Daily Archives: September 9, 2009

Carola Hoyos

Ali Naimi, Saudi Arabia’s athletic oil minister, skipped his customary dawn jog around Vienna’s Ring Road during this week’s meeting of the Opec oil cartel. (It is Ramadan after all and ministers’ gatherings are happening after sundown.)

But his rhetoric as he left his hotel this afternoon, was in itself something of a victory lap.

Kate Mackenzie

Petrobras

Santos Basin. Source: Petrobras

Petrobras, BG and Repsol are jubilant over tests from a well in Brazil’s Santos pre-salt field, dubbed Guara, that show it could initially flow at 50,000 barrels per day, and could hold up to 2bn recoverable barrels of oil equivalent.

Coming a week after BP’s ‘giant’ Gulf of Mexico discovery, it begs comparison. But the two announcements are quite different: BP’s was a discovery in an area generally thought to be already thoroughly-explored, while Guara was discovered over a year ago, and was already thought to be one of the bigger new discoveries in recent years. Moreover, Guara in an area that is the great new hope for oil supplies.

BG holds a 30 per cent stake in the well and Petrobras, the operator, owns 45 per cent; Repsol has the balance.

But as to who would welcome it more, it could be a tie between BG and the Brazilian government.

Kate Mackenzie

Calling Opec decisions: Conventional wisdom isn’t always right

The EU’s €15bn for developing countries: A turning point or more of the same?

Valero points to difficulties in US energy sector

What’s going on in Libyan oil politics

Oil demand to recover by 2012, says CERA

Biofuels fight back

First Solar plans Chinese plant

Further reading:

Waxman-Markey study finds the bill’s benefits would outweigh its costs (WSJ Environmental Capital)

Mexico sees 2010 output dip (UpStreamOnline)

Visa woes for China may trip power projects in India (Economic Times)

Why is it called ‘climate change’ now? (Christian Science Monitor)

World’s first floating wind turbine launched (BBC)

US nuclear energy expansion stumbles ahead (NY Times)

A solar-power-from-space conference! (The Star)

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Sheila McNulty

As desperate as the US is for new investments to boost its economy, China seems to be increasingly attractive to companies making those much-needed investments.

First Solar, an Arizona-based manufacturer of solar modules with an advanced semiconductor technology, has announced it will team up with Ordos City in Inner Mongolia, China, to build a major solar power plant in the China desert. First Solar said the 2 gigawatt solar power plant, planned for commence construction next year, would require a feed-in tariff to guarantee the pricing of electricity produced by the power plant over a long-term period.

Kate Mackenzie

Developing countries have repeatedly voiced demands for financial assistance to reduce their greenhouse gas emissions ahead of an agreement in Copenhagen. But apart from a peep out of the UK back in June, the developed world has remained fairly mute on the subject, especially when it comes to hard numbers.

However, a new draft proposal suggests the European Union might pay €15bn a year to help developing countries reduce their greenhouse gas emissions.

The figure is worked out like this: take an amount in the realm of $100bn a year, which according to a briefing prepared by G20 officials is the minimum amount of assistance the developing world might need to help transition to low-carbon economies.

Divide it in half, on the assumption that only 50 per cent needs come from the public sector. The other half will be coming from the private sector, of course – via carbon trading schemes, that will see them invest in developing countries’ carbon offset projects.

Then divide that $50bn by a third, which the EU thinks is what it should have to contribute out of the rest of the world, and you have something in the region of €15bn.

Okay, so there’s obviously a big difference if the overall transfer is €100bn a year or $100bn a year – but to say the numbers are rough at this point is an understatement – at this stage, they’re really points for negotiation, rather than actual commitments.

Carola Hoyos

Somewhat unsurprisingly, the market monitoring committee of the Opec oil cartel has recommended the group keep its quotas where they are.

Opec ministers meeting in Vienna today after sundown can take that guidance or leave it.

The majority of ministers, analysts, reports and hangers-on crowding the Vienna hotels at which the delegates are staying believe Opec will maintain the status quo. After all, oil prices are at around $70 – right where Opec wants them.

At most, they believe, Opec will call for members to stop cheating. Kuwait, which sits on the MMC and has enacted its entire share of the cuts, last night said it would like to see compliance rise to 74 per cent from around 68 per cent today.

But there is one lone voice suggesting Opec knows the market is oversupplied, inventories are high and that the group will have to do something about it.

Sheila McNulty

The US energy sector has endured the recession better than most. That is because energy companies had stockpiled tremendous returns during the economic boom that yielded record oil and natural gas prices last year.

Yet the pain is being felt by a growing number of companies.

That was why, analysts say, Baker Hughes, the oilfield services provider, said it would buy oil pumping company BJ Services for $5.5bn in cash and stock at the end of August. It also is why a growing number of US independents are selling access to some of their natural gas assets to foreign energy companies.

Now refiners can be added to the list of the suffering. Valero, the US’ biggest refiner, said it is shutting down the coker and gasifier complex at the Delaware City refinery.

Kate Mackenzie

Libya’s oil industry has been in the spotlight over the past couple of weeks for numerous reasons – most notably, its role in the transfer of the Lockerbie bomber, and for the tough new conditions that have been placed on foreign oil companies operating there – particularly, requiring foreign joint ventures to appoint a Libyan chief executive. Then China’s CNPC this week confirmed it would not be buying Verenex, a small Canadian company with interests in Libya, after the Libyan government blocked its bid. And the drama doesn’t end there: it’s also been confirmed that Shokri Ghanem, Libya’s oil minister, will be standing down.

My colleague Carola Hoyos writes on FT.com about Ghanem’s role in the global oil industry, and his accomplishments – such as helping Libya punch above its weight in Opec, and extracting tougher terms from international oil companies including Eni and Total, while keeping on good terms with them.

However he was less keen on the signs of creeping nationalisation of the country’s oil industry:

As Libya became more and more aggressive about clawing control from international oil companies, and the rhetoric of Mr Gaddafi became more nationalistic, Mr Ghanem found himself in an increasingly uncomfortable position of having to smooth relations between the two.

Ghanem was a reformist, so his departure, although it had been on the cards for a while, does not bode well for international oil companies wanting to do business in Libya. Although BP so far seems to be pressing ahead.

The full story is here: Libyan minister will be Opec no-show (FT, 08/09/09)

James Fontanella-Khan

CNPC boosts war chest with $30bn loan
Fresh cash to fund its ‘go global’ strategy (FT)

Opec hints it will hold production steady
Oil ministers see no need for oil cartel to reduce production (FT)

EU sets out €15bn climate aid plan
Move to convince developing nation to cut emissions (FT)

World threatened by 4 degrees of warming, says Miliband
UK minister says climate change deal in Copenhagen is in ‘real danger’ (Bloomberg)

Copenhagen cap urged for airline emissions
Move is part of a new international treaty on climate change (FT)

Valero to Reduce Jobs, Operations
Refiners have been struggling since last year (WSJ)

Call to switch oil for carbon in North Sea
Britain could earn billions of pounds a year (FT)

NPC cancels Verenex deal
Libya seeking to buy Verenex at reduced price (Reuters)

Analysis: Split on the atom
Nuclear power looks increasingly attractive (FT)

Interactive map: Nuclear energy revival
Find out were current and planned reactors are being built globally (FT)

US solar firm cracks Chinese market
US group to develop 2,000-megawatt in the Mongolian desert (NYT)

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