2014

OPEC IN THE WORLD .

Iran ......................................................................................................................................................................... 2 Iran forecasts increase in oil, gas output ............................................................................................................ 2 Iran’s crude oil prices up in February: OPEC .............................................................................................. 3 Iran may raise marine service fees for domestic and foreign shipping lines ....................................................... 4 Iran says sabotage prevented at nuclear facility ......................................................................................... 5 Negotiations with Iran serve U.S. interests .............................................................................................. 6 What motivates Iran to fight in Syria?............................................................................................................... 7 EUROPA ............................................................................................................................................................. 10 Europe and Russia will not use the oil weapon ................................................................................................ 10 OPEC ................................................................................................................................................................... 12 OPEC to cut exports as refinery demand slows ............................................................................................... 12 Are US weekly oil imports from OPEC nations finding support? ................................................................... 13 Weatherford says cutting back Venezuela operations due to "serious liquidity" ............................................. 14 OPEC to Cut Exports on Lower Asian Demand, Oil Movements Says .......................................................... 15 OPEC daily basket price closes higher again .................................................................................................... 16 U.S.A. ................................................................................................................................................................... 17 America's Energy Edge: The Geopolitical Consequences of the Shale Revolution ........................................... 17 Nigeria .................................................................................................................................................................. 27 Finally, Shell to sign FID on Bonga Southwest project in December .............................................................. 27 Malasia ................................................................................................................................................................. 30 Malaysia’s Petronas buys LNG cargoes in Galp Energia tender ..................................................................... 30 Mexico .................................................................................................................................................................. 30 Pemex mulls crude imports, more exports to India, Japan ............................................................................... 30 MEXICO DF .................................................................................................................................................... 30 Why Petroleo Brasileiro SA Petrobras (PBR) Stock is HIgher Today .............................................................. 32

Iran

Iran forecasts increase in oil, gas output On Line: 17 March 2014 17:53 In Print: Tuesday 18 March 2014

TEHRAN - Iran forecasts an increase in its crude oil and natural gas production in Iranian calendar year 1393, which begins on March 21. Iran’s crude oil output is forecast to increase by about 200,000 barrels per day to 4 million barrels per day, and its daily natural gas output is forecast to increase by about 100 million cubic meters per day to 400 million cubic meters per day, Iranian Oil Minister Bijan Namdar Zanganeh said on Monday. On December 3, 2013, Zanganeh said Iran could boost production to 4 million barrels per day in the next Iranian calendar year if the sanctions were lifted. The country is currently exporting about 1.2 million barrels per day and has earmarked 1.5 million barrels of daily sales in the national budget for the year 1393, which includes 300,000 barrels of condensates. The Iranian oil minister has invited France’s Total, the British/Dutch corporation Royal Dutch Shell, Norway’s Statoil, Italy’s Eni, the UK’s British Petroleum, and the United States’ Exxon and Conoco to invest in oil projects in Iran. Mansour Moazzami told IRNA that a number of prioritized gas projects will come on stream in Iranian calendar year 1393 (March 2014-March 2015), including five phases of the South Pars gas field development plan. The South Pars/North Dome field is a gas field located in the Persian Gulf. It is the world’s largest gas field and is shared by Iran and Qatar. The field’s recoverable gas reserves are estimated to be equivalent to 215 billion barrels of oil. It also holds about 16 billion barrels of recoverable condensate. Iran’s South Pars gas field, which is divided into 29 phases, has about 14 trillion cubic meters of gas, or about eight percent of total world reserves. Iran is estimated to hold 33.7 trillion cubic meters of natural gas and 157 billion barrels of recoverable crude oil reserves.

Thus, Iran possesses the world’s second largest reserves of natural gas and the world’s fourth largest reserves of crude oil.

Iran’s crude oil prices up in February: OPEC

TEHRAN – Iran sold crude oil at $104.96 per barrel in February, a 7 cent rise compared to January, ISNA reported, citing the Organization of Petroleum Exporting Countries (OPEC). Iran maintained its crude oil shipments at the highest since the end of 2012 last month amid talks between the country and world powers over its nuclear program, according to the International Energy. Buyer countries imported 1.41 million barrels a day last month, the same as a revised figure for January, the IEA, a Paris-based adviser to 28 nations, said in a report. Deliveries to India and China fell, while those to Japan and South Korea rose, the IEA said. The shipments were the highest since December 2012, according to the agency’s data compiled by Bloomberg. An interim accord easing restrictions on insurance for Iran’s oil shipments and freeing up cash held outside the country in return for a suspension of nuclear work went into effect in January. Under the agreement, six buyers permitted under U.S. sanctions to take Iranian crude don’t have to cut imports to avoid penalties. Iranian crude held on tankers rose 2 million barrels at the end of February to 32 million barrels, compared with 30 million barrels at the end of January, including 6 million barrels in vessels off China’s coast, according to the report. Talks in February and March on Tehran’s nuclear program were “substantive and useful” according to officials, the IEA said. The next meeting will be on March 18. Iran and the international community have set a late-July deadline to reach a final agreement. “While the political will to achieve a resolution appears strong, major issues and differences over Iran’s nuclear program remain and success is far from assured,” according to the IEA report. The six buyers permitted to import Iranian crude under U.S. sanctions are Turkey, China, Japan, India, South Korea and Taiwan. Chinese and Indian imports of Iranian oil fell by 180,000 and 240,000 barrels a day respectively. Japan’s and South Korea’s rose by 155,000 and 145,000 barrels a day.

Iran may raise marine service fees for domestic and foreign shipping lines 18 March 2014, 09:46 (GMT+04:00) Baku, Azerbaijan, Mar.17 By Fatih Karimov

Iran may raise marine service fees for domestic and foreign shipping lines, the Mehr News Agency quoted the managing director of Iran's Oil Terminals Company Pirouz Mousavi as saying on March 17. A proposal has been submitted to the National Iranian Oil Company. If approved, fees of marine services to domestic and foreign shipping lines in the Persian Gulf and Caspian Sea ports will be increased by 20 per cent and 30 per cent, respectively, Mousavi said. Iran has not increased marine service fees for about five years, he noted. Sanctions against Iran's shipping lines may be lifted, the Mehr News Agency quoted the Islamic Republic of Iran Shipping Lines (IRISL) Managing Director Mohammad Hossein Dajmar as saying on Feb. 15. Iran may negotiate with the P5+1 group for lifting the sanctions, he said, adding that IRISL is currently providing an estimate of its losses as a result of the sanctions to be argued in the international courts. On November 29, 2013, Dajmar said the IRISL will sue the European Union for reimposing sanctions against the company. The European Court struck out EU sanctions against IRISL, he said, adding that unfortunately the European Union has reissued sanctions against the company. Dajmar said that the company may fill a new complaint against the EU after consultations with its legal advisors.

Iran says sabotage prevented at nuclear facility Posted: Monday, March 17, 2014 11:18 am

Iran says sabotage prevented at nuclear facility Associated Press | TEHRAN, Iran — Iranian authorities have prevented attempted sabotage at the country’s heavy water nuclear reactor, a senior official said Saturday without giving specifics as to the nature of the attempted disruption or its suspected initiator. Asghar Zarean, who heads security at the Atomic Energy Organization of Iran, said domestic intelligence agencies were instrumental in uncovering the plot, which has not been the first attempt to disrupt the contentious nuclear program. “Several cases of industrial sabotage have been neutralized in the past few months before achieving the intended damage, including sabotage at a part of the IR-40 facility at Arak,” he said in a statement issued by his organization Saturday. In the past, computer viruses have attacked Iranian nuclear facilities. While Zarean did not say whether that was the case this time, his comments coincided with the opening of a specialized lab Tehran says will fight industrial sabotage and neutralize cyberattacks. “This specialized lab has been launched to identify, prevent and fight threats including modern software viruses,” Zarean said. In 2010, the so-called Stuxnet virus temporarily disrupted operation of thousands of centrifuges, key components in nuclear fuel production, at Iran’s Natanz uranium enrichment facility. Iran says it and other computer virus attacks are part of a concerted effort by Israel, the U.S. and their allies to undermine its nuclear program through covert operations. Some Iranian officials have also suggested in the past that specific European companies may have sold faulty equipment to Iran with the knowledge of American intelligence agencies and their own governments, since the sales would have harmed, rather than helped, the country’s nuclear program. Since then, Iran has also said that it discovered tiny timed explosives planted on centrifuges but disabled them before they could go off. Authorities now claim the Islamic Republic is immune to cyberattacks. The country has also reported computer virus attacks on its oil facilities, including one in 2012 that disabled Internet connections between the Oil Ministry, oil rigs and a major export facility. The U.S. and its allies fear Iran may be able to develop a nuclear weapon. Iran denies the charges, saying its nuclear program is peaceful and aimed at generating electricity and producing medical radio isotopes to treat cancer patients.

Negotiations with Iran serve U.S. interests March 18, 2014

By Nathaniel Batchelder The Norman Transcript NORMAN — Ongoing negotiations with Iran could lead to normalized relations, even a major trading partner with the US. Iran would import U.S. beef and grains, benefiting Oklahoma producers. U.S. firms serving the petroleum and other industries are eager to open offices in Iran and become trading partners. Releasing Iran’s oil production would lower the world oil price, giving Americans relief at gas pumps. As diplomatic relations improve, Iran might well become an ally for regional stability, peace and the security of U.S. interests. Iran is the size of Alaska with a population of 75 million and an advanced military. President Rouhani and Foreign Minister Zarif are Western educated and pro-Western, reaching out to change Iran’s image. TV personality Rick Steves (“Rick Steves’ Europe”) calls Iran “the most misunderstood country he has ever visited.” His 2008 documentary about his tourism in Iran reports a modern and developed society, the majority of whom admire the U.S. and the Western world. Iran maintains that their nuclear program is exclusively for peaceful purposes — nuclear energy and medical uses. Skeptics in Congress and Israel do not believe this, but the IAEA — doing inspections in Iran for years — has never reported evidence to the contrary. Despite naysayers and obstructionists, the negotiations that Iran agreed to with the P5+1 nations (U.S., China, France, Russia, the UK and Germany) are on track. There is great promise in the progress thus far: UN inspectors with the IAEA report that Iran is complying with the demands of the agreement. According to the IAEA, Iran has stopped producing 20 percent enriched uranium (UF6); has disabled centrifuges producing UF6; has begun diluting its stockpile of UF6 to be complete in six months; has stopped installing additional centrifuges; has begun providing information required by the agreements; and is granting increasing access to IAEA inspectors. The IAEA is doubling the numbers of their inspection teams and is installing additional monitoring equipment. All this means enhanced transparency of Iran’s nuclear program for the international community.

“Trust but verify” has an honorable tradition in serious negotiations. Nathaniel Batchelder is director of the Peace House in Oklahoma City, a member of Americans Against The Next War. He can be contacted at [email protected].

What motivates Iran to fight in Syria? Tuesday, 18 March 2014 Jamal Khashoggi

What does Iran want by being so politically active and making its population pay such a dear price? The population, like others in the Muslim world, suffers from poverty and disease, despite the countries massive oil industry. Iran is planning to bolster its power and influence, seeking to confirm its readiness to fight in Syria , propagating conspiracy in Iraq and spoiling its relations with Saudi Arabia and other neighbors. It also applies pressure on the West at times and eases pressure at other times. What does Iran want out of all of this? It is easy to answer the question: what did Britain want from India? It took interest in India as an investment which gave English politicians and businessmen abundant income. This enabled them to enjoy an aristocratic lifestyle. By understanding their reasons for occupying India, we can understand the reasond behind their occupation of South Yemen, their interest in the Gulf sheikhdoms and Egypt. Based on the same logic we can explain the foolish reason behind Saddam Hussein’s invasion of Kuwait. He saw Kuwait as a source of money as it has enormous oil reserves. He saw it as a means to solve all the economic problems caused by Iraq’s eight year war with Iran. Turning to Egypt, why did Gamal Abdel Nasser send his army to Yemen in an adventure that went awry? There was no clear benefit to the Yemen campaign, it seems it was simply about feeding Nasser’s ego. He wanted to lead the Arab nation into conflict for his own personal glory. There was no economic gain or strategic influence for Egypt in the mountains of Yemen. The case of Syria I use the example as a reference when answering the question: Why is Syria so important to Iran? The answer is not based on old imperialist economic calculations; there is no economic gain for Iran in Syria nor in Lebanon, nor in Yemen. Australian researcher Roger Shanahan focused on the Sayeda Zeinab Shrine as a reason for the attention of Iranian Shiites on Syria, in an article published by the

Carnegie Center a few weeks ago. He asked: What does Syria mean to the Shiite of the region? He was unable to provide a better answer than saying Syria is a strategic extension of Iran’s influence in the region. He also added that “It is as well necessary to ensure the supply line to Hezbollah in Lebanon , being the most powerful manifestations of the Islamic revolution.” Real reasons However, those reasons are purely political , and they do not justify the high cost borne by the Iranian economy, and Iran’s extreme support of Bashar al-Assad’s regime. It also does not justify the intervention of Iran in Yemen . Iraq alone provides an economic incentive to motivate Iran to be involved in the country. Involvement in Iraq provides huge gains for some of the men in power in Tehran. Nevertheless it is certain that is not honest or sustainable money that is gained in Iraq. Iraq is rife with corruption and injustice, an obscene price paid by the Iraqi people, resulting in poverty, ignorance and a tremendous deterioration in the simplest of services. Does Iran seek to open markets for its products and companies? Yes it does, like the Soviet Union and his neighboring Communist countries. But even if this is the case, to justify it economically they do not need to establish militia parties such as Hezbollah in Lebanon. Iran does not have to finance and arm ideological movements such as the Houthis in Yemen. In addition to that, weapons smuggling into Nigeria does not serve the policy of opening markets. Saudi Arabia and Turkey, for instance, are opening markets in Middle East countries without the need to form militias. Seeking to spread Shiism What if Iran is seeking to spread Shiism in the region and the Islamic world? This is a fact , and Iran is ready to bear the consequences. Iran knows that this resulted in anger in many countries, with protests ranging from Malaysia to Morocco. It is possible to justify the reason as being the duty of any ideological state. They don’t need to establish militias and secret networks for that. Saudi Arabia spends money on a lot of schools and mosques around the world openly and clearly. Egypt and its Azhar Mosque do the same, but without the need to establish militias. What motivates Iran and stimulates its appetite for domination? One opinion is that it was Iran’s consistent purpose since the Shah’s time, who once wanted to be the Gulf’s policeman. However, Iran in its current state is pragmatic; domination according to the colonial era idea of the concept has become an obsolete idea. Syria was never Shiite, so why does Iran fight in Syria with such ferocity? It is fighting to defend the system of minority dictatorship that can only prevail by force

Jamal Kashoggi Times have changed and the Gulf is no longer in need of a policeman after the American cop entered the scene. It is better for the Iranians to practice the Turkish model, encouraging business and not domination. Iran has a skilled labor force looking for jobs and factories looking for markets. I found some answers in what Dr. Juma Hamad al-Essa wrote in his book Time of Strife: Shiites against Sunnis, Sunnis against Shiites.” From what I understood, radicalism drives Iran’s ayatollahs. They have a dream of building an Islamic state in preparation to receive the Mahdi, the 12th Imam who they expect to return at the end of times, a concept in Iranian Shiite Islam. Iranian ayatollahs want to facilitate his mission of unifying the Muslim world and preventing injustice. When Sunni Fundamentalism became active, an example being the Brotherhood in Egypt and Tunisia, the dispute was centered on ideology and not sectarianism. However, when Shiite fundamentalism was activated, the dispute was defined within the parameters of sectarianism: it was about Sunni vs. Shiite and vice versa. The problem with Iranian, or Shiite, fundamentalism is that it occurred outside the borders of Iran, where the majority of the public is different. Other countries’ weaknesses tempted Iran into believing it was her time to lift the perceived oppression of the region’s Shiites. Why is Iran involved? There are points of contact for the Shiite fundamentalism in the entire Islamic world outside of Iran. Even in Iraq , which some people assume is a Shiite bloc, there is a Shiite majority but if the Kurds are ruled out, it is not enough to make it a Shiite country . Logic, reason and history dictate that secularism is best for Iraq. This will preserve the rights of Shiites and Sunnis. But if someone insisted on a different approach, it will cause the partition of Iraq and that is what is happening today. Syria was never Shiite, so why does Iran fight in Syria with such ferocity? It is fighting to defend the system of minority dictatorship that can only prevail by force. It is a non - sustainable cause, unless radicalist Iranians believe that they can convince the majority of the Syrian Sunni population to become Shiite. The dream of transforming Syria into a Shiite country is one of the most important sectarian causes for Iran’s involvement. Tehran is dealing with Syria as it is in Iran’s backyard in terms of distance. Iran is trying desperately to defend Bashar al-Assad and his regime and it is involved in the fighting, sending experts and volunteers to the country.

Even the argument of confronting extremist groups in Syria is compelling. Those become the problem of the Sunni majority in Syria before they can be considered as a problem for the Shiites. We, as Muslims - Sunni and Shiite – have enough problems and challenges. We all suffer underdevelopment, ignorance, disease, intolerance and tyranny. We are all in underdeveloped third world countries. This article was first published in al-Hayat on March 15, 2014. ___________________ Jamal Khashoggi is a Saudi journalist, columnist, author, and general manager of the upcoming Al Arab News Channel. He previously served as a media aide to Prince Turki al Faisal while he was Saudi Arabia's ambassador to the United States. Khashoggi has written for various daily and weekly Arab newspapers, including Asharq al-Awsat, al-Majalla and al-Hayat, and was editor-in-chief of the Saudi-based al-Watan. He was a foreign correspondent in Afghanistan, Algeria, Kuwait, Sudan, and other Middle Eastern countries. He is also a political commentator for Saudibased and international news channels. Last Update: Tuesday, 18 March 2014 KSA 12:06 - GMT 09:06

EUROPA

Europe and Russia will not use the oil weapon London, 19 March 2014

Update on the Ukraine crisis: Societe Generale. After voters in Crimea voted on Sunday to secede from Ukraine and join Russia (96.7% in favour), the US and EU reacted by imposing modest sanctions, consisting of asset freezes and travel bans on Russian and Ukrainian policy makers. In response to this mild “slap on the wrist” to Russia, the oil markets breathed a sigh of relief. Front-month ICE Brent fell $2 and NYMEX WTI dropped $1; news of higher output from Iraq and Iran was also a factor. The crisis is far from over. Late Monday night in Moscow, President Putin of Russia formally recognized Ukraine’s Crimea region as a “sovereign and independent state”. Tomorrow, Putin will address the Russian Parliament, where he is expected to back the annexation of Crimea.

What happens next? Crimea is “done” – and this was already the case two weeks ago. The big question is whether or not Putin will start to grab and occupy more majority ethnic Russian territory in eastern Ukraine. In our opinion, Europe and the US would view such a development as a dramatic escalation of the crisis. The severity of economic sanctions imposed on Russia would start to increase, and could possibly include more sweeping and widespread sanctions on Russian companies and banks, along the lines of those imposed on Iran. Of course, Russia would retaliate with economic measures of its own. The key point for the oil markets is that, in sharp contrast to Iran, Europe and Russia have a gun to each other’s head which should prevent either side from using the oil weapon and stopping oil trade flows. Using IEA figures for 2013, OECD Europe imported 3.05 Mb/d of crude oil from Russia, or 36% of their net crude oil imports. When refined products, NGLs, and other feedstocks are included, total net oil imports rose to 4.33 Mb/d, or 44%, of OECD Europe’s net oil imports. These volumes far exceed Saudi/OPEC spare capacity of less than 2 Mb/d. If Europe is heavily dependent on Russia, Russia is even more dependent on Europe. Looking at it from the Russia perspective, crude oil exports to OECD Europe of 3.05 Mb/d represent 71% of Russia’s total crude exports of 4.3 Mb/d. For refined products, 1.02 Mb/d, or 36%, out of a total 2.8 Mb/d of Russian exports flow to OECD Europe. For Russia, combined crude oil and refined products exports to OECD Europe represent 57% of total oil exports. Europe needs the oil and Russia needs the money. So logic and rational reasoning strongly argue that neither the Europeans (backed by the US) nor the Russians should use the oil weapon, because the self-inflicted pain would be as bad as the pain inflicted on the other side. Of course, history is full of examples where conflicts escalated because of emotion, miscalculation, and bad intelligence. If necessary, the strategic reserves of all IEA countries would last 12 months at a drawdown rate of 4 Mb/d (roughly Europe’s imports from Russia). That is a lot of reserves... but there are also many other potential disruptions out there.

OPEC

OPEC to cut exports as refinery demand slows March 19, 2014 | Filed under: Company News | Author: Editor

The Organisation of Petroleum Exporting Countries (OPEC) will cut crude exports this month to the lowest level since November as refinery demand slows in Europe and North America, according to tanker-tracker Oil Movements. OPEC, responsible for 40 percent of global oil supplies, will decrease shipments by 1.1 million barrels per day (bpd), or 4.6 percent, to 23.6 million bpd in the four weeks to March 29, according to Oil Movements, reported Bloomberg. The figures exclude two of OPEC’s 12 members, Angola and Ecuador. Sailings were last this low in the four weeks to November 16, when an extended maintenance period caused a fall in refinery demand, according to the consultant. “There is a spring low point for refinery demand sometime in April” in Europe and North America, Oil Movements founder Roy Mason was quoted as saying, “Demand is going down and sailings respond to that.” Global oil consumption typically ebbs at the end of the first quarter as demand for heating fuel tapers off and refiners start to perform routine overhauls. Brent crude slipped 1.2 percent this month, trading at $107.70 a barrel on the ICE Futures Europe exchange as of 3:50 p.m. London time. Middle Eastern exports will average 17.23 million bpd in the four weeks to March 29, compared with 18.23 million bpd in the period to March 1, Oil Movements said. These figures include non-OPEC nations Oman and Yemen. Crude on board tankers will drop by 2.8 percent to 482.21 million barrels in the four weeks to March 29, from 496.34 million in the previous period, data from Oil Movements show. The researcher calculates volumes by tallying tanker bookings and excludes crude held on vessels for storage. OPEC’s members are Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates and Venezuela. The group will next meet on June 11 at its headquarters in Vienna.

Are US weekly oil imports from OPEC nations finding support? By Xun Yao Chen - Disclosure • Mar 26, 2014 Production’s impact on imports It’s well known that higher crude oil production in the United States will have a negative impact on its imports. After all, that’s what’s been happening over the last few years, driving tanker rates lower and contributing to Teekay Tankers Ltd. (TNK), Nordic American Tanker Ltd. (NAT), Tsakos Energy Navigation Ltd. (TNP), Frontline Ltd. (FRO), and the Guggenheim Shipping ETF’s (SEA) underperformance. But even with higher domestic production, crude imports may not fall further.

Enlarge Graph

Export origins The chart above shows the United States’ weekly oil imports from countries such as Kuwait, Colombia, Venezuela, Saudi Arabia, and Iraq, and another for major OPEC (Organization for Petroleum Exporting Countries) nations. Kuwait, Colombia, Venezuela, Saudi Arabia, and Iraq are part of major OPEC nations that ship crude oil into the United States, but they generally produce crude that’s low-grade (heavier and sourer), as opposed to the higher-grade (light sweet) crude produced in the United States.

Crude grades

Higher-grade crude yields larger volumes of premium products such as gasoline, but it doesn’t yield as many lower-value products due to chemical differences. In the past, refiners spent millions of dollars on equipment that would allow them to produce larger amounts of premium products from heavier and sourer crude. As the economics maybe isn’t there to change existing capacity to accommodate lighter and sweeter crude, demand for crude from Kuwait, Colombia, Venezuela, and Saudi Arabia remains strong. Major OPEC nations’ oil imports fell throughout 2013, while those from lower-qualitycrude–exporting nations floated mostly sideways. On March 14, 2014, imports from major OPEC totaled 3,511 thousand barrels a day, while imports from heavy crude exporters amounted to 3,407 thousand barrels a day.

Positive trend The difference between the two indicators has averaged just 250 thousand barrels since the start of 2014—half the 564 thousand barrels average difference in 2013. If the difference remains minimal, we could assume these imports from other major OPEC nations are of low grade, which would be positive for the crude tanker business.

Weatherford says cutting back Venezuela operations due to "serious liquidity" NEW ORLEANS/HOUSTON Petroleumworld.com, March 26 2014

Oilfield services provider Weatherford International Ltd said on Monday it was reducing operations in Venezuela and expects its Russian business to grow this year. The Swiss-headquartered company, which competes with Schlumberger and Halliburton, said the "serious liquidity situation in Venezuela" is causing it to pare back services it provides inside the OPEC country, Chief Executive Bernard DurocDanner said at the Howard Weil conference in New Orleans on Monday.

Weatherford provides drilling and exploration services to Venezuela's national oil company Petroleos de Venezuela SA , but Venezuela's currency devaluation and economic instability have prompted payment delays, according to Weatherford's annual filing with the U.S. Security and Exchange Commission. In Russia, Weatherford expects a "very constructive year," Duroc-Danner told the conference. He did not mention the ongoing tension between Russia and Ukraine over Crimea and how it could affect his business. Last year, revenue in Weatherford's business unit that includes Russia rose 7 percent from a year earlier to $2.7 billion, helped by increased drilling activity in that country, the company said in a regulatory filing. Shares of Weatherford rose 8 cents to $16.86 in afternoon New York Stock Exchange trading. Story by Ernest Scheyder in New Orleans and Anna Driver in Houston; Editing by David Gregorio, Bernard Orr from Reuters

OPEC to Cut Exports on Lower Asian Demand, Oil Movements Says By Grant Smith Mar 27, 2014 12:00 PM GMT-0430

The Organization of Petroleum Exporting Countries will curtail exports through midApril in response to lower seasonal demand from refiners in Asia, according to tanker-tracker Oil Movements. OPEC, responsible for 40 percent of global oil supplies, will reduce shipments by 620,000 barrels a day, or 2.5 percent, to 23.78 million a day in the four weeks to April 12, the researcher said in an e-mailed note. The figures exclude two of OPEC’s 12 members, Angola and Ecuador. “Heading into April, there’s a very clear reason to expect a fall,” Oil Movements founder Roy Mason said by phone from Halifax, England. “We’re moving past a winter peak, which happened in February. In the second quarter, crude demand will be lower based on refinery runs. The east is heading into maintenance.” Global oil consumption typically ebbs at the end of the first quarter as demand for heating fuel tapers off and refiners start to perform routine overhauls. Brent crude slipped 1.4 percent this month, trading at $107.55 a barrel on the ICE Futures Europe exchange as of 2:55 p.m. London time.

Middle Eastern exports will average 17.43 million barrels a day in the four weeks to April 12, compared with 17.93 million a day in the period to March 15, Oil Movements said. These figures include non-OPEC nations Oman and Yemen. Crude on board tankers will drop by 1.6 percent to 489.21 million barrels in the four weeks to April 12, from 496.93 million in the previous period, data from Oil Movements show. The researcher calculates volumes by tallying tanker bookings and excludes crude held on vessels for storage. “There has been a very big build in oil-in-transit over the winter,” Mason said. “That’s oil that’s on the water and has to find a home, and it hasn’t hit land yet. There’s a lot of oil there which will arrive in the next two months.” OPEC’s members are Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates and Venezuela. The group will next meet on June 11 at its headquarters in Vienna.

OPEC daily basket price closes higher again IANS March 27, 2014 Last Updated at 15:42 IST

Vienna, March 27 (IANS/WAM) The basket of 12 crude oils of the Organisation of Petroleum Exporting Countries (OPEC) stood at $103.62 a barrel Wednesday, compared to $103.39 Tuesday, according to the OPEC Secretariat.

The new OPEC reference basket comprises Saharan Blend (Algeria), Girassol (Angola), Oriente (Ecuador), Iran Heavy (Iran), Basra Light (Iraq), Kuwait Export (Kuwait), Es Sider (Libya), Bonny Light (Nigeria), Qatar Marine (Qatar), Arab Light (Saudi Arabia), Murban (United Arab Emirates) and Merey (Venezuela). A barrel is equal to 159 litres.

U.S.A.

America's Energy Edge: The Geopolitical Consequences of the Shale Revolution Is America’s shale-based energy revolution having at least one expected effect? Yes, say Robert Blackwill and Meghan O'Sullivan. In the case of global energy production, it’s facilitating a gradual shift away from traditional suppliers in Eurasia and the Middle East. By Robert D. Blackwill and Meghan L. O'Sullivan for Foreign Affairs Only five years ago, the world’s supply of oil appeared to be peaking, and as conventional gas production declined in the United States, it seemed that the country would become dependent on costly natural gas imports. But in the years since, those predictions have proved spectacularly wrong. Global energy production has begun to shift away from traditional suppliers in Eurasia and the Middle East, as producers tap unconventional gas and oil resources around the world, from the waters of Australia, Brazil, Africa, and the Mediterranean to the oil sands of Alberta. The greatest revolution, however, has taken place in the United States, where producers have taken advantage of two newly viable technologies to unlock resources once deemed commercially infeasible: horizontal drilling, which allows wells to penetrate bands of shale deep underground, and hydraulic fracturing, or fracking, which uses the injection of high-pressure fluid to release gas and oil from rock formations. The resulting uptick in energy production has been dramatic. Between 2007 and 2012, U.S. shale gas production rose by over 50 percent each year, and its share of total U.S. gas production jumped from five percent to 39 percent. Terminals once intended to bring foreign liquefied natural gas (LNG) to U.S. consumers are being reconfigured to export U.S. LNG abroad. Between 2007 and 2012, fracking also generated an 18-fold increase in U.S. production of what is known as light tight oil, high-quality petroleum found in shale or sandstone that can be released by fracking. This boom has succeeded in reversing the long decline in U.S. crude oil production, which grew by 50 percent between 2008 and 2013. Thanks to these developments, the United States is now poised to become an energy superpower. Last year, it surpassed Russia as the world’s leading energy producer, and by next year, according to projections by the International Energy Agency, it will overtake Saudi Arabia as the top producer of crude oil. Much has been written lately about the discovery of new oil and gas deposits around the world, but other countries will not find it easy to replicate the United States’

success. The fracking revolution required more than just favorable geology; it also took financiers with a tolerance for risk, a property-rights regime that let landowners claim underground resources, a network of service providers and delivery infrastructure, and an industry structure characterized by thousands of entrepreneurs rather than a single national oil company. Although many countries possess the right rock, none, with the exception of Canada, boasts an industrial environment as favorable as that of the United States. The American energy revolution does not just have commercial implications; it also has wide-reaching geopolitical consequences. Global energy trade maps are already being redrawn as U.S. imports continue to decline and exporters find new markets. Most West African oil, for example, now flows to Asia rather than to the United States. And as U.S. production continues to increase, it will put downward pressure on global oil and gas prices, thereby diminishing the geopolitical leverage that some energy suppliers have wielded for decades. Most energy-producing states that lack diversified economies, such as Russia and the Gulf monarchies, will lose out, whereas energy consumers, such as China, India, and other Asian states, stand to gain. The biggest benefits, however, will accrue to the United States. Ever since 1971, when U.S. oil production peaked, energy has been construed as a strategic liability for the country, with its ever-growing thirst for reasonably priced fossil fuels sometimes necessitating incongruous alliances and complex obligations abroad. But that logic has been upended, and the newly unlocked energy is set to boost the U.S. economy and grant Washington newfound leverage around the world. The Price is Right Although it is always difficult to predict the future of global energy markets, the main effect the North American energy revolution will have is already becoming clear: the global supply of energy will continue to increase and diversify. Gas markets have been the first to feel the impact. In the past, the price of gas has varied greatly across the three largely distinct markets of North America, Europe, and Asia. In 2012, for example, U.S. gas prices stood at $3 per million BTU, whereas Germans paid $11 and Japanese paid $17. But as the United States prepares to generate and export greater quantities of LNG, those markets will become increasingly integrated. Already, investors have sought government approval for more than 20 LNG export projects in the United States. However many end up being built, the exports flowing from them will add to major increases in the flow of LNG that are already occurring elsewhere. Australia is soon set to surpass Qatar as the largest global supplier of LNG; by 2020, the United States and Canada together could export close to Qatar’s current LNG capacity. Although the integration of North American, European, and Asian gas markets will

require years of infrastructure investment and the result, even then, will not be as unified as the global oil market, the increased liquidity should help put downward pressure on gas prices in Europe and Asia in the decade ahead. The most dramatic possible geopolitical consequence of the North American energy boom is that the increase in U.S. and Canadian oil production could disrupt the global price of oil -- which could fall by 20 percent or more. Today, the price of oil is determined largely by the Organization of the Petroleum Exporting Countries, which regulates production levels among its member states. When there are unexpected production disruptions, OPEC countries (primarily Saudi Arabia) try to stabilize prices by ramping up their production, which reduces the global amount of spare production capacity. When spare capacity falls below two million barrels per day, the market gets jittery, and oil prices tend to spike upward. When the market sees spare capacity rise above roughly six million barrels a day, prices tend to fall. For the past five years or so, OPEC’s members have attempted to balance the need to fill their public coffers with the need to supply enough oil to keep the global economy humming, and they have managed to keep the price of oil at around $90 to $110 per barrel. As additional North American oil floods the market, OPEC’s ability to control prices will be challenged. According to projections from the U.S. Energy Information Administration, between 2012 and 2020, the United States is expected to produce more than three million barrels of new petroleum and other liquid fuels each day, mainly from light tight oil. These new volumes, plus new supplies coming on line from Iraq and elsewhere, could cause a glut in supply, which would push prices down -- especially as global oil demand shrinks due to improved efficiency or slower economic growth. In that event, OPEC could have a hard time maintaining discipline among its members, few of which are willing to curb their oil production in the face of burgeoning social demands and political uncertainty. Persistently lower prices would create shortfalls in the revenues they need to fund their expenditures. Winners and Losers If oil prices fall and stay low, every government in the world that relies on hydrocarbon revenues will find itself under stress. Countries feeling the pinch will include Indonesia and Vietnam in Asia; Kazakhstan and Russia in Eurasia; Colombia, Mexico, and Venezuela in Latin America; Angola and Nigeria in Africa; and Iran, Iraq, and Saudi Arabia in the Middle East. These countries’ abilities to endure such fiscal setbacks vary and would depend in part on how long low prices lasted. Even with a more moderate drop in prices, the increased volume and diversity of the oil supply would benefit energy consumers worldwide. Countries that like to use their energy supplies for foreign policy purposes -- usually in ways that run counter to U.S. interests -- will see their influence shrink.

Of all the governments likely to be hit hard, Moscow has the most to lose. Although Russia possesses large reserves of shale oil that it could eventually develop, the global supply shift will weaken the country in the short term. The influx of North American gas to the market will not entirely free the rest of Europe from Russia’s influence, since Russia will remain the continent’s largest energy supplier. But additional suppliers will give European customers leverage they can use to negotiate better terms with Russian producers, as they managed to do in 2010 and 2011. Europe will gain most from the change if it further integrates its natural gas market and builds more LNG terminals to import gas; such moves could help it ward off crises like those that occurred when Russia cut off gas supplies to Ukraine in 2006 and 2009. The development of Europe’s own considerable shale resources would help even more. A sustained drop in the price of oil, meanwhile, could destabilize Russia’s political system. Even with the current price near $100 per barrel, the Kremlin has scaled back its official expectations of annual economic growth over the coming decade to around 1.8 percent and begun to make budget cuts. If prices fall further, Russia could exhaust its stabilization fund, which would force it to make draconian budget reductions. Russian President Vladimir Putin’s influence could diminish, creating new openings for his political opponents at home and making Moscow look weak abroad. Although the West might welcome the thought of Russia under such strain, a weaker Russia will not necessarily mean a less challenging Russia. Moscow is already trying to compensate for losses in Europe by making stronger inroads into Asia and the global LNG market, and it will have every reason to actively counter Europe’s efforts to develop its own resources. Indeed, Russia’s state-run media, the state-owned gas company Gazprom, and even Putin himself have warned of the environmental dangers of fracking in Europe -- which is, as The Guardian has put it, “an odd phenomenon in a country that usually keeps ecological concerns at the bottom of its agenda.” To discourage European investment in the infrastructure needed to import LNG, Russia may also preemptively offer its European customers more favorable gas deals, as it did for Ukraine at the end of 2013. More dramatically, should low energy prices undermine Putin and empower more nationalist forces in the country, Russia could seek to secure its regional influence in more direct ways -- even through the projection of military power. Energy producers in the Middle East, meanwhile, will lose influence, too. As the longtime regulator of OPEC’s spare capacity and a regional leader, Saudi Arabia merits special attention. The country is already facing growing fiscal constraints. It responded to the Arab Spring by boosting public spending at home and offering generous economic and security assistance to other Sunni regimes in the region. As a result, since 2008, the kingdom’s fiscal breakeven oil price (the level needed to ensure its budget balances) jumped over $40 per barrel to nearly $90 in 2014, according to the International Monetary Fund. At the same time, more pressure is

coming from the country’s extremely young population, which is demanding better education, health care, infrastructure, and jobs. And as its enormous domestic energy demand continues to grow, the country will begin consuming more energy than it exports by around 2020, should current trajectories hold. Riyadh is already trying hard to diversify its economy. But a prolonged decline in the price of oil would test the regime’s ability to maintain the public services on which its legitimacy rests. Other Middle Eastern countries -- including Algeria, Bahrain, Iraq, Libya, and Yemen -- are already living beyond the limits of their fiscal breakeven prices. Iran, already staggering under the weight of economic sanctions and years of economic mismanagement, could face even more severe challenges. The country ranks fourth in the world in oil and gas production, and it depends on its energy supplies to project regional influence. But of all OPEC’s members, it has the highest fiscal breakeven price: over $150 per barrel. Although it is possible that lower prices might further diminish the legitimacy of the regime and thereby pave the way for more moderate leaders, the fate of the recent revolutions in the Middle East, as well as Iran’s own ethnic, religious, and other cleavages, caution against such optimism. The net implications for Mexico are less clear. Given its declining oil production and heavy reliance on oil revenues for its budget, the country could well suffer if the price of oil drops. The recent push for energy reforms could allow Mexico to increase production enough to outweigh the effects of lower global prices. Doing so, however, would require the government to follow up on the reform law passed in December. It would have to implement legislation more conducive to private investment in Mexico’s energy sector -- including its own shale resources -- and accelerate its reform of Pemex, the state-owned oil company. Unlike energy producers, consumers should welcome the energy revolution. Increased North American production has already helped buffer markets by providing much-needed additional production during recent disruptions of exports from Libya, Nigeria, and South Sudan. Lower energy prices will be a particular boon for China and India, which are already major importers and which, according to the International Energy Agency, will see their demand for oil imports grow by 40 percent (for China) and 55 percent (for India) from 2012 to 2035. As the two countries import more energy from the Middle East and Africa, they will take ever-greater interest in these regions. China also stands to benefit in another way: its relations with Russia could improve markedly. For decades, history and ideology have kept these two countries from finding common cause, despite the obvious benefits that would accrue from a closer partnership between the world’s largest energy producer and its largest consumer, which happen to share a 2,600-mile border. But as more and more North American energy comes on line, energy demand in the developed world remains flat, and demand continues to increase in the developing economies of Asia, Russia will

increasingly seek to secure markets in the East. Moscow and Beijing could well move closer together on long-stalled energy deals and pipelines and collaborate more on energy issues in Central Asia. Once clinched, such arrangements could form the basis for a more extensive geopolitical relationship -- one in which China would have the upper hand. As for India and other Asian economies, the benefits will also go beyond the purely economic. A surge in the quantity of gas and oil transported through the South China Sea will provide common cause to all countries seeking to combat piracy and other risks to the free flow of energy shipments, giving China greater incentives to cooperate on security matters. At the same time, U.S. allies in East Asia, such as Japan, the Philippines, and South Korea, will have the opportunity to increase their energy imports directly from the United States and Canada. Their ability to rely on North American partners, shipping oil and LNG via shorter, more direct sea routes, should also give these countries greater peace of mind. The US Advantage The biggest beneficiary of the North American energy boom, of course, will be the United States. The most immediate effect will be the continued creation of new jobs and wealth in the energy sector. But beyond that, since U.S. gas is among the cheapest in the world, U.S. industries that rely primarily on gas for feedstock, such as petrochemicals and steel, will continue to see their competitive advantages grow. The energy boom is also providing an economic fillip by fueling investments in U.S. infrastructure, construction, and services. The McKinsey Global Institute estimates that by 2020, unconventional oil and gas production could boost the United States’ annual GDP by between two and four percent, or roughly $380–$690 billion, and create up to 1.7 million new permanent jobs. Furthermore, since energy imports account for roughly half of the more than $720 billion U.S. trade deficit, declining energy imports are already leading to a more favorable U.S. trade balance. A diminished reliance on energy imports should not be confused with full energy independence. But the U.S. energy windfall should help put to rest declinist thinking about the United States. Moreover, the end of U.S. dependence on overseas energy supplies -- and on the producer countries with which Washington has often had prickly relations -- will grant the United States a greater degree of freedom in pursuing its grand strategy. But the United States will remain firmly linked to globalized energy markets. Any dramatic disruption of the global oil supply, for instance, would still affect the price at the pump in the United States and derail growth. Washington will therefore maintain an interest in preserving the stability of international markets. Nowhere is that truer than in the Middle East, where vital U.S. interests -- in preventing terrorism, countering nuclear proliferation, and promoting regional security to protect allies such as Israel and ensure the flow of energy -- will

endure. So will the need to police the global commons, such as the major sea-lanes through which trade in energy and other goods flows. These truths remain poorly understood, however. U.S. policymakers need to start explaining to both domestic and foreign audiences that although the energy landscape is changing, U.S. national interests are not. Newfound oil and gas will not cause Washington to disengage from the world. To be sure, the United States will remain, by almost any measure, the most powerful country on the planet. Yet it will never be able to insulate itself from shocks to the global economy, and so it will remain deeply involved overseas. This message requires particular emphasis in the Middle East, given Washington’s exit from Afghanistan and Iraq and its announced pivot toward Asia. U.S. policymakers will also need to make sure they protect the sources of the country’s energy wealth. Even though private-sector players have driven nearly all the advances that unleashed the boom, their success has depended on a supportive legal and regulatory environment. Leaders at both the state and the federal levels will have to strike the right balance between, on the one hand, addressing legitimate concerns over the environmental and other risks associated with fracking and, on the other hand, securing the economic benefits of production. Likewise, leaders in the U.S. energy sector should work with public authorities to establish standards of transparency, environmental protection, and safety that can help build public confidence and address the risks of developing shale resources. And the country as a whole will have to update and expand its energy infrastructure to fully harness developments in unconventional oil and gas -- a transformation that will require substantial investments in building and modifying pipelines, railroads, barges, and export terminals. Oil and Gas Diplomacy In addition to bolstering the U.S. economy, the energy boom promises to sharpen the instruments of U.S. statecraft. When it comes to levying economic sanctions, a diversified energy supply confers distinct advantages. It would have been nearly impossible to put in place the unprecedented restrictions on Iran’s oil exports, for example, absent the increase in North American supply. Unlike the sanctions against Iran, Iraq, Libya, and Sudan in the recent past, which were imposed during global oil gluts, the current sanctions on Iran were put in place when the oil market was tight and prices were high. Getting the support of other countries reluctant to impose such strict measures on Tehran required Washington to make a credible case that removing Iranian oil from the international market would not cause a price spike. The sanctions that Congress passed in December 2011 conditioned the imposition of certain strictures on the administration’s determination that there was enough oil in the global market to ask other countries to reduce their imports.

While this provision gave the White House an effective waiver, it never used it, thanks to steadily increasing U.S. production of light tight oil, which compensated for the more than one million barrels a day of Iranian oil that the sanctions forced off the market. That U.S. oil allowed Washington to assuage other governments’ fears of a price spike and thereby win international support for rigid and exacting sanctions. These measures did major damage to the Iranian economy and helped push Tehran to the negotiating table. Absent new U.S. supplies, the sanctions would likely never have been approved. The energy revival is also providing U.S. trade negotiators with newfound leverage as other countries compete for access to U.S. LNG. Washington is currently negotiating two major multilateral trade deals: the Transatlantic Trade and Investment Partnership (with the 28 countries of the EU) and the Trans-Pacific Partnership (with 11 countries in the Asia-Pacific and the Americas). When it comes to LNG exports, U.S. law grants automatic approval to applications for terminals intended to ship gas to countries that have signed free-trade agreements with Washington. Applications for LNG terminals designed to send gas elsewhere, by contrast, must go through a review process that determines whether such trade is in the U.S. national interest. For the many countries in Asia and Europe that want to add U.S. natural gas imports to their energy mix, achieving this special trade status holds extra value. In fact, this incentive proved crucial in convincing Japan -- hungry for gas in the wake of the Fukushima disaster, which took its entire nuclear power infrastructure offline -- to join the talks for the Trans-Pacific Partnership. The shift in global energy also gives Washington a new way of reinforcing its alliances. Many countries now hope to follow the United States’ lead and start tapping their own unconventional gas and oil resources, and the U.S. government has started to integrate the country’s energy experience into its diplomacy. Two State Department projects -- the Unconventional Gas Technical Engagement Program and the Energy Governance and Capacity Initiative -- are bringing technical expertise from across the government to help other countries (so far, small developing ones) build up their own oil and gas industries. The government should expand on these initial efforts and link them to its broader alliance strategy by supporting such countries as Poland and Ukraine as they work to capitalize on their domestic shale reserves. New production in these and other countries would not only lessen the risk of conflict over scarce resources but also help states produce and consume more climate-friendly energy without sacrificing the economic growth they need. Washington should work to help them understand the particular policies that allowed the boom to occur on U.S. soil and, where welcome, offer advice on how to create similar environments. The United States should also begin using its new energy resources to prevent allies from being bullied by less friendly suppliers. As it reviews applications for LNG

export licenses and assesses their national security implications, the Department of Energy should consider whether the proposed projects support U.S. allies -- a move that could encourage U.S. energy companies to export to such countries, helping those countries resist pressure from Russia or elsewhere. The U.S. government and its partners should also support regular forums that bring together private-sector energy experts and investors to help other countries develop their own shale resources. Although such expanded public-private dialogues would not result in increased production right away -- even in the most favorable environments, development takes years -- they would nonetheless serve as a public symbol of American solidarity. In a similar vein, the U.S. government should use its own expertise on unconventional energy to engage directly with foreign governments -- especially Beijing. The United States shares many diverse interests with China. Both countries are massive energy consumers. Both desire a stable and growing global economy, which depends on the reliable flow of reasonably priced energy. Both want to minimize climate change. And both want to diversify their energy supplies. Such an overlap of interests between the world’s top two energy consumers creates ample room for collaboration. In December, the United States and China reaffirmed their shared interest in “secure and well-supplied energy markets” and discussed cooperating to develop China’s energy resources, including shale gas. Chinese companies are already investing billions in shale developments at home and in the United States. But Washington and Beijing should accelerate progress on this front by broadening the U.S.-China Strategic and Economic Dialogue to include light tight oil and by committing real resources to the joint development of techniques for exporting shale oil and gas in an efficient and environmentally responsible manner. If U.S.-Chinese relations improve, the two sides could work together with other energy consumers to enhance global energy security -- for example, by extending antipiracy operations around the Horn of Africa. Finally, the shale gas revolution can enhance U.S. leadership on climate change. Natural gas emits up to 40 percent less carbon than coal, and the United States is now meeting its climate goals not thanks to bold decision-making in Washington but simply because the economics of gas have proved so much more favorable than those of coal. The resulting downward trend in U.S. carbon emissions has given Washington greater credibility in climate talks than it once had; the U.S. government should use it to assume a more forceful stance toward countries that have resisted reining in their emissions. The spread of shale technology across the globe will be good news for the climate in other ways. Some environmentalists fear that the widespread replacement of coal with gas, while reducing emissions in the short term, will lessen the pressure for more far-reaching reforms. But even though shifting from coal to gas would not solve

the problem of greenhouse gas emissions, it could buy enough time for the next generation of technological and policy innovations to take hold, and these innovations could cut emissions even more dramatically. Energy and Influence The North American energy revolution is here, it is big, and it will only increase in importance as the United States comes close to becoming a net energy exporter, which is set to happen around 2020. The resulting shift in global energy supplies will benefit consuming countries and erode the power of traditional producers. These developments could also undercut OPEC’s traditional role as the manager of global energy prices, perhaps to the extent that energy prices plummet. Such a disturbance could, in turn, cascade through all countries that depend on hydrocarbons for their public finances. Even without such a dramatic drop in prices, the global flow of energy will continue to be transformed -- and, with it, economic and geopolitical relationships. The United States, meanwhile, will be uniquely positioned to profit from the shift and seize new opportunities. The energy boom will add fuel to the country’s economic revitalization, and the reduction of its dependence on energy imports will give it some measure of greater diplomatic freedom and influence. The energy boom will not solve all the challenges facing U.S. policymakers: Washington still must manage the aftermath of more than a decade of war in Afghanistan and Iraq, its own fiscal profligacy, hyperpartisanship along the Potomac, the erosion of trust among many allies in the wake of revelations about U.S. surveillance, and the rise of China. That said, the huge boom in U.S. oil and gas production, combined with the country’s other enduring sources of military, economic, and cultural strength, should enhance U.S. global leadership in the years to come -- but only if Washington protects the sources of this newfound strength at home and takes advantage of new opportunities to protect its enduring interests abroad. Robert D. Blackwill is Henry A. Kissinger Senior Fellow for U.S. Foreign Policy at the Council on Foreign Relations. Meghan L. O’Sullivan is Jeane Kirkpatrick Professor of the Practice of International Affairs at Harvard University’s Kennedy School of Government. She also consults for energy firms on geopolitical risk. Both served on the U.S. National Security Council staff in the George W. Bush administration.

Nigeria

Finally, Shell to sign FID on Bonga Southwest project in December March 19, 2014 | Filed under: main story | Author: OLUSOLA BELLO & FRANK UZOEGBU

The Nigerian oil and gas industry looks set for a major shift as Shell Petroleum Development Company (SPDC) plans to take the Final Investment Decision (FID) on the large-scale Bonga Southwest deepwater project by December this year. The disclosure was made by the company, amid the uncertainty surrounding the industry on account of the non-passage of the Petroleum Industry Bill (PIB), which has stalled investments in the petroleum industry over the past six years. The Federal Government also said it was negotiating about 450 million euros for the various gas pipelines to be constructed across the country, just as it claimed it lost over $11billion worth of oil revenue in 2013 due to incessant attacks on major pipelines and crude oil theft in the Niger Delta. Speaking at the ongoing Nigerian Oil and Gas conference (NOG 2014) in Abuja on Tuesday, Markus Droll, vice president, Shell global upstream, said Bonga Southwest is one of the large investment portfolios the company is currently working on. “In the deepwater, we are pushing forward to have the world-class Bonga Southwest project FID ready by the end of 2014.” He said the company would continue with a strong suit of infill drilling projects on the original Floating Production Storage Offshore (FPSO) to keep the facility full, generating returns for partners and government alike. According to Droll, the company, along with its operator partner, ExxonMobil, is investing substantially in the further development of the ‘important Erha field’. “On the onshore, we are embarking on a number of large gas projects, so that we can keep Nigeria Liquefied Natural Gas (NLNG) company supplied with enough gas, and make sure Nigeria can maintain its strategic importance in the global LNG market. “Together with Nigerian National Petroleum Corporation (NNPC) and other stakeholders in NLNG, we are investigating how we can further expand the NLNG supply and processing capacity. “And I should mention that NLNG is a world-class operation, recognised as such, well beyond the borders of Nigeria. We are also working extremely on how to make the Assa North/Ohaji South project work,” he said. Also speaking, Diezani Alison-Madueke, minister of petroleum resources, said that through the assistance of the ministry of finance, a loan of about 450 million

euros for some gas projects in the country is being negotiated to expand the gas processing and transportation facilities. She said aside from security challenges hurting the industry, limited institutional capacity, poor funding of investments, high technical costs, obsolete laws, outdated fiscal regimes and infrastructural constraints, with particular respect to gas commercialisation, have also taken a toll on it. In terms of institutional incapacity, the petroleum laws in the country were mainly designed for oil production, with limited coverage for gas. On the other hand, gas is less fundable compared to oil, as it requires complex commercial and technical regulations to ensure its commercialisation, she added. In terms of funding, she explained that the competing fiscal needs by other sectors of the economy have meant that the joint ventures have suffered for a long time, and that the government is aware of this, despite the fact that it yields much higher benefits than the production sharing contract. “And as oil prices have risen, so have costs escalated, most of our oil producing facilities are actually in our onshore and shallow waters, and they are aging and would need to be refurbished or replaced; additional funding will be required to enable these facilities meet current fire safety standards.” Two days ago, Shell said that it had halted crude oil exports at the Forcados terminal because of a leak in a supply pipeline. With a capacity of 400,000 barrels per day. Forcados is one of Nigeria’s key export terminals. Last month, the company shut the Nembe Creek trunkline which carries about 150,000 barrels per day to the Bonny export terminal, because of a leak. Oil companies including Shell, Chevron, Total and ExxonMobil, which pump about 90% of Nigeria’s crude, have repeatedly called on the government to do more to stop the unprecedented level of theft from the pipelines. Nigeria has been facing fuel scarcity for the past two months. The minister, however, blamed the current fuel scarcity on sabotage, diversion, hoarding, panic buying and rumours of imminent pump price increase. She also outlined other challenges confronting the sector which include sabotage and the non-passage of the ‘famous’ petroleum industry bill (PIB). Madueke also called for reforms in the oil and gas sector stating that “now that reforms in power sector are underway, the next focus should be reforms in the downstream sub-sector”. She said that the continued regulation of the downstream sector with some positives, has more negative impact on the economy, especially as the subsidy does not actually benefit the poor who are the real targets but rather the rich. Nigeria derives over 75% of its revenue and more than 90 percent of its foreign exchange earnings from the oil industry. In his remark, Andrew Yakubu, group managing director, NNPC stated that in 2013, the country lost 300,000 barrels of crude oil per day (bpd). By implication, computing

this figure at an average price of $100 per barrel, it means a loss of $10,950,000,000 in value was made last year. “In 2013, Nigeria suffered severe attacks on its critical export pipeline system, leading to the loss and or deferment of about 300,000 bpd. This deferred production or loss is equivalent to the total production of Equatorial Guinea and larger than the entire production of Ghana, Congo Brazzaville, Cameroun and Gabon,” he said. Yakubu stated that the Federal Government has taken steps to curb the menace. “The government has set aside N15billion for the purchase of security equipment to checkmate the scourge of oil theft in the Niger Delta, approved by the National Economic Council (NEC). This, he said includes utilisation of new technology and radar surveillance to boost maritime security and increase sea patrol by the Nigerian Navy and inauguration of an Inter-Agency Maritime Operations Coordination Committee (IMOCC) to provide synergy among agencies operating in the industry. This is to ensure safety and security in the Nigerian maritime industry and provision of air surveillance of Nigeria’s pipelines with modern aircraft, manned by Nigerian pilots, trained under the Petroleum Technology Development Fund (PTDF) programme. Nigeria’s crude oil production is dependent on key arteries which include Trans Forcados, Trans Niger, Nembe Creek line and Temidaba-Brass pipelines. These lines connect to three export terminals, Forcados, Bonny and Brass terminals. Shell Nigeria Exploration and Production Company (SNEPCo) began producing oil and gas from Bonga field, Nigeria’s first deep water oil discovery, which is located in Oil Mining Lease (OML) 118, in 2005. The Bonga South West deposit was discovered in May 2001, 135 kilometers off the coast of Nigeria in the Niger Delta, at a water depth of 1,300 meters. It is located on OML 118, which also includes the Bonga field that has been producing since 2005 at a rate of 225,000 bpd. The Bonga South West development plan will entail the construction of an FPSO vessel with a production capacity of 225,000 bpd. First oil from the project is scheduled for 2020. OLUSOLA BELLO & FRANK UZOEGBU

Malasia

Malaysia’s Petronas buys LNG cargoes in Galp Energia tender March 18, 2014 | Filed under: main story | Author: Editor

Malaysian oil and gas company Petronas has secured around 18 LNG cargoes of Nigerian origin from Portuguese utility Galp Energia in a recent tender, a source with knowledge of the matter said. Earlier this month Galp launched a tender to sell up to 30 LNG cargoes from Nigeria’s Bonny Island liquefaction plant over a period of five years, with 4-6 cargoes offered each year. Petronas has won three years of that supply contract, equating to around 18 cargoes, the source said. It was not immediately clear which companies won the remaining cargoes.

Mexico

Pemex mulls crude imports, more exports to India, Japan MEXICO DF Petroleumworld.com, March 19 2014

Mexico's Pemex PEMX.UL is considering crude imports to boost local refinery output, but at the same time, it expects to sell more oil to India and Japan to diversify its export markets. The state-owned company could begin imports of light and intermediate crudes as early as this year to improve production of higher-value refined products like gasoline, Jose Manuel Carrera, chief executive officer of its P.M.I. Comercio Internacional oil trading arm, said in an interview. Mexico, the world's 10th-largest crude oil producer, has very rarely imported the commodity, instead preferring a decades-long self-sufficiency. Still, it must import about half of its gasoline due to flagging refinery output at home. "Pemex is analyzing in great detail how to optimize the diet of its national refining system with imported crudes ... both light and intermediate," Carrera told Reuters. P.M.I. officials say crude imports would not exceed 20 percent of a refinery's crudeprocessing capacity. The company also aims to produce less fuel oil as Mexico's power sector increasingly substitutes cheaper natural gas for the generation of electricity, said Carrera.

"Given the changing structure of demand in Mexico, it's important to adjust the diet of our refineries," he added. Carrera said the timing of any crude imports remained unclear. He emphasized that P.M.I. was looking at light and intermediate grade crudes from West Africa, Colombia and the Middle East, not just the United States. The head of Pemex's refining unit said last year that any light crude imports to boost fuel output would only make sense in the next few years, before major new upgrades are completed. Sector analysts say those projects, a $11 billion push to install deep conversion coking units at the company's three biggest refineries, will probably be delayed through 2020. MORE OIL TO INDIA, JAPAN Mexico is the No. 3 crude supplier to the United States, but export volumes to its neighbor have fallen by 43 percent since 2004 to 850,000 bpd last year, the lowest level in two decades, according to the U.S. Energy Information Administration. Light sweet crude output in the United States, the destination for about 70 percent of the 1.19 million barrels per day (bpd) of crude Pemex shipped last year, is booming because of surging volumes at major shale plays like the Eagle Ford formation in Texas. With the United States increasingly energy-independent, Pemex needs new markets. Analysts expect competition to intensify for heavy crudes in the Gulf coast refining sector in Texas and Louisiana, where most Mexican shipments go, as more West Canadian Select heavy crude is delivered to refiners over the next few years. That could push out Mexican heavy crudes. P.M.I. plans to lift crude export revenue beyond the $42.7 billion in 2013. That was down 11 percent from 2012 as the price of Pemex's main heavy crude export, Maya, slipped and oil output slowed 5.3 percent, according to the company's annual report. By the end of 2014, Mexico's export volumes to India are expected to grow by 50,000 bpd from around 105,000 bpd now, said P.M.I. Crude Oil Director Tomas Banos. P.M.I. expects crude exports to Japan to double to 60,000 bpd by the end of 2014 because of two new clients, Banos added. A one-time sale of 1 million barrels to refiner Cosmo Oil Co (5007.T) announced last month is the first Mexican crude bound for Japan in 11 years. Carrera said he also expected higher sales to European and U.S. West Coast clients, but did not say which. "We want to sell barrels of Mexican crude to the Arabian Peninsula," said Banos, adding that shipments should begin this year or next. Banos said P.M.I. expected crude shipments to China, which began in 2010, to remain steady in 2014 at about 30,000 bpd. They are unlikely to grow beyond that due to adjustments Chinese refineries must make to process more Mexican crudes.

In December, Mexico ended Pemex's 75-year monopoly on a wide range of oil industry activities, including exploration and production as well as first-hand gasoline sales. It is unclear whether P.M.I. will remain Mexico's only legal crude-sales agent when new exploration and production contracts start in the next couple years, said Carrera. This, he added, is a key detail of the fine print of the reform Congress is debating. "There are lawmakers who say that each operator should do as they see fit in an open market," said Carrera. "But on the other side, there are lawmakers and currents that have suggested that one (national sales agent) makes sense." If BP Plc (BP.L), Exxon Mobil Corp (XOM.N) and other companies that may enter post-reform Mexico had to turn over any crude production there to a state-run sales agent, they would lose out on lucrative marketing revenue. President Enrique Pena Nieto pitched the new contracts allowed under the reform, including production-sharing agreements and licenses, as necessary tools to lure significant streams of private investment and boost lagging oil production. Mexican crude output averaged 2.52 million bpd in 2013, down a quarter since hitting a peak of 3.38 million bpd a decade ago. Story by David Alire Garcia and Ana Isabel Martinez; Editing by Dave Graham and Lisa Von Ahnfrom Reuters reuters.com| Tue Mar 18, 2014

Why Petroleo Brasileiro SA Petrobras (PBR) Stock is HIgher Today BY Tedd Cohen | 03/27/14 - 01:32 PM EDT

NEW YORK (TheStreet) -- Shares of Petroleo Brasileiro SA Petrobras (PBR) are higher today by 7.17% to 12.86. For now, Brazil has not been influenced by Monday's Standard & Poor's downgrade. S&P downgraded the country's long-term debt rating to BBB minus, and changed its outlook to "stable" from "negative." That affected President Dilma Rousseff efforts to spur the slumping economy which has hurt the country's finances. Today's rally may be the result of a new poll that shows President Rousseff's approval rating slipped for the first time since last July when street protests erupted. The country has a general election in October. Must Read: Warren Buffett's 10 Favorite Stocks STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

TheStreet Ratings team rates PETROBRAS-PETROLEO BRASILIER as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation: "We rate PETROBRAS-PETROLEO BRASILIER (PBR) a HOLD. The primary factors that have impacted our rating are mixed some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its attractive valuation levels, largely solid financial position with reasonable debt levels by most measures and notable return on equity. However, as a counter to these strengths, we also find weaknesses including poor profit margins, weak operating cash flow and a generally disappointing performance in the stock itself." Highlights from the analysis by TheStreet Ratings Team goes as follows: 

Regardless of the drop in revenue, the company managed to outperform against the industry average of 7.8%. Since the same quarter one year prior, revenues slightly dropped by 0.2%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.

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PBR's debt-to-equity ratio of 0.76 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 0.98 is weak.

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Net operating cash flow has decreased to $4,734.00 million or 16.58% when compared to the same quarter last year. Despite a decrease in cash flow of 16.58%, PETROBRAS-PETROLEO BRASILIER is in line with the industry average cash flow growth rate of -23.37%.

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The gross profit margin for PETROBRAS-PETROLEO BRASILIER is currently lower than what is desirable, coming in at 28.99%. It has decreased from the same quarter the previous year. Regardless of the weak results of the gross profit margin, the net profit margin of 7.75% is above that of the industry average.

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You can view the full analysis from the report here: PBR Ratings Report STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.