OIL FUTURES: Crude Mixed on Stocks, Currency; Fresh Cues Ahead

http://online.wsj.com/article/BT-CO-20120815-701691.html

By Surabhi Sahu
Crude-oil futures were mixed in Asian trading Wednesday, with Brent crude edging upward in tandem with currency movements and the U.S. benchmark weighed by an industry group's estimate of rising U.S. crude stockpiles last week.

Meanwhile U.S. Defense Secretary Leon Panetta's remarks late Tuesday to the effect that Israel hasn't decided to strike Iran and there is still time to negotiate a solution to the nuclear showdown with the Islamic Republic narrowed oil's risk premium.

The euro was trading at $1.2341 at 0640 GMT compared with $1.2332 at 0625 GMT. Dollar-denominated commodities such as oil tend to rise when the greenback weakens, making them more affordable to holders of other currencies.

On the New York Mercantile Exchange, light, sweet crude futures for delivery in September traded at $93.39 a barrel at 0642 GMT, down $0.04 in the Globex electronic session. September Brent crude on London's ICE Futures exchange rose $0.13 to $114.16 a barrel.

A Singapore-based trader put immediate support for Nymex crude at $91 a barrel on the back of the bearish cues.

The American Petroleum Institute said Tuesday that crude inventories rose by 2.784 million barrels in the week ended Aug. 10. Analysts surveyed by Dow Jones Newswires had predicted a 1.9 million-barrel drawdown.

The more closely watched inventory survey from the U.S. Energy Information Administration is due at 1430 GMT. Any significant departure from API's estimate will likely prompt investors to adjust their positions accordingly.

Meanwhile, macroeconomic data are providing generally bullish cues, with positive sentiment unlikely to be significantly disturbed by an array of U.S. data releases this week, Jim Ritterbusch at Ritterbusch and Associates said late Tuesday.

Any favorable numbers on the heels of Tuesday's better-than-expected French and German GDP figures would bode well for petroleum demand, Mr. Ritterbusch said.

Germany's gross domestic product grew by 0.3% in April-June, compared with expectations of a 0.2% growth, while France reported flat growth for a third quarter in a row. A Bank of France business survey last week forecast a 0.1% GDP contraction in the third quarter.

Investors will be taking further cues from the U.S. Consumer Price Index for July and housing starts data at 1230 GMT and on Thursday, respectively, to assess the health of the world's largest economy, a Tokyo-based trader said.
Nymex reformulated gasoline blendstock for September--the benchmark gasoline contract--rose 99 points to $3.0113 a gallon, while September heating oil traded at $3.0342, 4 points lower.
ICE gasoil for September changed hands at $960.25 a metric ton, up $2.75 from Tuesday's settlement.

Write to Surabhi Sahu at surabhi.sahu@dowjones.com

Nigeria: Much Ado About Petroleum Industry Bill (PIB)

http://allafrica.com/stories/201208150184.html

editorial

Expected emotional outbursts have greeted the submission of the Petroleum Industry Bill to the National Assembly. Some oil companies which had bought into the proposed oil industry reforms two years ago are now threatening to sue the federal government over some provisions of the Bill. The oil companies are concerned that the bill will reduce their profit and make the regulatory environment tighter. The new bill seeks to provide separate regulators for the upstream, midstream and downstream sectors.

It replaces the Joint Venture (JV) agreements between the Nigerian National Petroleum Corporation (NNPC) and the oil producing companies with Incorporated Joint Ventures (IJVs) which are designed as corporate entities capable of raising loans commercially and repaying them from income generated. Therefore problems associated with NNPC's inability to meet up with its cash-call obligations will be a thing of the past. One area that really riles the oil companies is the introduction of higher royalties and increased government share of the takings. A 20 per cent royalty currently applies to onshore operations and 18.5 per cent for prospects in swamp/shallow waters (1-100 metres). The rates are graduated depending on water depth. But the new PIB introduces a progressive royalty linked to production rate and oil price.

The tax regime governing oil exploration has also been changed under the new law but the 10 per cent withholding tax on dividends and education tax of 2 per cent on revenue existing under the current fiscal regime is retained. An objective assessment of the new law shows that government would be raking in an average of 73 per cent to 82 per cent under PIB.

The existing arrangement is more advantageous to the oil companies. However the business environment in Nigeria still compares favorably with countries of similar geological features. In the United Arab Emirates for example, government's share is about 94 per cent on the average; in Libya it is about 93 per cent. While we recommend that the National Assembly demonstrate unalloyed patriotism in considering the PIB, we urge them to also take another look at the provisions in the bill that would virtually make a Czar of the petroleum minister. Also, since the bill creates a petroleum host communities fund with 10 per cent of oil revenue accruing to the fund, what becomes of the Niger Delta Development Commission (NDDC)?

The PIB also provides that if any installation is damaged in the land belonging to one of the host communities, that the host community will forfeit its share in the host community fund. Who determines if a pipeline mishap is a case of force majeure? Amazingly, there is nothing definitive in the PIB to stop gas flaring which has been going on since 1956. That is a major omission which the National Assembly must redress before passing the bill into law. The Nigerian government must be firmly on the side of its people.

Oando Makes OML 56 Discovery

http://www.petroleumafrica.com/en/newsarticle.php?NewsID=14069

Nigerian independent Oando Energy Resources Inc. (OER)saw positive initial results from drilling on OML 56. The company said that the EB-4 well, spud in March, was drilled to a total depth of 12,120 ft measured depth to appraise the updip portion of the structure.

During drilling eight new hydrocarbon bearing sands over an interval from 9,667 ft to 11,182 ft were encountered. Each of the eight had an individual reservoir thickness of between 21ft and 110 ft. These sands were in addition to the producing sand target previously encountered in the first well (EB-1).

"We continue to successfully advance our appraisal program in the Ebendo Marginal Field," said Olapade Durotoye, CEO of OER. "Next steps include further evaluating this positive data and further delineation of the discoveries to assess their size and productive capacity, which we expect to begin in Q4 2012."

The deepest of the newly appraised sands, contained in Level XXa, was perforated and tested. The well flowed over 950 bpd of 49° API oil during a well flow test on a 24/64" adjustable choke. Further well tests will be conducted over the next few days on the next sand (Level XIX). Level XIX was the primary target for the well, as it was the only identified producing sand from the single producing well in the field. These test results may not necessarily be indicative of the well's long-term performance or of ultimate recovery.

The company intends to complete the EB-4 well as a dual string producer prior to commencing drilling on the EB-5 well, which is intended to appraise the shallow hydrocarbon bearing sands encountered in EB-4.

OER has a 42.7 % non-operated interest in the Ebendo Marginal field.

2013 Worldscale flat rates to increase

http://www.tankeroperator.com/news/todisplaynews.asp?NewsID=3690

Current bunker prices suggest that next year’s Worldscale flat rates will increase by around 9-10% on long haul voyages and by 6-7% on short haul routes, a leading broking house said.
Since 2009, we have seen large scale fluctuations in Worldscale flat rates. On long haul voyages, flat rates have increased over the past two years by around 20% per annum, said Gibson Research in its latest weekly report. Even bigger changes were seen in 2009 and 2010, when flat rates on long haul routes first jumped by nearly 40% in 2009, but only to fall by around 25% during the following year. These sizeable fluctuations have been driven by the extreme volatility in oil prices and hence changes in bunker prices, Gibson said. Most notable swings were seen in 2008, when international bunker prices first surged to over $700 per tonne in mid-2008, but then fell to less than $250 per tonne at the end of the year. However, since early 2009, bunker prices have been on an upward path. By September last year, prices had nearly trippled from levels seen in late 2008/early 2009 (hence the tanker industry witnessed the large scale increases in Worldscale flat rates in 2011 and 2012). The question now is what is going to happen to flat rates next year? Are we going to see a similar magnitude of changes once again? As the bunker element that goes into the flat rate formula is based on prices between October and September each year, we already have nearly 10 months of data that will go into 2013 calculations, Gibson said. Earlier this year, bunker prices increased further, jumping close to $750 per tonne in March 2012 (above the peak level seen back in mid-2008) amid oil supply concerns and geopolitical tensions, primarily on the back of the Iranian developments. On its own, this may suggest that we would see a similar rise in Worldscale flat rates next year, Gibson said. However, bunker prices fell in the second quarter to below $660 per tonne in June, as the market concerns shifted towards the increasing weakness in the global economy. More recently there has been a rebound in oil prices and cumulatively over the past 10 months bunker prices have averaged 14% higher than during the corresponding period last year. Furthermore, if we assume that bunker prices will remain around current levels in August and September, this suggests that in 2013 Worldscale flat rates will increase by around 9-10% on long haul voyages and by 6-7% on short haul routes, the broker forecast.This is a smaller increase in flat rates seen during the previous two years. Nonetheless, it is still significant and the general trend in nominal rates remains the same – upward, Gibson concluded.

New York Fracking Opponents Put Pressure On Governor Cuomo

http://www.huffingtonpost.com/2012/08/01/new-york-fracking-opponents_n_1730217.html

ALBANY, N.Y. (AP) — Opponents of shale gas drilling using high-volume hydraulic fracturing, or "fracking," are asking Gov. Andrew Cuomo's top campaign contributors to pressure the governor to ban the practice everywhere in New York.

New York Residents Against Drilling and several other groups sent a letter Wednesday to Cuomo's top 1,000 individual donors. The letter says Cuomo's reported plan to permit fracking in a limited area would "treat Southern Tier residents as second class citizens and unfairly subject them to potentially irreparable hazards."

The signers include Binghamton Mayor Matthew Ryan. They're asking the donors to tell Cuomo to ban fracking until issues including disposal of drilling wastewater and potential health impacts are fully addressed.

The Department of Environmental Conservation is expected to complete a massive environmental review and new regulations within months.

Buckeye buys liquid storage terminal in New York Harbor

http://tankstoragemag.com/industry_news.php?item_id=5216

Buckeye Partners has completed the acquisition of Chevron's New Jersey-based marine terminal.

Buckeye bought the facility, which stores liquid petroleum products, for $260 million (€212 million) in cash. Chevron will continue to be a key customer at the terminal under multi-year storage and throughput commitments.

With more than 4 million barrels of storage capacity, the terminal raises Buckeye's total liquid petroleum storage capacity to over 68 million barrels (6%). However, there is room for future expansion projects at the site as it has 'significant underdeveloped land available'.

The terminal, which features four docks and can be accessed via pipeline, rail or truck, is located in New York Harbor on approximately 250 acres of land. This is an advantageous acquisition for Buckeye as its Linden complex is based just six miles away.

'We expect its [the facility] integration into our network to proceed quickly... and we intend to initiate our planned commercialisation activities immediately,' says Buckeye Partners' president and CEO Clark Smith.

Smith also expects the terminal will 'provide Buckeye with security and diversity of product supply by directly linking our domestic pipeline and terminal network to an owned and operated marine facility through a new 16" pipeline to be built to our Linden complex'.

He adds: 'This will provide Buckeye with direct access to international and US Gulf Coast petroleum products imports. The facility also can serve as a link between our domestic assets and our BORCO facility in the Bahamas.'

Build up to WW3 - US will Sanction CHINA for BUYING IRAN OIL!.