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6 Posts authored by: jillian.sherburne Champion

Japan-flag-icon.pngOpportunities on the Rise for US-Japan Energy Trade

 

January 22 — Last Tuesday at the Westin Hotel in Houston, the US-Japan Business Council and Pink Petro Executive member Donna Cole of Cole Chemical invited US Energy Attaché Jeffrey Miller to speak to a room full of Houston business officials on Japan’s energy industry. Executive member Denise Sanders with Atwood Oceanics was also in attendance.

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The lecture’s topics ranged from an overview of Japan’s energy and nuclear non-proliferation achievements in 2015, to the liberalization of the country’s power policies and its growing production of renewable energy. Throughout it all, one point was made clear: the future is looking bright for US-Japan energy trade.

 

In 2011, when all of Japan’s Nuclear Plants were shut down in response to the Fukushima Daiichi incident, the country saw an almost 30% loss in domestic energy production capacity. Since then, it has sought new sources of energy to fill its consumption demands. Though its renewable energy output has over doubled since 2012, with particular advancements in solar energy, Japan is still 86% reliant on fossil fuels, most of which are imported. In the past, these imports came primarily from the Middle-East, but now Japan is looking to diversify in order to provide, as Trade and Industry Minister Motoo Hayashi said last December, “a stable supply of energy resources and the strengthening of national security for Japan.”

 

This focus on diversification comes just as the US lifts its 40 year ban on oil exports, and, unsurprisingly, Japanese companies have already begun to target the newly opened US market. By February, over 300,000 barrels of American crude oil, sourced from areas such as Eagle Ford, Texas, are slated to leave for Japanese shores. The shipment, purchased by Cosmo Energy Imports, is due to arrive in April, where it will be refined into gasoline and petroleum products. 

 

However, Japan’s energy focus is not only for oil. JERA, a joint venture set up between Tokyo Electric Power (TEPCO) and Chubu Electric Power, is set to become the world’s largest buyer of LNG by the end of the year. Again, the timing is ideal for US-Japan trade. With the low production cost of US natural gas and several Gulf Coast liquefaction terminals such as Freeport LNG and Sabine Pass coming online, US LNG will soon be an attractive alternative in the world marketplace. Furthermore, the US’ new LNG export capacity coincides with the completion of the expanded Panama Canal, which will enable the passage of modern 1,000 foot long LNG tankers and drastically reduce the cost of transporting LNG to Asia markets. With all of these market factors working in tandem, it’s no wonder that Mr. Miller is confident that 2016 will be a good year for the US-Japan energy trade.

 

Reporting by: Mayor's Office of Trade & International Affairs

Four oil producing nations agree to freeze output - BBC News

 

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Oil ministers from three Opec countries, Saudi Arabia, Qatar and Venezuela, as well as Russia, have agreed to freeze oil output at January levels, as long as others follow suit.

The announcement came after the four ministers met in Doha on Tuesday.

The move is designed to support the oil price, which has dropped sharply in recent months.

Oil prices have fallen about 70% from their recent peak of around $116 a barrel in June 2014.

The steep decline is due to oversupply, sluggish demand and worries about the global economic outlook.

Saudi Arabian oil minister Ali al-Naimi said: "Freezing now at the January level is adequate for the market. We don't want significant gyrations in prices, we want to meet demand. We want a stable oil price."

Brent crude, which had been up more than 5% earlier, fell back to be 0.76% higher at $33.61 a barrel, while US crude was up 0.3% at $29.85

Fears of oversupply have been added to recently as Western sanctions against major oil producer Iran were lifted recently.

Also on Tuesday, Iraq announced record oil production in January, when output from all the country's fields, including from the semi autonomous region Kurdistan, averaged 4.7 million barrels per day. Iraq is Opec's second largest oil producer, according to the International Energy Agency.

'Pressure'

The closed-door meeting indicates the mood may be shifting among producers, especially Saudi Arabia, which has been determined to defend market share rather than prices in the face of competition from US shale oil producers.

Opec's plan to drive out higher-cost producers has proved largely ineffective.

City Index analyst Fawad Razaqzada said the move had disappointed the market slightly because many had hoped for a cut rather than a production freeze.

"In the short term, oil prices may come under some pressure. Nevertheless, it is a step in the right direction and if other major producers follow suit then at the very least it should help to prevent oil prices from suffering further big falls," he said.

Olivier Jakob, a Petromatrix strategist, said: "It's really the first supply management decision taken since November 2014, so even though there will be some that will try to discount it and say it's not a cut, it's a change. It is a big change in policy."

Oil-producing nations have had to cut spending, increase deficit forecasts and push through politically unpopular reforms.

Venezuela's oil minister, Eulogio Del Pino, has visited major oil producers in recent weeks to rally support for the idea of freezing production at current levels in an effort to stabilise prices.

Shortly after Tuesday's announcement, Mr Del Pino said he would travel to Tehran to meet ministers from Iraq and Iran on Wednesday.

Iran wishes to recover its market share after the lifting of western sanctions against it came into effect last month.

Iran has said it wants to increase its production and exports of crude oil to one million barrel per day in two phases over roughly six months.

The country's deputy minister of petroleum, Rokneddin Javadi said on Sunday that Iran had increased its crude oil production to 400,000 barrels a day, according to Iran's news agency, Irna.

He added that figure was expected to increase by another 200,000 barrels.

At the weekend it started its first oil exports to Europe, and has also been increasing supplies to Japan.

Copyright © 2016 BBC.

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Shell Wins Investor Approval to Buy BG, Sealing Biggest Deal

 

  • More than 83 percent of Shell investors back $52 billion deal
  • BG shareholders set to vote on the transaction on Thursday

 

Royal Dutch Shell Plc won shareholder approval to buy BG Group Plc, sealing its biggest acquisition amid the worst oil-industry slump since the global financial crisis.

More than 83 percent of Shell shareholders voted in favor of the transaction, the company said in a statement. Most votes were cast by proxy while other investors met in The Hague on Wednesday.

The approval vindicates Shell’s belief that it can better ride out the market rout by combining with U.K. oil and gas producer BG. Crude’s tumble since the deal was announced in April prompted some shareholders to question whether it’s paying too much, yet Chief Executive Officer Ben Van Beurden has said the acquisition will boost cash flow and enhance Shell’s ability to pay dividends, while BG’s growing production will help bolster its declining output.

Shareholders have shown confidence in the “strategic logic of the combination,” Van Beurden said in the statement. He now faces a vote by BG investors on Thursday and final court approval before the transaction can close in mid-February.

The planned acquisition, which will also make Shell the biggest liquefied natural gas trader and increase its access to Brazil’s deepwater oil reserves, is valued at about $52 billion, compared with $70 billion when Shell agreed to the cash-and-shares purchase.

Boosting Resilience

“The enlarged group has stronger growth potential, will benefit from further synergies and cost reductions, is more resilient in a lower price environment and can maintain the dividend,” Tudor, Pickering, Holt & Co., the Houston-based oil investment bank, said in a note following the vote.

Benchmark Brent crude has lost almost half its value since the purchase was announced and now trades near $32 a barrel. That slump, which Shell has said may be prolonged, means the company may need longer to make a profit on the acquisition. It said last month it will break even when Brent reaches the low $60s, and add to operating cash flow per share at $50 this year.

Shell is doing “exactly what you would want a good management team and board to be doing” in an oil-market downturn, Chris Cernich, head of special situations research at Institutional Shareholder Services, said before the vote. ISS advises many of Shell’s largest holders and told them to back the deal earlier this month.

Solving Problems

By acquiring BG, Shell is “substantially lowering” oil production costs, replenishing reserves and gaining “very good natural-gas assets” in Australia, Cernich said. “You solve an awful lot of problems at a point in time where it’s actually relatively cheap to do it,” he said.

Shell Chief Financial Officer Simon Henry said the purchase would boost cash flow at any oil price, although the slump to $30 a barrel from $50 will reduce flows from the combined company by $8 billion a year. Some of the economics of the deal "may indeed be stretched" should low prices persist over the next two years, he told shareholders in The Hague.

Shell bid 0.4454 of its B shares and 383 pence for each BG share in April, offering a 50 percent premium. As Shell’s stock dropped with the oil price, the deal’s value has shrunk.

Share Reaction

BG shares erased declines when the result was announced and ended the day up 3.5 percent at 1,029.5 pence in London. Shell’s B shares advanced 2.9 percent to 1,462 pence.

Almost 17 percent of shareholders voted against the deal, with some citing concerns that cash flow will suffer if crude’s crash persists.

“We feel that the downside risks have not been fully reflected,” Paul Koster, chairman of Dutch investor group VEB, said at the meeting. “We are concerned, we can’t find enough data on what will happen if oil prices stay low for five years, as low as they are now.”

In the run-up to the vote, Standard Life Investments was the only Shell shareholder that publicly said it would vote against the combination, believing the acquisition to be “value destructive.”

Since April, Van Beurden has insisted that the deal is an acquisition for the long term and that rising oil and gas demand will eventually drive a rebound in energy prices. The company confirmed on Wednesday that it will maintain its dividend this year.

Check out more on Bloomberg:

Shell Wins Investor Approval to Buy BG, Sealing Biggest Deal - Bloomberg Business

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Iran nuclear deal: 'New chapter' for Tehran as sanctions end - BBC News

Iran "has opened a new chapter" in its ties with the world, President Hassan Rouhani said, hours after international nuclear sanctions were lifted.

The move came after the international nuclear watchdog, the IAEA, said Iran had complied with a deal designed to prevent it developing nuclear weapons.

UN, US and EU sanctions have hit Iran hard for years.

Sanctions on Iran

Nuclear sanctions have been in place since 2006, on top of other sanctions stretching back decades:

  • The economic sanctions being lifted now were imposed progressively by the US, EU and UN in response to Iran's nuclear programme
  • The EU is lifting in full restrictions on trade, shipping and insurance
  • The US is suspending, not terminating, its nuclear-related sanctions; crucially, Iran can now reconnect to the global banking system
  • The UN is lifting sanctions related to defence and nuclear technology sales, as well as an asset freeze on key individuals and companies
  • Non-nuclear US economic sanctions remain in place, notably the ban on US citizens and companies trading with Iran, and US and EU sanctions on Iranians accused of sponsoring terrorism remain in place

Iran plane.jpgA flurry of Iranian economic activity is anticipated:

  • Nearly $100bn (£70bn) of Iranian assets are being unlocked
  • Iran is expected to increase its daily export of 1.1m barrels of crude oil by 500,000 shortly, and a further 500,000 thereafter
  • Iran is reportedly poised to buy 114 new passenger planes from the Airbus consortium

 

Copyright © 2016 BBC.

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December 20, 2015 | 6:59 PM | By Times News Service

 

Muscat: GE Oil & Gas has won two contracts from Petroleum Development Oman (PDO) for the supply, testing, installation and commissioning of a fleet of electric motor driven centrifugal compressors.

 

The compressors will be deployed as part of PDO’s Saih Nihayda Depletion Compression Phase II, Kawther Depletion Compression Phase II, Yibal Khuff Depletion, Burhaan West and Fahud Gaslift Compression projects.

 

The contract also covers aftermarket services for these new compressors, as well as the existing GE compressor fleet.

 

The contracts were signed at the Business Opportunities Forum held in Muscat, under the auspices of His Highness Sayyid Haitham bin Tariq Al Said, and organised by the Oman Chamber of Commerce and Industry (OCCI) to promote the efforts and programmes of the private sector in the field of In-Country Value (ICV) creation.

 

In addition, GE Oil & Gas signed an agreement with PDO to extend training and development support for Omani nationals over the next 10 years, underlining its commitment to localisation and the development of human capital in Oman.

 

Commenting on the contracts, PDO managing director Raoul Restucci said, “We are making significant investments in strengthening our infrastructure that will enhance our productivity and help create new jobs for Omani nationals. In addition, we are focusing on strengthening local supply chain and maintenance capabilities that support Omani talent development. The contracts with GE Oil & Gas, a long-term partner of PDO, will add significant value to the national economy.”

 

Meanwhile, Rami Qasem, president and chief executive officer, GE Oil & Gas Middle East, North Africa and Turkey, said, “Oman is one of the strategic growth hubs for GE Oil & Gas in the Middle East, where we have achieved over 90 percent Omanisation. The new contracts build on our commitment to deliver cutting-edge technology, support localised innovation and promote talent development in Oman – a key element of how GE does business in the region.”

 

As Oman focuses on projects to enhance oil and gas production, GE Oil & Gas is investing in its partnership with PDO by offering advanced technology and local service capabilities within Oman.

 

GE Oil & Gas developed the widest range of advanced technology centrifugal compressors, providing over 30,000 HP, as well as re-injection compressors catering to the harshest and most corrosive gas services, with delivery pressures as high as 10,000 psi (700 bar).

 

With an active presence since 1975, GE’s focus in Oman has always been to support the country in fulfilling its vision. GE has its country office in Muscat and an Electric Submersible Pumps (ESP) Field Service and Repair Center in Nimr. Serving as an energy technology partner of the Sultanate, over 300 advanced pieces of GE equipment are deployed in the country’s oil and gas sector.

 

GE Oil & Gas has also rolled out dedicated training programmes for Omani nationals at the Florence Oil & Gas University, a proof-point of ongoing support of Omanisation and human capital development. Further, GE has acquired land in Nizwa to develop a workshop for local repairs and services to strengthen its local capabilities.

 

GE is the world’s digital industrial company, transforming industry with software-defined machines and solutions that are connected, responsive and predictive.

 

Times of Oman

 

Copyright © 2015 Muscat Media Group.

By David Benoit and Ryan Dezember

Published: Dec 14, 2015 7:49 a.m. ET

Shake-up comes four months after Carl Icahn took a big stake in the company

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Charif Souki, CEO of Cheniere Energy

 

Cheniere Energy Inc.’s board has voted to replace Chief Executive Charif Souki, as the company prepares to become the first to export natural gas from the mainland U.S.

The shake-up comes four months after activist investor Carl Icahn took a big stake in the company and won two board seats.

Souki couldn’t be reached for comment.

The decision occurred at a weekend board meeting, where directors looked to clamp down on Souki’s goal of building the company beyond its core plan of exporting liquefied natural gas, or LNG, according to people familiar with the matter.

Souki has proposed the company build a second facility in Texas before its first, in Louisiana, is up and running. He has also suggested the company, which hasn’t turned a profit in its 19 years in business, could expand into other parts of the energy industry.

Cheniere’s LNG, -2.13%  directors felt the company needed a more experienced operator as it nears completion of its Louisiana export facility, the people said. Neal A. Shear, a director, will take over as chief executive on an interim basis while Cheniere hunts for a new leader. Director Andrea Botta will serve as the company’s chairman.

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