The Weekly Wrap: August 6, 2010
The end is nigh! BP announced on Thursday that it had completed pouring cement into the Macondo well, moving one step closer to permanently sealing it off. The announcement came on the heels of a new report this week estimating that the well had leaked 4.9 million barrels of oil into the Gulf of Mexico ...
The end is nigh! BP announced on Thursday that it had completed pouring cement into the Macondo well, moving one step closer to permanently sealing it off. The announcement came on the heels of a new report this week estimating that the well had leaked 4.9 million barrels of oil into the Gulf of Mexico since April. It's been three weeks since oil has actually leaked from the well, but BP is continuing to drill relief wells anyway to head off potential problems below the now-cemented casing of the original well.
The end is nigh! BP announced on Thursday that it had completed pouring cement into the Macondo well, moving one step closer to permanently sealing it off. The announcement came on the heels of a new report this week estimating that the well had leaked 4.9 million barrels of oil into the Gulf of Mexico since April. It’s been three weeks since oil has actually leaked from the well, but BP is continuing to drill relief wells anyway to head off potential problems below the now-cemented casing of the original well.
Oil legislation shelved, moratorium scaled back. With the House off on August recess this week and the Senate preparing to close up shop today Senate Majority Leader Harry Reid decided on Tuesday to delay a floor vote on the oil spill response bill until September. Under pressure from some Senate Democrats opposed to removing the $75 million cap on oil spill liabilities and unified opposition from Republicans, Reid concluded that the votes were not there to pass the bill, even after it was pruned of broader regulations on energy and carbon emissions. The bill’s shelving may buy time for the bill’s consideration, but it may also allow legislators to craft amendments to further scale it back. Combined with the potential early ending of the deepwater drilling moratorium, Big Oil may face a less stringent regulatory future in the Gulf than it was expecting.
Crude prices shatter three-month ceiling. Oil futures prices broke the $80 mark for the first time since May this week, based on optimistic speculation on Chinese economic indicators. After Chinese manufacturing contracted in July, Beijing is expected to reverse slow-growth policies it put in place earlier this year. China also announced that it planned to expand its oil-storage capacity by 50 percent by 2015. The price of crude reached a peak of just above $82 a barrel, only to back down after U.S. inventories rose to near-record highs and a negative jobs report curbed investors’ enthusiasm in New York. In any case, China’s renewed appetite may be offset by negative U.S. economic reports, which should leave oil swinging in the $75-$85 per barrel range.
BP’s yard sale continues. The beleaguered company kept up its efforts to raise $30 billion by selling assets this week, putting oil and gas interests from Latin America to Southeast Asia on the auction block. On Tuesday BP announced the sales of its Colombian assets to a consortium of Colombia’s Ecopetrol and Canada’s Talisman Energy for $1.9 billion. Talks moved ahead on its plan to sell its 60 percent stake in Argentina’s Pan American Energy as well. After BP’s Tony Hayward and Bob Dudley conducted a charm offensive in Moscow this week, reports surfaced that the two offered to sell energy ventures in Vietnam, Pakistan, and Venezuela to Russia’s OAO Rosneft and TNK-BP — mostly mature oil fields or projects that BP has deemed peripheral to its core focus area of deepwater drilling in Russia, West Africa, and the Gulf of Mexico.
South Korea’s and U.A.E.’s energy swap. National oil companies from South Korea and the United Arab Emirates signed an agreement on Monday that would create a joint venture to explore for oil in Abu Dhabi and create a Korean oil storage facility in the emirate. The stockpiling facility would have a capacity of 10 million barrels, about 7 percent of Korea’s entire oil storage capacity. The deal comes less than a year after Abu Dhabi awarded a $20 billion nuclear power plant contract to Seoul-based Korea Electric Power Corp., signaling a deepening of commercial relations and strategic links between Korea and the U.A.E.
LNG delays thwart Russia’s aspirations. A series of project delays on liquefied natural gas projects has put Russian gas giant Gazprom in the unfamiliar position of being outpaced by the competition. As the company continues to decide whether to move ahead in expanding its Sakhalin LNG facilities or developing the vast Shtokman field in the Arctic, a surge of investment in Australia, Qatar, and Southeast Asia has allowed these areas to target potential customers of Russian gas. Russia had hoped to supply a quarter of the world’s LNG, but with projects like Australia’s Gorgon field giving it a run for its money and increasing world gas supplies undercutting prices, that aspiration now seems increasingly unlikely. These combined pressures may force Gazprom to join in some of these new investments abroad, or even cause a re-evaluation of Russia’s energy export-based economy.
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