Oil Marketing Companies gets new members

They are Kings Energy, Tel Energy Limited, Rich Oil Company Limited, Ready Oil Limited, Shelleyco Petroleum Limited, Petro Afrique Ghana Limited, EV Oil Company Limited and Joekona Company Limited.

http://www.spyghana.com/oil-marketing-companies-gets-new-members/

Mr Kwaku Agyemang-Duah, AOMCs Industrial Coordinator, said the Board of Governors of the Association had the mandate and could on reasonable grounds decide that a member’s continued membership was not in the Association’s interest or is undesirable and the member shall consequently cease to be a member.

At an induction ceremony in Accra on Saturday, Mr Agyemang-Duah explained that the Association recognized and sought to promote amongst its member responsible, accountable and legitimate OMC to be efficient and effective to contribute to the welfare of society.

The AOMCs Industrial Coordinator said the Association was concerned with creating balance economic and social goals, while encouraging efficient use of resources and accountability in business practices.

Mr Agyemang-Duah said the association would continue to enforce strict compliance with all the laws of the country, anti-trust legislation of Ghana, non engagement in product dumping and adulteration practices and quality standards and responsibility to customers.

He urged members to ensure transparency and accountability, as well as maintaining a high degree of social responsibility, high safety, health and environmental standards.

“You must adhere to fair competition without conflict of interest, no engagement in bribery and corruption,” he said.

Mr. Emmanuel Abledu AOMCs Board Chairman, said the Association would continue to promote the interests of its members and bodies engaged as marketers of petroleum products and will oppose actions that might adversely affect the petroleum industry in the country.

He said “as a Board we will continue to create enabling platform for co-operation with Government, Ministries and Regulators on all matters relating to the petroleum industry”.

Each of the new members were presented the AOMCs’ code of conduct, regulation and certificate of membership Other AOMCs members are: Ghana Oil Company Limited; Agapet Oil Company Limited; Naagamni Oil Company; Allied Oil; Obiba J. K.; Anasset (GAS); Oando Ghana Limited; AP Oil & Gas Company; Pacific Oil; Bano Oil; Petrobay Oil; Benab Oil; Quantum Petroleum Company Limited; and Capstone Oil Company Limited.

The rest are: Crown Petroleum Ghana Limited; Champion Oil Company Limited; Dukes Petroleum Company Limited; SO Energy Ghana Limited; Excel Oil Limited; Sonnidom Energy Limited; Sky Petroleum Company Limited; Engen Ghana Limited; Star Oil Company Limited; and Fraga Oil Company.

Strategic Energies; Frimps Oil Company Limited; Superior Oil Company Limited; Galaxy Oil Company Limited; Grace Petroleum; Top Oil Company; Total Petroleum Company; Glory Oil; Trade Cross Limited (GAS); and Glasark Oil Company; Trinity Oil (GAS) and Glee Oil Company Limited.

UBI Petroleum Ghana; Havilah Oil Company; Union Oil; Unity Oil Company; Kaysens Oil Marketing Company; Universal Oil Company; Kings Energy Limited; Virgin Petroleum Limited (GAS); Lucky Oil; Venus Oil; Modex Oil; VIVO Energy; Manbah Gas Company (GAS); West African Petroleum; Merchant Oil Ghana; ZEN Petroleum and NASONA Oil Company Limited.

GNA

Oil Slumps to Five-Year Low Amid Concern Funds May Start Selling

http://www.bloomberg.com/news/2014-12-07/oil-extends-drop-from-five-year-low-as-u-s-drill-rigs-increase.html

By Rupert Rowling

Brent crude slumped to a five-year low amid concern that hedge funds and other money managers bet too much on rising prices. West Texas Intermediate also fell.

Futures dropped as much as 3.3 percent in London and 2.6 percent in New York. Net-long positions on Brent rose to the highest in four months in the week to Dec. 2, according to data from the ICE Futures Europe exchange, while bullish bets on WTI climbed the most in 20 months. Brent declined 9.9 percent in the period while WTI slumped 9.7 percent.

“The near-term risk is for additional long-liquidation,” Ole Hansen, head of commodity strategy at Saxo Bank A/S, said by e-mail. “The belief is spreading that we could hit $60 or even lower before this stabilizes.”

Oil Prices

Oil is trading in a bear market as the U.S. pumps at the fastest rate in more than three decades and global demand growth slows. Explorers in the U.S. increased the number of operating rigs last week, defying predictions of a drilling slowdown as price plunge, data from Baker Hughes Inc. show.

Brent for January settlement declined as much as $2.30 to $66.77 a barrel on the London-based ICE Futures Europe exchange, the lowest since Oct. 7, 2009. It declined $1.84 to $67.23 at 1:38 p.m. local time. The European benchmark crude traded at a premium of $2.65 to WTI.

WTI for January delivery dropped as much as $1.74 to $64.10 a barrel in electronic trading on the New York Mercantile Exchange. It slid 97 cents to $65.84 on Dec. 5, the lowest close since July 2009. The volume of all futures traded was about 3 percent above the 100-day average for the time of day. Prices decreased 34 percent this year.

WTI Slide

Money managers increased bullish bets on Brent crude by 31,303 contracts to 97,276 lots in the week to Dec. 2, the highest since Aug. 5, ICE data show. Speculators boosted net-long positions on WTI by 14 percent to 184,374 contracts in the same period, data from the U.S. Commodity Futures Trading Commission show. The figures are for futures and options combined.

Brent crude slumped the most in more than three years on Nov. 27 when the Organization of Petroleum Exporting Countries left its output ceiling unchanged at its meeting in Vienna, resisting calls from Venezuela to curb production. Brent slumped 18 percent last month, a fifth straight decline.

Saudi Arabia led OPEC’s decision to maintain output at the group’s meeting in Vienna, citing the threat from U.S. shale, Iranian Oil Minister Bijan Namdar Zanganeh said on Nov. 28. The group pumped 30.56 million barrels a day in November, exceeding its quota of 30 million for a sixth straight month, according to estimates compiled by Bloomberg.

Photographer: Eddie Seal/Bloomberg

Orion Drilling Co.'s Perseus drilling rig near Encinal in Webb County, Texas. U.S. oil production accelerated to 9.08 million barrels a day through Nov. 28, according to data from the Energy Information Administration data. Close

Orion Drilling Co.'s Perseus drilling rig near Encinal in Webb County, Texas. U.S. oil... Read More

Orion Drilling Co.'s Perseus drilling rig near Encinal in Webb County, Texas. U.S. oil production accelerated to 9.08 million barrels a day through Nov. 28, according to data from the Energy Information Administration data.

The surplus in the market will peak in the second quarter of next year after OPEC refrained from tackling an oversupply, Morgan Stanley analyst Adam Longson said in Dec. 5 report

U.S. Rigs

The number of U.S. rigs in operation rose to 1,575 through Dec. 5, the first gain in three weeks, according to Baker Hughes, a Houston-based field services company. The nation’s oil boom has been driven by a combination of horizontal drilling and hydraulic fracturing, which has unlocked supplies from shale formations including the Eagle Ford in Texas and the Bakken in North Dakota.

U.S. oil production accelerated to 9.08 million barrels a day through Nov. 28, according to data from the Energy Information Administration data. That’s the fastest rate in weekly records that started in January 1983.

To contact the reporter on this story: Rupert Rowling in London at rrowling@bloomberg.net

To contact the editors responsible for this story: Alaric Nightingale at anightingal1@bloomberg.net Rachel Graham

Ghana earned over 847 million dollars from oil export

http://www.spyghana.com/ghanas-oil-gas-regulations-clumsy/

http://www.businessghana.com/portal/news/index.php?op=getNews&id=202038

Ghana earned a total of 846,767, 184 million dollars from petroleum export for 2013.

This brings the cumulative earnings of the country from the petroleum export since 2011 to 1.833 billion dollars.

Ghana's earnings from the petroleum export is shared between the Ghana National Petroleum Corporation and the Ghana Petroleum Fund, while and the rest is used to support the budget.

The amount used to support the budget is used to support agricultural modernization, roads and infrastructure development, payment of loans and interest on loans contracted for the energy sector, and capacity-building for the energy sector.

These disclosures were made by Major Ablor Quarcoo, Chairman of the Public Interest and Accountability Committee (PIAC), at the comiittee's public meeting on the management of the petroleum revenue of the country in Koforidua.

The meeting, the fifth regional meeting of the committee, was to inform the people in the Eastern Region about the amount that the country earned from its petroleum exploitation, and how it was used.

The committee is made of nominees of 13 professional associations and independent institutions, including the Ghana Journalists Association, the Trade Union Congress, Institute of Charted Accountants, Ghana Bar Association, National House of Chiefs, Ghana Queen mother Association, the Christian Groups, the Moslem Group and others established by law to monitor the use of the petroleum revenue of the country by the government on behalf of the people of Ghana.

Mr Yaw Owusu Addo, a member of the committee, uged Ghanaians to show interest in the work of the committee, and support it to help the country to get things right from the start, because the nation's revenue would grow to become bigger, and if not well managed, it could lead to confusion and war, as is being experienced in other sister African countries.

He said the current revenue is from the exploitation of just one well, out of the 24 wells that had been discovered from Axim to Keta.

Mr Owusu-Addo said, all being well, next year, the country would start the exploitation of a second oil well.

Mr Kwame Jantuah, a member of the committee, called for the building of more human resources capacity for the oil and gas industry, because research had proved that, about 75 percent of the land mass of the country is a potential future oil mines.

He said the current position of the country calls for effective land use planning.

In a speech read on his behalf, Mr Antwi-Boasiako Sekyere, Eastern Regional Minister, called on the business community in the region to take active interest in the recently passed Local Content Legislative Instrument, to take advantage of the opportunities available for Ghanaians in the oil and gas industry.

The New Juaben Municipal Chief Executive, Dr Kweku Owusu Acheampong, expressed his appreciation of the meeting, because he said, often , the discussions on the air waves on the earnings of the country from the oil and gas and its usage are not based on facts and the wrong messages are often put up to incite the citizenry against duty bearers.      

Markets - Is floating storage feasible?

http://www.tankeroperator.com/ViewNews.aspx?NewsID=6210

Floating storage is not economically feasible based on the current contangos in Brent and West Texas Intermediate (WTI), a leading US consultancy said.

       

However, it may occur if one-year VLCC timecharter rates remain at current levels and Brent strengthens, which could happen as a result of perceived future demand growth, or supply constraints.

But, it is unlikely that the WTI contango will support floating storage, due to the isolationist nature of the US crude oil supply market, McQuilling Services said in a report released this week.

McQuilling took a look at the situation today following its last note published in September, when both crude oil benchmarks stood at much higher levels.

Following the collapse of the global financial system in 2008, a super-contango materialised on both the Brent and WTI forward curves. Bullish sentiment developed as the price bottom was established and the contango steepened. Both onshore and offshore storage plays were profitable during 2009, as the depth of the curve left plenty of profit potential.

During September, 2014, the Brent curve had moved into contango producing a flurry of speculation about the formation’s bullish effect, which led crude oil stakeholders to scrutinise the market for storage opportunities. However, since then, both Brent and WTI have been in steep decline.

The September 2014 contango did not provide enough future premiums to hedge the exposure at a profit, unlike in 2009 when the forward curve was steep enough to cover associated storage and carrying costs. Another consideration was that the September 2014 contango formed towards the top of a multi-year price range amid a period of oversupply and decreasing demand.

As global crude oil production outpaced demand, crude oil surpluses amassed and Brent and WTI prices fell. An unhedged storage play implemented in September would have yielded extremely poor results.

Both Brent and WTI have continued to weaken since September, as a result of the global oversupply of crude oil. On 27^th November, 2014, OPEC decided to maintain its production ceiling for 2015 forcing Brent and WTI to the lowest price levels since July 2009.

Currently, neither Brent nor WTI are showing enough of a future premium to front month prices to justify implementing a floating storage play, assuming the average blended cost per VLCC on a one-year timecharter at $31,500 per day. The cost of carry per barrel per month utilising a one-year timecharter amounts to $0.58 per barrel/month.

Even though Brent provides a steeper premium to the front month than WTI, the economics still do not justify floating storage plays. At $0.58 per barrel/month, floating storage is in profit in April and August, 2015. However, there is likely not enough profit available to get into the arbitrage.

WTI has been trading at a sharp discount to Brent this year because of increased North American production and decreasing foreign imports. Less US reliance on foreign crudes has created a price polarity between the two benchmarks.

McQuilling has monitored the Brent/WTI spread since the beginning of the price decline in July and has identified a strong correlation between falling prices and a tightening Brent/WTI benchmark spread. From a high near $11 in July, the spread traded down to $3.11 on 11^th November, 2014. Regression analysis on the price data yielded an 80% correlation between falling prices and a tightening spread.

It is likely that Brent forward premiums will increase at a faster rate than WTI futures, which may yield the potential for storage plays.

The relative price level at which these current contangos exist does fit the criteria for considering storage plays, McQuilling said. http://www.tankeroperator.com/ViewNews.aspx?NewsID=6210

Gas Under $2 a Gallon as Gas Stations Launch Price Wars

Long lines formed after the OnCue gas station in Oklahoma City dropped its price to $1.99 a gallon. (@keatonfox/Twitter)

http://time.com/money/3618320/cheap-gas-price-wars/

Gas Prices Will Soon Drop Below $2 Per Gallon

Less than a week ago, gas price analysts were forecasting that gas stations in some part(s) of the country would probably drop prices below $2 per gallon sometime in the near future—most likely “by Christmas.” Turns out it didn’t take nearly that long to dip under the $2 mark.

Less than one month after the national average dropped below $3 per gallon, a gas station in Oklahoma City apparently became the first in the country to plunge beneath $2. It happened sometime on Wednesday, and as Bloomberg News reported, within a few hours several other gas stations in the Oklahoma City area had engaged in a price war, with per-gallon costs falling from $2.11, to $2.03, to $1.99, to $1.98, and at least one reaching $1.95. As of Thursday morning, drivers in the Oklahoma City area are reporting four gas stations where a gallon of regular starts under $2, according to GasBuddy.

This doesn’t mean that all drivers in Oklahoma, or even in the capital city area, can expect to see such low gas prices. According to AAA, the statewide average in Oklahoma is $2.51, and GasBuddy estimates the average in greater Oklahoma City is around $2.42. It’s just that some stations are being particularly aggressive on pricing in order to attract drivers. They’re not making much if any money on sub-$2 gas, but the stations hope that customers grab coffee, snacks, and other purchases while they’re filling up.

Meanwhile, the latest press release from AAA notes that gas prices nationally have dropped 69 days in a row and have fallen nearly $1 from the 2014 high in late April, when the average was $3.70.

Based on the way things are going, prices at the pump should only get cheaper, indefinitely. “The holiday joy should continue as gas prices drop even further in the weeks ahead,” AAA spokesperson Avery Ash noted in the release. “We could see prices drop to the lowest levels since the Great Recession if the cost of crude oil continues to set multi-year lows.”

Another likely prediction is that Oklahoma City won’t be the only metro area where drivers will enjoy the financial benefits of gas price wars. Look for similar pricing competitions at a gas station near you, coming soon.

Crude oil price plunge sinks Canadian railway stocks

 

http://www.theglobeandmail.com/report-on-business/crude-oil-price-plunge-sinks-canadian-railway-stocks/article21892784/

The plunge in oil prices is expected to dampen the rise in moving crude by rail, a fast-growing segment that sprang up amid a shortage of pipeline capacity and $100 oil.

As oil touched $67.19 (U.S.) a barrel Tuesday, the economics of moving oil to market by train become less appealing to producers, and railways face slower growth in the lucrative segment.

Share prices for Canadian Pacific Railway Ltd. and Canadian National Railway Co. have fallen by 8 per cent and 7 per cent, respectively, over the past five trading days as investors weighed the prospect that rail companies would see a decline in oil volumes as producers either scale back production or balk at paying the $15 to $20 premium to ship a barrel of oil by rail.

Walter Spracklin, a Royal Bank of Canada equities analyst, said CP is more exposed to any drop in oil prices than rival CN, given the Calgary-based company’s focus on the high-cost Bakken shale region of North Dakota, Montana and Saskatchewan.

With production costs estimated to be just under $60 a barrel, Bakken-oil output could slow if low prices persist.

According to the North Dakota Pipeline Authority, 59 per cent of the state’s oil production moved by rail in September, compared with 35 per cent by pipeline.

CP’s $354-million in crude-by-rail revenue for the first three quarters of 2014 accounts for just 7 per cent of total sales, but represents a 33-per-cent rise over the same period a year earlier. CP has said it expects to double the number of oil tank cars it hauls to about 200,000 by next year amid a shortage of pipeline capacity.

Railways say they can help oil producers fetch better prices for their product by reaching more markets than pipelines. And as approvals for major pipeline projects, including TransCanada Corp.’s Keystone XL, remain stuck in political limbo, rail companies have picked up some of the excess production.

CN does not break out its oil revenue, which is believed to be a smaller share of the total than that of CP. Crude shipments are lumped in with chemicals and other petroleum products, to account for 20 per cent of sales. Mr. Spracklin said CN has an edge over CP because the Montreal-based carrier is focused on Western Canadian crude, a heavy variety whose producers are less affected by the plunge due to often lower production costs.

According to RBC’s yearly survey of rail shippers, overall freight volumes are expected to rise by up to 5 per cent in 2015, a sign of confidence in the economy even as oil prices plunge. The survey also found more than half of the shippers expected rail rates to increase by 4 per cent to 6 per cent next year, an increase that bodes well for the rail companies as they try to boost revenues and hit higher targets.

Fadi Chamoun, an equities analyst with Bank of Montreal, said he believes Western Canada’s production of crude, which has been the main source of growth for railways, will not slow as prices drop. He expects railways will move the expanded output over the next two years, and that pipeline capacity will remain limited “until 2018 or later.”

But if drillers in the Bakken region reduce production, Mr. Chamoun said railways should expect a decline in the booming business of hauling frac sand, which is injected into shale rock with fluid to release petroleum. It takes about 100 rail cars of frac sand to drill one well, said Mr. Chamoun, who sees an upside to the reduced demand from the energy sector: reducing the congestion that has choked much of the North American rail network in the past year.

Plummeting Crude Oil Prices Will Prove A Test For Deepwater And Unconventional Plays

http://www.forbes.com/sites/greatspeculations/2014/12/03/plummeting-crude-oil-prices-will-prove-a-test-for-deepwater-and-unconventional-plays/

Crude oil prices extended their losses last week, falling to their lowest levels in nearly 5 years after the Organization of Petroleum Exporting Countries elected to keep its output target unchanged, even after one of the steepest slumps in oil prices following the global recession. NYMEX crude prices fell to about $65 per barrel, while Brent crude breached the $70 per barrel mark. There is a possibility that prices could fall further in the near term since it seems likely that OPEC, which accounts for about a third of global crude output, is looking to maintain global market share while waiting for higher-cost producers like the U.S. shale industry to scale back production.

There have been concerns on the demand side as well, given the relatively weak macroeconomic backdrop. According to the International Energy Agency, growth in global oil demand is set to hit a 5 year low this year. While the plunging prices have had broad repercussions across the energy industry, the oilfield services sector has been particularly badly hit, given that the sector’s revenues are tied to the upstream capital spending of oil and gas companies. For instance, the PHLX Oilfield Services index has declined by about 26% over the last six months. Oilfield service majors Schlumberger and Halliburton could see their business come under pressure, given that they have significant exposure to services for expensive and potentially higher hurdle rate plays such as deepwater and unconventionals. These could be scaled back as oil and gas companies see cash flows from their upstream operations decline.

See Our Full Analysis For Oilfield Service Companies Halliburton| Schlumberger |Baker Hughes

Shale and Tight Oil

Services directed towards unconventional wells could face the most significant near-term impact. Shale and tight oil wells have shorter production life spans and their flow rates tend to peak off quickly, and operators need to constantly drill new wells in order to maintain production. This makes shale activity more vulnerable to oil price declines as producers can quickly adjust their planned investments in new wells and scale back drilling activity. Shale wells also have higher production costs, on average, compared to conventional wells, making their output less viable as prices fall. While breakeven prices vary widely depending on the shale basin, the average breakeven price is estimated to be around $75 per barrel in the United States, making a large portion of unconventional oil production non-viableat current prices. Additionally, the situation could be compounded by the fact that many small independent oil companies have borrowed significantly to underwrite their drilling operations, which could potentially lead to a significant decline in the horizontal rig count.

Deepwater Plays and Mature Wells 

Deepwater plays are important for oilfield services companies, given that they have a higher service intensity compared to shallow water and onshore wells – requiring more operations to drill, develop and produce hydrocarbons. Although the output from deepwater wells could be viable at current oil prices- since deepwater production costs per barrel can be as little as half that of shale oil – these projects have significantly higher initial investments and longer planning cycles compared to other oil plays. For instance, contract lives for deepwater services typically stand at about 8 years and deepwater wells can cost as much as $300 million each. The long cash conversion cycles and risk of these projects could make oil and gas companies more circumspect about committing to new projects as long as crude oil prices remain under pressure. Services directed towards mature oil fields could also face some pressure. Although these projects are likely to have a relatively lower risk profile and long time horizons when compared to shale projects, they still have relatively high production costs.