All five of Total SA (FP)’s refineries in France are resuming operations after employees at Gonfreville voted to return to work, the last to come back after a strike that began two weeks ago, the CGT union said.
All facilities are resuming activity, Eric Sellini, a CGT union representative, said by phone today. The 247,000 barrel-a-day refinery at Gonfreville in northern France, Total’s largest in the country, is the third site since yesterday where staff have ended industrial action. Officials at Paris-based Total haven’t returned two phone calls and an e-mail seeking comment on the plant’s status. European diesel traded near the highest in two months this week, boosted by the strikes, which began on Dec. 13.
“We estimate that France will have lost about 5.1 million barrels of distillates and 2.5 million barrels of gasoline production during those strikes,” Olivier Jakob, managing director of Petromatrix GmbH in Zug, Switzerland, said today in an e-mailed report. “With the French refineries gradually coming back we expect to see the European diesel differentials give back some of their recent gains.”
The premium for benchmark diesel barges in the Amsterdam, Rotterdam, Antwerp oil hub was much as $15 a ton more than benchmark ICE gasoil futures on Dec. 24, up from $12.50 on Dec. 13, according to a survey of traders and brokers monitoring the Platts pricing window. Diesel is France’s main transport fuel.
Staff Votes
Staff at the La Mede refinery voted overnight to resume work, and the Feyzin site ended industrial action yesterday, according to CGT.
Total’s refineries in France also include the Donges plant, where a strike ended last weekend, and the Grandpuits facility where workers went back to work on Dec. 17. The sites can collectively process about 800,000 barrels of crude a day, or 60 percent of the nation’s output, according to data compiled by Bloomberg. Demand for oil products in France averaged 1.76 million barrels a day in the third quarter, figures from the International Energy Agency published on Dec. 11 show.
At least two unions representing Total’s refining workers, CFDT and CGC-CFE, agreed to a pay deal with the company last week. CGT, which called for the industrial action, didn’t sign the accord, pressing for further benefits.
Total’s crude-processing and petrochemicals business in France may lose as much as 500 million euros ($690 million) this year, a company official said last week, asking not to be identified, citing corporate policy.
To contact the reporter on this story: Konstantin Rozhnov in London at krozhnov@bloomberg.net
To contact the editor responsible for this story: Stephen Voss at sev@bloomberg.net
* U.S. crude stockpiles rose last week, gasoline falls - API
* Coming up: U.S. EIA report, Friday 11 a.m. EST (Rewrites, adds analyst's quote, updates prices)
By Jeanine Prezioso
NEW YORK, (Reuters) - Crude oil futures edged higher on Thursday boosted by rising gasoline and ultra low-sulfur diesel prices, which soared to more than three-month highs after industry data earlier this week showed a steep decline in refined product inventories.
U.S. gasoline and ULSD, more commonly known as heating oil, futures both rose close to 1 percent as large French refineries remained offline due to strikes, while demand increases.
While U.S. crude stocks unexpectedly rose last week, refineries boosted output and distillate and gasoline stockpiles fell, a report from industry group the American Petroleum Institute said late on Tuesday, indicating strong demand for oil products, including exports.
"Seasonally, this is the time of year when gasoline and heating oil are in the middle of their rally," said Bill Baruch, senior market strategist at iitrader.com in Chicago.
Supply disruptions in Africa supported Brent while the rise in U.S. crude stockpiles capped gains in U.S. benchmark West Texas Intermediate.
Brent crude rose 9 cents to $111.99 a barrel by 12:21 p.m. EST (1721 GMT) after touching an intraday high of $112.12, the highest since Dec. 5.
U.S. crude was up 32 cents to $99.54. Both markets were shut for Christmas on Wednesday.
The spread between the two benchmarks has steadied around $12.50 per barrel for the last four sessions in thin holiday trade. It was last trading at $12.45 per barrel.
U.S. gasoline futures continued to rise, hitting $2.8398 per gallon, their highest level since Sept. 9, before easing to trade at $2.8393. ULSD futures traded to their highest level since Sept. 16 at $3.1040 per gallon. The contract last traded at $3.1010.
Traders will next look to the U.S. government's Energy Information Administration report to gauge supply and demand. The data is due on Dec. 27 at 11:00 a.m. EST, delayed from its usual Wednesday release by the Christmas holiday.
U.S. crude also drew support from jobs data showing the number of Americans filing new claims for unemployment benefits fell last week to the lowest level in nearly a month, a hopeful sign for the labor market in the world's top oil consumer.
In Europe, workers extended a strike over pay at two French refineries, while lifting action at a third plant. A majority of workers at the 247,000 barrel-per-day Gonfreville refinery, Total's largest in France, and at the 153,000-bpd La Mede refinery voted to extend their action, union officials said.
The strikes, in addition to poor refinery margins, have weighed on European crude demand, say analysts.
Supply outages in Africa are also in focus and added some geopolitical risk premium to prices. The government in South Sudan, which is threatened by civil war, has shut 45,000 bpd of production.
Export terminals remain closed in Libya, where output is around a tenth of the 1 million bpd it pumped in July. Tribal leaders will hold more talks on reopening ports in eastern Libya but the government will not negotiate with protesters blocking them, the prime minister said. (Reporting by Alex Lawler in London and Florence Tan in Singapore; Editing by Marguerita Choy)
Libya’s Ministry of Oil and Gas announced today that it is producing an average of 233,889 barrels of oil per day, up to 21 December 2013. It is also producing just over two million (2, 058.500) cubic feet of gas.
It will be recalled that Libya’s oil production, which had reached 1.5 million bpd after the February 17th Revolution, has been the subject of numerous political, social and economic demands ranging from the Cyrenaica Federalists in the east, the Tebu and Tuaraeg in the south and the Amazigh in the Nefusa mountains. There have also been stoppages by the war injured and for various labour despites since 2011.
The minority Amazigh, Tebu and Tuarage populations, suppressed for years under Qaddafi , are taking full advantage of a weak interim government to press home their demands, using oil and gas sources and pipelines in their regions as leverage.
As part of the campaign against the theft of the nation oil resources, the authorities of the Nigerian Navy have handed over 1,646 suspected oil thieves to the police, the Economic and Financial Crimes Commission and the Nigerian Security and Civil Defence Corps for prosecution.
The Chief of Naval Staff, Vice Admiral Dele Ezeoba, who disclosed this at the inauguration of the Chief of Naval Staff Strategic Guidance ‘02’ in Abuja said the suspects were arrested between October 12 and September 13, 2013.
Ezeoba also said operatives of the Navy also destroyed 1,556 illegal refineries, 1443 wooden boats and 69, 606 auxiliary equipment during the period.
The Navy Chief added that the service rescued two vessels -MV Crow and MT Norte- which were carrying 17,000 metric tonnes of gasoline as of the time they were hijacked by the pirates.
He said the efforts of the Navy had resulted in a drastic reduction of the incidents of piracy and oil theft in the nation’s maritime domain.
He added that the Navy responded effectively to most of the alerts it received on piracy and sea robbery and was investigating others.
Dirty tanker rates on key Asian freight routes could edge down next week due to year-end holidays, but are likely to remain firm, ship brokers said on Friday.
Rates on the benchmark very large crude carrier (VLCC) export route to Japan from the Middle East on Thursday rose to W62.5 in the Worldscale measure, up from W61 a week earlier.
But Shell and Exxon paid a premium, fixing tankers at W63.5 on Thursday and Wednesday, for early January loading positions, chartering data showed.
"These were very much positional fixtures so charterers paid a higher rate," said one Singapore-based tanker broker.
"The market was quiet early in the week, but has started to come alive in the past two days. We expect it to quieten again next week."
Norwegian shipbroker Fearnley said in a research note that rates would remain around current levels.
Charter rates for VLCCs from West Africa to China remained unchanged at W59.5 on Thursday from the week before.
Unipec, the chartering and shipping subsidiary of Sinopec and Taiwan energy company CPC, were both active on Thursday, according to chartering data.
But the market has been flat as charterers remained quiet, a VLCC broker said.
Rates for 80,000-tonne aframax tankers from Southeast Asia to East Coast Australia continued to surge, rising to W110 on Thursday, up from W105 a week earlier.
"Charter rates started to come off on Thursday as charterers concluded business ahead of the holiday. We think that softening will continue," said a Singapore-based aframax broker.
In the clean tanker market, rates for medium range tankers travelling to Japan from Singapore climbed to W117 on Thursday, against last Thursday's close of W114.
Charter rates are expected to remain relatively firm because tonnage is tight and charterers want to fix their remaining cargoes before the end of this year, Fearnley said.
The Organization of Petroleum Exporting Countries will keep crude shipments stable through to early January as the first of two surges in winter fuel demand passes, according to tanker tracker Oil Movements.
OPEC, supplier of about 40 percent of the world’s oil, will boost sailings by 50,000 barrels a day, or 0.2 percent, to 23.98 million barrels in the four weeks to Jan. 4, the researcher said today in a report. That compares with 23.93 million in the period to Dec. 7. The figures exclude two of OPEC’s 12 members, Angola and Ecuador.
“This is a slowing-down number,” Roy Mason, the company’s founder, said by phone from Halifax, England. “There are two winter surges, with one just before Christmas and that’s already happened. The second one is in February, that’s still coming up and in the meantime it’s quiet.”
Global oil demand typically climbs during the fourth quarter with rising consumption of heating fuels during the Northern Hemisphere winter. This peak is divided into two stages, with the first ending in late December as refiners reduce their intake of crude in preparation for maintenance work the following spring, according to Oil Movements. Brent futures have dropped about 0.9 percent this year, trading near $110 a barrel in London today.
Middle Eastern exports will decrease 0.3 percent to 17.52 million barrels a day in the month to Jan. 4, compared with 17.57 million in the previous period, according to Oil Movements. The figures include non-OPEC nations Oman and Yemen.
Crude on board tankers will climb by 1.7 percent to 489.87 million barrels through Jan. 4 from 481.52 million in the previous period, data from Oil Movements show. The researcher calculates volumes by tallying tanker bookings and excludes crude held on vessels for storage.
OPEC’s members are Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates and Venezuela. The group will next meet on June 11 at its headquarters in Vienna.
Photographer: Simon Dawson/Bloomberg While Goodluck Jonathan, president of Nigeria, has not yet presented his 2014 budget, in an interim plan released on Sept. 18 he proposed cutting spending by 10 percent to 4.5 trillion naira ($28.3 billion). Even if that number is passed by parliament, it may not be the final figure for government outlay.
Nigerian President Goodluck Jonathan is facing the biggest test of his three years in office after the central bank questioned the lack of accounting for $50 billion in oil revenue and a former leader criticized him for failing to tackle corruption.
Former President Olusegun Obasanjo, a stalwart of the ruling People’s Democratic Party, said in a letter to Jonathan this month that he has failed to tackle graft and security threats in Africa’s biggest oil producer. He also accused him of widening a split between the mainly Muslim north and largely Christian south in a bid to retain power.
Obasanjo’s criticism came after Central Bank of Nigeria Governor Lamido Sanusi wrote Jonathan a letter alleging that the Nigerian National Petroleum Corp. is withholding more than three-quarters of oil revenue earned from January 2012 to July this year. The cumulative effect has been to dim Jonathan’s chances of winning Nigeria’s election scheduled for 2015.
“If the vote was tomorrow, the PDP would lose, which would be unprecedented for a ruling party in Nigeria,” Manji Cheto, vice president at consultancy Teneo Intelligence in London, said in a Dec. 16 phone interview. “The prevailing narrative about the advantages of incumbency doesn’t seem to be working in Jonathan’s favor.”
Finance Minister
Nigeria can account for the $49.8 billion alleged to be missing, Finance Minister Ngozi Okonjo-Iweala told reporters today in Abuja, saying the number was a product of “misconceptions and misunderstandings.”
A southern Christian who won elections in 2011, Jonathan, 56, hasn’t said if he will run in next vote. His administration is battling Islamist militants of the Boko Haram group in the north, rampant oil theft, falling revenue from crude oil exports and piracy off Nigeria’s coast.
All this has strengthened the opposition All Progressives Congress party. Five governors formerly with the ruling PDP defected last month to the APC, which has called for the president’s impeachment, a demand presidential spokesman Reuben Abati said was “reckless and irresponsible.”
In the House of Representatives, 37 members elected under the PDP defected to the APC, Speaker Aminu Tambuwal said during today’s session.
Voters Tired
Were the election to be held immediately, “there is a strong likelihood the APC might win, not because they represent a better option, but because people are tired of this administration,” Idayat Hassan, director of Abuja-based Centre for Democracy and Development research group said in a phone interview. “With corruption they see nothing is being done, with security, they see nothing is happening.”
Since May 1,224 civilians, troops and insurgents have been killed in fighting with Boko Haram, the United Nations said on Dec. 16.
The charges in Sanusi’s letter underline concern about the opacity of Nigeria’s public finances, according to analysts including Samir Gadio, strategist at Standard Bank Group Ltd.’s London unit.
“The CBN expressed similar concerns about the marginal level of fiscal savings and the NNPC’s alleged failure to remit crude oil sale proceeds to the Federation Account,” he said in e-mailed comments. “Even though NNPC officials denied the accusation, the debate about possible systemic leakages in the oil sector is likely to gain momentum.”
Oil Revenue
The Excess Crude Account, which the government uses to save oil revenue that comes in above the benchmark crude price set in the budget, stood at under $5 billion on Oct. 31, down from about $9 billion at the beginning of the year, the finance minister said that day.
Minister of State for Finance Yerima Ngama was reported on Dec. 13 in ThisDay as saying the balance had fallen to $3.18 billion.
The spot price of Nigeria’s benchmark Qua Iboe crude has exceeded $100 a barrel for most of the year, above the 2013 budget benchmark of $79. It dipped to $99.50 in April, and was trading at $113.81 a barrel as of 2:06 p.m. in London today.
Foreign-exchange reserves, which the central bank has been selling to support the naira, are at $44.4 billion, according to central bank data, down from $48.4 billion in June.
“The foreign-exchange reserves position in Nigeria is not as robust as one would expect it to be given they are generating more than $90 billion per year in oil revenue,” Angus Downie, head of economic research at Ecobank in London, said in a phone interview. “The allegation of the unaccounted $50 billion highlights insufficient transparency in public finances.”
Sanusi’s Exit
Sanusi, who was appointed by Jonathan’s predecessor and plans to step down from his post when his term expires in June, has said the central bank is bracing for public spending “shocks” in the approach to the election.
While Jonathan has not yet presented his 2014 budget, in an interim plan released on Sept. 18 he proposed cutting spending by 10 percent to 4.5 trillion naira ($28.3 billion). Even if that number is passed by parliament, it may not be the final figure for government outlay.
“One thing we’ve noticed in the fiscal account is that when the federal government comes up with an estimate for the budget deficit, we make allowances for deterioration, as there is a trend towards off-budget expenditure,” said Gaimin Nonyane, senior macroeconomics specialist at Ecobank.
To try to reassert his authority and bolster his election chances, Jonathan may try to force PDP chairman Bamanga Tukur to resign. That could help ease the schism between his presidency and party members who say he should respect a convention to alternate the presidency between northern and southern politicians by vowing not to run in 2015, Cheto said.
“January could become his last window of opportunity either to sack Tukur or, if the party decides that’s not good enough, Jonathan will have to go, because there’ll be no way he’ll win the nomination at the party primary, and if that happens then his political future is over,” she said.
After months of negotiations leading up to what was thought would be an end to the blockade of Libya's oil export terminals on 16 December, the ports remain closed for the foreseeable future.
Tribal leaders in the eastern Cyrenaica region had pledged to reopen the ports and allow oil exports to resume provided the central government in Tripoli met a number of conditions.
It has been reported that these conditions were not met.
Blockades of the key ports of Es Sider, Marsa el-Hariga, Ras Lanuf and Zueitina - with a combined export capacity of 740,000 b/d - were ordered by rebels demanding more autonomy for the Cyrenaica region of Libya.
Libyan oil minister Abdel Bari al-Arousi is quoted as saying last week that he 'was hopeful exports would resume shortly and reach pre-crisis levels quickly once blockades were lifted'.
It is unclear at this point if or when the blockades will be lifted, though it has been reported that Libyan prime minister Ali Zeidan is willing to talk about conditions with tribal elders only.
- See more at: http://www.tankstoragemag.com/industry_news.php?item_id=7197#sthash.Fr8WqnuP.dpuf
The Energy Department says domestic production of oil is increasing so quickly that it will push global prices lower over the next few years, which could bring down prices at the pump. The report also says the U.S. will need to import just 25 percent of the oil we use by 2016, down from about half just a few years ago.
Nigeria's oil giant, NNPC - Nigeria’s oil giant, Nigerian National Petroleum Corporation (NNPC), on Friday faulted claims by the Governor of Central Bank of Nigeria (CBN), Sanusi Lamido Sanusi, that it failed to remit a total sum US$ 49.8 billion accrued revenue from crude oil sales to the coffers of the Federal Government.
NNPC Group Managing Director, Mr. Andrew Yakubu, told journalists in Abuja that the processes of remittances into government coffers was not hidden and that the claims of the CBN governor cannot be explained on the altar of ignorance.
Yakubu said that as the government banker, the CBN Governor is part of the statutory body that reconciles all payments due to the Federal Government.
The report by the CBN Governor has elicited wide reaction in the country with the House of Representatives, which is dominated by opposition lawmakers, constituting a panel to investigate the alleged diversion of funds.
But the NNPC boss said: “We are taken aback by the comment of the CBN governor because most of our operations are multi-agencies transactions. All agencies involved meet regularly where reconciliation is done and lifting numbers are agreed to jointly and are signed off before the lifting of our crude oil.
'Operations at the terminals that have to do with loading is also done by all the agencies particularly and is championed and driven by all the regulatory agencies who are the arbiters of numbers.
'And they superintend over all the operations. So, NNPC is not a sole player in the entire business of the oil and gas value chain.
“Our functions are purely professional. We are surprised an issue that was clarified by the Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke, about four months ago is re-surfacing now at this time that the political atmosphere is charged.
Yakubu stressed that the financial inner workings of the oil industry dictates that the CBN, NNPC, Federal Inland Revenue Service (FIRS), Department of Petroleum Resources (DPR) meet regularly to reconcile liftings, sales and remittances of proceeds and that the data presented are jointly reconciled by CBN, NNPC FIRS and DPR.
Against insinuations that its accounts are not audited, the NNPC helmsman stated: “The audit of the NNPC was ordered by the Minister of Petroleum Resources a couple of months ago and I can confirm here that the audit process is on-going.
And against the figure of 1.287 billion barrels that the CBN claimed were recorded between 1 January 2012 and 31 July 2013, the NNPC said the actual figure is higher at 1.330 billion barrels.
Yakubu hinted that the total liftings during the same period was also higher at 618,552 million barrels as against the 594,024 million barrels as stated by the CBN.
The NNPC chief explained: “The proceeds from the total NNPC liftings comprising Federation Equity, Royalty Oil, Tax Oil, Volume for Third Party finance and NPDC equity amount to US$ 67.12 billion as against the US$ 65.33 billion stated. NNPC remitted its portion, which is US$ 18.48 billion (27.5%) into the Federation Account being the total proceeds from Equity Crude and gas sales of which CBN acknowledged receipt of US$ 15.528billion (24%).
'At this point, we wish to categorically state that all the proceeds from NNPC have been remitted as statutorily required.'
On the issue of US$ 49.8 bilion or 76% of total national liftings and the alleged unremitted funds, 'we would like to clarify that this represents the balance of other streams as stated above.”
The Tema Oil Refinery (TOR) Limited is the only precious refinery in our country. It has the mandate to process crude oil and market petroleum products. Many pioneer inhabitants of Tema still refer to the company as ‘GHAIP’ this is because it was originally named the ‘Ghanaian Italian Petroleum (GHAIP) company’ and incorporated as a private limited liability company under the companies ordinance on December 12, 1960.
History has it that it was 100% owned by Ente Nationalie Indrocarburi (ENI) Group of Italy before the government of Ghana bought all the shares of GHAIP in April 1977 thereby becoming the sole shareholder. Later in 1990, the name GHAIP was changed to Tema Oil Refinery, (TOR).
TOR has the vision to become a first class petroleum refinery in Africa. To achieve this, TOR has made its mission to provide quality petroleum product and services primarily in Ghana mainly through the refinery of crude oil in a safe, efficient, cost effective and environmentally friendly manner to satisfy customer needs and to increase the value of the shareholder.
Despite the government support and the monopoly environment TOR has operated over the years, I think it will be fair to say that TOR has failed the good people of Ghana. Successive governments had made several unsuccessful attempts to resuscitate the company to its former GHAIP days. In my humble opinion TOR’s leadership has failed to pursue its vision by using its mission as the roadmap to get to its destination. This is because though it has the capability and capacity to refine crude oil; it is NOT executing its operations in a safe and environmentally friendly manner as stated in the company’s mission.
The landscape outside the refinery where the Long Heavy duty Vehicles queue and wait to fuel or fill their vehicle is an eyesore. It is in a very deplorable state and unfit for TOR as part of its business infrastructure. Even all the major roads leading to the company’s premises are in very deplorable and fast deteriorating state. There is mud and filth all over the place. There is no order. There is congestion of heavy long vehicles everywhere blocking all roads all the time. It prevents workers driving to their work places like Valco, Aluworks and the free-zone areas including commuters to Kpone to have easy access to pass through. A typical example is what happened last Monday December 2, 2013. The whole place got jammed up for more than eight good hours crippling the entire business of companies around TOR including innocent people wanting to use the route to VALCO and Kpone destinations. It was really disgusting and such horrible incidents keep on happening virtually every day.
My worry is that, as a result of the aforesaid, the environment in which TOR is now operating is not safe. Should any eventuality like fire disaster happen (my mouth is not a gun), we will stand to lose huge lives and properties because there would be no escape route for anybody or anything that may happen to be around. This is my worry. It gives me sleepless nights as a concerned citizen of our country. Any time I use that stretch of the road I pray to God to have mercy on us.
SUGGESTIONS
It is my humble appeal to either the government or the management of TOR or both to make it a duty to get the landscape outside the company in order. One may say that we are living in this mess because there is no money. I totally disagree and suggest that they borrow money and either use pavement blocks or asphalt the whole landscape in front of the company premises and neatly mark parking spaces for the vehicle to use, starting from the traffic light to the end of the company fence wall joining the neighbor GOIL Gas Depot which I hope would bring order and safety to the place. Now because of the financial consideration involved, I further suggest that the authority that will execute the project should be allowed to charge Parking Fees mainly to be paid by the long vehicles drivers according the weight/size of their vehicles in support of the maintenance of the infrastructure in front of TOR.
Again the road and landscape project should take into account provision of toilet facilities including bathrooms and canteens for use mostly by client drivers who spend days around the company premises in search for fuel which is in short supply virtually every day, also at a fee for quality service.
When the above appeal fall into death ears, then the appeal must be embraced by the Kpone-Katamanso Metropolitan Assembly or Tema Metropolitan Assembly (whoever is in charge of the jurisdiction of TOR) if possible, because I am confident it is a viable project that will pay off.
In my candid opinion, the advantages of the proposed project are that; it will guarantee safe environmentally friendly operating conditions for TOR in the long-term. The investment will generate revenue for the investor of say TOR. It will also enhance effective and efficient operations as delays will be minimized. It will also improve the sanitation problems especially when it rains as compared to its current muddy state and go a long way to beatify the environment of the company. It will boost company’s prestige, image and confidence of staff to improve productivity. Above all, TOR will be on forward march to fulfill its vision of becoming the first class petroleum refinery in Africa thereby attracting a lot of tourists from Africa and beyond to improve the bottom line of TOR.
If I were the powers that be, this would be my vision to change the destiny the company of disaster waiting to happen to a world class refinery of choice.
SAN FRANCISCO (MarketWatch) — Oil futures gained ground on Monday as traders focused on political unrest in North African oil producer Libya, ahead of a decision by Federal Reserve officials due later this week on the central bank’s stimulus program.
On the ICE Futures exchange, Brent crude saw bigger gains, with the January contract /quotes/zigman/2648923/realtimeUK:LCOF4+1.56% adding $1.71, or 1.6%, to $110.54 a barrel on its expiration day.
The European crude-oil benchmark’s strength is all based on Libya, said Tariq Zahir, managing member at Tyche Capital Advisors.
“Expectations were for three [oil] ports to re-open over the weekend,” but that didn’t happen and news reports say that they may not open for some time, he said.
A Libyan rebel leader on Sunday refused to reopen the oil ports in the country’s east, which dampened hopes that Libya would export more crude into the market soon.
Platts on Monday attributed a month-on-month decline in oil production from the Organization of the Petroleum Exporting Countries to the turmoil in Libya. OPEC output in November fell 230,000 barrels per day from the previous month to 29.7 million barrels per day — the lowest volume since mid-2011, according to a Platts survey of OPEC and oil industry officials and analysts released Monday.
“Anticipating future OPEC oil output will likely be difficult due to Libya’s uncertainty,” said John Kingston, Platts global director of news, in a statement.
Analysts at Commerzbank cautioned, however that “the impact of negative news from Libya should not be overestimated,” given that the country is reportedly producing just shy of 200,000 barrels of crude oil per day.
“Before the war, Libya had been planning to step up production from 1.5 million barrels to 2 million barrels per day. If the situation were to normalize again in Libya, the oil price would no doubt come under increased pressure again,” they said in a note to clients.
And in China, HSBC data showed that growth in the nation’s manufacturing-sector activity slowed to a three-month low.
Fed watch
Meanwhile, the Fed could have a big impact later on this week, he said, adding that if the central bank decides to taper its bond-buying program that’ll provide weakness to West Texas Intermediate crude prices traded on Nymex.
The Federal Open Market Committee is due to convene Tuesday for the final policy meeting of the year, as markets focus on whether the central bank will start tapering its $85 billion monthly bond-purchase program. The Fed’s policy statement is due Wednesday afternoon.
Traders have been studying the latest economic figures for clues on what the Fed will decide to do with its stimulus program. The program has been seen as supportive for energy demand.
Back on Nymex, prices for petroleum products edged higher along with gold, but natural-gas prices pulled back after a hefty gain last week.
January gasoline /quotes/zigman/3163477/realtimeRBF4+1.25% rose nearly 4 cents, or 1.4%, to $2.665 a gallon, while January heating oil /quotes/zigman/9821432/realtimeHOF4+1.10% advanced 3 cents, or 1.1%, to $3.01 a gallon.
Worldscale flat rate on selected benchmark routes are set to fall by an average of 4% next year, compared to 2013.
This drop will be largely driven by the base bunker price declining 8% for the 2014 calculation, McQuilling Services said in the consultancy’s latest note. This contrasts to the 9% jump seen between 2012 and 2013.
When determining how the rates will impact owners’ earning, McQuilling examined TD3, the 260,000 tonne trade from Ras Tanura to Chiba. With roughly 45% of global oil demand growth forecast to be derived from non-OECD Asia, this route is a key driver of oil markets.
The year-to-date spot average on this route has been WS38.9 with a daily TCE of $12,225. If the reduced flat rate is factored in, the 2013 year-to-date spot rate rises slightly to 40.1 and the TCE increases to around $13,300 per day.
Despite this increase, it seems likely that owners will need to continue pushing spot rates higher in 2014, to break even and overcome financial pressures, McQuilling said.
Some additional support for higher spot rates should also come from global economic recovery forecasts, supporting oil demand.
In its latest Oil Market Report, the International Energy Agency (IEA) said that it expected demand growth to be 1.2 mill barrels per day in 2013 and 2014, up to 91.2 mill barrels per day and 92.4 mill barrels per day, respectively. This is being supported by an improving economic outlook in the US.
Nevertheless, the availability of tonnage and the potential that some owners might increase speed could quickly eliminate any of these gains. As 2014 draws near, owners, especially of larger tonnage, will attempt to maintain the momentum of the current market. Lower flat rates will help them make their case, but ultimately, their fate will be controlled by the throttle, McQuilling forecast.
Worldscale Association flat rates are a fundamental component in spot rate negotiations between owners and charterers. Spot rates are a gauge of the prompt tanker market and represent a percentage of the flat rate, with the latter being equal to the nominal or 100% freight rate.
The Association publishes more than 300,000 flat rates for various load/discharge points. The updated flat rates take effect at the start of each year.
While the flat rates provided by Worldscale are applied to the entire world tanker fleet, the Association uses a constant total cargo capacity of 75,000 tonnes.
This capacity accounts for cargo, as well as stores, water and bunker fuels. A constant sailing speed of 14.5 knots, both laden and ballast is applied, as are bunker consumption rates at sea and in port, Load/discharge days are established and a fixed hire rate of $12,000 per day is employed.
To calculate the annual increase in port charges, McQuilling assumed a rise of 5% on an annual basis.
Worldscale releases a base bunker price to be used in this calculation that is an average of the fuel’s price from October of the previous year to end-September of the current year. This is generally provided in the fourth quarter.
The Association reduced its base bunker price for HSFO 380 cst by about 8% from 2013 to 2014 from $686 per tonne to $632 per tonne. The base bunker price in 2013 was the highest level on record, McQuilling said
Despite this year’s contraction, bunker prices have a higher upside potential by reduced supplies stemming from a rise in refinery conversion capacity, aimed to maximise the output of more high value petroleum products.
According to data from JBC Energy, the global surplus of fuel oil was about 1 mill barrels per day in 2008 and should fall to 300,000 barrels per day through 2018. These reduced supplies have contributed to the base bunker price increasing for 12 of the previous 17 years, McQuilling said.
When Gary Gless bought his sleek, modernist house in Los Angeles in 2002, he thought he had hit a "gold mine." The world's largest inner-city park - featuring a lush, 18-hole golf course - was about to get built across the street. Gless's balcony was set to overlook the clubhouse and first tee.
Today, instead of golf carts and fairways, Gless looks out on to drilling wells and oil pads. The park plan was ditched, and Freeport-McMoRan Oil & Gas LLC now operates 700 wells there - and 400 more are on the way. All the drilling, Gless says, has caused house foundations to crack and swimming pools to start to slide down hills. (Reuters)
NEW YORK--U.S. crude-oil futures prices rose Thursday, lifted by the strongest demand from refiners since July.
Analysts said prices also drew support from mixed U.S. economic data, which they said could lead the Federal Reserve to keep its bond-buying program in place until at least January.
New claims for U.S. jobless benefits rose last week by 368,000, the largest increase in more than a year, the Labor Department said. The data topped economists' forecasts of a rise of 328,000.
Meantime, U.S. retail sales in November climbed by 0.7%, slightly above expectations, and were up 4.7% from a year earlier, the Commerce Department said.
Carl Larry, analyst at Oil Outlooks and Opinions, said the still uncertain jobs picture raises the odds that the Fed won't begin to reduce its stimulus program this month. The ongoing bond-buying program has contributed to strength in oil prices, analysts said.
"The economy is starting to look good and getting better, but we're far from looking great," Mr. Larry said, adding he expects the Fed to remain cautious.
Light, sweet crude oil for January delivery on the New York Mercantile Exchange was 43 cents higher, at $97.87 a barrel.
ICE Brent crude oil was 65 cents lower, at $109.05 a barrel, pressured by expectations that Libya soon will resume oil exports that have been curtailed by labor disputes.
U.S. oil inventories dropped by a huge 10.585 million barrels last week, the Energy Information Administration reported Wednesday, as refiners lifted processing rates to 16.1 million barrels a day, the most since July and a record high for December.
Refinery output of distillate fuel (diesel/heating oil) hit a record high last week as oil companies looked to boost exports of the fuel to Europe, Latin America and Asia, where demand is stronger than it is in the U.S.
Domestic crude oil output climbed to a 25-year high above 8 million barrels a day last week, and topped the year-earlier level by 1.2 million barrels a day. Use of hydraulic fracturing and horizontal drilling techniques allow producers to extract crude oil from shale, slashing the need for U.S. to import crude oil.
The U.S. relied on foreign supplies to meet just 26.8% of oil demand of 18.554 million barrels a day last week, the lowest level on EIA's weekly data beginning in February 1991.
Net imports of crude oil and refined products dropped by nearly 3 million barrels a day from a year earlier to 4.97 million barrels a day, the lowest level since February 1992, EIA data show.
The strong refinery operations allowed petroleum products stocks to rise sharply, with gasoline stocks up 6.7 million barrels and distillate stocks up 4.5 million barrels. Analysts said there is concern that U.S. oil demand needs to recover and exports need to continue at strong levels to avoid a glut of refined products.
Reformulated gasoline blendstock futures for January were 0.62 cent lower, at $2.6549 a gallon, while January diesel/heating oil futures were down 1.72 cents at $3.004 a gallon.
The Presidency on Wednesday reacted to a leaked letter written by former President Olusegun Obasanjo to President Goodluck Jonathan, accusing him of ineptitude and acts calculated at destroying the country.
The presidency described the letter as reckless, baseless, unjustifiable and of containing “indecorous charges leveled against him and his administration by the former head of state.”
In the leaked letter, General Obasanjo said some of Nigeria’s development partners were politically frustrated into withdrawing from the Olokola Liquified Natural Gas (LNG) project.
He said the Olokola and Brass LNG projects were viable and would have taken Nigeria close to the lofty production levels of Qatar, as an LNG producing country.
Obasanjo added: “Please do not frustrate Brass LNG and in the interest of what is best for Nigerian economy, bring back OK LNG into active implementation.
“The major international oil companies have withheld investment in projects in Nigeria. If they have not completely moved out, they are disinvesting. Nigeria which is the Saudi of Africa in oil and gas terms is being overtaken by Angola only because necessary decisions are not made timely and appropriately.
“Mr. President let me again plead with you to be decisive on the oil and gas sector so that Nigeria may not lag behind. Oil with gas is being discovered all over Africa.
“New technology is producing oil from shale elsewhere.
“We should make hay while the sun shines. I hope we can still save Ok and Brass LNG projects”. Obasanjo added that three things were imperative in the oil and gas sector. He listed these as the need to “stop oil stealing, encourage investments, especially by the IOCs, and improve the present poor management of the industry.”
Obasanjo’s letter also touched on politics.
Responding to the letter, Reuben Abati, special adviser to the president on media and publicity, said “…It is highly unbecoming, mischievous and provocative that a letter written by a former head of state and respected elder statesman to President Jonathan has been deliberately leaked to the mass media in a deplorable effort to impugn the integrity of the president and denigrate his commitment to giving Nigeria the best possible leadership”.
The presidency said “while many patriotic, objective and well-meaning Nigerians have already condemned the leaked letter as self-serving, hypocritical, malicious, indecent, and very disrespectful of the highest office in the land, President Jonathan has directed that none of his aides or any government official should join issues with Chief Obasanjo over it.
“The president himself will, at the appropriate time, offer a full personal response to the most reckless, baseless, unjustifiable and indecorous charges leveled against him and his administration by the former head of state”.
Obasanjo had in his letter accused the president of ineptitude and of taking actions calculated at destroying Nigeria.
“Nigeria is bleeding and the hemorrhage must be stopped,” Obasanjo had said in the 18-page letter dated December 2, 2013.
Obasanjo said Jonathan failed to deliver on his promises to the Nigerian people, stem corruption, promote national unity and strengthen national security.
ABUJA — Nigeria’s NNPC state energy company has not accounted for nearly $50bn in revenue from the sale of crude oil which should have been paid into government accounts under law, the central bank has said.
Central bank governor Lamido Sanusi said in a letter to President Goodluck Jonathan, dated September 25, that NNPC earned $65.3bn from crude oil sales between January 2012 and July 2013 but remitted only 24% of this to the federation account and $49.8bn was still outstanding.
"I am constrained to formally write your Excellency, documenting serious concerns of the Central Bank of Nigeria on the continued failure of the NNPC to repatriate significant proportions of the proceeds of crude oil shipments it made in gross violation of the law," the letter seen by Reuters said.
NNPC has been criticised for lacking transparency and for diverting funds in several investigations in recent years but the central bank governor appears to be one of the most high-profile figures to have brought up the issue with Jonathan.
Central bank sources confirmed the letter was genuine. The central bank spokesman said he could not comment on private correspondence and Mr Sanusi did not respond when contacted for comment.
A senior source at the presidency told Reuters Mr Jonathan had received the letter and had asked the head of NNPC to give him an explanation. The presidency spokesman did not respond.
"The allegation is borne out of misunderstanding of the workings of the oil and gas industry and the modality for remitting crude oil sales revenue into the Federation Account," NNPC said in a statement issued in response on Tuesday.
NNPC said it had remitted its oil sale proceeds but the missing funds should come from other government departments that are responsible for petroleum tax and royalties, while other funds will have been spent on field development.
Missing funds
Mr Sanusi’s letter says the missing $49.8bn is from the value of oil NNPC sold and makes a distinction with taxes. It says under law NNPC must submit all oil export proceeds.
"As an indicator of how bad this situation has become, please note that in 2012 alone, the Federation Account received $28.51bn in petroleum profits and related taxes but only $10.31bn from crude oil proceeds," the letter said.
NNPC sold 46% of Nigeria’s oil between January 2012 and July 2013 but its remittance amounted to only one-third of the taxes paid by oil companies that exported the other 54%, the letter claimed.
NNPC exports Nigeria’s share of about 2-million to 2.5-million barrels a day of oil the country produces, mostly in joint ventures with oil majors such as Royal Dutch Shell, Exxon Mobil, Italy’s Eni and Chevron.
Crude exports and taxes earned from these oil majors account for about 80% of government revenue in Africa’s second-largest economy and top oil producer.
A probe last year by the former head of Nigeria’s anticorruption body, Nuhu Ribadu, recommended an overhaul of NNPC because it lacked transparency in the way it sold oil, wielded too much power and was a vehicle for corruption.
Mr Jonathan set up a committee to investigate the findings of the probe but the panel’s report was never made public. Oil Minister Diezani Alison-Madueke denied at the time that there was a problem with corruption within NNPC.
A report in 2011 by Transparency International and Revenue Watch found NNPC to have the poorest transparency record out of 44 national and international energy companies it evaluated.
