IEA Emergency Oil Release Aims to Protect Economy

- IEA Emergency Oil Release Aims to Protect Economy

Thursday, June 23, 2011
Dow Jones Newswires
LONDON
by James Herron

Acting to protect a fragile global economic recovery against a backdrop of continually high oil prices, the International Energy Agency said Thursday it will release 60 million barrels of oil from emergency stocks to address the supply shortfall from Libya.

The move, announced by the agency's executive director at a hastily-organized press conference in Paris, helped send oil prices sharply lower Thursday, the latest drop in the commodity amid increased uneasiness about the economic outlook.

"The global economy is still emerging from recession and it is essential that this recovery not be endangered by an oil supply shortage," IEA Executive Director Nobuo Tanaka said. "The situation is getting tighter and tighter," he said, adding: "we have to act now and to fill the gap."

The IEA almost never diverts from a its public mantra on the need for OPEC and other producers to pump more oil to keep the economy humming. But Tanaka and other IEA officials have sounded an increasingly brittle note over the economy in recent weeks. Tanaka told a St. Petersburg, Russia economic forum last week that he feared a "very hard landing" due to high prices.

The IEA's surprise decision comes less than three weeks after a meeting of the Organization of Petroleum Exporting Countries disintegrated into chaos as members couldn't agree on a plan to boost output. The IEA has subsequently praised unilateral moves by Saudi Arabia and others to boost output without the OPEC agreement. On Thursday, Tanaka said the emergency release was taken to make up for a delay before Saudi supplies hit the market.

The IEA, which represents consuming countries and is responsible for coordinating emergency releases, said it will add an extra 2 million barrels a day of oil, equivalent to around 2% of global supply, into the market for the next 30 days from emergency stocks.

The IEA consulted OPEC members, as well as Chinese officials and representatives from other countries not officially part of the IEA, IEA officials said.

The IEA's move gave further downward pressure to oil prices on a day in which gloomy economic data had already sent crude lower.

Even before the IEA announcement, oil prices had been trading lower Thursday following surprisingly poor labor department figures in the U.S. But the IEA news sent prices lower still.

Light, sweet crude for August delivery tumbled $5.42, or 5.6%, to $89.99 a barrel on the New York Mercantile Exchange. Prices fell as low as $89.69 a barrel earlier in the session, their lowest since Feb. 22.

Brent crude on the ICE futures exchange fell even further, giving up $7.66 or 6.7%, to $106.55 a barrel, a day after the European contract rose sharply.

Crude prices have dropped around 10% since the June 8 OPEC meeting. Investors have fixated their attention on fears of weakening consumer demand and the ongoing debt crisis in Greece has dominated headlines.

The IEA elected not to release oil from stocks earlier this year, when 1.5 million barrels a day of Libyan oil supplies were shut down by the civil war. However, as the Libyan conflict has dragged on in stalemate, the effect of loss of those crude supplies has become more pronounced, the IEA said.

"The normal seasonal increase in refiner demand expected for this summer will exacerbate the shortfall further. Greater tightness in the oil market threatens to undermine the fragile global economic recovery," the IEA said in a statement.

Demand for oil typically rises in the summer season due to increased gasoline use in the U.S. Oil demand has also exceeded expectations in China as electricity supply problems have prompted higher use of diesel for power generation in China. Oil prices have retreated in recent days, but consumers remain concerned about a supply crunch later this summer.

Previous IEA stock releases followed the first Gulf War and hurricane Katrina.

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

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Ex-BP CEO's Energy Investment Vehicle Aims for $1.6B IPO

- Ex-BP CEO's Energy Investment Vehicle Aims for $1.6B IPO

Thursday, June 09, 2011
Dow Jones Newswires
LONDON (Dow Jones Newswires)
by Alexis Flynn

The new investment vehicle headed by financier Nathaniel Rothschild and former BP Chief Executive Tony Hayward Thursday announced plans for a London listing later this month, that could see the venture raise as much as GBP1 billion to invest in emerging market oil and gas assets.

The special purpose acquisition company, called Vallares in a nod to Rothschild's earlier commodities venture Vallar, marks Hayward's return to the spotlight less than a year after he left BP in the wake of the Deepwater Horizon disaster and Gulf of Mexico oil spill.

The June initial public offering will aim to sate investor hunger for resource stocks following the listing of giant commodities trader Glencore International last month.

Vallares, which has attracted the backing of a number of U.S. and U.K. long-only and hedge funds as well as sovereign wealth funds, will look to invest primarily in upstream oil and gas exploration and production, said Hayward.

"What we're looking to fund is an emerging market player with good resources and good assets but that has neither the capital nor capability to fully develop them, and to merge with them," said Hayward, who explained that Vallares wouldn't use the capital raised to buy assets, but would instead look to use its equity to enact mergers with emerging market firms, who would then benefit from London's access to capital and Vallares' management experience.

Hayward said Vallares was looking at a range of investment targets.

"The truth is we have a very broad base pipeline of potential ideas. It does pretty well spread the world, from South America, West Africa, Russia, the Middle East, South East Asia," said Hayward.

In addition to Hayward and Rothschild, Vallares was founded by former head of Goldman Sachs' U.K. investment banking business, Julian Metherell and Tom Daniel, who helped establish Vallar with Rothschild.

The firm's senior management team, meanwhile, includes ex-BAE Systems Group Finance Director George Rose and former Enterprise Oil CEO Sir Graham Hearne.

Hayward said he would build an operating team around him with "the necessary skills and capabilities." However, he downplayed the prospects of approaching his ex-colleagues at BP. "Where they come from will depend a little bit on the day, but I'm certainly not going to go poaching from any of my previous employers, so you don't need to worry about that," he said.

Credit Suisse Group (CS) is acting as the IPO's global co-ordinator and joint bookrunner, while J.P. Morgan Cazenove is acting as joint bookrunner and Evolution Securities is acting as co-lead manager.

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

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Jakarta Aims to Attract Energy Firms

- Jakarta Aims to Attract Energy Firms

Friday, June 03, 2011
Knight Ridder/Tribune Business News
by Lynn Lee, The Straits Times, Singapore / Asia News

As more people and more vehicles push up demand for energy in Indonesia, the government is under pressure to crank up the output of crude oil and gas.

But first it will have to win over investors -- including foreign firms with deep pockets -- to explore new sites.

These investors complain of a lack of reliable data on oil and gas reserves, frequent changes to laws, and conflicting legal interpretations between the central and local governments as barriers to investment.

All that makes their 15 percent share of the profit split with the government unattractive, they say.

Major players in Indonesia include Chevron from the United States and French oil giant Total. Indonesia's state-owned firm Pertamina accounts for around 15 percent of crude oil production, and owns the eight refineries supplying petrol to the domestic market.

Energy analyst Kuturbi, who like many Indonesians goes by one name, said current oil prices of around US $100 per barrel should be an incentive for companies to take part in oil exploration.

"But since there is low interest, this signals that something is wrong with how the government is managing investment in oil exploration," said Dr. Kuturbi, who is from the Centre for Petroleum and Energy Economics Studies in Jakarta.

Last year, only 21 exploration contracts between investors and the government were signed, compared to 34 in 2008. Two weeks ago, the government offered 20 oil and gas blocks in the first round of tenders this year, and said it would consider giving investors a bigger cut of profits and more favorable tax rates if they explored less accessible sites, such as those in eastern Indonesia.

The director-general of oil and gas at the Energy and Minerals Ministry, Ms Evita Legowo, said the ministry would try to find money for more detailed geological studies.

"We will try for this in the 2012 fiscal year. We haven't got the budget for it now... and some investors are waiting to see if we amend the oil and gas law before they decide whether or not to invest," she said earlier this week.

Mr. Kuturbi pointed out that around 70 percent of exploration contracts signed between 2002 and 2008 experienced delays in starting work, further depressing oil production. Oil and gas regulator BP Migas said these were due to problems with land acquisition to drill wells and poor project management.

Crude oil production -- at around 1.5 million barrels per day in the 1990s -- has in the past few years dropped to between 900,000 and 960,000 barrels per day, below the government's target of around 970,000 barrels. Gas production has been going up but Indonesia exports gas to countries such as Singapore, keeping only half of its output for domestic use by the state electricity company and industries.

The government also aims to raise renewable energy -- such as geothermal and biomass sources -- to 17 per cent of Indonesia's energy mix by 2025.

Energy analyst Pri Agung Rakhmanto, from the Jakarta-based Reforminer Institute, said the government would have to go back to the drawing board and ensure there was a decent investment climate for energy.

"It cannot just be business as usual," he said. "Otherwise, we will not be able to meet our own energy needs in future."

Copyright (c) 2011, The Straits Times, Singapore / Asia News Network

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Colombia Aims to Put Caribbean Oil Exploration Back On Track

- Colombia Aims to Put Caribbean Oil Exploration Back On Track

Wednesday, June 01, 2011
Dow Jones Newswires
by Dan Molinski

Colombia hopes it can resolve before the end of the year environmental issues that have delayed an offshore oil exploration plan in the Caribbean Sea by Spanish oil major Repsol and Colombia's state-controlled Ecopetrol.

Armando Zamora, the head of Colombia's oil licensing agency ANH, told reporters Wednesday that it and the two oil companies hope to reach an agreement with community leaders on the Colombia-owned island of San Andres that would allow for exploration contracts to be signed for the Cayos 1 and Cayos 5 blocks.

Nonetheless, the Colombian government official warned that without final consent from the San Andres island community--which is concerned about the effects on coral reefs and the fishing community--oil exploration in the area west of Nicaragua might prove impossible.

"We're aspiring for a deal to be reached during this year," Zamora said. "But both we the government and the companies don't want to force anything on the island communities. If in the end the communities say 'no,' then it's going to be very difficult" to continue with exploration plans.

The two oil blocks were awarded to Repsol and Ecopetrol last year in a drilling round aimed at boosting production in Colombia's already-booming oil sector. Crude oil output in Colombia reached a record 903,000 barrels a day in April and the government hopes production will reach 1 million barrels a day by the end of 2011.

Colombia has been hoping the waters it owns near San Andres, far from mainland Colombia, could allow it to become an offshore oil driller for the first time. Drilling near mainland Colombia has so far proven to be more gas-prone than oil-prone, although exploration efforts continue in several areas, including the Tayrona block held jointly by Repsol, Ecopetrol and Brazil's state-run company, Petrbras.

An official at Repsol in Bogota confirmed Wednesday that it hasn't yet signed a contract for either the Cayos 1 block or the Cayos 5 block, and he said that until that were to happen the company can't make any comments.

The oil blocks are located in the Seaflower Biosphere Reserve, a marine protected area that reportedly contains 76% of Colombia's coral reefs and is a nesting site for sea turtles. For more than a decade the reserve has been part of the United Nation's network of biosphere reserves.

The plan to begin exploration in the two oil blocks was suspended earlier this year after local groups filed a lawsuit against ANH for awarding the blocks within a protected area before consulting first with fishermen and others in the area that could be affected.

Zamora said the ANH hopes to convince the communities over the coming months that oil exploration would be done in an environmentally friendly fashion, and that the projects could bring jobs and improve the economies for the island of San Andres and Old Providence, a smaller island that is part of the same archipelago and is also owned by Colombia.

The Colombian official said it is too early to estimate how much oil might exist in the area.

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Iran Aims to Produce More Than 35 Tcf of Gas from North Pars Field

Iran Aims to Produce More Than 35 Tcf of Gas from North Pars Field

Wednesday, April 06, 2011
Knight Ridder/Tribune Business News

by  A.Yusifzade, Trend News Agency, Baku, Azerbaijan

Iran aims to produce over 35 trillion cubic feet (TCF) of gas from North Pars field for 35 years, FNA reported the Managing-Director of the South Pars Special Energy Zone (SPSEZ) Organization Seyed Pirooz Mousavi as saying.

By completion of the designed projects in the North Pars region, recoverable capacity of gas from North Pars gas field would reach 35 Tcf, Mousavi added.

The giant gas field has a significant share in Iran's prosperity and the Iranian government is resolved to develop the field, Mousavi stressed.

According to Mousavi, North Pars gas field reserves holds an estimated 57.1 trillion cubic feet of gas (some 1.63 trillion cubic meters).

Mousavi said that Kangan and Upper Dalan gas-bearing formations hold 72 percent of the field reserves and another 28 percent belongs to the Dallan gas formation.

According to the Pars Oil and Gas Company, North Pars Gas Field is one of the biggest independent gas fields of Iran. This field which was discovered in 1967, is located approx. 120 kilometers south east of Bushehr in water depths of 2 to 30 meters in the Persian Gulf.

Exploration activities started in this field in 1963 and the first exploration well was completed in 1967.The total volume of the gas in place of this field is about 58.9 TCF and the recoverable volume of sour gas is approximately 47.2 TCF.