Oil & gas

“Tax break could lead to rush of deals in North Sea”

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Source: Aberdeen Journals Ltd 23 November 2017

“A ground-breaking new tax break for the oil sector will revitalise the North Sea and pave the way for a flurry of deals, industry experts said yesterday.

They said the UK Government’s decision to let firms transfer tax credits would attract fresh investment to the basin and prolong production from mature fields.

Derek Leith, head of oil and gas tax at EY, said the changes had the potential to “revitalise” the UK oil and gas industry and Alex Kemp, professor of petroleum economics at Aberdeen University, said the reforms were to “everyone’s advantage”, including the Treasury, as “more transactions mean more oil will be recovered”.”

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“The 5 countries that could push oil prices up”

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Source usa today.com 26 October 2017

“Oil prices appear to be stuck in the $50s per barrel, but that doesn’t mean there aren’t serious supply risks to the market.

An unexpected disruption could occur at any moment, as has happened in the past, leading to a sudden and sharp jump in prices. Geopolitical tension has been largely irrelevant since the collapse of oil prices in 2014, but it’s making a return now that cracks have emerged in some key oil-producing nations. The threat of an outage will carry more weight as the oil market tightens.

“The ‘Fragile Five’ petrostates — Iran, Iraq, Libya, Nigeria and Venezuela — continue to see supply disruption potential, with northern Iraq crude exports at risk due to an escalation of tensions between the (Kurdistan Regional Government), Baghdad and Turkey, while the United States has decertified the 2015 Iran nuclear deal,” U.S. bank Citi said.”

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Opinion: Decommissioning – an inconvenient truth

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Source: Aberdeen Journals Ltd 12 June 2017

There’s no credible business case for decommissioning our redundant oil & gas structures. Better to use the money saved from leaving infrastructure in place for green energy projects.

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“U.S. Oil Rig Count Increases For 15th Straight Week”

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Source: oilprce.com 28 May 2017

“The number of active oil and gas rigs in the United States rose by 13 on Friday, according to oilfield services provider Baker Hughes. The total oil and gas rig count in the US now stands at 870 rigs, or 450 above the count a year ago.

Oil rigs increased by 9, while gas rigs bumped up 4.

This week marks the fifteenth straight build for oil rigs (+175 or +33.5% since January 13). While gas rigs haven’t enjoyed the same persistently ascending trajectory week to week, they have climbed 10 of the last fifteen weeks, for a total gain of 35 (+25.7%).”

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Ugandan Energy Minister Signed $157M Tax Waiver to Tullow Oil Without Reading the Agreement

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Source: taxjustice.net 10 May 2017

The East African press is reporting that Uganda’s former Energy Minister, Syda Bhumba, has confirmed that she signed a tax waiver agreement with UK company, Tullow Oil, without reading the document.

Time and again, oil and mineral rich African countries have been skinned alive by rapacious mining and oil companies who extract huge tax reliefs, exemptions and holidays from hapless and/or corrupt politicians.

There’s no doubt that this kind of thing happens in many countries around the world.

The waiver, which exempted both income and capital gains from tax, is being disputed by the Uganda Revenue Authority on the grounds that Bhumba had no authority to sign such a waiver since authority in this area lies with the Finance Minister.

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‘Cautious ­optimism’ as Aberdeen economy rebounds

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Source: scotsman.com 17 May 2017

Aberdeen’s economy is showing signs of “cautious ­optimism” after three years of oil-related misery, a report suggests.

Barry Fraser, Grant Thornton’s managing director in Aberdeen, said: “There are undoubtedly many challenges that still lie ahead for the oil and gas sector in Aberdeen, but we’re seeing some ­glimmers of light after a prolonged period of uncertainty.

“Many North-east businesses are no longer focused on pure survival and are seeing an increase in tender activity and new opportunities, ­particularly overseas.”

Ian Knott, director at the Grant Thornton practice in Aberdeen, added: “It’s reassuring to see the sector and the wider region taking a more positive view of the future, but businesses will also need to keep a close eye on cash resources as they return to growth, as this is a period where we see many business failures due to companies overstretching themselves.”

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Scotland’s geographical share of North Sea oil revenues was negative for the first calendar year on record in 2016

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Source: scotsman.com 10th May 2017

Analysis by economist John McLaren said the decline in North Sea revenues contrasted with a period of relative stability between 2005-2012 when Scottish offshore oil revenues did not fall below £6 billion in any single year.

Mr McLaren said: “The latest national accounts data shows that 2016 was a disappointing year for the Scottish economy.

“Much of this was connected to a further decline in the contribution of the North Sea.

“Furthermore, the Scottish trade balance for 2016 has worsened by £1.6 billion from 2015 and the savings ratio is at a record low.

“As a result, worries persist over the (Scottish) economy’s future growth potential and over the self-financed element of the Scottish budget.”

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US Oil Shale Drillers Gear Up for an $84 Billion Spree

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Source: Bloomberg 9th May 2017

“U.S. shale explorers are boosting drilling budgets 10 times faster than the rest of the world to harvest fields that register fat profits even with the recent drop in oil prices.

That’s bad news for OPEC and its partners in a global campaign to crimp supplies and elevate prices. Wood Mackenzie Ltd. estimates that new spending will add 800,000 barrels of North American crude this year, equivalent to 44 percent of the reductions announced by the Saudi- and Russia-led group.

Shale drillers can afford to be sanguine despite oil’s recent tumble because they’ve cushioned themselves with hedges.”

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“Oil hits five-month low amid warnings of commodities rout”

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Source: the guardian.com 05.05.2017

“Oil prices have fallen sharply along with other commodities as the prospect of slowing growth in the US and China blunts optimism about the global economy.

Oil prices plunged to five-month lows on Thursday amid record trading volume in Brent crude, as Opec and other producers appeared to rule out deeper supply cuts to reduce the world’s persistent glut of crude.

“While Opec is expected to extend a self-imposed production cap by another six months, it will be a challenge to convince several non-Opec members to follow suit,” said Abhishek Kumar, senior energy analyst at Interfax Energy. “Persistent growth in US oil production … will also make extensions of the Opec cap beyond 2017 unlikely.”

“At some point, the market should recognize Opec isn’t the most important player in the market any more,” said Commerzbank’s Eugen Weinberg, “That is non-Opec, and, above all, US shale.””

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“US shale’s the wild horse that OPEC just can’t tame”

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Source: Bloomberg April 23, 2017 3:00 AM EDT

“It was all so simple. By lifting restraints on output, Saudi Arabia would stop subsidizing high-cost oil producers and halt the rapid rise in U.S. production that was eating into OPEC’s market share. At least, that was the logic back in November 2014.

But things haven’t gone according to plan. OPEC’s experiment with production curbs has failed. More worryingly, the strength of shale’s rebound suggests that OPEC faces a long-term struggle against this new source of supply in an industry where technological advances are the norm and today’s niche play becomes the next decade’s global standard.”

“But the worry for OPEC goes well beyond the current market imbalance. The shale industry is in its infancy. True, the techniques of horizontal drilling and hydraulic fracturing have been used in the oil industry for decades, but their widespread application to shale formations is not much more than five years old. What should really be giving OPEC oil ministers sleepless nights are the parallels between shale and other industry sectors. It would be extremely rash to assume that advances in technology and geographical spread that we have seen in deep-water oil production, for example, will not apply to the shale sector.”

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