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[waldron] 25/4/2016 16:41

Global crude oil deficit seen in H2 2016 as markets re-balance: FGE chairman

Abu Dhabi (Platts)--25 Apr 2016 921 am EDT/1321 GMT

A global crude oil deficit will develop before the end of this year, the chairman of Facts Global Energy consultancy Fereidun Fesharaki said Monday.

In his opening keynote speech at the Middle East Petroleum and Gas Conference in Abu Dhabi, Fesharaki also said medium-term crude price recovery was a given as the market moved towards balance, although there could still be another short-term price dip.

"The oil markets will self-correct. Within two to three years, prices will rise to $60-$80/b range. this is inevitable," he told delegates.

Fesharaki predicted that global oil supply would fall worldwide by at least 500,000 b/d in 2016, while demand would rise by around 1.4 million b/d, noting that he was "optimistic" on global oil compared to some other organizations, such as International Energy Agency, on the strength of strong upturns in demand for gasoline in China, India and the US.

By 2020, global demand for crude would increase by over 5 million b/d, Fesharaki predicted.

"Supply will have problems catching up without a price increase," he added.

On the products side, Fesharaki was especially bullish about the global outlook for gasoline, although the current glut of diesel supply was likely to persist due to sluggish demand growth combined with recent refinery and upcoming refinery additions -- including a large planned new refinery in Kuwait -- that were designed to increase diesel yield relative to other refined products.

Addressing the question of Libya's return to the international oil market after years of civil unrest, Fesharaki said market re-balancing could be delayed by 12 months if Libyan oil production returns to pre-revolutionary levels in the short term, stretching out to 2018-19.

Turning to the role of OPEC and oil production kingpin Saudi Arabia, he said both were likely to agree to "manage the market in a [price] range" if they thought this was achievable and circumstances were right. That probably would not be before 2017, he added.

Indeed, Fesharaki said the long-term average oil price trend would be the same, with or without OPEC. However, the group's intervention could damp market volatility.

In an opening address to the conference, UAE energy undersecretary Matar al-Neyadi said the UAE strongly supported OPEC's role as a supranational body supporting the international petroleum sector, especially in oil-producing nations.

"We believe that OPEC continues to have an important role in the petroleum industry," he said.

Recently appointed Abu Dhabi National Oil Co.'s marketing and refining director Abdulla al-Dhaheri said he expected oil prices to remain volatile in the short term but to recover in the medium term. An average of $50/b for benchmark crudes in 2016 was "achievable," he said.

As a result of long-term planning, ADNOC aimed to increase its refined products output capacity and would start production of several new products -- including base oil types 2 and 3, carbon black and petcoke -- following the recent expansion of its Ruwais refinery.

That would strengthen Abu Dhabi's presence in international markets, he said.

Abu Dhabi is the leading UAE emirate, with more than 95% of the nation's oil reserves and production.

The Ruwais refinery expansion, which more than doubled the size of the UAE's largest petroleum refinery to 840,000 b/d, was completed in November 2015.

--Staff, [e-mail]

--Edited by Irene Tang, [e-mail]

[ariane] 25/4/2016 06:18

Volatile Exchange Rate Hurts Total Oil Earnings
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Posted: Apr 25, 2016 at 3:18 am / by Christopher Okobi / comments (0)
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[the grumpy old men] 24/4/2016 16:44

In response to the high cost of US shale, Saudi Arabia has been selling its massive stockpile of crude oil at rock-bottom prices.
Oil is the Most Likely Candidate to Rattle the US Economy
© AP Photo/ Hasan Jamali
US
17:51 24.04.2016(updated 17:52 24.04.2016) Get short URL
352550
An acceptable oil price for the US is within the $40–$60 range, this is what its market seems to be expecting; however the chances are that prices could spike by more than this, dealing a blow to the US economy, according to Forbes contributor Brad McMillan.

Oil pumps in operation at an oilfield near central Los Angeles
© AFP 2016/ MARK RALSTON
Why Low Oil Prices Are Dealing a Blow to US Economy
A large part of the current recovery in the US is due to cheap oil, reads McMillan’s article for the magazine.

“Lower prices have allowed consumers to spend and save more, have pushed up business profit margins (outside the energy sector), and have generally improved every economy on the planet.”

The acceptable oil prices rang for the US economy is $40–$60, the analyst says, anything higher will have a detrimental effect on the economy.

“Right now, world oil production appears to exceed demand, but not by that much, perhaps in the 1- to 2-percent range, per the International Energy Agency,” the author says.

That excess, he explains, includes Saudi Arabia “pumping as fast as it can, other suppliers doing the same, and US production declining but still strong.”

Denver Colorado
© Flickr/ mobil'homme
Quarter of US Economy About to Skyrocket on the Oil Slump
The analyst predicts that it wouldn’t take much for the excess supply to disappear as demand continues to increase and if suppliers cut back even by a very small amount.

What if OPEC actually freezes oil production, “Iraqi production drops for any one of a variety of reasons” or Daesh “manages to get some traction in Saudi Arabia itself,” the author wonders.

Then the supply and demand balance will undergo a change.

“Given current demand growth, even if supply remains constant, we should see that cushion erode in a reasonably smooth fashion over the next year or so,” he suggests.

If supply has time to respond, prices shouldn’t reach economically damaging levels but instead continue supporting economic growth while allowing the energy industry to function, he explains.

But if supply can’t adjust, though, the prices will then “spike by more than the market now thinks possible,” he states.

Read more:

[maywillow] 23/4/2016 16:57

Schlumberger CEO sees ‘full-scale cash crisis' in oil sector
By David Wethe on 4/23/2016

HOUSTON (Bloomberg) -- Schlumberger cut more jobs in the first quarter as the world’s largest provider of oilfield services sees the industry in an unprecedented downturn.

The global headcount dropped to 93,000 at the end of the first quarter with the reduction, Joao Felix, a spokesman for the company, said by email. The company let go about 8,000 people in the quarter, and reclassified about 5,500 contractors as permanent workers, Chairman and CEO Paal Kibsgaard said Friday in a conference call with analysts. One-third of Schlumberger’s workforce, or roughly 42,000, has now been cleaved off since the worst crude-market crash in a generation began in mid-2014.

“The decline in global activity and the rate of activity disruption reached unprecedented levels as the industry displayed clear signs of operating in a full-scale cash crisis,” Kibsgaard said in a statement announcing first-quarter earnings Thursday. "This environment is expected to continue deteriorating over the coming quarter given the magnitude and erratic nature of the disruptions in activity."

Oilfield service providers were the first to feel the pain when crude prices began falling in the middle of 2014. Of the more than 250,000 jobs cut globally in the energy industry during the downturn, service providers continue to be the most heavily impacted after customers slashed more than $100 billion in spending last year, with promises of more cuts to come.

Tight Margins

Schlumberger’s profit fell in the first quarter as the company adjusts to shrinking margins in North America as customers scale back work. Customers are slashing spending by as much as 50% in the U.S. and Canada.

Net income declined to $501 million, or 40 cents a share, from $975 million, or 76 cents, a year earlier, the Houston- and Paris-based company said. Profit was 1 cent more than the 39-cent average of 37 analysts’ estimates compiled by Bloomberg.

"It’s a weak beat mainly because they guided estimates down," Rob Desai, an analyst at Edward Jones in St. Louis, who rates the shares a buy and owns none, said in a phone interview. "North America came in weaker than we expected."

Challenges from the collapse in crude prices were seen in North America, the world’s largest hydraulic fracturing market, where Schlumberger reported a loss of $10 million, before taxes. Elsewhere, the company announced earlier this month plans to cut back activity in Venezuela, holder of the biggest oil reserves of any country, due to unpaid bills.

‘New Up’

Pricing for hydraulic fracturing was essentially unchanged during the first quarter in most of the major U.S. basins, according to a Bloomberg Intelligence report, citing data from industry consultant Spears & Associates. Oil service pricing may actually be nearing a low point, Andrew Cosgrove, an analyst at Bloomberg Intelligence, wrote Thursday in a report.

"Any enthusiasm, however, may need to be checked, as forecasts for 2H activity may show no real signs of a material recovery," Cosgrove wrote.

Schlumberger was expected to generate a North America operating profit margin at break-even, according to Capital One Southcoast. That’s better than smaller competitors reporting margins as low as negative 30%.

"Break-even is the new up," Luke Lemoine, an analyst at Capital One in New Orleans who rates the shares the equivalent of a buy and owns none, said in a phone interview before the results were released. "In this environment, it’s hard to defend the 5% margins in North America they had talked about."

Excess Costs

The second quarter is expected to get worse for Schlumberger, with North American margins dipping as much as 4% into the red, Lemoine said.

"A lot of it is carrying excess costs," he said. "Service companies have cut personnel and facilities, but they’re unwilling to cut to the bone, so they are maintaining some slack in capacity."

The earnings statement was released after the close of regular trading in New York. The shares, which have 35 buy ratings from analysts, 5 holds and 3 sells, are down 13% in the past year through Thursday.

Schlumberger shares rose 0.5% to $80.68 at 9:52 a.m. in New York Friday.

[ariane] 23/4/2016 08:23

Natural Gas Rises as Traders Expect Glut to Ease
Investors bet producers’ spending cuts and warm weather forecasts will spur a recovery
By Timothy Puko
Updated April 22, 2016 5:15 p.m. ET

Natural gas rose to match a nearly-three-month high Friday--its fifth winning week in the past seven--as investors continued to bet the market would burn off a storage glut.

source WALL STREET JOURNAL

[grupo guitarlumber] 22/4/2016 17:10

World’s biggest oil companies suffering from a $100 hangover that’s hammering profits as cost cuts fall short

Rakteem Katakey, Bloomberg News | April 22, 2016 11:59 AM ET
More from Bloomberg News
For producers from Royal Dutch Shell Plc to Chevron Corp., reeling under the threat of credit-rating downgrades, slashing costs is the surest way of protecting balance sheets. Still, reversing course is proving painful.
Andy Buchanan/AFP/Getty ImagesFor producers from Royal Dutch Shell Plc to Chevron Corp., reeling under the threat of credit-rating downgrades, slashing costs is the surest way of protecting balance sheets. Still, reversing course is proving painful.

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The world’s biggest oil companies, set to report their worst quarterly earnings in more than a decade, are finding their cost-cutting efforts haven’t matched the decline in crude prices over the past two years.
When the oil recovery comes, it won’t look like anything the world has ever seen before

Bloomberg.com

What will the memo say when oil prices recover? What will happen when positive cash flow and investment starts trickling again? Continue reading.

While producers have been deferring projects, eliminating jobs and freezing salaries, the process will take three years to complete, according to Barclays Plc’s Lydia Rainforth. In the meantime, profits are being hammered.

“A lot of work still needs to be done on costs,” Rainforth, a London-based oil sector analyst, said by phone. “It’s a reflection of how much costs had piled up and how long a process this is.”

For producers from Royal Dutch Shell Plc to Chevron Corp., reeling under the threat of credit-rating downgrades, slashing costs is the surest way of protecting balance sheets. Still, reversing course is proving painful after US$100 oil persuaded companies to pump money into expensive areas in search of new deposits, hire more people and rent rigs and services at record rates. Productivity suffered.

Shell, Europe’s biggest oil company, had operating costs of US$14.70 a barrel last year when Brent crude averaged US$53.60, Barclays said in a report last month. That’s more than double the US$6-a-barrel cost in 2005, the last time oil averaged in the US$50s, according to the report. BP Plc’s operating expense was US$10.40 last year compared with US$3.60 in 2005, according to Barclays. The operating costs don’t include capital spending, taxes and royalties paid by producers.
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Earnings Outlook

After rising every year from 2010 to 2014, Shell’s costs fell 15 per cent last year, according to Barclays. BP’s dropped 19 per cent.

That’s not been enough to counter the rout in oil prices.

BP is expected to post an adjusted loss for the first time since the Gulf of Mexico oil spill in 2010, when it reports first-quarter results on April 26, according to analyst estimates compiled by Bloomberg. Shell, reporting on May 4, is likely to post its weakest adjusted profit in more than a decade.

Exxon Mobil Corp., the world’s biggest oil company, will report the lowest quarterly profit in more than two decades on April 29, according to analysts estimates. Chevron is estimated to report a second consecutive loss the same day. Total SA’s first-quarter adjusted net income is predicted to be the lowest since 2001.

The extent of the work facing oil-major CEOs can be seen at BP. While the British producer’s boss Bob Dudley was one of the first to prepare for the downturn, it still took BP most of 2014 and 2015 to identify where costs could be cut, with full implementation only coming this year, Rainforth said.

The London-based company said in February it had reduced annual cash costs by US$3.4 billion compared with 2014 and expected them to be about $7 billion lower in 2017. A BP spokesman declined to comment further.

Shell plans to reduce operating expenditure by US$3 billion in 2016 after cutting it by US$4 billion last year. The company declined to comment beyond reiterating that it has options to further reduce spending should conditions warrant it. Exxon and Chevron declined to comment.

Total is targeting spending on operating its exploration and production business of US$6.50 a barrel of oil equivalent this year, after cutting that to US$7.40 last year from US$9.90 in 2014, according to a company presentation in February.
Total Dividend

Total Chief Executive Officer Patrick Pouyanne told reporters in Paris Thursday that action taken to reduce costs would allow the company to fully fund its dividend from cash flow at an oil price of US$60 a barrel.

Companies are doing whatever it takes. Total is reducing the speed of its service boats in Angola to save gasoline, renegotiating maintenance contracts in Congo, using fewer transportation vessels in Brunei and has stopped using a storage tank in Indonesia to save the French company about US$5 million, Chief Financial Officer Patrick de la Chevardiere told analysts in July last year.

“The companies need to do more of the same over an extended period,” said Iain Armstrong, a London-based analyst at Brewin Dolphin Ltd., which owns Shell and BP shares. “Companies are sharing helicopters and tug boats in the North Sea. It shows how far down the track they had gone in over-spending and over engineering projects.”

Companies are sharing helicopters and tug boats in the North Sea. It shows how far down the track they had gone in over-spending and over engineering projects.

Brent crude averaged US$35.21 a barrel in the first quarter, the lowest in almost 12 years. It traded at US$44.80 on the ICE Futures Europe exchange in London at 1:34 p.m. Friday.

The impact of weaker prices is being compounded by lower profits from refining, a business that has been bailing out oil majors over the past couple of years. Global refining margins dropped to US$10.50 a barrel in the first quarter, 31 per cent lower than a year earlier and 20 per cent lower than the preceding quarter, according to BP’s data.

Oil prices rose for 10 of the 11 years until 2012 and averaged above US$80 a barrel every year from 2010 to 2014. In those years, the companies were flush with cash and they expanded, even as productivity languished. Shell, BP and Total’s oil and natural gas output per employee in its upstream division dropped in many of those years as costs blew up, according to a Morgan Stanley report this month.

“Oil companies haven’t usually been good at controlling costs and allowed them to bloat out in the years of high oil prices,” said Philipp Chladek, a London-based analyst with Bloomberg Intelligence. “It feels like many oil companies haven’t really bought in to the lower for longer, at least by actions. Most people still seem to believe that oil will rebound to US$60 or above before long.”

— With assistance from Francois de Beaupuy.

Bloomberg News

[grupo guitarlumber] 22/4/2016 16:27

June 06, 2016
Ex-dividend date for the remainder of the 2015 dividend

[grupo guitarlumber] 22/4/2016 08:17

News | April 21, 2016
Veolia Signs Long-Term Contract To Supply Water Treatment Chemicals To TOTAL In Angola
Img1

Veolia Water Oil and Gas Angola Lda has been contracted by TOTAL and Sonangol to supply Veolia’s range of Hydrex® chemicals for its Floating Production Storage and Offloading (FPSO) fleet operating off the coast of Angola. Veolia Water Technologies South Africa will manufacture and deliver 160 tons of chemicals every six weeks for the next three years to keep the company’s Sulphate Removal seawater treatment units running at optimum capacity.

This chemical supply will augment the V-Care Service support contract Veolia Water Oil & Gas Angola Lda already has with TOTAL E&P Angola. “V-Care Solutions is our commitment to the oil and gas industry,” says Hein van Niekerk, General Manager, Hydrex & Consumables, Veolia Water Technologies South Africa. “Through this programme, we are able to offer onshore and offshore services as well as engineering, maintenance and training contracts.”

Veolia will supply five primary chemicals to maintain membrane functionality of the seawater Reverse Osmosis units and ensure that the treated seawater used in the oil extraction process meets not only TOTAL’s stringent quality standards, but conforms to global standards enforced throughout the industry. Shipped as 10 containers “FCL” every month, the 160 ton order comprises Antiscalants, two CIP Cleaners, Oxidising Biocides and Dechlorination chemicals all from Veolia’s renowned Hydrex® range.

“Over 75% of these chemicals are produced locally in Isando,” adds van Niekerk. “What this means for TOTAL is that by eliminating high import costs, we are able to offer the chemical order at a fixed rate for the duration of the contract – a key factor for the client. Producing this quantity of chemicals is well within our capabilities, and to assist us with storage and container loading we outsourced to local specialist freight forwarders Intraspeed and Hellmann.”

Veolia, using Intraspeed and Hellmann and its global logistics partners, will ship the chemicals to Sonils base in Luanda every four to six weeks. “Typically chemicals are shipped every four to six months to these operations, but owing to our local production we are able to guarantee the short shelf-life of these products with our monthly orders,” adds van Niekerk.

In addition, Veolia’s test rig, supplied by Veolia South Africa in 2014 to validate the effectiveness of its cleaning chemicals, will serve as an onshore membrane cleaning and training facility in Angola. “With the growing market in Angola, Veolia continues to invest heavily in the country to cater for our complete water treatment portfolio,” concludes van Niekerk.

Veolia shipped its first order of the three-year contract in December 2015, followed by two more in February and March 2016.

Veolia Water Oil and Gas Angola Lda, a subsidiary of Veolia’s VWS Westgarth Limited, was established in 2014 to better support its existing customers as well as to satisfy the country's emerging industrial water and wastewater requirements.

About Veolia group
Veolia group is the global leader in optimized resource management. With over 174 000 employees worldwide, the Group designs and provides water, waste and energy management solutions that contribute to the sustainable development of communities and industries. Through its three complementary business activities, Veolia helps to develop access to resources, preserve available resources, and to replenish them. In 2015, the Veolia group supplied 100 million people with drinking water and 63 million people with wastewater service, produced 63 million megawatt hours of energy and converted 42.9 million metric tons of waste into new materials and energy. Veolia Environnement recorded consolidated revenue of €25B in 2015. For more information, visit www.veolia.com.

SOURCE: Veolia Water Technologies

[waldron] 21/4/2016 19:06

hxxp://www.ibtimes.co.in/oil-three-reasons-why-you-should-invest-in-oil-companies-despite-doha-failure-675718

[waldron] 20/4/2016 19:14

PARIS--Total SA (FP.FR) said Tuesday that it would create a gas, renewable energy and power trading unit, a move designed in part to diversify the company's revenue away from highly volatile oil prices.

The unit, whose president will be a member of the company's executive committee, will start operating on Sept. 1 and will allow Total to become a major force in renewable energy and electricity trading within 20 years, the French oil major said.

"Gas, Renewables & Power will spearhead Total's ambitions in the electricity value chain by expanding in gas midstream and downstream, renewable energies and energy efficiency," Total said.

The unit will be Total's fourth. The others are exploration and production, marketing and services, and refining and chemicals.



Write to Nick Kostov at [e-mail]



(END) Dow Jones Newswires

April 20, 2016 07:21 ET (11:21 GMT)

[the grumpy old men] 19/4/2016 17:34

Europe's Seven Oil Majors to Post 22% Drop in Profit, Fitch Says
Rakteem Katakey
rakteem
April 19, 2016 — 4:32 PM CEST



Lower 2016 earnings follow decline of 34% last year: Fitch
Fitch sees significant deterioration in credit metrics



European oil majors will report a combined 22 percent decline in earnings this year as lower profit from refining compounds the impact of the rout in crude prices, according to Fitch Ratings.

That will result in a “significant deterioration in credit metrics” for some of the seven biggest oil producers and follows a 34 percent drop in profit last year, Fitch said in a report on Tuesday. The decline in earnings is “severe, but not disastrous,” given the plunge in crude, it said.

The slump since the middle of 2014 has crimped earnings and forced oil companies to cut costs, defer projects and dismiss employees to protect their balance sheets. While Fitch downgraded Royal Dutch Shell Plc in February after its acquisition of BG Group Plc and cut Eni SpA’s rating this month, following a worse-than-expected performance in refining and gas, the ratings company said it will look beyond this year’s earnings before taking further action.

“We therefore focus more on 2018, when we expect the cycle to be past its trough, and by which time companies will have been able to adjust their operating profiles to a more challenging oil price environment,” Fitch said.

Negative Outlook

The ratings company said the outlook for Shell, Total SA, OMV AG and Repsol SA remained negative.

“Maintaining the ratings will depend on companies being able to successfully implement the spending and disposal plans we currently assume, or on a stronger than assumed oil price recovery,” it said. Fitch assumes oil will average $35 a barrel this year and rise to $55 in 2018, according to Tuesday’s statement.

BP Plc is scheduled to announce first-quarter earnings on April 26, with Total SA reporting the following day. Eni will report on April 29 and Shell on May 4.
Before it's here, it's on the Bloomberg Terminal.

[the grumpy old men] 17/4/2016 09:20

Source: AAP
17 Apr 2016 - 5:58 PM UPDATED 5 MINS AGO

Italy has gone to the polls for a referendum on off-shore oil and gas drilling rights, a complex issue that the government hopes voters will shun.

For the ballot to be valid, more than 50 per cent of the Italian electorate must vote and Prime Minister Matteo Renzi has urged people to stay away, arguing that the referendum is unnecessary and might end up hurting the economy.

Opinion polls suggest that a quorum will not be reached and it would be a blow to Renzi if substantial numbers did turn out, suggesting voters were ready to snub him just weeks before major local elections.

The referendum focuses on whether Italy should stop renewing offshore drilling licences within 20km of the coast.

New drilling concessions are no longer being handed out, but the government says old accords should be kept in play.

[ariane] 15/4/2016 20:02

April 27, 2016
First Quarter 2016 Results
3 p.m. (Paris Time) – 2 p.m. (London Time)