Oil falls as Libyan supply seen rising, Iraq output remains safe

West Texas Intermediate fell for a sixth day, the longest losing streak since May 2012, while Brent slid amid speculation that crude supplies will increase after Libyan rebels agreed to hand over two export terminals.

Futures dropped as much as 0.5% in New York. Libya is reopening the Es Sider and Ras Lanuf facilities after reaching an agreement yesterday, July 2, with a group that blockaded ports in the country’s east in the past year, said Ahmed al-Amin, a government spokesman. Fighting in Iraq, OPEC’s second-largest producer, still hasn’t spread to the south, home to more than three-quarters of its crude output.

“Libya will just add more supply, and the world is awash with oil,” Jonathan Barratt, the chief investment officer at Ayers Alliance Securities in Sydney, said by phone. “There’s nothing new from Iraq and investors are starting to realize that there’s not going to be a major affect in terms of supply.”

WTI for August delivery declined as much as 53 cents to $103.95 a barrel in electronic trading on the New York Mercantile Exchange and was at $104.11 at 2:38 p.m. Sydney time. The contract fell 86 cents to $104.48 yesterday, the lowest close since June 11. The volume of all futures traded was about 5% above the 100-day average. Prices have gained 5.8% this year.

Libyan Supply

Brent for August settlement dropped as much as 52 cents, or 0.5%, to $110.72 a barrel on the London-based ICE Futures Europe exchange. The European benchmark crude traded at a premium of $6.95 to WTI. The spread narrowed for a third day yesterday to close at $6.76.

Libya’s biggest and third-largest oil ports were handed over in a gesture of support for the newly elected parliament, according to a spokesman for the group that calls itself the Executive Office for Barqa. Es Sider and Ras Lanuf, which can handle a combined 560,000 bpd of crude, may boost Libya’s export capacity almost five-fold.

The rebels, who are seeking self-rule for a region known as Cyrenaica, occupied the facilities in July last year, demanding to share oil revenues to make up for neglect experienced under Muammar Qaddafi’s 42-year rule. Libya, a member of the Organization of Petroleum Exporting Countries, holds Africa’s biggest reserves.

U.S. Stockpiles

In Iraq, oil production has mostly been unaffected by an Islamist insurgency in the north. The country will ship 2.8 MMbpd this month, close to a record high, loading programs obtained by Bloomberg show.

Crude inventories in the U.S., the world’s largest oil consumer, shrank by 3.2 MMbbl to 384.9 million in the week ended June 27, the Energy Information Administration reported yesterday. Supplies were projected to decrease by 2.4 million, according to the median estimate in a Bloomberg News survey of 10 analysts.

Gasoline stockpiles slid by 1.24 MMbbl, the first drop in five weeks, said the EIA, the Energy Department’s statistical arm. Distillate fuels, including heating oil and diesel, climbed by 975,000 bbl to 121.5 million, the highest level since Jan. 10.

WTI’s decline may stall as it approaches technical support, data compiled by Bloomberg show. Futures are trading along an upward-sloping trend line extending from the intraday lows of May 1 and June 5, at about $104 a barrel today. Buy orders tend to be clustered along chart-support levels.

Providing useful resources, articles and writings on crude oil, other petroleum products, energy and gas. By Giftelyon Multi-Sevices Int'l Ltd and services, UK, online.

Total’s 'Disappointment' with Angola LNG adds to output gap

Angola LNG, a $10 billion LNG plant halted in April due to a leak, has proved to be a disappointment for Total.

“The real concern is that we are at least one year late and even much more than that in terms of start of production,” Yves-Louis Darricarrere, head of upstream, said in an interview.

Angola LNG, which produces the super-chilled fuel for spot deliveries to destinations from South Korea to Brazil, is expected to restart in the middle of next year. The plant has experienced halts since production started last June after an 18 month delay caused by several fires and accidents.

Total, with a 13.6% stake, is “missing” about 25,000 boepd in natural gas due to the halt, Darricarrere said. “It’s a disappointment, but at the same time for us it’s marginal.” The French company has sent experts to the site, he said.

The halt adds to output gaps this year for Total at Kashagan in Kazakhstan, where leaky pipelines must be replaced, and the loss of a concession in Abu Dhabi. The company targets increased production over the coming years, a goal that will be helped by the start of production at the Clov field off Angola in June, 2014.

Angola LNG was running at about 50% of planned capacity before the latest incident because the composition of the plant’s associated gas supply required additional equipment, Chevron, the operator and largest shareholder, has said.

The April incident took place during the commissioning and testing phase as part of a ramp up to full LNG production.

Chevron holds 36.4% of the project, with Sonangol EP owning 22.8%. Total, BP and Eni each hold 13.6%, according to Angola LNG’s website.

Providing useful resources, articles and writings on crude oil, other petroleum products, energy and gas. By Giftelyon Multi-Sevices Int'l Ltd and services, UK, online.

Sonde seeks alternatives for Joint Oil block in North Africa

Sonde Resources reported the following operational updates of North Africa.

In March 2014, Sonde retained Taylor-DeJongh to initiate a process to explore and evaluate potential strategic alternatives to enhance shareholder value with regard to the Joint Oil Block. The process has included discussions with in excess of twenty international petroleum entities and financial institutions. Several interested parties have executed confidentiality agreements, met with management and staff and are evaluating the data provided in the virtual data room.

The preparations for drilling the Fisal-1 well have progressed. All long lead materials (casing and drilling support material) have been ordered and initial deliveries have arrived in Sfax, Tunisia (shore base).
 
Preparations are underway to perform the site surveys in anticipation of commencing drilling operations in early Q4 of 2014.

The 3D seismic survey acquired in late 2013 has been processed and initial evaluation of the data confirms the potential nature of the Hadaf structure in Libyan waters. Detailed interpretation work of the processed seismic data is underway.

Providing useful resources, articles and writings on crude oil, other petroleum products, energy and gas. By Giftelyon Multi-Sevices Int'l Ltd and services, UK, online.

CAMAC Energy spuds Oyo-8 development well offshore Nigeria

CAMAC Energy reported that the Oyo-8 development well was spudded on June 15, 2014. The Oyo-8 well is located offshore Nigeria in OML 120, where CAMAC Energy is the operator and owns a 100% working interest.

This development well lies within the Oyo field, which was one of the first deepwater oil discoveries made in Nigeria. The Oyo field is located approximately 75 km offshore Nigeria in water depths of approximately 300 m.

Oyo-8 will be drilled by the Northern Offshore Energy Searcher drillship to a total depth of approximately 1,800 m in water depths of approximately 310 m, and will produce from the Pliocene reservoir. The Oyo-8 well is expected to commence production in the Q4 and, together with the Oyo-7 well which will be completed subsequent to the Oyo-8 well, is expected to significantly increase production from the Oyo Field.

Providing useful resources, articles and writings on crude oil, other petroleum products, energy and gas. By Giftelyon Multi-Sevices Int'l Ltd and services, UK, online.

East African energy boom investments to take focus in budgets

Kenya, Uganda and Tanzania plan to allocate money in their annual budgets to spur investment in infrastructure to exploit oil and natural gas from deposits that companies including Tullow Oil are developing.

Ugandan and Kenyan oil discoveries, made in 2006 and 2012 respectively, and new gas finds off the coast of Tanzania that have boosted reserves to as much as 46 Tcf have seen East Africa become a frontier for petroleum exploration.

The three countries, along with Rwanda, which are all members of the East African Community, will present their budget statements for the financial year starting July 1.

The Kenyan Finance Ministry said in its 2014 budget policy statement that the government wants to “fast track” building a pipeline to export the crude.

Kenya also expects to increase its spending on infrastructure by 15% $2.9 billion in 2014-15 from a year earlier, according to the Treasury’s budget policy statement.

Tanzania is building the $1.23 billion Mtwara gas pipeline project with a loan from the Export-Import Bank of China, while Statoil and BG Group, are working on a project to build a LNG export plant. The government plans to present new natural gas rules to parliament in November aimed at helping the country get more benefit from its natural resources.

Providing useful resources, articles and writings on crude oil, other petroleum products, energy and gas. By Giftelyon Multi-Sevices Int'l Ltd and services, UK, online.