Shell ending investments in gas development project in #Saudi Arabia

Updated 08 July 2014

Shell ending investments in gas development project in #Saudi Arabia

DUBAI: Royal Dutch Shell is ending investments in a gas development project in Saudi Arabia, complicating the top oil exporter’s efforts to exploit its huge gas reserves.
The search for gas has been a priority for Saudi Arabia as it struggles to keep pace with rapidly rising domestic demand.
But the emergence of the shale gas industry has opened up more lucrative opportunities for energy companies elsewhere.
“Shell has decided to end further investment in the Kidan development,” it said in a e-mailed statement.
“This was a difficult decision but Shell remains committed to the Kingdom and we are keen to grow our investments, both in upstream and downstream.”
Shell did not give a reason for the decision to shelve the joint venture in the Kidan area of the Empty Quarter, the sea of sand dunes that cover south-east Saudi Arabia.
Last year, industry sources said the company was set to end investments in the venture due to disagreements with the government over terms.
At least three foreign firms — Italy’s, Spain’s Repsol and France’s Total — have already abandoned the search for commercially viable gas deposits in that part of Saudi Arabia.
Shell has stuck it out longer in its South Rub Al-Khali Co. (SRAK) project with Saudi Aramco after finding small quantities of gas.
Kidan is rich in sour gas and is near the 750,000 barrels per day (bpd) Shaybah oilfield, one of the biggest in the country. Sour gas has high levels of potentially deadly hydrogen sulphide and therefore is tougher to produce than conventional gas reserves.
The relatively high cost of developing challenging deposits in a country where gas sales prices are fixed at a fraction of probable production costs were possible reasons to discourage Shell too, industry sources familiar with the matter told Reuters last year.
Saudi Arabia, which holds the world’s fifth largest proven reserves of gas, expects domestic demand for natural gas — which it uses mainly for power generation — to almost double by 2030 from 2011 levels of 3.5 trillion cubic feet per year.


Oil prices rise as faith in supply cuts grows

Updated 54 min 21 sec ago

Oil prices rise as faith in supply cuts grows

  • Producers are following through on commitments to cut supplies as fuel demand picks up with coronavirus restrictions easing
  • OPEC+ countries are due to meet again in early June to discuss maintaining their supply cuts to shore up prices

NEW YORK: Oil prices rose on Tuesday, supported by growing confidence that producers are following through on commitments to cut supplies and as fuel demand picks up with coronavirus restrictions easing.
Brent crude futures were up 45 cents, or 1.3%, at $35.98 a barrel by 1:09 p.m. EDT (1709 GMT). US West Texas Intermediate (WTI) crude futures gained 89 cents, or 2.7%, to $34.14.
The Organization of the Petroleum Exporting Countries and other leading oil producers including Russia, a group known as OPEC+, agreed last month to cut their combined output by almost 10 million barrels per day in May-June to shore up prices and demand, which has been hit by the coronavirus pandemic.
Russian Energy Minister Alexander Novak is due to meet oil major producers on Tuesday to discuss the possible extension of the current level of cuts beyond June, sources familiar with the plans told Reuters.
The RIA news agency said Russian oil production volumes were near the country’s target of 8.5 million bpd for May and June.
On Monday, Russia’s energy ministry quoted Novak as saying that a rise in fuel demand should help to cut a global surplus of about 7 million to 12 million bpd by June or July.
OPEC+ countries are due to meet again in early June to discuss maintaining their supply cuts to shore up prices, which are still down about 45% since the start of the year.
“The 16 million bpd oversupply in crude during April could be reversed altogether by June, helped by a 4 million-bpd recovery in crude demand and a 12 million-bpd cut in crude supply,” said Bjornar Tonhaugen, head of oil markets for Rystad Energy.
“OPEC+ is pulling the most weight by far, effectively reducing supply by nearly 9 million bpd while non-OPEC+ crude supply is down by more than 3.5 million bpd from March levels.”
In an indication of lower supply in the future, data from energy services business Baker Hughes showed that the US rig count hit a record low of 318 last week.