The Associated Press ,  Singapore   |  Mon, 01/11/2010 6:34 PM  |  Business

Oil prices jumped above $83 a barrel Monday in Asia amid signs of strong Chinese demand for crude and a weakening U.S. dollar.

Benchmark crude for February delivery was up 80 cents to $83.55 a barrel at late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. On Friday, the contract rose 9 cents to settle at $82.75.

China said Sunday that oil imports rose 14 percent last year to a record high in December, part of a 56 percent surge in overall imports last month. The better than expected Chinese figures helped investors brush off Friday’s disappointing U.S. jobless report, which showed the economy lost 85,000 jobs in December and the unemployment rate was steady at 10 percent.

A weaker dollar also helped boost oil prices, as investors buy commodities as a hedge against inflation.

The euro rose to $1.4530 on Monday from $1.4430 on Friday while the dollar fell to 92.20 yen from 92.54.

Crude prices have spiked 20 percent in the last month as a rash of cold winter weather in parts of the U.S., Europe and Asia boost demand for oil products such as heating oil.

Supplies were threatened in Nigeria, where unidentified gunmen attacked a Chevron Corp. crude oil pipeline, cutting production by 20,000 barrels a day, a company spokesman said Saturday.

In other Nymex trading in February contracts, heating oil rose 2.09 cents to $2.22 a gallon and gasoline gained 2.15 cents to $2.18 a gallon. Natural gas futures were down 16.5 cents to $5.58.

In London, Brent crude for February delivery rose 72 cents to $82.08 a barrel on the ICE Futures exchange.

Source: Jakarta Globe

(Bloomberg Photo)

October 16, 2009

Janeman Latul & Venisa Tjahjono

Mining industry representatives said on Friday they were confused by a recently issued regulation restricting the work contractors were allowed to perform for mining concessionaires, saying it failed to clearly explain what contractors could and could not do.

Industry representatives said that Article 10 of the Sept. 30 regulation, which provides that “the holder of a mining concession or special mining concession must itself perform mining, processing, and refining work,” was particularly problematic, as much of this work was currently carried out by contractors.

The regulation could cause problems for multinational contractors like PT Thiess Indonesia, a unit of Brisbane-based Thiess, which is employed as a mining contractor by PT Bumi Resources, Asia’s biggest thermal coal producer. Article 5 also provides that contracting work must be given to domestic companies for a first right of refusal before foreign companies could be involved.

A Thiess representative was not available for comment.

One analyst said that if the regulation was implemented to the letter, many contractors and concessionaires would find themselves in trouble, as they would have to radically reorganize their operations.

Sara K Loebis, corporate secretary of PT United Tractors, the country’s largest supplier of heavy equipment, said her company was also confused by the regulation.

“We’re unsure about the difference between ‘stripping,’ which the regulation allows us to do, and mining, which we are prohibited from doing, as it’s frequently very difficult to differentiate between the two,” she said. “Our legal team is currently studying the regulation.”

United Tractors is the parent of PT Pamapersada Nusantara, the country’s biggest mining contractor.

Alwinsyah Loebis, president director of PT Aneka Tambang, the state-owned gold and copper miner, said that his company’s legal department was also studying the regulation.

Dileep Srivastava, senior vice president of Bumi Resources, the country’s biggest coal producer and one of the Pamapersada’s main employers, said he was not aware of the regulation and would have to study it first before commenting.

When asked for clarification about whether mining contractors could continue to perform main mining work, Bambang Setiawan, the director general of coal, minerals and geothermal energy, gave an inconclusive response.

“I am not saying they can. As long as they follow all of the requirements in Article 10. What is the process of mining? It’s digging, stripping, blasting and transporting. I think that’s all clear enough. What more do they want?”

Edwin Sinaga, president director of brokerage PT Finacorporindo Nusa, said the new regulation was intended to prevent small, local government-issued concessions from being sold to contractors, which was already a widespread practice here.

Source: The Jakarta Post

Harry Su ,  Researcher   |  Thu, 10/01/2009 11:45 AM  |  Business

Starting January 2010, the G20 countries plan to report monthly data on oil production, consumption, refining and stock levels.

This is to promote greater oil transparency and market stability, according to a recent statement issued by the G20.

Additionally, to improve regulatory oversight of energy markets, relevant regulators will collect data on large concentrations of trader positions on oil in commodities futures markets.

Thus various market regulators will be empowered to question and assess whether it would be appropriate, for example, for a particular trader to have an overstock position in oil, which could then lead to a speculative move.

What the G20 is attempting to do is combat market manipulation that could lead to excessive price volatility, much like the one we saw last year, when the global oil price spiked to US$147 per barrel in July 2008.

What will be the impact of this G20 move on Indonesia?

On the stock market, if speculative moves on oil (i.e. leading to other commodities as well) can be curbed, this would dampen sentiment on Indonesia as around a third of the Jakarta Composite Index’s (JCI) total market capitalization is comprised of commodity-related stock (see chart for details), which would benefit from greater volatility in commodity prices.

On the economic front, it was recently reported by The Jakarta Post that Indonesia may fail to meet this year’s oil production target of 960,000 barrels per day (bpd) on average.

If global oil prices are better contained, Indonesia’s oil and other commodity-related exports would fall going forward.

As of Sept. 4, the country’s oil production stood at 949,270 bpd, according to upstream oil and gas regulator BPMigas.

Furthermore, BPMigas is currently evaluating the option of selling crude stocks, given that Indonesia’s 2009 oil lifting target is unlikely to be reached.

Given the above-mentioned condition, it is imperative that Indonesia increase its underlying oil production and deal with the old and insufficient number of wells.

This can be done through additional investment to help slow down or stop the rate of production declines.

That said, it is of great importance for the industry to identify where the incremental capital expenditure should go and whether it should be allocated into the existing brownfield developments as opposed to greenfields, which might be too difficult and take too long to develop, not to mention also that infrastructure might be lacking.

Going into deeper horizons is certainly going to be more expensive, particularly given that oil quality could be different, flow rates lower and drilling costs much higher, making it very difficult for oil companies to do it economically.

On a more positive note, it is also worth noting that Indonesia’s status as a net oil exporter back in June 2009 was indeed short-lived – just a month long.

By July, Indonesia was back as a net oil importer.

July’s oil imports jumped to more than US$1.8 billion compared to oil exports of slightly less than $1.5 billion, translating to $366 million in net oil imports.

In this light, curbed global oil prices could mean a better trade balance for Indonesia.

The writer is the senior vice president and head of research at Bahana Securities.

Source: Jakarta Globe

Reva Sasistiya

In what could be construed as a resignation speech from a government official — but perhaps wasn’t — controversial Energy and Mineral Resources Minister Purnomo Yusgiantoro bid all his employees goodbye on Monday, and hinted that he wouldn’t be back in the job after a new cabinet is named later this month.

After nine years at the powerful ministry, which oversees trillions of rupiah in energy investment and revenue, Purnomo told his subordinates that it was time for him to give up his post.

“Nothing lasts forever. Everything has an end,” he said. “Please forgive all my faults during my term at the ministry.”

Purnomo has occasionally expressed his desire to resign from the post over the years, but has held on to the position anyway.

However, when later asked whether this “goodbye” meant he was likely to leave the government for good, Purnomo refused to comment, saying it was “up to the president” to decide.

Speculation is increasing that the government may create a higher coordinating ministry to oversee the country’s natural resources. Purnomo has been mentioned as a possible candidate for the job. He is also believed to be lobbying for the posts of either trade or industry minister, two separate positions that may also be merged under the new government.

Analysts have said Purnomo may have a chance to fill the position of chief economics minister if acting minister Sri Mulyani Indrawati is made to vacate the post.

Raden Priyono, the head of upstream oil and gas regulator BPMigas, said he believes Purnomo would most likely take on a more senior position, while his current director general, Evita Legowo, would replace him. “Evita will most likely be the new energy minister,” he said.

Waryono Karyono, secretary general at the Energy Ministry, concurred that Evita was Purnomo’s most likely replacement.

Evita declined to comment.

Two analysts criticized Purnomo’s performance as energy minister, saying they would be glad to see him go. Kurtubi, an independent energy analyst, said oil and gas output consistently declined during Purnomo’s tenure, from more than a million barrels in 2000 to 960,000 barrels currently . “Purnomo has failed to increase investment in the sector. Meanwhile, state revenue from energy resources kept decreasing,” Kurtubi said.

“Domestic needs were not covered well under Purnomo’s rule,” said Pri Agung Rakhmanto, an energy analyst at the Reforminer Institute. “That is why Indonesia is suffering from an energy crisis.”

Source: UK.Reuters.com

JAKARTA, Sept 28 (Reuters) – Indonesian President Susilo Bambang Yudhoyono, who begins a second, five-year term next month, may create new ministerial posts to spur development of the natural resources sector, sources told Reuters.

Indonesia has some of the world’s largest deposits of natural gas, nickel, copper, tin and coal, while it is the world’s biggest palm oil producer and second-biggest rubber producer.

But a combination of red tape, legal uncertainty, graft and heightened nationalism has deterred many foreign investors and held back development of energy and mineral resources, depriving Southeast Asia’s biggest economy of important sources of revenue.

“One idea is to establish a new coordinating minister for resources to accelerate permits and licensing to develop natural resources,” said a government source, who declined to be identified by name.

The new arrangement to help fast-track development could also lead to a separation of the energy and mining portfolios, which are currently under one minister. The co-ordinating minister would oversee these, as well as the agriculture, forestry, and environment ministries, the source said.

Disputes between ministries have often held up development of natural resource projects.

A second source said that under the law the president would have to scrap other portfolios in order to establish new portfolios. One possibility was that the president could decide to merge the trade and industry ministries into one portfolio.

(Reporting by Muklis Ali; Editing by Ed Davies)

Source: Bloomberg.com

By Fred Pals

Sept. 25 (Bloomberg) – Royal Dutch Shell Plc, held back by almost seven years of falling production, is set to overtake BP Plc after about $40 billion of investment from Qatar to Brazil.

Shell will boost its oil and gas output by a third, adding 1 million barrels a day to capacity by the end of 2012, according to company estimates. That would push Shell to 4.25 million, more than the 4.1 million BP anticipates for 2012.

Record investment in 2009 let Shell Chief Executive Officer Peter Voser expand programs including an oil-sands venture in Canada and the Sakhalin II project in Russia’s Far East. The outlook may help revive Shell’s London-listed shares, which have fallen this year even as competitors like BP gained.

“Shell will have so many startups in the coming five years that it will be impossible for European peers like BP to keep up,” said Peter Heijen, an Amsterdam-based analyst at Theodoor Gilissen Bankiers NV. He recommends buying Shell and predicts the stock will climb by 14 percent during the next year. “Shell has the biggest spending program and that is paying off.”

Shell, which reiterated the targets in a presentation yesterday, is Europe’s biggest oil company by market value, yet trails BP in production after militant attacks hurt operations in Nigeria. The exploration and production division is the top earner for oil companies.

The Hague-based Shell’s output averaged 3.25 million barrels of oil equivalent a day last year, while BP pumped 3.84 million. BP, which reversed two years of falling production in 2008, pushed output above 4 million in the second quarter. Shell takes into account an annual decline rate of 5 percent as fields mature.

Stock Performance

Shell is down 0.7 percent this year, underperforming a 3.9 percent gain for BP. Crude oil futures in New York have rebounded 49 percent since January.

Following a reserves scandal in 2004 when the company was forced to slash its proven reserve estimates, Shell accelerated investments into so-called unconventional projects such as a gas-to-liquids venture in Qatar.

Shell predicts annual production growth of 2 to 3 percent going into 2011 and 2012 after output was held back in recent years by OPEC cutbacks and the attacks in Nigeria, where it’s the largest producer.

BP forecasts average annual output growth of 1 percent to 2 percent up until 2013, said David Nicholas, a company spokesman.

Total, Exxon

Total SA, Europe’s third-biggest oil producer, predicts output will fall this year and expects projects in Africa to help boost production an average of 2 percent through 2014. Exxon Mobil Corp., the largest U.S. oil company, warned it may not meet a 2 percent production growth target this year. It still plans to boost output an average of 2 percent to 3 percent annually during the next half decade, Senior Vice President Mark Albers said Sept. 9.

Shell’s share of the Sakhalin II project in Russia will total 108,000 barrels a day of crude at peak production, while Athabasca will add another 60,000 barrels of oil equivalent a day from 2010. Liquefied natural gas projects in Qatar, Russia and Australia will boost output capacity to almost 26 million tons a year from 18.5 million tons in the second quarter once the Gorgon project starts in 2014.

“The projects are enormous and it remains to be seen whether they can deliver on the growth target,” said William Andrews, who holds Shell and BP stock among the $7 billion in assets he helps manage at C.S. McKee & Co. in Pittsburgh.

Debt Concerns

Increased output at Shell will come at the price of higher debt, which is estimated by Standard & Poor’s to exceed $35 billion by the end of 2010.

Expenses doubled between 2004 and 2008. The company estimates that Sakhalin II will cost $20 billion, while the Pearl GTL venture in Qatar required investment of as much as $18 billion. The expansion of the Athabasca oil sands development may cost as much as $11.6 billion.

“Though Shell has some material projects starting up in the next few years, it also has a chunk of its production in high-cost resources,” said Ivor Pether, a senior fund manager who helps manage the equivalent of about $9.9 billion at Royal London Asset Management. “The market naturally has some concerns about the high capex and rise in debt.”

Gearing, or the ratio of debt to equity, is set to triple by year-end as the company invests a record $32 billion. Voser pledged to cut capital expenditure in 2010 by about 10 percent and implement “substantial” job cuts after oil prices fell from last year’s record and the recession eroded demand.

S&P cited the prospect of “very sizeable debt increases” this year and next when it cut Shell’s long-term credit rating one step to AA, the third-highest investment grade, this month.

No Impact

The downgrade will have “no material impact” on Shell’s funding needs, said David Williams, a company spokesman, adding that the “balance sheet is a tool we’re using to underpin the investment program through the cycle.”

At the same time, S&P recognized that Shell’s cash flow is set to improve by 2011 to 2012 because of “forecast major contributions from various large projects.”

Shell has a 30 percent stake in the QatarGas4 project, which will have peak production of 280,000 barrels of oil equivalent a day. The Perdido deepwater project in the Gulf of Mexico and the floating oil production unit at the BC-10 field in Brazil will add another 96,000 barrels of oil equivalent a day to output. Shell, the operator of both projects, has a 35 percent stake in Perdido and a 50 percent interest in BC-10.

Shell owns Pearl GTL, which will process 320,000 barrels of oil equivalent a day into 140,000 barrels of gas-to-liquids products and 120,000 barrels a day of ethane.

“Shell is clearly a must own stock by mid 2010,” Alexandre Weinberg, a Brussels-based analyst at Petercam SA, said in a note to investors in August. “These assets should generate massive cash flow, while their plateau production characteristics should lower the decline rate from the current 5 percent to 4 percent.”

To contact the reporter on this story: Fred Pals in Amsterdam atfpals@bloomberg.net

Last Updated: September 24, 2009 19:00 EDT

Sep 17, 2009

Eric Watkins
OGJ Oil Diplomacy Editor

LOS ANGELES, Sept. 17 — Total SA subsidiary Total E&P Indonesie, the biggest producer of natural gas in Indonesia, said its production in East Kalimantan’s Mahakam block will decline to 2.55 bcfd this year from 2.57 bcfd in 2008.

“This is a difficult block with matured fields. We have to fight every day to prevent the decline,” said Elisabeth Proust, Total E&P Indonesie president director and general manager. Gas production from the block is predicted to decline further to 2.38 bcfd in 2010.

Hardy Pramono, Total E&P Indonesie deputy executive vice-president for the East Kalimantan district, said lower gas production would also reduce the block’s production of oil and condensate.

He said the firm expects the block’s oil and condensate production to drop to 86,200 b/d next year, down from its estimated output of 97,200 b/d this year.

The Mahakam block, which holds an estimated 11 tcf of natural gas, supplies 80% of the gas for the Bontang liquefaction plant, operated by PT Badak NGL.

Total operates the Mahakam block with a 50% stake, while Japan’s Inpex holds the remaining 50% under a production sharing contract that will expire at the end of 2017.

Proust said Total E&P Indonesie, which has requested an extension of the existing contract, plans to spend $16 billion from 2009 until the expiry date of its contract, and a further $6 billion in 2017-32 if it gets the extension.

Meanwhile, Indonesia’s state-owned firm PT Pertamina is said to be seeking 15% of Total E&P Indonesie’s stake in the block.

Earlier this month, Pertamina President Director Karen Agustiawan said Total E&P Indonesie agreed to hand over part of its stake in the block to Pertamina before the 2017 expiration.

“We have committed to work with a domestic company,” Proust told Indonesian lawmakers this week. “If the company turns out to be Pertamina, we are very pleased.”

Contact Eric Watkins at hippalus@yahoo.com.

Source: Oil & Gas Journal

Source: The Jakarta Post

Alfian ,  The Jakarta Post ,  Jakarta   |  Wed, 09/16/2009 2:19 PM  |  Business

Three fuel distributors, PT Aneka Kimia Raya Corporindo (AKR), PT Shell Indonesia, and PT Petronas  Niaga Indonesia, may operate alongside state oil and gas company PT Pertamina in distributing subsidized fuels, starting next year.

Downstream oil and gas regulator BPHMigas chairman Tubagus Haryono said that three companies had met the criteria to distribute subsidized fuels, but their appointment is subject to the endorsement of the 2010 state budget bill currently being deliberated in the House of Representatives.

“We need to wait for the state budget law as it will determine the subsidized fuels quota and the margin for distributing the subsidized fuels,” Tubagus said.

He added that BPHMigas would also carry out verification and clarification of the proposals on this from the three companies.

“We will verify and clarify their proposals right after the law on the 2010 state budget is endorsed.”

Tubagus added that the aspects to be verified included the three companies’ readiness to establish sufficient distribution channels in their appointed areas.

“They told us that they would complete this within two months. We require them to finish this by November,” Tubagus said.

Shell Indonesia’s spokeswoman Fathia Syarief said that the company had not received any notification from BPHMigas yet.

“We are basically ready to distribute the subsidized fuels,” Fathia said.

Shell and Petronas already produce and sell non-subsidized fuels in the country.

On Tuesday, BPHMigas announced that Pertamina is once again appointed as the subsidized fuel distributor for 2010.

Pertamina has so far been the sole distributor of subsidized fuels until the government this year decided to also give the chance to other companies to distribute subsidized fuels as of 2010.

Despite the new comers, Tubagus said Pertamina would remain dominant in term of distributed volume and coverage area.

“The subsidized fuels business will be an oligopoly market with Pertamina as the market leader.”

The government subsidizes Premium gasoline, diesel and kerosene.

Under the 2010 bill, the government estimates that subsidized fuel consumption next year will reach 21,454,104 kiloliters for Premium gasoline; 11,250,675 kiloliters for diesel and 3,800,000 kiloliters for keros

Revenue from energy set at Rp 189.48 trillion
The Jakarta Post , Jakarta | Sat, 09/12/2009 9:10 PM | Business

The energy and mineral resources sectors are expected to contribute Rp 189.48 trillion (US$18.9 billion) to state coffers in 2010, an official says.

Spokesman for the Energy and Mineral Resources Ministry Sutisna Prawira told Antara news agency on Saturday the revenue from the sectors would account for 20 percent of the country’s total income.

Sutisna said the House of Representatives and government had agreed an assumed price of $65 per barrel at an exchange rate of Rp 10,000 per US dollar as the basis for calculations. National crude oil output was set at 965,000 barrels per day.

The lawmakers have also approved a total energy subsidy of Rp106.53 trillion for next year. Rp 57.36 trillion of this amount will be allocated for fuel and biofuel subsidy.

Apart from the energy subsidy, the government will have to pay $12 billion in cost recovery to oil and gas contractors next year.