El periodico mas importante del mundo con informacion de la industria minero energetico, Platts Oilgram News, propiedad del gruppo McGraw Hills, en un articulo sobre los ataques contra la industria petrolera en Colobia, toma como fuente a Agora Consultorias

1. [OIL ]
www.platts.com OILGRAM NEWS
Volume 92 / Number 183 / Wednesday, September 17, 2014
Top stories
Asia Pacific
KNOC sees new
opportunity in shale 2
Total launches
development of Sisi-Nubi 2
PTTEP to invest $3.3 billion
in Myanmar upstream 2
Europe, Middle East & Africa
Russian firms flag delay
to Siberian fields 3
Iran completes gas line
to Iraq but delays exports 3
Nigerian oil workers
strike over pensions 4
Ophir expands African LNG
plans after new find 4
Sasol to push ahead in
South Africa despite uncertainty 4
The Americas
Cano Limon pipeline still
shut after attack 5
Corpus Christi splitter
project progresses 5
ExxonMobil’s Kara Sea
drilling must stop 6
Indian refiners eke out
a profit on diesel as oil falls 6
Markets & Data
Crude futures higher ahead
of weekly stock reports 7
Firm West African demand
tightens Europe products 7
World needs less OPEC oil in 2015: Badri
Oil producer group may lower output by 500,000 b/d
London—OPEC may lower its oil output next
year in response to weaker demand for its
crude, the organization’s secretary general
Abdalla el-Badri said Tuesday in comments
widely interpreted as a hint that OPEC is con-sidering
US ‘near miss’ offshore reporting system on the way
Washington—A voluntary federal data col-lection
program aimed at improving offshore
oil and gas safety will be sent to the White
House for approval next month and is expect-ed
to be in place before the end of the year,
spokesmen for the two agencies developing
the program said.
The “near miss” data collection program
is being developed by the US Transportation
Department’s Bureau of Transportation Statis-tics
and the Interior Department’s Bureau of
Safety and Environmental Enforcement.
Under the system, which is modeled after
a similar system to track near-miss incidents
in the airline industry, offshore operators will
voluntarily and anonymously report near inci-dents
which otherwise would not be required
to be reported.
An information collection request will
be sent to the White House’s Office of
Management and Budget next month, BTS
spokesman David Smallen, said Tuesday.
The new system is expected to be in place
by the end of the year, BSEE spokesman
Nicholas Pardi said.
The US offshore industry has bristled at
some of the details of the data collection pro-gram,
claiming it may be too broad and could
create administrative headaches for both off-shore
operators and regulators.
The American Petroleum Institute and its
Center for Offshore Safety claimed that how
regulators define a “near miss” is too vague
and does not including a ranking system for
the severity of potential incidents. This could
lead to a number of reports on inconsequen-tial
events submitted, which would overwhelm
oversight efforts.
“The proposed definition of ‘near miss’
leaves much leeway, and may impact the num-ber
of reports submitted,” the industry groups
wrote in a recent letter to the DOT.
In a separate letter, Louisiana-based LLOG
Exploration, an offshore operator, wrote that
by not ranking the incidents by severity “there
is the risk of reporting incidents out of con-text
from both an under-reporting and over-
(continued on page 5)
cutting its production targets before
year-end in response to weaker oil prices.
Speaking in Vienna after talks with Rus-sian
energy minister Alexander Novak, Badri
was reported as saying that he thought the
group’s output target would be lowered by
500,000 b/d for 2015.
But Badri, speaking to Platts later by tele-phone,
stressed that he was not predicting
the outcome of OPEC’s November 27 ministe-rial
meeting, which will review the current 30
million b/d output ceiling that has been in
place since January 2012, but was referring
to lower expectations of demand.
“I said this is only an outlook,” he told
Platts. It is “not a decision,” he said, adding:
“Our outlook is 29.5 million b/d.”
According to its latest monthly report
released last week, OPEC expects demand for
its crude to average 29.45 million b/d this
year and to fall to 29.2 million b/d in 2015,
a year-on-year average drop of 250,000 b/d.
But between the fourth quarter of this year
and the first quarter of 2015, OPEC expects
demand for its crude to plunge by nearly 1.8
million b/d—from 30.15 million b/d in the
fourth quarter to 28.39 million b/d in the first
three months of next year.
Badri’s comments provided additional sup-port
to rebounding crude prices Tuesday, with
the front-month WTI contract gaining over $1/
barrel in US trading hours.
“Talk of an OPEC quota reduction for
2015 is the bigger influence here, and the
statement from Secretary General El-Badri is
at least a reminder that OPEC is well aware of
the declining call on OPEC crude, and willing
to offset it with reduced output,” Citi said in
a note.
(continued on page 6)
„„Comments spark oil price rebound
„„Sees oil price recovery by year-end

2. Asia Pacific
KNOC sees new opportunity in shale
Looks to acquire technology and expertise before investing big
Seoul—State-owned Korea National Oil Corp.
is eyeing tight oil development in North
America or elsewhere as part of its efforts to
secure cheaper energy resources for South
Korea, a senior KNOC official said Tuesday.
Mounting geopolitical risks in the Middle
East and Africa leaves KNOC with few places
where it can pursue upstream projects,
but shale provides new opportunities, Choi
Byeong-goo, KNOC’s technology chief, said on
the sidelines of the International Shale Gas
Conference in Seoul.
“Upstream is becoming more technologi-cally
challenging, more time-consuming and
more costly,” Choi said. “Under the chang-ing
energy paradigm, just efforts to secure
resources are not economically viable. What
is at stake is how to secure technology,” said
Choi, who is the president of KNOC’s Petro-leum
Technology Institute.
“KNOC is currently in the stage of accu-mulating
technology and experience for shale
gas development by participating in Canadian
and US projects,” Choi said. KNOC is involved
in two shale gas projects—Deep Basin in
Canada and Eagle Ford in the US.
KNOC has drilled 40-80 wells a year in
the Deep Basin through its Canadian unit Har-vest
Operation Corp.
In 2011, KNOC bought a 23.7% stake in
the Eagle Ford shale from Anadarko, its first
acquisition of unconventional assets. Several
KNOC engineers are jointly working with Anadar-ko
in the Eagle Ford shale project, Choi said.
“Over the next three years until 2017,
KNOC will push for joint operatorship in
upstream shale gas projects to acquire tech-nical
expertise,” he said. “On the basis of the
accumulated technological skills and experi-ence,
KNOC would seek independent opera-torship
from 2018,” he added.
Financing
He did not say where debt-laden KNOC
would find the money for shale gas proj-ects.
However, another KNOC official said
that the company’s recent divestment plans
and belt tightening would not affect its
shale gas projects.
“KNOC has sold some foreign assets as
part of its efforts to improve its financial con-dition,
but this does not mean it would refrain
from investing in upstream projects,” he said.
“KNOC will refrain from costly M&A deals that
require massive cash input, and instead will
push for more upstream exploration projects.”
High development cost
Several speakers at the conference spoke
about how cost was the biggest hurdle in
shale gas development.
“Cost reduction and technology improve-ment
is the key to the future of the shale
gas boom. Technology is a key to identifying,
developing and producing shale and other
tight rock unconventional reserves,” said
Edward Poole, vice president for tight and
unconventional resources at Chevron.
Dong Xiucheng from China University of
Petroleum said that despite having abundant
shale gas resources, China’s technology and
equipment were in a nascent stage.
Reiterating that China would be able to
meet the target of 6.5 billion cubic meters of
shale gas output in 2015, he said shale gas
exploration and development still faced many
challenges. — Charles Lee
Total launches development of Sisi-Nubi
Jakarta—France’s Total has launched develop-ment
of the Sisi-Nubi Phase 2B project—a
key project to arrest declining production at
the giant Mahakam gas block offshore East
Kalimantan in Indonesia.
Sisi Nubi Phase 2B is part of an approved
development plan for Sisi Nubi Phase 2, which
includes Phase 2A and 2B, Hardy Pramono,
President of Total E&P Indonesia, said Tuesday.
The entire project is expected to cost
$1.033 billion, with Sisi-Nubi Phase 2B cost-ing
$739 million, Pramono said.
The Sisi Nubi Phase 2B is designed to
produce 350,000 Mcf/d of gas and produc-tion
is expected to start before the expiration
of the current production sharing contract for
the block in 2017, a source, who declined to
be named, said Tuesday.
About 70% of the output will be allocated
for export and the remaining 30% for domes-tic
use, the source said.
Mahakam is Indonesia’s largest gas block
and most of its output is fed to the Bontang
LNG plant.
2 Oilgram News / Volume 92 / Number 183 / Wednesday, September 17, 2014
The block had proven and probable
reserves of 1.68 billion barrels of crude and
21.2 Tcf of natural gas when it was discov-ered
in 1972. Total and Inpex have so far
exploited 80% of the block’s reserves.
The block is currently estimated to have
2.7-3 Tcf of proven gas reserves, but this is
expected to fall to 1.3-1.6 Tcf in 2018 due to
natural depletion.
Total and Japan’s Inpex each have a 50%
stake in the block.
The companies have been seeking an
early extension to the block’s PSC and have
in the past said an extension is crucial in
order for them to proceed with their invest-ment
plans for Mahakam and maintain pro-duction
levels there. But negotiations with the
government have dragged on, mainly due to
continued uncertainty surrounding Indonesian
state-owned Pertamina’s role in the asset.
A senior Total official said in May that the
company was concentrating on its operations
and on delivering production for as long as
possible despite the uncertainty surrounding
the PSC extension.
The partners plan to spend $2.5 billion a
year in 2014 and 2015 to maintain output at
the block.
Besides Sisi Nubi Phase 2B, Total is
also developing other projects on the block
— South Mahakam 3 and Bekapai 2A and
2B — to help maintain production at cur-rent
levels.
The Bekapai projects are expected to add
more condensate than gas, producing up to
1,800 b/d of liquids and 20,000 Mcf/d of
gas, the source said.
“Drilling activities are expected to start
next year and production can be achieved
before the contract ends. But again, it will
only offset declining production and won’t
increase the output,” the source said.
The Mahakam block is currently produc-ing
about 1.7 Bcf/day of gas and 67,000
b/d of liquids. — Anita Nugraha, with
Mriganka Jaipuriyar in Singapore
PTTEP to invest $3.3 billion in Myanmar upstream
Singapore—Thailand’s PTT Exploration & Pro-duction
plans to invest over $3 billion, or a
fifth of its capital budget, a little in Myanmar’s
exploration projects.
Spending in Myanmar will focus on seven
exploration blocks, the company said.
Three of these—MOGE 3, PSC G and
EP 2—were awarded during Myanmar’s last
onshore bid round. PTTEP said extensive explo-ration
drilling has started in PSC G and EP 2.
The offshore M11 block in the Mottama
basin was awarded to PTTEP in 2005. It has a
45% stake, partnering France’s Total (40%) and
Japan’s JX Nippon (15%). The partners drilled
the Manizawta-1 deepwater well in the block
in the fourth quarter of last year, although that
came up dry. They have since started a subsur-face
study for more potential prospects in the
area during the first half of this year.
In the nearby M3 block in the Gulf of
Martaban, PTTEP, which operates the acreage
with 80% stake alongside Japan’s Mitsui, is
planning to drill five appraisal wells and one
wildcat well during 2014-15.
Lastly, the company has completed 2D
seismic acquisition and is interpreting the
data at blocks MD-7 and MD-8 offshore in the
Andaman Sea.
Earlier this year, the Zawtika gas field—
Myanmar’s fourth producing project —came
on stream in March. PTTEP said Zawtika pro-duction
has ramped up to 300,000 Mcf/d,
the majority of which is exported to Thai-land.—
Song Yen Ling

3. Europe, Middle East & Africa
Russian firms flag delay to Siberian fields
Transneft postpones two oil pipelines over setbacks
Moscow—Russia’s oil majors have flagged
delays to a number of oil field projects in
Siberia in order to assess the impact of the
latest Western sanctions on their operations,
the country’s national pipeline operator Trans-neft
said Tuesday.
Transneft has also postponed the launch
of two new lines connecting greenfield sites
in Siberia into Russia’s domestic pipeline
network on the back of the expected delays of
between two and three years at some of the
fields, a company spokesman said.
Producers Rosneft, Lukoil, Gazprom and its
oil arm Gazprom Neft have informed Transneft
that they need more time to reappraise estimat-ed
start-up dates for some of their Siberian oil
projects after flagging initial setbacks to the gov-ernment
during the summer, Igor Dyomin said.
The government ordered the oil compa-nies
to present new estimated oil loading pro-grams
to Transneft by September 15 in order
for the state pipeline giant to plan the launch
of two new Siberian oil routes.
“Due to recently imposed sanctions the
companies asked to extend the deadline as
they have little clarity due to the changing
situation,” Dyomin said
The comments come just days after the
EU and US imposed new sanctions on Trans-neft,
Rosneft and Gazprom Neft, banning
Western firms from supporting their activities
in exploration or production from deep water,
Arctic offshore or shale projects and limiting
access to Western financing and technology.
The US also added Russia’s Gazprom, Lukoil,
and Surgutneftegas to its list of sanctions.
Dyomin denied, however, that Transneft
itself has seen its pipelines plans hit by sanc-tions
and was unable to say why the oil com-panies
had flagged the initial project delays to
the government.
Transneft’s initial plan envisaged the
900,000 b/d Zapolyarye-Purpe pipeline and
300,000 b/d Kuyumba-Taishet coming online
in 2106 to ship crude from new fields in
northern Russia and East Siberia into the
ESPO network.
Russia has recently been redirecting some
of its westbound oil flows to the east to take
advantage of the stronger Asia Pacific market,
as well as commitments by Rosneft to gradu-ally
boost deliveries to China.
Construction of the Zapolyarye-Purpe and
Kuyumba-Taishet routes fits in with the redi-rection
strategy, as the lines will help boost
eastbound oil flows.
The development of Russia’s East Siberia
oil fields are considered a key growth driver
for the country’s oil sector.
In April, oil giant Rosneft said it expected
to launch crude production at the Yurub-cheno-
Tokhomskoye field, the company’s
second-biggest oil asset in East Siberia, in
2017. At the time, Rosneft said it expected
the construction of a pipeline to link the
Kuyumba and Yurubcheno-Tokhomskoye
fields to the East Siberia-Pacific Ocean oil
pipeline was expected to be completed by
the end of 2016.
East Siberian C1+C2 crude reserves—
roughly equivalent to proved undeveloped,
probable and possible under international
standards—are estimated at 2.4 billion mt,
the gas reserves stand at just over 8 billion
mt, according to recent estimates by All-
Russian Research Geological Oil Institute.
— Dina Khrennikova, Robert Perkins
Iran completes gas line to
Iraq but delays exports
Tehran—The National Iranian Gas Export Com-pany
(NIGEC) said Tuesday that Iran has com-pleted
a natural gas pipeline to Iraq but that
Tehran won’t begin gas exports to its neighbor
until the insurgency situation in Iraq has stabi-lized,
oil ministry news service Shana reported.
“Iran is waiting for stability in Iraq for gas
exports,” NIGEC Managing Director Alireza
Kameli said. “Iran will be ready to export gas to
Iraq as of next year but the start of gas export
operations definitely depends on establishment
of normal conditions in the country.”
The new Iranian year starts in March.
Tehran and Baghdad finalized an agreement
in July last year under which Iraq would receive
an initial flow of around 4 million cubic meters/
day of natural gas, with the volume rising to
25 mil cu m/d at a later phase and eventually
reaching as much as 45 million cu m/d.
The first-phase pipeline starts at the town
of Charmaleh in the western Ilam province and
runs 220 km to the border town of Nafthshahr.
The gas will feed a power plant in the Iraqi
city of Sadr and another facility north of Bagh-dad,
producing a total of 2.5 GW of electricity.
“Iraq plans to use the gas for its power
plants...but the recent incidents have caused
problems for them,” Kameli said.
Offensives by the Islamic State insurgency
have destabilized large parts of Iraq in recent
few months.— Aresu Eqbali
News Briefs
Conoco reported to sell UK field stake
ConocoPhillips plans to sell its 24% stake in the UK’s giant Clair field, off northwest
Scotland, and is targeting a price of $2-3 billion, the Financial Times reported Tuesday.
ConocoPhillips has hired banks to carry out the sale, according to the report which com-pany
decline to comment on.
A sale would be the latest in a series of withdrawals from the UK by US companies
increasing their focus on booming domestic production.
The report came as Scotland prepares to vote in a referendum on independence from
the UK on Thursday, with opinion polls showing a close race.
BP confirmed that its Clair Ridge project—a second development phase intended to add
640 million barrels of production over four years—will come on stream in 2017 rather than
2016, as previously planned. It is expected to produce up to 120,000 b/d of oil.
Protesters vacate Chevron platform in Niger Delta
Chevron Nigeria’s oil producing unit confirmed on Monday that protesters from the Niger
Delta seized one of its offshore production platform but added the protesters have now
vacated the facility.
The youths shut down the facility to protest non payment of compensation by the US
firm for an oil rig blow-out in January 2012, sources said Monday.
“Some youths claiming to be from communities neighboring our operations in Bayesa
state, who illegally bordered our North Apoi platform off the coast of Nigeria have vacated
peacefully,” Chevron said in a statement.
“No one on the platform was harmed abduction there was no damage to the facilities,”
3 Oilgram News / Volume 92 / Number 183 / Wednesday, September 17, 2014
Chevron said.
The platform was producing around 220,000 b/d before the protest.
Russian Samburgskoye field starts new phase
Russia’s Novatek reported Monday the launch of the third phase of the Samburgskoye
gas condensate field in West Siberia, to raise the project’s capacity to peak production of 7
billion cubic meters/year of natural gas and over 900,000 mt/year of condensate.
The third phase adds 2 Bcm/year of natural gas to the field’s capacity, it said.
The Samburgskoye field is being developed by SeverEnergia, a joint venture between
Novatek and Gazprom Neft.
Its proved reserves stood at 90 Bcm of natural gas and 14.3 million mt of liquids as of
31 December 2013, according to the SEC classification.
Commercial production started in April 2012 and accounted for 4.8 Bcm of natural gas
and 646 mt of liquids in 2013, it said.

4. Europe, Middle East & Africa
Nigerian oil workers strike over pensions
Domestic gasoline supplies hit, exports at risk
Lagos—Oil workers at state-run Nigerian
National Petroleum Corp., began an indefinite
strike Tuesday that could disrupt oil produc-tion
and exports from the African OPEC mem-ber,
unions officials and the NNPC said.
Workers have already halted loading of
gasoline at the four state-owned refiner-ies
and depots across the country, Nojeem
Korodo, a spokesman for the unions, said,
adding that NNPC workers and their coun-terparts
at the department of petroleum
resources have also been directed to pull
out from oil export terminals.
“The strike is total because the NNPC
management failed to meet the deadline set
by the unions,” Korodo said. The unions took
the action after failing to resolve a dispute
over pensions and other issues, a union offi-cial
said earlier Tuesday.
NNPC’s headquarters in Abuja have been
shut to workers and visitors, the union official
said. It could not be independently confirmed
if the workers’ withdrawal from the export ter-minals
halted crude shipments by Nigeria.
The union spokesman said that if
NNPC management failed to meet workers’
demands, “in the shortest time possible, oil
export terminals will be shut down.”
Gasoline supplies
NNPC manages the government’s interest
in joint ventures with foreign firms, including
Shell, ExxonMobil, Chevron, Eni and Total. It
accounts for about 90% of Nigeria’s 2 million
b/d of oil production.
NNPC staff monitors and approves crude
shipment documents at the terminals in con-junction
with industry regulators.
NNPC joint venture partners said they
were closely monitoring developments in
the corporation.
One official at a Western oil company oper-ating
in Nigeria who preferred not to be identi-fied
said it may take up to a week before the
oil companies feel the impact of the strike on
production and exports if action is maintained.
NNPC spokesman Ohi Alegbe said Tuesday
that company was prepared to address the
workers’ pension concerns and end the strike.
“NNPC is taking steps to avert a looming
industrial action by the corporation’s arm of
the National Union of Petroleum and Natural
Gas Workers and the Petroleum and Natural
Gas Senior Staff Association of Nigeria,”
Alegbe said.
Officials also said Tuesday the NNPC
strike could hit gasoline imports and distribu-tion,
as the corporation accounts for 60% of
the Nigeria’s gasoline imports.
NNPC has had difficulty meeting its portion
of cash call contributions to funding joint ven-ture
operations with its foreign oil partners, a
source said. For pension contributions, the com-pany
has fallen Naira 85 billion ($531 million)
short, according to sources. — Staff Reports
Ophir expands African
LNG plans after new find
London—African-focused explorer Ophir Ener-gy
said Tuesday it has made a new gas find
offshore Equatorial Guinea, supporting plans
for an expanded floating LNG export develop-ment
in the West African country.
Ophir said its Silenus East-1 well on Block
R discovered a 67-meter gross gas column
in a “high-quality” reservoir. The find is esti-mated
to hold reserves in line with pre-drill
4 Oilgram News / Volume 92 / Number 183 / Wednesday, September 17, 2014
estimates of 405 Bcf, Ophir said.
Including recent discoveries, the total
mean recoverable resources for Block R are
now estimated at 3.4 Tcf, the company said.
“The Silenus East well result has confirmed
sufficient incremental volumes for Ophir to be
able to expand the Block R FLNG project from
a 2.5 million mt/year to a 3 million my/year
project,” CEO Nick Cooper said in a statement.
“This is important in that it provides economies
of scale that increase the value of this already
economic project,” he said.
The FLNG project is expected to deliver
first gas in early 2019, Ophir said, somewhat
later than earlier hopes of exports in late
2017 or 2018.
Ophir’s drilling update was not all positive.
Ophir said a deeper secondary drilling target
at the well, which had been targeting oil, was
water-filled with only weak oil shows. Inves-tors
have harbored hopes that Ophir could
strike more valuable oil off Equatorial Guinea,
which is already one of sub-Sahara’s largest
oil producers.
Ophir is seeking a major mid-stream
partner to help fund the planned floating LNG
facility in Block R and is agreeing gas terms
for the development.
“This discovery may help, however at 3.4
Tcf, this remains at the limit of what most larger
players would consider commercial,” analysts at
Westhouse said in note.— Robert Perkins
Sasol to push ahead in South Africa despite uncertainty
London—South Africa’s Sasol will continue
work under the terms of its exploration per-mit
for a license area offshore Durban, but
moving to a next phase of exploration will
depend on the results of the review of draft
legislation designed to cover the nascent
upstream sector in the country, a company
spokesman said Tuesday.
Several companies, including the
US’ Anadarko Petroleum and Shell, have
expressed reservations about spending
on operations in South Africa while the
review of the country’s Mineral and Petro-leum
Resources Development Amendment
(MPRDA) bill is ongoing.
“Work to be undertaken with regard to
the Durban exploration permit continues,” the
Sasol spokesman said.
He added that a seismic survey carried out
in March and April this year has been complet-ed
and analysis of the data is ongoing.
The company’s CEO David Constable ear-lier
this month said the company was awaiting
the outcome of the review before taking explo-ration
efforts to the next stage.
Sasol was awarded the three-year license
in November last year, and then in June Italy’s
Eni took control of the ER236 permit after
taking a 40% stake and operatorship.
The unexplored block covers 82,000 sq
km in the Durban and Zululand offshore basins
which are of interest because they sit at the
southern end of the Mozambique Channel.
Sasol shot a first phase of seismic at the
end of 2013 covering 4,000 km.
Sasol’s position is not as clear-cut as
that of Anadarko, which earlier this year said
it had mothballed spending due to the lack
of clarity over the proposed changes to the
MPRDA, which was passed by parliament
March 2014.
Anadarko has an 80% interest in two
blocks with state-owned PetroSA in the
Orange Basin.
“We have suspended all our expenditure
until the petroleum law and fiscal terms are
more clear, so that’s a bit disappointing,”
Anadarko’s exploration manager for East Afri-ca,
Tom Fletcher, said in Nairobi in April.
Shell also said it hoped the current
uncertainty over the bill would be resolved to
allow the company to move forward with drill-ing
plans.
Shell was awarded the permit, situated
in water depths of up to 3,500 meters and
covering an area of more than 37,000 km,
in 2012.
The MPRDA offers the state a 20%
free carried stake in all new develop-ments,
no limit on state ownership of
assets and no clarity regarding the pricing
terms for stake acquisition, according to
industry experts.
The concern within the industry centers
on its potential deterrent to investors as it
ultimately awards the state unfettered discre-tion
to acquire exploration opportunities with-out
its having to contribute to capital develop-ment
costs.
Although South Africa still awaits a large
discovery, the sector has drawn interest
from companies including Shell, Total, Sasol,
Canadian Natural Resources, ExxonMobil and
a number of independents with all of its off-shore
hydrocarbon blocks now under license.
— Stuart Elliott

5. The Americas
Corpus Christi splitter project progresses
New York—CCI Corpus Christi’s condensate
splitter project, geared towards finding a
home outside of the US for rapidly growing
North American production of ultra-light, sweet
liquids, made progress Monday after receiving
federal environmental regulatory approval.
With domestic refineries reaching their
saturation point when it comes to the pro-cessing
of light sweet crude, US producers
are looking for export outlets in order to keep
prices high enough to fund exploration and
production in unconventional plays such as
Texas’ Eagle Ford Shale.
CCI Corpus Christi, owned by merchant
commodities firm Castleton Commodities Inter-national,
still needs two further state environ-mental
permits before construction can begin
on Phase I of its planned 100,000 b/d facility,
a spokeswoman for the Texas Commission on
Environmental Quality (TCEQ) said Tuesday.
“There are two air permits under techni-cal
review,” said TCEQ spokeswoman Andrea
Morrow, adding that the project needs
approval of its New Source Review (NSR) and
Prevention of Significant Deterioration (PSD)
permit applications.
Both relate to air quality and permitted
levels of emissions, she said, adding that
there is no timeframe for when the approvals
for the two outstanding permits will be given.
“A technical review varies tremendously
based on the scope of the project,” Morrow
said, adding that the review is considered
complete when the engineers are satisfied
and sign off on it.
Export plans
A 40-year ban on crude oil exports to
most countries means potential exporters
like CCI Corpus Christi need explicit export
permission from the US Department of Com-merce
before they can ship out any liquids.
Two companies, oil and natural gas produc-er
Pioneer Natural Resources and midstream
giant Enterprise Products Partners, received
approval during the summer to export a cargo
each of processed condensate to Asia.
The port of Corpus Christi is located near
the Eagle Ford Shale play, where produc-tion
was up to 1.5 million b/d in July from
411,000 b/d in July 2013, according to data
from Bentek Energy. Bentek Energy is a unit
of Platts.
During Phase 1 of the project, CCI plans
to build a condensate splitter with two 50,000
b/d splitter trains, as well as associated equip-ment.
The second phase of the project will
include construction of a bulk terminal capable
of exporting 500,000 b/d of not only conden-sate
but diesel, jet fuel, naphtha, gasoil, and
Y-grade liquids, according to the PSD permit
application made with the TCEQ.
A Castleton spokeswoman was not avail-able
for comment Tuesday. Prior to January
2013, Castleton Commodities International
LLC was known as Louis-Dreyfus Highbridge
Energy. — Janet McGurty
Bogota—Colombia’s 220,000 b/d Cano Limon
pipeline remained closed Tuesday after the
weekend killing by suspected leftist guerril-las
of two contractors sent to fix a rupture
caused by a bombing the week before. Pipe-line
operator Ecopetrol has given no indication
US ‘near miss’ offshore reporting system on the way
...from page 1
5 Oilgram News / Volume 92 / Number 183 / Wednesday, September 17, 2014
of when the 500-mile line might reopen.
Bogota-based security consultant Orlando
Hernandez of Agora Consultores said repair
crews are still working near the half-way point
of the line that connects Occidental Petroleum’s
Cano Limon oil field in Arauca province with the
Covenas offloading port on the Caribbean.
The Cano Limon line, which is second only
to the 585,000 b/d OCENSA pipeline in size
and importance to Colombia’s oil industry,
was bombed a total of three times in August
in addition to last week’s attack.
The killing of the two workers by sus-pected
members of the National Liberation
Army (ELN) on Sunday is part of a pattern of
attacks on Colombian oil infrastructure carried
out by the ELN and another leftist rebel group
known by its initials FARC. The FARC currently
is involved in peace negotiations in Havana.
Ecopetrol president Javier Gutierrez told El
Tiempo newspaper on Monday that Colombia’s
oil field infrastructure has been attacked 140
times so far this year. He called on Colom-bia’s
armed forces to beef up security at oil
installations and bring the killers to justice.
Production loss strains budget
Combined with community protests that
have halted operations at several oil fields this
year, the attacks have cost the country 40,000
b/d of production so far this year, according to
energy vice minister Orlando Cabrales. Crude
output this year is expected to fall short of the
1.007 million b/d averaged in 2013.
The loss of anticipated oil export sales
has been the single most significant contribu-tor
to the Colombia government falling about
$6 billion short of the tax and royalty revenue
it expected to collect this year to fund social
programs and infrastructure projects, causing
a huge fiscal hole.
Security consultant Hernandez said that
the number of guerrilla attacks on oil field
operations and personnel is running at a
lower rate than last year, but the economic
consequences of the attacks have been much
more severe in 2014.
The uptick in oil field violence has also been
partially blamed for the relatively poor results of
the 2014 Colombia Bid Round completed in July
in which only 26 of 95 exploration blocks on
offer received bids from oil companies.
Earlier this year, the Cano Limon line was
down a total of 90 days after indigenous com-munities
along the pipeline route refused to
allow repair crews on-site to fix bomb damage,
claiming the government first had to promise
to clean up oil spills caused by the attacks.
In addition to bombings, guerrillas have kid-napped
seven oilfield workers so far this year,
all of whom have been released.
In Sunday’s attacks, the two contractors,
welder German Ariza Camacho and heavy
equipment operator Jairo Aguilar of the Ter-moelectrica
Coindustrial firm were killed by
snipers as they labored to restore operations
where the pipeline crosses the Teorama town-ship
in North Santander state near the Ven-ezuelan
border.
Hernandez said it was the first time guer-rillas
had killed oilfield workers with gunfire
since July 2012, when five Ecopetrol contract
workers were killed in Puerto Caicedo town-ship
in southern Putumayo province. The
workers were then fixing the 45,000 b/d
Transandino pipeline that runs from Orito to
Tumaco on the Pacific coast.
In August, the Transandino complex of
pipelines was bombed a total of five times
by suspected rebels, Hernandez said. Numer-ous
tanker trucks that producers use to haul
crude were forced by rebels to empty their
loads, causing extensive environmental dam-age.
— Chris Kraul
Cano Limon pipeline still shut after attack
Pattern of violence continues on Colombia’s oil infrastructure
reporting standpoint.”
These industry groups also pushed against
a plan in the proposed program to allow report-ing
of near misses by individuals, in addition
to companies, which they claim “allows for
alleged near misses to be reported by dis-gruntled
individuals who may want to create
inconveniences for industry organizations.”
Similarly, the Offshore Operators Com-mittee,
another industry group, wrote that
allowing reporting from companies only “will
provide more consistent and focused report-ing
data.”
Earlier this year, BSEE Director Brian
Salerno said the program will give indus-try
and regulators a “broad view” of which
safety barriers are working and which ones
have failed.
He said that the anonymous nature of the
reporting system allows operators to partici-pate
without fear of added scrutiny from regu-lators.
— Brian Scheid

6. ExxonMobil’s Kara Sea drilling must stop
US sanctions unambiguous about Russian venture
World needs less OPEC oil in 2015: Badri
...from page 1
OPEC’s biggest producer Saudi Arabia
cut its crude production by 408,000 b/d
in August, according to its submissions to
OPEC, the biggest monthly reduction since
late 2012.
A Platts survey of OPEC and oil industry
officials and analysts last week estimated
OPEC crude output to have averaged 30.2 mil-lion
b/d in August. The International Energy
Agency estimated OPEC production to have
averaged 30.31 million b/d. OPEC’s Vienna
secretariat, using secondary sources, estimat-ed
August production at 30.347 million b/d.
In its latest monthly report last week, the
IEA said it saw a need for less OPEC crude,
cutting its “call” of OPEC oil by 300,000 b/d
to 29.6 million b/d.
Oil prices
The Americas
6 Oilgram News / Volume 92 / Number 183 / Wednesday, September 17, 2014
Badri was also quoted as saying he
expected world oil prices to stage a recovery
from two-year lows by the end of this year.
The oil producer group’s crude basket,
which dipped below the $100/barrel level in
mid-August and has been falling since, stood
at $94.68/b on Monday.
“The oil price has been falling over the
past two months but we believe that the price
will grow again by the end of the year,” Rus-sian
news agency Prime quoted Badri as say-ing
after the talks with Novak.
Last week, Saudi oil minister Ali Naimi
played down the sharp drop in oil prices,
saying prices “always go up and down so I
really don’t know why the big fuss about it
this time.”
A joint statement said the Vienna talks
had reached “a general consensus that the
market is well-supplied with healthy stock
levels and adequate spare capacity.” Both
delegations, the statement said, “also under-scored
the importance of stable and predict-able
markets for the health of the industry
and investments and the well-being of the
global economy.”
The meeting between Badri and Novak
was a regular annual meeting to discuss the
general oil market situation, a Russian minis-terial
spokeswoman said.
Russia’s budget envisages crude prices
for Urals, the country’s key export blend, at
$96/barrel, and the current decline in oil
prices puts pressure on a country already hit
by western sanctions over Moscow’s role in
the Ukrainian conflict.
The sanctions limit access to capital
markets for a number of Russian key oil pro-ducers
and also ban exports of equipment
and technology for oil drilling in the Arctic and
deepsea as well as for shale.
The spokeswoman also said that the min-istry
planned to offer a new date for trilateral
talks among Kiev, Brussels and Moscow to
discuss ways to resolve the ongoing gas dis-pute
between Russia and Ukraine — Margaret
McQuaile with Nadia Rodova in Vienna
Washington—If ExxonMobil intends to halt
its Kara Sea drilling project with Rosneft, as
required under the latest round of US sanc-tions,
it is not tipping its hand.
But the US Treasury Department says its
sanctions, implemented in response to Rus-sia’s
continued involvement in the Ukraine
crisis, are clear—all US companies involved
in Arctic, deepsea and shale oil projects in
Russia must cease them by September 26.
“Any joint project, any ongoing existing
project or contract that involves this activity
would fall under these sanctions,” a Treasury
official, who spoke on condition of anonymity,
told Platts.
ExxonMobil has yet to say how, or even if,
it will unwind its Kara Sea drilling operations,
which began in mid-August.
In a statement, company spokesman Alan
Jeffers would only say that ExxonMobil is
“assessing the sanctions” and would “comply
with all laws.”
He would not comment on whether Exxon-
Mobil would withdraw its staff and equipment,
or if it would restrict partner Rosneft’s access
to any data. Nor would he say whether Exxon-
Mobil will continue to finance the project, as
the US sanctions do not cover financing.
ExxonMobil and Rosneft began drilling
their first exploration well in the Arctic Kara
Sea on August 9, at the Universitetskaya
structure in the East Prinovozemelsky-1 block.
US sanctions at the time had prohibited
US companies from providing technology for
Arctic, deepsea and shale oil exploration, but
sources have said ExxonMobil exploited a
loophole in the sanctions that allowed compa-nies
to provide services for such projects.
The new sanctions announced Friday close
that loophole and expressly prohibit any US
companies from offering technology, services
and expertise for those complex projects.
Rosneft and ExxonMobil inked a strate-gic
cooperation agreement in August 2011,
calling for joint development of offshore
blocks in the Arctic and in the southern
Black Sea and shale oil resources in West
Siberia, as well as a number of joint proj-ects
in North America.
The two companies earlier this month
launched seismic exploration work at blocks
in the Arctic Laptev Sea. — Herman Wang
Indian refiners eke out a
profit on diesel as oil falls
Singapore—The recent drop in oil prices
led to a thin and rare profit margin on
diesel for India’s state-owned refiners and
rekindled a debate that the subsidies for
the fuel be scrapped
The refiners are earned Rupees 0.35
(0.6 cents)/liter on diesel sales as fall-ing
international oil prices coupled with
a government-regulated Rupees 0.50/
liter monthly price hike that completely
wiped out their under-recoveries—losses
suffered from selling diesel at below
market prices.
This brought speculation that the
Indian government may use the opportu-nity
to officially deregulate diesel prices,
though elections in two major states next
month have made this a politically sensi-tive
decision.
Raghuram Rajan, the governor of the
country’s central bank, the Reserve Bank of
India, in a speech Monday said that the coun-try
needs to “seize the moment and eliminate
diesel subsidies.”
The basket of India’s crude oil price as
calculated by the Petroleum Planning and
Analysis Cell was $95.50/barrel on Septem-ber
15, down from $96.74/b on the previous
publishing day, September 12, the petroleum
ministry said in a statement Tuesday.
India subsidizes diesel, LPG and kerosene
prices. New Delhi, under the previous govern-ment,
introduced controlled deregulation of
diesel prices in January 2013—when the
under-recoveries stood at Rupees 14/liter—
allowing prices to rise by Rupees 0.50/liter
each month.
The Indian budget for fiscal 2014-2015
(April-March), announced in July by finance
minister Arun Jaitley, stated that the govern-ment
is aiming to fully deregulate diesel
prices within one year via monthly price hikes
“if there are no global price shocks,”
The government also reduced its subsidy
estimates for gasoil, LPG and kerosene for
the current fiscal year (April 2014-March
2015) to Rupees 634.27 billion, compared
with Rupees 854.80 billion in the previous
fiscal year. — Mriganka Jaipuriyar, with M.C
Vaijayanthi in Mumbai
Capital Crude Platts Podcast
What can the US crude oil industry
learn from Pabst Blue Ribbon?
Platts senior editors Brian Scheid and
Herman Wang compare the ongoing
campaign to allow export of US crude
oil to some of the most successful beer
marketing campaigns.
http://plts.co/capitol-crude-091514

7. New York—The oil complex settled higher Tues-day
as an expected drop in weekly US commer-cial
crude stocks helped strengthen prices.
NYMEX October crude futures settled
$1.96/b higher at $94.88/b. Front-month
ICE Brent closed $1.17/b higher at $99.05/
barrel, one day after the expiration of the
October contract.
In refined products, NYMEX October ULSD
finished the day up 1.67 cents at $2.7563/
gal, while NYMEX October RBOB settled 2.8
cents higher at $2.7563/gal.
Oil analysts surveyed by Platts Monday
What crude & natural gas
markets are doing...
September 16 settle: $94.88, up $1.96
($/bbl)
95
94
93
92
94.88
4.00
3.95
3.90
3.85
September 16 settle: $3.995, up $0.064
3.995
Chief Editor: Gary Gentile, gary.gentile@platts.com
Senior Editor: Benjamin Morse, benjamin.morse@platts.com
EMEA Senior Editor: Robert Perkins
APAC Senior Editor: Mriganka Jaipuriyar
Design and Production: David Stark
Regional offices:
New York—Janet McGurty; Washington—Herman Wang, Brian
Scheid; Houston—Starr Spencer; London—Margaret McQuaile,
Nick Coleman; Cape Town—Jacinta Moran; Dubai—Tamsin Car-lisle,
Adal Mirza; Moscow—Nadia Rodova, Dina Khrennikova,
Rosemary Griffin; Singapore—Song Yen Ling; Sydney—Chris-tine
Markets & Data
7 Oilgram News / Volume 92 / Number 183 / Wednesday, September 17, 2014
ISSN# 0163-1284
To reach Platts
E-mail:support@platts.com
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Forster; Tokyo—Takeo Kumagai
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Vol 92 / No 183 / Wednesday, September 17, 2014
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Manager, Advertisement Sales
Kacey Comstock
said they expected US crude commercial
crude stocks to have fallen 400,000 barrels
for the reporting week ended September 12.
Declining crude stocks can be interpreted as
a sign of accelerating demand, which traders
interpret as a bullish for oil prices.
Carl Larry, president of Oil Outlooks, said
he expects a weekly draw of 1.5 million bar-rels,
noting a number of refineries may hold
off performing routine maintenance.
“The refining margins are just too good
right now,” he said.
Refinery owners typical shut down their
plants after the end of the summer driving sea-son
in order to conduct regular maintenance
work. The resulting drop in crude runs typically
causes downward pressure on oil prices.
A few weeks ago, analysts had been
predicting a large number of refineries would
come offline for maintenance, Larry said. That
view has shifted as high refining margins are
providing an incentive for refinery owners to
keep producing products, he said.
US Gulf Coast cracking margins for Loui-siana
Light Sweet averaged almost $18.50/b
last week. West Texas Sour coking margins
averaged over $20/b.
Platts margin data reflects the difference
between a crude’s netback and its spot price.
Netbacks are based on crude yields, which
are calculated by applying Platts product price
assessments to yield formulas designed by
Turner, Mason & Co.
Tradition Energy analyst Gene McGillian
said Brent futures were due for an increase
after the October contract settled Monday at
a front-month low not seen since 2012.
“I think we were oversold, making the mar-ket
vulnerable to corrective covering,” he said.
The fall in oil prices is causing atten-tion
to turn to whether OPEC will decide to
lower its output ceiling at its next ministerial
meeting November 27. OPEC’s current 30
million b/d target has been in place since
January 2012. The oil producer group’s last
monthly report, released last week, forecast
OPEC demand to average 29.2 million b/d in
2015.— Geoffrey Craig
Crude futures higher ahead of weekly stock reports
Firm West African demand
tightens Europe products
London—Increased demand from West Africa
is tightening the gasoline blending components
market, as increased blending activity for low-
Reid Vapor Pressure summer grade gasoline
exerts upwards pressure on premiums for
octane boosters, market sources said Monday.
“There is overall demand for European
summer gasoline...in particular from WAF,”
said a refiner, adding that the discounts at
which the higher-sulfur, lower-octane WAF
grade trades to the 10 ppm premium unlead-ed
gasoline barges were decreasing from
previously-heard values of $30/mt to single-digit
values for FOB loading.
In October, Europe will transition from the
more expensive summer-specification low-RVP
gasoline to the typically cheaper high-RVP win-ter
specification. West Africa, however, typically
imports low-RVP gasoline throughout the year.
Premiums for Light Virgin Naphtha [LVN], a
key blending component for WAF grade gaso-line,
were seen rebounding, with the product
heard pegged on offer at a $30/mt premium to
the CIF NWE naphtha assessment, higher than
the $20/mt premiums previously observed.
“WAF pulled so much and everyone had
empty systems,” said a trading source.
Increased buying interest was also
observed for reformate, a key octane booster,
with the 102 RON specification heard pegged
at a high $20/mt premium to the EBOB barg-es
from single-digit values.
The arbitrage from NWE to WAF was also
favored by a rebound in prices for summer-grade
gasoline in the US Gulf Coast, which
typically competes with NWE to supply WAF.
— Francesco Di Salvo
NYMEX crude settle, rst month
NYMEX natural gas settle, rst month
($/MMBtu)
91
91.67
92.83
92.27
92.92
10-Sep 11-Sep 12-Sep 15-Sep 16-Sep
3.80
3.954
3.823
3.857
3.931
10-Sep 11-Sep 12-Sep 15-Sep 16-Sep

8. Exchanging value
in the oil markets
As an array of new supply sources for Asian buyers
have been freed up due to rising US production and
unconventional energy options, what impact will this
have on the low margin downstream environment?
Exchange ideas and opinions on Asia’s growing
dominance in global crude oil markets. Analyse
upstream developments and key market changes
affecting trading, risk management and pricing through
presentations, panel discussions and interactive
onstage interviews with over 100 of your peers
including senior strategic upstream executives from
the world’s IOCs, NOCs and independents, senior oil
traders, analysts, regulators and government officials
at Platts’ 2nd Annual Asian Crude Oil Summit.
Email : sg-conference@platts.com
Tel: +65 6216 1191
Website: www.platts.com/crudeoilasia