Iraqi plans, Nigerian violence and more refineries

This section summarizes downstream developments of the previous month. Exploration & Production are covered in 'Upstream Review'.
Iraq has announced several schemes to raise its production of oil, natural gas and LPG, and to upgrade its refinery system. Work on all these projects, however, continues to be hindered by the high levels of violence, despite the arrival of more US forces in some of the worst-affected areas. The only region where reconstruction and new developments can take place is in the Kurdish north of the country, but here, political tensions between the regional government of Kurdistan and Baghdad are threatening plans to develop new oilfields. Baghdad objects to a series of development deals signed between the Kurdish regional government and various oil and gas companies, one of which has led to the development of a new oilfield and associated infrastructure at Tawke, which is expected on-stream shortly with an output of about 20,000 bpd. Baghdad has drawn-up new rules stating that all such deals should be signed with the central government. Kurdistan's regional government is fighting to retain control of its oil and gas industries.     

Iraqi violence, Saudi attack and further bombings

This section summarizes downstream developments of the previous month. Exploration & Production are covered in 'Upstream Review'.
Iraq moved closer to all-out civil war following an attack on the Imam Ali al-Hadi mosque in Samarra, one of Shi'i Islam's holiest shrines, on 22nd February. In the days that followed, several hundred Iraqis died in inter-communal violence. Attacks on installations close to the Basrah Oil Terminal were reported. Earlier in the month, the main oil storage facility in Kirkuk was bombed, forcing the Northern Oil Company to shut-in the 0.3 mn bpd field. Oil and electricity supplies in southern Iraq were cut by attacks on installations some 40 miles south of Baghdad. Turkey agreed to resume product exports to Iraq after a deal was agreed on repaying Iraqi debts of $1 bn to Turkish suppliers. An official Australian inquiry into illegal payments made under the UN's oil-for-food programme is to investigate allegations involving two Australian-controlled oil firms.     

Still more records, Iraqi violence and Caspian exports

This section summarizes downstream developments of the previous month. Exploration & Production are covered in 'Upstream Review'.
Oil prices set further records at the start of May before falling back. December WTI hit an all-time high of $78.00/bbl on Nymex on 3rd May. IPE November Brent went up to a record $76.45/bbl. Both contracts eventually settled lower and prices in general weakened before staging a minor rally at the end of the month. Other price records were broken early in the month. In Asia, the Indonesian marker grade, Minas, was recorded at $74.04/bbl on 2nd May, whilst Malaysia's Tapis went above $76.70/bbl. Strong Asian demand also boosted the prices of West African crudes. The markets appeared to be reacting to growing tensions in Iraq, Iran and Nigeria. These considerations returned to haunt the markets later in the month. All crude oil loadings at Iraq's Persian Gulf marine terminal were suspended following a fire, though the main Gulf terminal at Basrah continued to operate. The Ceyhan terminal remained out of action. Tensions between the US and Iran over the latter's nuclear programme gave rise to fears of an embargo on Iranian oil exports. Several foreign oil workers were kidnapped following an armed attack on oil installations in Nigeria. OPEC ministers kept their production ceiling unchanged at 28 mn bpd at a meeting in Caracas.     

THE MONTH IN BRIEF: Iraq descends into chaos,Baiji refinery shut,Kurdistan offers to help export Iraqi crude

This section summarizes downstream developments of the previous month. Exploration & Production are covered in “Upstream Review.”     

Gasoline records, Nigerian troubles and security problems

This section summarizes downstream developments of the previous month. Exploration & Production are covered in 'Upstream Review'.
Gasoline reached record prices in the US as inventories fell and demand rose. Average retail prices hit $3.11/gal in mid-month before falling slightly. Supplies were squeezed by a series of unexpected refinery shutdowns and problems were reported meeting new fuel specification ( see 'Focus', March 2006 ). Partly in response to the lower than expected refinery runs, the price differential of WTI fell to a record $6.30/bbl below BFO. The US remained generally oversupplied with crude oil despite the temporary loss of 100,000 bpd of Alaska North Slope (ANS) production in yet another disruption to BP's operations there ( see 'The Month in Brief', November 2006 ). President George W Bush meanwhile declared that federal government departments must investigate further ways of improving US energy efficiency.     

No OPEC increase, Iraqi output up and Mexican exports down

This section summarizes downstream developments of the previous month. Exploration & Production are covered in 'Upstream Review'.
Oil prices fell back early in December as fears grew that high prices were about to push the US and other markets into recession. Brent fell back below $90/bbl ( see 'Oil Price Review') but the fall proved only temporary and prices began to rise sharply towards the end of the year. OPEC ministers did nothing to ease market fears when, at their meeting on 5th December in Abu Dhabi, they decided to leave the organization's output ceiling unchanged at 27,253,000 bpd. The ministers rejected calls from consuming countries to produce more oil, declaring in their communiqué that the market was well-supplied, with stocks at comfortable levels. The high level of prices was blamed on what the communiqué called speculative activity by financial funds and others. Angola and Ecuador were brought into the production-sharing system, being given output quotas respectively of 1.9 mn bpd and 520,000 bpd.     

Iraqi law opposed, worries about security and a petrol mystery

This section summarizes downstream developments of the previous month. Exploration & Production are covered in 'Upstream Review'.
Iraq's Cabinet has approved a controversial draft law permitting foreign oil investment and allowing regional governments to negotiate directly with foreign companies. Many in Iraq say the law is being imposed on the government by Washington as a way of ensuring that US oil companies have a large role in the production of Iraq's oil. There is also opposition to the idea that regions such as Kurdistan and the Shi'i-dominated south should have an important role in oil policy. Moreover, there is still no firm agreement on how Iraq's oil revenues are to be shared between the various provinces. An important gas export project looks unlikely to go ahead, following Kuwait's decision not to refurbish a pipeline designed to import gas from Iraq's South Rumailah field after Iraq failed to build the infrastructure to export the gas.     

More price records, Iraqi tensions and oil companies in court

This section summarizes downstream developments of the previous month. Exploration & Production are covered in 'Upstream Review'.
Oil prices ended October at record levels. Spot month Brent futures hit $91.18/bbl before settling at a record $90.63/bbl on 31st October. WTI went as high as $95.28/bbl before settling-again at a record-of $94.53/bbl. Traders were worried about political tensions in the Middle East and US markets were spooked by a fall in crude inventories at Cushing, Oklahoma, the delivery point for Nymex crude. Product prices rose sharply, boosted by a fire at the Coryton refinery in England. Gasoline barges rose above $800/t in North West Europe. Across the world in Asia, jet fuel went above $100/bbl for the first time in Singapore, just as the first Airbus 380 airliner completed its maiden flight from Singapore to Sydney.     

Bombs, hurricanes and more chaos in Iraq

This section summarizes downstream developments of the previous month. Exploration & Production are covered in 'Upstream Review'.
The oil market's roller-coaster continued into July with rising prices for US gasoline ahead of the 4th July holiday and a jump in prices for WTI on fears of hurricane damage to US Gulf production. August Nymex gasoline settled at a record $1.8056/gall on the 7th July as figures were released showing US demand at record weekly levels. On the same date, a series of fatal terrorist bomb attacks in London propelled IPE Brent to its highest-ever level of $60.70/bbl whilst, in Asia, Dubai traded at an all-time high of $55.80/bbl. The market's strength rapidly proved to be evanescent. Within hours of the London bombings, Brent had given up $5.00/bbl. Crude oil and gasoline prices eased in subsequent days and middle distillate lost some of its recent strength relative to gasoline as US stock figures showed a steady improvement in inventory levels. Volatility returned towards the end of the month on worries about gasoline shortages in both the US and Europe and more price records fell on 1st August on news of the death of King Fahd of Saudi Arabia. WTI gained $1.00 on the day, settling at a record $61.57/bbl on Nymex, having been even higher during the day's trading, at $62.30/bbl. On the IPE in London, Brent rose to its highest-ever intra-day level of $60.98/bbl, before settling slightly lower. Some product prices also went into previously uncharted territory: notably jet fuel in North West Europe, which went above $600/t.     

More price records, more Nigerian troubles and privatization woes

This section summarizes downstream developments of the previous month. Exploration & Production are covered in 'Upstream Review'.
Crude oil prices rose steadily during July, establishing new records in some instances. Dated BFOE went above $78.90/bbl for the first time, whilst on 1st August, September WTI futures hit a record $78.77/bbl after US crude oil inventories recorded a sharp drop. North Sea markets were affected by the shut-down of a gas pipeline which threatened production of more than 100,000 bpd of NGL. OPEC declined to come to the market's rescue by producing more oil, claiming that the high price levels were caused by geopolitical factors and shortages of refined products rather than insufficient supplies of crude. Demand for oil was boosted in Asia by the shut-down of Japan's largest nuclear power station.     

Another hurricane, high prices and more chaos in Iraq

This section summarizes downstream developments of the previous month. Exploration & Production are covered in 'Upstream Review'.
Another hurricane, this time called Rita, battered the US Gulf Coast, sending oil prices up worldwide, though not to the heights seen when its predecessor, Katrina, arrived. As before, a large swathe of US refinery capacity was temporarily put out of action: this time mainly in Texas. For around a week in late September, when Rita arrived, nearly 4.1 mn bpd of crude distillation capacity was taken off-line. At the same time, some 0.9 mn bpd was still unusable as a result of the depredations of Katrina in late August, leaving the US briefly minus nearly one third of its refinery capacity. The situation improved as some capacity was brought slowly back on-line, but by the beginning of October around 3.0 mn bpd was still not back in operation. The main price effects of Katrina were on gasoline, prompting demands in the Congress and elsewhere for investigations into overcharging by refiners and retailers ( see 'Focus'). A record weekly increase in the first week of September propelled the average price of regular gasoline across the US to $3.07/gall. Rita's principal effect was on heating oil, which went up in the last week of September by nearly 20% to $2.51/gall in the US Gulf. US crude oil prices remained below their immediate post-Katrina record highs ( see 'The Month in Brief', September 2005 ) despite the loss of the entire 1.5 mn bpd production in the Gulf of Mexico following Rita's arrival.     

BGP，Agip Sign Seismic Contract for Nigerian Block

Bureau of Geophysical Prospecting (BGP), asubsidiary of CNPC, and Agip, an Italian oilcompany, signed a contract for seismic explorationof a Nigerian block in February 2002.     

Merging EU Energy and Climate Policy Can Achieve EU Energy Independence

In order for the European Union (EU) to sign on to the Kyoto Protocol, the EU also signed up for greater energy dependence on Russia under the belief that Russian natural gas would help it achieve climate goals with no political risks.     

OPEC quotas unchanged, violence continues and countries go green

This section summarizes downstream developments of the previous month. Exploration & Production are covered in 'Upstream Review'.
OPEC maintained its output ceiling at 28 mn bpd at its meeting on 8th March in Vienna, agreeing to review quotas again on 1st June in Venezuela. Venezuela's oil minister said $60/ bbl was a sustainable price for WTI and that OPEC should react when prices fell below that level, having already asked his fellow ministers to cut the OPEC ceiling by 500,000 bpd. Iraq announced that it was standing by plans to raise production capacity to 3 mn bpd by the end of 2006 despite the widespread chaos and violence. It has not been able to produce more than 2 mn bpd on a sustained basis since the US-led invasion three years ago. Production has been close to 1.8 mn bpd in recent weeks. Exports via Basrah are being restricted by a lack of tugs, pipeline leakages, poor equipment and power cuts. The export route to Ceyhan has been closed by repeated acts of sabotage and is unlikely to reopen for at least eight months according to the country's oil ministry.     

Cuts from OPEC, violence in Iraq, more biofuel

This section summarizes downstream developments of the previous month. Exploration & Production are covered in 'Upstream Review'.
OPEC's ministers, meeting in Doha on 19th October, decided to cut their production by 1.2 mn bpd from 1st November. The reduction is based on an output total of 27.5 mn bpd, which represents the production of the ten quota-observing countries in the weeks immediately preceding the Doha meeting. The Kuwaiti Oil Minister subsequently observed that the OPEC-10 were unlikely to be at their 26.3 mn bpd target before the second half of November. Venezuela said its 138,000 bpd cut would be concentrated on foreign joint-ventures operating in the Orinoco heavy oil belt. Crude oil prices fell in the wake of OPEC's announcement, prompting the Saudis to speculate that the group might cut production by a further 500,000 bpd at its meeting in the Nigerian capital, Abuja, on 14th December.