IEA 'Still Assessing' Oil Market after OPEC Stalemate

- IEA 'Still Assessing' Oil Market after OPEC Stalemate

Tuesday, June 14, 2011
Dow Jones Newswires
PARIS
by Geraldine Amiel

The International Energy Agency is in talks with member countries following last week's OPEC meeting and is "still assessing" the oil market situation before considering any potential response, Executive Director Nobuo Tanaka said Tuesday.

Tanaka reiterated that the IEA "stands ready to act" if the market requires additional oil. At the same time, Tanaka, whose organization represents consuming countries, expressed confidence that Saudi Arabia could pump additional oil to meet supplies, he said in an exclusive interview with Dow Jones Newswires. The IEA has authority to coordinate an emergency response of oil from its member governments.

Tanaka's remarks came less than a week after a Vienna meeting of the Organization of Oil Exporting Countries concluded in acrimony after members failed to agree to boost output to meet anticipated demand growth. The surprising outcome continued to reverberate Tuesday, as OPEC's Secretary General expressed concerns that oil prices could rise later this year.

OPEC split last week on whether to boost output by some 1.5 million barrels a day, a plan favored by Saudi Arabia and some other Gulf producers. Some OPEC members, including Iran, were skeptical additional supplies were needed. The members that fought the increase have also tended to favor somewhat higher oil prices.

OPEC Secretary General Abdalla Salem Al-Badri, the official spokesman for the organization, said Tuesday that oil prices "will go up for sure" if the would rise later this year if the supply gap in many official forecasts comes to fruition, Reuters reported. The OPEC official was also quoted as saying high prices will hurt economic growth, Reuters said.

Also Tuesday, EU Energy Commissioner Gunther Oettinger told Dow Jones Newswires in Stockholm that the European Union plans to discuss oil market issues at a meeting with OPEC in Vienna later this month.

"We want to speak (with OPEC) about security of supply for 2011 and 2012 and to speak about what is a feasible price," Oettinger said in an exclusive interview.

Asked whether he was worried about a high oil price, Oettinger said: "No, I'm not worried".

Meanwhile, Tanaka said he was confident Saudi Arabia could use its spare production capacity to put additional oil on the market following the OPEC meeting. Saudi Arabia plans to immediately boost output to as much as 10 million barrels a day, Gulf sources have said.

The issue will be "how fast" the Saudis can put additional oil on the markets, Tanaka added, noting that Saudi domestic oil consumption is expected to increase during the summer.

Tanaka later told the audience that the at the IEA, "we stand ready to take all our options." But Tanaka said the IEA would tap emergency supplies only after a "disruption" such as if Saudi Arabia and other OPEC members were unable to pump more oil. He said some of the current anxieties were reminiscent of the oil market in 2008.

The IEA warned on May 19 that it was prepared to "consider using all tools" if OPEC failed to boost output, a statement that was seen by producers as a veiled threat that the IEA would tap strategic supplies if OPEC didn't pump more oil.

Copyright (c) 2011 Dow Jones & Company, Inc.

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China Says Won't Use Force in South China Sea

- China Says Won't Use Force in South China Sea

Tuesday, June 14, 2011
Dow Jones Newswires
BEIJING

China said Tuesday it wouldn't resort to the use of force in the tense South China Sea, after its neighbors expressed concern about its more assertive maritime posture.

"We will not resort to the use of force or the threat of force," Foreign Ministry spokesman Hong Lei told reporters.

"We hope relevant countries will do more for peace and stability in the region," Hong said.

Vietnam on Monday staged live-fire exercises following recent confrontations at sea with China, which reignited a long-standing dispute over the sovereignty of two potentially oil-rich archipelagos--the Paracels and Spratlys.

Hong insisted Vietnam was to blame for the recent flare-up, sparked by a confrontation between Chinese surveillance vessels and a Vietnamese oil survey ship.

"Some country took unilateral actions to impair China's sovereignty and maritime rights and interests, and released groundless and irresponsible remarks with the attempt to expand and complicate the issue of the South China Seas," Hong said, in a thinly veiled reference to Hanoi. "This is where the problem lies."

He said China was willing to hold direct negotiations with the other nations embroiled in territorial disputes in the South China Sea within the framework of a code of conduct agreed to in 2002.

Tensions have also risen this year between China and the Philippines, another claimant to the Spratlys, which on Monday said it would from now on refer to the South China Sea as the "West Philippine Sea".

Taiwan at the weekend reiterated its claim to the Spratlys, and said missile boats and tanks could be deployed to disputed territory.

Brunei and Malaysia have also staked claims in the area.

Copyright (c) 2011 Dow Jones & Company, Inc.

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Rise of Oil Brings A Visit from Ghana

- Rise of Oil Brings A Visit from Ghana

Tuesday, June 14, 2011
Houston Chronicle
by Jenalia Moreno

Ghana has long relied on its exports of cocoa and gold.

But oil is becoming much more important to its economy since production began last year at Ghana's offshore Jubilee field.

The emerging Ghanaian oil industry brought the nation's vice president, John Dramani Mahama, to Houston this week for meetings with energy companies to encourage investment in the western African nation.

"With this trip, we're going to build a partnership between Ghana and Texas," he said during a news conference Monday at the Greater Houston Partnership.

Total annual trade between Houston and Ghana rose to $244 million in 2010 from $159 million in 2009, according to the partnership.

Since the Jubilee discovery a few years ago, several foreign energy companies have set up operations in Ghana. But the region's offshore geology makes exploration challenging.

"Drilling on the west coast of Africa is very tricky business," Mahama said.

Many of the companies working in Ghana are from developing nations, he said.

"Their businessmen are crawling over Africa and looking for opportunities," he said.

His delegation also visited the Port of Houston, and at the news conference Mahama discussed his nation's transportation needs .

Ghana must upgrade its rail lines and roads to make it easier to move products through Africa, he said.

Partnership officials said they are pushing for a nonstop flight from Houston to Ghana's capital of Accra. United Airlines plans to start flying between Houston and Lagos, Nigeria, later this year.

Copyright (c) 2011, Houston Chronicle

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Impact Fee Proposed on Natural Gas Wells

- Impact Fee Proposed on Natural Gas Wells

Tuesday, June 14, 2011
Pittsburgh Post-Gazette
by Laura Olson

A state Senate measure to charge natural gas drillers a per-well impact fee will be getting some tweaks today, in an effort to move forward on the measure as lawmakers head into final budget talks.

One lawmaker says those are the beginning of a more comprehensive revamp to the drilling fee legislation, which is being negotiated by supporters in that chamber.

The Senate Environmental Resources and Energy Committee this morning will be taking up the impact fee bill from the chamber's President Pro Tem Joe Scarnati, R-Jefferson. An amendment from the panel's chairwoman would raise the initial amount of that fee, Although no fee would be assessed after the 10th year of production.

Under Mr. Scarnati's current bill, a $10,000 base fee would be charged, with that fee rising based on the price of natural gas and level of production. The senator's staff estimates that the average fee for a well in its first year of production would be between $25,000 and $30,000.

Of the revenue collected, 60 percent would go to local and county governments with drilling activity. The other 40 percent would go for environmental initiatives.

Changes from Sen. Mary Jo White, R-Venango, would start that fee at a flat $40,000, lowering it by $10,000 per year in the second, third and fourth years. A fee of $10,000 would be assessed from years four through 10.

Adam Pankake, the Senate panel's executive director, said that reflected the decrease they'd seen in the impacts on local communities as a well ages. As production decreases -- which occurs rapidly during the first few years that a shale well is producing -- the truck traffic and other strains on a municipality also shrink, he said.

Ms. White's proposed changes would also narrow how the 40 percent that goes toward environmental initiatives could be used. With the current measure, some funds could be used for open-space preservation and recreation trails. That option would be removed, Mr. Pankake said.

Another change would allow drillers a credit of up to 30 percent of their overall fee if they donate to a county housing trust fund or a nonprofit involved in affordable housing.

Drew Crompton, Mr. Scarnati's chief of staff, said the senator was pleased that his measure will probably be moving forward, but added that there were "some aspects that are going to need further conversation." Those include the proposed changes to how the environmental funds can be spent, he said.

Sen. Tim Solobay, D-Canonsburg, said other changes were under discussion for a broader overhaul of the fee proposal. Funding for continued training of emergency responders, as well as incentives for converting fleet vehicles to natural gas, could be included, he said.

Mr. Solobay said he supported the general aim of the impact fee plan to send the majority of funding to communities with drilling and reserve the remainder for environmental or infrastructure projects.

While he was optimistic that the measure "definitely" can be approved this month alongside the state budget, Mr. Scarnati's staff gave a more cautious forecast.

"It doesn't mean it gets done, but we are going to push the issue," Mr. Crompton said.

Copyright (c) 2011, Pittsburgh Post-Gazette

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