PEOPLE: Oil and gas wages continue to rise strongly, said Hays group

(EnergyAsia, February 29 2012, Wednesday) — Wages and confidence are surging in the global oil and gas industry, according to the joint annual salary survey produced by consultants Hays Oil & Gas and leading jobsite Oil and Gas Job Search.

The Salary Guide, based on over 14,000 respondents worldwide, reveals an industry generally brimming with confidence despite widespread concerns over the global economy.

It found that employer confidence has surged, with 26.7% extremely positive about the current market: up from just 9.7% in 2011.

Three quarters of all employers expect staffing levels to increase in the next 12 months.

Matt Underhill, managing director of Hays Oil & Gas, said:

“This level of confidence has far surpassed that which we have seen over the last few years, and contrasts significantly with the wider economic outlook.

“With confidence comes salary increases and this is reflected with an increase in the average worldwide salary for professionals and skilled employees in the industry to US$80,458 per annum (equivalent) up 6.1% in the past 12 months.”

Duncan Freer, managing director of Oil and Gas Job Search, said:

“The oil and gas industry is certainly in good shape and this is coming through loud and clear in our data. There has been a distinct move to employ permanent staff rather than contractors for many oil companies, demonstrating a confidence amongst employers in hiring new staff to cover future workloads.

“This is not to say that contractor demand is falling, with a multitude of new projects coming on line through the year, rates in this sector of the industry are still rising. “

“While many western economies have witnessed anaemic rises in wages, the oil industry has rewarded its professionals with robust growth and a wealth of opportunities. Indeed many industry professionals are rewarded at far higher rates than the average figures suggest, especially if they have a good level of experience or particular in-demand skills such as drilling and the geosciences.”

The US, Canada, Norway, The Netherlands and Australia once again feature prominently in the current guide but, as Mr Underhill points out, there are also areas of tremendous potential around the world.

He said: “Brazil, China and Iraq are rising stars that have seen significant salary hikes driven by huge local investment giving rise to some very exciting and bold projects.

“These positive developments are not to say the industry is without its concerns. Skills shortages have become the most significant of these, and economic and political instability also remain prominent. The guide also highlights demographic issues particularly in the US and other developed economies.

“Salaries are rising as are staffing levels and with a range of promising projects coming to fruition, there is every reason to be upbeat about the oil and gas industry over the coming 12 months and beyond.”

MARKETS: ExxonMobil expects world energy demand to rise by 30% between 2010 and 2040

(EnergyAsia, February 29 2012, Wednesday) — ExxonMobil expects global energy demand to rise by about 30% from 2010 to 2040 as economic output more than doubles while the world population grow to nearly 9 billion people from just under seven billion over the same period.

The developed economies of the Organization for Economic Cooperation and Development (OECD) which include North America, Europe and Japan will register little energy demand growth even as their economies continue to grow and their living standards improve.

In contrast, non-OECD energy demand will grow by close to 60%, said ExxonMobil, in its latest “The Outlook for Energy to 2040”.

Overall, the world’s energy demand growth will slow as economies mature, efficiency gains accelerate and population growth moderates.

China’s surge in energy demand will extend over the next two decades then gradually flatten as its economy and population mature.

Elsewhere, billions of people will use up more energy as they work to improve their living standards.

ExxonMobil said the need for energy to produce electricity will remain the single biggest driver of demand.

“By 2040, electricity generation will account for more than 40% of global energy consumption. Demand for coal will peak and begin a gradual decline, in part because of emerging policies that will seek to curb emissions by imposing a cost on higher-carbon fuels. Use of renewable energies and nuclear power will grow significantly,” it said.

“Oil, gas and coal continue to be the most widely used fuels, and have the scale needed to meet global demand, making up about 80 percent of total energy consumption in 2040.”

As with its rivals Shell and BP, ExxonMobil expects natural gas demand to outpace the other energy sources.

It said natural gas use, rising at over 60% through 2040, will overtake coal to become the second largest fuel source after oil.

It expects unconventional sources such as shale to provide a greater share of the global output of both oil and natural gas.

Gains in efficiency through energy-saving practices and technologies such as hybrid vehicles and new, high efficiency natural gas power plants will temper energy demand growth and curb emissions.

Global energy-related carbon dioxide (CO2) emissions will grow slowly, then level off around 2030. In the US and Europe, where a shift from coal to less carbon-intensive fuels such as natural gas already is under way, emissions will decline through 2040.

CHINA: Ties with oil producer South Sudan frayed

(EnergyAsia, February 29 2012, Wednesday) — China said it wants to repair ties with South Sudan following “misunderstandings” that led to the African oil producer expelling the Chinese head of the local oil producing and pipeline company.Last week, the government of recently independent South Sudan said it expelled Liu Yingcai, President of Petrodar, for allegedly…

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CHINA: Oil and gas finds up more than 20% in 2011, said Ministry of Land and Resources

(EnergyAsia, February 29, Wednesday) — China’s Ministry of Land and Resources said the upstream hydrocarbon industry substantially boosted its oil and natural gas discoveries in 2011 to record its second most successful year since the country’s founding in 1949.It found 1.37 billion tonnes of proven oil reserves, up 20.6% compared with 2010, and 765.95 billion…

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CHINA: World Bank presses for economic and energy reforms as dependence on imported oil passed 55% in 2011

(EnergyAsia, February 29 2012, Wednesday) — China’s oil imports exceeded five million b/d for the first time last year, raising the country’s dependence on external supplies beyond 55% and putting it on course to reach 67% by 2020, according to an analysis by the CNPC Economics& Technology Research Institute. Of growing concern to Chinese policy…

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KAZAKHSTAN: Chevron-led consortium to begin drilling programme as part of US$25-billion investment

(EnergyAsia, February 28 2012, Tuesday) — A consortium led by US major Chevron Corp plans to spend US$5 to US$6 billion in a five-year drilling programme as part of an estimated US$20 to US$25 billion project to further develop Central Asian country’s biggest producing oil field.

Chervon’s 50%-owned the TengizChevroil LLP venture will drill Kazakhstan’s Tengiz field to raise oil output to between 820,000 and 870,000 b/d b y 2017 from 570,000 b/d now. The field’s production fell by 0.4% to 565,000 b/d last year.

The other members of the TengizChevroil LLP venture are ExxonMobil, which holds a 25%, a Russian oil company, LukArco (5%), and the government of Kazakhstan, which owns 20% through state oil company KazMunaiGas.

Discovered in 1979, the Tengiz field on the northeast shore of the Caspian Sea is one of the largest hydrocarbon discoveries in modern times, holding as much as 25 billion barrels of oil and nearly 13 trillion cubic feet of natural gas

THAILAND: Bangchak to invest eight billion baht to upgrade refinery

(EnergyAsia, February 28 2012, Tuesday) — Thailand’s Bangchak Petroleum Plc (BCP) said it plans to invest eight billion baht to over the next eight years to upgrade its 120,000 b/d refinery and expand its nameplate capacity by 20%. (US$1=30 baht).President Anusorn Sangnimnuan said the upgrade and expansion the Bangkok-based plant will be part of a…

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THAILAND: PTTEP proposed to acquire UK’s Cove Energy for £1.12 billion

(EnergyAsia, February 28 2012, Tuesday) — Thai state upstream company PTTEP has offered to acquire UK-listed Cove Energy plc for £1.196, or nearly US$1.9 billion, surpassing Royal Dutch Shell’s competing bid of US$1.6 billion submitted earlier last week. (US$1= £0.63).

Shell is expected to raise its price this week for Cove Energy, which holds an 8.5% stake in Mozambique’s Rovuma Offshore Area 1 that operator Anadarko claims holds as much as 30 trillion cubic feet of recoverable natural gas reserves.

The Thai off of 220 pence for each Cove share, listed on London’s AIM exchange, exceeds Shell’s by 13%.

Cove also has a 10% stake in the Rovuma onshore area, and between 10% and 25% interests in seven blocks in the deepwater areas off Kenya.

Anon Sirisaengtaksin, President and CEO of PTTEP, said Cove Energy and its upstream interest in Rovuma represents a strong fit for the Thai company which is looking to develop its liquefied natural gas (LNG) value chain.

“The proposed transaction would mark PTTEP’s entry into East Africa. PTTEP is dedicated to using its extensive experience in building a natural gas based economy for the benefit of the Republic of Mozambique and its people,” said PTTEP.

CHINA: Beijing Blacksea to become ‘substantial shareholder’ of Ruifeng Petroleum

(EnergyAsia, February 28 2012, Tuesday) — Hong Kong-listed investment company Ruifeng Petroleum Chemical Holdings Limited said it has signed a letter of intent to sell off an unspecified “substantial” equity stake to Black Sea Horizon Investment Holdings Limited and Beijing Xuan Fu.

The announcement came just as Beijing Black Sea and real estate company, Beijing Xuan Fu, are jointly developing an oil trading and storage business in China, according to Ruifeng, which is involved in a range of businesses including computing solutions and oil trading and storage.
 
It did not provide terms of the proposed acquisition including the cost, equity stake and targeted deadline for completion of the proposed deal.

AUSTRALIA: Caltex reports huge A$714 million loss on refineries’ write-down

(EnergyAsia, February 28 2012, Tuesday) — Australia’s largest downstream company reported what could be its largest loss of A$714 million after writing down the value of its two ageing refineries that can no longer compete against larger and newer export plants in Asia and the Middle East. (US$1=A$0.94).

Caltex Australia Ltd said the outlook for the battered refining sector remains poor in 2012, with the prospects that its two refineries in Sydney and Brisbane could be shutdown later in the year as “the status quo is not sustainable,” said managing director and CEO Julian Segal.

The company, half owned by Chevron, reported a net loss of A$714 million for the year ended December 31, reversing a A$317 million profit in 2010 while revenue rose 18% to A$22.11 billion. The A$1.5 billion write-down of the refineries, the strong Australian dollar and plant outages contributed to the sharp reversal of fortune.

The company is awaiting the outcome of a study into the refineries’ viability due out after August.

Mr Segal said: “The overarching objective of this review is to optimise value for our shareholders. We continue to thoroughly evaluate all options to improve the business, ranging from investing to improve their performance, or closing if we are able to import product at a competitive price. Continuation of the status quo is not sustainable.

“The detailed review is assessing issues such as the supply alternatives for our marketing and distribution business, the risk associated with each strategic option and the impact of possible decisions on a broad range of stakeholders.”
 
Despite the poor performance, the Caltex board has declared a dividend of A$0.28 per share for the second half of the year for a total dividend of 45 cents per share for 2011. The company paid a total dividend of A$0.60 cents for 2010.

CHINA: Gas, coal led energy consumption increases last year

(EnergyAsia, February 27 2012, Monday) — Led by natural gas and coal, China’s total energy consumption grew by 7% last year to 3.48 billion tons of standard coal equivalent, said the National Bureau of Statistics (NBS).Natural gas demand surged 12% while coal grew by 9.7%, and crude oil use rose by a mere 2.7%. The…

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INDONESIA: Pertamina on course to complete US$1.4 billion upgrade of Cilacap refinery by 2014

(EnergyAsia, February 27 2012, Monday) — Indonesia’s state-owned oil and gas company Pertamina is targeting to complete its US$1.4 billion project to upgrade its 348,000 b/d refinery in Cilacap, Central Java by end-2014.Two months after the project was officially launched by Indonesian President Susilo Bambang Yudhoyono, the company expects to meet its deadline of adding…

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PAPUA NEW GUINEA: Clough Curtain JV awarded A$145 million work order for LNG project

(EnergyAsia, February 27 2012, Monday) — Australian engineering and construction company Clough Limited said its joint venture with Curtain been awarded work orders worth approximately A$145 million associated with the liquefied natural gas (LNG) upstream infrastructure project in Papua New Guinea. (US$1=A$0.94).The PNG LNG project is an integrated development that includes gas production and processing…

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MARKETS: Analyst predicts Brent-WTI spread to experience “dramatic swings” from -US$10 to US$25 a barrel

(EnergyAsia, February 27 2012, Monday) — BENTEK Energy, a Colorado, US energy information and analytics company, said the Brent-WTI crude oil price differential will range between minus US$10 to US$25 a barrel or an average of US$14 over the next five years.

For now, the average Brent-WTI spread for April 2012 to 2016 stands at roughly US$6.20.

According to its “Crude Awakening: Shale Boom Hits Oil” report, BENTEK expects WTI tumbling to a discount of nearly minus US$18 this year before rebounding in 2013 and 2014 in response to the construction of several pipeline expansions between Cushing and the US Gulf Coast including Seaway and Keystone XL.

Despite these capacity additions, BENTEK said supply growth is expected to substantially outpace pipeline and refinery increases and lead to the return of deep WTI price discounts to Brent in 2015 and 2016.

BENTEK said crude oil production from the Utica and Bakken production areas in the US in addition to increasing oil supply from Canada are expected to add significant supply to the US Midwest market and contribute to frequent periods of regional oversupply and distressed prices at Cushing relative to the Brent international benchmark.

Adam Bedard, BENTEK senior director for energy analysis, said:

“Increasing Midwest supply and downward pressure on regional prices have led to a growing incentive to move more oil from the Midwest to the Gulf Coast. As traditional flow patterns are altered and the value of crude transportation capacity is realigned, WTI-Brent and regional price differentials will feel the effect.

“The rollercoaster ride that the WTI-Brent price spread will experience over the next five years is due to transportation and refining constraints, not the quality of the crude.

“Increasing Midwest supply and downward pressure on regional prices have led to a growing incentive to move more oil from the Midwest to the Gulf Coast. As traditional flow patterns are altered and the value of crude transportation capacity is realigned, WTI-Brent and regional price differentials will feel the effect.”

BENTEK’s Market Alert expects US Midwest crude oil supply to double during the 2011-16 period, growing nearly 808,000 b/d by 2016. It predicts that crude oil production growth will include increases of 547,000 b/d in the Williston-ND, 97,000 b/d in the Anadarko and 131,000 b/d in the Utica (Appalachia-OH).

Despite these massive supply gains and six currently announced Midwest refinery expansions, crude oil demand from regional refineries is projected to grow only 3% or 108,000 b/d during this time. Consequently, regional oil prices are projected to remain deeply depressed.

PAPUA NEW GUINEA: Japan’s Mitsubishi Corp to pay US$280 million for licence stakes held by Canada’s Talisman Energy

(EnergyAsia, February 27 2012, Monday) — Canadian upstream company Talisman Energy Inc said it has sold stakes in nine of its exploration licences in Papua New Guinea’s onshore Western Province to Japan’s Mitsubishi Corporation (MC) for US$280 million.

Talisman said the farmout deal is effective January 1 2012, subject to approvals by government and joint venture partners, and will be paid in the form of a capital carry.

Upon approval, Talisman said it will reduce its average stake in the nine licences to 40% while MC will own an average of 20%.

The partners will work towards aggregating natural gas from the province with a view to developing it into liquefied natural gas (LNG) for export at the rate of three million metric tonnes per year.

Paul Blakeley, Talisman’s executive vice-president for International Operations East, said:

“MC brings extensive experience in LNG development and marketing and I am confident they will be a key success factor in helping us unlock the value of our Papua New Guinea assets.”

With a presence in PNG since 2001, Talisman secured onshore licences of the Papuan Foreland in 2009 and now has a portfolio comprising interests in nine petroleum prospecting licences (PPLs) and five petroleum retention licences (PRLs), covering 13.7 million acres.

As one of the most active explorers in PNG over the past two years, Talisman said it has participated in a gas discovery at Ubuntu in PRL 28 and the successful appraisal of the Stanley and Elevala gas discoveries in PRL 4 and PRL 21, respectively. Talisman intends to commence a four-well drilling program on PPLs 235 and 261 during 2012, as well as ongoing appraisal in PRL 21.

MC has held interests in LNG operations since 1969 and currently participates in nine major LNG projects in addition to its extensive exposure to downstream marketing and LNG tanker activities. Most recently, it started construction of the Donggi-Senoro LNG project in Indonesia as project lead in planning and operation.

NEW ZEALAND: Refinery to undergo NZ$425 million upgrade

(EnergyAsia, February 24 2012, Friday) — New Zealand’s only oil refinery at Marsden Point will undergo a NZ$425 million upgrade aimed at increasing energy efficiency, reducing fuel losses and improving product yields. (US$1=NZ$1.2).The proposed upgrade, New Zealand Refining Company’s third in seven years, largely comprises the construction of a new continuous catalyst regeneration platformer.The company…

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CHINA: CNOOC Limited, Total completes acquisition of Ugandan assets from UK’s Tullow

(EnergyAsia, February 24 2012, Friday) — China’s CNOOC Limited and France’s Total said they have completed their purchases of one-third stakes in three exploration sites in Uganda owned and operated by UK’s Tullow Oil plc.The two companies paid a total of US$2.9 billion for their stakes in Exploration Areas (EA) 1, 2 and 3A.With the…

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SINGAPORE: JOIL expects to triple jatropha productivity over next eight years

(EnergyAsia, February 24 2012, Friday) — JOil (S) Pte Ltd, a Singapore-based developer of the jatropha biofuel crop, said latest biotechnology processes could boost its oil yield from less than one ton of oil per hectare now to three tons.

The company said it could achieve this by using breeding, tissue culture and genetic engineering processes, as uncovered and explained by Hong Yan, JOIL’s chief scientific officer, at the INSULA/RSB conference on jatropha held at the UNESCO Headquarters in Paris, France last December.

Dr Hong demonstrated in his presentation that biotechnology is the core science required to address jatropha’s present low yield.

“There was initially great excitement surrounding the use and commercial potential of jatropha in the early 2000s but this was followed by a wave of disappointment in India, Central America and Africa with poor yields as early plants were from seeds collected from wild accessions and had greater vulnerability to pests than anticipated,” he said. 

“The yield and better pest resistance of jatropha can be realised with biotechnology over time. At JOil, we are applying breeding, tissue culture and genetic engineering to develop a continuous pipeline of improved jatropha varieties.  We are also seeing very good field trial data for our new varieties with traits like better uniformity, improved self-branching, early flowering and higher productivity.

“More than two tons of seeds per ha was achieved for the first year in field trials on marginal land plots in southern India. Such continuous efforts on jatropha improvement will move the average productivity of jatropha from one ton of oil per hectare to about three tons of oil per hectare over the next seven to eight years.”

Sriram Srinivasan, JOIL’s chief financial officer, said:

“The demand for jatropha-derived biodiesel already exists among airlines and motor fleet operators. It is the supply-side of the equation that is holding up the adoption rate of biofuels.  We believe the turning point will come when jatropha plantation becomes commercially viable with the adoption of improved jatropha varieties and better agronomic practices.”

In his paper, Mr Srinivasan presented several scenarios for jatropha’s viability with the right mix of genetics and practices to improve its economics as a fuel crop.

If low quality planting material and low care is taken, he said the Internal Rate of Return (IRR) could be less than 10%, whereas with good quality planting material and good care, the IRR will be more than 25%. He also mentioned that with revenue from by-products from Jatropha for high end uses like animal feed, the IRR can significantly improve.

 

MARKETS: Brent price in Euro at all time, WTI at nine-month high

(EnergyAsia, February 24 2012, Friday) — The embattled Eurozone economy is facing the additional threat of record-high oil prices as Brent crude surged to a new all-time high after breaking 93.46 euro, its previous record set on July 3 2008.

A combination of a weaker Euro, Iran’s threats to expand its oil embargo on Europe beyond UK and France, and rising threat of a war between Iran and the West all helped Brent crude reach its new peak of nearly 94 euro in US trade on February 23.

In US dollar terms, the global benchmark climbed to a nine-month high of US$124.50 a barrel, still far below record of over US$147 a barrel reached in July 2008.

Bogged down by infrastructure constraints and insufficient storage capacity in Oklahoma, US benchmark WTI has been held back and is still a long way from approaching US$147 last seen on July 23 2008. WTI has been trading at a nine-month above US$107 a barrel.

Despite the weakness in the world economy, some traders believe oil could climb higher on geo-political tensions and supply disruptions in the Middle East and Africa.

Vitol, the world’s largest oil trader, believes Brent could exceed US$150 if tensions between the West and Iran escalates further.

CHINA: Sinopec, Germany’s BASF to expand Nanjing plant after completing US$1.4 billion investment

(EnergyAsia, February 24 2012, Friday) — German chemicals giant BASF and China’s Sinopec have started work on expanding their joint venture petrochemical plant in Nanjing city after completing its second phase expansion at a cost of US$1.4 billion.

The second phase, inaugurated last month, includes expansions of existing plants and construction of new facilities.

The partners expanded the steam cracker’s ethylene capacity to 740,000 metric tons per year (mt/y), the ethylene oxide (EO) plant to 330,000 mt/y, and the oxo-C4 capacity to 305,000 mt/y.

They also built a new 150,000 mt/y EO purification unit, a 60,000 mt/y non-ionic surfactants plant; a 130,000 mt/y amines complex to produce ethanolamines, ethyleneamines, and dimethylethanolamine, and a 25,000 mt/y DMA3 plant.

The site now has an integrated C4 complex comprising a new 130,000 mt/y butadiene extraction plant, a 60,000 mt/y isobutene extraction plant, a 50,000 mt/y highly reactive polyisobutene plant, and a 80,000 mt/y 2-propyl-heptanol plant.

The partners expects to start complete the construction of a 60,000 mt/y superabsorbent polymer (SAP) plant by mid-2012, with commercial start-up due for early 2014.

They will be strengthening the plant’s C3 and C4 value chains with the construction of a 160,000 mt/y acrylic acid plant and a butyl acrylate plant, and expansion of the existing 2-propyl-heptanol plant.

Martin Brudermüller, BASF’s vice chairman with responsibility for the Asia Pacific region, said:

“Through this successful partnership, we are able to bring vital chemical products and solutions to China that will directly support local industries as they strive to meet the needs of a rapidly developing population.

“At the same time we are also investing in advanced production technologies that themselves use less water, save energy and reduce emissions. The Nanjing site is a flagship example of our Verbund system, which achieves extremely efficient production and safety by clustering plants and re-using by-products.”

Dai Houliang, a Sinopec board member and vice president, said:

“With the smooth completion of the second phase of Nanjing investment, BASF-YPC has once again set an excellent example of Sinopec’s international partnerships and paved ways for further prosperous developments between BASF and Sinopec. We are confident BASF-YPC will continue expanding its product portfolio and providing crucial chemicals to the growing demands in China while contributing to a sustainable future.”

In December 2010, BASF and Sinopec signed a memorandum of understanding (MOU) to explore the expansion of BASF-YPC at a cost of U$1 billion.

CHINA: Japan’s MHI subsidiary sets up environmental equipment marketing company in Beijing

(EnergyAsia, February 23 2012, Thursday) — Japan’s Mitsubishi Heavy Industries, Ltd (MHI) said wholly-owned subsidiary Mitsubishi Heavy Industries Environmental & Chemical Engineering Co Ltd (MHIEC) has established a Chinese unit in Beijing on February 1.MHIEC Environment (Beijing) Co Ltd (MHIECC) will market its environmental services to China’s waste incineration plants and sewage sludge treatment facilities.MHIECC…

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JAPAN: Chubu Electric to purchase LNG from BP over 16 years starting 2012

(EnergyAsia, February 23 2012, Thursday) – Chubu Electric Power Co, Japan’s third- largest utility, has agreed to buy a total of eight million metric tons of liquefied natural gas (LNG) from BP Plc over 16 years starting 2012.Drawing from the global portfolio of the UK major, BP Singapore Ltd will supply an average 500,000 tons…

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MARKETS: IEA now sees 2012 world oil demand rising by 800,000 b/d instead of 1.1 million b/d

(EnergyAsia, February 23 2012, Thursday) — The International Energy Agency (IEA) sees world oil demand for 2012 growing by just 800,000 b/d, down from its previous forecast of 1.1 million b/d.In its latest monthly forecast, the Paris-based agency said slower economic growth will impact the rate of oil consumption to just 89.9 million b/d for…

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MARKETS: OPEC sees world oil demand rising 940,000 b/d or 1.07% in 2012

(EnergyAsia, February 23 2012, Thursday) — The Organisation of Petroleum Exporting Countries (OPEC) expects world oil demand to rise by 940,000 b/d or 1.07% in 2012, revised down from its previous forecast for growth of 1.06 million b/d or 1.21%.The cartel lowered its outlook for world oil demand to 88.9 million b/d in line with…

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MARKETS: EIA sees “one-in-50” chance of WTI exceeding US$140 a barrel in 2012

(EnergyAsia, February 23 2012, Thursday) — The US Energy Information Administration (EIA) thinks there is a 1-in50 chance that benchmark crude WTI could exceed US$140 a barrel in June 2012.

Based on recent futures and options data, the official energy statistics arm of the US government said the market believes there is a 1-in-15 chance the average WTI price could exceed US$125 a barrel.

For the full year, it sees WTI averaging US$100, almost US$6 per barrel above 2011’s price. The agency sees oil prices continuing to rise to reach US$106 per barrel in the fourth quarter of 2013.

It expects the Henry Hub natural gas spot price to average US$3.35 per million British thermal units (MMBtu), a decline of about US$0.65 per MMBtu from 2011, before recovering to US$4.07 in 2013.

The EIA said its price forecasts assume that US real gross domestic product (GDP) will grow by 2% in 2012 and 2.4% in 2013, while world real GDP (weighted by oil consumption) will rise by 2.9% and 3.7%.

The forecasts do not take into account geopolitical developments including the escalating tensions between the West and Iran over its controversial nuclear energy programme.

Oil prices surged to a nine-month high on Feb 22, with WTI climbing above US$106 and global benchmark Brent exceeding US$121 a barrel as crude supply problems in South Sudan, Yemen, Syria and Libya added to rising tensions between the West and Iran.

Vitol, the world’s largest independent oil trader, said oil prices could surge to a new record high of US$150 a barrel while RMG Wealth Management sees Brent at US$200 if the West’s confrontation with Iran escalates.