Home' Trinidad and Tobago Guardian : February 18th 2016 Contents FEBRUARY 18 • 2016 www.guardian.co.tt BUSINESS GUARDIAN
ENERGY | BG9
Areported agreement that Venezuela, Russia
and Saudi Arabia have agreed to a pro-
duction freeze, but analysts are noting it
may not be time to celebrate just yet. The
agreement hinges on Iraq and Iran signing
on and pledging they won t increase their
production either -- a caveat that doesn t bode so well for
"While it s the first coordinated supply move of any kind
by OPEC members and Russia in the past 15 years, it is clear
that any deal without Iranian and Iraqi participation will do
little to tighten the market, at least in 2016," analysts at Ray-
mond James said in a Tuesday note to investors about the
agreement, which also includes Qatar.
The deal to leave production at January levels would tighten
the market by about 120,000 barrels per day (bpd), and most
of that would come from Russia, which isn t a member of
the Organisation of Exporting Petroleum (OPEC) group.
However, if all OPEC nations plus Russia decided to park
their production at January levels, the impact would be about
700,000 bpd, analysts said.
Investors recognise this isn t a panacea for rebalancing
supply and demand, but "wouldn t completely dismiss the
symbolic value of coordinated OPEC/non-OPEC action,"
At Simmons & Company International, analysts pointed
out that Iran s leaders have repeatedly said they intend to
restore production quickly with their recent relief from some
Western sanctions in January.
What s more, the agreement "crystalises a few grim exis-
tential truths," Simmons analysts said, including that US$30
oil is taking a serious toll on even the lowest-cost producers,
"Without agreement from Iran and Iraq, the two countries
most likely to increase production going forward, the agree-
ment to freeze output will have little impact as most market
prognosticators are assuming OPEC supply ex-Iran is going
to be held flat," Simmons said. "That said, the fact that
major producers are holding discussions increases the potential
for future production restraint."
BP and state-owned Oman Oil Co agreed to expand an exploration
and production sharing agreement of the Khazzan natural gas field
to include a second development phase, at an estimated cost of
US$16 billion for the entire project.
Block 61 will add 1,000 square kilometers (386.1 square miles)
to the original 2,700 square kilometer area of development, BP
said Sunday in an e-mailed statement. The project will produce
1.5 billion cubic feet of gas per day, or 40 percent of Oman s
current output. The new development requires final approval of
Oman s government and BP, which is expected in 2017, the company
said. The reservoir is known to have "tight gas," which is trapped
in impermeable rocks and requires techniques including hydraulic
fracturing to extract.
Oman, an exporter of liquefied natural gas to Spain, Japan and
South Korea, is studying options to import LNG to help generate
power. Domestic consumption jumped to 774 billion cubic feet in
2013 from 520 billion cubic feet in 2009, according to the US
Energy Information Administration. Oman imports gas via a
pipeline from Qatar and is in talks to build a link with Iran across
the Persian Gulf.
"Khazzan is a major resource with the potential to produce gas
for Oman for decades," BP Chief Executive Officer Bob Dudley
said in the statement.
The first phase of the project is expected to deliver gas in 2017
and the second will start in 2020. BP owns 60 per cent of the
block, with the remaining 40 per cent held by Oman Oil. More
than 325 wells are planned over 15 years. Bloomberg Oil production freeze
deal no panacea
China, one of Asia s largest energy consumer, experienced
slower growth in natural gas consumption last year on weaker
demand, while surplus supplies appeared on the domestic market
as gas imports under long term contracts started to flow into the
country, local media Xinhua Finance Agency reported Sunday.
The country s apparent consumption of natural gas reached
6.74 trillion cubic feet (tcf) or 191 billion cubic metres (Bcm) in
2015, up 3.7 per cent from the previous year. Slower growth in
natural gas demand was attributed to China s economic slowdown
as well as high domestic gas prices, Xinhua Finance said, citing
a report from state-owned China National Petroleum Corp.
In 2015, China s natural gas imports rose 4.7 per cent year on
year to 2.20 tcf (62.4 Bcm), while domestic production grew 3.5
per cent in the corresponding period to 4.65 tcf (131.8 bcm).
The country had signed several long-term natural gas import
contracts around 2010 to ensure its energy security amid forecasts
of strong gas demand growth, a development that did not mate-
rialise last year due to a weaker Chinese economy. Reuters
BP expands scope of US$16b
natural gas project in Oman
China sees slower natural gas
consumption growth in 2015
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