One of the largest share this year offering has just gotten bigger.  Petrobras, the giant Brazilian deep water supremo, has just increased its share offering to $ 79 billion (dwarfing AgBank’s IPO earlier this year by 3 and half times) – this is on the back for the Government – Petrobras Oil for share deal.  The FT asks what is going on ?

There are three theories: the first, a pessimistic one in that share offering demand is low and Petrobras needs to sell extra shares to finance its $224 billion investment plan.  There is also an optimistic scenario in that a big Soverign Wealth Fund (perhaps the Chinese, Iranians or possibly Qatar) has expressed interest and this is backed by some of the chatter coming out of some of the fund managers on the ground and close to the roadshow. The third is brinkmanship in that the company is bluffing but as one analyst is quoted in the FT Energysource says “would be a dangerous game to play”.      Why has Petrobras increased its share offer? | beyondbrics | FT​.com.

According to Bloomberg, Asian Refinery losses on production of Fuel oil widened as imports jumped by 25% this month to 4 million metric tons due to more Russian refinery production is diverted from US to Singapore as well as slowing demand for bunker fuel.

Algeria, the Middle East largest gas producer, is starting to look for unconventional gas. Algeria produced a total of 81 Billin CM and exported 21.3 BCM to Italy by pipeline and another 8 BCM to Spain and Portugal (Total Algeria gas exports according to BP Energy Statistics of 52.67 BCM). This comes in wake of its neighbors, Morocco & Tunisia already stating their shale gas ambitions. Algeria goes unconventional – No Hot Air.

Saudi Aramco revealed that the Kingdom has large unconventional gas reserve and will speak to its partners in brining some of their expertise in unconventional gas exploration in North America to the country.  Nevertheless, the new method and technology utilized in North America such as water injection to crack rocks and allow gas to flow, may not be suitable for the deserts of Saudi Arabia.

Although Saudi is the world’s largest oil producer, its gas reserves are minimal when compared to its giant oil reserves. Saudi need for gas is paramount in order to meet its domestic electricity demand and large petrochem industry.  FT​.com / In depth – Saudi reveals large unconventional gas reserves.

Cheng Siwei, a leading Chinese economist said that China will reduce its reliance on fossil fuel from current 91% of energy mix to 85% in 2020.  Improvement in energy efficiency and costing of pollution via Carbon Credit will enable China to reduce consumption of fossil fuel.   China Daily

Al Neft >  Assuming China continues to grow at 8% a year, China will need to replace 1.12 million bbl / day via alternative clean energy.  This translate to 22,000 wind farms of 100 MW capacity.

New research report by Goldman Sachs indicates that unlike the US market, Global oil market conditions are constructive. It points to recent IEA report that shows draws on floating storage continuing in August with World oil demand exceeding supply by 600k bbl/day.  In addition, China data demonstrate strong industrial rebound with implied oil demand of 950k bbl/day.  Although GS sees oil prices touching $85 – 95 this fall, they view increasing US production as a risk.

Barclays Capital has downgraded Qatar’s estimated total LNG production forecast for 2010 by as much as 27% owing to a large number of maintenance stoppages in the first half of the year and the delay of two LNG mega-trains.

Analysis: Qatar’s LNG delays affect 2010 forecast | ArabianOilandGas​.com.

Repot by Commodity Weather Group, LLC for a significantly warmer winter in the US will only add cold water to Gas Bulls.  As the article states; we could be looking at gas prices below $4 in middle of winter, adding more pressure on Gas Industry that is wrecked by over-supply and weak prices. Natural Gas and the Bulls of Summer – Oilpatch Online.

WSJ reports that the UAE is asking Banks in the country to declare remittance sent to Iran on a monthly basis.   U.A.E. Studies Impact of Iran Sanctions – WSJ​.com.

Image via Wikipedia

Petrobras, Brazil’s largest Oil & Gas company, is preparing to raise US$ 32 billion from minority shareholders to fund development of offshore “pre-salt” oil fields as part of $ 224 capital expenditure.  This is part of Oil for shares swap between the Government and the company. Many analyst, predict that the Governments stake will rise from 29.6% to 38% in the company as a way of supporting the share issue.

Al Neft Commentary:

Petrobras has built its reputation as an able operator and deepwater expertise at home and abroad.  The discovery of “pre-salt” fields has added billions of barrels to its fortune. More production and more revenues to be expected. Nevertheless, the increasing Government shareholding will mean more interference by Brasilia – committing the company to use local companies and labour and potential influence on strategic decisions.  So while the company’s days as an oil production giant are about to begin, its time as one of the world’s more independent NOCs may be over.

Petrobras prepares to raise up to R$55bn (FT)

The lack of strong and clear legal framework in Saudi is putting pressure Saudi’s business credentials.  Legal cases can drag on for years and enforcement is difficult.  As one Legal analyst in quoted in Bloomberg:

“Enforcement is really, really difficult,” Pump said. “If you can get anything, 10 cents on the dollar, I really recommend taking it.”

Bloomberg.