Falklands : Hydrocarbons Weekend Record (07/08 October 2006)
Submitted by Falkland Islands News Network (Juanita Brock) 08.10.2006 (Article Archived on 22.10.2006)
Regardless of US persuasion it is expected that OPEC will announce a production cut of 3% on Monday.
HYDROCARBONS WEEKEND RECORD: 07 AND 08 OCTOBER 2006
By J. Brock (FINN)
Speculation is that a 3% cut in production by OPEC could raise the price per barrel of crude by a few cents as it is reported that stockpiles of hydrocarbons in the United States and the People’s Republic of China are good – at the moment. It is thought that those responsible for buying in supplies of hydrocarbons products would have done so at a lower price than the all time high that was hit in mid July. Consumers are seeing the price of gasoline decrease at the pumps – a welcome gift prior to Christmas and the winter heating season.
(OPEC)
Over the weekend speculation was high that on Monday OPEC would announce a 3% cut in production. Last Thursday, Sam Bodman, the US Energy Secretary, urged OPEC to reconsider cutting its production. OPEC pumps 28.7 bpd, with unofficial cuts already being initiated by Nigeria and Venezuela. Finn on Thursday indicated that the 23% drip in crude prices since 14 July may not be as serious as envisaged as the $78.40 price from which the price fell was artificially high. As yet it is not known what affect any production cut will have on the price of crude.
(Libya)
The exploration wing of French oil giant Total has found a new hydrocarbons deposit approximately 800-km from Tripoli, south-west of Libya. Total’s announcement said that the find, the first since the company was granted drilling permit in Libya in March 2001, holds a potential 675 barrels of crude oil per day. The new find would boost the company's activities in Libya. Total was banking on the third round of an international oil tender launched last August to expand its field activities in the country.
(Falkland Islands)
Islanders interested and indeed investing in hydrocarbons exploration in the North and South Falkland Basin have been patiently waiting for an exploratory rig to come to the area and drill the best known prospects. Though the seismic is outstanding we won’t know if there are hydrocarbons in commercial quantities until an exploratory rig finds them.
A major reason why there is as yet no good news about an oil rig is because the price of oil, until recently, has been increasing. One would think that once the price has dropped to 6-month lows that rigs would immediately become available. This isn’t the case. It will take time for rigs to finish their present contracts and move on to other projects in their programme before becoming available for hire.
Another factor in scheduling an exploratory drilling rig is the size and location of the discovery. The smaller and more difficult the discovery, the less likely it is that a rig would be a priority for a supplier.
Geopolitics and nature can also play an important part in prioritising an exploratory drilling rig. Rigs not only are expensive but also susceptible to adverse weather and sea conditions as well as terrorism.
The Falklands discoveries are in relatively deep water so a rig designed for shallow water won’t do. According to Dr. Colin Phipps of Desire Petroleum a semi-submersible rig would be the best for the North Falkland Basin and according to officials at FOGL, a drilling ship would be best for the deeper waters of the South Falkland Basin.
Those investors with shares in Falklands’ related exploration should hang in there. The lower prices aren’t the only factor that will bring a rig or a ship to the area but the tide has turned.
Share prices at the close of play on Friday, 06 October 2006
Desire Petroleum Plc ended unchanged on the day to settle at 33.25.
Falkland Oil and Gas Limited (FOGL) ended unchanged on the day to stand at 84.50.
Rockhopper Exploration ended down 0.50 points or 1.25% on the day to settle at 40.00.
Borders & Southern ended down 2.50 points or 6.10% on the day to stand at 38.50
Tullow Oil ended up 4.25 points or 1.18% to stand at 363.75
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