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Business

Oil hits 6-week high as U.S. Gulf braces for storm Nicholas

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An oil storage tank and crude oil pipeline equipment is seen during a tour by the Department of Energy at the Strategic Petroleum Reserve in Freeport, Texas, U.S. June 9, 2016. REUTERS/Richard Carson

  • U.S. energy firms brace for another storm amid slow recovery from Ida
  • Over 40% of U.S. Gulf’s oil, gas output still shut following Ida
  • IEA sees oil demand rebounding by 1.6 million bpd in October

LONDON, Sept 14 (Reuters) – Oil prices hit a six-week high on Tuesday asHurricane Nicholas weakened into a tropical storm, bringing the threat of widespread floods and power outages to Texas and Louisiana, and as the International Energy Agency forecast a big demand rebound for the rest of the year.

Brent crude was up 44 cents, or 0.6%, at $73.95 a barrel by 1114 GMT. U.S. West Texas Intermediate (WTI) crude climbed 41 cents, or 0.6%, to $70.86 a barrel.

Both contracts have risen for three consecutive sessions and were trading near their highest since early August.

Nicholas is the second major storm to threaten the U.S. Gulf region in recent weeks. Hurricane Ida killed more than two dozen people in August.

Evacuations were underway on Monday from offshore oil platforms in the area, as onshore oil refiners began preparing for Nicholas. read more

“The substantial production outages in the Gulf of Mexico remain one of the factors driving prices,” Commerzbank said.

About 794,000 barrels per day (bpd), or more than 40% of the U.S. Gulf’s oil and gas output remained offline on Monday, two weeks after Ida slammed into the Louisiana coast, according to offshore regulator Bureau of Safety and Environmental Enforcement (BSEE). read more

After three months of decline in global oil demand, COVID-19 vaccine roll-outs are set to rekindle appetite for oil that was suppressed by pandemic restrictions especially in Asia, the International Energy Agency (IEA) said on Tuesday.

The IEA sees a 1.6 million bpd demand rebound in October, and continuing to grow until the end of the year.

Overall, the agency lowered its 2021 global oil demand growth forecast by 105,000 bpd to 5.2 million bpd, but raised its 2022 figure by 85,000 bpd to 3.2 million bpd.

These forecasts are well below those of the Organization of the Petroleum Exporting Countries which sees demand growing by about 5.96 million bpd this year and 4.15 million bpd next year. read more

Reuters Graphics

Protesters blocked an oil tanker from loading at the Libyan terminal of Es Sider on Tuesday, the National Oil Corporation (NOC) media office and an engineer at the port said.

The U.S. government agreed to sell crude oil from the nation’s emergency reserve to eight companies including Exxon Mobil (XOM.N) and Chevron (CVX.N), under a scheduled auction to raise money for the federal budget. read more

Traders noted China’s planned release of oil from strategic petroleum reserves (SPRs) could boost supplies available in the world’s second biggest oil consumer. read more

Additional reporting by Yuka Obayashi in Tokyo; editing by Muralikumar Anantharaman and Jason Neely

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Business

China to auction off state oil reserves to help refiners

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Refinery plants of Chambroad Petrochemicals are seen in Boxing, Shandong Province, China, May 10, 2016. REUTERS/Meng Meng/File Photo

  • China to sell state crude reserves in phases via public auction
  • Top oil importer’s producer price inflation at 13-yr high in Aug
  • Auctions could sell off 10-15 mln bbl of oil at a time – analyst
  • Brent falls as much as 1.9% after announcement before rebounding
  • China has released other commodity stocks in 2021 to cool prices

BEIJING, Sept 9 (Reuters) – China’s state reserves administration said on Thursday it would release crude oil reserves to the market via public auction to ease the pressure of high feedstock costs on domestic refiners.

The release, described as a first, will be made in phases and is mainly for integrated refining and chemical plants, the National Food and Strategic Reserves Administration said in a statement. That potentially rules out the participation of some smaller, independent refiners known as “teapots”.

The move will “better stabilise domestic market supply and demand and effectively guarantee the country’s energy security,” the administration added, without specifying the volume of crude it would sell or when.

China, the world’s biggest crude oil importer, is famously secretive about its strategic petroleum reserve (SPR).

It has repeatedly taken steps to cool a rally in the price of key commodities this year, even auctioning off state metal reserves for the first time in more than a decade to try and keep manufacturers’ costs down.

Even so, factory gate inflation hit a 13-year high in August, data published earlier on Thursday showed. read more

The out-of-the-blue announcement from the reserves administration comes with benchmark Brent crude oil prices up around 40% this year amid a rebound in energy demand after a coronavirus-led collapse in 2020.

Brent fell as much as 1.9% following the announcement before recovering to trade up 0.4% at $72.89 a barrel as of 1502 GMT.

Consultancy Energy Aspects in early July estimated China’s SPR sites hold 220 million barrels of crude oil, equivalent to 15 days of demand. read more

“The SPR news comes at a time when the outage at Shell’s Mars platform is forcing Chinese majors to scramble for alternatives as many of the 10-12 million barrels of Mars cargoes bought for September and October loadings have been cancelled,” Energy Aspects analyst Liu Yuntao said.

Royal Dutch Shell Plc (RDSa.L) shut the Mars platform in the Gulf of Mexico late last month as Hurricane Ida approached.

Liu predicts releases via auction would sell 10-15 million barrels at a time, at most.

The last public figures for China’s SPR were given in 2017, when the National Bureau of Statistics said the country had built nine storage bases with total reserve capacity of 37.73 million cubic metres, or 237.66 million barrels, of crude oil.

Reporting by Muyu Xu and Tom Daly
Additional reporting by Beijing Newsroom
Editing by David Goodman, Mark Potter and Pravin Char

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Business

Exclusive: Exxon launches U.S. shale gas sale to kick-start stalled divestitures

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HOUSTON, Aug 10 (Reuters) – Exxon Mobil Corp (XOM.N) has begun marketing U.S. shale gas properties as it ramps up a long-stalled program that aims to raise billions of dollars to shed unwanted assets and reduce debt taken on last year.

Three years ago, the top U.S. oil producer set a goal of raising $15 billion from sales by December 2021. More recently, it promised to accelerate lagging sales to whittle a record $70 billion debt pile.

The company’s XTO Energy shale unit is seeking buyers for almost 5,000 natural gas wells in the Fayetteville Shale in Arkansas, spokeswoman Julie King confirmed.

The assets are among gas projects with declining production and market value Exxon is selling as it focus on newer ventures in Guyana, offshore Brazil and Texas’s Permian Basin.

Exxon is marketing the properties itself and aims to receive bids by Sept. 16 and close any sale by year-end.

“We are providing information to third parties that may have an interest in the assets,” King said. No buyers have been identified, she said, declining to confirm the due date for bids or the company’s anticipated value on the wells.

DECLINING PRODUCTION

The company has achieved about a third of its three-year, $15 billion sales target.This year, it has received sales proceeds of $557 million through June, and has deals pending valued at more than $2.15 billion. read more

Exxon acquired the Fayetteville assets in 2010 for $650 million during a shale boom that would change the U.S. energy landscape, leading to an oversupply of gas that pushed prices to record lows and last year. This led Exxon to reduce the value of its U.S. oil and gas holdings by $17.1 billion. read more

Output in the assets on offer fell by more than half since 2016 to about 160 million cubic feet per day last year, according to Exxon marketing materials seen by Reuters.

The Arkansas properties cover some 416,000 net acres (1,680 square kilometers) and are some of the North American natural gas resources cut last year from Exxon’s development plan. The sale includes 844 operated and 4,104 non-operated wells, King said.

Dallas-based Merit Energy is evaluating the properties, one person familiar with the matter said. Merit in 2018 purchased about 258,000 acres in the same area from BHP for $300 million.

Merit did not reply to requests for comment by phone, e-mail and LinkedIn. Exxon declined to comment on potential bidders.

WORLDWIDE DIVESTMENTS

Exxon, which suffered a historic $22.4 billion loss in 2020, is selling dozens of properties in Asia, Africa, the United States and Europe.

The company is prioritizing debt reduction and its shareholder dividend, officials said last month. After total debt last year doubled to almost $70 billion since 2018, Exxon paid off more than $7 billion this year, to reduce its burden to $60.6 billion.

This year, it has held talks with Britain’s Savannah Energy (SAVES.L) over properties in Chad and Cameroon and sold stakes in two deep water oilfields to Occidental Petroleum (OXY.N) and others. read more

Exxon is seeing new interest in its properties with this year’s rebound in oil and gas prices, said Exxon Senior Vice President Jack Williams on July 30.

“That whole divestment discussion that we’ve had in the past continues,” Williams said.

By Sabrina Valle in Houston, Liz Hampton in Denver and Shariq Khan in Bengaluru; editing by Gary McWilliams, Marguerita Choy and David Gregorio

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World

‘Eye of fire’ in Mexican waters snuffed out, says national oil company

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MEXICO CITY, July 2 (Reuters) – A fire on the ocean surface west of Mexico’s Yucatan peninsula early on Friday has been extinguished, state oil company Pemex said, blaming a gas leak from an underwater pipeline for sparking the blaze captured in videos that went viral.

Bright orange flames jumping out of water resembling molten lava was dubbed an “eye of fire” on social media due to the blaze’s circular shape, as it raged a short distance from a Pemex oil platform.

The fire took more than five hours to fully put out, according to Pemex.

The fire began in an underwater pipeline that connects to a platform at Pemex’s flagship Ku Maloob Zaap oil development, the company’s most important, four sources told Reuters earlier.

Ku Maloob Zaap is located just up from the southern rim of the Gulf of Mexico.

Pemex said no injuries were reported, and production from the project was not affected after the gas leak ignited around 5:15 a.m. local time. It was completely extinguished by 10:30 a.m.

The company added it would investigate the cause of the fire.

Pemex, which has a long record of major industrial accidents at its facilities, added it also shut the valves of the 12-inch-diameter pipeline.

Angel Carrizales, head of Mexico’s oil safety regulator ASEA, wrote on Twitter that the incident “did not generate any spill.” He did not explain what was burning on the water’s surface.

Ku Maloob Zaap is Pemex’s biggest crude oil producer, accounting for more than 40% of its nearly 1.7 million barrels of daily output.

“The turbomachinery of Ku Maloob Zaap’s active production facilities were affected by an electrical storm and heavy rains,” according to a Pemex incident report shared by one of Reuters’ sources.

Company workers used nitrogen to control the fire, the report added.

Details from the incident report were not mentioned in Pemex’s brief press statement and the company did not immediately respond to a request for comment.

Reporting by Adriana Barrera and Marianna Parraga; Additional reporting by David Alire Garcia; Writing by Anthony Esposito; Editing by Daina Beth Solomon, Philippa Fletcher and David Gregorio

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