The Export-Import Bank of the United States (Ex-Im Bank) has authorized a $2.95 billion direct loan to support U.S. exports to the Australia Pacific liquefied natural gas (LNG) project.
The transaction is Ex-Im’s second-largest single-project financing in history and is also the Bank’s first LNG project in Australia.
The project on Curtis Island in south-central Queensland will produce natural gas from coal-seam wells and will have total capacity of nine million metric tons per year. China Petroleum and Chemical Corp. (Sinopec) and Kansai Electric Power Co. Inc. of Japan will purchase most of the LNG produced. China Ex-Im Bank and commercial lenders are also providing debt financing for the project.
Ex-Im’s financing is expected to support an estimated 11,000 American jobs. Principal U.S. exporters are ConocoPhillips Co. and Bechtel International, both of Houston, Texas. Additional exporters and suppliers include numerous small businesses in Texas, Colorado, Nevada, California, Oregon and Oklahoma.
“Our authorization paves the way for U.S. companies to export equipment and services to this major LNG project and, in so doing, to maintain thousands of American jobs across the country,” said Ex-Im Bank Chairman and President Fred P. Hochberg. “This financing also demonstrates how the United States and China can work together for our mutual benefit to foster trade and develop critically needed energy resources.”
The transaction, approved by Ex-Im’s board of directors on May 3, was announced following Chairman Hochberg’s trip to China, where he participated in the fourth round of the Strategic and Economic Development Dialogue (S&ED) with Treasury Secretary Timothy F. Geithner and other officials. The S&ED was held in Beijing on May 3-4.
Bechtel official Jay C. Farrar, who manages the company’s office in Washington, D.C., cited the importance of Ex-Im’s financing for U.S. exporters to large international projects. “Since 1992, Ex-Im Bank has been instrumental in the successful awarding and completion of projects involving Bechtel that have supported thousands of jobs for highly skilled employees at our company. The Bank’s financing also has helped to maintain thousands of additional jobs related to the supply chain for these projects,” Farrar said.
The Australia Pacific LNG project will involve development of coal-seam natural-gas fields, two gas transmission lines to a collection hub, a natural gas liquefaction plant and an adjacent marine shipping export terminal on Curtis Island near the city of Gladstone.
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Spanish oil company, Repsol, posted a net income of EUR 2.193 billion in 2011, 53.3% lower than that recorded in 2010 and which included the one-time gain from the agreement between Repsol and China’s Sinopec in Brazil.
Earnings were negatively affected by external factors such as the armed conflict in Libya and the strikes and the suspension of the Petróleo Plus program in Argentina.
The Upstream unit’s (exploration and production) recurring operating income was 1.301 billion euros by the end of 2011, a decrease of 11.7% compared to the previous year. Higher international crude oil and gas prices along with lower exploration costs somewhat mitigated the effect of lower production due to external factors and the depreciation of the dollar against the euro.
Repsol’s crude realization prices increased 14.4% compared to 2010. Particularly noteworthy was the 29.6% increase in the Repsol gas realization price compared with a 9.1% decline in the Henry Hub index benchmark. Realization prices had a positive impact of 648 million euros on the upstream unit’s income. During 2011, oil and gas production was 298,800 Boepd, 13.2% less than in 2010, mainly due to reduced production of liquids in Libya, and maintenance work in Trinidad and Tobago. In October, operations in Libya resumed and gross production of almost 300,000 Boepd has already been achieved.
Especially significant was the increased reserve replacement ratio for the Upstream unit, which in 2011 rose to 162% from 131% in 2010. Investments made during the period in this area totalled 1.813 billion euros, 62% more than during 2010. Investment in field development represented 43% of the total and was assigned mainly to the United States, Bolivia, Trinidad & Tobago, Venezuela, Peru and Brazil. Investments in exploration were 40% of total investments, and conducted primarily in the United States, Brazil and Angola. The rest of the investment went mainly to the acquisition of Eurotek in Russia.
During 2011 multiple operations were carried out in this unit that consolidated and increased a portfolio of assets and projects that will allow Repsol to meet its production growth objectives and reserves replacement ratio.
Repsol highlighted the start of development of the giant Cardon IV gas field in Venezuela, the new discovery in the Sapinhoa (previously Guará) appraisal well in Brazil which confirms the high potential of the area, as well as the declaration of commercial viability which allows the company to book reserves. Additionally the company increased production in the Margarita-Huacaya fields in Bolivia and the Shenzi field in the United States.
Repsol in 2011 also received approval from the Algerian authorities to start development work in the Reggane gas project in Algeria.
In addition, the company drilled six successful wells: Sapinhoa North, Northeast Carioca, Gávea (rated one of the 10 largest oil discoveries in the world in 2011) and Malombe in Brazil; Buckskin 2 in the United States and A1-130 in Libya (February 2011).
During 2011, Repsol added 720 mboe in contingent resources from successful exploration, acquisitions and revisions of existing fields. During the period, Repsol acquired a total of 79,000 km² of new acreage in 13 countries including Alaska, Ireland, Norway, Colombia and the United States.
In February 2012, Repsol announced two new discoveries; in Sierra Leone (Jupiter) and a highly promising find in Brazil (Pao de Açúcar).
The partnership announced today that it has made a high impact discovery in the Pão de Açúcar prospect located in the BM-C-33 block in the Campos Basin. The well, drilled by the Stena DrillMAX drillship, is located some 195 kilometres offshore Rio de Janeiro State in 2,800 meters of water.
The Pão de Açúcar well encountered two pre-salt accumulations comprising a hydrocarbon column of 480 meters with a total pay of around 350 meters. A test performed in a partial section of the pay zone flowed 5,000 barrels per day of light oil and 28.5 million cubic feet per day of gas. This was a choked Drill Stem Test (DST) with very limited drawdown. The Pão de Açúcar discovery is the third find made in the BM-C-33 block after Seat and Gávea and confirms the area’s high potential.
“The development potential of the Pão and Gávea discoveries will now be evaluated by the partnership. This discovery increases our understanding of the pre-salt potential in the Campos Basin and improves our confidence in the recently acquired acreage position in the pre-salt Kwanza basin of Angola,” says executive vice president for Exploration in Statoil, Tim Dodson.
“Statoil’s exploration strategy focuses on high impact opportunities and the deepening of core areas. The Pão de Açúcar success shows that we are delivering on our strategy,” continues Dodson.
“Statoil has clear ambitions to grow in Brazil through new exploration opportunities. The Pão discovery will become an important building block in our growth ambitions,” says Kjetil Hove, country president for Statoil in Brazil.
Repsol Sinopec is operator of the exploration consortium with a 35% stake. Partners Statoil and Petrobras hold respective 35% and 30% shares.
Statoil is also the operator of the Peregrino field in Brazil, which came on stream in April 2011.
The Pão discovery is the sixth high impact discovery made by Statoil in the last 12 months. The other discoveries are Skrugard and Havis in the Barents Sea, Johan Sverdrup (former Aldous/Avaldsnes) in the North Sea, Peregrino South in Brazil and Zafarani in Tanzania.
(*) ”High-impact well” = a total of more than 250 million barrels of oil equivalent (boe), or 100 million boe net to Statoil.
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Two export pacts a coup for Beijing
By Kelly Hearn – Special to The Washington Times
BUENOS AIRES — Off the coast of Rio de Janeiro — below a mile of water and two miles of shifting rock, sand and salt — is an ultradeep sea of oil that could turn Brazil into the world’s fourth-largest oil producer, behind Russia, Saudi Arabia and the United States.
The country’s state-controlled oil company, Petrobras, expects to pump 4.9 million barrels a day from the country’s oil fields by 2020, with 40 percent of that coming from the seabed. One and a half million barrels will be bound for export markets.
The United States wants it, but China is getting it.
Less than a month after President Obama visited Brazil in March to make a pitch for oil, Brazilian President Dilma Rousseff was off to Beijing to sign oil contracts with two huge state-owned Chinese companies.
The deals are part of a growing oil relationship between the two countries that, thanks to a series of billion-dollar agreements, is giving China greater influence over Brazil’s oil frontier.
Chinese oil companies are pushing to meet mandatory expansion targets by inking deals across Africa and Latin America, but they are especially interested in Brazil.
“With the Lula and Carioca discoveries alone, Brazil added a possible 38 billion barrels of estimated recoverable oil,” said Luis Giusti, a former president of Venezuela’s state oil company, PDVSA, referring to the new Brazilian oil fields.
“That immediately changed the picture,” he said, adding that Brazil is on track to become “an oil giant.”
During Mrs. Rousseff’s visit to China, Brazil’s Petrobras signed a technology cooperation deal with the China Petroleum & Chemical Corp., or Sinopec.
Petrobras also signed a memorandum of understanding with Sinochem, a massive state-owned company with interests in energy, real estate and agrichemicals.
The Sinochem deal aims to identify and build “business opportunities in the fields of exploration and production, oil commercialization and mature oil-field recovery,” according to Petrobras.
The relationship with China goes back to at least two years before Mr. Obama came to Brazil to applaud the oil discovery and tell Mrs. Rouseff:
“We want to work with you. We want to help with technology and support to develop these oil reserves safely, and, when you’re ready to start selling, we want to be one of your best customers.”
China rescued Petrobras in 2009, when the oil company was looking at tight credit markets to finance a record-setting $224 billion investment plan. China’s national development bank offered a $10 billion loan on the condition that Petrobras ship oil to China for 10 years.
A chunk of Brazil’s oil real estate appeared on China’s portfolio in 2010, when Sinopec agreed to pay $7.1 billion for 40 percent of Repsol-YPF of Brazil, which has stakes in the now internationally famous Santos Basin, and the Sapinhoa field, which has an estimated recoverable volume of 2.1 billion barrels. Statoil of Norway also agreed that year to sell 40 percent of the offshore Peregrino field to Sinochem.
Last year, Sinopec announced it would buy 30 percent of GALP of Brazil, a Portuguese company, for $3.5 billion. GALP has interests in the Santos Basin and a 10 percent stake in the massive Lula field.
“The $5.2 billion cash-in we will get from Sinopec is paramount for our strategy in Brazil,” GALP CEO Manuel Ferreira de Oliveira told Bloomberg News.
“It will give us a rock-solid capital base as we enter a decisive investment period at the Santos Basin. This operation values our existing Brazilian assets at $12.5 billion and is really a landmark for the company and for our shareholders.”
News reports in December said Sinopec is the current favorite to buy stakes in Brazilian oil owned by Britain’s BG Group, which also has interests in the massive fields of Carioca, Guara, Lula and Lara.
On Jan 8., the French company Perenco announced it was selling Sinochem a 10 percent stake in five offshore blocks located in the Espirito Santos Basin. Some of the transactions still await approval by Brazil’s government.
In December, Venezuelan Oil Minister Rafael Ramirez publicly reiterated his government’s commitment to an oil refinery joint venture with Petrobras.
That project reportedly is set to be funded by China’s national development bank. Some news reports have quoted the head of China’s development bank saying that new deals with Brazil are under consideration.
James Williams, an energy economist with the U.S. consulting group WTRG Economics, said the Chinese are taking on big risks with ultra-deep-water investments.
“But for them, the benefits are greater, as they become partners with companies that have better technology and expertise,” he said.
• This article is based in part on wire service reports.
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- Brazil: Petrobras Discovers Hydrocarbons in Campos Basin (mb50.wordpress.com)
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By Andrew Quinn
WASHINGTON, Jan 12 (Reuters) – The United States on Thursday imposed sanctions on China’s state-run Zhuhai Zhenrong Corp, which it said was Iran’s largest supplier of refined petroleum products, as it sought to impress on Beijing and Tehran its resolve to increase economic pressure over Iran’s nuclear program.
Secretary of State Hillary Clinton also imposed sanctions on Singapore’s Kuo Oil Pte Ltd and FAL Oil Company Ltd, an independent energy trader based in the United Arab Emirates, the State Department said in a notice.
The State Department said the move was part of a broadening international effort to target Iran’s energy sector and persuade Tehran to rein in its nuclear ambitions.
“The sanctions announced today are an important step toward that goal, as they target the individual companies that help Iran evade these efforts,” the statement said.
The sanction bar all three companies from receiving U.S. export licenses, U.S. Export Import Bank financing or loans over $10 million from U.S. financial institutions, the department said, stressing that the sanctions apply only to the companies and not to their governments or countries.
The U.S. announced the decision after China’s rebuff this week of Treasury Secretary Timothy Geithner, who traveled to Beijing to press China on U.S. demands it do more to help curb Iran’s oil revenues.
A Zhenrong spokeswoman and China’s Foreign Ministry both said they had no immediate comment.
‘SHOT ACROSS THE BOW’
Analysts said the U.S. move was largely symbolic, given that Zhenrong was unlikely to have much U.S. business exposure.
But the move will send a signal to Beijing and its state-run oil giants such as China National Petroleum Corp (CNPC), China Petroleum and Chemical Corp (Sinopec Corp) and China National Offshore Oil Corp. , they said.
These companies have invested billions of dollars in the U.S. energy sector, and are much more exposed to the impact of potential sanctions.
“It’s a good shot across the bow and signals the U.S. is serious about vigorous sanctions enforcement,” said Mark Dubowitz, executive director of the Foundation for Defense of Democracies, a Washington pressure group that favors stronger sanctions on Iran.
“This could be the beginning of a cascade of more sanctions on Chinese companies if China doesn’t curtail its Iranian trade.”
Zhuhai Zhenrong – one of four dominant Chinese state oil traders – brokered the delivery of over $500 million in gasoline to Iran between July 2010 and January 2011 in contravention of U.S. sanctions law, the State Department said.
While the U.S. move targeted Zhenrong for its gasoline sales, the Chinese company has a broader role in Beijing’s energy dealings with Iran.
It has been a major buyer of Iranian oil since at least 1995, typically selling the oil to Sinopec and PetroChina, the country’s two dominant refiners.
Zhenrong has been buying about 240,000 barrels per day for several years, representing about 5 percent of China’s imports. Sources last week said China would cut crude imports from Iran for a second month in February.
In mid-2010, Zhenrong joined Chinese state energy giants in filling a void left by Western oil companies and trading houses that had halted sales of gasoline to Iran because of toughening U.S. sanctions.
Derek Scissors, an expert in the Chinese economy at the Heritage Foundation think tank, said the action against Zhenrong would send a message to other Chinese state oil majors.
“We don’t want to be taking action against Sinopec, CNPC and CNOOC. They are huge, and politically powerful,” he said.
“But Zhenrong is close enough to them, and won’t really do that much harm beyond sending the signal.”
The U.S. announcement followed Western moves to tighten the economic noose on Tehran through unilateral sanctions.
President Barack Obama has signed a U.S. law imposing sanctions on financial institutions that deal with Iran’s central bank, its main clearinghouse for oil exports, while the European Union is expected soon to agree to a new ban on Iranian oil imports.
Washington has sought to impress on friends and foes that it means business, sending U.S. officials around the world to warn of the dangers of dealing with Iran.
A senior Obama administration official stressed that the purpose of sanctions was to draw Iran back to the negotiating table to discuss curbing its nuclear ambitions, the other half of the ‘two-track’ U.S. policy of pressure and engagement.
“The theory of the case here is that these two tracks will ultimately converge and Iran will make a decision that it is important to come to the table to try to remove some of these sanctions, to improve their economy,” the official told reporters on condition of anonymity.
The other two companies listed by the State Department, both well-known names in the Asian oil trading world, are smaller, private trading firms that typically specialize in shipping bunker fuel or heavy residual products but, like Zhenrong, had also begun doing deals to sell gasoline to Iran.
The State Department said Kuo Oil had provided over $25 million in refined petroleum to Iran between late 2010 and early 2011, while FAL provided over $70 million in refined petroleum to Iran over multiple shipments in late 2010.
Kuo had no immediate comment, a senior official said.
In all cases, individual deliveries were worth significantly more than the $1 million threshold under U.S. law and the total value of the transactions was well above the $5 million threshold for sanctionable activities within a 12-month period, the State Department said.
- EU firms renew Iran oil deals to win sanction reprieve (mb50.wordpress.com)
- U.S. adds three companies to sanctions list (jta.org)
- Iran Oil Blockage: US Imposes Sanctions on Chinese Firm (ibtimes.com)
- State Department sanctions three companies under Iran Sanctions Act (blogs.jta.org)
- US acts against three oil firms (bbc.co.uk)
- US hits 3 companies with sanctions for Iran links (seattletimes.nwsource.com)
- US slaps sanctions on companies dealing with Iran (laaska.wordpress.com)