UPI Energy Watch

OPEC to cut output again

The Organization of Petroleum Exporting Countries announced Thursday it will cut output for a second time at the end of the month if oil prices do not rebound son, Chinese news agency Xinhua reported.

OPEC cut its production output by 1.5 million barrels at the end of last month in an attempt to push prices higher for the benefit of countries that rely on oil revenues. The cut did little, however, and oil prices have continued to fall on economic concerns and decreasing demand.

Algerian Minister of Energy and Mines and President of OPEC Chakib Khelil told reporters that OPEC members will meet in Cairo on Nov. 19 on the sidelines of the Organization of Arab Petroleum Exporting Countries to discuss oil output cuts.

Some OPEC member countries, such as Algeria, Kuwait, Libya, Qatar and Saudi Arabia, also are members of OAPEC.

OPEC's ministers also will hold a meeting in Oran, Algeria, on Dec. 17 to discuss international oil market prospects in the first half of 2009.

Mexico hedges its oil bets

Officials in Mexico announced they bought 330 million barrels of oil for 2009 at $70 per barrel, expecting that oil prices will rebound.

Mexico can then sell the oil at a predetermined price and date, in an effort to lock in its oil revenues for next year, Agustin Carstens, Mexico's finance minister, told the Financial Times.

The hedged oil, 330 million barrels, or about 900,000 barrels per day, is equal to all of Mexico's net crude oil exports.

Analysts have said that Mexico's use of put options -- instead of futures or swaps -- is likely to push brokers to review trading patterns, especially after this past summer when many dealers took put options, which may have played a role in the current decline of oil prices.

Carstens said the cost of the put option initiative was about $1.5 billion. Carstens told the Financial Times that after such high prices over the summer, all signs pointed to lower oil.

ONGC Videsh makes Egyptian oil and gas discovery

OVL, the overseas arm of India's largest oil producer, Oil and Natural Gas Corp., and its partner IRP Red Sea Inc. announced they have made a second oil and gas discovery in an offshore block in Egypt, the Business Standard reported.

The latest discovery was made off the North Ramadan Concession in the Gulf of Suez, where the company also discovered oil in April 2007, though the first discovery has not yet been put on commercial production. No estimates of the size of the latest discovery have been released yet. The initial test well, however, produced about 3,000 barrels per day and 15 million standard cubic feet per day of natural gas.

"A further analysis for development of the prospect is in progress," OVL said.

OVL holds a 70-percent interest in the North Ramadan Concession, and IPR holds the remaining 30 percent.

The North Ramadan Concession is 290 square kilometers and is right in the middle of a number of other oil fields.

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Closing oil prices, Nov. 14, 3 p.m., London

Brent Crude oil: $52.15

West Texas Intermediate crude oil: $56.18

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(e-mail: energy@upi.com)