Novedades de Petroleo y Algo mas

FT.com

This year’s oil market witnessed spiral price hikes as global crude supplies did not keep pace with growing demand. It had a great impact on the global economy and people’s daily life.

Will global oil prices head upward next year? Economists and market analysts have offered varying assessments on the trend in oil prices for next year.

The crude prices started to soar early this year as cold spells fired up furnaces and boosted demand for heating fuels in Europe and the United States. Light crude futures topped 50 U.S. dollars a barrel in March on the New York Mercantile Exchange, and hit a record high of 56.46 dollars on March 16.

The prices were pushed further above 60 dollars in late June in early days of the summer when consumption peaks, and surged over 65 dollars in early August following the death of Saudi Arabian King Fahd Ibn Abdul-Aziz and the devastating hurricanes that battered production facilities along the coast of the Mexico Gulf.

The prices hit an astonishing all-time record of 70.85 dollars on Aug 29.

Light crude futures averaged 63.28 dollars on the New York Mercantile Exchange in the third quarter, 44.4 percent up from a year earlier. In London, Brent crude futures also rose by 52.1 percent to 61.57 dollars a barrel.

Thanks to the release of 60 million barrels of oil inventories by the International Energy Agency (IEA), the crude prices began to fall and the downtrend continued in November. But the prices rebounded to top 59 dollars per barrel in December as a chill gripped parts of the United States and lifted natural gas prices.

Economists and market analysts now were divided over the price trend next year. Some said it would remain volatile but would be unlikely to slide below 40 dollars per barrel, while others expected it to continue edging up to be hovering above 60 dollars.

On the supply side, several major producers in the world are already pumping near full tilt or even beginning to scale down production due to dwindling reserves as well as political and economic factors. Iraq, Russia, Venezuela and Nigeria are expected to produce less crude this year and the trend is also lingering in oil fields in Europe and North America.

Boone Pickens, CEO of BP Capital, also one of the oil market’s most prominent bulls, believed crude supplies may hover at the present level as the development of new oil fields takes a long time and global production is near its peak.

Demand will pick up speed if the global economy resumes the trend of fast growth, which will push oil prices up again, Pickens said.

The Energy Information Administration of the U.S. Energy Department said in a report in November that oil prices would stay high, averaging 64 to 65 dollars per barrel next year as global oil output and production capacity are unlikely to rise remarkably in the near term.

Limited refinery capacity have also strained oil supplies. While global demand for oil grew by 2.4 percent and 3.2 percent in2003 and 2004, refinery capacity rose only by 0.4 percent and 0.3 percent respectively.

"Oil prices will keep rising over the next two decades unless the oil-rich nations of the Middle East and North Africa substantially increase investments in their energy sectors, "IEA chief economist Fatih Birol.

Oil prices on the international markets would hit new highs again in the future unless the issue of refining bottlenecks is resolved, Birol said.

But statistics from the French Petroleum Institute showed global investment in the oil industry reached 150 billion dollars last year and part of it will be used to raise production capacity in 2006.

On the demand side, the slowdown in world economic growth will curtail demand for oil and the uptrend in oil prices would not be maintained, other experts believed.

Against the backdrop of skyrocketing oil prices, the Global Insight Inc. lowered its forecast for 2006 global economic growth to 3.2 percent.

Derek Burleton, a senior economist with TDBank Financial Group, said a slowdown in U.S. GDP growth from current 3.5 percent to just 2 percent in the first six months next year will take a major bite out of the global expansion.

The U.S. Energy Department and the Organization of the Petroleum Exporting Countries also predicted last month that global demand for oil will slow down to 1.8 percent in 2006, far below the 3.2 percent last year. The view was echoed by Frederic Lasserre, head of French bank Societe Generale commodities research.
"We think the main explanation of this demand slowdown is purely and simply economic growth which is losing momentum almost everywhere," said Lasserre.

According to the French bank’s prediction, crude oil prices are expected to average 52 dollars a barrel in 2006 from a projected 55.98 dollars this year. But IEA chief economist Fatih Birol played down the possibility of prices plummeting in 2006.

And a senior energy analyst with Merrill Lynch Securities believed that violent fluctuations in global oil prices could take place if a key link in the chain of supply snapped.

President Hugo Chavez ordered by decree on Monday the takeover of oil projects operated by foreign oil companies in Venezuela’s Orinoco River region.

Chavez previously announced the government’s intention to take a majority stake by May 1 in the four heavy oil-upgrading projects run by British Petroleum PLC, Exxon Mobil Corp., Chevron Corp., ConocoPhillips Co., Total SA and Statoil ASA.

He said Monday that he has officially signed the decree to proceed with the nationalizations through which the state oil company will take at least a 60 percent stake.

Halliburton Co, an oilfields services company, said that its board of directors has approved a plan for disposal of its remaining interest in KBR Inc. through a split-off exchange offer to Halliburton’s stockholders.

According to the terms proposed, the company would offer 135.627 million shares of KBR common stock to its stockholders in exchange for shares of Halliburton common stock at an exchange ratio to be determined by a specified formula. The company said that the distribution to its stockholders would be through a special pro rata dividend.

While the exchange offer and spin-off distribution is expected to be tax-free to Halliburton stockholders, it would be the final step in the separation of KBR from Halliburton, resulting in two independent companies.

For the recently concluded fourth quarter, KBR, a subsidiary of Halliburton providing engineering and construction services, reported a fall in profit on lower revenues, higher provision for income taxes and minority interest expenses. Income from continuing operations fell to $43 million or $0.28 per share from $48 million or $0.35 per share for the same quarter last year. Net income was $43 million or $0.28 per share compared to $56 million or $0.41 per share for the corresponding quarter prior year. On average, 5 analysts polled by First Call/Thomson Financial expected earnings of $0.19 per share for the fourth quarter.

Nova Scotia should nix a $4.5-billion petrochemical plant and liquefied natural gas terminal proposed for Goldboro, Guysborough County, because it doesn’t meet the province’s requirements for air quality assessments or the country’s commitments under the Kyoto Protocol, says a local environmental group. A provincial environmental review panel released a report Friday conditionally approving the Keltic Petrochemicals project, which would be the first of its kind in Atlantic Canada.

"We have made it clear . . . that the project should be rejected, but obviously the panel has recommended something different," said Chantal Gagnon of the Ecology Action Centre in Halifax.

Environment Minister Mark Parent must consider some "crucial comments by the panel in the report that was released last week . . . especially the comments regarding the sustainability of the project and the greenhouse gas emissions," Ms. Gagnon said.

Mr. Parent now has less than three weeks to make up his mind whether to approve the report, reject it or approve it with conditions. The panel members said Mr. Parent has a tough judgment to make because the project represents a "scale and type of development which would be unique in Nova Scotia" and has the potential of benefiting but also hurting the rural area.

"While some impacts would be positive (employment and investment), other impacts to the environment and on the rural surroundings and way of life would be negative. . . . The panel recognizes that a final decision will present significant challenges to the Nova Scotia (environment minister) in balancing economic development with the need to ensure environmental sustainability."

In the 184-page report, the proponent fails to answer direct inquiries by Health Canada and Environment Canada with regard to volatile organic compounds, greenhouse gas emissions, on-site incineration emissions and other related air pollution, Ms. Gagnon said.

"When it comes to the long-term impact of this project, on health, on the economy, on the environment, on social issues, the burden will be on the public’s wallet," she said.

Besides awaiting the minister’s decision, the Keltic Petrochemicals project, which also includes developing a plastics plant, is still far from being a done deal. The company’s partner, Maple LNG, a consortium of 4Gas of Rotterdam and Russia’s Suntera, is to operate the gas terminal but still lacks a supply of liquefied gas.

The panel held six days of public hearings in November and received thousands of pages of evidence. While the project has received support from the community, there has been opposition from environmental groups and local lobster fishermen who are concerned about the massive tankers harming the lucrative fishery.

The project is to build five storage tanks with a gross capacity that would allow one billion cubic feet of gas to be sent out every day. The plant would create an expected 500 full-time positions and 3,000 construction jobs and would be operating by 2010.

by Barry Clouter
When this association was started, there was no such thing as Cohasset-Panuke, no such thing as Hibernia, White Rose or Sable. And the Deep Panuke gas field still had 17 years before it would see its first drill bit.

Then came the Cohasset-Panuke oil project, followed by the hustle and bustle of the Sable Offshore Development Project. And yet the last few years have been marked by pessimism and questions about whether the best days were in fact behind us.

This time last year, the latest news on Deep Panuke was a dry well at Dominion J-14. And look at where we are today — the hearings on the Deep Panuke development plan are a week and a half away. Our situation today puts this recent negative feeling into perspective for what is was — a normal part of the ups and downs of the industry.

Deep Panuke is, of course, considerably important to Nova Scotia in the short and long terms. According to the Department of Finance’s own estimates, if this project goes ahead, the spinoff effects of Deep Panuke will result in more than 3,200 person-years of employment. Household income will benefit by more than $250 million, and the province’s own bottom line will be bolstered by more than $450 million.

We strongly support this project, and OTANS will limit its intervention into the Deep Panuke public review process to three minor points.

First, we believe that the benefits reporting requirements for both EnCana and its contractors should be less onerous while still providing the information needed by Nova Scotia policy-makers. Second, we will also advocate for a minor improvement in the wording of the definition of Nova Scotia person-hours in order to ensure that more of this work gets done in Nova Scotia while at the same time not limiting the learning opportunities that come with Nova Scotians working on project components abroad.

And third, we will encourage the province to direct the Deep Panuke gross revenue fund that EnCana has agreed to set aside for research, development and training, to whatever it takes to find the next development project. We need to invest to ensure the momentum continues into the post-Panuke period.

A quick glance at the Sable numbers underlines the importance of investing in finding the next project. Since production from Sable began, ExxonMobil and its partners have purchased more than $1 billion of Nova Scotian goods and services to keep the project running, and they have provided the equivalent of 1,100 good-paying jobs in the years since.

And that’s just during the steady-state production stage. The construction years were even more lucrative. Nova Scotia’s most recent energy strategy notes that since 1990, the strongest years of economic growth in Nova Scotia coincided with the Sable construction. And royalties from Sable — that contribution that nobody sees but everyone benefits from — are expected to contribute more than $280 million to Nova Scotia’s bottom line for 2006-07. This is currently the fourth largest source of provincially generated revenue, following only corporate, personal and sales tax revenue.

Deep Panuke can have a similar impact.
And there can be a legacy from Deep Panuke if the province does indeed invest the gross revenue fund into finding the most likely prospect for another development project; we can provide a direct link between Deep Panuke and the next economic windfall. We must keep our eyes on the prize to ensure that this momentum continues.

This project can also be a tremendous opportunity for all of us to demonstrate to other outside investors that Nova Scotia is indeed a good place to do business.

And it is extremely encouraging to hear the chairman of the Offshore Petroleum Board, Diana Dalton, say that she wants to have the regulatory process completed within nine months. This is the type of co-operative determination that sends exactly the right signals to others who would consider investing in this province.

We also have to look outward as well as inward. Newfoundland and Labrador has tremendous prospects for both its offshore and onshore industries as well, and a successful industry there benefits our members as well. A healthy industry in both provinces is good for the entire Eastern Canadian region and is something we should all be cheering for.

But OTANS interests are not limited to the offshore. Coal-bed methane has really great prospects onshore. New technology is allowing abandoned coal to be accessed from the Donkin mine. As well, a contract has recently been awarded to do a soil assessment at Lake Ainslie to test for oil. And OTANS is supportive of Keltic Petrochemicals’ and Maple’s LNG project at Goldboro.

OTANS also realizes that petroleum does not have to be the be-all and end-all of the energy business, and we continue to support renewable and alternative energy prospects. These include the plans for a second tidal station and exciting prospects for ocean wave action.