'Today's price of around $70 a barrel is increasingly viewed as a new floor for the [oil] industry.'  Perhaps the reason why Russia is wary of coordinating production limits with OPEC can be explained by the success achieve by Russian oil companies in upping production over a year of reduced output from OPEC producers and higher prices.  The Ministry of Natural Resources is looking for new measures that will bolster the country's crude output, which is already at record highs. The FT says the new Oando-Gazprom alliance is bad news for Brussels.  Lukoil has put in a bid for Iraq's West Qurna-1 oil field, which is preparing to award development rights within two weeks.  Ukraine's Naftogaz has had to restructure its $500 million eurobond and offer higher payout rates after failing to meet its September payout deadline. ...

CNOOC Ltd. (CEO) expects to sign a deal with Norway’s StatoilHydro ASA (STO) soon to buy stakes in some deepwater exploration blocks in the U.S. Gulf of Mexico (GoM). StatoilHydro is putting five prospects on the market, out of its more than 400 leases in the U.S. GoM. The company had acquired these assets, with 100% working interest, in 2007 and 2008 lease sale. This deal could mark the introduction of China's foray into the U.S. GoM. The GoM remains one of the most abundant areas of the world for oil discoveries, with billions of barrels of crude believed to be trapped beneath the seabed. Chinese companies are pursuing assets acquisitions abroad to cope with the country’s increasing demand for oil and gas. But they are facing difficulties in tying up deals partly because the oil-rich countries want greater control over their resources. We ...

A consortium, led by Eni SpA (E) was awarded the license to develop the giant Zubair oil field in Iraq. Eni, which is the operator, will have a participation of 40% in the consortium, subject to adjustments. The other members include Occidental Petroleum Corp. (OXY) and Korea Gas Corp. It also includes the participation of Southern Oil, the Iraqi state company, who has a 25% interest in the field.   The Zubair field currently produces 195,000 barrels of oil per day (Bbls/d). As a result of the expansion program, production at the field is expected to reach 1.125 million Bbls/d over the next seven years.   Eni’s job at the field consists of drilling more than 200 wells, construction of treatment facilities and the required collection network, as well as the overhaul of the existing plants. The service contract expires in 20 years with a provision to ...

Following ExxonMobil’s (XOM) agreement last week to buy Kosmos Energy’s stake in oil blocks of the Jubilee oil field -- offshore of the West African country of Ghana -- for approximately $4 billion, China National Offshore Oil Corporation, or CNOOC (CEO), now makes a rival bid. CNOOC is in advanced talks with the Ghana National Petroleum Corporation, or GNPC. Earlier, many oil majors had shown interest in this deal, including Royal Dutch Shell (RDS.A) and BP plc (BP). While the Chinese government is keen to secure access to more of the world's oil, the Ghanaian government wants to be a larger participant in Jubilee. The Jubilee region is emerging as a major new oil region, and Ghana is expected to be an oil exporter by the end of next year. The Jubilee field, discovered in 2007 off the coast of Ghana, could potentially ...

The challenges for private oil companies to increase oil production are pretty daunting.

ExxonMobil (XOM) has been producing a little over 2.4 million barrels of oil a day for the last year and a half, its lowest rate of production over the last decade. The dark blue line in the figure below shows the company's production each year since 1999. Four years ago, Stuart Staniford noted that ExxonMobil's 2001 annual report predicted 3% annual growth in production between 2001 and 2007. That projection appears as the red line in the graph below; didn't quite come out as planned. Stuart's theory was that the company correctly predicted the contribution of its new discoveries, but underestimated the declining production rates from mature fields.

ExxonMobil again predicted in 2006 that it could achieve 3% annual growth over 2006-2011. I've shown that forecast as the lighter blue line

...

The Dow Jones industrial average moved up 132 points on Tuesday and all major indicators rose more than 1% as the Australian central bank’s decision to raise interest rates boosted optimism about the world economy.   Investors' show of confidence ahead of a flood of corporate earnings reports came as Australia became the first major country to raise interest rates since the onset of the financial crisis last year.  The move signals that policymakers see that country's economy as strong enough to withstand higher borrowing costs. That touched off hopes that other economies might also be growing.

Australia's decision dented demand for the U.S. dollar, which, in turn, raised commodities prices.  US energy and materials stocks moved up, oil also rose, and gold reached a record high.  Stock investors cheered the drop in the dollar because it boosts corporate profits by making U.S. goods cheaper for overseas buyers.

...

Russia has denied yesterday's report in the Independent that the country discussed changing the dollar as the global currency of oil; France has called it speculation.  Iran's finance minister Shamseddin Hosseini says he has occasionally discussed a move away from the dollar with other nations, but such a shift would require agreement from everyone.  France and Kazakhstan have signed a flurry of deals: Total will acquire 17% and GDF Suez 8% of the Caspian Sea Khvalynskoye natural gas field.  Naftogaz says that it has paid in full its September bill.  Despite a catastrophic financial situation, the company is ready to meet its gas obligations this winter.  Reuters has a feature on the Nenet tribespeople of the Yamal Peninsula for whom Gazprom's plans for Arctic plunder are a threat to their very existence.  According to ...

BP: British Petroleum. Big Profits

by Tony Daltorio, the Investment U Research Team

Not too long ago, seven major oil companies – commonly referred to as the Seven Sisters – controlled their market.

But that was then and this is now. Today, they’re scrambling to find new oil fields, while “smaller” companies rock the industry.

That’s why there’s been so much excitement over the recent discovery of a ‘giant’ oil field in the Gulf of Mexico by one of the Seven Sisters, British Petroleum ADR (NYSE: BP).

When international oil companies consider where to invest, they typically have to choose between technically straightforward fields in politically turbulent countries, or politically stable areas that require complex and costly production techniques.

Easily produced, accessible energy resources in secure countries just don’t exist anymore; the era of cheap oil is truly over.

But BP has a long history

...

Spain’s largest integrated oil and gas company, Repsol YPF, S.A. (REP), will pay Venezuela $203 million to exploit the Barua-Motatan oil field. Repsol took the minority share of this oil field, which includes 432 square kilometers, after lawmakers voted for the transfer of that area to Petroquiriquire, a joint venture between Repsol and the Venezuelan Oil Corporation (CVP), a unit of Venezuelan state oil company PDVSA. Repsol has been pursuing talks for several years on acquiring an interest in Barua-Motatan, located near Petroquiriquire’s Mene Grande oil field in western Venezuela. Petroquiriquire was formed in 2006 as a 60-40 joint venture between PDVSA and Repsol to operate the Mene Grande oil field. With the addition of this field, the current production of 25,000 barrels per day could increase up to 100,000 barrels per day. Management is targeting stable production growth, driven by the company’s pipeline ...

The Russian government plans to invest as much as $1.9 trillion in its energy sector by 2030 in an attempt to increase idling oil and gas output.  Mongolian President Tsakhiagiin Elbegdori has proposed that a Russia-Mongolia natural gas pipeline could be built as the two countries attempt to develop their 'strategic partnership'.  Russia looks set to open a pipeline supplying gas to South Ossetia, bypassing Georgia.  The Nord Stream pipeline group has asked banks to bid for $5.6 billion financing.  Gazprom expects exports to increase over the second half as gas prices have fallen.  A group of Russian investors plan to obstruct any attempt by Ukraine's Naftogaz to restructure a $500 million bond that matures next month.  Uranium supplies will not match demand after 2015 as Russia, the US, India and China develop ...