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    MHWirth Axes 100 Jobs in Norway (Friday, 22 May 2015)

    1 Jan 1970, 12:00 am
    MHWirth, a provider of drilling solutions and services, is reportedly laying off 100 of its employees from several locations in Norway.The company has offices in six Norwegian cities including Stavanger, Oslo and Bergen. MHWirth is headquartered in Kristiansand and it has around 1,500 employees there.According to NRK Sørlandet, that quoted the spokesperson for the company, this downsizing is in line with the plans that the company announced earlier and that there are no plans for further reductions.NRK further reports that competence and seniority were considered during the process and that the underlying reason for the downsizing is a weak market.“We still have a good backlog with many major projects that are under implementation and will be delivered as well as a great service, and equipment orders,” NRK quotes the spokesperson as saying.Offshore Energy Today reached out to MHWirth for confirmation and more information regarding the location of the affected positions. We are yet to receive the company’s response.Source: www.oilandgaspeople.comPlease leave comments and feedback below

    Shale Set to Pummel Another Market as U.S. LNG Plants Arrive (Friday, 22 May 2015)

    1 Jan 1970, 12:00 am
    The U.S. is about to change the global LNG market forever.When the first tanker carrying liquefied natural gas from shale fields leaves the Sabine Pass terminal in Louisiana in December, it will turn consumers into traders with more bargaining power. That will transform a market dominated by long-term contracts into one where spot trading gains prominence, similar to crude oil.Since the first LNG cargo went to the U.K. from Algeria under a long-term contract in 1964, buyers opted for guaranteed supply because the fuel was scarce. That’s changing because gas from the Eagle Ford and other fields will transform the U.S. into the third-biggest exporter by 2020. Spot trading will probably account for almost half of transactions by then, from 29 percent last year, and LNG is poised to overtake iron ore as the most valuable commodity after oil.“We see the U.S. as a major contributor to the development of the LNG spot market as the volumes start to ramp up,” Jamie Buckland, head of investor relations at GasLog Ltd. in London, which owns 22 LNG tankers, wrote in an e-mail May 14. “There should be a lot more flexibility and you could see some buyers of U.S. volumes selling product on to others.”Last week, the Energy Department gave Cheniere Energy Inc. final approval for the nation’s fifth major export terminal at Corpus Christi in Texas, which will ship the fuel from 2018.Valuable CommodityCompanies including Tokyo Gas Co. have said they will seek to profit from buying and selling U.S. cargoes that, unlike those on most current contracts, aren’t tied to a destination. Cheniere, the operator of Sabine Pass, expects the U.S. to produce 74 million metric tons of LNG by 2020. That’s about 22 percent of expected global output by 2019. Only Qatar and Australia will produce more.Significant U.S. exports will likely boost prices, currently at about $3 a million British thermal units, Energy Aspects Ltd. said in a report for UniCredit SpA on Tuesday. U.S. gas may converge toward European levels, now at about $7 a million Btu, the analysts said.U.S. natural gas will play an important role in connecting Pacific and Atlantic markets, Shigeru Muraki, an adviser at Tokyo Gas, said at a conference in Kuala Lumpur on Tuesday. The company is expanding its investment in shale gas production in the U.S. as a natural hedge for LNG, he said.Suppliers are now signing deals going as short as two or three years rather than 20 years, according to Charif Souki, Cheniere’s chief executive officer.$120 BillionLong-term contracts will be eroded amid new supply coming from Australia and the U.S., Dubai Mercantile Exchange’s CEO Christopher Fix said at the conference in Kuala Lumpur.LNG trade will exceed $120 billion this year, overtaking iron ore as the second most valuable commodity after oil, Goldman Sachs Group Inc. said in a March report. LNG is gas cooled to minus 160 degrees Celsius (minus 256 degrees Fahrenheit) so it occupies 600 times less space.Spot and short-term LNG trades are defined by the International Group of LNG Importers in Paris as deals lasting four years or less. They accounted for 16 percent of all transactions in 2006 and that share may expand to 45 percent by 2020, according to Alan Whitefield, a senior associate at Sund Energy AS, a consultant to the industry.The total LNG market will expand 40 percent by 2019, from 2013 levels, according to the International Energy Agency in Paris.Commodity Market“What will make it a more interesting market is when gas starts being exported from the U.S., because then it becomes really like a commodity market,” Marco Dunand, the CEO of Mercuria Energy Group Ltd., said in an interview last month in Lausanne, Switzerland. “If you have constant supply coming from a terminal, then it becomes a liquid commodity.”The new U.S. supply will also help link regional markets, said Ann-Elisabeth Serck-Hanssen, acting senior vice president of marketing and trading at Statoil ASA in Stavanger, Norway.“We as a trading organization make our living from margins, so it both opens up opportunities and ties the different producing regions closer together,” she said by phone May 13. “If you believe a good market is a liquid market, this is positive.”Source: www.bloomberg.comPlease leave comments and feedback below

    Oil Market Shrugging Off Turmoil in Middle East (Friday, 22 May 2015)

    1 Jan 1970, 12:00 am
    When Islamic State fighters in Iraq captured the town of Ramadi this week, just 80 miles (129 kilometers) from the capital of the Middle East’s second-largest oil producer, crude markets shrugged.Rather than the spikes that have historically accompanied geopolitical disturbances, oil prices actually fell that day.Elsewhere, Libya is on the verge of becoming a failed state and Saudi Arabia is waging an air war against rebels in neighboring Yemen. Again, the markets seem blissfully indifferent.The old certainty that oil prices respond sharply to geopolitical upset no longer seems the case. It’s a change that reflects a new global market where the rise of U.S. shale fields and Saudi Arabia’s determination to defend the country’s share of world production ensures ample supply,“There is a lot of risk in the world, but there isn’t much of a risk premium in oil right now, which is unusual, despite all the tension in the Middle East,” said oil industry historian Daniel Yergin. “It’s because there is so much oil and there’s the sense that if there is a disruption, supplies can be made up elsewhere.”While a deal with Iran would bring even more oil, he said, “developments on the ground in the Middle East could bring back a risk premium pretty quickly.”Supply DisruptionIn fact, politics is disrupting supply more than usual. Once Iran is taken into account, about 2.6 million barrels a day are being kept from the market by conflict and sanctions, more than five times the average from 2000 to 2010, according to the U.S. Energy Information Administration.As Iraqi government forces tried to halt the advance of Islamic State, oil futures traded in New York fell 4 percent in the first two days of the week to about $57 a barrel, and rebounded the next two days.Oil futures dropped as much as 34 cents to $60.38 a barrel on Friday.While prices have rallied more than 10 percent this year, that’s mainly a result of robust demand, oil analysts say.Even with conflict across the Middle East, the geopolitical situation isn’t as dangerous as it appears, Michael Wittner, head of oil research at Societe Generale SA in New York and a former CIA official, said in a report. The impact of the war in Yemen is overstated, he said.The possibility of a nuclear deal with Iran in the coming weeks is another reason traders are relatively relaxed. The EIA believes an agreement that eases sanctions could knock as much as $15 a barrel from oil prices.Thinnest CushionOn the other hand, some analysts believe the risk of a shock is growing because the world is short of spare supply. While global stockpiles are ample, the oil market is working with the thinnest cushion against a new supply outage in seven years, EIA data show.The main reason: Saudi Arabia’s decision to pump more than 10 million barrels a day as it tries to grab market share from higher-cost producers has left the largest oil exporter little room for maneuver.“At some point, Saudi production hikes stop being bearish and become bullish because the spare capacity is reduced,” said Paul Horsnell, head of commodities research at Standard Chartered Plc in London.Gary Ross, founder of PIRA Energy Group, an influential oil consultant in New York, expects the cushion to get thinner still as Saudi Arabia boosts production further this summer to meet domestic demand.“The very low level of spare capacity carries a risk of a price spike in the not-too-distant future,” PIRA said in a report to clients in April.Spare CapacityThe U.S. EIA estimates current global spare capacity at 1.76 million barrels a day, well below the 10-year average of 2.2 million and less than half of 2010’s peak of 4 million.That narrowing margin hasn’t rattled the market yet, partly because even in conflict-prone countries the oil has kept flowing.Iraq has been able to boost production to its highest since 1979, approaching 4 million barrels a day, adding 600,000 barrels day in extra output over the last two years. In Libya, production has fluctuated wildly over the last two years even as militias fight.“It’s remarkable that in contrast to last summer, when ISIS was on the march, there’s hardly any geopolitics in the price of oil,” Yergin said.Source: www.bloomberg.comPlease leave comments and feedback below

    Oil Has Lowest Share of U.S. Transport Since Steam Age (Friday, 22 May 2015)

    1 Jan 1970, 12:00 am
    Oil has the lowest share of the U.S. transportation fuel market since the 1950s, when steam trains remained a common sight on American railroads.While petroleum-based products still make up more than 90 percent of U.S. transport fuel demand, the share taken by ethanol, gas and electricity has more than doubled since 2000, highlighting the growing challenge to the dominance of oil in the world’s largest economy.The U.S. Energy Information Administration said in a report on Monday that non-petroleum sources of energy used in U.S transportation rose last year to 8.4 percent.“The share of fuels other than petroleum for U.S. transportation has increased to its highest level since 1954, a time when the use of coal-fired steam locomotives was declining and automobile use was growing rapidly,” the U.S. EIA said.The inroads that non-oil energy sources are making is one of the biggest changes in America’s automobile culture, immortalized by Hollywood movies such as Rebel Without a Cause and American Graffiti.The dominant role oil plays in transport means that even small changes in market share are important for exporting nations such as Saudi Arabia and companies from Exxon Mobil Corp. to Royal Dutch Shell Plc. The changes also affect the world’s largest carmakers like General Motors Co.Efficient CarsAs ethanol, natural gas and biomass make slow inroads, oil’s global share in transportation will drop to 85 percent by 2040 from 93 percent in 2013, according to the Paris-based International Energy Agency’s World Energy Outlook.More efficient cars, particularly in highly populated emerging countries such as China and India, are also weakening the link between oil and driving, the IEA said.For the time being, non-oil energy sources still struggle to compete with gasoline and diesel because of high costs for electric cars.“As in other fields, technology breakthroughs or a big fall in cost could lead to a more rapid uptake of new vehicle and fuel technologies,” the IEA said.Source: www.bloomberg.comPlease leave comments and feedback below

    Contract Value for ‘Safe Bristolia’ Cut (Friday, 22 May 2015)

    1 Jan 1970, 12:00 am
    Prosafe, a Cyprus-based owner of offshore accommodation rigs, has informed that the contract value for its accommodation rig Safe Bristolia has been reduced.Safe Bristolia sustained damage to lifeboats after experiencing bad weather during work at the Everest field in UK in October 2014. Operations were suspended and the vessel was brought to the Hanøytangen shipyard in Norway for repair work.Therefore, Prosafe and BG Group have agreed to re-phase the Safe Bristolia accommodation support vessel 2015 work programme at the Everest platform with a shorter 2015 period and the addition of a new 2016 duration.According to Prosafe, operations at BG Group’s Everest platform in the North Sea are scheduled to start in June 2015 for a firm period of four months. Thereafter, from mid-May 2016, the Safe Bristolia will return to the Everest platform for two months. In addition and in relation to the new 2016 duration, Prosafe has granted BG Group two additional fifteen-day options.As a result of the re-phased firm period work programme in 2015 and 2016, the total value of the contract has been reduced from $68 million to approximately $40 million.Safe Bristolia was converted to a service/accommodation vessel at Yantai Raffles Shipyard in China in 2006. In 2007/2008 it underwent further refit and modification work to qualify it for work in the UK North Sea. The flotel offers accommodation for 316 (UKCS) to 587 persons.Source: www.offshoreenergytoday.comPlease leave comments and feedback below

    Grupo Alfa and Harbour Energy close to $6.5bn buyout of Pacific Rubiales (Thursday, 21 May 2015)

    1 Jan 1970, 12:00 am
    Pacific Rubiales, the largest independent oil producer in Latin America, is set to be acquired by Grupo Alfa and Harbour Energy in what would be the region’s biggest-ever private equity deal.The all-cash deal, which could be announced as early as Thursday, will value Pacific Rubiales at C$6.50 a share, or $6.5bn, including $4.8bn of debt, according to people close to the situation. The price represents a 73 per cent discount to the 12-month high of C$24 a share for the Toronto-listed oil and gas company.Harbour Energy was formed in 2014 as a joint venture between Hong Kong commodity trader Noble Group and US buyout group EIG Global Energy Partners. Alfa already owns approximately 19 per cent of Pacific Rubiales.“The acquisition is both a value play and a growth play in Latin America and Mexico,” said one person familiar with the transaction. “EIG wants to buy the best assets at the best price in Latin America and Asia and take part in any further regional consolidation.”The acquisition of Pacific Rubiales would mark the largest buyout of a Latin American energy company since a KKR-led consortium bought energy company Samson Resources for $7.2bn in 2011. That deal was struck before the dramatic slide in energy prices, which has led the US buyout group to value that investment at pennies on the dollar today.It comes as private equity groups look for bargain investments beyond US shale. Shares in Pacific Rubiales have fallen by about 67 per cent in the past year as a collapse in crude oil prices weighed heavily on its performance.Pacific Rubiales’s production is primarily in Colombia and Peru, and it has proven or probable reserves of 500m barrels as well as an attractive portfolio of exploration tracts in the region.The deal will help Alfa, one of the top 10 companies in Mexico by market capitalisation, gain better access to the country’s newly liberalised upstream sector.The Monterrey-based oil producer first announced that it had entered into exclusive discussions with Pacific Rubiales and Harbour Energy on May 5. Credit rating agency Fitch said the deal would be positive for the company’s credit quality if it received a capital injection aimed at improving its capital structure following the acquisition, which could help stabilise the rating.Harbour Energy serves as a platform for Alfa and Noble to acquire high-quality energy assets and then possibly roll all of these assets up in a single company that could one day go public. The group plans to expand further in China, possibly with the help of Chinese sovereign wealth fund CIC that has a stake in EIG, is an investor in its funds and also has a small stake in Noble Group.Source: www.bloomberg.comPlease leave comments and feedback below

    Oil Giants Band Together to Add Their Voice to Climate Debate (Thursday, 21 May 2015)

    1 Jan 1970, 12:00 am
    Europe’s largest oil companies are banding together to forge a joint strategy on climate change policy, alarmed they’ll be ignored as the world works toward a historic deal limiting greenhouse gases.Royal Dutch Shell Plc, Total SA, BP Plc, Statoil ASA and Eni SpA are among oil companies that plan to start a new industry body, or think tank, to develop common positions on the issues, according to people with knowledge of the matter. So far the largest U.S. companies -- Exxon Mobil Corp. and Chevron Corp. -- have decided not to participate, the people said, asking not be named before a public announcement expected as early as next month.Efforts to reduce fossil fuel investments and spur renewables such as solar and wind power have gathered pace in the past two years with oil companies sitting largely outside the debate. One aim of the European producers will be to push natural gas as more climate friendly in generating power than coal, the people said. Of the most used fossil fuels, gas is the one that pollutes the least while coal tops emissions.“There are companies that are now going beyond the industry’s traditional defensive position by at least appearing to rethink strategy and practices,” said Carole Mathieu, research fellow at the French Institute for International Relations in Paris.The heads of the biggest European oil producers have been pushing the idea of more active engagement with climate policy in recent weeks.“If each of us is attacked separately, we will be stronger as a group,” Total Chief Executive Officer Patrick Pouyanne said today in Paris. “If we have an announcement of something, it will be then.”Waking UpThe industry is slowly waking up to the existential danger to their operations emerging from policies designed to limit climate change. With global temperatures and carbon emissions at a record, governments are looking for a way to clamp down on pollution. The International Energy Agency, a policy adviser to industrial nations, says half of all fossil fuel reserves may have to remain in the ground to prevent overheating.“We’re trying to put together a group of people to begin to speak the same language” on climate, BP Chief Executive Officer Bob Dudley said at a meeting hosted by IHS Inc.’s CERA consulting unit in Houston in April. “There’s a bit of different language coming out of different companies and therefore our voice is lost in this.”Statoil Chief Executive Officer Eldar Saetre has embraced the UN’s goal to limit global warming to 2 degrees Celsius, a level beyond which scientists say will bring disastrous climate change such as more violent storms and rising sea levels. He set up a renewable energy unit and described steps the industry should follow, starting with a shift to cleaner fuels such as gas, reducing flaring and support for carbon pricing.Seeking Acceptance“If we don’t, we risk becoming an industry that neither gets access nor acceptance -- and that’s not a good thing,” Saetre said at the CERA gathering.Shell is urging the industry to get out of its defensive crouch and make its views understood. It wants alternative arguments to counterweight the divestment campaign, which has persuaded institutions such as the Rockefeller Brothers Fund and Stanford University to scrap fossil fuel investments.“In the past we thought it was better to keep a low profile on the issue,” Chief Executive Officer Ben Van Beurden said in February. “It’s not a good tactic. We have to make sure that our voice is heard by members of government, by civil society and the general public.”Demanding ActionThe European companies are more sensitive to environmental issues because governments in the region are leading the way on climate and voters are demanding action. The 28-nation European Union plans to cut carbon emissions 40 percent by 2030, double the commitment it made for 2020.For their part, Exxon and Chevron say there’s little difference in the approach between them and their European competitors. Exxon CEO Rex Tillerson has said he’d speak more openly about the issue and acknowledged the risks of climate change warrant action. He is urging policymakers to consider a global price on carbon emissions and since 2007 included carbon prices in his company’s business planning.Chevron said today in a statement that it shared the concerns of governments and the public about climate change and action was needed to address the risks. Exxon declined to comment.While Europe’s big oil groups present a friendlier position toward climate change, they are continuing with investments that environmental groups sharply criticize, including drilling int he ArcticSlight ReductionsEmissions data released through the Carbon Disclosure Project shows little difference between the U.S. and European oil companies over the past four years. All of the companies have reduced pollution “slightly” since 2011, with BP in the lead mainly because of asset sales needed to pay more than $40 billion in costs associated with a Gulf of Mexico disaster in 2010.“All companies need to be low-carbon or zero-carbon by 2050,” said Paul Simpson, CEO of the Carbon Disclosure Project, which helps 822 institutional investors with $95 trillion in holdings analyze risks from sustainability issues. “The oil and gas sector is one that doesn’t yet show a clear transition. The longer that goes on, the more concern investors will have.”Source: www.bloomberg.comPlease leave comments and feedback below

    ExxonMobil Encouraged by Oil Discovery Offshore Guyana (Thursday, 21 May 2015)

    1 Jan 1970, 12:00 am
    ExxonMobil recently discovered hydrocarbons offshore Guyana, while drilling the Liza-1 exploration well at the Stabroek block, located approximately 120 miles offshore Guyana. The oil discovery is significant, Exxon said.According to Exxon, the well was drilled to 17,825 feet (5,433 meters) in 5,719 feet (1,743 meters) of water with the Deepwater Champion drillship. Stabroek Block is 6.6 million acres (26,800 square kilometers).It was drilled by ExxonMobil affiliate, Esso Exploration and Production Guyana Ltd., and encountered more than 295 feet (90 meters) of high-quality oil-bearing sandstone reservoirs.“I am encouraged by the results of the first well on the Stabroek Block,” said Stephen M. Greenlee, president of ExxonMobil Exploration Company. “Over the coming months we will work to determine the commercial viability of the discovered resource, as well as evaluate other resource potential on the block.”The well was spud on March 5, 2015 and the well data will be analyzed in the coming months to better determine the full resource potential, the company said in the press release.Esso Exploration and Production Guyana Ltd. holds 45 percent interest. Hess Guyana Exploration Limited holds 30 percent interest and CNOOC Nexen Petroleum Guyana Limited holds 25 percent interest.Source: www.offshoreenergytoday.comPlease leave comments and feedback below

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