HYDROCARBONS WEEKEND RECORD 08 TO 10 JUNE 2007
Compiled by J. Brock (FINN)
WEEKEND DEVELOPMENTS
(Chile)
Several Latin American newspapers have reported that Chile invited local and foreign companies to invest in the exploration and production of oil and natural gas. Chile offers blocks in the Magallanes region, on the southern tip of South America. Mining Minister Karen Poniachick announced that seven blocks are being offered to private companies and the other three will be operated jointly with Chile's state-owned National Petroleum Company. The government expects some $200 million will be invested in exploration. It is expected that an agreement will be signed at the end of the year.
WEEKEND ANALYSIS:
A downturn in the global equities market and news that Sudan’s new infrastructure is producing 200,000 barrels a day for export has helped crude prices to lower. However, looming on the horizon are threats from Iran to hit US interests in the Persian Gulf and another Iranian threat to help crude to increase to $80.00. Resulting nervousness could add to increases in crude prices.
LAST WEEK’S CRUDE PRICES:
Monday, 04 June 2007: Light Sweet Crude was trading at $66.21 up $1.13 on the New York Mercantile Exchange and Brent Crude was trading at $70.40 up $1.33 on London’s Ice Futures Market.
Tuesday, 05 June 2007: Light Sweet Crude was trading at $65.61 down 60 Cents on the New York Mercantile Exchange and Brent Crude was trading at $70.45 up 5 Cents on London’s Ice Futures Market.
Wednesday, 06 June 2007: Light Sweet Crude was trading at $65.95 up 34 Cents on the New York Mercantile Exchange and Brent Crude was trading at $70.97 up 52 Cents on London’s Ice Futures Market.
Thursday, 07 June 2007: Light Sweet Crude was trading at $67.02 up $1.06 on the New York Mercantile Exchange and Brent Crude was trading at $71.58 up 56 Cents on London’s Ice Futures Market.
Friday, 08 June 2007: Light Sweet Crude was trading at $64.76 down $2.17 on the New York Mercantile Exchange and Brent Crude was trading at $70.31 down 91 Cents on London’s Ice Futures Market.
BRIEF INVENTORY REPORT FOR THE WEEK ENDING 01 JUNE 2007:
Crude: up 100,000 barrels to 342.3 million barrels
Gasoline: up 3.5 million barrels to 201.5 million barrels
Distillates: up 1.9 million barrels to 122.3 million barrels
ANALYSIS FOR THE WEEK OF 04 TO 08 JUNE 2007:
Monday, 04 June 2007: Rising crude prices are blamed on the drop in the Shanghai market as well as refinery capacity – now at 91.1% - and increased demand for gasoline. Also, the hurricane season in the Southern United states seems to be giving investors the jitters. It will put out the fire, so it can’t be all that bad.
Tuesday, 05 June 2007: A severe tropical storm in the Persian Gulf potentially threatening infrastructure in Oman, Iran and Pakistan has not lived up to expectations. Also causing nervousness is the up and coming inventory report from the US Department of Energy Administration. With Refinery capacity running at 91.1% there is much room for improvement. These factors helped to steady the price of crude today.
Wednesday, 06 June 2007: The Persian Gulf cyclone and Turkish troops entering northern Iraq have caused nervousness but the crunch is the drop in refinery capacity from 91.1% to 89.6% at the end of last week. These factors helped to increase the price of crude today.
Thursday, 07 June 2007: The Persian Gulf cyclone caused Oman to stop exporting oil and gas for three days. Add in worries about supply and you have two reasons why crude increased in price today. OPEC has reiterated their assessment of supplies that will meet demand but this was not enough to lower prices.
Friday, 08 June 2007: As cyclone Gonu weakens infrastructure in the Persian Gulf is not under threat. Three days worth of oil and gas exports were lost from Oman due to the weather but crude prices dropped today.
REGIONAL DEVELOPMENTS FOR THE WEEK ENDING 08 JUNE 2007:
(Argentina)
On Monday, Spanish-Argentine oil company Repsol YPF SA (REP) announced that it is looking to divest a stake of around 45% of its Argentine unit, YPF. Repsol-YPF, based in Madrid, indicated in a regulatory filing it's looking for local partners to acquire 25% of YPF. Later the Company plans to float 20% of YPF in the Buenos Aires stock market. The announcement clarifies earlier statements about the company's plans for YPF. Repsol is in advanced talks with three Argentine financiers - Jorge Brito, Enrique Eskenazi and Eduardo Eunekian - and plans to allow one of them to buy between 15% and 25% of YPF.
The Argentine press reports that three men are the leading candidates to acquire 25% of Spanish energy company Repsol YPF's Argentine unit. Eduardo Eurnekian, an Argentine businessman and Jorge Brito and Enrique Eskenazi, bankers, are candidates to purchase 25 percent of YPF, the Argentine subsidiary of Repsol/YPF.
(Bolivia)
Bolivia’s Hydrocarbons Ministry has announced that RDSA may start to explore for oil and gas in Bolivia. Officials from Shell have met with Bolivia’s President Evo Morales and proposed participation in the phase of exploration and production. Bolivi’s Hydrocarbons Minister, Carlos Vellegas, made the statement only three days after Shell announced it had given up its gas transport activities in Bolivia. Ashmore Energy International (AEI) announced on Tuesday that it agreed to buy part of the Bolivia-Brazil natural gas pipeline and Shell's stakes in energy businesses in Brazil. AEI also agreed to buy out Shell's 25% in Bolivia's largest natural gas transport company, Transredes Transporte de Hidrocarburos SA.
(Falkland Islands)
Shareholders are hopeful that a rig can be brought to the Falklands and shared amongst the exploration companies operating in the North and South Falklands Basins. However, a rig that would be suitable in the North Falklands Basin where the water depths are shallower would not be suitable for the deep waters in the South Falkland Basin. There are areas where a drill ship would be the best way forward. Hopefully things will be clearer by the end of the year.
Analyst Jon Dunningham of Seymour Pierce Research has reported that RPS Energy has been appointed by Desire Petroleum to carry out an environmental impact assessment for its North Falkland Basin-based operations. “The successful approval of the assessment is required for carrying out drilling operations offshore of the Falkland Islands,” the note says.
Unsubstantiated reports indicate that there should be good news about a rig for one of the exploration companies in the Falklands.
PRESS RELEASE
4 June 2007
Rockhopper commissions Environmental Impact Assessment and see signs of improvement in rig market
Rockhopper Exploration plc (Rockhopper) (AIM:RKH) is pleased to announce that it has appointed RPS Energy (RPS) to undertake an Environmental Impact Assessment (EIA) over licences PL023 and PL024. The EIA will be conducted in parallel with Desire Petroleum’s EIA over licences PL006 and PL007, resulting in cost savings for both companies.
The EIA will prepare Rockhopper for the drilling of Prospect Ernest and also provide background work for any other drilling undertaken in licenses PL023 and PL024. An additional EIA will be carried out over licenses PL032 and PL033 following completion of the current 3D seismic processing and interpretation exercise to prepare for any drilling on that acreage.
Completion of our 3D has brought us closer to drilling and a number of contractors have indicated increased availability of drilling units to us during 2008 which would be capable of drilling in our water depth and that of our partner, Desire.
Sam Moody, Managing Director, commented:
“We are very pleased to be working with RPS who have already successfully produced an EIA for Rockhopper and Desire in licenses PL003 and PL004.
We are getting strong indications of easing in the rig market in terms of availability, though not yet in price, with floating drilling units suitable for the Falklands due to become available during 2008. While prices remain relatively high, we do not believe they are prohibitive. With this in mind, undertaking an EIA at this stage will put us in a position to act quickly when an appropriate rig becomes available.”
From a Press Release
Desire Petroleum plc announces that on 3 June 2007, Wavefield InSeis ASA commenced a contract to acquire high resolution 2D shallow-seismic data, at a number of potential drilling sites, on its licences in the North Falkland Basin, using the seismic vessel “Bergen Surveyor”. This vessel has just finished work for Falklands Oil and Gas Limited on their licences to the south of the Falkland Islands.
Desire currently has detailed site survey information on 9 locations (Liz A, B, C, Beth A, B, C, Ninky A, Rachel A and Anna A) based on shallow 3D seismic data. Desire now wishes to acquire 2D shallow-seismic data at locations where the 3D data are not available, at the Ann prospect in Tranche C, and weather permitting, at the Dawn prospect, in Tranche I and the Ruth prospect, in Tranche L.
The survey on Tranche C will be on behalf of Desire and its partner Rockhopper Exploration plc; Tranches I and L are 100% Desire licences.
These data are necessary in order to be able to drill, providing information on shallow, potential hazards which could affect the surface location of the wellbore.
Acquiring these data will assist Desire in adding these prospects to the inventory of prospects which can be drilled when drilling resumes in the area.
Following these site surveys, Desire will be in position to drill any of ten, possibly 12 locations which will greatly assist decision-making during the drilling programme. It will also ensure that, should the early wells prove successful, it will be possible immediately to continue with an extended drilling programme.
Prospects in Tranches I and L have been enhanced by the results of the electromagnetic survey carried out by Rockhopper on its Ernest Prospect adjacent to Tranches I and L.
Commenting on these developments, Dr Ian Duncan Chief Executive Officer of Desire said: “The company now has a number of locations in the North Falkland Basin from which to select its final drilling programme. With our detailed seismic knowledge and complementary electromagnetic data we are increasing the chances of exploration success once a rig is secured.”
RELEVANT SHARE PRICES MONDAY, 04 JUNE 2007:
TLW: 383.50 down 0.50, DES: 33.75 up 1.50, FOGL: 79.50 up 0.50, RKH: 43.50 up 0.50, BOR: 27.50 up 0.50
RELEVANT SHARE PRICES TUESDAY, 05 JUNE 2007:
TLW: 384.00 up 0.50, DES: 32.75 down 1.00, FOGL: 78.00 down 1.50, RKH: 43.50 unchanged, BOR: 26.25 down 1.25
RELEVANT SHARE PRICES WEDNESDAY, 06 JUNE 2007:
TLW: 379.00 down 5.00, DES: 32.25 down 0.50, FOGL: 77.50 down 0.50, RKH: 43.50 unchanged, BOR: 26.00 down 0.25
RELEVANT SHARE PRICES THURSDAY, 07 JUNE 2007:
TLW: 372.50 down 6.50. DES: 32.75 up 0.50, FOGL: 81.50 up 4.00, RKH: 43.50 unchanged, BOR: 25.25 down 0.75
RELEVANT SHARE PRICES FRIDAY, 08 JUNE 2007:
RELEVANT SHARE PRICES:
TLW: 383.50 up 11.00, DES: 32.75 unchanged, FOGL: 79.00 down 2.50, RKH: 43.50 unchanged, BOR: 25.00 down 0.25
