Oil India said to study purchase of Shell's Nigerian oil blocks

Oil India Ltd. is studying an acquisition of Nigerian oil and gas assets owned by Royal Dutch Shell Plc, according to people familiar with the matter.

Oil India is weighing a bid for stakes Shell holds in some onshore blocks, valued at as much as $2 billion, the people said. It will partner with India’s Sandesara Group on the potential purchase, according to the people, who asked not to be identified as the deliberations are private.

The explorer joins Dangote Group, controlled by Africa’s richest man, and Seplat Petroleum Development Co. in seeking to acquire Nigerian assets being sold by Western rivals. Shell and Chevron Corp. are divesting fields in the country amid persistent violence and crude theft in the oil-rich Niger River delta.

India’s government-run oil companies are building on their record $5.5 billion of acquisitions last year to secure supplies for Asia’s second-biggest energy consumer. Oil India, which had 124.9 billion rupees of cash at the end of September, has purchased stakes in gas fields in Mozambique and shale assets in the U.S. over the past two years.

Oil India Chairman S.K. Srivastava and finance director Rupshikha Saikia Borah didn’t answer two calls each to their mobile phones seeking comment. Sandesara Group Chairman Nitin Sandesara didn’t immediately respond to an email and phone call to his office.

Sterling Energy & Exploration Production Ltd., a unit of Sandesara Group, has more than 250 MMbbl of certified oil reserves and 1 Tcf of natural gas reserves in the Niger Delta, according to its website. Nigeria pumped about 2.1 MMbpd last month, data compiled by Bloomberg show.

Shell said in October divestments in India have been deferred to 2014. The Anglo-Dutch company’s earnings in the country were curbed by almost $1 billion last year because of oil theft and a LNG export blockade by the government, CFO Simon Henry said March 13.

Earlier this year, Oil & Natural Gas Corp. and Oil India paid $2.5 billion for a 10% stake in a Mozambique natural gas field. Securing fuel supplies is crucial for Prime Minister Manmohan Singh as India relies on imports to meet about three-quarters of its oil requirements.

Seplat Petroleum, based in Lagos, and its partners are bidding for two Nigerian oil and gas permits Shell is selling, Chairman A.B.C. Orjiako said March 11. Dangote Group is in talks to purchase onshore oil blocks in the country as international companies sell assets, Group Executive Director said in January.

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

Encana to sell U.S. LNG assets to Stabilis Energy

Stabilis Energy has signed a definitive agreement to purchase substantially all of the U.S. based assets of Encana Natural Gas Inc. (ENGI).

Denver-based ENGI is a leading distributor of LNG fuel to domestic high horsepower engine operators in the oilfield, mining, rail, marine, over the road transportation, and industrial sectors. ENGI is a subsidiary of Encana Corporation. The transaction is scheduled to close on April 30, 2014.

"We are proud to announce the addition of Encana Natural Gas Inc.' s people, assets, and customer relationships to Stabilis Energy," said Casey Crenshaw, President and CEO of Stabilis Energy.

In addition to adding ENGI' s staff, Stabilis has agreed to purchase its fleet of cryogenic rolling stock assets including storage and regasification trailers, mobile fueling units, and other related equipment. Stabilis will fulfill all of ENGI' s existing customer obligations including its existing contracts, subject to customer consent.

Stabilis plans to open its first LNG production facility in George West, Texas, in January 2015 to service oilfield customers in the Eagle Ford shale. The facility is being built as part of a previously announced venture with Flint Hills Resources LLC to build up to five LNG production facilities that target oilfield customers.

The George West facility is under construction now and will be able to produce approximately 100,000 LNG gallons per day when complete. Other targeted LNG liquefaction plant locations include West Texas, North Dakota, and other major oilfield regions. Stabilis also will continue to source fuel from ENGI' s large existing third-party supply network.

"Encana is pleased that Stabilis Energy will carry on the outstanding LNG business that our Natural Gas team has worked hard to build over the past several years," said David Hill, executive V.P. of Encana Corporation. "Encana believes that natural gas has a bright future as a domestic fuel source for high horsepower engines and that LNG will be an important part of this value chain." Encana will remain a customer of Stabilis Energy for LNG.

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.

Petrobras starts third well at Santos basin’s Sapinhoá field

Petrobras has announced the start-up of well 7-SPH-04-SPS, at a water depth of 2,120 m, in Sapinhoá field, in the Santos basin pre-salt region. This well has an estimated production potential of 26,000 bpd and is interconnected to the FPSO Cidade de São Paulo through the platform connecting system known as BSR (Buoyancy Supported Risers).

This is the third production well of the Sapinhoá Pilot Project and the second to go in operation through the BSR gathering system, following the start-up of well SPS-77A, which has been producing approximately 36,000 bpd since February 18, 2014.

FPSO Cidade de São Paulo has the capacity to process up to 120,000 bpd and has been in operation since January 5, 2013, when it was directly interconnected to well SPS-55. The fourth production well of the project will be interconnected early in the second half of the year. With the start-up of this well, the platform will reach its full output capacity.

Besides the first buoy already installed in Sapinhoá field, three other similar systems have been commissioned for installation in Santos basin pre-salt fields. Of these three, one more will be destined for Sapinhoá field (Sapinhoá Pilot Project - FPSO Cidade de São Paulo) and the other two for Lula field (Lula Nordeste Pilot Project - FPSO Cidade de Paraty). FPSO Cidade de Paraty, with the capacity to process up to 120,000 bpd, went into operation on June 6, 2013, when it was directly interconnected to the output of well LL-11.

Installation of the second buoy, destined for Lula field, was completed in February in less than a third of the time it took to install the first one, due to improvements made to installation processes. Then, on March 9, installation of the rigid steel pipelines to gather the output from two NE Lula wells, through the buoy, was completed.

At this time, installation is underway of the flexible pipelines of well 7-LL-22D-RJS, the first production well to be connected to the Lula NE buoy. This well will go in operation this quarter. Then, two other wells will be interconnected and FPSO Cidade de Paraty will reach its full output capacity in the third quarter of this year.

Two other buoys will be installed in the first half of the year

Operations to interconnect the third buoy in Sapinhoá field are ahead of schedule. The buoy is already submerged and attached to its foundations. Installation work will be completed this quarter.

The fourth and last buoy, designed for Lula field, is already on site and is currently in the initial installation phase, according to schedule. Installation is also expected to be completed this quarter.

Sapinhoá field is operated by Petrobras (45%), in partnership with BG E&P Brasil Ltda (30%) and Repsol Sinopec Brasil S.A. (25%).

Lula field is operated by Petrobras (65%), in partnership with BG E&P Brasil Ltda (25%) and Petrogal Brasil S.A. (10%).

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

OPEC to make room for extra oil from Iran, Iraq, Libya

OPEC, which supplies 40% of the world’s oil, will accommodate additional output from members Iraq, Iran and Libya, Secretary-General Abdalla El-Badri said, without explaining how it will do so under the group’s ceiling.

The Organization of Petroleum Exporting Countries will wait until 2015 to discuss output targets with Iraq, which currently operates outside the production-quota system for each of the group’s other 11 member countries, El-Badri told reporters today in Doha, Qatar. OPEC foresees gradual increases from Iraq and Iran, while Libya is capable of boosting output by as much as 1 MMbbl within a month, he said.

“There is no problem for OPEC to absorb any production increment from Iraq and Iran in 2014,” El-Badri said. “When Libya output comes back, we will accommodate it because its production is in our numbers.”

OPEC is set to boost output as its second-biggest producer Iraq pumps at a 35-year high and Libya’s government makes progress in talks with rebels who control fields and export terminals in the country’s oil-rich east. Sanctions on Iran over its nuclear program have constrained the country’s production and sales of crude. OPEC plans to meet on June 11 in Vienna to review its output target, now at 30 MMbpd.

Global demand will increase by 1.1 MMbpd in 2014, and the group will produce up to 30 MMbpd for the rest of the year, El-Badri said. “Of course, ministers can change that when they meet,” he said.

OPEC pumped 30.3 MMbpd in March, data compiled by Bloomberg show.

The group has yet to determine how to make room for potential output increases from Iraq, Iran and Libya, El-Badri said. “We will discuss that when they come to the point to discuss their increase,” he said.

Iraq, with the world’s fifth-largest oil reserves, is rebuilding its energy industry after decades of war and economic sanctions. Helped by investors including Royal Dutch Shell Plc and Exxon Mobil Corp., it leap-frogged Iran in 2012 to rank second in OPEC, after Saudi Arabia. Iraq pumped 3.4 MMbpd in March, according to data compiled by Bloomberg, and targets 9 MMbpd.

Iran raised production to 2.9 MMbpd last month, an increase of 65,000 bbl from February, the data show. Libya, which produced 250,000 bpd in March, holds Africa’s biggest crude reserves. Libya’s government reached an agreement with eastern rebels on April 6 to reopen two oil ports.

OPEC’s spare production capacity is at an adequate level this year, and producers and consumers are happy with current oil prices, El-Badri said. The price for OPEC’s basket of crudes rose $1, or 1%, yesterday to $103.16 a barrel, the group’s secretariat reported today.

The group’s 12 members are Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates and Venezuela.

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