Oil Glut:light in the end of the tunnel

OPEC has decided not to cut output, despite record levels of crude in inventories and weak demand forecasts, with some cartel members believed to have ignored previous commitments to cut.
OPEC sees no need to change its guidance to oil exporters – even though oil prices are hovering around a six-month high of $63/bbl. At their meeting in Vienna members agreed stick to the current levels of output, despite oversupply, with OPEC Secretary General Abdalla Salem El-Badri, saying the organization is looking to foster economic recovery.
”The market is oversupplied, but we are seeing a light in the end of the tunnel. There is a slow recovery and we don’t want to send the wrong signal to the economy.”
With recent production cuts of 4.2 million barrels per day, OPEC members lost revenues totaling $400 million Al Badri says.
Some countries can’t withstand such losses and have exceeded their quotas – undermining OPEC’s authority,

North Sea Aldous Major South 1.6 bbl

Statoil ASA , together with partners Petoro AS, Det norske oljeselskap ASA and Lundin Norway AS, has confirmed significant additional volumes in its appraisal well in the Aldous Major South discovery (PL265) in the North Sea.
The results of appraisal well 16/2-10 have increased production license PL265 estimates to between 900 million and 1.5 billion barrels of recoverable oil equivalent.
This is a doubling of the previously announced PL265 volumes of between 400 and 800 million barrels of oil equivalent.
It has previously been confirmed that there is communication between Aldous in PL265 and Avaldsnes in PL501, and that this is one large oil discovery.
“Aldous/Avaldsnes is a giant, and one of the largest finds ever on the Norwegian continental shelf. Volume estimates have now increased further because the appraisal well confirms a continuous, very good and thick reservoir in Aldous Major South,

New world oil map

The outline of a new world oil map is emerging, and it is centered not on the Middle East but on the Western Hemisphere. The new energy axis runs from Alberta, Canada, down through North Dakota and South Texas, past a major new discovery off the coast of French Guyana to huge offshore oil deposits found near Brazil. The new hemispheric outlook is based on resources that were not seriously in play until recent years — all of them made possible by technological breakthroughs and advances. They are “oil sands” in Canada, “pre-salt” deposits in Brazil and “tight oil” in the United States.
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The Zaedyus well is being drilled in the Guyane Maritime licence using the ENSCO 8503 deepwater semi submersible. The well was drilled in water depths of 2,048 metres and has been drilled to a depth of 5,711 metres. Drilling operations will now continue and the well will be deepened to over 6,000 metres to calibrate the deeper geology. The well will then likely be sidetracked to enable cores to be obtained over the reservoir sections.

Tullow (27.5%) operates the Guyane Maritime license and is partnered by Shell (45%), Total (25%) and Northpet (2.5%), a company owned 50% by Northern Petroleum and 50% by Wessex Exploration.
Tullow was citing six additional prospects off French Guiana with a similar make-up to Zaedyus suggested major potential in the coastal area extending from
Guyana through offshore Suriname and French Guiana and into
northeast Brazil's maritime area.
"It's a potential game-changer -- in the sense of the size,
that you have an area with such immense prospects," here

Commodity prices: oil vs. wine

Emerging economies have accounted for more than 100% of the increase in global oil demand since 2000, while oil consumption in rich countries has declined. Likewise, rising incomes in emerging economies have spurred wine drinking, whereas consumption in Europe, notably France and Italy, has fallen. China (including Hong Kong) overtook Britain last year as the biggest export market for Bordeaux wines. So for both wine and oil, emerging economies now account for the bulk of incremental changes in demand and therefore have the biggest influence on prices.

Not only are emerging economies growing faster, but their growth is more energy intensive. Likewise, an increase in income seems to lead to a bigger rise in wine demand in these economies than in the rich world, and so gives a bigger boost to prices.

Falklands oil: 200 million barrels — worth £17 billion

Rockhopper Exploration, the North Falkland Basin oil and gas exploration company, has announced that the Sea Lion 14/10-B exploration well has encountered significant oil. The Sea Lion Prospect is located on Licence PL032 which is 100% owned and operated by Rockhopper.The discovery was made using the Ocean Guardian, a 14,400-tonne rig that was towed 13,000km miles from Scotland last autumn. The journey took six months. The Ocean Guardian is set to drill another four wells around the Falklands over the next few months. A Rockhopper spokesman said that the company had encountered a 53m-thick deposit of oil distributed in several layers. The largest was 25m thick.

Richard Rose, an analyst at Oriel Securities, the City firm, said that the find was “very significant” and could amount to 200 million barrels of oil — worth £17 billion at current prices. “That’s pretty chunky,” an industry source said.

Happy Talk: 500bn barrels of crude oil

Oil companies from around the globe are lining up to participate in the Carabobo oil drilling project, which seeks to open-up untapped fields of tar-like crude in the eastern Orinoco region. This is the most touted drilling project in the region since the 1990s, when oil companies such as ConocoPhillips (COP), Total S.A. (TOT), Exxon Mobil Corp. (XOM) and Chevron Corp. (CVX) built massive extraction and upgrading projects in the area.

The initial opening of the Orinoco oil belt resulted in a major production boost in the region, but ended in legal controversy, when state-owned Petroleos de Venezuela S.A. took over control of the projects in 2007 under a new hydrocarbons law. ExxonMobil and ConocoPhillips left, starting arbitration proceedings against the country. Chevron, Total and other international companies stayed.

Companies that in recent months have shown interest in making a bid for the Carabobo project include China National Petroleum Corp., or CNPC, Total, Spain's Repsol YPF SA (REP, REP.MC), Royal Dutch Shell PLC (RDSA, RDSA.LN) and India's Oil & Natural Gas Corp., or ONGC (500312.BY). Scientists working for the US Geological Survey say Venezuela's Orinoco belt region holds twice as much petroleum as previously thought.

The geologists estimate the area could yield more than 500bn barrels of crude oil. Saudi Arabia has proven reserves of 260bn barrels.

Incentives for states to raise production

The 2010 mean demand estimate of 86.3 mb/d compared to December global supply of 86.2 mb/d, on an unexpected rise of 270 kb/d, suggests that supply is gaining while demand growth, rooted in non-OECD developing Asian countries, is less than stable. Also important are upside supply surprises from the OPEC 12, which prove that there are incentives for the cartel member states to raise production levels at these prices. here