BP Plc asked federal regulators on Monday to reverse an administrative judge’s ruling that it had manipulated natural gas markets in Texas in 2008. “There is no direct evidence of manipulation,” BP said in an appeal filed with the Federal Energy Regulatory Commission. The energy company said last month’s initial ruling by the agency was “arbitrary and capricious.”
Shale producers in the US have learned to do more with less. Last year’s price crash forced drillers to cut budgets, reducing the number of rigs in U.S. oil fields by 59 percent from the peak. Crude production, though, has fallen only about 5 percent. Part of the reason for that is a spurt of innovation driven by desperation. Rig productivity increased last month in all shale oil plays, the Energy Information Administration said in a report Monday, as companies drill more wells in less time.
Jerry Brown’s dreams of cutting California’s gasoline use in half and imposing a stricter limit on greenhouse-gas emissions may have died on the legislative floor last week. But they live on elsewhere. There are plenty of ways for the four-term governor to achieve his goals with an end-run around the legislature. For one, Brown has state agencies under his control already entrusted with his climate change mission. And he suggested last week that he’s ready to use them to achieve his targets. The California Air Resources Board that runs the state’s carbon market and other programs aimed at curbing pollution“has all the power that it has had, and it will continue to exercise that power, certainly as long as I’m governor,” Brown said during a press conference with reporters Sept. 9.
Japanese stocks fell, dragged down by energy explorers as oil prices declined and mobile carriers after Prime Minister Shinzo Abe called for lower phone rates. Mobile carriers NTT Docomo Inc., KDDI Corp. and SoftBank Group Corp. sank at least 5.5 percent after Abe said reducing the burden on households from mobile phone fees is an important issue to tackle. Energy explorer Inpex Corp. declined 6 percent as crude oil traded below $45 a barrel. Kansai Electric Power Co. climbed 1.9 percent as utilities led gains on the Topix index. Shipper Kawasaki Kisen Kaisha Ltd. jumped 1.8 percent after Mitsubishi UFJ Morgan Stanley Securities Co. raised its investment rating. The Topix slipped 0.9 percent to 1,466.37 as of 12:58 p.m. in Tokyo, swinging from a gain of 0.5 percent after last week capping its biggest weekly increase in almost two months. Volume was 34 percent below the 30-day intraday average. The Nikkei 225 Stock Average dropped 1.4 percent to 18,001.12. Both the Federal Reserve and Bank of Japan are holding policy meetings this week.
Oil Search Ltd. rejected Woodside Petroleum Ltd.’s $8 billion takeover bid, saying the proposal undervalues the company’s liquefied natural gas expansion plans in Papua New Guinea. “The feedback we got from all the major shareholders we consulted with confirmed that the proposal was one that should be rejected,” Oil Search Chairman Rick Lee said on a conference call Monday. “The proposal on whatever basis you apply was significantly undervaluing Oil Search and certainly not one that encouraged us to consider it further.” Woodside’s bid of one share for every four Oil Search shares, which implied a 14 percent premium, was too low to win investors’ support, according to Sanford C. Bernstein & Co. and UBS Group AG. The offer last week valued Oil Search at A$11.65 billion ($8.1 billion) and would have been the biggest energy takeover in Asia. Oil Search fell as much as 3.1 percent to A$7.22 in Sydney trading, while Woodside slid as much as 3.5 percent to A$27.43.
Hedge funds added the most bullish oil bets since April on optimism that the global oversupply will disappear as producers slow output. Money managers boosted their net-long position by 16,855 contracts to 132,857 futures and options in the week ending Sept. 8, according to data from the Commodity Futures Trading Commission. The world is “not awash in oil,” Andy Hall, hedge fund manager and noted oil bull, said this month in a letter to investors. The US and other nations outside of OPEC will reduce output next year by the most since since 1992, according to the International Energy Agency. The U.S. government released new output estimates wiping out 13 million barrels of production from the first half of the year. “People are beginning to see significant declines in production figures as a result of the declining rig count, and you can expect that trend to continue through the balance of the year,” Andy Lipow, president of Lipow Oil Associates LLC, said by phone from Houston. “If you were short, you might have made your money and covered your positions.”
Stocks in the United Arab Emirates fluctuated between gains and losses as one of the nation’s biggest sources of revenue retreated for a second week and uncertainty about an increase in Federal Reserve’s interest rates weighed on sentiment. The ADX General Index rose as much as 0.5 percent before declining 0.2 percent at 10:23 a.m. local time. The DFM General Index was little changed. The UAE holds almost 6 percent of the world’s proven oil reserves. Brent crude ended the week 3 percent lower after Goldman Sachs Group Inc. said a global supply surplus could force prices as low as $20 a barrel.
A meeting to discuss Woodside Petroleum Ltd.’s $8 billion takeover bid for Oil Search Ltd. was called off amid speculation that the offer for the Papua New Guinea- focused explorer is too low to succeed. The meeting scheduled for Sunday was postponed at Oil Search’s request, according to a statement from Woodside, the Australian oil producer. Oil Search is expected to reject Woodside’s bid as early as Monday, the Australian Financial Review reported Sunday, without citing sources.
Oil supplies outside OPEC will decline next year by the most in more than two decades as the price rout curbs U.S. shale output, according to the International Energy Agency.
The global surplus of oil is even bigger than Goldman Sachs Group Inc. thought and that could drive prices as low as $20 a barrel. While it’s not the base-case scenario, a failure to reduce production fast enough may require prices near that level to clear the oversupply, Goldman said in a report e-mailed Friday. The bank cut its forecast for Brent and WTI crude through 2016 on the expectation that the glut will persist on OPEC production growth, resilient non-OPEC supply and slowing demand expansion. “The oil market is even more oversupplied than we had expected and we now forecast this surplus to persist in 2016,” Goldman analysts including Damien Courvalin wrote in the report. “We continue to view U.S. shale as the likely near-term source of supply adjustment.”
Shale oil producers already awash in a supply glut face added crude as early as next year after an agreement to ease sanctions on Iran cleared a Senate obstacle. A Senate vote Thursday paved the way for President Barack Obama to ease financial penalties for doing business with Iran. Democrats kept Republicans’ disapproval resolution from advancing in a 58-42 procedural vote, with 60 required. That may allow additional Iranian exports to hit the market as early as the first quarter of 2016.
Few things have more potential to spook the oil market than the prospect of Russia joining forces with OPEC. Speculation that such a move was afoot last month drove crude to its biggest three-day gain in 25 years. Despite the market buzz, there are sound economic and technical reasons why this is unlikely to happen.
When Luke Rickert first started as an engineer at Aker Solutions ASA in Oslo, a Norwegian oil services provider, his team of 24 had people from 15 different countries. People from the U.S. to India, Brazil, Portugal and dozens of other countries came to fill a shortage of skilled workers in Norway’s booming petroleum industry. They were lured by $20,000 relocation packages, high salaries and the nation’s fabled home and work balance. They helped Norway turn oil into cash that created the world’s largest sovereign wealth fund.
India’s Power Minister Piyush Goyal said disputes blocking a hydroelectricity project worth at least $1.4 billion have been cleared, part of a drive to revitalize the industry as he targets an unprecedented expansion in renewable energy. Resolving the years-long delay in the Teesta-III project in northeastern Sikkim state near China will make hydroelectricity more alluring to investors, according to Goyal. One of his major challenges is finding the $200 billion India needs for a goal of 175 gigawatts of green-energy capacity by 2022. “If you go back in history for the last five years, the entire hydel industry has come to a standstill in India,” Goyal, a 51-year-old former banker and chartered accountant, said in an interview in New Delhi on Tuesday. “We’re going to revive it.”
A Dutch court is set to hear arguments that production from Europe’s largest natural gas field should be suspended because earthquakes linked to extraction threaten safety. The Netherlands has progressively cut the amount of gas won from the Groningen field in the north amid protests over the tremors, with the Economy Ministry in June slashing this year’s output cap by 29 percent. The Administrative Jurisdiction Division of the Council of State will hear 41 appeals from local political parties, environmental organizations and individuals against an earlier production decision on Thursday, and possibly Friday, before making a final ruling in October or November.
Mexico plans to spend the least in nine years to explore for oil, relying instead on foreign companies to help reverse a decade-long decline in production. Even as President Enrique Pena Nieto announced late Tuesday that Mexico would reduce its investment in Petroleos Mexicanos by 20 percent in 2016, Finance Minister Luis Videgaray said the company has no plans to pump less to support oil prices that have plunged by more than half in the past year. The Mexican state-owned oil producer, which has lost money 11 quarters in a row, is for the first time in 77 years making room for foreign firms to bid for the right to drill in Mexican territory. The reduction of the investment, which was cut $4.1 billion this year amid depressed oil prices, “forces Pemex to accelerate the process of forming partnerships,” according to Alejandra Leon, Mexico City-based analyst with research firm IHS Energy. “Pemex’s new framework forces it to consummate its independence and to generate its own resources,” Leon said. “This changes its investment strategy.”
A.P. Moeller-Maersk A/S’s oil unit cut $1 billion off its annual budget for capital expenditure after petroleum prices plunged. Maersk Oil plans long-term capex in the range of $2 billion to $4 billion a year compared with a previous range of $3 billion to $5 billion, according to an investor presentation in Copenhagen on Wednesday. The new forecast doesn’t include funds to be spent on acquisitions, which the company says it’s still pursuing. Maersk Oil is following the rest of the industry in cutting jobs and lowering investments after crude prices dropped about 50 percent over the past 12 months. The company says it has lowered unit costs by about 33 percent over the past year and completed 600 job cuts by the end of June.
Investment in U.K. North Sea oil and gas projects could drop as much as 80 percent by 2017 as the collapse in crude prices forces the industry to cut back. Capital investment across the industry of 14.8 billion pounds ($22.8 billion) last year will probably decline by 2 billion to 4 billion pounds annually to 2017, Oil & Gas U.K., an industry lobby group, said in its annual economic report Wednesday.
Gulf Arab stocks were poised for the longest winning streak since April following a surge in Asian equities and oil’s biggest gain this month. The Bloomberg GCC200 Index, a gauge of 200 of the region’s biggest and most-liquid shares, rose 1.9 percent as of 1:20 p.m. in Riyadh. That put it on track for a fifth-day gaining and the highest close in almost three weeks. The measure climbed above its 20-day moving average for the first time since July 27.
The wave of defaults and debt restructuring hurting oil bonds around the world looks set to reach China. Notes of oil services firms are the nation’s worst performers this quarter with a 5.9 percent slide amid record industry debt and slumping crude prices, according to a Bank of America Merrill Lynch index of foreign-currency notes. Explorers have lost 1.4 percent. Some private-sector companies have dropped to distressed levels with the 2019 notes of Honghua Group Ltd. at 38.5 cents on the dollar and Anton Oilfield Services Group’s 2018 paper at 44 cents. China’s quest to secure resources for the world’s second- biggest economy has sparked a fourfold expansion in petroleum industry debt in the past decade to 1.3 trillion yuan ($205 billion). Crude’s 14 percent slide this year is adding to stress on energy firms’ finances. Standard & Poor’s says oil and gas companies account for 28 percent of all corporate defaults globally this year, and that they are among the most vulnerable to failures in coming months.
Billionaire Warren Buffett dumped Exxon Mobil Corp. shares held by Berkshire Hathaway Inc. and took a $4.5 billion stake in refiner Phillips 66 after souring on the outlook for oil prices, he said in television interviews. “I did get less enthusiastic about crude oil prices at the time we owned” Exxon, he said in an interview with Bloomberg television Tuesday. “I felt that the future wasn’t going to be as good as people were thinking it was going to be.” That pessimistic view of oil was only part of the reason Berkshire exited Exxon, Buffett said, noting that he no longer owns any oil and gas production businesses. His choice to invest in Phillips 66 stems from his admiration of Greg Garland, the refiner’s chairman and chief executive officer, as well as its operations in chemicals and other businesses, he told CNBC. “We’re not buying it as a refiner,” he said. “We’re certainly not buying it as an integrated oil company. We’re buying it because we like the company and we like the management very much.”
Mexico is willing to work with OPEC if the group tries to stabilize crude markets amid a global supply glut and slide in prices, Iran’s Oil Minister Bijan Namdar Zanganeh said after talks with Mexico’s labor secretary.
Woodside Petroleum Ltd. offered A$11.65 billion ($8.1 billion) in stock for Oil Search Ltd. as it aims to take advantage of a collapse in oil prices in what would be the biggest energy deal between non-related companies in the Asia-Pacific region. Woodside offered one share for every four Oil Search shares, which amounts to a premium of about 14 percent based on Oil Search’s closing price on Monday. Oil Search rose 16 percent to A$7.835 and Woodside slid 2.9 percent to A$29.68 as of 1:12 p.m. Sydney time. Oil Search was one of the few oil and gas companies to report a jump in profit in the first half, driven by its Papua New Guinea liquefied natural gas project. “The market is sending a pretty clear signal that Woodside’s offer is undervaluing the Oil Search stake in the PNG LNG project, which is really one of the most competitive LNG investments in the whole Asia Pacific region,” Angus Nicholson, a market analyst at IG Markets Ltd. in Melbourne, said by phone. “Not to mention Woodside will need PNG government support, so that could be tricky.”
At a time when the collapse in crude prices pushes Russia’s economy into a recession, the nation’s oil producers are managing to beat their western counterparts. On measures including cash flow, profit margins and share prices, OAO Rosneft, Lukoil PJSC-- Russia’s two largest oil producers -- and OAO Gazprom Neft are performing better than Royal Dutch Shell Plc, BP Plc or Exxon Mobil Corp. “When oil goes down, the western companies are hurt more than the Russian companies,” said Maxim Edelson, a Senior Director at Fitch Ratings in Moscow. Because Russian tax rates adjust automatically to lower prices the nation’s companies enjoy a buffer to the slump in crude while “a lot of the hit is taken by the government.”
Brent crude rebounded after a two-day decline before trade data from China, the world’s second-biggest oil consumer.
