UPI Energy Watch

OPEC negotiations push oil prices down

Oil prices fell after the Organization of Petroleum Exporting Countries delayed a decision on a third production cut, just as was predicted Friday, before the meeting.

Prior to the announcement before the meeting in Cairo on Saturday, it was widely believed that OPEC would further cut the oil production of its member nations. Now, according to OPEC Secretary-General Abdallah El-Badri, the group likely will announce cuts at its December meeting in Oran, Algeria, The National reported.

Analysts are concerned about the growing number of unsold oil stocks, while OPEC members are concerned about what low oil prices mean for their budgets.

The oil ministers did discuss what appropriate production cuts might be at their meeting Saturday. Led by Saudi Arabia, a group of Gulf producers said somewhere between 1 million and 1.5 million barrels per day should be removed from the market.

Saudi Arabia's King Abdullah has acknowledged he would like to see oil prices return to about $75 per barrel.

"(In Oran) will the action be," El-Badri told reporters. "It will be a good amount, a good quantity," he said when asked what will be cut.

The oil cartel controls about 40 percent of the world's oil production and already promised to decrease its production by 2 million barrels per day over the last two months. Only between 1 million and 1.2 million barrels are estimated to actually have been cut by now.

Papua New Guinea works to maintain LNG

Despite the global economic slump, ExxonMobil, the lead developer of PNG's liquefied natural gas project, has said the project plans are still on track.

Right now Exxon, which has a 41.5-percent stake in the project, is working to secure its funding. With a triple-A credit rating, Exxon has taken the lead in funding efforts over its partners, Oil Search Ltd., Santos and AGL Energy Ltd., which has sold 3.6 percent of its stake, however.

"The project is the largest private investment in PNG, and has an estimated benefit of over $30 billion to the local economy over its 30-year lifespan," according to The Age.

While Exxon is still pursuing the project, the company's LNG venture manager Peter Graham said it will be difficult to find $10 million in such a depressed market. Still, he said, there are about 70 lenders scheduled to visit the project in January.

"Things are moving very, very quickly on the project," Graham said.

The goal is to complete the project in time to ship the first LNG shipment by January 2014.

State Oil Co. of Azerbaijan received 1.7 million tons of oil

SOCAR released the oil and gas numbers in its first publication of the volumes of oil and gas received for participation in joint ventures.

Since January, SOCAR has received 1.7 million tons of oil and 462 million cubic meters of natural gas through jointly owned oil and gas production projects in the country that are co-owned by foreign companies, Azerbaijan Business Center reported.

In October alone, SOCAR received 101,820 tons of oil and 52.53 million cubic meters of gas as an equity stake in joint projects.

Most of the oil has come from the Azerbaijan International Operating Co.'s development of the Azeri-Chirag-Gunashli field block in the Azerbaijani sector of the Caspian Sea.

From that field alone, SOCAR received 68,540 tons in October and 1.38 million tons since January.

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Closing oil prices, Dec. 1, 3 p.m., London

Brent Crude oil: $50.55

West Texas Intermediate crude oil: $53.41

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(e-mail: energy@upi.com)