World Oil/10 October 2017
LONDON (Bloomberg) — As crude oil gushes out of the U.S. like never before, it looks increasingly like North Sea oil will suffer collateral damage.
America exported a record high 1.98 MMbpd of crude in the week ended Sept. 29, equal to the crude that normally gets shipped every day in the North Sea. Much of the U.S. outflow is going to Asia, which has become increasingly important in recent years in determining North Sea oil prices, effectively sandwiching Brent crude between bearish forces.
“It’s direct competition to North Sea production on many different fronts,” said Olivier Jakob, managing director at Petromatrix GmbH in Zug, Switzerland. Where U.S. exports go to Asia, “it will be more difficult for the North Sea to push some of its barrels outside of the region. It creates competition. It’s going to be a bearish factor for the North Sea market.”
The impact of rising American oil shipments on Brent — for many in the industry the most important crude benchmark — shows the increasingly disruptive force of U.S. crude in international markets. Washington in late 2015 lifted a 40-year ban on most oil exports, in the process reshaping the world’s energy map with U.S. crude being sent by trading houses such as Vitol Group and Trafigura Group to faraway locations including Switzerland, China and Israel. The U.S. export restrictions were imposed in the aftermath of the 1973-74 oil crisis.
U.S. producers ship barrels directly to refineries in Europe, placing the cargoes in competition with North Sea supply. At the same time, they’re sending a growing share to the prized Asian market. Refineries in China and South Korea in particular have become a critical source of demand for North Sea oil in recent years, helping to clear any oversupply out of the European market.
Of the flood of crude exported by the U.S. late last month, more than half went to East Asia and nearly a third was shipped to Northwest Europe and the Mediterranean region, according to a trader who’s monitoring the region’s exports. The remainder was shipped to the Caribbean and Latin America, the trader said. That’s in line with exports so far this year, according to data from the EIA and Kpler, a company that monitors ship movements.
The size of the U.S. exports — which has jumped from 25,000 bpd a decade ago to nearly 2 MMbpd now — is now rivaling those from the North Sea. As a whole, North Sea flows have averaged 1.98 MMbpd this year, according to loading programs compiled by Bloomberg. The flow of the key four regional crude streams — Brent, Forties, Oseberg and Ekofisk, which largely set the price of the benchmark — will run at about 820,000 bpd in November.
Widening spread
U.S. crude has become increasingly attractive to foreign buyers in recent months due to the widening discount of West Texas Intermediate crude to Brent, the global benchmark. The spread, now near $6/bbl, started to expand in late July amid a tightening market for Brent, and then ballooned in late August amid Hurricane Harvey.
The exports surge has coincided with WTI becoming more of an international crude. Trading during Asian hours has risen sharply this year and stood at 18% of all activity in the third quarter, according to Owain Johnson, head of the energy research and product development team at CME Group Inc.
It’s not just the relative cheapness of WTI that’s hurting North Sea prices. Margins from turning crude into fuels are also sliding, creating downward pressure on Brent, according to Florian Thaler, an oil strategist at Signal Ocean. So-called hydroskimming margins, one of the simpler processes by which refineries can make fuels, fell to $3.15/bbl on Oct. 9 for North Sea oil, data from Oil Analytics show. That’s down by more than 50% from the start of September, when Harvey temporarily slashed a quarter of U.S. processing capacity.
Slow clearance
Added to that, U.S. exports are “clearly not helping the sweet-crude picture either,” with Brent-priced West African oil taking longer than normal to find buyers to Asia, Thaler said. Along with margins, that means prices for crudes with lower sulfur content in the Atlantic Basin are “a bit under pressure.”
Physical North Sea oil trades at differentials to regional benchmarks, and in late September, Forties was at three-year highs to its yardstick. Hurricane-related disruptions in the U.S. Gulf, which have now abated, originally helped to account for the high differentials, according to Petromatrix’s Jakob. Forties slipped to parity on Oct. 2 and other prices have been around that level in recent days.
“Two forces are at work” in weakening North Sea oil prices, said Eugene Lindell, an analyst at JBC Energy GmbH in Vienna. “Arbitrage inflows of U.S. crude into Europe are weighing” while WTI-priced crude is growing in appeal the world over due to its relative cheapness to Brent.
News Source: World Oil
Read MoreWorld Oil/10 October 2017
STOCKHOLM — Lundin Petroleum AB (Lundin Petroleum) has announced that its wholly-owned subsidiary, Lundin Norway AS (Lundin Norway), has commenced drilling of exploration well 7219/12-2 on the Hufsa prospect in PL533, in the southern Barents Sea.
The well is located in PL533, south of the Filicudi oil discovery and the large Statoil operated Johan Castberg oil discovery.
The Hufsa prospect has multiple Jurassic and Triassic sandstone reservoir targets, requiring a two-branch well to test the full extent of the prospect. The first branch will target the Nordmela and the Tubåen formations and the second branch will target the Stø formation. The Hufsa prospect is estimated to contain gross unrisked prospective resources of 285 MMboe.
The well will be drilled with the semisubmersible drilling rig Leiv Eiriksson and is expected to take approximately 70 days.
Lundin Norway is the operator of PL533 with a 35% working interest. The partners are Aker BP with 35% and DEA Norge with 30%.
News Source: World Oil
Read MoreWorld Oil/10 October 2017
STAVANGER — Statoil and partners have made an oil discovery in the Verbier sidetrack well in the outer Moray Firth on the UK Continental Shelf, proving a minimum of 25 million recoverable barrels of oil in the immediate vicinity of the wellbore.
The preliminary results suggest the discovery could range anywhere between 25 and 130 MMbbl of oil.
“This is an encouraging result for Statoil and the UK team. We have proven oil in good quality sands with good reservoir properties, but significant work remains, most likely including appraisal, to clarify the recoverable volumes and to refine this range,” says Jez Averty, senior V.P. of exploration in Norway and the UK.
The partnership will continue to assess the data and plan further appraisal to determine the exact size of the discovery. The partnership will also seek to determine the commerciality of the discovery in addition to maturing additional opportunities within the P2170 licence.
The Verbier main wellbore encountered a water-filled sand and the decision was made to drill a sidetrack to assess the remaining potential up-dip.
“The results show that we made the right decision to sidetrack the well and this discovery proves that there could be significant remaining potential in this mature basin,” says Jenny Morris, V.P. for exploration in the UK.
“Our aim this summer was to develop Statoil’s UK position through testing three independent prospects ranging in geological risk and with a potential impact on our portfolio. Whilst the results of the other two exploration wells were disappointing, we are convinced of the remaining, high-value potential on the UK continental shelf and the Verbier result certainly gives us the confidence and determination to continue our exploration efforts,” says Jenny Morris.
The Mariner Segment 9 well encountered two oil-filled sands in the Heimdal Formation and a thin oil column in the deeper Maureen Formation. A comprehensive suite of data was acquired which will be used to establish the extent of the Heimdal sand bodies, the impact on resources and future drainage strategy for the main Mariner field together with the potential for tie back of additional resources.
Jock Scott was dry and no reservoir section was encountered. All wells were drilled safely and very efficiently, and the drilling program came in below budget.
News Source: World Oil
Read MoreSingapore Business Review/9 October 2017
Their worth is a 30% drop from the original value.
Sembcorp Marine disposed nine jackup rigs to Borr Drilling Limited (Borr) for $1.8b (US$1.3b).
According to DBS Equity Research, the price suggests an average resale price of $196.4m (US$144m) per rig, a 30% drop from the original contract value.
However, the loss of income is largely offset by deposits collected and provisions made.
DBS said Borr’s upfront payment of US$502m would help to lower Sembcorp Marine’s net gearing by 0.25x.
Here’s more from DBS Equity Research:
The successful disposal of all six terminated jackup rigs and three newbuild jackuprigs (options which customers failed to exercise) removes a major concern on SMM.
The only other jackup rig currently under construction for Japan Drilling is considered “safe” as it is backed by BOT Lease.
SMM will continue to actively market West Rigel – the harsh-environment ultra-deepwater semisubmersible rig built for financially distressed North Atlantic Drilling at a contract value of US$568m.
News Source: Singapore Business Review
Read MoreWorld Oil/9 October 2017
ARIS — Total and the National Office of Petroleum of Guinea (ONAP) signed a Technical Evaluation Agreement to study deep and ultra deep offshore areas located off the coast of Guinea Conakry, covering approximately 55,000 km2.
“By taking this position on a new under-explored area, Total pursues its exploration strategy targeting deep offshore prospective basins,” declared Kevin McLachlan, senior V.P., Exploration & Production at Total. “Therefore, Total has the opportunity to evaluate a very large area, located in an extension of the prolific Mauritania/Senegal basin where we already are. This will allow us to capitalize on our know-how and experience acquired in West Africa.”
According to the terms of this agreement, Total will have a year to assess the potential of the basin on the basis of existing data. At the end of this period, the Group will select three licenses to start an exploration program. As part of the agreement, Total will also train ONAP staff to develop their technical skills in exploration and production.
News Source: World Oil
Read MoreWorld Oil/9 October 2017
SAN ANTONIO — Paradigm today unveiled Paradigm k, its new Production Management solution, in the company’s booth #3163, at the 2017 Society of Petroleum Engineers Annual Technical Conference and Exhibition in San Antonio. Paradigm k is a cloud-based, collaborative workflow for production and reservoir engineers to support field operations in maintenance and management of the well system.
The workflow applies fast and rigorous reservoir physics to real-time decision-making using advanced computational mathematics. With advanced tools for surveillance, optimization and collaboration, it helps asset teams achieve an elevated level of situational awareness to meet field production targets and eliminate deferment.
“Paradigm k is the latest addition to our rapidly expanding offering of solutions for production management,” said Indy Chakrabarti, Paradigm’s senior vice president of Product Management. “The Paradigm k technology provides unprecedented speed and a holistic view of physical measurements and critical production performance metrics at the resolution of individual wells. This helps detect production issues before they transpire, and enables truly proactive production management at the speed of today’s oilfield operations.”
News Source: World Oil
Read MoreHR In Asia/6 October 2017
Recent independent research conducted by Robert Half reveals how the government’s SkillsFuture initiative has brought positive impacts to the Singapore’s information technology (IT) sector. Surveying 75 local CIOs/CTOs, the research found more than half employers said the initiative has helped their IT employees upgrade their skills in the field.
According to the study, six in ten CIOs in Singapore (61 percent) said the government’s programme has helped their IT staff within the organisation to enhance essential skillsets, while the other 43 percent believed it has helps aided the crucial IT skills shortage in the city state.
The research also noted 31 percent employers said it has contributed in making Singapore an attractive place to work for IT professionals. This figure is supported by the fact that Information and Communication Technology (ICT) is the most popular training area used in the SkillsFuture initiative, especially for young Singaporeans who have enrolled in numerous IT courses such as data analytics.
Under the SkillsFuture initiative, eligible Singapore citizens aged 25 and above can get allowance of $500 in credit that can be used to take up training and courses on work skills, including for those who work in IT sector. 56 percent employers are confident about Singapore’s IT workforce developing the right skilss to adapt to future market changes, the research found.
However, despite the positive sentiment, there remains room to improve the effectiveness of the initiative. The research found 67 percent employers thought there should be more external training initiatives to fill the IT skills gap in Singapore, 51 percent believed there needs to be greater focus on IT education in schools, while 33 percent said more internal training programmes within companies is needed.
Managing Director at Robert Half Singapore Matthieu Imbert-Bouchard said that local workforce has much to gain from the initiative that helps them thrive in today’s competitive working environment, especially in IT industry.
“This is especially true for those in the IT industry, where workers are constantly faced with new technologies and innovations that can disrupt the industry. SkillsFuture represents a positive step forward to fill the skills gap in the IT industry, enabling CIOs to keep their organisations competitive by training their staff with the most up-to-date technological skillsets, while also improving employment opportunities for individual workers.”
Some hesitancy still exists among Singaporean IT leaders, however. Despite more than half (56 percent) CIOs being “completely” or “mostly” confident in the IT workforce’s ability to upskill, more than four in 10 (44%) are only “somewhat” or “not at all” confident about the ability of the Singaporean IT workforce developing the right skills to adapt to future market changes.
Additionally, despite the government’s initial aim to help IT staff upgrade their skills, the research also noted that almost one in five IT (19 percent) leaders are still doubtful with the positive effect of the SkillsFuture towards the tech industry, while the other 5 percent saying the effects are still yet to be felt.
News Source: HR In Asia
Read MoreHR In Asia/5 October 2017
Named as OrgDev Institute (ODi), a new institute aiming to help human resource professionals with the new DNA of employees and emerging technology challenges was launched on September.
The institute was founded by 10 industry leaders in HR, training, and employee behaviour from Australia, New Zealand, Singapore and the United States. It will provide HR practitioners from across the globe with best of advanced tools and solutions to create happier and more productive workforce amidst today’s rapidly changing talent pool.
Chief Development Officer for ODi John Belchamber stated that artificial intelligence (AI) and the growing digitally-driven workforce had created a myriad of challenges that have changed roles and responsibilities required to be HR professionals. HR practitioners must have high quality resources that cover the area of employee engagement, skills training, wellness programs and psychological assessment of the workforce.
Providing evidence-based and up-to-date resources, employees can reap the benefits of ODi membership to enhance their capacity to adapt and deliver the type of relevant and impactful organisational development material. With this powerful resource needed to thrive in the business for now and into the future, HR professional will ensure that their role is recognised as critical to the organisations’ success.
The OrgDev Institute members enjoy a vast range of resources, training throughout the year and benefits that will make a lasting contribution to their own development and the organisations they work for. It also provides members with the latest industry insights and discounts to tools covering:
- Organisational Resilience and Positive Psych
- Psychometric Profiling
- Measurement and Habit Creation
- Engagement Surveys and Insights
- Lean Continuous Improvement
- Training and Microlearning
Mr Belchamber also underlined the importance of having happy, healthy, and productive people to ensure an effective and talented team. However, while companies globally have invested around $130 billion on training and development, they often fail to deliver the learning experience that is yearned for by today’s workforce or necessary for the workplace of the future. Therefore, sourcing effective strategies that can improve employee retention over extended periods of time can reduce recruiting, induction training, as well as operational costs.
The OrgDev Institute is represented in seven countries across the globe, including in Australia, New Zealand, The United States, United Kingdom, Singapore, the Philippines and Malaysia.
For more details on the OrgDev Institute or make inquiries about membership, interested organisation can visit www.orgdevinstitute.co. Membership is open to Internal HR teams, people and culture managers, OD consultants and HR Business Partners that meet specific criteria. Internal HR or People Development practitioners need to be in an organisation with at least 200 FTEs and either have a degree or a minimum of five-years-experience and at least one industry qualification.
HR, human capital and OD consultants need to have a registered business or work for a professional services firm offering advisory services and have a degree in HR or a related field, or have a minimum of five-years-experience and at least one industry qualification.
News Source: HR In Asia
Read MoreThe Straits Times/4 October 2017
TOKYO (AFP) – The operator of the crippled Fukushima nuclear plant cleared a major regulatory hurdle Wednesday (Oct 4) to restart two reactors in Japan, its first since the 2011 tsunami sparked the worst atomic accident in decades.
The Nuclear Regulation Authority gave Tokyo Electric Power Co. (Tepco) preliminary approval to restart the two reactors at the Kashiwazaki-Kariwa plant, one of the world’s biggest and the largest in Japan.
The plant, in the central Japan prefecture of Niigata, has been idle since the disaster as have been many other nuclear power plants in Japan.
Triggered by a 9.0-magnitude earthquake in March 2011, a massive tsunami overwhelmed reactor cooling systems at the Fukushima Daiichi plant in northeastern Japan.
It caused reactor meltdowns, releasing radiation in the most dangerous nuclear disaster since Chernobyl in 1986.
On Wednesday, Tepco won safety approval as the authority judged the two reactors meet the stricter safety standards introduced after the disaster.
The decision is expected to be formalised after a month of public hearings but Tepco still needs to get local consent to bring the reactors online, which could take years.
Niigata Governor Ryuichi Yoneyama, who won the local election in 2016 for a four-year term, is known to be cautious about restarting Kashiwazaki-Kariwa.
Nuclear power is one of key issues at the October 22 general election in Japan, with Prime Minister Shinzo Abe favouring gradual restarts while his main opponent and currently Tokyo governor, Yuriko Koike, campaigning to cease nuclear power by 2030.
News Source: The Straits Times
Read MoreCNBC/3 October 2017
- A $1 billion fund will see Russia and Saudi Arabia strengthen their cooperation in oil, gas, electricity and renewable energy
- It signifies an increasingly close strategic partnership between the two oil-rich states
- King Salman will make the first ever state visit to Russia by a Saudi monarch
The world’s biggest oil producers, Russia and Saudi Arabia, have announced a $1 billion fund to invest in energy projects — marking another chapter in the blossoming economic and political partnership between the two countries.
The latest deal will see Russia and Saudi Arabia strengthen their cooperation in oil, gas, electricity and renewable energy, Russian Energy Minister Alexander Novak told Al Arabiya television Monday, Reuters reported.
It signifies an increasingly close strategic partnership between the two oil-rich states.
RBC Capital Markets’ Global Head of Commodity Strategy Helima Croft told CNBC on Tuesday that the $1 billion deal was “just the tip of the iceberg” and that she expected a lot more cooperation and joint ventures on oil, energy, infrastructure and public investment projects.
“It’s remarkable what’s going on with Russia and Saudi Arabia now. Back in 2015, Russia said it had no intention of cooperating with Saudi Arabia but look at it now… You just have to look at the last OPEC meeting in May and look at Saudi Arabia Energy Minister Khalid al-Falih and Russian Energy Minister Alexander Novak’s comments – it is like watching an OPEC ‘bromance,'” Croft told CNBC, refering to the increasingly close economic and political relationship between the two nations, particularly in terms of oil.
‘No courtesy call’
Leaders of the oil industry and energy ministers are heading to Russia this week for a meeting between OPEC and non-OPEC members, with all eyes on whether an extension to a deal restricting oil exports will be extended.
In a sign of the meeting’s significance, King Salman is also attending – marking the first ever state visit to Russia by a Saudi monarch.
Croft said that King Salman’s visit to Russia was “a total continuation of the trend that we discussed in this report. Russia has gone from saying in 2015 that it had absolutely no intention of cooperating with OPEC in 2015, to essentially playing the role of OPEC co-president.”
“For King Salman to make this visit to Russia now, with all the reports of his failing health and plans to hand over the reins to MBS (Crown Prince Mohammad bin Salman bin Abdulaziz Al Saud), to me signifies how important this strategic partnership has become to both sides,” she said.
The meeting in Moscow comes hot on the heels of a plan by Russia and Saudi Arabia, the de facto leader of OPEC, to set up a $1 billion fund to invest in energy projects, announced by Novak on Monday. The fund is expected to be finalized this week in Moscow and is designed to “extend cooperation” between the world’s largest oil producers.
Chris Weafer, senior partner at Macro Advisory Partners, told CNBC on Tuesday that King Salman’s attendance at the meeting was “very significant.”
“King Salman doesn’t do courtesy calls. The fact that he’s visiting Moscow – marking the first ever visit of a ruling sovereign of Saudi Arabia to Russia – just underlines how much the relationship between Russia and Saudi Arabia has changed over the last few years and more so in the as 12 months,” he told CNBC.
Making waves
Saudi Arabia and Russia made waves last year when they agreed (along with the rest of OPEC, albeit with some members more reluctant than others) to cut oil output by 1.8 million barrels a day in a bid to support and stabilize oil prices, which have declined since mid-2014 on the back of a glut in supply. In June 2017, the oil producers agreed to extend those cuts until March 2018.
Oil prices have failed to see the gains hoped from those cuts, however, with U.S. shale oil producers coming back online and demand still failing to keep up with supply. As of Tuesday midday, benchmark Brent crude was trading at $56.04 a barrel and West Texas Intermediate (WTI) at $50.51 with concerns of an over-supply still at the forefront of investors’ minds.
Russia’s Novak said Tuesday that oil exports would also be the focus of the Russia Energy Week 2017, which begins in Moscow on Wednesday. It is expected to be attended by more than half of OPEC’s 14 members, Reuters reported, with ministers due to focus on recommendations for the next meeting between global oil producers, scheduled for November.
There are also expectations that producers could discuss an extension to the deal to cut output beyond March 2018. RBC Capital Market’s Helima Croft believed the deal could be extended to June; meanwhile, Macro-Advisory’s Chris Weafer said the deal could be extended to run until fall 2018, saying that oil markets were not yet stable.
“We are not at the point where the oil price is safe,” he warned. “The original optimism that the oil market might reach some kind of equilibrium in late 2017 has largely disappeared… so I expect we’ll see an extension to the deal to cut output, although I expect we’ll hear that at OPEC’s next meeting in November.”
Miswin Mahesh, oil analyst at Energy Aspects, agreed that the oil giants could be more cautious in terms of announcing a further extension to the reduction in oil output.
“(Saudi Arabia and Russia) were both instrumental in brokering the global oil output deal, and now it opens a new area of cooperation in the energy sector between the two countries, in the wider energy spectrum (oil field services, cooperation in gas production and renewable projects among others),” he told CNBC via email Tuesday.
“(But) they are likely to continue monitoring the state of market fundamentals before announcing further extensions” and were likely to “play their cards close this time round, and not signal their decision to the market too early, so as to avoid being held hostage to the market’s pricing it too early and demanding more (as what happened last time).”
News Source: CNBC
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