Vela Orders 4 VLCCs for $600 million

Daewoo Shipbuilding Wins Order for Oil Tankers at Record Price
By Kyunghee Park
Nov. 14 (Bloomberg)

Daewoo Shipbuilding & Marine Engineering Co., the world's third-largest shipbuilder, received an order to build four crude tankers at an industry record price from Vela International Marine Ltd. of Saudi Arabia.

The 317,000-deadweight-ton tankers were priced at about $151 million each, Seoul-based Daewoo said in an e-mailed statement today. A 300,000-ton vessel cost $142 million at the end of September, according to Clarkson Plc, the world's biggest shipbroker. The order was announced yesterday.

Shipyards in South Korea, the world's biggest shipbuilding nation, have received record orders this year as global demand for iron ore, fuel, toys and computers increase the need vessels. Ship prices have more than doubled to a record since 2003, when they came off from a 10-year low.

``The order will help further improve Daewoo Shipbuilding's profitability,'' the shipbuilder said in the statement.

Including the latest order, Daewoo Shipbuilding now has a total of $18 billion in new contracts this year, surpassing its target of $17 billion. The company's backlog rose to about $39 billion, representing more than three years of work.

Daewoo Shipbuilding added 2.6 percent to 50,800 won as of 9:48 a.m. in Seoul, compared with a 2.4 percent advance in the benchmark Kospi index. The stock has climbed 74 percent this year, about double the Kospi's gain.

Saudi pipeline blast kills 28

Saudi pipeline blast kills 28
The Associated Press
Nov. 18, 2007

An explosion set a gas pipeline ablaze and killed 28 workers in eastern Saudi Arabia, the Saudi national oil company Aramco said Sunday.

"The fire broke out while contractor workers where linking a new pipe" to the pipeline during maintenance late Saturday, Aramco said in a statement.

It said 28 workers, including five Aramco employees, had died in the fire, which was put out early Sunday some 30 kilometers from its Hawiyah gas plant.

The company did not specify how many people had been injured in the blaze, or give the victims' nationalities.

"The company is taking all necessary measures to guarantee the continuation of the normal gas output," it said.

Saudi Arabia's national oil company, Saudi Aramco is the world's largest oil producer, located on the country's east coast.

The Hawiyah plant produces 310,000 barrels of ethane and NGL daily.

URL: http://www.msnbc.msn.com/id/21864094/

IEA Cuts Oil Demand Forecast

IEA Cuts Oil Demand Forecast as High Prices Curb Use
By Bill Murray
Nov. 13 (Bloomberg)

The International Energy Agency, the adviser to 26 oil-consuming nations, cut its forecast for global demand for the rest of this year and 2008 as prices near $100 a barrel slow consumption in the U.S., Europe and Japan.

Global demand next year will be 87.69 million barrels a day, the IEA said today in its monthly report, 300,000 barrels a day less than its previous estimate. The Paris-based agency reduced its estimate for the fourth quarter by 500,000 barrels a day, to 87.14 million barrels.

The IEA has cut its fourth-quarter forecast three times since August on expectations higher gasoline prices and an economic slowdown in the U.S. will restrain demand in the world's largest energy consumer. Federal Reserve Chairman Ben S. Bernanke said last week the U.S. economy is likely to ``slow noticeably'' this quarter.

``We are certainly seeing a downward revision for 2007 and 2008, and high prices starting to have an effect,'' Lawrence Eagles, chief author of the monthly report, said.

``Consumer spending on transportation fuel in the U.S. is reaching the type of levels in the 1980s'' when inflation- adjusted prices were at similar levels, he said in an interview.

India, China

Oil prices have risen 53 percent this year on surging demand from developing countries led by China and India. Futures reached a record $98.62 a barrel in New York on Nov. 7. Chinese and Indian demand for crude could create a supply ``crunch'' as soon as 2015, the IEA said in a separate report last week.

``The whole fact that we've approached $100 has created a scare for some people,'' said Michael Davies, an energy analyst with Sucden (U.K.) Ltd. in London. ``The underlying fundamentals are that we're expecting tighter markets through 2015.''

Oil demand in the U.S. will be slower than previously expected next year as near-record fuel prices and a slumping housing market depress consumer spending, the IEA said.

Still, while the rapid increase in global prices this year has affected demand, especially in the U.S., ``it is too soon to believe that significant structural changes have taken place to make this lower level of demand permanent,'' the report said.

Stockpiles Fall

Industry stockpiles in the world's most developed economies fell 29.5 million barrels in September to 2.6 billion barrels. Global inventories are 113.9 million barrels lower than a year and Japanese crude stock levels are at their lowest in at least 20 years, the report said.

``The warning flags on demand are out there and we're not into the winter yet,'' said Mike Wittner, a commodities analyst with Societe Generale in London. ``Even with the revisions the IEA has made, the market still expects stock draws into the winter and the first quarter, and that's what the market is keying on.''

In addition, half of the world's growth in oil demand is in China and the Middle East, where consumers benefit from government fuel subsidies, the report said.

Chinese oil demand is expected to remain ``strong,'' driven by economic growth, while rising oil revenue in the Middle East mean that subsidies are ``more easily financed and unlikely to be removed,'' the IEA said.

OPEC Call

The ``call on OPEC,'' an estimate by the IEA of how much crude is needed from the Organization of Petroleum Exporting Countries to balance global markets, was reduced by an average 400,000 barrels a day for 2008 to 31.3 million barrels a day, in part because of lower demand in the world's most developed economies.

The IEA cut its estimate of non-OPEC oil production for 2007 by 35,000 barrels a day to 50.1 million barrels a day, and left unchanged its estimate for 2008 at 51.2 million barrels a day on supply from the U.S., Canada, Brazil and Russia.

Production of crude oil from OPEC's 12 members, including new member Angola, rose 410,000 barrels a day in October to an average 31.2 million barrels a day, the IEA estimated, with half the increase coming from Iraq and Angola.

Crude output from Saudi Arabia, OPEC's largest member, rose 100,000 barrels a day last month, to 8.57 million barrels a day, while Iraqi supply gained 120,000 barrels a day to 2.3 million barrels a day, the highest since April 2004, the IEA said.

Excluding Angola and Iraq, which are exempt from OPEC's output targets, the producer group pumped 27.15 million barrels a day last month, a gain of 195,000 barrels daily. OPEC spare capacity slipped in October to 2.46 million barrels, the report said.

Saudi Arabia Pushes for Extra 500,000 bpd OPEC Hike

Saudi Arabia Pushes for Extra 500,000 bpd OPEC Hike
by Adam Smallman and Spencer Swartz
Nov 12th, 2007

Saudi Arabia is to push for an extra 500,000 barrels-a-day hike in output by OPEC, or 1.8%, as soon as this week if oil prices drive toward $100 a barrel, an official familiar with the situation said Monday.

Speaking the day after Saudi Arabia's Oil Minister Ali Naimi indicated that the 12-member Organization of Petroleum Exporting Countries may discuss a production increase, an official close to the group's policy discussions told Dow Jones Newswires: "The Saudis want another 500,000 barrels a day in the market. They don't like these prices for consumers."

Leaders from the world's top oil producers will meet this weekend in Saudi Arabia's capital, Riyadh to discuss the challenges a potential global recession and an anemic dollar present to their estimated $1.8 billion a day in revenue.

Presidents, sheikhs and a king from the OPEC cartel, which meets more than 40% of the world's needs, are to discuss a raft of challenges to their core business, including soaring costs to projects, heightened environmental concerns that spur a push toward alternative energies, and what, if anything, they can do to prevent record oil prices from destabilizing the global economy.

Senior officials within the Saudi Arabian delegation have made it plain they don't feel comfortable with current oil prices, which have almost doubled from a low of $49.90 a barrel in January to a record $98.62 a barrel for U.S., light, sweet crude last week, and that something must be done.

In Kuwait Sunday, Naimi, OPEC's de facto leader, told reporters: "It is premature" to speak of a production hike, but "when OPEC meets, we will discuss this issue," though it was unclear if he was referring to this week's summit or formal OPEC policy talks by oil ministers due Dec. 5 in Abu Dhabi.

One sticking point is the timing of any such a move. The official said the timing would hinge on talks with other OPEC oil ministers, who will meet Thursday or Friday in a closed session ahead of the summit of heads of state in Riyadh at the weekend.

"If the market progresses (and rises above) $100 a barrel, I think the Saudis will push for something then and not wait until the December meeting," the official said.

But a source familiar with OPEC thinking said Monday that insiders "really don't want this summit to turn into an OPEC policy meeting" and senior officials "are not getting any indication that they'll do anything" this week. It was, the source added, perfectly possible that oil ministers might agree to something late this week.

OPEC Revenue

OPEC's revenue may climb 9% this year to $658 billion, the Financial Times reported Monday, citing the U.S. Energy Information Administration, but, with rising economic concerns driven by a worsening global credit crunch, it is oil and the associated costs of heating fuel and gasoline that some economists now say could be the trigger for a full scale economic meltdown.

But the oil leaders may have little wiggle room when it comes to averting such an event, as many believe a wall of investment cash, not constrained oil flows, lie behind the record prices. Any move to add, say, a million barrels a day of additional oil, or around 3% more than they currently pump, would eat into Saudi Arabia's spare capacity ahead of the worst of winter, and at a time of heightened concern over OPEC member Iran's nuclear program and the future stability of U.S. ally Pakistan.

OPEC members at their last meeting on Sept. 11 agreed to raise output by 500,000 barrels a day from Nov. 1, shared among the 10 members with production quotas, amid growing concerns high oil prices may adversely affect global economies and that demand could outstrip oil supplies as the northern hemisphere's energy consuming nations head into winter season.

According to estimates by Dow Jones Newswires, the OPEC-10 in October were already pumping roughly in line with their new target of 27.25 million barrels a day, with Iraq and Angola, which don't have quotas, pumping a further 3.9 million barrels a day.

"However, OPEC's announcement has not yet dampened upward price pressure, and it is unlikely that these higher volumes will be enough to halt the downward trend in commercial inventories over the next several months," the U.S. Energy Information Administration said.

Indeed, recent output hikes by OPEC have tended to be followed by record high oil prices as investors assume spare capacity is shrinking and demand will outstrip supply.

With no OPEC hike agreed this week, leaders, many of whom hold competing political views, may be forced into issuing a bland communiqué that insiders say seeks to reassure customers they are reliable suppliers of oil and are increasingly responsible toward the environment.

© 2007 Dow Jones Newswires.