Carola Hoyos

Matthew R. Simmons died suddenly of a heart attack on Sunday. He was the controversial author of Twilight in the Desert, which shed doubt on Saudi Arabia’s continued ability to supply the world with oil. Mr Simmons – one of the most influential proponents of peak oil, the theory that world oil production had, or was about to, peak – did more than anyone to prompt the secretive kingdom to make available data on its oil industry.

His study of the world’s biggest oil fields and their steep production decline rates was closely followed by a similar study by the International Energy Agency, the rich countries’ energy watchdog. This helped thrust the debate from the sidelines of internet doomsayers to the mainstream, especially as oil prices were rising to the July 2008 record of $147 a barrel.

Carola Hoyos

This graph from Bloomberg shows that shareholders are beginning to believe BP and Anadarko may have different fates.

For the first time since the April explosion of the Deepwater Horizon Rig the share price of the two companies has significantly diverged.

“People are starting to believe Anadarko will dispute some of their liability with BP,” says Ben Dell, analyst at Sanford Bernstein.

Anadarko owns a 25 per cent stake in the ill-fated Macondo well, which is still spewing oil into the US Gulf of Mexico, while BP owns 65 per cent and Mitsui, the remaining 10 per cent. That means Anadarko and Mitsui are liable to pay their share of any clean-up bill, unless BP is found guilty of gross negligence.

On Wednesday, BP agreed to put $20bn in an escrow account to pay claims arising from the spill. The question now is: Will Anadarko pay $5bn of that or will it set up its own account?

Anadarko, a US exploration and production company a fraction of the size of BP, could have a tough time paying up, especially as $5bn may not be the final bill, given that the $20bn is not a ceiling and punitive damages as well as clean-up costs come on top of it.

With all the focus on BP, Anadarko has kept rather quiet. In a statement to the FT, an Anadarko spokesman distanced the company from the claims account. “We were not involved in the negotiations or contacted regarding the establishment of the account, so we don’t have the insight to comment further,” he said in an email.

He added, however: “We’re going to do what’s right. We continue to assess the various remedies available to us in this matter, and all of the questions regarding potential liabilities will be answered at the appropriate time.”

Carola Hoyos

It appears Canada’s oil industry has had enough of being maligned. After months of attacks from environmentalists and campaigning shareholders, the Canadian Association of Petroleum Producers has drawn the line at designer soap.

As my colleague Bernard Simon in Canada writes, the industry has hit back after Lush, the UK cosmetics group, joined the campaign against the development of Alberta’s oil sands.

Carola Hoyos

East Africa has long been the next big play for oil companies. For years, it has been the domain of smaller, more intrepid players. Bigger companies, such as ExxonMobil in the Malagasy straits, have dipped their toes into the region’s waters but results have been mixed, with the oil fields on Uganda’s Lake Albert proving the brightest success story. Recently a handful of deals in the region shows that far from giving up on East Africa’s potential, companies, big and small, are hoping they will discover the next Uganda.

Petroleum Intelligence Weekly has called East Africa the “next exploration hotspot.” Here is why:

Carola Hoyos

An email by Tony Hayward, BP’s chief executive, to the company’s employees offers a glimpse of the internal turmoil the oil spill in the US Gulf of Mexico has caused at the company.

Perhaps the most telling part was that Mr Hayward felt he needed to reassure his staff members that their jobs and pensions were safe and that the $142bn company could afford the massive response it has launched in the wake of the Deepwater Horizon explosion.

Carola Hoyos

News has been in ample supply these past weeks, with the meltdown in Greece, the UK election, Europe’s continuing air travel disruption caused by the volcanic ash cloud and BP’s oil spill in the Gulf of Mexico jostling for space on the front pages of newspapers around the world.

At least two of these stories – the ash cloud and the oil slick – have striking similarities.

Carola Hoyos

A rig drilling for gas in Venezuela sank in the early hours of today. All 95 people on board were saved and there is no risk to the environment, according to Rafael Ramirez, Venezuela’s energy minister.

The Aban Pearl semi submersible rig was working in the Caribbean Sea close to the islands of Trinidad and Tobago and had been visited by Mr Ramirez and Mr Chavez in the past, according to Reuters. It was being operated by Pdvsa, the country’s national oil company, without the help of international partners.

Other than the stark difference to the current disaster unfolding in the Gulf of Mexico, this story’s most notable facet may well be the form in which the news was delivered.

Mr Chavez delivered the news: “Con pesar les informo q se hundió la plataforma gasifera Aban Pearl hace pocos momentos. La buena noticia es q los 95 trabajadores a salvo….” by Twitter.

That translates to: “With regret I inform you that the Aban Pearl gas rig has sunk a few moments ago. The good news is that the 95 workers were saved.”

Carola Hoyos

With so many theories of what went wrong – and who was in charge – on Deepwater Horizon that fateful night of April 20, Energy Source has decided to enlist the help of ‘on the rig’ expert Mike Clarke, who started his career as a mud engineer on the Diamond M92 rig offshore Louisiana in 1969. After a long working life in the industry, including as a consultant, Mr Clarke is now retired.

Carola Hoyos

One of the most important jobs on an oil rig is that of ballast control operator. It is an arguably tedious task in good times. But in bad times, it becomes an extremely challenging exercise of keeping hundreds of men alive and tens of thousands of tonnes of steel, worth hundreds of millions of dollars, upright.

In December 2005, I had the chance the step into a simulator at Transocean’s training centre in Aberdeen, Scotland. The facility trains offshore workers heading to the rough, cold, medium-depth waters of the North Sea, rather than those working on the deep water rigs in the hurricane-prone Gulf of Mexico. On ultra deep water rigs, such as Transocean’s Deepwater Horizon, which exploded last week in the Gulf of Mexico, the ballast control operator’s job is done by dynamic positioning operators. There are other differences too, not least because the training I got was five years ago. But the scenarios I was put through ran the gamut, from Gulf Coast hurricanes to floating icebergs in Arctic waters.

The trip came shortly after Hurricane Katrina whipped through the rigs and platforms of the Gulf of Mexico and highlights the dangers and pressures of the life and death decisions made on a rig in trouble.

Carola Hoyos

Angola overtook Saudi Arabia as China’s largest crude oil supplier in March, a month in which China’s imports rose to their second highest level on record, according to Petroleum Intelligence Weekly.

China’s third largest provider was Iran. Here is more from PIW:

Crude imports in March rose nearly 29 per cent to 4.98m b/d, the second highest on record. Angola was top supplier, shipping over 1m b/d, nearly double the volume last March. Saudi Arabia slipped to second spot with 760,700 b/d while Iran was third with 524,800 b/d. Total Mideast volumes were 2.25m b/d, or 45% of overall deliveries, while African cargoes comprised 35.8 per cent. China’s total imports in the first quarter of this year averaged 4.62m b/d, up 29 per cent year-on-year. The higher imports have been attributed to increased domestic refining capacity as well as robust economic growth, which was 11.9 per cent in the first quarter.

China’s Top 10 Crude Suppliers
(’000 b/d) Mar.’10 Mar.’09 Vol. Chg. % Chg.
Angola 1,081 544 537 98.7
Saudi Arabia 761 589 172 29.2
Iran 525 457 68 14.9
Russia 383 322 61 18.9
Libya 341 31 310 1,000
Oman 289 303 -14 -4.6
Sudan 241 242 -1 -0.4
Iraq 224 129 95 73.6
Kuwait 223 177 46 26.0
Kazakhstan 217 86 131 152.3
Others 695 984 -289 -29.4
Total 4,980 3,864 1,116 28.9

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