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30/9 Adolf Lundin Adolf Lundin founder of Lundin Petroleum, Lundin Oil, Sands, IPC, Argentina Gold, Tenke Mining, Lundin Mining and most of the companies in the Lundin sphere is dead at 74 years of age. Mr Lundin had battled with a severe form of leukemia over the last few years. I would like to forward my deepest condolences to the Lundin family. 30/9 Lundin Petroleum LUPE:SAX - Norway - Licensing Round Lundin Petroleum is one of the companies bidding in the current round. Results are due in December. The licensing is for acreage in the North Sea, Norwegian Sea and Barents Sea. 30/9 Lundin Petroleum LUPE:SAX - Oudna - Tunisia That a production start will happen at the beginning of October is in the bag.. I will not need to post a Correction about this one. 29/9 Lundin Petroleum LUPE:SAX - Lagansky - Correction! I am now going to retract the 21/9 post and say what I have always thought the outcome would be ie that a drill this year is very unlikely. This is part of the reason why I belive the VPC share holders actually got a better deal than most think. The delay has had to date little to do with the Russian authorities, it is a technical issue. It always has been thus. If we see a spud date this year great, but I am not holding my breath. *21/9 Lundin Petroleum LUPE:SAX - Lagansky Spud date within 14 days. 28/9 USA - ETF - United States Oil Fund USO The OPEC effect.. Just don´t bet the farm on this one as it is short lived. Good uptick for the day though.. The fear of an OPEC reduction is going to drive the price north which leads to less risk that the organisation actually will do something. Catch 22. But it sure is good trading weather. 27/9 USA - EIA Reserve Report The US reserve of Crude oil rose for the first time in three years in 2005, according to a report due from the EIA. US Natural Gas reserves increased by 6% in 2005 the largest increase in 35 years... Peak who? 27/9 Oil - Statistics from the USA DOE - API 14.30 GMT Crude - 0.1 mmbls (API + 1.3 mmbls) Gasoline + 6.3 mmbls (API + 6.9 mmbls) Distillates + 2.6 mmbls (API + 2.0 mmbls) Natural Gas + 77 bcf Crude Import 11.1 mmbopd Gasoline Imports 1.5 mmbopd Refineries 92.4% - 1.0% Gasoline Demand 9.4 mmbopd Distillate Demand 4.1 mmbopd Total Petroleum Inventories + 9.2 mmbls Imports way above average especially for Gasoline. The US is yet again more than well supplied with oil and products... Crude should show a larger increase next week as Refiners backed off much due to seasonal considerations. Yet another market negative report! Note that BP´s Prudhoe Bay is due back online this coming weekend with 150.000 bopd.. Natural Gas stocks now stand at 3.254 trillion cubic feet, up 377 billion cubic feet from the year ago level, and 354 billion cubic feet above the five year average. 27/9 Oil - The Contracts As I pointed out earlier OPEC have been worried about demand for some time and as global demand backs off their worry seems warrented. Far too many have bought the hype as the results from many Hedge Funds now are showing. $6 billion losses, $4.5 billion losses etc on oil and natural gas contracts... Ouch! The driving force for the contracts over the near time will be just OPEC. There will be a lot of talk coming out of the member states in the next days and weeks. The question is if the market belives it for longer than the very short term. To get all of OPEC to cut production is not easy and it´s usually up to the Saudis to do "their part"... 27/9 Oil - Statistics from the USA DOE - API 14.30 GMT I expect, Crude + 0.5 mmbls Gasoline + 2.1 mmbls Distillates + 3.0 mmbls Natural Gas + 100 bcf Crude Import 10.8 mmbopd Gasoline Imports 0.7 mmbopd Refineries 93.5% Gasoline Demand 9.4 mmbopd Distillate Demand 4.1 mmbopd Total Petroleum Inventories + 5.0 mmbls 26/9 Lundin Petroleum LUPE:SAX - North Sea I did say long ago look for more deals going forward... * Licence P.1301 containing block 12/17b. Lundin Petroleum will be the operator with 30% working interest. * Licence P.1129 containing blocks 41/10a, 41/5, 42/2a and 42/7. Lundin Petroleum will be the operator with 25% working interest. * Licence P.1125 containing blocks 30/22a, 30/23a, 30/27a, 30/28, 30/29a (East) and 20/29a (West). Lundin Petroleum will be the operator with 25% working interest. * Licence P.1107 containing block 21/8 and licence P.1109 containing blocks 21/14 and 21/15b. Lundin Petroleum will be the operator with 40% working interest. * Licence P.1399 containing blocks 12/26b, 12/27, 17/5b, 18/1a and 18/2a. Endeavour Energy UK Limited (Endeavour) is the operator with Lundin Petroleum holding 15%. * Licence P.1397 containing block 12/23a. Endeavour is the operator with Lundin Petroleum holding 15%. * Licence P.1089 containing blocks 14/28a, 14/29b and licence P.1295 containing bloc k 14/23b. Oilexco North Sea Limited is the operator with Lundin Petroleum holding 10%. "This portfolio with five exploration wells gives us access to net reserve potential of over 100 million barrels of oil equivalents in the next 18 months." - Ashley Heppenstall 25/9 Dacke Group Nordic - DACKB:NM Accumulate... The company is in the process of being listed on the OMX O-list, ie the same listing as Lupe. This means access to a far greater span of investors including internationals. The recent KONE order is just another fairly small piece in the puzzle, look for a listing change within three months, if not sooner. 25/9 Saudi Arabia - Peak Oil As the Opec oil ministers opted in the historic and picturesque Hofburg Palace in Vienna to rollover their current output quota rather nervously for another term, a very engrossing, encompassing and interesting debate was raging on the side lines and the entire energy fraternity was passionately involved. With the Saudi prosperity almost solely dependent on the cash flows from crude sales, Saudi oil wizards told the energy world that beneath the deserts of Saudi Arabia, there lied enough oil for more than 140 years at current output levels. With the pronouncement, the oil era has been given a new lease of life. Until now many had thought the current oil based civilisation to last at most for another 40-50 years. And 140 more years mean the worries of the energy world are baseless - at least in the medium-term. At the historic Hofburg Palace, Saudi Aramco chief executive Abdullah S. Jum’ah forcefully argued before a select gathering about the longevity of the oil era, setting aside all the arguments about the imminent end of the oil era. Admitting though in a very conspicuous manner that crude remains a finite source, and none can indeed argue it, he emphasised the world has tapped only a small portion, than previously thought, of this precious natural resource. Speaking before industry experts in Vienna, Mr Jum’ah vehemently argued, “the world has consumed only about 18% of its conventional potential” of the totally ‘producible’ of 5.7 trillion barrels of oil. And he stressed: “We are looking at more than 4.5 trillion barrels of potentially recoverable oil (still to be recovered).” He added that extracting ‘every last economic barrel’ was challenging but not impossible and exhorted the industry leaders to step up exploration and ‘leave the minimum amount of oil in the ground’. In the process Mr Jum’ah shred apart the theory that the global crude supplies are in danger of running out within a few decades. He emphasised, the facts speak to the contrary. Mr Jum’ah had indeed reasons for his optimism. Saudi Arabia is under explored, every one agrees. And hence the potential is immense. He thus argued that over the next 25-30 years, the kingdom could add another 200 billion barrels to its recoverable reserves. And others also concurred with him on the issue. Applying new technology to unearth the last drop of possible oil from the earth and increase recovery rates appears today the key to keeping the world well oiled, he argued. Technology could indeed go a long way in making exploration costs lower, thus making the otherwise uneconomical assets productive and feasible, he deduced. And when Mr Jum’ah says something he speaks with a sense of authority and responsibility. After all he is the caretaker of the world’s largest crude reserve. Mr Jum’ah’s assertions were followed by similar remarks from Exxon chief executive Rex Tillerson too who emphasised before the select audience that there was no dearth of resources. “The era of easy oil is not over, because there has never been easy oil,” Tillerson argued. However, as Jum’ah and Exxon Mobil CEO were putting across reasons after reasons to reassure the jittery energy fraternity saying the much feared ‘oil peak’ was not to be encountered soon, in our lifetimes at least, many were still far from convinced. Kenneth Deffeyes, a leading peak-oil theorist from Princeton University, sees nothing that could shake his conviction about the imminent end of the oil era. On the contrary, he said he could point to the precise month when global crude production peaked - December, 2005. Indeed the pointing was based on Hubbert’s Peak theory that correctly forecast in 1956 that the US conventional oil production would begin to decline in the early 1970s. "This is 99% physical; 1% economics," he said in an interview. "There is only so much oil in the ground and we have now reached the peak of productive capacity." Prof Deffeyes noted that data from the US Energy Information Administration indicates world crude oil production peaking at 85.1 million barrels a day last December and then declining to 84.3 million barrels last June. He appeared unfazed by the EIA forecasts of oil production growing up to 102 million barrels a day by 2030, dismissing it outrightly. "I work from facts contained in the data, not from fantasies in forecasts." Though the peak-oil theorists are undeterred by the price slide, the fact remains that governments and the broader public may lose interest in the theory if prices settle back into a more comfortable range. In the wake of the currently raging debate in the United States, the Department of Energy has asked the National Petroleum Council, an industry information group, to investigate peak-oil claims. The council launched a study that includes different industries and environmental groups. It will survey existing studies and examine why they differ on how much oil and gas the world holds and what the response should be. In Australia too, a senate committee has concluded that the government there should plan for an imminent decline in world oil production, while Sweden hopes to end its oil dependency by 2020. *G* James Williams, a veteran energy economist at WTRG Economics Inc, said the peak-oil theorists make a legitimate point - over the long-term. "There is only so much oil in the ground," Mr Williams said. He added, however, that higher prices - even if they fall back to $50 - will allow crude oil deposits that have not been counted as potential reserves to be commercially exploited. "The estimate of reserves is a moving target," he said. "If you double the price, you automatically increase reserves." However, there is a third dimension to this entire debate, that of finding a middle way, away from the black and white scenario. Presenting his argument in the very Hofburg Palace, Ambassador Arne Walther, secretary-general of the Riyadh-based International Energy Forum Secretariat, characterised the ‘new energy era’ in a contrasting perspective. “The new energy era is of heightened energy consciousness around the world, with increasing uncertainties and growing interdependencies among nations,” he pleaded before the select gathering. With national policies ‘being tuned to energy demands and uncertainties of today and tomorrow, new uncertainties are being created in the process’, he argued, leaving the comity of nations with no alternative but to interact more on energy issues for a common better future. The debate hence lingers on. The fact though remains the world is not going to be out of economically viable crude sooner. One could definitely argue the exact time frame of this ultimate eventuality to happen, yet in the medium-term there is no shortage and especially so if the assurance comes form none other than the Saudi Aramoc CEO. The world has to give credence to what Mr Jum’ah sees through his Crystal Ball. 23/9 USA - ETF - United States Oil Fund USO There is nothing here that says bottom of the cycle... 22/9 Oil - The Contracts Did the turn at $60 and this then due to short term Iran concern which should abate as the US is pulling back further from sanctions and Iran is doing what it does ie stall.. Todays uptick was perhaps a momentary lapse of reason. Unless gepol´s get in the way. The question is how the big hedge and pension funds are set to conduct their business going forward. Yet in the oil patch the market is far larger than any group of individual players. The $50´s it is.. 21/9 Lundin Petroleum LUPE:SAX - Lagansky Spud date within 14 days. 20/9 Oil - The Contracts Open interest has been rising while prices have been falling, which indicates fresh shorts in the market. However, the short positions are being held by non-reportables or small speculators, while non-commercials, which are comprised of hedge funds, continue to liquidate longs. IE the big money is getting out... This downward trend is hard to judge as to when bottom is reached, without external influences the contracts are heading for the middle $50´s in the first phase. 20/9 Oil - Statistics from the USA DOE - API 14.30 GMT Crude - 2.8 mmbls (API - 4.1 mmbls) Gasoline + 0.6 mmbls (API + 0.5 mmbls) Distillates + 4.1 mmbls (API - 0.1 mmbls) Natural Gas + 93 bcf Crude Import 10.6 mmbopd Gasoline Imports 0.8 mmbopd Refineries 93.4% + 0.4% Gasoline Demand 9.5 mmbopd Distillate Demand 4.1 mmbopd Total Petroleum Inventories + 4.3 mmbls Yet another negative/neutral report. Refiners are back to pre-Katrina mode. Natural gas was below what I expected yet it is far beyond the averga this time of year of 85 bcf. 20/9 USA - ETF - United States Oil Fund USO Low on huge volume. The simple fact is that there is a lot of big money moving out of oil at this level. 20/9 Oil - Statistics from the USA DOE - API 14.30 GMT I expect, Crude - 0.8 mmbls Gasoline + 1.3 mmbls Distillates + 4.0 mmbls Natural Gas + 100 bcf Crude Import 10.8 mmbopd Gasoline Imports 1.1 mmbopd Refineries 93.2% Gasoline Demand 9.4 mmbopd Distillate Demand 4.1 mmbopd Total Petroleum Inventories + 5.8 mmbls Sorry! But the US is well supplied with product... Crude could in this show a lower storage number.. 18/9 Site Updates Due to extensive travels updates during the rest of September will be erratic at best. 13/9 Oil - Statistics from the USA DOE - API 14.30 GMT Crude - 2.9 mmbls (API - 7.9 mmbls) Gasoline + 0.1 mmbls (API + 4.4 mmbls) Distillates + 4.7 mmbls (API + 6.0 mmbls) Natural Gas + 108 bcf Crude Import 10.6 mmbopd Gasoline Imports 1.1 mmbopd Refineries 93.0% - 0.6% Gasoline Demand 9.5 mmbopd Distillate Demand 4.1 mmbopd Total Petroleum Inventories + 4.4 mmbls Natural gas rose by a mighty 108 bcf this then well above the 81 bcf level same time last year. Total stocks now stand at 3.084 trillion cubic feet, up 339 bcf from the year-ago level, and 341 bcf above the five-year average. Total inventories rose again and are now 2.3% above last year. Distillates showed a healthy rise as they should this time of year. Market neutral/bearsih report. The huge difference between API and DOE is agin as I have pointed out due to where in the system the products are. Refiners are producing 0.6 mmbpd more this year than last year. 13/9 Oil - Statistics from the USA DOE - API 14.30 GMT I expect, Crude + 1.0 mmbls Gasoline + 1.0 mmbls Distillates + 2.5 mmbls Natural Gas + 83 bcf Crude Import 10.9 mmbopd Gasoline Imports 1.1 mmbopd Refineries 93.8% Gasoline Demand 9.6 mmbopd Distillate Demand 4.1 mmbopd Total Petroleum Inventories + 3.0 mmbls 8/9 Baker Hughes - Rig Count August international offshore rig count was 278, up 9 from July and 10 from last year. August international rig count was 954, up 33 from July and 40 from last year. 8/9 Oil - Gold and Iran - An interesting view It was an information-laden day at the annual Las Vegas Hard Assets Investment Conference held by International Investment Conferences. Scores of mining companies, traders and personal investors congregated to hear mining CEOs, newsletter editors and market specialist speak on a variety of topics. Many speakers spent a good deal of time speaking on the issue of geopolitics in relation to commodity investments. One speech in particular focused solely on the volatile matter. Craig R. Smith, CEO and Chairman of the Board of Swiss America Trading Corp., and co-author of "Black Gold Stranglehold", gave a presentation with special focus on the investment atmosphere in regards to current geopolitical situations with special focus on oil, gold and Iran. Smith stated throughout the speech that the U.S. in general must “come to grips” with the fact that we are at war, both ideologically and culturally, but also financially. “Soon we will see a war of resources…not wars fought with tanks and bombs…but on a financial level,” Smith said. Oil One driving point reiterated numerously throughout the speech was what Smith called the myth of Peak oil and the reality that oil is in fact abundant, not scarce, and plentiful today and for years to come. “I can assure you we are not running out of oil,” Smith said. According to Smith’s numbers, there are 1,350 trillion barrels of proven reserves available, the highest number ever in history. Smith pointed out that now we drill oil wells in locations where geologists previously thought deposits were impossible by accessing deep abiotic oil by using ultra-deep- well drilling, and he was resolute that explorers and companies will continue to find new oil deposits in the distant and not-so-distant future. Supporting Smith’s case was the Chevron NYSE:CVX oil-find in the gulf last week, possibly the largest resource of its kind found to date. Oil and the Dollar According to Smith, the dollar’s downturn and decrease in value over the past several years is an extreme threat, essentially to the energy security of the U.S. Accordingly, Smith, posed the question asking why oil producing countries will want to accept the U.S. dollar for oil, especially in regards to OPEC. At the moment, global oil demand stands at roughly 85 million barrels per day (bpd). However, Smith said that with the addition of an approximate 10,000 cars on the road per day from China, that number is expected to increase to 90-100 million bpd in the near-future. Recently, Russian President Vladimir Putin suggested that Russia take payment in euros for oil, rather than dollars. The point being, what happens when OPEC and others decide to stop taking payment in dollars for oil, and demand yaun or euros? Smith noted that recently, China, sold 2.4% of its American dollar reserves to invest in gold. In 2006, it is not just the U.S. that wants to purchase oil. The massive energy demand coming from China and India at the moment has created new buyers whose demand needs are climbing rapidly. Smith said that in the US, “there is a perception that everything is ok…when in fact it is not.” Myth of Scarcity Annually, roughly $35 to $45 billion worth of gold is traded where as upwards of $1 trillion in oil is traded each year. According to Smith, the general population in general has their facts severely reversed when it comes to the issue of scarcity in oil and gold. Smith said that oil is primordial, plentiful and abundant. He stated that peak oil theorist and Malthusians have been incorrect in their predictions a number of times in the past, and will continue to do so. Yet, for gold, the tone of Smith’s presentation was that many investors believe that gold is abundant and plentiful when in fact it is gold that’s scarce, not oil. Each year, companies must dig deeper and farther, and as efforts increase, so will the cost for mining companies, Smith said. Smith said that it was the “ignorance of people who have chosen to ignore the facts and the science,” relation to the myth of scarcity. Iran “Iran will acquire nuclear weapons unless they’re stopped,” Smith said. Geopolitical threats by Iran have played a large role in spiking oil prices to recent peaks of $78, and the fear premium which the country holds in regards to the nuclear enrichment dispute is rather large as witnessed in previous correlations between oil spikes and Iran non-compliance with the international community. “Iran is a guarantee of uncertainty, and we can’t take that out of the equation,” he stated. Conclusion Whether you believe in peak oil or believe that the black gold of energy is infinite, any reasonable person can agree that the value of the dollar has steadily declined for a number of years now. Energy demand from India and China is imminent, persistent and will continue to grow in coming years. Smith himself stated that his theories may ruffle a few feathers; however, we must realize that times are rapidly changing and the energy and economic security once realized are no longer living out their golden years. If one day, OPEC and other oil-rich nations demand “real money for real resources,” the state of the dollar would be in dire despair according to general economic principles. Smith closed, stating sombrely that investors should be aware of geopolitical events, the myth of scarcity, and the state of the economy to make sound investment decisions. 8/9 Beach Petroleum - BPT:ASX - Spuds Glenaire 1 This then in the Otway basin, Victoria. Target is the Early Cretaceous Pretty Hill sandstones. Glenaire has a possible recoverable reserve of around 68 bcf of gas. 8/9 Oil - The Contracts Look for a slight uptick on Friday. The 5th anniversary of September 11 is on Monday.. Even so the trend is still down. 7/9 Oil - Statistics from the USA DOE - API 14.30 GMT Crude - 2.2 mmbls (API - 3.9 mmbls) Gasoline + 0.7 mmbls (API - 0.03 mmbls) Distillates + 3.1 mmbls (API + 1.7 mmbls) Natural Gas + 71 bcf Crude Import 10.4 mmbopd Gasoline Imports 1.0 mmbopd Refineries 93.6% + 0.7% Gasoline Demand 9.6 mmbopd Distillate Demand 4.1 mmbopd Total Petroleum Inventories + 1.8 mmbls Off on the Crude numbers but they are not going to outweigh the fact that Refiners are up and running and Gasoline and Distillates showed larger than increases. Market negative report. Natural Gas stocks now stand at 2.976 tcf, up 312 bcf from the year-ago level, and 322 bcf above the five-year average. Low import numbers gives a fall in Crude also refining output was up 0.7%. Most Refineries are now in pre-Katrina mode, something to keep an eye on going forward. 7/9 Lundin Petroleum LUPE:SAX - Congo I did write "look for a deal or two in the coming months".. 7/9 USA - ETF - United States Oil Fund USO A new low yesterday and at volume after 1pm... This is just going to keep going down. Unless geopoliticals... 7/9 Oil - Statistics from the USA DOE - API 14.30 GMT I expect, Crude + 0.5 mmbls Gasoline - 1.2 mmbls Distillates + 2.4 mmbls Natural Gas + 75 bcf Crude Import 11.2 mmbopd Gasoline Imports 1.2 mmbopd Refineries 93.1% Gasoline Demand 9.6 mmbopd Distillate Demand 4.1 mmbopd Total Petroleum Inventories + 4.8 mmbls Post Labour Day weekend stats without the weekends effect. Again I am tempted to expect a build across the board as import numbers still are going to be strong. Remember that at this time of year there usually is some disruption to loadings at LOOP, yet not so thus far. On the whole I am betting investment wise on the stats being - market bearish. 6/9 OPEC - August Production Aug. July Monthly Quota Est.Vs Est. OPEC Est. Output Change Target** Target Cap(@) Saudi Arabia 9,380 9,320r 60 9,099 +281 10,800r Iran 4,020 4,070r -50 4,110 -90 4,100r Venezuela* 2,500 2,450r 50 3,223 -723 2,550r Iraq 1,940 2,060r -120 --- --- 2,200 U.A.E. 2,600 2,560 40 2,444 +156 2,600 Kuwait 2,470 2,460 10 2,247 +223 2,550 Nigeria 2,200 2,200 0 2,306 -106 2,600 Libya 1,700 1,700 0 1,500 +200 1,700 Indonesia 860 900 -40 1,451 -591 920r Algeria 1,380 1,380 0 894 +486 1,400 Qatar 810 810 0 726 +84 820 Total OPEC 11 29,860 29,910r -50 --- --- 32,240r Total ex. Iraq 27,920 27,850r 70 28,000 -80 30,040 Iraq has no quota. Totals rounded r = revised. @ Capacity attainable within 30 days and sustainable for 90 days. **OPEC reaffirmed its quota ceiling at its June meeting. # Includes Neutral Zone production shared equally between Saudi Arabia & Kuwait OPEC have, as I have stated before about 2.0 - 2.5 mmbopd in spare production capacity... 6/9 Lundin Petroleum LUPE:SAX - Goes to Africa Again - Congo SOCO Exploration and Production Congo ("SOCO EPC"), has entered into a farm-out agreement wherein it has agreed to farm-out 18.75% of its interest in the Marine XI block, offshore the Republic of Congo (Brazzaville), to each of a subsidiary of Lundin Petroleum AB and Raffia Oil SARL. SOCO EPC will remain as the operator with a 37.5% working interest in the block. The exploration and production branch of SNPC (15%) and Africa Oil & Gas Corporation (10%) hold the remaining Related Parts. The block, located in the Lower Congo Basin, is in shallow water adjacent to the coast with water depths ranging up to 110 meters and covers approximately 1,400 square kilometers. There has been previous exploration activity on the block resulting in four small oil discoveries, the largest of which has initial recoverable reserves estimated to be in the 30 to 60 million barrel range. A contract has been awarded to PGS Overseas AS for the acquisition of a 1,200 square kilometer 3D seismic program. The Ramform Explorer is expected to begin acquisition in early October. The Lundin´s have very good contacts, very good connections in the Congo by way of a long time in country - Tenke Mining.. 6/9 Beach Petroleum - BPT:ASX - Spuds Snowden 1 South Australia’s Cooper/Eromanga basin... Target depth 1906 metres in the Namur and Hutton sandstones. Possible reserve 1.2 mmbo. 6/9 Beach Petroleum - BPT:ASX - Delhi Petroleum Deal is Done As expected Beach bought Delhi in a deal worth about A$574 million that will increase the company’s reserves to more than 95 mmboe. 5/9 UN meeting in Berlin 7/9 - Iran UN representatives will meet 7/9 in Berlin possible sanctions against Iran is on the table. Worth a note is.. A U.S. military strike against Iran is "unavoidable" and probably will happen during George W. Bush's presidency, Israeli lawmaker Jacob Edri told Thueringer Allgemeine, a local German newspaper, according to a Deutsche Presse Agentur report. An attack would be "limited" and aim to destroy parts of the nuclear program, Edri told the newspaper, as cited by DPA. 5/9 Deep drilling in The Gulf of Mexico Chevron Corp said it's made the deepest successful well test in the Gulf of Mexico, saying the Jack #2 well at Walker Ridge Block 758 drilled to a total depth of 28,175 feet. It and partners Statoil and Devon Energy Corp which each own 25%, plan to drill an additional appraisal well in 2007. The Wall Street Journal reported that it could become the nation's biggest new domestic source of oil since the discovery of Alaska's North Slope more than a generation ago. the companies estimate that the recent discoveries in the Gulf of Mexico's lower tertiary formations which include more than the Jack #2 well hold between 3 billion and as much as 15 billion barrels worth of oil and gas reserves. At 15 billion barrels, it would boost the nation's current reserves of 29.3 billion barrels by 50%. The well, 270 miles southwest of New Orleans, sustained a flow rate of more than 6,000 barrels of crude oil per day. A repost from 10/8 Oil - Its all about Technology Today an oil well is "dry" after about 35% of the total reserve is through different techniques pumped to the surface as production. In this most of the oil produced is done onshore. 20 years ago the maximum depth of an offshore well was about 500 meters today it is 3000 meters plus ie 10.000 feet. Once the oil drillers left the continental shelf they still found oil and are still finding more, given at greater depths but still there is more and more oil found in places that 20 years ago were unthinkable. The point is that it is not the lack of oil or capacity that is the major problem even if capacity is today one factor as there is enough production but not enough capacity to take care of the raw crude. The major problem is technology. With 65% of an oil reserve still in the ground there is a lot of oil down there still to be "pumped to the surface". In this if the global average of 35% of a "well dry" could be brought up to 40% this would result in one Saudi Arabia being added to the worlds current oil reserve. In this given that today oil drilling at depth is all about robots, joysticks, computers etc but we are just at the beginning of this new part of the oil drilling phase. In this there is much to do and much that can and will be done. 5/9 Beach Petroleum - BPT:ASX - Shares Suspended Beach Petroleum’s shares on the Australian Stock Exchange have been suspended before an expected counter bid to Santos A$474 million bid for privately-owned Delhi Petroleum. The company had said on 1 August that while it had not made an offer for Delhi, it was interested in Delhi’s assets and was evaluating its position. Santos was told in late July by Westpac Resources and Infrastructure and Westpac Funds Management that they had received an unsolicited offer from an unnamed third party that was of greater value to its offer. The acquisition of Delhi would have increased Santos’ interest in the Cooper basin joint venture from 63% to 85% and add about 67 mmboe of proven and probable reserves as at 31 December 2005. 5/9 Oil - The Contracts Since the July 14 high of $78.40 the WTI price has dropped 13%.. The "risk premium" is slowly leaking out of the price structure. No Hurricans, No war with Iran etc etc.. As the UN is running the "Iran Show" dont look for anything to happen for months. I can see oil dropping further than most think as the US is well supplied and China is going to get tougher on trying to cool down the economy. Yet Iran can to make more export dollars put a few gunboats in the Strait of Hormuz and then we are off to the races, again... Worth a note.. Hedge fund managers and other large speculators decreased their net long position in New York crude oil futures in the week ended Aug 29, according to U.S. Commodity Futures Trading Commission data. Speculative long positions, or bets prices will rise, outnumbered short positions by 60,861 contracts on the New York Mercantile Exchange, the commission said Sept 1. Net long positions fell by 8,054 contracts, or 12%, from a week earlier... 4/9 Methane Hydrates - Taiwan Taiwanese government geologists have confirmed the existence of more than 500 billion cubic metres of gas hydrate off Taiwan's south-west coast, enough to meet the island's gas needs for over 60 years. Commercial extraction is likely much more than a decade away away as techniques to tap the gas are still being developed, according to Wang Yunshuen, section chief of the mineral resources section, at the Central Geological Survey. "For gas hydrate, every country in the world is still in the investigative stage and cannot yet produce it commercially," Wang. "There are still many technical difficulties that must be overcome .... it will take more than 10 years." Wang said the hydrate formation was around 100 nautical miles off Kaohsiung in the south, and added the geological survey would now take more detailed imaging of the sea floor on areas where signs of hydrate reserves are strongest. Originally detected by the state-run Chinese Petroleum Corporation in the early 1990s, the gas hydrate was confirmed by the geological survey after two-and-a-half years of investigation, the survey said in a statement on its website last month. The Geological Survey.. Gas hydrate consists of methane gas trapped inside cage-like crystal structures made up of water molecules. It formed at pressure higher than 50 atm and temperature lower than 7 C, and widely distributed in the permafrost and offshore sediments. The reserve of world gas hydrate is huge and may play an important role in energy supply for 21 century. Previous geophysical investigations indicate that gas hydrate widely occurred in the continental slope of the South China Sea and the accretionary wedge offshore southwestern Taiwan. A 4-year Gas hydrate exploration program conducted by the Central Geological Survey including geological investigation, geochemical exploration, geophysical surveys, and data bank establishment will be undertaken in that area. The objective of these studies is to map the regional gas hydrate distribution and to understand the geological and geochemical characteristics of the offshore southwestern Taiwan. Gas hydrate prospects will be selected for detailed investigation, drilling sites will be identified and studied, then drilling, coring and gas hydrate sampling will be carried out in the 4th year. The final purpose of this exploration program is to estimate the probable reserve and the possibility of future exploration and exploitation of the gas hydrate prospects offshore southwestern Taiwan. 4/9 Tanganyika Oil - TYK:TSX - TYKS:NMG 1/9 USA - BP Prudhoe Bay Restart A partial restart date could be as soon as the end of September. This would then bring back online about half of the 0.2 mmbopd shut in.. 1/9 Old Material from the Site I am in the process of trying to extract the old site from a very damaged hard drive. The material harks back to the Sodra drills, Red Sea Oils part in Libya, TYK in Tanzania, Argentina Gold etc ie middle of the 1990´s. It has little value today but it may amuse some of you. 1/9 Lundin Petroleum LUPE:SAX The Irish Inishbeg exploration well 13/12-1 was a duster. yet it was always a low percentage play, as wild cats are. Lagansky is at least 4 weeks away from spud, could be sooner yet it´s all up to the Russian authorities.. Look for a deal or two in the coming few months... PL 006C in block 2/5 on the Norwegian Continental Shelf is a good play with an advantageous setup for Lupe. Further I would lke to point out that through the history of this company there have been times when deals, mergers and simple acquisitions have been misunderstood by the market at large, yet here we are many investors and many millions later.. A phrase I have used many times before - You´ve got to have a little faith. 31/8 Iran - Oil Production Iran will miss its 2010 crude oil production target by 0.5 mmbpd owing to a lack of investment in ageing oil fields. Crude oil production could reach 4.5 mmbpd by the end of the state's fourth five-year development plan 2005-2010, well under the original production target of 5.0 mmbpd, this according to the National Iranian Oil Company. Iran is not close to the 5.0 mmbpd target of the fourth plan. More than 80% of the current total oil output is being provided from aged oil fields that need serious investment to increase production. Irans current oil production is 4.08 mmbpd, which is 0.03 mmbpd less than its OPEC quota. Of this 2.4 mmbpd is exported. What Iran needs is economic growth and an end to current sanctions which has put it´s oil industry, airline industry and pretty much all industry into the toilet. Yet Irans leaders are apparently blind to the fact that it is they who are creating this problem. Iran has the oil yet it is the infrastructure to get it out of the ground that is sorely lacking.... 31/8 USA - ETF - United States Oil Fund USO A new low yesterday and an impressive bounce back. Iran is today the main driving force for the contracts and as such I expect the downward trend to continue as sanctions, action whatever from the UN is a long way off. The latest soundbite from the US, Iran and the rest can change the curve yet oil is right now in a downward trend. Good trading times.... 30/8 Oil - Statistics from the USA DOE - API 14.30 GMT Crude + 2.4 mmbls (API + 3.5 mmbls) Gasoline + 0.4 mmbls (API + 0.8 mmbls) Distillates + 1.3 mmbls (API + 1.7 mmbls) Natural Gas + 48 bcf Crude Import 11.2 mmbopd Gasoline Imports 1.2 mmbopd Refineries 92.9% + 0.1% Gasoline Demand 9.6 mmbopd Distillate Demand 4.1 mmbopd Total Petroleum Inventories + 4.0 mmbls Import of Crude was way better than I expected and therefore a sizable build in inventories. A build across the board as expected. Gasoline demand is still up hence the moderate storage numbers. 31/8 Natural gas injection was below what I expected yet storage is still 12% above the 5 year average. Injection at this time of year usually comes in at + 65 bcf.. 29/8 Oil - Statistics from the USA DOE - API 30/8 14.30 GMT I expect, Crude + 0.5 mmbls Gasoline + 1.5 mmbls Distillates + 1.5 mmbls Natural Gas + 65 bcf Crude Import 10.8 mmbopd Gasoline Imports 1.3 mmbopd Refineries 93.0% Gasoline Demand 9.6 mmbopd Distillate Demand 4.0 mmbopd Total Petroleum Inventories + 5.5 mmbls Again I am out on a limb by calling a build across the board. Gasoline demand should have seens it´s peak, yet with falling prices at the pump there is an x-factor. The US is well supplied with Crude so with my expected import numbers this say´s a build. Distillates are the product to start tracking as we get into the cold season. The market is thinking Hurrican Season and it´s impact. I say with nothing but a stiff breeze sofar it´s a non-factor. 28/8 Dacke Group Nordic - DACKB:NM I did say, Accumulate... 24/8 Oil - VLCC Freight Rates
24/8 Natural Gas - Arabian region The demand for gas in the Arab region has grown faster than oil demand over the past decade, to peak at 3.34 mmboepd in 2005. A study by the 10 nation Organisation of Arab Petroleum Exporting Countries (Oapec), says gas demand is projected to rise to 4.08 mmboped 2010. Demand is then expected to rise to 5.1 mmboped in 2015, before it climbs to a record 6.4 mmboped, an annual growth of 4.4% between 2005 and 2020. The growth is expected to expand the share of gas in the Arab energy market to 46% in 2020 from 42% in 2005. The expansion will be at the expense of oil products demand, whose share will slide to around 51% from 56% in the same period. The report said consumption of oil products is projected to grow from about 4.5 mmboped in 2005 to 5.14 mmboped in 2010, 6.02 mmboped in 2015 and 7.07 mmboped in 2020, an annual growth rate of nearly 3.1% during 2005-20. "Our projections show that the gas share will continue to grow during that period, while the market share of oil products will decline," according to an Oapec spokesperson. The total energy consumption is forecast to increase from 8.05 mmboped in 2005 to 9.46 mmboped in 2010, to 11.44 mmboped in 2015, and 13.85 mmboped in 2020, an average annual growth rate of 3.7%. Saudi Arabia is expected to consume nearly 25% of the total Arab energy demand in 2020 as its consumption is forecast to climb to 3.47 mmboped in 2020 from 2.1 mmboped in 2005. "As for per capita energy consumption in the Arab world, it is projected to grow by 2.1% to around 12.8 mmboped in 2020 from 9.4 mmboped in 2005 despite a rapid growth in the population", according to the study. In a separate study, Oapec said that combined Arab gas exports have soared more than 25% per cent over the past five years from 83,043 million cubic metres in 2000 to a record 104,770 million cubic metres in 2005. The bulk of the increase was in Qatar, with its exports of natural and liquefied natural gas jumping to 24,060 million cubic metres from around 14,040 million cubic metres. Qatar controls the third largest gas resources in the world after those of Russia and Iran, estimated at over 25 trillion cubic metres at the end of 2005. Gas exports by the UAE increased slightly, and there was sharp growth by Oman, which is not an Oapec or Opec member. The report did not list Saudi Arabia in the exporter section as the Kingdom is struggling to exploit its gas reserves for domestic use.
24/8 Iran As expected Iran is running circles around the UN, hell a snail can run around this totally inept body of blow hards yet in the process Iran is also running part of its bargaining chip into the ground. The IEA has called for OPEC to take up the eventual slack in production an Iranian shut down would cause. OPEC can today increase it´s output by 2 mmbopd and this then only 0.4 mmbopd short of Irans current export. Yet as global demand is waining Iran´s "ace in the hole" is getting weaker and weaker. Also an Iranian shut down of export would be very much welcomed by the rest of the oil exporting world as it would keep oil prices up, thank you very much. The big loser in this is - Iran.
24/8 Oil - Its all about Technology I wrote on the 10/8 about Technology.. The Gullfaks field was slated 20 years ago to be shut in just about now, yet Statoil have given it at least another 20 years of life. Lars Christian Bacher, senior vice president - "We have gained unique expertise through 20 years of Gullfaks experience. The combination of new technology and a highly motivated and enthusiastic organisation means that we can look forward to exciting times ahead." 23/8 Venezuela - Chavez - China Hugo has pledged to sell China 150.000 bopd.. Problem is that China does not, unlike the US have the special refineries that are needed to process Venezuelas Heavy Sour Crude. China would need to build new refineries and that takes at least 5 years if started today. Also you have to get your head around the logistics and economics of transport. It takes 5 days for Venezuelas Crude to reach the US market, it would take 40 days for it to reach China. Thats a difference of 35 days of VLCC day rates for oil China can not refine itself. Got to give to old Hugo he´s a good salesman. 24/8 An update on Hugos trip to China is his latest statement.... "We're getting to 150,000 barrels of crude a day (in sales to China) and next year we will double it to (sell) 300,000 b/d and we will reach 500,000 b/d in 2009,' President Hugo Chavez said during a telephone interview broadcast through the state-owned television channel Venezolana de Television." So what is China going to do with all this Heavy Sour Crude?.... 23/8 Iraq - DNO - DNO:NO Iraqi Oil Minister Hussain al-Shahristani has signalled that the race for oilfield deals worth $20 billion could start this autumn. Yet as readers of this site know there are companies there already. The majors are probably going to hold back until things settle down and as I have stated earlier this means opportunity for others. DNO is preparing for test production from its Iraqi field Q1 2007. Amazing when you think on it awhile that there are 115 billion barrels (proven) lying more or less dormant in the ground... 23/8 Oil - Statistics from the USA DOE - API 14.30 GMT Crude - 0.6 mmbls (API - 1.9 mmbls) Gasoline + 0.4 mmbls (API + 1.3 mmbls) Distillates + 2.3 mmbls (API + 2.1 mmbls) Crude Import 10.2 mmbopd Gasoline Imports 1.3 mmbopd Refineries 92.8% + 1.3% Gasoline Demand 9.6 mmbopd Distillate Demand 4.0 mmbopd Total Petroleum Inventories + 4.2 mmbls Refieners runs are up and Gasoline inventories are up. A market neutral to negative report. PADD V only saw a slight decrease in Crude storage by - 0.2 mmbls. 23/8 Oil - Statistics from the USA DOE - API 14.30 GMT I expect, Crude - 0.5 mmbls Gasoline - 2.0 mmbls Distillates + 1.0 mmbls Natural Gas + 45 bcf Crude Import 10.0 mmbopd Gasoline Imports 1.4 mmbopd Refineries 91.5% Gasoline Demand 9.6 mmbopd Distillate Demand 4.0 mmbopd Total Petroleum Inventories + 1.0 mmbls Driving season is drawing to a close with the real end with Labor Day Weekend, Sept 2-4/9. 17/8 Oil - The Market As the price of oil contracts fall one has to remember that at the top of a price curve there is always a great deal of worry. $80 oil without the fundamentals ain´t going to to push oil shares upward. Oil in the $60´s well that´s another ball game and we are I suspect heading for the $60´s again, unless ofcourse Geopoliticals.. Iran and the 22 August is coming up for instance... A falling oil price ie a reduction of the risk-premium is actually good for oil shares as it brings back the buyers. Expectation and Hope are the corner stones of the market and as prices fall the E&H factor grows. I see an interesting period developing with trading being the name of the game... Why well because there are a lot more players out there who are hooked on oil.. The latest run has been very profitable and there is a whole market out there that wants a repeat thank you very much. 17/8 USA - ETF - United States Oil Fund USO Selling late at volume, this tracker says down.. A test of the low $64.89 is on the cards. 16/8 Libya - Third Bidding Round EPSA Would it not be funny if a company that was there for a fairly long while and left, should happen to go for an EPSA... Libya is an old stomping ground for some folk... 16/8 Oil - Statistics from the USA DOE - API 14.30 GMT Crude - 1.6 mmbls (API - 2.0 mmbls) Gasoline - 2.3 mmbls (API - 1.8 mmbls) Distillates + 0.8 mmbls (API + 2.3 mmbls) Crude Import 10.0 mmbopd Gasoline Imports 1.4 mmbopd Refineries 91.5% - 0.1% Gasoline Demand 9.6 mmbopd Distillate Demand 4.0 mmbopd Total Petroleum Inventories + 1.2 mmbls As expected PADD V took a beating on the Crude supply front with 51.9 mmbls in storage down from 53.8 mmbls, due in part to Prudhoe Bay. Poor refinery output again, yet a fairly robust import number for Gasoline. The reason that Crude inventories have fallen the last weeks by 4.5 mmbls is not due to the lack of Crude it is simply that Crude imports have been less than normal. Add to this the Prudhoe Bay problems, yet crude storage is still above the average by 4%. Going forward Distillates is increasingly going to become the one to watch as we head into winter. 16/8 OPEC - Demand Forecast OPEC cut its 2006 oil demand forecast by 80,000 barrels a day, citing an unexpected decline in OECD country demand. The cartel is now expecting demand in 2006 to rise 1.3 million barrels a day to 84.5 million barrels a day. Yet another lowering of the projected demand.. 16/8 Lundin Petroleum LUPE:SAX - Q2 Report 16/8 USA - ETF - United States Oil Fund USO Bottom crawling at fairly low volumes, even if the late downturn did see a slight pick-up in shares traded. The US inventory stats.... 16/8 Oil - VLCC Freight Rates 16/8 Oil - Statistics from the USA DOE - API 14.30 GMT I expect, Crude - 1.0 mmbls Gasoline - 1.2 mmbls Distillates - 1.8 mmbls Natural Gas + 35 bcf Crude Import 10.8 mmbopd Gasoline Imports 1.3 mmbopd Refineries 92.1% Gasoline Demand 9.6 mmbopd Distillate Demand 4.1 mmbopd Total Petroleum Inventories + 1.5 mmbls Do not forget last weeks API numbers for Crude + 5.65 mmbls, the difference with DOE´s stats are as I have stated earlier down to where the oil is in the system. Therefore I expect a draw in crude but only slightly. Gasoline with refiners again up should also decline and Distillates see a pre-autumn build. Jet fuel, with the shut down of flights to the UK this should show up during next week and possible going forward as air travel may have suffered.. Prudhoe Bay should show up in part in this week and there the PADD V (five) numbers are the once to watch. Yet this week feels like it could see a lot of surprises... 14/8 Lundin Petroleum LUPE:SAX - Netherlands - L4G Up an running.. With a 4.35% share well it´s not a barn burner.. 14/8 Lundin Petroleum LUPE:SAX - Peik Field · 50% of NCS Block 24/6a · 33.3% of UK Block 9/15a · 85% of UK Block 9/10b At $45 million it´s one for the future. Yet again diversification.. 10/8 Oil Price Crude oil prices showed little movement Thursday as the market watched factors influencing supply in the United States, Africa and the Middle East. Light, sweet crude for September delivery fell 2 cents to settle at $76.33 a barrel in midmorning Asian electronic trading on the New York Mercantile Exchange. A day earlier, prices had risen as high as $77.44 less than a dollar away from the trading record of $78.40 reached July 14. 10/8 Oil - Its all about Technology Today an oil well is "dry" after about 35% of the total reserve is through different techniques pumped to the surface as production. In this most of the oil produced is done onshore. 20 years ago the maximum depth of an offshore well was about 500 meters today it is 3000 meters plus ie 10.000 feet. Once the oil drillers left the continental shelf they still found oil and are still finding more, given at greater depths but still there is more and more oil found in places that 20 years ago were unthinkable. The point is that it is not the lack of oil or capacity that is the major problem even if capacity is today one factor as there is enough production but not enough capacity to take care of the raw crude. The major problem is technology. With 65% of an oil reserve still in the ground there is a lot of oil down there still to be "pumped to the surface". In this if the global average of 35% of a "well dry" could be brought up to 40% this would result in one Saudi Arabia being added to the worlds current oil reserve. In this given that today oil drilling at depth is all about robots, joysticks, computers etc but we are just at the beginning of this new part of the oil drilling phase. In this there is much to do and much that can and will be done. 10/8 USA - ETF - United States Oil Fund USO One o´clock, again.. 9/8 Iran - Cheap oil to poor Countries Iran's President Mahmoud Ahmadinejad wants to sell cheap oil to poor countries, this then a move which its OPEC partner Venezuela has used to counter US influence in Central America. Well maybe and then not so much as Citgo which is Venezuelas State Oil Company with 1.500 service stations and several Refineries in the US has done exactly the same but with a twist. Last winter Citgo sold cheap heating oil to customers in the US North East and even the company president was on hand to help with the delivery. The Iranian Oil Ministry is considering the proposal but cautioned parliamentary approval is needed for any cuts in the price of crude exports. Ahmadinejad is getting desperate and slightly off the beaten track if he wants to follow Chavez. Or maybe Iran wants to sell cheap oil to the US? 9/8 Oil - Statistics from the USA DOE - API 14.30 GMT Crude - 1.1 mmbls (API + 5.65 mmbls) Gasoline - 3.2 mmbls (API - 3.14 mmbls) Distillates - 0.2 mmbls (API + 0.05 mmbls) Crude Import 10.2 mmbopd Gasoline Imports 1.2 mmbopd Refineries 91.6% + 0.8% Gasoline Demand 9.6 mmbopd Distillate Demand 4.1 mmbopd Total Petroleum Inventories - 2.0 mmbls Well well Gasoline should put a few cats amongst the pidgeons.. Gasoline production increased to 9.2 mbopd and hence part of the draw on stocks. Refiners picked up a smidgen. A word of caution is that over the summer period Refinery Output has been way below normal and both Crude and Gasoline Imports have been mediocre. Yet Crude storage is 10% above the average. The one to watch, on the back of Prudhoe Bay is PADD V ie the storage numbers for California, Washington, Oregon, Alaska and Hawaii. Last week they fell 1.7 mmbls, this then before Prudhoe Bay. The API numbers are in the same region as the DOE except for Crude but this does a have lot to do with Crude in transit and loadings so next weeks DOE stats for Crude could show an increase. Over time if you split the difference between the two reporting entities you usually get a fair assessment of the situation. 9/8 USA - BP´s Atlantis Field - Green Canyon Block 787 The worlds largest semi-submersible platform left Ingleside, Texas for the Atlantis field in the US Gulf of Mexico yesterday. Production when online next year is expected to be 0.2 mmbopd of oil, 4% of US production and 180 million cubic feet of gas. More than 18 wells can be drilled from this behemoth.. 9/8 Dacke Group Nordic - DACKB:NM I can only reitirate, Accumulate... 9/8 USA - ETF - United States Oil Fund USO Price is dropping and the volume ain´t great.. Short trigger as Geopoliticals are the driving force. 9/8 Oil - The Market It´s surprising that 0.7 mmbopd is taken off the market in Nigeria and 0.4 mmbopd in Alaska and spare capacity can easily be found to counterbalance this. War is raging on a still small scale in the Middle East, Iran is being Iran and calling for all sorts of madness including "oil as a weapon". There are serious rumours flowing around the oil patch that war, of a larger variety is brewing come September or December with Iran and Syria as the main players along side with the US and Israel. And oil is till not at a $100? 9/8 USA - Prudhoe Bay - SPR Part 2 Nigeria has 0.7 mmbopd of Shells oil locked in due to hostilities and now BP´s Prudhoe Bay puts another 0.4 mmbopd of the market. Nigerias Crude is Sweet and BP´s is Sour and in this Saudiarabia with today at least 2.0 mmbopd in spare capacity could well fill BP´s shortfall... A boon for the kingdom and pretty much anyone else producing sour Crude. Net effect probably not much difference for the market as a whole. And the SPR deal I see as being off the table. Easier and more sensible to just import the balance and in this Mexico have also stepped up to the plate to do it´s share... 8/8 Lundin Petroleum LUPE:SAX - The Share Price As with most overreactions once they are over things go back to pretty much as they were before... As should happen in the case of this oiler. Eight days until the Report.. Look for happier faces.. 8/8 Oil - Statistics from the USA DOE - API 9/8 14.30 GMT I expect, Crude + 1.0 mmbls Gasoline - 1.0 mmbls Distillates + 1.5 mmbls Natural Gas - 25 bcf Crude Import 10.9 mmbopd Gasoline Imports 1.4 mmbopd Refineries 91.5% Gasoline Demand 9.6 mmbopd Distillate Demand 4.1 mmbopd Total Petroleum Inventories + 4.0 mmbls Crude storage is about 10% above the five year average, Gasoline storage is 1% above the same.. So Gasoline stocks are comfortable and Gasoline demand should start to wane after Labor Day. As I am expecting a rise in both Imports and Refining I am out on a limb... yet. An important number is the Gasoline Imports. 8/8 USA - Prudhoe Bay - SPR Chances are that not just the tested part of the pipeline is corroded and that means extensive work-overs. As it stands right now BP are set to replace 75% of pipe along the 35 kilometer pipeline, work that can take months.. In this Energy Secretary Samuel Bodman has offered to release oil from the SPR which today holds about 688 mmbls in storage. On top of this it should be noted that large refiners usually hold about 30 to 50 days in storage so there is a level of short term covering for the shut in of BP´s Prudhoe Bay operations yet this is only going to push the problem further forward. The US West Coast refiners can operate at normal pace for about a month at todays levels without further disruptions. It´s the West Coast that is most directly affected by the shut in.. Which is said to last until January 2007.. 4/8 Iran - Petroleum Imports Big Problems President Mahmoud Ahmadinejad intends to use Irans foreign currency reserves to pay for fuel imports. The government, in response to parliament's reduced budget for gasoline imports, plans to stop importing fuel on Sept 23 and enact rationing. "A bill to withdraw a sum of $4 billion to $4.5 billion from the Oil Stabilization Fund will be submitted to parliament for importing gasoline and diesel in the coming days," according to parliament's Energy Committee chairman Kamal Daneshyar. Iran, which lacks refinery capacity, imports about 40 percent of the 70 million litres of daily gasoline consumption. The Central Bank has warned against using Iran's foreign reserves to pay for gasoline imports, saying this would increase the current inflation rate of 12.1 percent. Ofcourse Mahmoud Ahmadinejad need´s a little war to distract people from the real problems in Iran.. 4/8 Iran - Petroleum Storage Capacity Increase - SPR Gholamhossein Nozari, the Managing Director of the National Iranian Oil Company (NIOC), has said that NIOC has prepared long-term plans to raise Iran’s total crude storage capacity to 30-35 million barrels. The immediate plans of the company, he added, were to raise total storage capacity to cover 10-15 days of exports. According to a recent NIOC announcement, storage capacity at Kharg Island, Iran’s biggest export terminal has increased to 12 million barrels, compared to 7 million barrels in 2000 NIOC plans to increase further the storage capacity at Kharg Island to 22 million barrels. Kharg island is a small island 55 km northwest of the port of Bushehr in northern Persian Gulf. The National Iranian Oil Company is implementing a plan aimed at building strategic crude storage capacity in major energy producing regions at a cost of more than one billion dollars. Six tanks with a total capacity of four million barrels will be build at Goureh, three tanks capable of storing three million barrels will be build at Omidiyeh, four tanks with a total capacity of about two million barrels will be constructed at Ahwaz, while another two tanks, each of 500,000 barrels capacity, will be build at Bahregansar and on Sirri Island. 4/8 Lundin Petroleum LUPE:SAX - Lowers Production Estimates The current daily production is about 30.000 boepd and will be about 40.000 boepd by years end. The problem is the UK operations that more or less stand for most of the production loss ie 6.000 boepd plus 1.450 boepd in Venezuela as the 12.5% share becomes 5%. Russia and Tunisia do not completely way up the loss in production but Tunisia is coming online faster than earlier expected and Russia well that´s another story. Further I should point out that the first stage production of 20.000 bopd in Tunisia is about 20% above what was initially expected... On the whole I feel the shares fall on Friday was an overreaction as the fundamentals ofcourse are altered but only slightly and production problems are the easy part to fix as the companys oil reserves are not affected by this. Lupe are usually conservative in their estimates and the profit warning must be seen in that light and also that the budget is set against an oil price well belows todays market level. As far as this news being unforeseen I would like to point to the 2006, Q3 Report from March 31.. "Production averaged approximately 32.6 mboepd for the quarter with a realised oil price in excess of USD 58.00 per barrel. Production during the quarter was negatively impacted by facilities issues on the Heather and Thistle platforms which reduced United Kingdom production." "Net production from the Broomfield (Lundin Petroleum Working Interest (WI) 55%) averaged 14,200 boepd during the period. Production was below expectation due to the underperformance of the North Terrace production well coupled with limitations on water injection capacity due to pump availability." "During the first quarter of 2006, Lundin Petroleum and its partners continued negotiations with the Venezuelan national oil company PDVSA Petróleo SA in connection with the conversion of the Colón Block Operating Services Agreement into a joint venture company form, with direct participation by PDVSA. The parties signed a Memorandum of Understanding during the first quarter which finalised certain of the outstanding issues related to this conversion. PDVSA has agreed to extend the period for exploration and production on the Colon Block from 2014 to 2025. This extension will allow investment in further exploration and development projects within the Colón Block which otherwise could not have been undertaken during the limited period of the Operating Services Agreement. Under the terms of the Memorandum of Understanding, Lundin Petroleum will hold a five percent interest in the joint venture company with the other partners being PDVSA and Lundin Petroleum’s current partners: Tecpetrol and Perenco. The final terms and conditions of the joint venture company remain subject to the further negotiations with PDVSA. These negotiations are expected to be completed during 2006." You´ve got to read the reports boys and girls... Do not forget that Lupes program of acquiring new blocks and operations continue.. So todays doom and gloom can quickly become something else. This is what it´s all about in the oil patch. You got to love it! 4/8 Methane Hydrates - The fuel of the future may be ice that burns I have written about this energy sorce many times before and as times roll on you are going to get more text on it. Check my earlier link to Digital Oil, if man can put a little rover that could on Mars it should be fairly simple to put one on the sea floor that can be a part of production. Technology... For some obscure reason many think that the world is going to run out of oil and all the huge energy companies are going to stand there with their pants down. This ain´t ofcourse so.. Methane Hydrates are a very real and abundant alternative... 4/8 Iran - August 22 "promising the world by August 22 is the light in the sky over the Aqsa Mosque" Iranian President Mahmoud Ahmadinejad is just crazy enough and also arguebly close enough to the thought of being a Martyr to turn this date into something more than it already is.. OK way out there on the scale of things yet history is full of simpler reasons. Also there is an ongoing power struggle in Iran amongst the Mullahs for the place atop of the 86.... 4/8 USA - Hurricane Season And Chris turns out to be a no show... August, September and October are still to come even if the experts don´t expect a 2005 repeat.. 3/8 Iran - Sells stored Oil Iran has managed to sell millions of barrels of oil it was storing at sea because of a lack of buyers, Royal Dutch Shell and India have taken most of it. Iran has sold 12 million barrels of heavy, high sulphur crude from its Soroush and Nowrouz Gulf oil field over the past two months. Industry experts had estimated Iran was storing around 20 million barrels - a quarter of the world's daily demand - on tankers. This then mostly oil that is best used for industrial and heating purposes. The crude must have been offered at a pretty hefty discount as refining margins for heavy, sour crude are poor as the crude is difficult to convert into transport fuels, much in demand during the summer driving season. 3/8 USA - Hurricane Season The latest storm, Chris.. And as it happens it was pretty much the last storm for the season. 3/8 Dacke Group Nordic - DACKB:NM Accumulate... 3/8 Lundin Petroleum LUPE:SAX - Sudan Yet again I say, sell the minority 24.5% stake in 5B and go do something better with the money. The situation in the Sudan ain´t going nowhere fast. 3/8 Oil - The Market Someone said $105 oil.. And no one is laughing. Lets look at the facts. Iraq is a war zone, Nigeria is producing 25% less than normal, Saudiarabia is storing unwanted Oil in tankers, Venezuela is being Venezuela, Iran is fighting a proxy war in Lebanon, Iran says it wants the bomb well maybe not but it wants the technology, OPEC has cut it´s output forecast, IEA it´s demand forecast... And oil is still only att $77... Add to this the Hurricane Season in the US, low refinery runs, everyone having a bad hair day, etc etc ad nauseum.. It´s all Risk Premium - it has nothing to do with the Fundamentals. Go figure the difference! OK you may want to check the dollar.... 2/8 Oil - Statistics from the USA DOE - API 14.30 GMT Crude - 1.8 mmbls (API + 6.7 mmbls) Gasoline - 0.1 mmbls (API + 1.5 mmbls) Distillates + 0.7 mmbls (API + 1.1 mmbls) Natural Gas + 19 bcf Crude Import 10.4 mmbopd Gasoline Imports 1.3 mmbopd Refineries 90.8% - 1.7% Gasoline Demand 9.6 mmbopd Distillate Demand 4.1 mmbopd Total Petroleum Inventories + 5.2 mmbls Yet again weak Refinery numbers... At the moment they are operating at about 4% below the norm. Again a huge difference between the DOE and API stats. 2/8 USA - Hurricane Season The latest storm, Chris.. 2/8 USA - ETF - United States Oil Fund USO 2/8 Middle East - Irans Proxy War with The West As the fighting goes on the "rest" of the world is calling for, wait for it - A New UN Resolution! As if 1559 and 1680 were not enough.. The US and UK and in this I should say Bush and Blair at least have the guts to call this one for what it is, one sovereign country protecting itself. It is sad to note that for all the talk and posturing not much has changed... Hezbollah are in this by media almost called freedom fighters.. Hezbollah is in this made up of fighters from Yemen, Sudan, Iran, Iraq, Lebanon, Afghanistan and pretty much any Islamic state in the region. Iran is up to it´s armpits in a proxy war with the West yet most don´t want to see that scenario. Mainly because it´s true and mainly because it is truly scary monsters... UN/Iran on August 22 coming up..! 2/8 Tenke Mining - TNK:TSE With elections held - of a sort, look for Gecamines to try to make sense out of the rubble that is the DRC´s mining industry. Tenke has been there all the while and is there still... 2/8 Oil - Statistics from the USA DOE - API 14.30 GMT I expect, Crude + 1.0 mmbls Gasoline - 1.8 mmbls Distillates + 1.0 mmbls Natural Gas + 30 bcf Crude Import 10.8 mmbopd Gasoline Imports 1.0 mmbopd Refineries 92.9% Gasoline Demand 9.6 mmbopd Distillate Demand 4.2 mmbopd Total Petroleum Inventories + 3.0 mmbls The stats do feel a bit off topic as Geopoliticals are running the show yet for the market they do matter, a great deal. If you peel away all the details the fact is that the US is still well supplied with Oil and more so with Natural Gas even if the build of late is below the average. Gasoline is ofcourse the one to watch and with Hurricane season about to kick into phase 2 any weakness will be amplified. 31/7 Lundin Petroleum LUPE:SAX - Block 06/94I Nam Con Son Basin, Vietnam Look for deals like this to continue to happen going forward.. 27/7 Ceyhan - Baku Oil Pipeline The inauguration of the Ceyhan - Baku oil pipeline, which links the Caspian sea to the Eastern Mediterranean, took place on the 13th of July. The pipeline totally bypasses the territory of the Russian Federation. It transits through the former Soviet republics of Azerbaijan and Georgia, firmly integrated into a military alliance with the US and NATO. Moreover, both Azerbaijan and Georgia have longstanding military cooperation agreements with Israel. In 2005, Georgian companies received some $24 million in military contracts funded out of US military assistance to Israel under the so called Foreign Military Financing program. Israel has a stake in the Azeri oil fields, from which it imports some 20% of its oil. The opening of the pipeline will substantially enhance Israeli oil imports from the Caspian sea basin. Israel a major re-exporter of Caspian Oil... Think on this awhile in the greater context of the ongoing military actions. 26/7 Oil - Statistics from the USA DOE - API 14.30 GMT Crude + 0.0 mmbls (API + 0.1 mmbls) Gasoline - 3.2 mmbls (API - 2.2 mmbls) Distillates + 0.8 mmbls (API - 0.2 mmbls) Crude Import 10.5 mmbopd Gasoline Imports 1.0 mmbopd Refineries 92.5% Gasoline Demand 9.6 mmbopd Distillate Demand 4.2 mmbopd Total Petroleum Inventories + 2.5 mmbls 26/7 Beach Petroleum - BPT:ASX - Cooper-Eromanga Oil Discovery Beach Petroleum calls a new oil discovery in the Cooper-Eromanga basin, South Australia. The Callawonga-1 well flowed 2400 bopd after the first drill stem test over an interval of 1340 metres to 1346 metres in the Namur sandstone. The rig is currently preparing to further evaluate the Namur sandstone and deeper objectives. Callawonga-1 tested an anticlinal structure in the east of PEL 92 with the Namur and Hutton sandstones as the primary objectives. Both sandstones are producing in the Christies oilfield, which is located about 7 km to the south south east. Cooper Energy said that the Namur sandstone may have reserves of about 1.0 mmbls while the Hutton may have about 0.7 mmbls. Partners in PEL 92 are Beach (75%) and Cooper (25%).. 26/7 Oil - Nigeria In the midst of the problems in the middle east it is easy to forget that 25% of Nigerias oil production has been shut-down since February, thats 0.5 mmbopd... This then mostly in Royal Dutch Shell operations. In fact today about 0.7 mmbopd are off-line and this for the High quality Nigerian crude that is a prime source of Sweet Crude import for US Refiners. The militant Movement for the Emancipation of the Niger Delta - MEND. In an email to Reuters this week, has threatened to extend its attacks, most of which took place in the western delta, to the eastern side as of mid August. "We are resuming an all out war on the eastern sector with an aim to wiping out fields there and the export terminals. This we hope to achieve before the end of August, "the MEND said. While the militants have usually provided accurate information about attacks they have carried out, they have also issued a number of precise threats that did not materialise. They said in March their attacks would cut a further 1 million bpd in oil output that month but that did not happen. They said in May they would attack Niger Delta state governors but they have also not carried out that threat. Yet here we are at 0.7 mmbopd taken from the market.. 26/7 Oil - Statistics from the USA DOE - API 14.30 GMT I expect, Crude + 0.5 mmbls Gasoline + 0.5 mmbls Distillates + 2.5 mmbls Natural Gas + 35 bcf Crude Import 10.5 mmbopd Gasoline Imports 1.2 mmbopd Refineries 92.5% Gasoline Demand 9.6 mmbopd Distillate Demand 4.1 mmbopd Total Petroleum Inventories + 3.5 mmbls Refineries and refineries and Gasoline are the ones to watch as several US refineries have been partially shut down during the last week or will see workovers going forward. This in the middle of the driving season. I still expect a small build in Gasoline this based on last weeks numbers but... 25/7 Lundin Petroleum LUPE:SAX - Valkyries Petroleum VPC:TSX - Deal is Done I said this one was in the bag... VALKYRIES SHAREHOLDERS APPROVE ACQUISITION BY LUNDIN PETROLEUM At the special meeting of its shareholders held July 25, 2006, Valkyries Petroleum Corp.'s shareholders approved the proposed acquisition of all of the shares of Valkyries by Lundin Petroleum AB. 57% of the total number of issued Valkyries shares were voted at the meeting; 99% of those shares were voted in favour of the transaction. Valkyries proposes to seek final court approval of the acquisition on July 27, 2006, and to close the transaction effective July 31, 2006. All other regulatory approvals, including the approval of the TSX Venture Exchange, which was conditional only upon shareholder approval, have been obtained. Pursuant to the acquisition of the Valkyries shares by Lundin, each Valkyries common share will be exchanged for one Lundin Petroleum share. Valkyries president and chief executive officer, Keith Hill, commented: "Management of Valkyries is grateful for the support and confidence of Valkyries shareholders that was demonstrated in today's vote. We look forward to working with the Lundin management team through the transition process to ensure that it is completed as seamlessly as possible." President and chief executive officer of Lundin Petroleum, Ashley Heppenstall, commented: "We now propose to grow the Russian business in Lundin Petroleum using the Valkyries assets and personnel as a platform, Lundin will pro-actively invest in the existing Valkyries assets and will pursue a pro-active investment strategy to increase production from those assets." 21/7 Oil - Next Week With the gepoliticals as they are a week is a long time yet I am going to stick with the assumption that next week will in part mirror this week. Which pretty much turned out as expected.. 20/7 Lundin Petroleum LUPE:SAX - Valkyries Petroleum VPC:TSX As I said right at the beginning this deal is done and the 25th sees the ink hit paper. Look for the new company to rather quickly reap the fruits of this merger... 19/7 Oil - Statistics from the USA DOE - API 14.30 GMT Crude + 0.2 mmbls (API - 1.0 mmbls) Gasoline + 1.5 mmbls (API + 1.3 mmbls) Distillates + 1.2 mmbls (API - 3.6 mmbls) Natural Gas + 59 bcf Crude Import 10.7 mmbopd Gasoline Imports 1.1 mmbopd Refineries 92.9% + 2.5% Gasoline Demand 9.6 mmbopd Distillate Demand 4.1 mmbopd Total Petroleum Inventories + 6.6 mmbls Refiners made up all of last weeks losses. And the build across the board was not a surprise. API´s distillate numbers may be down to the fact that they were very high last week. I did warn about the Imports and they are the main reason Crude is up and Gasoline came in at a build despite still below average refinery numbers. API Report: US demand for crude oil and petroleum products in June declined 2.9% from a year earlier, as lower demand for distillates, jet fuel and residual oil offset higher gasoline use. Petroleum deliveries in June, excluding exports, averaged 20.6 mmbpd, down 0.6 mmbpd from the same period a year ago. Deliveries, which are a good indicator of demand, are calculated by the API to reflect petroleum products moved from refineries and bulk storage to wholesale and retail suppliers. Gasoline consumption rose by 0.2 mmbpd, or 2.1%, to 9.6 mmbpd even as crude oil prices increased. US gasoline production hit a record of 9.2 mmbpd in June. Distillate fuel use, including diesel fuel and heating oil, fell 0.3% to 0.4 mmbpd in June. To meet federal clean air requirements that took effect on 1 June, refineries and importers have to produce or import enough of the new low sulfur diesel to meet 80% of highway diesel fuel demand. At the end of June refiners were producing more than 2.0 mmbpd of ultra low sulfur diesel. Jet fuel demand fell 4.8% to 1.6 mmbpd and residual use dropped 15.1% to 0.7 mmbpd as cheaper natural gas made it affordable for industrial and utility users to switch fuels. High pump prices have encouraged gasoline imports, which hit a record 1.26 mmbpd for the first half of 2006, up 18.8% from a year ago. 19/7 Greenland - New Oil Concessions Greenland opened a new round of concessions Tuesday for exploration licenses in the Arctic region. Oil exploration off west Greenland started in the 1970s but stopped after five failed drillings. Activities resumed in 2001 off Nuuk, the Greenland capital. Canadian company EnCana ECA:TSX, ECA:NYSE last year became the first company to win a license for offshore oil and gas exploration off Nuuk. In 2008, Calgary, Alberta based EnCana is expected to start drilling in an area it believes has reserves ranging from 400 million to 1.2 billion barrels of oil. Government officials have declined to say which companies are tending and what conditions the Greenland government would put forth for exploration in Disko Bay, the area being opened for the current round of concessions. "All I can say is that the top 15 biggest in North America and Europe are here," said Joern Skov Nielsen, manager of Greenland's Bureau of Minerals and Petroleum. The deadline for bids is December 15. 19/7 Israel - Lebanon - UNIFIL I find it interesting that a lot of folk are calling for the UN to intervene in the conflict between Israel and Lebanon or rather foreign forces in Lebanon ie Hezbollah. UNIFIL has been "guarding" the border since 1978... With the mandate; According to Security Council resolutions 425 (1978) and 426 (1978) of 19 March 1978, UNIFIL was established to: * Confirm the withdrawal of Israeli forces from southern Lebanon; * Restore international peace and security; * Assist the Government of Lebanon in ensuring the return of its effective authority in the area. Most recently the mandate of UNIFIL was extended until 31 July 2006 by Security Council resolution 1655 (2006) of 31 January 2006. The UN really is a limp biscuit... Yet note the extension date expiration 31 July, 2006.... The US and UK could in this put real pressure on the UN to actually make UNIFIL a force to be recond with ie instead of being casual observers on a nice Mediterranean military holiday. 19/7 USA - ETF - United States Oil Fund USO OK so I was 13 cents off the rebound floor.. Yet I do not look for more upturn right now. US stats and Geopoliticals.. As I have stated a tricky market to trade. 19/7 Oil - Statistics from the USA DOE - API 14.30 GMT I expect, Crude + 2.0 mmbls Gasoline - 1.5 mmbls Distillates + 2.5 mmbls Natural Gas + 69 bcf Crude Import 9.9 mmbopd Gasoline Imports 1.4 mmbopd Refineries 91.8% Gasoline Demand 9.6 mmbopd Distillate Demand 4.1 mmbopd Total Petroleum Inventories - 1.0 mmbls US Natural Gas inventories are currently at 2.704 trillion cubic feet, 19% above last year and 27% above the five year average. When it comes to Crude the question is were last weeks numbers credible... I initially had a - 1.0 mmbls estimate for Crude and that was due to a momentary lapse of reason, it is now as it stands. The reason simple off-loading mechanics where oil in tankers and on the way to storage does not show up in the stats. I would therefore not be surprised to see a larger than build in Crude and Imports. 18/7 China - Economic Growth In the three months ending in June, China's economy expanded 11.3% compared to the same period a year earlier, according to the National Bureau of Statistics. The rate of expansion was faster than the first quarter, where the economy grew at 10.3% from a year earlier. Economists had expected second quarter growth of 10.4%. For the first half of the year, the economy grew at 10.9% to 9.14 trillion yuan, a rate that was 0.9% faster than a year ago. Lending and deposit rates should keep going up further after these statistics... 18/7 Merrill Lynch - Global Economic Survey More fund managers than ever expect the global economy to weaken over the next year, according to a survey of global fund managers conducted by Merrill Lynch. A net 60% of institutional investors see the global economy weakening, the most negative reading in the survey's history. This reading marks a sharp decline from April, when only 5% of respondents expected the economy to weaken. Fund managers blamed rising energy prices and a lagged effect from higher interest rates for the change of heart, the survey of 213 participants said. "This survey is so grim it could constitute a contrarian signal," says Merrill Lynch's David Bowers. He said that high cash levels, high risk aversion and extreme pessimism about growth could produce a stock market rally if there is "the merest pinch of good news." The survey also showed that, although growth's expected to slow, the percentage of respondents saying that they believe a recession will occur over the next year has remained fairly constant at about 6%. As might be expected, gloom about the macroeconomic outlook has also hurt corporate-profit expectations, the survey said. Some 44% of fund managers expect profits to deteriorate over the coming year, with two-thirds of managers believing it unlikely that corporations will produce double-digit earnings growth in the period. Last month, about 34% said that they believe profits will deteriorate, while 14% believed that it was unlikely companies would show double-digit earnings. The outlook for corporate profits is most favorable in Europe, according to the fund managers surveyed, with a net 20% holding this view, up from 18% a month ago. Europe is also still the most undervalued equity market, according to a net 20% of respondents."What is also striking this month is the extent to which allocators have closed their underweight stance on U.K. and U.S. equities, a move consistent with a more defensive market stance," the survey said. On the whole, global equity markets are still undervalued, the managers believe, with a net 17% holding this view compared to 15% in June. A net 27% said that they were taking lower-than-normal risks with their investment strategies or portfolios, compared to their benchmarks, up from 23% in June. In parallel with decreasing risk aversion, a net 31% of institutional investors are now overweighted in cash, up from 29% a month ago and from 10% in April. The Merrill survey said that this is the second highest reading for this position in five years. 18/7 G8 and the rest Interesting is the silence from the G8 on the ongoing crisis in the Middle East, and more so is the tacid support for the view that Hezbollah is to blame for most of the happenings. This then a feeling shared by Saudiarabia, Jordan and Egypt. Think on this awhile! 18/7 USA - ETF - United States Oil Fund USO Good volume again, to the down side.. $70 is a turnaround level. 18/7 President Bush on Hezbollah "See the irony is that what they need to do is get Syria to get Hezbollah to stop doing this shit and it's over." This said when microphones were still on.. I do feel that the world might be an easier place to live in if clear speak was used more often... 18/7 Refineries BP has begun preparations to restart the second of two crude units at its 0.5 mmbpd refinery in Texas. Venezuela's 0.65 mmbpd Amuay refinery is closed down following a fire at a distillation unit. 18/7 IEA The International Energy Agency chief Claude Mandil told reporters on Monday that the world does not need more oil but rather the capacity to do something with it. The world is well supplied with oil but the problem is that refining capacity is sadly lacking. Now for anyone who has read this site for awhile this is what I have been saying for a very long time. There is enough oil in the world! Claude Mandil - "We don't need more oil. We need more investment in capacity" 18/7 Dacke Group Nordic - DACKB:NM Accumulate this one... Things are going to happen. 17/7 OPEC - Lower Oil Demand Oil demand growth should slow in 2007 due to lower economic growth and continued refinery bottlenecks, according to OPEC´s monthly oil report. World oil demand growth is seen rising 1.4 mmboepd a day in 2006, and by 1.3 mmboepd in 2007. The oil cartel said the crude demanded from it will be around 0.6 mmbopd lower than last year. 17/7 Methane Hydrates I have posted earlier about this energy source. The amount of carbon bound in gas hydrates is conservatively estimated to total two times the amount of carbon to be found in all known fossil fuels on Earth.. Watch this space. 16/7 Oil - This Week With the military actions escalating in Lebanon the contracts will ofcourse reflect this yet I do not belive that they will go much further unless Syria and Iran are brought to the front in the conflict. Supply of oil and shipment of oil has not been disrupted and most likelly will not be as I have stated earlier, it would be too costly. Iran does not have the economic legs to involve itself in any form of pulling it´s oil off the market. Syria is in this a byline as it does not have enough production today to matter at all. I can see the oil price back off somewhat as every day that goes by the crisis becomes more and more routine for the marketplace, just a simple fact. The correlation between the oil price and oil share prices has decoupled again as the risk-premium is soo high. Unless there is a grave escalation of Irans "Gaza/Lebanon Proxy War", I see this week as fairly neutral for both the contracts and shares. Yet in five minutes the above analysis could be out the geopolitical window... Yet I think not. One caveat would be that the US Crude stats were not an aberration and actually showed a further decline in inventories, yet I think not. 15/7 Israel - Lebanon - Syria - Iran I would encourage anyone who feels the need to know more to study UN Resolutions 1559 and 1680 for a clue to what is some of the basis to what is going on... And why there is such a silence from the world community, UN and all.. 15/7 Canada - Oil Sands - Supply the USA The US imported 205 mmbls of crude oil and petroleum products from Canada in Q1 of 2006, up 10% from 187 mmbls in the same period 2005. Canada's share of total US oil imports for that period rose to 17% from 16%. Which more or less offsets all of a decline in US oil imports from the Persian Gulf countries which shrunk to 15% from 18% over the period. This makes Canada for the first time a more important supplier of oil to US markets than the Middle East. Look in this for US companies to become ever more interested in the Canadian Oil Shale patch. The Chinese sure are... I have posted this list before of the major sources for US imported Crude: CANADA 1.8 mmbopd MEXICO 1.7 mmbopd VENEZUELA 1.5 mmbopd SAUDI ARABIA 1.3 mmbopd NIGERIA 1.1 mmbopd IRAQ 0.5 mmbopd ANGOLA 0.4 mmbopd ECUADOR 0.4 mmbopd ALGERIA 0.2 mmbopd COLOMBIA 0.2 mmbopd TRINIDAD AND TOBAGO 0.1 mmbopd EQUATORIAL GUINEA 0.1 mmbopd CHAD 0.1 mmbopd KUWAIT 0.1 mmbopd NORWAY 0.07 mmbopd IRAN 0.00 mmbopd 14/7 USA - ETF - United States Oil Fund USO Huge volume, highest so far with 1.626.000 contracts traded. Early after hours trade is up further just under $74.. 14/7 Israel - Lebanon - Gaza - Syria - Iran This fight has been brewing for some time as Hezbollah with 23 seats in the Lebanese parliament has been losing support but is still seen as the guards in the towers on the Lebanese southern border. Hamas is also losing support as little if anything they promised before the election has materialised. So what do the two organisations do? Act by kidnapping Israeli soldiers. Eagerly supported by Iran and Syria with Iran having the most axes to grind with well pretty much anyone but ofcourse the US primarily. So what for the oil-patch? Well I do not see a repeat of the 70´s with embargos etc, simply because it would cost too much. However the Oil Price will keep going up and it is already in the sillysphere yet there you are such is the political commodity - Oil. The only way oil can effectivly be touched by the ongoing military actions is if Iran or Syria should be brought in on the front line of this situation. Today oil supply or shipment is not affected at all. Yet it is the fear that it could be that is driving the contracts and as such the psychological mind-set of the market is in this all important. A tricky market to trade, profitable but tricky. Yet the smart money waits for the dust to settle as the current oil price really is in the - Sillysphere.. 13/7 Oil new ATH I would be very weary in buying into this market as the contracts are all risk driven ie Israel-Lebanon-Gaza ie Iran and Syrias little proxy war... Very short trades is the name of the game and as I have stated before close all positions before the bell if not sooner. 13/7 Iran "A gift of God for the Iranian people", this is how Ayatollah Khomeini described oil, and in Iran, a litre of fuel still costs less than a litre of drinking water, eight euro cents. Fuel is not only tax free, it is subsidized by the state, this scenario generates border trafficking and allows many Iranians to own a car and to be "private" taxi drivers in the absence of efficient means of public transport. Iran lays claim to independence in the entire production cycle of nuclear energy, but it is incapable of refining its own oil, 30 out of 70 million litres consumed per day must be imported. Each litre that is reimported costs the Iranian state 40 euro cents per litre, 20% more than in 2005. Due to price increases, the $2.5 billion dollars allocated by the annual budget to these imports will only last until mid August. On the other hand, oil price hikes, fuelled by instability and by Iranian provocations, should lead to gains of $54 billion dollars for Iran this year. This automatic income will certainly help to finance many things in Iran, but it will also weaken the economy and feed inflation. Oil production, increasingly expensive on the market, is becoming more and more costly and difficult. In the Iranian GDP, oil is no longer a motor of economic growth, only growing +0.6% last year, to +5.4% of the Iranian GDP. Iranian oil production is decreasing. In this scenario, Iran’s domestic "free" petrol policy is irrational, especially considering that 250,000 litres are wasted by gas station clerks alone! In Iran, cars, mostly very old and not catalyzed, have a very high consumption and they create huge ecological problems. Nearly 10,000 people die in Teheran each year because of air pollution. For Iran, the badly managed manna of oil is not only a curse for the economy in the medium term, it is one of the roots of a human and social problems. Irans problems are huge and are littled helped by it´s own actions... 13/7 WTI Front Month - A FishNet® Perspective - Daily 12/7 Oil - Statistics from the USA DOE - API 14.30 GMT Crude - 6.0 mmbls (API - 3.0 mmbls) Gasoline - 0.4 mmbls (API + 1.4 mmbls) Distillates + 2.6 mmbls (API + 4.3 mmbls) Natural Gas + 89 bcf Crude Import 9.6 mmbopd Gasoline Imports 1.1 mmbopd Refineries 90.5% - 2.6%! Gasoline Demand 9.6 mmbopd Distillate Demand 4.1 mmbopd Total Petroleum Inventories - 1.9 mmbls SPR´s 687.8 mmbls - 0.8 mmbls These stats will put a cat amongst the etc.. Way off on pretty much all the numbers. The thing to remember is that most stocks are at above the average level. The Crude numbers is all down to the low import number. That Gasoline only showed a small decline despite the very sad Refinery numbers should be a thing to keep an eye on. With Gasoline demand in the higher 9 mmbopd´s and inventories still around last years level - a warning. Look for Crude numbers next week to take back a great deal of the fall in this week´s stats. The API figures make more sense and are probable closer to the truth.. 12/7 Oil - Statistics from the USA DOE - API 14.30 GMT I expect, Crude + 1.0 mmbls Gasoline + 0.5 mmbls Distillates + 1.5 mmbls Natural Gas + 80 bcf Crude Import 10.8 mmbopd Gasoline Imports 1.4 mmbopd Refineries 93.5% Gasoline Demand 9.6 mmbopd Distillate Demand 4.1 mmbopd Total Petroleum Inventories + 0.5 mmbls The 4th of July weekend shows up in this weeks stats and as such, look for surprise numbers for both Gasoline and demand. Demand has been as high as 9.8 mmbopd during the last few weeks and June saw a top of 9.7 mmbopd. 9/7 USA - ETF - United States Oil Fund USO Take heed.. Monday is set for a pull-back. 8/7 White Nile WNL:LSE - Sudan 7/7 Hardman Resources Ltd HDR:ASX HNR:LSE - Uganda Just check it out.. Especially Waraga 1. 7/7 Iraq - A huge Opportunity Three years later on after the fall of Saddam most if not all major oilers are still not in country, and those who are like Norway's DNO, Canada's Heritage Oil and Britain's Sterling Energy are relative minows. DNO did rather well in the north *G*. It is the north that is the target. In Iraq's peaceful north, the trio of foreign oil companies have begun classic wildcat exploration, hoping a gusher of black gold will bring them untold wealth. But the companies are just minows in the industry something that's unlikely to change until security improves. And the deals they have cut with the Kurdish regional administration bypassing the central government leaves them in a murky legal situation. Yet they are there!!.... And in this there is a great opportunity for those who are willing to take the risk, security concerns etc aside. 7/7 Israel - Oil Shale A new technique for extracting oil from shale... 6/7 Oil - Statistics from the USA DOE - API 14.30 GMT Crude - 2.4 mmbls (API - 2.6 mmbls) Gasoline + 0.7 mmbls (API - 0.8 mmbls) Distillates + 1.0 mmbls (API + 2.6 mmbls) Crude Import 10.5 mmbopd Gasoline Imports 1.3 mmbopd Refineries 93.1% - 0.7% Gasoline Demand 9.5 mmbopd Distillate Demand 4.1 mmbopd Total Petroleum Inventories + 0.3 mmbls The important numbers are that Gasoline broke the negative trend yet Refiners declined and are below the average level for this time of year. On the whole a neutral report. 6/7 Oil Price - Share Price Why, you may ask is not the price of my oil share increasing? WTI is at ATH.. Why are my shares way below the level they were at the last time oil saw an ATH? The explanation is very simple and that is that the risk-premium in the contracts are today so high that it creates a level of fear in the market. A too high oil price relative to the fundamentals sooner or later puts a ceiling on the oil shares price level. The positive part of this equation is though that share prices more reflect the fundamental levels for the contracts. If you are buying an oiler today and belive that the price of oil factored into the share price is $70 plus, well then you are doing the right thing for the wrong reason. Most oil shares today are based on an oil price closer to $50-55, perhaps $60 in some cases. This then true for most Nordic Oil stocks yet not so much for the US... 6/7 Lundin Petroleum LUPE:SAX - Tunisia - Oudna 1 - Production start It should be pointed out that the first stage production at 20.000 bopd is about 20% above what was initially expected. That in itself says a great deal. The one small negative in this is the ETAP option, a 20% farm in. As it stands today it´s 50 - 50 deal with Lundin being the operator. Further I would like to stress the fact that Lundin in this venture is partner with Sinopec, Chinas largest state owned oil company... See the larger picture.. 6/7 White Nile WNL:LSE - Sudan Enough said. 6/7 Oil - Statistics from the USA DOE - API 14.30 GMT I expect, Crude - 1.5 mmbls Gasoline - 1.0 mmbls Distillates + 2.5 mmbls Natural Gas + 80 bcf Crude Import 10.9 mmbopd Gasoline Imports 1.4 mmbopd Refineries 94.0% Gasoline Demand 9.5 mmbopd Distillate Demand 4.0 mmbopd Total Petroleum Inventories + 1.5 mmbls It´s all about Gasoline. 5/7 USA - ETF - United States Oil Fund USO 28/6 Ever cautious I would keep an eye on the after 1 o´clock trade... There is just simply too much risk-premium in the contracts today. Korea, Iran-EU talks on hold... The chance for a pull-back is there. 5/7 Lundin Petroleum LUPE:SAX - Tunisia - Oudna 1 - Production start 20.000 bopd should be the daily production in the first stage. Production start, soon... The Oudna 1 well, which was drilled in 1978, tested Sweet Crude with 41 degrees API oil in two intervals of the Miocene lower Birsa sandstone at a cumulative rate of 7,000 bopd and proved an oil-down-to of 1638 metres subsea. Oil will be produced using a 7” down hole Jet Pump. At least that is the last reported technicals. 4/7 Cairn Energy PLC UK - CNE:LSE - India & Bangladesh Has started an exploration and production enhancing drill program in Sangu gas field, Block 16 off Bangladesh.. The International Finance Corp., the private-sector arm of the World Bank, has signed a $150 million loan agreement with Cairn Energy to help alleviate India and Bangladesh's energy shortage. In a statement, IFC said: "IFC's nine-year term-loan and IFC's social and environmental due diligence have given a group of international commercial banks assurance to provide $850 million in additional five-year term funding. The total $1-billion loan will finance Cairn's capital expenditure program, primarily the development of its recent discoveries in India's northwestern state of Rajasthan. Cairn has a 70% stake in the Rajasthan oil exploration fields - Mangala, Aishwariya, Saraswati and Raageshwari located in the RJ-ON-90/1 block. Cairn is the block's operator. With a target peak production of around 150,000 barrels per day, the Rajasthan development will equal around 25% of India's current oil production and about 8% of its current oil imports. 4/7 Pearl Exploration PXX:V A company within the Lundin sphere, actually shares office space and directors with Tanganyika Oil. Texas is the big one... 4/7 White Nile WNL:LSE - Sudan This graph should look a lot more perky going forward.. 4/7 USA - 4th of July Have a good one!... 3/7 Iraq - Oil Export Iraqs oil export stod at about 1.6 mmbopd in June, this then set in comparison to Irans daily export level of 2.5 mmbopd... Iraq´s oil output and export is not part of the OPEC numbers. Interesting scenarios arise from this as if Iran cuts it´s $60 billion a year export due to the nuclear mess. A large part of this can be picked up by Iraq... Note that Iraq is exporting the bulk of its crude from southern oil fields, but Northen Kirkuk Crude is picking up speed and just under 8 mmbls have been sold over the last 10 days. 30/6 Oil - Contracts & Stocks Close all trading positions before the bell, if you have not already done so. 30/6 Valkyries - Broken Links Apparently several of the links below to the documentation were faulty. This has been fixed. The same documents can ofcourse be found at 30/6 Japan - Oil - Russia Japan is today 90% dependent on oil from the Middle East, this is about to change as it is now going to start importing oil directly from Russia. In the process a new pricing structure is about to emerge with a new benchmark - North Asian Crude. Today Dubai and Oman crude oil are used to set prices in Asia. 29/6 USA - FOMC 25 points and a clear hint the rate rise cycle may be over for this time. In it´s statement the FOMC changed the wording from May 10th to "growth is moderating" from "growth could be moderating". Go figure Fedspeak but it does sound like 5.25% is the level going forward. 29/6 Valkyries Petroleum VPC:TSX - SPECIAL MEETING OF SHAREHOLDERS Relevant documentation for the special meeting at 1200 pm 25th day of July, 2006. The Management Circular is 340 pages plus ie it may take time to load. 29/6 Dacke Group Nordic - DACKB:NMG This one is well worth a good look... It´s not an oiler but some of us have put cash into it anyway for awhile now.. For instance the Lundin family have increased their ownership to 6% of outstanding shares. Dacke Group Nordic is an investment company specialised in acquiring and developing companies within the marketing communication industry in the New Nordic Countries. The company is listed on First North (previously called the Nya Marknaden) at the OM Stockholm Stock Exchange and will apply for a listing on the OMX Nordic list (equivalent to today’s O list at the OM Stockholm Stock Exchange). The Group’s business is divided into four business areas; Interactive Communication, Advertising & Branding, Research & Analysis as well as Meetings & Events. Today, the following companies are part of the Group; 24 HR, Byrån 1&2, Dimant, Frank Kommunikation, Hansen Conference & Event, Hermelin Nordic Research, Relevant Information, Softcom Customer Care, United Power and Venture Communication. All companies are 100 per cent owned by Dacke Group Nordic. The ambition is to continue the expansion by means of acquisitions and to invest further within the marketing communication industry. 29/6 Beach Petroleum - BPT:ASX The company is set to drill 69 exploration and appraisal wells in 2006/2007. This all part of a programme that is budgeted to more than AUS$100 million. 29/6 OPEC - Saudi Arabia Saudi Arabia cannot sell some of its crude oil production due to a lack of buying interest from oil refiners. The kingdom has 300,000 to 400,000 barrels per day that is going unsold because there are no buyers. Saudi Arabia has said it will sell as much oil as buyers want in order to bring prices down from their current levels but Saudi crude oil production dipped to just over 9 million barrels per day in May/June of this year amid a lack of buying interest. The kingdom is currently storing unsold oil in tankers. The crude is on tankers and it is going around the world hoping to find a customer, the kingdom is prepared to keep storing the oil on tankers until a buyer can be found. I have earlier speculated that Saudi Arabia has been storing crude oil in tankers. Crude oil storage capacity in many parts of the world is tight as consumers, weary of further price increases, are keeping stocks high. As I have pointed out several times. Saudi Second Deputy Premier and Minister of Energy and Industry H E Abdulla bin Hamad Al Attiyah has recently remarked that a lack of heavy crude oil refining capacity worldwide was making it difficult for Opec to sell all of its production, although he added the group should not alter its production policies until oil prices fall to $50 per barrel. Opec members have attributed the rise in oil prices in 2006 to factors beyond their control, such as worries over the security of oil supplies due to political unrest in major oil exporters and the consequences of years of underinvestment in oil refining capacity. Saudi Arabia is the most compelling proof yet that record high prices are divorced from the realities of supply and demand. The world's biggest crude exporter dared to make a huge cut in its production through the second quarter but growing demand for oil was still satisfied. From July 2004 to March 2006 the kingdom had been pumping well in excess of 9 million barrels per day, in part to keep the world's top two consumers the United States and China supplied. In that time global oil stocks have risen to their highest in 20 years and US stocks are at an 8 year high, persuasive evidence that inventories have become a more reliable indicator of whether producers are pumping too much or too little. As I have pointed to earlier the International Energy Agency recently reported that OECD countries have enough crude oil in reserve today to keep their refineries running for 30 days – well above the norm. Crude oil stocks are in this still rising. There is in this absolutely no relationship between price and supply and demand and crude oil today is worth no more than $50 a barrel based on fundamentals. The oil price is determined by the multi-billion dollar market that brings together oil companies, traders, investment and hedge funds. Opec for it´s part argues in this that it is the market that has pushed oil from $20 at the start of 2002 to above $70 today. Disruption to exports from Nigeria and Iraq, tensions over Iran and the sudden knowledge that oil will eventually run out have ofcourse all contributed to the rally. Yet the fact is that the world is today more than well supplied with oil. 29/6 USA - FOMC A 50 point hike would not surprise. The 25 point up-tick is already in the bag. 29/6 OECD - Crude Oil Inventories - 20 year high OECD crude oil reserves are 1.005 billion barrels, 58 mmbls above the 2005 level. This then at a 20 year high which means that refiners can run for 30 days without new stock being added. This is then well above the historical average. In comparison US inventories of Crude are at a 8 year high where refiners can run for 160 days without new crude deliveries. Saudi Arabia produced 9 mmbopd in May/June in this well below the 11.5 mmbopd capacity. The world is well stocked with Crude and the inventory levels are rising fast. Even so VLCC bookings from the kingdom to the US for July are the highest since 2004 at 18.5 mmbls. This in a market where no one really is asking for more oil and the OPEC decision in March of 2005 in Isfahan to build global supplies has more then well been met. 29/6 USA - ETF - United States Oil Fund USO 28/6 Note the volume.. 28/6 Lundin Petroleum LUPE:SAX - Tunisia - Oudna 1 140 days and counting... 28/6 Oil - Statistics from the USA DOE - API 14.30 GMT Crude - 3.4 mmbls (API - 1.5 mmbls) Gasoline - 1.0 mmbls (API - 1.6 mmbls) Distillates + 1.8 mmbls (API + 3.2 mmbls) Natural Gas + 66 bcf Crude Import 10.5 mmbopd Gasoline Imports 1.0 mmbopd Refineries 93.8% + 0.5% Gasoline Demand 9.4 mmbopd Distillate Demand 4.1 mmbopd Total Petroleum Inventories + 0.6 mmbls I said that the Crude and Gasoline numbers could surprise.. Otherwise much as expected. The large decrease for Crude is all down to the 0.5 mmbopd import drop. Note in this that two of the refineries in the Gulf impacted by the oil spill have asked for and been granted loans from the SPR. The pick-up in refinery output will start to show up first next week. The lower than expected Total Inventories is in part due to the RBOB conversion. 28/6 White Nile WNL:LSE - Sudan Production in the Thar Jaht field has started this month at a rate of 20 000 bpd, estimated to gradually rise to 60 000 bpd by the end of the year. The production of oil was made in accordance with the operation agreement the joint-venture had concluded for oil drilling and production at blocks 5A, 5B, and 8. Involved in these operations are the Indian Oil Company, Sudapet, and the Malaysian company Petronas. White Nile Oil Company was established in Mauritius as an international company in July 2001, with a branch established in Sudan in 2002. 28/6 USA - ETF - United States Oil Fund USO 27/6 28/6 World Proven Gas & Oil Reserves North America 1984 10.51 Tcm 101.1 bbls South and Latin America 1984 3.23 Tcm 36.3 bbls Europe and Eurasia 1984 42.02 Tcm 96.7 bbls Middle East 1984 27.40 Tcm 430.8 bbls Africa 1984 6.22 Tcm 57.8 bbls Asia Pacific 1984 7.02 Tcm 38.1 bbls World Total 1984 93.89 Tcm 761.6 bbls North America 1994 8.42 Tcm 89.9 bbls South and Latin America 1994 5.83 Tcm 81.5 bbls Europe and Eurasia 1994 63.87 Tcm 80.3 bbls Middle East 1994 45.56 Tcm 661.7 bbls Africa 1994 9.31 Tcm 65.0 bbls Asia Pacific 1994 10.07 Tcm 39.2 bbls World Total 1994 142.89 Tcm 1017.5 bbls North America 2004 7.32 Tcm 61.0 bbls South and Latin America 2004 7.19 Tcm 101.2 bbls Europe and Eurasia 2004 64.02 Tcm 139.2 bbls Middle East 2004 72.83 Tcm 733.9 bbls Africa 2004 14.06 Tcm 112.2 bbls Asia Pacific 2004 14.21 Tcm 41.1 bbls World Total 2004 179.53 Tcm 1188.6 bbls North America 2005 7.46 Tcm 59.5 bbls South and Latin America 2005 7.02 Tcm 103.5 bbls Europe and Eurasia 2005 64.01 Tcm 140.5 bbls Middle East 2005 72.13 Tcm 742.7 bbls Africa 2005 14.39 Tcm 114.3 bbls Asia Pacific 2005 14.84 Tcm 40.2 bbls World Total 2005 179.83 Tcm 1200.7 bbls 27/6 Great Artesian Oil & Gas Limited GOG:ASX Check this one out. Paprika-1 looks like a keeper... Beach Petroleum BPT:ASX owns a 20% share in GOG. 27/6 Oil - Statistics from the USA DOE - API 28/6 14.30 GMT I expect, Crude + 1.0 mmbls Gasoline + 0.5 mmbls Distillates + 1.5 mmbls Natural Gas + 65 bcf Crude Import 11.0 mmbopd Gasoline Imports 1.0 mmbopd Refineries 93.8% Gasoline Demand 9.4 mmbopd Distillate Demand 4.1 mmbopd Total Petroleum Inventories + 6.5 mmbls ConocoPhillips, Citgo Petroleum, Calcasieu Refining and Pelican Refining all have refineries that are partially closed down due to the effects of an oil spill caused by heavy rains. In this it should be noted that the close-downs are tiny in the amounts shut in. These will however not show up in this weeks numbers. Gasoline imports dropped last week and with 4th of July coming up things get interesting. I still look for a further build across the board and an uptick in refinery output. This week can give us all a surprise in the Crude and Gasoline numbers..