Libya lifts force majeure at Zueitina
The Libyan National Oil Corp. announced it lifted a legal clause that absolved it from meeting contractual obligations at the eastern oil terminal because of what it said was an "improvement of the circumstances" in the country. NOC said the first barrels from the 70,000 bpd facility could leave the eastern port at some point this week. The port's re-opening is a response to a deal brokered with eastern rebel leaders last month and Libyan Justice Minister Salah al-Merghani said protracted conflict could drag the country into war. Libya's oil output, however, remains a shadow of its peak post-war capacity of 1.4 million bpd.
U.S. crude oil imports continue steady decline
The U.S. Energy Information Administration said crude oil imports averaged 7.5 million barrels per day for the week ending April 25. That's down 313,000 bpd from the previous week and establishes a steady trend that reflects accelerated domestic crude oil production. Domestic production for the week averaged 8.5 million bpd, which marks a 14.2 percent increase from the same time last year. U.S. crude oil inventories, meanwhile, increased by 1.7 million barrels, not counting the barrels stored in the Strategic Petroleum Reserve. Nevertheless, the level of import decline was slow. EIA said the average level reported during the last four-week period was only 0.1 percent lower year-on-year.
Discoveries & Exploration Results
Igor Sechin, president of Russian oil giant Rosneft, said his company was looking to capitalize on what he said was the "enormous resource potential in the offshore arctic." Drilling the first well in the far north Kara Sea, he added, was without question one of main priorities of future exploration and production. A seismic campaign began in 2012 in the region and the company expects to install meteorological stations and monitoring units this summer to determine best how to develop Rosneft's Eastern Prinovozemelsky license areas.
The troubles continue for developers looking to take advantage of the 13 billion barrels of crude oil thought to sit in the Kashagan oil field offshore Kazakhstan. The field's entire network of pipelines may have to be replaced with an alloy resistant to the corrosive hydrogen sulfide present in the field. Consortium member Eni said this week the pipeline problems may be "worse than we considered." Kashagan began operations very briefly in late 2013 and production isn’t expected to begin again until at least next year.
Iranian Oil Minister Bijan Zanganeh said this week he would look to domestic companies to replace China National Petroleum Corp. at the South Azadegan oil field straddling the Iranian border with Iran. Accused of foot-dragging, Iran said the National Iranian Oil Co. was now tasked with looking for another company to help develop what it says is a field estimated to hold 42 billion barrels of oil. Iran signed the deal with CNPC in 2009.
Norwegian energy company Statoil announced it made an oil discovery in a wildcat well drilled into the Fram field in the North Sea. The Norwegian Petroleum Directorate said Statoil, the operator, ran through an oil column measuring about 157 gross feet. NPD said the preliminary size of the discovery is estimated at between 35 million and 105 million standard cubic feet of recoverable oil equivalents, categorizing the discovery as minor. NPD said March oil production of 1.5 million barrels per day was 1 percent below its expectations, but 6 percent higher year-on-year.
Members of the international community had harsh words for an Egyptian government that issued death sentences for more than 650 supporters of Mohammed Morsi, the Muslim Brotherhood official who became president in Egypt's first-ever democratic contest in 2012. European diplomats described the sentence as "alarming." It's been more than three years since Egypt's revolution, though the U.S. State Department said in a report this week the level of political instability in the country was still "significant." BG Group, operating in the country's gas sector, said that barring any major effort to curb diversions of gas to the domestic market, its LNG business there was "increasingly at risk."
The International Monetary Fund said the Russian economy, already slowing down, has been damaged by lingering tensions over Ukraine. The Russian economy is expected to grow by just 0.2 percent and the IMF said ongoing turmoil in Eastern Europe, coupled with additional Western sanctions, could make things even worse. A modest recovery is expected in 2015, when the economy should grow by 1 percent. Russian President Vladimir Putin this week said the role of Western energy companies operating in his country may have to be reconsidered if sanctions continue. Russia's petroleum industry represents about a quarter of its gross domestic product.
Chinese Foreign Minister Wang Yi wrapped up his tour of Latin America last week to prepare for a visit later this year from Chinese Xi Jinping. Wang said from Brazil the economies of Latin America were "natural" partners for an expanding China. Beijing said Venezuela, the premier oil state in the region, exported an average 626,000 barrels of oil per day during the first four months of 2013 and it may look for even more in the coming years.
Iraq held elections this week, a first for the country since U.S. troops ended combat operations in 2011. Incumbent Prime Minister Nouri al-Maliki is expected to secure a third term in office, largely because Iraq's fractured political system has suppressed any chances of a real rival emerging from the political din. He'd continue holding the reins in a country looking to capitalize on its vast oil wealth, but the Kurdish and Turkish government may have other plans.