3---Egypt Launches Record LNG Tender
Egypt launched the world's biggest tender for liquefied natural gas (LNG) as officials from top energy companies and trading houses converged on Cairo undeterred by new rules that could force them to wait for as long as six months to get paid.
After months of speculation and delay, state-run Egypt Natural Gas Holding (EGAS) released tender documents bidding to secure 96 LNG shipments in 2017 and 2018, participants in the tender told Reuters.
An additional 12 optional cargoes were included in the tender, which EGAS may decide not to award, they said.
At a price-tag of several billion dollars, it is the biggest mid-term LNG buy tender ever issued, trade sources said.
Egypt, a major importer of commodities from wheat to diesel, helped buoy global gas markets last year after emerging as the fastest-growing new LNG consumer.
Once an LNG exporter, Egypt turned into a net gas importer just as global spot prices plunged.
Commodity trade houses, led by Switzerland-based Trafigura, have vied to supply Egypt as the country looks to buy until giant new gas finds can be developed offshore.
But Egypt's worsening credit profile has tempered some enthusiasm as suppliers fret over payment difficulties given the country's sinking economy and shortage of U.S. dollars.
Under the latest tender terms, LNG suppliers may have to wait as long as six months to get paid for deliveries arriving between January and June 2017, according to two sources with knowledge of the matter.
Thereafter payments will take 120 days, the sources said. LNG shippers previously got paid 90 days after delivery.
EGAS was unavailable to comment despite repeated attempts by Reuters to contact the company.
At a meeting with energy suppliers this month Egypt discussed extending payment deadlines to as much as 120 and 180 days after delivery to give itself more breathing room, the sources said.
"The 180-day payment terms were something agreed in Cairo a couple of weeks ago across all products and is a sign of the current situation in Egypt," one trading source said.
Some firms may think twice about committing to large supply positions carrying credit risks, but the tender is still expected to draw large crowds given generally weak demand for LNG.
"It's a big short in a long market - I expect participation to be huge," a trade source said.
Some firms, though, were put off by EGAS' requirement for tender hopefuls to hand over $30,000 in cash in exchange for the bidding documents, two sources said. A third source confirmed the cash fee.
At the same time signs point to Egyptian gas import demand peaking as one of the country's two long-idle LNG export plants, at Idku, has tentatively resumed shipments at reduced levels.
EGAS also recently delayed a handful of LNG shipments due to arrive in the fourth-quarter until early next year, several trade sources said.
4-----Nigeria Oil OutputClimbs Up to 1.9 mb/d
Nigeria's oil production has risen to 1.9 million b/d, the oil ministry said, even as the government has begun moves for all-inclusive talks with Niger Delta leaders to end militancy in the region and bolster oil production.
"We have built capacity of up to 2.4 million b/d, but [we are] currently producing about 1.9 million b/d," Omar Farouk, the special adviser on international energy relations to Nigeria's oil minister of state, said on the ministry's twitter handle.
Farouk said Nigeria was in urgent need of new investments to increase its reserve base and output.
"Nigeria has produced over 10 billion barrels of oil since the year 2000. However, we have not discovered this much in the same period," he said.
Nigerian oil output plummeted to near 30-year lows of around 1.5 million-1.6 million b/d in August, according to government estimates, from 2.2 million b/d earlier in the year as attacks on oil facilities in the Niger Delta rose at an alarming pace amid resurgent militancy.
The sharp drop in oil production has severely hurt Nigeria's economy, already exacerbated by the slump in global oil prices.
Militant group Niger Delta Avengers, responsible for most of the attacks on oil facilities that cut Nigerian production by more than 700,000 b/d, said late in September it was abandoning its ceasefire announced September 2 over what it said was the Nigerian government's failure to respond to its peace overtures.
Some other militant groups, including the self-styled Greenland Justice Mandate, have been carrying out pockets of attacks on pipelines operated by state-owned Nigerian National Petroleum Corp.
A presidential aide confirmed that a government team would commence on October 31 talks with "all stakeholders in the Niger Delta region," including community leaders and youth organizations, to end the attacks on oil installations.
Nigerian President MuhammaduBuhari said on October 10 that the peace talks had not got off the ground, because the government was trying to identify the actual leaders and groups to negotiate with.
NNPC and oil ministry officials have said they expect the country's oil output to climb to around 2 million b/d by the end of this year.
5----Global Oil Demand Growth Seen Steady
Global oil demand will rise by 1.2 million barrels per day (bpd) in 2017, steady from 2016 global demand growth levels, despite gains in Chinese consumption, the chief of the International Energy Agency (IEA) said in Singapore.
Talking on the sidelines of Singapore's International Energy Week, the IEA's executive director FatihBirol said that oil demand growth could weaken, if prices kept rising.
International benchmark Brent crude oil futures have almost doubled from their January multi-year lows to over $50 per barrel.
Birol said the slowdown in demand growth, compared with the 1.8 million bpd seen in 2015, would likely mean that a re-balancing of oil markets in terms of supply and demand would not happen until the second half of 2017.
Birol also cast doubts on the effectiveness of a planned output cut by the Organization of the Petroleum Exporting Countries (OPEC) to prop up prices, as this could trigger new production elsewhere, further undermining a re-balancing of oil markets.
"If there is an increase in the prices as a result of this (OPEC-led) intervention, we may well see a response from higher cost production," Birol said, adding that at $60 per barrel, U.S. shale oil and offshore projects in Latin America could resume.
Despite an overall slowdown in demand, China - the main pillar of demand growth in recent years - will further increase its imports because of declining domestic crude production caused by lower prices.
"China continues to be an important driver of global oil demand growth," he said.
6---Iraq to Offer Oil Fields Directly to Foreign Firms
The Iraqi oil ministry will negotiate directly with international oil companies (IOCs) and consortiums in the upcoming bidding of a dozen small- to medium-sized fields located in the provinces of Central, Basra and Misan.
According to a tender document on the ministry's website and cited by Reuters, firms will be permitted to “submit their own proposals for contractual, commercial and financial terms and conditions.”
Officials pre-qualified nineteen firms from around the world to participate in the bidding process, including six from Japan and others from countries such as Russia, Italy, and the United Arab Emirates.
In addition, firms that have not been prequalified may also participate in the process after paying a US$15,000 fee as well as submitting proof of their technical and financial capabilities. To help with that process, the ministry has offered a data package with the price tag of US$50,000.
The Iraqi government’s appeal to deal directly with oil companies signaled a shift in its strategy away from prior contract offers for the country’s huge southern fields such as Rumaila and Majnoun. The oil ministry pays IOCs a fixed dollar-denominated fee for every barrel of oil produced as part of the service-based agreements reached between the parties.
The slump in the price of oil since 2014 forced Iraq to receive less revenue from the commodity while paying the same pre-2014 fees to the likes of BP, Shell, and Lukoil. Thus, the ministry has sought to renegotiate these deals to allow fees that are flexible with market fluctuations and to force IOCs to pay a greater share when prices sink.
Futures fell to their lowest point in a week over the Iraqi government’s desire to be exempt from planned Organization of the Petroleum Exporting Countries (OPEC) production limits. Oil Minister Jabbar Al-Luaibi said Iraq continues to be embroiled in clashes with extremist militants; thus, the country should not be subjected to whatever OPEC output conditions are agreed upon on November 30.
7---Angola Becomes China's Biggest Oil Supplier in Sept
Angola became China's largest crude supplier for the second time in September, taking the top position from Russia, customs data showed.
China imported 4.19 million tonnes of oil from the southern African nation last month, up 45.8 percent from a year ago. That meant Angolan shipments stood at 1.02 million barrels per day, below 1.11 million bpd seen in August, the last time the country was the top exporter to China.
The amount of crude oil heading east from ports on Africa's west coast is expected to reach a five-month high in September, partly driven by trading houses such as Trafigura and Gunvor, a Reuters survey showed in September.
Chinese demand for Angolan oil, which is cheaper and deemed to offer stable supply, is set to accelerate in October as the refinery maintenance season comes to an end.
In the first nine months of 2016, Angola was also China's third-largest supplier. Imports jumped 17.7 percent on-year to 34.39 million tonnes (916,229 bpd) in the period, data showed.
Imports from Iraq jumped 58.4 percent in September from a year earlier to 4.07 million tonnes, or 989,400 bpd. In the January to September period, imports grew 10.3 percent from a year ago to 706,155 bpd.
Imports from Russia were down 2.14 percent year-on-year in September at 962,620 bpd. Saudi Arabia supplied 949,500 bpd, down 1.29 percent.
Saudi Arabia still holds the position of top suppler year-to-date, with shipments at 1.03 million bpd.
China imported record volumes of crude oil last month, eclipsing the United States as the world's top buyer of foreign oil as Beijing's state reserves shipped in cheap crude to fill new storage tanks.
8---Iraq Lobbies for Oil Output Cut Exemption
Iraq told a top OPEC official it was ready to cooperate in reaching a deal on supply cuts to support oil prices as long as it kept its output at near current levels.
"We are prepared to cooperate on the correct basis," Prime Minister Haider al-Abadi said, commenting on the visit by OPEC Secretary General Mohammed Barkindo to Baghdad.
"We stress the need to exempt Iraq from any agreement that would lower its production," said a statement from influential Shi'ite cleric Ammar al-Hakim after a meeting with Barkindo.
Hakim is the president of the National Alliance, a coalition of the main Shi'ite political groups including Abadi'sDawa party. The Shi'ite community form a majority in Iraq.
Barkindo, who is trying to cement an accord on supply cuts that would support sagging oil prices, was in Baghdad ahead of OPEC's meeting on Nov. 30.
OPEC's second largest producer after Saudi Arabia, Iraq says it will not cut output because it needs oil money to fight Islamic State. Iraqi officials say it should get the same exemptions as Iran, Nigeria and Libya -- whose crude output has been hit by wars and sanctions.
They have also hinted that they may agree to a cut, but from a higher baseline, which would amount to preserving output at the same level. Iraq says it produces more than OPEC's estimate.
"We want oil prices to increase," Abadi told a news conference in Baghdad. "There was a misunderstanding about the figures."
Iraq puts its September output at 4.774 million bpd and its production could rise a little in October. OPEC's secondary sources put it at 4.455 million bpd.
Barkindo met Oil Minister Jabar al-Luaibi who expressed "support for the efforts of the secretary general", according to statement on the oil ministry's website.
Falah al-Amri, head of state oil marketer SOMO, said Iraq will not go back below 4.7 million barrels per day, "not for OPEC, not for anybody else".
9---North Sea Oil Developer XciteSet for Liquidation
London-listed Xcite Energy is set to go into liquidation after bondholders rejected a restructuring plan for the North Sea oil developer, the company said.
Trading of the company's AIM-listed shares was suspended after principal debt holders rejected a plan that would see the exchange of 100 percent of the outstanding bonds for 98.5 percent of the enlarged share capital of the company.
"The principal bondholders have informed the company that they are not satisfied that the transaction is capable of being implemented in a manner acceptable to them," Xcite, which is developing the Bentley heavy oilfield in the East Shetland area, said in a statement.
A sharp drop in oil prices since mid-2014 has put severe pressure on energy companies' balance sheets, forcing many to undergo restructuring.
Bond trustees are expected to petition the British Virgin Islands court within the next 10 days, requesting the appointment of a liquidator to the company "which is expected to take effect approximately four to six weeks from the filing of such request."
Ian McLelland, global head of natural resources at Edison Investment Research, said that the announcement was a blow to both the company's share and debt holders as well as to the British authorities.
"This is a big blow for everyone, and suggests that management could not broker a deal to sell its prized Bentley asset at pretty much any reasonable price," McLelland said in a statement.
"Timing could not have been worse for the UK, as the newly independent Oil & Gas Authority (OGA) attempts to drive the industry towards Maximum Economic Recovery (MER). The Bentley field was one of OGA's strategic priorities when it was formed, now its future is more uncertain than ever."