Oil and Gas Mining Companies News

Growth Rate of China's Industrial Profit Decreases

2009-01-04T08:50:00.001-08:00

From January to November, the total profit of China's industrial enterprises with annual sales of more than $724,600 reached $348.78 billion, an increase of 4.9 percent year over year but down 31.8 percentage points compared with the same period last year, the National Bureau of Statistics of China on December 26.

- State-owned and state-controlled firms: $115.72 billion, down 14.5%
- Collective-owned firms: $9.96 billion, up 29.5%
- Share-cooperative firms: $2.43 billion, up 19.2%
- Joint-stock firms: $195.17 billion, up 11.4%
- Foreign-funded firms: $92.38 billion, down 3.1%
- Private firms: $79.64 billion, up 36.6%

Taxes paid totaled $265.42 billion, up 20.7% year over year, and combined revenue totaled $6.37 trillion, up 24.1% year over year. By the end of November the total volume of net receivables totaled $652.26 billion, up 12.3%, and the total value of finished products reached $334.99 billion, up 25%.

Sectors

- Oil and natural gas: up 37.2%
- Coal: up 133.7%
- Iron and steel: down 13.7%
- Architectural materials: up 27.7%
- Chemicals: up 0.2%
- Smelting and pressing of nonferrous metals: down 34.1%
- Special-purpose machinery: up 9.4%
- Transportation equipment: up 15.7%
- Electronic communication equipment: up 1.1%
- Electric power: down 84.1%
- Chemical fibers: down 74.9%

The petroleum processing and coking industries lost $18.26 billion compared with a profit of $3.55 billion in the same period last year.

Cooking Gas Supply to Ease This Weekend

2009-01-04T08:45:00.000-08:00

The supply of cooking gas remains tight for small retailers even as the Energy department’s inspection has so far cleared some suppliers from allegations of hoarding.

In a phone interview, Liquefied Petroleum Gas Marketers Association (LPGMA) President Arnel U. Ty said there are still long queues for the commodity in suppliers’ depots.

He said the supply situation is expected to ease on Saturday with the arrival of liquefied petroleum gas (LPG) imports.

The Energy department has ordered during the holiday break an inspection of major and so-called independent LPG retailers to ensure steady supply in the market after small sellers complained of supply lack to meet the holiday demand.

The department has cleared, among others, Petron Corp.’s facility in Bataan province of hoarding after an inspection conducted on Jan. 2.

Col. Felipe Perez of the Presidential Task Force on the Security of Energy Facilities and Enforcement of Laws and Standards said they will also inspect other major suppliers Pilipinas Shell Petroleum Corp., which sells Shellane, and Total Philippines, Inc., which retails TotalGaz, but he did not indicate a specific date.

"We are looking at inspecting them this month, we can’t do it all at the same time since we lack manpower," Mr. Perez said in an interview at the weekend.

Mr. Ty earlier said the supply lack forced their members to operate only every other day and that this has affected 30% of their operations.

LPGMA members, who operate only in Luzon, control 30% of the market.

Liquigaz, which supplies LPGMA members, earlier said there is enough supply for its customers.

LPGMA members include Pinnacle Gas, Cat Gas, Omni Gas, Nation Gas and Island Gas.

LPG prices remain steady at P380 to P464 per 11-kilogram cyinder tank.

Rise in Oil Prices Helps Fuel Stock Gains

2009-01-04T08:44:00.002-08:00

U.S. stocks last week advanced the most since November after fewer Americans filed for jobless claims and oil's biggest weekly increase in two decades lifted energy stocks.

Marathon Oil and Baker Hughes led energy producers, climbing more than 15 percent as the price of crude oil reached $46.34 a barrel, the highest in a month. SanDisk staged the steepest rally among technology companies in the Standard & Poor's 500-stock index, adding 21 percent as investors speculated that it may be acquired. The S&P 500 gained 6.8 percent during the holiday-shortened week, to 931.80. The Dow Jones industrial average added 6.1 percent, to 9034.69. The Nasdaq composite index rose 6.7 percent to 1632.21.

"If we get some letup in risk aversion, we could easily see double-digit" percentage gains in U.S. stocks this year, said E. William Stone, chief investment strategist at PNC Wealth Management. "We only know two things: Typically, the market moves before the economy does, and valuations are reasonable."

More than $30 trillion was erased from global equity markets in 2008. The S&P 500 plunged 38 percent, the most since 1937, as the economy entered a recession and the biggest financial firms lost more than $1 trillion on subprime-related loans and securities.

Energy stocks increased the most among 10 S&P 500 industry groups, jumping 9.6 percent. Companies that rely on growing consumer spending rose 8.4 percent, the second-biggest gain. Industrial, financial and technology companies advanced more than 7 percent and every group added at least 3.8 percent.

Crude futures gained 23 percent last week, the most since August 1986, as the conflict in Gaza increased concern that Middle East supplies would be cut and Russia curbed natural-gas shipments to Ukraine. Oil fell 54 percent last year, the first annual drop since 2001.

The Labor Department said new jobless claims were depressed by the shortened Christmas workweek even as the total number of people collecting benefits reached a 26-year high. There were 492,000 new claims for the week ended Dec. 27, below the 575,000 average estimate of economists in a Bloomberg survey.

The Treasury will auction $32 billion of three-month bills and $22 billion of six-month bills on Monday. They yielded 0.11 percent and 0.32 percent, respectively, in when-issued trading. The Treasury will sell $16 billion of 10-year bonds on Thursday. They yielded 2.37 percent.

Oil Prices Begin the New Year by Slipping 4%

2009-01-04T08:44:00.001-08:00

Crude oil prices were lower and gold prices rose as trading resumed after the New Year holiday.

Crude oil prices fell in New York, extending their worst yearly drop, on concern that a global economic contraction would limit fuel demand.

Crude oil for February delivery dropped as much as $2.06, or 4.6 percent, to $42.54 a barrel in after-hours electronic trading on the New York Mercantile Exchange.

Gold rose in Asia after an eighth straight annual gain as demand increased for the metal as a hedge against inflation and an alternative asset.

Gold advanced 5.8 percent in 2008 on demand for a store of value, as a financial crisis pushed major economies into recession and drove equity markets lower.

Bullion for immediate delivery gained $2.10 an ounce to $881.55 at 9 a.m. in Singapore, after earlier rising as much as 1 percent to $888.35. Gold for February delivery fell 0.2 percent to $882.40 in after-hours electronic trading on the Comex division of the New York Mercantile Exchange.

Among other precious metals for immediate delivery, silver fell 0.4 percent to $11.345 an ounce, platinum was little changed at $935 an ounce, and palladium rose 1.1 percent to $189 an ounce as of 8:54 a.m. in Singapore.

Oil fell 54 percent in 2008, the first annual decline since 2001 and the biggest drop since futures trading started in 1983. The February contract rose $5.57 to $44.60 a barrel on Dec. 31, the highest settlement since Dec. 12.

Fuel consumption in the United States was down 3.7 percent during the four weeks ended Dec. 26 from a year earlier, according to the Department of Energy. Oil rose 14 percent on Dec. 31 after a report showed American fuel stockpiles climbed less than expected and the conflict between Israel and Hamas raised concern that Middle East supplies may be disrupted.

“That rally on the 31st didn’t have too much behind it so we’re seeing crude come back to a level more reflective of the fundamentals,” said Toby Hassall, an analyst with Commodity Warrants Australia in Sydney. “We still don’t have a clear picture of when a global recovery is going to take place.”

Crude oil may rise next week as the Organization of the Petroleum Exporting Countries makes record production cuts to counter the deepest economic slump since World War II.

Iran Budget To Be Based on Oil Price of $37.5

2009-01-04T08:41:00.000-08:00

Iran's 2009-10 budget is expected to be based on an oil price of $37.5 per barrel, a "logical" level in view of last year's price fall, Oil Minister Gholamhossein Nozari was quoted as saying on Sunday.

An Iranian newspaper last month said the government and a parliament committee had an initial agreement to base the budget starting in March on an oil price of $45, lower than previously suggested.

"The price of oil in next year's budget has been envisaged at $37.5 (per barrel) which seems to be a logical price considering the drop in prices," Nozari was quoted as saying by the semi-official Mehr News Agency.

The Islamic Republic of Iran Broadcasting (IRIB) website carried a similar report, saying the government and parliament had agreed on this price for the budget, which has yet to be presented to the legislature.

Oil prices have plunged by some $100 per barrel since mid-July to around $46, pulled down by a slowing world economy.

Some 80 percent of the foreign exchange earnings of Iran, the world's fourth-largest oil producer, come from crude sales.

Economists say Iran's government, which has enjoyed windfall oil earnings in recent years, would likely have to cut spending in 2009 when President Mahmoud Ahmadinejad is expected to run for re-election, unless crude prices rebound to $80 or so.

The head of parliament's economic commission Gholam-Reza Mesbahi said the lower oil price was expected to cause a 33 percent drop in government revenue in the next budget, the Jahan-e Eghtesad business daily reported.

"In view of the drop in income from crude oil exports one of the necessities of the budget would be for it to be contractionary," Mesbahi was quoted as saying.

He said raising taxes would not be possible and that borrowing from the Iranian banking system would fuel inflation. Financial sanctions imposed on Iran over its disputed nuclear plans hindered borrowing from foreign banks, he said.

A government official said in October Iran was planning for an oil price of $55 to $60 in the next budget, but oil prices have continued to slide since then.

The oil price set for Iran's budget indicates government expectations but does not give a full picture.

Economists said last year's budget was officially based on a price of about $40 a barrel but, when withdrawals from an oil revenue reserve fund and other crude-related earnings were taken into account, the state needed $70 or more to balance its books.

The government has been seeking to reduce subsidies, a heavy drain on state coffers, including discussing utility bill hikes.

Rusian Oil and Gas Company, Gazprom Cut All Natural Gas Supplies to Ukraine

2009-01-02T09:54:00.000-08:00

Ukraine sought support Friday in European capitals a day after Russia cut off gas supplies and hardened its stance on prices.

Russia's Foreign Ministry issued a statement saying that it, too, was ready to explain its position in the dispute to Europe, asking for a special session of the European Commission to address the question.

But there were no face-to-face talks between Ukraine and Russia as of late afternoon Friday, a day after Russia's state-controlled energy giant Gazprom cut off gas to Ukraine, saying it had failed to pay an outstanding $2.1 billion bill.

For the moment, the two countries instead fought a public relations war.

A Ukrainian delegation headed by Energy Minister Yuriy Prodan, and including the deputy chief of gas company Naftogaz, Volodymyr Chuprun, visited Prague, the Czech Republic, and Bratislava, Slovakia, on its way to Brussels for meetings with officials.

"Our aim is to explain our position to our European partners on the situation which arose in the gas sphere," Bohdan Sokolovsky, energy adviser to Ukrainian President Viktor Yushchenko, told The Associated Press in a telephone interview from Bratislava. "We are informing them on how the negotiations are going, we are stating our negotiating position."

Sokolovsky said Ukraine was trying to reassure its neighbors that it would not interrupt gas supplies.

"We told them that Ukraine is fulfilling all of its transit obligations and they have no doubts about that," he said.

Russian Deputy Foreign Minister Alexander Grushko said Friday Russia was ready to go to Brussels as well to make its case to the European Union.

Many in the West viewed a 2006 Russian cutoff of gas to Ukraine as an effort to punish Ukraine's political leaders for their pro-Western policies.

That cutoff, which temporarily affected supplies to Europe, also led to accusations that Russia was an unreliable source of energy and led to calls for greater energy independence from Moscow.

This year, Russia has taken pains to paint the conflict as a purely commercial matter, and both countries have pledged they would keep gas flowing through Ukraine's pipeline system to the rest of Europe. As of late Friday afternoon there were no reports of interruptions in shipments beyond Ukraine.

Despite the apparent absence of talks, there seemed to be little sense of urgency. Experts say both Ukraine and Europe have significant stockpiles of gas.

Germany's E.ON Ruhrgas utility said it had seen no disruption to Russian gas deliveries as of Friday — although it said any effects would not be noticeable until the beginning next week because of the distance the gas travels.

In any case, "we have nearly 25 percent of our annual needs ... in reserves, so that even if gas volumes from Russia were to be reduced, we are well prepared," German Economy Ministry spokeswoman Beatrix Brodkorb said in Berlin.

Thomas Steg, a spokesman for Chancellor Angela Merkel, called on both sides to "negotiate quickly and constructively" on a new contract.

The cutoff came after Ukraine made a $1.5 billion overdue payment, but Russia demands another $600 million, including $450 million penalties for the late payment for gas shipped in November and December. The two sides also have not agreed on prices for 2009.

Gazprom also wants to charge Ukraine higher gas prices for 2009. Ukraine, meanwhile, says Russia should pay more to ship through its pipelines, which carry 80 percent of the gas Russia sells to European Union customers.

The dispute also reflects strained relations between the two former Soviet nations that developed after Ukraine's 2004 Orange Revolution, which brought a pro-Western government to power.

Ukraine has since sought to join NATO and supported Georgia during its brief war with Russia in August — moves that angered the Kremlin.

The recent decline in energy prices has hit Russia hard, and Gazprom faces a sharp drop in demand for energy.

Experts say efforts to resolve the dispute are also hampered by divisions within Ukraine's leadership. President Yushchenko and Prime Minister Yulia Tymoshenko are bitter political rivals.

At one point Gazprom said it would accept $250 per 1,000 cubic meters of gas, close to the $235 that Ukraine has offered.

But late Thursday Gazprom CEO Alexei Miller toughened his company's stance, resuming an early demand of $418 per thousand cubic meters, the price Russia will charge European customers over the next few months.

Those prices are expected to slide considerably later this year, as the gas market begins to reflect the fall in world oil prices. Last year, Ukraine paid $179.50 per 1,000 cubic meters of gas.

Russian To Supply Natural Gas Demand in Europe

2009-01-02T09:50:00.000-08:00

Russian natural gas was reaching Europe in full measure Friday, one day after Russia cut supplies to Ukraine in a contract dispute, the European Union said.

French Foreign Ministry spokesman Eric Chevallier said Friday Russia and Ukraine were honoring their promise to maintain natural gas supplies to their European customers, reported RIA Novosti, the Russian news agency.

Russia cut its natural gas supplies to Ukraine Thursday after talks on a 2009 contract broke down, but increased shipments to European countries.

The European Union urged both sides to continue discussions, RIA Novosti said.

"All existing commitments to supply and transit (natural gas) must be honored," the European Union, the Czech Republic and the European Commission said in a joint statement.

Recurring disputes between Moscow and Kiev have raised concerns among European countries about Russia's reliability as a supplier, the Russian news agency said. Ukraine transports about 80 percent of Russian gas, shipped to EU members.

Iran Sign Agreement To Import Natural Gas From Turkmenistan

2009-01-02T09:39:00.000-08:00

Tehran has agreed on a six-month pricing mechanism for natural gas imports from Turkmenistan to supply customers in northeastern Iran, officials said.

Iran holds some of the most abundant gas reserves in the world, but struggles under economic sanctions to keep up with a faltering infrastructure. Gas imports from Turkmenistan were disrupted during the 2008 winter when Ashgabat insisted on a higher price.

Resa Kasaizadeh, the head of the National Iranian Gas Export Co., said his country reached a deal on a fixed, six-month term for gas imports, the Gulf Daily News said Friday.

"It was agreed that Turkmenistan's gas would be imported to the country with a fixed price in the first six months of the year," he said.

Iran has lobbied to position itself as a regional energy hub from Central Asia to Europe amid pressure from Washington. The deal comes as Europe eyes a gas row between Ukraine and Russia.

Nigeria Crude Oil Production Will Decline 1.1.6 mln barrel

2009-01-02T09:33:00.000-08:00

Following the decision by the Organization of Petroleum Exporting Countries (OPEC) to cut production by an additional 2.2 million barrels per day, Nigeria will produce about 1.584 million barrels of crude oil per day by January 1, 2009, far below the 2.29 million barrels per day production estimated in the 2009 budget.

Lagos-base Business Day reported on Thursday that in November, following a 113,000 barrels -per day cut, Nigeria produced 1.903 million barrels per day, according to a figure given in the organization's Oil Market Report for December.

With another 319,000 barrels per day OPEC cut for Nigeria which takes effect January 1, the nation's crude oil export will dip to 1.584 million barrels per day.

Meanwhile, oil rose just a bit over 40 U.S. dollars on Monday, reinforcing the fact that the Nigerian economy will face turbulent times in 2009.

With the OPEC production cuts and falling prices, many of federal government's projections in the 2009 budget might not be met except prices rise again.

Nigeria has also based its 2009 budget on 45 U.S. dollars per barrel for its oil revenues as the international oil price has crashed to slightly more than 40 U.S. dollars per barrel this week.

According to local media reports, oil money accounts for more than 95 percent of Nigeria's export gains and over 80 percent of the federal government revenues, contributing to approximately 30 percent of the Africa's most populated country's total GDP.

Crude Oil Prices Drop in Asia

2009-01-02T09:25:00.001-08:00

Gold declined in Asia as crude oil’s rally stalled and the dollar strengthened, reducing demand for the precious metal as a hedge against inflation and an alternative asset. Platinum was little changed.

Oil fell as much as 5.2 percent, after gaining 14 percent Dec. 31, on concern that a global economic contraction will limit fuel demand. The dollar was at $1.3870 a euro from $1.4045 late yesterday in New York.

“The relationship between gold and oil has steadily strengthened as the commodity boom has progressed,” Standard Chartered Plc’s analysts Helen Henton and Dan Smith wrote in a report. “While both were affected by deleveraging and risk aversion, the oil market is far more exposed to the deterioration in global growth. As the markets have become more settled, the relationship has strengthened again.”

Bullion for immediate delivery traded down 0.5 percent to $874.90 an ounce at 12:09 p.m. in Singapore, after rising as much as 1 percent earlier. Gold for February delivery was 0.8 percent lower at $875.40 in after-hours electronic trading on the Comex division of the New York Mercantile Exchange.

Crude oil for February delivery dropped as much as $2.32 to $42.28 a barrel in after-hours electronic trading on the New York Mercantile Exchange. It fell 4.3 percent to $42.70 a barrel at 12:41 p.m. Singapore time.

Silver Falls

Among other precious metals for immediate delivery, silver fell 1.8 percent to $11.185 an ounce, platinum was little changed at $935.50 an ounce, and palladium rose 1.2 percent to $189.25 an ounce as of 11:50 a.m. in Singapore.

Gold advanced 5.8 percent last year on demand for a store of value as the global financial crisis pushed major economies into recession and drove equity markets down.

“If one bought gold on January 1, 2008, instead of any other investment, they would still have everything they had come January 1, 2009,” Peter Grandich, managing member of Grandich Publications, said in a report. “How many people wish all they did was break even in 2008? Gold continues to offer not only that result, but gains of 20 percent or more in 2009.”

Crude Oil Advances on Gaza Attacks, Russia’s Gas-Shipment Cut

2009-01-02T09:25:00.000-08:00

Crude oil rose in New York for a second day as the conflict in Gaza raised concern that Middle East supplies would be cut and Russia curbed natural-gas shipments to Ukraine.

Israeli warplanes conducted fresh attacks against Hamas on the seventh day of a bombing campaign in the Gaza Strip, raising the prospect of violence in the Middle East, source of one-third of the world’s oil. Russia’s dispute with Ukraine over natural- gas prices deepened today and no new talks are scheduled. Oil futures have traded in a range of more than $5 a barrel today.

“A lot of the volatility we are seeing is a result of the wild geopolitical news,” said Michael Lynch, president of Strategic Energy & Economic Research, in Winchester, Massachusetts. “The news from Gaza and Ukraine scares some people and not others.”

Crude oil for February delivery rose $1.58, or 3.5 percent, to $46.18 a barrel at 11:43 a.m. on the New York Mercantile Exchange. Oil dropped 54 percent last year, the first annual decline since 2001 when crude slipped 26 percent, and the biggest loss since trading began in 1983.

OAO Gazprom boosted gas supplies to Europe through Belarus, avoiding Ukrainian pipelines. Talks between the two sides on the price of gas deliveries to Ukraine for 2009 and transit fees for Russian gas to Europe through the country broke down on Dec. 31, and Gazprom cut supplies of the fuel to Ukraine yesterday.

Stocks Rally

Agricultural futures also rose and equities rallied on speculation that government stimulus efforts will curtail the recession. The Dow Jones Industrial Average increased 49.78 points, 0.6 percent, to 8,826.17. The Standard & Poor’s 500 Index rose 0.4 percent to 906.87.

“Equities and commodities are tracking each other,” said Bill O’Grady, chief markets strategist at Confluence Investment Management in St. Louis. “The outsized moves we are seeing are in part due to very thin trading volume.”

Oil prices may be more volatile this week because many traders are taking time off for the New Year’s holiday.

Brent crude oil for February settlement climbed $1.16, or 2.5 percent, to $46.75 a barrel on London’s ICE Futures Europe exchange.

Crude Oil Extend Decline Record Trader Year-End

2009-01-02T09:22:00.000-08:00

Crude oil fell in New York as some traders viewed a rally of 14 percent at the end of last year as excessive amid slumping demand.

Manufacturing in the U.S., the biggest energy user, probably contracted in December at the fastest pace in almost 30 years, economists said before a report today. Fuel consumption there fell an annual 3.7 percent last month, according to the Department of Energy. Oil jumped 14 percent on Dec. 31 as U.S. fuel stockpiles rose less than expected, and as the conflict between Israel and Hamas raised concern that Middle East supplies would be disrupted.

“There was an over-reach to the upside,” said Olivier Jakob, managing director of Petromatrix Gmbh in Zug, Switzerland. “The extent of the move was more due to low liquidity, and it being the end of the year” than fundamentals.

Crude oil for February delivery fell as much as $3.55, or 8 percent, to $41.05 a barrel in after-hours electronic trading on the New York Mercantile Exchange. It was at $42.28 a barrel at 1:11 p.m. London time and is up 12 percent this week.

Oil fell 54 percent in 2008, the first annual decline since 2001 and the biggest drop since futures trading started in 1983. The February contract rose $5.57 to $44.60 a barrel on Dec. 31, the highest since Dec. 12.

Fundamentals

“That rally on the 31st didn’t have too much behind it so we’re seeing crude come back to a level more reflective of the fundamentals,” said Toby Hassall, an analyst at Commodity Warrants Australia in Sydney. “We still don’t have a clear picture of when a global recovery is going to take place.”

An 8 percent drop in crude imports last year by South Korea reaffirmed the spread of plunging demand in Asia, the center for oil demand growth. The continent’s fourth-biggest economy imported 865.3 million barrels in 2008, down from 872.5 million the previous year, according to a government report today.

The U.S. Institute for Supply Management will probably say today its factory index fell to 35.4, the lowest level since 1980, from 36.2 the prior month, according to the median estimate of 57 economists surveyed by Bloomberg News. A reading of less than 50 signals contraction.

U.S. stocks last year plunged the most since the Great Depression as financial shares collapsed, energy and metal producers tumbled and the economy entered a recession.

Output Cuts

The Standard & Poor’s GSCI Index of 24 commodity futures lost 47 percent last year, the most since its introduction in 1971. The Reuters/Jefferies CRB Index of 19 raw materials dropped 40 percent, the biggest plunge since 1957.

Crude oil may rise next week as the Organization of Petroleum Exporting Countries makes record production cuts to counter the deepest economic slump since World War II.

Seven of 14 analysts surveyed by Bloomberg News, or 50 percent, said futures will gain through Jan. 9. Five respondents, or 36 percent, forecast oil will fall and two said there will be little change in prices. Last week, 46 percent of analysts said prices would drop.

Oil jumped earlier this week on turmoil in the Middle East and a natural gas dispute in Europe.

Israel yesterday killed a Hamas leader in its assault on the Gaza Strip and Foreign Minister Tzipi Livni said her nation would keep pressure on the militant Islamic group. An army spokesman, speaking anonymously in accordance with regulations, said warplanes hit Hamas leader Nizar Rayyan’s house in the Jabaliya refugee camp.

Gas Dispute

In Europe, the repeat of an energy standoff between Russia and Ukraine threatened fuel shipments. Russia prepared to resume talks with Ukraine in their dispute over the price of natural gas after cutting supplies to its western neighbor for the second time in three years.

The European Union urged Russia and Ukraine to “rapidly” resolve their dispute and said it counted on assurances gas supplies would continue uninterrupted.

Ukrainian President Viktor Yushchenko said in a statement the two sides are near a compromise, urging state utility NAK Naftogaz Ukrainy and OAO Gazprom, Russia’s gas exporter, to meet again in one or two days. Gazprom also proposed talks.

Brent crude oil for February settlement fell as much as $3.99, or 8.8 percent, to $41.60 a barrel on London’s ICE Futures Europe exchange. It was at $42.05 a barrel at 12:53 p.m. London time. The contract on Dec. 31 rose $5.44, or 14 percent, to settle at $45.59 a barrel.

Iraq to Open More Oil Fields to Bidding

2009-01-01T09:19:00.001-08:00

Iraq announced on Wednesday that it would begin a second round of bids to license international oil companies to develop 11 oil and gas fields or groups of fields.

Iraq's oil minister, Hussain al-Shahristani, said at a news conference that he hoped that these fields could be producing 2 to 2.5 million barrels of oil a day in three or four years. The goal, he said, is to produce 6 million barrels a day in four or five years, up from the current 2.4 million.

The oil and gas fields are distributed around the country and include some that lie near the border or are shared with neighboring countries like Iran and Kuwait.

The first round of bids, announced last summer, is scheduled to be concluded in the middle of 2009. It will be for the development of six major oil fields and two gas fields.

The same 35 foreign companies that qualified to take part in the first round are involved in this one, said Ahmed al-Shammar, a deputy minister, but it is possible that more companies could be added.

Shahristani said he hoped the contracts in the second round would be signed by the end of 2009. He also said the ministry was planning to announce more licensing auctions in the future.

The ministry has come under criticism for the slow pace of Iraq's oil production. Although the country sits on one of the largest proven oil reserves in the world, roughly 115 billion barrels, security and infrastructure problems have left them largely untapped.

Iraq is producing far below its capacity, Shahristani acknowledged at the news conference, but he said opening these fields for development was meant to address that.

"There are about 78 oil and gas fields in Iraq, but only 15 of them are under operation," he said.

Plunging oil prices around the world have hurt Iraq's revenues as well; Iraq's oil is being sold for around $38 a barrel, a ministry official said, down nearly 70 percent from its high for 2008.

One of the other main events of Wednesday was to be the start of the trial of Muntader al-Zaidi, the Iraqi reporter who was arrested for throwing his shoes at President George W. Bush during a news conference two and a half weeks ago.

But Abdulsattar al-Berikdar, a spokesman for the Supreme Judicial Council, said the trial had been postponed because Zaidi's lawyer had filed an appeal.

In a phone interview, Dheyaa Saadi, the lawyer, said the appeal's purpose was to reduce the charge against Zaidi so that the case could be taken outside the jurisdiction of the Central Criminal Court of Iraq, which specializes in terrorism and other serious cases. A higher court will rule on the appeal.

Though recent statistics report that there were fewer civilian deaths in Iraq in 2008 than in any other year since the 2003 invasion, violence continues to buffet the volatile provinces of Nineveh and Diyala.

Two bombs exploded Wednesday in Mosul, the capital of Nineveh, killing 4 and wounding 20, a local security official said. The target of the first was a police patrol, and the second exploded shortly afterward, as bystanders gathered.

A candidate for the coming provincial elections was killed by unidentified gunmen on a major street in Mosul, a police official said. One policeman died in a gunfight with the attackers as they escaped.

The candidate, Mowaffaq al-Hamdani, was a Sunni Arab. The elections in Nineveh are seen as crucial for the Sunnis. Many of them boycotted the last election, leaving a provincial council dominated by a Kurdish bloc.

A car bomb exploded near a public market in Sinjar, a town in Nineveh near the Syrian border, killing 3 and wounding 35. The Kurds maintain a tight control of Sinjar, which they view as belonging to Kurdistan, a situation that has raised tensions with Sunni Arabs who live in the volatile, poverty-stricken towns to the south.

In Diyala, a bomb, its target an army patrol, exploded near Khanaqin, another area that has been involved in a tense standoff between Kurds and Arabs. Two were killed in the attack, including an officer, and two others were wounded, a security official said.

Exxon Argues for Alaskan Oil Lease

2009-01-01T09:14:00.000-08:00

Exxon Mobile Corp. said it was ready to drill at Alaska's Point Thomson oil field contrary to the state's assertion the company would rather procrastinate.

The state has accused Exxon of holding back on drilling while it pursues other ventures and has tried to regain control the 106,000-acre field, the Anchorage Daily News reported Thursday.

Exxon is the dominant leaseholder of the oil field, the newspaper said.

The argument went to court Wednesday. Mark Ashburn, representing the state, told Judge Patrick McKay that a suit on the issue was moot, as the state had not yet given Exxon its final decision on a permit to start drilling.

Exxon said it was "ready, willing and able," to initiate its drilling in the field that could produce 10,000 barrels daily of condensate -- a light oil -- by 2014, the newspaper reported.

Ashburn called Exxon's assertion that it will drill soon "a public relations ploy."

The state contends the company is using the field as a natural warehouse and does not intend to begin drilling soon.

A decision on whether or not Exxon can continue with the suit could come within a week, Ashburn said.

China's LPG imports hit 6.89 mln tons in 2007

2008-03-16T21:20:00.001-07:00

China's imports of liquefied petroleum gas (LPG) surged 15.2% year-on-year to hit 6.98 million tons, valued at US$3.09 billion, according to sources.

The liquefied natural gas imports surged 320% to 2.91 million tons, accounting for 41.7% of the total imports, according to sources with the General Administration of Customs on Saturday.

Of the total LPG imports, 83.4% or 5.82 million tons were imported by the foreign-funded companies, up 37.5%. The main import sources were from Australia and the Middle East, with 3.38 million tons and 2.83 million tons respectively, accounting for 18.55% and 20.6% of the total.

Industry observers predicted China would continue to face the short supply of LPG in a short term, as the LPG importers would reduce their imports due to the limited profits.

China Huaneng the winner in race to buy Tuas Power

2008-03-16T21:20:00.000-07:00

China Huaneng Group will buy Singapore's Tuas Power Ltd for S$4.24 billion (US$3.1 billion) in China's second-biggest overseas acquisition this year.

The Beijing-based company has signed an agreement to buy Tuas Power from Temasek Holdings Pte, Huaneng, China's biggest power producer, said on its Website Friday.

The transaction is expected to be completed by March 24, Singapore's state investment company said in a separate statement.

The purchase "represents a major step for China Huaneng in its goal to diversify its assets across geographies and technologies," Vice President Huang Long said in the statement.

Tuas Power, the first of three utilities Temasek is selling, was set up in 1995 and has 2,670 megawatts of capacity built at a cost of S$2 billion.

Its power station at the western end of the city state comprises four blocks of natural-gas-fired combined cycle plants and two units of steam plants.

"The move is a natural extension of the Chinese power producer's core competencies," Donovan Huang, a Nomura Securities Ltd analyst, said by phone from Hong Kong. "Huaneng has sound management and has some gas-fired management experience."

For the year to March 2007, Tuas Power had revenue of S$2.27 billion, up 31 percent from a year earlier, its financial report showed.

Net income for the year to March 31 was S$177 million, 70 percent more than a year earlier. At December 31, Tuas Power's net debt stood at S$71 million.

Wong Kim Yin, Temasek's managing director for investments, said in the statement that China Huaneng's proposal, through its subsidiary SinoSing Power Ltd, was the "most attractive." It was the clear winner on price and commercial terms, according to the statement.

Kuwaiti firm buys shares in Sudanese oil Petrodar

2008-03-16T21:18:00.000-07:00

Kuwait’s Al-Kharafi Group on Sunday bought shares in Sudanese oil company Petrodar Company, taking some 3 percent stake of the capital.

According to KUNA, the official Kuwaiti news agency, Al-Kharafi has agreed to buy a 3 percent stake of Perodar at a value of 500 USD million from Thani, a Dubai based firm. The Kuwaiti group signed the contract with the Sudapet in Khartoum on Sunday.

Sudapet Director-General Saleh Jaafar told reporters that the company had agreed to buy Thani’s five-percent stake in Petrodar, noting that Al-Kharafi would acquire three percent while the Sudanese company would obtain two percent.

Al-Kharafi Group Deputy Director-General Marzouk al-Kharafi said his company had agreed with the Ministry of Energy to enter agricultural and animal investment in Sudan, which abounds in natural potential and resources in such fields.

Thani Group had bought the sold shares for USD two million. The Sudanese responsible said that the agreement with Al-Kharafi came due to its large experience in the oil field.

The deal would raise Sudapet’s stake to 10 percent in Petrodar, which operates the Dar Blend field. Dar’s exports were estimated at about 200,000 barrels per day in mid-2007. The Sudan produces around 500,000 bpd of crude oil.

Petrodar was set up to explore, develop and produce oil and gas from blocks 3 and 7 in the south east with a total area of about 72,000 square km (27,800 square mile).

Petrodar is a venture between China National Petroleum Company International (Nile) Ltd, Petronas Carigali Overseas Sdn Bhd, Sudapet Ltd, Gulf Oil Petroleum Ltd and Al Thani Corp. The Chinese Sinopec holds the majority 41 percent stake in Petrodar, the Malaysian Petronas, holds 40 percent, while Sudapet, Gulf oil and Al Thani jointly hold the remaining 19 percent.

Native Leader Serving Six Months for Opposing Mine

2008-03-16T21:17:00.000-07:00

Algonquin community leader Robert Lovelace had never been charged with an offence, but when a uranium company began prospecting for radioactive ore on unceded First Nations land without engaging in consultation, he decided to take action and organized a non-violent blockade.

On February 15, Judge Cunningham of Ontario's Superior Court sentenced Lovelace to six months in jail for contempt of court and fined him $50,000 for his involvement in the peaceful protest.

Chief Paula Sherman, elected leader of the Ardoch Algonquin First Nation, a small community about 110 kilometres southwest of Ottawa, where the controversial uranium prospecting is taking place, calls Robert Lovelace "a political prisoner."

"It seems like a very heavy sentence," said Jamie Kneen of Mining Watch Canada, a non-governmental watchdog. "If the court had issued a trespassing charge, there could have been an argument about who was really trespassing."

The territory in question involves mainly Crown land that is subject to ongoing land-claim negotiations between First Nations and the provincial and federal governments.

In September 2007, an Ontario provincial court issued Frontenac Ventures, the mining company, an interlocutory injunction ordering protestors from Ardoch and Sharbot Lake First Nations, along with their non-native allies, to vacate the Robertsville camp. The camp is the only feasible entry point to a 30,000-acre wilderness tract in Frontenac County, where the company has its prospecting license. Lovelace and other activists violated that order.

"The source of this conflict is the Ontario Mining Act, which allows companies to stake land and prospect without consultation with private land owners or other users, including First Nations," said Kneen. Lovelace and other activists argue their constitutional rights were violated by the lack of consultation.

People living on or near the exploration site discovered their land was being taken almost two years ago. There were no community meetings or information sessions about the uranium exploration. "It started on private land when a cottager saw trees being cut and started protesting the development," said Kneen. A few months later it became clear that some of the land being staked was disputed territory.

"Uranium mining has no record other than environmental destruction and negative health issues," said Doreen Davis, chief of the Shabot Lake First Nation. "Uranium can't be stored safely," said Davis, who will be sentenced on March 18 for participating in the blockade. She is under court order not to talk about the dispute with Frontenac.

"I do know that we have communities from Kingston to Ottawa on our side against uranium mining in this district," said Davis. "A huge group of settlers, that's what they call themselves, have been working with us, pounding the pavement and educating people about this. I think it is unique to have aboriginal and non-aboriginal people standing shoulder-to-shoulder like this."

The federal government has yet to get involved in this case and Ontario's provincial government has only been reluctantly and peripherally involved, according to Kneen.

Not much is known about the company at the centre of the dispute. "Frontenac is a private company, so they don't have to file any disclosure," said Kneen. "Aside from the president and their lawyer, no one knows who they are or where they get their money."

The company's website has only one page and a press release. Frontenac's president, George White, did not return calls. The website says the company "is committed to participating in any efforts of Ontario and the First Nations' to consult in good faith," but Ardoch Chief Paula Sherman isn't convinced.

"No consideration was given to the circumstances leading to our actions," said Sherman in a statement following Lovelace's sentencing. "The testimony given under oath by Robert Lovelace outlined Algonquin Law and the corresponding responsibilities of Algonquin people with respect to human activity in our territory," wrote Sherman, who was fined $15,000 during the court case for breaking the injunction that prohibited protests on land being explored by Frontenac.

Because the company obtained a court order against protestors rather than filing trespassing charges, the judge was not required to consider arguments regarding historical precedent or Algonquin legal codes when making the decision. "It's a way of avoiding the core issues," said Kneen.

After a decade of low prices, the spot price of uranium has increased drastically in recent years, from $43 per pound in 2006, to $75 today.

As oil prices rise, countries have re-started old nuclear reactors and countries like South Africa, India and China have ambitious nuclear-power plans on the horizon. UBS, a financial services company, predicts uranium will hit $110 per pound by 2010.

These developments don't sit well with Dr. Mark Winfield, a Canadian nuclear expert. "Existing [uranium] mines in northern Saskatchewan have caused severe contamination through heavy metals like arsenic, and long-lived radionuclides, along with conventional pollutants," said Winfield.

In 2004, Health Canada concluded that effluent from uranium mines meets the definition of a toxic substance under the Canadian Environmental Protection Act.

Canada is the world's largest supplier of uranium and Conservative Prime Minister Stephen Harper wants to increase exports in his bid to transform the country into an "energy superpower."

"The Intergovernmental Panel on Climate Change was very clear that nuclear [energy] can't compete economically," said Winfield. "The potential health and environmental impacts of uranium mining are not worth the risks."

Chevron Corporation Financial Analysts

2008-03-16T21:16:00.001-07:00

Chevron Corporation (NYSE:CVX) told financial analysts at a meeting in New York City today that major upstream capital projects in the U.S. Gulf of Mexico, offshore Nigeria and in Kazakhstan will produce additional crude oil and natural gas this year. In the downstream business, company executives said projects to increase refining scale and flexibility are under way in areas of market strength in the United States and Asia.

"We are focused on execution as a top priority for 2008 and 2009" Dave O’Reilly, Chevron’s chairman and CEO, said at the company’s annual analyst meeting. "This entails excelling at operational performance, executing our capital projects well and effectively managing costs"

O’Reilly’s presentation outlined the momentum Chevron has developed in key areas of its business plan:

* Significant upstream and downstream presence in the highest-growth regions of the world.
* Outstanding queue of upstream projects in all phases of engineering and construction.
* Successful exploration program that provides resources for oil and gas development projects.
* Improved refinery capabilities to process heavier, higher-sulfur crudes.

UPSTREAM – EXPLORATION AND PRODUCTION

George Kirkland, executive vice president for Global Upstream and Gas, said a track record of exploration success and project execution is expected to grow Chevron’s production capacity and boost proved reserves of crude oil and natural gas.

The company has approximately 40 major capital projects with a net Chevron investment of $1 billion or more each. Of those, important projects – including Blind Faith in the Gulf of Mexico, the Sour Gas Injection/Second Generation Plant in Kazakhstan and Agbami in Nigeria – are planned to increase production capacity in 2008. In 2009, Tombua Landana in Angola, Frade in Brazil and Tahiti in the Gulf of Mexico are expected to come online and further grow production capacity.

Kirkland also explained that the company’s exploration teams had another strong year in 2007. Each year from 2002 through 2007, Chevron’s exploration program has added an average of 1 billion barrels to its resource base. The 2007 success rate for exploration wells was 41 percent, comparable with Chevron’s average of 42 percent over the past six years. In addition, a recently released Wood MacKenzie report cited Chevron as the leader among its peers in exploration results from 2002 to 2006.

"Not only is our exploration success feeding our strong queue of major capital projects, it is also building the foundation for long-term reserves replacement as the discovered resources move to proved reserves" he said.

In regard to proved reserves, Kirkland said projects in Kazakhstan, Nigeria, Australia, Brazil, China, the United States and Angola will deliver strong reserves replacement for Chevron over the next three years.

"Our three-year business plan indicates we will have reserves of approximately 11.3 billion barrels of oil-equivalent at the end of 2010 – more proved reserves at the end of the decade than we have today" Kirkland explained.

ConocoPhillips Describes Business Strategies Intended to Deliver Growth and Enhance Shareholder Value

2008-03-16T21:16:00.000-07:00

ConocoPhillips, Houston Becky Johnson, 281-293-6743 (media) or Gary Russell, 212-207-1996 (investors) ConocoPhillips (NYSE:COP) held its annual analyst meeting today in New York. The company's Chairman and Chief Executive Officer Jim Mulva outlined how ConocoPhillips' strategic objectives and operating plans will enable the company to utilize its portfolio of high-quality assets in delivering growth and enhancing value for shareholders, while overcoming a variety of challenges inherent to the current business environment.

"We have a strong portfolio of opportunities, and development plans are under way so that we can fully capitalize on their potential," Mulva said. "We are benefiting from our talented work force and ongoing focus on capital discipline and project execution, financial optimization, operating excellence, and safety and environmental stewardship. As a result, we believe ConocoPhillips is well positioned to operate successfully in the business environment we foresee for 2008 and beyond - one that seems likely to be characterized by strong energy demand. Although we face intense competition for access to new resources and the prospect of legislation on climate change, we have taken steps to enable ConocoPhillips to operate effectively and deliver value as we manage the challenges ahead."

Mulva noted that ConocoPhillips' 2007 total shareholder return of 25.4 percent was above the peer group average, and that the company's three-, five- and 10-year returns led the peer group. He reaffirmed ConocoPhillips' intent to fund a capital program of $15.3 billion in 2008, to continue select asset sales that facilitate ongoing renewal of its portfolio, and to continue pursuing efficiency in executing its development projects, drilling programs and base operations.

In pointing out that efficiency, Mulva said, "In terms of cash contribution per barrel of oil equivalent, our performance leads our peers in both the E&P and R&M segments. This ability to generate cash enables us to enhance distributions to our shareholders, such as the recently announced 15 percent increase in our dividend, and it should enable us to complete the $10 billion in share repurchases authorized for 2008."

In its Exploration and Production (E&P) segment, the company outlined its strategic plans to advance an asset portfolio that is resource-rich, with more than 50 billion barrels of oil equivalent of existing resources, including 10.6 billion barrels of proved reserves at year-end 2007. ConocoPhillips has leading positions in both natural gas production and heavy-oil acreage in North America, a legacy asset position in the North Sea, and strong growth prospects in the Asia Pacific, Russia and Caspian, and Middle East regions. Major near- and long-term development projects are under way in all these regions. The company expects to sustain a long-term, average production growth rate of 2 percent and a five-year reserve replacement average of 100 percent or more. ConocoPhillips also anticipates new opportunities to emerge from its business development efforts and from a replenished exploration program that is increasing the company's exposure to high-potential prospects.

In Refining and Marketing (R&M), ConocoPhillips is committed to maintaining its segment-leading performance in U.S. refining, a strong refining position in Europe and an advantaged position in Asia. The company expects to sustain its leadership position by delivering safe, reliable and environmentally responsible operations, while holding base operating costs generally flat. ConocoPhillips also plans to capitalize on opportunities in the market by improving its clean products yields and enhancing the integration of its downstream, upstream and commercial businesses, while increasing operating margins through key investments in refining conversion capacity. In addition, the company is engaged with foreign partners in studying opportunities to expand its global portfolio.

Updates also were provided on the company's strategic partnership with LUKOIL, the upstream and downstream business ventures with EnCana Corporation, and the DCP Midstream and Chevron Phillips Chemical Company joint ventures.

In addition, Mulva addressed the important role technology would play in helping ConocoPhillips achieve its plans. "We have a rich history in technological development devoted to the recovery of conventional resources, and we believe that further research is the key to unlocking the value of our non-conventional resources and advancing the development of alternative energy sources."

The company expects to spend approximately $400 million on technology in 2008, primarily to progress such technologies as reservoir imaging, steam-assisted gravity drainage, coal gasification, carbon capture and sequestration, cellulosic ethanol conversion, and refining processes. This also includes more than $150 million for research efforts focused on the development of non-conventional oil and gas resources and the development of new energy sources, such as alternatives and renewables. Additionally, ConocoPhillips plans to build both a state-of-the-art global technology center and a best-in-class corporate learning center on land recently purchased in Colorado.

"Further, we are investing strongly in our people by enhancing our efforts to recruit, retain and develop a highly capable, demographically balanced and diverse work force," Mulva said. "We are making good progress, and our plans to develop both a technology center and a corporate learning center will help ensure our employees attain their maximum potential."

Discussing other issues, Mulva said that, "To ensure that our business remains sustainable over the long term, we must operate safely and with environmental care, while also helping address the key challenges facing society. For example, society clearly needs to achieve energy supply security, as well as address the challenge of climate change caused by carbon emissions. We believe these issues are interrelated and must be solved together. Therefore, ConocoPhillips supports enactment of a comprehensive U.S. energy policy, and a mandatory national framework to reduce carbon emissions. Also, we are working to conserve and recycle more of the water used in our operations, and are funding research into new techniques that could utilize the water produced in association with oil and natural gas for agricultural and industrial applications."

More information, including presentation materials and a recorded webcast of the meeting, is available at www.conocophillips.com/investor.

ConocoPhillips is an international, integrated energy company with interests around the world. For more information, go to www.conocophillips.com.

Oil, gas exploration gets costlier after govt clarifies ship rental tax

2008-03-16T21:13:00.001-07:00

The government’s clarification in the Budget 2008 that ships hired to support drilling activities would indeed attract a 12.5% service tax, will make oil and gas exploration more expensive, given the unwillingness of explorers to pay the tax, forcing shipowners to take a hit to their financials by doing so themselves.
Exploration firms were brought under the purview of service tax in Budget 2007, but they have thus far refused to pay up arguing that the levy did not cover hiring of ships, as these were not involved in mining and drilling operations.
“To promote oil exploration activities along the county’s coast, the government introduced a special tax regime for this industry in the new exploration licensing policy, wherein it (the sector) is exempted from all duties and levies. Why should the government impose a service tax on us now?” asked an official with Oil and Natural Gas Corp. Ltd (ONGC), India’s biggest oil explorer. The official did not wish to be identified. ONGC has hired at least 100 offshore support and supply ships, paying anywhere between $2,000 (Rs81,000) and $12,000 a day to shipowners. Hiring of oil drilling rigs is costlier with daily rentals in excess of $200,000.
Both oil firms and local shipowners lobbied vigorously in the run-up to the Budget to exempt ship rentals to the offshore oil industry from service tax.
However, Budget 2008 clarified that renting ships such as drilling rigs, offshore support and supply vessels, anchor handling tugs and other supply boats would come under the scope of service tax.
Exploration companies are still resisting the tax. State-owned ONGC said it could not absorb the extra costs unless the government provides for it in the firm’s annual budget. “Oil exploration firms told us that service tax is not payable by them when we asked them to reimburse the levy on ship rentals for payment to the government,” said an official with Garware Offshore Services Ltd.
Shipowners could be in trouble as a result. The indirect nature of the tax means shipowners have to collect it from explorers and pay it to the government.
Recently, the Indian National Shipowners Association (Insa), the umbrella body representing local shipowners, received a communication from the government’s service tax department asking shipowners to pay the tax or risk action.
“We are in a jam. On one hand, we cannot violate government tax laws. On the other, we cannot give up on our clients,” said an executive with TAG Sealogistics Ltd who did not wish to be identified.
Shipowners such as Shipping Corp. of India Ltd, Great Eastern Shipping Co. Ltd, Varun Shipping Co. Ltd, Garware Offshore, TAG, Great Offshore and Dolphin Offshore Enterprises (India) Ltd will have to take a substantial hit if they are to pay the service tax from their own pockets. “It is a sizeable amount and will be a big problem for shipowners,” an Insa official who did not wish to be identified said.
The oil explorers’ stance contradicts a commitment by at least some of them to reimburse the service tax if it is made mandatory. “In fact, some shipowners had incorporated a clause in their contracts with ONGC that the company would reimburse service tax if it became payable,” said an executive with Great Offshore, India’s biggest offshore service provider.
“So, we are pretty much covered both contractually as well as due to the indirect nature of the tax, which is paid to the government only after it is collected from the end users,” added this executive who did not wish to be identified.

Coastal likely to clinch new offshore support vessel orders

2008-03-16T21:13:00.000-07:00

SHIPBUILDER Coastal Contracts Bhd expects to secure a further RM400mil worth of new offshore support vessels (OSV) orders this year, said executive chairman Ng Chin Heng.

“Apart from the RM105mil sale announced in January and the RM51mil deal announced last week, we are targeting to bag at least an additional RM400mil worth of new OSV orders to add to our already sizeable order book.

“We hope to achieve this before the end of 2008 to close the financial year at a high,” he told StarBiz.

Ng said the Sabah-based company was in “advanced negotiations” with several potential OSV buyers and was confident of closing these deals soon.

Coastal’s order book to build vessels had surpassed the RM1bil mark, he added.

In January, it announced that its wholly-owned subsidiary Coastal Offshore (Labuan) Pte Ltd had secured the sale of two OSVs to an Indonesia buyer for about RM105mil while last week it said it had secured the sale of two units of OSVs to an Egyptian buyer for RM51mil.

Ng said Coastal hoped to maintain a strong double-digit growth in net profit this year, with the OSV segment spearheading the earnings expansion.

At the same time, the company was positive that demand for tugboats and barges – its traditional vessels which are chartered out – would remain significant in line with the rise of global seaborne trade, he said.

Coastal’s vessels are used by agriculture, mining and heavy industry companies to transport grains, coal, iron ores, scrap irons, crude oil, crude palm oil and various other commodities.

“We are also considering the option of retaining a number of OSVs from our current building programme for outright charter to support vessel service providers.

“Alternatively, we can opt to assume the role of a support vessel service provider ourselves to get the ball rolling in this lucrative sector and bolster our recurring income,” Ng said.

He said that despite looming inflationary pressures, shipbuilders were still anticipating growth in orders of OSVs this year.

This is because demand is expected to trend up in line with robust activities in the oil and gas sector, which would drive demand for offshore exploration platforms and rigs. That, in turn, would generate demand for OSVs.

As for competition, although there have been several new entrants into the OSV market on the domestic front recently, Coastal does not expect congestion overnight in the sector.

“There will definitely be a gestation period of a few years between the development and preparation of new shipbuilding facilities and the actual roll-out of finished products,” Ng said.

Additionally, Coastal had moved up the shipbuilding hierarchy by fabricating “sophisticated” OSVs – a segment where barriers to entry were high, he said.

“We believe the pie is large enough to absorb additional OSV supply. Vietnam's oil industry, for example, is booming and that country is expected to have some 900 exploration wells over the next 15 years.

“Meanwhile, Petronas has targeted to explore and develop 500 new wells over the next five years,” Ng said.

Against this backdrop, surely the OSV demand and supply imbalance would continue, he added.

Coastal reported a 102% jump in net profit to RM69.3mil for the financial year ended Dec 31, 2007 while sales grew 82% to RM290.4mil.

Troop surge won't stop Iraq oil fraud, insurgency: leading Democrat

2008-03-16T21:12:00.001-07:00

Senator Dianne Feinstein said Sunday that the US troop surge in Iraq could fall short of its goal, and raised concerns about a news report that said stolen oil cash was paying for the insurgency.

"The surge, where it has worked militarily, has not worked politically. What's left in Iraq is a government that is incompetent," Feinstein, a Democrat who serves on the Senate Appropriations committee, told CNN.

Feinstein also pointed to a report in the New York Times that alleged that stolen Iraqi oil profits were paying for deadly insurgent activities five years after the US-led invasion.

"The front page of the New York Times points out massive, massive oil fraud. We had a hearing in defense appropriations, which dealt with some of it. The estimate is nine billion dollars of oil revenues are missing," she said.

"Now, the Times contends it's going in to fuel the insurgency. If this is allowed to happen, it doesn't matter what the surge does, the insurgency will continue."

The newspaper citing American military officials as saying fraudulent activities, including hijackings of oil tankers, bribed drivers, forged papers and manipulated meters are responsible for siphoning off about one-third of Iraqi oil revenue toward the black market.

"Some of the earnings go to insurgents who are still killing more than 100 Iraqis a week," the newspaper said.

The Times quoted Captain Joe DaSilva, a platoon commander at the Baiji oil refinery in a Sunni Arab-dominated region of Iraq, as saying such kinds of fraud were "the money pit of the insurgency."

The United States boosted troop levels to Iraq last year, sending in tens of thousands of extra soldiers. Its force in Iraq, which currently numbers 162,000, is supposed to fall to 140,000 by July.

CORRECTED - Oil prices rising due to speculation-OPEC president

2008-03-16T21:12:00.000-07:00

Oil markets are rising due to speculation and the dollar's fall, not to a lack of petroleum production, OPEC President Chakib Khelil said on Sunday, the official Algerian news agency APS reported.

APS quoted Khelil, who is also Algerian Energy and Mines minister, as saying: "Prices are not going up because of a lack of output, but rather from the effect of speculation."

This increase in price "is linked not to a lack of production but to the devaluation of the dollar, which has given speculators the opportunity to invest in oil."

Victoria Petroleum Announces Growler Oilfield Commences Production PEL104, Cooper Basin

2008-03-16T21:11:00.000-07:00

Victoria Petroleum as operator for the Growler Oilfield Development Project, advised that oil production has commenced from the Growler Oil Field. The start of production is significant as this is the first oil produced from PEL 104 located on the north western margin of the Cooper-Eromanga Basin. Both Growler wells were opened to natural flow on 12 March and were flowing at a combined rate of 100 BOPD. Artificial Lift production pumps will be installed over the next few days and once this work has been done the production rate is expected to reach 300 barrels of oil per day.

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