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CALGARY (Bloomberg) -- Canada is poised to lose energy companies as the industry faces the “new normal” of lower and more volatile oil prices along with tougher climate and regulatory policies, billionaire investor Murray Edwards warned Friday.
The chairman of the nation’s largest heavy-oil producer, Canadian Natural Resources Ltd., likened the oil industry to a horse race in which western Canadian producers are struggling to compete with developers of light crude from U.S. shale. While cost cuts and innovation are allowing some oil-sands developers to stay in the game, parts of the Canadian industry will go by the wayside, Edwards said at a conference hosted by Bennett Jones LLP in the mountain community of Lake Louise,Alberta. “We have a lot of wind blowing in our face right now, a lot of challenges before us,” Edwards told reporters after delivering remarks to a crowd of more than 300 at a ski resort hotel. “Only those that are going to be top in class on execution are going to be able to survive in that environment.” Snow-covered peaks in the background at the conference offered an uplifting contrast to the pall cast over Calgary. Office buildings in the center of the nation’s oil patch are emptying with a persistent price slump that began in June 2014, which has led to 40,000 lost jobs across the Canadian industry and 100,000 cumulatively with the spillover to other industries, according to the latest figures Friday from the Canadian Association of Petroleum Producers. U.S. crude is down about 60 percent since its high last year, hovering just above $40 a barrel.
Oil companies in Alberta are facing higher levies, with a new climate policy this month including a rising carbon tax, and await the results of a policy review to finish later this year on the royalties the provincial government collects on their production. Some parts of the industry won’t outlive the new regime, said Peter Tertzakian, chief energy economist at ARC Financial Corp. and a member of the royalty review panel.
"I am confident that segments of the industry will remain competitive," Tertzakian told reporters. In an earlier presentation, he outlined a "new world" facing oil companies since the Organization of Petroleum Exporting Countries last year decided to maintain output amid a supply glut, boosting competition, complicated by rising use of renewable energy that&rsquo ;s damping demand for crude. "We are in the mother of all market share battles." Canada is one of the most expensive places to extract crude, yet some of its largest energy companies publicly embraced the province’s new climate policy even if it means that only oil-sandsprojects with the lowest carbon footprint get developed in the future, Edwards said. Producers are seeking to "change the conversation," he said, after years of environmental opposition that has held back the development of export pipelines, including Keystone XL to the U.S. and Northern Gateway to Canada’s Pacific Coast. Edwards, who joined environmentalists on stage Nov. 22 to announce the policy, challenged the U.S. and other countries to tax the emissions from their oil and natural gas production to level the playing field.
"I hope that Canadians are taking a leadership role on this one and that others will start to follow," Edwards said. "It’s going to lead to a more positive discussion, rather than the adversarial discussion we’ve had in the past."
NEW YORK (Bloomberg) -- Total, Royal Dutch Shell and Lukoil are among international companies that have selected oil and natural gas deposits to develop in Iran as the holder of the world’s fourth-largest crude reserves presents $30 billion worth of projects to investors. Total is one of the companies that have been in the forefront of discussions and Eni SpA is also looking to invest, Oil Minister Bijan Namdar Zanganeh said. Shell, Total and Lukoil all specified fields they would be interested in developing in Iran, Ali Kardor, deputy director of investment and financing at National Iranian Oil Co. said in an interview in Tehran.
“Many companies are interested. Europeans are interested, Asian companies are interested," Zanganeh told reporters at a conference in Tehran on Saturday. "Total is interested, Eni is interested." Iran is pitching 70 oil and natural gas projects valued at $30 billion to foreign investors at a two-day conference in Tehran that started today as the Persian Gulf country prepares for the end of sanctions that have stifled its energy production. All banking and economic sanctions will be lifted by the first week of January," Amir Hossein Zamaninia, deputy oil minister for international and commerce affairs, said at the event. "We are interested to come back to Iran when the sanctions are lifted and if the contracts are interesting," Stephane Michel, Total’s head of exploration and production in the Middle East said at the conference. "We have worked in this country for a long time, so we know specific fields on which we’ve worked." Representatives of Lukoil and Shell declined to comment at the conference.
Iran won’t have a problem to sell an additional 500,000 barrels a day once the sanctions are lifted, and the quantity won’t have a significant impact on prices, Zamaninia told reporters. The country hopes it can reach an agreement with fellow members of the Organization of Petroleum Exporting Countries so that Iran’s planned additional production remains within the 30 million barrels a day OPEC production ceiling, he said. Iran doesn’t expect OPEC to change that output target at its Dec. 4 meeting, Zanganeh said. The country plans to boost total oil output capacity to 5.7 MMbopd by the end of 2020, with the help of new productioncontributed through new energy contact models, Roknoddin Javadi, managing director of state-run National Iranian Oil Co., said at the event. The figure includes both crude and condensate output, he said. Iran pumped 2.7 MMbopd in October, according to data compiled by Bloomberg. Iran could sign its first development contract in March or April, Kardor said. The new 20-year energy contracts framework is being introduced to investors at the Tehran conference, he said. "The next step is for foreign vendors to make a technical assessment and choose a domestic partner." International companies will need to find a local partner for exploration and production projects, with more than half of engineering and construction and equipment manufacture done by Iranian firms, Javadi said.
Iran will ask companies to bid a per barrel fee for energy projects, and they will be paid on a fixed fee basis only and won’t receive a premium for producing more than predetermined levels, Talin Mansourian, a consultant for the Petroleum Contracts Restructuring Committee, said at the conference. NIOC will announce other bid parameters in four or five months when it will hold an energy auction, she said. The companies won’t be asked to pay bonuses on the contracts, she said. The country is offering 52 oil and gas development projects in addition to 18 exploration blocks, according to a brochure from the Iranian oil ministry. That includes projects at 29 new and currently producing oilfields and 23 gas developments. Onshore fields make up 34 of the projects. Iran’s oil exports fell to an average 1.4 MMbopd last year from 2.6 MMbopd in 2011 due to the sanctions on the country, U.S. Energy Information Administration data show. U.S. sanctions on Iran limit it to selling about 1 MMbopd to China, India, Japan, South Korea, Turkey and Taiwan, with additional purchases of condensate, a light oil liquid found in gas deposits, also allowed.
LONDON -- Lloyd’s Register has signed a Master Service Agreement (MSA) with Statoil, effective Nov. 10 which will cover Statoil’s full project portfolio from new builds to modifications of existing assets. Key services provided under the agreement include safety studies, platform technology engineering services, and a full scope of global inspection services such as new build certification, vendor site inspection and vendor assessments. Inge Alme, Sales Director at Lloyd’s Register Energy said, "We are delighted to secure this MSA with Statoil; a significant milestone in our long collaboration which will prove highly beneficial for both parties in our shared efforts to enhance safety and efficiency in operations.” Alme explained, "The agreement covers the full Lloyd’s Register service offering throughout the value chain from safety studies through inspection services to technical services related to verification, validation, and class." "It builds upon and reinforces our long and successful collaboration with Statoil and pays testament to the robust relationship we have developed over the years." The MSA allows Lloyd’s Register to competitively bid on global services for Statoil projects, both onshore and offshore. It also provides the framework for country specific call-offs to be entered into by the local entities of both companies.Readmore