More Oil Traders

Ari J. Officer wrote an article for TIME magazine arguing the need for more oil traders. He says the Obama Administration can’t stabilize prices by regulating speculators. According to the article, limiting trading would make the oil-futures market smaller than it currently is, something Officer believes is dangerous.


“The oil-futures market is tiny compared with the physical oil market: less than 3% of the world’s oil consumption over the next year is accounted for in the open interest.”


Because oil is an international commodity and the U.S. government can’t regulate the global market, Officer believes that the U.S. “should not outsource markets by placing a divide between America and the rest of the world.”

Check out the article. It is an interesting read.

Bingaman to offer new fuels reserve legislation

As part of the energy legislation that Senate Energy Committee is developing, Chairman Bingaman has introduced S. 967, the Strategic Petroleum Reserve Modernization Act of 2009 to create a refined petroleum product reserve that would contain at least 30 million barrels of transportation fuels like gasoline and diesel.  The new reserve will be part of the nation’s 1-billion-barrel Strategic Petroleum Reserve (SPR).

 

Sen. Bingaman:  “Our domestic oil market has changed and we must have a more sophisticated strategy to react to disruptions in our oil supply.  While we are more dependent on imported crude oil than ever before, we also import more refined petroleum products.  When U.S. refinery operations are disrupted, imported products from other countries are required to fill the gap.  This legislation would provide a needed cushion while damaged infrastructure is repaired.”

 

In the 1970s, when SPR was set up, the U.S. was vulnerable to supply disruptions, as the nation was a significant and growing importer of crude oil.  However, the country then had plentiful refining capacity and did not import large volumes of refined products such as gasoline and diesel.  Therefore, SPR managers decided to stockpile only crude oil.

 

Since then, history has shown that severe weather, not geopolitical events, is the most frequent cause of supply interruptions.  For example, Hurricanes Gustav and Ike last September halted much of our nation’s refining operations, and that resulted in fuel shortages in parts of the U.S. (mainly in the Southeast).  The SPR was of limited use in easing these outages because the refineries affected by the storms were not able to process the crude oil from the reserve into fuels.

 

Both the bill text and a one-page summary have been posted to the Senate Energy 

Vitol takes more interest in Congo

Vitol is seeking to increase its stake offshore of Congo.  According to Offshore Magazine, the Swiss-based physical trading company is increasing its stake in the opportunity.

Sellers like Vitol, Glencore, and Chemoil find alternative offload in Singapore

Good take on using future to offload excess inventories, from Reuters out of Singapore:

SGX fuel oil futures plan attractive to sellers

Reuters

29 April, 2009

Journalist: Yaw Yan Chong

 

Singapore Exchange's proposed fuel oil futures could see warmer reception from sellers, who see it is another way to offload cargoes, than buyers averse to paying security deposits and to its loading limits, traders said on Wednesday.

 

SGX (SGXL.SI: Quote, Profile, Research), which is developing a fuel oil contract similar to that operated by SIMEX in the early 1990s, held a session on Tuesday with majors Shell, BP and Singapore Petroleum Co, as well as traders Vitol, Glencore, Chemoil, Hin Leong, PetroChina, shipper Maersk and bunker supplier Equatorial Marine.

Vitol and Arawak

For a good selection of information on Arawak and Vitol, check out the VitolNews blog.

Vitol on the Move with ICECAP

Check out this Reuters article.  Interesting to see Vitol moving into a clean energy endeavor. Looking forward to more details on this:

Vitol buys ICECAP's Kyoto carbon offset portfolio

Tue Apr 28, 2009 2:13pm BST

By Michael Szabo

LONDON, April 28 (Reuters) - Swiss-based oil trader Vitol has bought up the remaining share of a clean energy project portfolio it co-owned with developers ICECAP Ltd., sources close to the deal said on Tuesday.

"It was simply a portfolio, a joint venture with Vitol, that was bought out by Vitol," said one source who declined to be named.

Neither Vitol nor UK-based ICECAP would confirm the deal but another source who requested anonymity said the portfolio consisted of between 10-20 U.N.-registered projects in China, a majority of which were hydro dams.

Under the Kyoto Protocol climate change pact, developers like ICECAP can invest in clean energy projects in emerging countries under the $32 billion Clean Development Mechanism (CDM) scheme.

In return, developers receive carbon offsets called Certified Emissions Reductions (CERs) from the United Nations which can be sold to investors like Vitol.

The number of CERs to be generated by the portfolio before 2012, the year Kyoto expires, was unclear but U.N. data showed it could be more than 10 million tonnes of avoided carbon dioxide.

Benchmark CERs for delivery in December CEREZ9 were trading at 11.40 euros ($14.84) a tonne on Tuesday.

The deal has also resulted in the departure of at least two ICECAP employees involved in project origination, a third source said. Sources said ICECAP will continue to manage its 15 million CER fund, called the ICECAP Carbon Portfolio fund, which boasts clients including Italy's Enel Trade SpA (ENEI.MI), Greece's Public Power Corporation (DEHr.AT) and Japan's Marubeni Corporation (8002.T). 

"In terms of what it means for ICECAP ... nothing really has changed. They still have the ongoing responsibilities under the fund (and) it still has a large portfolio of projects," the first source said, adding that ICECAP will continue to originate CDM projects.

"There are still origination requirements in that fund. Initial volume projections on projects can fluctuate and therefore there can often be an ongoing requirement to continually originate projects."

Vitol's Chief Executive Ian Taylor said in March it will expand into natural gas, carbon emissions, and coal markets. [ID:nLO410484] (Additional reporting by Jackie Cowhig; Editing by Peter Blackburn)

Chinaoil emerging as major force in crude trading

Interesting report from Reuters on Chinaoil:

Chinaoil emerges as major force in crude trading
26.04.09
Source ::: REUTERS

SINGAPORE: Chinaoil, trading arm of state refiner PetroChina, has been the most active player on crude oil during the Asian Platts window this month, signalling its aim to become a major market force, rivalling peer Unipec.

It is only the third Asian firm, after South Korea’s largest refiner SK Energy and Unipec, trading unit of Asia’s top refiner Sinopec, to actively participate in the trading window dominated by majors such as Shell, BP and Total, as well as large independent traders such as Vitol and Glencore...

The following release was posted on Vitol's web site today:

Trading Market.com

Arawak shares cease trading on London Stock Exchange

Fri. April 24, 2009; Posted: 02:00 AM

ST. HELIER, Jersey, Apr 24, 2009 (Canada NewsWire via COMTEX)

Arawak Energy Limited ("Arawak" or the "Company") announces that following the successful offer by Rosco S.A. ("Rosco") to acquire all of the outstanding common shares of Arawak, the Company's shares have been delisted from trading on the London Stock Exchange effective 24 April 2009.

On 8 April 2009, Rosco announced that it held approximately 96.91% of Arawak's total issued common share capital following its recommended and increased cash offer (the "Offer") of C$1.00 per Arawak share at the end of January 2009. Rosco, a subsidiary of the Vitol group of companies, has declared its Offer wholly unconditional and has commenced proceedings to compulsorily acquire all the remaining outstanding shares related to the Offer. Arawak shares were delisted from trading on the Toronto Stock Exchange on 14 April 2009.

Arawak also announces that executive Directors Alastair McBain and Shahveer Kapadia and non-executive Directors James Coleman, Nicholas Clayton and Alan Duncan have stepped down from the Board. Arawak's new Board comprises David Fransen, Roland Favre and Jacques Sterken, nominees of the Vitol group of companies.

All documentation related to the Offer can be found on www.arawakenergy.com or on www.sedar.com.

Notes to editors

Arawak is engaged in the exploration, development and production of oil and natural gas in Kazakhstan, Russia and Azerbaijan. In Kazakhstan, the Company holds five producing fields and two exploration blocks. The Company has a 40% participating interest in the Saigak producing block acquired in June 2008. The remaining assets are held through its 100% wholly-owned subsidiary Altius Energy Corporation ("Altius"). Altius' main producing field is Akzhar with smaller fields at Besbolek, Karataikyz and Alimbai. The two exploration blocks East Zharkamys III and Tamdykol are also situated in western Kazakhstan. Arawak's producing assets in Russia are held through ZAO PechoraNefteGas ("PNG") and LLC NK Recher-Komi ("Recher-Komi"), in which Arawak has a 50% interest with the remaining interest being held by Lundin Petroleum AB. Also in Russia, Arawak holds a 100% interest in the Kymbozhyuskaya exploration block and in the South Sotchemyu appraisal block. In Azerbaijan, the Company's asset is its interest in the Exploration Development and Production Sharing Agreement ("EDPSA") for the South West Gobustan oil and gas fields. CGL, a company registered in Anguilla, British West Indies, in which the Company has a 37.17% interest, holds an 80% interest in the EDPSA with the remaining 20% held by an affiliate of SOCAR. The remaining 62.83% share in CGL is held by two affiliates of the project operator, CNPC.

For a detailed description of Arawak's business and the risks and uncertainties facing the Company, readers should refer to Arawak's Annual Information Form for the year ended 31 December 2008 and dated 30 March 2009 as filed at www.sedar.com.

SOURCE: Arawak Energy Limited

Arawak Energy Limited, Tel: +44 (0) 20 7973 4285, Tanya Pang, Head of Investor

Relations, Fax: +44 (0) 20 7824 8466, E-mail: info@arawakenergy.com, Web:

www.arawakenergy.com; Brunswick Group LLP, Tel: +44 (0)20 7404 5959, Patrick Handley;

J.P. Morgan Cazenove Limited, Tel: +44 (0)20 7588 2828, Steve Baldwin, Neil Haycock;

Oriel Securities Limited, Tel: +44 (0)20 7710 7600, Richard Crawley, Natalie

Fortescue

For full details for ABGLF click here.

Trafigura inspection spat in Norway

Interesting article in Tradewinds on dispute with Trafigura:  "A UK-based cargo inspector has strongly denied that it provided false information to a Nigerian company currently embroiled in a law suit against oil trader Trafigura Beheer.  ... At the heart of the case is an allegation that the specification, or ‘spec’, of a cargo of automotive gas oil (AGO) bought from Trafigura by local company Felshade International Nigeria last year was not of the required level to sell on."