That's what they are calling it.
Tuesday evening oil jumped to $69. $5 in 5 minutes as one trader reported. I saw mention of two different rumors. One was of a possible British rescue mission. One of an American ship being attacked.
Yesterday the Iranians videos of the captured British. Lead sailor whatsername to be released soon, supposedly.
In other news: interesting article on Molybdenum prices yesterday.
Here are some excerpts from a piece that appeared on MSNBC: Since taking over the Department of Defense at the end of last year, Robert Gates has gotten kudos for what he has done, demanding responsibility for mistakes like the Walter Reed debacle and the cover-up of Pat Tillman’s death. He is also known to have wanted to close the U.S. prison at Guantanamo as a way of helping the United States recover some of its lost credibility in the Muslim world. But Gates has also been getting quiet credit for something he hasn’t done: push hard on Iran, not raising the temperature in a time of crisis. In particular, Gates has distanced himself from some of the harshest criticism of Iranian operations in Iraq and pushed back on rhetoric calling for military solutions to U.S. problems in the Persian Gulf. Most prominently, on the supply of explosives technology, Gates has declined to point the finger of responsibility at the Iranian government, something his own Army Chief of Staff, Gen. George Casey, has done. Gates says that some of the technology in improvised explosive devices (IEDs) and explosively formed projectiles (EFPs) has found its way into Iraq from Iran, but has left open the question of high-level Iranian involvement. “I think the evidence is pretty solid that at least the materials for this and some of the machining associated with the EFPs is coming out of Iran,” Gates said in a March 13 interview with Pentagon TV, adding, “What we're not certain of is how high the level of approval these operations goes. That's the area of uncertainty. The fact that these things are coming out of Iran, I think, is not in question. ” Anyone who has followed Gates’ interest in U.S.-Iranian relations should not be surprised at those comments, coming even as they did a month after a more conclusive Defense Intelligence Agency assessment appeared on the front page of the New York Times. Gates, quite simply, is not a hawk on Iran. As a senior former U.S. intelligence official who worked with Gates said of him, “If Bob Gates is Secretary of Defense, we are not going to war with Iran.” In fact, three years ago, Gates and former Carter National Security Advisor Zbigniew Brzezinski co-chaired a Council on Foreign Relations task force on U.S.-Iranian relations. The comments and recommendations found in the report, entitled, “Iran: Time for a New Approach” give a sense of what Gates thinks about Iran. Conceding the wide gaps on issues like nuclear weapons development, terrorism and Iraq, Gates and Brzezinski still argued for a rapprochement with the Islamic Republic: “The Task Force proposes selectively engaging Iran on issues where U.S. and Iranian interests converge, and building upon incremental progress to tackle the broader range of concerns that divide the two governments," the final report concluded. “U.S. policies toward Tehran should make use of incentives as well as punitive measures. The U.S. reliance on comprehensive, unilateral sanctions has not succeeded in its stated objective to alter Iranian conduct and has deprived Washington of greater leverage vis-à-vis the Iranian government apart from the threat of force.” Analysts say Gates’ position is one that was finely honed during the Cold War, which he sees as the model for dealing with Iran. “Just as the United States maintains a constructive relationship with China (and earlier did so with the Soviet Union) while strongly opposing certain aspects of its internal and international policies,” the two Cold Warriors noted, “Washington should approach Iran with a readiness to explore areas of common interests, while continuing to contest objectionable policies.” And while that was 2004, Gates more recently gave strong support for negotiations with Iran and Syria while a member of the Iraq Study Group. Gates left the group before its final report to take the Pentagon job, but during his confirmation hearings he reiterated his fundamental support for the talks. Gates is also on the record as being opposed to those in the White House and elsewhere in Washington who think the Iranian issue can best be resolved by working with Iranian dissidents to overthrow the current regime. “Despite considerable political flux and popular dissatisfaction, Iran is not on the verge of another revolution,” he and Brzezinski wrote. “Those forces that are committed to preserving Iran’s current system remain firmly in control and currently represent the country’s only authoritative interlocutors. “Direct U.S. efforts to overthrow the Iranian regime are therefore not likely to succeed; nor would regime change through external intervention necessarily resolve the most critical concerns with respect to Iran’s policies.” Bottom line for Gates and Brzezinski: Iran “could play a potentially significant role in promoting a stable, pluralistic government in Baghdad. It might be induced to be a constructive actor toward both Iraq and Afghanistan, but it retains the capacity to create significant difficulties for these regimes if it is alienated from the new post-conflict governments in those two countries.”
ANALYSIS
By Robert Windrem
March 28, 2007
Mark Shenk reports:
Ashok Dutta
CanWest News Service
Friday, March 23, 200
CALGARY -- Canada has been ranked fifth in a new global oil grouping unveiled Thursday by an independent energy analyst in testimony in Washington to the U.S. House Committee on Foreign Affairs.
Called Oil-15, or O-15, the new order put together by Daniel Yergin, chairman of Cambridge Energy Research Associates, includes all OPEC states — barring Indonesia — and includes five others that have the highest potential to increase supplies by 2015. Besides Canada, they are Azerbaijan, Kazakhstan, Brazil and Russia. The group is projected to produce 72.7 million barrels per day, or 69 per cent of total global oil output.
“It is a straight forward grouping of producers that are planning major investments and do not necessarily have a political agenda,” Guy Caruso, administrator of Washington-based watchdog Energy Information Administration, said in an interview.
Saudi Arabia was ranked No. 1. Its output was forecast by Cambridge to grow to 14.3 million barrels per day from 2005 output of 12.7 million bpd. Russia was in the No. 2 spot, and was forecasted to see production grow to 11.5 million bpd from 9.6 million. Iran was No. 3, with output forecast to grow to 4.3 million bpd from 5.7 million bpd, and Iraq No. 4, with output forecast to grow to 5.5 million from 2.6 million.
Next came Canada, with production forecast to grow to 5.3 million bpd by 2015 from 3.5 million bpd in 2005.
“We will see a concentration of growth in liquid production capacity within the O-15,” said Yergin, who was asked to make the presentation on energy security.
“After two decades of working off excess capacity, global energy supply is now dominated by the growth challenge.”
Canada, with over $125 billion investments in the Alberta’s oilsands sector, is set to play a central role in meeting U.S. energy demand. Last year, the largest share of American’s energy imports came from Canada, Yergin said.
Greg Stringham, vice-president at the Canadian Association of Petroleum Producers, said the testimony is a recognition of Canada’s importance both now and in the future for delivering energy supplies.
“Canada is the most secure source and will continue to maintain its lead position,” he said.In 2006, Canada exporting 2.29 million bpd of crude oil to the U.S., accounting for 17 per cent of total imports. This was followed closely by Mexico at 13 per cent. Until a few years ago, Saudi Arabia was the principal supplier of Arabian Light and Super Light grades of crude to the U.S. The call on Canadian crude is likely to increase, if a statement issued Wednesday by Mexico’s Pemex on a 5.8 per cent dip in its proved oil and gas reserves is any indication.
However, from an energy security perspective, a question remains to what extent.
“From an energy security perspective, there will be a limit. But, it is still too early days to talk about it,” Caruso said.
Stringham felt that if the O-15 group were drawn up on a political-stability basis, Canada would have been on the top.
“The U.S. has made it amply clear they do not want us to sell our oil in the global markets and will take as much as we can offer. At the same time there will not be any pressure on Canadian producers to increase
supplies,” he said.
Thursday, March 22, 2007
IHS Inc. has acquired the RapiData product, well known for its comprehensive well test, pressure and completions data for the Western Canadian Sedimentary Basin. IHS purchased RapiData from Rapid Technology Corporation of Calgary, Alberta, Canada.
RapiData is the only complete source of well test, pressure and completions data for Western Canada. IHS has been a partner with Rapid since 2003. IHS products AccuMap and Enerdeq use RapiData to provide exploration and production (E&P) companies desktop access to information used to evaluate reservoir pressures and well-flow rates, forecast flow and pressure declines, and estimate reservoir size.
"The acquisition of RapiData is consistent with the IHS strategy of providing superior information to E&P companies' desktops," said Ron Mobed, president and chief operating officer of the Energy segment of IHS. "The combination of existing IHS products and RapiData will allow E&P companies of all sizes to make informed, profitable decisions at all stages of a well's lifecycle and development. IHS is committed to a vision of transforming physical data sets into high-value, high-speed, on-demand digital data sets. The acquisition of RapiData represents a substantial step forward for that vision."
The Energy segment of IHS enables oil and gas companies worldwide to create and maintain best-in-class decision-making processes by providing and integrating essential exploration and production information, intuitive software and consulting services.
Rapid Technology Corporation is a privately held company that provides integrated software, data and engineering solutions for the oil and gas industry. Following the sale of its product line to IHS, Rapid Technology Corporation will be a holding company with an investment interest in publicly traded Rapid Solutions Corporation which is unaffected by the sale.
IHS is a leading provider of critical technical information, decision-support tools and related services to customers around the world. Its data and services are used primarily by the energy, defense, aerospace, construction, electronics, and automotive industries.
The U.S. case against Iran is based on Iran’s deceptions regarding nuclear weapons development. This case is buttressed by assertions that a state so petroleum-rich cannot need nuclear power topreserve exports, as Iran claims. The U.S. infers, therefore, that Iran’s entire nuclear technology program must pertain to weapons development. However, some industry analysts project an Irani oilexport decline [e.g., Clark JR (2005) Oil Gas J 103(18):34–39]. If sucha decline is occurring, Iran’s claim to need nuclear power could begenuine. Because Iran’s government relies on monopoly proceedsfrom oil exports for most revenue, it could become politicallyvulnerable if exports decline. Here, we survey the political economyof Irani petroleum for evidence of this decline. We define Iran’s export decline rate (edr) as its summed rates of depletion and domestic demand growth, which we find equals 10–12%. We estimate marginal cost per barrel for additions to Irani production capacity, from which we derive the ‘‘standstill’’ investment required to offset edr. We then compare the standstill investment to actual investment, which has been inadequate to offset edr. Even if a relatively optimistic schedule of future capacity addition is met, the ratio of 2011 to 2006 exports will be only 0.40–0.52. A more probable scenario is that, absent some change in Irani policy, this ratio will be 0.33–0.46 with exports declining to zero by 2014–2015. Energy subsidies, hostility to foreign investment, and inef-ficiencies of its state-planned economy underlie Iran’s problem,which has no relation to ‘‘peak oil.’’
Tanker Rates May Snap 7-Year Second-Quarter Drop, Dahlman Says
By Grant Smith
March 14 (Bloomberg)
The cost of hiring crude-oil supertankers may rise in the second quarter for the first time in seven years as record U.S. temperatures allow refiners to finish maintenance work early and boost imports in readiness for the annual driving season, according to Dahlman Rose & Co. LLC.
Daily hire rates for the largest tankers in the next three months may be higher on average than the $50,000 a day estimated for the first quarter, said Dahlman Rose analyst Omar Nokta. Rates for the 2-million-barrel carriers are currently at $55,000 a day, he said.
The U.S. has had its warmest January since the National Weather Service began storing data 128 years ago, damping demand for heating oil and enabling refiners to cut imports after bringing forward maintenance programs. Refiners are poised to increase imports to replenish shrinking motor-fuel inventories.
``Rates are picking up steam now as refiners get ready for the driving season, so we could see the second quarter beating the first for the first time in this cycle,'' Nokta said in a telephone interview from New York March 12.
Dahlman Rose correctly forecast the direction of freight rates last year. It upgraded its outlook for the shares of tanker operators last June before a two-month rally in which freight rates rose 32 percent. The bank advised ``caution'' on Sept. 11. Rates declined 27 percent in the next 11 weeks.
Seven-Year Trend
Hire rates have fallen every second quarter since 2000 because refinery operators such as Exxon Mobil Corp. and Valero Energy Corp. take units offline when consumption of winter fuels dwindles, to reconfigure equipment for gasoline production. This year, refiners have chosen to overhaul machinery in the first quarter instead, to take advantage of the warmer-than-normal weather. The U.S. is the world's biggest energy user.
U.S. refinery utilization rates
fell in the week to Feb. 12 to 85.2 percent of capacity, their lowest in more than a year, Department of Energy data show. Gasoline supplies have declined 4.7 percent to 216.4 million barrels in the past four weeks.
Tanker demand will be buoyed because the Organization of Petroleum Exporting Countries, which pumps 40 percent of oil used worldwide, has finished a phase of production cuts begun in November aimed at trimming unwanted supply, Nokta said. The 12- member group has pledged to reduce supply by 1.7 million barrels a day since last October and will meet tomorrow in Vienna.
``OPEC is going to have to boost supplies, or at least not cut, as they've seen the last set of cuts starting to work and because the demand is there,'' said Nokta.
Increased hire rates will help stoke gains for the shares of Frontline and Overseas Shipholding Group, Nokta said. The companies are among the largest tanker operators, after Nassau, Bahamas-based Teekay Shipping Corp., the world's biggest.
``It looks like Frontline and Overseas Shipholding should see some support,'' he said.
Matches Bank of America
Last May, Dahlman Rose helped Athens-based Quintana Maritime Ltd. raise $191 million from a sale of shares to finance the purchase of 17 commodity carriers, the second- biggest acquisition by a dry-bulk shipping company.
Dahlman Rose's outlook matches that of Bank of America Corp. which cited an expected increase in OPEC shipments.
``We expect long-haul shipping rates to rise late March into the second quarter as OPEC increases production to re- supply the market,'' Bank of America analyst Philippe Lanier in New York said in a March 5 report.
Nokta, 27, has worked as an analyst for Dahlman Rose for three years and holds degrees from Texas A&M University and Fordham University.
Some words on this before I turn it over to the sponsors. When you read these stories always be thinking of the present situation. Saudi through OPEC is telling Angola it shouldn't count on more than about 2.0 mbpd - probably in line with what would be equitable given reserve/production standards of OPEC. Meanwhile Venezuela is in a constant running war of words with the US. A farce. We are their biggest customer. Citgo. They are trying to get the Orinoco "certified." They need this to be able to pump more oil. Without certification of these as reserves(effectively putting them on Saudi turf), Saudi would never let them exceed 3.0 mbpd. At the same time we have some saying Saudi is on an 8% downslope. So what is going on. Does any one player know all the cards that all the other players hold? With all the talk in the oil world, you would think this situation would get more attention. If one can believe the numbers, the Orinoco produces at least 500,000 barrels per day of what would be termed Syncrude in Canada. We have allread about Alberta. With all the fanfare, it produces about 1.2, maybe 1.4 mbpd. So Venezuela is not doing badly. The fact that Big Oil is sitting down to talk rather than simply walking is hugely significant. I would walk if I was an American company. I would go elsewhere. Let Statoil and Total deal with it. Let the Chinese in. Hugo Chavez will be dead one day. If Big Oil is going to make concessions to nationalization somewhere, it should be Mexico. Mexico is a friend of the United States. Ignore Chavez and Correa. It isn't worth it. This lies in the fact that Chavez simply can't put production online fast enough in his lifetime as a political candidate to make a difference in his own personal power equation. The Saudis stand in the way of this. Unless, of course, the Saudis are in terminal decline. Hmm.
Big Oil Faces Tough Talks on Their Stakes in Orinoco Patch
by Peter Millard
Mar 15, 2007
Six western oil majors are sitting down with Hugo Chavez's government to plot the future of the world's largest hydrocarbons basin. But they face a stark choice: Play a supporting, not leading role, and accept less profit from operations involving Venezuela's massive tar oil reserves, or take a hike.
On Wednesday, France's Total (TOT) and Norway's Statoil (STO) set up a "transition team" to hand day-to-day operations at the Sincor project over to the state oil company, and meet a June 26 deadline to draft a new corporate structure. Partners in the other three heavy oil ventures have set up similar technical and negotiating teams over the past month.
Venezuela has come to epitomize resurgent oil nationalism, where resource-rich states such as Russia and Algeria force less-attractive terms on international energy firms from oil-importing countries. The Orinoco talks will show other petro-states just how far they can push the oil majors before these firms hit the road.
The tar oil, located in an area the size of Kuwait alongside the Orinoco river, is one of two so-called unconventional oil regions that will be key to meeting world oil demand for decades to come. The other is Alberta's tar sands, which supply an increasing percentage of U.S. oil imports.
The upcoming negotiations encompass future equity stakes, compensation, financial, commercial and operational arrangements. The six companies have an estimated value of some $30 billion in the projects, which together now produce around 525,000 barrels a day of synthetic crude but have a capacity of 600,000 barrels a day. The projects also have a total $4 billion in outstanding commercial bonds and bank loans.
Chavez, a fierce nationalist who is wiping out private ownership of "strategic" areas of the economy such as energy, power and communications, began unwinding the previous Orinoco contracts in 2004 as oil prices entered a sustained rally.
After hiking taxes and royalties, Chavez is now going for majority control, insisting on a minimum equity stake of 60% in each venture.
It is unclear how much of a say the majors will have over the projects. At the start of this year, Oil Minister Rafael Ramirez announced Orinoco negotiations had ended, saying the companies would have to accept Venezuela's terms after failing to meet the first end-2006 deadline.
Since then, he has toned down the rhetoric, saying this week he would like these
companies to remain as minority partners and that negotiations could go on past
the end-June deadline. Just the same, Venezuela has a history of heavy-handed
treatment.
These six companies were hit with a 2004 royalty hike with no warning - Chavez made the announcement on national television. The government also set the new negotiating deadline unilaterally through a decree. Many of these firms, including Chevron Corp. (CVX) and ConocoPhillips (COP), have said Venezuela was slow in launching talks.
Ramirez also announced a scheme to compensate these firms with crude oil instead of cash before three of the transition teams had been established, indicating the government will continue setting the new terms with little to no consultation.
Big Oil took a gamble in the Orinoco in the 1990s, setting up four huge projects to extract the extra-heavy crude and upgrade it into low-carbon synthetic grades that can be processed in most foreign refineries.
At the time these companies - which also include Exxon Mobil Corp. (XOM) and BP Plc. (BP) - won substantial tax breaks to compensate for the high cost structure at a time of rock-bottom oil prices.
In private, executives at these firms regret not negotiating with the government as a group, which could have increased their leverage in current talks. Divergent positions made it difficult to form a unified front.
Exxon is the only firm to publicly say it could leave if profitability is too low. The company, with more booked reserves than any of the other majors involved, has taken a harder line with Venezuela since 2004. At one point it suggested international arbitration over the royalty hike.
Other companies like Chevron and Statoil are said to be willing to suffer through
periods of nearly flat profitability to maintain a foothold in Venezuela, and be
well-placed in case the government offers better terms in the future.
Conrad Black will be found guilty, but not sentenced to the rest of his life.
"Legal Costs for the Defense" Ticker and daily trial coverage:
http://www.torontolife.com/blog/conrad-black-trial/
http://www.nytimes.com/2007/03/12/business/12black.html?_r=1&ref=business&oref=slogin
http://www.lawandstyle.ca/?p=715
This is now officially the trial of the century. Everybody knew that Saddam, Scott Peterson, and Michael Jackson were guilty. Until now only those following the story in Vanity Fair know anything about this one. That's what makes it so interesting. There are some big names and some big issues involved here. It is too bad the media is only starting to glom on now.
From Rigzone article :
OPEC members "have already reached their goal of wiping out a large part of excess inventories and stabilizing prices," said Vera de Ladoucette, director of Middle East Research at Cambridge Energy Research Associates in Paris.
A senior OPEC official said ministers will review the latest demand, supply and inventory data -- including a monthly oil market report due to be published today by the Paris-based International Energy Agency, the industrialized world's energy watchdog. "It looks like there will be no change" in output policy at this week's meeting, this official said. The official cautioned against ruling out a surprise decision, if fresh data suggest a need to cut.
Analysts reckon OPEC's ministers are likely to wait until oil-inventory data for the first few months of this year are published in coming months to confirm what the industry suspects -- that inventories are close to becoming so lean that the market is prone to a renewed price surge. OPEC members have relished the four-year boom in crude revenue, which has put hundreds of billions of extra dollars in their coffers, but they are anxious to avoid a recession-inducing price climb
fighting words
Blood and Oil
Three cheers for Iraq's new hydrocarbon law.
By Christopher Hitchens
Posted Monday, March 12, 2007, at 12:28 PM ET
http://www.slate.com/id/2161629/fr/flyout
Iraq Oil Plan Avoids Key Issues
by Chip Cummins, Hassan Hafidh, and Philip Sh
Fri, Mar 9, 2007 21:38 GMT
http://realtimenews.slb.com/news/story.cfm?storyid=640640
By Michael J. Economides and Xiomara Sangronis
The Orinoco Belt, one of Venezuela’s richest deposits of heavy oil, will soon be under the complete control of PDVSA. On January 10, at a speech before the National Assembly, Venezuelan president Hugo Chávez said that the Orinoco oil projects should switch to state hands. He also announced that the Venezuelan government will take control of the Orinoco fields (currently operated by companies from the U.S., France, Norway, and the U.K.) by May 1.
“We want to negotiate…but I have given instructions that on May first when the sun gets up, we will have all those oil fields under our control,” said Chávez in a subsequent press conference. “If someone does not agree, he has the right to go away…but we are going to respect their rights,” he said.
He went on to say that the companies “will accept this because we are going to continue being partners.” The outside companies will be allowed to invest as minority partners on joint ventures. “The company that wants to stay as our partner, we left the possibility open to them. The one that does not want to stay as minority partner, return the oil field and goodbye…good luck, thank you very much,” he said. Chávez also claimed that the process would allow “PDVSA, and therefore the nation,” to save some $6 billion.
The Orinoco Belt covers some 55,000 square kilometers and contains up to 1.3 trillion barrels of extra-heavy crude with an expected recovery of about 20 percent. If that rate is realized, an international certification of the Orinoco’s reserves, expected next year, could place Venezuela either equal to or surpassing Saudi Arabia with its 264 billion
barrels of reserves. Production in the Orinoco is currently about 566,000 barrels per day of crude with an API gravity of 9. That oil is then upgraded to a much lighter 34 degrees API by heating and hydrogen injection. This is done at the petrochemical complex in Jose, about 250 kilometers east of Caracas.
At present, there are four major projects underway in the Orinoco, all of which are called “associations.”
- Sincor: Total, 47 percent, Statoil, 15 percent, and PDVSA, 38 percent.- Petrozuata: ConocoPhillips, 50.1 percent, and PDVSA, 49.9 percent.- Ameriven: ConocoPhillips, 40 percent, Chevron, 30 percent, and PDVSA, 30 percent.- Cerro Negro: PDVSA, 41.67 percent, Exxon Mobil, 41.67 percent, and BP, 16.67 percent.
Rafael Ramírez, Venezuela’s energy minister, recently said that since he has been negotiating with the international companies for months, the nationalization should not be a “surprise for anybody.” Given that history, he said there is “no possible negotiation whatsoever. Nationalization will be implemented under a law, the draft of which has been completed.” PDVSA, through its affiliate Venezuelan Petroleum Corporation, will also gain control of the oil firms involved in upgrading the Orinoco’s crude. Ramírez explained that the government’s goal is to standardize the upgrading operations and gain the means to better implement “governmental decisions, such as output cuts under OPEC.”
Although the Venezuelan oil industry was originally nationalized in the 1970s, Ramírez claimed that the move regarding the Orinoco was no more than a further nationalization because, in the past, neither the country’s constitution, nor the laws governing hydrocarbons, specifically defined control over the region.
The move by Chávez to take over the Orinoco was greeted with skepticism from the U.S. government. “This is a disturbing trend, far from the principles of transparency and open markets,” said Craig Stevens, a spokesman for the U.S. Department of Energy. Stevens said the move will be “to the detriment of the Venezuelan people, the long-term development of the country’s national resources, and ultimately, economic
growth.”
The 10 members of the Organization of Petroleum Exporting Countries (OPEC) bound by the group's output agreements produced an average 26.62 million barrels of crude oil per day in February, a Platts survey showed March 8. This is down 330,000 barrels per day (b/d) from January's 26.95 million b/d but still well above the group's new 25.8 million b/d production target established last month.
Total OPEC production, including that of Iraq and new member Angola, averaged 30.18 million b/d, up 70,000 b/d from January, the survey showed. Iraq is not bound by OPEC's output agreements and Angola has yet to be assigned a production target.
Among the OPEC-10, Nigeria was the only country not to reduce output. Algeria, Libya, Qatar and the UAE each cut by 10,000 b/d. Indonesia and Venezuela each reduced output by 20,000 b/d. Slightly bigger cuts of 50,000 b/d each came from Iran and Kuwait, while Saudi Arabia sliced 150,000 b/d off January production to produce an average 8.6 million b/d in February.
"OPEC's focus may soon begin to shift toward loosening its hold on supplies toward the third quarter," suggests Platts Director of Oil John Kingston, especially if oil prices stay strong. "With the price of benchmark West Texas Intermediate firmly in the vicinity of $60, it's doubtful that OPEC will seek to significantly tighten the screws on the market." Kingston says it will be particularly interesting to see what Iraq and Angola produce over time.
Iraq, still struggling to rebuild its oil industry after years of UN sanctions and the US-led invasion of 2003, boosted its output to just above 2 million b/d from 1.66 million b/d in January as exports recovered after January disruption.
Angola, which joined OPEC in January, has yet to be asked to limit its oil output. According to survey data, the oil exporter boosted production to 1.55 million b/d in February from 1.5 million b/d in January.
OPEC ministers agreed last October to remove 1.2 million b/d of crude from world oil markets from November, saying supply was well in excess of demand and setting a production target of 26.3 million b/d. In December, they agreed to expand the cut by 500,000 b/d from February. The cuts were based on estimated September production of 27.5 million b/d. The target, as of February 1, is 25.8 million b/d.
The latest survey shows that the OPEC-10 have cut supply by more than 1 million b/d since September, when Platts estimates pegged production at 27.81 million b/d.See original article for table
http://www.rigzone.com/news/article.asp?a_id=42332
Black-Sea Tanker Rates Fall to Lowest in More Than Three Years
By Grant Smith
March 8 (Bloomberg)
The cost of hiring oil tankers to ship 1 million-barrel cargoes of crude from the Black Sea to European ports fell to its lowest in more than three years because too many ships are available.
The fleet of so-called suezmax-class ships expanded 7 percent last year, according to London-based Drewry Shipping Consultants Ltd. Availability widened this month as increasing daylight hours speeded the passage of ships on the route from Russia to the Mediterranean.
``There are lots of vessels available,'' said Luis Mateus, an analyst with shipbrokers Riverlake RLS in Geneva. ``I don't see rates going up in the next few days.''
Freight rates from Black Sea terminals to ports in the Mediterranean were assessed at 91.3 Worldscale points yesterday by London's Baltic Exchange after declining for 11 consecutive days. That's the lowest since Sept. 10, 2003.
Delays through Turkey's 17-mile Bosporus Straits, which can reach about three weeks for a round-trip during the winter, have shortened to eight days. The waterway is the only sea route between Russia, the world's second-biggest oil exporter, and the Mediterranean.
Worldscale points are a percentage of a nominal rate, or flat rate, for a specific route. Flat rates, quoted in U.S. dollars a ton, are revised annually by the Worldscale Association in London to reflect changing fuel costs, port tariffs and exchange rates.
Oil shipments from Russia's main ports are due to fall 1.3 percent this month to 2.95 million barrels a day, according to schedules obtained by Bloomberg.
Based on a rate of 99.7 Worldscale points, operators of double-hull suezmax vessels can earn about $30,489 a day on the 12-day round trip between Novorossiisk, Russia, and the Italian port of Augusta, Sicily, according to a formula by R.S. Platou, an Oslo-based shipbroker, and Bloomberg bunker prices.
Frontline Ltd., the world's biggest tanker company by capacity, said Feb. 27 that it needs to make $22,600 a day on each of its suezmaxes to break even.
I've moved Oil Tanker coverage to a new address:
http://oiltankers.blogspot.com/
OPEC Exports Seen Up 70,000 bpd in 4 Weeks to March 24th
by Spencer Swartz
Mar 8, 2007
LONDON - Seaborne oil exports from the Organization of Petroleum Exporting Countries are seen rising by 70,000 barrels a day near the end of March compared with the previous four-week period, a leading U.K.-based tanker tracker said Thursday.
Oil Movements projected OPEC crude exports for the four weeks to March 24 to rise to 24.05 million barrels a day from 23.98 million barrels a day in the four weeks to Feb. 24.
Roy Mason, head of the tanker tracker consultancy, said shipments fell to Eastern markets while those to receivers in the West held steady.
Looking forward, Mason said he expects shipments to taper off because of the coming close of the northern hemisphere winter in coming weeks, when heating demand eases, but said continued declines in U.S. product inventories could lead to OPEC stepping up deliveries.
"Whether shipments fall off in the next few weeks very much hinges on whether (U.S. inventories of) products keep dropping. If they do, I think you can expect to see shipments hold steady or rise," he said.
A big surplus of product inventories that existed at the end of January has been nearly eliminated in past weeks by demand and reduced imports.
Mason said the 10 quota-bound OPEC members' compliance with the group's past two production cut decisions was about 1 million barrels a day compared with total targeted reductions of 1.7 million barrels a day.
The OPEC cuts have significantly tightened global oil market conditions, as has the return of seasonal winter weather fueling heating demand in the U.S. and Europe and recent data showing non-OPEC production from countries like Mexico undershooting analyst expectations.
Several OPEC ministers have said they believe the producer group will maintain its current production policy when they meet March 15 in Vienna as long as current oil prices remain. Oil prices Thursday in London traded at around $62.70 a barrel, safely above OPEC's price-comfort zone.
Oil Movements forecasts OPEC exports based on spot and term chartering of crude oil from OPEC group members, whose number grew to 12 in December with the addition of Angola. OPEC's production meets almost 40% of the 85 million barrels a day consumed globally. Iraq isn't part of OPEC's production policies.
OPEC-10 Oil Output Down 205,000 bpd in Feb; Jan Revised Down NEW YORK - The Organization of Petroleum Exporting Countries cut its crude oil output further in February following a curb of production in January, the U.S. Department of Energy said Tuesday.
by Anna Raff
Mar 7, 2007
The 10 OPEC members subject to production quotas, not including Iraq and recent member Angola, produced 26.455 million barrels a day, down 205,000 barrels a day from January levels, according to a report by the Energy Information Administration. The EIA is the statistics arm of the Energy Department.
In addition, the EIA revised downward its estimate of OPEC-10 January output. According to the new estimate, oil production fell 220,000 between December and January to 26.66 million barrels a day.
'The OPEC-10 made about half of the targeted 1.2 million barrels per day production cut by January 2007,' the EIA said its monthly Short-Term Energy Outlook. 'OPEC-10 production could increase by 1 million bbl/d by the fourth quarter of 2007 when compared with first-quarter levels.'
February's output was 575,000 above the 10 members' combined production target of 25.88 million barrels a day for the month.
In a bid to buoy sliding oil prices, OPEC agreed to cut output from these ten members by 1.7 million barrels a day in two tranches starting Nov. 1. The second phase took effect Feb. 1.
According to a Dow Jones Newswires survey, the 10 members of the Organization of Petroleum Exporting Countries that have output quotas cut production in February by 1.6% on month to 26.45 million barrels a day. This is in line with the EIA's estimate.
OPEC is scheduled to meet March 15 in Vienna, and several countries have already said that another production cut is unlikely because oil prices have stabilized around $60 a barrel, a level believed to be acceptable to most OPEC countries.
http://realtimenews.slb.com/news/story.cfm?storyid=640558
© 2007 Dow Jones Newswires.
Xinhua Financial News High costs and the uncertainty of the oil market have prompted the Centre for Global Energy Studies (CGES) to revise downward its forecast for supply growth from non-OPEC producers.
3/6/2007
The CGES calculated that actual growth in non-OPEC supplies had been over-estimated by an average of more than 400,000 bpd in recent years, said the report entitled "Non-OPEC production: Rising costs slow output growth."
Increases in total non-OPEC production will reach 1.07 million bpd in 2007 compared with 456,000 bpd last year, said the CGES in its latest forecast.
"The problem is that new projects must first compensate for output declines at existing fields before they can add to overall capacity," explained the report. Unforeseen technical problems, unexpected project delays, bad weather, accidents and geopolitical risks forced the downward revision by the CGES. But, the London-based research center said, compared to 2006, 2007 will be a banner year for non-OPEC output.
"If you add up all projects which should come upstream this year the figure is even more than the 1.2 million bpd which the International Energy is forecasting, but you have to assume they don't come upstream as planned," said Dr Leo Drollas, head of the CGES oil analysis.
He added with the uncertainty of the oil market, "even we could be wrong. If the figure is reduced to 500,000 bpd, that could push prices higher."
URL: http://www.rigzone.com/news/article.asp?a_id=42141
Oil May Rise on Demand, Iran Sanctions, Survey
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aQ7mnmeI9Cc8
China's Defense Spending Rises 17.8% to $45 Billion
http://www.bloomberg.com/apps/news?pid=20601087&sid=atHwe2IfXAjY&refer=home
Giuliani Leads McCain by 25 Percentage Points in Poll
http://www.bloomberg.com/apps/news?pid=20601087&sid=a2M5E78Jiv6Y&refer=home
By Grant Smith
March 2 (Bloomberg)
http://www.bloomberg.com/apps/news?pid=20602099&sid=aXvljKXZBpKU&refer=energyThe cost of shipping 2 million-barrel consignments of crude to Asia from the Middle East may end a week of gains on expectations that supplies of ships will build as refiners start maintenance programs.
More than two-thirds of the expected cargoes from the Persian Gulf this month have been assigned ships, according to a report today by Paris-based shipbrokers Barry Rogliano Salles. It's another two weeks before new supplies will need to find vessels, the report said.
``In April refineries will close for maintenance so oil companies re-let'' vessels they don't need, Nikolaos Varvaropoulos of Athens-based Optima Shipbrokers said in an electronic message.Freight rates for supertankers on the benchmark route to Japan were assessed at 69.3 Worldscale points yesterday by London's Baltic Exchange, up 13 percent from Feb 23. Two tankers were hired to Taiwan at WS 65, Barry Rogliano said in its report.
Worldscale points are a percentage of a nominal rate, or flat rate, for a specific route. Flat rates, quoted in U.S. dollars a ton, are revised annually by the Worldscale Association in London to reflect changing fuel costs, port tariffs and exchange rates.
At 65 Worldscale points, owners of modern, double-hulled Very Large Crude Carriers, or VLCCs, can earn about $40,022 a day on a 38-day round trip from Saudi Arabia to South Korea, based on a formula by R.S. Platou, an Oslo-based shipbroker, and Bloomberg bunker prices.
Frontline Ltd., the world's biggest operator of supertankers, said Feb. 27 that it needs $30,200 a day to break even on each of its VLCCs. I've moved Oil Tanker coverage to a new address:
http://oiltankers.blogspot.com/
