WTI $45.17 -$1.95, Brent $49.52 -$2.69, Diff $4.35 -74c, NG $2.75 +3c
Given how badly the oil price performed yesterday this piece is actually rather short, mainly because the news that pushed the oil price down, the Iranian Oil Ministers speech on Sunday, didnt get into oil markets until yesterday. He has sharpened his knives a bit, 500/- b/d will now be ‘ a week’ after sanctions and a million b/d ‘a month’ after but those figures are intended for the December Opec meeting and are not realistic.
Barry has a cunning plan re carbon emissions which involve closing down coal fired generation which is eminently sensible and also shutting down the natural gas industry which strikes me as less so. Remember what Johnny Cash said, ‘one piece at a time’….
What we do know is that the Iraq-Iran gas pipeline has nearly completed phase 1 testing and trials and again, subject to sanctions will transmit 5 mmcf/d to power plants in an around Baghdad, increasing to 25 mmcf/d by next March.
Tonight sees the API inventory stats, after the close remember, which need to have a minus sign in front of them and finally both retail diesel and gasoline prices lost around 5.5 cents last week, gasoline is still down 83c on the year, diesel $1.19 which shows how much of that product is about nowadays…
KRG- Genel/Gulf Keystone
Yesterday was the day I had been hoping for, after months of believing Tony Hayward and his views that the KRG would eventually start to cough up, initial progress looks to be being made. According to the MNR ‘ from September onwards the KRG will on a monthly basis allocate a portion of the revenue from its direct oil sales to the producing international oil companies to cover their ongoing expenses’. Now we all know that this is but an early and as yet unproven initiative and I suspect that payments will be of a fairly modest nature in the early stages but it is an important step in the words of Jón Ferrier of GKP, Genel ‘declining to comment’ to the FT which must be a first. At this stage it is worth bearing in mind that there is a substantial backlog owed to the companies and this is but a tiny step but for those who believed it might never happen and force companies into bankruptcy is is a stay of execution if not better. I am promised an interview with Mr Ferrier next week so more after that…
Soma Oil & Gas
I dont intend to delve too deeply into events at Soma as it is an unquoted company but as I have previously shown an interest in its seismic programme and as the opportunity in Somalia is worth considering I am keeping an eye on the situation. Today’s FT carries an article suggesting that the SFO is ‘examining payments as part of a criminal investigation into alleged corruption’ according to people familiar with the case. Soma, in a detailed response on their website say that UNSEMG ‘fundamentally misunderstood the nature, purpose and destination of payments made by Soma to the Somali Government’. It is worth noting that Soma also paid for the data room set up for the assets involved and that the company also paid for the ‘independent advice’ that PRA gave to the Somali Government although I am led to believe that this was done after the advice had been given which is important. It is also worth noting that without the massive amount of time and money spent by Soma, more than $41m I’m told, on its extensive seismic campaign there would be no chance for the country to develop its nascent oil and gas industry nor would it be able to attract back previous licence holders which apparently is under consideration by the likes of Shell.
Finally it has been pointed out to me that I made an error in yesterday’s piece on the company when I described Executive Deputy Chairman Basil Shiblaq as a founder of Afren, that should have read Ophir.
Not much around today with excitement mounting ahead of the football season, yawn, on Saturday…
Funny that, Danny Cipriani has had his bail extended to November, curiously just after the Rugby World Cup ends, thus meaning that Mr Lancaster doesnt have to make a decision about where on the subs bench to place his little self. Not normal for the Chelsea rozzers to wait over six months to decide whether the bag went green or not….
And a fantastic gold medal for Adam Peaty in the World Swimming Championships where he took a gold medal in breast stroke for the first time in over 40 years.