Tuesday, April 30, 2013

The Company Bringing Natural Gas to Truckers

The domestic abundance and competitive pricing of natural gas is pushing the industrial transport industry to consider it as a more cost effective fuel source. In early March BNSF, the railroad wholly owned by Berkshire Hathaway (BRK-B) announced it will test using liquefied natural gas [LNG] to run its trains. Matthew Rose, CEO of BNSF referred to LNG “a potential transformational change for our railroad and for our industry."
The trucking industry would be just as financially motivated as rails to find an alternative to expensive diesel fuel prices.
US Retail Diesel Price Chart

One of the big barriers to trucks using LNG is re-fueling; if you’ve spent any time on major interstates that are the lifeblood of the trucking industry it’s not exactly easy to find a filling station pumping LNG. And until infrastructure is in place it’s a harder sell to get trucks to invest in modifying their engines to take LNG.
But the infrastructure piece is gaining momentum. In early April Royal Dutch Shell (RDS-B) announced it is going to build out more LNG-friendly facilities in the U.S. and Canada. A more direct pure-play is Clean Energy Fuels (CLNE) a $1.1 billion market cap California company dedicated to building out LNG fueling stations for the trucking industry. Clean Energy Fuels also traffics in compressed natural gas facilities; that’s typically the form used for cars and buses.
The company currently has 348 LNG and CNG locations in the U.S. At the end of 2012 it had completed 70 of a planned 150 LNG facilities that will allow heavy-haul truckers to traverse the major I-40, I-10 and I-95 corridors without fear of running out of juice. The company also recently signed a partnership with GE Oil & Gas to make sure those locations will have a ready supply of LNG.
Fund manager Ron Muhlnekamp owns the stock. In a recent shareholder note he explained that while he owns natural gas drillers and suppliers, it’s the transportation angle that he thinks is the next wave in the natural gas investment theme, with trucking getting a special shout out.
To be clear, Clean Energy Fuels is an aggressive small cap gambit that has yet yet to turn a profit. In 2012 revenues rose 14% and delivery of natural gas climbed 25%.
CLNE Chart

A near-term concern is Chesapeake Energy’s (CHK) planned reduction of its 7.7% stake in Clean Energy to about 1%. That’s not a vote of no confidence, but rather a function of Chesapeake Energy’s need to raise cash.
Carla Fried, a senior contributing editor at ycharts.com, has covered investing for more than 25 years. Her work appears in The New York Times, Bloomberg.com and Money Magazine. She can be reached at editor@ycharts.com.

Monday, April 29, 2013

9 oil workers kidnapped by pirates in Nigeria

Nigeria’s Bayelsa State was home to three kidnapping attempts on April 24th. A total of 9 hostages were taken from two vessels by kidnappers, while a third kidnapping attempt was unsuccessful. The identity of the kidnappers is unknown, although they are believed to be the same men accused of killing 12 police officers three weeks ago.
The hostages are almost all Nigerian oil workers, but reports indicate a Russian and a Malaysian may be included. The attacks happened at different times and locations. In the largest and most publicized attack, 5 workers were taken from a vessel in the waters off the coast of Brass, a Local Government Area in Nigeria. Fishermen in the area witnessed one kidnapping, reporting the kidnappers boarded the vessel armed and took 5 men and cash.
In the other successful kidnapping, located north-east of the first, off the coast of the Port of Harcourt, four men were taken from a container ship. The remaining crew in both kidnappings were left unharmed.
A third attempt at a kidnapping happened the same day, as attackers in a speed boat attempted to board another vessel. This time, the vessel increased speed and managed to get away.
Bayelsa state, and the water off its coast, is considered an exceptionally turbulent region. Incidents of violence have led to increases in insurance for much of the Gulf of Guinea, which follows Africa’s southward curve from Liberia to Gabon.

Friday, April 26, 2013

OPEC to Bolster Exports on Asian Demand, Oil Movements Reports

By Grant Smith
The Organization of Petroleum Exporting Countries will increase shipments by 60,000 barrels a day through to the middle of May because of rising demand inAsia, according to tanker tracker Oil Movements.

The group that supplies about 40 percent of the world’s oil will boost exports by 0.3 percent to 23.61 million barrels a day in the four weeks to May 11, the researcher said today in an e-mailed report. The figures exclude Angola and Ecuador.

“It’s all going east at the moment, which means that the Chinese are buying,” Roy Mason, the company’s founder said by phone from Halifax, England. “Westbound sailings from the Gulf are drooping.”

Middle East shipments will rise by 0.5 percent to 17.3 million barrels a day in the period, compared with 17.21 million in the four weeks to April 13, according to Oil Movements. That figure includes non-OPEC members Oman and Yemen.

While total OPEC sailings will probably increase in about a month as seasonal demand for driving fuels in the northern hemisphere climbs, the acceleration will probably be weaker than in previous years because of elevated levels of crude inventories held by refiners, Mason said.

Crude on board tankers will average 470.66 million barrels to May 11, up 0.6 percent from the previous period, Oil Movements’ data show. Oil Movements calculates the volumes by tallying tanker bookings. Its figures exclude crude held on vessels for storage.

OPEC’s members are Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates and Venezuela. The group will next meet on May 31 in Vienna to discuss output policy.

To contact the reporter on this story: Grant Smith in London at gsmith52@bloomberg.net

To contact the editor responsible for this story: Stephen Voss on sev@bloomberg.net

Thursday, April 25, 2013

Ghana Oil Output to More Than Double by 2021 With New Fields

Ghana, West Africa’s second-biggest economy, expects oil production to more than double to 250,000 barrels a day by 2021 as output rises at the Jubilee field and other sites start pumping.
The country has new crude discoveries at different stages of appraisal and development, Nana Boakye Asafu-Adjaye, chief executive officer of the state-owned Ghana National Petroleum Corp. known as GNPC, said in an interview in the capital, Accra, yesterday. At the Tullow Oil Plc-operated Jubilee field, 60 kilometers (37 miles) off Ghana’s western coast, output has averaged 110,000 barrels a day over the last three months, he said.
Oil displaced cocoa as Ghana’s second-most valuable export in 2012, with shipments worth $3 billion, according to the central bank. Photographer: Pius Utomi Ekpei/AFP/Getty Images
In the next “five to eight years we will be spending $20 billion” to develop Jubilee and other discoveries, Asafu-Adjaye said. Jubilee, which started output in December 2010, is Ghana’s lone crude-exporting oil field. Nigeria, Africa’s biggest oil producer, pumped 1.8 million barrels a day in March.
Oil displaced cocoa as Ghana’s second-most valuable export in 2012, with shipments worth $3 billion, according to the central bank. Gold remains the country’s top foreign-currency earner. Kosmos Energy Ltd. (KOS) also has a stake in the Jubilee field, while Tullow, Kosmos and Anadarko Petroleum Corp. (APC) are developing the Tweneboa-Enyenra-Ntomme, or TEN, project.
“First oil from TEN could be in late 2016,” Asafu-Adjaye said. The site may have reserves of 245 million barrels and peak daily production is forecast at 76,000 barrels, he said.

Onshore Exploring

GNPC is also pushing exploration in the onshore Voltaian Basin which stretches from the south to the northern part of Ghana and covers about 40 percent of the country, Asafu-Adjaye said.
“We have conducted field mapping and site surveying of selected locations for slim hole drilling,” he said in a speech yesterday. In 2011, GNPC received geophysical data on the region.
Tullow’s shares fell 0.9 percent to 1,037 pence in Londonyesterday, bringing the decline this year to 18 percent.
To contact the editor responsible for this story: Antony Sguazzin at asguazzin@bloomberg.net.

TOR workers must own shares - Jinapor

TOR workers must own shares - Jinapor

Deputy minister designate for energy, John Jinapor has said he favored giving some shares to workers of the Tema Oil Refinery (TOR). He believed this is an innovative way of developing a sense of ownership in the struggling company.

He said this during his vetting by the Appointments Committee of Parliament, Monday. He was answering questions on how to resuscitate TOR.

The former spokesperson for the President Mahama said "when you give employee shares you create a sense of ownership".

He explained that TOR was saddled with technical efficiency and capital infusion challenges. TOR was built to process lower grade crude and cannot refine oil from the new local fields unless significant investment was made.

The refinery has been shut down since October last year.

The Deputy minister designate also said the refinery had secured $30 million from the government for its plant sustainability and profit enhancement programme.

The TOR debt currently stands at $350 million after the government managed to clear almost a billion Ghana cedis in the past four years.

It currently requires about $650 million for its day-to-day operations.

Mr. Jinapor answered questions on nuclear energy options and re-branding Electricity Company of Ghana (ECG).

Monday, April 22, 2013

Deputy Minister Designate for Energy and Petroleum, Mr John Abdulai Jinapor


The Deputy Minister Designate for Energy and Petroleum, Mr John Abdulai Jinapor, has assured that government would achieve its short, medium and long term measures instituted to address the energy challenges facing the country.

He said the shortage in generation of electricity would be completely over by 2016 when the government increased its generation capacity to 5000 megawatts.

Mr Jinapor said these when he appeared before the Appointment Committee of Parliament yesterday to be vetted.

He noted that, despite the current power crises, Ghana was still the second largest producer of energy in the Sub-Saharan Africa adding that, apart from South Africa, no country in Africa generated as much electricity as produced in this country.

Mr Jinapor said the power crisis had arisen as a result of the government’s inability to meet the country's peak electricity demand of 1750 megawatts.

He said though Ghana had an installed generation capacity of 2455 Megawatts, the damage to the West African Gas Pipeline last year, knocked out some of the country's electricity generation installations, including the Asogli Power Plant, which he said was producing 200 megawatts.

Mr Jinapor pledged to support the substantive Minister, Mr Emmanuel Armah Kofi Boah, to implement the president's short, medium and long-term solutions to ending the power crisis.

Mr Jinapor said the ministry would also explore the possibility of adopting renewable and nuclear energy as part of long-term efforts to solving the country's electricity problem.

Touching on the challenges facing the Tema Oil Refinery (TOR), Mr Jinapor said the government had resolved to resource the refinery with about $70 million.

He said government had released US$30 million dollars to the company and had earmarked an additional US$ 37 million be disbursed to the company soon.

He pledged to “push and support the Minister to ensure that, the monies are released immediately to put TOR out of its present predicament”.

He also suggested that, part of the shareholdings in the Tema Oil Refinery should be allocated to the workers of the company to serve as an incentive to motivate them to deliver their best to ensure the success of the refinery of this year

Mr Jinapor who was also the Spokesperson of President John Dramani noted that, it was imperative that, the government provided the necessary infrastructure and some working capital to enable the refinery become a viable profit making entity for the country.

Mr Benjamin Dagadu, a deputy minister designate for the same ministry who also appeared before the committee attributed the energy crisis to the failure by governments over the years to make the investment needed to add an additional 100 megawatts of thermal generation onto the national grade.

He promised to bring his expertise in the energy sector to bear to ensure that, the current energy challenges facing the country became a thing of the past.

Source: ISD (Gilbert Ankrah)

Friday, April 19, 2013

Israel seeks millions of gallons of JP-8 from US

Israel wants to buy jet fuel from the US for its Air Force fleet
The government of Israel is looking to purchase 864 million gallons of petroleum products, including jet fuel, from the US at a cost of around $2.67 billion (€2 billion), the US Department of Defense says.
Most of the jet fuel will be consumed by the nation's Air Force, while the diesel and unleaded petrol products will be used for the Israel Defense Forces' land-based equipment.
The Defense Security Cooperation Agency said in a statement: 'Due to volatility in the oil market, this notification requests a total quantity of these various fuels rather than specific quantities of individual fuels. The US vendors are unknown at this time due to the competitive bid process for the supply source(s). There are no known offset agreements proposed in connection with this potential sale.'
The US has been selling JP-8 aviation fuel to Israel for a number of years in connection with the American foreign aid programme.
The agency continued: 'The United States is committed to the security of Israel, and it is vital to US national interests to assist Israel to develop and maintain a strong and ready self-defence capability. This proposed sale is consistent with those objectives.

'The proposed sale of the JP-8 aviation fuel will enable Israel to maintain the operational capability of its aircraft. The diesel fuel and unleaded gasoline will be used for Israeli ground vehicles. Israel will have no difficulty absorbing this additional fuel into its armed forces.
'The proposed sale of these three types of fuel will not alter the basic military balance in the region and will provide Israel with the necessary flexibility to balance its individual fuel type needs as the situation requires.'

Thursday, April 18, 2013

Neb. opposition muted ahead of Keystone XL hearing

In this photo from Sept. 29, 2011, ranchers Todd Cone, left, and Terry Frisch stand by a cattle watering circle where the Ogallala Aquifer water table is at ground level, in the sandhills near Atkinson, Neb., Thursday, Sept. 29, 2011. Cone said he still considers the Keystone XL pipeline a threat to the state's groundwater, but is too busy to keep fighting the project after it was rerouted away from near his property. Terry Frisch remains ardently opposed to the pipeline, even though the planned route has moved from near his property to about 10 miles away.(AP Photo/Nati Harnik)
LINCOLN, Neb. (AP) -- A proposed Canada-to-Texas oil pipeline would run just 1,000 feet from Terri Funk's doorstep, but the Nebraska farmer and her husband don't plan to protest or even attend the U.S. State Department's lone public hearing on the contentious proposal Thursday.
That's because the company building the pipeline has pledged to restore any of their land it digs up. So her opinion is this: Build away.
Just months after intense opposition in Nebraska helped delay and reroute the Keystone XL pipeline, Funk's position has grown more popular in this conservative state. Local politicians and landowners now largely support the line — or at least aren't actively opposing it.
"I'm not really worried about it," said Funk, who grows corn and soybeans in Antelope County, about 150 miles northwest of Omaha. "It's planting season right now, and we've got better things to do."
TransCanada, which is building the pipeline, has told the couple they could continue growing crops and that the disruption of their property would be temporary. The agreement, one of hundreds reached with landowners in the state, gives Funk little reason to drive to the planned eight-hour public hearing about 100 miles away in Grand Island.
Besides the individual deals with landowners, opinions have shifted in Nebraska since the line was rerouted away from the ecologically sensitive Sandhills region, which overlies the sprawling Ogallala Aquifer.
There still will be plenty of opposition voiced Thursday from environmentalists who maintain the pipeline could have catastrophic implications for global warming and still crosses parts of the fragile, sandy soil that is outside the officially designated Sandhills region. But in Nebraska — the most visible face of the opposition effort a year ago — even some opponents now seem resigned to idea that Keystone XL will be built.
"I'm not really happy with the way it is, but you can only fight for so long," said Todd Cone, who was a vocal opponent of the initial route that cut through the Sandhills near his property. "It's moved off to the east now. And I guess my thought is, those people over there, they need to stick up for themselves."
Supporters and opponents are expected to pack the State Department's only hearing before Secretary John Kerry recommends to President Barack Obama whether to build the $7.6 billion Canada-to-Texas line. A recommendation by the department, which has jurisdiction because the pipeline would cross a U.S. border, is not expected until summer.
A poll last year by the Omaha World-Herald showed Nebraskans support the pipeline by more than a 2-to-1 ratio, and the state's governor and congressional delegation — all Republicans — have either backed the plan or relaxed their opposition. That support mirrors national sentiment about the pipeline. A poll last month by the Pew Research Center showed that 66 percent of those polled favor building the pipeline, compared with 23 percent who oppose it.
The pipeline would carry 800,000 barrels of oil a day across six states to refineries along the Gulf Coast. One leg of the pipeline from Cushing, Okla., to ports near Houston, already has been approved and construction is proceeding.
Jane Kleeb, executive director of the anti-pipeline group Bold Nebraska, said it's wrong to conclude opposition to the project has waned. A core group of Nebraska ranchers, property-rights advocates, young people and American Indians will continue to fight the pipeline, and national and global opposition remains strong, she said.
Kleeb's group is among those trying to persuade Obama to reject a federal permit for the pipeline, and opponents also have filed a lawsuit challenging a new Nebraska law that allowed the Department of Environmental Quality to review the new proposed pipeline route.
The law is key because it allowed the state to re-launch its review after Obama denied a federal permit for the original pipeline route last year. TransCanada was allowed to reapply once the pipeline through Nebraska was rerouted around the Sandhills.
Nebraska remains a battleground for national groups because the opposition originated with local landowners, said Becky Bond, the policy director for the San Francisco-based CREDO Action, the left-leaning advocacy arm of a cell phone company that opposes the pipeline.
"What's happening in Nebraska proves that this isn't a red and blue issue," Bond said. "Nebraska proves that this is a common-sense issue about protecting our water and our climate."
National opponents have formed a new group, the "All Risk, No Reward Coalition," which recently ran television ads in large markets, including Boston, Denver, Los Angeles and Philadelphia, and planned to air the ads Tuesday in Lincoln, Neb. The ad targets what the group calls TransCanada's poor safety record and highlights a recent oil spill in Arkansas.
Opponents say the thick, gooey oil derived from tar sands in western Canada is harder to clean up than conventional oil. The Keystone XL pipeline would carry a similar type of oil.
The Sierra Club sent emails to supporters showing video of the Arkansas spill, warning that tar sand pipelines are "disasters waiting to happen."
Terry Frisch, a landowner from the north-central Nebraska community of Atkinson, insisted a core group of Nebraska opponents — dubbed "the posse" — remains strong, but he acknowledged some landowners have moved on.
Although the line was shifted away from his property, Frisch said he remains ardently opposed because of fears the pipeline could endanger the aquiver.
"This has caused some real friendships to go by the wayside," Frisch said. "The only ones who are satisfied with it are the politicians and the ones who are bought off by TransCanada. But this is all we've got. It's all we've got. We're expected to feed the world, and this water is our lifeblood. We won't live without water."
Nebraska Gov. Dave Heineman, who opposed the initial route but supported it after the route was changed, said this week he was satisfied the state listened to landowners' concerns. He pointed to a 2,000-page review by the state Department of Environmental Quality that concluded the project would have a minimal environmental impact.
TransCanada spokesman Shawn Howard said the company has listened to the concerns of Nebraska residents during a series of state environmental hearings. The company also submitted to four federal environmental reviews and nearly a dozen state and local ones, he said.
"The product we carry is essential, and the need for it doesn't change," Howard said. "Would you rather get it from Venezuela, and have to ship it farther, in a way that's less safe? Where do Americans want to get the oil that we all use to power our homes and our vehicles — including the vehicles and airplanes that are going to bring the opponents to this meeting?"
Associated Press Writer Matthew Daly in Washington contributed to this story.

Wednesday, April 17, 2013

Africa's richest man plans to build refinery in Nigeria

Reuters/Reuters - Nigerian billionaire Aliko Dangote gestures during an interview with Reuters in his office in Lagos June 13, 2012. REUTERS/Akintunde Akinleye
By Tim Cocks
LAGOS (Reuters) - Africa's richest man, Aliko Dangote, plans to invest up to $8 billion to build a Nigerian oil refinery with a capacity of around 400,000 barrels a day by late 2016, the tycoon told Reuters on Tuesday, almost doubling Nigeria's refining capacity.

"This will really help not only Nigeria but sub-Saharan Africa. There has not been a new refinery for a long time in sub-Saharan Africa," Dangote said in a telephone interview.

The country currently has the capacity to produce some 445,000 barrels per day among four refineries, but they operate well below that owing to decades of mismanagement and corruption in Africa's leading energy producer.

Nigeria, the continent's second-biggest economy, relies on subsidized imports for 80 percent of its fuel needs. A surge in domestic capacity would be welcomed by investors in Nigeria, but it would cut into profits made by European refiners and oil traders who would lose part of that lucrative market.
Dangote said the country's ability to import fuel would soon be challenged. "In five years, when our population is over 200 million, we won't have the infrastructure to receive the amount of fuel we use. It has to be done," he said.

Past efforts to build refineries have often been delayed or cancelled, but analysts have said Dangote should be able to build a profitable Nigerian refinery, owing to his past successes in industry and his strong government connections.

The Dangote Group's cement manufacturing, basic food processing and other industries have helped lift his personal fortune to $16.1 billion from $2.1 billion in 2010, according to the latest Forbes estimate.

Nigeria has two refineries in its main Port Harcourt oil hub, one in the Niger Delta town of Warri, and one in Kaduna in the north that serve 170 million people. Not one of them functions at full capacity.

Analysts have said previous attempts to get refineries going have been held back by vested interests such as fuel importers profiting from the status quo. Dangote said this concerned him.
"The people who were supposed to invest in refineries, who understand the market, are benefiting from there being no refineries because of the fuel import business," he said. "Some ... are going to try to ... interfere."

Nigeria's government subsidizes fuel imports to keep pump prices well below the market rate at a cost of billions of dollars a year. Fuel subsidies are the single biggest item on the country's budget.

Dangote said making a new refinery run at a profit would work even if the government failed to scrap the subsidized fuel price that has deterred others from investing.

"We've done our numbers and the numbers are okay."

Monday, April 15, 2013

Gold Set For Worst 2-Day Loss In 30 Years


LONDON - Gold headed for its biggest two-day drop in 30 years on Monday as funds accelerated their exits from the market, and investors also cut exposure to oil, copper and grain after underwhelming Chinese growth data.
The precious metal slid further into bear territory, dropping more than $30 in a matter of minutes at one point. Losses widened to more than 6 percent at the lows as prices breached support at $1,400 per ounce after falling 5.3 percent on Friday.
Oil fared scarcely better, dropping by as much as nearly 3 percent. Other precious metals were caught in the downdraft, with silver briefly dropping 10 percent, and industrial metals plummeted, with copper hitting its lowest in over a year. In the grains market, wheat, corn and soybeans fell.
Both oil and gold have been under substantial selling pressure. Bullion has come off worst, shedding around 9.5 percent since last Monday's close, while crude has lost about 3.5 percent.
China's economy grew 7.7 percent in the first quarter, undershooting market expectations for an 8.0 percent expansion and frustrating investor hopes that the world's No. 2 economy would rebound after posting its weakest growth in 13 years in 2012.
"If you want to be worried about China, there's plenty to keep you awake at night," said Sean Corrigan, chief investment strategist at Diapason Commodities Management in Switzerland.
Gold was already under pressure from a variety of factors, including a proposed sale of Cypriot gold holdings, and more fund-based investors headed for the exits on Monday.
Spot gold hit a two-year low at $1,384.69 an ounce.
"We have seen massive liquidation from all quarters - ETFs, funds, CTAs, specs and even Chinese and Indian physical buyers. This is a market that has only got one thing on its mind ... get me out," said David Govett, head of precious metals at Marex Spectron in London.
Brent crude oil sank below $101 a barrel to a nine-month low and was threatening to break below $100 for the first time since early July. It was down about 15 percent from this year's peak of $119.17 reached in early February.
Prior to the latest Chinese and U.S. data, the International Energy Agency, the U.S. Energy Information Administration and the Organization of Petroleum Exporting Countries had already lowered their global oil demand growth for 2013.
China's weaker-than-forecast GDP growth was backed by slower increases in industrial production and fixed-asset investment, despite strong lending growth in March.
"There are questions about the trend of bottoming in China's economy and whether it can re-accelerate above 8 percent this year in a sustainable way," said Vishnu Varathan, market economist at Mizuho Corporate Bank in Singapore.
In gold, "what we now see is panic selling, perhaps triggered by the Fed's stimulus view. The Fed has given the signal that there's a possibility to reduce QE (quantitative easing), and that took a lot of trust out of gold," said Dominic Schnider, an analyst at UBS Wealth Management.
"And people recognize that an environment where you have no inflation is a powerful driver to get out of the metal."
Minutes of the U.S. Federal Reserve's March policy meeting released last week showed some officials were keen on ending the stimulative bond-buying program this year, although those views were expressed ahead of last month's poor non-farm payrolls data and Friday's weak retail sales.
London copper fell to its lowest level in 1-1/2 years at $7,085 a metric ton, while aluminum hit a three-and-a-half year low.
China is the world's biggest consumer of copper.
Soft commodities sugar, coffee and cocoa were the only commodities seemingly little affected by the market rout on Monday, with prices particularly for sugar and coffee already at low levels due to large surpluses.
(Additional reporting by Manolo Serapio Jr in Singapore and Eric onstad in London; Editing by Jane Baird)

Thursday, April 11, 2013

Oil falls below $94 a barrel on demand forecast

NEW YORK (AP) — Oil fell below $94 a barrel Thursday after the International Energy Agency lowered its forecast for global oil demand.
The benchmark oil contract for May delivery was down $1.18 to $93.46 a barrel in afternoon trading on the New York Mercantile Exchange.

The IEA, which represents some of the world's biggest oil-consuming nations, lowered its expectations for global oil demand in 2013 by 45,000 barrels, to 90.6 million barrels a day. That is still 795,000 barrels a day more than in 2012.

"A weak macroeconomic environment is expected to keep demand growth relatively subdued for the remainder of the year," the Paris-based agency said.

Its predictions echoed those made Wednesday by OPEC, comprised of the world's key oil exporters.
Brent crude, which sets the price of crude used by many U.S. refineries to make gasoline, fell $1.40 to $104.38 a barrel on the ICE Futures exchange in London.

Brent has dropped about 11 percent in the past two months ($118.13 on Feb.11) amid Europe's ongoing financial crisis, increased supplies and tepid forecasts for demand. Along with a drop in wholesale gasoline futures, that's contributed to a sharp drop in U.S. pump prices. Gasoline futures fell 4 cents to $2.83 a gallon Thursday, close to a three-month low.

The national average price for a gallon of regular fell a penny to $3.56 a gallon, the lowest price since Feb. 7. Drivers are paying, on average, 22 cents a gallon less than at the end of February, and 36 cents less than a year ago.

Natural gas was up 1 cent to $4.10 per 1,000 cubic feet, after rising as high as $4.18.

The Energy Department's Energy Information Administration reported Thursday that natural gas in storage shrank last week by 14 billion cubic feet to 1.673 trillion cubic feet. Overall supplies are now about 4 percent below the five-year average.

In other energy futures trading on the Nymex:

— Heating oil lost 4 cents to $2.90 per gallon.
Pamela Sampson in Bangkok and Pablo Gorondi contributed to this report.

Gold losses seen limited on Cyprus bullion sale plan

By Frank Tang and Jan Harvey
NEW YORK/LONDON (Reuters) - Gold posted its biggest one-day drop in nearly 2 months on Wednesday after Cyprus was forced to sell most of its gold reserves, but analysts said strong bullion buying by other central banks should underpin the price of the metal.
Investor fears over more gold sales by other debt-stricken euro zone members such as Portugal and Greece sent spot bullion prices down 1.7 percent on Wednesday, within striking distance of a 10-month low.
Renewed gold interest by emerging economies and gold sales limitations stipulated by Europe's Central Bank Gold Agreement (CBGA) are positive factors that should put a floor under the market, analysts said.
"The bigger concern for the bullion market may be the potential for other distressed euro zone nations to liquidate a portion of their gold reserves," said James Steel, chief precious metals analyst at HSBC.
"We do not believe this will be the case, however, and we expect the official sector to remain standout buyers of bullion," Steel said.
Cyprus, one of euro zone's smallest economies, has to sell excess gold reserves to raise around 400 million euros to help finance its part of its bailout, an assessment of Cypriot financing needs prepared by the European Commission showed.
It was the first major gold disposal by a euro area central bank since France sold 17.4 tonnes in the first half of 2009.
At current prices, 400 million euros' worth of gold amounts to 10.36 tonnes of metal, representing just a small fraction of gold liquidated by gold exchange-traded funds since the beginning of the year, analysts said.
Cyprus' total bullion reserves stood at 13.9 tonnes at end-February, according to data from the World Gold Council.
Macquarie metals analyst Matthew Turner said that it would be very bearish for the gold market if other countries like Spain and Italy with large gold reserves became sellers, but that there are good reasons to believe Cyprus is a special case.
Portugal holds 382.5 tonnes of gold, worth some 14.76 billion euros at current prices, in its reserves, while Spain's holdings stand at 281.6 tonnes, worth 10.8 billion.
Italy is the world's fourth largest gold holder, with 2,451.8 tonnes of gold in its reserves, worth 94.6 billion euros.
The third Central Bank Gold Agreement inked in 2009 states that gold sales by signatories will not exceed a collective ceiling of 400 tonnes per year over a five-year period.
The agreement covers gold sales by the European Central Bank and around 20 European countries that have adopted the euro including Portugal, Greece and Spain.
Despite the Cypriot gold sales, emerging economic powers will remain strong buyers of gold and that should underpin prices in the long term, said Michael Cuggino, portfolio manager of the $16 billion Permanent Portfolio Funds.
Russia, Turkey, South Korea and other smaller but fast-growing economies have been adding gold to their reserves, data by the International Monetary Fund has shown.
Central banks have been keen buyers of gold since the advent of the financial crisis, acquiring a net 532 tonnes of gold last year, a 48-year high, according to metals consultancy GFMS.
As a group, central banks had turned into buyers in 2010, as the 2008 economic crisis highlighted the importance of gold as a hedge against currency and credit risk.
(Additional reporting by Clara Denina in London; Editing by Veronica Brown, William Hardy and Joseph Radford)

Wednesday, April 10, 2013

Exxon Mobil Must Pay $236 Million in NH Pollution Case

Exxon gas contamination
Getty Images


CONCORD, N.H. -- Exxon Mobil Corp. (XOM) was found liable Tuesday in a long-running lawsuit over groundwater contamination caused by the gasoline additive MTBE, and the jury ordered the oil giant to pay $236 million to New Hampshire to clean it up.

The jurors reached their verdicts in less than 90 minutes, after sitting through nearly three months of testimony in the longest state trial in New Hampshire history.

The panel awarded the state the $236 million it was seeking to monitor and remediate groundwater contaminated by MTBE. The chemical was added to gasoline to reduce smog but was found to travel farther and faster in groundwater than gasoline without the additive.

"We appreciate the jurors' service during this long trial, but erroneous rulings prevented them from hearing all the evidence and deprived us of a fair trial," said Exxon Mobil lawyer David Lender.

Jurors found that Exxon Mobil was negligent in adding MTBE to its gasoline and that it was a defective product. They also found Exxon Mobil liable for failing to warn distributors and consumers about its contaminating characteristics.

The jury determined that the hazards of using MTBE gasoline were not obvious to state officials, who opted into the reformulated gasoline program in 1991 to help reduce smog in the state's four southernmost counties.

Lawyers for Exxon Mobil argued the company used MTBE to meet federal Clean Air Act mandates to reduce air pollution and should not be held liable for sites contaminated by unnamed third parties, such as junk yard owners and independent gas station owners who allowed gas containing MTBE to get into the ground.

The state says more than 600 wells in New Hampshire are known to be contaminated with MTBE and an expert witness estimated the number could exceed 5,000.
Jurors had more than 400 exhibits to sift through, including memos and reports dating back decades. Those memos included some dating back to 1984 in which Exxon Mobil researchers warned against using MTBE gasoline.

Jessica Grant, representing the state, said they were pleased the jury held Exxon Mobil accountable for widespread ground water contamination.

"The finding of Exxon's negligence is particularly important because it shows the jury understood that this problem could have been avoided," she said.

Jurors, via court personnel, said they did not want to talk to the media about their verdict.

Irving, Texas-based Exxon Mobil was the sole remaining defendant of the 26 the state sued in 2003. Citgo was a co-defendant when the trial began in January, but it began settlement negotiations with the state and withdrew from the trial. Citgo ultimately settled for $16 million, bringing the total the state has collected in MTBE settlement money to $136 million.

Tuesday, April 9, 2013

Militant Escalation in Nigeria


OPEC Starts to React to US Shale Boom: If You Can’t Beat ‘em Join Them

The first signs are emerging that key Persian Gulf members of the Organization of Petroleum Exporting Countries (OPEC) are adjusting their strategies to cope with the growing threat that North American shale oil is making to their long-term dominance in global energy markets. The OPEC moves lag behind other international players such as Statoil and Sinochem, who are staking out a major stake in the U.S. shale industry but provide the first insights on how major oil producers might respond over time to the possibility of a future supply glut: Integration through foreign investment.
Liquefied natural gas (LNG) powerhouse Qatar Petroleum (QP) might be next, according to Middle East Economic Survey. QP is considering investment in Canadian or U.S. shale upstream assets as a price hedge for its planned investment along with ExxonMobil to convert the Golden Pass LNG import terminal near Port Arthur, Texas, to an export facility. The QP strategy mirrors Statoil, which aimed to sustain a high growth path through diversification to foreign investment as it hit up against production constraints inside Norway. Qatar is facing possible long-term decline in its future crude oil production as well as an extended moratorium on further development of the massive North Field natural gas field.
Saudi Arabia can also tap its ongoing downstream investment and integration to protect its exports from shale oil competition. The expansion of Saudi Aramco’s joint venture Motiva refinery in Port Arthur, Texas, gives the Saudis leverage to try to maintain their geopolitically prominent, one million barrels a day plus crude exports to the United States even in the face of rising supplies from U.S. shale oil and Canadian oil sands. Saudi Arabia can ill-afford to get knocked out of the U.S. crude oil market at this delicate time when U.S. support could be more critical to the kingdom’s future. Saudi Arabia is also pursuing shale resources at home, which Baker Hughes estimates to be as large as 645 trillion cubic feet. Saudi Aramco has committed $9 billion to pilot projects such as the Quesaiba shale and the Nafud Basin north of Riyadh.
Kuwait has been more cautious in its response to the shale boom but its investment arm Aref Energy Holding Company has dabbled profitably in U.S. shale asset investment. Kuwait recently announced it will be studying its own shale resources at home.
Back in the 1980s, vertical integration was a key strategy employed by OPEC’s largest producers to cope with the encroachment of rising non-OPEC production and a related price collapse. The question remains whether the market is about to see a déjà vu or whether geopolitically-driven supply disruptions from traditional production regions like the Middle East or Venezuela will be enough to keep markets balanced in the coming years in the face of new supplies from North America and Africa.

Monday, April 8, 2013

Mahama negotiates for regular supply of crude to TOR


Tema Oil Refinery (TOR) is expected to have regular supply of crude following recent negotiations between Ghana and Nigeria.

There has been a concern over the irregular supply of crude oil to the refinery which over the years has led to constant closure of the refinery.

At full capacity, the refinery in a month needs about one million barrels of crude to operate. This will be at a cost of $120 million.

The state refinery in January secured $30 million from government for its plant sustainability and profit enhancement programme.

President John Mahama speaking at the national thanks giving ceremony at the Independence Square in Accra on Sunday revealed that his recent visit to Nigeria was to negotiate for regular supply of crude among others to power the refinery.

“I had to travel to Nigeria to ensure we had a continuous flow of gas to power the many thermal plants that operate on gas as soon as the repair of the West African gas pipeline is completed later this month.”

“I also went to arrange for regular supply of crude to our refinery when it restarts,” he added.

Friday, April 5, 2013

West African Truckers (Documentary)


U.S. trade deficit narrows in February as crude oil imports drop

Traders work on the floor of the New York Stock Exchange, August 22, 2012. REUTERS/Brendan McDermid
Traders work on the floor of the New York Stock Exchange, August 22, 2012.
Credit: Reuters/Brendan McDermid

WASHINGTON (Reuters) - The U.S. trade gap narrowed unexpectedly in February as crude oil imports fell to their lowest level since March 1996 and overall exports increased slightly, a Commerce Department report on Friday showed.

The deficit narrowed to $43.0 billion, from an unrevised $44.5 billion in January. The consensus estimate of Wall Street analysts surveyed before the report was for the trade gap to widen slightly to $44.6 billion.

The lower-than-expected deficit could prompt analysts to raise their estimates of first-quarter U.S. economic growth.

The United States imported 205 million barrels of crude in February, down sharply from 261 million the previous month. The 17-year low came as monthly crude oil import prices rose nearly $2 a barrel from January to $95.96.

Higher imports of autos, consumer goods, capital goods and food offset the reduced imports of oil and other industrial supplies and material, leaving overall imports unchanged from January at $228.9 billion.

U.S. imports from China fell in February to their lowest level in nearly a year. The bilateral U.S. trade gap with China narrowed to $23.4 billion, also the lowest since March 2012.

Overall U.S. exports grew 0.8 percent in February to $186.0 billion, just shy of the record level.

Increased exports of industrial supplies and materials, other goods and autos were partly offset by lower exports of capital goods, consumer goods and food.

(Reporting by Doug Palmer)

Thursday, April 4, 2013

VLCC tanker rates could find additional support during the second half of 2013

It's been the usual story so far in the 2013 year for the owners of VLCC tankers; pressured spot rates, which are attributed to the usual culprit combination of tonnage overcapacity and relatively weak demand. According to the latest report from US-based consultantants of Mcquilling Services, weak demand "has been further exacerbated by seasonal refinery maintenance, particularly in the US. According to data from JBC Energy, roughly 2 million b/d of North American refining capacity was scheduled to be offline during each month of the first quarter. In the Asia-Pacific, refinery turnarounds are set to reach 1.9 million b/d in March, an almost three-fold increase versus February and are expected to climb to 2.3 million b/d in April before falling in May. These reduced throughput rates, combined with vessel availability and concerns over the global economy, are pressuring VLCC rates. Year-to-date the voyage from Ras Tanura to Chiba has averaged WS 35 while the same period averaged WS 51 (Basis 2013 WS100)", the company said.

 But, the report also noted that "despite the market skimming at low levels, rates have recently shown some signs of life and could find further support as we enter the second half of 2013. Demand from the US should perk up as refiners wrap up seasonal turnarounds and after several hiccups, the Motiva refinery has reportedly been ramped back up to full capacity. Highlighting this, the Energy Information Administration (EIA) reported that in the week ending March 22, US refinery utilization was at 85.7% of capacity, up nearly five percentage points compared to two weeks earlier", Mcquilling Services said.

 In addition to these seasonal factors, trading patterns continue to shift, which is also helping to gradually disperse regional tonnage availability. According to the report, "the production gains in US crude oil output are being driven by light sweet grades that are extracted from shale plays. These are reducing demand for similar quality imports, particularly from countries located in West Africa. According to the EIA, Nigerian crude oil imports averaged just over 400,000 b/d in 2012 compared to over 1 million b/d in 2007. As the EIA expects US crude oil production to rise by another 815,000 b/d this year, a further reduction in imports from West Africa seems likely to transpire. According to our proprietary data, only 51 Suezmax spot fixtures have occurred since the start of 2013, which is approximately 40% lower than the same time period in 2010.

 As a result of this reduced demand by US refiners for West African crude oil, end-users in the Far East and Indian Sub-Continent are increasingly purchasing these cargoes. These economies’ strong growth, combined with the continuing expansion of refining capacity, are the driving factors behind this development. In its Medium Term Market Report, the International Energy Agency (IEA), forecasted that China and other Asia (includes India) will add some 4.5 million b/d of refining capacity between 2013 and 2017 and the impact of this is clear. On routes involving the Far East and the Indian Sub-Continent the upward trajectory in recent years is evident. Given the previously mentioned demand erosion from the US for West African grades and refinery expansion in the Far East and India this momentum should continue. Voyage economics are supporting VLCC employment for these cargoes and are even diverting some vessels out of the AG", the report noted.
It also mentioned that "since the start of the year, 57 VLCCs have been fixed from West Africa for discharge in the Far East or India. Although this level is in line with year-ago levels, it is a rise of roughly 45% compared to same time period in 2010. From an owners perspective, year-to-date earnings from West Africa to the Far East (TD15) has averaged US $7,200/day, which is roughly US $3,000/day higher than earnings commencing in the AG (TD3)*. This premium, combined with a long tonnage list in the AG, is influencing some owners to ballast the additional 13 days to West Africa. Despite this steady demand for West African barrels from the Far East and India, rates for voyages commencing in the AG have failed to rise noticeably. This is partially the result of reduced loadings due to the previously mentioned refinery turnarounds. Our proprietary data shows that since the start of 2013, fixtures out of the AG to the Far East and India have been almost 10% lower at 227 spot fixtures compared to 2012. The same situation out of the AG has transpired with spot VLCC fixtures for discharge in the US down by about 25% year-on-year to 59. These reduced loadings are limiting any upward pressure on rates or the impact from a reduction of tonnage in the region. However, as the year continues, current projections are for global oil demand to slowly increase. The IEA forecasts that during Q2, global crude oil demand will be at the year’s lowest point of 89.9 million b/d. Consumption figures will then start to rise and hit 91.1 million b/d in Q3 and should close out 2013 at just shy of 92 million b/d.

 This projected rise in crude oil consumption should provide some support to VLCC spot rates in the coming months. Furthermore, our net-fleet growth forecast of 16 vessels for this year, combined with vessels operating at reduced speeds, should also help spot rates climb. Owners, of older tonnage will remain under pressure from rising bunker costs and harnessing triangulated voyages will not be enough to cover operating costs. The rising demand from emerging economies and the evolution of sailing routes will continue to help disperse vessel availability. However, in order for this to have a noticeable impact on spot rates some owners will need to make tough decisions about future opportunities based on vessel economics", Mcquilling concluded.

 Nikos Roussanoglou, Hellenic Shipping News Worldwide
RSS: Hellenic Shipping News Worldwide

Wednesday, April 3, 2013

Nigeria’s MEND Rebels Pledge Attacks on Oil Region

The main rebel group in Nigeria’s oil-rich Niger River delta said it’s resuming assaults on Africa’s biggest petroleum industry after its suspected leader,Henry Okah, was imprisoned in South Africa.
The Movement for the Emancipation of Niger Delta will start April 5 to carry out “a plague of attacks,” spokesman Jomo Gbomo said today in an e-mailed statement. “The attacks will be sustained until an unreserved apology is offered to MEND and the Nigerian government shows their willingness to dialogue.”

Suspected MEND Leader Henry Okah

Suspected MEND Leader Henry Okah
Alexander Joe/AFP/Getty Images
A South African court sentenced Henry Okah to 24 years in jail after he was found guilty of 13 counts of terrorism, including a bombing that killed 12 people in the capital, Abuja, on Oct. 1, 2010.
While Okah denies he leads the group, he has said he commands the support of many armed factions in Nigeria’s oil region.
Attacks including kidnappings and bombing of oil installations by groups including MEND cut more than 28 percent of Nigeria’s oil output between 2006 and 2009, according to data compiled by Bloomberg. The violence declined after thousands of fighters accepted a government amnesty offer in 2009 and disarmed.
Hague-based Royal Dutch Shell Plc (RDSA), Irving, Texas-basedExxon Mobil Corp. (XOM), Chevron Corp. (CVX) of San Ramon, California, Total SA and Eni SpA (ENI) run joint ventures with the state-owned Nigerian National Petroleum Corp. that pump more than 90 percent of the nation’s oil.
To contact the reporter on this story: Dulue Mbachu in Abuja at dmbachu@bloomberg.net
To contact the editor responsible for this story: Antony Sguazzin at asguazzin@bloomberg.net

Tuesday, April 2, 2013

Halliburton worker testifies at Gulf spill trial

<p> FILE - In this April 21, 2010 file photo, the Deepwater Horizon oil rig burns in the Gulf of Mexico. A Halliburton employee who worked on a failed cement job linked to a 2010 deadly oil rig explosion in the Gulf is testifying in a trial to determine what caused the blowout. Jesse Gagliano began testifying Tuesday, April 2, 2013, about his work for BP's cement contractor on the Deepwater Horizon. (AP Photo/Gerald Herbert, File)
Associated Press -
FILE - In this April 21, 2010 file photo, the Deepwater Horizon oil rig burns in the Gulf of Mexico. A Halliburton employee who worked on a failed cement job linked to a 2010 deadly oilmore rig explosion in the Gulf is testifying in a trial to determine what caused the blowout. Jesse Gagliano began testifying Tuesday, April 2, 2013, about his work for BP's cement contractor on the Deepwater Horizon. (AP Photo/Gerald Herbert, File) less
NEW ORLEANS (AP) -- A man who worked for BP's cement contractor on the drilling rig that exploded in the Gulf of Mexico in 2010 testified Tuesday that he didn't believe the oil giant's employees were risking workers' safety when they didn't follow his recommendations.
Halliburton employee Jesse Gagliano, a witness for his employer at a trial over the Deepwater Horizon disaster that killed 11 people, said his relationship with employees for London-based BP PLC deteriorated amid disagreements about how to perform the cement job that ultimately failed to seal the BP-owned well.
But Gagliano said he said he never saw a reason to call a temporary halt to the project before the well's blowout.
"At any time when you recommended to BP something and they did not follow your
recommendation, did you think at any time that that created a risk of a hazard?" Halliburton attorney

Donald Godwin asked.
"No," Gagliano responded.
The trial, which has entered its sixth week, is designed to determine what caused the blowout of BP's Macondo well and assign fault to the companies involved. BP will begin presenting its defense once Halliburton rests its case, possibly later this week.
Gagliano invoked his Fifth Amendment right against self-incrimination at his 2011 deposition but later agreed to testify at trial. He previously had been interviewed by a congressional committee and testified in 2010 before a government panel probing the disaster. BP had argued that Gagliano's late change of heart would give Halliburton an unfair strategic advantage, but a judge permitted Gagliano to testify.
Gagliano said BP had the ultimate responsibility for deciding how the cement job would be performed and didn't always follow his recommendations.
For instance, Gagliano had recommended the use of 21 centralizers, which are devices designed to ensure the casing is running down the center of the well bore. BP, however, decided to use only six centralizers for the cement job.
Gagliano said his models showed that using only six centralizers indicated "severe gas flow potential." A report that BP issued for its investigation of the blowout concluded that using six centralizers instead of 21 likely wasn't a factor in the cement job's failure.
But plaintiffs' attorneys have said the extra centralizers were intended to reduce the risk of a blowout. Using fewer centralizers, they argued, allowed BP to save time and money on a project that was behind schedule and millions of dollars over budget.
Plaintiffs' attorney also have accused Halliburton of using leftover cement on the Macondo well that contained a destabilizing additive in an effort to save time and money.
Paul Sterbcow, a plaintiffs' attorney who cross-examined Gagliano, pressed him to explain why he used a defoamer in a foam cement when Halliburton's own policies said the additive shouldn't be used under that circumstance.
"I had no issues with the design I had," he responded.
Gagliano said he used his best engineering judgment and, even in hindsight, wouldn't have changed anything about his design.
"While there were agreements and disagreements, do you believe that the two groups, Halliburton and BP, tried to work together to come up with a design of the cement slurry that was going to work in that well?" Godwin asked.
"Yes," Gagliano said.
U.S. District Judge Carl Barbier is hearing testimony without a jury for the first phase of the trial, which is expected to last several more weeks. The judge also plans to hold a second phase designed to determine how much oil spilled into the Gulf and examine BP's efforts to stop the gusher.
Barring a settlement, Barbier could decide how much more money BP and its contractors, including rig owner Transocean Ltd., should pay for their roles in the blowout that led to the nation's worst offshore oil spill.
At the start of Tuesday's proceedings, Barbier said attorneys won't deliver any closing arguments at the end of the trial's first phase. Instead, the parties will submit written briefs outlining their views on the evidence.