The number of rigs drilling for oil and natural gas in the U.S. decreased by two the week ending Aug. 26 to 489.
A year ago, 877 rigs were active. Depressed energy prices have sharply curtailed oil and gas exploration.
Houston oilfield services company Baker Hughes Inc. said 406 rigs sought oil, u…
Emergency responders in communities along oil train routes in Washington state will start receiving advance notice of the shipments this fall.
The Spokesman-Review reports (http://goo.gl/i7M9Ui ) that terminals, refineries and other facilities that receive crude oil by rail must begin notifying the…
What does a name say about a company? Management of NovaCopper Inc. feels that its corporate moniker does not say enough about the diversity of metals present in the high-grade deposits encompassed by its Upper Kobuk Minerals Projects in the Ambler mining district of Northwest Alaska.
Arctic, the m…
Contango Ore Inc. Aug. 25 reported second-quarter financial results along with assays from seven additional holes drilled at its Tetlin gold project in eastern Alaska. The company reported a net loss of US$1.2 million, or US31 cents per share, for the year ended June 30, compared with a loss of US$3…
Coventry Resources Ltd. Aug. 29 reported binding agreements with investors who have subscribed for 56.47 million shares at AU3.2 cents per share, to raise a total of AU$1.8 million. The company’s two largest institutional shareholders, Lowell Resources Fund and Ruffer Gold Fund, have agreed to parti…
Seabridge Gold Inc. Aug. 30 said results from the first two core holes drilled this year into the Deep Kerr deposit indicate an increase in the potential mining rate from the proposed underground block cave shapes for the copper-gold deposit at the KSM project in northwestern British Columbia. In Ma…
Millrock Resources Inc. Aug. 30 reported the purchase of an exploration operations facility in the town of Stewart, B. C. from J. Calder Resources Inc. and Geofine Exploration Consultants. The facility, which consists of a house-office, a large storage garage, and core-cutting facility, is situated…
Silver Range Resources Ltd. Aug. 30 said it has signed a letter of intent to option the Up Town gold project located about five kilometers (three miles) northwest of Yellowknife to Rover Metals Corp. The property covers eight gold showings, collectively defining two corridors of structurally hosted…
Comstock Metals Ltd. Aug. 30 said a 2,500-meter rotary air blast drill program is now underway at its QV gold project in the White Gold district, Yukon Territory. This program will test for extensions of the VG Zone, where 3,400 meters of diamond drilling in 17 holes formed the basis for a maiden in…
Kennady Diamonds Inc. Aug. 30 provided an update on the summer drilling program on the Kennady North diamond project in Nunavut. Exploration and delineation drilling is being conducted from two land-based setups. One rig is focused on the Faraday 1 and Faraday 3 kimberlite complex, and the second ri…
Sabina Gold and Silver Corp. Aug. 30 provided a permitting update on its Back River gold project in Nunavut. A June report by the Nunavut Impact Review Board recommended to the Minister of Indigenous and Northern Affairs Canada not to advance the Back River project to the next phase of permitting at t…
TMAC Resources Inc. Aug. 29 reported the safe delivery of the processing plant to its Hope Bay gold mine project in Nunavut. ‘We remain on track to advance the Hope Bay Project towards commercial production in early 2017,’ said TMAC CEO Catharine Farrow. ‘As of this week, the mill building is nearin…
Northern Empire Resources Corp. Aug. 29 reported a definitive agreement to sell its Kiyuk Lake gold property in Nunavut to Montego Resources Inc., a Vancouver B.C.-based junior exploration company incorporated in 2012. Under the terms of the agreement, Northern Empire will transfer its 100 percent i…
Used cooking oil can be processed to make biodiesel, which is derived from renewable bio-mass resources. In India, cooking oil accounts for 20% of the total output of biodiesel.
The panel, which had a purely advisory status, said lack of data and “inherent technical limitations” prevented it from quantifying ‘unfair enrichment’.
and Criteria Caixa are in talks to sell up to 20 per cent of utility , a transaction that would mark another step towards disentangling the complex web of that have long marked Spain’s corporate scene.
In a statement to Spain’s stock market regulator on Thursday, Repsol said the two groups were looking to sell 10 per cent each, but cautioned that talks were at a “preliminary stage” and that no decision had been taken. Criteria, which owns a controlling stake in along with industrial stakes in Spain and abroad, issued a similarly-worded statement.
Based on Gas Natural’s current market value, a 20 per cent stake would be worth about €4bn.
The regulatory statements made no mention of the interested parties, but according to people familiar with the talks they include US funds Global Infrastructure Partners and KKR.
News of the sales talks was first reported by Bloomberg.
Repsol controls 30 per cent of , while Criteria owns 34 per cent. Criteria is also the dominant shareholder in Caixabank, Spain’s third-biggest financial group by market value, which in turn owns 12 per cent of Repsol. Even a sale of 20 per cent of Gas Natural would leave Criteria and Repsol as the most powerful voices on the board of the utility.
The sale, if it goes ahead, would form part of a broader portfolio realignment both at Repsol and Caixa. Like other oil and gas groups, by the recent sharp fall in oil prices, made worse still by the group’s ill-timed acquisition of a Canadian energy company. In an attempt to shore up its balance sheet, Repsol has already sold assets worth €2.8bn over the past year, including wind farms in the UK and piped gas business in Spain.
The Caixa group, meanwhile, has been working to streamline its sprawling portfolio and create a clearer separation between its banking arm, Caixabank, and its industrial holding. Among other steps, it announced this year a plan to sell down its from the current 56.8 per cent to no more than 40 per cent.
extended losses to more than 10 per cent over the past two weeks, dropping towards $45 a barrel, as doubts about the possibility of an output agreement between the world’s main producers intensified.
Russia, which Opec hopes may join next month as the largest exporter outside the cartel, said prices might need to decline further before it engaged “more actively in this issue”.
The comments from Alexander Novak, the Russian energy minister, were a blow to hopes that the world’s biggest producers might be inching towards co-ordinated action to restrict output and help accelerate the end of a two-year old supply glut, which has roiled energy markets and hit their budgets hard.
Renewed discussions of an output cap had helped prices recover last month, peaking above $52 a barrel on August 19 before renewed uncertainty crept in. A similar plan in April was derailed after Saudi Arabia, the largest producer in Opec, refused to participate without Iran’s co-operation.
Brent crude oil, the international benchmark, fell 2.4 per cent on Thursday to $45.78 a barrel, after gaining 11 per cent in August. US benchmark West Texas Intermediate dropped 2.5 per cent to $43.59 a barrel.
Plans for Opec to meet in Algiers at the end of September are going ahead, with signs Saudi Arabia may this time be willing to cap output, with its aim of listing a stake in its state oil company being hampered by the drop in prices.
Since averaging above $100 a barrel for most of the period between 2008 and 2014, crude prices have since more than halved as fast-growing US shale output triggered increased competition among the world’s largest producers.
Opec members have raised output to the highest on record, led by increases from Saudi Arabia and Iraq, while Iran’s production has also recovered since western sanctions linked to its nuclear programme were largely lifted in January.
Khalid Al Falih, Saudi Arabia’s oil minister, has insisted Riyadh is not trying to flood the market but has instead raised output to more than 10.6m barrels a day in response to customers and higher domestic demand.
Olivier Jakob, a market analyst at Petromatrix in Switzerland, said, however, that much of the additional oil Saudi Arabia was selling might be going into storage, as traders tried to buy up cheap crude to sell at higher prices later.
“Part of the demand for crude oil is for stockbuilding,” Mr Jakob said.
“Therefore as long as Saudi Arabia continues to gradually increase production to answer the demand for stockbuilding, it is not allowing the expected ‘rebalancing’ to occur.”
Production outside of Opec is expected to fall this year, helping bring the market back towards balance, with lower prices also boosting demand. But a recovery from below $30 in January has allowed some US producers to add drilling rigs, with many now operating leaner, more efficient companies after working to drive down costs.
Some think the market glut might not clear until well into 2017.
“Middle Eastern Opec production also needs to start stabilising (and then falling) before prices can rise sustainably,” analysts at Energy Aspects said this week.
has doubled down on its commitment to shale gas in China by striking a second exploration deal with China National Petroleum Corporation.
The , covering a 1,000 sq km area of Sichuan province in south-west China, sets BP apart from rivals such as and which have backed away from investments in Chinese shale gas.
The latest BP contract with CNPC involves a block called Rong Chang Bei, adjoining the companies’ existing partnership in Neijiang-Dazu. CNPC will have operational control in both cases. Financial terms were not revealed.
BP’s investment promises to restore some confidence to the Chinese shale sector after recent . Complex geological challenges as well as increased economic hurdles caused by the fall in energy prices have damped hopes of a US-style shale boom in China.
Edward Yang, president of BP China, said the production-sharing deals with CNPC demonstrated the group’s “continued confidence in the Chinese market” and its dedication to helping China “in unlocking its potential for more sustainable energy development”.
Bureaucrats in Beijing see shale gas as a promising means of protecting Chinese energy security, and initially offered subsidies to get the industry off the ground. Those subsidies have been as the oil and gas market has swung into oversupply over the past two years.
China holds the world’s largest shale gas reserves, with 68 per cent more technologically recoverable than the US, according to the US Energy Information Administration.
But efforts to exploit these have so far been disappointing. Chief among the problems have been the of the Chinese shale beds, which in some cases, lie 4km below ground compared with 1km in North American shale fields.
The large volumes of water used in extraction is another obstacle. Much of China’s identified reserves lie below arid deserts; in other promising areas, exploration wells run the risk of interfering with water supply for densely-packed communities on the surface.
Water conflicts were one of the reasons that persuaded Royal Dutch Shell to shelve a shale project with CNPC in Sichuan, which is home to China’s most successful shale project to date. CNPC rival Sinopec is selling gas produced at Fuling, in Sichuan, as part of its ambitions to expand shale gas production sharply.
For BP, Thursday’s deal represented a renewed sign of commitment to China after Sinopec said last month that the UK group planned to in their Secco petrochemicals plant near Shanghai.
The agreement stems from a wider strategic partnership announced between BP and CNPC when Xi Jinping, the Chinese president, visited London last year and came ahead of a visit to China this weekend by Theresa May, UK prime minister, for the G20 summit. Investment ties between the countries have been since Mrs May announced a review in July of the proposed Hinkley Point nuclear power station in which state-owned Chinese investors have a one-third stake.
Ambani refrained from commenting on the report by the panel headed by former chief justice of Delhi High court AP Shah detailed Tuesday.
RIL challenged the cost disallowance through an international arbitration insisting that the output fall was not its doing but a natural phenomenon.
This is the third straight increase in subsidised cooking gas since July when the government decided to go in for a small hike in rates every month to cut down subsidies.
In an attempt to kick-start stranded gas-based projects, Prime Minister Narendra Modi’s government had introduced subsidy-based auctions to import gas and supply it to these power units.
Saudi Arabia’s first international debt sale has generated so much interest from Asian investors that the kingdom is weighing a full pipeline of bonds to follow a $15bn initial auction as early as October, according to bankers briefed on the sale.
The clamour for Saudi sovereign debt, which could be the largest emerging market issuance in history, comes as record-low interest rates in mature economies has prompted investors to pour money into developing markets at a overlooking the risks in some of the world’s least stable economies.
“We are seeing massive, massive demand,” said one banker of the Saudi debt. “Asian banks are throwing around billion-dollar numbers.”
Saudi Arabian leaders are expected to discuss their plans with potential investors at next week’s Group of 20 meeting in China, bankers say.
Deputy Crown Prince Mohammed bin Salman, the 31-year-old responsible for the kingdom’s ambitious economic and social reforms, is also planning to visit Japan this week and will chair the kingdom’s G20 delegation in China.
Saudi officials surprised the financial markets earlier this year by hiring bankers to raise international debt, underlining the extent of the economic downturn after an extended oil boom had erased the memory of previous crashes.
Spurred by the collapse in energy prices, Prince Mohammed has spearheaded a sweeping reform programme aimed at diversifying the kingdom’s economy away from dependence on oil reserves. The $15bn offering, expected to come as early as October, is also expected to pave the way for the biggest initial public offering of all time by Saudi Aramco.
Detailed plans for the sovereign debt sale are unlikely to be set until after the Islamic holiday of Eid al-Adha, with many government offices not expected to reopen until September 18.
A roadshow to sell the landmark issuance — which will set the final size and tenor of the deal — could then begin at the start of October with the deal potentially closing around the time of the annual meetings of the International Monetary Fund and World Bank in Washington on October 7-9.
Bankers say Saudi government entities, lenders and private corporations are also lining up their own debt issuance to follow in the wake of the .
“Everyone is waiting to see how the appetite will turn out for the government, and at what price, which can then be used as a benchmark,” said a second banker. “There should be some other issuance before the end of the year.”
Saudi Arabia is seen as a safer investment than other emerging economies because it remains nearly debt free and has the world’s largest oil reserves. But it is also benefiting from the desperate hunger for yield among investors starved by record-low interest rates in Europe, the UK and Japan.
Bankers say Asian investors not previously seen in emerging market bond transactions are helping to raise order books to new highs as negative interest rates in Japan leave the majority of Japanese government bonds trading in sub-zero territory.
The demand has prompted countries from Qatar to Mexico to ramp up their borrowing plans, leading JPMorgan to predict that 2016 will set a new record in emerging market sovereign bond sales.
Earlier this year, Argentina ended 15 years in market exile with a sale of debt that attracted bids of more than $70bn. Like Saudi Arabia, the Latin American country had originally planned to borrow $15bn but raised the sum issued to $16.5bn as the result of investor interest.
Initial soundings have shown strong Asian demand for the Saudis’ 30-year paper, while US investors prefer a 10-year maturity.
Riyadh may return to market with a second tranche next year if oil prices remain below , the second banker said.
Government finances have been hit hard by the sustained slump in oil prices, slowing the overall economy and forcing Riyadh to plunder its foreign reserves and borrow locally, which is further squeezing a private sector already hit by late payments from state entities.
The world’s three largest credit rating agencies — Moody’s, S&P Global Ratings and Fitch — all downgraded Saudi Arabia’s credit rating this year, citing the impact of lower oil prices.
In Japan, few concepts are as important as “wa”, an emphasis on harmony by focusing on the common good rather than selfish desires. Public opinion towards nuclear power remains resolutely hostile, years after the 2011 disaster at the Fukushima Daiichi nuclear power plant run by (Tepco). Its shares have suffered ever since. All of its low-cost nuclear reactors are shut. That could now change. If it can cope with the newly deregulated electricity market, the worst has passed for Tepco.
Until 2014, nuclear provided the cheapest power of all fuels, including solar, at ¥10 per kilowatt hour. Closing its reactors hurt Tepco initially — a third of its generation came from nuclear. But the costs of imported fossil fuels have all dropped since, boosting profits back to pre-2011 levels. Free cash flow has turned positive again.
Instead, there is a new challenge: deregulation. Since April, other utilities with a thick book of clients, such as , have jumped into electricity supply. The new providers have turned a few heads; Tepco has already lost around 4 per cent of its 20m household customers. Any revenue lost is bad news for a company with net debt of over 5 times its earnings before interest, tax, depreciation and amortisation, and a shaky credit rating.
Tepco, its shares down by nearly half this year, needed some good news, and may have some. , fiercely against reopening two of its key reactors, said this week he will not run for re-election. On Wednesday, Tepco’s shares soared by a tenth on very high trading volume. Restarting these large reactors could eventually add as much as ¥30bn to operating profits (currently forecast at ¥230bn for the year to March 2017).
When that happens is another matter. Even so, the shares deserve some attention. They are lowly valued relative to peers. Although Tepco’s bonds have provided a better option, the long dated ones now look overpriced. , equity investors’ wa may be partially restored.
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“The government will take appropriate action on this issue… We will take a call by the end of September,” Oil Minister Dharmendra Pradhan said.
Petrol will cost Rs 63.47 a litre in Delhi from midnight, up from Rs 60.09 a litre, said Indian Oil Corp, the nation’s largest fuel retailer.
It was also asked to report any “acts of omission and commission” on part of all the stakeholders including RIL, ONGC.
Rarely a day passes without at least one mention of a product that was not even easy to buy in its current form seven years ago: . But behind the headlines about new electric models from the world’s largest carmakers, the spread of charging stations and Tesla’s car battery “gigafactory” in Nevada, a more profound question emerges. Could electric cars ever cut the world’s thirst for oil enough to depress significantly?
Even the most ardent environmental campaigner might have hesitated to entertain such a prospect in 2009, when International Energy Agency there were fewer than 6,000 electric cars on the road across 40 countries.
But that figure shot up to 1.2m last year, capturing interest well beyond the green movement. “Everybody is paying attention,” says Michael Wojciechowski, a Houston-based oil analyst at the energy consultancy Wood Mackenzie. “This thing has the potential to really start to take off.”
One energy expert in Houston who believes electric cars will remain a niche industry for a long time says some oil producers, including , are nonetheless concerned.
“I think they are scared to death,” says Vikas Dwivedi, global energy strategist at the Macquarie Group. “ are a massive enemy and I think they are worried to the point that this has been one of the motivations, among others, for the Aramco IPO.”
revealed this year that it plans an initial public offering to sell up to 5 per cent of Saudi Aramco, the state-owned oil producer, as it moves to cut its economy’s reliance on crude.
Outwardly, the oil industry is less bothered. , the producers’ cartel, predicted last year that by 2040 only 6 per cent of the world’s passenger cars will be running on non-oil fuels. Just 0.1 per cent of the nearly 1bn passenger cars on the road last year had a plug, according to the IEA.
“Without a technology breakthrough, battery electric vehicles are not expected to gain significant market share in the foreseeable future,” Opec said, citing high purchase prices, driving range limitations and poor battery performance in very high or low temperatures.
, the world’s largest listed oil company by market value, also thinks electric cars will only make small strides, accounting for of new car sales globally by 2040.
Sales last year were less than 1 per cent of the 80m passenger cars and light trucks sold worldwide, according to EV Volumes, a Swedish electric car consultancy.
The oil industry’s views do not seem outlandish considering the vehicles are so novel there is still some confusion about how they work.
There are two main types of electric car: battery-only ones like and the Nissan Leaf that have an electric motor but no petrol engine, and plug-in hybrids such as the Mitsubishi Outlander that have a petrol engine and a battery that can be recharged, unlike older hybrid models.
Annual sales of both have increased faster than expected, from 48,000 in 2011 to 550,000 last year, especially the battery-only cars that have been showered with incentives by governments trying to tackle climate change. Sales of the two types should reach 850,000 this year, says EV-Volumes.
The questions are, will the industry keep growing as quickly as it has and, if it does, how long will it take before it starts to make an appreciable dent in oil demand?
Passenger cars use 18m barrels a day of oil products, 18.7 per cent of the 96m barrels consumed daily, according to the IEA.
Crude prices crashed from $115 a barrel in mid-2014 to less than $30 in the early part of this year, when at a rate of about 1m b/d, the IEA says.
Some analysts say this shows how vulnerable prices are to a relatively small shift in demand — a change that could become permanent if electric cars can eat into the global car market in big enough numbers.
But it is not quite that simple, says IEA chief economist Laszlo Varro, pointing out oil prices are affected by supply as well as demand. So even if electric car sales keep booming, the industry’s effect on crude prices will struggle to match the impact of the natural depletion of existing oilfields, he says.
Considering demand alone, it would take 50m-100m electric cars to displace 1m barrels a day of oil, he adds, depending on future driving habits, That is a far cry from today’s fleet of 1.2m plug-in vehicles on the road.
Then there is the question of how long the government subsidies that are powering much of the electric car market will last. Last year, electric cars had more than 1 per cent of the market in six countries, led by Norway with 23 per cent. But the vehicles received an average subsidy of $4,000 to $5,000, says Mr Varro, and that is clearly unsustainable. “You can subsidise 10,000 cars but you cannot subsidise 10m,” he says.
Still, Mr Varro thinks technical advances and consumer excitement about electric cars point to their potential to be highly disruptive for the oil industry.
“Electric cars are roughly where solar power was 10 years ago in terms of their impact on commodity markets,” he says. “Today, solar is a multibillion-dollar business which has a significant impact.”
The solar industry’s breakthrough followed dramatic falls in the price of photovoltaic panels and some improvements in their efficiency.
One factor holding back electric car sales is the price of the vehicles, which is strongly determined by the batteries that power them. These can account for about one-third of overall costs. Many of the subsidies that bridge part of the pricing gap between conventional and electric vehicles are set to be wound down. China, the world’s largest electric car market, this year confirmed it will , removing them by 2020.
“We expect this to pose a significant challenge for the adoption and economics of the EVs on sale, particularly as battery costs remain elevated versus what would be economic at current gasoline prices,” wrote Robin Zhu, an analyst at Bernstein.
Germany’s recent introduction of electric subsidies, worth about €600m, will last until 2019, while the UK’s offer of up to £4,500 towards the upfront cost of an electric car is due to end in 2018.
In the US, some subsidies expire once a certain threshold of sales is cleared. Tesla cars in California come with less of a discount because certain subsidies extend only to the first 100,000 sold in the state.
1.2m
Electric cars on the road in 2015, up from 6,000 across 40 countries in 2009
850,000
Sales of plug-in vehicles expected this year, up from 48,000 units in 2011
14%
Fall in current oil demand, if electric cars reach 35% of global sales, which is predicted by 2040
6%
Opec estimate of passenger cars running on non-oil fuels by 2040
18m
Barrels a day of oil products used in passenger cars, 18.7% of the 96m barrels consumed daily
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Subsidies for purchasing electric vehicles are available in most European countries as well as China, the US, Turkey and Canada. In almost all of these, the current schemes will expire within five years. While some could be replaced before they elapse, new governments in those countries may also pull the plug on subsidies, as happened in Denmark last year. Without the subsidies, electric vehicles become less appealing.
In Germany, consumers will pay up to €18,000 more for a plug-in hybrid or electric model than for the equivalent petrol or diesel model, according to figures from EV-Volumes.
Viktor Irle, an analyst at the consultancy, says carmakers are not incentivised to make electric vehicles more affordable “because it will cannibalise sales of the internal combustion engine”.
Nevertheless, all major car manufacturers are developing hybrid or fully electric cars, largely to meet stricter environmental targets around carbon dioxide emissions that come into force towards the end of the decade.
The race to develop an affordable mass-market electric vehicle, able to travel several hundred miles on a single charge, remains tight.
Chevrolet, which is owned by General Motors, this year will begin selling the Bolt, with a range of 200 miles and costing about $30,000 including subsidies, while Volkswagen has said it wants one in four of its cars to be electric by 2025.
Some industry analysts predict that sales of electric cars will soar once the total unsubsidised costs of ownership, including savings on fuel and servicing, equal those of a traditional combustion-engine model.
Salim Morsy, an analyst at the research group Bloomberg New Energy Finance, believes that the unsubsidised total cost of owning a battery-only car will fall below that of conventional cars as soon as 2022, assuming that oil prices are between $50 and $70 a barrel.
By 2030, he believes that the average cost of and packs may have fallen to less than $120 per kilowatt hour from as much as $350/kWh recorded last year.
So by 2040, he predicts 35 per cent of new car sales globally and 25 per cent of the world’s car fleet will be electric cars, displacing 13m b/d of oil, or nearly 14 per cent of current demand.
“A lot of people think that’s actually very conservative,” he says.
Indeed, analysts at UBS expect electric car cost parity to be reached by 2021 in Europe and by 2025 in China, which is already a powerful force in the market.
In the US, however, where fuel costs are substantially lower, they say “battery electric vehicles will not beat internal combustion engine cars for the foreseeable future”.
Much may depend on whether conventional carmakers follow the path of Tesla and start making their own batteries. Elon Musk, Tesla’s chief executive, says his gigafactory venture — which involves Japan’s — should drive battery costs down sharply.
Most carmakers currently source their batteries from suppliers such as Samsung and LG Chem, both of South Korea, and Panasonic.
Volkswagen says it wants to develop a “new competency” in batteries, which has fuelled speculation that it may announce its own version of Tesla’s gigafactory. But the chances of other carmakers moving into production are low, says Philippe Houchois, an analyst at Jefferies.
“The low current levels of profitability in battery cell manufacturing and the need to get prices down by around 40 per cent in the next five years is hardly supportive of investment,” he adds.
This may suggest the oil industry’s complacency about the impact of electric cars today is warranted. But as coal and gas electricity companies have learnt from the growth in solar power, disruption in the energy sector can take effect much faster than expected.
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A global shortage of batteries — and factories to make them — threatens to keep the price of electric cars high for the time being.
Battery costs need to fall significantly before electric cars will be cheap enough to convince consumers to ditch petrol. But carmakers are reluctant to build their own batteries.
Except Tesla, which is building its own gigafactory in Nevada, most of the major manufacturers buy batteries from third-party suppliers such as Samsung, Panasonic and LG Chem.
Philippe Houchois, an analyst at Jefferies, predicts a “sharp shortage in battery capacity as the industry accelerates its transition to electric vehicles”. But carmakers are loath to get into the battery business due to high costs of entry, low margins and “limited scope for differentiation” in the resulting performance of the vehicles, he says.
David Lesne, an analyst at UBS, says it is unclear whether making batteries “is the best use of capital for the carmakers at the moment”.
Excluding Tesla’s $5bn Nevada plant, global battery manufacturing is based almost exclusively in Asia, with the majority of production in China. This leaves Europe with no major production, which is “at odds with commitments to renewable energy”, according to Mr Houchois.
Carmakers in Europe may therefore combine forces to build batteries, he predicts. “Battery capacity may become a political issue in Europe given carmakers’ need to integrate vertically for security of supply and the near total absence of manufacturing capacity in the region,” says Mr Houchois.
Iraq’s prime minister Haider al-Abadi has thrown his weight behind plans for major oil producers to freeze production next month, verbally backing the attempt to boost prices even as Baghdad expands its own output.
Mr Abadi said Iraq, the second largest oil producer in Opec, was “with” those looking to cap production, giving the strongest indication yet Iraq may consider joining the freeze, though stopping short of committing to participating.
“We are with freezing production at the Opec meeting,” Mr Abadi told a news conference in Baghdad, according to Reuters.
His comments are the latest in a series of statements from major producer countries in the run-up to next month’s meeting in Algeria, which will take place at an industry conference.
Oil prices have risen by more than 10 per cent since plans for the talks were announced, as traders who were betting against the price, have scrambled to buy back their positions.
But analysts remain will be reached, with the two-year old price crash and crude glut seeing countries fighting for customers and raising output to try and maximise revenues.
Opec kingpin Saudi Arabia, the world’s biggest oil exporter, has given cautious backing to the talks, but oil minister Khalid al Falih said last week that he did not believe “significant” intervention in the market was necessary. Its output hit a record 10.7m b/d in July.
Iran, whose refusal to participate in similar talks in April contributed to Saudi Arabia deciding to scupper a deal, has this time said it will send oil minister Bijan Zanganeh to Algeria, though it too has not committed to taking part.
Since sanctions against its oil industry were largely lifted in January Iran has been racing to regain market share. But its output has risen sharply to get within touching distance of 4m b/d — the pre-sanctions level Tehran says it must reclaim before considering a deal — leading some to argue it could be more amenable to action this time.
Despite Mr Abadi’s comments on Tuesday, Iraq is still seen as a possible sticking point to a deal. It has also been boosting output, including restarting production at fields at Kirkuk in the north of the country that will send 150,000 b/d through a pipeline system controlled by the semi-autonomous Kurdistan Regional Government.
Iraq has also asked foreign oil companies to commit to continue expanding production in the south of the country. Oil minister Jabar al-Luaibi said on Saturday they wanted to “play a very active role” with other Opec countries in supporting prices but said it would not “specify a ceiling for future production like in the past.”
“Oil producers have received a price reprieve thanks to the planned Opec meeting in September,” said David Hufton at London-based oil brokerage, PVM.“But they should be under no illusion that they are sailing in extremely dangerous water.”
Brent crude oil, the international benchmark, fell 1.8 per cent on Tuesday to $48.41 a barrel.
I
sees no sign of a slowdown in spending by national oil companies in the Middle East despite speculation about a freeze in production by Opec countries.
Ayman Asfari, chief executive, issued the bullish outlook as the UK oil services group drew a line under heavy losses on a big Scottish contract by announcing a in the first half of this year.
He said strong investment by national oil companies, such as Saudi Aramco and the Kuwait Petroleum Corporation, was helping offset the sharp downturn in spending by international groups, such as ExxonMobil and Royal Dutch Shell, in the era of protractedly low oil and gas prices.
Opec ministers have been giving about the possibility of a production freeze to shore up prices ahead of a planned meeting next month but Mr Asfari said he was not worried about potential impact on demand for oilfield services.
“If they freeze they will be freezing at record production levels and they need to continue spending a lot to keep production at those levels,” he told the Financial Times.
, which is heavily focused on the Middle East, reported a “strong bidding pipeline” for new engineering and construction contracts on top of a business backlog worth $17.4bn.
Mr Asfari said this was helping drive recovery from the $800m of losses incurred since 2014 on a big Scottish project for Total of France. The gas plant in the Shetland Islands opened in May after delays and cost overruns caused by hostile weather and labour disputes.
Mr Asfari said Petrofac would not take on further fixed-cost construction work in the UK or similar markets after its experience in the Shetlands.
He said high costs and inflexible labour practices were a threat to the UK offshore oil and gas industry at a time when the North Sea basin was facing while newer fields west of the Shetland Islands were in need of further investment.
“I’m very worried about the UK industry,” he said. “With the lack of investment in the past two years, many fields will come to an end sooner than they would have otherwise.”
Petrofac eked out a profit of $12m in the first half of the year, compared with a loss of $182m in the same period last year.
As well as Laggan-Tormore, earnings were depressed by a $123m exceptional charge related to the reduced value of oil price-related assets in its energy services division.
Excluding the exceptional charge and Laggan-Tormore losses, profits were up 80 per cent at $236m. Revenues rose 22 per cent to $3.89bn.
Daniel Butcher, analyst at JPMorgan Cazenove, said the results were a mixed bag with slightly higher-than-expected sales and lower-than-expected debt offset by slightly lower-than-expected profits. Guidance for full-year net profits was maintained at $440m, excluding exceptional items and Laggan-Tormore losses.
Shares in Petrofac closed down almost 1 per cent at 858.5p.
About 90% of total LPG consumed in the country is used by households,some subsidised cylinders meant for household use are diverted for commercial purpose.
Staying power is a useful trait for a boss to possess. It is epitomised by Ayman Asfari, chief executive of . In January, Mr Asfari’s closest counterpart Samir Brikho was ousted from the top job at , another FTSE 250 oilfield services group. On Tuesday, Mr Asfari, who has faced similar challenges, unveiled Petrofac’s half-year . He has been in post since 2002.
Both businesses came unstuck by taking risks that turned bad. Petrofac’s main nemesis was a lump sum job for Total at the Laggan-Tormore gas project near Shetland. The company has chalked up its last loss on the work — $101m — with the result that profits before tax were an anaemic $58m on sales of $3.9bn. Amec, meanwhile, came a cropper by overpaying for engineer Foster Wheeler, purchased for $3.2bn before the oil price tanked in 2013.
Mr Asfari would have been harder for investors to lever out, since he owns 18 per cent of Petrofac. But the group is, by the same token, more his creature than Amec was ever Mr Brikho’s. He built it up from humble beginnings using a formidable contacts network in the Middle East.
It is sometimes best to wield influence quietly. On Tuesday, Mr Asfari let drop for example, that unnamed bigwigs at Total saw Petrofac’s completion of the Laggan-Tormore job as a boon worthy of quid pro quos. The bluff Mr Brikho was more upfront, adorning his office with photos of himself glad-handing the powerful. The courtly Mr Afari is the survivor. There is little to choose between the shares of Petrofac and Amec, though. Both are in the bargain bin at around 11 times forward earnings and worthy of reappraisal.
jonathan.guthrie@ft.com
India has steadily raised crude oil imports from Iran after US sanctions were lifted in January this year. Iran today is India’s fourth biggest crude oil supplier.
The single-member committee was formed in December 2015 to look into the dispute related to gas blocks of the two companies in the Krishna-Godavari basin.
Investment companies backed by some of the world’s biggest private equity groups have expressed interest in North Sea assets being sold by .
Neptune, funded by Carlyle Group and CVC Capital Partners, and Siccar Point Energy, whose owners include Blackstone, are among potential bidders.
Both companies are looking at a package of North Sea assets offered by as part of its $30bn disposal programme, according to people involved in the process.
under the leadership of Sam Laidlaw, former chief executive of Centrica, the UK energy supplier, with a target to invest up to $5bn in the North Sea, north Africa and Southeast Asia.
Siccar Point, backed by Blackstone and Blue Water Energy, a specialist private equity company, is led by another Centrica veteran, Jonathan Roger, with the former chief executive of BG Group, Chris Finlayson, as chairman.
Shell has a target to raise $30bn from by the end of 2018 as it battles to curb rising debts after its £35bn takeover of BG Group. Simon Henry, Shell’s chief financial officer, wants to make “significant progress” on deals worth $6bn-$8bn this year.
One person involved in the process cautioned that talks over the North Sea assets were at an early stage and the likelihood of a deal would become clearer in the next two months.
Shell declined to comment.
Any disposals would add to the retreat by large oil groups from the North Sea as the ageing basin struggles with high costs and falling output. Shell’s acquisition of BG brought together two of the biggest operators in UK waters but the primary motivation lay in BG’s strength in high-growth regions such as and Tanzania.
Shell insists it will not abandon the North Sea, where it has 33 platforms and interests in 65 fields. Further multibillion-dollar investment is planned in two big developments — Clair and Schiehallion — west of the Shetland Islands. However, Shell is looking to sell a range of older assets, as well as stakes in newer fields, in what would amount to a significant downsizing, according to people involved in the process.
North Sea deals have slowed to a trickle since the collapse in oil prices two years ago depressed valuations and drained capital from the sector. But this month of an 8.9 per cent stake in the Mariner oilfield east of Shetland from JX Nippon of Japan has raised hopes that private equity cash could bring urgently needed investment.
Neptune, Siccar Point and their backers declined to comment on the Shell assets but made clear their appetite for North Sea deals.
Mustafa Siddiqui, managing director at Blackstone, said: “We have a market where there are not many strategic buyers; so a company like Siccar Point, with the capabilities and the capital, is in a very good position to acquire assets that require further investment.”
Greig Aitken, an analyst at Wood Mackenzie, the energy consultancy, reported signs of deal activity picking up as continued oil price weakness led sellers to accept that valuations were not returning to previous highs. “We’ve seen some movement on the side of the sellers,” he said.
People close to Neptune and Siccar Point said the Shell assets were just one among a range of investment options and there was no guarantee they would pursue their interest. Liabilities related to the future cost of decommissioning depleted oil and gasfields — the sums can run into billions of dollars — are among potential sticking points.
Asset sales are crucial to Shell’s efforts to safeguard its prized dividend and streamline operations after the BG deal. The group’s debt-to-equity ratio has more than doubled in the past year to 28.1 per cent — on the brink of the 30 per cent “upper limit” declared by Mr Henry.
“Gearing has gone up to the point where they do not want it to go much higher and disposals are one of the few levers available to bring it down,” said Mr Aitken.
Shell has so far agreed or completed $3.1bn of deals this year, mostly involving downstream pipeline and refining assets less exposed to the deflationary impact of low oil prices. A further sizeable sum is expected from , the Saudi state-owned oil company, as part of the break-up of their Motiva US refining joint venture.
However, the sale of upstream production and exploration assets will provide a bigger test. Shell faces a balancing act between maximising proceeds and pressure to get deals done. Upstream assets in New Zealand, Thailand and Gabon are among others on the block, as well as a 13 per cent stake in Woodside Petroleum of Australia, valued at about $2.4bn at its current stock price.
Mr Henry knows the first big upstream transaction will set a benchmark. Addressing investors last month, he signalled Shell would rather let its gearing ratio temporarily drift above 30 per cent than lower the $30bn disposal target. “We are not planning for asset sales at giveaway prices,” he said.
