Iran oil shipments highest since sanctions began, IEA says

Iran’s crude shipments in February were the highest since the imposition of sanctions and more than a limit agreed with Western powers in an interim nuclear deal, according to the International Energy Agency.

The country shipped 1.65 MMbpd to importing countries in February, the highest level since June 2012, the IEA said. March shipments, estimated to have fallen to 1.05 MMbpd, “will likely be revised upwards closer to February levels upon receipt of more complete data,” the IEA said.

“Imports of Iranian oil are running well above 2013 levels for the third consecutive month” and could remain high in April, the Paris-based adviser to 28 nations said in its monthly oil market report. Under the interim nuclear deal agreed in November, “Iran’s exports are supposed to be held at an average 1 MMbpd for the six months to end-July,” it said.

Iranian oil production plunged by 1 MMbpd, or 28%, from 2011 to 2013 after the U.S. and European Union banned imports of oil from the country and imposed financial sanctions. An interim accord easing restrictions on insurance for Iran’s oil shipments and freeing up cash held outside the country went into effect in January, in return for a suspension of some parts of the country’s nuclear program.

Crude shipments from Iran will probably average above 1.2 MMbpd over the six month period of sanctions relief, Richard Mallinson, geopolitical analyst at Energy Aspects, said by phone today from London.

Keeping production at the level of the last couple of months “will have a real knock-on effect in the diplomacy,” Mallinson said. “I don’t think it’s too late yet for Iran to moderate that short-term behavior, in order to rebuild some confidence in the talks and as they progress towards a final deal.”

Officials from Iran, the U.S., UK, France, Germany, China, Russia and the EU met in Vienna this week. “A lot of intensive work will be needed to overcome the differences,” between the two sides before a final July deadline for a nuclear deal, EU foreign policy chief Catherine Ashton said as talks ended April 9. Diplomats will meet again on May 13 for talks.

The IEA revised upward February import volumes of Iranian crude by 240,000 bpd after it gathered more complete data. China, India, and South Korea all imported more Iranian oil than originally estimated in last month’s report, the IEA said. The agency counts cargoes once they are received in importing countries.

Buyers permitted to import Iranian crude under U.S. sanctions are Turkey, China, Japan, India, South Korea and Taiwan. In March importers of Iranian oil expanded to include Albania and Syria, the IEA said. February data for Chinese, Indian and Korean imports were revised upwards by 168,000, 93,000 and 83,000 bpd respectively. Japanese data was revised down by 103,000 bpd.

Iranian crude stored on tankers fell from 32 MMbbl at the end of February to 22 MMbbl at the end of March, the agency said citing data from E.A. Gibson Shipbrokers.

Providing useful resources, articles and writings on crude oil, other petroleum products, energy and gas. By Blockline and Associate Ltd Nigeria Ltd, online.

Chevron production heads for 8-year low as profit declines

Chevron is on track to post its lowest first quarter production in eight years after bad weather disrupted operations in Central Asia and North America.

Chevron by its market value also signaled that profit for the first three months of the year was the lowest since late 2010, according to a statement. Chevron, which is overseeing the $54 bn Gorgon natural gas export project in Australia, cited currency fluctuations and the falling value of some assets for the decline.

Chevron said it pumped the equivalent of 2.579 MMbpd during January and February. If output persisted at that pace through March, production for the full quarter would have been the lowest for that time of year since 2006.

Chevron is scheduled to disclose results for the entire three month period on May 2.

Before its statement, the company was expected to report full quarter output of 2.61 MMbbl, based on the average of three analysts’ estimates compiled by Bloomberg. That compares with 2.645 MMbbl in the first three months of 2013.

Chevron is accelerating oil exploration from Argentina to China to add reserves and revive output. Chairman and CEO John Watson is spending almost $40 bn this year to find, extract, transport and process oil and gas. Watson’s strategy also calls for auctioning off $10 bn in oilfields and other assets to hone the Chevron’s focus on the highest profit projects.

The statement was released after the close of regular trading in New York, where the shares fell 0.7% to $118.22.

Chevron declined 4.7% this year through the close, after advancing 16% in 2013. In March, Watson cut the company’s long-term production target by 6.1% to the equivalent of 3.1 MMbpd in 2017.

The company’s output fell for a third consecutive year in 2013, the longest streak of declines since the 2001-2004 period, according to data compiled by Bloomberg.

Exxon Mobil is the biggest energy company by market value, followed by Shell.

Providing useful resources, articles and writings on crude oil, other petroleum products, energy and gas. By Blockline and Associate Ltd Nigeria Ltd, online.

Inpex to make Australia focus of $44 bn exploration plan

Inpex plans to spend $44 bn on exploration and development to double its production by early next decade, investing a significant amount in Australia.

Inpex, developing the $34 bn Ichthys LNG project in northern Australia, already has stakes in 10 exploration blocks surrounding the Ichthys field, President Toshiaki Kitamura said in notes for a speech he’s scheduled to give at a conference in Perth. The LNG will be produced in the Northern Territory capital of Darwin.

“I fully expect we will discover resources to supply the Ichthys LNG plant in Darwin well into the future,” he said. The investment goal is over five years through 2016, he said.

The Ichthys LNG project, one of seven under construction in Australia to meet rising Asian demand for the fuel, is expected to generate total revenue of more than $232 bn, Kitamura said. The developments are forecast to make the country the world’s largest exporter of LNG.

Disagreement between LNG buyers and sellers about how the gas should be priced and future supply and demand could delay the expansion of the LNG industry in a “worst-case scenario,” Kitamura said. Buyers should consider becoming the sellers’ partners in the development of the gas fields as one way to align their views on the market, the Inpex president said.

Providing useful resources, articles and writings on crude oil, other petroleum products, energy and gas. By Blockline and Associate Ltd Nigeria Ltd, online.