Saturday, July 26, 2014

Pemex Predicts Lowest Production in More Than Two Decades

Petroleos Mexicanos cut its output forecast to the lowest in at least 24 years as mature fields are shrinking faster than it had previously expected.
The forecast was lowered to 2.41 million barrels of oil a day from a prior projection of 2.5 million, said Gustavo Hernandez, Pemex’s head of exploration and production. This will be the Mexico City-based company’s lowest annual output since at least 1990, when it produced 2.55 million barrels a day, according to the oldest available government output data.
“We have been working to review the declines of each of our fields that contribute to national production,” Hernandez said today on an earnings call. “In the recent review, we obtained a better idea of the declines of the fields and have adjusted the production expectation downward.”
Pemex is counting on a landmark law enacted last year that opens Mexico’s energy industry to private competition for the first time since 1938 to help stem declining output. The entrance of foreign oil producers such as Exxon Mobil Corp. (XOM) and Chevron Corp. (CVX) will bring in $50 billion of annual private investment by 2020, according to Gabriel Casillas, chief economist at Grupo Financiero Banorte SAB.
“We want to reverse the decline in our oil production and need to invest more money in some of our projects,” Pemex Chief Financial Officer Mario Beauregard said in a July 9 interview in Mexico City. Pemex, which has identified potential partners, plans to move “very fast” in establishing joint ventures once additional energy legislation is approved, he said.
The passage of secondary legislation that sets a framework for oil and natural gas contracts is being debated this week by lower house committees after being approved by the Senate on July 21. The final bill will be sent to President Enrique Pena Nieto to enact it.

‘Biggest Challenge’

“We must redefine our future strategy as a value generating operator and not as a state monopoly,” Beauregard said on today’s call. “As CEO Emilio Lozoya has mentioned previously, Pemex faces the biggest challenge in its history” as the company transitions from a government monopoly to a competitive entity.
Pemex’s 2015 capital expenditures budget will be an estimated $29 billion, up from this year’s $27.7 billion, Beauregard said on the call.
The company’s net loss of 52.2 billion pesos ($4.02 billion) widened from a 49 billion-peso loss a year ago, the producer said earlier today in a statement. It is the company’s seventh consecutive quarterly loss. Sales increased 4.1 percent to 409 billion pesos.

Untapped Crude

The legislation will allow outside oil companies to help produce an estimated 113 billion barrels of untapped Mexican crude. Output from the third-largest crude exporter to the U.S. has fallen nine consecutive years because the company lacks sufficient funding and infrastructure to tap the biggest proven oil reserves in Latin America after Venezuela and Brazil.
The company produced an average 2.45 million barrels a day in the second quarter, Hernandez said on the call.
Pemex’s preliminary monthly crude production fell to 2.44 million barrels a day in June. Preliminary month-to-date output slid to 2.38 million barrels a day, below the new company’s forecast for the 2014 average.

Indika Enjoys Profit Jump, EMP Earnings Plummet in H1

Jakarta. Indika Energy, an integrated mining and energy company, swung to a profit in the first six months of this year thanks to its growing number of engineering, procurement and construction project.

Indika posted a $8.5 million year-on year profit in the first half of 2014, a massive comeback compared to the $7.9 million loss it suffered last year, the company stated on its website on Friday. I
Revenue rose 26.6 percent to $523.1 million from $413.3 million.

The significant jump was largely due to “revenue from a string of new EPC [engineering, procurement and construction] projects,” statement read.

Indika’s subsidiary, Tripatra Engineers and Constructors, is currently engaged in projects with Pertamina-Medco E&P Tomori Sulawesi, Exxon Mobil Cepu and ENI Muara Bakau, from which the company collects a third of its total revenue.

The company also has a hand in coal resources, energy services and infrastructure through its three other subsidiaries.

Energi Mega Persada

Profit at upstream oil and gas firm Energi Mega Persada took a nosedive in the first half of this year compared to the same period in 2013, during which it had basked in a one-time gain from the stake sale of one of its units.

Net income at Energi Mega Persada, or EMP, fell 84.5 percent year-on-year to $27.3 million in the first six months of 2014 from $175.7 million.

“We booked a one-time gain from the sale of our Masela block last year. Without such a gain, EMP had actually recorded a 127 percent increase in profit,” EMP president Imam Agustino said a statement.

In June last year, the mining and energy firm sold a 10 percent stake of its Masela PSC block, located in West Timor, to Inpex Masela and Shell Upstream Overseas Services for a sum of $313 million.

Inpex is a Japanese oil and gas exploration and distribution company, while Shell Upstream Overseas Services is a unit of Royal Dutch Shell.

EMP has raked in $413.4 million in net sales so far with its production output of approximately 13,000 barrels of oil per day and 223 million cubic feet of gas per day throughout the first semester this year.

Shares of Energy Mega Persada climbed 1.1 percent to settle at Rp 92, while shares at Indika grew 2.2 percent to reach  Rp 695 at the end of trading day on Friday.

Both outperformed the broader’s index decline of 0.2 percent.

Jakarta Globe

PetroChina reconsiders sale of natural gas pipeline assets: sources

(Reuters) - PetroChina is reconsidering a plan to auction off its multi-billion dollar natural gas pipeline unit, and could instead sell it to an affiliate, three people who were briefed on the matter by the Chinese energy giant told Reuters.
Selling PetroChina Eastern Pipelines Co Ltd to the affiliate, 50 percent owned by PetroChina, would enable China's largest energy producer to maintain control over the national gas grid as well as raise cash to fund oil and gas exploration.
But scrapping the auction would pose a setback to the government's plans to open up the state-dominated energy sector to domestic private investors to improve competition and rein in corruption.
PetroChina controls more than 80 percent of China's natural gas grid, and some privately owned domestic gas companies have complained this monopoly hurts their business.
"It's almost a done decision to let the joint venture... acquire Eastern Pipelines," said a Beijing-based energy industry executive, who declined to be named as the matter remained confidential.
"Few private investors also have the financial appetite to swallow such a massive asset," the executive added.
A financial industry executive who was also briefed on the sale added: "It's a possibility that PetroChina actually would like to see. They are moving in that direction."
PetroChina's spokesman, Company Secretary Mao Zefeng, declined to comment. Analysts expect PetroChina to make a final decision on the sale in the fourth quarter.
The potential buyer of Eastern Pipelines is PetroChina United Pipelines Co Ltd - a 50-50 joint venture PetroChina set up last year with a domestic insurance firm and an investment fund that counts numerous non-state institutions among its investors, the sources said.
Gas pipelines generate the steady, long-term returns favored by deep-pocketed financial investors such as insurers and funds.
United Pipelines is one of a few local companies with enough capital to buy a huge asset like Eastern Pipelines, one of the sources said. Eastern Pipelines carries an estimated net asset value of between $4.7 billion and $6.3 billion.
United Pipelines, which already acquired parts of PetroChina's gas pipeline assets last year, has a total registered capital of 40 billion yuan ($6.46 billion).
Chinese fund management firm Taikang Asset Management Co Ltd has a 30 percent stake in United Pipelines. Beijing Guolian Energy Industry Investment Fund owns 20 percent.
The remaining 50 percent of United Pipelines is owned by PetroChina.
Like many other state-owned enterprises in sectors largely controlled by the government, PetroChina is under pressure from Beijing to bring in private investment.
In May, it said it would auction Eastern Pipelines, which controls the two west-to-east, cross-country gas pipelines in China.
There has been speculation that some privately-run natural gas distributors, which buy gas from PetroChina and sell it to consumers, would be interested in the pipeline assets.
But most of these companies, however, do not have the capital to buy a meaningful stake in Eastern Pipelines, said a senior executive with a Hong Kong-listed, privately controlled Chinese gas company.
"Such projects require huge amounts of investment," said the executive, who declined to be named as he was not authorized to speak to the media. "We just cannot afford to join."
Like its peers, PetroChina is cutting capital spending and selling some non-core assets to fund more profitable exploration and production projects. Runaway spending in the downstream business was one of the factors that have hurt the company's finances for several years.
Sinopec Corp, China's second-largest oil and gas producer, is selling up to 30 percent of its retail arm to raise up to $20 billion. Both companies are following Beijing's policy to promote so-called "mixed ownership" in the energy sector which has enjoyed massive expansion over the last two decades but has also become a breeding ground for corruption.
PetroChina and its parent firm, China National Petroleum Corp (CNPC), are at the center of one of the biggest corruption investigations into the Chinese state sector in years.

($1 = 6.1944 Chinese Yuan)

Exclusive: Exxon eyes expanding Texas refinery into biggest in U.S. - sources

(Reuters) - Exxon Mobil Corp is considering a multibillion-dollar plan to expand its Beaumont, Texas, refinery into the country's largest, the first major refining investment of the U.S. shale oil boom, people with knowledge of the deliberations said.
The expansion of the 344,600 barrel-per-day (bpd) Beaumont refinery, if carried out, would be completed by 2020 and potentially double its size with the addition of a third crude distillation unit (CDU), the sources said. More modest near-term projects to renew and expand so-called coking units to help refine more heavy crude already are under way, they said.
If Exxon presses ahead, the investment would be a further indication that the American oil giant is breaking ranks with many of its big global rivals, who have been looking to sell off refining assets across the world. Just weeks ago Exxon unveiled a $1 billion investment in its Antwerp plant.
An Exxon spokesman, while declining to discuss possible plans for the Beaumont refinery, said the company was always evaluating growth options.
"We regularly evaluate our global portfolio of businesses and opportunities for growth, depending upon the fit with its strategic business objectives," Exxon spokesman Todd Spitler said. "We take a disciplined long-term approach to investing, regardless of the economic cycle."
A bigger Beaumont would bolster the U.S. Gulf Coast's position as a top global supplier of gasoline and diesel at a time when domestic demand is falling. Profits for Gulf Coast refiners have swollen as cheaper North American crude allows them to capture big margins when exporting refined products.
U.S. oil production has embarked on an unprecedented 50 percent rise over the past four years as new drilling techniques allowed oil to flow from vast shale reserves in North Dakota and Texas - this after two decades of seemingly irreversible decline.
The sources said Exxon already was moving forward on plans to replace four coking unit drums in 2015 and add two new coker drums in 2017 at the Beaumont refinery. The drums turn residual crude oil into petroleum coke, a coal substitute.
Exxon announced plans on July 2 to invest $1 billion to build a delayed coking unit at its 320,000 bpd Antwerp, Belgium, refinery so the plant could refine cheaper high-density, high-sulfur crude oils. That was on top of a previous $1 billion in upgrades to the Antwerp refinery.
Exxon's Antwerp investments in some ways bucked a trend in recent years that has seen major integrated oil companies cut refining capacity with BP selling plants in Texas and California and Royal Dutch Shell shutting a refinery in Australia.
The Beaumont refinery has two CDUs that do the initial refining of crude oil coming into the refinery and provide feedstock for all other units.
Exxon officials are considering boosting the Beaumont refinery’s size to at least 500,000 bpd, which is close to the capacity of the company’s Baton Rouge, Louisiana, refinery.
The country's biggest refinery is Motiva Enterprises LLC's [MOTIV.UL] 600,250 bpd Port Arthur, Texas, plant. Exxon is considering making the Beaumont plant bigger than Motiva's Port Arthur refinery.
"They've talked between 700,000 and 800,000 bpd in total refinery capacity," one of the sources said.
Andy Lipow, president of Lipow Oil Associates LLC, a Houston consultancy, said an Exxon expansion could boost profits.
"Given the increase in North American oil production and in conjunction with the low operating cost due to the price of natural gas, it seems increasing the capacity of oil refining facilities makes a lot of sense," Lipow said.
Beaumont Mayor Becky Ames said she had not been informed of any plans by Exxon to expand the Beaumont refinery.
But she said the expansion would lead to more direct and indirect jobs for the area, which she said benefits from regional oil refining and petrochemical plants.
"When they do an expansion anywhere in the area it not only means more jobs from the work itself, but it creates spin-off businesses in the community," Ames said.
The two other most recent major expansions of Gulf Coast refining capacity - at Motiva's Port Arthur refinery and Marathon Petroleum Corp's Garyville, Louisiana, plant -were planned before the sudden rise in shale output started about seven years ago.
Motiva, a joint venture between Shell and Saudi Aramco [SDABO.UL], invested $10 billion to expand its Port Arthur refinery from 285,000 bpd. In addition to a 325,000 bpd CDU, the project added multiple units and was completed in 2012.

Marathon invested $3.9 billion to boost its Garyville, Louisiana, refinery from 256,000 bpd to 436,000 bpd in 2009. The refinery has optimized performance of its units to increase production to 522,000 bpd.

U.S. sets anti-dumping duties on solar imports from China, Taiwan

(Reuters) - The United States on Friday set new import duties on solar products from China and Taiwan after the Commerce Department found that the solar panels and cells are being sold too cheaply on the U.S. market.
Preliminary anti-dumping duties as high as 165.04 percent for Chinese goods would come on top of anti-subsidy levies imposed last month, as the U.S. arm of German solar manufacturer SolarWorld AG seeks to close a loophole allowing Chinese producers to sidestep duties imposed in 2012.
China's Trina Solar Ltd faces total import duties of nearly 30 percent and Suntech Power nearly 50 percent as a result of Friday's decision.
Taiwanese producers face anti-dumping duties of up to 44.18 percent, with the highest rate applying to Motech Industries Inc, Commerce said. There will be no doubling-up of duties with those from the 2012 case.
The new duties, which must still be confirmed, are likely to inflame U.S.-China tensions already exacerbated by recent accusations that Chinese military officers were cyber-spying on U.S. companies involved in trade disputes, including SolarWorld.
SolarWorld said the new duties would average 47 percent for most companies, compared with 31 percent in the 2012 case.
The company, which makes crystalline silicon solar panels in Oregon, complained that Chinese manufacturers dodged those duties by shifting production of the cells used to make their panels to Taiwan.
"Today’s actions should help the U.S. solar manufacturing industry to expand and innovate," said SolarWorld Industries America President Mukesh Dulani. "We should not have to compete with dumped imports or the Chinese government."  But the Coalition for Affordable Solar Energy, which represents mainly installers, said the duties would hinder the deployment of clean energy by raising the prices of solar products and hurting consumers. The solar industry has been battered over the last four years by a glut of products from China, falling prices and a withdrawal of consumer subsidies in Europe, which has pressured solar companies' margins and sparked a rash of trade cases.
India has slapped levies on panels from the United States and China. The European Union also has targeted Chinese panels and China has moved against imports of U.S. polysilicon, solar’s key raw material.

Meanwhile, the United States is challenging India's solar program at the World Trade Organization. The WTO found irregularities in the previous U.S.-China anti-subsidy case. U.S. imports of solar products from China were worth $1.5 billion in 2013, half the level of 2011, while imports from Taiwan more than doubled to $657 million over the period, according to Commerce data. Commerce will make its final decision by Dec. 15. The U.S. International Trade Commission is due to make a decision on whether the imports pose or threaten injury to U.S. producers by Jan. 29.

Thursday, July 24, 2014

India's Jan-June Iran oil imports climb by a third -trade

(Reuters) - India's crude imports from Iran rose by a third in the first half of the year, data from trade sources showed, after the shipments were boosted following an interim deal to slow Tehran's nuclear activity and ease Western sanctions.
India, Iran's top oil client after China, raised the imports to some of the highest levels in nearly two years in the first quarter, partly to make up for deep cuts in 2013 due to the lack of insurance coverage for refineries processing Iranian oil.
Intake rates have eased off since but are still running significantly higher than last year. Indian refiners shipped in 281,000 barrels per day (bpd) of oil from Iran between January and June, up from 211,400 bpd in the same period a year ago, data on tanker arrivals from trade sources shows.
In June, imports from Iran dropped by about a quarter from May to 167,300 bpd, the lowest in 10 months. The June intake was up about 19 percent from the same month last year.
India cut supplies from Iran by nearly 40 percent last year, the largest reduction by Iran's top clients - which besides China and India, includes Japan and South Korea.
China also boosted its imports after the temporary deal between Tehran and Western powers was signed in November last year, with imports from Iran rising by 50 percent in the first six months of this year.
Iran and six world powers agreed to a four-month extension of the temporary deal after missing a July 20 deadline to reach a final agreement on curbing Iran's nuclear programme in return for the end of sanctions.
Asian buyers are expected to import about 1.25 million to 1.3 million bpd of Iranian oil in the first half of the year, industry and government sources have said.
South Korea's imports from Iran fell 11 percent in the first half of the year, while Japan has yet to report is oil imports for June.
State-run Mangalore Refinery and Petrochemical Ltd was the biggest India client of Iranian oil in June followed by Essar Oil Ltd, the data showed. MRPL and Essar are India's only two regular monthly importers of Iranian crude.
Iran's share of total Indian oil imports rose to 7.3 percent in the first half of this year compared with 5.4 percent last year, the tanker arrival data also showed.
In the first half of the year India's import of oil from Latin America and Middle East has declined marginally while that from Africa has risen.

Overall, India shipped in 10.8 percent less crude in June than a year ago, the data showed. Total crude imports for the January-June period fell 1 percent.

India pays 3rd tranche of oil dues to Iran -sources

(Reuters) - India paid a third and final instalment of $550 million to Iran on Thursday, three industry sources said, part of the frozen funds released to Tehran in the interim deal with world powers.
Under a pact reached in November, Iran won access to $4.2 billion in oil revenues held by its buyers, to be paid out in eight money transfers through July. The payments were linked to Iran carrying continuous reduction in its nuclear activities.
Iran and six world powers have now agreed to extend the November deal another four months, after failing to reach a final agreement before a July 20 deadline. The extension allows Tehran access to another $2.8 billion in frozen oil monies.
Five Indian refiners - Mangalore Refinery and Petrochemicals Ltd, Essar Oil, Indian Oil Corp, Hindustan Petroleum Corp and HPCL-Mittal Energy Ltd (HMEL) - have partly paid money owed for crude imports in the previous two instalments.
Of the total of about $4.6 billion the refiners owe Iran as of May 31, they have paid $1.65 billion by taking the last three of the eight payment slots scheduled in the November deal.
In the latest round of payments, HMEL, part owned by steel tycoon L. N. Mittal, did not make its payment due to exchange rate fluctuations, the sources said. That lead to a higher payout by the other four.
"HMEL shall not be participating in this payment process whereby exchange losses are being imposed upon HMEL contrary to commercial understanding," the company said to the oil ministry earlier this month in a letter seen by Reuters.
HMEL as a policy does not comment on its crude sourcing or matters associated with it, a spokeswoman for the company said, replying to an email seeking comments.
Essar Oil cleared dues of $240 million, followed by $236 million by MRPL, $67 million by IOC and $7 million by HPCL, which also has a stake in HMEL, the sources said.
HMEL was due to pay money owed for 4 million barrels of oil imported from Iran in 2012. Since then, however, the Indian rupee has weakened, and the fluctuation would increase its cost by about 10 percent, the company said in the letter.
India, which imports a total of 4 million barrels per day of oil, has been steadily reducing its dependence on Iran. Over the last five years to the fiscal year ended this past March 31, Iran's share of India's crude imports has fallen by two-thirds to 5.8 percent.
However, in the January-June period for this year its crude imports from Iran rose by a third compared to a year ago, data from trade sources showed.

China and India both started raising their oil imports from Iran after the interim deal was reach in November.