Easwaran Kanason

Co - founder of PetroEdge
Last Updated: July 20, 2018
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Business Trends
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The US has just rebuffed high-level pleas from the European Union to grant exemptions to European companies operating in and with Iran, underlining America’s hardline stance in implementing its renewed sanctions on Iran. The goal is, according to Treasury Secretary Steven Mnuchin, is to reduce Iranian oil exports ‘down to zero’ to ‘pressure Iran into changing its threatening behaviour.’

In May, Iranian crude and condensate exports totalled 2.7 mmb/d. If the US unwaveringly continues on its stance, that will be a major shock to the market. All across the world, crude buyers are adjusting their habits. Most major European refiners, along with South Korea and Japan, have drastically reduced their purchases. Loopholes had allowed China and India to continue trading with Iran during the Obama-era sanctions, but America’s hardline stance this time appears to be dissuading them – US crude exports to India rose to an all-time high in June as it moves to replace supplies from Iran and Venezuela. Small waivers were allowed under Obama’s sanctions, which was coordinated with the EU, but this new unilateral US move appears to be far, far stricter. At risk is not just global crude oil flows, but billions in investment – Total will now be forced to pull out of the South Pars project, having already spent some US$90 million out of a projected US$2 billion investment. This would leave the South Pars project in the hands of China’s CNPC, but even that is uncertain, given the wide-ranging impact of the sanctions. China and the US are spoiling for a fight, having ramped up trade moves against each other and if China chooses to ignore the sanctions, things could get quite messy. However just recently, Iran announced that Russia is able and willing to get into the ring with an investment close to US$50 billion. President Putin himself affirming this plan with deals of at least US$15 billion being put on offer for exploration, production as well as refining.

Crude prices have been rallying over the last two months, as traders fear the supply-side shock that could arrest the oil’s demand recovery. Quixotically, the Trump administration has balked against this self-inflicted higher level of prices – road gasoline prices in the US are at their highest levels since 2014, making Republicans more vulnerable to dissatisfaction in a crucial mid-term election year. Add to that the outage of the SynCrude facility in Alberta bumping WTI prices up significantly, pulling American fuel prices up to their lowest differential with Brent since late last year. The US is mulling tapping its emergency crude supply to mitigate rising pump prices, but Trump has gone on the offensive instead, accusing OPEC of colluding to keep prices high. But whatever good that OPEC’s deal to raise production levels at its June 22 meeting in Vienna is being neutered by America’s decision to allow Iran no space. Saudi Arabia has said it has spare capacity of some 2 mmb/d, but is reluctant to use all of that. And even if it did, it would not be able to make up for the complete loss of Iranian volumes.

So prices must rise. Morgan Stanley is predicting Brent prices of US$85/b in the second half of 2018. Goldman Sachs thinks prices will definitely rise above US$80/b. And the Bank of America is warning that a complete cut-off of Iranian oil could see prices jumping to US$120/b. That will be a political disaster for the Trump administration, as it battles to keep its majority in both US Houses of Congress. The solution to this is rather simple. Drop, or at the very least soften, its stance on Iranian sanctions. It seems logical, but logic does not always dictate geopolitical decisions.

Countdown to the US – Iran Sanctions 

  • The Deadline: November 4, 2018
  • The Goal: Reduce Iranian crude exports to zero
  • Current Export Volume: +/- 2.7 mmb/d of crude exports
  • Major Iranian Crude Buyers: Asia (65%), Europe (35%)
  • Iranian Crude Production: 3.8 mmb/d (May 2018)
  • Crude Oil Proved Reserves: 158 Billion Barrels (2017)
  • Proved Reserves of Natural Gas: 1, 283 Trillion Cubic Feet (2017)

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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