Sep 2008

Despite recent adverse publicity, the biofuels industry has a bright future, writes Ian Lewis

David Finch's historical perspective on Canada's energy sector has made him a prominent commentator on Alberta's oil patch. But he still found time to take a canoe trip with Petroleum Economist. Derek Brower braved Calgary's Bow River

As the majors continue to cede their position in the refining sector to niche players, what is their future role in the downstream industry? Edward Osterwald and Roger Newenham of CRA International write

Iran's strategy to become a significant gas exporter has been left in disarray by its political isolation. But the domestic supply picture is looking brighter. With new production coming on stream, Iran may avert another winter gas crisis, writes Alex Forbes

As refining projects across much of the Middle East come under threat from cost inflation, Saudi Arabia seems determined to push ahead with large capacity additions, writes James Gavin

The UAE is extending its footprint far beyond the Mideast Gulf, writes James Gavin

The worldwide refining business is seeing margins fall as capacity bottlenecks disappear. Meeting rising diesel demand at a time of declining utilisation rates is the next challenge, Martin Quinlan writes

The negative affects of high oil prices on its downstream business mask Marathon's upstream upside, writes NJ Watson

Iran's oil sector is producing at its highest rate since the revolution. But that does not mean things are healthy – the country's energy industry still faces a welter of problems, writes Derek Brower

Security of energy supply is high on the political agenda. Soaring energy prices and technological advances have made it possible to exploit petroleum resources in areas that were previously inaccessible. Policymakers are increasingly interested in the potential of the Arctic. By Morten Anker, advisor, and Eivind Magnus, director, The Petroleum Group, Econ Pöyry

During Tuesday trading, Brent futures fell below $100 a barrel for the first time since April, as the dollar's gradual recovery and weaker global oil demand continued to depress prices. On Wednesday, however, following a surprise decision by Opec to cut crude production, Brent was back above that level, the October contract rising by $0.02/b to $100.36/b. WTI October futures, meanwhile, were up by $1.07/b at $104.33/b.

Oil prices fell by 5% today amid renewed turmoil on financial markets. With Lehman Brothers seeking bankruptcy protection, Merrill Lynch being sold to Bank of America, and concerns about the stability of insurer AIG mounting, Brent futures for November delivery were down by $4.55/b, at $89.69/b. WTI futures for October delivery were $4.35/b lower, at $91.36/b. Both Brent and WTI are at their lowest points since February.

A few months ago, the prospect of $100 a barrel oil was real and frightening. It is a real prospect once again, but this time it is a point that would be reached with relief, not trepidation. Last week, oil prices rose to almost $120/b as markets fretted about the threat Hurricane Gustav posed to US offshore oil infrastructure.

CRUDE oil prices surged on Monday as a squeeze on short positions in New York triggered an intra-day rise of $16/b. The spike in the afternoon session on Nymex was the largest dollar gain and second-highest percentage rise ever seen on the board, and left the front-month contract at almost $121/b. On Tuesday afternoon in London, Brent had softened to just over $103/b, while in the morning session in New York the price was around $107/b.

Oil prices started the week with a near 10% fall, as the prospect of a significant contraction in energy demand grew, following the US House of Representatives' shock rejection of the government's $0.7 trillion Wall Street rescue package.

SHELL became the first western energy major to strike a significant post-war hydrocarbons deal with the country last month, following the cabinet's decision to approve a project to process and market all the associated gas that is flared in the Basra governorate, an area covering some 19,000 square km. That followed another cabinet decision to approve a deal with China National Petroleum Corporation (CNPC) that will lead to development of the Al-Ahdab oilfield.

THE SEPTEMBER crisis on Wall Street coincided with a slump in oil prices to around $90 a barrel. That brought into question the claim of the US Commodity Futures Trading Commission (CFTC) that institutional investors' investment in energy futures was not the primary reason for the rise in oil prices in 2007 and the first half of 2008. Indeed, the fall in oil prices in the face of bullish physical fundamentals – with most US Gulf of Mexico oil production unavailable because of Hurricanes Gustav and Ike (see p12) – appears to support Opec's view that speculators are largely to blame for oil-price inflation.