Exxon Rig To Return To Philippines

Further Drilling Expected in South Sulu Sea

Exxon Mobil Corp. is set to drill a third well in the South Sulu Sea in the south-west Philippines in a bid find petroleum reserves in the area

Philippines Energy Undersecretary Ramon V. Oca said the West Aquarius drill rig, which was used by Exxon to drill the first and second wells, is expected to return in the coming weeks.

“At the earliest April, but most probably May,” Mr. Oca told reporters on Monday.

The cost for the drilling of the third well will be similar to those incurred in the first and second, which is $100 million.

Two wells have already been drilled in the area since last October and Mr Oca said that data from the drilling was still being processed with the results due in the next few months

Mr Oca said that the target for the third well is about five kilometres from sea level and that drilling might take two to three months depending on the sea surface

ExxonMobil Exploration and Production Philippines B.V. is the operator of the field, with a 50% stake while Mitra Energy Limited and BHP Billiton Pty. Ltd. each have a 25% interest.

The field – known as SC 56 - covers an area of 8,200 square kilometres and is located some 900 kilometres southwest of Manila and 200 kilometrer northwest of Bongao, the capital of Tawi-Tawi.

The Philippines Department of Energy estimates possible reserves at SC 56 at about 750 million barrels, which, if true, may be enough to fuel the country’s oil requirements for seven years.

Oil investors are entitled to a 70% share of revenues from production sales under the government’s fiscal regime for petroleum development. The mechanism is designed to allow the contractor to recover investment costs.

The government will then receive 60% of the remaining 30% of revenues, with the remaining 40% divided over the companies involved in the project.

Essar 'Plans London Listing'

Essar Group, the Indian company which at the weekend announced plans to buy US coal miner, Trinity Coal, plans to raise $3 billion overseas to fund acquisitions and expand its oil, power and steel businesses, according to sources familiar with the company.

It is thought that the money could be raised via a listing on the London stock exchange. Such a move would make it the biggest overseas listing by an Indian company. According to a report in today’s Financcal times, Essar group has appointed JPMorgan Chase & Co. and Deutsche Bank AG as advisers for the listing.
Essar is bidding for Royal Dutch Shell Plc refineries and is acquiring steel plants and coal and iron ore mines across the world to compete with rivals including ArcelorMittal and analysts see the London listing as vital to that end.

It is thought that the Bombay-listed Esaar Oil – itself worth $3.9 billion – could also be listed in London.

Galoc Oilfeed To Resume Production In February

Production at the Galoc oil field in Palawan, Philippines will resume in mid-February, two weeks later than originally targeted, with the operators still repairing the system following bad weather late last year.

Nido Petroleum Ltd. has told the Australian Stock Exchange it had been advised by the Galoc oilfield operator, Galoc Production Co. WLL (GPC), that repairs to the oil recovery system were still ongoing.

The oil explorer had targeted to resume production at the end of the month. Nido Petroleum Deputy Managing Director Joanne Williams said the operators were improving the setup to reduce the frequency of disconnection of its oil recovery system.

The shutdown, the company said, would delay the delivery of its fourth shipment to Japan, previously committed for delivery in early February.

Galoc’s first cargo was bought by Petron Corp. while two other cargoes were shipped to Thailand and South Korea.

The Galoc field started commercial production on Oct. 9 and was producing 15,000 to 20,000 barrels daily. The figure was equivalent to about 6% of the country’s total daily demand of 300,000 barrels.

Nido Petroleum owns 22.28% of the oilfield, while fellow Australian firm Otto Energy Ltd. holds an 18.3% indirect interest. The rest is owned by Filipino oil explorers.

Otto Energy owns 31% of Galoc Production, the operator of the project. The rest belongs to Vitol GPC Investments SA.

Crude oil from Galoc is expected to generate foreign exchange savings for the country worth over a billion dollars during its lifetime.

Source: Business World, Manila

Opportunists Thrive As China Commodity Demand Sags

The Guardian - 22 Jan - China's energy and metals demand slid again last month as its economy worsened, according to official figures released on Thursday that also showed a few opportunists making the most of hard times.

Chief among the opportunists may be China's government, which has been taking advantage of cheap prices to stock up on everything from crude oil to soybeans, causing some blips in data that pointed to a continued slowdown in the economy.
Economic growth slumped to 6.8 percent in the final quarter of 2008, bringing growth for the full year to a seven-year low of 9.0 percent, China's National Bureau of Statistics said, with some economists expecting worse is to come.

The economy's dwindling appetite for energy in December cut China's electricity generation for a third month running, down by 7.9 percent on December 2007, and its vast coal production showed a rare year-on-year fall of 1.3 percent.

With few buyers at home or abroad, China's coal imports fell 38 percent and exports dropped 22 percent, according to data from the country's General Administration of Customs.

Demand for oil fell 5.5 percent from a year earlier in December after declining 3.2 percent in November, a Reuters calculation showed, pointing to a fast declining appetite from the world's second-biggest consumer of oil.

"For oil, the market demand should remain bearish before any apparent signs of an economic recovery, even though China has stepped up building reserves," said a Beijing-based analyst with a research firm, who declined to be named for personal reasons.

Demand has fallen by about 500,000 barrels per day since October, roughly equivalent to the amount consumed by Argentina. Around half the slowdown has fallen on Angola, which vied for much of 2008 with Saudi Arabia to be top supplier to China. Its exports to China have shed almost 250,000 barrels per day since October, putting it at risk of being pushed into fifth position as a Chinese supplier behind Iran, Oman and Sudan.

China's refiners responded to the demand slump by slamming on the brakes in December, cutting processing by the biggest margin in 7-1/2 years. But crude continued to flow in, 4 percent faster than in November, as the government seized on low-priced crude for its reserves.

As well as crude oil, China's has been shopping for metals and commodities such as rubber, sugar and grains. The mere anticipation of the State Reserves Bureau (SRB) seeking copper may have been enough to spark a rush to sell copper to China in December. Copper imports jumped 89 percent on the year to a record, helped by relatively high Chinese prices and bunched term shipments at end-year. The import surge pushed China's apparent demand for copper up 3.9 percent in the month, the only metal to show an increase.

Traders are able to divert cargoes towards a quick profit because shipping costs collapsed in late 2008, opening long-closed arbitrage or trade routes never seen before.

Coal, coffee and zinc alloys arrived from the United States, while Peru and Mexico jumped up the ranks of suppliers of zinc ore and concentrates.

Iron ore supplies from Peru, which Chinese President Hu Jintao visited in November, also jumped 700 percent. It made the Latin American country, where Chinese-owned Shougang Hierro Peru is the top iron ore miner, China's No.5 supplier ahead of Russia and Indonesia.

That comes just as China's steel industry is trying to rebound with indirect help from a 4 trillion yuan ($585 billion) state stimulus package. Hopes of stimulus-related sales may have been behind a 7 percent month-on-month rise in crude steel output, the first such rise in six months. Steel production was still 10.5 percent below December 2007.

Steel revival hopes may also have been behind an 89 percent jump in China's output of nickel, used in stainless steel.

Market sources said firms such as Jinchuan and Jilin Nickel started up new capacity in November, just as many others were cutting output to try and stem their losses from falling prices.

In another anomaly, China's December exports of aluminium surged, accounting for over 40 percent of 2008's total.

Traders said the cash crunch and tight credit had forced merchants to sell overseas, amid weak domestic demand, with one re-exporting more than 40,000 tonnes, which could account for much of December's export bulge.

Source: The Guardian