Energy Watchblog: gas

Banamex Analysts: Cheaper natural gas to aid Mexico's petrochemical sector

<div class="separator" style="clear: both; text-align: center;"></div><span style="clear: left; float: left; font-family: Times, Times New Roman, serif; margin-bottom: 1em; margin-right: 1em;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiO0_KPFM-c6UvomN5-SWBFh1F-45opeJcoD4aJx6LdnQJXL7bB_CQoNUIRP3k1YfjDTKDuT_XjTueuHXacw3rlg5zl4oqUrkuhRWxWOv5hfjY4PoE7CLeFUlCjX5YZ9StqzUB44-dWMV8G/s1600/mexichem_250313.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="192" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiO0_KPFM-c6UvomN5-SWBFh1F-45opeJcoD4aJx6LdnQJXL7bB_CQoNUIRP3k1YfjDTKDuT_XjTueuHXacw3rlg5zl4oqUrkuhRWxWOv5hfjY4PoE7CLeFUlCjX5YZ9StqzUB44-dWMV8G/s320/mexichem_250313.jpg" width="320" /></a>The opening of Mexico's natural gas sector to private investment will lower prices and allow local firms to increase their production capacity for petrochemical-based products, according to analysts. <span style="background-color: white; line-height: 18px;">Mexican firms such as Mexichem and Alpek will be benefited by the lower prices and be able to grow their presence in the sector, according to a report analyzing Mexico's energy reforms by Banamex Accival Casa de Bolsa. Both companies are currently investing to expand their production capacity to take advantage of the price differential between ethylene and natural gas. </span></span><span style="clear: left; float: left; font-family: Times, Times New Roman, serif; margin-bottom: 1em; margin-right: 1em;"><span style="background-color: white; font-family: Times, Times New Roman, serif; line-height: 18px;">"Mexichem is investing in the production of 550,000t of vinyl chloride monomer (VCM) in the US, while Alpek plans similar investment with a plant supplied by natural gas in Mexico," the report states. </span><span style="background-color: white; line-height: 18px;">VCM is a chemical used to produce polymer and polyvinyl chloride (PVC). </span><span style="background-color: white; line-height: 18px;">The expectation is that the energy reforms will contribute to an increase in the supply of ethane/propane, which have a high concentration of natural gas, and to a deregulation of the downstream sector, which will in turn lead to a drop in prices, the report states.</span></span><br /><div class="text-contenido" style="background-color: white; margin: 0px 10px 0px 0px;"><div style="line-height: 18px; margin-bottom: 20px;"></div><div style="line-height: 18px; margin-bottom: 20px;"></div><div style="line-height: 18px; margin-bottom: 20px;"><span style="font-family: Times, Times New Roman, serif;">Alpek is expected to invest in the construction of plants producing monoethylene glycol (MEG) in Mexico and an ethylene plant in the short term in order to take advantage of the lower gas prices.</span></div><div style="line-height: 18px; margin-bottom: 20px;"></div><div style="line-height: 18px; margin-bottom: 20px;"></div><div style="line-height: 18px; margin-bottom: 20px;"><span style="font-family: Times, Times New Roman, serif;">"The confirmed availability of gas will probably lead Alpek to build an MEG plant in Mexico, instead of in the US," the report states.</span></div><div style="line-height: 18px; margin-bottom: 20px;"></div><div style="line-height: 18px; margin-bottom: 20px;"></div><div style="line-height: 18px; margin-bottom: 20px;"><span style="font-family: Times, Times New Roman, serif;">Mexichem is also likely to expand its VCM production in Mexico, after having begun to build a cracker plant in Texas in partnership with US firm Oxychem. </span><span style="font-family: Times, 'Times New Roman', serif;">Mexichem is currently building a 200MW cogeneration plant powered by natural gas in Altamira, in the northeastern state of Tamaulipas, and could approve the construction of another one in Salamanca, in the central state of Guanajuato. </span></div><div style="line-height: 18px; margin-bottom: 20px;"></div><div style="line-height: 18px; margin-bottom: 20px;"></div><div style="line-height: 18px; margin-bottom: 20px;"><span style="font-family: Times, Times New Roman, serif;">"Mexico is the only country in the world where an artificial barrier was created in the petrochemical sector, and the reality is that the lack of investment in the sector by Pemex has created huge bottlenecks in the production chain, leading to more imports, which in 2013 surpassed US$23bn," according to an analysis of the reform by Mexican energy consultancy GMEC. </span></div><div style="line-height: 18px; margin-bottom: 20px;"><span style="font-family: Times, Times New Roman, serif;">Mexico's petrochemical imports increased by 7.7% in 2013, while the petrochemical sector's contribution to GDP dropped by 0.4% to 1.2%, according to the national association of the chemical industry (ANIQ). </span></div><div style="line-height: 18px; margin-bottom: 20px;"></div><div style="line-height: 18px; margin-bottom: 20px;"></div><div style="line-height: 18px; margin-bottom: 20px;"><span style="font-family: Times, Times New Roman, serif;">A lack of natural gas transportation infrastructure has meant that Mexican firms have suffered a supply deficit from the US, GMEC added, with Pemex importing more natural gas at a higher price to satisfy local demand.</span></div></div>

Banamex Analysts: Cheaper natural gas to aid Mexico's petrochemical sector

The opening of Mexico's natural gas sector to private investment will lower prices and allow local firms to increase their production ca...

Mexico: Energy reform clears final hurdle of state approval

MEXICO CITY -- Mexico’s sweeping energy reform cleared its final  legal hurdle Monday when San Luis Potosi became the 17th state  legislature to give rapid-fire approval to constitutional changes that  will allow foreign investment into what has been a 75-year-old state  monopoly.<br /><div class="p402_premium">The ambitious energy bill, opening up Mexico’s promising but poorly performing oil and gas industry, was <a href="http://lat.ms/1hX34Y7">approved solidly</a> in both houses of <a class="taxInlineTagLink" href="http://www.latimes.com/topic/politics/government/u.s.-congress-ORGOV0000131.topic" id="ORGOV0000131" title="U.S. Congress">Congress</a> last week, amid bitter opposition by leftist parties.<br /><br /><div class="separator" style="clear: both; text-align: center;"></div><div class="separator" style="clear: both; text-align: center;"><span style="font-size: x-small;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgWCWn4bN_A0fW3tGwa3ZTUlsJWCBwgj0WGLY-Cw7ZgKUF5e4WOS76hdAC3pNnOcglLyU9NLoyEpRdoVTUqwWTDe3liWRS0tWOYOn25FM4SMxkethetJsxW5L59zRCp-mfHioOlbqnF2tEB/s1600/la-fg-wn-mexico-energy-reform-hurdle-approval--001.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgWCWn4bN_A0fW3tGwa3ZTUlsJWCBwgj0WGLY-Cw7ZgKUF5e4WOS76hdAC3pNnOcglLyU9NLoyEpRdoVTUqwWTDe3liWRS0tWOYOn25FM4SMxkethetJsxW5L59zRCp-mfHioOlbqnF2tEB/s1600/la-fg-wn-mexico-energy-reform-hurdle-approval--001.jpg" /></a></span></div><span style="font-size: x-small;"></span><span style="font-size: x-small;">The Centenario exploration oil rig operated by Mexican company Grupo R  and working for Mexico's state-owned oil company Pemex, in the Gulf of  Mexico. State and federal bodies have quickly lined up behind  constitutional changes that will allow foreign investment into what has  been a 75-year-old state monopoly.                                                 <span class="credit">(<span class="photographer">Omar Torres / AFP/Getty Images</span>)</span></span><br /><br />Because measures in the bill require changing the constitution, a  majority of states also had to give their OK. That happened over the  weekend and early Monday, when 17 of 31 states voted in favor of the  bill, even as leftist demonstrators protested and surrounded some state  legislatures in hopes of discouraging approval.<br /><br />But passage was never really  in doubt because most state governments are controlled by the  Institutional Revolutionary Party (PRI) of President Enrique Peña Nieto,  for whom overhauling state oil giant Petroleos Mexicanos (Pemex) has  been a major goal of his year-old administration. Along with the PRI,  the conservative National Action Party also lent crucial support.<br /><br />The bill now returns to the Senate for official recognition of the  states’ votes and then will be signed into law by Peña Nieto -- all  formalities.<br /><br />Peña Nieto, on an official visit to Turkey on Monday, praised the  “responsibility and commitment” exhibited by the states. “This shows  that Mexico has solid democratic institutions, capable of carrying forth  major national transformations,” he said via Twitter.<br /><br />The new law will call for “production-sharing” agreements that allow  private firms to take a cut of the crude they find under licensing  agreements and contracts. It also opens up the highly inefficient state  electricity sector and is designed to make Pemex a competitive and more  productive company.<br />Proponents argue that Mexico needs outside expertise to be able to  exploit the hard-to-reach deep-water oil reserves and shale rock  deposits of gas. Otherwise, with production declining and shallow-water  wells drying, Mexico could become a net importer of oil by 2020, experts  say.<br />But opponents, including the left and a large percentage of ordinary  Mexicans, maintain that allowing foreign companies to drill and take  away oil amounts to a sell-out of precious natural resources. A better  plan would be to fight rampant corruption and waste in Pemex, they  argue.</div>

Mexico: Energy reform clears final hurdle of state approval

MEXICO CITY -- Mexico’s sweeping energy reform cleared its final legal hurdle Monday when San Luis Potosi became the 17th state legislatur...

Oil Boom 2.0 – An American Dream Updated with Christof Rühl

<div id="content" itemscope="" itemtype="http://schema.org/Article" style="background-color: #e9e9e9; border: 0px; clear: both; float: left; font-family: Helvetica, Arial, sans-serif; font-size: 15.555556297302246px; line-height: 17.77777862548828px; margin: 0px; outline: 0px; padding: 0px; vertical-align: baseline; width: 646px;"><div id="article-5767888004492324951" style="border: 0px; font-family: inherit; font-size: 15.555556297302246px; font-style: inherit; font-variant: inherit; font-weight: inherit; line-height: inherit; margin: 0px; outline: 0px; padding: 0px; vertical-align: baseline;"><div class="module-box  new-social-gestures" id="article-container" style="-webkit-box-shadow: rgba(0, 0, 0, 0.247059) 0px 1px 2px; background-color: white; border: 0px; box-shadow: rgba(0, 0, 0, 0.247059) 0px 1px 2px; font-family: inherit; font-size: 15.555556297302246px; font-style: inherit; font-variant: inherit; font-weight: inherit; line-height: inherit; margin: 0px 0px 12px; outline: 0px; padding: 0px; vertical-align: baseline;"><div id="article-container" style="border: 0px; font-family: inherit; font-size: 15.555556297302246px; font-style: inherit; font-variant: inherit; font-weight: inherit; line-height: inherit; margin: 0px; outline: 0px; padding: 0px; vertical-align: baseline;"><div id="article-body" style="border-top-color: rgb(230, 230, 230); border-top-style: solid; border-width: 1px 0px 0px; clear: both; color: #333333; font-family: inherit; font-size: 15px; font-style: inherit; font-variant: inherit; line-height: 20px; margin: 0px; outline: 0px; overflow: hidden; padding: 10px 20px; vertical-align: baseline;"><div style="border: 0px; font-family: inherit; font-size: 15.555556297302246px; font-style: inherit; font-variant: inherit; font-weight: inherit; line-height: inherit; margin-bottom: 1em; margin-top: 1em; outline: 0px; padding: 0px; vertical-align: baseline;"></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgaoTKnINZhnlTkRmolpKBwBbmpZdOskykNyT6H91YHcrMfRIx5pcWAWHp18qS8MXvLkr8TMChkPlhuuwS44XuB_8R-JDded0zGPbIQDAsTg0FSmWSCxEokRkMxQAWswHmdbwz6fCbbKy4a/s1600/1c7f78e.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgaoTKnINZhnlTkRmolpKBwBbmpZdOskykNyT6H91YHcrMfRIx5pcWAWHp18qS8MXvLkr8TMChkPlhuuwS44XuB_8R-JDded0zGPbIQDAsTg0FSmWSCxEokRkMxQAWswHmdbwz6fCbbKy4a/s1600/1c7f78e.jpg" /></a></div><div style="border: 0px; font-family: inherit; font-size: 15.555556297302246px; font-style: inherit; font-variant: inherit; font-weight: inherit; line-height: inherit; margin-bottom: 1em; margin-top: 1em; outline: 0px; padding: 0px; vertical-align: baseline;"><br /></div><div style="border: 0px; font-family: inherit; font-size: 15.555556297302246px; font-style: inherit; font-variant: inherit; font-weight: inherit; line-height: inherit; margin-bottom: 1em; margin-top: 1em; outline: 0px; padding: 0px; vertical-align: baseline;">The impact of the US shale “revolution” has people all around the world scratching their heads – over what it means: Is North America really on the road to self-sufficiency? Of oil, of gas, or of all fuels? And increasingly, people wonder about the implications for their own regions: Are there similar resources? What would it take to get at them?</div><div style="border: 0px; font-family: inherit; font-size: 15.555556297302246px; font-style: inherit; font-variant: inherit; font-weight: inherit; line-height: inherit; margin-bottom: 1em; margin-top: 1em; outline: 0px; padding: 0px; vertical-align: baseline;">By the numbers, this already <i style="border: 0px; font-family: inherit; font-size: 15.555556297302246px; font-variant: inherit; font-weight: inherit; line-height: inherit; margin: 0px; outline: 0px; padding: 0px; vertical-align: baseline;">IS</i> a big development. Last year, the US witnessed the world’s largest increase in oil as well as gas production. Not only did oil production expand faster than in any other country, last year also saw the biggest oil production increase in the history of the US – a country, mind you, which has produced oil since 1859.</div><div style="border: 0px; font-family: inherit; font-size: 15.555556297302246px; font-style: inherit; font-variant: inherit; font-weight: inherit; line-height: inherit; margin-bottom: 1em; margin-top: 1em; outline: 0px; padding: 0px; vertical-align: baseline;">So far this year, production has grown even stronger.</div><div style="border: 0px; font-family: inherit; font-size: 15.555556297302246px; font-style: inherit; font-variant: inherit; font-weight: inherit; line-height: inherit; margin-bottom: 1em; margin-top: 1em; outline: 0px; padding: 0px; vertical-align: baseline;">The reason is tight oil - oil generated with the same technologies that gave us shale gas.</div><div style="border: 0px; font-family: inherit; font-size: 15.555556297302246px; font-style: inherit; font-variant: inherit; font-weight: inherit; line-height: inherit; margin-bottom: 1em; margin-top: 1em; outline: 0px; padding: 0px; vertical-align: baseline;"><b style="border: 0px; font-family: inherit; font-size: 15.555556297302246px; font-style: inherit; font-variant: inherit; line-height: inherit; margin: 0px; outline: 0px; padding: 0px; vertical-align: baseline;">Production</b></div><div style="border: 0px; font-family: inherit; font-size: 15.555556297302246px; font-style: inherit; font-variant: inherit; font-weight: inherit; line-height: inherit; margin-bottom: 1em; margin-top: 1em; outline: 0px; padding: 0px; vertical-align: baseline;">US production last year grew by over 1 million barrels per day, 80% of which came from North Dakota and Texas, currently home to the country’s most prolific tight oil formations. North Dakota surpassed Alaska to become the second largest producing state and in Texas, the number one, output has doubled over the past five years.</div><div style="border: 0px; font-family: inherit; font-size: 15.555556297302246px; font-style: inherit; font-variant: inherit; font-weight: inherit; line-height: inherit; margin-bottom: 1em; margin-top: 1em; outline: 0px; padding: 0px; vertical-align: baseline;">Meanwhile, the US is well on its way to replace Saudi Arabia as the world’s largest oil producer – the switch may take place as early as next year.</div><div style="border: 0px; font-family: inherit; font-size: 15.555556297302246px; font-style: inherit; font-variant: inherit; font-weight: inherit; line-height: inherit; margin-bottom: 1em; margin-top: 1em; outline: 0px; padding: 0px; vertical-align: baseline;">How did this happen?</div><div style="border: 0px; font-family: inherit; font-size: 15.555556297302246px; font-style: inherit; font-variant: inherit; font-weight: inherit; line-height: inherit; margin-bottom: 1em; margin-top: 1em; outline: 0px; padding: 0px; vertical-align: baseline;">Parts of the story are well known:</div><ul style="border: 0px; font-family: inherit; font-size: 15.555556297302246px; font-style: inherit; font-variant: inherit; font-weight: inherit; line-height: inherit; list-style-image: initial; list-style-position: initial; margin: 1em 0px; outline: 0px; padding: 0px 0px 0px 3em; vertical-align: baseline;"><li style="border: 0px; font-family: inherit; font-size: 15.555556297302246px; font-style: inherit; font-variant: inherit; font-weight: inherit; line-height: inherit; margin: 0px; outline: 0px; padding: 0px; vertical-align: baseline;">The existence of a massive resource base.</li><li style="border: 0px; font-family: inherit; font-size: 15.555556297302246px; font-style: inherit; font-variant: inherit; font-weight: inherit; line-height: inherit; margin: 0px; outline: 0px; padding: 0px; vertical-align: baseline;">A decade of high and rising prices for both oil and gas.</li><li style="border: 0px; font-family: inherit; font-size: 15.555556297302246px; font-style: inherit; font-variant: inherit; font-weight: inherit; line-height: inherit; margin: 0px; outline: 0px; padding: 0px; vertical-align: baseline;">Most importantly, a competitive environment, allowing entrepreneurs and their companies to take a gamble to connect the two.</li></ul><div style="border: 0px; font-family: inherit; font-size: 15.555556297302246px; font-style: inherit; font-variant: inherit; font-weight: inherit; line-height: inherit; margin-bottom: 1em; margin-top: 1em; outline: 0px; padding: 0px; vertical-align: baseline;">Everyone can invest in oil and gas in the US or Canada – and many did. It was actually mostly small or medium sized firms which tried to develop the technologies to make it possible to connect high prices and known shale resources – first for gas, and then for oil. Many failed and lost their shirt in the process. A few succeeded. But the big ones, the BP’s or Exxon’s of this world, only came in once the basic technologies (such as horizontal drilling and hydraulic fracturing) had been developed – to buy them, and to apply them elsewhere.</div><div style="border: 0px; font-family: inherit; font-size: 15.555556297302246px; font-style: inherit; font-variant: inherit; font-weight: inherit; line-height: inherit; margin-bottom: 1em; margin-top: 1em; outline: 0px; padding: 0px; vertical-align: baseline;"><b style="border: 0px; font-family: inherit; font-size: 15.555556297302246px; font-style: inherit; font-variant: inherit; line-height: inherit; margin: 0px; outline: 0px; padding: 0px; vertical-align: baseline;">Economics</b></div><div style="border: 0px; font-family: inherit; font-size: 15.555556297302246px; font-style: inherit; font-variant: inherit; font-weight: inherit; line-height: inherit; margin-bottom: 1em; margin-top: 1em; outline: 0px; padding: 0px; vertical-align: baseline;">Economists use a big name for this type of development (named, of course, after a fellow economist) and call it a <i style="border: 0px; font-family: inherit; font-size: 15.555556297302246px; font-variant: inherit; font-weight: inherit; line-height: inherit; margin: 0px; outline: 0px; padding: 0px; vertical-align: baseline;">“Schumpeterian”</i> process – otherwise also known as Economics 101: Under market conditions, high prices trigger competition, and competition triggers innovation. There are victims among those agile spirits who move in first, and there is a wave of followers who come in next, catching up with the new technologies and refining them to make them more efficient, until the system turns stable again. These waves of innovation indeed are one of the most fundamental characteristics of functioning market economies.</div><div class="center" style="border: 0px; font-family: inherit; font-size: 15.555556297302246px; font-style: inherit; font-variant: inherit; font-weight: inherit; line-height: inherit; margin-bottom: 1em; margin-top: 1em; outline: 0px; padding: 0px; text-align: center; vertical-align: baseline;"><img alt="" class="left" src="http://m.c.lnkd.licdn.com/mpr/mpr/p/1/000/2bd/2b9/0271df7.png" style="border: 0px; float: left; font-family: inherit; font-size: 15.555556297302246px; font-style: inherit; font-variant: inherit; font-weight: inherit; line-height: inherit; margin: 0px 1em 1em 0px; max-width: 606px; outline: 0px; padding: 0px; text-align: left; vertical-align: baseline; width: auto;" /></div><div class="left" style="border: 0px; font-family: inherit; font-size: 15.555556297302246px; font-style: inherit; font-variant: inherit; font-weight: inherit; line-height: inherit; margin-bottom: 1em; margin-top: 1em; outline: 0px; padding: 0px; vertical-align: baseline;">The US is now reaping the second round effects of such a wave of innovation: after access to the massive resource base has been granted by technological improvements, and thus the boom been triggered, comes the hour of efficiency improvements.</div><div style="border: 0px; font-family: inherit; font-size: 15.555556297302246px; font-style: inherit; font-variant: inherit; font-weight: inherit; line-height: inherit; margin-bottom: 1em; margin-top: 1em; outline: 0px; padding: 0px; vertical-align: baseline;">The graph above shows how: In North Dakota, for example, the number of new wells started in 2012 grew by more than 50% and so did the state’s oil production – even though the number of rigs grew by only 10%. Producers are getting more oil out of the ground with less activity.</div><div style="border: 0px; font-family: inherit; font-size: 15.555556297302246px; font-style: inherit; font-variant: inherit; font-weight: inherit; line-height: inherit; margin-bottom: 1em; margin-top: 1em; outline: 0px; padding: 0px; vertical-align: baseline;">Perhaps the most important lesson one can ever hope to learn from this development is what it means for energy markets generally: that energy markets are governed by the very same simple principles as any other market.</div><div style="border: 0px; font-family: inherit; font-size: 15.555556297302246px; font-style: inherit; font-variant: inherit; font-weight: inherit; line-height: inherit; margin-bottom: 1em; margin-top: 1em; outline: 0px; padding: 0px; vertical-align: baseline;">There is a reason this happened in the US or Canada and not, say, in Venezuela or China – despite the fact that they sit on unconventional resources at least as plentiful as those in the US and Canada (oil sands in Venezuela, shale formations in China). This reason has nothing to do with resource endowments below ground but everything to do with competition and markets above ground. Innovation tends not to happen in economies where government control extinguishes the private reward for trial and error - in energy markets just as in any other industry.</div><div style="border: 0px; font-family: inherit; font-size: 15.555556297302246px; font-style: inherit; font-variant: inherit; font-weight: inherit; line-height: inherit; margin-bottom: 1em; margin-top: 1em; outline: 0px; padding: 0px; vertical-align: baseline;"><b style="border: 0px; font-family: inherit; font-size: 15.555556297302246px; font-style: inherit; font-variant: inherit; line-height: inherit; margin: 0px; outline: 0px; padding: 0px; vertical-align: baseline;">Global Impact</b></div><div style="border: 0px; font-family: inherit; font-size: 15.555556297302246px; font-style: inherit; font-variant: inherit; font-weight: inherit; line-height: inherit; margin-bottom: 1em; margin-top: 1em; outline: 0px; padding: 0px; vertical-align: baseline;">Meanwhile, the developments in North America are changing energy relations for the rest of us. They are still too new to be emulated in other parts of the world, although the resource base is wide-spread. But while other places are busy trying to locate those resources (and remember, they will have to mimic the “above ground” competitive conditions as well to access them efficiently, which will take time), developments in the US are reshaping global oil markets as we used to know them.</div><div style="border: 0px; font-family: inherit; font-size: 15.555556297302246px; font-style: inherit; font-variant: inherit; font-weight: inherit; line-height: inherit; margin-bottom: 1em; margin-top: 1em; outline: 0px; padding: 0px; vertical-align: baseline;">Five years ago the US imported 2 million barrels per day of refined products (i.e. gasoline, diesel, etc.). Last year, it became the world’s biggest exporter, selling 1 million barrels per day of refined products abroad (crude oil exports are still legally constrained in the US). All told, the US still is a net oil importer and likely to remain one for years to come, but look at the graph below – I think it tells it all.</div><div style="border: 0px; font-family: inherit; font-size: 15.555556297302246px; font-style: inherit; font-variant: inherit; font-weight: inherit; line-height: inherit; margin-bottom: 1em; margin-top: 1em; outline: 0px; padding: 0px; vertical-align: baseline;"><img alt="" class="center" src="http://m.c.lnkd.licdn.com/mpr/mpr/p/3/000/2bd/2a3/177ed88.png" style="border: 0px; display: block; font-family: inherit; font-size: 15.555556297302246px; font-style: inherit; font-variant: inherit; font-weight: inherit; line-height: inherit; margin: 0px auto 1em; max-width: 606px; outline: 0px; padding: 0px; text-align: center; vertical-align: baseline; width: auto;" /></div><div style="border: 0px; font-family: inherit; font-size: 15.555556297302246px; font-style: inherit; font-variant: inherit; font-weight: inherit; line-height: inherit; margin-bottom: 1em; margin-top: 1em; outline: 0px; padding: 0px; vertical-align: baseline;">Net US oil imports peaked in 2005 and have since fallen by 36% (or 4.5 million barrels per day). Just to clarify the order of magnitude; this reduction is equal in size to Japan’s entire oil consumption last year, Japan being the third largest oil consumer on the planet.</div><div style="border: 0px; font-family: inherit; font-size: 15.555556297302246px; font-style: inherit; font-variant: inherit; font-weight: inherit; line-height: inherit; margin-bottom: 1em; margin-top: 1em; outline: 0px; padding: 0px; vertical-align: baseline;">Just a few years ago, US imports were on a par with Europe’s; now they are one third below those of the European Union.</div><div style="border: 0px; font-family: inherit; font-size: 15.555556297302246px; font-style: inherit; font-variant: inherit; font-weight: inherit; line-height: inherit; margin-bottom: 1em; margin-top: 1em; outline: 0px; padding: 0px; vertical-align: baseline;">Over that same period, Chinese net oil imports rose 84% (2.8 million barrels per day). China is well on its way to overtake the US to become the world’s largest oil importer. You can take a guess as to how long it will take for the orange and light green lines cross - it is happening right as we speak. (Believe it or not, 20 years ago, China was a net exporter of energy!).</div><div style="border: 0px; font-family: inherit; font-size: 15.555556297302246px; font-style: inherit; font-variant: inherit; font-weight: inherit; line-height: inherit; margin-bottom: 1em; margin-top: 1em; outline: 0px; padding: 0px; vertical-align: baseline;">In my view, and this is a little guesswork now <a href="http://www.bp.com/en/global/corporate/about-bp/statistical-review-of-world-energy-2013/energy-outlook-2030.html" style="border: 0px; color: #006699; font-family: inherit; font-size: 15.555556297302246px; font-style: inherit; font-variant: inherit; font-weight: inherit; line-height: inherit; margin: 0px; outline: 0px; padding: 0px; text-decoration: none; vertical-align: baseline;" target="_blank">the foundation of which can be found here</a>, the US is likely to remain a modest net oil importer until about 2030. North America as a region (comprising Canada, Mexico and the US) looks set to become self-sufficient around 2020. China, on the other hand, soon the world’s biggest importer of fossil fuels (oil, gas and coal), will import almost 80% of its oil and more than 40% of its natural gas by 2030.</div><div style="border: 0px; font-family: inherit; font-size: 15.555556297302246px; font-style: inherit; font-variant: inherit; font-weight: inherit; line-height: inherit; margin-bottom: 1em; margin-top: 1em; outline: 0px; padding: 0px; vertical-align: baseline;">In this way the shale “revolution” becomes part of a much bigger development.</div><div style="border: 0px; font-family: inherit; font-size: 15.555556297302246px; font-style: inherit; font-variant: inherit; font-weight: inherit; line-height: inherit; margin-bottom: 1em; margin-top: 1em; outline: 0px; padding: 0px; vertical-align: baseline;">But what triggered it? Accident? The North American resource base? Markets? What are the implications? And - will it happen elsewhere?<br /><br /><br /><br /></div><div class="module-box" id="author-header" style="-webkit-box-shadow: rgba(0, 0, 0, 0.247059) 0px 1px 2px; background-color: white; border: 0px; box-shadow: rgba(0, 0, 0, 0.247059) 0px 1px 2px; font-family: Helvetica, Arial, sans-serif; font-size: 15.555556297302246px; line-height: 17.77777862548828px; margin: 0px 0px 12px; outline: 0px; overflow: visible; padding: 0px; vertical-align: baseline;"><div class="articles-header-bar" style="border: 0px; font-family: inherit; font-size: 15.555556297302246px; font-style: inherit; font-variant: inherit; font-weight: inherit; line-height: inherit; margin: 0px; outline: 0px; padding: 0px; position: relative; vertical-align: baseline;"><img alt="Christof Rühl" class="member-photo" height="80" src="http://m.c.lnkd.licdn.com/mpr/mpr/shrink_80_80/p/5/000/26f/17d/071a24f.jpg" style="border: none; font-family: inherit; font-size: 15.555556297302246px; font-style: inherit; font-variant: inherit; font-weight: inherit; left: 0px; line-height: inherit; margin: 0px 20px; outline: 0px; padding: 0px; position: absolute; top: -10px; vertical-align: baseline;" width="80" /><br /><div class="author-info" style="border: 0px; font-family: inherit; font-size: 15.555556297302246px; font-style: inherit; font-variant: inherit; font-weight: inherit; line-height: inherit; margin: 0px; outline: 0px; padding: 10px 0px 10px 120px; vertical-align: baseline;"><h2 class="author-name" style="border: 0px; font-family: inherit; font-size: 15.555556297302246px; font-style: inherit; font-variant: inherit; font-weight: inherit; line-height: inherit; margin: 0px; outline: 0px; padding: 0px; vertical-align: baseline;">Christof Rühl</h2><h3 class="author-headline" style="border: 0px; font-family: inherit; font-size: 13px; font-style: inherit; font-variant: inherit; font-weight: normal; line-height: 17px; margin: 0px; outline: 0px; padding: 0px; vertical-align: baseline;">Chief Economist at BP</h3></div></div></div></div></div></div></div></div>

Oil Boom 2.0 – An American Dream Updated with Christof Rühl

The impact of the US shale “revolution” has people all around the world scratching their heads – over what it means: Is North America really...

Companies Line Up For Myanmar Blocks

<div id="ArticleToolBar" style="background-color: white; border-bottom-color: rgb(223, 223, 223); border-bottom-style: solid; border-bottom-width: 1px; border-top-color: rgb(223, 223, 223); border-top-style: solid; border-top-width: 1px; font-family: Arial, Helvetica, sans-serif; margin: 0px 0px 10px; padding: 4px 0px;"><div id="Article_Byline" style="float: left; margin-left: 3px; text-align: right;"><span style="color: #666666; font-size: 13px; line-height: 17px;">By Ravi Prasad, Special to Hart Energy</span><span style="color: #747474;"><span style="font-size: 12px; line-height: 11px; white-space: nowrap;"> </span></span></div><div id="Article_Byline" style="float: left; margin-left: 3px; text-align: right;"><i style="color: #333333; font-size: 14px; line-height: 22px;">More than 100 companies are seeking offshore and onshore blocks.</i></div></div><div id="ArticleContent" style="background-color: white; color: #333333; float: left; font-family: Arial, Helvetica, sans-serif; font-size: 14px; line-height: 22px; margin-top: 15px; width: 550px;"><div class="articleBody" style="padding-bottom: 40px;"><div class="separator" style="clear: both; text-align: left;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhZ_Lre0fsvQorchwXTKGuSQtd_XHeOaPQSvxULnKU9QRjXXgKi5erlKgLTf9OYFWpqMCtYxCIv-cJxNwRkbAx-9ySWbvST4JMQfwZi1F_4ek8YPrG-20FXInhWEy0Dg5DG1Wbp4HLD0VIn/s1600/DIA.jpeg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhZ_Lre0fsvQorchwXTKGuSQtd_XHeOaPQSvxULnKU9QRjXXgKi5erlKgLTf9OYFWpqMCtYxCIv-cJxNwRkbAx-9ySWbvST4JMQfwZi1F_4ek8YPrG-20FXInhWEy0Dg5DG1Wbp4HLD0VIn/s1600/DIA.jpeg" /></a></div>After the easing of political and economic sanctions by the west, global oil and gas companies are rushing to tap the largely untouched vast hydrocarbon reserves in Myanmar.<br />More than 100 companies are lined up to get contracts for exploration and development of 48 blocks offered in the offshore and onshore bidding rounds. The country's energy ministry said it has selected 61 companies as prequalified bidders to participate in the tender for 30 offshore blocks (19 deepwater and 11 shallow) and 59 companies for 18 onshore blocks.<br />The short-listed companies for the offshore blocks include Shell, ConocoPhillips,ExxonMobil, Chevron, Total, Statoil, Eni, Repsol, Anadarko Petroleum, Husky Energy,Hess, Murphy Oil, Premier Oil, Woodside Energy, Santos, and Delek Energy. Asia's national oil companies, including China National Petroleum Corp., Korea National Oil Corp., Korea Gas Corp., Thailand's PTTEP, and Nippon Oil & Gas Exploration Corp., also are in the race.<br />International firms that are prequalified for onshore blocks include Nippon Oil & Gas Exploration, Mitsui Oil Exploration, Woodside Energy, Eni International, Petronas,ONGC Videsh, Brunei National Petroleum, PetroVietnam, Oil India Ltd., Prize Petroleum, and Nido Petroleum.<br />The energy ministry will now allow the short-listed companies to look at more detailed seismic information about the blocks. The companies would subsequently be allowed to submit bids for up to three blocks, drawn from the list of shallow-water blocks and/or the deepwater acreage.<br />The shallow and deepwater blocks are located in the Rakhine, Moattama, and Tanintharyi basins, off Bay of Bengal. The onshore concessions are in the central, south, and southeast part of Myanmar.<br />An energy ministry official said the Myanmar government would award the onshore blocks by December 2013 and offshore blocks by February  or March 2014.<br /><b>Red carpet rolls out</b><br />Myanmar, which was isolated from the global economy for about 50 years till 2011 due to military rule,  has rolled out the red carpet to companies by offering the concessions with revised terms and conditions for exploration and development of oil and gas blocks.<br />The democratically-elected government, headed by President Thein Sein, revised the rules for submission of bids before launching the bidding round for onshore blocks in January and offshore blocks in April 2013. According to the tender document, bidders can apply for operatorship for up to three blocks. While the companies are required to join a local firm to operate onshore and shallow-water blocks, they are free to operate the deep waters without local partnerships. The bidders submit proposals on a block-by-block basis. The proposal with the best terms and conditions will be selected.<br />State-run Myanmar Oil & Gas Enterprise (MOGE) has a right to acquire 15% to 25% of undivided interest in onshore and offshore concessions after commercial hydrocarbon discovery.<br />The energy ministry is also fine-tuning the existing norms of the production-sharing contract (PSC) to facilitate greater foreign investment. Khin Khin Aye, the ministry’s director, said a proposal to increase the tax holiday from three years to five years and reduce the income tax rate from 25% to about 20% is being considered.<br />The existing PSC norms state the exploration period for a concession is three years with a two-year extension option. After discovery, the production period is 20 years for each commercial discovery.  A 12.5% royalty fee and a 25% tax on contractor’s net profit are levied but with a three-year tax holiday from the start of production. Twenty percent of crude oil and 25% of natural gas are reserved from the contractor’s share for domestic supply and will be paid at 90% of fair market value. The disputes of PSC are to be settled per the UNCITRAL arbitration rules.<br />The main objective of these moves is to attract foreign investment for the exploration and development oil and gas blocks. The energy ministry leased acreage in the last few years but exploration and development had limited success in the absence of investment from global companies. Almost all the global companies avoided Myanmar’s oil and gas sector after the imposition of economic sanctions by western countries. So far, small- and medium-sized upstream companies with limited financial resources are involved in the country.<br />The absence of large-scale private investments and presence of increasing local demand for oil have made the hydrocarbons-rich Myanmar a net importer of crude oil. Crude oil and condensate production mainly comes from two fields, Man and Yetagun, which jointly produce about 21,000 b/d.<br /><b>Vast hydrocarbon resources</b><br />The Yadana and Yetagun gas fields, discovered in the 1990s, are jointly producing 1,200 MMscf/d of natural gas. Of that amount, about 1000 MMscf/d is exported to neighboring Thailand. <br />Yadana’s M-5 and M-6 blocks, operated by Total E&P, are estimated to have gas reserves of 5.7 Tcf. Petronas Caligali Myanmar operates the Yetagun project in M12, M13, and M14 blocks, which produces gas and about 12,000 b/d of crude oil. This block has estimated gas reserves of about 3.16 Tcf.<br />Daewoo International Corp. announced the discovery of the Shwe field in 2004, off the coast of Sittwe, with estimated gas reserves of about 5 Tcf. The Shwe project started producing gas in July 2013, and most of the gas will be exported via pipeline to China.<br />Thailand's PTTEP discovered gas reserves in blocks M-7 and M-9. These include the Zawtika, Gawthika, Shweypyihtay, Kokona, and Zatila, with estimated reserves of between 5 Tcf and 8 Tcf.  The country’s gas production averaged about 1,232 MMcf/d in 2011.<br />The current level of oil and gas production in Myanmar is insignificant considering the large size of the potential hydrocarbon reserves in the country. Myanmar has abundant natural gas resources especially offshore. It holds estimated gas reserves of between 60 Tcf and 72 Tcf and crude oil of 540 MMbbl. The energy ministry says the size of the hydrocarbon reserves is likely to increase as a large part of the country’s sedimentary basins is still unexplored.<br />Burma has 17 sedimentary basins. Of these, three onshore (Central Myanmar, Pyay Embayment, and the Ayeyarwady) and three offshore (Rakhine, Mottama, and Tanintharyi) have been explored. Chindwin and Rakhine coastal basins are explored to some extent, while Hukaung, Shwebo-Monywa, and Bago Yoma basins are less explored. Five basins – Hsipaw-Lashio, Namyau, Kalaw, Sittaung Valley, and Mawlamyine/Mepale – are yet to be explored.</div></div>

Companies Line Up For Myanmar Blocks

By Ravi Prasad, Special to Hart Energy More than 100 companies are seeking offshore and onshore blocks. After the easing of political and ...