OPEC will wait to cut more oil production
The Organization of Petroleum Exporting Countries, which cut its daily oil production by 1.5 million barrels last month, announced it likely will make additional output reductions, but not until the end of December, the U.K. OilVoice reported.
Prior to the announcement from OPEC President Chakib Khelil, there were weeks of speculation that OPEC would cut its production further to try to counteract falling oil prices. Iran and Venezuela were also pushing for another round of production cuts.
Khelil said OPEC would wait until all its members implement the first round of cuts before implementing additional cuts.
Leaders in Iran and Venezuela are saying that oil needs to be between $70 and $90 per barrel for their economies to bring in enough revenue, and now oil is hovering around $50 per barrel.
Khelil said right now there is no reason to believe cutting production again will have any more impact than the first round of cuts.
A decision could be made on Nov. 29, when OPEC will hold a special session of ministers in Cairo, or at OPEC's regular summit on Dec. 17 in Oran, Algeria.
OPEC did, however, cut its expected demand for 2009. Demand is now predicted to fall by 670,000 barrels a day, and consumption is expected to grow by less than half of a percent to 86.5 million barrels per day.
Canadian oil sands project delayed.
Petro-Canada, UTS Energy Corp. and Teck Ltd. agreed to postpone their bitumen upgrader project in Alberta until they feel they can make such an important financial decision.
The three companies are partners in the Fort Hills oil sands project and have decided to defer their final investment decision until next year, the Financial Post reported.
The partners will wait to make a final decision "until a cost estimate consistent with the current market environment can be established," said Petro-Canada, the second-largest oil and gas company in Canada.
"The partnership will use the extra time to evaluate opportunities for cost reductions, execution efficiencies and the overall project schedule for bitumen production," Petro-Canada said.
The costs of the project have increased by about 50 percent as of September, but crude oil prices continue to drop to nearly two-year lows.
At current costs of materials and labor compared with current commodity prices, the project just is not feasible.
The Fort Hills upgrader was estimated to cost $9.9 billion. UBS Securities estimated that the new oil sands project needs crude prices to be more than $100 a barrel to bring in a respectable profit.
Petro-Canada owns a 60-percent interest in the project, and UTS and Teck each own 20 percent.
Kazakhstan, Azerbaijan sign oil deal
Leaders from Kazakhstan and Azerbaijan have signed a deal that will create an oil transport system across the Caspian Sea. The new system will transport oil in Central Asia to Western markets, bypassing Russia, the Turkish newspaper Hurriyet reported.
The agreement was signed on the sidelines of an energy summit held in Baku, Azerbaijan, where officials from Turkey, Georgia, Poland, Ukraine, Lithuania, Estonia, Bulgaria and Hungary met to discuss new, alternative energy routes.
The deal, signed by Rovnag Abdullayev, president of SOCAR, the Azeri state oil company, and Kairgeldi Kabildin, president of KazMunaiGas, almost certainly will make Western nations happy. The European Commission has been pressing Central Asian nations to cooperate on such a project for several months.
The European Union is trying to decrease its reliance on Russian oil and gas and diversify its import sources.
The $3 billion Trans-Caspian Oil Transport System will deliver oil from the Kazakh port of Aktau to Baku in Azerbaijan using tankers and barges. The system will have an initial capacity of 500,000 barrels per day, according to KazMunaiGas, but capacity could grow to 1.2 million barrels per day.
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Closing oil prices, Nov. 17, 3 p.m., London
Brent Crude oil: $52.91
West Texas Intermediate crude oil: $57.81
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