Home' Trinidad and Tobago Guardian : April 6th 2017 Contents APRIL 6 • 2017 guardian.co.tt BUSINESS GUARDIAN
ENERGY | BG9
US drillers add most
oil rigs in a quarter
since 2Q 2011
US drillers added oil rigs for an 11th week in a row
in the best quarter for boosting the rig count since
the second quarter of 2011, as a ten-month recovery
gathers pace with energy companies boosting spend-
ing on new production.
Drillers added 10 oil rigs in the week to March 31,
bringing the total count up to 662, the most since
September 2015, energy services firm Baker Hughes
Inc said on Friday.
During the same week a year ago, there were 362
active oil rigs.
The 137 rigs added in the first quarter is the biggest
boost in a quarter since the drillers activated a record
152 rigs in the second quarter in 2011, according to
Baker Hughes data going back to 1987.
This recent rig count increases have come despite a
collapse in US crude futures this month to levels seen
when the Organisation of the Petroleum Exporting
Countries (OPEC) agreed to cut production on Nov 30.
US crude futures eased to around US$50 a barrel
on Friday, putting the contract on track for its worst
quarter since 2015, as investors fret that growing US
supplies are undermining the OPEC-led cuts.
Since crude prices first topped $50 a barrel in May
after recovering from 13-year lows in February 2016,
drillers have added a total of 346 oil rigs in 40 of the
past 44 weeks, the biggest recovery in rigs since a
global oil glut crushed the market over two years
starting in mid 2014.
Baker Hughes oil rig count plunged from a record
1,609 in October 2014 to a six-year low of 316 in May
2016 as US crude collapsed from over US$107 a barrel
in June 2014 to near US$26 in February 2016.
Analysts projected US energy firms would boost
spending on drilling and pump more oil and natural
gas from shale fields in coming years with energy
prices expected to climb. Reuters
LNG sellers ready for more flexible contracts
producers of liquefied
natural gas (LNG) such as
Woodside and Shell are
softening up on years of
resistance to granting buy-
ers more flexible term contracts, potentially
opening the door to a more actively traded
market for the commodity.
LNG executives, traders and dealmakers
are gathering in Chiba, just outside Tokyo,
for an industry conference this week. Top of
the agenda has been the increased push from
LNG importers wanting more flexibility over
what they are allowed to do with supplies
they buy under decades-long contracts.
The pressure from buyers culminated in
March when the world's biggest importers
in Japan, South Korea and China agreed to
form a club to focus on forcing producers to
drop so-called destination clauses, which
prohibit them from selling imported LNG
to third parties.
In Japan this week, major LNG produc-
ers have started showing a willingness to
"There is room to negotiate flexibility in
new contracts," said Peter Coleman, chief ex-
ecutive of Australian energy major Woodside
Petroleum, an owner and operator of several
LNG export plants who is also developing
Following the announcement of the buy-
ers' club by Japan's JERA, Korea Gas Corp
and China National Offshore Oil Corp,
Woodside was the first major producer
to signal future openness to more flexible
In Japan this week, Royal Dutch Shell's
director of integrated gas and new energies,
Maarten Wetselaar, also said destination
clauses in LNG contracts were "not really
This is a significant move from Shell, the
world's biggest listed producer of LNG,
because smaller suppliers are likely now to
show their own willingness to offer greater
flexibility for fear of losing customers.
Japan, the world's biggest importer of LNG, is also
in the midst of liberalising its power and gas markets.
That means the country's utilities openly compete
for customers, and that they need to be more flexible
with their fuel imports instead of being tied to fixed
long-term contracts under which they receive a set
volume each month.
What makes this flexibility and liberalisation an
option is that the biggest ever flood of new supply is
hitting the market, with large new volumes coming
this year from Australia and the United States, and
new future production expected from Qatar, Russia,
Mozambique and potentially Canada.
Although LNG demand growth is also rising, pro-
duction far outpaces consumption, contributing to
a more than 70 per cent fall in spot LNG prices since
2014 to under US$6 per million British thermal units
These excess supplies are also increasingly being
sold freely in the emerging Asian spot LNG market,
putting further pressure on sellers.
In preparation of a more liquid market, commodity
trading house Trafigura on Tuesday launched an ini-
tiative encouraging the adoption of a standard master
sales and purchase agreement (MSPA) for the LNG
industry, something that's well established in other
commodities such as oil.
"LNG ... lacks standard terms and conditions which
has created ... a lack of transparency and barriers to
new entrants that would help increase liquidity in
the industry," said Hadi Hallouche, head of LNG for
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