has reported a loss of $1.4 billion pounds for the second quarter on the back of lower prices for oil and gas as well as reduced output.

BP reported Tuesday that its net loss compared to a net profit of $5.7 billion a year earlier. Revenue was down 9 percent at $95 billion. The company also made an additional provision of $847 million for the Gulf of Mexico oil rig disaster and cleanup, taking the total provision to just over $38 billion.

Underlying replacement cost profit for the period was $3.7 billion, down from $5.7 billion a year earlier. The figure excludes non-operating items and accounting effects.

BP said non-operating charges totaled $4.8 billion and mainly related to a lower value assigned to U.S. shale gas assets and some refineries, and the decision to suspend the $1.5 billion offshore Liberty project in Alaska.

"The underlying results were depressed by weaker oil and U.S. gas prices together with reductions in output due to extensive planned maintenance, particularly affecting high-margin production from the Gulf of Mexico," BP said.
It said the average price of Brent oil in the second quarter was $8.75 per barrel lower on average compared to a year earlier, while production was down 7.4 percent.

In addition, BP said it had lower income from its Russian joint venture, TNK-BP.
BP shares were down 2.8 percent at 432 pence in early trading London.

"The company itself recognizes the weakness shown in this quarter and has implied that it will continue into the next," said Richard Hunter, head of equities at Hargreaves Lansdown Securities.

"More positively, BP is attempting to position itself for the future, focusing on higher margin fields whilst disposing of what it considers to be non-core assets," Hunter said.

The additional charge of $847 million for the Gulf of Mexico reflected an increase in various costs and litigation, BP said. As of June 30, BP said it had paid nearly $8.8 billion for individual, business and government claims, advances and other payments.

In June, the court-supervised settlement program received 23,950 claims in addition to 1.09 million previously submitted. BP said it expects to begin making final payments in the third quarter.

Saturday, July 28, 2012

NNPC Has Huge Invoice for the Government


NNPC, the state-run oil firm in Nigeria, is owed a substantial amount of money from the government. The firm said that it was owed $7 billion in government fuel import subsidies, debts which would wipe out Nigeria’s oil savings account.

The government’s crude savings account, the Excess Crude Account (ECA), is where all funds earned from oil sales in excess of $72 per barrel go. According to a report from Reuters that account held $6.9 billion earlier this month, a substantial amount but not enough to pay NNPC's subsidy claims, let alone a string of other fuel importers' debts.

"As at the end of May 2012 NNPC had unpaid (subsidy) claims of 1.134 trillion naira," Fidel Pepple, spokesman for the Nigerian National Petroleum Corp (NNPC), said

Two fuel import unions have threatened to strike this week over unpaid subsidies, risking fuel shortages in Africa's most populous nation, an issue which has prompted public protests in the past.

The situation could lead to fuel shortages and people are already lining up for hours to fill up at inflated prices in some regions of the Niger Delta. According to NNPC it has 46 days of fuel supplies and it would do its best to meet demand despite "limited resources."

Wednesday, July 25, 2012

Nigeria state-oil firm says owed $7 bln in subsidy


* Subsidy debts could wipe out Nigeria's savings
* Unions strike over non-payments, risking fuel shortages
* Nigerian cbank says signs for economy "ominous" (Adds quotes, details, background)

By Joe Brock and Camillus Eboh

ABUJA, July 25 (Reuters) - Nigeria's state-oil company said on Wednesday it was owed $7 billion in government fuel import subsidies, debts which would wipe out savings supposed to protect Africa's second biggest economy from oil price dips.

Nigeria's Excess Crude Account (ECA), where it saves oil revenues over a benchmark price of $72 a barrel, held $6.9 billion on July 19, not enough to pay NNPC's subsidy claims, let alone a string of other fuel importers' debts.

Nigeria's Central Bank Governor Lamido Sanusi said on Tuesday risks to Africa's second biggest economy from high government spending, worsening security problems and lower oil output were "ominous."

"As at the end of May 2012 NNPC had unpaid (subsidy) claims of 1.134 trillion naira ($7.06 billion)," Fidel Pepple, spokesman for the Nigerian National Petroleum Corp (NNPC), said
Two fuel import unions have threatened to strike this week over unpaid subsidies, risking fuel shortages in Africa's most populous nation, an issue which has prompted public protests in the past.
People are already queuing for hours to get petrol at inflated prices in some regions in the oil-producing Niger Delta in the south of the country.

Nigeria is among the top 10 crude oil exporters in the world but due to decades of corruption and mismanagement it has to import most of its refined fuel needs.

NNPC said it had 46 days of fuel supplies and it would do its best to meet demand despite "limited resources."

"Yes we are concerned about the shortages but just to put it on record NNPC has been the only organisation importing products since January when the fuel subsidy issue began," Pepple said.
The finance ministry declined to comment on the missed subsidy payments but has previously said it is waiting for the results of probes into fuel importers before resuming payments.

Several investigations into the import subsidy were launched after President Goodluck Jonathan attempted to remove the support on Jan. 1, before partially reinstating it after more than a week of protests over increased motor fuel costs.

Nigeria's anti-corruption agency will charge 12 fuel traders on Wednesday over allegations they illegally collected a combined 11 billion naira ($68.46 million) in subsidy payments for fuel they never delivered, it said in a statement.

The 12 individuals from seven companies charged are all from low-level Nigerian firms, although the Economic and Financial Crimes Commission (EFCC) said more than 100 other marketers were being investigated.

The presidential committee said on Tuesday fuel traders collected $2.38 billion last year in fraudulent subsidy payments.

($1 = 160.6800 Nigerian naira) (Writing by Joe Brock)

As Ghana mourns president, focus turns to election race

(Reuters) - Ghana has seen a smooth transition of power after the sudden death of its president, but as the nation mourns attention is already turning to who will replace him as the ruling party's candidate in a December vote.

Vice-President John Dramini Mahama was sworn in hours after the announcement of the death through sudden illness on Tuesday of 68-year-old President John Atta Mills.

This ensured that the West African oil, gold and cocoa producer, a former British colony once known as the Gold Coast, avoided the kind of messy political transitions that have plagued other states in a coup-prone region.

Ghanaians congratulated themselves on the seamless handover. Mahama, 53, a historian, former minister and communications expert, is expected to bring a steady hand to a fast-growing economy, one of Africa's newest oil producers.

But questions over who will now step into Mills' shoes as the candidate to keep his governing National Democratic Congress (NDC) in power in December's elections will inject some uncertainty into the political outlook.

Analysts say this could drive down the Ghanaian currency, which has lost about 17 percent against the dollar this year as the country's oil-fuelled boom sucks in capital and consumer imports and drives up demand for dollars to pay for them.

Traders said the cedi was relatively stable on Wednesday at 1.9550/1.9600 to the greenback.
"Political disruption is likely to be internal and will focus on who is the NDC's presidential nominee," said Azim Datardina, Ghana analyst at Africa Risk Consulting.

Mills, seeking a second term despite having suffered for years from undisclosed health problems, had already won his party's nomination to run against the opposition New Patriotic Party's Nana Akufo-Addo, defeating a divisive challenge from the wife of still influential ex-president Jerry Rawlings.

Some analysts expect Nana Konadu, Rawlings' wife whom Mills crushed in the NDC primaries, to claim an automatic nomination.

But Alban Bagbin, Ghana's health minster and a member of the NDC legal team, said the party would hold an extraordinary meeting to pick a new candidate for what is expected to be a tight race for the presidency.

"Most likely is a new nomination contest with a number of high-profile challengers who earlier balked at opposing Mills. A likely candidate is John Mahama," said Africa Risk Consulting's Datardina.


Flags flew at half mast on Wednesday as the nation began a week of national mourning for Mills, who had served as president since winning a 2008 presidential contest that won plaudits for going down to the wire but remaining peaceful.

"I am personally devastated - I've lost a father, I've lost a friend, I've lost a mentor and a senior comrade," Mahama said in his first comments after being sworn in before a somber parliament on Tuesday evening.

"The fine gentleman that he was, President Mills rightly earned the title 'Asomdwehene' (King of Peace). He brought a distinctive insight to Ghanaian politics. He remained humble, honest and modest throughout his years in public service."

That sense of loss was shared by ordinary Ghanaians too.

"I didn't know him personally but he's everybody's father and a peacemaker," said Peter Fiave, a 70-year-old who went to parliament to witness the swearing-in of Mahama.

Tributes poured in from around the globe from heads of state like U.S. President Barack Obama, who had feted Ghana under Mills as a model and "good news story" for Africa.

Rivals were quick to praise the nation's handling of the sudden loss. "We are showing a maturity that must encourage all Ghanaians," said opposition NPP Chairman Jake Obetsebi-Lamptey.

Mahama, fresh from a U.S. tour to promote a recently published personal memoir on Ghana's history, is widely expected to maintain current policies in his caretaker role.

Yet, amid the plaudits for his predecessor, he will inherit the same struggles Mills had faced in managing Ghanaians' high expectations over the flow of crude from the country's Jubilee oil field since 2010, and in tackling corruption scandals that have dogged the NDC administration.

"Given the above, recent momentum has favored the NPP. Ghanaians also have a history of evicting the ruling party at the ballot box in favor of the opposition," Standard Bank said in a research note on Wednesday.

"Much will hinge on the manner in which the NDC is able to swiftly elect a replacement presidential candidate. Infighting already poses a significant threat to party unity, and any signs of an exacerbation of these tensions will favor the opposition," it added.

Ahead of Mills' death, most analysts had expected a year of election spending testing Ghana's reputation for improved economic management. The government last week sought parliament's permission for extra spending.

"We think heightened uncertainty will result in some foreign investors taking a wait-and-see stance, which would imply a slowdown in FX inflows, which in turn would be negative for the already troubled cedi," Renaissance Capital said.

"We think another 5-10 percent depreciation is likely by (the end of 2012)," it added.

(Additional reporting by Ed Cropley in Johannesburg; Writing by David Lewis; Editing by Pascal Fletcher)

Tuesday, July 24, 2012

Gold turns positive as dollar retreats from highs

(Reuters) - Gold prices swung back into positive territory on Tuesday as the dollar retreated from highs against the euro, with investors' confidence in the metal growing after it held its ground during the previous day's financial market sell-off.

Weakness in the single currency pressured gold earlier in the day, with the euro hurt by soft German economic data and Moody's alteration of its outlook for Europe's biggest economy.

But it pared losses versus the dollar ahead of the U.S. market open after data showed U.S. manufacturing expanded at its slowest pace in 19 months, allowing gold to swing higher.

Spot gold was up 0.2 percent at $1,580.70 an ounce at 8:53 a.m. EDT (1353 GMT), while U.S. gold futures for August delivery were up $2.90 an ounce at $1,580.30.

"Gold is just moving with the U.S. dollar," MKS Finance head of trading Afshin Nabavi said. "Yesterday, below the $1,570 level, we saw some light physical related interest come in. Today it has been very quiet."

The euro/dollar exchange rate has taken the lead role in dictating day-to-day moves in gold, as impetus from monetary policy announcements and the physical markets petered out. A weaker dollar benefits assets priced in the U.S. unit.

Gold priced in euros rose 0.2 percent as the single currency retreated, having outperformed gold this month. It is currently up 3.2 percent in July so far, against a 1.5 percent drop in spot prices.

Analysts were impressed by the metal's resilience after it hit a 10-day low on Monday, which saw it strongly outperform other major commodities like copper and crude oil. Chart support arrested its decline above $1,560.

"Markets sold off really heavily yesterday, and gold held up pretty well against that. It is maybe the one thing that has really stayed solid against some pretty solid headwinds elsewhere," Macquarie analyst Hayden Atkins said.

"People are just keeping the bid where it is, still waiting on things like quantitative easing." Talk of more QE in the United States, which would undermine the dollar and keep interest rates at rock bottom, lifted gold earlier this year.

Analysts who study past price patterns to determine the future direction of trade said gold's consolidation is showing signs of ending in correction lower. Commerzbank said in a note that it expects the major $1,532/1,522 support area, which held in September and December, to give way over the summer
"The metal continues to move deeper and deeper into a consolidation triangle," ScotiaMocatta said in a note, meanwhile. "Current parameters currently lie at $1,560 and $1,611."

"We would expect fresh selling now below $1,548 and fresh buying above $1,623 as the market tries to play the breakout, it added. "Big picture, triangles tend to be continuation formations, so bias would be a break lower from the $1,790 to $1,528 March-May drop."

Little support came from the physical market, with offtake still soft in number one gold consumer India, where demand has been hurt by high prices this year. Volumes remained low on the Shanghai Gold Exchange.

Silver was up 0.2 percent at $27.08 an ounce, while spot platinum was down 0.1 percent at $1,390.59 an ounce and spot palladium was down 0.4 percent at $564.25 an ounce.

The gold/platinum ratio, which measures the number of silver ounces needed to buy an ounce of gold, rose back to seven-month highs on Tuesday as the yellow metal outperformed.

Platinum, demand for which is heavily reliant on the European car market, has suffered from concerns that a growing market surplus would hurt prices this year.

(Editing by William Hardy)

Ghana, Oil Partners to Invest $20 Billion in Oil Fields


Ghana and its partners on the Jubilee oil field, which include Tullow Oil Plc (TLW) and Anadarko Petroleum Corp. (APC), will invest an estimated $20 billion over the next 10 years to develop newly discovered oil fields.

“We will raise the money in collaboration with our partners,” said Nana Boakye Asafu-Adjaye, chief executive officer of the Ghana National Petroleum Corp., in a July 3 interview in the capital, Accra. “We have made clusters of discoveries and these need to be developed.”

Jubilee, which began production in 2010, is operated by London-based Tullow, which also owns 35.5 percent of the field. Anadarko and Kosmos Energy (KOS), both based in the U.S., each hold 24.1 percent and GNPC 13.6 percent. Sabre Oil & Gas Ltd. holds 2.7 percent.

By May 31 Jubilee had produced 35 million barrels, Asafu- Adjaye said. Output from the Jubilee oil field is now at 63,000 barrels per day, with production expected to reach an average of 90,000 barrels this year, according to Tullow.

New discoveries in the Deep Water Tano Block include Tweneboa and Enyenra as well as other clusters of discoveries such as Mahogany, Teak, Akasa and Banda, Asafu-Adjaye said.

Following Jubilee’s start up oil became Ghana’s third- biggest export after gold and cocoa last year.
Shares of Tullow, which has the most exploration licenses of any oil company operating in Africa, fell 1.7 percent, to 1,476 pence at the close in London, giving the company a market value of 13.4 billion pounds ($20.8 billion).

To contact the reporter on this story: Ekow Dontoh in Accra at edontoh@bloomberg.net
To contact the editor responsible for this story: Antony Sguazzin at asguazzin@bloomberg.net

Monday, July 23, 2012

Nigeria's Petro Bill (PIB) Goes to Parliament


Goodluck Jonathan, Nigeria’s president, has sent the much delayed Petroleum Industry Bill (PIB) to parliament for debate

"I am happy to announce to you that this morning Mr President forwarded the Petroleum Industry Bill to the national assembly," Diezani Alison-Madueke, the West African country’s oil minister told reporters.

Nigeriahas seen various drafts of the PIB drawn up in recent years but they have been scrapped or re-written because government, lawmakers, and foreign oil companies couldn't agree on details.

Friday, July 20, 2012

UAE opens export terminal outside Hormuz


As Iranian threats to close the Strait of Hormuz grew last weekend, the United Arab Emirates loaded its first cargo on Sunday from its new oil export terminal at Fujairah.

UAE oil officials and executives from oil majors, including ExxonMobil, Shell and Total, witnessed the opening of an alternative route for up to 75% of UAE’s oil exports, reported Reuters.

A European Union ban on Iranian crude imports came into effect on 1st July and Iran has been intensifying its threats to disrupt oil shipments from the Gulf. Two Iranian military officials warned over the weekend that Iran could stop oil from sailing through the Strait.

Alarmed by the Iranian threats, the UAE has completed its long-delayed project to pump up to 1.8 mill barrels per day to an export terminal at Fujairah.

Over the next few months, the Gulf OPEC member hopes to increase exports from the new facility to around 1.5 mill barrels per day, nearly two-thirds of the 2.4 mill it typically exports each day and the new pipeline could carry three-quarters of the UAE’s oil exports if needed, Reuters reported.

“This is a very strategic project, it gives the options to our clients to transport larger quantities (of oil),”UAE’s oil minister Mohammed bin Dhaen al-Hamli said. “I consider this project to be complementary, so we have an alternative…to give us choice to have more than one trade route.”

The 370-km Abu Dhabi Crude Oil Pipeline carries oil from fields in the UAE’s western desert to Fujairah. As well as the export terminal, the facility also has eight crude oil storage tanks each with a capacity of one million barrels.

The first cargo was loaded last Sunday with oil pumped from western fields in Abu Dhabi across to be shipped from Fujairah to Pakistan. The bulk of UAE’s oil is exported to Asia.

“It will make other projects viable in this area, and will also avoid more insurance and also will give access to the open sea,” Abdulla Nasser Al Suwaidi, the head of state-run Abu Dhabi National Oil Co (ADNOC) said after the opening ceremony.

In addition, Saudi Arabia has opened a bypass in the last few months, giving Riyadh scope to export more of its crude from Red Sea terminals should Iran try to block the Strait of Hormuz, but other Gulf oil exporters remain dependent on it, Reuters said.

Tanker transits through the Strait last year accounted for about 35% of all sea-borne traded oil, or almost 20% of oil traded worldwide.

Almost 17 mill barrels of oil were shipped between the northern tip of Oman and the southern coast of Iran in 2011, according to the US Energy Information Administration.

Abu Dhabi government-owned International Petroleum Investment Company (IPIC) undertook the pipeline project and ADNOC’s onshore unit ADCO is the operator.

IPIC is also planning to build a $3 bill refinery at Fujairah with a capacity of 200,000 barrels per day, due to be completed in mid-2016, Reuters said.

Thursday, July 19, 2012

Checkbook diplomacy? China pledges $20 billion in credit to Africa

China's President Hu Jintao (right) shakes hands with South Africa's President Jacob Zuma during the opening ceremony of the Fifth Ministerial Conference of the Forum on China-Africa Cooperation in Beijing on Thursday.
BEIJING -- Chinese President Hu Jintao on Thursday pledged African governments $20 billion in credit over the next three years and called for more China-Africa coordination international affairs to defend against the "bullying" of richer powers.

Hu made the lending pledge during the opening ceremony of the Forum on China-Africa Cooperation in Beijing. The credit line is double the amount offered in 2009 at the last forum held in Egypt.

Hu promised more Chinese help for African countries in building agricultural technology centers, training medical and other personnel, and digging wells to expand access to clean water. China will encourage investment and assistance in infrastructure that facilitates trade within Africa, he said.

China has emerged as Africa's main trading partner and a major source of investment for infrastructure, pouring billions of dollars into roads and developing the energy sector across the continent.

But the loans could add to discomfort in the West, which criticizes China for overlooking human rights abuses in its business dealings with Africa, especially in Beijing's desire to feed its booming resource-hungry economy.
PhotoBlog - Africa rising? China building on Zambian frontier

Hu brushed off such concerns in his speech at the Great Hall of the People, attended by leaders including South African President Jacob Zuma and Equatorial Guinea's Teodoro Obiang Nguema, a man widely condemned by rights groups as one of the world's most corrupt leaders.

"China wholeheartedly and sincerely supports African countries to choose their own development path, and will wholeheartedly and sincerely support them to raise their development ability," Hu said.

China will "continue to steadfastly stand together with the African people, and will forever be a good friend, a good partner and a good brother", he added at the summit held every three years since 2000.

Sudan's president, who is accused by an international court of war crimes, is visiting China, one of the biggest investors in his country. The visit comes just days before the oil-rich south of Sudan declares its independence. NBC's Adrienne Mong reports.
Hu also pledged to "continue to expand aid to Africa, so that the benefits of development can be realized by the African people." He did not provide an amount.

Hu said the new loans would support infrastructure, agriculture, manufacturing and development of small and medium-sized businesses in Africa.

'Checkbook' approach

Critics say China supports African governments with dubious human rights records as a means to get access to resources.
The EU has rejected what they call China's "checkbook" approach to doing business with Africa, saying it would continue to demand good governance and the transparent use of funds from its trading partners.

Such criticism draws rebukes from China that the West still views Africa as though it were a colony. Many African countries say they appreciate China's no-strings approach to aid.

"Africa's past economic experience with Europe dictates a need to be cautious when entering into partnerships with other countries," Zuma told the forum.

"We are particularly pleased that in our relationship with China we are equals and that agreements entered into are for mutual gain," Zuma added.

Oil-hungry China welcomes alleged war criminal al-Bashir

"We certainly are convinced that China's intention is different to that of Europe, which to date continues to intend to influence African countries for their sole benefit."

China's friendship with Africa dates back to the 1950s, when Beijing backed liberation movements in the continent fighting to throw off Western colonial rule.

Growing trade links

Chinese state-owned firms in Africa also face criticism for using imported labor to build government-financed projects like roads and hospitals, while pumping out raw resources and processing them in China, leaving little for local economies.

"Certainly quite a number of us are thinking we need to move into more value addition," South African's Trade and Industry Minister Rob Davies told Reuters.

"We need to export mineral products in a more processed form ... We need to bite this bullet very seriously."
Trade has jumped in the past decade, driven by Chinese hunger for resources to power its economic boom and African demand for cheap Chinese products.

China's trade with Africa reached $166.3 billion in 2011, according to Chinese statistics. In the past decade, African exports to China rose to $93.2 billion from $5.6 billion.

Industrial and Commercial Bank of China 601398.SS, for example, the world's most valuable lender, has invested more than $7 billion in various projects across the continent.

Reuters and The Associated Press contributed to this report.

Wednesday, July 18, 2012

Supertanker sea storage looms as oil prices fall


* Floating oil storage may become profitable as prices fall
* Contango oil price structure brings funds roll losses

* Pressure to sell prompt, buy forward helps build stocks

By Christopher Johnson and Jonathan Saul

LONDON, (Reuters) - Speculators could soon be hoarding crude oil in supertankers off the coast of Britain and other European countries if prompt oil prices keep falling, shipping and oil industry executives say.

A glut of crude oil in western spot markets is forcing the price of oil for immediate delivery below forward futures costs, and it could soon be profitable to buy oil, store it and sell it later in the year at higher prices.

Three years ago - the last time oil prices fell sharply on world spot markets - dozens of supertankers were moored along the English south coast and off Scotland as floating storage.

Nearby spot oil prices have almost fallen enough to make that happen again and the trend is likely to continue, opening up a trading window shortly, analysts and shipping firms say.

"We could soon see a return of floating storage," said Olivier Jakob, analyst at consultancy Petromatrix in Zug, Switzerland. "For floating storage to be workable, the spreads need to widen a little bit, but not much. We aren't far away."

Oil prices have fallen 30 percent from this year's peak over $128 per barrel, with nearby North Sea Brent crude oil futures on the InterContinental Exchange now about $90.

The resumption of Libyan crude oil production after almost a year of civil war, a big rise in Middle East oil output, global economic slowdown and the closure of several oil refineries have left the prompt oil market heavily over-supplied.

Brent for immediate use is trading at a discount of around $1 to August futures and oil for delivery in a year's time is around $2 dearer, in a price structure known as 'contango'.

The contango is not yet quite deep enough to pay for oil storage and other costs such as financing, but it has been widening steadily this month and storing oil at sea could soon be a viable option for oil companies and trading houses.


This week money managers controlling billions of dollars of pension funds and other investors will decide where to allocate their portfolios in the third quarter and they are likely to move out of prompt Brent if the contango looks set to persist.

A contango brings 'roll losses' for investors if they have to sell out of a weak front futures contract and buy more expensive later months as prompt months expire.

This would help depress prompt oil, deepening the contango.

"A contango feeds itself," said a senior trader with a large U.S.-owned oil company. "No one wants roll losses every month."

Average daily earnings for supertankers known as very large crude carriers, or VLCCs, on the benchmark Middle East Gulf to Japan route - the major market barometer - reached $11,159 on Friday, down slightly from Thursday, Baltic Exchange data show.

These are poor returns for ships that can carry up to 2 million barrels of crude oil, and they make long-term chartering of VLCCs an attractive alternative for some tanker owners.

The current cost of a one-year time charter for a VLCC runs from around $23,000 per day, and shorter charters, for three to six months, would start from around $25,000 per day - or about 37 cents per barrel of crude oil per month.

The August-September ICE Brent futures spread traded on Monday at up to 34 cents - just 3 cents lower.

Frode Morkedal, analyst with ship brokerage and investment bank RS Platou Markets in Oslo, said onshore stocks of crude oil were rising fast and offshore storage options could soon open.

"A supply overhang is building as the short term Brent curve has moved into a small contango," Morkedal said. "On-land inventories are not full, but should the overproduction of oil continue ... floating storage may again become a hot topic."

Oil traders say that for floating storage trading plays to be a serious option for most speculative traders, the spread between Brent futures months would have to exceed 40 cents per barrel and a margin of 50 cents would be better.

"Even if spreads are not wide enough yet to bring floating storage, they will encourage traders to hold cargoes longer," Jakob said. "That will put extra pressure on prompt prices."

Shell: Disagrees with $5 Billion Fine for Nigeria Oil Spill


By Sarah Kent

LONDON--Royal Dutch Shell PLC (RDSA) confirmed Tuesday it faces a $5 billion fine for its Bonga oil spill offshore Nigeria late last year, but added that it doesn't "believe there is any basis in law" for such a punishment.

The company's Nigerian subsidiary "responded to this incident with professionalism and acted with the consent of the necessary authorities at all times to prevent environmental impact as a result of the incident," Shell said in a statement.

The leak at the 200,000 barrel-a-day Bonga field in December was Nigeria's worst offshore spill in more than a decade and resulted in at least 40,000 barrels-a-day of oil spilling into the ocean.

Write to Sarah Kent at sarah.kent@dowjones.com

Friday, July 13, 2012

PetroSA Negotiating for Jubilee Stake


PetroSA is looking to pick up a stake in Ghana’s Jubilee oilfield and is in talks with Sabre Oil & Gas. Nosizwe Nocawe Nokwe, the head of South Africa’s state-run company, said the company hoped to conclude the deal soon.

"We hope to conclude (the Sabre deal) in the near-term future," Nokwe told Reuters, but declined to disclose the potential value of the deal.

There is also a possibility that PetroSA will pick up a stake in Mozambique’s recently discovered offshore natural gas bounty. Nokwe said the company was in talks with ENI regarding a potential partnership in the neighboring country.

PetroSA may also participate in the next bidding round for blocks expected in Mozambique towards the end of the year.
"In our upstream strategy we are looking at access to near-producing blocks. We are constantly looking at opportunities ... either by acquisitions or bidding for acreage," she said.

US tightens Iranian sanctions’ noose


The US has ramped up pressure on Iran's ability to export oil this week, identifying Tehran's main tanker concern and exposing dozens of its vessels as government-controlled entities.

In the latest set of measures designed to stop Iran from acquiring nuclear weapons, the US Treasury identified 58 NITC vessels and 27 of its affiliates as extensions of the state, which would undermine Iran's attempts to use renamed, disguised vessels to evade sanctions, the department said, reported Reuters.

The exposures, which also included naming what Washington said were four front companies for Iran's state oil enterprise, would help countries and foreign companies comply with Western penalties against Iran, it was claimed.

A US Government official said the measures would have some impact on Iran's ability to sell oil. "It will make it that much more difficult for Iran to deceive potential purchasers about the origin of the oil," the official told reporters, including Reuters.

US companies and Americans are already prohibited from doing business with entities controlled by Iran's government.

NITC changed the names and flags of many of its tankers ahead of a European Union ban on Iranian oil imports. It was thought that some tankers were moved from the Maltese and Cypriot registries to Tuvalu and Tanzanian flags.

NITC’s fleet has become in the spotlight this month, as new European Union sanctions have cut off access to the London-based ship insurance market, putting Iran off-limits to almost every major tanker operator.

"We will continue to ratchet up the pressure so long as Iran refuses to address the international community's well-founded concerns about its nuclear program," Treasury Undersecretary David Cohen said in a statement.

The US sanctions have limited Iran's major trading partners from buying Iranian crude. The EU banned Iranian oil imports, as well as providing insurance for vessels carrying Iranian oil from 1st July.

Malaysian-based Noor Energy, Petro Suisse, Dubai-based Petro Energy and Hong Kong Intertrade were identified by the US as being controlled, or acting on behalf of the Iranian government. The Treasury said they were acting as front companies for the National Iranian Oil Company (NIOC) and other blacklisted Iranian entities, Reuters said.

US lawmakers said that the US Treasury's action was a move in the right direction but said much more had to be done. "We must continue to increase pressure on the Iranian regime until it verifiably abandons its nuclear weapons programme," said Howard Berman, the top Democrat on the House Foreign Affairs Committee, who has asked Tuvalu and Tanzania to stop accepting Iranian oil tankers in to their registries.

A senior Senate Republican aide said the administration was finally playing the game correctly by exposing Iranian fronts for sanctions evasion and laying the groundwork for new sanctions legislation that will make any business dealing with such entities illegal.

Four individuals, including an Austrian, who allegedly provided support to Iran's missile programme and an Islamic Revolutionary Guard Corps official were also blacklisted.

Meanwhile, the Iranian Central Insurance Company has announced that it will offer cover to foreign tankers, which are destined for Iranian ports.

The company's managing director Mohammad Karimi told the IRNA News Agency, the decision has been made to deal with international sanctions against Iran’s oil sector, reported the Baku-based Trend News.

Due to the EU sanctions, Iran will see its oil exports fall by more than 50% this month compared with June, before the sanctions came into force.

European insurers who dominate the maritime sector are also banned from offering cover on Iranian crude.

Thursday, July 12, 2012

Nigerian fuel tanker fire kills 92: witness


NIGER DELTA (Reuters) - At least 92 people including women and children were killed on Thursday after a gasoline tanker crashed on the east-west road in Nigeria's oil-producing Niger Delta and caught fire as people tried to scoop up fuel, a Reuters witness said.

"Early this morning a tanker loaded with petrol fell in Okogbe and people trooped to the scene obviously to scoop the spilled fuel and suddenly there was fire resulting in casualties," Rivers State police spokesman Ben Ugwuegbulam said.
Ugwuegbulam said it was too early to give a casualty figure but a Reuters witness at the scene counted 92 dead bodies of men, women and children.

Hundreds of people crowded around as soldiers and emergency workers lifted bodies into ambulances and police trucks. The fuel tanker was a pile of smouldering ash, twisted metal and melting tyres.

Crashes are common on Nigeria's pot-holed and poorly maintained roads, and in a region where most people live on less than $2 a day the chance to collect spilling petrol is too much of a temptation, despite the high risk of fires.

The east-west road, which runs across the oil-producing region, has been scheduled for development for almost a decade and money is allocated for it in the budget each year.

Nigeria, Africa's biggest oil producer, is plagued by corruption and inefficiency. Most years only about half budgeted programmes are implemented.

New found support for Maine terminal


DCP Searsport's proposed liquefied propane gas (LPG) terminal and bulk storage tank in Searsport, Maine was the centre of much debate at a Rockford councillor meeting on 9 July.

Back in March councillors were considering sending a letter of concern to the Searsport Planning Board about DCP's proposed terminal. However, councillors seemed to do a U-turn at their most recent meeting, now supporting an increased use of propane to supply rural Maine.

The project will feature a 22.7 million (LPG) bulk storage tank, an LPG fuel storage tank, a one mile long pipeline, ship unloading facilities and four truck loading stations.

The LPG tank would reach 138 feet high, something that many residents say would damage the region's tourism industry. However, just one-third the size of FMC's nearby existing facility, and with a 300-foot tall silo already constructed under Dragon Products, councillor Larry Pritchett ensures the tank will not affect tourism.

But this is not the only concern that some have about the proposed terminal. They also fear it would bring increased volumes of traffic to their roads, as well as a high risk of incidents.

Rockland fire chief Charles Jordan Jr., however, believes an incident is unlikely, having not witnessed one at such a facility for 30 years. He says if such a problem were to occur, his personnel are trained in HAZMAT responses.

Monday, July 9, 2012

Jet fuel prices reach October 2011 low


The price of aviation turbine fuel (ATF), or jet fuel, in India fell on 30 June.

In Delhi, the commodity went from Rs.1,241 (€17.80) per kilolitre to Rs.61,169/kl – a drop of around 2% – which went into effect on 1 July.

The reduction is the sixth consecutive cut in rates since April when prices reached a record high of just over Rs.67,800. Prices are now level with those seen in October 2011.

The cost of jet fuel in the region reached an all-time high in August 2008 when it was priced at Rs.71,028.26/kl at a time when international oil rates hit $147 per barrel.

In Mumbai, the price slash saw fuel go from Rs.63,178/kl to Rs.61,934/kl on 3 July.

The revision will come as a relief to many cash-strapped Indian airlines that continue to shell out over 40% of their total operational costs on ATF.

Friday, July 6, 2012

Petrobras in chartering spree


Period charters continued unabated, illustrated by Petrobras reportedly taking at least three tankers on long term charter for three year periods.

These included the Aframax ‘LMI Star’ at $15,200 per day, plus the MRs ‘Elka Delos’ and ‘Evros’ at $14,000 per day each.

Elsewhere, Morgan Stanley fixed the 2006-built MR2 ‘Maersk Marmara’ for 12 months at $13,500 per day, while NORDEN took the fellow Danish managed MR2 ‘Torm Helsingor’ for three years at $12,750 per day, as well as the ‘Nord Observer’ for 17 months at $12,200 per day, brokers reported.

In addition, Shell was believed to have fixed the MR ‘Maersk Mediterranean’ for 12 months at $13,500 per day.

Indian refiner Reliance reportedly took the 2002-built VLCC ‘Eagle Virginia’ for 12 months at $18,500 per day.

Leaving the fleet were the 1993-built Aframax ‘Pioneer’, reportedly sold to Pakistan breakers for $397 per ldt and the 1989-built VLCC ‘Sri Qadriah 1’, believed sold to Bangladesh recyclers at $416 per ldt.

Pakistan breakers were said to have taken the 1994-built Aframax ‘DHT Dania’, ex ‘Overseas Ania’, for $425 per ldt on the basis ‘as is’ Singapore with 400 tonnes of bunkers remaining on board.

The 1992-built Suezmax ‘ISI Olive’ was sold to Indian sub-continent buyers for $405 per ldt, while the 1989-built Aframax ‘Ratna Urvi’ was reportedly sold to Pakistan interests for $410 per ldt.

Finally, the 1994-built Aframax ‘Unity’ was believed to have been committed to Bangladesh recyclers on private terms.

Thursday, July 5, 2012

Tanks catch fire after lightning strike


A fire broke out amongst three oil well tanks in Kentucky, US after they were hit by lightning.

The incident happened at around 10pm on 2 July and caused one tank lid to fly off, landing on the nearby US 41-Alternate in Webster County.

No one was injured and a recent tanker truck pick-up meant some oil had been pumped away from the site, reducing the fire hazard. Heavy rain also helped prevent the flames from spreading.

Homes were left without electricity, however, after the explosion damaged some power lines.

The US 41-A was closed for around three hours.