Falklands : Hydrocarbons Weekend Record (29 June to 01 July 2007)
Submitted by Falkland Islands News Network (Juanita Brock) 02.07.2007 (Article Archived on 16.07.2007)
Crude prices have increased on the same tired supply fears.
HYDROCARBONS WEEKEND RECORD (29 June to 01 July 2007)
By J. Brock (FINN)
WEEKEND ANALYSIS:
Crude increased in price on Friday due to fears there won’t be adequate gasoline to meet demand during summer drive season. There was enough supply last year but this kind of nervousness kept prices high and caused real consternation at the pump. Two real concerns deal with the supply of gasoline in that refinery capacity hasn’t increased significantly since refineries came back on line after hurricanes Katrina and Rita hit the Gulf at the end off 2005. Capacity hovers between 86% and 91% even though profits from higher prices can go a long way in completing repairs, finding regular maintenance and investing in new infrastructure. Also adding to nervousness about supply is OPEC’s decision not to increase production. They have firmly adhered to this decision even there is mounting pressure to increase production.
WEEKEND DEVELOPMENTS:
(Falkland Islands)
Progress report – Friday, 29 June 2007
2D Seismic – COMPLETED
Falkland Oil and Gas Limited (FOGL) reports that the 2D seismic survey was completed on May 31st 2007. A total of 9950km were acquired during the survey. This dataset is now being processed by Fugro in the UK.
Controlled Source Electromagnetic (CSEM)
The CSEM survey resumed on June 3rd 2007. The initial processing of the four lines acquired during the first phase of acquisition is now complete. More advanced processing will now be performed on some of the data in an attempt to refine the location and depth of positive anomalies.
(Argentina)
During the much awaited regional energy conference at the Mercosur summit in Paraguay on Friday, 29 June, Argentine President Nestor Kirchner has addressed the body saying that Mercosur must not be influenced by the "whims" of energy companies facilitating Mercosur’s need for further integration. Representatives of Royal Dutch/Shell, Repsol YPF, Petroleo Brasileiro SA and Esso announced on Thursday that they did not cause the region's energy problems, said that their companies have delivered 10 percent more diesel than at the same quarter in 2006.
(Brazil and Israel)
Several Latin American newspapers report that Hadas Detection and Decoding Systems Ltd. have signed a $15 million three-year contract with Petrobras for the supply of natural gas pipeline defence systems. Reports go on to say that officials at Petrobras are making reciprocal visits to Israel this week to meet with Hadas Detection and Rafael Armament Development Authority Ltd. to complete preparations signing the contract. Engineers from Hadas Detection will go to Brazil in early September to install the infrastructure.
CRUDE PRICES:
Monday, 25 June 2007 Light Sweet Crude was trading at $69.18 up 4 Cents on the New York Mercantile Exchange and Brent Crude was trading at $70.23 down 95 Cents on London’s Ice Futures Market.
Tuesday, 26 June 2007 Light Sweet Crude was trading at $67.77 down $1.41 on the New York Mercantile Exchange and Brent Crude was trading at $70.14 down $1.22 on London’s Ice Futures Market.
Wednesday, 27 June 2007 Light Sweet Crude was trading at $68.97 up $1.20 on the New York Mercantile Exchange and Brent Crude was trading at $70.53 up 31 Cents on London’s Ice Futures Market.
Thursday, 28 June 2007 Light Sweet Crude was trading at $69.57 up 60 Cents on the New York Mercantile Exchange and Brent Crude was trading at $71.13 up 60 Cents on London’s Ice Futures Market.
Friday, 29 June 2007 Light Sweet Crude was trading at $70.25 up $1.00 on the New York Mercantile Exchange and Brent Crude was trading at $70.68 up $1.11 on London’s Ice Futures Market.
ANALYSIS:
Monday, 25 June 2007: Supply concerns ahead of the weekly US Department of Energy Administration weekly inventory report have helped crude prices to remain fairly stable today. Though the amount of crude in storage went up last week, the drop in refinery capacity could have had an affect on the reserves.
Tuesday, 26 June 2007: There is optimism about crude reserves in the US Department of Energy Administration inventory report. However, refinery capacity is a key factor in producing supplies of gasoline. It is those supplies that dictate the price at the pump as well as the price we pay for crude. The optimism about crude reserves helped the price of crude to drop today.
Wednesday, 27 June 2007: Perhaps analysis prior to the release of the US Department of Energy Administration Inventory Report isn’t such a good thing. The decline in supplies of gasoline and distillates has caused the price of crude to rise today. Refinery capacity increased by 1.8% to 89.4% and this is key to the supply of distillates and gasoline. Capacity has been as high as 91.1% lately and it is thought that some of the profits made by oil companies can be spent on infrastructure that would help to increase refinery capacity. Also key to the price of gasoline and distillates is the price at which reserves of crude are bought. The higher the price means the end products will be more expensive.
Thursday, 28 June 2007: Comments from the Federal Reserve Bank in the US that interest rates would remain at 5.25% due to a mild increase of economic growth but that the organisation was still concerned about inflation caused the price of crude to rise today.
BRIEF INVENTORY REPORT FOR THE WEEK ENDING 22 JUNE 2007:
Crude: Up 1.6 million barrels to 350.5 million barrels
Gasoline: Down 750,000 barrels to 202.6 million barrels. Some press reports read that supplies declined 749,000 barrels and others say 700,000 barrels.
Distillates: Down 2.3 million barrels to 120.4 million barrels
Refinery Capacity: Up 1.8% to 89.4%
INTERNATIONAL DEVELOPMENTS:
(India)
Petrobras has agreed to take a 30% stake in one of ONGC’s discovered gas blocks in the Krishna Godavari basin. The Brazilian state owned company will now jointly operate the block, KG-DWN-98/2, with ONGC. In a press release an ONGC official said, “We will offload 15% stake in the KG basin block in favour of Petrobras. The Brazilian company will acquire the additional 15% only after the development plan is approved by the directorate general of hydrocarbons. A bonus will be paid to ONGC when the agreement is signed.” ONGC’s gas reserves in the KG basin at 2.09 trillion cubic ft.
(Russia)
Hugo Chavez, Venezuela’s President, arrived in Moscow on Thursday for a three-day official visit, including a meeting with his Russian counterpart Vladimir Putin. President Chavez is expected to have talks about trade ties, energy security and arms sales with President Putin, President Chavez will also attend the Russian-Venezuela business forum on Friday. President Chavez will travel on to Belarus and Iran. Bolivia’s President Evo Morales also plans to visit Iran and Russia and Iran to seek investment in the Bolivia's natural gas industry. According to a government press release, the visit is tentatively scheduled for August. The trip could also include stops in Libya, Angola, and Qatar.
A press release from Imperial Energy Corporation announces that Vodorazdelnaya-3 well in Russia's Tomsk region has encountered commercial hydrocarbons in the Tyumen reservoir from a depth of 2,767.9 metres with a total thickness of 28.3 metres net pay and added that the well is being tested. The press release goes on to say that North Chertalinskaya-403 well was spudded ahead of schedule earlier this month. Buranovskaya-2 and Nyulginskaya-2, will also be spudded ahead of schedule. Drilling of the exploration well on North Torgai has been Block in Kazakhstan, originally scheduled for late this year, has now been brought forward.
(Lukoil)
Eleven Directors of the Board have been elected by shareholders during LUKOIL's annual meeting that was held on Thursday. Donald Everst of ConocoPhillips will replace Kevin Meyers in the new BOD, AK&M got to know during the meeting. The Bord of Directors also includes LUKOIL's president, Vagit Alekperov, GD of Lukoil-Garant, Milhail Berezhnoy, RITEKs' GD, Velery Graifer, Oleg Kufatin, Ravil Maganov, Sergey Mikhailov, Nikolay Tsvetkov, Igor Sherkunov, Richard Matske, and Alexander Shokhin.
REGIONAL DEVELOPMENTS
(Argentina)
According to Argentina’s presidential website bidding has started for the Gasoducto de Noroeste Argentario (GNEA) project. Argentina's President Néstor Kirchner and Bolivia’s President, Evo Morales started on Wednesday that the bidding process for the $2billion USD GNEA gas pipeline project. This should replace Argentina’s ageing gas pipeline and will benefit Argentina’s Northern provinces, which lack gas service.
The pipeline will have a capacity of 27.7Mm3/d of natural gas to Argentina. Argentina's portion of the pipeline will run 1,500km and Bolivia's will cover 90km. The pipeline should be complete by 2010.
It is expected that in 2008 Argentine banker Enrique Eskenazi will finalise the purchase of 25% of Repsol YPF SA.
In an interview with La Nacion, Eskenazi said: 'I have serious group backing and have been working on this deal for a year.' Eskenazi says that the Argentine part of Repsol/YPF could close down if the deal doesn’t go through. The banker heads up the Petersen group, which controls various Argentine provincial banks and is also active in the construction business. In the La Nacion interview, Eskenazi said the financing for the acquisition of 25 pct of YPF would come from foreign banks.
(Bolivia)
Brazilian state-owned energy company, Petrobras, has relinquished two refineries it owns in Bolivia after a compensation deal last month. The head of the state energy company, YPFB, said Bolivia had taken back the refineries, saying they belonged to Bolivia in the first place. The $112m (£56m) buy-back was part of President Evo Morales' wider energy nationalisation, giving the state more control and a larger slice of profits. This seems to be the final word on the story that has been widely reported in HDR.
(Argentina, Brazil and Bolivia)
The Latin American press are reporting that Petrobras, won't pay a fine levied against them by Bolivia's government for “irregularities” during past oil exports, a company press officer said on Monday. Bolivia's legal proceedings could result in a fine of up to $239 million. The Petrobras press official said that, to quote Will Rogers, all they know is what they read in the papers and that no formal charges have been filed against his company. Last year, Bolivia accused Spanish-Argentine energy company Repsol-YPF SA of illegally exporting hydrocarbons. Bolivia, according to pres reports, accuses Petrobras' refining unit of exporting oil worth about $188 million in 2004 and 2005 without notifying a government anti-drug unit, to ensure they won't end up with drug traffickers. According to Petrobras’ press officer the law was not in force at the time of the exports.
(Venezuela)
Venezuela’s government is taking over the majority operating share in the Orinoco Belt, as it nationalises hydrocarbons assets. State-owned oil firm, PDVSA, says they've not come to agreement with Conoco Phillips and Exxon Mobil about their future in the region. PDVSA, is now in charge of exploration in the Orinoco Belt. There are proven reserves of at least 80 bn barrels but there could be enough there to make Venezuela the world's biggest source of oil. It has been reported that Conoco Phillips, however, has taken the decision to leave Venezuela entirely after failure to reach an agreement over its role in the Orinoco Belt project. Though President Chavez wants a decision by Tuesday, the company has not accepted the terms for the government to take a majority stake in the Belt where projects are valued at more than $30 billion and can produce 600,000 barrels per day.
Conoco Phillips and Exxon Mobil have announced that they are pulling out of Venezuela’s oil industry. Venezuela’s government is taking over the majority operating share in the Orinoco Belt, as it nationalises hydrocarbons assets. Four other oil companies – Total, Chevron, BP and Statoil have met today’s deadline and signed deals with Venezuela. PDVSA, is now in charge of exploration in the Orinoco Belt. There are proven reserves of at least 80 billion barrels but there could be enough there to make Venezuela the world's biggest source of oil. Both Conoco Phillips and Exxon/Mobil have invested heavily in Venezuela.
(Peru)
PRIMAX, the sentinel independent oil and gas market based in Peru, has retained the retail division of Colemanbrandwor (CBX), an important branding, design and consultancy agency based here, to develop a new prototype for its convenience store operation. Recently PRIMAX retained CBX to develop “corporate identity and retail branding” strategies for the gas station and convenience store network in Peru it had acquired from Royal Dutch Shell. The purchase consisted of 165 petroleum retail sites, which have since been re-branded under the PRIMAX banner and feature new pylon signs, gas canopies, fuel dispensers, and shop fronts.
RLEEVANT SHARE PRICES:
Monday, 25 June 2007:
TLW: 499.75 UP 20.75, DES: 31.00 unchanged, FOGL: 80.00 up 0.50, RKH: 42.50 down 0.50, BOR: 24.50 up 0.50
Tuesday, 26 June 2007:
TLW: 490.25 down 9.50, DES: 30.25 down 0.75, FOGL: 80.00 up 0.50, RKH: 42.50 down 0.50, BOR: 24.50 unchanged
Wednesday, 27 June 2007:
TLW: 477.25 down 13.00, DES: 30.25 unchanged, FOGL: 80.00 up 0.50, RKH: 42.00 down 0.50, BOR: 24.50 unchanged
Thursday, 28 June 2007:
TLW: 487.25.00 up 10.00, DES: 30.25 unchanged, FOGL: 80.00 up 0.50, RKH: 41.50 down 0.50, BOR: 26.50 up 2.00
Friday, 29 June 2007:
TLW: 488.00 up 0.75, DES: 30.25 unchanged, FOGL: 80.00 unchanged, RKH: 41.50 unchanged, BOR: 26.00 down 0.50
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