Oil prices hit fresh highs on Libya unrest fears

Thursday, Feb 24, 2011

Oil prices have continued to climb, hitting their highest levels in two-and-a-half years, amid fears the unrest in Libya could spread to larger oil producing nations and disrupt supplies.

Brent crude hit $119.79 a barrel in early Thursday trade, before falling back to $116.80.

US light crude was up $3.65 at $101.80 a barrel, but earlier it had reached $103.41.

Oil firms have been suspending production in Libya this week.

France's Total, Spanish oil firm Repsol and Italy's ENI have all partly suspended operations.

Austrian firm OMV also suspended operations and Germany's Wintershall said it had shut down operations which produced up to 100,000 barrels of oil per day.

Market reaction

The last time prices were this high was in August 2008 and analysts are predicting more gains may be on the way.

European shares fell on Thursday, extending losses for the fourth consecutive session as investors expressed concern about the impact of the oil price spike on global growth.In London, the FTSE 100 was down 0.6% at 5886.16, while in Germany the Dax was 1.15% lower at 7111.82.

"The general unrest in the Middle East has knocked all the confidence out of the market," said Mark Priest, an equities trader at ETX Capital.

"We can not see a turnaround unless suddenly the situation is resolved in Libya," he added.

The high oil price also weighed on Asian stock markets. Japan's Nikkei 225 index lost 0.9% while South Korea's KOSPI shed 0.7%.

Supply worries

Oil prices have been rising for months, but the uprising in Libya has caused a sharp increase in crude costs.

Libya is the world's 12th-largest exporter of oil, with the majority of its output going to Europe.

According to the International Energy Agency, Libya produces 1.6 million barrels per day of crude.

Barclays Capital estimates that so far about one million barrels per day of production has been shut down.

On Tuesday, Saudi Arabia's Oil Minister Ali al-Naimi had tried to reassure markets that his country's spare production capacity could help to "compensate for any shortage in international supplies".

Saudi Arabia has 4 million barrels per day of spare capacity which it can bring online if needed.

Spare capacity

Investment banking firm Goldman Sachs said that another regional disruption could create severe oil shortages and require demand rationing.

"The market cannot accommodate another disruption, in our view, with the problems in Libya potentially absorbing half of Opec's spare capacity," said Jeffrey Currie of Goldman Sachs in a research note.

Analysts say that if oil prices keep climbing, it could push up the cost of fuel and food. This would hit consumers in the pocket and could result in slower economic growth and weaker corporate earnings.

Petrobras acquires exploratory block in Benin, Africa

Wednesday, Feb 23, 2011

Petrobras, inform that acquired 50% interest in Block 4, located off the coast of Benin – a country situated on the west coast of Africa -, from Compagnie Béninoise des Hydrocarbures (CBH), a subsidiary of Lusitania Petroleum, which maintains the remaining 50%.

Petrobras aims to find Light oil, reproducing the discoveries that took place in the African continent, aligned with the company’s strategy to seek for opportunities in deep and ultra deep waters in the region were we already have operations in countries like Nigeria, Angola, Tanzania, Namibia and Libya.

The block covers an area of approximately 7.4 thousand square kilometers, at a water depth that varies from 200 to 3,000 meters, at an average distance of 60 Km from the coast.

CBH continues to be the operator of the asset; however, Petrobras has the right to take over the operation. The work commitment assumed by the company is to collect and process 2,250 Km2 of 3D seismic data still this year. Once the exploratory potential of the area is confirmed, the consortium will undertake to drill three wells.

Baklon's Inside Story :-US' worst environmental disaster?

We ask if the oil spill in the Gulf of Mexico was over-hyped at BP's expense?
The commission investigating the BP oil spill in the Gulf of Mexico has found BP and other companies guilty of complacency and blamed cost cutting and poor management and engineering decisions.

The National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling has released forward chapters in advance of its full report, which will come out on January 11.

But was this really the worst environmental disaster in US history or was it over-hyped at BP's expense?

To discuss this, Inside Story is joined by Turki Hemsh Al Terkawi, an expert on offshore drilling, and Chris Calland, a senior account manager at Political Lobbying and Media Relations.

Graft war offsets oil price impact on Shilling

Rising oil prices in the global economy could depress the shilling further against the dollar, giving exporters an opportunity for foreign exchange gains that have eluded them in the recent past.

Market analysts, however, said Kenya’s rising credibility in international markets following the purge on graft that has seen three ministers hounded out of office in as many months could support the currency through direct investments and aid inflows.

“Oil Imports make up about 25 per cent of the local dollar demand, and the rising oil prices could put pressure on the shilling,” said Andrea Balongo, senior trader at Kenya Commercial Bank.

On Wednesday, the Kenyan shilling weakened against the dollar in response to the greenback gaining against other currencies globally.

Commercial banks quoted the shilling at 81.00/81.10 per dollar, down from 80.90/81.00 on Tuesday.

Traders expect the shilling to trade in a range of 80.80-81.30 as the market returns to normal business.

Traders said that in the long run, the intensifying war against corruption would likely boost investor confidence after a third minister was forced to step down on Tuesday on abuse of office charges.

A day earlier, the Attorney General had allowed the Kenya Anti-Corruption Commission (Kacc) to prosecute Mr Henry Kosgey in a rare rapport hailed as a breakthrough in the fight against graft.

Sudan oil; Blessing or curs

HomeNews :- Uranium being smuggled via EA to Iran - WikiLeaks

Secret messages published by WikiLeaks show great concern on the part of US diplomats with alleged smuggling of uranium from poorly secured mines and nuclear facilities in the Democratic Republic of Congo.

In one leaked cable from September 2006, the US embassy in Dar es Salaam suggests that uranium from the DRC may be passing through Tanzania en route to Iran.

Such trafficking is “common knowledge to two Swiss shipping companies,” this message states, citing “a senior Swiss diplomat” as the source of the allegation.

In addition to its worries about Iran’s nuclear programme, the United States fears that raw uranium and processed nuclear material could make its way from Central and East Africa into the hands of terrorist networks.

A United Nations report in November revealed that a Rwandan gang operating in the eastern DRC tried unsuccessfully in 2008 to sell six containers of what was claimed to be uranium mined during the Belgian colonial era.

American concern was highlighted last week by the signing of an agreement with the DRC aimed at preventing trafficking of nuclear and radioactive materials. The DRC and Tanzania are both rich in uranium resources.

Congo was the source of the uranium used in the US nuclear weapons that destroyed Hiroshima and Nagasaki at the end of World War II.

And a July 2007 message from the US embassy in Kinshasa notes that “all of Katanga Province could be said to be somewhat radioactive.”

Tanzania, meanwhile, was reported by Reuters in May last year to have at least 54 million pounds (108 million kilos) of uranium oxide deposits.

Tanzania expects to begin mining this motherlode in the coming year, Reuters added, reporting that the French energy group Areva is interested in exploiting the country’s uranium deposits.

Uranium is a valuable commodity. The July 2007 cable from the US Kinshasa embassy notes that the price for a pound of the mineral increased from $15 in 2004 to $135 in 2007.

(Uranium currently sells on spot markets for about $62 per pound.) The DRC also maintains a nuclear research centre known as CREN-K at which “external and internal security is poor, leaving the facility vulnerable to theft,” a September 2006 cable warns.

Reporting on a tour of the Kinshasa centre by US embassy officials, this message notes there are “numerous holes” in a fence around the facility as well as “large gaps where the fence was missing altogether.”

Farmers grow manioc in a field next to the centre’s nuclear waste storage building, the cable adds, observing parenthetically that elevated levels of radiation had been detected in this manioc plot.

“It is relatively easy for someone to break into the nuclear reactor building or the nuclear waste storage building and steal rods or nuclear waste, with no greater tool than a lock cutter,” the cable continues. “It would also be feasible to pay a CREN-K employee to steal nuclear material.”

Inside Baklon's story: BP OIL SPILL - Conspiracy Theory!

BP OIL SPILL - Conspiracy Theory With Jesse Ventura

BP And Total Show Keen Interest In Algeria Oil And Gas.

Anadarko Announces Major Discovery Offshore Mozambique

Houston. Anadarko Petroleum Corporation (NYSE: APC) today announced its third major natural gas discovery this year in the Offshore Area 1 of Mozambique's Rovuma Basin at the Lagosta prospect. The discovery well encountered a total of more than 550 net feet of natural gas pay in multiple high-quality Oligocene and Eocene sands.

"The Lagosta discovery, located approximately 16 miles to the south of the previously announced Barquentine discovery and 14 miles to the southeast of the Windjammer discovery, significantly expands this emerging world-class natural gas province," Anadarko Sr. Vice President, Worldwide Exploration Bob Daniels said. "The Lagosta discovery continues to validate our geophysical models, and we expect to keep the Belford Dolphin drillship in the basin for the foreseeable future to continue a very active exploration and appraisal program, including at least one planned drillstem test in 2011.

"Although additional appraisal drilling will be required, we believe the three discoveries announced to date already exceed the resource size threshold necessary to support an LNG (liquefied natural gas) development, and we have assigned an integrated project team to begin advancing commercialization options. Given the global LNG trade and its indexing to the global crude market, this resource can provide tremendous economic value for the people of Mozambique, the government and the partnership," added Daniels.

The Lagosta exploration well has been drilled to a current depth of approximately 13,850 feet in water depths of approximately 5,080 feet. The partnership plans to drill to a total depth of approximately 15,900 feet to evaluate a deeper zone. Once operations are complete at Lagosta, the partnership expects to mobilize the rig 17.5 miles to the southwest to drill the Tubarão exploration well, which also is located in the 2.6-million-acre Offshore Area 1.

Anadarko is the operator of Offshore Area 1 with a 36.5-percent working interest. Co-owners in the area are Mitsui E&P Mozambique Area 1, Limited (20 percent), BPRL Ventures Mozambique B.V. (10 percent), Videocon Mozambique Rovuma 1 Limited (10 percent) and Cove Energy Mozambique Rovuma Offshore, Ltd. (8.5 percent). Empresa Nacional de Hidrocarbonetos, ep's 15-percent interest is carried through the exploration phase.

A map of Anadarko's position in the Offshore Area 1 of the Rovuma Basin and the Lagosta discovery will be available under the "Media Center/Anadarko News" tab at www.anadarko.com.

Anadarko Petroleum Corporation's mission is to deliver a competitive and sustainable rate of return to shareholders by exploring for, acquiring and developing oil and natural gas resources vital to the world's health and welfare. As of year-end 2009, the company had approximately 2.3 billion barrels-equivalent of proved reserves, making it one of the world's largest independent exploration and production companies. For more information about Anadarko, please visit www.anadarko.com.

This news release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Anadarko believes that its expectations are based on reasonable assumptions. No assurance, however, can be given that such expectations will prove to have been correct. A number of factors could cause actual results to differ materially from the projections, anticipated results or other expectations expressed in this news release, including Anadarko's ability to successfully drill, complete, test and produce the wells and prospects, or successfully develop or commercialize the LNG or related projects, identified in this news release. See "Risk Factors" in the company's 2009 Annual Report on Form 10-K, Quarterly Report on Form 10-Q for the quarter ended Sept. 30, 2010 and other public filings and press releases. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date hereof. Anadarko undertakes no obligation to publicly update or revise any forward-looking statements.

Oil’s Most Accurate Forecasters See Second-Highest Price in 2011

New York. Oil demand increasing at almost twice the pace of supply is spurring the most-accurate forecasters to predict the second-highest price on record in 2011.

Sanford C. Bernstein & Co., whose estimate last January was within 1 percent of 2010's mean price of $79.60 a barrel, says crude will average $90 this year. Natixis Bleichroeder Inc., which tied with Bernstein, sees $100 a barrel, 26 percent higher than in 2010. Global oil use will increase 1.7 percent to a record 87.8 million barrels a day this year, and output will rise 0.9 percent, according to the U.S. Energy Department.

While economic growth in China, the world's biggest energy consumer, will slow to 9 percent this year from 10 percent, that would still be three times the rate in the U.S. and six times Europe's, according to the median estimate in Bloomberg surveys of economists. As oil prices rise, spare production capacity may drop the most since 2003 as exporters including the 12 members of OPEC boost supply, according to Bernstein.

"We expect OPEC to have to increase their production, causing a reduction in spare capacity, which to us is increasingly becoming a more important determinant of oil prices," said Oswald Clint, who replaced Neil McMahon in August as Bernstein's head oil analyst in London. "Since China became a more important part of the demand pie, the spare-capacity factor has become more important."

Highest Since 2008

Crude futures on the New York Mercantile Exchange will average $87 in 2011, based on the median of 34 analyst estimates compiled by Bloomberg. That would be the highest since the record $99.75 reached in 2008 and 40 percent more than 2009's average of $62.09.

Exxon Mobil Corp., BP Plc and Royal Dutch Shell Plc are forecast to report increased profit this year, according to analysts' estimates compiled by Bloomberg. Airline earnings may drop 40 percent partly because of increased fuel costs, the International Air Transport Association said Dec. 14.

Oil is likely to trade at $75 to $120 this year, said Roger Read, who since giving his forecast for an average of $100 has left New York-based Natixis Bleichroeder to join Morgan Keegan & Co. in Houston.

Crude gained 15 percent last year, less than the 20 percent advance of the Standard & Poor's GSCI gauge of 24 commodities. The Standard & Poor's 500 index of stocks jumped 13 percent, while bonds as measured by Bank of America Merrill Lynch's Global Broad Market Plus Index returned 4.9 percent.

Spare production capacity in the Organization of Petroleum Exporting Countries is about 5.7 million barrels a day and sufficient to absorb this year's projected consumption increase, according to Bernstein's Clint.

U.S. Stockpiles

Higher-than-average U.S. stockpiles will limit price increases this year, said Frank Schallenberger, head of commodities at Landesbank Baden-Wuerttember in Stuttgart, Germany, who predicts $87 oil this year. U.S. inventories were 339.4 million barrels as of Dec. 24, 7.6 percent above their five-year seasonal norm, the U.S. Energy Department said.

"There isn't much for the bulls," said Schallenberger, whose 2010 estimate of $78 was about 2 percent below last year's average. "There's still too much oil."

This year's projected average of $87 is 4.8 percent lower than the closing price of $91.38 on Dec. 31. Prices have almost tripled since reaching a low of $32.40 in December 2008, when OPEC agreed to record production cuts. The group acted after crude tumbled from an all-time high of $147.27 in July 2008.

Futures for February delivery climbed as much as 0.5 percent to trade at $91.85 a barrel in New York today.

OPEC's Range

OPEC, which accounts for 40 percent of world production, may raise supply if needed, Secretary-General Abdalla El-Badri said on Dec. 11 at the group's last meeting in Quito, Ecuador. Ali Al-Naimi, oil minister for Saudi Arabia, the group's biggest producer, prefers $70 to $80, he said at the meeting.

"We subscribe to the notion that OPEC is the central bank of oil," said Jason Schenker, president of Prestige Economics LLC in Austin, Texas, one of the five most-accurate forecasters in 2010. "If global growth continues to rise, even at a decelerated pace, there may very well be a need for OPEC to raise production quotas," he said, predicting oil at $93.

OPEC said Dec. 11 it will skip a regularly scheduled first- quarter meeting, a sign that it's ready to let prices climb, said Lawrence Eagles, head of oil research at JPMorgan Chase & Co. in New York. Crude will average $93 this year, according to Eagles, whose 2010 forecast was $78.25.

"At any point, OPEC could bring on extra supply and push the market down," he said. "We don't think they'll do that."

Not Enough

OPEC'S daily production capacity will shrink by about 1 million barrels to 4.7 million as countries outside the group struggle to make up the shortfall, according to Clint. Supply from Russia, the largest non-OPEC producer, will drop 2 percent this year, while output from Mexico, which provides about 13 percent of U.S. imports, will fall 9 percent, he said.

Shell's earnings per share will rise to $3.71 this year from $3.03 in 2010, according to the mean of as many as 22 analysts' forecasts compiled by Bloomberg. Exxon's will climb to $6.55 from $5.92, based on 10 estimates. BP will post earnings per share of $1.12, compared with a loss of 23.3 cents a year earlier, according to 18 estimates.

Shell, based in the Hague and Europe's biggest oil company, jumped 15 percent last year in Amsterdam trading. Irving, Texas- based Exxon, the biggest publicly traded crude producer, rose 7.6 percent in New York. BP, which agreed last year to a payment of $20 billion for its role in the biggest offshore oil spill in U.S. history, fell 22 percent in London.

Airline profits will drop a total of $6 billion to $9.1 billion as fuel costs rise and passenger demand wanes, according to the Montreal-based International Air Transport Association.

Driven by China

Oil consumption will increase by 1.3 million barrels a day, or 1.5 percent, to a record 88.8 million in 2011, according to the Paris-based International Energy Agency. Demand will fall 0.7 percent in Europe and be little changed in the U.S. China, which accounts for 11 percent of the global total, will consume 9.7 million barrels a day this year, 4.8 percent more than last year, the IEA said Dec. 10.

U.S. demand may also rise this year as the Federal Reserve purchases $600 billion of Treasuries through the first half of this year to sustain the recovery, according to JBC Energy, a Vienna-based consultant.

"The growth story is the primary focus," said Prestige's Schenker, whose 2010 forecast of $78 was about 2 percent below the annual average. "If speculative forces push crude markedly higher, it may be difficult for OPEC quota changes to significantly impact prices."

Total In Talks To Enter Congo Oil Block

London. Total SA (TOT) is in talks to enter an oil block owned by South African companies in Eastern Congo, people familiar with the matter said this week as majors show renewed interest in the resources-rich African nation.

French oil giant Total is in discussions with South African companies SacOil Holdings Ltd. (SCL.JO) and DIG Oil for a stake in a block near Lake Albert in exchange for covering initial exploration costs, the people said.

The talks are focusing on a 35% stake in Bloc III "and a carry-through initial exploration" and "little cash upfront," one person said.

Total has already struck a deal to help develop acreage on the Ugandan side of Lake Albert in blocks operated by Tullow Oil PLC (TLW.LN). China National Offshore Oil Co. (CEO), or Cnooc, is also part of the Ugandan deal.

Total, which is already producing from blocks in the neighboring Congo, has made Africa one of its priorities.

Eni SpA (E) of Italy and Exxon Mobil Corp. (XOM) have also expressed interest in joining the acreage, the people said.

In addition, Eni has also held talks with Congo to enter Bloc IV, in the same area, which is currently unattributed, the people said.

Total, Eni and ExxonMobil declined to comment. SacOil didn't return a request for comment.

"A number of companies have expressed interest in entering the block," said Andrea Brown, the businesswoman who controls DIG Oil, formerly known as Divine Inspiration Group Pty Ltd. But "it is far too early in any of the discussions" to name any of the contenders, she said.

Brown said "the budget and work programme were approved [last month] with a 7, 000 kilometers line airborne gravity and magnetic survey due to commence end of January."

SacOil and DIG Oil were among companies whose rights on Lake Albert blocks were sanctionned in a Congolese presidential decree earlier this year.

Soco International PLC (SIA.LN) and Dominion Petroleum Ltd (DPL.LN) have rights to another block in the area. And Caprikat Ltd. and Foxwhelp Ltd., linked to South African President Zuma's nephew Khulubuse Zuma, have two licences which Tullow has disputed.