Gregor​.us has compiled a Big Macs per barrel of Oil graph.   By using big Macs, the graph strips out dollar volatility and highlight the relationship between oil and basket of agricultural goods (i.e. the Big Mac).  A decade ago, one barrel can only buy you 10 Big Macs while today, each barrel will bring you 20 Big Macs.  Even with decrease in Oil prices in 2009, 1 barrel of oil still bought you 20 big macs. Oil today commands more food than a decade ago.  There is a lot of food for thought that can be deduced from this graph.

Iraq oil service contracts bonanza have started with earnest. BP has awarded contracts worth $ 500 m to three companies; Schlumberger /Iraq Drilling Co, Weatherford and China’s Daqing Oil Field Co. It is of note that total service contracts in Iraq last year amounted to $ 500 m and is said to grow to $ 5 billion in the next two yeas.  (RIGZONE)

Rationality is finally starting to creep in. The two main exchanges in the UAE are said to start merger talks.  This is an overdue step that was probably brought forward by declining volumes on both exchanges and greater co-opeartions between the two Emirates following Abu Dhabi’s financial assistance to Dubai Government and its related entity (Dubai World) debt problems. (Reuters)

ArabianOilandGas reports that Aramco may cancel or delay up to five years its 400,000 bpd refinery project in Ras Tanura.

It was only a matter of time until Dubai Holding start restructuring its $20 billion debt.  In recent weeks, Dubai Government has given creditors some comfort with regard to negotiating debts of Dubai World.  The focus will now shift to the other Government owned entity, Dubai Holding. This will be a blow for the Emirate’s reputation. (Reuters)

LIbya is to draft new Oil & Gas laws to update its 1955 laws that govern the sector.  The new law has become a battle ground between conservatives and reformers.  Dr Shokri Ghanem, Chairman of National Oil Company, who resigned last September when the Libyan Government blocked China National Petroleum Company (CNPC) from acquiring Canada’s Verenex which has producing asset in the country. He returned to his post in October following support from Ghaddafi’s son, Saif Al-Islam, the lead reformer in the country.

Dr Ghanem said that the new law will not alter the relationship with existing Oil & Gas companies operating in the country.

“I can assure the oil companies the law will not mean a departure or a violation or changes in the existing relationship,” said Mr Ghanem. “The relation between the companies and the host country is governed clearly by contracts which cannot be changed except by negotiation.”  (FT)

The Dubai debt story continues.    Just as the Banks and Creditors to Dubai are pondering the offer from Dubai World, the Government of Dubai decides to inject $ 9.5 billion into the state owned conglomerate.  Although not much has come out from the meeting (we assume it is NDA’s being rigidly enforced) it seems that the Banks have two choices. The first is to take a 40% haircut but get paid faster. The second option is to restructure the debt into longer tenors (5-8 years) but repay the principal in full. The coupon or interest on the restructured loans remain a point of discussion between the Government and creditors of Dubai World.    All of this has helped the CDS or Insuring against a Dubai default to improve. At least the panic is controlled and situation is under control compared to PR fiasco last November.

Related articles

• Dubai government to inject £6.4bn into Dubai World (newstatesman​.com)
• Dubai World Investors ‘Will be Paid Back’ (news​.sky​.com)
• Dubai World Gets $9.5 Billion (online​.wsj​.com)

France’s Total and Qatar Petroleum will invest together in exploration and production internationally with focus on Africa. (RIGZONE)

This is the first time that a regional NOC team up with International Oil Company to invest outside in the region.  The tie-up will ensure asset diversification for Qatar well developed Oil & Gas sector in the country.

Lukoil stops work on Anaran project in Iran due to International and US pressure.  This comes on the back of other companies like Shell and traders like Vitol also ceasing operations & trading with Iran. (Maktoob)

The JV refinery of Saudi Aramco & Total will sell 25% stake in an initial public offering in 2-3 years time. The $8 billion financing which include a mix of sukuks and Government backed Public Investment Fund (PIF) will be closed in second quarter of 2010. It is likely that Aramco will buy most of the output of  the refinery that includes 190,000 bpd of Diesel, 90,000 bpd of gasoline and 50,000 bpd of Kerosene to supply the local as well as international markets. (Reuters)

Scientist from Oxford University argue that World’s Oil Reserves are over-estimated by a third mainly due to over-reporting of reserves by OPEC.  Total World Reserves of Oil which stands at 1,150 – 1350 billion barrels should be revised down to 850 – 900 billion barrels, according to the scientist.  In addition, world demand will outstrip supply by 2014 giving Peak Oil backers more traction. (Telegraph)

It sounds too good to be true; Calera, a US company backed by some famous venture capital,is aiming to capture carbon dioxide from coal and gas power plants and turn CO2 into cement. The process is similar to what occurs in marine coral formation.  Nevertheless, there are some skeptics who see difficulties in scaling up the process as well as other harmful by-product.   Joseph Romm, senior fellow at Center for American progress notes:

People have the impression that the energy sector is like the I.T. sector and you just have to build an iPhone and suddenly it will be everywhere, which is simply not the case..You have to build up so much infrastructure.     (NYTimes)

Comments from recent TOTAL investor roadshow :

• Total SA is using $80/bbl oil and $8/mcf gas prices long term.
• targets 2% pa organic production growth 2009-14.
• cautious on returns from Iraq, calculates an avg IRR for the majors involved of 5%.
• believes industry costs have bottomed.
• expects refining margins to stay depressed for 3-5 years.

Time is running out for ConocoPhillips. The US major must make a decision on whether or not to go ahead with the $10 billion-12 billion Shah sour gas project in Abu Dhabi, with pressure mounting from shareholders, contractors and, most importantly, state partner Abu Dhabi National Oil Co. Investors may get a clue to Conoco’s intentions as early as this week, but if not, time will be called on the company’s delaying tactics in May. Conoco Under Pressure From All Sides Over Shah.

Good interview with Iraq’s Oil Minister, Hussein al-Shahristani.   In the interview he points out the following :

Iraq will be producing 3 milion barrels a day by end of 2011.

Oil from Kurdistan will resume. Payment mechanism is in place via SOMO & Development Fund of Iraq. Contracts with Oil comapnies operating in the region will need to be renegotiated and cost will be compenasted if they are in line with cost in the South. … Continue Reading