Medgaz Sonatrach and Endesa sign an LNG Sale agreement ...

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Market News Marketing Activity Newsletter Oil outlook hIGHLIGHTS (continued from page 1) Saudi Arabia • Saudi Aramco signs Memoranda of Understanding with Total and ConocoPhillips in the downstream sector. On 21 and 24 May, the Saudi company Aramco, has signed Memoranda of Agreements with Total and ConocoPhillips relating to the development of two refinery projects in Joubail and Yanbou, with a capacity of 400.000B/Day mainly for export. Indeed, both state-of-the-art, full conversion heavy crude refineries will process heavy crude ( Arab Heavy) for the production of refined products that meet the most stringent market specifications. Joubail refinery targets the Asian markets, namely China and India, whereas Yanbou aims to supply the European and American markets. The refineries will be put on steam in 2011 with a unit cost estimated at 5-6 G$. Venezuela • Oil tax nearly doubled on the Orinoco oil Belt. Venezuela has recently announced a new " extraction oil tax" (33.3%) and the $/Bbl 74 72 70 68 66 64 62 60 58 56 54 52 50 48 46 44 42 40 Upward trends Downward trends increase by 30 up to 50 % of its oil tax for the pumping of extra-heavy crude made by all foreign companies operating on the Orinoco River. Four consortia, namely: Sincor (Total, PdVSA and Statoil), Hamaca (ConocoPhillips, Chevron, PdVSA), Cerro Negro (ExxonMobil, PdVSA, BP) and Petrozueta (ConocoPhillips, PdVSA ) among which PDVSA is a minor shareholder and whose production reaches 620.000 B/d, will have to comply to those new measures. Brent Prices in May -Rise of oil products stocks in USA for the third consecutive week -Downward review of 2006 world oil demand by IEA -Increase of OPEC offer in April - Sustained inflation in the USA and Euro Zone due to high energy prices -Significant sales on commodity market - Normalisation of diplomatic relations between USA and Libya 1 2 3 4 5 8 9 10 11 12 15 16 17 18 19 22 23 24 25 26 30 31 June 2006 - Increase of US GDP by nearly 5.3 % in the first half 2006 on a yearly basis - US Government Forecast of an intensified hurricane activity in the Atlantic Basin - Upsurge of tensions between Iran- UNO June 2005 • Project to implement a new refinery technology. The Venezuela's state oil company PDVSA is to launch the construction of a heavy oil reprocessing plant in the Venezuelan Basin on the Orinoco Oil Belt, permitting the transformation of 800.000 B/d of heavy crude into lighter crude. This project is in line with Venezuela target to expand its refining activities in order to develop the huge potential of the Orinoco with recoverable reserves reaching 235 GBbls. Gas outlook North Europe by Othmane Irain In May 2006, natural gas prices in the UK have registered downward tends due to climatic factors. Indeed, because of early May mild weather, "Day Ahead" spot prices have shown a downward trend with the lowest score on 11 May, namely, 28 pence/th. This trend has been inversed end of May with the significant decline of temperatures leading to an average increase by 10 pence/th , reaching 40 pence/th on 22 May. Thus, "Day Ahead" prices rose by nearly 35 pence/th. ( "First Month" Price) has shown a stable trend around 37 and 40 pence/ th, namely a difference of 3 pence/th compared to NBP. Currently, the interconnector operates from Bacton to Zeebrugge. Forward prices (winter 2006/2007) are high and stand at 98 pence/th for the IPE contract of January 2007. USA In May 2006, natural gas prices in the USA have shown a downward trend mainly driven by a mild weather and high record of inventories . "First Month" prices (June 2006 supplies) have shifted from 6.80 $/ MMBtu early month to 5.93 $/MMBtu by the end of the month, namely the lowest level since 18 February 2005. Stock Market The exchange rate £/$ has registered a rebound since the beginning of May 2006, shifting from 1.8394 to 1.8907, then progressively declining to finish at 1.8712 on 30 May 2006. Gas - UK and US price evolution In Zeebrugge market, prices have shown a similar trend with a slight margin estimated at 0.7 pence/th, whereas "First Month" prices have steadily declined shifting from 38.50 pence/th early May to 30.55 pence/th by the end. This downward trend is mainly due to the scheduled shutdown of the gas interconnector for 15 days, as of 5 June. (Yearly maintenance). UK: Pence/th NBP (Day Ahead) NBP (first month) Nymex (first month) US: USD/MMBtu The re-opening date of Rough storage site being postponed from 3 to 13 June, has accentuated the decline because of the potential natural gas surplus during the interconnector shutdown period. Zeebrugge market,
Market News Marketing Activity Newsletter Events OPEC Ceiling production unchanged at 28 MB/d. F urther to the meeting held on 1 June 2006 in Caracas, Opec has decided to maintain unchanged its ceiling production and confirmed its determination to help prices to moderate towards reasonable levels and renewed its readiness to take all necessary steps to preserve the country members interests for the short and long terms. It has also been reported during the conference that although oil markets are adequately supplied with crude oil and oil stocks are at comfortable levels, crude prices volatility is essentially fuelled by concerns over a deficient refining capacity and the refiners' ability to satisfy short term demand in addition to the geopolitical developments and speculation on future markets. Given the uncertainties over the oil markets throughout 2006, OPEC countries have agreed to monitor the developments of oil market and consider convening an extraordinary meeting should the situation require that. Carbon emissions The European Commission releases results for 2005 T he European Commission released on 12 May 2006, the 2005 results on carbon dioxide emission of its State members for the first trading period 2005-2007 covered by the EU Emissions trading Scheme. Out of 25 Member States, 4 countries have not fulfilled their obligations, namely, Portugal, Cyprus, Luxembourg and Malta. The Transactions are checked for irregularities at EU level by the Community Independent Transaction Log ( CITL) which is the database of all the transactions undertaken by the European registries. According to the report, the total amounts emitted by the 21 countries do not exceed the "assigned amount". The differences between allowances and emissions represent 44 million tons ( MT). Although emissions are below allowances, some countries (6) show significant excess such as: ( continued page 4) American LNG market Repsol YPF and Irving launch the construction of a 10 Gm 3 terminal on the Canadian Eastern coast C anaport LNG, a joint venture between Repsol YPF and Irving Oil, has a n n o u n c e d winning EPC CANADA contracts for its Montreal LNG import St-John terminal in St- John (Saint-Jean) in the New Brunswick, on U S A the Canadian Eastern coast. SNC-CENMC has Boston New-York Atlantic Ocean been entrusted with the onshore construction works (a partnership between SNC- Lavalin and Saipem) and Kiewit- weeks-Sandwell Partnership will be in charge of the offshore works. The terminal is located near Irving refinery, some 100 km off the US border. LNG will be supplied to the Canadian and US markets. Canaport LNG will receive LNG tankers with a capacity of 200.000 Cm and will be operational in 2008 with an initial capacity of 10 Gm 3 /year. Shipping Opening Ceremony of the "technical offers" relating to AtlanticMax tankers acquisition T he Commission of the opening of technical Bids responsible for supervising the International open call of tenders N° 20/ Sonatrach -Hyproc S.C./2006, related to the joint acquisition of an LNG tanker, AtlanticMax, Very large carriers ( 1+1 optional) held its meeting on 6/6/2006 at the Hyproc shipping Company head office in Oran. Twelve companies have collected the procurement documents of this call for tenders. The deadline was set on 5 June 2006. 5 offers have been considered as valid by the Commission and will be submitted to the Technical offers Evaluation Committee ( CEOT). Hassi R'Mel Hybrid power station The Spanish company ABENER wins the project R enewable energy development and use is one of the objectives of the national policy. Pursuant to the provisions of the law N° 02-01 dated 5 February 2002 related to both electricity and distribution of gas by pipe, it has been considered to use 5 % of renewable energy in the energy balance sheet by 2015. For this purpose, the company New Energy Algeria (NEAL), an affiliate of the Group Sonatrach has set out its development scheme which aims to the construction of infrastructures promoting renewable energy. A call for tender has been launched for the construction of a hybrid power station ( natural gas and solar energy) from Hassi R'Mel to Laghouat. The Spanish tenderer "Abener" has been selected for the realisation of this unit, further to the public ceremony bids opening, which took place on 28 May 2006. An association between Abener with a 66 % share of the capital and Neal and a bank consortium with 34 % will be in charge of the project. The whole production will be allocated to Sonatrach through Sonelgaz network and distributed in Hassi R'Mel and other parts of the country. This unit will produce 150 MW according to the following processes: • Classical combined cycle gas turbine 120 MW. • Combined cycle steam turbine 30 MW. The energy required for the boiler to produce steam heated at 400 °C and a 70 atm pressure will be recovered from: -1 the energy released by exhaust gas of the gas turbine -2 the solar energy recovered by the solar panels and transmitted to the water steam cycle through an oil circuit. Steam condensation will be produced by aero-refrigerants.
Page 1: Market News June 2006 - N° 27 Mark

Medgaz Sonatrach and Endesa sign an LNG Sale agreement ...

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