Argus Crude Crude Market Prices and Analysis Issue 12H - 57 Wednesday 21 March 2012

www.argusmedia.com Argus Crude Crude market prices and analysis Issue 12H - 57 Wednesday 21 March 2012

North Sea $/bl Mideast Gulf $/bl Basis Diff Bid Ask +/- Month Basis Diff Bid Ask +/- Dated May -0.38 123.74 123.80 -0.10 Dubai May 123.09 123.19 -0.36 Brent Dated +0.90 124.64 124.70 -0.10 Oman May May Dubai swaps +2.52 123.31 123.41 -0.22 Forties Dated -0.20 123.54 123.60 -0.17 Murban May Adnoc +0.28 125.36 125.46 -0.06 Oseberg Dated +1.90 125.64 125.70 -0.15 See p10 for all other Mideast Gulf assessments Ekofisk Dated +1.65 125.39 125.45 -0.10 Asia-Pacific $/bl See p4 for all other North Sea assessments Basis Diff Bid Ask +/- Russia-Caspian $/bl Minas ICP +5.00 131.39 131.49 -0.06 Tapis Dated +7.20 130.92 131.02 -0.10 Urals NWE Dated -3.05 120.69 120.75 -0.10 Northwest Shelf Dated -3.80 119.92 120.02 -0.10 Urals Med (80kt) Dated -2.55 121.19 121.25 +0.05 Russia Asia-Pacific $/bl Azeri Light Dated +3.80 127.54 127.60 -0.10 ESPO Blend Apr Dubai swaps +3.65 125.49 125.59 -0.16 CPC Blend Dated -0.50 123.24 123.30 -0.10 Sokol May Dubai swaps +7.80 128.59 128.69 -0.06 See p6 for all other Russia-Caspian assessments See p11 for all other Asia-Pacific assessments Russia-Caspian fob netbacks $/bl US pipeline $/bl Urals fob Primorsk Dated -4.55 119.19 119.25 -0.08 Month Basis Diff Price +/- Urals Fob Novo (80kt) Dated -4.12 119.62 119.68 +0.02 LLS Apr Apr WTI +22.58 129.45 +1.49 CPC fob terminal Dated -1.65 122.09 122.15 -0.07 Mars Apr Apr WTI +14.89 121.76 +1.48 Azeri fob Supsa Dated +2.39 126.13 126.19 -0.13 Argus Sour Crude Index (ASCITM) $/bl See p6 for all other Russia-Caspian assessments Month Basis Diff Price +/- Mediterranean $/bl ASCI Apr Apr WTI +14.64 121.51 +1.23 Saharan Blend Dated +0.85 124.59 124.65 -0.10 See index methodology on p3 Es Sider Dated +0.60 124.34 124.40 +0.10 Canada pipeline $/bl Syrian Light Dated +0.65 124.39 124.45 -0.10 Timing Basis Low High +/- See p8 for all other Mediterranean assessments Synthetic May Can CMA 99.14 100.14 +3.53 West Africa $/bl WCS May Can CMA 79.89 81.89 +2.78 Bonny Light Dated +2.50 126.24 126.30 -0.10 Americas cargoes $/bl Girassol Dated +2.00 125.74 125.80 -0.15 Qua Iboe Prompt* May WTI 127.06 128.06 -0.71 Hungo Dated -0.40 123.34 123.40 -0.10 Vasconia Prompt* May WTI 120.07 121.07 -0.50 See p9 for all other west African assessments See p13 onwards for all other Americas assessments * Delivery 10-60 days forward Overview Data showing an unexpected fall in US crude stocks offset In the News Page 20 Saudi reassurances about supply, leaving outright prices Industry virtually unchanged. • Obama to expedite Keystone XL segment permitting In New York, the May Nymex WTI contract ended the first • UK unveils oil and gas tax overhaul session as the front-month contract $1.20/bl stronger at $107.27/ • Payment dispute between KRG and Baghdad • China’s February crude imports at 5.97mn b/d bl. Infrastructure In London, May Ice Brent ended the session up by 8¢/bl to • Mexico’s Pemex escapes earthquake damage $124.20/bl. Analysis Towards 4:30pm in London the May North Sea price was • Europe majors up exploration spend Continued on page 2 Contents Overview, futures and forward spreads 2 Americas US Gulf coast and midcontinent pipeline Forward markets 3 commentary and prices 13 North Sea commentary and prices 4 US Gulf coast waterborne and midcontinent commentary Russia-Caspian commentary and prices 6 and prices 14 Mediterranean commentary and prices 8 Deals done 16 West Africa commentary and prices 9 US west coast and Latin America commentary and prices 18 Mideast Gulf commentary and prices 10 Canada commentary and prices 19 Asia-Pacific commentary and prices 11 Industry and Infrastructure News 20 Official selling prices and formula prices 12

Overview continued Futures markets

$124.15/bl, down by 8¢/bl from the previous session. Ice Brent $/bl Improving refinery margins and the gradual clearance of Open High Low S’pore* London† Settle +/- almost all cargoes loading in the first ten days of April have gen- May 124.21 124.80 123.76 124.44 124.08 124.20 +0.08 erated a more positive tone in the North Sea market. Jun 123.85 124.34 123.35 124.00 123.62 123.68 -0.04 Despite a lack of apparent trade, Urals values continued to Jul 123.43 123.84 122.85 123.56 123.12 123.16 -0.11 firm on the back of improved refining margins and an opening *4.30pm Singapore minute marker, †4.30pm London minute marker arbitrage east. In the Mediterranean, a steady trickle of Libyan cargoes Nymex Light Sweet $/bl were offered for April loading, while a May cargo was bought by Open High Low S’pore* London† Settle +/- an Asian refiner. May 106.33 107.64 106.06 106.69 106.91 107.27 +1.20 Spot trade picked up on May-loading Angolan cargoes Jun 106.90 108.11 106.58 107.20 107.38 107.75 - while more May Nigerian programmes emerged. Jul 107.40 108.51 107.09 107.70 107.79 108.18 +1.11 On the Mideast Gulf market, spot differentials were steady Aug 107.86 108.80 107.43 107.94 108.07 108.47 - as the bulk of May cargoes were now sold. Dec 2012 108.75 +0.94 In Asia Pacific, softer distillate margins weighed on differen- Dec 2013 104.65 +0.50 tials for May-loading Malaysian medium sweet crude cargoes. Dec 2014 99.23 +0.33 WTI Midland trade weakened significantly from Tuesday to Dec 2015 95.81 +0.08 trade about 20¢/bl under fellow midcontinent grade WTS. Dec 2016 94.26 -0.01 Delivered foreign crudes were assessed lower against WTI *4.30pm Singapore snapshot, †4.30pm London snapshot as the US crude rose against international benchmarks. At the US west coast, regional crude oil inventories were DME Oman $/bl Tocom Mideast Gulf (day session) $/bl down by over 1mn bl for a second consecutive week, according Settle +/- Settle +/- to the latest government data. May 123.26 -0.22 May 121.31 -1.09 In Latin America, Ecuadorean heavy sours were talked at Jun 122.58 -0.15 Jun 120.64 -0.75 slightly stronger premiums relative to benchmark WTI as discus- Jul 121.98 +0.36 Jul 120.00 -0.63 sion moved on to a June WTI basis. Aug 121.27 +0.40 Aug 119.44 -0.62 In eastern Canada, cargoes of Terra Nova and White Rose Volume (bl) 1,923,000 Volume (bl) 865,480 changed hands while trade for Hibernia failed to emerge.

Forward spreads

4.30pm London $/bl N Sea/Dubai WTI/N Sea WTI/Dubai May +1.46 -17.24 -15.78 Jun +2.25 -16.31 -14.06 Jul +2.805 -15.41 -12.605 Aug -11.62

Forward curve Nymex WTI and Ice Brent Nymex WTI curve current and six months ago

Nymex WTI Ice Brent Nymex WTI 6 Months ago 125 110

118 105

111 100

104 95

97 90

90 85 Apr 12 Apr 13 Apr 14 Apr 15 Apr 16 Apr 17 Month 1 Month 13 Month 25 Month 37 Month 49 Month 61

Forward markets Argus Consulting Services North Sea Singapore close $/bl Tailored analysis, research, data and commentary Bid Ask +/- services on international energy markets. Apr 124.86 124.94 -0.13 May 124.57 124.63 -0.06 Argus uses its industry expertise, deep databases and Jun 124.12 124.20 -0.09 market contacts in specially commissioned research Jul 123.68 123.76 -0.09 projects for its customers. Argus focuses on markets — North Sea London close $/bl their structure, outlook, logistics and economics — where Bid Ask +/- our understanding, knowledge and insight provide clients Dated 123.74 123.80 -0.10 with a real competitive advantage. For more information, Apr 124.48 124.56 -0.01 email [email protected] or call +44 (0) 20 May 124.12 124.18 -0.08 7780 4200 Jun 123.65 123.73 -0.13 Jul 123.16 123.24 -0.19 Methodology Dubai Singapore close $/bl Argus Sour Crude Index Bid Ask +/- Argus publishes a daily price series, called the Argus Sour Crude Index May 123.09 123.19 -0.36 (“ASCI”), that represents the value of US Gulf coast medium sour crude by Jun 121.84 121.94 -0.16 including transactions from three separate crude streams. The ASCI pricing Jul 120.79 120.89 -0.06 tool is designed to serve primarily buyers and sellers of imported crude that need a broader index of US Gulf coast medium sour crude value for use in Aug 120.09 120.19 -0.06 long-term contracts.

Dubai London close $/bl The ASCI price is a volume-weighted average of all deals done for three grades of crude combined: Mars, Poseidon, and Southern Green Canyon. Bid Ask +/- May 122.65 122.73 -0.38 The methodology and a White Paper discussing the ASCI price are available at www.argusmedia.com/asci. Jun 121.39 121.49 -0.17 Jul 120.35 120.44 -0.08 Aug 119.64 119.74 -0.08

Dated to Ice Brent frontline London close $/bl Bid Ask +/- Apr +0.20 +0.28 +0.05 May +0.22 +0.30 +0.06 Jun +0.28 +0.36 +0.07 Q2 +0.23 +0.31 +0.06 Q3 +0.46 +0.54 +0.02 2013 +0.47 +0.53 +0.03

WTI Cushing 1:30pm Houston $/bl Bid Ask +/- Apr 106.85 106.89 +1.26 May 107.25 107.29 +1.20 Jun 107.73 107.77 +1.16 Jul 108.16 108.20 +1.11

North Sea fi rst month vs second month $/bl WTI light sweet crude fi rst month vs second month $/bl

3.00 0.50 WTI second month = 0

2.00 0.00

1.00 hh hhh hh hhh -0.50 0.00

North Sea second month = 0 -1.00 -1.00 27 Sep 11 23 Nov 11 24 Jan 12 21 Mar 12 22 Sep 11 18 Nov 11 23 Jan 12 21 Mar 12

North Sea

North Sea $/bl Improving refinery margins and the gradual clearance of Basis Diff Bid Ask +/- almost all cargoes loading in the first ten days of April have Dated* May -0.38 123.74 123.80 -0.10 Brent† Dated +0.90 124.64 124.70 -0.10 generated a more positive tone. Despite this, differentials Forties Dated -0.20 123.54 123.60 -0.17 are still nudging lower as more information about recent Oseberg Dated +1.90 125.64 125.70 -0.15 trade emerges. Ekofi sk Dated +1.65 125.39 125.45 -0.10 With no March loading dates left in the 10-25 day assess- Statfjord cif Rotterdam Dated +2.10 125.84 125.90 -0.30 ment window for benchmark setting Forties, the value of the Statfjord fob platform Dated +1.05 124.79 124.85 -0.30 Gullfaks cif Rotterdam Dated +3.65 127.39 127.45 -0.05 benchmark setting grade fell back into line with recent trade for Gullfaks fob platform Dated +2.60 126.34 126.40 -0.05 April cargoes. Flotta Dated -2.00 121.74 121.80 -0.10 Trafigura returned to the window, again offering the 4-6 April *Argus North Sea Dated is the equivalent of Platts dated Brent †Argus Brent is the price of physical Brent calculated using Argus North Sea Dated plus the Dated- loading cargo from Dated +0.20 down to Dated -0.10, while Shell related market differential for Brent repeated its offer of a 10-12 April cargo starting at Dated +0.15, North Sea EFP $/bl lowered to Dated +0.05. There were no bids and neither found a Basis Diff buyer. Trafigura also kept the 15-17 April Forties from chains. May Ice +0.16 Ekofisk was offered at Dated +1.85 but recent trading activ- Jun Ice +0.16 ity has been in the region of Dated +1.60/+1.70, traders said, Ice Bwave 20 Mar 2012 $/bl although there were few details on transactions. May 124.05 Oseberg is sold out up to 13 April but Statoil was indicating Jun 123.60 Jul 123.22 Saudi formula base 124.37 North Sea calculations $/bl Ice minute markers $/bl Volume weighted average of North Sea partial traded May 124.15 1-minute +/- Ice Brent marker May 124.08 May 124.08 -0.12 Exchange of futures for physical (EFP) May +0.16 Jun 123.62 -0.16 North Sea basis (fl at price) May 124.15 Jul 123.12 -0.22 +/- Dated CFDs Singapore Close $/bl Anticipated Dated based on 10-25 days CFD strip: 31 Mar-15 Apr 123.97 -0.03 Bid Ask +/- Argus Brent component of Dated 124.87 -0.03 26 Mar - 30 Mar May -0.29 -0.21 -0.12 Argus Forties component of Dated* 123.77 -0.10 2 Apr - 6 Apr May +0.15 +0.23 -0.15 Argus Oseberg component of Dated 125.87 -0.08 9 Apr - 13 Apr May +0.14 +0.22 -0.10 16 Apr - 20 Apr May +0.08 +0.16 -0.08 Argus Ekofi sk component of Dated 125.62 -0.03 *the lowest component sets Dated Dated CFDs London close $/bl Bid Ask +/- Argus alternative Dated illustrations $/bl 26 Mar - 30 Mar Jun +0.16 +0.24 +0.04 +/- 2 Apr - 6 Apr Jun +0.22 +0.30 +0.07 Argus Dated Average May +0.88 125.03 -0.06 9 Apr - 13 Apr Jun +0.26 +0.34 +0.12 Argus Dated BFOE May -0.38 123.77 -0.10 16 Apr - 20 Apr Jun +0.16 +0.24 +0.08 Argus Dated BFO May -0.38 123.77 -0.10 Argus Dated FOE May -0.38 123.77 -0.10 Intermonths Singapore Close $/bl Intermonths London close $/bl Bid Ask Bid Ask Argus North Sea Reference Price $/bl Apr/May +0.26 +0.34 Apr/May +0.33 +0.41 +/- May/Jun +0.40 +0.48 May/Jun +0.42 +0.50 Argus North Sea Reference Price (NSRP) 124.76 -0.14 Jun/Jul +0.40 +0.48 Jun/Jul +0.45 +0.53 Argus Synthetic Brent (NSRP component) 123.97 -0.04

Brent, Forties, Oseberg and Ekofi sk vs North Sea Dated $/bl Statfjord vs North Sea Dated and UKC $/bl

2.00 Brent Forties Oseberg Ekofisk 4 North Sea Dated = 0 3 1.50

2 hh hhh 1.00 1

0 0.50 Dec 11 Jan 12 Feb 12 Mar 12 -1 27 Sep 11 23 Nov 11 24 Jan 12 21 Mar 12 Cross UKC 135,000t Statfjord vs North Sea Dated

further cargoes at slightly lower levels than on Tuesday, down Argus Bid/Offer/Deal Bulletin Board 10¢/bl to Dated +2.00. Traders pegged likely trade at around Dated +1.90. Argus publishes European bids, offers and deals done that On offshore grades, Grane was seen as struggling with have been reported to its crude reporting team. These can be the recent sharp falls in Urals dragging on the grade’s potential seen at www.argusmedia.com/petroleum. The Bulletin Board value. Statfjord was still indicated for sale at Dated +2.40 but is free to view but readers will need to register a few details at most felt that trade was more likely closer to Dated +2.00. A the site in order to access the information. Gullfaks may have traded and the first available cargoes are If you are a market participant and would like to submit your now loading 17 or 22 April. deals to Argus for inclusion in the Bulletin Board, please The more positive tone was reflected in marginally firmer contact the Argus Crude team by telephone, +44 20 7780 CFDs with at least 700,000 bl of 2-5 April paper changing hands 7220, email [email protected] or send a Yahoo at Jun NSea +0.26, 7¢/bl up from Tuesday. message to arguscrude. The Argus May North Sea price was assessed at $124.15, down 8¢/bl from Tuesday, based on 400,000 bl of trade in the minute leading up to the timestamp. Argus Crude Methodology

Argus uses a precise and transparent methodology to assess prices in all the markets it covers. The latest versions of each methodology can be found at: www.argusmedia.com/methodology.

For a hard copy, please email [email protected], but please note that methodogies are updated frequently and for the latest version, you should visit the internet site.

Ekofi sk vs LLS $/bl North Sea Dated vs North Sea Basis month $/bl

10 6 LLS = 0 North Sea basis month = 0

4 5

2 hh hhh hh hhh 0 0

-5 -2 21 Sep 11 17 Nov 11 23 Jan 12 21 Mar 12 APR-11 JUN-11 AUG-11 OCT-11 DEC-11 FEB-12

WTI vs North Sea Dated and UKC - US Gulf freight $/bl Oseberg vs Tapis $/bl 10 -2 Tapis = 0

0 -3

-10 -4 hh hhh -20 -5

-30 Dec 11 Jan 12 Feb 12 Mar 12 -6

UKC-USGC 260,000t WTI vs North Sea Dated 21 Sep 11 21 Nov 11 20 Jan 12 21 Mar 12

Russia-Caspian

Russia-Caspian $/bl Druzhba pipeline Basis Diff Bid Ask +/- Urals $/bl Urals NWE Dated -3.05 120.69 120.75 -0.10 Urals Med (80kt) Dated -2.55 121.19 121.25 +0.05 Basis Diff Bid Ask +/- Urals Med (135kt) Dated -2.80 120.94 121.00 +0.10 Druzhba Czech Republic Dated -3.20 120.54 120.60 -0.10 Siberian Light Dated +0.60 124.34 124.40 -0.25 Druzhba Slovakia Dated -3.50 120.24 120.30 -0.10 CPC Blend Dated -0.50 123.24 123.30 -0.10 Druzhba Hungary Dated -3.50 120.24 120.30 -0.10 Tengiz Dated -0.45 123.29 123.35 -0.10 Druzhba Poland Dated -3.70 120.04 120.10 -0.10 BTC Dated +3.80 127.54 127.60 -0.10 Druzhba Germany Dated -4.00 119.74 119.80 -0.10 Azeri Light Dated +3.80 127.54 127.60 -0.10 Kumkol Dated +1.70 125.44 125.50 -0.10 Druzhba monthly prices

Fob netbacks $/bl North Sea Dated month average $/bl Basis Diff Bid Ask +/- Feb 119.53 Urals Primorsk Dated -4.55 119.19 119.25 -0.08 Jan 110.52 Urals Novo (80kt) Dated -4.12 119.62 119.68 +0.02 Dec 107.80 Urals Novo (135kt) Dated -4.33 119.41 119.47 +0.07 Druzhba monthly prices CPC Terminal Dated -1.65 122.09 122.15 -0.07 Basis Diff Bid Ask Tengiz Odessa Dated -1.88 121.86 121.92 -0.13 Czech Republic BTC Ceyhan Dated +2.66 126.40 126.46 -0.12 Feb Monthly avg of Dated -1.55 117.95 118.01 Azeri Light Supsa Dated +2.39 126.13 126.19 -0.13 Jan Monthly avg of Dated -2.45 108.04 108.10 Dec Monthly avg of Dated -1.60 106.17 106.23 Retrospective netbacks $/bl Slovakia Basis Diff Bid Ask +/- Feb Monthly avg of Dated -1.80 117.70 117.76 Urals fob Primorsk Dated -2.56 121.18 121.24 -0.17 Jan Monthly avg of Dated -2.65 107.84 107.90 Urals fob Novo (80kt) Dated -3.28 120.46 120.52 -0.33 Dec Monthly avg of Dated -1.80 105.97 106.03 CPC Blend fob Dated -1.23 122.51 122.57 -0.10 Hungary Turkish straits demurrage Feb Monthly avg of Dated -1.80 117.70 117.76 Delay (days) 4 Jan Monthly avg of Dated -2.65 107.84 107.90 LR1 (Aframax) demurrage rate $/day 32,000 Dec Monthly avg of Dated -1.80 105.97 106.03 LR2 (Suezmax) demurrage rate $/day 40,000 Poland Feb Monthly avg of Dated -2.20 117.30 117.36 Jan Monthly avg of Dated -2.90 107.59 107.65 Despite a lack of apparent trade, Urals values continued to Dec Monthly avg of Dated -2.00 105.77 105.83 firm on the back of improved refining margins and an open- Germany ing arbitrage east. Feb Monthly avg of Dated -2.20 117.30 117.36 Russia’s energy minister Sergei Shmatko approved the Jan Monthly avg of Dated -3.10 107.39 107.45 exports schedule for pipeline crude supplies from Russia in Dec Monthly avg of Dated -2.15 105.62 105.68 April-June, but details were slow to emerge. Druzhba and No- Cif basis Singapore $/bl vorossiysk destinations are largely expected to suffer based on Bid Ask +/- preliminary information suggesting that the rise of Baltic exports BTC Blend 130.16 130.22 -0.12 through Ust-Luga will be at least partially at the expense of Urals (Black Sea) 123.31 123.37 +0.07 southern exports, since crude production and refinery utilisation in Russia is relatively stable. Urals Med vs North Sea Dated $/bl

Discussions on offers of Urals were muted, but the grade 1.00 did see buying interest in the afternoon. Arcadia bid for a 80,000t North Sea Dated = 0 cargo for 11-15 April up to North Sea Dated -2.45 cif Augusta, 0.00 but failed to find a buyer. The dates for the cargo are still not available, as cargoes due to load in the second ten days of April are yet to be allocated, so traders noted that it was difficult for -1.00 hh sellers to meet Arcadia’s bid. The bid mostly fell outside of Argus’ hhh

5-21 day assessment window, and so was not fully taken into -2.00 consideration for Wednesday’s assessment. At the same time the sentiment was clearly more bullish and traders said Urals -3.00 differentials could be supported by a possible arbitrage east, as 27 Sep 11 23 Nov 11 24 Jan 12 21 Mar 12 well as healthier refining margins.

Traders said that CPC cargoes scheduled to load in the first half of April were sold out and demand for the grade was strong, energy markets, data and analysis but no substantial evidence for this was provided. On BTC Blend, traders said cargoes due to load in the first 20 days of April had been sold. Market sources said a trader Argus Crude Data offered a cargo at above Dated +4.00 cif Augusta, but this could The price information contained in Argus Crude is available not be confirmed. as regularly updated data files. The daily files contain all the data from the report and are available in Comma Separat- ed Values (CSV) format accessible from Argus FTP sites. The documentation for and explanation of these files are available at www.argusmedia.com under the Resource/Data tab.

Alternatively Argus can provide custom one-off historical collections for specific price assessments . If you are interested in Argus data files please contact [email protected].

Argus constantly makes improvements to its publications to reflect the current energy markets most accurately. Argus announces any changes to the data content by email, and online at www.argusmedia.com. If you would like to receive these announcements, please contact us at [email protected].

Urals NWE vs Mars $/bl Urals Med vs Azeri Light $/bl

6 -2 Mars = 0 Azeri Light = 0 -3 4

-4 2 hh hhh hh -5 hhh

0 -6

-2 -7 21 Sep 11 17 Nov 11 23 Jan 12 21 Mar 12 27 Sep 11 23 Nov 11 24 Jan 12 21 Mar 12

Urals NWE vs North Sea Dated $/bl Urals NWE vs Urals Med $/bl

1 1 North Sea Dated = 0 Urals Med = 0 0 0.5

-1 0

hh -2 hhh hh -0.5 hhh

-3 -1

-4 -1.5 27 Sep 11 23 Nov 11 24 Jan 12 21 Mar 12 27 Sep 11 23 Nov 11 24 Jan 12 21 Mar 12

Mediterranean

Mediterranean $/bl Offi cial formula prices Basis Diff Bid Ask +/- Saharan Blend Dated +0.85 124.59 124.65 -0.10 Algeria $/bl Zarzaitine Dated +0.95 124.69 124.75 -0.10 Basis Jan Feb Mar Syrian Light Dated +0.65 124.39 124.45 -0.10 Saharan Blend Dated +0.85 +0.80 +0.80 Es Sider Dated +0.60 124.34 124.40 +0.10 Kirkuk Dated -2.55 121.19 121.25 -0.20 Syria $/bl Basrah Light fob Sidi Kerir Dated -3.00 120.74 120.80 -0.20 Basis Aug Sep Oct Iran Light fob Sidi Kerir Dated -1.50 122.24 122.30 -0.10 Syrian Light Dated na na na Iran Heavy fob Sidi Kerir Dated -2.90 120.84 120.90 -0.10 Souedie Dated -9.75 -9.75 -9.75 Suez Blend Dated -5.35 118.39 118.45 +0.05

Libya $/bl In the Mediterranean, a steady trickle of Libyan cargoes Basis Feb Mar Apr were offered for April loading, while a May cargo was Es Sider Dated +0.70 +0.70 +1.00 bought by an Asian refiner. Bu Atiffel Dated +1.40 +1.50 +1.90 Indian state-owned BPCL bought a Suezmax of Mellitah for Sirtica Dated -0.50 -0.60 -0.70 May loading in a buy tender, although this could not be con- Zueitina Dated +0.80 +1.00 +1.20 Brega Dated +0.30 +0.40 +0.40 firmed and no deal levels were seen. BPCL has already bought Sarir Dated -0.40 -0.20 +0.00 a cargo of Sarir for late April loading from a Japanese trader. Amna Dated +0.90 +0.90 +0.90 A major was continuing to offer a 22-25 April Esharara at Bouri Urals Med -0.20 -0.20 -0.20 around 10¢/bl above the formula price, while the 17-19 April Mellitah Dated +0.90 +0.90 +0.90 cargo, which had been available, is now being kept within the Al-Jurf Urals Med +0.20 +0.40 +0.30 refiner’s own system. Esharara Dated +1.20 +1.10 +1.30 Other grades were being discussed, including a 27-29 April Amna offered at Dated +1.10, although this could not be verified. Egypt $/bl A European refiner was heard offering a 22-24 April Sirtica Basis Nov Dec Jan at flat to the April formula price. OMV was understood to have Suez Blend Dated -5.30 -3.10 -3.05 Ras al-Behar Dated -4.70 -3.00 -2.95 won Libyan state-owned NOC’s buy tender for 600,000 bl 7-9 Zeit-Bay Dated -4.70 -3.00 -2.95 April Sirtica loading at a similar level, traders said. Belayim Dated -13.66 -13.84 -8.96 April Es Sider was assessed between Dated +0.30/0.40 at Ras Budran Dated -9.55 -8.60 -8.85 the start of April to Dated +0.70/1.00 for end April, but no fresh Ras Gharib Dated -9.60 -8.65 -8.90 offers were heard. Western Desert Dated -1.10 -1.05 -0.80 Algerian naphtha-rich Saharan Blend was heard offered as Qarun Dated na -1.10 -0.85 high as Dated +1.20 by state-owned Sonatrach, although this could not be confirmed directly. Likely deal levels were seen below the April formula price and Basrah Light was also under closer to Dated +0.80. pressure. But the latter could gain some support from stronger At least three April loading cargoes of Iraqi Kirkuk were US buying due to the more favourable formula price as well as heard available and levels were weakening in the light of falling US demand to blend the grade with its domestic light sweet alternative Urals prices. Kirkuk was assessed around 30¢/bl crude.

Saharan Blend vs LLS $/bl Saharan Blend vs North Sea Dated and Med-US Gulf freight $/bl

4 3.00 LLS = 0 2 2.00

1.00

hh -2 hhh

-4 0.00 Dec 11 Jan 12 Feb 12 Mar 12

-6 Med-US Gulf 260,000t 21 Sep 11 17 Nov 11 23 Jan 12 21 Mar 12 Saharan Blend vs North Sea Dated

West Africa

West Africa $/bl Nigerian official formula prices $/bl Basis Diff Bid Ask +/- Basis Feb Mar Apr Agbami Dated +0.30 124.04 124.10 -0.10 Abo Dated +1.20 +1.10 +1.20 Amenam Dated +1.90 125.64 125.70 -0.10 Agbami Dated +0.75 +0.70 +0.70 Bonga Dated +2.85 126.59 126.65 -0.10 Akpo Dated +0.65 +0.65 +0.65 Bonny Light Dated +2.50 126.24 126.30 -0.10 Amenam Dated +2.20 +2.00 +2.00 Brass River Dated +2.40 126.14 126.20 -0.10 Antan Dated +1.10 +1.40 +1.35 Erha Dated +3.20 126.94 127.00 -0.10 Bonga Dated +3.10 +3.00 +2.90 Escravos Dated +2.50 126.24 126.30 -0.10 Bonny Light Dated +2.80 +2.65 +2.65 Forcados Dated +4.30 128.04 128.10 -0.10 Brass River Dated +2.80 +2.65 +2.65 Qua Iboe Dated +2.60 126.34 126.40 -0.10 EA Dated +3.90 +3.80 +3.80 Cabinda Dated +1.50 125.24 125.30 +0.10 Erha Dated +3.20 +3.10 +3.00 Dalia Dated +0.35 124.09 124.15 -0.05 Escravos Dated +2.50 +2.40 +2.40 Girassol Dated +2.00 125.74 125.80 -0.15 Forcados Dated +3.80 +3.90 +4.00 Hungo Dated -0.40 123.34 123.40 -0.10 Ima Dated +0.60 +0.60 +0.60 Kissanje Dated +1.50 125.24 125.30 -0.10 Obe Dated +1.30 +1.30 +1.25 Nemba Dated +1.25 124.99 125.05 -0.10 Okono Dated +2.60 +2.40 +2.40 Zafiro Dated +1.50 124.69 125.30 -0.10 Okoro Dated +1.25 +1.35 +1.30 Okwori Dated +2.60 +2.40 +2.40 Oso Condensate Dated na na na Spot trade picked up on May-loading Angolan cargoes Pennington Dated +4.40 +4.20 +4.15 while more May Nigerian programmes emerged. Qua Iboe Dated +2.80 +2.65 +2.65 Ukpokiti Dated +0.75 +0.70 +0.70 At least four Cabinda have now changed hands. Unipec Yoho Dated +2.80 +2.65 +2.65 has bought the 20-21 May Cabinda from Eni while China Oil has Oyo Dated +1.20 +1.25 +1.20 picked up the 15-16 May Cabinda from Sonangol, traders said. Zafiro* Dated +1.30 +1.60 +1.50 These deals were not confirmed and no further details were Ebok Dated -5.50 -5.50 -5.00 available. Sonangol has been offering Cabinda at Dated +1.80. Okwuibome formula Dated na na -3.50 Unipec has also picked up the 4-5 May Dalia from Sonangol Premium for advanced pricing Dated +0.05 +0.05 +0.05 in addition to the 17-18 May Dalia, traders said. Reliance bought Premium for deferred pricing Dated +0.10 +0.05 +0.05 the 6-7 May Pazflor from BP as well as a 22-23 May Pazflor * Equatorial Guinea, priced by NNPC from Statoil and Sonangol may also have sold its 17-18 May Pazflor, according to traders. These deals were not confirmed. and two Kissanje have now been placed as well as one Hungo. Pazflor and Dalia were last heard on offer at Dated +0.60. A couple of Girassol may also have been sold. The grade has Reliance is also thought to have bought an 18-19 May Kuito been offered at Dated +2.10. from Chevron while Unipec was thought to be the buyer of the Sonangol’s 18-19 May Palanca was sold to ChinaOil while 3-4 May Sonangol Kuito. This would mean that the grade is now Chevron sold its 19 May Doba, traders said. Confirmation could sold out. Sonangol had been offering Kuito at Dated -3.50. not be obtained. Sonangol’s 21-22 May Nemba has moved to Shell while Around 9-10 cargoes of Angolan crude have been placed IOC is taking the 30-31 May Sonangol Nemba together with the under term arrangements. Cargoes have also been tied up on 27-28 Sonangol Girassol on a term basis, traders said. Nemba offer into Taiwanese refiner CPC’s tender for May crude. was last heard on offer at Dated +1.30. At least two Nemba India’s BPCL was taking a VLCC of Qua Iboe from Exxon- Mobil in its tender for May crude, according to traders. Indian Bonny Light vs Tapis $/bl refiner IOC also has a tender pending for May-loading crude. -2 Part one closed on Wednesday 21 March and part two closes on Tapis = 0 Thursday 22 March, to remain valid until Friday 23 March. An overhang of five to 10 April loading Nigerian cargoes -3 may still be available. No bids or offers for the May loading cargoes were heard. -4 hh hhh

-5

-6 21 Sep 11 21 Nov 11 20 Jan 12 21 Mar 12

Mideast Gulf

Mideast Gulf $/bl Dubai forward 4.30pm Singapore 4.30pm London $/bl Month Basis Diff Bid Ask +/- Bid Ask +/- Bid Ask +/- Dubai May 123.09 123.19 -0.36 May 123.09 123.19 -0.36 122.65 122.73 -0.38 Oman May May* +2.52 123.31 123.41 -0.22 Jun 121.84 121.94 -0.16 121.39 121.49 -0.17 Murban May Adnoc +0.28 125.36 125.46 -0.06 Jul 120.79 120.89 -0.06 120.35 120.44 -0.08 Lower Zakum May Adnoc +0.20 124.88 124.98 -0.11 Aug 120.09 120.19 -0.06 119.64 119.74 -0.08 Qatar Land May QP +0.20 124.38 124.48 -0.06 Dubai intermonths 4.30pm Singapore $/bl Qatar Marine May QP -0.20 122.83 122.93 -0.14 May/Jun +1.20 +1.30 Qatar Al-Shaheen May* +2.50 123.29 123.39 -0.16 Jun/Jul +1.00 +1.09 Banoco Arab Medium May OSP +0.10 123.00 123.10 -0.14 Jul/Aug +0.66 +0.75 *basis is Dubai swaps Dubai swaps 4.30pm Singapore $/bl Trade on the Mideast Gulf crude market was starting to Bid Ask +/- wind down as the bulk of May cargoes were now sold. Apr 121.84 121.94 -0.16 May 120.79 120.89 -0.06 Spot differentials for most grades were holding steady but Jun 120.09 120.19 -0.06 some traders said Murban premiums could head lower amid Jul 119.52 119.62 -0.05 softer margins. Murban was notionally pegged around Adnoc Dubai swaps months are pricing months +0.25/+0.30, although no new trades have been heard done. May Murban was heard to have earlier traded last week at as Dubai EFS 4.30pm Singapore $/bl high as around Adnoc +0.32, traders said. Kenya is expected to Dubai/Ice Brent Bid Ask +/- May +3.55 +3.65 +0.00 tender to buy spot Murban crude for May arrival, the first time in Jun +3.81 +3.91 -0.03 two months that it is seeking spot crude. Jul +3.94 +4.04 -0.04 Medium sour Qatar Marine was pegged around QP -0.20 but supplies had dwindled as most sellers had now committed Ice Brent 4.30pm Singapore $/bl May +124.44 -0.06 their cargoes. India’s Reliance was heard to have bought a few Jun +124.00 -0.09 cargoes earlier, at discounts deeper than 10¢/bl to the official QP Jul +123.56 -0.09 price. Aug +123.02 -0.12 The May Oman crude futures contract on DME weakened further to settle at the equivalent of Dubai swaps +2.42 as com- Oman forward 4.30pm Singapore $/bl Dubai Differential Bid Ask +/- pared with Dubai swaps +2.58 yesterday. swaps May Brent-Dubai EFS was pegged steady from yesterday May +2.52 May 123.31 123.41 -0.22 around $3.60/bl. Intermonth Dubai spreads weakened slightly Jun +2.54 Jun 122.63 122.73 -0.15 with April-May Dubai swaps pegged at $1.05/bl in backwardation Jul +2.50 Jul 122.02 122.12 +0.36 as compared with $1.15/bl yesterday. May-June Dubai swaps Russia-Caspian crude cif basis Singapore $/bl were steady at around 70¢/bl in backwardation. Bid Ask +/- Urals (Black Sea) 123.31 123.37 +0.07

Methodology

Dubai forward month calculator $/bl Ice Brent month 1 May 124.44 Dubai EFS month 1 May - 3.60 Murban vs Dubai $/bl Dubai swap month 1* Apr = 120.84 5.00 Dubai forward month 3* Jul = 120.84 Dubai = 0 Dubai intermonth Jun/Jul + 1.05 Dubai forward month 2 Jun = 121.89 4.00 Dubai intermonth May/Jun + 1.25 Dubai forward month 1 May = 123.14 *Dubai swap month 1 = Dubai forward month 3 3.00 hh hhh Oman forward month calculator $bl Dubai- Diff to Dubai Oman 2.00 MOG Oman Dubai swaps forward formula spread swaps outright midpoint May +0.10 +2.42 +2.52 121.89 124.41 1.00 Jun +0.10 +2.44 +2.54 120.84 123.38 22 Sep 11 22 Nov 11 20 Jan 12 21 Mar 12 Jul +0.09 +2.41 +2.50 120.14 122.64

Asia-Pacific

Asia-Pacific $/bl Benchmarks $/bl Basis Diff Bid Ask +/- North Sea Dated 123.77 Minas ICP +5.00 131.39 131.49 -0.06 Substitute Dated 124.11 Duri ICP +5.00 127.69 127.79 -0.06 Sudan $/bl Cinta ICP +2.70 128.25 128.35 -0.06 Basis Diff Bid Ask +/- Widuri ICP +2.70 128.29 128.39 -0.06 Nile Blend Dated* +5.00 128.72 128.82 -0.10 Senipah ICP +1.20 120.49 120.59 -0.06 Dar Blend Dated* -8.00 115.72 115.82 -0.10 Attaka ICP +3.30 131.16 131.26 -0.06 * When North Sea Dated is unavailable due to a UK holiday, Substitute Dated Ardjuna ICP +2.10 128.69 128.79 -0.06 will be used Belida ICP +3.00 130.19 130.29 -0.06 Bach Ho Minas +8.10 134.49 134.59 -0.06 Russia Asia-Pacific Sutu Den Minas +7.10 133.49 133.59 -0.06 Russia $/bl Tapis Dated* +7.20 130.92 131.02 -0.10 Basis Diff Bid Ask +/- Kikeh Dated* +9.10 132.82 132.92 -0.10 ESPO Blend Apr Dubai swaps +3.65 125.49 125.59 -0.16 Labuan Dated* +9.00 132.72 132.82 -0.10 Sokol May Dubai swaps +7.80 128.59 128.69 -0.06 Kutubu Light Dated* +4.00 127.72 127.82 -0.10 Vityaz May Dubai swaps +5.60 126.39 126.49 -0.06 Cossack Dated* +2.50 126.22 126.32 -0.10 Dirty freight rates from Kozmino (ESPO) 100,000t $/bl Northwest Shelf Dated* -3.80 119.92 120.02 -0.10 To Yosu 0.56 Enfield Dated* +10.50 134.22 134.32 -0.10 To Tianjin 0.67 Stybarrow Dated* +9.70 133.42 133.52 -0.10 To Chiba 0.68 Vincent Dated* +7.30 131.02 131.12 -0.10 To Singapore 0.77 Pyrenees Dated* +7.40 131.12 131.22 -0.10 Van Gogh Dated* +7.20 130.92 131.02 -0.10 Russia-Caspian crude cif basis Singapore $/bl * When North Sea Dated is unavailable due to a UK holiday, Substitute Dated Bid Ask +/- will be used BTC Blend 130.16 130.22 -0.12

More Malaysian medium sweet grades traded at slightly Trade for May ESPO Blend is set to begin earlier than lower premiums against benchmark Dated, backed by normal months, as producers TNK-BP and Surgutneftegaz softer distillate margins. have issued their tenders to sell May-loading cargoes. US independent and marketer of Malaysian crude Murphy TNK-BP is offering three cargoes through its tender, for Oil was heard to have sold 600,000 bl of medium sweet Kikeh loading 3-10 May, 14-17 May and 26-29 May. Fellow produc- crude to an oil major. The 6-10 May loading cargo traded at a er Surgutneftegaz has also tendered to sell three cargoes, more than $9/bl-premium against benchmark Dated, although for loading 9-13 May, 12-16 May and 28-31 May. traders said the May premium was likely lower than last month Both the TNK-BP and Surgutneftegaz tenders close on 22 when an April Kikeh cargo was sold at $9.60/bl over Dated. March. Traders said that with Asia-Pacific buying weaker in line Vietnam state-owned PVOil sold distillate-rich Song Doc to with a decline in refining margins, the early offers of May-loading a Japanese trader at around $8/bl over benchmark Minas. The ESPO Blend cargoes could help the sellers capture demand. 250,000 bl cargo is slated for 1-6 May loading. No Song Doc April ESPO Blend cargoes had traded at much lower premiums cargoes were offered last month, although PVOil sold a 15-21 compared with previous months, with one April cargo sold at March loading cargo to BP at around Minas +9.30/+9.40 in its year-low premium of $3.20/bl to front-line Dubai, amid softer last tender. gasoil margins and delays in marketing of cargoes. PVOil is expected to offer Vietnamese medium sweet Chim Sao crude soon. It currently has several outstanding tenders for Bunga Orkid, Bunga Kekwa and Te Giac Trang (TGT) crude.

Official formula prices Official formula prices

Saudi Arabia to US: fob Ras Tanura $/bl Yemen fob Salif/Ash Shihr $/bl Basis Feb Mar Apr Basis Feb Mar Apr Berri (Extra Light) ASCI +2.20 +1.85 +1.85 Marib Light Dated 0.00 0.00 0.00 Arab Light ASCI +0.25 -0.05 +0.05 Masila Dated +2.93 +2.15 +2.55 Arab Medium ASCI -1.90 -2.15 -2.10 Iraq to Europe $/bl Arab Heavy ASCI -3.60 -3.75 -3.40 Basis Feb Mar Apr Saudi Arabia to US: delivered US Gulf $/bl Kirkuk (fob Ceyhan) Dated -2.90 -1.25 -2.25 Berri (Extra Light) ASCI +3.55 +3.20 +3.20 Basrah Light Dated -4.35 -2.55 -4.15 Arab Light ASCI +1.60 +1.30 +1.40 Iraq to US $/bl Arab Medium ASCI -0.55 -0.80 -0.75 Kirkuk (fob Ceyhan) ASCI +0.05 -0.25 +0.05 Arab Heavy ASCI -2.25 -2.40 -2.05 Basrah Light ASCI -1.70 -2.00 -2.00 Saudi Arabia to NW Europe: fob Ras Tanura $/bl Berri (Extra Light) Ice Bwave +0.70 +1.55 +0.70 Iraq to Asia-Pacific $/bl Arab Light Ice Bwave -1.75 -0.85 -1.25 Basrah Light Oman/Dubai avg +1.10 +0.65 +1.15 Arab Medium Ice Bwave -3.55 -2.40 -2.95 Arab Heavy Ice Bwave -5.55 -4.30 -4.60 Official selling prices Saudi Arabia to Mediterranean: fob Sidi Kerir $/bl Berri (Extra Light) Ice Bwave +0.45 +1.65 +2.10 Abu Dhabi $/bl Arab Light Ice Bwave -1.75 -0.90 -0.75 Dec Jan Feb Arab Medium Ice Bwave -3.35 -2.25 -2.25 Murban 111.80 114.20 120.45 Arab Heavy Ice Bwave -5.35 -4.20 -4.45 Lower Zakum 111.45 113.85 120.05 Saudi Arabia to Mediterranean: fob Ras Tanura $/bl Upper Zakum 108.85 111.60 117.80 Berri (Extra Light) Ice Bwave +0.00 +1.45 +1.75 Umm Shaif 111.05 113.40 119.65 Arab Light Ice Bwave -2.20 -1.10 -1.10 Qatar $/bl Arab Medium Ice Bwave -3.80 -2.45 -2.60 Dec Jan Feb Arab Heavy Ice Bwave -5.80 -4.40 -4.80 Dukhan/Land 110.75 113.30 119.55 Saudi Arabia to Asia-Pacific: fob Ras Tanura $/bl Premium to Dubai +4.35 +3.50 +3.39 Arab (Super Light) Oman/Dubai avg +4.10 +4.20 +7.60 Marine 109.50 112.20 118.40 Berri (Extra Light) Oman/Dubai avg +3.55 +3.10 +5.20 Premium to Dubai +3.07 +2.40 +2.24 Arab Light Oman/Dubai avg +2.05 +1.55 +2.80 Oman $/bl Arab Medium Oman/Dubai avg +0.75 +0.25 +0.90 Feb Mar Apr Arab Heavy Oman/Dubai avg -0.45 -0.85 -0.75 Oman 107.41 110.63 117.32

Iran to Mediterranean: fob Sidi Kerir $/bl Indonesia $/bl Basis Feb Mar Apr Dec Jan Feb Iran Light Ice Bwave -1.90 -1.10 -1.05 Minas 112.52 118.38 124.63 Iran Heavy Ice Bwave -3.35 -2.50 -2.50 Duri 109.22 114.91 120.49 Foroozan Blend Ice Bwave -3.25 -2.40 -2.40 Widuri 110.81 116.10 122.35 Belida 114.52 119.06 124.76 Iran to Mediterranean: fob Kharg Island $/bl Attaka 114.33 118.57 124.55 Iran Light Ice Bwave -4.00 -3.20 -3.20 Ardjuna 111.74 116.26 122.09 Iran Heavy Ice Bwave -5.45 -4.60 -4.75 Cinta 110.69 115.66 121.90 Foroozan Blend Ice Bwave -5.35 -4.50 -4.65 Senipah 105.37 110.65 118.04 Soroush Ice Bwave -9.45 -8.65 -9.15 Nowruz Ice Bwave -9.45 -8.65 -9.15 Malaysia $/bl Iran to NW Europe: fob Kharg Island $/bl Dec Jan Feb Tapis 115.33 119.08 127.55 Iran Light Ice Bwave -2.35 -1.45 -1.75 Tapis ‘Alpha’ Premium +7.50 +8.50 +8.00 Iran Heavy Ice Bwave -3.85 -2.80 -3.35 Labuan 115.33 119.08 127.55 Foroozan Blend Ice Bwave -3.75 -2.70 -3.25 Miri 115.33 119.08 127.55 Iran to Asia-Pacific: fob Kharg Island $/bl Bintulu 115.03 118.78 127.25 Iran Light Oman/Dubai avg +2.26 +1.76 +3.01 Dulang 115.03 118.78 127.25 Iran Heavy Oman/Dubai avg +0.74 +0.24 +0.89 Brunei $/bl Foroozan Blend Oman/Dubai avg +0.92 +0.42 +1.07 Soroush Oman/Dubai avg -3.45 -4.00 -4.05 Dec Jan Feb Nowruz Oman/Dubai avg -3.45 -4.00 -4.05 Seria Light 115.33 119.08 127.56 Champion 115.18 118.93 127.41 Kuwait to Asia-Pacific $/bl Basis Feb Mar Apr Reference prices Kuwait Oman/Dubai avg +0.50 +0.05 +0.70 Kuwait to US $/bl Opec reference basket monthly average $/bl Basis Feb Mar Apr Dec Jan Feb Kuwait ASCI -1.90 -2.15 -2.10 Opec 107.34 111.76 117.48

Dubai fob $/bl Japanese crude cocktail $/bl Basis Mar Apr May Oct Nov Dec Dubai Oman MOG OSP -0.55 -0.70 -0.70 JCC 110.88 109.37 114.12

Americas US Gulf coast and midcontinent pipeline

Gulf coast and midcontinent pipeline $/bl Month Basis Diff low Diff high Diff wtd avg MTD wtd avg Low High Wtd avg WTI Diff to CMA Nymex Apr CMA -0.58 -0.50 -0.54 -0.59 WTI Postings-Plus Apr Postings +2.80 +2.85 +2.82 +2.80 WTI Midland Apr Apr WTI -6.10 -6.00 -6.05 -3.65 100.77 100.87 100.82 LLS Apr Apr WTI +22.25 +22.85 +22.58 +19.84 129.12 129.72 129.45 LLS May May WTI +18.50 +19.25 +18.80 +17.40 125.77 126.52 126.07 HLS Apr Apr WTI +22.05 +22.25 +22.15 +21.48 128.92 129.12 129.02 Bakken May Can CMA -16.50 -14.50 - - 91.39 93.39 - Thunder Horse Apr Apr WTI +19.80 +20.20 +20.00 +18.73 126.67 127.07 126.87 Bonito Apr Apr WTI +17.50 +18.25 +18.13 +16.90 124.37 125.12 125.00 Eugene Island Apr Apr WTI +18.25 +19.25 +18.75 +17.48 125.12 126.12 125.62 WTS Apr Apr WTI -6.00 -5.50 -5.88 -4.43 100.87 101.37 100.99 WTS May May WTI -4.50 -3.75 -4.13 -3.72 102.77 103.52 103.14 Poseidon Apr Apr WTI +13.60 +13.80 +13.70 +13.74 120.47 120.67 120.57 Mars Apr Apr WTI +14.75 +14.95 +14.89 +14.26 121.62 121.82 121.76 Mars May May WTI +14.85 +15.02 +14.94 +14.11 122.12 122.29 122.21 Southern Green Canyon Apr Apr WTI +14.05 +15.00 +14.14 +14.39 120.92 121.87 121.01 Wtd avg is volume-weighted average of deals done during entire trading day

Argus Sour Crude Index (ASCITM) $/bl April Poseidon traded at WTI +13.70, and was valued at a Month Basis Diff Price discount to Mars of $1.05-$1.25/bl in several conversion deals. ASCI Apr Apr WTI +14.64 121.51 April SGC was also fairly active in conversion deals, trading on See index methodology on p3 a ConocoPhillips Postings Plus basis at +17.70 when P+ was WTI Formula Basis $/bl valued at about +2.80, and at premiums fo 25¢/bl and $1.40/bl Month MTD avg versus Mars and Poseidon, respectively. Apr 106.87 106.69 May 107.27 WTI Formula Basis is used to calculate prices for US Gulf coast and Midcon- tinent grades

Differentials continued to move in both directions relative to WTI ahead of Friday’s last April trading session. Notably, WTI Midland weakened over $1/bl to trade under WTS. Trade for April WTI Midland occurred in a WTI -6.10/-6.00 range, weakening $1.05/bl from Tuesday’s weighted-average differential. Fellow midcontinent grade April WTS traded about 40¢/bl weaker than the previous session with deals between WTI -6.00/-5.50. Both grades were valued at parity in a conversion deal. Throughout the April trade month, WTI Midland has traded Bonito vs ASCI and WTI $/bl at about a 83¢/bl premium to WTS, however on Wednesday, Bonito vs ASCI (5 day MA) the midcontinent sweet traded at almost a 20¢/bl discount to the Bonito vs WTI (5 day MA) sour. WTI Midland has not traded at a discount to WTS since 40 20 September 2011, and has traded at an average of a 90¢/bl premium to WTS in the 2012calendar year. Market talk attributes 30 the weakening differentials of the grades to pipeline mainte- hh nance and the possible proration of Plains’ basin pipeline for the 20 hhh May trade month. 10 The April LLS/Mars spread remained stable from Tuesday at about $7.70/bl with both grades strengthening about 23¢/bl. HLS for April continued to weaken its discount to LLS, trading 0 28-Jun 23-Sep 21-Dec 21-Mar 43¢/bl under the light sweet.

US Gulf coast waterborne and midcontinent

Gulf coast waterborne $/bl US Pipeline deals done Timing Basis† Low High Low High +/- Bonito Thunder Horse Saharan Blend Prompt* May WTI +19.20 +20.20 126.11 127.11 -0.71 Apr +17.50 1000 Apr +20.00 2000 Qua Iboe Prompt* May WTI +20.15 +21.15 127.06 128.06 -0.71 Apr +18.25 1000 WTI Cash Roll Escravos Prompt* May WTI +20.05 +21.05 126.96 127.96 -0.71 Apr +18.25 2000 Apr/May -0.43 4000 Forties del Prompt* May WTI +19.40 +20.40 126.31 127.31 -0.61 Apr +18.25 2000 Apr/May -0.40 625 Nemba Prompt* May WTI +16.90 +17.90 123.81 124.81 -0.71 Eugene Island vs. Bonito Apr/May -0.40 1000 Kissanje Prompt* May WTI +17.20 +18.20 124.11 125.11 -0.71 Apr +0.75 2000 Apr/May -0.40 1000 Basrah Light Prompt* May WTI +12.75 +13.75 119.66 120.66 -0.81 HLS Apr/May -0.40 1667 Apr +22.15 2000 Apr/May -0.40 2000 * Delivery 10-60 days forward, †4.30pm London snapshot LLS Apr/May -0.40 5000 Midcontinent delivered equivalent $/bl Apr +22.25 2000 Apr/May -0.40 6667 Month Basis Low High Low High +/- Apr +22.50 2000 Apr/May -0.39 2000 LLS Apr Apr WTI +22.83 +23.43 129.70 130.30 +1.46 Apr +22.50 2000 Apr/May -0.38 200 LSB May Can CMA -15.18 -9.68 92.09 97.59 +7.65 Apr +22.50 2000 Apr/May -0.38 1000 Apr +22.70 1000 Apr/May -0.38 3300 Mars Apr Apr WTI +15.45 +15.65 122.32 122.52 +1.63 Apr +22.75 1000 Apr/May -0.38 3333 WCS May Can CMA -23.46 -21.46 83.81 85.81 +2.78 Apr +22.75 2000 Apr/May -0.37 833 Syncrude May Can CMA -4.64 -3.64 102.63 103.63 +3.52 Apr +22.85 1000 WTI CMA (Merc) Apr +22.85 1000 Apr -0.58 2000 Waterborne cargoes were assessed lower against WTI after Apr/May +3.50 2000 Apr -0.57 1000 the US benchmark gained strength against Brent futures. May +18.50 1000 Apr -0.56 1000 Delivered waterborne cargoes were assessed 70-90¢/bl May +18.50 1000 Apr -0.55 1000 May +18.60 2000 Apr -0.55 3000 lower against May WTI as the US benchmark stepped higher. May +18.65 1000 Apr -0.54 1000 A slight increase in freight costs lent some support to delivered May +18.70 2000 Apr -0.54 1000 Forties prices. No Forties has been shipped to the Gulf coast May +19.25 1000 Apr -0.54 1000 so far this year, although small volumes have made their way to May +19.25 2000 Apr -0.54 1000 Canada and to PBF refineries on the Atlantic coast. Mars Apr -0.54 1033 Basrah Light remained under considerable pressure – both Apr +14.75 1000 Apr -0.54 2000 Apr +14.90 1000 Apr -0.53 1000 in Europe and the US Gulf – because of a recent increase in Apr +14.90 1000 Apr -0.53 2000 Iraqi export capacity. At least 400,000 b/d of Basrah Light was Apr +14.90 1000 Apr -0.53 2000 dispatched for the US Gulf in February, and Iraq is likely to Apr +14.90 2000 Apr -0.52 1000 dispatch the same volume or higher to the Gulf coast market this Apr +14.95 2000 Apr -0.52 1000 month. Apr/May 0.0 1000 Apr -0.50 4000 Apr/May 0.0 3000 May -0.56 6000 At least two cargoes of west African crude were on offer May +14.85 1000 WTI CoP P-Plus delivered to the US Gulf. A cargo of Azurite for April 15-20 arrival May +15.02 1000 Apr +2.80 1000 was available at June Ice Brent +1.70, equivalent to May WTI Poseidon Apr +2.80 1000 +18.00. A cargo of Brass River arriving 10-15 April was available Apr +13.70 1000 Apr +2.85 1000 for May Ice Brent +6.15, equivalent to May WTI + 22.85. Poseidon vs. Mars WTI Midland Apr -1.25 700 Apr -6.10 1000 Apr -1.25 1000 Apr -6.00 1000 Apr -1.05 2,000 WTI Midland vs. WTS SGC Apr 0.0 1000 Apr +14.05 2000 WTS Nymex light sweet fi rst month vs second month $/bl Apr +15.00 200 Apr -6.00 1000 SGC vs. CoP P-Plus Apr -6.00 1000 0.5 Apr +17.70 2400 Apr -6.00 1000 Nymex second month = 0 SGC vs. Mars Apr -5.50 1000 Apr +0.25 1000 0 SGC vs. Poseidon Apr +1.40 2000

hh hhh -0.5

-1 22 Sep 11 18 Nov 11 23 Jan 12 21 Mar 12

EIA weekly data

Industry Statistics EIA Change US Refinery Inputs - EIA Production 5,826 -4.00 Imports 8,224 -492.00 16,000 Runs 14,363 -100.00 15,500 Percent Utilization 82.20% -1.00 Total Stocks 346,288 -1162.00 15,000 Stocks Padd 1 10,629 +112.00 Stocks Padd 2 99,148 -393.00 14,500 '000 b/d '000 Stocks Padd 3 165,162 +671.00 Stocks Padd 4 16,931 +58.00 14,000 Stocks Padd 5 54,418 -1611.00 Imports Padd 1-4 7,339 -417.00 13,500 Mar-11 Jun-11 Aug-11 Oct-11 Dec-11 Mar-12 Imports Padd 1 866 -46.00 Imports Padd 2 1,789 +260.00 Inputs 4 Week Moving Avg Imports Padd 3 4,362 -632.00

Imports Padd 4 322 +1.00 US Crude Inventories - EIA Imports Padd 5 885 -76.00 Runs Padd 1 998 +60.00 380 Runs Padd 2 3,316 -170.00 Runs Padd 3 7,289 +168.00 365 Runs Padd 4 586 +13.00

Runs Padd 5 2,174 -171.00 350 mn bl

335

320 Mar-11 Jun-11 Aug-11 Oct-11 Dec-11 Mar-12

Stocks 4 Week Moving Avg

US Crude Imports - EIA

10,200

9,700

9,200

8,700

'000 b/d 8,200

7,700

7,200 Mar-11 Jun-11 Aug-11 Oct-11 Dec-11 Mar-12

Imports 4 Week Moving Avg

Deals done

US Pipeline deals done $/bl Grade Location Trade month Basis month Differential basis Differential Price Volume (b/d) WTI Cushing Oklahoma Apr Apr CMA Nymex Trade Days -0.58 2,000 WTI Cushing Oklahoma Apr Apr CMA Nymex Trade Days -0.57 1,000 WTI Cushing Oklahoma Apr Apr CMA Nymex Trade Days -0.56 1,000 WTI Cushing Oklahoma Apr Apr CMA Nymex Trade Days -0.55 1,000 WTI Cushing Oklahoma Apr Apr CMA Nymex Trade Days -0.55 3,000 WTI Cushing Oklahoma Apr Apr CMA Nymex Trade Days -0.54 1,000 WTI Cushing Oklahoma Apr Apr CMA Nymex Trade Days -0.54 1,000 WTI Cushing Oklahoma Apr Apr CMA Nymex Trade Days -0.54 1,000 WTI Cushing Oklahoma Apr Apr CMA Nymex Trade Days -0.54 1,000 WTI Cushing Oklahoma Apr Apr CMA Nymex Trade Days -0.54 1,033 WTI Cushing Oklahoma Apr Apr CMA Nymex Trade Days -0.54 2,000 WTI Cushing Oklahoma Apr Apr CMA Nymex Trade Days -0.53 1,000 WTI Cushing Oklahoma Apr Apr CMA Nymex Trade Days -0.53 2,000 WTI Cushing Oklahoma Apr Apr CMA Nymex Trade Days -0.53 2,000 WTI Cushing Oklahoma Apr Apr CMA Nymex Trade Days -0.52 1,000 WTI Cushing Oklahoma Apr Apr CMA Nymex Trade Days -0.52 1,000 WTI Cushing Oklahoma Apr Apr CMA Nymex Trade Days -0.50 4,000 WTI Cushing Oklahoma May May CMA Nymex Trade Days -0.56 6,000 WTI Cushing Oklahoma Apr Apr ConocoPhillips Posting +2.80 1,000 WTI Cushing Oklahoma Apr Apr ConocoPhillips Posting +2.80 1,000 WTI Cushing Oklahoma Apr Apr ConocoPhillips Posting +2.85 1,000 WTI Cushing Oklahoma Apr May WTI -0.43 4,000 WTI Cushing Oklahoma Apr May WTI -0.40 625 WTI Cushing Oklahoma Apr May WTI -0.40 1,000 WTI Cushing Oklahoma Apr May WTI -0.40 1,667 WTI Cushing Oklahoma Apr May WTI -0.40 6,667 WTI Cushing Oklahoma Apr May WTI -0.40 1,000 WTI Cushing Oklahoma Apr May WTI -0.40 2,000 WTI Cushing Oklahoma Apr May WTI -0.40 5,000 WTI Cushing Oklahoma Apr May WTI -0.39 2,000 WTI Cushing Oklahoma Apr May WTI -0.38 3,333 WTI Cushing Oklahoma Apr May WTI -0.38 1,000 WTI Cushing Oklahoma Apr May WTI -0.38 3,300 WTI Cushing Oklahoma Apr May WTI -0.38 200 WTI Cushing Oklahoma Apr May WTI -0.37 833 WTI Midland Texas Apr Apr WTI -6.10 1,000 WTI Midland Texas Apr Apr WTI -6.00 1,000 WTI Midland Texas Apr Apr WTS +0.00 1,000 Bonito sour St. James Louisiana Apr Apr WTI +17.50 1,000 Bonito sour St. James Louisiana Apr Apr WTI +18.25 1,000 Bonito sour St. James Louisiana Apr Apr WTI +18.25 2,000 Bonito sour St. James Louisiana Apr Apr WTI +18.25 2,000 Eugene Island St. James Louisiana Apr Apr Bonito +0.75 2,000 HLS Empire Louisiana Apr Apr WTI +22.15 2,000 LLS St. James Louisiana Apr May LLS +3.50 2,000 LLS St. James Louisiana Apr Apr WTI +22.25 2,000 LLS St. James Louisiana Apr Apr WTI +22.50 2,000 LLS St. James Louisiana Apr Apr WTI +22.50 2,000 LLS St. James Louisiana Apr Apr WTI +22.50 2,000 LLS St. James Louisiana Apr Apr WTI +22.70 1,000 LLS St. James Louisiana Apr Apr WTI +22.75 1,000 LLS St. James Louisiana Apr Apr WTI +22.75 2,000 LLS St. James Louisiana Apr Apr WTI +22.85 1,000 LLS St. James Louisiana Apr Apr WTI +22.85 1,000 LLS St. James Louisiana May May WTI +18.50 1,000 LLS St. James Louisiana May May WTI +18.50 1,000 LLS St. James Louisiana May May WTI +18.60 2,000 LLS St. James Louisiana May May WTI +18.65 1,000 LLS St. James Louisiana May May WTI +18.70 2,000 LLS St. James Louisiana May May WTI +19.25 1,000 LLS St. James Louisiana May May WTI +19.25 2,000 Mars Clovelly Louisiana Apr May Mars +0.00 1,000

Deals done continued

US Pipeline deals done $/bl Grade Location Trade month Basis month Differential basis Differential Price Volume (b/d) Mars Clovelly Louisiana Apr May Mars +0.00 3,000 Mars Clovelly Louisiana Apr Apr WTI +14.75 1,000 Mars Clovelly Louisiana Apr Apr WTI +14.90 1,000 Mars Clovelly Louisiana Apr Apr WTI +14.90 1,000 Mars Clovelly Louisiana Apr Apr WTI +14.90 1,000 Mars Clovelly Louisiana Apr Apr WTI +14.90 2,000 Mars Clovelly Louisiana Apr Apr WTI +14.95 2,000 Mars Clovelly Louisiana May May WTI +14.85 1,000 Mars Clovelly Louisiana May May WTI +15.02 1,000 Poseidon Houma Louisiana Apr Apr Mars -1.25 700 Poseidon Houma Louisiana Apr Apr Mars -1.25 1,000 Poseidon Houma Louisiana Apr Apr Mars -1.05 2,000 Poseidon Houma Louisiana Apr Apr WTI +13.70 1,000 Southern Green Canyon Nederland / Texas City Apr Apr ConocoPhillips Posting +17.70 2,400 Southern Green Canyon Nederland / Texas City Apr Apr Mars +0.25 1,000 Southern Green Canyon Nederland / Texas City Apr Apr Poseidon +1.40 2,000 Southern Green Canyon Nederland / Texas City Apr Apr WTI +14.05 2,000 Southern Green Canyon Nederland / Texas City Apr Apr WTI +15.00 200 Thunder Horse Clovelly Louisiana Apr Apr WTI +20.00 2,000 WTS Midland Texas Apr Apr WTI -6.00 1,000 WTS Midland Texas Apr Apr WTI -6.00 1,000 WTS Midland Texas Apr Apr WTI -6.00 1,000 WTS Midland Texas Apr Apr WTI -5.50 1,000

Global crude deals $/bl Region Grade Deal date Delivery Volume Price Diff Diff Diff Loading Loading period (bl) timing basis price from to Northwest Europe North Sea 21-Mar-2012 May 100,000 124.15 Northwest Europe North Sea 21-Mar-2012 May 100,000 124.15 Northwest Europe North Sea 21-Mar-2012 May 100,000 124.15 Northwest Europe North Sea 21-Mar-2012 May 100,000 124.13 Northwest Europe North Sea 21-Mar-2012 Jun 100,000 123.62 Northwest Europe North Sea 21-Mar-2012 Jun 100,000 123.62 Northwest Europe North Sea Dated CFD 21-Mar-2012 100,000 Jun North Sea +0.26 02-Apr-2012 05-Apr-2012 Northwest Europe North Sea Dated CFD 21-Mar-2012 200,000 Jun North Sea +0.26 02-Apr-2012 05-Apr-2012 Northwest Europe North Sea Dated CFD 21-Mar-2012 200,000 Jun North Sea +0.26 02-Apr-2012 05-Apr-2012 Northwest Europe North Sea Dated CFD 21-Mar-2012 200,000 Jun North Sea +0.26 02-Apr-2012 05-Apr-2012 Northwest Europe North Sea Dated CFD 21-Mar-2012 100,000 Jun North Sea +0.28 09-Apr-2012 13-Apr-2012 Northwest Europe North Sea Dated CFD 21-Mar-2012 400,000 Jun North Sea +0.30 09-Apr-2012 13-Apr-2012 Northwest Europe North Sea Dated CFD 21-Mar-2012 500,000 CFD +0.15 02-Apr-2012 05-Apr-2012 Northwest Europe North Sea Dated CFD 21-Mar-2012 300,000 CFD +0.16 02-Apr-2012 05-Apr-2012

WCS Hardisty vs Mars $/bl Mars diff WTI $/bl

-10 30 Mars = 0 WTI = 0 25 -20 20

-30 15 hh hhh hh hhh 10 -40 5

-50 0 20 Sep 11 17 Nov 11 23 Jan 12 21 Mar 12 22 Sep 11 18 Nov 11 23 Jan 12 21 Mar 12

US west coast and Latin America

US west coast Latin America

West coast pipeline $/bl Latin America $/bl Month Basis Low High Low High +/- Timing Basis Low High Low High +/- SJLB P-Plus Apr Postings -0.25 +0.25 123.17 123.67 +1.65 Cusiana Prompt* May WTI +17.60 +18.60 124.87 125.87 -0.50 Implied WTI diff Apr Apr +16.30 +16.80 Cano Limon Prompt* May WTI +16.60 +17.60 123.87 124.87 -0.50 Line 63 P-Plus Apr Postings +1.00 +1.50 124.42 124.92 +1.65 Vasconia Prompt* May WTI +12.80 +13.80 120.07 121.07 -0.50 Implied WTI diff Apr Apr +17.55 +18.05 Escalante Prompt* May WTI +18.10 +19.10 125.37 126.37 -0.50 Midway Sunset Apr Postings +0.50 +1.00 118.35 118.85 +1.65 Oriente Prompt* May WTI +8.50 +10.00 115.77 117.27 +1.95 P-Plus Napo Prompt* May WTI +4.50 +6.00 111.77 113.27 +1.95 Implied WTI diff Apr Apr +11.48 +11.98 Castilla Prompt* May WTI +9.60 +10.60 116.87 117.87 -0.50 Light postings avg 123.42 +1.65 Olmeca Mar Apr +15.63 122.50 +0.75 Heavy postings avg 117.85 +1.65 K-factor Mar +4.55 West coast waterborne $/bl Isthmus Mar Apr +13.91 120.78 +0.92 Timing Basis Low High Low High +/- K-factor Mar +3.85 ANS Apr Apr WTI +15.50 +16.00 122.37 122.87 +1.26 Maya Mar Apr +5.04 111.91 +0.71 Oriente Prompt* May WTI +11.50 +14.50 118.77 121.77 +2.10 K-factor Mar +1.60 * Delivery 10-60 days forward * Delivery 10-60 days forward

Oil stocks fell over 1mn bl for a second consecutive week WTI-related pricing for crudes available out of Latin Ameri- at the US west coast in an otherwise subdued session on ca moved in mixed directions on Wednesday as discussion the regional crude market. moved on to a June WTI basis. Padd 5 crude oil inventories were down by 1.6mn bl to Talk for Colombian grades remained mostly muted on 54.4mn bl for the week ending 16 March, according to data Wednesday, with a surplus of heavier crude availabilities at both released by the EIA on Thursday morning. the US Gulf and west coasts heard to be limiting demand for ad- But the draw on regional stocks came despite reductions in ditional foreign grades. But by the session’s end, Vasconia was both foreign oil imports into the west coast as well as reduced valued at a discount relative to US Gulf coast domestic deepwa- throughputs at Padd 5 refineries. ter sour Mars, which ended the session with a weighted average Foreign crude oil imports into Padd 5 fell by 76,000 b/d last premium of $14.94/bl to benchmark WTI. week to average 885,000 b/d, leaving weekly foreign imports Additionally, June WTI slashed at its discount below June into the region once again at their lowest levels since the week Ice Brent, with the June WTI-Ice Brent spread ending the day ending 25 November 2011. $1.72/bl narrower at -$15.93. US west coast refineries trimmed crude oil runs last week But market participants once again were divided on the by 171,000 b/d for an overall throughput rate of just under 2.2mn market for Ecuadorean heavy sour crudes Oriente and Napo. b/d. This left Padd 5 oil run rates at their lowest levels since While some sellers were said to be unwilling to part with Oriente the week ending 9 December 2011, when crude runs averaged volumes for less than a premium of $10/bl to June WTI on a fob 2.1mn b/d, according to EIA historical data. Reduced crude basis, most buyers continued to value the grade at a premium throughputs last week ushered Padd 5 operable refinery utiliza- below $9/bl to the benchmark. The assessments for Oriente and tion down by 5.2 percentage points to 74.2pc. Napo were adjusted moderately stronger to reflect Wednesday’s Otherwise, BP confirmed on Wednesday that it has begun stronger discussion for the Ecuadorean sister crudes. a crude and coking turnaround over the last week at its 260,000 b/d Los Angeles-area refinery in Carson, California. While a source familiar with refinery operations confirmed the units involved in the turnaround, BP declined to give a timeframe for how long the turnaround may last.

Canada

Pipeline Volume Weighted Indices Low/High Low/High Daily Wtd Daily Wtd Daily Daily Vol- Trade Month Monthly Monthly Grade Timing Basis +/- (diff) outright Avg (diff) Outright Deals ume Wtd Avg Deals Volume Syncrude (SYN) May Can CMA -8.75/-7.75 99.14/100.14 +3.53 -8.25 99.64 0 0 - - - WCS May Can CMA -28.00/-26.00 79.89/81.89 +2.78 -27.00 80.89 0 0 - - -

Pipeline Low/High Prices $/bl ANNOUNCEMENT: Month Basis Low High Low High +/- After further consultation with the industry, Argus is postpon- Condensate May Can CMA +3.50 +8.00 111.39 115.89 +1.90 ing the elimination of the Cusiana crude assessment until MSW May Can CMA -18.00 -15.50 89.89 92.39 +1.15 the end of June 2012. The fi nal Cusiana assessment will LSB May Can CMA -18.00 -12.50 89.89 95.39 +7.65 be published on 29 June 2012. If you have any comments LLB May Can CMA -28.25 -26.25 79.64 81.64 +2.78 or questions please contact Gustavo Vasquez at gustavo. Canadian CMA May 107.89 +1.15 [email protected] and (713) 968-0014 or Robert Waterborne $/bl Brelsford at [email protected] and (713) Basis Low High Low High +/- 968-0062. Hibernia Dated +1.85 +1.95 125.62 125.72 -0.25 Terra Nova Dated +1.80 +1.90 125.57 125.67 -0.25 Canadian Synthetic vs LLS $/bl In western Canada, market participants continued to await 0 apportionment data as the first offers for May-delivering LLS = 0 volumes began to emerge. -10 May volumes of Syncrude were offered during Wednes- day’s session at around WTI -7.75, which is $2.28/bl stronger -20 than its weighted average on 19 March – the final day of the hh -30 hhh April trade month. May volumes of Western Canadian Select (WCS) were -40 offered during Wednesday’s session at WTI -26.00, which is

$2.63/bl firmer than its final weighted average of the April trade -50 month. 20 Sep 11 17 Nov 11 23 Jan 12 21 Mar 12 No bids emerged on Wednesday for either Syncrude or WCS. In eastern Canada, the single May cargo of light, sweet Other cargoes were heard to be taken off the market by White Rose sold for around a $2.70/bl premium to the Atlantic their producers who will take them into their own refineries. Basin Benchmark, North Sea Dated. Factors, including refinery closures across the Atlantic basin A cargo of Terra Nova also sold during Wednesday’s ses- and declining values for competing grades, are causing prices sion for Dated +1.85. for Canadian waterborne crudes to deteriorate for the May Two late-April cargoes of Hibernia remain unsold with ask- program. ing prices now heard by traders to be below Dated +2.00. A market participant said that unsold April cargoes of Ni- Two direct-to-market cargos of Hibernia remain unsold. gerian crude and slow Angolan crude sales for May are weigh- At the Newfoundland Terminals one cargo of Hibernia and ing particularly heavily on the market for Canadian waterborne one cargo of Terra Nova also remain available. grades.

Argus Crude Publisher: Customer support and sales: is published by Argus Media Ltd. Adrian Binks email: [email protected] Chief operating offi cer: London, UK Registered office: Argus House, 175 St John St, London, EC1V 4LW Neil Bradford Tel: +44 20 7780 4200 Fax: +44 870 868 4338 Tel: +44 20 7780 4200 Fax: +44 870 868 4338 email: [email protected] CEO Americas: Euan Craik Moscow, Russia ISSN 1368-7492 Global compliance offi cer: Tel: +7 495 933 7571 Fax: +7 495 933 7572 Copyright notice Jeffrey Amos Copyright © 2012 Argus Media Ltd. All rights reserved. Singapore Commercial manager: Tel: +65 6496 9966 Fax: +65 6533 4181 By reading this publication you agree that you will not copy or reproduce any part of Karen Johnson its contents (including, but not limited to, single prices or any other individual items Editor in chief: Tokyo, Japan of data) in any form or for any purpose whatsoever without the prior written consent of Tel: +81 3 3561 1805 Fax: +81 3 3561 1807 the publisher. Ian Bourne Managing editor: Argus Media Inc, Houston, USA Trademark notice Cindy Galvin Tel: +1 713 968 0000 Fax: +1 713 622 2991 ARGUS, ARGUS MEDIA, the ARGUS logo, ARGUS CRUDE, other ARGUS publication Editor: Emma Reiss titles, ASCI and other ARGUS index names are trademarks of Argus Media Ltd. Tel: +44 20 7780 4368 Washington DC, USA Visit www.argusmedia.com/trademarks for more information. [email protected] Tel: +1 202 775 0240 Fax: +1 202 872 8045

Industry News

Obama to expedite Keystone XL segment permitting ern segment of its proposed line and hopes to have that project completed by 2015. US President Barack Obama is directing federal agencies to Obama’s Cushing line memorandum is part of a broader ef- expedite permitting of the southern portion of TransCanada’s fort Obama will roll out tomorrow to expedite the permitting and Keystone XL oil pipeline to relieve a bottleneck that has swelled review of vital infrastructure projects. supplies in the midcontinent storage hub of Cushing, Okla- State governments handle the siting of interstate oil pipelines. homa. At the federal level, the Federal Energy Regulatory Commission Obama, who is scheduled to travel to Cushing tomorrow as regulates oil pipeline tariffs and the Army Corps of Engineers part of a two-day trip to highlight his “all-of-the-above” energy and US Fish and Wildlife Service review projects affecting bod- strategy, will issue a memorandum ordering his administration to ies of water. speed up permitting of the $2.3bn line that would bring 500,000 Republicans on the US House of Representatives Energy b/d of crude to refineries along the Texas Gulf coast. and Commerce Committee, said the southern pipeline leg is be- Back in January, Obama denied TransCanada’s permit to ing built “in spite of the president, not because of him.” build the 830,000 b/d Keystone XL pipeline, which would bring The only federal, regulatory issues outstanding regarding crude across the US border from Canada’s Alberta oil sands the line are a Clean Water Act permit to be issued by the Corps region down to Cushing and then on to the Gulf Coast. of Engineers and a biological opinion from Fish and Wildlife, The White House has insisted that decision was not based on “approvals that should have been granted long ago but for the the merits of the project but was necessitated by a Republican- Obama administration’s continued foot dragging,” House Repub- led effort to force approval prematurely. But critics say Obama licans said. was trying to push off a decision until after the November elec- Alaska senator Lisa Murkowski, ranking Republican on tion to avoid a backlash from his environmental allies. the Senate Energy and Natural Resources Committee, said Earlier this month, the Senate tried to attach language to a Obama’s celebration of the southern portion of the line “seems highway bill to force the administration to approve the full Key- just a little bit hypocritical.” stone XL project, and Obama was personally involved in helping defeat that proposal. But Obama has applauded efforts to build the Cushing-to- UK unveils oil and gas tax overhaul Gulf- Coast-segment. Besides the Keystone XL southern leg, The UK has announced a package of tax changes intended to the memo would direct agencies to expedite permitting of other encourage maximum resource extraction from UK waters, in- pipelines needed to relieve bottlenecks. cluding £3bn ($4.7bn) in allowances to help open up the west of “Expanding and modernizing our nation’s crude oil and re- Shetlands area, and will adopt a contractual approach to reduce fined products pipeline infrastructure is a vital part of a sustained uncertainty around decommissioning. strategy to continue to reduce our reliance on foreign oil and Initial reaction from the industry was positive, with BP wel- enhance our nation’s energy security,” the White House said. coming the changes but stressing the need to support produc- TransCanada is reapplying for permission to build the north- tion from existing fields and the need for a simple, competitive tax system. In his annual budget speech, which followed a backlash Infrastructure News against the previous year’s budget, finance minister George Osborne said he was looking to give the oil and gas industry a Mexico’s Pemex escapes earthquake damage “huge boost”. Mexico’s state-run oil company Pemex said none of its opera- The UK needs a tax system that is “more competitive for busi- tions had been damaged by the 7.4 magnitude earthquake ness than any other major economy in the world”, he said. that hit the country yesterday. The plans introduce a new £3bn field allowance for large, All Pemex facilities on the Pacific coast are operating nor- deep fields west of the Shetlands and doubles the maximum mally, including the country’s largest refinery, the 330,000 b/d allowance for small fields to £150mn, as well as increasing the Salina Cruz, which was closest to the earthquake’s epicentre size of fields that qualify. in Oaxaca state — 320km southeast of the capital Mexico City. The government will also introduce legislation next year ena- Mexico’s main natural gas distributor Gas Natural Fenosa bling it to sign contracts that provide assurances to companies also said there were no disruptions to the country’s natural on the relief they will receive when decommissioning assets. gas production and distribution systems. Legislation will also be introduced allowing the government to take measures to support investment in brown-field sites, in consultation with the industry. Changes to allowances for high- India’s Vadinar refinery expansion near end pressure, high-temperature fields will also be considered. Private-sector Indian refiner Essar Oil has commissioned Oil companies will also benefit from a proposed reduction in new units at its 280,000 b/d Vadinar refinery and is only days corporation tax. away from completing an expansion and upgrade that will In his budget last year, the chancellor provoked howls of take capacity to 360,000 b/d and raise complexity to 11.8 protest from the oil industry when he raised marginal tax rates from 6.1. on a number of oil and gas fields, prompting some companies to A 135,000 b/d vacuum gasoil hydrotreater and a sulphur say developments would be cancelled or delayed. The pro- recovery unit have been commissioned, leaving only a de- tests pushed the government into amending the proposed tax layed coker unit yet to start up, the company said today. changes. The hydrotreating unit will boost Vadinar’s output of low- Today’s announcement was welcomed by financial services sulphur, high-octane gasoline, as well as naphtha, kerosine Ernst and Young’s head of UK oil and gas taxation, Derek Leith. and diesel. The sulphur unit will enable Essar to broaden its He said it will encourage significant investment in the North Sea crude slate. and “was badly needed after last year’s shock increase in the oil and gas tax rate”.

Infrastructure News (Continued) UK North Sea and the multiple options investors now have,” BP added. Essar is also undertaking an optimisation programme at Vadinar aimed at further increasing the refinery’s capacity to Payment dispute between KRG and Baghdad 405,000 b/d. The completion of the expansion project means Essar can The Kurdistan Regional Government (KRG) of northern Iraq’s begin to reduce capital expenditure and that its profitability semi-autonomous enclave has accused Iraq’s federal govern- should see a “substantial pick up”, it said. ment of withholding over $1bn it owes to the KRG for crude exports from the enclave, and has threatened to reduce and then cut off exports if the money is not paid. BP starts turnaround at Carson Under an agreement for the export of crude from the KRG BP over the last week began a crude and coking turnaround at region through Iraq’s state-controlled export pipeline to the Turk- its 260,000 b/d Los Angeles-area refinery in Carson, California. ish port of Ceyhan, Baghdad must pay the costs of foreign oil A source familiar with refinery operations confirmed the companies producing the exported crude. The crude is marketed units involved in the turnaround. BP declined to say how long by Iraqi state-owned oil Marketer Somo and the sales revenues the turnaround may last. are deposited in the Development Fund for Iraq, controlled by BP is actively trying to sell the west coast site, as well as Iraq’s federal finance ministry. retail operations in the state. Iain Conn, BP’s head of refining “No payment has been made by the federal government and marketing, earlier this year said it was a good refinery but since May 2011,” said an official KRG statement. The federal would need upgrades to expand its crude slate and that BP government “owes the KRG more than $1bn for revenues ac- must focus on a smaller number of refineries for such costly crued in 2011” and has not paid “a single penny” for exports in investments. 2012, according to the statement. The KRG says that it will stick to its agreement with the gov- Motiva reports FCC outage at Port Arthur refinery ernment for the export of 175,000 b/d from the KRG region this year “only if the federal government honours its payment agree- Storms knocked out power to a gasoline producing unit at ment. Otherwise, even the 90,000-100,000 b/d currently being Motiva’s 275,000 b/d refinery in Port Arthur, Texas. exported will decline and eventually cease.” The Saudi Aramco and Shell joint venture reported 24 Current exports come from the 120,000 b/d TaqTaq field, hours of flaring related to the power outage from its fluid operated by UK-listed Genel Energy, Norwegian DNO’s 75,000 catalytic cracker and a hydrocracker, beginning at 2:33pm ET b/d Tawke field and the 75,000 b/d Khurmala dome of the Kirkuk yesterday in a filing to state environmental regulators. field, said the statement. The KRG seized control of Khurmala A series of heavy storms moved through the area yester- from Iraq’s state-owned North Oil Company (NOC) in 2009, and day. A 325,000 b/d expansion to the refinery is wrapping up. It Khurmala is now operated by Kurdish private company Kar. is scheduled to come on line by June. The KRG statement also disputes export figures from the KRG provided by the oil ministry in Baghdad. “The ministry of Valero’s Memphis refinery reports flaring oil spokesman in Baghdad has made repeated claims that only A problem with a boiler on a hydrotreater caused flaring at 65,000 b/d are being exported from the Kurdistan region,” says Valero’s 190,000 b/d refinery in Memphis, Tennessee. the statement. It adds that if those claims are correct, 25,000- Emissions were reported to the US National Response 30,000 b/d of crude “are being lost in the process of Somo re- Center early yesterday, according to a filing made public today. ceiving oil from the KRG and taking it to market.” And it demands The problem did not materially impact production, Valero said. that “this discrepancy should be investigated immediately in The US independent refiner is midway through a five-week case somebody is creaming off the difference between the oil turnaround at the facility. received and the oil sold.” Iraq needs $30bn refinery investments Industry News (Continued) Iraq’s refining sector is in pressing need of extensive rehabilitation, modernisation and conversion, and needs new refinery pro- Financial services firm Deloitte said that although “intense jects to start immediately, an expert on the country’s oil markets work” is still needed on the legislative details, the introduction told an Argus conference today. of decommissioning contracts is particularly important, noting Saadallah al-Fathi said the country requires total “fast-track” that UK decommissioning costs over the next 30 years are likely investment of up to $30bn in the refining sector. Iraqi refineries to amount to £50bn. “This will remove a major fiscal risk for have suffered three wars and 13 years of economic sanctions, UK North Sea investors and may release significant funds for and “repairs have been modest at best and little fresh invest- investment by allowing companies to move to post-tax decom- ment was made either by the government or the private sector,” missioning guarantees. This will also free up capital available for he said. Refinery utilisation rates have been at 50-65pc since investment and development of opportunities in the North Sea,” 2003 and are not expected to rise before major rehabilitation and said Deloitte’s head of tax, Derek Henderson. repairs take place, al-Fathi said. BP, which is investing over £7bn in west of Shetland fields, Al-Fathi is a former head of the energy studies department also welcomed the planned changes, adding: “As well as in the Opec secretariat in Vienna and currently adviser to Dome encouraging new green-field developments, we believe it is International Petroleum, an oil market development consultancy important that the Treasury also recognises the critical nature of and trading company that specialises in Iraq. He was speaking ongoing investment in existing producing fields. The opportuni- at the second Argus Mideast Gulf and Indian Ocean Oil Confer- ties for these producing fields must be maximised if we are to ence in Dubai. ensure the longevity of critical infrastructure that many of them “There is an urgent need to start new refinery projects,” al- support. Fathi said. But out of the four refinery projects being planned, “Overall we believe the tax regime needs to be simple, pre- only the 140,000 b/d Karbala project will probably see the light dictable, and competitive globally, recognising the maturity of the of day, he said. France’s Technip has completed the design work

Industry News (Continued) Securities and Exchange Commission can agree on what consti- tutes a swap. for the $5bn refinery. Among the other projected refineries are a Gensler, appearing today before a Senate panel, said he 300,000 b/d facility in Nassiriya and two 150,000 b/d refineries in expects regulators will finalize the swap definition this spring. Kirkuk and Misan. Regulators also must collect a year’s worth of data to imple- Al-Fathi said there has been no success in the past few years ment a second phase of position limits, and that effort will not be in getting direct government budgetary allocation for the refinery completed before October. investments because of political problems. No joint ventures with Regulators have reviewed about 50 studies examining the foreign companies have been formed, and there is no interest role of speculators when formulating the position limits rule. in private-sector ownership, he added. Proposals for loans on a “About half of them said the role of speculators had an influence government-to-government basis are proceeding very slowly, he on price and volatility, and half said no,” Gensler told a Senate said. He said the government has to step into the refinery sector Appropriations subcommittee. “You have the St. Louis Federal urgently as private-sector participation is very difficult to find. Reserve and some very esteemed economists on one side Al-Fathi said the grim state of the Iraqi refining sector is re- saying ‘yes,’ and you have some other surveys on the other side flected in the fact that the country’s domestic gasoline specifica- suggesting ‘no’” Gensler said. tion had fallen to 81 Ron from 91 Ron in 1990. And domestic Gensler said the commission has used its emergency author- gasoil quality has fallen, with sulphur content rising from 0.2pc ity only a handful of times, in a targeted way. And when senator to 1pc. Jerry Moran (R-Kansas) said the term “speculator” has assumed And he predicted that Iraqi imports of oil products “will be a negative connotation, Gensler said “not to me.” much more” than Baghdad’s estimate of 4mn-5mn t in 2012-14. Sanders and other lawmakers met with Gensler last week to The Iraqi government last year revised its forecast production discuss their concerns. Sanders contends that “Gensler does and consumption of oil products for 2012-14. According to this not understand the urgency of the moment, the pain that millions forecast, gasoline production is expected to increase to 95,000 of people are feeling right now at the gas pump.” And he thinks a b/d against total consumption of about 142,000 b/d. Gasoil pro- call from Obama “might help” get Gensler to act. duction will rise to 140,000 b/d against consumption of 134,000 Asked whether the White House had made any suggestions b/d, while the corresponding numbers for jet fuel are projected at or requests, Gensler said: “We are an independent agency.” 68,000 b/d and 62,000 b/d, respectively. Al-Fathi termed these In making a case for his bill, Sanders noted the measure estimates “wishful thinking” on the part of the government. merely resuscitates a bill that passed the US House of Repre- sentatives by a vote of 402-19 back in 2008. But Democrats China’s February crude imports at 5.97mn b/d controlled the House that year – unlike today - while the right wing tea party movement did not play such a prominent role in China imported 5.97mn b/d of crude in February, up by 11pc, the Republican Party. or 635,000 b/d, from the same month last year, according to With lawmakers unlikely to act and regulators seemingly customs data released today. Net crude imports last month were unable to move forward on a swaps definition, CFTC member 5.86mn b/d. Bart Chilton today suggested regulators kick a decision over to Crude imports from the Middle East rose to an all-time high the Financial Stability Oversight Council, an entity created by above 3mn b/d in February, up from 2.34mn b/d a year earlier. the Dodd-Frank Wall Street reform law to coordinate federal Imports from Saudi Arabia reached a record high of 1.39mn b/d financial regulators. last month. Imports from Iran fell by 200,000 b/d from a year “I realize this is a highly unusual, and perhaps incendiary, earlier to under 290,000 b/d. move, but we have a responsibility to act here, and it is high time Imports from the former Soviet Union also reached a new we do so to protect markets and consumers,” Chilton said. high of 890,000 b/d in February, mainly because of an increase in Russian imports to 613,000 b/d. North Dakota oil, gas output climbs as prices fall Lawmakers want CFTC to move against speculators North Dakota hit new record oil and natural gas production in January as rig counts and hydraulic fracturing activity climbed A group of liberal senators are championing a new bill that would amid mild winter weather. force the Commodity Futures Trading Commission (CFTC) to The state, which recently surpassed California as the third- rein in speculators whom they blame for helping drive up gaso- largest oil producing state in the US, produced an average line prices. 546,047 b/d of oil and 571mn cf/d of natural gas in January, But since shepherding any legislation through this bitterly marking new all-time highs for both commodities, based on divided Congress will be extremely difficult, bill author senator preliminary numbers released today by from the North Dakota Bernie Sanders (I-Vermont) wants President Barack Obama to Industrial Commission’s Department of Mineral Resources. intervene to prod the CFTC to act. Warm weather boosted hydraulic fracturing activity and pro- Sanders’ bill would require the CFTC to use its authority, in- duction, pushing the idle well count to under 250 wells that are cluding emergency powers if necessary, “to curb immediately the currently awaiting fracturing services. Additional crews are mov- role of excessive speculation” and “eliminate excessive specu- ing to North Dakota to address the backlog, the department’s lation, price distortion, sudden or unreasonable fluctuations or director Lynn Helms said. unwarranted changes in prices or other unlawful activity.” In December, North Dakota produced 535,048 b/d of oil and Pointing to the long-running debate over whether spikes in 545mn cf/d of gas. oil prices have been caused by the fundamentals of supply and Producing wells also hit an all-time high of 6,617 in January, demand or “excessive” speculation, Sanders said: “That debate compared to 6,471 in December. The state’s rig count is 205 to- should be put to rest.” day, and the state hit a record rig count of 207 earlier this month. The CFTC has approved a rule setting “speculative” limits for February’s rig count averaged out to 202, January’s 200, and futures and swaps covering 28 commodities, including oil and December’s 199. The rig count is rising slowly, but daily produc- gasoline. But CFTC chairman Gary Gensler argues the agency tion has grown 2-3pc. Over 95pc of drilling is targeted towards cannot impose speculative limits on spot month contracts, the the Bakken and Three Forks formations, Helms said. first of a series of restrictions planned, until the CFTC and the New rigs are replacing less efficient ones, and the area is

Industry News (Continued) ans benefit from these resources—rather than just out-of-state oil and gas companies and their shareholders—is right and beginning to require new build rigs because in the Rocky Moun- necessary,” Kasich’s spokesman told Argus. “Even with this tax tain area. Utilization of rigs capable of over 20,000ft of drilling is modernization, Ohio will still have one of the lowest severance over 95pc. Shallow well rigs that drill to 7,000ft or less utilization tax rates among oil and gas producing states.” remains about 50pc. Today’s sweet crude price has dropped off sharply to $75.50/ Alaska intervenes in offshore litigation bl, compared to $88.09/bl in January and $88.57/bl in December. The record high was $136.29/bl in July of 2008. Alaska governor Sean Parnell has directed the state’s attorney Rail and truck transportation is helping make up for limited general to intervene in another federal court lawsuit filed by en- crude pipeline capacity, but the continued bottleneck at Cush- vironmental and native Alaskan groups seeking to block Shell’s ing, Oklahoma, is sending North Dakota Sweet posted price to a oil and gas exploration plans in the offshore Alaskan Outer 30pc discount to Nymex WTI. Continental Shelf (OCS). “This is forcing an increasing amount of North Dakota crude A coalition of environmental and native Alaskan groups have oil onto rail transportation where it can reach destinations that appealed a January decision by a federal board upholding air pay Brent price,” Helms said. permits issued by the Environmental Protection Agency (EPA) Rig counts in the Willison basin are increasing slowly. Drilling for Shell to explore federal leases in the Chukchi and Beaufort permit activity is high, but still well below record levels. seas. The construction of natural gas processing plants and gather- The same coalition previously had asked an EPA internal ing systems slowed in February due to colder weather, but new appeals panel to review the agency’s decision originally granting facilities coming online are bringing down the percentage of Shell air permits that would allow drillship Noble Discoverer to natural gas being flared, which should continue to decline over operate in the Beaufort and Chukchi seas starting in July. But the next few months, Helms said. Low natural gas prices make after reviewing the air permits, the panel approved the original exploration unattractive, but the production and processing of decision in January. NGLs boosts Bakken gas economics. “We need to stop the endless federal delays,” Parnell said late yesterday. “Alaska’s resources, including the estimated 27bn bl of oil in the Arctic Outer Continental Shelf, can help lead Ohio shale tax proposal shelved by legislature the nation to energy security, extend the life of the Trans Alaska Ohio governor John Kasich’s proposal to impose higher sever- Pipeline and create tens of thousands of good-paying jobs for ance taxes on unconventional oil, NGLs and natural gas produc- Alaskans.” tion in his state has run into opposition from his allies in the “The state of Alaska has reviewed the facts and the law and Republican-controlled state House of Representatives, which will vigorously fight for its voice to be heard in support of the air postponed it indefinitely. permits issued by the EPA,” Alaska attorney general Mike Ger- Kasich, a Republican, introduced legislation last week to im- aghty said. “The permits at issue are the most stringent the EPA pose a severance tax on crude and NGLs extracted from shale has issued for OCS activities and the state joins both the EPA formations, with the rate set at 1.5pc of sales for the first year and Shell in defending the decision-making process. It is time to or until drilling costs are recovered, and 4pc thereafter. Shale- move forward.” derived natural gas output would be taxed at 1pc of sales. Since first purchasing leases from the federal government in Kasich introduced the severance tax proposal as part of 2005, Shell has invested more than $3.5bn in hopes of develop- a deal to cut Ohio’s state income tax, estimating it will raise ing petroleum resources in Alaska’s OCS. But government and $900mn-$1bn from Utica and Marcellus producers in Ohio environmental regulatory hurdles since that time have hampered over the next five years, and $500mn/yr when Utica produc- actual exploration activities from moving forward. tion peaks. Severance tax receipts would fund corresponding Earlier this month, Shell chief executive Peter Voser told decreases in state income tax. Argus the company is spending $800mn to stage equipment, The state House of Representatives stripped the severance personnel, and supplies in the Arctic in anticipation of starting to tax proposal from the budget legislation Kasich introduced and drill off the Alaskan coast in July. will consider it at an undetermined later date. Alaska’s OCS holds an estimated 26.6bn bl of oil that is eco- “We do not want to discourage [the shale industry], so that nomical to produce using conventional drilling techniques, ac- Ohio remains competitive,” state House assistant majority whip cording to a mean production estimate from a 2006 US Interior Cheryl Grossman told Argus. Department report. Legislators also had concerns about revenue projections in the governor’s proposal. Pennsylvania has seen a consider- US crude, gasoline stocks sink, distillates rise able increase in state tax revenue from the natural gas industry without having a severance tax, while Arkansas saw a decline in US commercial crude inventories were drawn down 1.162mn revenues after imposing a severance tax, Grossman said. bl last week 346.288mn bl the week ended 16 March, as oil The Ohio chapter of Americans for Prosperity — a conserva- imports fell and refineries throttled back on runs amid turna- tive advocacy group that supported Kasich’s 2010 election effort rounds. — said it will “closely examine the proposed tax increases to be According to an Argus survey of analysts, there had been levied upon Ohio’s growing energy industry.” The group said it a market expectation that crude stocks would build across the supported income tax cuts but the “expansive legislative pack- US by 2mn bl. Nationwide, refineries reduced their run rates by age needs further evaluation.” 0.5pt to 82.2pc of capacity, according to the latest data from the Taxing shale producers will negatively affect prospects for Energy Information Administration (EIA). further development of an industry that is making its first steps in US crude throughputs came down 100,000 b/d to average Ohio, according to industry group Ohio Oil and Gas Association. 14.363mn b/d last week. Imports of oil fell by 492,000 b/d to But Kasich has signaled he will not back away from his pro- 8.224mn b/d. At the oil storage and pricing hub of Cushing, Okla- posal. homa, crude inventories were down 176,000 bl to 38.521mn bl. “Updating a 40-year-old oil and gas tax to ensure all Ohio- Oil inventories fell by the most at the US west coast, driving the nationwide crude draw as imports also slipped and Conoco-

Industry News (Continued) Congress, regulators agree on Dodd-Frank tweak Phillips’ 96,000 b/d refinery in Ferndale, Washington, went off US regulators and a bipartisan group of lawmakers have line for turnaround. reached a rare agreement over a proposed modification to the West coast oil inventories fell 1.611mn bl to 54.418mn bl last Dodd-Frank financial system regulation overhaul law. week. Imports to the region were down a slight 76,000 b/d to The common ground is a piece of Dodd-Frank that they say re- 885,000 b/d, while refineries cut back sharply, reducing runs by stricts swap data sharing among regulators worldwide and has the 5.2pt to 74.2pc of capacity. Crude throughput at the west coast potential to fragment information on swap positions across nations. was lower by 171,000 b/d to an average 2.174mn b/d. Republican and Democratic members of the House of Rep- The US midcontinent also cut refinery runs by 4.7pt to 89.3pc resentatives are pushing a bill that attempts to fix the issue. The of capacity, as Valero’s 190,000 b/d refinery in Memphis, Ten- Securities and Exchange Commission (SEC) wants Congress nessee, is in the process of a five-week turnaround. Crude runs to intervene, while the Commodity Futures Trading Commission for the region were down 170,000 b/d to average 3.316mn b/d. (CFTC) — which is not taking a formal position on the bill — is Oil imports to the midcontinent were up 260,000 b/d to 1.789mn working on its own regulatory remedy. b/d, but stocks still fell 393,000 bl to 99.148mn bl. “Not only must we correct this legislatively to eliminate any In refined products, total product supplied – a measure of question or uncertainty about what the intentions were, but this demand – fell 897,000 b/d to average 17.674mn b/d last week, is absolutely necessary,” representative Maxine Waters (D-Cal- the agency said today. ifornia), a leading Democratic lawmaker on the House Financial Gasoline stocks were down 1.214mn bl to 226.907mn bl, Services subcommittee that is taking up the bill, said. compared to expectations of a 1.8mn bl draw. Production of The proposed House bill would eliminate a Dodd-Frank provi- gasoline fell 160,000 b/d to 8.577mn b/d last week. Demand for sion that requires foreign governments that want US swap data gasoline fell 36,000 b/d to 8.379mn b/d. to indemnify US regulators and private swap data repositories Distillate inventories rose 1.763mn bl to 136.577mn bl last from litigation arising from misuse of the information. week, compared to expectations of a 1.6mn bl drop. Produc- Under Dodd-Frank, US market participants must report all tion of distillates rose 105,000 b/d to 4.251mn b/d last week, but swaps to the CFTC or SEC directly, or, more likely, through third- demand fell 615,000 b/d to 3.217mn b/d. party swap data warehouses. Pieces of the data will be released to the public in “real-time,” while regulators will have access to more detail. US House panel issues MF Global subpoena Officials with the CFTC and the SEC told lawmakers at a A US House of Representatives subcommittee today agreed to hearing today that their foreign counterparts have expressed subpoena Edith O’Brien, who served as assistant treasurer at unwillingness to recognize US swap data repositories and that commodity futures broker MF Global at the time of its collapse foreign governments might impose reciprocal restrictions on US last year. regulators. The Republican-led Financial Services oversight and inves- In response, the CFTC in the coming weeks will issue a pro- tigations subcommittee wants O’Brien to testify at a 28 March posal saying international access to a US-registered swap data hearing focused on the week leading up to MF Global’s 31 repository will not be subject to indemnification requirements if a October bankruptcy. She has declined to appear. repository is regulated under foreign law and the requested data “This is not a trial, this is a hearing that we are having next is reported pursuant to foreign law. week, and we are trying to gather as much information as we But the SEC, which will enforce Dodd-Frank swap rules can,” subcommittee chairman Randy Neugebauer (R-Texas) alongside the CFTC, wants Congress to provide more certainty said. The subcommittee plans to issue a report on its findings in with changes to the law. the late spring or early summer, he added. “The establishment of separate local trade repositories in the Since December, House and Senate committees have heard US and in foreign jurisdictions would be likely to produce inef- from former chief executive Jon Corzine and other MF Global ficiency and fragmentation,” SEC director of international affairs officials on the reasons behind the company’s demise and what Ethiopis Tafara said. happened to missing commodities customer money, much of Two companies have applied to the CFTC to operate data which has yet to be returned. repositories that will capture global oil swaps by the time the The shortfall of customers funds, which should have been agency begins enforcing mandatory reporting of all swaps late segregated and protected in compliance with US rules and long- this year. Exchange operator Ice is building its Ice Trade Vault time industry practice, is estimated to be around $1.6bn. atop its existing trade confirmation service. The Depository Trust According to a chronology provided by exchange operator and Clearing Corporation (DTCC) has experience running swap CME Group, O’Brien was one of the first MF Global officials to data warehouses in other asset classes, and it has the endorse- confirm for CME in the early hours of 31 October that a deficien- ment of the International Swaps and Derivatives Association to cy in customer funds had occurred after $700mn was moved to run a global commodities repository. the broker-dealer side of the business to meet liquidity issues. DTCC argues that existing global guidelines for swap data O’Brien is still with MF Global on a temporary assignment, access already work. The company is pushing lawmakers to assisting a liquidation trustee’s staff to wind down the company. modify another data reporting piece of Dodd-Frank, a so-called She works in MF Global’s Chicago office, which the trustee is “plenary access” requirement, that DTCC said gives US regula- closing at the end of this month. tors direct oversight of all US-registered repositories, even those O’Brien has the right to invoke the US Constitution’s Fifth located abroad. Foreign governments are concerned the provi- Amendment that protects citizens from self-incrimination, but sion could give the US access to data that has no relevance to today Neugebauer left open the possibility she will show up to its regulation, DTCC said. the hearing. “Resolving indemnification without the second issue, plenary “People have said they were going to plead the Fifth in the access, still makes it likely global swap data will be fragmented past and then they show up and testify,” he said. “A lot of people by jurisdiction,” DTCC chief executive Donald Donahue said at did not think Mr. Corzine was going to testify. Mr. Corzine testi- today’s hearing. “Addressing both issues can prevent a further fied.” crisis for swap information sharing.”

Industry News (Continued) Ecuador’s Pacific refinery progresses with bid round The legislation likely will face little opposition in the Republi- Construction of Ecuador’s Refineria del Pacifico Eloy Alfaro, a can-controlled House, where next week the Financial Services 300,000 b/d project slated for the coastal province of Manabi, Committee is scheduled to mark up the bill. appears to be progressing. Democratic lawmakers who control the Senate are more pro- RDP-CEM, a 51:49 joint venture between state-controlled tective of Dodd-Frank, which is a signature piece of legislation oil company PetroEcuador and Venezuelan counterpart PdV, for their party. The Senate is unlikely to move on the legislative opened a bidding round for a 500 hectare earthmoving project it fixes until 2013, after this fall’s election. says it worth around $315mn. “I am hopeful we can move this bill through the House pretty At least 30 contractors interested in presenting offers visited quickly and the Senate will realize Dodd-Frank is not completely the site on 20 March. The contract represents 45pc of the perfect over there,” House Financial Services subcommittee $700mn that PetroEcuador and PdV plan to jointly invest this chairman Scott Garrett (R-New Jersey) said. year on the Refineria del Pacifico project. Interested contractors must present proposals by 15 May, and the contract will be awarded on 8 June. Earthmoving is sched- Quebec to take stakes in provincial energy projects uled to start in the third quarter of this year. The province of Quebec will take equity stakes in promising oil, The joint venture will also launch a round of negotiations in gas and mining projects within its own borders through a new April or early May to find funding sources for the construction of $1.2bn investment vehicle. the refinery, according to Pedro Merizalde, general manager of Quebec’s finance minister, Raymond Bachand, announced RDP-CEM. the creation of Ressources Quebec, a new subsidiary of Inves- Last month Ecuador’s strategic sectors minister Jorge Glas tissement Quebec, which will buy the equity interests on behalf signed a letter of intent with China’s state-owned oil company of the province. CNPC and the Industrial and Commercial Bank of China to help “The government must have the means necessary to ensure finance the $12.8bn project. that all Quebecers benefit from the development of Quebec’s resources,” he said. Ressources Quebec will manage the equity portfolio and European refinery output up in February advise the provincial government on the management of a sepa- February European refinery output edged up by 0.5pc compared rate new fund called Capital Mines Hydrocarbures. with January to 10.94mn b/d, but fell by 1.6pc from the same “These investments will allow us to take away, as partners of month a year earlier. the companies, a bigger share of the profits, all while assuming Refinery intake of 10.69mn b/d was 0.2pc lower than in Janu- a part of the associated risk.” the minister said. ary and 0.5pc higher than a year earlier. The capacity utilisation rate was 81.59pc, against a slightly upwardly revised 81.72pc for January and 81.21pc in February last year, according to data Ecopetrol, Pacific Rubiales turn to arbitration from Euroilstock for the 15 EU members prior to the 2004 acces- Colombia’s two largest oil companies, state-controlled Ecopetrol sions, plus Norway. and independent Pacific Rubiales, are taking their dispute over Gasoline output was 2.59mn b/d, 0.1pc up on the month and an oil block to an arbitration court. 1.3pc up on the year, while middle distillate production of 5.66mn Pacific Rubiales believes subsidiary Meta Petroleum owns a b/d was 0.4pc down from the previous month but 0.6pc up on 60pc stake in the Quifa block in the Llanos foothills, with Ecopet- the same month a year ago. rol owning the balance. But according to a report revealed last Fuel oil production was 1.17mn b/d, 0.6pc down on the month March by Pacific Rubiales’ reserves certifier, Ecopetrol is entitled and 17.2pc down on the year. Naphtha production of 759,000 to receive additional working interest at Quifa after 5mn bl of b/d slipped by 2.8pc against January and 17.9pc against Febru- cumulative production, which has been reached. ary 2011. Quifa’s heavy crude production doubled to 60,000 b/d during 2011. The clause increases Ecopetrol’s working interest in Quifa Debt moratorium sought for Swiss refinery based on the increase in the price of US benchmark crude WTI Provisional administrators for Petroplus’ 68,000 b/d Cressier since 2006. With WTI trading at above $100/bl, Meta’s working refinery in Switzerland and the company’s Switzerland market- interest would drop to 44pc. ing arm have asked the courts for a six month debt restructuring “Pacific Rubiales will comply with the final determination in moratorium. this process and its outcome will not affect in any way the com- They have completed reports on the refinery and marketer to mercial relationship we have with our partner Ecopetrol,” Pacific the court just ahead of the statutory two month debt restructuring Rubiales said. moratorium expiry date of 27 March, and will issue further infor- A panel of lawyers could take a year or two to settle the mation once the court has taken a decision on the restructuring conflict. of the debt. The Quifa block is key for both companies, but especially to Azerbaijan’s state-owned Socar was interested in buying Pacific Rubiales, for whom it accounts for 36pc of the company’s Cressier to integrate with its wholesale and retail assets in 407mn bl in oil equivalent (boe) of net proven and probable Switzerland. But it was put off when the administrators split the reserves, oil analyst German Hurtado at pension firm ING said. disposal of the plant itself from associated infrastructure. Pacific Rubiales’ gross output was 218,450 boe/d of in 2011, Last week, the administrator for insolvent Petroplus in France a 51.4pc increase from 2010, driven by heightened production extended the deadline for bids to buy the 146,000 b/d Petit Cou- from the Quifa and Rubiales heavy crude fields. ronne refinery to 5 April, after receiving no bids by the original 15 Pacific Rubiales has said production for 2012 could be in the March deadline. lower range of its 15-35pc growth target if environmental permits In late February, Shell said it had provisionally agreed to sup- on pending exploratory areas are not approved quickly. The ply 100,000 b/d of crude to Petit Couronne under a third-party company will fail to increase oil output in the first quarter of this processing arrangement. But that has yet to commence and the year because of those permitting delays. plant remains shut.

Industry News (Continued) South African bitumen supplies fall The 115,000 b/d Petroplus BRC Antwerp refinery is in the South African energy firm Sasol has reduced bitumen production process of being sold to trader Gunvor while the 180,000 b/d by 20-25pc at its South African operations because of restricted Coryton refinery in the UK is a number of weeks into a stop gap Iranian crude imports. third-party processing deal with Morgan Stanley and others. International sanctions on Iranian crude exports have re- The 100,000 b/d Ingolstadt plant in Germany is shut. duced crude availability in South Africa, forcing Sasol to lower production at Natref’s 107,000 b/d Sasolburg refinery by up to a quarter. Iranian crude plays an important role in the production Greece to start sale of Hellenic Petroleum of bitumen at Natref’s refinery, and production at the plant has The Hellenic Republic Asset Development Fund (HRAF), the fallen broadly in line with the refinery’s overall output as a result. company in charge of a wave of Greek public asset privatisa- Technical problems and maintenance programmes at other tions, said that it was seeking expressions of interest for the South African refineries are further reducing bitumen availability. Greek state’s remaining 35.5pc share in oil refiner Hellenic The bitumen unit at Shell and BP’s 180,000 b/d Sapref refin- Petroleum by mid-May, shortly after planned elections in the ery in Durban is currently running at 50pc of capacity, following country. the shutdown of the unit in the first half of March because of A spokesman for the fund said the current valuation of the technical problems. And the condensate pipeline on the refin- stake on the Athens Stock Exchange did not accurately reflect ery’s propane de-asphalting unit broke in late February, resulting the value of the company. in severe disruptions to bitumen sales. The spokesman said that HRAF hoped that a more stable po- Chevron’s 100,000 b/d Cape Town refinery remains closed for litical climate after elections would help to secure a better price maintenance until 2 April and is not producing any bitumen. for the stake in Hellenic Petroleum. The value of the company Some relief has come from a recent bitumen bulk cargo will be more clearly indicated following the sale of Greek state- booking that moved bitumen to Cape Town from Singapore in owned gas supplier Depa, in which Hellenic Petroleum holds a the second half of March. The cargo contains 60/70 and 80/100 35pc stake. bitumen.

Kazakh KMG restructures crude marketing US supports Lebanon’s offshore exploration A production arm of Kazakhstan’s state-controlled Kazmunaigaz US special co-ordinator for regional affairs Frederic Hof said is to offer crude cargoes direct to the market, further weakening the US supports Lebanon in resolving its maritime boundaries, KMG PM, the established trading unit of the group. after meeting with speaker of parliament NabihBerri and Prime RD KMG will start offering crude cargoes from 1 July, no Minister NajibMikati. longer selling its crude through KMG PM, which last month lost Hof also “supported the development of offshore oil and gas management control over the three largest refineries in the reserves in a manner that contributes to peace, stability, and country. prosperity,” according to a statement from the US Embassy in RD KMG may export a total of 11mn t of crude this year com- Beirut. pared with 10.4mn t in 2011. The Lebanese council of ministers is expected to launch A sales department has been formed in RD KMG for the mar- exploration licensing rounds by the end of this month, pending keting operations. BatykzhanUtegaliev, nominated to the post of the formation of a petroleum administrative commission, said the the deputy general director of RD KMG for commercial issues, Ministry of Electricity and Water, will be responsible for development of crude marketing. The country passed its new petroleum law in August 2010. RD KMG plans to produce about 13.1mn t of crude this year, The law decrees that exploration will cover an initial four years, a 6pc increase over 2011 when production fell by 7pc to 12.3mn and can be extended for a maximum of two three-year terms, t. giving a maximum exploration period of 10 years. RD KMG plans to supply 2.1mn t of crude to the domestic market this year at a fixed price of 34,000 Tenge/t ($228/t), compared with about 1.9mn t in 2011. Gulf Petrochem to expand UAE storage The company plans to export the rest of its crude production. UAE-based Gulf Petrochem is planning to add to its storage ca- One of the main export routes for RD KMG is along Russian oil pacity at its terminal in Sharjah’sHamriyah free zone in the next pipeline monopoly Transneft’s system to the Black Sea port of six months, the company’s chief executive officer SanjeevSisau- Novorossiysk. The company shipped 318,000t of crude along dia told Argus today. the route in February compared with 239,000t in January. The oil trading company already has 220,000 bl of storage The news department may expand into fuel oil exports in capacity at the terminal, but is looking to add another 94,000 bl future. of capacity after being given direct access to the main harbour. Gulf Petrochem’s storage capacity at the terminal was previously limited as it only had access to the inner harbour of the terminal Tethys lifts Kazakh reserve which has strict draft restrictions. Its current tanks in Hamriyah London-listed Tethys Petroleum has increased the estimate of store around 100,000 bl of dirty products, 82,000 bl for gasoil its proven and probable oil reserves in Kazakhstan and said and base oils while another 38,000 bl is utilised for bitumen stor- second-quarter appraisal drilling may result in another, substan- age. tial upgrade. Gulf Petrochem also operates a 4,000 b/d refinery out in The company has raised it estimate of crude reserves by Hamriyah which has another 188,000 bl storage capacity. Hamri- 62pc to 12.5mn bl. Its natural gas reserve estimate was in- yah serves as an export point for the products from the compa- creased by 31pc to 76.7bn ft³ (2.15bn m³). ny’s refinery, as well as a storage point for products imported to During 2011, the company discovered the Dione field and serve the UAE’s domestic market. The company also conducts successfully appraised Doris. Second-quarter drilling will target bunkering activity by truck at the terminal. the Dyna prospect. After that is complete, an independent re- Gulf Petrochem expects to complete the first phase of its stor- source report will be published. age terminal project in Fujairah by the third quarter of 2012. The

Industry News (Continued) between the regional government and the national government in Baghdad over rights to issue licences in the Kurdish region. first stage of the project will provide 2.6mn bl of storage capac- The field is not producing close to capacity as a result, with half ity. The Fujairah terminal will eventually have 7.5mn bl storage its crude production sold to the local market for $50-56/bl, well capacity project in Fujairah, 60pc of which will be for storing fuel below international prices. oil, with the rest used for the storage of clean products such as gasoil. India February refinery runs up 4pc on year India’s refineries processed around 3.58mn b/d of crude in DNO reports success at Kurdistan Tawke field February. The February run rate was up from the 3.44mn b/d in An exploration and appraisal well on the northern flank of the January and up by 4.1pc from February last year. Tawke field in the semi-autonomous Kurdish region of northern The country’s state-run refineries increased throughput by Iraq flowed at over 25,000 b/d of 26-27°API crude, Norwegian 11.9pc to 2.52mn b/d compared with February last year. Febru- independent DNO said. ary throughput was up by 5.3pc on January’s 2.4mn b/d produc- The Tawke-16 well will be connected to pipeline and process- tion. ing facilities next month. The 120,000 b/d Bina refinery in central India’s Madhya DNO said the well is the most prolific yet drilled on the field Pradesh state, operated by India’s state-controlled Bharat and that its flow characteristics are exceptional. Petroleum (BPCL) and state-owned Oman Oil, came on stream Tawke-16 is the first of five wells that operator DNO and its last year but has yet to be included in the oil ministry’s monthly partners plan on Tawke this year and takes development of the refinery throughput figures. field a long way towards the stakeholders’ target of sustain- Crude runs at the private sector refineries increased by 6pc able production capacity of 100,000 b/d by the end of the year. in February to 1.06mn b/d compared with a year earlier. Private Capacity is now some 75,000 b/d. sector crude runs were up by 2pc compared with January, driven But building capacity is not the field partners’ only aim. by an 8pc increase in throughput at Reliance Industries’ (RIL) Tawke’s output has long been running well below capacity, aver- 660,000 b/d Jamnagar refinery but offset by a 20pc decline aging 51,700 b/d in 2011 and ending the year at 60,000 b/d. This in output at private-sector Indian refiner Essar Oil’s 280,000 was a major improvement on the 12,000 b/d achieved in 2010. b/d Vadinarrefinery. But the Vadinar refinery is set to complete But production has been held back by restricted access to the an expansion and upgrade process that will take capacity to Kirkuk-Ceyhan export pipeline because of the continuing dispute 360,000 b/d in the coming days.

Analysis – Europe majors up exploration spend and 15-25 in 2013-14, up from six last year, making use of an expanded prospect inventory. The European majors are increasing exploration spending, The company was awarded 55 new licenses last year, buoyed by a handful of high-profile discoveries last year and including deepwater licenses in Angola, Australia and China. increased access to some of the most prospective acreage in “Expect our exploration drilling machine to ramp up as it drills the world. But different definitions of exploration and appraisal out our exploration inventory — and yes it has a focus on the wells make it difficult to compare the size of the headline budg- deep water,” executive vice-president of strategy and integra- ets on a like-for-like basis. tion Andy Hopwood says. The firm has already followed it up Total says it will plough $2.5bn into exploration in 2012, up this month by farming into four of state-controlled Petrobras’ by 20pc on last year, focusing on larger prospects. It plans to deepwater licenses in Brazil’s Barreirinhas and Ceara basins. drill 65 wells in 2012-13, compared with 48 last year. “It is a Shell spent $3.6bn on exploration last year, excluding acqui- mix of conventional and frontier, but always targeting what we sitions. It plans to lift investment to $5bn this year. “About $2bn call elephant and big cat prospects,” chief executive Chris- will go into onshore unconventional activity,” chief financial tophe de Margerie says. officer Simon Henry says. “Not all of that is North America. At The firm had its share of “big cat” discoveries last year, least $500mn will be outside North America.” with significant gas finds at the onshore Aquio block in Bolivia A further $2bn is earmarked for deepwater drilling, includ- and the Absheron block in the Caspian Sea. And it has a 25pc ing up to five wells in the US Gulf of Mexico. Shell expects to stake in the much-heralded Zaedyus oil discovery offshore drill 20-25 “key wells” this year, up from 18 last year. Its drilling French Guiana. program covers wildcat wells and near-field prospects and BP missed out on last year’s high-impact finds, but is stick- will include two further wells in the Zaedyus block. Shell has a ing to its pledge to double exploration investment over the next 45pc stake in Zaedyus and is due to take over from UK-listed few years. The firm plans to use a third of its upstream budget independent Tullow Oil as operator this year. The firm says in 2012-14 on “creating future projects, including exploration”. the initial well confirmed over 300mn bl of oil equivalent of Exploration costs rose to $1.52bn last year from $843mn in resources. 2010. Increased exploration activity this year is one of the driv- ers of a planned $2bn-3bn rise in organic upstream spending For further intelligent and thought-provoking opinion and to $16bn-17bn. BP plans to drill 12 exploration wells in 2012 analysis, request a free trial of Petroleum Argus.