Gas industry in shock, braces for write-downs

PUBLISHED: 07 Jan 2015 23:53:59 | UPDATED: 08 Jan 2015 06:10:46 A wave of write-downs, project delays and job losses is looming across Australia’s battered oil and gas sector, which has been forced into crisis mode as oil prices plummet to levels not seen for almost six years. ========= Clean energy sector 'uninvestable' due to renewable energy target uncertainty, analyst says Updated 10 minutes agoMon 12 Jan 2015, 6:06pm Beef cattle grazing near wind farm Photo: Large-scale energy investment in Australia fell 88 per cent in 2014 compared to the previous year, the report says. (Brett Worthington) Related Story: Labor says climate report shows need for RET retention Related Story: Investment in renewable energy down 70pc: report Map: Australia Uncertainty surrounding the renewable energy target (RET) has made the large-scale sector of the industry in Australia "uninvestable", a clean energy analyst says. A report by Bloomberg New Energy Finance said large-scale energy investment fell 88 per cent - to $240 million - in 2014 compared to the previous year. It was the lowest level since 2002, the report said. Analyst Khobad Bhavnagri said uncertainty over the renewable energy target was to blame and that Australia was faring poorly on an international scale. "In 2013, Australia was the 11th largest investor in large-scale clean energy projects and in 2014 it slid to 39th," he said. "And it's lagging behind Honduras, which came in at 33, Costa Rica, which was 27th, and Myanmar at 24th." Total investment in clean energy fell 35 per cent over the same period, the report said, propped up only by investments in rooftop solar power. Resource-rich countries such as Canada, South Africa and Brazil invested as much as 20 times more in large-scale clean energy projects as Australia over the year, the report said. It follows a November report from the Climate Council that suggested Australia had "moved from a leader to laggard" on renewable energy, with investment dropping 70 per cent. Mark Butler, shadow minister for environment, climate change and water, said Prime Minister Tony Abbott's "anti-renewable ideology" was the "main cause of any fall in investment in renewable energy in Australia". "There are endless opportunities presented by investing in and developing renewable energy and Australia is ideally placed to take advantage of these opportunities," he said. "We have the knowledge base as well as abundant sun, wind and wave energy. "It beggars belief that the Abbott Government is so desperate to stymie the industry's growth." A spokesperson for Ian MacFarlane, Minister for Industry and Science, said the Government was "acutely aware that the renewable energy industry is facing uncertainty". "This is because the current RET scheme is not operating the way it was intended," the spokesperson said. "Uncertainty has existed for a number of years and many in the renewable sector privately acknowledge the current target is neither sustainable nor achievable. "A recalibrated RET will better reflect market realities, which will in turn create a more stable environment for long-term investments." Topics: environment, alternative-energy, energy, electricity-energy-and-utilities, solar-energy, australia ===================== dafydd123 7 Jan'15 - 17:00 - 395736 of 395743 7 0 Spoke to Anastasia. Here are her answers and my comments. (1) $9m OPEX - I asked for a broad breakdown but she was unwilling to give it to me and I would have to wait for year end results. However, I asked whether Shaikan-11 was part of the CAPEX and OPEX estimates for 2015 ($4.5m and $9m) and it is! Good news. (2) AMINE - RNS 31/3/14 claims that it was being connected. RNS 16/12/14 states that PF-2 is being connected followed by PF1. This was painful. I explained my concerns over two conflicting RNSs but I couldn't get much sense out of her regarding the situation. In the end I had to bluntly ask whether the Amine plant at PF1 had ever been operational. According to AV, it has not. So the f_u_cing thing was connected up in April 2014 but never used. Why, I don't know. It was a s__t load of money to spend, for it to lay around and not save the company $400k a month in diesel costs. They could have been clearer as to why they hadn't made it operational in April in the 16/12/14 RNS but that just isn't GKP's style. Clarity, it seems, is a bad thing and another example of GKP handling something badly. From this point onwards the conversation was a little strained! (3) I asked about SA3 - "RNS has informed that testing has finished and that they are busy working on an appraisal report". That was it. Fair enough. Make of it what you will but there has been a reduction in the amount of info the company give out and they claim it is because they are a proper company these days. Others claim that they went quiet when they started running into problems. (4) Fiskabur loading of oil into pipeline- "material news. We shall inform the market as and when." Fair enough. (5) December payment - I asked if December's payment is considered material news and if it is, for how long will they report each payment from the Kurds. She said it was material news and they would report it. She also said they would report every payment. I pointed out that this would be a little odd in the future as after 3-4 payments you could claim they were regular and not worth reporting. She re-iterated the "material news, will be RNSed". So, look forward to you monthly $12m received RNS then - well, if the Kurds cough up. (6) Director buying/Close Period. I pointed out to AV that the last time I spoke to her she was claiming a Close Period as to why directors weren't buying. I pointed out to her that was wrong as it only applies to 30 days prior to a results announcement and that maybe what she meant was that the directors were in possession of material news. She started to agree with me but then changed tack to "the company informs directors when they are able to buy or sell shares. Then it is up to them if they do." No s__ t =================== ============= Gulf Keystone in Kurdistan By Amy McLellan A good start to the year for London-listed Gulf Keystone Petroleum, which begins 2015 having met its year-end production target of 40,000 barrels per day from its Shaikan field in the Kurdistan Region of Iraq. This has been a long-held goal for the company and, given the turbulent geopolitical backdrop in the region, it was an important one to hit in order to reassure investors that it’s business as usual for the £575 million market cap company. The giant Shaikan field, where there are 12.5 billion barrels of oil in place, produces from seven wells, with an eighth due online this month and another now drilling ahead. The 40,000 bpd milestone was reached on December 27 and two days later, the company loaded a record 354 trucks from its PF-1 and PF-2 facilities with nearly 58,000 barrels of Shaikan crude for trucking to the Turkish coast for export. CEO John Gerstenlauer said the company was “proud” to have delivered a near 300 per cent increase in production and export sales from Shaikan despite the challenges in the region. Importantly, the Bermuda-registered company is now getting paid for its export production. In early December the company announced it had received an initial US$15 million for its oil export sales. Given the ongoing export dispute between Baghdad and Erbil, the capital of the Kurdistan Region of Iraq, concerns about payment have long been a headwind for the stock. In November the Kurdistan Regional Government’s Ministry of Natural Resources, which is keen to exercise is constitutional rights to produce and market the natural resources under its control and to put clear blue water between how it operates compared to its counterparty in Baghdad’s Ministry of Oil, made an initial payment of US$75 million on account to producers for exports, with further payments to follow on a regular basis. This was good news for Gulf Keystone and fellow producers in the region, such as Genel and DNO, which together have helped lift exports through the Kurdistan to Turkey pipeline to around 400,000 bpd, with plans to export 500,000 bpd by the end of Q1 2015 and 1 million bpd by early 2016. This production is vital to the KRG as it continues to battle Islamic State and handle a growing refugee crisis. While Gulf Keystone’s initial US$15 million is a modest contribution to the monies it is currently owed for export sales, it does signal the willingness of the KRG to meet its obligations to the international oil producers. Analysts at Edison Investment Research said the payment was a “very welcome first step”, noting that they believe the company is owed US$35 million from its production over H1 2014 with “probably more” than US$50 million due in H2. The company now wants to bed in its higher production rate and ensure a period of stability at this 40,000 bpd level. Next steps will be to ensure those payments are made regularly and to finalise a pipeline solution for exporting Shaikan crude in order to reduce trucking costs. The elephant in the room, however, remains the oil price. Stable production of 40,000 bpd at an oil price of US$100 or more would have been transformational for the company; with oil now under US$60 a barrel and still falling, the revenue stream will be lower and more volatile, weighing on the company’s ability to fund its capex plans for the year ahead, which may include further development of Shaikan as well as starting work on the first phase of the Akri-Bijeel development. Shares in the company have lost two thirds of their value over the past 12 months, a reflection of the troubles in the region and the wider lack of appetite for oil stocks, but have added 20 pence since the lows of October. On Monday the stock was trading at 64.5 pence per share. Analysts at Northland Capital Partners said that were the company operating in another part of the world it would be a “ripe takeover target” but its “strong underlying fundamentals” remain “offset by the significant risk profile that continues to mean it is not one for the faint hearted”. --------------- Keystone clears hurdles, stage set for Washington showdown Fri, Jan 09 17:05 PM EST image By Patrick Rucker and Timothy Gardner WASHINGTON (Reuters) - The Keystone XL oil pipeline cleared two hurdles on Friday, setting up a showdown between Congress and President Barack Obama who has raised new questions about the project after more than six years of review. Following months of deliberation, the Nebraska Supreme Court allowed a route for the pipeline to cross the state, shifting the debate over TransCanada Corp's project fully to Washington, where Republicans now in control of Congress are seeking to force its final approval. Hours later, the House of Representatives passed a bill 266 to 153, with 28 Democrats in support of the project. The Senate will debate a Keystone bill next week, but White House officials said Obama would reject the legislation. "If presented to the president, he will veto," spokesman Eric Schultz said in a statement. Obama has criticized the pipeline recently saying it would do little to cut prices for U.S. consumers and that it would mainly benefit the company as the petroleum would eventually be shipped abroad. In Nebraska, the legal question narrowly focused on whether former Governor Dave Heineman had a right to bless the route of the pipeline in his state. The pipeline would carry up to 830,000 barrels of oil per day mostly from Canada's oil sands to Nebraska, en route to Gulf Coast refineries. But the court was deadlocked, which amounted to ruling in the company's favor. The pipeline has galvanized environmentalists who see it as an emblem of fossil fuel dependence, and energy interests who see a Canada-to-Texas pipeline system as a tool to spur more energy production in North America. Obama has said he could not endorse a project that meaningfully worsens climate change and the issue could become one of the more controversial of his second term. But Congress may yet settle the matter if Republicans can surmount an Obama veto or attach a Keystone provision to must-pass legislation, such as a spending bill or a wider energy measure. Senator John Hoeven, a North Dakota Republican who is sponsoring the legislation, has said he has 63 votes for the bill, four short of the number needed to overturn any veto. The court's ruling allows the U.S. State Department to decide whether the pipeline meant to carry Canadian oil sands petroleum would be in the country's interest, a necessary step for the cross-border project. Environmentalists oppose Keystone since it could help expand emissions-intensive development of the oil sands. Obama has said his administration could not measure the project's impact on the climate before the Nebraska Supreme Court ruled. Friday's decision cleared the way. (Additional reporting by Aruna Viswanatha, Jeff Mason and Amanda Becker in Washington; Editing by Alden Bentley and Tom Brown) --------------------