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[grupo guitarlumber] 06/6/2018 10:35

France's Total may not re-enter Mahakam oil, natural gas block: Indonesia regulator

Jakarta (Platts)--6 Jun 2018 521 am EDT/921 GMT

Total is unlikely to re-enter Indonesia's Mahakam oil and gas block as a project partner, as the French oil major has refused to pay state-run Pertamina for its new participating interest, oil and gas director general at Indonesia's Energy and Mines Ministry, Djoko Siswanto, said Tuesday.

However, Japanese oil explorer Inpex has expressed interest in continuing its participation in the block, Siswanto said Tuesday.

Total's apparent lack of interest is a major setback for Indonesia's exploration sector, and significantly reduces the chances of raising production levels at Mahakam. Its exit from Mahakam comes after oil majors like ConocoPhilips, Chevron and BP have already pulled out of Indonesia.

Total declined to comment, in response to emailed queries.

On January 1, joint operators Total and Inpex surrendered Mahakam, Indonesia's most productive offshore gas field, to Pertamina after the license expired in December 2017.

The 100% government takeover of Mahakam after nearly 50 years under Total and Inpex underscored growing state control over Indonesia's energy assets and natural resources.

Pertamina still needed project partners to share exploration risk and said it would restart discussions for a new partnership structure. At the time, Total had expressed interest in further developing Mahakam under new agreements.

Total and Inpex notified the government of their intention to take a combined 39% operating interest in the new production sharing contract for the Mahakam block. But Pertamina insisted that the company is only able to sell up to 30% stake in Mahakam, S&P Global Platts reported previously.

Siswanto said Pertamina allowed Total to return to the project for a fee that Total refused to pay, while the government was still in discussions with Inpex, which has not officially stated the size of the stake it plans to have in the new partnership.

Separately, Pertamina's upstream director Syamsu Alam told Platts Tuesday that the national oil company has not discussed the Mahakam issue with Total.

Industry experts say they believe the complexity and size of a lucrative asset like offshore Mahakam needs foreign partners that can bring in experience and technology to operate the asset, as well as share high capex costs and financial risks.

Mahakam's production averaged 951.8 million cu ft/d as of April compared with the target of 1.1 billion cu ft/d throughout this year. Its condensate output reached 46,060 b/d compared with a target of 48,271 b/d, according to data from upstream regulator SKK Migas.

As a mature E&P block, Mahakam's annual production decline rate could reach 50% if Pertamina does not do anything, but the company can arrest the decline rate at 20-25%. Pertamina plans to spend $75.3 million of investment over a three-year contract starting 2018.

Based on Pertamina's assessment, the Mahakam block's gas output may reach 1.207 Bcf/d in 2019, 1.268 Bcf/d in 2020, 1.267 Bcf/d in 2021 and 1.218 Bcf/d in 2022. In 2023, output may decline to 1.11 Bcf/d.

Mahakam's condensate production may reach 42,000 b/d in 2019, 43,184 b/d in 2020, 41,850 b/d in 2021 and 39,451 b/d in 2022. In 2023, condensate output may decline to 35,575 b/d.

Wood Mackenzie estimates that Mahakam will need $2.5 billion of investment over the next three years to maintain production levels.

--Anita Nugraha, [e-mail]

--Edited by Jonathan Fox, [e-mail]

[waldron] 04/6/2018 15:52

04/06/2018 | 4:09 p.m.
HSBC raised its target price on Total from 56.5 to 59 euros while reiterating its purchase recommendation in a sectoral study devoted to oil majors. The broker believes that cash distributions to shareholders may be higher than expected. In addition, the additional cash that companies will receive through their efforts to control expenditures and increase oil prices should enable them to accelerate their energy transition.

[waldron] 04/6/2018 06:37

Why Oil Markets Should Fear Trump’s Trade War
By Nick Cunningham - Jun 03, 2018, 4:00 PM CDT Trump

“We're putting the trade war on hold,” U.S. Secretary of Treasury Steven Mnuchin said on “Fox News Sunday,” nearly two weeks ago. That didn’t go down well with President Trump who promptly restarted the trade war.

Not only did Trump step up trade penalties on China, announcing a few days ago that tariffs on $50 billion worth of Chinese goods would go forward, but he moved to impose tariffs on Canada, Mexico and the European Union, the U.S.’ closest allies and trade partners. The tariffs will include a 25 percent levy on steel and 10 percent on aluminum. Months ago, Trump proposed these tariffs, but repeatedly offered exemptions to allies while U.S. officials negotiated with their counterparts to come up with a resolution.

But, the U.S.’ trade partners refused to give ground, especially since the Trump administration subsequently launched an investigation into automotive imports, which led the EU, in particular, to come to the conclusion that offering concessions would only be met with demands for more concessions.

Sensing he was losing leverage, Trump ripped up that playbook and moved to impose the steel and aluminum tariffs immediately.

Needless to say, Canada, Mexico and the EU promptly announced retaliatory action. Moreover, many argue the U.S. tariffs are illegal under WTO and NAFTA. “The American administration has made a decision today that we deplore, and obviously is going to lead to retaliatory measures, as it must,” Canadian Prime Minister Justin Trudeau said in a statement, announcing retaliatory tariffs on U.S. steel, aluminum, as well as an array of other products.

Related: Turkmenistan’s Natural Gas Dilemma

And in a testament to how ill-conceived the U.S. strategy is, even the United Steelworkers union opposes the move. “The regular chaos surrounding our flawed trade policies is undermining the ability to project a reasoned course and ensure that we can improve domestic production and employment,” the union said in a statement.

What is worrying for the Trump administration is the fact that Canada, Mexico, the EU and China are all retaliating and ceding very little ground. It’s extremely difficult to imagine the U.S. being able to force such a long list of countries into giving in, especially since Trump is fighting a trade war on so many fronts at once.
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The escalating trade war could lead to significant fallout for the oil market, although for now, the extent to which it impacts demand is unclear. “Recent signs of protectionism from the U.S. are a risk to the forecast, raising the possibility of a global trade war,” the IEA said in March, when Trump originally proposed tariffs. “A slowdown [in global trade] would have strong consequences, particularly for fuel used in the maritime sector and in the trucking industry.”

The oil and gas industry, typically an ally of the Trump administration, criticized the tariffs. “The implementation of new tariffs will disrupt the U.S. oil and natural gas industry’s complex supply chain, compromising ongoing and future U.S. energy projects, which could weaken our national security," said API President and CEO Jack Gerard in a statement. Oil and gas pipelines use a special type of steel, much of which is not made in the United States.

Related: Have Oil Prices Peaked?

“If you consider that U.S. oil and gas companies spent $8 billion to $9 billion on pipe last year alone, this would increase material cost by more than $2 billion dollars per year if they sourced all of that material from outside of the United States,” Ed Longanecker, president of the Texas Independent Producers & Royalty Association, told S&P Global Platts.

Josh Zive, a trade attorney with Bracewell, told S&P Global Platts that industries using steel have already started to see costs creeping up. "It's difficult to perceive any scenario in which that doesn't increase" at an accelerated pace, he said. The Trump administration is offering a process in which individual companies can apply for exemptions, and Zive says that the new tariffs will lead to thousands of such requests.

The real danger for oil prices is that Trump’s trade crusade curtails oil demand at a time when OPEC and its non-OPEC partners could begin adding oil back into the market. On a similar but somewhat unrelated note, Bank of America Merrill Lynch recently outlined a pessimistic scenario in which the possibility of an emerging market slowdown occurred at a time when OPEC increased production, a combination that could ultimately push oil down to $60. The bank didn’t even factor in Trump’s trade war, which could upend growth in industrialized countries as well.

Trump is being criticized from all corners, including many in his own party, but for now he is moving forward with an aggressive trade approach.

By Nick Cunningham of Oilprice.com

[grupo] 03/6/2018 10:39

Sources: US on Verge of Sanctioning EU Firms Involved in Russia's Nord Stream 2
Sources: US on Verge of Sanctioning EU Firms Involved in Russia's Nord Stream 2

TEHRAN (FNA)- Foreign Policy magazine cited three sources familiar with the issue as saying that the US administration is close to slapping sanctions on energy companies from Germany and other EU countries that are involved in the construction of Russia's Nord Stream 2 gas pipeline project.

Referring to "key figures" in the Donald Trump administration who see the sanctions as "an increasingly likely option," one of the sources said that "they will stop at nothing to block Nord Stream".

Another source pointed to the stance taken by US National Security Advisor John Bolton and other senior US officials who perceive the Nord Stream 2 project as "a threat to the United States and European security" and are poised to halt it.

"Everything is on the table. … The [Trump] administration is taking a whole of government approach to stopping the Nord Stream project," the source added.

A State Department source, in turn, stated that "we have been clear that firms working in the Russian energy export pipeline sector are engaging in a line of business that carries sanctions risk."

Last month, Spiegel Online quoted Sandra Oudkirk, US deputy assistant secretary of state for energy, as saying that the White House is willing to impose economic sanctions against the Nord Stream 2 pipeline project.

According to her, the pipeline will allegedly provide Russia with an opportunity to install surveillance equipment beneath the Baltic Sea and may also bolster Europe's reliance on Russian natural gas supplies.

The Nord Stream 2 is a joint venture between Russia's Gazprom, France's Engie, Austria's OMV AG, the Anglo-Dutch company Royal Dutch Shell, as well as Uniper and Wintershall, both German companies.

The project involves the construction of two legs of a gas pipeline to run from the Russian coast through the Baltic Sea to Germany. The pipeline is due to be put into operation in 2019.

The Nord Stream 2 pipeline, which is due to annually deliver 55 billion cubic meters of Russian natural gas to the EU across the Baltic Sea, has already been approved by Germany and Finland. The US, in turn, has claimed that the pipeline will allegedly increase Europe's dependence on Russian fuel.

[joestalin] 03/6/2018 10:21

"top executives from some of the major global oil companies will be discussing climate change next week at the Vatican with Pope Francis, who called on Catholics in 2015 to join the fight against climate change,"

I love that - as if he has any influence!