Platts, Jan 17, 2011
Israel Corporation Ltd has given the Tamar consortium until February 1 to guarantee that it can meet the holding company's timetable for supplying natural gas to its subsidiaries, according to Israel Corporation Ltd officials Monday.
The request came in the form of a letter to the partners in the Tamar consortium.
The Israel Corp. letter stated that if the Tamar consortium was unable to meet the timetable then the company would be free to sign agreements with other suppliers.
Israel Corp is expected to be the largest industrial consumer of natural gas in Israel and second only to the state owned Israel Electric Corp.
Last month, the holding company signed an agreement with East Mediterranean Gas Supply Corp., or EMG, for the initial supply of 1.4 billion cubic meters of gas from Egypt beginning in the second quarter of 2011. [See my post here -- D.R.]
The 20-year EMG contract is for supplies to three companies controlled by Israel Corp -- Oil Refineries Ltd, Israel Chemicals and OPC Rotem.
A senior Israel Corp. official said that a contract for an additional 1.5 Bcm/year of supplies could eventually go to the Tamar consortium, which comprises Noble Energy Inc, Delek Drilling, Avner Oil and Gas, Isramco and Dor Gas.
Israel Corp. CEO Nir Gilad made it clear that the holding company would prefer to buy from local producers. But Israel Corp. said at the time of the signing of the EMG contract that it also had an option until March 31 for an additional 1.5 Bcm/year in supplies from Egypt.
The Tamar consortium is hoping to commence deliveries of gas in 2013 but the development of the huge offshore field has been held up over the debate in Israel over a change in the tax regime for oil and gas exploration companies.
The companies charge that the proposed changes by a finance ministry-appointed committee earlier this month would make it difficult to raise the necessary funds for developing the field.
The committee headed by Professor Eitan Sheshinski recommended increasing the government take on oil and gas profits [i.e. the share of the state in the net profits -- D.R.] from the current level of less than 30% to 50 to 62%. In addition, the committee recommended a tax on profits ranging from 20% to a maximum of 50%, accelerated depreciation, a lower level of taxation be imposed on oil and gas fields that begin production by 2014, retaining the 12.5% royalty tax and the cancellation of the depletion allowance. The Israeli government is expected to decide in the coming weeks on the tax issue.
The agreement between the Israel Corp. and EMG was seen as a setback for the Tamar consortium, which was hoping to clinch the entire deal. ...
(Prime Minister Binyamin Netanyahu on Tuesday (Jan 18) said that he fully accepts the recommendations of the Sheshinski Committee. -- D.R.)
Wednesday, January 19, 2011
Tuesday, January 18, 2011
Iraq’s Upstream Opening Beginning To Bear Fruit
by Editorial Team, MEES, Jan 17, 2011
Capacity at 3 Iraqi oilfields (Zubair, Rumaila, West Qurna-1) operated by IOCs has risen by 300,000 b/d, taking the country’s production level to 2.7mn b/d.
(Read also my blog posts under the category/label "Iraq" -- D.R.)
Capacity at 3 Iraqi oilfields (Zubair, Rumaila, West Qurna-1) operated by IOCs has risen by 300,000 b/d, taking the country’s production level to 2.7mn b/d.
(Read also my blog posts under the category/label "Iraq" -- D.R.)
BP, CNPC Increase Production from Iraq's Rumaila Field
by Eric Watkins, OGJ, Jan 11, 2011
Output at Iraq’s giant Rumaila oil field has increased by more than 10% above the 1.066 million b/d ... [initial production rate -- D.R.] established in December 2009, ...
“This production increase is an important step for Iraq and demonstrates the success of the contracts awarded,” said Iraq’s oil minister Abdul Kareem Luaibi, referring to the contract awarded to the two firms, along with Iraq’s State Oil Marketing Co. (SOMO).
Management of the field’s development has been carried out by the Rumaila Operating Organization (ROO), which was originally staffed by 4,000 employees from Iraq’s state-owned South Oil Co. along with 100 technical experts and managers from BP and CNPC.
BP said that the pace of activity on Rumaila has built steadily over the past year, with 20 new rigs now mobilized in the field. Altogether over the past year, BP said 41 wells have been drilled, 103 workovers completed, and 122 km of flowlines laid. Employment has more than doubled to 10,000 workers.
On signing the TSC in 2009, BP and CNPC said they planned to invest $15 billion in cash over the 20 year lifetime of the contract with the intention of increasing plateau production to 2.85 million b/d ...
“Once production has been raised by 10% from its current level of about 1 million b/d, costs will start to be recovered, and fees of $2/bbl earned on the incremental oil production,” BP said at the time.
“Increasing production at Rumaila, the world’s fourth largest oilfield, has been a massive undertaking,” said BP Chief Executive Bob Dudley this week, adding that “We look forward to working with our partners to make Rumaila the world’s second largest oil field.”
In April 2010, BP let contracts worth about $500 million to three firms for drilling. Schlumberger, in partnership with Iraqi Drilling Co., received a contract for three rigs; Daqing Drilling a contract for three rigs; and Weatherford a contract for one rig (OGJ Online, Apr. 5, 2010).
The Rumaila consortium is comprised of BP, 38%, CNPC 37%, and SOMO, 25%.
(Meeting this production target, and the approval of the Rumaila rehabilitation plan last year, represents the achievement of two significant contractual requirements of the technical services contract--TSC--signed between BP, PetroChina, the SOMO and the South Oil Company in November 2009. The terms of the TSC awarded to foreign companies stipulate that the 10% production increase from each of the fields awarded for further development must come within three years of the contracts coming into effect though several foreign companies involved have said the planned increments are well ahead of schedule.--see e.g., Zubair development, too. View my posts under the category/label "Iraq" -- D.R.)
Sunday, January 16, 2011
China: The World's Largest Energy Consumer and Investor in Clean Energy
PR Newswire via EIN News: Oil & Gas Industry Today, Jan 12, 2011
New Wilson Center Publication Explores China's Energy and Climate TrendsIn 2010 China achieved number one status in two infamous categories: energy consumption and carbon emissions. In the same year, however, it was also the world's number one investor in clean energy, nearly doubling the U.S. investment over the same period.
While counterintuitive, these are just some of the indicators of the intriguing trends in China's energy and environment sectors. This China Environment Forum publication takes a deep look into fast changing energy and climate trends within China and how they pose opportunities and challenges to U.S.-China relations.
"China and the United States are the two largest national emitters of the greenhouse gases that contribute to global climate change, and together comprise almost half of global emissions. Any global solution to climate change must therefore include participation by these two countries." –Joanna Lewis, Georgetown University.
Highlights of the report include:
- An extensive overview of the history of U.S.-China climate and energy cooperation
- The status and potential of carbon capture and sequestration in China
- Spotlights on NGO activities in China
- Extensive articles looking into green jobs, MRV issues, U.S.-China cooperation on renewables, industrial energy efficiency, and water pollution and supply issues within China
(The IEA data--World Energy Outlook 2010 - Executive Summary--suggests that China overtook the United States in 2009 to become the world's largest energy consumer. Srikingly, Chinese energy use was only half that of the United States in 2000 -- D.R.)
Saturday, January 15, 2011
Rosneft and BP Form Global and Arctic Strategic Alliance
BP website, Jan 14, 2011
BP and Rosneft announced today [Jan 14] that they have agreed a groundbreaking strategic global alliance.
Rosneft and BP have agreed to explore and develop three license blocks - EPNZ 1,2,3 – on the Russian Arctic continental shelf. [See map below -- D.R.] These licences were awarded to Rosneft in 2010 and cover approximately 125,000 square kilometres in a highly prospective area of the South Kara Sea. This is an area roughly equivalent in size and prospectivity to the UK North Sea.
Map: Location and Scale of South Kara Sea Licences
Source: BP
This historic agreement creates the first major equity-linked partnership between a national and international oil company. Following completion of this agreement, Rosneft will hold 5 per cent of BP’s ordinary voting shares in exchange for approximately 9.5 per cent of Rosneft’s shares. The share swap component of the alliance creates strategic alignment to pursue joint [oil and gas] projects and demonstrates mutual confidence in the growth potential of both companies.
BP and Rosneft have also agreed to establish an Arctic technology centre in Russia which will work with leading Russian and international research institutes, design bureaus and universities to develop technologies and engineering practices for the safe extraction of hydrocarbon resources from the Arctic shelf. The technology centre will build on BP’s deep offshore experience and learnings with full emphasis on safety, environmental integrity and emergency spill response capability.
Rosneft and BP have agreed to continue their joint technical studies in the Russian Arctic to assess hydrocarbon prospectivity in areas beyond the Kara Sea. The parties will also seek additional opportunities for international collaboration beyond their 50/50 joint venture partnership in Ruhr Oel GmbH, a refining joint venture in Germany (subject to completion of Rosneft’s recent purchase of 50 per cent of Ruhr Oel from PDVSA).
Igor Sechin, Deputy Prime Minister of the Russian Federation, who participated in the signing ceremony, said: “Global capital and Russian companies are clearly ready to invest in world class projects in Russia; and Russian companies are quickly emerging at the forefront of the global energy industry.”
BP’s chief executive, Bob Dudley, said: “This unique agreement underlines our long-term, strategic and deepening links with the world’s largest hydrocarbon-producing nation. We are very pleased to be joining Russia’s leading oil company to jointly explore some of the most promising parts of the Russian Arctic, one of the world’s last remaining unexplored basins. Underpinning this alliance is a new type of relationship based on a significant cross-shareholding, and bringing together technology, exploration and safe and responsible field development skills. We are very pleased to welcome Rosneft as a strategic partner and major shareholder in the BP Group.”
Rosneft’s President, Eduard Khudainatov, said: “I am pleased that in just a few months we’ve significantly moved forward in implementing Russia’s offshore strategy. In its operations, our future joint venture will utilize the experience and expertise of BP, one of the leaders in the global oil and gas industry. This project is unique in its complexity and scale both for Russia and the global oil and gas industry. We see it as the next step in developing our relations with BP.”
BP Chairman, Carl-Henric Svanberg, said: “The world’s need for energy continues to increase. BP is working with national oil companies using its leading exploration skills and expertise to meet this demand. This is a trend which will increase as access to resource becomes scarcer.
This landmark deal creates a deep partnership which represents a new stage in these relationships. The exchange of shares demonstrates our mutual commitment. The BP board believes that the combination of assets and skills will unlock significant value and thus the issue of shares to Rosneft is in the interests of all shareholders.”
The aggregate value of the shares in BP to be issued to Rosneft is approximately $7.8bn (as at close of trading in London on 14 January 2011). The transaction is subject to certain listing approvals and the completion of certain administrative requirements and is expected to complete within a few weeks. BP and Rosneft view their cross-shareholdings as long term and strategic.
Rosneft is Russia’s leading oil producing company. Read More
(BP already has a 1.3% stake in Rosneft and as a result of the announced transaction, BP's stake in Rosneft will increase to 10.8% -- i.e. 9.5% + 1.3%. Also, Russia accounts for around one quarter of the British energy giant's total production -- before the U.S. oil spill. In 1998, BP and Rosneft started an alliance that eventually led to the formation of three joint ventures to conduct exploration on the Russian continental shelf, offshore Sakhalin. BP also owns 50% of Russia's third biggest oil producer, TNK-BP -- see my blog post here. Rosneft's major shareholder (75.16% of shares) is the company Rosneftegaz, 100% state-owned. For the Rosneft's profile, see Platts Top 250 Global Energy Company Rankings -- No. 14, in my blog here. Rosneft has proved reserves of approximately 18.1 billion barrels of oil and 816 billion cubic meters of gas. As of year-end 2009, Rosneft’s total proved oil and gas reserves under PRMS classification were 22.9 billion barrels of oil equivalent, among the highest for a publicly traded petroleum company worldwide, according to Rosneft's website. Also -- according to Platts data, the company operates 1,690 filling stations in 39 regions of the Russia Federation and 7 refineries. It has operations primarily in Western Siberia, Southern and Central Russia, Timan-Pechora, Eastern Siberia, and the Far East, as well as in Kazakhstan and Algeria. -- D.R.)
BP and Rosneft announced today [Jan 14] that they have agreed a groundbreaking strategic global alliance.
Rosneft and BP have agreed to explore and develop three license blocks - EPNZ 1,2,3 – on the Russian Arctic continental shelf. [See map below -- D.R.] These licences were awarded to Rosneft in 2010 and cover approximately 125,000 square kilometres in a highly prospective area of the South Kara Sea. This is an area roughly equivalent in size and prospectivity to the UK North Sea.
Map: Location and Scale of South Kara Sea Licences
This historic agreement creates the first major equity-linked partnership between a national and international oil company. Following completion of this agreement, Rosneft will hold 5 per cent of BP’s ordinary voting shares in exchange for approximately 9.5 per cent of Rosneft’s shares. The share swap component of the alliance creates strategic alignment to pursue joint [oil and gas] projects and demonstrates mutual confidence in the growth potential of both companies.
BP and Rosneft have also agreed to establish an Arctic technology centre in Russia which will work with leading Russian and international research institutes, design bureaus and universities to develop technologies and engineering practices for the safe extraction of hydrocarbon resources from the Arctic shelf. The technology centre will build on BP’s deep offshore experience and learnings with full emphasis on safety, environmental integrity and emergency spill response capability.
Rosneft and BP have agreed to continue their joint technical studies in the Russian Arctic to assess hydrocarbon prospectivity in areas beyond the Kara Sea. The parties will also seek additional opportunities for international collaboration beyond their 50/50 joint venture partnership in Ruhr Oel GmbH, a refining joint venture in Germany (subject to completion of Rosneft’s recent purchase of 50 per cent of Ruhr Oel from PDVSA).
Igor Sechin, Deputy Prime Minister of the Russian Federation, who participated in the signing ceremony, said: “Global capital and Russian companies are clearly ready to invest in world class projects in Russia; and Russian companies are quickly emerging at the forefront of the global energy industry.”
BP’s chief executive, Bob Dudley, said: “This unique agreement underlines our long-term, strategic and deepening links with the world’s largest hydrocarbon-producing nation. We are very pleased to be joining Russia’s leading oil company to jointly explore some of the most promising parts of the Russian Arctic, one of the world’s last remaining unexplored basins. Underpinning this alliance is a new type of relationship based on a significant cross-shareholding, and bringing together technology, exploration and safe and responsible field development skills. We are very pleased to welcome Rosneft as a strategic partner and major shareholder in the BP Group.”
Rosneft’s President, Eduard Khudainatov, said: “I am pleased that in just a few months we’ve significantly moved forward in implementing Russia’s offshore strategy. In its operations, our future joint venture will utilize the experience and expertise of BP, one of the leaders in the global oil and gas industry. This project is unique in its complexity and scale both for Russia and the global oil and gas industry. We see it as the next step in developing our relations with BP.”
BP Chairman, Carl-Henric Svanberg, said: “The world’s need for energy continues to increase. BP is working with national oil companies using its leading exploration skills and expertise to meet this demand. This is a trend which will increase as access to resource becomes scarcer.
This landmark deal creates a deep partnership which represents a new stage in these relationships. The exchange of shares demonstrates our mutual commitment. The BP board believes that the combination of assets and skills will unlock significant value and thus the issue of shares to Rosneft is in the interests of all shareholders.”
The aggregate value of the shares in BP to be issued to Rosneft is approximately $7.8bn (as at close of trading in London on 14 January 2011). The transaction is subject to certain listing approvals and the completion of certain administrative requirements and is expected to complete within a few weeks. BP and Rosneft view their cross-shareholdings as long term and strategic.
Rosneft is Russia’s leading oil producing company. Read More
(BP already has a 1.3% stake in Rosneft and as a result of the announced transaction, BP's stake in Rosneft will increase to 10.8% -- i.e. 9.5% + 1.3%. Also, Russia accounts for around one quarter of the British energy giant's total production -- before the U.S. oil spill. In 1998, BP and Rosneft started an alliance that eventually led to the formation of three joint ventures to conduct exploration on the Russian continental shelf, offshore Sakhalin. BP also owns 50% of Russia's third biggest oil producer, TNK-BP -- see my blog post here. Rosneft's major shareholder (75.16% of shares) is the company Rosneftegaz, 100% state-owned. For the Rosneft's profile, see Platts Top 250 Global Energy Company Rankings -- No. 14, in my blog here. Rosneft has proved reserves of approximately 18.1 billion barrels of oil and 816 billion cubic meters of gas. As of year-end 2009, Rosneft’s total proved oil and gas reserves under PRMS classification were 22.9 billion barrels of oil equivalent, among the highest for a publicly traded petroleum company worldwide, according to Rosneft's website. Also -- according to Platts data, the company operates 1,690 filling stations in 39 regions of the Russia Federation and 7 refineries. It has operations primarily in Western Siberia, Southern and Central Russia, Timan-Pechora, Eastern Siberia, and the Far East, as well as in Kazakhstan and Algeria. -- D.R.)
Friday, January 14, 2011
World Watch: [Russian Oil Production Hits Post-Soviet Record in 2010]
by Nelli Sharushkina, Energy Intelligence (EI)
Russia had a good year in 2010, with ... oil production rising by 2.2% to a record 10.145 million b/d, according to preliminary data issued this week. But the outlook for 2011 is uncertain. The energy ministry expects output to remain at 2010 levels, while oil companies are more vague, with one or two hinting that much will depend on Moscow's taxation policies. The increase in 2010 was driven largely by greenfield projects. The 255,000 b/d Vankor field was the main contributor to a 6.2% rise at state-controlled Rosneft, Russia's largest oil company, which produced an average of 2.26 million b/d. TNK-BP, the third largest, increased output by 2.5% to 1.45 million b/d, mainly because of new fields. Lukoil, the second biggest producer, which saw its Russian output drop 2.3% to 1.81 million b/d, has not ruled out a further decline, as it may redirect spending to strategic projects overseas and away from its traditional production base in Western Siberia. Surgutneftegas, whose output fell 0.1% to 1.196 million b/d, is targeting growth of 1.9% this year but has warned that drilling is not effective under the current tax regime.
(Thus, the forecast regarding the Russia's record oil production in 2010, has come true. -- See the related post, here. Energy Ministry’s CDU-TEK statistics unit data showed Russia pumped a total of 10.145 million b/d last year, a record since the collapse of the Soviet Union, up from 9.93 million b/d in 2009 and 9.78 million b/d in 2008 (total output including crude plus lease condensate; natural gas plant liquids; other liquids; etc). In the Soviet-era, Russian production peaked in 1987 at 11.48 million b/d. It is also worth noting that Russia is the world's largest crude oil producer, followed by Saudi Arabia---please see my post here. -- D.R.)
Russia had a good year in 2010, with ... oil production rising by 2.2% to a record 10.145 million b/d, according to preliminary data issued this week. But the outlook for 2011 is uncertain. The energy ministry expects output to remain at 2010 levels, while oil companies are more vague, with one or two hinting that much will depend on Moscow's taxation policies. The increase in 2010 was driven largely by greenfield projects. The 255,000 b/d Vankor field was the main contributor to a 6.2% rise at state-controlled Rosneft, Russia's largest oil company, which produced an average of 2.26 million b/d. TNK-BP, the third largest, increased output by 2.5% to 1.45 million b/d, mainly because of new fields. Lukoil, the second biggest producer, which saw its Russian output drop 2.3% to 1.81 million b/d, has not ruled out a further decline, as it may redirect spending to strategic projects overseas and away from its traditional production base in Western Siberia. Surgutneftegas, whose output fell 0.1% to 1.196 million b/d, is targeting growth of 1.9% this year but has warned that drilling is not effective under the current tax regime.
(Thus, the forecast regarding the Russia's record oil production in 2010, has come true. -- See the related post, here. Energy Ministry’s CDU-TEK statistics unit data showed Russia pumped a total of 10.145 million b/d last year, a record since the collapse of the Soviet Union, up from 9.93 million b/d in 2009 and 9.78 million b/d in 2008 (total output including crude plus lease condensate; natural gas plant liquids; other liquids; etc). In the Soviet-era, Russian production peaked in 1987 at 11.48 million b/d. It is also worth noting that Russia is the world's largest crude oil producer, followed by Saudi Arabia---please see my post here. -- D.R.)
Thursday, January 13, 2011
TAPS to Be Shut Down Again 36 Hours for Repairs This Weekend
Platts, Jan 13, 2011
The Trans Alaska Pipeline system, restarted on Tuesday after a four-day [3½-day] stoppage due to a small leak, will be shut down again for 36 hours this weekend to install bypass piping at Pump Station 1, according to the Joint Information Center, a task force comprised of Alyeska and state and federal government agencies.
Other repairs will be made at the pump station, where the discovery of a leak on Saturday [Jan 8] resulted in the shutdown.
Regulators approved a temporary restart on Tuesday because of worries about technical risks associated with a prolonged cold-weather shutdown. ...
Since the restart Tuesday about 55 barrels of crude oil have been recovered from a 800-gallon containment vault from the still leaking pipeline. Vacuum trucks are removing oil from the vault as it accumulates.
"The current startup of TAPS is a temporary startup and one part of a multi-part plan to return to normal operations," the JIC said in a release issued Wednesday in Alaska.
After the interim startup, throughput reached 400,000 b/d on Wednesday. The pipeline had been flowing at about 630,000 b/d before it was shut.
Crude inventories at the Valdez terminal, from where ANS is shipped out, were down by 789,575 barrels to 2.158 million barrels on Wednesday, compared with 2.948 million barrels on Friday.
A Platts survey of refiners in California and Washington said they have not been affected by the closure of the TAPS.
(See the related post on this topic, as well as my remarks and map, here. The 84-hour shutdown turned out to be the longest since Aug 15, 1977, when the TAPS was shut down for four days, 14 hours and 11 minutes, a few months after it went into operation. Or the second longest since the pipeline began operating in 1977. -- D.R.)
The Trans Alaska Pipeline system, restarted on Tuesday after a four-day [3½-day] stoppage due to a small leak, will be shut down again for 36 hours this weekend to install bypass piping at Pump Station 1, according to the Joint Information Center, a task force comprised of Alyeska and state and federal government agencies.
Other repairs will be made at the pump station, where the discovery of a leak on Saturday [Jan 8] resulted in the shutdown.
Regulators approved a temporary restart on Tuesday because of worries about technical risks associated with a prolonged cold-weather shutdown. ...
Since the restart Tuesday about 55 barrels of crude oil have been recovered from a 800-gallon containment vault from the still leaking pipeline. Vacuum trucks are removing oil from the vault as it accumulates.
"The current startup of TAPS is a temporary startup and one part of a multi-part plan to return to normal operations," the JIC said in a release issued Wednesday in Alaska.
After the interim startup, throughput reached 400,000 b/d on Wednesday. The pipeline had been flowing at about 630,000 b/d before it was shut.
Crude inventories at the Valdez terminal, from where ANS is shipped out, were down by 789,575 barrels to 2.158 million barrels on Wednesday, compared with 2.948 million barrels on Friday.
A Platts survey of refiners in California and Washington said they have not been affected by the closure of the TAPS.
(See the related post on this topic, as well as my remarks and map, here. The 84-hour shutdown turned out to be the longest since Aug 15, 1977, when the TAPS was shut down for four days, 14 hours and 11 minutes, a few months after it went into operation. Or the second longest since the pipeline began operating in 1977. -- D.R.)
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