The 3 Week Diet System

Saturday, February 27, 2010

Western Oil Companies Feel the Heat in Kazakhstan

FEBRUARY 27, 2010

Fine Levied on Group Developing Gas Field Stirs Concern Government May Adopt Russian-Style Pressure Tactics


A consortium of Western oil companies developing a huge natural-gas field in Kazakhstan was slapped with a $21 million fine Friday, the latest step in a pressure campaign that is raising concern among investors in the oil-rich Central Asian state.

The move, against the group developing a field called Karachaganak, is reminiscent of tactics deployed by Russia, which also used penalties and investigations to coerce Western oil majors into giving state companies stakes in their projects.

Kazakhstan, on the shores of the Caspian Sea, is currently scrutinizing all the landmark oil deals it signed in the early 1990s, many of which are now seen as being unfairly skewed towards the international oil companies.

The biggest deals, known as production-sharing agreements, or PSAs, were supposed to lock in favorable tax regimes. But authorities now want to open them up and remove their exemptions from tax changes so as to increase government revenues from the oil sector.

The Kazakh Finance Ministry is currently analyzing 17 contracts, including the main PSAs, and may recommend sweeping changes.

"We have issues regarding their legality," said Deputy Finance Minister Daulet Yergozhin in an interview. "There are certain clauses, including on tax, which may need to be amended to bring them in line with Kazakh law."

He said the ministry would present the findings of its analysis to the government by April 1.

Friday's fine was imposed on Karachaganak Petroleum Operating B.V., or KPO, which is led by Britain's BG Group PLC and Eni SpA of Italy. Many observers think it is a prelude to Kazakhstan's state-owned oil company, KMG, forcing its way into the consortium.

The companies referred all questions to KPO, which declined to comment.

A person familiar with the matter said the consortium may appeal the fine in Kazakhstan's Supreme Court.

KPO is vulnerable because it is the only big oil-and-gas project in Kazakhstan in which KMG doesn't have an interest. Last December, Kazakh authorities confirmed they wanted KMG to become a partner in Karachaganak, although BG and Eni deny there have been any discussions on it joining the consortium.

"This is part of the 'bully then buy out' model," said Ana Jelenkovic, a Central Asian expert at consultancy Eurasia Group.

There are precedents for such a scenario. A long-running dispute between Kazakhstan and an Eni-led group developing another huge oilfield, Kashagan, ended with KMG doubling its stake in the venture.

That echoed the travails suffered by Royal Dutch Shell PLC, which was forced to sell a majority stake in its massive Sakhalin 2 natural-gas project in Russia's Far East to OAO Gazprom after a long campaign of official harassment.

A statement Friday from the Kazakh prosecutor general's office said a regional court had fined KPO for environmental violations such as excessive dumping of waste dating back to 2008.

KPO is currently seeking to recover more than $1 billion in export duties which it says were illegally levied on the venture by the Kazakh government in 2008. Analysts say the Kazakh authorities could pay back the $1 billion and get a 10% stake for KMG in the venture in exchange.
—Kadyr Toktogulov contributed to this article.

Write to Guy Chazan at


Petrobras project sticks to schedule

By BRETT CLANTON Copyright 2010 Houston Chronicle

Feb. 27, 2010, 12:15AM

Despite recent economic headwinds that forced some rivals to retrench, Petrobras remains on track to launch its biggest project ever in the U.S. in coming months, a senior official with Brazil's state-owned oil company said Friday.

Petrobras, keeping with its original timeline, is set to begin producing oil by mid-2010 from two ultradeep- water fields in the Gulf of Mexico known as Cascade and Chinook, said Cesar Palagi, a Gulf of Mexico asset manager for the company.

“Midyear is a fair statement for what we know today and the challenge that we have ahead of us,” Palagi told reporters after a luncheon speech to the Brazil-Texas Chamber of Commerce at the Westin Galleria Houston.

The Petrobras project is being closely watched because it will be among the first to come on-stream in the emerging Lower Tertiary play, an ancient rock layer under the Gulf of Mexico some 150 miles offshore from Louisiana and Alabama, where the industry has made huge oil discoveries in recent years.

It's likely to follow only Shell's multibillion-dollar Perdido project — capable of 100,000 barrels per day of oil and 200 million cubic feet per day of natural gas — which is slated to start production early this year.

For the project, Petrobras also has secured the first U.S. license to use a Floating Production, Storage and Offloading vessel, or FPSO, to operate in the Gulf of Mexico. The vessel, currently en route to the Gulf from Singapore, has the capacity to produce 80,000 barrels per day of oil, a mark Palagi said the project could hit within two years.

For the project, Petrobras also has secured the first U.S. license to use a Floating Production, Storage and Offloading vessel, or FPSO, to operate in the Gulf of Mexico. The vessel, currently en route to the Gulf from Singapore, has the capacity to produce 80,000 barrels per day of oil, a mark Palagi said the project could hit within two years.

FPSOs, which are more mobile than other production platforms, typically are used in offshore areas without as much infrastructure as the Gulf, but Petrobras will tie into existing subsea pipeline networks to transport natural gas from the fields, Palagi said. The company has said using the FPSO will give it more flexibility in developing the project.

In January, Petrobras exercised an option to acquire the remaining 50 percent of the Cascade field held by Oklahoma City-based Devon Energy Corp. The move came after Devon said last year it would sell its international and Gulf of Mexico assets to reduce debt and refocus on North American onshore gas fields. In Chinook, Petrobras has a 66.7 percent stake, while France's Total holds the remaining 33.3 percent.

Petrobras is operator of both fields and plans to develop them jointly.

Under a first phase of the project, the company will bring on line two wells in Cascade and one in Chinook. How many additional wells will be brought on in a second phase will be based on how things go in the initial phase, Palagi said, noting challenges of operating in 8,000 feet of water and the extreme downhole temperatures and pressures in the region.

Palagi declined to disclose how much Petrobras has invested in the project to date but said “we are very much on budget.”

He noted that the project did not benefit much from lower prices during the economic downturn because equipment was ordered before the recession, when prices were higher.

Petrobras is one of the world's biggest oil companies, with some 2.5 million barrels per day of production and 77,000 employees worldwide.

But while the Cascade-Chinook project is big — the company has roughly 430 contractors and employees in Houston working on Gulf of Mexico projects — the company's focus remains on developing oil and natural gas resources in Brazil.

Petrobras has a capital spending plan of $174 billion over the next five years, nearly $35 billion annually. Only $3 billion a year is earmarked for international projects, with the U.S. being the biggest recipient.

“That will not change,” Palagi said, though the company could boost spending in Brazil.


Huge earthquake batters Chile, 78 dead

27/02/2010 - 12:04

By Alonso Soto

SANTIAGO, Chile (Reuters) - A massive magnitude-8.8 earthquake struck south-central Chile early on Saturday, killing at least 78 people, knocking down homes and hospitals, and triggering a tsunami.

Buildings caught fire and residents huddled in streets strewn with glass and masonry, many terrified by powerful aftershocks and desperately trying to call friends and family.

President Michelle Bachelet said there were 78 confirmed deaths and that more were possible. Telephone and power lines were down, making it difficult to assess the full extent of the damage close to the epicentre.

Chile is the world's No. 1 copper producer, and the quake halted operations at two major mines near the capital.

"Never in my life have I experienced a quake like this, it's like the end of the world," one man told local television from the city of Temuco, where the quake damaged homes and forced staff to evacuate the regional hospital.

The U.S. Geological Survey said the earthquake struck 56 miles (90 km) northeast of the city of Concepcion at a depth of 22 miles (35 km) at 3:34 a.m. (6:34 a.m. British time).

The capital Santiago, about 200 miles (320 km) north of the epicentre, was also badly hit. The international airport was forced to close as the quake destroyed passenger walkways and shook glass out of doors and windows,

Local television showed a building in flames in Concepcion and said some residents looted pharmacies and other businesses in the chaos.

Broken glass and masonry were strewn across roads and several strong aftershocks rattled jittery residents in the hours after the initial quake.

In the moments after the quake, people streamed onto the streets of the capital, hugging each other and crying.

"My house is completely destroyed, everything fell over ... it has been totally destroyed. Me and wife huddled in a corner and after hours they rescued us," said one elderly man in central Santiago.

There were blackouts in parts of Santiago and communications were still down in the area closest to the epicentre. Emergency officials said buildings in the historic quarters of two southern cities had been badly damaged and local radio said three hospitals had partially collapsed.

Chile's main copper producing region and some of the world's largest copper mines are in the far north of the country near its border with Peru, but there are also major copper deposits near Santiago.

Production was halted at the Los Bronces and El Soldado copper mines, owned by Anglo American Plc following the quake, but Chile's biggest copper mine, Escondida, was operating normally.

Chile produces about 34 percent of world supply of copper, which is used in electronics, cars and refrigerators.


Bachelet urged people to stay calm and to remain at home to avoid road accidents. "With a quake of this size we undoubtedly can't rule out more deaths and probably injuries," she said.

An earthquake of magnitude 8 or over can cause "tremendous damage," the USGS says. The quake that devastated Haiti's capital Port-au-Prince on January 12 was measured as magnitude 7.0.

Bachelet said a huge wave hit the Juan Fernandez islands off the Chilean coast. Radio stations reported serious damage on the archipelago, where Scottish sailor Alexander Selkirk was marooned in the 18th Century inspiring the novel Robinson Crusoe.

Bachelet said a huge wave swept into the southern island of Juan Fernandez, and radio stations said it caused serious damage.

She said residents were being evacuated from coastal areas of Chile's remote Easter Island, a popular tourist destination famous for its towering Moai statues.

The Pacific Tsunami Warning Centre said the tsunami may have been destructive along the coast near the epicentre "and could also be a threat to more distant coasts."

It issued a Pacific-wide tsunami warning for countries in Latin America, and as far away as the U.S. state of Hawaii as well as Japan, Russia, Philippines, Indonesia and the South Pacific.

According to a 2002 census, Concepcion is one of the largest cities in Chile with a population of around 670,000.

In 1960, Chile was hit by the world's biggest earthquake since records dating back to 1900.

The 9.5 magnitude quake devastated the south-central city of Valdivia, killing 1,655 people and sending a tsunami which battered Easter Island 2,300 miles (3,700 km) off Chile's Pacific seaboard and continued as far as Hawaii, Japan and the Philippines.

Saturday's quake shook buildings as far away as Argentina's Andean provinces of Mendoza and San Juan. A series of strong aftershocks rocked Chile's coastal region from Valdivia in southern to Valparaiso, about 500 miles (800 km) to the north.

The tsunami warning centre said there was a possibility the U.S. state of Hawaii could be elevated to watch or warning status.

(Additional reporting by Doina Chiacu in Washington and Helen Popper, Kevin Gray and Guido Nejamkis in Buenos Aires; Editing by Kieran Murray)


Nigeria: Agbami Oil Field - Court Freezes Statoil Accounts

Davidson Iriekpen

26 February 2010

Lagos — Justice Efang Archibong of the Federal High Court in Lagos has ordered that the accounts of Statoil Nigeria Ltd be frozen in the Agbami oil field due to a contract dispute between the company and Dr. John Abebe, younger brother to the former First Lady, Stella Obasanjo.

Abebe instituted legal action claiming a contractual default by Statoil.

Justice Archibong directed the oil firm to open an escrow account with a reputable financial institution within the jurisdiction of the court where all revenues, income, funds, profit proceeds and earnings from the oil firm's 18.5 per cent interest in the Agbami oil field would be deposited.

Archibong also advised that the deposit be made in the name or at the instance of the Chief Registrar of the court pending the hearing and determination of the suit.

The judge ordered that notice of the order and other necessary documents emanating from the suit be served on the Federal Internal Revenue Service (FIRS), the Federal Ministry of Petroleum Resources, ChevronTexaco, Petrobras Nigeria and Ocean Energy (Devon) all in Nigeria and the respondent,

"It is ordered that all revenues, income, funds, profit proceeds and earnings, however called after returns by way of VAT, royalties or whatever tax obligations have been made to the Federal Internal Revenue Service, after such tax, commitments, all inflows are to be paid into an interest bearing escrow account with a Nigerian bank at the instance of the Chief Registrar of the Federal High Court of Nigeria," said the court.

"It is also ordered that notice of this order be served on the Federal Internal Revenue Service and the Federal Ministry of Petroleum Resource, ChevronTexaco in Nigeria, Petrobras in Nigeria and Ocean Energy (Devon) in Nigeria; and together with a motion on notice to the defendant/ respondent to be argued on the return date," it added.

Archibong's order was sequel to an ex parte motion brought by Abebe and his company, Inducon Nigeria Limited, and argued by his lawyer, Mr. Uche Nwokedi (SAN).

He wants Statoil to be compelled whether by itself or agents to deposit all revenues, income, funds, profits, proceeds, earnings it derived from its operation in the deepwater exploration lease OML 129 as well as its interests in OPL 315 operated by Petrobras and OPL 242 operated by Ocean Energy (Devon) into an interest bearing escrow pending the hearing and determination of the plaintiff's motion on notice for interlocutory injunction.

Abebe is also seeking an order of court compelling the defendant to deliver and submit to the plaintiff, details of payments received in respect of the concession interest in Nigeria.

Abebe, in his statement of claim said in April 1990 that he was informed by British Petroleum (BP) that it was interested in pursuing opportunities in the Nigerian oil industry together with its partner Statoil of Stavanger, Norway with whom it had entered into an alliance agreement.

The main objectives of the alliance agreement, he averred, was spelt out in a document titled "The Alliance-International Exploration and Production."

According to him, the alliance as it was presented to him, would create the first ever opportunity for Statoil, then an indigenous Norwegian company, to operate outside its home base, Norway, and to venture into West Africa.

He stated that at all material times, it was presented to him by the Alliance that BP and Statoil would be equal partners on a 50:50 basis; and that the alliance would not be set up as separate legal personalities; that the two companies would operate as one.

He claimed that it was stated to him by the Alliance at different times verbally and in writing that participation of BP and Statoil was to be on identical terms and that all agreements reached would be performed on equal terms.

He further averred that his business development efforts on behalf of Statoil/BP had resulted in a profitable portfolio of petroleum interests now converted and defined as oil mining lease interests pursuant to the provisions of the Petroleum Act.

He however claimed the defendant had refused to sign or otherwise give effect to the net profit interest agreement in order to prevent him from receiving the accruable income from current production.

This is in spite of a letter dated November 15, 1991 where the defendant had conveyed to the plaintiffs, its willingness to accept the net profit interest agreement, Abebe said.

The plaintiffs, among other things, therefore urged the court to declare that they are entitled to a net profit interest of 1.5 per cent out of the defendant's interest in the Agbami oil field in consideration of the business development successes it achieved for the defendant.


OPEC Oil Output Reaches 14-Month High, Survey Shows (Update1)

February 26, 2010, 3:15 PM EST

(See {OPCA } for table. Updates prices in the fifth paragraph, adds output starting in ninth.)

By Karyn Peterson and Mark Shenk

Output rose 125,000 barrels a day, or 0.4 percent, to an average 29.17 million barrels a day, the highest level since December 2008, according to the survey of oil companies, producers and analysts. The January production total was revised 45,000 barrels a day higher.

OPEC cut its production quotas by 4.2 million barrels to 24.845 million barrels a day beginning in January 2009 as fuel demand tumbled during the worst global recession since World War II. The group left the targets unchanged at a Dec. 22 meeting in Luanda, Angola. Ministers are next scheduled to gather on March 17 in Vienna.

“At $70 there is really no incentive for OPEC to cut production,” said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. “OPEC should be worried because rising production and economic uncertainty isn’t the recipe for a bull market.”

Oil futures have more than doubled to $79.66 a barrel on the New York Mercantile Exchange from a four-year low of $32.40 touched in December 2008, which caused OPEC to curb output.

Saudi Output

Saudi Arabia, the group’s biggest producer, boosted output by 100,000 barrels to 8.25 million barrels a day, the highest level since December 2008. It was the largest increase of any member. The kingdom exceeded its quota by 199,000 barrels a day.

The 11 countries with quotas, all except Iraq, pumped 26.785 million barrels a day, 1.94 million above their target. Compliance with output quotas slid to 54 percent in February from 57 percent in January. All members exceeded their production limits.

Nigeria’s output fell 85,000 barrels a day to an average 1.94 million, the biggest decline of any member, as militants renewed attacks on oil installations. The Movement for the Emancipation of the Niger Delta, the main armed group in the region, said on Jan. 30 it called off a three-month “indefinite cease-fire” and would resume attacks on the oil industry.

Iraqi output slipped 20,000 barrels a day to 2.385 million, the second-biggest decrease in OPEC.

Production in Iran, OPEC’s second-biggest producer, declined 10,000 barrels a day to 3.795 million. The country is the biggest overproducer in the group, exceeding its quota by 459,000 barrels a day.

--Editors: Joe Link, Charlotte Porter

To contact the reporters on this story: Mark Shenk and Karyn Peterson in New York at


IBM, Shell Team Up On Oil Exploration

Big Blue will lend its analytics expertise to Shell's efforts to extend the life of gas and oil fields.

By Paul McDougall
febrero 26, 2010 02:22 PM

IBM said Friday it struck a deal with Royal Dutch Shell under which it will help the oil and gas giant improve its ability to predict the location of fossil fuel reserves.

The arrangement calls for IBM to lend to shell its expertise in advanced computer analytics, which Shell uses to build mathematical algorithms employed in oil and gas exploration and research.

"This collaboration is remarkable," said Gerald Schotman, executive VP for Shell's Innovation, Research & Development Group, in a statement.

"Two industrial research giants are coming together to solve a very specific, real-world problem and make the most of oil and gas reservoirs. This will not be done through expensive, experimental facilities, but by bringing together a powerful team and powerful computers so we can be smarter than before," said Schotman.

Rather than focus on finding new oil deposits, the collaboration is primarily aimed at helping Shell locate previously untapped reserves in its existing oil fields.

IBM will help by using its supercomputing prowess to automate the reconciliation of different data sets containing information about seismic activity, flow rates, rock formations, and other factors relevant to determining the odds that a particular patch of ground might hold oil or gas.

"Working with Shell is a prime example of the importance of collaborative research in the effort to build a smarter planet," said John Kelly, director of IBM Research.

The Joint Development Agreement between the two companies calls for IBM and Shell research scientists to work together in locations in the U.S. and the Netherlands.

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China targets to be the largest solar market in the world

Anuradha Shukla

26.02.2010 kl 21:38 | IDG News Service

Going green is profitable as well as good for our environment and apparently China's policy-maker understands this. The nation is doing its best to promote energy-saving industry, and focusing on the solar system project.

Going green is profitable as well as good for our environment and apparently China's policy-maker understands this. The nation is doing its best to promote energy-saving industry, and focusing on the solar system project.

China has announced "Golden Sunlight Projects" in Beijing. This initiative is designed to make the country's solar market the largest one in the world.

First solar city in China

The capital of one of the fastest growing economies in the world will soon be set up as the first solar city in China. Future plans to expand the "Golden Sunlight Projects" will depend largely on the success of Beijing's solar city efforts.

The growth of the country's solar sector will be managed by China Innovation Investment Limited. Few projects have already been approved and passed by the Beijing Municipal Commission of Development and Reform. The approved six major "Golden Sunlight Projects" are set to accelerate the development of new and improved solar systems, and market new energy products.

Huge power generation capacity

This initiative is expected to yield huge energy savings across China, and project experts say that Beijing's solar energy power generation capacity will total 70 megawatts (MW). The output value of its solar energy industry is expected to exceed 20 billion yuan in 2012, and by the year 2020 capacity may reach 300 MW.

The intentions behind these efforts are great but it will be some time before solar energy becomes popular among customers, because of its often prohibitive costs. This situation may change, due to government subsidies and as the technologies behind it mature. Overall, the "Golden Sunlight Projects" should help reduce production costs in China, by offering companies viable options to on-grid and traditional electricity.


RPT-FACTBOX-U.S. nuclear units seeking license renewal

Fri Feb 26, 2010 6:27pm GMT

Feb 26 (Reuters) - A total of 59 nuclear reactors in the
United States have obtained 20-year license extensions from the
U.S. Nuclear Regulatory Commission since 2000, according to the
Nuclear Energy Institute, a trade association. No applications
have been rejected.
Currently, 19 renewal applications are under NRC review and
20 other reactors have indicated they will apply for extensions
before 2017.


US natural gas rig count climbs near 12-mth high

Fri Feb 26, 2010 8:15pm GMT

NEW YORK, Feb 26 (Reuters) - The number of rigs drilling for natural gas in the United States climbed by 12 this week to near a one-year high of 905, according to a report on Friday by oil services firm Baker Hughes in Houston.

It was the ninth straight weekly gain and puts the gas rig count at its highest level since March 6, 2009, when there were 916 gas rigs operating.

The U.S. natural gas drilling rig count has rebounded 36 percent since bottoming at 665 on July 17, its lowest level since May 3, 2002, when there were 640 active gas rigs.

But the rig count is still well off its recent peak above 1,600 in September 2008, and stands at 65 rigs, or 7 percent, below the same week last year.

Many gas producers had scaled back drilling operations earlier last year with credit tight and natural gas cash prices sinking during summer to about $2 per million British thermal units (mmBtu), a 7-1/2 year low and down some 85 percent from July 2008 highs above $13.

But cash gas prices are still more than double their late summer lows, trading in the $4.80s this week, high enough to encourage more onshore drilling, particularly in some of the prolific shale basins such as Marcellus and Haynesville where break-even drilling costs are below $4.

While drilling is still down over the past year or so, traders noted production has not slowed much, with government data Friday showing December gross natural gas output fell 0.7 percent from November because of well freeze offs but was still 0.9 percent above December 2008 levels.

Some traders said rig cuts eventually may be necessary to balance the market unless demand, particularly from the industrial sector, starts to recover with the economy, but few expected to see any significant rig declines as long as cash prices hover near current levels. (Reporting by Joe Silha; Editing by Lisa Shumaker)


Off Florida, massive oil tanks menace U.S. refiners

Fri Feb 26, 2010 9:08pm EST

There, a huge oil storage terminal is expanding capacity to handle millions of barrels of fuel shipments that could hit the U.S. market at a time when refiners are bleeding cash and fuel demand has fallen.

The Bahamian terminal, known as Borco, is planning to add 6 million barrels in light fuel storage tanks by the end of 2011, a company executive said in an interview.

"If you're on the East Coast, you better be ready for competition," said Tim Day, managing director at First Reserve Corp, the Connecticut-based private equity firm that bought the site in 2008 with Dutch partner Vopak.

"A light sweet refiner making gasoline on the East Coast could suffer long term," he told Reuters.

First Reserve has decided to move ahead with the expansion after it received project bids and major interest from customers in late January, Day said. Borco is in talks with customers to lease the new space.

The tank expansion may cost around $350 million, Borco managing director Raymond Jones told Reuters on Friday by email.

An oft-ignored patch of the oil industry compared with high-profile exploration and production, oil storage is now gaining marquee status. A rapid expansion of Asian and Middle East refineries is lifting fuel trade between regions, and in turn, demand for terminals like Borco that handle the flows.

Since the new owners bought Borco from Venezuela's PDVSA in 2008, they have spent $150 million refurbishing it, expanding usable capacity by 80 percent to 21.5 million barrels -- enough to meet a quarter of the world's daily oil demand.

Borco's usable capacity had dropped to as little as 12 million barrels before the sale, as PDVSA used the terminal to handle mostly Venezuelan crude, allowing many of its tanks to fall into disuse.

The 40-year old terminal known among oil traders as Borco has been officially redubbed Vopak Terminal Bahamas.

But unlike most of Borco's existing storage of heavy fuel oil or crude oil, which is often shipped to U.S. refineries for processing, the new "clean" tanks will hold already-refined light products such as gasoline, diesel, jet fuel, heating oil or naphtha.

Borco's capacity to store these lighter products would rise to near 8.8 million barrels, or enough tank volume to supply the United States with gasoline for a full day, based on recent demand.

With the new tanks, Borco would grow to 27.5 million barrels -- about double the size of the next-largest regional facility -- putting First Reserve in control of around a quarter of the oil tank capacity for commercial lease offshore from eastern and southern U.S. fuel markets.

Many of the light refined products could be shipped from new overseas refineries to Borco, from where they often are sent to U.S. markets, Day said.

First Reserve, which has invested over $12.5 billion in energy projects worldwide, may soon have interests in refining light fuels itself. It is also a partner to legendary refiner buyer Tom O'Malley in PBF Investments, a $2 billion U.S. refinery buyout fund looking to snap up cheap plants.


Since 2008, an oil market contango -- when barrels for delivery further in the future are priced higher than prompt barrels -- has put the world's commercially available oil storage leases in high demand. The contango curve in futures markets encourages traders to hoard oil instead of selling right away.

First Reserve isn't the only one betting on more storage trade. Swiss trader Vitol will open a new 2.8 million-barrel clean fuels terminal in Florida in April, and PetroChina has taken up a large 5 million-barrel lease at a fuel and crude oil storage facility in St. Eustatius in the Caribbean.

Borco's customers include private oil majors, state-run oil giants, foreign refiners and traders who often lease tanks for years of use, also gaining access to Borco's blending facilities and deepwater jetties. This allows them to ship bulk cargoes into Borco, mix them to any market's specifications, and store or ship them onwards, often in smaller batches.

"Most if not all major players in the oil and oil products markets have expressed interest for storage at Borco," Day said, declining to name specific customers.

Industry sources told Reuters they already include big Asian refiners like Reliance Industries, which controls a new 1.24 million barrel-per-day (bpd) refinery complex in India and is using Borco to stage regular shipments of gasoline into U.S. markets.

A flood of new fuel from abroad could squeeze U.S. refiners like Valero Energy Corporation or Sunoco Inc, with several plants each on the East Coast, where three refineries were closed last year and others are on sale. The region's plants are facing their third straight year of slumping margins.

Around half of supplies that move through Borco now are bound for the United States, Day said.

Industry sources say customers like Venezuela's PDVSA use Borco to stage Venezuelan heavy fuel oil exports to China, and Petrobras is using it to handle new Brazilian oil exports.


Borco's building spree comes after its customers requested more space to lease, but it's also based on one seeming paradox: the customers want to sell more fuel into a U.S. market where demand is shrinking.

"Demand is stagnant and potentially declining. Why do you need more storage?" said Mark Gilman, an oil analyst at the Benchmark Company in New York.

U.S. crude and oil product demand plunged by more than 2 million bpd since 2007 amid a financial crisis. A push for fuel efficiency means U.S. gasoline use may never recover to 2007 levels, according to the Energy Information Administration.

In 2008, the United States became a net exporter of distillate fuels and a net exporter of gasoline in 2009.

Still, the country remains by far the top market for fuel, and a favorite dumping ground for other regions' extra supply.

While Asia has the fastest-growing market for oil products, its refining capacity may grow even quicker than demand, creating a glut that needs to be stored or sopped up in other regions.

World refining capacity should expand by 8.7 million bpd through 2014, with Asia and the Middle East making up 75 percent of growth, International Energy Agency data shows.

In December, China became a net exporter of refined oil for the first time since at least 1993.

"(If) China all of a sudden found itself with 5 million barrels a day of excess capacity and decided to dump it in the Western hemisphere, that would be a bad thing for Western refiners," said Peter Beutel of Cameron Hanover in Connecticut.


As Borco grows its capacity next-door to vulnerable U.S. refiners, First Reserve may also be betting that easy access to oil storage will allow some U.S. refiners to flourish even if others fail.

The equity firm could soon get its own stake in a heavy oil refinery on the East Coast, through PBF Investments, the buyout fund where it holds a one-third stake.

PBF is in advanced talks to buy the Delaware City refinery, which was shuttered by Valero in late 2009, since it was losing up to $1 million a day.

Famed for buying cheap, troubled refineries and turning them profitable, O'Malley also chairs Petroplus, another PBF shareholder, which owns refineries in Europe.

Day declined to comment on PBF's plans. But experts say the use of distribution terminals like Borco could give O'Malley -- or others with a transatlantic refining network - an important edge, by helping them stage fuel shipments or "refinery arbitrage" between regions.

Europe has had chronic shortages of diesel fuel that could be supplied via Borco. The fuel could even come from U.S. refineries if margins improve, as they might if some more plants are shut down.

Vopak, the world's largest tank terminal operator, operates the site and lists it as the company's largest in the world. First Reserve owns 80 percent of Borco while Vopak has a 20 percent stake.

The owners' move to rapidly expand storage leases at Borco now looks prescient: Demand for storage has since boomed due to the market contango. Last year, traders even parked more than 100 million barrels of oil in ships at sea, with terminals like Borco brimming with crude.

(Editing by Jonathan Leff)


U.S. ethanol output rises in December -EIA

Fri Feb 26, 2010 8:49pm GMT

WASHINGTON, Feb 26 (Reuters) - U.S. daily ethanol output rose in December for the third month in a row as distillers took advantage of low prices for corn and natural gas, the Energy Information Administration said.

Distillers made 787,870 barrels per day of the alternative motor fuel in December, the last month for which data was available. That was up from 786,400 barrels per day in November, and 740,000 bpd in October.

"Ethanol makers are making money again," said Matt Hartwig a spokesman for the Renewable Fuels Association, an ethanol industry group. "It's become more economical for producers to make ethanol as corn prices fall."

Most U.S. ethanol is made out of corn, while distillers use natural gas to fire their plants.

Motor fuel blenders and refiners mixed about 718,838 bpd of ethanol into gasoline in December, up from 695,900 bpd in November and 703,258 bpd in October

U.S. mandates call for increasing amounts of ethanol to be blended into gasoline to help reduce foreign oil demand. The mandate for ethanol made from corn and other grains hits a maximum of 15 billion gallons a year by 2015. (Reporting by Timothy Gardner; editing by Jim Marshall)


Solar panel productivity boosted by Origami

February 27, 2010

Solar panels nowadays are flat, but folding them in origami-like ways could help dramatically boost the amount of power they could generate, scientists say.

Research into solar or photovoltaic panels thus far have kept them flat largely to prevent them from casting any shadows that might diminish the amount of light they could harvest. Two-dimensional panels are also far easier to install on rooftops and are well suited to standard large-scale fabrication techniques.

Still, three-dimensional solar panels could in principle absorb more light and generate more power than a flat panel of the same area footprint, which could prove useful in circumstances where the available space is limited. The idea is that any light that might normally reflect unused off a solar panel surface could then get trapped on another panel.

“This was a fully 'bio-inspired' idea,” said researcher Jeffrey Grossman, a theoretical physicist at MIT. “I was hiking up at Lake Tahoe in California and noticing the shapes of trees, and wondering, 'Why do they have a given shape over another?'“

To investigate the optimal shape a 3-D panel might take in order to harvest the most light, scientists used a “genetic algorithm” to evolve solar panels in a computer simulation.

The model they developed randomly generated jumbles of flat, triangular double-sided solar panels and analyzed which generated the most power as a virtual sun moved across the sky. The best ones were then “mated” together for “offspring” that combined features of each with “mutations” that varied their structures. This process was then repeated for up to millions of generations, all in order to see what might evolve.

Assuming a roughly 1,075 square foot area (100 square meters), flat solar panels would generate roughly 50 kilowatt-hours daily. In comparison, the best 3-D structures the researchers came up with - jagged clusters of 64 triangles - could harvest more than 60 kilowatt-hours daily if the devices were 6.5 feet high (2 meters) and up to 120 kilowatt-hours daily if the designs was roughly 33 feet high (10 meters).

Since these jagged clusters would likely prove unwieldy to use, the scientists explored a simplified version they dubbed the “funnel,” resembling a square box whose sides each caved in at the middle, a design that generates nearly as much energy as the best evolved structures.

“I originally thought that such structures would only be useful in situations where area is at a premium - for example, roof-tops,” Grossman said. “Lately, though, we have been exploring more and more directions for ideas that may make 3-D structures more appealing than flat panels even when area is not limited.”

For instance, 3-D solar panels could be as easy to implement as flat ones while generating more energy - for instance, by taking advantage of light reflected off the ground, Grossman said. Two-thirds of the cost of a panel for residential or commercial rooftop installation is due to the module and installation costs, not the cost of the silicon or other material that converts solar power to electricity. One could imagine shipping 3-D panels flat and then opening them up like origami for use.

Also, with 3-D solar panels, the way their components are set up, they generate power evenly throughout the day. To achieve the same with flat panels, one has to arrange them on systems that track the movement of the sun across the sky, “which is a big bummer, since you really don't want any moving parts sitting on your rooftop,” Grossman said.

“I'm excited about the fact that such a seemingly simple idea could help lower the cost of solar power,” Grossman added. The researchers are now teaming up with experimentalists to build prototypes of their computer-generated designs.


Iran ready to entrust Japan with 5 power plant projects

February 27, 2010

TOKYO - Iran is ready to transfer the construction of five nuclear power plants to Japan, Iranian Parliamentary Foreign Policy and National Security Committee Chairman Alaeddin Boroujerdi stated.

In a meeting in Tokyo with Japanese Parliamentary Committee on Foreign Affairs and Defense Chairman Naoki Tanaka, Boroujerdi said that Iranian parliamentarians think that Japan should take decisions independent from the United States, IRNA news agency quoted him as saying on Thursday.

He noted that Japan may invest in various sectors of Iran, including the transportation, oil and gas sectors.

He added that the Iranian government plans to produce 20,000 megawatts of nuclear electricity in the next 20 years and Japan may also invest in the construction of nuclear power plants in Iran.

According to him, nuclear power stations will be built to generate electricity and for the development of Iran.

""Iran does not have other goals for the construction of these stations,"" he said. ""The claims of the United States and some Western countries regarding Iran's nuclear program are unfounded.""

The Iranian parliamentary delegation led by Speaker Ali Larijani began a four-day official visit to Japan Feb. 23


U.S. coal burn falls 3 percent for week - Genscape

Fri Feb 26, 2010 3:28pm GMT

HOUSTON, Feb 26 (Reuters) - U.S. coal use fell 3 percent
last week from the week before, Genscape said Friday, as winter
weather eased across much of the nation.
Compared with the same week last year, U.S. coal use was up
2 percent for the week ended Thursday, the power industry data
provider said.
Slow recovery of the economy from the recession also was a
factor in power demand and the need for generation from
coal-fired power plants.
For reports on weather day by day, see [WSC/OUS]
and [WSC/STORM].
Coal demand in the populous East was down 4 percent last
week but up 3 percent from the same week last year, reflecting
colder weather at this time of winter this year than last
In the less populated West, reflecting weather shifts, coal
demand rose 7 percent for the week but was 8 percent less than
the same week a year ago, the data provider said.
For U.S. energy weather by region, click on [WEATHER/NEWS1]
and select regions.
Genscape's regional indexes are calculated separately from
the national index and do not always add up to the separately
calculated U.S. total, Genscape has said.


Ukrainian President to discuss gas cooperation in Moscow

27 February 2010 | 08:26 | FOCUS News Agency

Kiev. Relations in gas field between Ukraine and Russia will be discussed during the visit of the newly elected Ukrainian President Viktor Yanukovich to Moscow, sources close to Yanukovich announced.

“As it is known Viktor Yanukovich is to pay a visit to Russia. I am convinced that new gas agreements and price of the natural gas as well as organization in the field of the gas-transit system will be under discussion, with sure”. This is what Deputy-leader of the President’s administration Irina Akimova said for Inter TV channel.


Oil settles near US$80 a barrel again

Published: Saturday February 27, 2010 MYT 11:10:00 AM

NEW YORK: Oil prices hit US$80 a barrel Friday to end a wild trading week that saw prices swing in the opposite direction every day.

Benchmark crude for April delivery added $1.49 to settle at $79.66 a barrel on the New York Mercantile Exchange.

Prices reached as high as $80.05 a barrel earlier in the day.

Crude barrels have wavered between $70 and $80 all year, and the latest batch of economic reports failed to give a clear picture of when energy demand in the U.S. would pick up.

The Energy Information Administration said the country has started consuming more petroleum over the past few weeks.

It also said the U.S. is still working off a hefty crude surplus built up during the recession.

And gasoline contracts slid this week as a refinery strike ended in France.

The U.S., which imports much of its fuel from Europe, still has larger-than-average supplies of both motor gasoline and distillate fuels like diesel.

Crude hit $80 on Monday and Wednesday, only to fall on Tuesday and Thursday.

On Friday, prices jumped again after the government reported that the economy grew at an annual rate of 5.9 percent in the final three months of 2009.

The GDP reading was the strongest in six years, though the economy isn't expected to maintain that level of growth this year.

Crude prices also got a boost Friday from a weaker U.S. dollar.

Dollar-based commodities like oil become cheaper for international investors when the dollar falls.

In other Nymex trading, heating oil for March delivery added 3.87 cents to settle at $2.0249 a gallon, while gasoline for March delivery rose 4.18 cents to settle at $2.0788 a gallon.

Natural gas for April delivery gained 4.6 cents to settle at $4.813 per 1,000 cubic feet.

In London, Brent crude rose $1.30 to settle at $77.59 on the ICE futures exchange. - AP


Friday, February 26, 2010

Chinese CNPC going to become member of major oil project in Azerbaijan

9:52 p.m. Friday,
February 26, 2010

Baku, Fineko/ The next participant sells stake in the largest oil project of Azerbaijan – PSA for development of block of oil fields Azeri-Chirag-Gunashli (АCG) in the Azerbaijan sector of the Caspian Sea.

Chief of Investment Department of the State Oil Company of Azerbaijan (SOCAR) Vagif Aliyev said that Devon company within the framework of the plan for sale of participation in offshore projects all over the world in order to concentrate on projects in the USA, announced on withdrawal from project of ACG and the consortium, which implements it – the Azerbaijan International Operational Company (AIOC).

“In this connection, the company offered other participants of the consortium to purchase its participation, and then has begun negotiations on sale of equity stake of the China National Petroleum Corporation (CNPC). Presently, it has started negotiations with other participants of AIOC on sanctioning of this transaction. No decisions have been taken so far and there is no information about terms of the transaction,” V. Aliyev told.

PSA is focused only on oil. Associated gas, which is not used for technological needs, is transferred free to Azerbaijan. Resources of the block are estimated at 925 million tons of oil. Devon possesses 5.6% of participation in the project against 34.1% of its operator, represented by BP, Chevron has 10.2%, SOCAR - 10 % and INPEX - 10 %, Statoil – 8.6% and TPAO owns 6.8%. Itochu enjoys 3.9% in the project and Hess – 2.7%.


Obama Proposes Fee On Carbon Emissions

Margaret Kriz Hobson

Wednesday, February 24, 2010 1:00 PM

President Obama today recommended imposing a price on carbon dioxide emissions to help U.S. companies transition to a clean-energy economy. Without specifying how the fee should be imposed, Obama vowed to work with "companies that face significant transition costs" as the nation addresses climate change.

"I want to work with organizations like this to help with those costs and get our policies right," he said in a speech to the Business Roundtable. Warning that oil prices will remain volatile into the future, Obama argued that "if we decide now that we're putting a price on this pollution in a few years, it will give businesses the certainty of knowing they have time to plan and transition."

Left unsaid in the speech was what policies the White House will support to curb U.S. greenhouse gas emissions. In the past Obama has supported an economy-wide cap-and-trade program similar to the climate change legislation that was passed last year by the House. But in recent months, administration officials have backed away from the cap-and-trade approach and said only that they support a fee on carbon dioxide emissions.

The president argued that the nation "has to move towards a clean-energy economy. That's where the world is going. And that's how America will remain competitive and strong in the 21st century." Obama also repeated his State of the Union address support for nuclear power, offshore oil and gas drilling, renewable sources of energy and energy efficiency.


Mexico oil output falls amid delay on reforms

 February 25, 2010, 5:41PM ET



Mexico's oil production continues to fall from year-ago levels as the government struggles to implement hard-fought energy reforms designed to boost exploration.

January crude production was 2.615 million barrels a day, a 2.6 percent decline from 2.685 million in the same month of 2009, state-run oil company Petroleos Mexicanos, known as Pemex, reported Thursday.

The bright side is that January output was the highest level in nine months, though still a significant drop-off from the record annual average of 3.4 million barrels a day in 2004.

The majority of oil reserves in Mexico's waters remain untapped because Pemex lacks technology for exploration.

After a hard-fought battle waged by President Felipe Calderon, Congress passed a bill in 2008 intended to give Pemex more flexibility to make exploration deals with foreign companies. Although significantly watered down to win opposition support, the bill was a landmark in a country where state ownership of oil is enshrined in the constitution and a matter of national pride.

More than a year later, however, Pemex has not sealed any new exploration deals with foreign contractors amid red tape and political resistance.

"They have been so delayed because they are very complex, very difficult," Pemex board member Fluvio Ruiz said in an interview with The Associated Press. "It's a very sensitive topic for this country."

Ruiz said it will likely take until the end of the year to finalize any new deals. He said Pemex has been implementing complicated changes mandated by the reform bill, including overhauling Pemex's corporate board to include outside experts.

Meanwhile, international oil companies are cashing in on major discoveries on the U.S. side of the Gulf of Mexico.

McMoRan Exploration Co. and Energy XXI Ltd. shares soared in January after they announced a major discovery. In September, British Petroleum said it had tapped into billions of barrels of oil after digging the world's deepest oil well in the area.

Mexico's government relies on oil revenues for about a third of its budget. Falling production is jeopardizing government programs and hurting the country's credit ratings as it struggles to pull out of one of its worst economic recession in decades.

Mexico is a top oil supplier to the United States, but experts say the country could lose its standing as a major exporter within five years and wind up importing crude if it does not find more oil.

"Everyone is just waiting to see whether or not this legal reform is going to mean anything," said Michelle Michot Foss, head of the Center for Energy Economics at the University of Texas at Austin. "They've been moving very, very slowly."

Pemex estimates Mexico has 30 billion barrels of reserves beneath deep waters on its side of the Gulf. The company has earmarked more than 34 billion pesos ($2.6 billion) for exploration in mature fields and shallow water this year, a 13 percent increase over 2009.

Pemex has drilled about a dozen wells, compared to hundreds of deep-water platforms on the U.S. side.

The Mexican Constitution bars most outside involvement in Pemex, although the company contracts services from some private businesses. The reforms loosen the barriers by allowing Pemex to pay outside contractors a "bonus" -- not a percentage cut -- for any oil they find.

The country's protective attitude toward its oil dates to March 18, 1938, when President Lazaro Cardenas kicked out American and European oil companies that refused to comply with union wage demands while reaping oil profits.

Politics could still get in the way of new contracts.

One leftist lawmaker has proposed creating an independent committee to review all contracts under the new system.

"We don't sell our oil! We defend it!" dozens of leftist legislators chanted during a session of Congress last week.


Canadian firm sells T and T gas asset $380m deal with foreign firm

Friday, February 26th 2010

Canadian company Suncor Energy is selling its natural gas asset in Trinidad and Tobago to Centrica plc, another foreign firm. 

Suncor will sell its assets to Centrica through a subsidiary, Centrica Resources (Armada) Ltd, for US$380 million.

Current production is in the range of 60 million to 70 million cubic feet of natural gas equivalent per day to Suncor from its 17.3 per cent stake in Trinidad’s North Coast Marine Area block NCMA-1.

The sales agreement also includes equity in three additional blocks: Block 22 and Blocks 1a and 1b.

The sale is expected to close on or about the end of the first quarter and is subject to Government approvals and other regulator approvals, Suncor Energy said in a statement yesterday.

The sale is part of Suncor’s divestment of a number of non-core assets.

Divestments also include natural gas assets in Western Canada, the United States Rockies and assets in the Netherlands.

Ex-Caroni fallout


Two oil reserves discovered in Brazil

Rio de Janeiro, Feb 26 – Brazil’s state energy giant Petrobras announced Thursday that it has located two new significant oil deposits, estimated at a combined 65 million barrels.

Both deposits are in the Barracuda oilfield, about 100 km off the coast of Rio de Janeiro state and were detected through one single oil well.

One of the deposits, has recoverable reserves of 25 million barrels around 800 metres below sea level, while the second holds an estimated 40 million barrels at a depth of 4,300 metres below sea level.

Betrobras reported massive oil findings off the Brazilian coast in 2007 and 2008, at depths of several thousand metres below the surface.

Brazil’s proven, commercially recoverable oil reserves are estimated at nearly 13 billion barrels, ranking 15th in the world, roughly equivalent to Algeria, according to US government data.



Mitsubishi to invest £100m in UK wind turbine research

By Sarah Arnott

Friday, 26 February 2010

Mitsubishi Power Systems Europe (MPSE) is investing £100m in offshore wind turbine research in Britain and will create up to 200 jobs by 2014.

The plan is one of several boosts to Britain's wind industry in recent weeks, raising hopes that the UK manufacturing sector will cash in on the rapid expansion needed to meet green targets.

The MPSE research and development (R&D) programme is supported by £30m of government grants, from a £950m fund created to invest in industrial innovation, job creation and growth.

Although the plan is initially for research only, it puts Britain in a strong position to compete for future MPSE manufacturing investment, with the potential for another 1,500 jobs, according to the Government.

"The UK is now well placed to manufacture the turbines needed for the next generation of offshore wind farms," Lord Mandelson, the Business Secretary, said. "We will continue to work with Mitsubishi to secure production in the UK."

The Government is also putting £18.5m into the New and Renewable Energy Centre (Narec) in Blyth, for the development and testing of extra-large offshore turbines.

Britain already has the most offshore wind power generation of any country in the world. Only 1 per cent of global installed wind capacity is out at sea, because of the technical difficulties of building turbines that can withstand such harsh conditions. But half of it is in the UK. And the market is set to explode over the coming decade as Britain races to meet EU targets for carbon emissions.

The opportunity for UK business is huge. At the moment the UK has a total of 600 megawatts (MW) of wind capacity, and the industry supports about 5,000 jobs. To meet the 2020 targets, Britain will need to source upward of 40 per cent of all electricity from renewables, more than three-quarters of which will have to come from wind. That means between 30,000 and 40,000 MW of wind power, which the industry estimates will cost in excess of £100bn and create more than 70,000 jobs.

The question is whether the majority of the investment and the new jobs will benefit the British economy. UK industry missed the early days of the onshore wind industry and the mature supply chain is now dominated by Germany and Scandinavia. But in the offshore wind, the market is wide open.

"It is not exaggerating to say we are talking about the rebirth of Britain's manufacturing base," Maria McCaffery, the chief executive of the British Wind Energy Association, said. "Right now there is no established, mature offshore wind supply chain anywhere, and we want it to be here in the UK."

There has been considerable progress in recent weeks. Yesterday's announcements from MPSE and Narec came hot on the heels of a commitment from Clipper Windpower to build a factory in Newcastle to develop and assemble the giant blades needed for the group's "Britannia Project", a 10 megawatt turbine prototype with blades 72 metres long and weighing more than 30 tonnes. And last month the engineering group Mabey Bridge announced plans for a £40m turbine tower factory in Chepstow.

Ed Miliband, the Energy Secretary, said: "The UK is starting to turn its leadership in offshore wind generation into leadership in manufacturing. We have the wind resource and we now have an industry that is really starting to grow. It is another step to turning Britain into a leading green manufacturing centre."


Despite Pressure, China Still Resists Iran Sanctions


Published: February 25, 2010

WASHINGTON — Despite intense public and private pressure by the Obama administration, China has not yet shown any sign that it will support tougher sanctions against Iran, leaving a stubborn barrier before President Obama’s efforts to constrain Iran’s nuclear ambitions.Diplomats from two major European allies said this week that China had refused even to “engage substantively” on the issue of sanctions, preferring to continue diplomatic efforts with Tehran. And one senior diplomat said he believed that the most likely outcome might be a decision by China to abstain from voting on a resolution in the United Nations Security Council.

“An abstention is better than a veto,” said the official, who spoke on condition of anonymity, citing the delicacy of the matter.

Secretary of State Hillary Rodham Clinton expressed optimism this week that China was edging toward the American view that the time had come for tougher measures against Iran. But other administration officials acknowledged that her optimism was based less on tangible evidence than on a belief that China would not want to end up diplomatically isolated.

China, the officials note, has backed all three previous United Nations sanctions resolutions on Iran, overcoming its initial reluctance. Last November, it joined 25 other members of the International Atomic Energy Agency in rebuking Iran for concealing a uranium enrichment plant at Qum.

“I think we’ve made a lot of progress,” Mrs. Clinton said Wednesday in testimony before the Senate, adding that she believed that the Security Council would adopt a resolution in the “next 30 to 60 days.”

In a sign that the administration may be managing expectations in light of China’s stance, she noted that the United Nations was not the only arena for squeezing Iran. The United States and the European Union are expected to impose their own sanctions, she said, and other countries could team up against Iran.

“We will look at additional bilateral and preferably multilateral sanctions with willing nations, on top of whatever we get out of the Security Council,” Mrs. Clinton said Thursday before the House Foreign Affairs Committee. “So, in sum, we believe in a broad approach.”

For now, though, the spotlight is on the United Nations, where she said diplomats were “hammering out” the language of a resolution. The United States, Britain, France and Germany are largely united around sanctions aimed at equipment and financing for Iran’s nuclear and missile programs, with an emphasis on measures against the Islamic Revolutionary Guards Corps, which runs those programs.

Russia is also expected to support a resolution, though diplomats predicted that it would try to water down the sanctions.

That leaves China, which declared again this week that it preferred diplomacy. Experts say Beijing is being driven partly by its commercial ties: it has vast investments in Iran’s oil and gas sector, and Iran is its second largest supplier of oil, after Saudi Arabia. It also has a deep aversion to sanctions, stemming from its own experience after the Communist revolution in 1949.

“China regards sanctions as ineffective, counterproductive and a form of interference in other countries’ affairs,” said Kenneth G. Lieberthal, a China expert at the Brookings Institution.

For all that, some experts said they saw hints that China might be coming around to tougher measures.

It did not object when the Financial Action Task Force, an intergovernmental body that combats money laundering and terrorism financing, put Iran on a blacklist last week. (China is a member of the task force.) Nor did it protest last week when the atomic energy agency issued another report critical of Iran’s efforts to conceal its nuclear activities.

“I took that as a hopeful tea leaf,” said Patrick Clawson, the deputy director of the Washington Institute for Near East Policy. “I don’t see the Chinese as on board with general-purpose sanctions,” he said. “But if you’re willing to go with nuclear-related things, I think you could get a Chinese ‘yes.’ ”

By playing hard to get, a European diplomat noted, China had put itself “at the heart of the process.”

Mrs. Clinton has kept the pressure on China by arguing that its energy security would be threatened by the instability that a nuclear-armed Iran would create in the Middle East.

Other countries are also pushing: a delegation of senior Israeli officials arrived in Beijing on Thursday, and was expected to raise the Iran issue. Saudi Arabia said last week that it hoped China would back a resolution.

Mrs. Clinton’s sales pitch is not limited to China. Next week, she is scheduled to travel to Brazil, which currently holds a rotating seat on the Security Council and which has said it opposes sanctions. Officials said she would pressure the Brazilian government to fall in line.

The United States has said it wants international solidarity in the campaign against Iran’s nuclear ambitions. But of the 15 countries that now hold seats on the Council, 5 are viewed as reluctant: China, Brazil, Turkey, Lebanon and Bosnia. Nine yes votes are needed to adopt a resolution.


Indian coal delegation to visit US for mines and technology

Friday, 26 Feb 2010

PTI reported that a high level delegation led by Mr Sriprakash Jaiswal coal minister will visit the US in June 2010 for scouting for mining properties and seek expertise for an ambitious project to convert coal into gas among others. The delegation would comprise senior officials from the coal ministry and PSU Coal India Limited.

Mr Jaiswal said that "I will lead a delegation to the US in June with an aim to buy coal mines, procure latest mining equipment and forge alliance in underground coal gasification technology. Coal India is already looking to buy or jointly develop mines abroad to bridge the domestic demand supply gap. Its domestic expansion projects are facing delays."

Mr Jaiswal said that "There is an urgent need for adoption of clean coal technologies including coal washing, coal bed methane, coal mine methane, underground coal gasification and coal liquefaction as these are also important in improving the coal usage in an environment friendly manner."

Mr Jaiswal added that "The coal demand reached a level of 550 million tonnes in 2008-09 is envisaged to be over 2 billion tonnes by 2031-32. There is need to increase the domestic coal supply."

The coal ministry is also scouting for sophisticated mining equipment from abroad to dig out more from domestic coal deposits. It has also sought reduction in customs duty on such machineries to about 3% from around 10% at present in the upcoming Union Budget.

CIL is unlikely to meet production target of 435 million tonnes for this fiscal and has already revised downward its estimated output for 2011-12 to 486 million tonnes from 520 million tonnes mainly on account of regulatory hurdles. The US, which has one of the world's largest coal reserves, has rich experience in converting coal into gas.

(Sourced from

Japan, Taiwan, Korea May Sink Natural Gas Shipments

February 26, 2010

Japan, Taiwan and South Korea may cancel 12 planned liquefied natural gas shipments this year from Indonesia’s Bontang and Arun LNG plants, Ira Miriawati, head of oil and gas utilization at upstream oil and gas regulator BPMigas, said on Thursday. The three countries cancelled the purchase of 22 LNG cargoes last year.

Indonesia may divert the affected LNG to the domestic market, Ira said. There has been mounting pressure for the government to divert gas exports to the local market as power plants and other industries, such as fertilizers and ceramics, struggle to secure enough gas.

State-owned gas company PT Perusahaan Gas Negara plans to impose a surcharge, starting in April, on gas purchases that exceed the volume set under contract. Some officials have recently said the government would not extend maturing export contracts to ensure domestic supply. Bloomberg/JG


Oil prices slumps on recovery fears

Posted: 26 February 2010 0542 hrs

NEW YORK - Oil prices fell sharply Thursday amid concerns over economic recovery arising from weak US economic data and Greece's crisis-hit finances, as well as the stronger dollar.

New York's main futures contract, light sweet crude for April delivery, fell 1.83 dollars to 78.17 dollars a barrel.

London's Brent North Sea crude for April delivery shed 1.80 dollars to 76.29 dollars a barrel.

Investors were concerned over weak US economic data this week -- rising weekly claims for jobless insurance benefits, plunging consumer confidence and the sluggish housing market at the center of financial turmoil, said independent oil analyst Ellis Eckland.

"The implication is that demand won't be as good as expected," he said.

New claims for US jobless benefits jumped to a three-month high, the government said Thursday in a report underscoring ongoing struggles for the labor market and the economic recovery.

The increase in claims by 22,000 to 496,000 for the week ending February 20 was the second consecutive gain, with claims having reached a level not seen since November, analysts said.

On Wednesday, a closely watched survey showed US consumer confidence tumbled in February as Americans turned sharply more pessimistic about the labor market and economic recovery,

The Conference Board, a business research firm, said its consumer confidence index fell to 46.0 in February -- its lowest reading since April 2009 -- from an upwardly revised 56.5 in January.

Sales of new homes in the United States plunged by 11.2 percent in January from December to a historic low, the government reported Wednesday in a fresh sign of weakness in the troubled housing market

Oil prices also came under pressure as the dollar gained at the expense of the euro amid rising fears of sovereign default as Greece grappled with a raging debt crisis, said Mike Fitzpatrick, vice-president of MF Global.

A stronger greenback weighs on dollar-denominated crude because the commodity becomes more expensive for buyers holding weaker currencies.

The dollar is still "a very, very important indicator" for the oil market, said Tetsu Emori, commodities fund manager at Astmax Investments.

Fitzpatrick said that fresh US housing data coupled with the US Fed chief Ben Bernanke's intention to keep rates low for some time "should speak volumes about policymakers opinion of the alleged recovery.

"Unless and until consumers go back to work, and start feeding the demand upon which oil prices are necessarily dependant, prices will remain in check," Fitzpatrick said.

- AFP /ls


Wednesday, February 3, 2010

Europe Gasoline-Up on MidEast demand, naphtha firms

Wed Feb 3, 2010 12:07am IST

LONDON, Feb 2 (Reuters) - European gasoline and naphtha
prices rose on Tuesday, marginally exceeding gains in crude oil
Gasoline was continued to support by spot demand from Saudi
Arabia and West Africa.
Saudi Arabia was expected to purchase up to 28,333 barrels
per day (bpd) of gasoline for delivery in February, more than
for January. [ID:nLDE6110DF]
Restart of petrochemical cracks supported naptha prices,
offsetting the limited arbitrage to Asia, traders said.
All three of German chemicals company BASF's (BASF.DE: Quote, Profile, Research)
European petrochemical steam crackers are now online following
two restarts in January after fires, a company spokeman told
Reuters on Tuesday. [ID:nLDE61128P]
"Cracks (of naphtha) are positive today. Good news for BASF
with decent margins on the petrochemicals," one trader said.


Iran makes new nuclear offer

Wednesday, 3 February 2010 11:43

President Mahmoud Ahmadinejad says Iran is ready to send its enriched uranium abroad in exchange for nuclear fuel.

A US official said Washington was prepared to listen if Iran was making a new offer to break an impasse over its disputed nuclear programme.

The president appeared for the first time to drop long-standing conditions Tehran had set for accepting a UN-brokered proposal.

The International Atomic Energy Agency brokered the proposed plan under which Iran, which denies seeking nuclear weapons, would send its low-enriched uranium abroad in exchange for more highly enriched fuel for a medical research reactor.

'We have no problem sending our enriched uranium abroad,' Mr Ahmadinejad told state television.

'We say: we will give you our 3.5% enriched uranium and will get the fuel. It may take four to five months until we get the fuel.

'If we send our enriched uranium abroad and then they do not give us the 20% enriched fuel for our reactor, we are capable of producing it inside Iran,' he said.

Iranian Foreign Minister Manouchehr Mottaki said the uranium could be exchanged in Turkey, Brazil or Japan if agreement is reached.

Iran has faced intense Western pressure, under threat of new sanctions, to implement the plan and Mr Ahmadinejad's words came with both conciliatory international gestures and uncompromising moves to crack down on opposition protestors at home.

The president offered to swap three detained US citizens charged with spying for jailed Iranians in the US. At the same time, Iran said it would hang nine more rioters over unrest following a disputed presidential vote last June.

US Vice President Joe Biden said Iran's leaders were 'sowing the seeds of their own destruction' through their harsh crackdown on anti-government unrest.

Western powers accuse Iran of trying to develop nuclear weapons under cover of a civilian enrichment program that Tehran says will fuel a future network of nuclear power plants so it can export more oil and gas.

Mr Ahmadinejad's statement on the nuclear issue - on which Supreme leader Ayatollah Ali Khamenei has the last word - was apparently the first time a top official had publicly accepted exchanging low-enriched uranium for nuclear medicine fuel off Iranian soil.

'We made a good faith and balanced offer regarding the Tehran research reactor,' White House spokesman Mike Hammer said in Washington.

'We believe it makes sense for all parties. If Mr. Ahmadinejad's comments reflect an updated Iranian position, we look forward to Iran informing the IAEA.'

The IAEA said last week a deal on uranium enrichment was still possible, despite Western diplomats saying Tehran had in effect turned down the proposal.

Under the proposed deal Tehran would transfer 70% of its low-enriched uranium abroad for conversion into special fuel rods to keep the nuclear medicine reactor running.

The plan aims to reduce Iran's reserves below the quantity needed for the fissile core of a nuclear weapon, if the material were refined to a high degree of purity.


US coal stores fall 1.3 pct for week - Genscape

Tue Feb 2, 2010 5:00pm GMT

HOUSTON, Feb 2 (Reuters) - Coal stockpiles at U.S. power plants fell 1.3 percent this week but remained 12.6 percent greater than the same week last year, Genscape said Tuesday.

U.S. generators, which rely on coal to fuel about half of U.S. electricity production, had 61 days worth of coal on hand, one day less than last week, the power industry data provider said.

Companies averaged seven more days of coal stockpiled than the same week of 2009, the same year-over-year cushion as last week, Genscape said.

Genscape estimated power generators as of Monday had 159.7 million tons of coal, down from 161.8 million tons stockpiled on Jan. 25 but up from 141.9 million tons the same week last year.

The numbers reflect adjustments to the Genscape model and restatement of inventories for early 2009 due to distortions caused by unprecedented substitution of gas for coal in that period.

Inventories typically grow in spring and fall when demand for heating and cooling drops. Stockpiles usually shrink during summer and winter when demand rises for climate control in homes, stores and factories.

The past 12 months have been different due to the economic slowdown followed by signs of rebound. Winter also has been more severe this year.

Mathematical rounding sometimes affects the results, overstating some changes and understating others, Genscape has said. (Reporting by Bruce Nichols; Editing by Lisa Shumaker)


Natural Gas gains due to cold weather

Published on 2010-02-03 13:16:29

Natural gas ended higher on forecasts for cold temperatures that are expected to drive more demand for the fuel. Cold weather, and the resulting increase in heating demand, can help draw down robust natural gas stockpiles.

Natural gas in U.S. storage for the week ended Jan. 22 stood at 2.521 trillion cubic feet. Natural Gas yesterday we have seen that market has moved 1.16%. Market has opened at 251.6 & made a low of 249.2 versus the day high of 255.8.

The total volume for the day was at 29892 lots and the open interest was at 5628.Now support for the Natural Gas is seen at 249.80 and below could see a test of 246.20.

Resistance is now likely to be seen at 256.40, a move above could see prices testing 259.40.

Trading Ideas:

Natural gas trading range is 240-265.
Natural gas ended higher on forecasts for cold temperatures that are expected to drive more demand
Now resistance is at 255.80 above this a rally till 257-259 can be seen.
Cold weather and the resulting increase in heating demand, can help draw down robust gas stockpiles
BUY NAT. GAS FEB AT 250-251 SL 247 TGT 253.80-256.50-258.MCX

Courtesy: Kedia Commodities


Oil rises towards $78 ahead of U.S. inventory data

LONDON (Reuters) - Oil touched a two-week high above $78 a barrel on Wednesday, rising ahead of key inventory data out of the world's largest energy consumer, the United States, later in the session.

U.S. crude for March delivery touched $78.04 a barrel, the highest since January 21, and was trading up 61 cents at $77.84 at 0957 GMT (4:57 a.m. EST).

London ICE Brent crude for March rose 66 cents to $76.72.

On Tuesday U.S. crude soared 3.8 percent, the biggest gain for a front-month contract since September 30, as the dollar dipped on the back of strong corporate earnings reports that boosted risk appetite and on signs China's oil demand will stay high in coming months.

"After a long decline last month and a sharp rebound yesterday, it might be that we have reached a U-turn if the EIA data today is not too bearish," JBC Energy analyst David Wech said.

The U.S. government's Energy Information Administration (EIA) will release stockpile and demand statistics at 1530 GMT, and inventories are expected to have edged up on higher imports, according to a Reuters poll.

The dollar was down 0.3 percent at 78.748 against a basket of major currencies, but was still near a six-month high of 79.534 touched earlier this week.

A stronger dollar makes commodities priced in the U.S. currency more expensive for those holding other currencies.

The monthly Reuters foreign exchange poll, covering analysts' forecasts for the euro, sterling, yen and dollar, will be released at 1215 GMT (8:15 a.m. EST) on Wednesday.


In a report late on Tuesday, the American Petroleum Institute (API) said U.S. crude stocks jumped by 4.7 million barrels last week. That compared to an average forecast gain of 200,000-barrel in a Reuters poll.

The API said U.S. gasoline stocks fell 1.2 million barrels and distillate stocks fell by 1 million barrels.

"Wednesday's EIA data will obviously provide the market with further direction, and we suspect that if the numbers shadow the API figures, a slight downward dias could set in," said senior commodity analyst Edward Meir at MF Global in their daily report.

U.S. gasoline stocks were forecast to have risen by 1.3 million barrels in the week to January 29 and total distillate stocks, including heating oil and diesel, were projected to have fallen 1.1 million barrels.