TransCanada to sell two U.S. pipeline stakes to raise funds

http://houstonenergyinsider.com/transcanada-to-sell-two-u-s-pipeline-stakes-to-raise-funds/

Feb 27 TransCanada Corp has offered to sell stakes in two U.S. natural gas pipelines to fund other projects including its recently purchased Columbia natural gas network, the Calgary-based company said on Monday.

The move comes after TransCanada, Canada’s No. 2 pipeline operator, sold other assets and offered new shares late last year to help fund its $10.3-billion acquisition of the Columbia Pipeline Group, a deal that eased concerns over its outlook, which had been hindered by challenges on crude pipelines.

TransCanada said it would sell its 49.3 percent stake in the Iroquois system and its remaining 11.8 percent stake in the Portland system, both serving the U.S. Northeast, to TC PipeLines LP, a partnership in which it holds a 27-percent stake.

Financial terms were not disclosed, but a 25.9 percent stake in Iroquois system sold for $286.5 million in 2015, and TransCanada last year sold a 49.9 percent stake in the Portland pipeline to TC PipeLines for $223 million.

“This offer demonstrates the meaningful role that TC PipeLines, LP can fulfill in funding a portion of our C$23 billion near-term capital program,” TransCanada Chief Executive Russ Girling said in a statement.

According to TransCanada, its near-term projects also include the Nova Gas Transmission Ltd and Canadian Mainline natural gas systems, minor crude pipelines and power generation projects in Canada and gas pipelines in Mexico.

TransCanada’s outlook has been clouded by regulatory challenges to two proposed pipelines projects from Canada’s oil heartland of Alberta, Energy East to the East Coast and Keystone XL to the Gulf.

While the United States under President Donald Trump has been favorable toward Keystone XL, analysts have said it was unclear how quickly the pipeline could go ahead if approved.

TC PipeLines said the offer was subject to approval by its board of directors.

The Iroquois pipeline extends from the TransCanada Mainline system at the U.S. border near New York to markets in the U.S. Northeast. The Portland pipeline connects with the TransQuebec and Maritimes pipelines at the Canadian border and the Tennessee gas system near Boston.

Another Record Week for U.S. Oil Exports as Production Surges

 

http://houstonenergyinsider.com/another-record-week-for-u-s-oil-exports-as-production-surges/

Another week, another record for U.S. crude exports.

Producers and traders shipped out 1.21 MMbopd from the U.S. in the week that ended February 17, the most in Energy Information Administration data going back to 1993. Domestic output increased to 9 MMbopd last week, the fastest pace since April, while U.S. refiners used the least crude since October 2015.

Shale output has surged and tankers loaded in the Middle East during the last days of all-out production by OPEC nations arrived this month in the U.S., swelling stockpiles to a record. Prices for West Texas Intermediate crude have averaged $2.24/bbl below global marker Brent this year, making U.S. oil more attractive to refiners around the world.

Local refiners are using as much domestic crude as they can and the remaining incremental production is being exported, Gary Morgan, director for Clarksons Platou Shipping Services USA LLC’s analyst group, said by phone from Houston. “Going forward, most of the increasing production will be for exports. As output moves from 9 MMbpd to 9.3 million or 9.4 million, three-quarters of that increased output will be for export.”

For now, U.S. crude is looking especially attractive to buyers in Asia. WTI has averaged 22 cents below Dubai, a lower-quality grade that’s the benchmark for Asia, this year, based on front-month swaps data from broker PVM Oil Associates Ltd.. That compares to a $3.76 premium a year ago.

Most of the incremental volumes from last week were destined for the Far East, Court Smith, director of research with shipbrokers MJLF & Associates, said by instant message from Stamford, Connecticut. “The Far East will remain the main destination for U.S. crude exports in the short-term, assuming there are no big swings in price spreads.”

OPEC Reaches 98.5% Compliance for February

http://www.petroleumafrica.com/opec-reaches-98-5-compliance-for-february/

OPEC has met 98.5% of its total combined cuts from the 10 member countries participating. Members moved closer to full compliance in meeting their production cut agreement signed in December last year, as output in February fell from January levels to average 32.03 million bpd, according to the S&P Global Platts survey.

“A Saudi-led OPEC is showing the market it is serious in making the agreement stick. While it remains an open question whether OPEC will achieve its goal of drawing down stocks sufficiently to rebalance the market, OPEC is fulfilling its commitment, certainly in contrast to non-OPEC partners who are some ways from cutting down to their agreed levels,” said Herman Wang, OPEC Specialist, S&P Global Platts.

Under the agreement, OPEC pledged to cut 1.2 million bpd for six months and freeze production at around 32.5 million bpd, including Indonesia, which suspended its membership in November and is not included in the Platts survey estimates for 2017.  OPEC as a whole averaged 32.11 million bpd in January and February, according to the survey. Adding in Indonesia’s typical 730,000 bpd of production would take the producer group about 340,000 bpd above its ceiling.

There are also 11 non-OPEC countries that are participating in the production cuts. The non-OPEC countries, led by Russia, have agreed to dial back production by a combined total of 558,000 bpd.

Malabu Oil Scandal: $800m Transferred To Nigerian Banks Through JP Morgan In London

http://saharareporters.com/2017/03/05/malabu-oil-scandal-800m-transferred-nigerian-banks-through-jp-morgan-london

Prosecutors in Milan believe that $800m, the alleged proceeds of the controversial OPL 245 oil deal involving oil giants Shell and Eni and former Nigerian petroleum minister Dan Etete, was transferred to two Nigerian banks through J.P. Morgan in London.

Italian prosecutor Fabio de Pasquale, who has led a team investigating the scandalous oil deal for over two years, discovered that the transfer was made in two separate payments of $400m.

Over $400m was converted into cash while tens of millions was used to purchase a private jet and armored cars in the US, according to documents compiled by the prosecutors.

Mr. de Pasquale’s discovery came after carrying out raids of Eni’s offices in Italy and Shell’s headquarters in the Netherlands, which turned up thousands of documents and emails pertaining to the scandal. He subsequently requested that an Italian court charge ten individuals, five of whom are high-ranking Eni executives, implicated in the deal. The prosecutor also warned four Shell executives, including former MI6 employees Guy Colegate and John Copleston, that they could be charged to court.

According to Mr. de Pasquale, before working at Shell, Mr. Copleston served as the UK’s intelligence representative in Nigeria, while Mr. Colegate worked as a “business advisor” for the MI6 and was tasked with briefing the intelligence agency on the OPL 245 oil block deal.

It would be recalled that the oil-rich OPL 245 block in Nigeria was sold to Malabu Oil and Gas in 1998 by then petroleum minister Dan Etete, who, it was later revealed, owned a significant stake in the company.

In 2011, it was sold to Shell and Eni for $1.3b, which was paid to the Nigerian government so that no direct deal would be made with Malabu or Dan Etete, who was officially recognized as a criminal due to his past convictions of money laundering.

The Nigerian government then placed $1.1b in an account with J.P. Morgan in London and directed the bank to transfer the money to a Swiss bank account allegedly linked to Mr. Etete and Malabu. The transfer was rejected, however, due to Mr. Etete’s connection with the funds. A second attempt to transfer the sum to Mr. Etete was made through a Lebanese bank, which was also rejected.

J.P Morgan finally transferred $800m in two tranches to two separate Nigerian banks.

Italian prosecutors have accused Shell and Eni of knowing that the money paid to the Nigerian government would go to Dan Etete and Malabu oil, although the oil giants have denied these allegations.

Markets - VLCCs in declining rate levels

Some very quiet days were noted last week with VLCC tonnage building up in the MEG, leaving multiple choices for charterers. 

 

Inevitably, rates dropped sharply MEG/East, which also pulled WAfrica/East down accordingly, Fearnleys reported. 

VLCC earnings dipped below $20,000 per day, and only a sharp increase in volumes in all areas will avoid rates remaining under pressure, as the spring months advance. 

Suezmaxes in West Africa saw steady activity but most fixing was undertaken under the radar. There was an element of doubt as to the actual market direction. The position lists gradually began to tighten and as this week has progressed, we have seen sentiment building as owners sense charterers are facing a different scenario in the early third decade, Fearnleys said. 

Td20 earnings were closing in on $15,000 per day at WS85 levels. The Med and Black Sea market was more transparent over the past week with a steady feel. Enquiry for longer tonne/mile voyages going east picked up but didn’t prove enough to move rates on the standard cross-Med routes. 

Charterers are currently seeing owners trying to force rates up but patience will be the key to hold rates in check. 

North Sea and Baltic looked tighter for Aframaxes, and owners started to hold back and push for higher rates, which was mainly caused by a huge 71 crude cargoes quoting ex Baltic in March. 

In addition, several ice class vessels were repositioning to the Med and furthermore, there were a lot of East enquiry for fuel as the arb opened. In the Med and Black Sea the market was described as being in limbo. 

All the fundamentals for the market to firm up were present, as the Turkish Straits were frequently closed, Black Sea programme was quite busy and the tonnage list looked thinner. 

However, one factor outlined the difference between firm and soft, and that was oil company relets willing to fix at competitive rates. That being said, we do believe this market have the potential to firm in the near future as both Novo and CPC will be quite busy cargo wise, Fearnleys concluded.  

Meanwhile, VLCC rates on the AG/Japan route tumbled by nearly WS10 points within a day to WS60 on Tuesday of this week, after news of S-Oil placing ‘Australis’ on subs for an AG/Onsan run at WS54.75, loading 13^th-15th March basis 274,000 tonnes, broke, Ocean Freight Exchange (OFE) reported. 

Other charterers followed, with at least four older vessels fixed within the range of WS55-WS58 for an AG/East voyage. 

“We believe that VLCC rates will remain depressed in the short term, due to the upcoming refinery turnaround season in Asia, diminishing floating storage inventories that will free up more tonnage, as well as OPEC production cuts,” OFE said 

Upcoming Asian refinery maintenance over the next two months is unusually heavy and is expected to lower March cargo flows out of the AG, weighing on VLCC rates. At least 2 mill barrels per day of refining capacity East of Suez is expected to be offline in March, more than double that of last year. 

China’s state-owned refiners account for around 50% of overall capacity closures in Asia in March, which will reduce AG-loading cargo volumes, as they form the core of Saudi Aramco’s client base. 

The unwinding of storage plays has begun, as floating storage becomes less economically viable, due to the flattening Brent futures curve. According to Reuters, 12.1 mill barrels of crude (equivalent to six VLCCs) were released from floating storage in Malaysia, Singapore and Indonesia. 

The influx of tonnage will further push down freight rates. Moreover, some of the vessels previously chartered for floating storage are older units, which are typically available at discounted rates, OFE said.

The overall impact of OPEC’s production cuts (~1.2 mill barrels per day) is evident from the fall in VLCC fixtures from the AG, which were estimated to have dropped by 9% month-on-month to 145 in February. According to OPEC, compliance reached over 90% in January with Saudi Arabia shouldering the bulk of the agreed cuts, OFE concluded.

As mentioned elsewhere in this news roundup, Frontline is to buy two VLCC resales from Daewoo Shipbuilding & Marine Engineering (DSME) for $77.5 mill each. 

They are scheduled for delivery in September and October, 2017, respectively.

Elsewhere, Nordic American Tankers (NAT) took delivery of the newbuilding Suezmax ‘Nordic Space’ on 27^th February.

She is NAT’s second Suezmax newbuilding delivered by Sungdong Shipbuilding and Marine Engineering.

This brings NAT’s fleet up to 33 Suezmaxes, which includes three newbuildings to be delivered during the second half of 2018.

KNOT Offshore Partners (KNOP) has completed the acquisition of the ownership interests in the company that owns and operates the shuttle tanker ‘Tordis Knutsen’  for an aggregate purchase price of $147 mill less $137.5 mill of outstanding debt, plus about $21.1 mill for a receivable owed by Knutsen NYK to KNOT 24 and around $0.8 mill for certain capitalised fees related to the financing of the vessel. 

‘Tordis Knutsen’ is a 156,559 dwt shuttle tanker, built by Hyundai Heavy Industries and delivered in November, 2016. She is operating in Brazil under a five-year time charter with a subsidiary of Royal Dutch Shell, which will expire in the first quarter of 2022. The charterer has options to extend the charter for two further  five-year periods. 

Meanwhile, the only newbuilding reported recently was Central Mare’s declaration of an option to construct a second MR at Hyundai Vinashin for a reported $32.5 mill.

In another newbuilding sale, the ‘Gener8 Nestor’ was committed to unknown interests for $80 mill subject to the signing of a five year charter to Unipec. She is due for delivery this year from HIC Philippines.

The 2006-built LR1 ‘New York Star’ was believed committed to US-based Norstar Shipping for $14.5 mill.

In the charter market, brokers reported  that the 2004-built Suezmax ‘Valtamed’ was fixed to Petraco for six, option six months at $28,000 per day.

STI was said to have taken the LR2s ‘FPMC P Ideal’ and the ‘Densa Alligator’ for six months each at $14,000 and $14,500, respectively with the latter having an option for a further six months at $15,000 per day.

In the MR segment, ATC was thought to have fixed the 2013-built ‘Nave Orion’ for 12 months at $13,250 per day and Hpel was believed to have fixed the 2000-built ‘Prem Malta’ for 12 months at $12,750 per day.

 

http://www.tankeroperator.com/ViewNews.aspx?NewsID=8438 

Oil prices slip as rising U.S. supplies offset OPEC cuts

http://www.reuters.com/article/us-global-oil-idUSKBN166023?il=0

Oil prices slipped on Tuesday but kept trading in a tight range, as concerns about rising U.S. crude inventories ahead of data overshadowed OPEC production cuts.

U.S. crude stockpiles have risen for seven straight weeks. Forecasts for another weekly build, this time of 3.1 million barrels last week, fueled worries that demand growth may not be sufficient to soak up the global crude oil glut.

U.S. West Texas Intermediate crude futures settled down 4 cents, or 0.1 percent, at $54.01 a barrel and Brent crude fell 34 cents, or 0.6 percent, to $55.59 a barrel.

For the month, Brent was little changed, and WTI notched a monthly gain just above 2 percent.

U.S. gasoline futures settled down 1.35 percent at $1.5120 a gallon, also weighing down the petroleum complex.

Gasoline was under pressure on the final trading day for the March contract, the final month in which gasoline that complies with environmental standards for winter-grade fuel is offered. Abundant supplies of the fuel, which has different additives from those required in the summer, have weighed on prices.

The Organization of the Petroleum Exporting Countries has so far surprised the market by showing record compliance with oil-output curbs, and could improve in coming months as the biggest laggards - the United Arab Emirates and Iraq - pledge to catch up quickly with their targets.

While the Nov. 30 agreement to reduce production prompted oil prices to rise $10 a barrel, they have been trading in a narrow $3 range in recent weeks.

"Without full compliance by the OPEC cartel and non-OPEC producers, and signs that demand is picking up, we are positioned for a correction," said Gene McGillian, manager of market research at Tradition Energy in Stamford, Connecticut.

"There's a risk that some of the new longs will start to head for the exits, and that's where we could see a correction."

Still, he said, prices are likely to stay locked in their current band unless there are signs that the production cut agreement has failed, or that compliance is dropping.

U.S. stockpiles rose 2.5 million barrels in the week to Feb. 24, according to a report from trade group the American Petroleum Institute. Gasoline stockpiles rose unexpectedly and distillate stockpiles fell more than expected, the API said. Crude declined slightly on the report.

The official report from the U.S. Energy Information Administration is due at 10:30 a.m. EST on Wednesday.

OPEC agreed to curb output by about 1.2 million barrels per day (bpd) from Jan. 1, the first cut in eight years. Underlying the high compliance to the deal, Iraq trimmed exports of Kirkuk crude oil to help meet its output target.

Related Coverage

• Iran describes OPEC compliance with oil cuts as 'acceptable'

In addition, 11 non-OPEC oil producers have promised to cut output. Russia reduced production by 124,000 barrels per day this month from October levels, Interfax reported, citing a source familiar with the data.

Broadly, analysts and economists expect an average 2017 Brent price of 57.52 a barrel, according to a Reuters poll.

Oil industry and OPEC country sources told Reuters Saudi Arabia wanted crude prices to rise to $60 a barrel this year., hoping that would not spur new U.S. production.

But a report from consultancy Rystad Energy this month said the break-even price for U.S. shale oil producers fell last year to an average $35 per barrel.

The market shrugged off a report Tuesday afternoon that showed U.S. crude production had contracted in December. [EIA/PSM] The market has been looking to the weekly rig count report for a more timely picture of U.S. crude production.

(Additional reporting by Naveen Thukral in Singapore and Sabina Zawadzki in London; Editing by Marguerita Choy and David Gregorio)

OPEC members must lower costs to compete with shale: Nigeria oil minister

                                                                     

Nigerian Oil Minister Emmanuel Ibe Kachikwu speaks during an interview with Reuters in Abuja, Nigeria February 12, 2016. REUTERS/Afolabi Sotunde/File Photo

http://www.reuters.com/article/us-nigeria-oil-idUSKBN1683XX?il=0

Members of the Organization of the Petroleum Exporting Countries must lower production costs to compete better with shale producers, Nigeria's oil minister said on Wednesday.

Emmanuel Ibe Kachikwu, in an interview with CNBC Africa, also said he was confident that an output reduction agreement agreed in November would see oil prices hold.

Nigeria, which relies on crude sales for around two-thirds of government revenue, saw its economy shrink 1.5 percent in 2016 - the first full-year contraction in 25 years - largely due to lower oil receipts.

Eleven of OPEC's 13 members along with 11 non-OPEC countries agreed to make cuts for the first half of 2017, although Nigeria and fellow OPEC member Libya were exempt due to production setbacks suffered last year.

"OPEC members must lower production costs to compete better with shale producers," said Kachikwu, quoted in a tweet on CNBC Africa's Twitter feed.

Kachikwu said he was "impressed with the work OPEC has done" and "confident prices will hold", but added: "What is more fundamental is what OPEC countries can begin to do for themselves in term of costs, diversification."

The Nov. 30 agreement to cut production prompted oil prices to rise $10 a barrel, although they have been trading in a narrow $3 range in the last few weeks.

But analysts say that a revival in U.S. shale production is likely to limit any major price recovery in crude oil.