Gunvor decides against oil products deal

MOSCOW (MRC) -- Oil trader Gunvor has decided against signing a contract for oil products bought through tenders from Russia’s troubled Antipinsky refinery, three trading sources told Reuters.

SOCAR Energoresource, a joint venture between Russian lender Sberbank and a group of investors, holds an 80% stake in the refinery, which has debt exceeding USD5 billion and has filed for bankruptcy.

Last week, SOCAR Energoresource sold up to 150,000 tonnes of ultra-low sulphur diesel originating from the Antipinsky refinery and loading via the Baltic port of Primorsk over August-September to Gunvor, through tenders, and up to 30,000 tonnes of gasoline AI-80 for delivery in August via the Baltic Sea port of Ust-Luga.

Three trading sources familiar with the tenders said that Gunvor has refused to sign a firm deal since then, as SOCAR Energoresource and Gunvor failed to agree on the terms of the contracts.

Gunvor did not immediately reply to a Reuters request for a comment.

A SOCAR Energoresource spokesman declined to comment, Antipinsky refinery did not immediately reply to a Reuters request for a comment.
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MOSCOW (MRC) -- Shareholders of Anadarko Petroleum Corp voted overwhelmingly to sell the company for USD38 billion to rival Occidental Petroleum Corp , ending a short-lived contest that pitted two of the most storied names in the oil industry against one another, said Reuters.

Occidental in May beat out Chevron Corp to grab a major oil industry prize: Anadarko’s nearly quarter million acres in the Permian Basin, the top U.S. shale field, where low-cost output has helped turn the United States into the world’s top oil producer at more than 12 million barrels per day.

Anadarko’s shareholders voted 99% in favor of the deal that gives them USD72.34 per share based on Wednesday’s closing price for Occidental. Investors also voted in a non=binding measure 71% against executive payouts tied to the deal. Anadarko’s top six executives are to receive USD300 million in payouts.

Occidental said immediately after the vote it had closed the transaction, and had named new executives to run Western Midstream Partners LP, Anadarko’s natural gas pipeline business. Its shares rose 2.5% to close at USD47.13.

“We begin our work to integrate our two companies and unlock the significant value of this combination for shareholders,” Occidental Chief Executive Vicki Hollub said in a statement.

Anadarko shares are up 56% from the day before it disclosed merger talks, while Occidental shares are down 30% since its discussions were revealed.

The market’s sour response has dampened enthusiasm for deals. Even with stocks of many shale firms trading at multi-year lows, it may not be enough to spur a buyout spree by the world’s largest oil and gas firms, said Artem Abramov, analyst with Rystad Energy.

“Some super-majors might be waiting for even lower pricing,” Abramov said.

Hollub has been lining up financing and organizing asset sales to fund the deal while battling activist investor Carl Icahn, who wants to replace four Occidental directors and influence the pace of the company’s asset sales.

Hollub avoided her own shareholder vote on the deal by securing a controversial and pricey USD10 billion financing agreement with Warren Buffett’s Berkshire Hathaway. Icahn likened the deal to “taking candy from a baby” on Buffett’s part.

Occidental this week sold USD13 billion in bonds to help fund the Anadarko purchase and has proposed selling Anadarko’s Africa assets to Total SA.

It also formed a drilling partnership with Colombia’s state-run oil company Ecopetrol SA to develop part of its Permian shale field for up to USD1.5 billion.

Occidental last week reported a 14% drop in second quarter profit, as costs related to the deal and weaker chemical earnings hit its bottom line.
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MOSCOW (MRC) -- QEP Resources (QEP.N) will remain an independent oil and gas producer after ending a half-year process to sell itself without a deal, the company said, deciding instead to work with a rebuffed suitor to identify further cost savings, as per Reuters.

At the start of the year, Paul Singer’s USD38 billion hedge fund Elliott Management Corp, which owns 4.9% of QEP, offered USD2.07 billion for the Denver-based company, saying it was undervalued despite having good acreage in the Permian Basin, the largest U.S. shale oilfield.

Despite running a sale process aimed at soliciting other bids for the company, QEP said it had concluded “the best path to create superior value for our shareholders is to move forward as an independent company." Instead, QEP and Elliott have agreed to work together to identify two new QEP board members and create a five-person committee chaired by Chief Executive Tim Cutt to implement best practices and boost efficiency. The committee will include two current independent directors and the two new board members.

Elliott had been in talks with QEP’s board until very recently about buying the company, but they could not agree on a valuation, according to sources familiar with the matter. QEP is now worth half of what Elliott offered in January.

The hedge fund still believes QEP and its assets are undervalued and could return with a new proposal, one of the sources said.

QEP shares edged higher despite widespread declines in the sector following a 5% drop in WTI crude prices on Wednesday.

The gains were supported by QEP saying that it would reinstate its quarterly dividend of 2 cents per share. It cut its 2019 spending projection by about USD50 million, and raised its 2019 production forecast to between 29.9 million barrels of oil equivalent (boe) and 31 million boe, from 28.5 million boe and 30.3 million boe.

U.S. energy mergers and acquisitions have been tepid in 2019 as shareholders have pressured oil and gas companies to cut costs and return cash to them instead of expanding during a period of wild swings in crude and equity prices.

As well as reducing planned capital expenditure this year, QEP said it had slashed its general and administrative expenses by 50% compared with the first quarter.

The S&P Oil & Gas Exploration & Production index slipped on Tuesday below the level in February 2016, the trough of the last oil price slump.
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MOSCOW (MRC) -- Nigerian oil has suffered its slowest sales of the year in August, traders said, as U.S. exports of competing light, sweet grades flood traditional markets in Europe and Asia, said Hydrocarbonprocessing.

The changes illustrate how U.S. President Donald Trump’s strategy for “energy dominance” is reshaping oil markets worldwide, as U.S. oil exports surged 260,000 barrels per day in June to a monthly record of 3.16 million bpd.

Crude from Africa’s top exporter has largely been pushed out of the U.S. market in the last decade due to booming domestic output. Exports to the United States slid to zero for three weeks in July, the U.S. Energy Information Administration said.

But now shale oil from the U.S. Permian basin is pouring ever more into traditional strongholds for Nigerian oil in Western Europe, India and Indonesia.

Both Nigeria and the United States are big producers of the kind of light, sweet grades that are ideal for refining into gasoline.

According to IHS Markit, Europe has imported around 46% of Nigeria’s oil since the beginning of 2019, India nearly 18%, and the rest of Asia about another 10%.

“They’re facing bigger competition from the U.S., and in the last few weeks, U.S. exports have really picked up,” one major buyer of West African crude told Reuters.

As many as forty cargoes for export in August were still in need of buyers when Nigeria began publishing its preliminary programme for September exports beginning on Jul. 18.

It was the largest oversupply so far in 2019, with about 25 cargoes the monthly norm.

Though the excess has begun to clear, in part due to energy majors absorbing much of the excess into their own refining systems, the discounts sellers made to attract interest has lowered price expectations for Nigerian exports for September.

“They’ve got a big volume still remaining, and though the number of cargoes left for August is in the single digits, it seems to be taking longer and longer to clear lately. It’s not a pretty picture,” the crude buyer said.

A fire and explosion on June 21 which shut down the Philadelphia Energy Solutions (PES) refinery - a consistent buyer of Nigerian oil - only added to the marketing challenge.

Up to two month’s worth of light sweet oil, or about 20 million barrels, from West Africa and the North Sea which had been scheduled to arrive there were rerouted elsewhere at steep discounts, and prices have not since recovered in either region.

“Demand has been dire. (We) need margins to improve quickly and dramatically,” one seller of Nigerian oil said.

Traders said the competition for European demand was helping drive down offers for similar cargoes elsewhere.

“Imports of U.S. crude into Europe ... (are) obviously having an impact on sweet demand in other regions.”

Mele Kolo Kyari, the new managing director of the Nigerian National Petroleum Corporation (NNPC), assured Reuters in an interview this week that buyers would not soon lose interest.
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MOSCOW (MRC) -- Oil jumped more than 2% on Thursday on expectations that falling prices could lead to production cuts, coupled with a steadying of the yuan currency after a week of turmoil spurred by an escalation in U.S.-China trade tensions, said Reuters.

Brent crude ended the session up USD1.15, or 2.1%, at USD57.38 a barrel, after hitting a session high of USD58.01. U.S. West Texas Intermediate (WTI) crude futures rose USD1.45, or 2.8%, to settle at USD52.54 a barrel after hitting a peak of USD52.98.

Prices rebounded after tumbling nearly 5% to their lowest since January on Wednesday after data showed an unexpected build in U.S. crude stockpiles after nearly two months of decline. Lending some support to prices on Thursday, inventories at Cushing, Oklahoma, the delivery point for WTI, fell about 2.9 million barrels in the week to Aug. 6, said traders, citing data from market intelligence firm Genscape.

China’s yuan strengthened against the dollar and its exports unexpectedly returned to growth in July on improved global demand despite U.S. trade pressure. The dollar fell 0.2% against the offshore yuan. “Today’s price rebound across the energy spectrum looks like a normal correction from a short-term oversold technical condition,” Jim Ritterbusch of Ritterbusch and Associates said in a note.

“While some Saudi overtures of additional output restraint, a softening U.S. dollar and lift in global risk appetite are facilitating today’s rally, we are not viewing this as the beginning of a sustainable advance by any measure."

Reports that Saudi Arabia, the world’s biggest oil exporter, had called other producers to discuss the slide in crude prices have helped supported the market, traders and analysts said. “Saudis are scrambling to send a signal that will stabilize oil markets ... With energy prices heading for the worst weekly close since December, we should not be surprised to hear more rumors that OPEC may be considering increased production cut efforts ahead of a key summit that is tentatively planned for the second week in Abu Dhabi,” said Edward Moya, senior market analyst at OANDA in New York.

Persistent worries about demand growth have weighed on global oil markets, particularly as the world’s two biggest economies are locked in a trade row. Crude oil shipments into China, the world’s largest importer, in July rose 14% from a year earlier as new refineries ramped up purchases. Fuel exports continued to climb as supply outstripped demand in the world’s second-largest oil consumer.

Saudi Arabia plans to keep its crude oil exports below 7 million barrels per day in August and September despite strong demand from customers, to help drain global oil inventories and bring the market back to balance, a Saudi oil official said.

Geopolitical tensions over the safety of oil tankers passing through the Persian Gulf remained unresolved as Iran refused to release a British-flagged tanker it seized last month.

The U.S. Maritime Administration said U.S.-flagged commercial vessels should send their transit plans for the Strait of Hormuz and Gulf waters to U.S. and British naval authorities, and that crews should not forcibly resist any Iranian boarding party.
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