Russia sees oil-cut extension as consensus with OPEC emerges


MOSCOW and CAIRO (Bloomberg) — Russia’s Energy Minister Alexander Novak expects OPEC and its allies to reach a decision on Thursday to extend their pact to curb oil output as signs of a growing consensus emerged with the cartel’s biggest producer Saudi Arabia.

“We have reached in general a mutual understanding” on the future of the deal, Novak said in Vienna on Wednesday. “I think we will have” a decision on an extension tomorrow, he said.

Novak’s comments were echoed in the Austrian capital by his Saudi Arabian counterpart Khalid Al-Falih, who praised the “solid results” achieved, but added that “a good deal more hard work and commitment is essential.”

The two key decision makers spoke in a preparatory meeting ahead of Thursday’s ministerial gathering. While the Organization of Petroleum Exporting Countries and its main ally Russia agree that oil production cuts are working and should be extended deeper into next year, Moscow is said to want clarity on how and when to end the curbs. OPEC has agreed to discuss an exit strategy.

The oil-production cuts have been “fruitful” and participants were showing a “responsible approach,” Novak said. Details of the deal have still to be discussed, he said before a meeting of ministers in Vienna.

Exit strategy

For Russia, an exit strategy seems to be as important as the duration of the extension, according to people involved in the closed-door negotiations. Its need for clarity is greater than most OPEC members because its economic policy making is more complex, including a floating exchange rate that fluctuates with the oil price.

Moscow also wants a schedule of how the cuts will end so it can guide privately-owned Russian oil companies and their foreign partners about future output, the people said, asking not to be named because the talks are private. Most OPEC members have a single national oil company that answers to the government.

Igor Sechin, chief executive officer of state-run Rosneft PJSC, and Lukoil PJSC’s billionaire boss Vagit Alekperov have questioned the wisdom of prolonging the deal when oil prices are already above $60/bbl. Benchmark Brent traded at $63.47 as of 2:35 p.m. in London.

Commitment needed

Russia is “unlike OPEC countries that have national oil companies, and therefore are able to turn on and off production easier,” said Amrita Sen, chief oil analyst at consultant Energy Aspects Ltd. in London. Moscow needs to plan a bit more given the involvement of several different producers, she said.

Saudi Arabia’s Al-Falih called for the oil producers to redouble their efforts.

“The job is not done,” he said. “We will need the full commitment of all countries. While I want to congratulate and thank the over-performing members for their dedication — we have a few countries that have consistently over delivered their commitment — I also want to take the opportunity to urge those few under-performing countries to catch up.”


Hamm: EIA Forecasts Costly To Industry

Joseph Markman Senior Editor, Digital News Group Hart Energy

Energy titan Harold Hamm reiterated his concerns about the U.S. Energy Information Administration’s (EIA) oil production forecasts  Nov. 16, this time on the federal agency’s own webinar.

“We believe that the unrealistic growth projection that EIA has made disadvantages U.S. markets,” said Hamm, chairman and CEO of Continental Resources Inc. (NYSE: CLR), who spoke in his role as chairman of the Domestic Energy Producers Alliance (DEPA). That disadvantage is brought out in the current spread on global markets between Brent and West Texas Intermediate (WTI) crude oil.

“Brent trades at a premium to WTI at about 10%—a 10% advantage that puts America last, not first,” he said. “That 10% can mean the margin of profit or loss for many wells in America and many DEPA members.”

Harold Hamm, CEO of Continental Resources

Hamm said he and others from DEPA met with EIA officials in August following the markets’ response in July to crude export increases from Libya and Nigeria. The surprise addition of 400,000 barrels per day (bbl/d) pulled down the WTI price of oil from $53/bbl to $43/bbl from April to June.

The industry responded to the lower prices by curtailing production, but the EIA nevertheless held to its previous lofty forecast for the year. After meeting with DEPA, the agency trimmed its exit rates for 2017 in September from 9.92 million bbl/d to 9.69 million bbl/d.

It was progress, but Hamm and DEPA weren’t entirely satisfied.

The “EIA still remains on the high side by about 220,000 barrels or more, we believe,” he said. “Actual production from April to August was very flat, and activity level and drilling has continued downward through much of November.”

Given the total volume of U.S. crude oil output, the 220,000 bbl/d could be overlooked as a rounding error, except for the ultimate impact. The combination of that figure with the barrels that the EIA already cut from its projection is roughly equivalent to the added output from Libya and Nigeria early in the year—the sum of 400,000 bbl/d of oil that roiled global markets and delivered an almost 20% hit to the price of WTI.

The overestimate, Hamm said, has been calculated by DEPA to have cost $4 billion in revenue, royalties and tax dollars.

“The EIA forecast is very important,” he said. “It moves markets, and it impacts our industry greatly. Within 72 hours after the November 2017 Short-Term Energy Outlook was released, EIA data was referenced by more than 155 analysts. Another 25 articles appeared in major media publications. Right or wrong, no other agency provides data with greater impact.”

This could explain why DEPA was eager to engage with the EIA to help it produce the most accurate numbers.

In the second quarter, DEPA representatives sought out public reporting companies to check on whether its suspicions about production estimates were correct. The organization learned that overall output by public companies—those responsible for about 75% of U.S. production—had dropped by 0.78%. In the third quarter, output slipped again by about 0.5%.

But to accurately gauge what oil companies are doing, the EIA must be aware of the changing dynamics of the industry, Hamm said.

“The capital markets have changed,” he said. “Shareholders want return on capital employed. Growth at any cost … no longer applies. They rightly are demanding decent returns.”

At this point in mid-November, Hamm said, it is mathematically difficult if not impossible for U.S. producers to match the EIA’s forecast for the 2017 exit rate without raising the average output by 130,000 bbl/d. The actual growth rate, dating to September 2016, has been about 59,000 bbl/d.

While those in the industry may be awareof those figures, markets rely heavily on the EIA to do the math.

“It is crucial for EIA to provide the most accurate energy supply and demand data possible,” Hamm said, “particularly during this new era of energy in America.”

Joseph Markman can be reached at and @JHMarkman.


Pantheon Resources plc: Commencement of First Gas Production



Commissioning of gas processing facilities, Polk County

The gas processing facility operated by Kinder Morgan in Polk County was successfully commissioned yesterday, 14 November 2017, with the VOBM#1, VOBM#2H and VOBM#3 (the Polk County wells) all having been tied-in to the facility. First gas sales have already commenced.


The facility will now be optimized and production will be ramped up progressively over the next few weeks in line with standard commissioning practice and best practice reservoir management. A further update will be provided over the next 30-40 days, once operations have bedded in and production volumes have been optimized. A photograph of the fully commissioned gas processing facilities has been posted to the image gallery at


The Company expects to receive first production revenues in late December 2017/early January 2018.



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