1--- Russia Fixes Cooperation with OPEC

Russian Energy Minister Alexander Novak said in an interview he has ruled out possible coordination with OPEC group on oil output after a failed attempt to jointly maintain production levels earlier this year.

"We do not discuss the issues of coordination of actions between Russia and OPEC... We can't agree on production cuts as we don't have such tools and mechanisms," Novak told Reuters in an interview cleared for publication.

The Organization of the Petroleum Exporting Countries and other big oil producers, including Russia, were not able to reach a deal in Doha in April on freezing oil production in order to support falling oil prices.

Global crude oil prices reached a 13-year low of $27 per barrel in January due to oversupply, but have recovered since then to around $50.

The weak price for oil, Moscow's chief export commodity, hit the Russian economy which shrank by 3.7 percent last year.

In the interview with Reuters, Novak said Russia sees its cooperation with OPEC focusing on the exchange of information and analysis on the global oil market, rather than on coordinating production level.

Russian companies have been increasing oil production this year. Novak said he expects domestic oil output at 542-544 million tons this year after it hit 534 million tons (10.73 million barrels per day), a 30-year high, in 2015.

Novak said he will likely meet new Saudi energy minister Khalid al-Falih at 15th IEF Ministerial Meeting in Algeria in late September. It will be their first meeting since Falih was appointed in May, taking over from veteran minister Ali al-Naimi.

"Obviously, we will discuss the situation on the (global) oil market," he said, adding that they will also look into the possibility of joint energy projects in Russia, Saudi Arabia and third countries.

Novak said Russia is sticking to its forecast that the oil price will average between $40 and $50 this year. He said though there are risks that it could be lower due to seasonal decline in demand.

Trading houses across the globe are betting on oil markets remaining oversupplied for at least two more years even as crude prices stage a recovery driven by early signs of falling production.

The Russian minister said he expected global oil markets would balance out by mid- or end-2017, with a lot depending on Saudi Arabia's policy. He said he saw demand rising by at least 0.8-1 percent per year, or by 0.7-1.0 million barrels per day.

Novak added that global oil stockpiles have reached 3 billion barrels, of which 500 million barrels he called "excessive" and warned that it will take a long time before they leave the market.

"In general, this is almost 1.5 million bpd, meaning that if nothing in addition will be produced (globally) and output is maintained at current levels, this overhang will still cover for the annual increase in demand," Novak said.

2-----GECF: Fight Global Warming

Combining renewable energy and natural gas is the way to fight global warming and prevent surface temperatures from rising more than 2° C, Gas Exporting Countries Forum, or GECF, secretary general Seyed Mohammad Hossein Adeli said in an interview with EFE.

“It’s very important that global warming not exceed 2° centigrade and, to achieve this, the response lies not just in renewable energy. The study we’ve done concluded that we have to combine renewables with natural gas,” Adeli said.

The GECF official, who attended an oil conference in Bolivia, stressed that this strategy should be accompanied by a reduction in oil and coal consumption.

The Iranian diplomat and economist said countries should aim to expand the renewable energy market and consumption of natural gas, a fuel that is considered cleaner than burning coal or crude.

The GECF predicts that dependence on fossil fuels in the world will be reduced from 80 percent to 75 percent within 25 years.

The world has large natural gas reserves and Iran, Qatar and Russia and possess huge reserves, Adeli said.

Scientists are working on new technologies to remove the CO2 produced by coal in an effort to make it a cleaner energy source, the GECF official said.

Fossil fuels, however, will still be around over the next 50 years because the growth in renewables will be insufficient to meet total energy demand, Adeli said.

For many countries in Asia, Africa and Latin America, natural gas is accessible, inexpensive and does not require complex technologies, compared to solar power plants.

The GECF members are Algeria, Bolivia, Egypt, Equatorial Guinea, Iran, Libya, Nigeria, Qatar, Russia, Trinidad and Tobago, Venezuela and the United Arab Emirates.

The Netherlands, Iraq, Oman, Peru and Norway have observer status in the organization.

GECF members control 42 percent of the global natural gas supply, hold 70 percent of proven reserves, and account for 40 percent of the gas transported via pipelines and 65 percent of the global liquefied natural gas (LNG) market.

3----Nigeria Launches $100mn Oil Fund

Nigeria’s government has launched a special fund worth US$100 million to take care of securing the credit that the oil industry of the country needs. Called a Nigerian Content Intervention Fund, the fund will be managed by the Nigerian Content Development and Monitoring Board and the Bank of Industry.

Until now, Nigerian oil service companies could benefit from a 50 percent interest rebate on loans from commercial banks plus partial security. These were provided by the Nigeria Content Development Fund, which was launched in 2012.

The Acting Executive Secretary of the NCDMB said the new fund was set up in response to difficulties cited by local oil industry players in obtaining borrowed funds for their operations. Patrick Obah added that the board and the Bank of Industry were dedicated to providing assistance to oil services companies that wanted to create more jobs locally, retain their revenues in-country and add value to the economy.

Nigeria’s oil sector has been deeply troubled by falling oil prices and more recently, by a long string of attacks on oil production and transport infrastructure. Some of these attacks, though not targeting people, have ended with human casualties. The groups taking responsibility for the attacks have stated that their aim is to redirect a bigger portion of state oil revenues from Lagos to the impoverished region of the Niger Delta, where the country’s oil industry is concentrated.

Just the other day, senior government officials from the two southern provinces of Nigeria urged the central government to revise the oil well ownership regulations in such a way as to give Niger Delta communities a bigger share of the profits. “The people of the Niger Delta region should possess at least 65 percent of the oil wells contrary to the present ownership structure where less than 10 percent of the oil blocks belong to our people,” the legislators said

----Angola LNG Export Plant Shuts Down

Angola's liquefied natural gas (LNG) export facility has been shut down until mid- to late-August for a planned phase of testing and maintenance before ramping back up to full capacity, trade sources said.

Angola's recently refurbished plant reopened in early June after it was shut down in April 2014 to fix design flaws.

Since then it has exported four cargoes, while traders had expected it to pump out six to nine shipments before shutting down for a final phase of tests.

The Chevron-led project should ramp-up toward full export capacity once it is back in operation by September, traders said.

Angola LNG did not immediately respond to request for comment.

----Mexico Approves Auction Terms for 15 Offshore Oil Areas

Mexico's oil regulator approved contracts and auction terms for 15 shallow water areas in the southern Gulf of Mexico, to be bid out early next year as part of a series of tenders following a sweeping energy overhaul.

The first phase of the so-called Round Two tender will feature 30-year production sharing contracts, the regulator known as CNH said. Winners will be announced on March 22, 2017.

The auction hopes to draw investment of about $750 million per block, or about $11.25 billion in total over the life of the contracts, said CNH president Juan Carlos Zepeda.

Ranging from 375 square miles (972 sq km) to 180 square miles (466 sq km) in size and containing mostly light oil, the blocks lie along the coast of Veracruz, Tabasco and Campeche states, and location of most local production. They include nearly 650 million barrels of crude oil equivalent in proven reserves.

Hoping to reverse slumping oil output, Mexico ended the decades-long monopoly of national oil company Pemex in 2013, paving the way for private producers to operate on their own. But a sharp fall in crude prices has made that harder.

To pre-qualify for the auction, firms or consortia must be able to document technical capability from at least three exploration and production projects between 2011 and 2015, or total investments of at least $1 billion on such developments.

Eligible bidders must also have experience either as an operator or financial partner in either shallow or deep waters.

To bid alone or in consortium, the companies participating must meet minimum capital requirements of $1 billion. Or, the bidders can document assets worth at least $10 billion.

Contracts will be awarded based on which bidders offer the largest government take, using a formula that includes the share of pre-tax profits companies offer the state plus an additional investment commitment.

Local content procurement requirements range from 15 percent to 35 percent of goods and services over the contract lifespan.

The 2017 auction will follow three auctions that began last year covering both shallow water and onshore blocks. The first highly-anticipated deep water auction is scheduled to take place in December.

The three Round One auctions have met with mixed success, with several shallow water fields receiving no bids, while all onshore blocks offered late last year attracted winning bids.

9----CNPC Evacuates Oil Personnel from South Sudan

The China National Petroleum Corporation (CNPC) evacuated 191 of its employees in South Sudan amid worries over an escalation in the armed conflict between the government and opposition troops.

A CNPC statement issued on 19 June mentioned that only 77 of their workers remain in the African country manning the company’s oilfields. The communiqué further detailed that CNPC will try maintain normal operations in South Sudan. Nevertheless, the firm warns that it may remove all its personnel should the situation worsen.

China spent US$20 billion in Sudan before it split into two separate countries in 2011, and initially the investment paid off as nearly 14 million barrels of oil were produced in the first ten months of 2013. Yet the advent of civil war starting in December 2013 between forces loyal to President Salva Kiir and former Vice President Riek Machar led to tens of thousands of people dead and output plummeting to 120,000 barrel per day.

Clashes erupted earlier this month in the Southern Sudanese capital of Juba that left 272 people dead, including two United Nations peacekeepers from China. Both sides in the conflict declared a ceasefire on 12 July, but fighting could resume over the mobilization of 3000 rebels threatening to attack Juba.

“We are communicating with them to stop this and disperse,” said Army spokesman Lul Ruai Koang to Bloomberg. “If they insist to fight, we will attack them with our air force. This is the warning we are giving them.”

In light of the re-escalation of the conflict, Germany, Britain, Italy, Japan, India, and Uganda have all attempted to pull their citizens out of South Sudan.

The conflict has limited oil production to the northern Upper Nile state even though South Sudan maintained 75 percent of Sudan’s oil supply following independence. Sudan holds a vital importance over its landlocked neighbor, which maintains pipelines and other facilities used in order to export South Sudanese oil via the Bashayer port along the Red Sea.

 

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