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Seek "sees" more than you know. 7 years experience is not enough.
DB .... Disagree.... Total coming in mean there is going to be development, and they do KNOW the results, and Total is not just interested in block 1. My Opinion.
Krom... The point is SNP would be making a very good business decision to buy ERHE for say $4 billion and owning it from the "get go" as opposed to spending $2.5 billion on behalf of ERHE and waiting years to get their money back and then having no ownership of ERHE's interest. Remember SNP would also be buying interest in 3 more JDZ blocks plus the Interest in 4 EEZ blocks. Seems like a no-brainer to me.
Krom....So, why wouldn't SNP just buy ERHE before spending all that money for a free carry for OFFOR and the minority shareholders?
Krom.... What would be the increase in SNP's share of present value of the total assetsif they owned ERHE and did not have to pay the carry?
“There’s a bit of a sellers’ market, they’re getting premium prices,” said Lucy Haskins, an oil industry analyst at Barclays Capital in London. “It’s a wave of new buying interest from emerging markets.”
The sales also showed buyers paying a premium to secure supplies. The average price per barrel of BP reserves sold in Argentina, Venezuela, Vietnam, Colombia, Canada and Egypt is about $11 a barrel of oil equivalent, Evolution Securities said in a Dec. 6 note. That compares with a valuation of less than $8 a barrel based on BP’s market capitalization.
“BP has got quite good prices,” said Colin McLean, chief executive officer of SVM Asset Management Ltd. in Edinburgh, who oversees about $900 million, including Shell shares. “That has attracted some others to test the market. We’ll see more M&A activity.”
The cost of developing new fields is rising as companies depend on deepwater drilling, oil-sands mines and LNG projects to replace spent fields.
Krom....So, ERHE would be carried by SNP for a cost to SNP of $2.5 billion in your example? To be paid by production?
Really? ....About Gazprom
Gazprom is one of the world’s largest energy companies. Its major business lines are geological exploration, production, transportation, storage, processing and marketing of hydrocarbons as well as generation and marketing of heat and electric power. Gazprom’s mission is to ensure maximally efficient and balanced gas supply to Russian customers and reliably fulfill long-term gas export contracts.
Krom....How much would you estimate would be ERHE's share of the cost of developing the present licensed JDA blocks?
BP, Shell, Conoco Set Asset Sale Record as China Buys
http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=aI2QlKXKwFbE
equidoc. No connection. Was just guessing from your name. Ky. is a beautiful state.
SM.....Because there is no accurate information available to the market players to price the stock nearer to it's real worth. This has to be the all time best example of an inefficient market in the case of ERHC's share price. Buyers will be rewarded, and sellers will be thinking about their mistake in the not so distant future. My Opinion.
Total very busy last couple days. Deals in three different countries. Management very active in building for the future. hmmmmmm!
Hey equidoc. Do you live in Ky?
SM.... Yes, they are saying Block 2. That is the only block Equator is involved with. Sinopec's estimate is even higher if you care to read a little further.
Good Question.
In case anyone missed it a few months ago.
EQUATOR EXPLORATION LIMITED – ANNUAL REPORTS & FINANCIAL STATEMENTS 2007, 2008 & 2009
Operational status
Sinopec, the operator, has a well established team in its office in Lagos. Sino Geophysical Co. Limited was
engaged to reprocess the 3D seismic survey using state-of-art algorithms for Pre-Stack Time Migration and
Common Reflection Surface stack processing. The operator then proceeded to interpret the reprocessed
data, evaluate the prospects and rank them for drilling. In a cooperative effort, using all of their technical
skills, from the top 10 prospects identified by the operator, the participants selected the ‘Bomu’ prospect as
the prime candidate for the one commitment well required under the PSC.
In March 2007, Sinopec entered jointly with Addax Petroleum into a drilling services agreement with Aban
Abraham Pte Limited for the provision of the ‘Aban Abraham’ deep water drillship. However, it became very
clear that Aban would not deliver the rig in time to drill the well before the end of the Phase 1 Exploration
Period in March 2010. The contract was cancelled and an assignment was taken from Shell for the use of
the Transocean Sedco 702 drilling rig.
The Bomu 1 exploration well was spudded on 29 August 2009 and completed on 3 October. The well, drilled
in 1655 metres of water, reached a total depth of 3543 metres below sea level, achieving all of its geological
objectives. It was completed under budget by approximately US$10 million, a benefit of the low contract
rates for services inherited from Shell. Analysis of the wireline logs and of fluid samples collected by wireline
tester indicates the presence of gas in a number of sand intervals. Subject to acknowledgement by the JDA,
the well fulfils the work obligation of Phase I of the Exploration Period in the PSC.
During August 2009, the performance bonds, amounting to US$2.8 million, previously issued to the JDA to
guarantee the Company’s share of the financial commitment to the work programme were replaced by new
ones guaranteed by Oando. This released the US$2.8 million cash previously held as collateral by the bank
that issued the original performance bonds.
Prospectivity
JDZ Block 2 lies at the end of the toe thrust of the deep water Niger basin. It is adjacent to Nigerian Block
OML 130, which hosts the Akpo Field, with reserves of 600 million barrels of oil and 1 TCF of gas (Total
2007) and series of significant discoveries. The Obo-1 well discovery in the adjoining Block 1 proved the
existence of a hydrocarbon source and the presence of excellent reservoir sands in the region of Block 2.
Based on the 3D seismic survey, acquired in 2003 by PGS and partially funded by Equator, NSAI made a
Best Estimate of Gross Unrisked Prospective Resources of 1.3 billion barrels of oil and 1.9 trillion standard
cubic feet of gas in total in the 10 identified prospects (Table 2).
The subsequent evaluation by the operator differs in detail with regard to the definition, size and ranking of
the prospects from the NSAI evaluation. For example, the operator identified 18 structures. Their estimate of
total unrisked prospective oil-in-place is 3.9 billion barrels and of unrisked prospective gas-in-place is 8
trillion cu ft, both at the P50 level. These figures compare with NSAI’s Best Estimates of unrisked prospective
in-place volumes of 4.7 billion barrels for oil and 3 trillion cu ft for gas.
While the discovery in the Bomu 1 well of gas rather than oil was disappointing, the reservoir sands and
traps were, by and large, encountered as expected. Further technical and commercial evaluation of the
discovery and the other prospects on Block 2 is underway. The JDA has granted a six month extension to 14
September 2010 to allow Sinopec to complete these studies and to allow the participants to make a properly
informed judgment on whether to enter the next Exploration Phase with its commitment of one well. Four
other wells were drilled in the JDZ, three in Block 4 and one in Block 3, simultaneously with Bomu 1. We
believe that the JDA may also grant extensions for these blocks allowing the common operator, Sinopec, tointegrate the studies on a regional basis to the benefit of the JDA and participants.
Nigeria, Sao Tome and Principe drilling campaign shows promise
Business Aug 30, 2009
Hope and expectations have greeted the commencement of drilling, this week, in the Joint Development Zone (JDZ), an exclusive economic area in the Gulf of Guinea, shared by Nigeria and Sao Tome and Principe.
The JDZ, supervised and managed under the auspices of the Nigeria and Sao Tome and Principe Joint Development Authority (NSTP-JDA), is reportedly rich in both hydrocarbons and aquatic resources, waiting to be fully exploited by the two states’’ parties.An authoritative source at the NSTP-JDA told NAN in Abuja on Friday that two rigs spudded in their first deepwater exploration within the week; one on Tuesday and the second on Thursday. “As of now, there are two rigs in the zone. In block 4, in which Addax is the operator, the Trans-Ocean Deepwater project development rig started spudding a well on Aug. 25.
It (the drilling rig) is going to be operating in the Kina-1 prospect.“Then, in block two in which Sinopec rig operates, the rig Sedco-702 started spudding on Aug. 27 and the prospect of the well is Bomu-1. This development is very significant. Let us appreciate the fact that deep water rigs have been in short supply and operations in the JDZ have also been waiting for a long time.
Therefore, the securing of two rigs is quite significant in the activities of the JDZ,’’’’ the official said.The source also said that Addax had plans to drill three wells back-to-back to further the exploration and production campaign in the zone. ‘This is exciting. The initiative will spur the expectations of the contract parties, shareholders and the two countries,’’’’ the source said. According to the official, both Sinopec and Addax have carried out extensive sub-surface studies and preparations for exploration while drilling have been ongoing.
NAN recalls that Sinopec JDZ Block 2 Ltd had projected that it would spud its first deepwater exploration well in the NSTP-JDZ before the end of August.The company said that its JDZ Bomu-1 would target a number of potential exploration targets at different depths in one of the several prospects, identified from 3-D seismic analysis and interpretation in the JDZ Block 2.
http://www.vanguardngr.com/2009/08/nigeria-sao-tome-and-principe-drilli
Mt....I disagree. It would be good to have the NSAI, but better to have a third party fairness opinion based on the NSAI from a well recognized expert in such valuations. How about OFFOR sells, offer made to the remaining public at same price supported by the fairness opinion and approved by the BOD including a committee charged with protecting the minority rights. What else do shareholders need?
"This buyout scenario has been festering for years without any hint of realism."
Now we have drilled some wells and the operators have vast amounts of information on the area. That makes a big difference. My opinion.
Mt.... Another way to look at this situation, is to recognize ERHE could now have about the same reserves { NSAI } as Addax had when it was sold, and has further similar upside in its rights holdings as to what Addax had. Addax had 500 million proved and a lot of upside in deep water. Of course they had the Kurdish assets, but i don't think they had much value because Bagdad refused to recognize that contract. How does a value of 1/2 of Addax's takeout sound?
MT The present market price is just that the current price being set by buyers and sellers who have absolutely no creditable information on which to base that price. Price is based mostly on fear that biogenic gas was all that was found, and that more shares are going to be sold a give away prices. Therefore if there are commercial discoveries on block 2 and 4 [ as i believe ], the price can be multiples of the present unrealistic price.
I also think the current NSAI report will show an increase over the the one released a year ago. And be used as the basis for a discounted present value that will fairly value the company and be the take out value. Would a buyer not be willing to pay that price without regard to the unrealistic present price?
Well Mongo, That should provide you with some fodder to keep trying to find something on which to post negative opinions. That is your MO , you know.
The AIM listing has been and still is a diversionary tactic. They have had about 3 different plans to get AIM listing, the first was unbelievable and showed a complete lack of stock market sense. The last is doable but of very little consequence. They have managed to kill about 1 year of time and provide fodder for thousands of MB messages and opinions. But what was the real purpose of the NSAI update which probably has been done since July?
amj....Yes, but since it is for the AIM listing and since the stock probably will never be listed, we will not see it. My opinion. 90 more days until Mar. 14. Things will happen before then. Again my opinion.
The future is in deepwater, my opinion.
http://www.rigzone.com/news/article.asp?a_id=102136&hmpn=1
Usan development.
http://www.menas.co.uk/pubsamples/NF1205.pdf
Total Has Yet to Find ‘Doable’ Shale-Gas Production in Europe
By Jim Polson and Tara Patel
Dec. 10 (Bloomberg) -- Total SA, France’s largest crude producer, has yet to find “doable” oil or natural gas from shale deposits in Europe, said Chief Executive Officer Christophe de Margerie.
Europe’s system of petroleum royalties, in which producers share revenue with the government, doesn’t benefit private landowners, de Margerie said at an event at the French Consulate in New York today. Landowners have no incentive to permit drilling, in contrast to the U.S. where they share in royalties, he said.
Total entered the U.S. shale-gas business in January, agreeing to pay $800 million for 25 percent of Chesapeake Energy Corp.’s assets in the Barnett Shale field in Texas. Total committed to spend another $1.45 billion to cover 60 percent of Chesapeake’s share of drilling costs. The company also has a shale-oil joint venture in the U.S., de Margerie said.
Shale formations consist of dense rock that can be broken apart using water, sand and chemicals to release oil or gas.
Europe is less accepting of shale production than the U.S., de Margerie said. Local groups are mounting opposition to Total’s shale-exploration plans in southern France because of potential environmental damage.
The Montelimar permit allows Total to search for shale gas in an area that spans 4,327 square kilometers (1,671 square miles) from south of Valence to areas around Montpellier. The government issued the five-year permit in March.
“We cannot drill,” de Margerie said today. “It is difficult to do anything.”
Research will continue, he said.
To contact the reporters on this story: Jim Polson in New York at jpolson@bloomberg.net; Tara Patel in Paris at tpatel2@bloomberg.net
To contact the editor responsible for this story: Susan Warren at susanwarren@bloomberg.net.
Last Updated: December 10, 2010 12:35 EST
IEA expects faster growth in world oil consumption
Tamsin Carlisle
Last Updated: Dec 11, 2010
The International Energy Agency expects oil demand to reach 93.4 million barrels per day by 2015.
Hasan Jamali / AP Photo
The International Energy Agency (IEA) has revised its medium-term global oil outlook, predicting higher oil demand in the next five years than it expected just six months ago.
The agency that advises rich countries on energy issues also now projects rising demand for OPEC's crude oil between last year and 2015 and warns of "jittery" energy markets as spare production capacity among the group's members shrinks.
The IEA released the update yesterday, the day before OPEC ministers were to gather for their final meeting of the year in Quito, Ecuador, and as crude hovered near US$90 a barrel.
"Fingers still point at shadowy 'speculative inflows' to futures and derivatives markets, but a more plausible foundation for price strength lies with now apparent third quarter fundamentals," the IAE said in its latest monthly oil market report.
"Upward demand revisions have outstripped those for supply, and suggest that global demand grew by a giddy 3.3 million barrels per day (bpd) year on year in the third quarter," the agency said. "This implies a global net stock draw of some 1.3 million bpd, the largest since the fourth quarter of 2007, showing that fundamentals do matter, even if they sometimes only become evident after the event."
OPEC has blamed "market speculation" and US dollar weakness for crude's recent rise above the $70-$80 price band in which it had stabilised for more than a year prior to last month.
"Growing interest in the futures market was reflected in increasing volume of trading contracts," the oil exporters' organisation said on Friday in its November market report.
The IEA has a different interpretation of the oil price rebound, based on market fundamentals.
"Harsh northern hemisphere weather, allied to electric power rationing in China, if sustained, could push short-term demand higher and tighten market balance further," it warned.
The agency's global oil demand forecast for this year and next was about 1.1 million bpd higher than anticipated in June. Projecting the same growth rate as previously forecast from next year onwards, the IEA now expects demand to reach 93.4 million bpd by 2015, up from 87.4 million bpd this year.
It predicted that OPEC would need to supply 32.35 million bpd of oil to meet demand in 2015, a 10 per cent increase from this year's call on OPEC crude. Over the same period, the IEA expected 30 per cent of OPEC's effective spare output capacity to be absorbed, reducing it from more than 5 million bpd to about 3.6 million bpd.
The predicted narrowing of the spare capacity margin was "symptomatic of a tightening and potentially more jittery market", the IEA said.
"We continue to argue that maintaining this valuable supply cushion should provide the impetus for sustained investment" in new energy supplies and energy efficiency, it said.
Among OPEC producers, Iraq was expected to develop the most new oil output capacity in the medium term, adding 1.1 million bpd by 2015, followed by the UAE, which was on track to add 500,000 bpd, the agency said. By contrast, Iran's production capacity was forecast to shrink from 3.9 million bpd to 3.1 million bpd.
"For the medium term, claims about a physical oil supply peak seem very wide of the mark. Nonetheless … the industry still has to run pretty hard just to stand still," the IEA said.
In a more bearish forecast, OPEC predicted the stronger-than-expected rebound in oil demand this year would suppress next year's growth.
"Energy efficiency policies along with the use of biofuel will put more downward pressure on oil consumption worldwide," it predicted.
OPEC forecast a 300,000 bpd increase in the call on its crude next year, unchanged from its projection last month.
The one issue on which both groups agreed was that market volatility was likely to increase, albeit for different reasons.
"Despite a convergence of views that fundamentals are improving, the market is still facing a large degree of uncertainty," OPEC said. "Over the medium and long term, the level of uncertainty is even greater.
"In addition to the uncertain direction of the global economy, there is also a lack of clarity over the impact that energy and environmental policies in several major consuming countries will have on future oil demand."
http://www.thenational.ae/business/energy/iea-expects-faster-growth-in-world-oil-consumption?pageCount=0
tcarlisle@thenational.ae
Sinopec buys Occidental's Argentina assets for $2.45 bln
BEIJING | Thu Dec 9, 2010 10:45pm EST
BEIJING Dec 10 (Reuters) - China Petrochemical Corp, parent of Sinopec Corp (0386.HK), has signed an agreement to buy all of U.S.-based Occidental Petroleum Corp's (OXY.N) oil and gas assets in Argentina for $2.45 billion, the company said in a release on Friday.
The purchase is subject to government approvals, it said.
Occidental's Argentina units hold interest in 23 production and exploration concessions in Santa Cruz, Mendoza and Chubut provinces in Argentina, according to the release.
As of Dec 31, 2009, the concessions held gross proven plus probable reserves of 393 million barrels of oil equivalent.
Gross production from 22 producing concessions totaled over 51,000 barrels of oil equivalent per day in 2009, according to the release.
(Reporting by Jim Bai and Tom Miles; Editing by Ken Wills)
Hungry for oil: China's crude imports rose to their fourth highest on record in November
China increases crude imports
China's crude imports jumped 22.1% last month from a year earlier to 5.09 million barrels per day, the fourth highest on record, data from China's General Administration of Customs showed today.
News wires 10 December 2010 04:22 GMT
The volume was also up 31.9% from the 19-month low of 3.86 million bpd in October, Reuters calculation showed, as oil companies stepped up shipments to support high refinery crude throughput amid widespread diesel shortages.
Imports of refined oil products rose 29.4% to 3.52 million tonnes last month, the highest volume since July 2009, while exports of oil products rose 10.6% to 2.08 million tonnes.
The net imports of oil products were also the highest since July 2009.
Urged by the government to increase domestic diesel supplies, state-owned oil majors have almost halted diesel exports since last month and bought cargoes from international markets for the first time in nearly two years.
Published: 10 December 2010 04:22 GMT | Last updated: 10 December 2010 04:22 GMT
http://www.upstreamonline.com/live/article239306.ece
ot....Venezuela’s oil sector troubles revealed: WikiLeaks
Rory Carroll
American diplomats say president is now desperate to attract foreign partners after nationalisation frightened many away
Venezuela’s tottering economy is forcing Hugo Chavez to make deals with foreign corporations to save his socialist revolution from going broke.
The Venezuelan president has courted European, American and Asian companies in behind-the-scenes negotiations that highlight a severe financial crunch in his government.
Venezuela’s state-owned oil company, PDVSA, is the engine of the economy but buckled when given an ultimatum by its Italian counterpart and has scrambled to attract foreign partners, according to confidential U.S. embassy cables released by WikiLeaks.
The memos depict an unfolding economic fiasco and suggest some of Chavez’s key allies - Argentina, Brazil and Cuba - are gravely concerned at Venezuela’s direction. “President Chavez, for his part, is acutely aware of the impact the country’s general economic trajectory has had on his popularity,” says one cable.
With a recession, underfunded infrastructure and 30% inflation, Venezuela’s economic woes are no secret. But the government has insisted PDVSA, the country’s golden goose, is thriving and capable of funding Mr. Chavez’s vision of “21st century socialism”.
Mr. Chavez took over the company and declared it a revolutionary instrument after defeating a management-led strike in 2003. He nationalised and expropriated swaths of the oil industry and said PDVSA would fill the slack left by departing foreign companies, declaring a triumph for sovereignty and socialism.
Analysts have suspected all is not well, citing corruption, broken rigs and unpaid suppliers, but the foreign oil companies still in Venezuela stay largely silent lest they anger the government and find themselves locked out of the western hemisphere’s biggest energy reserves.
However, in separate private conversations with the ambassador, Patrick Duddy, industry figures detailed the parlous state of the industry. A senior manager from Chevron estimated the state oil company’s output at 2.1m to 2.3m barrels per day, well below official declarations of 3.3m.
Chevron was funnelling profits to the U.S. and no longer investing in Venezuela, the manager said. An executive at oil exploration company Baker Hughes Inc said the firm had a similar strategy and “received a congratulatory message from BHI corporate headquarters for not growing the business (and increasing its risk exposure)”.
A director of Mitsubishi in Venezuela was quoted as saying Mr. Chavez’s executives were struggling to attract investment. “[The businessman] stated that privately, senior PDVSA leadership is extremely upset with the failure of international companies to register bids. He added that Mitsubishi sent a letter to PDVSA explaining why the conditions offered by Venezuela were insufficient and what would need to be changed to make a bid commercially viable.”
Italy’s ambassador to Caracas, Luigi Maccotta, told his U.S. counterpart that Italian oil company ENI squeezed PDVSA over an Orinoco belt deal in January this year knowing it had no one else to turn to.
The Italians delayed the signing by two days to reinforce the Venezuelan government’s “need for ENI”. Paolo Scaroni, the company’s CEO, then faced down Venezuela’s oil minister, Rafael Ramirez, over changes to terms and conditions.
“Thirty minutes before the ceremony was supposed to begin Mr. Scaroni told Mr. Ramirez: ‘Take it or leave it, I can get on my plane and move on.’ Mr. Ramirez apparently used that half an hour to convince President Chavez to accept all of ENI’s proposed changes or risk losing the deal,” according to the U.S. cable. The Italians said they would not pay PDVSA a standard signing bonus because the company already owed them $1bn.
Venezuela’s oil minister, who is the head of PDVSA, travelled to Moscow and Beijing hoping for solidarity deals with allies, only to find the Russians and Chinese as profit-minded as western companies.
Venezuela’s oil travails, combined with rolling power blackouts, decaying infrastructure and expropriations, have worried its other friends. Jorge Taiana, Argentina’s foreign minister, told a U.S. envoy that Cristina Kirchner’s government did not agree with Mr. Chavez’s assault on the private sector. “Taiana said [former president] Peron had already gone through a nationalisation phase in the 1940s and the country had learned its lesson.” In a separate cable Marco Aurelio Garcia, a foreign policy adviser to the Brazilian president, Luiz Inacio Lula da Silva, was quoted telling the U.S. ambassador that Venezuela had “deep domestic economic problems, particularly with regard to energy supply”.
The U.S. ambassador to Havana reported that the Castro government, which depends heavily on Venezuelan financial support, was fretting about its benefactor’s economic health. “The view from the French is that Venezuela ‘es en flames’ and a source of serious concern for Cuba.” Mr. Chavez has brushed off claims of meltdown as capitalist propaganda, saying Venezuela’s economy will emerge stronger than ever from current difficulties. The government is studying a draft law to facilitate further oil industry nationalisations to deepen the revolution.
Copyright: Guardian News & Media 2010
Keywords: Venezuela economy, wikileaks, cablegate
Venezuela orders foreign oil firms to lift output targets
From Herald News ServicesDecember 9, 2010curriebarracks
Production - Venezuela's government has ordered foreign oil companies to present higher production targets at more than 20 joint ventures within a month, as the OPEC nation struggles with falling output of its main export.
In a letter dated November and seen by Reuters on Wednesday, Oil Minister Rafael Ramirez gave companies including Chevron, Repsol, BP and Petrobras 30 days to present a new production plan.
He said he was "concerned" that previous targets had not been met, and requested that they seek their own financing.
"The joint-venture partners have a period of no more than 30 days . . . to present my office with a revised production and investment plan," the letter said.
Several firms want another month to put forward their proposals, a company source said.
© Copyright (c) The Calgary Herald
Bloomberg
Mexico May Extend Oil Output Declines for 7th Year
December 08, 2010, 6:16 PM EST
By Carlos Manuel Rodriguez
(Updates with minister’s comment in final paragraph.)
Dec. 8 (Bloomberg) -- Petroleos Mexicanos, the state-owned oil company, is likely to post a seventh straight year of output declines in 2011 after the company faced delays to attract private investment for exploration projects.
Output will likely average 2.55 million barrels a day next year, down from 2.58 million in 2010, Mexican Energy Minister Georgina Kessel said today in an interview. “From there on, we’ll continue to increase, very gradually, our production,” said Kessel, who is also chairwoman of the state-owned company.
Chief Executive Officer Juan Jose Suarez Coppel had been seeking Pemex’s first production gains since 2004 as he stabilized output at the company’s Cantarell field and brought online new projects. The company is counting on new performance- based contracts with foreign operators to help boost output. These faced delays in being approved by the company’s board.
State-owned Pemex plans to hire companies to maximize reserves in older fields and also explore in deep waters in the Gulf of Mexico, where it estimates it may have 30 billion barrels of oil. Kessel said that contracts for deep water projects may be offered at the end of 2011 or early 2012.
Pemex is targeting companies such as Exxon Mobil Corp., Royal Dutch Shell Plc and BP Plc. The Mexico City-based company has been preparing the performance-based accords since Mexico revised its oil laws in 2008 to allow the hiring of foreign companies. Mexico’s Supreme Court upheld those plans this week after they were challenged by some lawmakers.
Betting on Contracts
Pemex “was betting in the implementation of the new contracts to revert the falling production,” Alejandra Leon, an analyst with Cambridge Energy Research Associates, or CERA, in Mexico City, said today in a telephone interview. She estimates Pemex won’t be able to stop output declines before 2018.
Pemex published preliminary contract conditions last month to develop three mature fields. Final auction rules will be published in February, the company said.
“Those contracts are too small for the needs of a company such as Pemex,” David Shields, a Mexico City-based energy analyst who has written two books about Pemex, said today. “I don’t see how they can increase output.”
In about a year, the Mexican oil producer may produce about 2.6 million barrels a day and start reverting the trend, Kessel said. “We’re about to start seeing the results from the increased investments in the sector,” she said.
--Editors: Dale Crofts, Carlos Caminada
OPEC will not lift output to cap oil price rise
Thu Dec 9, 2010 6:43am GMT
By Hugh Bronstein
QUITO (Reuters) - OPEC appears unlikely to raise oil supply limits to cap an oil price rally when it meets in Quito on Saturday, with ministers insisting world economic growth can hold up with crude at $90 a barrel.
OPEC ministers going into the December 11 meeting in the Ecuadorean capital have said that the world economy can handle up to $90, increasing their previous range of prices considered acceptable for consumers.
Saudi Oil Minister Ali al-Naimi flagged the change last month, adding $10 to the top end of the $70-$80 ideal range that Riyadh said it preferred over the past two years.
"A crude price of $90 is not yet a trigger to put more oil into the market," said New York-based John van Schaik at Medley Global Advisors.
"OPEC will not fiddle with its official output targets at this meeting," he added. "It will continue tweaking its actual output to balance the market, to see to it that supply meets demand."
The 12-member Organization of the Petroleum Exporting Countries has not officially changed production policy since December 2008, when it reacted to a recession that had crushed fuel demand by announcing its deepest-ever supply cuts.
$90 NO MAGIC NUMBER
"Everybody seems to be comfortable with these prices. $90 is not a magic number," said David Kirsch, director of market intelligence services at consultancy PFC Energy in Washington.
"OPEC has been generally pleased with economic growth and oil demand," he added. "They see higher prices as consistent with macroeconomic conditions. Any adjustments that need to be made to output can be made through minor tweaks and do not need to be enshrined in a formal agreement, at least at this time."
Even energy consumer watchdog the International Energy Agency does not appear concerned that OPEC is letting oil prices get out of hand.
The oil market will have plenty of supply if OPEC keeps producing at current levels, International Energy Agency Executive Director Nobuo Tanaka said on Monday.
With zero expectation of any change in policy, oil traders will be looking for signals from ministers about the conditions they consider necessary to trigger more supply in 2011.
"If oil prices start heading toward $100 per barrel, then OPEC will be concerned," said Fadel Gheit, a New York-based oil industry analyst at Oppenheimer & Co.
"Once they lose control of oil prices on the way up they will also lose control of oil prices on the way down. Basically they would be conceding the price movement to speculators, and that's the last thing they want to see," he said.
Oil slumped from a peak of $147 a barrel in mid-2008 to a low under $33 in December of that year as the economic crisis hit fuel demand and inventories soared. OPEC cut output sharply and economic recovery this year has lifted demand.
As the cartel keeps a lid on production, world demand is recovering faster than most forecasters expected. World oil demand led by China may increase as much as 2 million barrels daily this year to over 86 million bpd and restore global consumption to pre-crash levels of 2007.
"With prices pushing $90 per barrel, no one seems to be complaining or calling for higher OPEC production. The recent rally in the dollar and high oil inventories that we are seeing around the world are probably helping," Gheit said.
At least five banks raised their mid- or long-term oil price forecasts last week, citing factors such as rising demand in emerging markets, faster global economic growth and OPEC's reluctance to boost output.
J.P. Morgan said on Friday oil would top $100 in the first half of 2011 and $120 before the end of 2012, predicting OPEC would be very slow to react to higher prices.
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Thursday, December 9, 2010 2:43 AM
World oil demand to reach all-time high this year
By IB Times Staff Reporter
World oil demand is likely to exceed the previous all time high reached in 2007, mainly driven by huge demand from the Asian countries, a report said on Wednesday.
Oil demand globally is forecasted to reach an annual average 86.7 million barrels a day in 2010 -- 100,000 barrels a day higher than in 2007, said Wood Mackenzie.
Wood Mackenzie forecasts the demand to increase to 88.1 million bpd in 2011 and about 90 million in 2012.
"This year will see the recovery of all the demand lost during 2008 and 2009, while in 2011 world demand will be two percent above the peak pre-recession level hit in 2007. In 2012 demand will be almost four percent higher than this peak,” said Francis Osborne, analyst, Wood Mackenzie. "Only twice before in the past 30 years has demand grown as much as this, and in recent years, 2010 will be second only to the surge in 2004.”
The report said that the recovery in the global oil demand is mainly led by China where diesel, gasoil and gasoline demand is growing at eight percent annually.
According to an IEA report in July, China overtook the US as the largest consumer of energy in the world in 2009.
The IEA said China’s energy consumption surpassed the US by 0.4 percent at 2.252 billion tons of oil equivalent in 2009 whereas the US consumed 2.17 billion tons.
Automobile sales in China reached 13.6 million in 2009 surpassing the US as the world’s biggest auto market for the first time.
On the other hand, India is recording 7 percent annual increase in the consumption of diesel and gasoil. Gasoline demand is growing 11 percent per annum.
The research firm said Asia’s oil market this year will be 3 million bpd larger than the North American market - in 2008 it was 1.4 million bpd larger.
"The global market for oil is diverging as never before. OECD demand fell by a total 3.9 million bpd over the course of 2008 and 2009. On the other hand emerging market demand increased by 1.6 million bpd," said Osborne.
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