ZEIDAN SAYS MEDIATORS ARE SEEKING TO END OIL DISPUTE - LIBYA

Libya’s Prime Minister Ali Zeidan said the government would give mediators a chance to end a standoff with protesters blockading eastern oil ports, seeking a peaceful solution even after an escalation of the dispute over crude exports.

Libya’s navy last week fired warning shots at an oil tanker the government said tried to load crude at one of the terminals seized by protesters who are demanding more regional autonomy and a greater share of oil.

Two years after the fall of Muammar Gaddafi, the port dispute is the most serious challenge to the fragile central government as it struggles to control former militias and rebels, who refuse to bow to Tripoli’s authority.

With Libya’s leadership hamstrung by infighting and a nascent army still in training, Zeidan’s government may have little option but to seek help from mediators in trying to negotiate an end to the crisis.

For several months, delegations from Libya’s General National Congress parliament and from tribal leaders have reached out to protesters but with little success.

“We are now in touch with mediators who intend to dialogue with those occupying the ports,” Zeidan said at a press conference.

“We have two solutions: Through force or peaceful means. We preferred the peaceful way. We have found some people who say they can do this, and we will give them the chance.”

Libya’s crude production last week was at around 600,000 barrels per day, down from 1.4 million bpd, which is putting a strain on public finances that depend almost completely on oil revenue.

Eastern oil protesters in August took over the ports of Ras Lanuf, Es-Sider and Zueitina, which previously accounted for 600,000 bpd in exports, to demand more political autonomy for the region and a share of Libya’s crude sales.

Eastern federalists from the self-declared Cyrenaica government promise that ships can safely dock at the ports they control, dismissing Zeidan’s warnings that tankers may be destroyed if they try.

But even with the government’s limited military resources, experts say, protesters may struggle to find tanker operators willing to risk entering ports to load cargoes of discounted crude, which the government would see as an act of piracy.

Negotiations have had more success in the west and the south, where protests ended at the major El Sharara field, allowing its production to rise again to around 328,00 bpd, according to the state-run National Oil Corp.

Political solutions are complicated in Libya, where the General National Congress and its members have yet to complete vital parts of the transition to democracy since Gaddafi’s fall, including the writing a new constitution.

The parliament is deadlocked between secular and Islamist parties, while militias that once helped fight Gaddafi have refused to disarm, claiming that Tripoli is too weak to guarantee stability.

[ENERGY MIX REPORT]

OIL REVENUE DROPS TO N479.9BN IN DECEMBER

Following serious disruptions in crude oil production and lifting operations including vandalism of pipelines, maintenance and the Force Majeure declared at Bonny Terminal, monthly gross oil revenue dropped by N117. 802 billion to N479.950 billion in December compared to N597.752 billion the previous month.

Notwithstanding, a total distributable revenue including Value Added Tax (VAT) amounting to N581.498 billion was yesterday shared among the three tiers of government for December.
Revenue collection from VAT also fell to N64.725 billion in the period under review compared to N91.730 billion in November.

Addressing journalists last night after the monthly meeting of the Federation Accounts Allocation Committee (FAAC) in Abuja, the Minister of State for Finance, Alhaji Yerima Ngama, said mineral revenue of N379.122 billion which was received for the month fell short of the budgeted amount of N465.057 billion while the non-mineral revenue of N100.828 billion also fell short of the budgeted figure of N158.711 billion.

Although Ngama noted that the meeting had been hitch-free but the Chairman, Commissioners of Finance Forum, Mr. Timothy Odah, told journalists that there were some reservations.

He said a post- mortem committee had been inaugurated and further empowered to monitor revenue remitting agencies especially the Nigerian National Petroleum Corporation (NNPC).
Meanwhile, the distributable statutory revenue for the month stood at N473.607 billion.
A breakdown of the statutory revenue distribution showed that the federal government got N221.161 billion while the states shared N112.176 billion as well as the local governments, which got N86.483 billion.

The oil and gas producing regions shared N48.461 billion as derivation fund.
Also shared was the N7.617 billion refund from the NNPC.

[ENERGY MIX REPORT]

FG APPROVES N1.9BN FOR ONITSHA-NEW HAVEN POWER TRANSMISSION PROJECT

 

The Federal Executive Council (FEC) has approved the sum of N1.9 billion for the supply of 746-kilometer of Aluminium Conductor Composite Core Reinforced (ACCR) for the re-conduction of the Onitsha-New Haven 330kv transmission line.

The approval was sequel to  a memo brought before it by the Minister of Power, Prof. Chinedu Nebo, who sought approval for the award of the contract.

Briefing journalists shortly after the FEC meeting, Nebo said the project would  generate  about 3,000 employment  during the installation of the conductor.

He equally disclosed that the multiplier effect of additional 400 mega watt of power to the thriving areas of New Haven, Abakaliki and Makurdi would stimulate the generation of over one million jobs.

“The Transmission Company of Nigeria (TCN) intends to fund the contract for the supply of the 746-kilometer of ACCR conductor from the $135 million allocated to TCN from the proceeds of the Eurobond recently issued by the federal government.”

“The reinforcement of the line would improve the nation’s transmission capacity and facilitate the evacuation of stranded generation from Afam and Okpai power plants.

“Council approved the award of contract for the supply of 746-kilometer of ACCR for the re-conductor in favour of Composite Technology  Corporation (a United States  firm) in the sum of $11.2million payable at the prevailing rate of exchange plus N189.43 million inclusive of five per cent Value Added Tax (VAT), with a delivery period of 20 weeks” the minister stressed.

[ENERGY MIX REPORT]

LABARAN MAKU - WHY FG SUSPENDED THE PRIVATISATION OF REFINERIES

The Federal Government suspended the proposed sale the nation’s four refineries in order to ensure the stability of the political environment, the Minister of Information, Mr. Labaran Maku, has said.

Maku, who spoke in an interview with a correspondent of punch newspaper in Abuja on Wednesday, said although the Federal Government believed in the benefits of privatising the refineries to the Nigerian economy, a decision on the sale would be taken when critical stakeholders come to an agreement on the need for the action.

Making a reference to the protests that greeted the deregulation of the pump prices of petroleum products on January 1, 2012, the minister said any instability now could stress  the economy, adding that there was a need for all critical stakeholders to appreciate the need for the sale of the refineries.

He said, “We have a huge challenge winning citizens to appreciate that the deregulation will be to the advantage of the economy and the welfare of the citizens. In every political system, unless the people are won over, even when your policies are right, you can create a major problem as we saw in January 2012 when we brought up the issue of deregulation.

“The media, the civil society, political organisations and everybody was up in arms against the government. You have to weigh the options. Stability is very crucial to the realisation of national objectives.”

The minister said without stability, a lot of costs would be incurred in trying to win the citizens’ hearts and stabilising  economic activities, adding that up until now, the country was still having the challenge of winning Nigerians to its side because the issue of deregulation of the downstream sector of the petroleum industry had been politicised.

Maku added, “Every political opponent is busy trying to show that he loves the citizens more than the other party. So, in the course of this, we believe that Nigerians will come to see the losses we are sustaining today by keeping this wrong economic regulation in place.”

[ENERGY MIX REPORT]

OIL INDUSTRY METERING POLICY BEGINS FEBRUARY 1

The Federal Government Of Nigeria has said that the full implementation of the accurate metering policy in the oil and gas sector by the Weights and Measures Department of the Ministry of Industry, Trade and Investment will begin on the 1st of February.

This was disclosed by the Director, Weights and Measures, Mr. Oluyinka Sikuade, during a technical meeting between officials of the ministry and the consultants handling the project.

A statement from the ministry on Wednesday quoted Sikuade as saying that ''the full implementation of legal metrology services in the oil and gas sector would enable stakeholders to conform with the weights and measure regulation.''

He said, “We are going to look at the metering system of the operators for accuracy, equity, fairness and conformity. We will take into consideration internationally acceptable error margin for us to have fair and justice in trading devices used by the operators.” 

FG, EX-MILITANTS TO PARTNER IN FIGHT AGAINST OIL THIEVES

A group of Urhobo ex-militants has vowed to join forces with President Goodluck Jonathan and security agents to curb oil theft across waterways in Delta and Bayelsa states.

The ex-militants operate on the platform of Urhobo Arms Struggle, UAS.

National Chairman of UAS, Mr Israel Akpodoro , who gave the assurance during a courtesy visit on a former senatorial aspirant on the platform of the ruling Peoples Democratic Party, PDP, in Delta State, Mr. Daniel Idonor, last weekend, applauded the move by President Goodluck Jonathan to provide adequate security for oil and gas installations in Urhoboland.

[ENERGY MIX REPORT]

OXFORD BUSINESS GROUP (OBG) REPORTS NIGEREIA'S POWER SECTOR AS A NEW INVESTMENT HUB

Oxford Business Group (OBG), reports that the Nigeria's power sector looks set to play a major role in addressing the country's electricity shortage.

Ms. Stephanie Parker, the Director Circulation and Communications OBG, said that the major part that the privatisation of Nigeria's power sector will play is the addressing of the country's long standing electricity shortages.

The report, which was tagged  “ Nigeria 2013”, contains a contribution from President Goodluck Jonathan, together with a detailed, sector-by-sector guide for investors.

Ms. Parker also said the Report analysed the country’s bid to overhaul its oil production infrastructure, which is seen as key to sustaining output and boosting downstream processing. It mulls the challenges facing Africa’s number one oil producer, while documenting new initiatives, such as plans to channel funds into deep water reserves exploration.

STAKEHOLDERS WANT LAGOS TANK FARMS RELOCATED

After last Tuesday’s inferno in Apapa area of Lagos State where 15 people were burnt to death, victims  have called on the government to relocate the fuel tank farms from their present location in Apapa, saying the number of casualties arising from tanker-related accidents in the area was on the increase.

Also, the victims want the government to assist them get back on their businesses.

A victim, Mr. Daniel Apere, lamented that he lost goods worth more than N5 million to the inferno.
“I don’t know where to start from, I watched all my life earnings totaling more than N5 million being consumed by the raging fire. Also, my elder brother lost over N30 million to the fire.” Apere used the opportunity to appealed to the Federal Government to relocate the tank farms from Apapa, saying: “The number of casualties from tanker-related accidents is increasing daily, as a result the tank farms should be removed from Apapa and environs.”

It would be recalled that Governor Babatunde Fashola of Lagos State, while assessing the extent of damage caused by the explosion at the MRS tank farm, last year, urged the Federal Government, in the interest of the masses, to relocate the tank farms from the area.

Another victim, Collins Okafor, said: “All my goods were completely burnt and I could not salvage anything. For the past four months, we have been experiencing fire disasters around here but this is the greatest of all. An orange seller lost her son to the inferno and she also got burnt in the process, in her bid to rescue her son.”

Mr. Oke Udeagbara, President of the Berger Business Community, lamented the loss of his members. He said: “The loss was unimaginable. We lost over N1 billion on that day. One can imagine all the shops loaded with engines and the least of the truck engines costs N800,000. The explosion occurred at a time some of our members had just stocked their shops with new arrivals.”

Mr. Moses Okolie, chairman, Board of Trustees of the traders, said five of the traders who had rushed to the scene to salvage their property were injured in the process.

Mr. Arinze Okolie, manager, Berger Suya car park, said: “The fire started at about 10:00 pm and immediately spread to nearby buildings, burning several people to death.”

Okolie, who attributed the incident to negligence on the part of the tanker driver, said: “The fuel-laden tanker experienced brake failure and rammed into the Police post at the bus stop. Its content spilled on the road caught fire. The driver should have checked the brake system and other parts of the vehicle before setting out on the journey.”

Govt should rehabilitate our roads –Residents
Residents of Osho Drive, the closest community to the scene of the incident, yesterday, expressed disappointment with the state of Kirikiri-Ajegunle road and called on government to rehabilitate its and save them from incessant tragedies.

Chairman, Osho Drive Community Development Association, Mr. Nwogu Emmanuel, who spoke to Vanguard said the road was an eyesore.

He said: “May I state categorically that the tragedy was aggravated by the bad road. The tanker driver would have been able to handle the situation if not for the deplorable condition of the road. The bus-stop is prone to gridlocks as a result of the bad road, the number of casualties would have increased if there was gridlock on that day.”

The CDA chairman, however, affirmed that many of the victims were non-residents of the community.
He said: “Nobody has come to search for their relatives because the victims mostly consist of traders, lotto dealers and suya dealers who come from far away places to transact their businesses in the area.”

Tankers should operate at night –Petroleum dealers
President, Petroleum Dealers Association, Badagry branch, Otunba Adisa Osiefa, said the tankers were causing more havoc than good especially in day time.

He said: “We cannot continue to lose lives on our roads. Tankers are not supposed to be on the road during the day, rather, they should move in the night. I have travelled far and wide and discovered that things like this rarely happen in foreign countries.

“I have told the government on many occasions to restrain tankers from operating during the day. The amount we make on tankers cannot be compared with the number of lives lost each time an explosion occurs on our road.”

Fresh tanker explosion averted
What could have been another petroleum tanker explosion was averted in Lagos, yesterday, through the quick intervention of the state’s fire fighters and men of the Lagos State Traffic Management Authority, LASTMA, who prevented an overturned tanker from igniting fire.

According to an eyewitness, a tanker fully loaded with petrol which registration number was removed, while on transit suddenly overturned in the process of negotiating a bend and spilled the content on the road.

The incident which reportedly occurred at about 1pm at Oke Ajuwon, along Iju-Ishaga road, in Ifako-Ijaiye Local Council Development Area, LCDA, led to traffic congestion as men of the Lagos State fire fighters and LASTMA, who sped to the scene following distress call, kept onlookers and motorists away from the spot of the incident.

According to Mr Tayo Adewale, a banker in one of the new generation banks in the area, “It is a miracle that the tanker did not burst into flames. But thank God for the quick arrival of LASTMA and fire fighters, it would have been a different story.”

The situation was brought under control few hours later and the tanker was removed from the road.

[ENERGY MIX REPORT - VANGUARD]

OIL PRODUCTION LOWERED IN SUDAN

The Sudanese oil minister Makkawi Mohamed Awad has said that his country’s production of oil is at 130,000 barrels per day (bpd).

The number contrasts with ones given by his longtime predecessor Awad al-Jaz last month who said that Sudan is producing 150,000 bpd.

Prior to the country’s breakup, Sudan produced close to 500,000 barrels but the south, which broke away in 2011, held more than three quarters of the oil reserves.

On Thursday Awad met with the Norwegian ambassador to discuss a recent accord signed for cooperation in oil and gas sector.

The minister hailed the benefits gained by Sudan through the oil boom it witnessed including the increase in number of national oil companies and qualified oil workers.

He noted an offer made by Khartoum to Juba to send Sudanese oil workers to prevent any possible oilfields shutdown in the wake of the conflict engulfing the young state.

The Norwegian envoy on his end said that his country is prepared to offer technical expertise in oil and gas sector through training and other means.

[ENERGY MIX REPORT]

ANALYSIS BY JOE LYNAM BBC CORRESPONDENT - BBC REPORT

 

 

 

 Joe Lynam Business correspondent, BBC News that Total is now getting involved in the UK shale gas industry is not insignificant. 

 

The oil majors (BP, Shell, Total, Exxon, and Chevron) waited in the wings for five years in the US while smaller exploration companies drilled for shale gas.

When it became clear there were major commercial flows in America, then the majors piled in.
Now it looks like the majors are getting interested in Britain at a very early stage - thanks in no small part to the confident reserve estimates from the British Geological Survey and the open arms of the UK government.

The large energy players bring deep pockets and serious expertise with them and will be able to extract, sell and distribute any found gas quicker than smaller companies.

The advantage for the consumer could also be mouth watering - US energy costs are now a third of those in Europe.

If Britain can extract 10% of the estimated reserves it could supply the entire country for almost 50 years.

Total is to spend tens of millions of pounds buying substantial stakes in firms with drilling licences in the north of England, where other large energy firms such as Centrica and Gaz de France have already invested.

FRENCH OIL & GAS COMPANY TOTAL TO INVEST IN THE UK'S SHALE GAS INDUSTRY

French oil and gas company Total is to invest in the UK's shale gas industry, it is to be announced on Monday.

Total will be the first among the oil major, to invest in shale gas in the UK,  BBC has confirmed.

The British Geological Survey estimates there may be 1,300 trillion cubic feet of shale gas present in the north of England, but the process to extract shale gas - called "fracking" - has proved controversial.

Total is to spend tens of millions of pounds buying substantial stakes in firms with drilling licences in the north of England, where other large energy firms such as Centrica and Gaz de France have already invested.

This comes as the government is expected to introduce more incentives to encourage local authorities to allow drilling for shale gas, according to environmental campaigners Greenpeace.

Under the measures, local authorities would keep all income from business rates paid by companies drilling for shale gas, instead of giving it to the UK treasury.

BBC reports that in december, a report commissioned by the Department of Energy and Climate Change (DECC), said more than half of the UK could be suitable for fracking.

The process has attracted anti-fracking protests in the UK, with environmentalists fearing the technique could cause small earth tremors, water contamination and environmental damage.

But the BBC's Joe Lynam said the announcement will be welcomed by the government which has championed shale gas as a major source of the UK's future energy needs.

BBC'S correspondent said Total's entry into the UK's shale gas market is not insignificant and the other four major oil and gas companies could follow.

If Britain can extract 10% of its estimated gas reserves, it could supply the entire country for 50 years, BBC'S correspondent said.

In August, Prime Minister David Cameron said the whole country should support fracking, insisting it is safe if properly regulated and could create thousands of jobs and reduce energy bills.

Shale gas has helped boost the domestic energy industry in the US in recent years, where oil production has risen and gas prices have plummeted.

Major oil companies waited for more than five years before investing in shale gas production in the US, but the UK will receive this major oil and gas company backing while the industry is still in its infancy.

Senior government sources told the BBC that the Total investment was a strong vote of confidence in the sector.

That view was echoed by business lobby group, the Institute of Directors, which said shale gas could be a "New North Sea" for Britain.

However, Greenpeace climate campaigner Lawrence Carter, said: "Total, a French company who can't frack in their own country because the French government has stopped the French countryside being ripped up have now turned their sights on the UK countryside where the UK government seem happy to allow the industrialisation of our green and pleasant land.

He said the UK government "are pushing ahead with selling off two-thirds of Britain for drilling without a public mandate".

Mr Carter said the government was "resorting to straight-up bribery" by allowing local authorities to keep all of the business rate income from companies drilling for shale gas.

The UK currently consumes only three trillion cubic feet of gas annually.

The government previously unveiled a package of reforms to encourage development in the industry.
They included new planning guidelines to make the process of approving new drilling sites more streamlined, and a consultation on tax incentives to encourage exploration.

Communities affected by shale gas drilling are also expected to receive £100,000 in "community benefits" and 1% of production revenues, should sites start producing gas.

Total has 97,000 employees operating in more than 130 countries.
According to its website, it is the world's fifth largest publicly traded oil company.

SENATOR MAGNUS ABE SHOT AT APC RALLY TODAY AT RIVERS STATE

Senator Magnus Abe, the Chairman of the Senate Committee on Petroleum (Downstream) and the Chief of Staff to Rivers State Governor Rotimi Amaechi, Tony Okocha have been reported to both be hit with rubber bullets shot by Rivers police this morning Sunday January 12th during a political rally in Port Harcourt.

The Senator had led members of the Save Rivers Movement to a venue where a pro-APC rally was to hold, and the police fired rounds and released teargas in a bid to stop the event. Several people were wounded and have been reportedly transported to the hospital.

One of those wounded Tony Okocha said Rivers police was trying to militarize the state and blamed the attack on Supervising Minister of Education, Nyesom Wike, who he claimed told police to stop the rally.

INDEPENDENT PETROLEUM MARKETERS ASSOCIATION OF NIGERIA (IPMAN) THREATEN STRIKE

The Independent Petroleum Marketers Association of Nigeria, (IPMAN) and its allied bodies have threatened to embark on an indefinite strike, commencing from first week in February, over the deplorable Sagamu/Mosimi depot road.

 At a press briefing held at Mosimi petroleum products loading depot, in Sagamu, Ogun State, South-West Nigeria, this ultimatum was given by the association.

They said that the bad road has had a bad effect on their business, and that a good number of human life and resource, have been lost on the road.

Due to this reason, the independent marketers, tanker drivers and other bodies of the union have threatened to withdraw their services indefinitely, if something is not done urgently by the Federal Government.

CAMAC ENERGY SECURES LONG TERM FPSO CONTRACT

Camac Energy Inc. has signed a letter of intent regarding terms and conditions of a long-term agreement for the Armada Perdana floating production, storage, and offloading vessel.

The agreement encompasses an initial term of 5 years beginning Jan. 1, with an automatic extension for an additional 2 years unless terminated by Camac with prior notice. The parties are working toward executing a definitive agreement on or before the 31st of Jan.

The Armada Perdana FPSO can process as much as 40,000 b/d of oil and has a storage capacity of 1 million bbl. It currently supports production of 2,000 b/d of oil and 40 MMcfd of natural gas from the Oyo field offshore Nigeria in OML 120.

Camac has proceeded with the roadshow presentation to institutional investors for the proposed $300 million bond offering that will provide the company with the capital to complete Oyo-7 and drill and complete Oyo-8 and 9. Pro forma closing of the Allied Energy PLC transaction, these three wells will bring online a total of 21,000 b/d of oil net.

The Oyo-7 well encountered oil and gas in the producing Pliocene reservoir in October, and in November confirmed the presence of oil in Miocene.

[OIL AND GAS JOURNAL]

FIRE HITS SHELL'S GERMAN REFINERY

The company said a fire that broke out in a chemical tank on Jan. 9 at Shell's 327,000-b/d Rheinland refinery near Cologne, Germany, has been contained.

The fire, which occurred at about 15:00 GMT at a toluene tank, was extinguished by both on-site and off-site fire brigades by 16:15 GMT, according to a statement posted to Shell Deutschland Oil’s web site.

The company confirmed that there were no casualities as a result of the incident, but the status of current operations at the refinery was not disclosed.


[OIL AND GAS JOURNAL]

BAKER HUDGES: US DRILLING RIG COUNT RISES TO 1,754

 

The US drilling rig count added 3 units to reach 1,754 rigs working during the week ended Jan. 10, Baker Hughes Inc. reported.

 

Land-based rigs added 7 units to reach 1,677, while rigs drilling offshore lost 4 units to settle at 57. Rigs drilling in inland waters were unchanged at 20.

A 15-unit gain in oil rigs to 1,393 was offset by a 15-unit fall in gas rigs to 357. Rigs considered unclassified emerged with 3 more units to 4 total.

Horizontal drilling rigs spiked 10 units to 1,158 as directional drilling rigs were off 2 units to 224.

Canada’s rig count skyrocketed 195 units to 477, a near 70% increase from a week ago. One hundred forty-eight of those units were targeting oil, bringing that total to 300, and the remaining 47 were targeting gas, stretching that total to 177. Canada still has 54 fewer rigs working from a year ago this week.

Oil and gas journal further reported for major states:

Oklahoma by a large margin saw the largest increase of the major oil- and gas-producing states, tallying 14 units to reach a total of 183.

New Mexico, West Virginia, and Utah each gained 2 units to 81, 34, and 25, respectively.

Wyoming and Kansas each improved 1 unit to respective totals of 54 and 30. Unchanged from a week ago were Ohio at 35, California at 34, and Arkansas at 11. Pennsylvania and Alaska declined 1 unit each to respective counts of 55 and 10.

Louisiana was down 2 units to 110. North Dakota and Colorado each lost 6 units to 168 and 59, respectively. Texas relinquished 7 units, settling at 825.

Among the major US basins, the Permian and Granite Wash each added 3 units to reach respective totals of 471 and 55. The Haynesville claimed 2 more units to 45. The Williston, meanwhile, fell 6 units to 179, representing the largest loss of the basin group.

[OIL AND GAS JOURNAL]

BRENT RISES TOWARD $107 ON SUPPLY WORRIES; US JOBS DATA EYED

Brent crude rose towards $107 a barrel on Friday amid worries about supply from North Africa, although speculation that strong U.S. data could prompt the Federal Reserve to further taper its stimulus capped gains.

The reaction in oil markets to mixed Chinese trade data released earlier Friday was muted, with traders now waiting for a key report on U.S. jobs that are forecast to have risen by a solid 196,000 in December.

“There is lots of second guessing going on about the Fed’s intentions and non-farm payrolls,” said Ben Le Brun, a market analyst at OptionsXpress in Sydney.

Brent crude was up 26 cents at $106.65 per barrel at 0404 GMT, after settling 76 cents lower in a volatile session that saw the contract swinging by more than $2.

U.S. oil was up 76 cents at $92.42 per barrel, after touching an eight-month low of $91.24 on Thursday.

“Generally we see markets quieting down ahead of key data, but the geopolitical situation in the Middle East is feeding through to create a lot of volatility,” Le Brun said.
“It is very much a double-edged sword. A positive jobs report will be supportive for oil prices, but then that could bring forward tapering. It’s very very hard to preempt.”

Technicals indicate that U.S. oil may to rebound to $93.48, while Brent may bottom around $105.59, according to Reuters market analyst Wang Tao.

CHINA IMPORTS
Oil prices were also underpinned by data showing Chinese crude imports rose by 13 percent from a year ago to a record 6.31 million barrels per day in December.

But imports by the world’s No.2 consumer of oil after the United States rose by a smaller 4 percent in 2013 versus a near 7 percent year-on-year increase in 2012.

Chinese trade data for December was a mixed bag with exports growing a little less than expected at 4.3 percent from a year earlier and imports outpacing forecasts with an increase of 8.3 percent.

On the supply side, Saudi Arabia increased output last month to 9.819 million bpd, from 9.745 million bpd in November, a source said. The world’s largest oil exporter also raised supply to the market, which may differ from production depending on movement in or out of storage.

But unrest at Libyan ports seized by protesters has capped losses in Brent, though some traders say they anticipate exports from those ports to resume by the weekend.

Libya is now producing around 650,000 bpd of oil following the restart of the El Sharara field at the weekend, with the first exports from the western port of Zawiya expected to load around Jan. 10-12.


[ENERGY MIX REPORT]

CYRENAICA DEFIES LIBYA OIL POLICY

Self-rule activists in eastern Libya on Wednesday (January 8th) declared plans to resume oil exports outside central government control.

The move by the self-declared Cyrenaica regional government marked a sharp escalation of its standoff with Tripoli, which on Sunday deployed the navy to prevent two tankers docking in the eastern port of al-Sedra to take on crude.

“We announce our intention to trade in crude after the government failed to meet our demands,” said Abd Rabbo Abdul Hamid al-Barassi, who heads the executive bureau of the regional government.

Barassi said that he was unilaterally lifting the force majeure declared by the state-owned National Oil Company, which has halted exports from the activist-held eastern ports.

He promised to export oil “publicly and via legal means”, respect all Libyan oil contracts signed with foreign companies and disclose revenues. His bureau was also willing to receive representatives from Fezzan and Tripoli to discuss the export of oil.

Barassi said federalist guards would provide protection for all vessels entering al-Sedra to prevent any repetition of Sunday’s naval action.

“We will protect tankers taking on crude from al-Sedra from the moment they enter Libyan territorial waters until they leave,” he said.

Libyan premier Ali Zidan on Wednesday called Barassi’s statement an attempt to “undermine national sovereignty”, AFP reported.

“Any state, company, group or gang that tries to send a ship to Libya’s oil ports without authorisation or agreement with the NOC… will face the necessary measures,” Zidan said, speaking of the possibility of “sinking” any vessel in contravention of the order.

Journalist Abdulmounaim al-Shumani also voiced doubts about the Cyrenaica strategy.

“I’m surprised with the statements of Mr. Abd Rabou, head of the executive bureau of Cyrenaica regional government, which I think don’t show a political mentality,” journalist Abdulmounaim al-Shumani told Magharebia.

“He described his government’s plan to export oil as legitimate, but failed to show us whence he got that legitimacy. Is it the legitimacy of a federal regime, or the legitimacy of secessionist region?” al-Shumani asked.

But Benghazi resident Khalid Mohamed said would support the plan, “if they can invest the revenues for the interest of Cyrenaica, especially in Benghazi”.

The money could help “build security and army forces that would protect the region’s resources”, he said.
“Zidan’s government is selling oil from western oilfields, but where is that money?” he asked.
Meanwhile, Libya output rose to 546,000 bpd after production resumed at the Al-Sharara oilfields, the National Oil Corporation said on Wednesday.


[ENERGY MIX REPORT]

IVORY COAST SEES SOARING OIL OUTPUT RIALLING GHANA BY 2019

Ivory Coast Prime Minister Daniel Kablan Duncan said his nation will boost oil production within five years to 200,000 barrels a day, rivaling neighboring Ghana as stability returns to a country racked by a decade of turmoil.

The West African nation wants oil companies to increase exploration and drilling offshore after output more than halved to about 30,000 barrels a day because of technical problems, he said in an interview Jan. 6.

Ghana pumps about 100,000 barrels a day and wants to more than double output to 250,000 by 2021. Ghana is West Africa’s fourth-largest producer, after Nigeria, Equatorial Guinea and Gabon.

“We have about 50 oil blocks of which half have been awarded,” Duncan said in the commercial capital, Abidjan. “We expect to add at least five wells a year.”

President Alassane Ouattara has pledged to spur economic growth by investing in energy and infrastructure to sustain growth near 10 percent annually. The economy of the world’s largest cocoa producer has expanded at a faster pace than sub-Saharan African nations since gross domestic product contracted in 2011 following post-election violence that left more than 3,000 dead.

The government will sell Eurobonds in the first half of the year, the first since a 2011 default, to fund the projects and is turning to China for additional financing. The economy will expand 10 percent this year, from 9 percent in 2013, Duncan said.

Bond Yields
Yields on Ivory Coast’s $2.5 billion of dollar bonds due 2032 fell 1 basis point, or 0.01 percentage point, to 7.48 percent at 9:13 a.m. in London, where the debt is listed. The government will seek to sell $800 million to $1 billion in the new Eurobond offer this year, Duncan said.

Foreign donors have pledged $8.6 billion to fund $19 billion of projects in the Ivory Coast in the next two years. Chinese agencies and banks, including the Export-Import Bank of China, plan to lend $10 billion to fund infrastructure projects in the next six years at below market rates, Planning Minister Albert Mabri Toikeusse said in July. The Chinese have offered Ivory coast 20- to 25-year loans with interest rates between 2 percent and 3 percent, Duncan said.

Ivory Coast missed out on soaring oil prices in the past few years as output dropped to 30,000 barrels a day last year from about 60,000 barrels a day in 2008. Total SA, U.K.-based Tullow Oil Plc. and Anadarko Petroleum Corp. operate in Ivory Coast. Ghana and the Ivory Coast ended a dispute over the delineation of a maritime boundary in which an oilfield is located.

The government is also reviewing its mining regulations to as it plans to receive increased revenue from an expanding mining industry, Duncan said. “The state has begun to impose order in the sector,” he said.
Ivory Coast contains reserves of gold, diamonds, nickel, manganese and iron ore. Parliament is set to endorse a new mining code while a minimum investment level for prospect licenses was set last year.


[ENERGY MIX REPORT]

UNCERTAINTY FOR NIGERIA'S PETROLEUM BILL LINGERS

Despite assurances from top Nigerian officials and high-ranking legislators that the Petroleum Industry Bill (PIB) would be passed in 2013, the bill remains stuck in the National Assembly (parliament) and may not be passed before the 2015 national elections.

Last year, Petroleum Resources Minister Diezani Alison-Madueke, other key officials of the Nigerian National Petroleum Corp. (NNPC), and the parliament said on several occasions that the PIB would be approved in 2013, but this did not happen, although the PIB scaled the second reading in the House of Representatives in November 2012 and the Senate passed the second reading in March 2013.

Afterward, the Senate referred the PIB to its Joint Committees on Petroleum Upstream, Downstream, Gas, Judiciary, Human Rights and Legal Matters for further legislation. The committee concluded a two-day public hearing on the bill in July 2013.

Some of the PIB’s objectives are to replace all existing oil and gas legislation, redesign the oil and gas governance structure, commercialize and restructure the NNPC, revise fiscal regime for onshore, shallow water and deepwater oil and gas production, and change provisions for awarding, renewing, and revoking licenses and leases.

Oil industry stakeholders said it is uncertain whether the PIB will be passed in 2014 because of sharp political divisions in the ruling People’s Democratic Party (PDP), the new strength of the opposition All Progressives Party (APC), the two state governorship elections in the country’s southwest region slated for June 2014, and the 2015 general elections including the presidential poll.

After the 2011 general elections, the PDP had the majority in the House. But 37 of its members defected to the APC on the House floor Dec. 18, 2013, thereby reducing PDP’s majority. In addition, several PDP senators are threatening to defect to the APC this year following the divisions and disagreements in the ruling party with the past six months.

The APC, which has called for the impeachment of President Goodluck Jonathan, may vote against the PIB in the house.

“President Jonathan cannot bank on the National Assembly as now constituted to pass the PIB. It was not passed when his ruling party had a comfortable majority in the assembly. So the bill may not be passed until after the 2015 elections,” an oil and gas industry expert in Lagos said.

But two high-ranking members of the National Assembly have said the bill would be passed by the National Assembly before the 2015 general elections. During the 2013 Oil Trade and Logistics (OTL) Exhibition for Downstream Operations in Lagos in November 2013, Magnus Abe, chairman of the Senate Committee on the Downstream Sector, said the PIB would be passed before the 2015 general elections.

“The senate experienced some delays in dealing with the bill because of events outside the control of the lawmakers,” Abe said. “We have decided to come out with a timetable on how to deal with issues affecting the bill.”

Some of the contentious issues in the bill are the new fiscal regimes opposed by international oil companies (IOCs) operating in Nigeria, wide powers of the petroleum minister, the president’s powers on oil licensing, the 10% fund for host communities, and the new frontier exploration agency.

The Oil Producers Trade Section (OPTS) of the Lagos Chamber of Commerce and Industry – which  includes Shell, Chevron, ExxonMobil, Total, and Eni SpA – opposed the bill in its present form because, according to the OPTS,  “the proposed increased taxes in the bill would make exploration  and projects uneconomical.”

As part of the bill, the minister has powers to reassign licenses to operators, revoke leases, and supervise all institutions of the industry, while the president has powers to grant or award oil block licenses to investors or stakeholders.

Oil unions, political leaders, and several other groups have called for the removal of these powers from the PIB before passage because they are against international best practices.

Political leaders from the northern region of Nigeria have not relaxed their opposition to the 10% Petroleum Host Community Fund (PHCF) aimed to boost the economy and improve the social infrastructure of communities in petroleum-producing areas. Oil companies will contribute 10% of the net profits to the PHCF after royalties and other taxes have been deducted, if the bill is passed without amendments.

The northern leaders opposed the fund because oil-producing communities already receive 13% of the oil derivation fund, comprised of oil proceeds received by Nigeria. Allocating the additional 10% fund in the PIB would give the Niger Delta communities “too much money” to the detriment of other communities, especially in the north, which has no oil, the leaders said.

Also, the Revenue Mobilization, Allocation and Fiscal Commission (RMAFC), which is in charge of  monitoring and disbursing federal revenue including oil money to the country’s 36 states, the Nigerian Extractive Industries Transparency Initiative (NEITI), and the non-oil producing states are opposed to the 10% host community fund because of the same reason voiced by northern leaders.

Speaking after the senate public hearing on the bill, Alison-Madueke “the powers (of the minister) complained of are even less than what my counterparts in advanced oil-producing countries enjoy.”
Babatunde Ogun, president of the Petroleum and Natural Gas Senior Staff Association of Nigeria, said “As long as the PIB is still in limbo, no investment will come to Niger Delta and no investment will come to oil and gas industry. The consequence for the union is that we are losing members, multinationals are afraid of kidnapping, vandalism and uncertainty; they will keep back their funds or in the alternative, use it … in other countries. That is driving away investors from Nigeria.”

The bill’s journey has been long, and it has created some interesting records. The bill has:
• Taken the longest amount of time to prepare in Nigeria’s history. The groundwork for the bill was laid by the Oil and Gas Sector Reform Implementation Committee (OGIC) that was inaugurated in April 2000. Its report and that of the second OGIC formed the basis of the first PIB submitted to parliament in 2008;
• Spent the longest amount of time in Nigeria’s parliament without passage; and
• Been unable to gain parliament approval by two administrations, that of former President Musa Yar`dua and Jonathan, who presented a new draft of the bill to parliament in July 2012.
Nigeria, which is Africa’s largest oil producer, earns more than 90% of its foreign exchange and 80% of government revenue from oil exports.

[ENERGY MIX REPORT]

OANDO GAS DISTRIBUTION EXTENDED TO MARINA CENTRAL BUSINESS DISTRICT

Oando Plc, Nigeria's indigenious energy group said it has concluded plans to extend natural gas distribution network from Ijora to the Marina Central Business District, in Lagos.

The project, which is being executed by one of its subsidiaries, Gaslink Nigeria Limited in conjunction with Oilserve Limited, will increase available gas distribution capacity from current utilisation put at 55mmscf/d against 85mmscf/d installed capacity.

Oando argued that the venture will have a substantial socio-economic impact on the Central Business District, as the availability of natural gas in those areas will attract industrial investors and businesses thereby enhancing commerce and industry in Lagos State.

Natural gas is a cheaper alternative to liquid fuels such as diesel and low pour fuel oil, LPFO, that have been used by industries and commercial customers to augment the epileptic power supply from the national grid.

The project is also expected to have a positive environmental impact as natural gas, which is more environmentally friendly, will displace diesel/LPFO as the primary fuel source in the industries and power generation plants in the areas.

Commenting on the signing of the Construction Contract, the Chief Executive Officer, CEO, Oando Gas and Power, Mr. Bolaji Osunsanya, said, “We are extremely pleased with the strides we have made thus far, and our overall strategy remains focused on the aggressive expansion and growth of our asset portfolio.”

[ENERGY MIX REPORT]

PENALTIES REVIEWED FOR ENVIRONMENTAL ACT VIOLATION BY FG

The Federal Government has said that violators of the provisions of the Environmental Impact Assessment Act will have to pay penalties that are commensurate with their levels of default beginning from April this year.

It said the EIA Act No. 86 of 1992 was being reviewed so that its principles would stop defaulters of environmental laws from violating them.
The supervising Minister of the Environment, Mr. Darius Ishaku, said this at the ministry’s headquarters in Abuja on Thursday during the inauguration of the Ministerial Committee for the Review of the EIA Act No. 86 of 1992, energy mix reports.

He said, “Currently, the amount that is expected to be paid by violators of the EIA Act is not in line with current realities. For example, some defaulters would prefer to pay the paltry sum of N1m fine instead of fulfilling the provisions of the Act.

“In this regard, the review will facilitate the prescription of appropriate penalties for violation of the EIA Act in accordance with current realities so as to discourage the would-be defaulters from such violations.”
According to Ishaku, in the recent past, most developmental projects and rapid industrialization had impacted the Nigerian environment negatively.

He said the environmental impact assessment policy was to ensure sustainable development in the country, adding that the agenda was adopted by the United Nations Conference on Sustainable Development in 1992.

The minister said, “This propelled the Federal Government to enact the EIA Act of 1992 as a demonstration of its commitment to sustainable development. Prior to the enactment of the Act in Nigeria, project appraisals were predominantly limited to feasibility studies and economic cost benefit analysis.
“Most of these appraisals did not take environmental costs, public opinion, and social and environmental impacts of development projects into consideration.”

On the uniqueness of the Act, Ishaku said it was meant to prevent, reduce or mitigate the negative effects of projects or activities on the environment before their commencement.

The minister noted that the revised EIA Act would have procedural and sectoral guidelines.
He emphasised that the sectoral guidelines would provide sector-specific guidelines for the preparation of EIA reports, adding that it had been developed for the oil and gas, infrastructural, industrial, agricultural and mining sectors of the economy.

Ishaku named the chairman of the eight-man committee as Dr. Oluwole Ameyan and urged members to ensure that its report would be ready by the March deadline.

Ameyan, who spoke on behalf of the committee, promised that the members would do their best to come up with a reviewed Act in record time.

[ENERGY MIX REPORT]

FG LIFTS EMBARGO ON OIL BUNKERING OPERATIONS

 ..targets N250m revenue from licensing

The Federal Government recently announced measures to liberalize oil bunkering operations in Nigeria. 

The development of a new set of guidelines aimed at stimulating activities in the area in ways that would maximize value for the nation and stakeholders was one of the steps listed to achieving the objective.

Operations will rely on enhanced synergy and cooperation between the relevant Government institutions on bunkering activities; such as the Navy, Nigerian Customs Services (NCS) the Nigerian Ports Authority (NPA) and the Nigerian Maritime Administration & Safety Agency (NIMASA) under the new arrangement.

Government expects to generate more than N250 Million annually from the licensing of prospective bunkering operators. It is expected that the official reintroduction of bunkering activities under a synergized monitoring regime as announced, would curb the excesses identified with the activities in the past. In addition, the Director of Petroleum Resources, Mr. George Osahon said while addressing Stakeholder’s at a forum in Lagos on Wednesday January 8^th, 2014.

He also said that the new bunkering regime would create employment opportunities for Nigerians in the sector. He noted that the potential economic prospects in the area informed the approval of the President, Dr. Goodluck Ebele Jonathan, GCFR for bunkering activities to be restored in the country. Mr. Osahon recalled that bunkering was first officially established in Nigeria and licensed by DPR in 1979 but suspended in 2000, following irregularities and sharp practices by some unscrupulous operators.

                

In his address to the forum, The Director of Petroleum Resources defined bunkering as the “business of fueling ships or the process of supplying seagoing vessels with fuels, including but not limited to AGO, fuel oil, liquefied natural gas and lubricating oil”, in his address to the forum, saying that now, the resumption of the activity under a strict regulatory regime is set to make Nigeria the hub of bunkering in West Africa.

According to him, resuscitating bunkering operations will help the budding Nigerian marine industry and save operators the stress of going as far as Senegal, Cape Verde and Cote D’Ivoire to refuel vessels operating in the Nigerian waters, as used to be the case.

Captain S. O. Ayeni, Naval Director of Marine Services and representative of the Nigerian Navy at the forum, reiterated that any vessel deployed for bunkering in the Nigerian waters must fulfill the laid-down requirements. He specifically noted that operators “…will be required to present to the Nigerian Navy an application for bunkering clearance, detailing the vessel involved, the location of the bunkering operation or discharge point, quantity of bunker fuel and duration of the operation”.  

Capt. Ayeni further stated that operators are required by the Navy to present valid DPR and NIMASA licenses and certifications on demand.

 The representative of the Nigerian Customs Services (NCS) Mr. Edoreh Elton, Deputy Comptroller of Operations, Eastern Marine Command, Port Harcourt outlined other conditions to be met by vessels engaging in bunkering operations in the Nigerian waters. He said operators of Nigerian flagged vessels in bunkering business are required to show proof that they had a paid the appropriate duties, and vessels leased from outside Nigeria are required to obtain temporary importation permit from NCS.

On his part, the NIMASA Representative, Mr. Ofonabasi Inem, Assistant Director of Operations, stated that proof of ownership; i.e. ship builder’s certificate, shipyard clearance and a number of other documents are required before certification of vessels by NIMASA. He therefore advised intending operators on the need to engage proven experts in the area before procuring vessels to forestall acquisition of unsuitable vessels.

                

The Director of Petroleum Resources, Mr. George Osahon in closing advised that intending operators and the general public should visit the DPR website, http://dprnigeria.org.ng/license-permit/bunkering-guidelines/ for the new guidelines on Bunkering and application forms for DPR license.

[DPR NEWS]

ABU DHABI TO OPERATE ONSHORE OIL FIELDS AS CONCESSION EXPIRES

Abu Dhabi's 75-year oil-production agreement is expiring, leaving the largest U.S. and European oil companies without direct stakes in the onshore crude deposits of OPEC’s fourth-biggest supplier.

Abu Dhabi National Oil Co. will continue to produce and market oil from the fields through an operating unit, ending its partnership with BP Plc (BP/), Royal Dutch Shell Plc (RDSA), Exxon Mobil Corp. (XOM) and Total SA (FP), state-run Emirates News Agency, or WAM, bloomberg reports.

The international companies are among those bidding for new production agreements that would allow them to keep pumping oil in the Persian Gulf emirate, leaving their future roles in the sheikhdom unclear. Adnoc has invited additional companies from Europe and Asia to compete for the oil-development projects.

Abdulla Nasser al-Suwaidi, Adnoc’s director general, said in November the bidding process could take until January 2015.

Abu Dhabi, capital of the United Arab Emirates, has produced at its main onshore oil fields under concession agreements with BP, Shell, Exxon, Total and Portugal’s Partex Oil & Gas, or their predecessor companies, since Jan. 11, 1939.

Adnoc became a partner in the 1970s, joining with the international companies to form Abu Dhabi Co. for Onshore Oil Operations, or ADCO. The partnership was responsible for extracting 1.5 million barrels a day of Murban grade crude.

ADCO will continue to operate the fields on behalf of Adnoc in the absence of the international partners, al-Suwaidi said at a ceremony marking the end of the concessions, according to the WAM statement. Adnoc has held a 60 percent stake in ADCO, with the five foreign partners owning the remaining 40 percent. Partex was not invited to bid for a new concession, bloomberg also reported.

[BLOOMBERG]

LEBANON DELAYS ENERGY EXPLORATION LICENSE AUCTION AGAIN

Lebanon postponed its first auction of licenses for offshore oil and natural-gas exploration until April 10, Energy Minister Gebran Bassil said, stalling bids for a third time amid political differences in the Arab state.

“This is the last time bidding will be delayed,” Bassil said at a news conference in Beirut. The auction will occur on the new date in April even if voting on the necessary decrees doesn’t take place by then, he said.

Political disagreements have blocked the formation of a new cabinet since Prime Minister Najib Mikati resigned in March. The auction was first scheduled for Nov. 4 then delayed to Dec. 10 and again to Jan. 10. Officials have yet to vote on decrees that would demarcate blocks, establish production-sharing contracts or specify tender protocols.

Exxon Mobil Corp. (XOM) and Total SA (FP) are among the companies prequalified to bid.
Lebanon, which must import most of its oil and gas, needs revenue to pare its public debt, the highest as a share of economic output among 22 Arab nations, according to data compiled by Bloomberg.

Seismic surveys and data analysis of about 45 percent of Lebanon’s territorial waters show a 50 percent probability that the country has 96 trillion cubic feet of gas and 850 million barrels of oil, Bassil said Dec. 5.

The U.S. Geological Survey estimates the Eastern Mediterranean’s Levant basin, of which Israel covers approximately 45 percent, holds about 122 trillion cubic feet of recoverable gas and 1.7 billion barrels of oil.

Companies that prequalified to bid as operators are Chevron Corp. (CVX), Royal Dutch Shell Plc. (RDSA), Eni SpA (ENI), Anadarko Petroleum Corp. (APC), Petroleo Brasileiro SA (PETR4), Statoil ASA (STL), A.P. Moeller-Maersk A/S, Repsol SA (REP), Index Corp. (1605) and Petroliam Nasional Bhd, according to the energy ministry’s website.

Among the 34 companies that prequalified as non-operators were Genel Energy Plc (GENL), Suncor Energy Inc. (SU), Marathon Oil Corp. (MRO), Santos Ltd. (STO), OMV AG (OMV), GDF Suez (GSZ), MOL Hungarian Oil and Gas Plc, Cairn Energy Plc (CNE), Dana Petroleum Plc and Japex Corp., the ministry said.
 
[BLOOMBERG]

CHINA'S 2013 SHALE GAS OUTPUT RISES TO 200MILLION CUBIC METERS

Shale-gas production in China, holding the world’s biggest shale reserves, surged by more than five times last year to 200 million cubic meters, according to the Land and Resources Ministry.

PetroChina Co. (857)'s Changning-Weiyuan and Fushun-Yongchuan areas, along with the Fuling block operated by China Petrochemical Corp., known as Sinopec Group, have built new production capacity of 600 million cubic meters, the ministry said in a statement on its website today.
Output was about 30 million cubic meters in 2012, according to Bao Shujing, a director at the ministry’s geological research bureau.

China’s government has pledged to spur the shale industry’s development and meet rising gas demand by prioritizing land approvals, allowing tax-free imports of equipment and offering subsidies to explorers. The country is pumping more than 2 million cubic meters a day of shale gas, the National Energy Administration said on its website. Sinopec plans to produce 3.2 billion cubic meters from Fuling in 2015, doubling its previous target, it said.

Oil and natural gas output hit record highs last year, according to the ministry. Production of crude rose 1.8 percent to 210 million metric tons while conventional gas increased 9.8 percent to 117.7 billion cubic meters.
PetroChina and Sinopec’s output may determine if China will reach its 2015 shale-gas production target of 6.5 billion cubic meters, said Gordon Kwan, the regional head of oil and gas research at Nomura Holdings Inc. in Hong Kong.

“Long term, we believe the government must raise domestic selling prices for natural gas and increase shale-gas subsidies further to motivate producers,” he said by e-mail to bloomberg.

That target may be hard to reach as development has been slow, Zhang Yousheng, a researcher with the National Development and Reform Commission, said on Oct. 16.

[BLOOMBERG]

ARCTIC COLD CUTS FUEL SUPPLIES AS REFINERIES TO PIPELINES FREEZE

Record cold weather pummeled energy infrastructure across the U.S., prompting gas pipeline operators to reduce flows, fuel terminals to shut loading racks and refineries to scale back production.

According to bloomberg news, the cold snap has pushed oil prices higher for a second straight day and boosted natural gas on the spot market to a 17-month high. Temperatures in several cities across the eastern half of the U.S. dropped to record lows, with New York’s Central Park hitting 4 degrees Fahrenheit (minus 16 Celsius) yesterday, breaking a mark for the date set in 1896, according to AccuWeather Inc. in state college, Pennsylvania.

Flows on all natural gas pipelines into New England from further west and south were constrained, as were flows into New York, the Energy Information Administration, the Energy Department’s statistical arm, said in a report.

“The very cold temperatures widespread from Chicago east are driving up demand for natural gas,” as well as prices for the fuel, said Tyson Brown, a statistician with the EIA in Washington. “Temperatures look to get a little bit more normal and ease off through the rest of the week.”

Kinder Morgan Inc., based in Houston, declared forces majeures in Alabama after a power failure and Georgia after a compressor outage, the company told shippers in notices. Other gas pipeline operators also declared forces majeures due to outages in Pennsylvania, Illinois and Utah.

Production of natural gas dropped at wells in the U.S. Rockies, the Midcontinent, the Gulf Coast and the Northeast, Luke Larsen, an analyst at LCI Energy Insight, an energy analysis and consulting company in El Paso, Texas, said by e-mail yesterday.

Kinder Morgan also reported a force majeure yesterday at the Argo, Illinois, ethanol terminal, a Midwest hub for the fuel, as ethanol futures advanced.

“At some point you have to have the gasoline blend with the ethanol, and that line from the ethanol tank to the rack is where you see a lot of those issues where it gets frozen,” said Eric Rosen, vice president of sales, supply and trading for petroleum marketer Papco Inc., based in Virginia Beach, Virginia.

Instruments that control flow have failed and products and additives have thickened and jelled in the lines at fuel terminals, said Mark Anderle, a trader at Truman Arnold Cos., a wholesaler based in Dallas. Anderle said his company has had to source some fuel from Tennessee and Mississippi.

Terminals have also been jammed. Bloomberg also reports that Midwest fuel terminals are jammed from greater demand for heating oil and gasoline as drivers keep tanks filled and run engines longer to warm up or during shopping trips, said Jeff Lykins, chief executive officer and president of Lykins Cos., a Milford, Ohio-based integrated downstream petroleum marketer that operates in 15 states.

Lykins said that in Ohio, his company was so busy he received waivers from the state to extend hours-of-service rules for drivers through Jan. 17.

“There’s just so much usage that it’s just taking longer to get trucks loaded and turn trucks around,” Lykins said.

Shutdowns were reported at refineries with at least 800,000 barrels a day of capacity. PBF Energy Inc. (PBF)'s 185,000-barrel-a-day Paulsboro refinery in New Jersey shut most production units yesterday after a loss of steam, Michael Karlovich, a spokesman for the company in Parsippany, New Jersey, said by telephone yesterday. The company wasn’t sure whether the loss was related to weather, he said.

Valero Energy Corp. (VLO)'s plant in Memphis, Tennessee, had instruments freeze and units trip offline, a person familiar with operations said. The 195,000-barrel-a-day plant was running most units, after a system shutdown due to low temperatures, said the person, who asked not to be identified because the information isn’t public.

Marathon Petroleum Corp. (MPC)’s 114,000-barrel-a-day Detroit  refinery restarted several units after shutting them when low temperatures caused a loss of instrument air, Jamal Kheiry, a Findlay, Ohio-based company spokesman, said by e-mail, bloomberg also reports.

Exxon mobil Corp. (XOM)’s 238,000-barrel-a-day Joliet, Illinois, refinery was operating normally after having unidentified problems with process units because of extreme cold, Tricia Simpson, a spokeswoman at the plant, reported to bloomberg.

Alon USA Energy Inc.’s Big Spring, Texas, refinery similarly restored operations after equipment froze up, a filing with state regulators showed.

Korea National Oil Corp.’s 115,000-barrel-a-day plant in Come-by-Chance, Newfoundland, was trying to restart after an island-wide power failure in the deep cold, Gloria Slade, a spokeswoman at the plant, told CBC News.

Colonial Pipeline Co.’s system was operating normally yesterday after experiencing limited power failures because of the weather, Steve Baker, an Alpharetta, Georgia-based spokesman for the company, reported to bloomberg.
 The Colonial system transports 2.4 million barrels a day of refined fuel on its 5,500-mile (8,900-kilometer) system that connects the Gulf Coast to the East Coast.

[BLOOMBERG]

ALGERIA TO REOPEN TIGUENTOURINE GAS COMPLEX

Almost one year following the terrorist attack at the Tiguentourine gas plant in Amenas, the foreign companies that operate the site reached an agreement with Algerian authorities to resume work.

Statoil and British Petroleum (BP) workers can once again return to their workplace, which has been deserted since the terrorist attack of January 16th, 2013. Thirty-eight civilians were killed in the attack.
The two companies demanded the introduction of security measures to protect expatriates working in this sensitive border area with Libya.

Following a series of meetings between the companies and military officials in the region, the two parties agreed to create a landing strip at the Tiguentourine gas plant to guarantee safe passage for workers.
Abbas Bouamama, a senator and key official in the wilaya of Illlizi, told Magharebia that “thanks to this landing strip, workers will no longer be forced to spend the night in Illizi”.

The foreign companies have decided to move their site facilities to Hassi Messaoud in the wilaya of Ouargla, a quiet region with no reported acts of terrorism over recent years. In other words, workers will operate on the site during the day from 8 in the morning, then return to their site facilities in Hassi Messaoud in the evening.

“Terrorist groups tend to operate at night, knowing that it is easier to spot them by day,” Bouamama said.
The landing strip should be finished in February, he added, noting that Algerian authorities rejected a demand from the foreign companies to handle their own security at their site facilities.

Safety measures had been stepped up since hostages were taken last year, but the unstable security situation in Libya has complicated matters: “It is no secret that the borders on the Libyan side are beyond the central Libyan authorities’ control,” he noted.

Some even fear there could be a revenge attack in the Tiguentourine area.

Members of the terrorist group led by Mohamed Lamine Bencheneb, who was killed during the hostage-taking, are still active in Ghad (a Libyan town very close to the Algerian border). There are reports that the terrorist leader’s brother is there.

The group is suspected of preparing for a terrorist operation in Tiguentourine “as a revenge”, added Bouamama.

Such suspicions were backed by the October 23rd discovery of a considerable cache of weapons in Illizi near the Libyan border, some 200km from the Tiguentourine gas complex.

“It is quite conceivable that those weapons were intended for use in a terrorist operation in the region,” he explained. Algerian Foreign Minister Ramtane Lamamra on December 28th said he understood the challenges facing Libyan authorities in ensuring borders security.

“Algeria acknowledges the difference between a country which cannot control its borders and one which does not want to,” the minister said during a press conference.

Algerian authorities delivered a “map showing the presence of the terrorist group in the region” to their Libyan counterparts one day after the Algerian Prime Minister’s visit to Tripoli, Echorouk reported on January 1st.

El Hadi Maydi, a journalist with expertise on security matters, said, “The two countries are forced to co-operate to secure their borders.”

“No-one can fail to be aware that Libya has become a refuge for terrorist groups from al-Qaeda fleeing Mali following the operations led by the French army,” he added.

“Co-operation must not stop simply at training the Libyan army and police, or at the logistical level,” he noted. “On the ground, Algeria could benefit from information supplied by the Libyan people living on the border with Algeria, particularly in Zintan and Ghat.”

[ENERGY MIX REPORT]

MOZAMBIQUE DUE TO BECOME OIL PRODUCERS IN 2014

Mozambique is due this year to become an oil producing country and significant progress is also expected to be made in natural gas and coal production, according to the Economist Intelligence Unit.

A small oil discovery next to the Temane gas field, in Inhambane province (south), will allow South African petrochemical company Sasol to launch oil production this year, said the EIU’s latest report on the Mozambican economy, to which Macauhub had access.

“The oil field is the first to produce oil commercially in Mozambique, where so far there have only been viable natural gas discoveries,” the report said.

The project will produce around 2,000 barrels of oil per day, which is a small amount commercially-speaking, but makes it possible to “diversify Mozambique’s export base,” it noted.

As well as this, Sasol’s representatives have already said that oil reserve estimates may be increased, as exploration activities are already underway in the area.

According to the Oil and Gas Journal, Mozambique has around 4.5 trillion cubic feet of proven natural gas reserves, but until the beginning of last year had no oil reserves at all.

The country has extensive onshore and offshore sedimentary basins containing natural gas, most of which has yet to be explored, as well as significant coal reserves, which are considered to be the biggest in the world.
William Telfer, an oil and gas specialist told DW Africa that the discovery “is very viable” and that 100 similar wells were the equivalent of Angola and Nigeria’s production.

“It’s not small, it’s very good. And we are soon going to hear about new discoveries that will increase the amount of wells,” said the specialist.

“Gross domestic product will increase. We have an excellent Finance minister and excellent deputy minister. A very strong staff. Mozambique is prepared to start exploring large quantities of oil,” he said.

Despite the announcement, the Economist kept its estimates for economic and export growth in the 2014-2018 period unchanged, as they already take into account substantial investments in the extractive industries and greater weight of exports.

Along with this Sasol is increasing production as its gas fields in Pande and Temane which is “welcome news for the nascent Mozambican energy sector,” and a “sign of confidence,” from an important foreign investors at a time that is sensitive in terms of both politics and security.

Sasol is investing in a number of areas, including increasing the capacity of its gas pipeline to South Africa (US$184 million) and a gas-fired power plant at the Ressano Garcia border (US$246 million).

The EIU for this year points to growth of the Mozambican economy of 6.5 percent, rising to 7.3 percent this year and 7.6 percent in 2015.

The industrial sector is expected to make the biggest contribution to economic growth over the next two years: 9 percent growth in 2014 and 14 percent in 2015.


[ENERGY MIX REPORT]

KENYAN GOVERNMENT ACCUSED OF FAILING TO MANAGE ESSAR EXIT AT KPRL

The Government has been accused of dragging its feet in resolving the Kenya Petroleum Refinery plant stalemate which has since seen the Changamwe plant halt operations.

The Kenya Petroleum Workers Union yesterday said the government is to blame for failing to boldly handle the matter which could save the refinery. The Mombasa based refinery stopped its operations four months ago after its future became uncertain.

This follows failure to agree on the terms of the planned exit by Indian firm Essar Energy and the government who own the plant on a 50-50 share.

KPWU Coast region secretary Rafael Olala said the refinery could have been saved if the government was serious but it is collapsing due to lack of commitment to salvage it.

“The government has something to hide on this issue. No government will seat back and see a plant going down without putting any efforts to save the situation. The government is failing us on this matter,’ said Olala.
The two partners have had to reschedule two meetings at the end of last year, which were meant to agree on Essars sale terms. The two are supposed to agree on whom will shoulder liabilities when Essar exits the refinery after a four-year management deal.

Among the liabilities is a Sh21.62 billion loan from Standard Chartered Bank secured on June 20, 2012 to transform KPRL from a toll to a merchant refinery.

Essar announced its plans to offload its stake at the plant in October on what it termed as advice from its international consultant against its commercial viability. The Indian subsidiary offered to sell its 50 per cent stake to the government for Sh432.5 million.

According to the Union, all contractors at the plant have already been terminated with most of them going unpaid. Hundreds of employees are also uncertain about their future with their last salaries being paid in the month of November last year.

The employees were paid after the refinery sold all its remaining fuel deposits leaving the tanks at the plant empty according to the union. “The employees were paid 50 percent of their November salary on December 5, this is January, people need to take their children to school, pay rent among other expenses, how will they live,” said Olala.

Sources privy to the discussions have previously indicated that Essar has demanded that the government clears all outstanding arrears including unpaid workers’ dues.

The government on the other hand is said to blame Essar for failing to remain committed on upgrading the facility as earlier planned at a cost of Sh104 billion ($1.2 billion).

The upgrade of the 53-year old refinery’s technology and capacity refinery was due in 2010. But Essar said on October 3, last year that it was opting out.

[ENERGY MIX REPORT]

PA RESOURCES TO SUBMIT DIEGA DEVELOPMENT PLAN IN 2014

The long term drill stem test on the Diega accumulation in Block I, Equatorial Guinea (PA Resources 5.7%) is now complete and the Atwood Hunter rig has been released.

An initial pilot well, I-8, encountered 12 m vertical thickness of good quality oil pay with no water and so established the deepest known oil on the Diega accumulation. Subsequently the planned horizontal sidetrack I-8ST drilled some 400m of oil pay of similarly good quality and was tested for one month at constrained rates up to approximately 7,300 barrels of oil per day.

The well has been suspended for re-use as a future production well. The test confirmed lateral reservoir continuity and absence of reservoir compartmentalisation and will permit the submission in 2014 of a plan of development for Diega as a subsea tieback to the Aseng FPSO, targeting first oil in 2016.

Mark McAllister, PA Resources’ CEO comments: “This is an excellent result in every respect; well productivity, reservoir quality, field continuity and the size of the accumulation. We indicated in 2013 that we expected a near term field development in Block I, conservatively of the order of 30 million barrels. However initial interpretation of these well results is consistent with our expectations of significantly larger reserves and further Diega drilling is likely in Block I, where the down-dip limit of the field has yet to be established. An early Diega development is facilitated by the existing infrastructure in Block I, and we expect that any development will be expandable to accommodate additional reserves identified during further appraisal drilling”.

[ENERGY MIX REPORT]