Commodity Corner: Oil Gains After OPEC Meeting Ends in A Draw

- Commodity Corner: Oil Gains After OPEC Meeting Ends in A Draw

Wednesday, June 08, 2011
Rigzone Staff
by Matthew V. Veazey

Thanks in part to a lack of consensus from OPEC, July crude oil gained $1.65 Wednesday.

The front-month contract settled at $100.74 a barrel after the oil cartel, meeting in Vienna, failed to decide whether to increase production quotas for its 12 member countries.

Saudi Arabia, Qatar, United Arab Emirates, and Kuwait advocated raising production—a position shared by the U.S. and other major oil importers that are trying to bolster their weak economies. Iran, Iraq, Venezuela, and the remaining countries save Nigeria urged keeping production at current levels. Nigeria took neither side in the contentious meeting.

Oil peaked at $101.89 and bottomed out at $98.02 during the midweek session.

Much of the central and eastern U.S. is experiencing a heat wave. Not surprisingly, demand for air conditioning has been on the rise. Also not surprisingly, July natural gas settled higher Wednesday.

Natural gas gained two cents to end the day at $4.85 per thousand cubic feet. The futures price fluctuated from $4.77 to $4.87.

Gasoline for July delivery lost a penny Wednesday, settling at $2.98 a gallon. The front-month contract traded within a range from $2.96 to $3.03.

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Opec talks collapse at 'worst ever' meeting

- Opec talks collapse at 'worst ever' meeting

Jun 9, 2011
Tamsin Carlisle and April Yee

VIENNA // The price of oil soared close to US$120 a barrel yesterday as Opec failed to reach agreement on production targets during a six-hour meeting described by the Saudi delegate as "one of the worst" ever.

The 12-nation group gathered behind closed doors at Opec's headquarters in Vienna while oil traders held their breath.

Earlier in the day it had been suggested the crude producers were close to agreement on a plan to increase production targets and to exclude Libya, which has halted production in the wake of its civil war, from the Opec quota system.

The delegates emerged from their meeting an hour earlier than expected, however, stunning oil markets with their failure to agree.

"We were unable to reach an agreement … this is one of the worst meetings we have ever had," the Saudi Arabian oil minister Ali al Naimi said, adding that his country - the world's largest oil exporter - was committed to keeping the market well supplied.

The UAE, Kuwait and Qatar, he said, had joined Saudi Arabia in supporting an increase in production quotas of 1.5 million barrels per day (bpd) over Opec's 28.8 million current daily production.

Nigeria's delegation head and Chairman of the Organization of the Petroleum Exporting Countries (OPEC) Goni Musa, left, Oil Minister of Iran and OPEC President Mohammad Aliabadi, center, and OPEC Secretary General Abdalla Salem el-Badri, right, talk to each other during the OPEC meeting in Vienna, Austria, Wednesday, June 8, 2011. (AP Photo/Bela Szandelszky) - AP

Libya also sparked intrigue as Muammar Qaddafi unexpectedly sent a delegate to the meeting, stymying plans by Libyan rebels to attend. Libya then joined Algeria, Angola, Ecuador, Venezuela, Iraq and Iran to oppose lifting quotas.

"Unfortunately at this time we are unable to reach any consensus," said Abdalla el Badri, the secretary general of the organisation that controls about 40 per cent of crude oil supply.

The International Energy Agency said it was disappointed with Opec's failure and called for "a prompt increase in supply".

The Paris-based group of energy-consuming nations added that any "potential increases in prices" caused by Opec's failure "risk undermining economic recovery".

Brent crude, the European benchmark, immediately shot up by more than $1 a barrel in late trading in London, hitting $118.58.

That widened the already yawning gap between Brent and the US benchmark West Texas Intermediate crude, which had slipped below $99 this week. The US crude climbed back above $100 early in yesterday's trading session on the New York Mercantile Exchange.

In the absence of a decision to raise the group's official output ceiling, which is some 1.4 million bpd lower than actual production in recent months, Opec will again leave unchanged the target that it set in December 2008, after crude had slid by about 80 per cent from the record $147 per barrel reached the previous July.

In what some analysts see as a reprise of the situation prevailing in the first half of 2008, crude has climbed steeply over the past eight months, with Brent averaging about $109 this year.

"Certain members believed that we should have had a production increase today. Others believed we should have some time to further assess the situation and then come to a decision," said Mohammad Aliabadi, the Opec president.

"The final proposal was that at the most we can wait for about three months during which we will assess the market situation, assess the demand and decide after that." he said.

But even on that modest proposal, the group could not reach agreement yesterday.

"I hope that in the period of three months at the latest we will be able to hold an extraordinary meeting to be able to come to a decision," said Mr Aliabadi, who only last week was appointed the caretaker oil minister of Iran.

Despite the lack of consensus, Opec took the unprecedented step of emphasising yesterday the meeting was not rancorous.

"The ministers are friends. The atmosphere was good. We had no conflict whatsoever," Mr el Badri said. "The reason we were unable to reach a decision was that everyone had their own information and data … so we were unable to agree. But the atmosphere was really friendly.

"As of today we're not in crisis. We have enough stocks; there is no shortage whatsoever."

Mr Aliabadi called for markets to "remain calm", while acknowledging that Opec ministers had failed to achieve their prime objective at yesterday's meeting, which was to reach a decision on the group's output target.

But analysts predicted a choppy market reaction with further oil price volatility virtually assured. "It's going to go up and then it's going to go down to where we are again, because we have demand destruction in the US, southern Europe," said Olivia Meyer, the chief executive of the MRL consultancy in London.

Mr el Badri said the Opec ministers specifically debated whether to raise crude production in the third and fourth quarters of this year.

Mr el Badri said the Opec ministers did not address the situation of Libya. There was no discussion of whether the North African country should be exempted from complying with an output quota when production and exports from its oilfields resume.

tcarlisle@thenational.ae
ayee@thenational.ae


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Commodity Corner: Oil Edges Up ahead of OPEC Meeting

- Commodity Corner: Oil Edges Up ahead of OPEC Meeting

Tuesday, June 07, 2011
Rigzone Staff
by Saaniya Bangee

Oil futures gained 0.1 percent Tuesday as traders await results from this week's OPEC meeting.

Crude for July delivery gained 8 cents to settle at $99.09 a barrel. Prices dropped as low as $97.74 before rebounding in the last 90 seconds of trading. A weaker dollar helped prevent oil prices from dropping too low.

The 12-member Organization of Petroleum Exporting Countries (OPEC) will be meeting Wednesday for the first time since the political uprising in the Middle East and North Africa. Analysts anticipate that OPEC members will increase oil production in an effort to hinder rising energy prices. By increasing production, oil prices may decrease—making up for the loss of Libyan exports due to the unrest. However, as global demand increases, it may be harder for OPEC to provide additional crude later—ultimately increasing oil prices.

Due to above-average temperatures, front-month natural gas rose for the second straight day settling at a 10-month high. Natural gas gained nearly a penny, ending the trading session at $4.83 per thousand cubic feet. The heat spurs demand for air conditioning, in term boosting the need for power-plant fuel. The intraday range for natural gas was $4.764 to $4.854 Tuesday.

July gasoline settled at $2.99 a gallon, up 4.20 cents from the previous session. Prices for gasoline traded between $2.928 and $3.002 Tuesday.

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Libya Sends Longtime Gadhafi Ally to OPEC Meeting

- Libya Sends Longtime Gadhafi Ally to OPEC Meeting

Monday, June 06, 2011
Dow Jones Newswires
by Benoit Faucon

Omran Abukraa, a long-time close ally of Col. Moammar Gadhafi and the former head of Libya's national electricity company, will be representing Libya at the OPEC meeting Wednesday, a person familiar with the matter said Monday.

But people close to anti-Gadhafi rebels said they were still considering sending an envoy to Vienna, which could set the stage for a confrontation between both parties.

Abukraa "will be replacing Shokri Ghanem [who has defected] at the meeting, but it's unclear if he is the new head of NOC [National Oil Corp.]," said the person familiar with Gadhafi's circles.

The Organization of Petroleum Exporting Countries is set to discuss a possible output increase at one of its most crucial gatherings in years.

The news about Libya's representation will lift some uncertainty about the meeting after Ghanem, the long-time head of the National Oil Corp. who normally represents Libya at OPEC, recently said he had joined the opposition to Gadhafi.

Abukraa is the former head of the General Electricity Company of Libya.

But rebels from the Transitional National Council, which is seeking Gadhafi's overthrow, are still considering whether or not they would send an emissary to the meeting.

"It will be discussed today [Monday] in Benghazi," one TNC official said. Another person close to the rebels said OPEC had been told that the rebels plan to send representatives to Vienna.

But the Council has been recognized by only handful of countries--including OPEC member Qatar--as a the official Libyan government.

That could pose problems for Libyan rebels' efforts to gain official representation at OPEC.

OPEC meets Wednesday for the first time since the Arab Spring against a backdrop of triple-digit oil prices. The producer's organization had until recently been expected to hold production steady.

But in recent days, several Gulf producers have signaled favoring an output hike when OPEC meets Wednesday to respond to mounting demand, people familiar with the matter said this weekend. However, at least one OPEC member, Iran, vocally opposes such a move.

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

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New Oil Minister Likely to Represent Iran at OPEC Meeting

- New Oil Minister Likely to Represent Iran at OPEC Meeting

Friday, June 03, 2011
Dow Jones Newswires
by Benoit Faucon

Iran's new oil ministry caretaker is likely to represent Iran at the next meeting of the Organization of Petroleum Exporting Countries, a person familiar with the matter said Friday.

That would logically make him the chairman of the crucial oil policy meeting Wednesday in Vienna, with the Islamic Republic having assumed the group's rotating presidency this year.

Late Thursday, Iranian president Mahmoud Ahmadinejad appointed Mohammad Aliabadi as the caretaker of the oil ministry, bowing to parliamentary pressure against his previous decision to run the ministry himself.

Aliabadi, a close Ahmadinejad loyalist, is better known as the head of Iran's National Olympic Committee and as the former head of its National Sports Organization.

"He has worked closely with the president," the person said.

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

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Iran Economy Minister May Attend OPEC Meeting June 8

- Iran Economy Minister May Attend OPEC Meeting June 8

Tuesday, May 31, 2011
Dow Jones Newswires
by Benoit Faucon

Iran's Economy Minister Shamseddin Hosseini may represent the Islamic Republic at the next meeting of the Organization of Petroleum Exporting Countries, a person familiar with the matter said over the weekend.

"It's a possibility," the person familiar with the matter said.

The considerations are bringing some clarity over who could chair the gathering at a key juncture for the producer group.

Iran's Oil Ministry caretaker head, President Mahmoud Ahmadinejad, has told officials he wouldn't attend, breaking away from earlier governmental statements that he would come.

Attendance by the economy minister, who would represent the holder of the presidency Iran, would make sense for the country at a time of increased budgetary needs from oil revenues.

But Iran's OPEC governor Muhammad Ali Khatibi said last week that "we are waiting for a decision from the president."

OPEC will have to decide June 8 in Vienna if it increases its output quotas or keeps them unchanged.

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

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Ahmadinejad Will Not Attend OPEC Meeting in Vienna

- Ahmadinejad Will Not Attend OPEC Meeting in Vienna

Tuesday, May 24, 2011
Knight Ridder/Tribune Business News
by Farshid Motahari, dpa, Berlin

President Mahmoud Ahmadinejad will not attend the next OPEC meeting scheduled for June 8 in Vienna, an Iranian oil ministry official said Monday.

Shojaeddin Bazargani told the official news agency IRNA that in a recent meeting, the president said that a minister would be assigned to represent the country both in the Vienna meeting and OPEC's joint session with the European Union.

Ahmadinejad last week dismissed oil minister Massoud Mirkazemi and took over the ministry himself, which would have also made him rotating chairman at the OPEC meeting in Vienna.

But Iran's constitutional watchdog, the Guardian Council, rejected the plan as illegal and said that Ahmadinejad could not run the oil ministry as caretaker.

The president's legal deputy, Fatemeh Bodaghi, said however that Ahmadinejad would remain caretaker of the ministry since the Guardian Council can only intervene on future decisions but not on those already made.

Ahmadinejad had argued that he planned to trim the cabinet, and one of his decisions was to abolish the oil ministry and merge it with the energy ministry. The plan led to wide-spread criticism in Parliament.

Ahmadinejad is involved in a row with Iran's clergy and conservative factions over his reform plans, which include reducing the cabinet from 21 to 17 ministries.

As caretaker of the oil ministry, Ahmadinejad would have been obliged to chair as well the OPEC meeting next month in Vienna, where protests against the Iranian president are reportedly being planned.

Copyright (c) 2011, dpa, Berlin

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Oxy Reviews 2010 Progress at Annual Meeting

Oxy Reviews 2010 Progress at Annual Meeting

Friday, May 06, 2011
Occidental Petroleum Corp.

Occidental Petroleum Corp. Executive Chairman Ray R. Irani and Oxy President and Chief Executive Officer Stephen I. Chazen reported the company's 2010 operational, financial and long-term achievements at the company's annual stockholders' meeting Friday in Santa Monica, California.

"Today marks a noteworthy moment for the future of the company. As announced last October, consistent with the Board's long-established succession plan, Steve Chazen was elected as President and Chief Executive Officer. I will continue as full-time Executive Chairman. The Board believes that Occidental will benefit from the continuation of our long and successful partnership," said Irani.

"For 17 years I have had the pleasure of working with Steve. He is widely recognized as one of the best financial minds in the industry. Steve has served in a number of important posts at Oxy, from head of business development, to Chief Financial Officer, to President and Chief Operating Officer."

Chazen noted, "Ray and I have worked side by side during these years. Oxy's achievements have been impressive: record profits, record market capitalization, recurring increases in production, significant reserve replacement, high credit ratings, and a very strong performance in total shareholder return. Oxy's cumulative stockholder return was 914 percent over the past 10 years. It has been a challenging and successful past and we now look forward to a challenging and even more successful future."

In reviewing Oxy's 2010 performance, Irani said, "Oxy delivered record production, a strengthened asset base and solid profitability in 2010, building value for our stockholders while positioning the company for continued growth and top-tier performance."

Oxy increased worldwide production by 5 percent in 2010 to a company-record of 753,000 barrels of oil equivalent (BOE) per day. In addition, the company replaced 150 percent of its production in 2010, adding a total of 409 million BOE in proved reserves.

Oxy ended 2010 with

Marcellus Panel Looks for Common Ground at First Meeting

Marcellus Panel Looks for Common Ground at First Meeting

Monday, March 28, 2011
Pittsburgh Post-Gazette
by  Laura Olson

The public comments at the end of Friday's inaugural meeting of the state Marcellus Shale Advisory Commission showed part of the challenge facing that panel during the next four months.

One county commissioner stood up to laud the number of jobs that gas drilling has brought to his community. He was followed by a northeastern resident who said her property value has plummeted because of the surrounding well pads, and another woman citing concerns about water quality.

"I moved up here to be at peace with nature," Wyoming County resident Joanne Fiorito told the panel. "You have now ripped my American dream apart, and I am appalled and outraged."

The 30-member panel has 120 days to assess how the state is managing natural gas drilling, as well as find some policy agreement between those skeptical of the booming business and those benefiting from it.

The group will report back to Gov. Tom Corbett in mid-July on what changes they recommend to balance job growth and environmental protection.

Their first task during the meeting, which lasted for more than four hours, was dividing the topics to be tackled among four work groups -- health, safety and environmental protection; economic and workforce development; infrastructure; and local impacts and emergency response.

Those groups will begin their work shortly, and give an update of their progress at the commission's next meeting on April 27.

A locally assessed impact fee on gas drillers will be part of those talks, said Lt. Gov. Jim Cawley, the commission's chairman. But a statewide severance tax, which the Corbett administration opposes, is "off the table," he added.

Several of the commission members -- who represent state government, local communities, environmental advocates, industry leaders and academia -- noted a need for some form of levy or fee to help local governments with rising costs.

Mr. Cawley said he'd like to see figures on what the drilling industry is costing municipalities and counties in additional road construction, staffing, emergency response calls and other growing demands.

Several on the panel talked about using a "fact-based" process to figure out how to responsibly grow the drilling industry, and to present Pennsylvania as the best place for drilling companies to invest.

"We have to win," said Nicholas Haden, vice president of Reserved Environmental Services, a wastewater treatment facility in New Stanton, Westmoreland County. "The Marcellus Shale is not the only shale play in the world."

Presenters giving a snapshot of the industry's activities relayed data on how much interest the Marcellus, and the state's other shale formations, already have garnered.

Southwestern Pennsylvania is near the forefront of activity, with Washington and Greene among the top five counties for number of wells. Department of Environmental Protection statistics show Washington with 305 wells drilled since 2007 and 179 in Greene, which puts them third and fourth behind Bradford and Tioga.

Those wells, and others in the works, are expected to bring more than 10,000 industry jobs to the state's southwest by 2014, said Tom Murphy, of Penn State's Marcellus Center for Outreach and Research.

But amid the presentations came questions to be discussed in the coming months: How should the state help non-drilling businesses, which are losing workers to higher-paying gas companies and having trouble filling the resulting openings?

And how many hotel rooms and apartment buildings should towns add to accommodate an industry that tends to move money and manpower quickly if markets shift?

Some lessons may be found in looking at the southern shale gas-producing states, said Teri Ooms, of the Institute for Public Policy and Economic Development.

A major complaint in Arkansas, and in some parts of Pennsylvania already, is road damage and congestion, said Ms. Ooms. She said one strategy that helped ease tensions was posting truck routes and advertising when those roads would have heavy traffic.

Other problems and solutions will be the source of much-welcomed debate by the commission and members of the public, said Mr. Cawley.

"We want to hear it from all sectors, because we want to provide a blueprint to Gov. Corbett in the middle of July that truly outlines all of the benefits as well as any potential impacts so that he can make an informed decision," he said.