Thursday, May 28, 2015

Pertamina to Halt Oil Contracts With Petral in June

Jakarta. Indonesia’s state-owned energy company Pertamina said on Wednesday it would halt all contracts with its oil trading arm, Petral, next month.

Pertamina announced earlier this month that it was disbanding Petral in line with government efforts to clean up the country’s graft-tainted oil sector.

Petral, which has assets of $2 billion, has held a near-monopoly on the trading of crude and oil products in and out of the country, supplying the former OPEC member with a third of its daily oil needs. The rest is produced locally.

“Petral’s contract ends in June,” Wianda Pusponegoro, Pertamina’s spokeswoman, told reporters. “From July, all contracts will be new.”

Pertamina, which has taken over the buying of crude and oil products from Petral, has secured supply contracts for a total of 9 million barrels per month of Premium gasoline (RON 88), she said.

She declined to name the suppliers but said they included national oil companies in Thailand, South Korea and the Middle East, and multinationals in Britain, France and the Netherlands.


Norway Oil Fund May Have to Sell Shares in up to 75 Firms in Coal Ban

Oslo. Norway’s $900 billion wealth fund may have to sell its stakes in up to 75 companies once new rules for limiting coal investments go into effect in a radical shift meant to lessen the impact of climate change, officials said on Thursday.

Parliament’s finance committee agreed a cross-party deal on Wednesday that the fund, which owns about 1.3 percent of listed companies globally, should sell stakes in firms that generate more than 30 percent of their output or revenues from coal-related activities.
Petter Johnsen, the fund’s chief investment officer for equities, estimated the deal would cover 50 to 75 companies.

Total Norwegian investments in the firms were worth 35 to 40 billion crowns ($4.51 billion to $5.15 billion), he told Reuters. “We will have to come back to the details of how it is implemented,” he said, declining to name any of the companies.

Environmental group Greenpeace predicted the fund would have to sell shares in European and US power companies including Duke Energy Corp, RWE AG, American Electric Power Co and Dominion Resources.

“We’re focusing on mining and utility companies,” Torstein Tvedt Solberg, an opposition member of the finance committee in parliament, told Reuters. The fund has already sold out of some firms, especially coal miners.

Tvedt Solberg said he hoped the fund’s decision would set a “gold standard” for other funds considering divestment from coal, whose greenhouse gas pollution is blamed for stoking global warming.

The Church of England has been among funds limiting holdings in coal and tar sands.
The planned ban is due to be debated and voted by parliament on June 5. The government would then work out clear rules in a 2016 budget that will enter into force on Jan. 1, 2016.
Part of the Norwegian deal is that divestment from coal will not be a model for wider divestment, such as from oil and gas.

Some environmental groups say that investing the fund, built on oil and gas revenues, in fossil fuels makes no sense if the goal is to limit climate change risks.

And the Norwegian state itself owns coal mines on the Norwegian Arctic archipelago of Svalbard. “There is a lot of hypocrisy in all directions,” Truls Gulowsen of Greenpeace said.

Tvedt Solberg said keeping Arctic coal mines was about more than climate change. Jobs in the Arctic are part of a wider goal of geopolitical stability, helping limiting the influence of neighboring Russia in the High North, he said.


Wednesday, May 27, 2015

Malaysia’s Petronas Extracts First Oil From Bukit Tua Field in Indonesia

Singapore. Malaysia’ state-owned oil firm Petronas has extracted the first oil from the Bukit Tua field in Indonesia, the company said on Tuesday.

The field, located in the Ketapang block about 110 km off East Java, is expected to produce 3,700 barrels per day (bpd) of oil and 2 million standard cubic feet of gas per day (mmscfd) initially, the company said.

This will gradually be ramped up to reach a peak of 20,000 bpd of oil and 50 mmscfd of gas.
The field, which achieved its first oil on May 17, is Petronas’ biggest upstream project in Indonesia so far, the company’s general manager and country chairman of Indonesia operations Hazli Sham Kassim said in a statement.

“This upstream project is an integrated development as it also involves the development of other supporting facilities such as Ratu Nusantara floating production, storage and offloading facility, a 110 km subsea pipeline and a 4.7 ha onshore receiving facility,” he said.

Gas produced from the field will be transported through a pipeline to the onshore receiving facility in Gresik, East Java, while the oil will be offloaded to carriers for export, Petronas said.

Petronas has signed an agreement with Petrogas Jatim Utama, owned by the East Java provincial government, to sell gas produced from the field for electricity generation to meet Indonesia’s energy demand, it said.

The Ketapang block is operated by PC Ketapang II, Petronas’ Indonesian subsidiary, who owns 80 percent interest while the remaining 20 percent is held by state-owned Perusahaan 

Gas Negara’s subsidiary Saka Ketapang Perdana.


Oil falls as dollar strengthens, ample supply weighs

(Reuters) - Oil prices fell nearly 3 percent on Tuesday as the dollar's rally weighed on dollar-denominated crude oil futures along with concerns that a recent rally might keep U.S. producers active.
The U.S. dollar index rallied as Greece's financial crisis and signs of increasing opposition to austerity in Spain pressured the euro.

"Pressuring oil is the dollar's strength on the concerns about Greece being able to make its debt payments and the U.S. Federal Reserve seeming to be closer to raising rates," said Phil Flynn, analyst at Price Futures Group in Chicago.

Friday's weekly data showed U.S. drillers cut the number of rigs by just one last week and Goldman Sachs said prices were at a level that would spur activity, adding to a growing list of headwinds crude faces that include rising OPEC supply.

On Sunday, Iran said the Organization of the Petroleum Exporting Countries (OPEC) was unlikely to change its production ceiling at its meeting on June 5.

Brent crude for July delivery fell $1.80, or 2.75 percent, to settle at $63.72 a barrel, the weakest settlement since April 22. Tuesday's $63.29 intraday low was the lowest Brent price since it fell to $62.88 on April 23.

U.S. July crude fell $1.69, or 2.83 percent, to settle at $58.03, having traded as low as $57.71.

"The main factor weighing on prices is the significantly appreciating U.S. dollar," said Carsten Fritsch, analyst at Commerzbank. "What is more, the decline in drilling activity in the U.S. that has been ongoing for 23 weeks appears to have stopped."

More drilling in the United States would lessen the prospect of a tighter oil market in coming months, one of the factors that have helped Brent rise from a near six-year low close to $45 in January.

"We believe that should West Texas Intermediate prices remain near $60 a barrel, U.S. producers will ramp up activity, given improved returns," Goldman said in a report.

A stronger dollar makes dollar-priced commodities more expensive for buyers using other currencies, and tends to weigh on oil prices. The dollar hit a one-month high against a basket of major currencies on Tuesday."The USD downward correction is complete," Morgan Stanley said in a report. "A stronger dollar would only reinforce our near-term concerns for oil prices, especially Brent."

Thursday, May 21, 2015

GE speeds up finance sales timing, confident in Alstom deal

(Reuters) -General Electric Co's (GE.N) chief on Wednesday gave a faster timeline for the U.S. conglomerate's massive finance asset sale as he more than doubled a target for benefits from its purchase of Alstom's (ALSO.PA) power equipment business.
GE, which announced plans last month to sell $200 billion in GE Capital finance assets, now expects to be largely done with the process by 2016 instead of finishing in 2017, Chief Executive Jeff Immelt told the Electrical Products Group investor conference on Wednesday.
GE estimated selling about $100 billion of the assets this year, up from its earlier target of $90 billion, with deals for $20 billion to $30 billion targeted by the end of the second quarter.
"I'd be disappointed if we don't beat these numbers," Immelt said. "I think we have the potential to do very well on this transaction."
GE's finance pullback would leave it primarily as a maker of big-ticket industrial products such as jet engines, locomotives and power equipment. But its planned 12.4 billion euro ($13.8 billion) purchase of Alstom's power equipment business, the biggest in GE's history, is still awaiting regulatory approval a year after it was announced.
"We like this deal. We're confident it's going to get approved," Immelt told the conference.
Immelt said GE now expects $3 billion in cost savings and other benefits five years after the completion of the Alstom deal, up from $1.2 billion. GE said the deal will add 15 to 20 cents per share in profit in 2018.
Reuters reported last week that the deal was unlikely to win unconditional approval from the European Commission, and GE has said it would be willing to consider concessions.
On Wednesday, Immelt said GE would consider selling intellectual property around a product to get the deal through, but would reject anything that would hurt its service revenue stream. Revenue from servicing power turbines and other equipment generally carries high profit margins.
Immelt also said he expects profit at GE's oil and gas business to decline by between 5 and 10 percent this year; or be unchanged or drop as much as 5 percent, excluding foreign currency fluctuations. Previously, GE had forecast a drop of as much as 5 percent.
Like other suppliers to the energy sector, GE is seen as vulnerable to a sharp slide in oil prices as customers reduce capital expenditures. Immelt said GE plans to cut $1 billion in costs from its oil business, including $600 million this year.
"We expect to have a good business going forward in oil and gas," the CEO said.
GE shares rose 1 percent to close at $27.64 on the New York Stock Exchange.

Saturday, May 16, 2015

Brent up, U.S. crude down as oil rally comes into question

(Reuters) - Brent rebounded from Friday's early weakness while U.S. crude held to losses as traders and investors debated whether oil's rally over the past month and a half should continue amid stubbornly high supplies.
Futures of North Sea Brent have rallied nearly 20 percent since the end of March, while U.S. crude futures have risen almost 30 percent. Crude inventories in the United States, meanwhile, remain near 80-year highs.
To some, that suggests a market that has overshot and likely to correct.
"A mood change is in the air," Eugen Weinberg, global head of oil and commodities research at Commerzbank in Frankfurt, told the Reuters Global Oil Forum. "The oil price rally looks like it may be slowly running out of steam."
U.S. crude CLc1 settled down 19 cents at $59.69 a barrel, after falling more than $1 during the session as a stronger dollar pulled down commodities denominated in the currency. But on a weekly basis, the market was up for a ninth straight week.
Brent LCOc1, the more important oil benchmark, settled up 11 cents at $66.81 a barrel. On a weekly basis, Brent was up in five of the past six weeks.
The mixed trend played out in the oil products markets too, with gasoline RBc1 settling down for the day and heating oil HOc1 rebounding from early losses.
Critics of the oil rally point to a market that remains oversupplied nearly a year after the selloff in crude began last summer, knocking prices off highs above $100 a barrel.
The International Energy Agency said this week that key producers in OPEC are pumping at least 2 million barrels per day (bpd) more than required. [IEA/M] [OPEC/M]
The U.S. Energy Information Administration says world stocks are rising at 1.95 million bpd this quarter and will build at least through 2016. [EIA/M]
On Friday, data showed the number of U.S. rigs drilling for oil fell just by 8 this week, the least since December, after declines numbering in the dozens earlier. [RIG/U]
U.S. demand for fuel is likely to pick up in the second half but global production runs well ahead of consumption. Without a major, unexpected disruption, the glut will stay, analysts say.
"We still have almost 485 million barrels in crude inventories," Chris Jarvis, analyst at Caprock Risk Management in Frederick, Maryland, said, referring to U.S. stockpiles. "That's a ton in supply."

Wednesday, May 13, 2015

Oil slips lower amid debate on U.S. shale oil recovery

(Reuters) - Oil edged lower on Monday on signs that a multi-week rally was encouraging a rejuvenation in already bloated U.S. shale supplies, even as the government expected less output in June from the fastest-growing fields.

Last week, U.S. crude prices gained on a weekly basis for an eighth straight week while Brent had its decline after four weeks of gains.

In a sign that the market was responding to those price gains, rigs for drilling oil in the voluminous Permian shale basin rose last week for the first time this year after months of cutbacks.

Still, the U.S. Energy Information Administration expects output from the fastest-growing U.S. shale plays to drop 71,000 barrels per day in June to 4.97 million bpd.

"It's pretty choppy as people try to figure out a clearer supply-demand situation," said Gene McGillian, senior analyst at Tradition Energy in Stamford, Connecticut.

While he was not a believer of the recent market runup, McGillian said there were no signs the rally was over and "we could ultimately be setting ourselves up for an even sharper decline later".

U.S. crude futures settled down 14 cents at $59.25 a barrel.

Brent crude futures, the more globally referenced benchmark for oil, fell 48 cents to end at $64.91.

The dollar rebounded, weighing further on commodities such as oil that are priced in the currency. [FRX/]

But the impact of the stronger dollar was cushioned somewhat by China's third rate cut in six months, which raised hopes the world's No. 1 energy consumer will absorb some of the excessive supplies.

Last week, hedge funds and other big speculators raised bets for a seventh consecutive week that crude prices will rise, exchange data showed.

But analysts raised concerns over a growing disconnect between the futures market, which has gained more than 40 percent since its January low, and a growing physical supply glut.

Rising supplies, more activity on the shale side and potentially higher OPEC output were all weighing on the outlook for oil, analysts at Morgan Stanley said.

"We have growing concerns about crude fundamentals in the second half of 2015 and 2016," the Wall Street bank said in a note to clients.

Oil's recent rally also appeared technically exhausted, chartists said on Friday, noting that Brent's halted advance after it had hit 2015 highs last week.Investors will be looking at Wednesday's monthly report from the International Energy Agency to see if falling oil prices have boosted global demand for oil.