Kurdistan Looks To Set Up Own Oil Firms Amid Legal Struggle With Baghdad

By Tsvetana Paraskova - Jun 17, 2022, 

Amid an escalating dispute with the federal Iraqi government over the control of oil resources, the semi-autonomous region of Kurdistan is working to establish two companies that would produce and market oil, a spokesperson for the Kurdistan Regional Government (KRG) told Reuters on Friday.

KRG wants to establish one company to work on oil exploration, KROC, and another—provisionally named KOMO—which is expected to market and export the crude oil pumped in the region of Kurdistan.

The KRG has recently discussed the idea of establishing those companies with representatives of the federal government of Iraq, the spokesperson told Reuters.

The region of Kurdistan and the federal government have been in a bitter dispute for months over who has the right to control the oil resources and revenues in the semi-autonomous Iraqi region.

Earlier this month, Kurdistan rejected a ruling from Iraq’s federal supreme court to hand over control over oil production. 

In February, the Supreme Court of the Federal Government of Iraq ruled that sales of oil and gas by Kurdistan, independent of the central government in Baghdad, are unconstitutional and that the Kurdistan Regional Government must hand over all oil production to the Federal Government of Iraq. The court also ruled that the Ministry of Oil has the right to: “Follow up on the invalidity of oil contracts concluded by the Kurdistan Regional Government with foreign parties, countries and companies regarding oil exploration, extraction, export and sale.”

In early June, dismissing the Supreme Court ruling, Kurdistan’s judicial council said that “The actions of the Kurdistan Regional Government (KRG) in relation to oil and gas operations are in accordance with the Iraqi constitution of 2005. The provisions of the oil and gas law issued by the parliament of the Kurdistan region in 2007 do not violate those of the Iraqi Constitution.”  

By Tsvetana Paraskova for Oilprice.com

Freeport LNG Extends Force Majeure Until September

By Julianne Geiger - Jun 17, 2022, 

Freeport LNG has declared a force majeure on LNG exports from its Gulf Coast location until September, Bloomberg sources said on Friday.

The company had reported earlier in the week that its Gulf Coast facility would be completely offline through September when it would operate in a partial capacity through the end of the year. It did not, however, specify a force majeure.

The original estimate for Freeport LNG’s outage was three weeks, but the estimate was quickly revised to span until September as the damage from a fire last week was assessed.

As a result, U.S. LNG exports are expected to remain subdued at least through September. This would keep more LNG for domestic use beyond what the market requires—a reality that has sent U.S. LNG prices down. On the other hand, Europe, starving for LNG imports from anywhere that isn’t Russia, has seen higher LNG prices as its U.S. prospects were dashed by the facility’s fire.

The Houston-based Freeport LNG facility accounts for 20% of all LNG processing in the United States, at 2.1 Bcf a day. It is the 7^th largest LNG facility in the world, and the United States’ 2^nd largest.

The impact of the Freeport LNG shutdown became even more significant this week after Russia cut its gas flows to Germany and Italy, with France not receiving any gas from Germany since Wednesday. What’s more, Russia’s Nord Stream 1 pipeline that carries gas from Russia to Europe will be down for weeks for regularly scheduled maintenance in July.

The outages and curtailments will force some European countries to burn some of the gas that it was trying to store for the upcoming winter season, although Germany said it would look to Norway and the Netherlands for additional gas supplies.

By Julianne Geiger for Oilprice.com

Iraq Wants To Buy Exxon’s Stake In Key Oil Field

By Irina Slav - Jun 20, 2022,

The Iraqi government is ready to buy Exxon's stake in the West Qurna-1 oil field, the country's oil minister said this weekend, after the supermajor earlier announced plans to exit the project.

Per news reports from Reuters and Bloomberg, the bulk of the 32.7-percent interest in one of Iraq's largest fields will go to Basra Oil Company.

Earlier this year, Exxon had agreed with two Chinese companies to transfer its West Qurna-1 stake to them, but the Iraqi government was not on board with that deal, and it was never finalized. Exxon's stake in West Qurna-1 was valued at up to $500 million in 2020 when the supermajor announced its plan to exit Iraq.

As for the reasons for the exit after a long involvement in Iraq's oil industry, at the time, Iraqi Prime Minister Mustafa al-Kadhimi said that "Exxon Mobil is considering exiting Iraq for reasons that are to do with its internal management practices, decisions, and not because of the particular situation in Iraq."

At the time, Al-Kadhimi said that Iraq would only accept another American company as a replacement for Exxon at West Qurna-1.

Media, however, suggested that the decision might have something to do with worsened relations between the supermajor and the Iraqi government after Exxon got involved in oil production in the Kurdistan autonomous region, whose leadership is at odds with Baghdad.

Iraq is the second-largest producer of oil in OPEC, but it has been struggling to produce as much oil as it had been assigned under the OPEC+ agreement reached last year.

Despite the problems plaguing its oil industry, however, Iraq has ambitions of higher production still, eyeing an average daily of 4.51 million barrels for this month and 4.58 million barrels for July, per a Bloomberg report. In May, Iraq produced 4.4 million barrels of oil daily, a decline of 21,000 bpd from April.

By Irina Slav for Oilprice.com

 

Ecuador Halts All OIl Operations Amid Escalating Protests

By Michael Kern - Jun 20, 2022, 

Ecuador's state-owned oil company Petroecuador declared force majeure across exploration, production, and transportation operations amid escalating protests against the government.

This means that exports of oil from the Andean country will be halted, as protesters entered oil fields, Reuters reported, citing a statement by Petroecuador.

The protests by indigenous peoples in Ecuador against the economic policies of the government of Guillermo Lasso, which have recently included fuel price hikes, prompted the president to declare a state of emergency across three provinces. This, however, did not stop the protests, as people demanded cheaper fuel and food price controls, Al Jazeera reported.

The state of emergency was motivated by the high degree of violence erupting among protesters in the three provinces where it was declared, with President Lasso saying, "I called for dialogue and the answer was more violence, there is no intention to find solutions."

In addition to the economic demands of the protesters, they also want a suspension of new mining and oil projects, Reuters reported. As a result of these protests, Petroecuador said it had lost some 6,975 barrels of crude and has had to suspend some drilling operations.

Ecuador has proven reserves of some 8.273 billion barrels of crude oil but is producing only about 400,000 bpd. Petroecuador, however, has the ambition to double this over the next five years and is looking for private sector investments of up to $12 billion to do it.

"In order to complete these projects within the planned deadlines, private capital and adequate regulations to provide legal certainty to those keen to invest in the hydrocarbon sector will be needed," the state company said earlier this year as quoted by Reuters.

"There are approximately 45 billion barrels of oil identified and only 14% is being produced, a figure that shows resources are not used properly," said the chief executive of the company separately.

By Michael Kern for Oilprice.com

People Rally In Belgium To Protest Soaring Cost Of Fuel, Food

By Tsvetana Paraskova - Jun 20, 2022, 

More than 70,000 people rallied in Belgium’s capital Brussels on Monday in a protest against the soaring cost of guel and food, while strikes at transportation services brought the city home to many of the EU institutions to a standstill.

Workers at the Brussels airport and at local transport networks went on a one-day strike, demanding the government take action against surging prices of food and fuel.

Departures at the airport were canceled as security personnel were also on strike. Most arrivals were also canceled.

Inflation in Belgium and all other European countries has spiked in recent months, to 9 percent this month, as the Russian invasion of Ukraine has sent commodity and fuel prices sky-high and has disrupted supply chains globally, which were still reeling from COVID-related disruptions.

Inflation in Belgium in May was just below 10 percent, the country’s National Bank said in an assessment last week, expecting a gradual easing of the inflation to below 2 percent by the autumn of 2023, barring a wage-price spiral. Wage costs are unprecedentedly high, posing a threat to the competitiveness of the Belgian economy, the bank said.

Workers in Belgium have received pay rises indexed to inflation in recent months. Belgian Prime Minister Alexander De Croo has said workers and employees are better protected against inflation than many other EU workers because of the wage indexation to inflation.

The Belgian National Bank has described the spike in energy prices as “a major impoverishment for the Belgian economy.” Yet again, the inflation-indexed wages have spared many Belgian households from the worst of the energy price surges, the bank said.

Belgium’s pace of economic recovery from COVID is set to slow to 2.4 percent growth in 2022 and 1 percent in 2023, “notably as the consequences of the embargo of the European Union on Russian oil materialize,” Organisation for Economic Co-operation and Development (OECD) said in a report earlier this month. Core inflation is forecast at close to 5 percent through 2023 before easing.

By Tsvetana Paraskova for Oilprice.com

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Namibia Bets On Recent Major Oil Discoveries To Double Its Economy

By Tsvetana Paraskova - Jun 21, 2022,

Following several offshore oil discoveries in recent months, Namibia hopes that the major oil finds could help it double its economy in the next two decades, the head of the National Petroleum Corporation of Namibia (NAMCOR) told Bloomberg on Tuesday.

Since the beginning of the year, oil majors Shell and TotalEnergies have announced discoveries offshore the African country.

“More than 30 years of exploration and we finally we hit the jackpot,” Jennifer Comalie, NAMCOR’s chairperson, told Bloomberg in an interview.

“At peak, these two discoveries could bring $5.6 billion to a very small economy,” Comalie said.

The economy of Namibia, neighbor to the south of OPEC producer Angola, is currently valued at around $11 billion.

Namibia could begin production around 2030 or a little bit earlier if appraisals for the recent discoveries support initial estimates and, of course, majors commit to developing those discoveries while they look to become net-zero energy companies by 2050.

In April, Shell said it was “very encouraged” by the early results from the deep-water Graff-1 exploration well completed earlier this year.

“Over the coming months, we’ll need to conduct further evaluation of the well results, and additional exploration activity, in order to determine the size and recoverable potential of the hydrocarbons that were identified,” said Dennis Zekveld, Shell’s Country Chair in Namibia.

Shell also made a second discovery in the Orange basin in April.

In the same basin offshore southern Namibia, TotalEnergies has made a significant discovery of light oil with associated gas on the Venus prospect, the French supermajor said in February this year. TotalEnergies also needs to proceed with appraisal drilling operations in the area in order to assess the commercial prospects for the discovery.

“This discovery offshore Namibia and the very promising initial results prove the potential of this play in the Orange Basin, on which TotalEnergies owns an important position both in Namibia and South Africa” said Kevin McLachlan, Senior Vice President Exploration at TotalEnergies.

By Tsvetana Paraskova for Oilprice.com

U.S. Gasoline Demand Increasing, Not Waning

By Tsvetana Paraskova - Jun 21, 2022, 

U.S. gasoline demand increased by 5.5 percent on Sunday compared to the previous Sunday and was 11.4 percent higher than the average U.S. demand of the past four Sundays, according to data from fuel-savings app GasBuddy.

In the week between June 12 and June 18, U.S. gasoline demand jumped by 6.3 percent from the prior week and was 7.4 percent above the rolling four-week average.

“It was the highest week of 2022,” Patrick De Haan, head of petroleum analysis at GasBuddy, said on Sunday. 

Over the past week, U.S. national average gasoline prices fell for the first time in nine weeks, GasBuddy said on Monday.

Per GasBuddy data, weekly gasoline prices fell by 4.2 cents from a week ago to $4.97 per gallon on Monday. Still, the national average is up 37.3 cents from a month ago and $1.92 per gallon higher than a year ago.

“Finally some relief! For the first time in nine weeks, gasoline prices have fallen, following a broad sell-off in oil markets last week, pushing the national average back under the $5 level with most states seeing relief at the pump,” De Haan commented on Monday.

“I’m hopeful the trend may continue this week, especially as concerns appear to be mounting that we may be on the cusp of an economic slowdown, putting downward pressure on oil. But the coast isn’t yet entirely clear. We could see the national average fall another 15 to 30 cents, if we’re lucky, by the time fireworks are flying, barring any unexpected shutdowns at a time when the market is extremely sensitive to such.”

The Biden Administration is desperate to see $5 a gallon prices drop, and its latest idea is a gas tax holiday. The U.S. Administration is considering a temporary pause of the federal gas tax as a tool to reduce prices at the pump, Energy Secretary Jennifer Granholm said this weekend in an interview with CNN.

By Tsvetana Paraskova for Oilprice.com

Vital Metals starts commissioning at Saskatchewan rare earth extraction plant

Staff Writer | June 17, 2022 | 

Vital’s rare earth extraction plant in Saskatoon, Saskatchewan. Image from Vital Metals.

Canada’s first rare earths producer, Vital Metals (ASX: VML l OTCQB: VTMXF), announced Friday it has begun feeding ore into a dense media separation (DMS) plant as part of commissioning of its rare earth extraction facility in Saskatoon, Saskatchewan.


Vital will commission the Saskatoon facility incrementally over the coming months with plans to produce a 2.5t rare earth carbonate sample for offtake partner REEtec as the next step of product qualification.

Vital is processing ore from the company’s Nechalacho operation in Canada’s Northwest Territories, where mining commenced in mid-2021.

“This is an exciting step for the company as we continue our transition from rare earth developer to operator,” Vital Metals managing director Geoff Atkins said in a media statement.

“We have been a rare earth miner for more than 12 months and now we can commence production of rare earth carbonate,” he said. “We are excited to have reached this milestone at Saskatoon despite the challenges surrounding supply chains and logistics across the world.

“We are targeting to produce 2.5t of carbonate for REEtec as an important step of our production qualification process before we commence ramping up our volume,” Atkins said.

“We are forecasting for this to occur in October 2022.”

Over the coming months, Vital said it will incrementally commission the calcination, leaching and purification and precipitation equipment at the plant, adding this approach will focus on producing product at specification while minimising off-spec production, and wastage.

Vital’s Saskatoon plant will have initial throughput capacity of 1,000 tonnes per year of rare earth oxide (REO) excluding cerium, which is equivalent to ~470t NdPr/year.

The facility is adjacent to a rare earth processing plant under construction by Saskatchewan Research Council (SRC) as part of a rare earths hub.