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Oil company proved reserves additions in 2017 were most since 2013 while expenditures were about half


In 2017, a group of the world’s largest publicly traded oil and natural gas producers added more hydrocarbons to their resource base than in any year since 2013, according to the annual reports of 83 exploration and production companies. Collectively, these companies added a net 8.2 billion barrels of oil equivalent (BOE) to their proved reserves during 2017, which totaled 277 billion BOE at the end of the year. Exploration and development (E&D) spending in 2017 increased 11% from 2016 levels, but remained 47% lower than 2013 levels.


Of the 83 companies, 18 held more than 80% of the 277 billion BOE in proved reserves at the end of 2017. While many of these companies have global operations, some are national oil companies with reserves concentrated in their home countries including Russia, China, and Brazil. Proved reserves change from year to year because of revisions to existing reserves, extensions and discoveries of new resources, purchases and sales of proved reserves, and production. Figure 1 illustrates the 83 companies’ combined proved reserves changes during 2017.

Figure 1. Regional proved reserves


Organic additions to proved reserves, or reserves added through improved recovery and extensions and discoveries, are linked directly with capital expenditures in E&D. Proved reserves acquired through purchases do not represent E&D capital investment, but rather reflect transfers of assets between companies. Revisions to proved reserves are usually more significantly influenced by changes in crude oil and natural gas prices than by E&D investment.


Of the 17.7 billion BOE in organic proved reserves added in 2017, slightly less than half (8.5 billion BOE) were in the United States, while Russia, Central Asia, and the Asia-Pacific region accounted for 24% (4.3 billion BOE). Canada (which includes oil sands and synthetic crude oil), Latin America, and the Middle East and Africa regions each added more than 1.1 billion BOE. Regionally, Europe accounted for the fewest organically added proved reserves for the sixth consecutive year, adding 0.3 billion BOE of proved reserves in 2017, 2% of the world total (Figure 2).

Figure 2. Regional organic  proved reserves


Global E&D spending by region was similarly distributed. Of the $285 billion companies spent on E&D in 2017, 33% ($95 billion) was in the United States, with the Russia, Central Asia, and Asia-Pacific region accounting for 30% ($85 billion) and all other regions each accounting for 10% or less. Changes in nominal year-over-year E&D spending varied across regions, increasing by 36% in the United States and by 15% each in Canada and the Russia, Central Asia, and Asia-Pacific region. Spending declined by 24% in Europe, 16% in the Middle East and Africa, and 15% in Latin America (Figure 3). Because significant cost deflation has occurred in the oil and natural gas industry since 2014, nominal spending values in different years may not be directly comparable.

Figure 3. Regional exploration and production


Because of a disparity between the timing of companies’ capital expenditures and the formal reporting of changes to their proved reserves, standard practice is to average the results over several years. Analyzed this way, E&D costs declined significantly on a per BOE basis from the 2012–2014 average to the 2015–2017 average (Figure 4). Three-year average E&D capital expenditures per BOE of organic proved reserves additions decreased in all regions except Latin America. On an annual basis, 2017 represented the lowest E&D capital expenditures per additional BOE to proved reserves during the 2012–2017 period at $16.12/BOE.

Figure 4. Finding costs for 83 publicly traded


First quarter 2018 capital expenditures for this set of companies were 16% higher than the first quarter of 2017, suggesting that many of these companies have increased their E&D budgets, which will likely contribute to further organic proved reserves additions in 2018.


U.S. average regular gasoline and diesel prices decrease


The U.S. average regular gasoline retail price decreased 3 cents from last week to $2.88 per gallon on June 18, 2018, up 56 cents from the same time last year. Gulf Coast and East Coast prices each decreased over four cents to $2.65 per gallon and $2.80, respectively, Midwest prices decreased nearly three cents to $2.79 per gallon, West Coast prices decreased nearly two cents to $3.43 per gallon, and Rocky Mountain prices decreased over one penny to $2.98.


The U.S. average diesel fuel price decreased over 2 cents from last week to $3.24 per gallon on June 18, 2018, 76 cents higher than a year ago. Midwest prices declined nearly three cents to $3.17 per gallon, East Coast and Gulf Coast prices each declined over two cents to $3.24 per gallon and $3.02 per gallon, respectively, West Coast prices declined nearly two cents to $3.75 per gallon, and Rocky Mountain prices decreased less than one cent to $3.34 per gallon.


Propane/propylene inventories rise


U.S. propane/propylene stocks increased by 3.2 million barrels last week to 54.1 million barrels as of June 15, 2018, 9.5 million barrels (14.9%) lower than the five-year average inventory level for this same time of year. Midwest, Gulf Coast, East Coast, and Rocky Mountain/West Coast inventories increased by 1.2 million barrels, 1.1 million barrels, 0.7 million barrels, and 0.2 million barrels, respectively. Propylene non-fuel-use inventories represented 5.0% of total propane/propylene inventories.

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Iran has produced and exported less crude oil since sanctions announcement

Iran liquid fuels, crude oil, and condensate production and exports

Source: U.S. Energy Information Administration, Short-Term Energy Outlook, October 2018; ClipperData
Note: Liquid fuels production includes crude oil, lease condensate, hydrocarbon gas liquids, biofuels, and refinery processing gain.

Iran's crude oil exports and production have declined since the May 2018 announcement by the United States that it would withdraw from the Joint Comprehensive Plan of Action (JCPOA) and reinstate sanctions against Iran.

The announcement included two wind-down periods to allow those doing business that involved Iran time to comply. On August 6, 2018, the first wind-down period ended and triggered the re-imposition of some sanctions. On November 4, 2018, the second wind-down period will end and trigger the re-imposition of full sanctions, including a number of measures that target Iran’s energy sector.

According to data from ClipperData, Iran's exports of crude oil and condensate peaked in June at about 2.7 million barrels per day (b/d), more than 300,000 b/d higher than the average during the first four months of the year (before the May announcement of sanctions). In September, Iran’s crude oil and condensate exports fell to 1.9 million b/d. Although some countries, such as France and South Korea, stopped importing crude oil and condensate from Iran in July, other countries continue to import from Iran. The United States has not imported crude oil and condensate from Iran in several decades.

monthly Iran crude oil and lease condensate exports

Source: U.S. Energy Information Administration, based on ClipperData

ClipperData indicates that China and India collectively received nearly half of Iran's crude oil and condensate exports in the first half of 2018. During this period, China's imports from Iran averaged 644,000 b/d and India's imports from Iran averaged 554,000 b/d. In September, China's imports from Iran dropped to 441,000 b/d, the second lowest level since December 2015, while India's imports from Iran were 576,000 b/d.

Whether Iran's energy exports are declining entirely because of the sanctions or for other reasons is unclear. Trade press reports indicate a willingness on India's part to at least partially comply with the sanctions, but China had continued to import from Iran even when previous sanctions were in effect.

In response to the announcement of sanctions by the United States, the European Union passed a statute to protect European companies doing business in Iran from the effects of U.S. sanctions. Despite this effort, data from ClipperData indicate that France has not imported any crude oil or condensate from Iran since June. In addition, Italy’s and Spain’s imports from Iran in September were 27,000 b/d and 15,000 b/d lower than their averages for the first half of the year. Some countries could continue to import Iran's crude oil and condensate until the November 4 deadline, at which point they might stop importing from Iran.

Iran's exports have fallen at a faster rate than production. Shipping operators have decreased operations with Iran, but Iran has continued to export largely through the state-run National Iranian Tanker Company (NITC) and the Islamic Republic of Iran Shipping Lines. Trade press reports indicate that as countries continue to decrease imports from Iran, some of Iran’s shipping fleet is already being used as floating storage, where crude oil is placed onto ships and stored indefinitely.

Surplus crude oil production capacity in the Organization of the Petroleum Exporting Countries (OPEC) could be used to replace some of Iran's crude oil barrels that are coming off the market. Saudi Arabia’s Arab Light is similar in composition to Iran Light crude oil and may provide refiners with a possible crude oil that would not require refiners to make significant alterations to their crude slates.

In addition, trade press reports indicate that Saudi Arabia is offering sales of Khuff condensate. However, the extent to which Saudi Arabia and other OPEC members offer enough volumes of crude oil and condensate to replace exports from Iran is unclear. After full sanctions are implemented in November, the total volumes of crude oil and condensate coming off the market will become more apparent in the following months.

October, 24 2018
Deals This Week: Rosenberg WorleyParsons, CNPC, Equinor

Rosenberg WorleyParsons has won an engineering, procurement and construction contract from Lundin Norway and partners of PL338 for handling the modification work on the Edvard Grieg platform in the North Sea.

Modifications will enable Edvard Grieg offshore platform to receive and process oil and gas from nearby fields. Work is expected to be complete in the first quarter of 2021.

Based in Australia, WorleyParsons is an engineering services company, while Lundin Norway is an oil and gas company based in Norway.

China National Petroleum Corporation (CNPC) has signed a memorandum of understanding (MoU) with Equinor for the development of sustainable energy projects.

The two companies will work to explore the unconventional gas resources or tight gas in China and will develop oil and gas ventures worldwide.

CNPC is an oil and gas company based in China, while Equinor is a Norway-based petroleum and wind energy company.

KBR’s UK-based subsidiary has secured a front-end engineering design (FEED) services contract from BP for the development of the Tortue field hub / terminal located off the coast of Senegal and Mauritania.

FEED work will assist in the final investment decision (FID) for the project.

The deal also includes a provision to transit the contract to an engineering, procurement and construction management (EPCM) agreement in future.

Based in the US, KBR is an engineering, procurement and construction company.

Saipem has received three offshore engineering and construction (E&C) contracts worth $400m in Azerbaijan, the North Sea and the Republic of Congo.

In Azerbaijan, the Saipem consortium comprising Saipem Contracting Netherlands, Boshelf and Star Gulf has received a subsea, umbilical, riser and flowline contract for Absheron field development.

On behalf of the Tolmount Development Partners, Humberside Gathering System provided a pipeline engineering, procurement, construction and installation contract to Saipem in Southern North Sea for development of the Tolmount Main gasfield.

Eni Congo provided a maintenance, modifications and improvements contract to Saipem for all Eni Congo offshore sites in the Republic of Congo.

Saipem is an oil and gas industry contractor company based in Italy.

Equinor has agreed to sell 77.8% stake in the King Lear gas discovery in the Norwegian Continental Shelf (NCS) for $250m to Aker BP.

The King Lear gas discovery lies in production licences PL 146 and PL 333 of the NCS and is estimated to contain recoverable resources of 77 million barrels of oil equivalent.

Equinor is an energy company, while Aker BP is an oil exploration and development organisation. Both companies are based in Norway.

October, 24 2018
How to write an application letter for jobs in the oil and gas sector

If you’re looking for a new job in the oil and gas industry, you must ensure that you have the right application letter that opens a window of opportunity. A role in the oil and gas sector is highly specialized, so a regular application letter will not catch the attention of the recruiter. To grab eyeballs, your letter should have all the right ingredients to get you the interview call from the company you have been eyeing. If you are unsure about how to go about it, then here is a detailed guideline:

What is the purpose of the application letter?

An application letter is your first introduction to the company. It must answer the following questions and provide clarity on the same:

  • Why are you interested in the job role?
  • What are your skills and expertise that makes you a ‘good match’?
  • What are your key selling points and what benefits will the organization get by hiring you?

In the application letter, do not restate what you’ve covered in the resume. Although, you can give a sneak-peak into your resume by emphasizing your key skills.

How to begin?

Before you begin, remember: Be original. Do not copy and paste the template. Carefully list down the job requirements and note down your achievements and qualifications that match the expectations.

Components/format of a job application

Here is a list of components that you must include in your job application to the oil and gas sector.

  • Contact details - Make sure that you write your complete contact details at the top of your application. It should include your current mailing address, email id, and contact number. After listing your details, mention employers’ name and contact details as well.
  • Heading/subject line- Write clear and concise headline stating the reason for writing the letter. Include it as a heading in the letter sent by post and for email, use it as a subject line.
  • Example:
  • Heading/Subject: Job Application for the post of [Name of the position you are applying for] at [Company Name]      
  • Salutation:  Address the letter to the correct person to increase the impact of your application. However, if the concerned person is not known, use ‘Hiring Manager’ as a salutation or a ‘Dear sir/ma’am’ will suffice.
  • Body:  This is the most significant part which has the power to make or break the deal. So, choose words carefully. Here are few tips to write:
  • Write small, concise, error-free statements
  • Break the content in 2-3 paragraphs or make a bulleted list
  • The first para should contain the reason to write the letter, the second must contain your relevant experience and qualification. In the last para, explain why you think you are the right fit
  • Conclude your letter by thanking the employer and providing your consent and availability for the subsequent process
  • Try to write within 350 words
  • Signature: Towards the end, mention your name and date. If you have a good social media presence you can include the links as well. Preferably of the professional site like LinkedIn. You can also include your website/portfolio if you have any.
  • Proof Read: Reread your letter carefully to avoid any factual, typo or grammatical error as it has the power to ruin the impression you are trying to make and also your chances.

The above components will give you a clear idea about the information that you will require to make your application stand out.

Detailed guideline to compose the letter for oil and gas industry

Use a technical CV format

In the oil and gas industry, technical expertise is in high demand. Exploration and production profiles in energy companies require electrical, chemical, mechanical engineering. Now with automation and digitization, IT skills are also in demand. The technical CV format is easily available online and it highlights the relevant technical expertise right at the beginning of the letter format. However, if you don’t find a ready-made format, always include your technical expertise in your cover letter, preferably in the first paragraph itself to highlight your credibility.

Highlight your willingness to travel

Numerous job roles in the oil and gas industry are available in remote locations. The head office is usually in a major city of the developed nation. However, the working centers are in developing nations. Oil and gas recruiters prefer candidates who are willing to work at remote locations and are flexible with traveling. So, highlight relevant experience where you have worked in remote locations. However, if you are a fresher, you may highlight evidence that proves your willingness to travel. You should mention it clearly, that you are internationally mobile and can relocate to any place based on the need.

Commitment to industry and relevant expertise 

Oil and gas jobs need a highly qualified, skilled and dedicated workforce. Highlight your work experience that shows your dedication to the industry. Also, highlight your intention to work in this industry in future and your plans to upgrade your skills to stay relevant. Mention any training and development programs that you have been a part of.

Focus and optimize your application

The Oil and gas sector generally has openings in the roles of scientists, engineers, business people/managers, mathematicians, and analysts. Define clearly what job role you are targeting at and what relevant skills you have. Learn about the popular keywords pertaining to your job role and ensure the right usage of keywords in the application.

Show you are future-ready

The oil and gas industry is witnessing many changes due to digitization, automation, social media boost, millennial-workforce entry, big data management, virtual and augmented reality. These changes will impact future job responsibilities and roles. So, highlight your skills that show you are future-ready. Include all new-age skills, relevant experience, certification, training programs that you have undertaken that will boost your chances of selection.

Do not forget to follow-up

Following up after you have mailed your application letter is a must. Be aggressive in your follow-up by stating in your application that you will be following up within a week. However, if the employer has mentioned a process or a timeline for announcement of the shortlisted candidate, then mention ‘you look forward to their response.’ Please make sure you specify clearly how to reach you.

The oil and gas industry has numerous job opportunities if you have the right skills, attitude and talent to work and thrive in this dynamic industry. Just work on your application, customize it based on the specific need and you are good to go. If you are looking for any relevant job openings in the oil and gas sector, do check out the NrgEdge platform.

         

 

October, 21 2018