Lundin: North Sea Oil Find Luno II May Hold 160M Barrels

OSLO - Swedish oil company Lundin Petroleum AB estimated that its Luno II discovery off Norway could yield as much as 160 million barrels, the latest in a string of finds that have revived interest in the North Sea.

It was the first indication of the size of the find, and the market was slightly disappointed.

Lundin said it expects the southern part of Luno II to contain between 25 million and 120 million barrels of oil equivalent. Another section to the north could produce between 10 million and 40 million barrels, the company said.

Lundin shares fell 2.2% to trade at SEK152.00 after the announcement, reflecting both uncertainty about the exact size of Luno II and the announcement Sunday of an increase in oil company taxes in Norway.

Luno II is located in a geological formation in the middle of the North Sea called the Utsira High. This is where Lundin discovered the Edvard Grieg in 2007 and the Johan Sverdrup in 2010, both significant finds.

"We are pleased to announce another significant discovery in the Utsira High region, which in terms of size and location is likely to be commercial," said Lundin chief executive Ashley Heppenstall.

Lundin's recent success on the Utsira High has contributed to renewed interest in the North Sea, where most companies thought there was nothing left to find after four decades of oil activity.

Statoil recently reported the discovery of between 40 million and 150 million high-value barrels near Gullfaks, a nearly depleted field in the northern North Sea where production began in the mid-80s.

Mr. Heppenstall said the company continues to explore Utsira High and said he was optimistic about further discoveries.

Lundin is the operator of production license 359 where Luno II was found, with a 40% ownership stake. Statoil ASA and Premier Oil Plc each have a 30% stake in the field.

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Lukoil Targets 150,000 Barrels per Day from West Qurna-2

OAO Lukoil Holdings, Russia's largest non-state oil producer, aims to produce 150,000 barrels of oil a day at Iraq's supergiant West Qurna-2 oilfield by the end of December 2013, a company executive said Tuesday. 

The 13-billion-barrel field is expected to raise output to 400,000 barrels a day by April 2014 and to hit 550,000 barrels a day in 2015, the executive told Dow Jones Newswires. 

Lukoil will invest $1 billion in 2013 to start first production from the green field, located in the Basra governorate near the Iranian border, he said. Last year the company invested a similar amount, putting total investment in the field by the end of this year at $2 billion. Lukoil had said that it would invest a total of $30 billion to upgrade the field. 

To date the company has drilled eight production wells and is planning to drill another 27 wells this year, he said, adding that four rigs are drilling in the field. 

In January, Lukoil signed a supplementary agreement with Baghdad to reduce the project's target production and prolong its duration. The agreement also put on record the transfer to Lukoil of Statoil ASA's participation interest of 18.75% in the project. 

The parties agreed to reduce the project's target production level to 1.2 million barrels a day from 1.8 million barrels a day, and to prolong the validity of the contract to 25 years from 20. 

The company has increased its stake in the West Qurna-2 project in Iraq to 75%, following last year's withdrawal of Statoil. Iraq's state-owned North Oil Company owns 25%. 

Operator Lukoil and Statoil were awarded the technical service contract at West Qurna-2 in December 2009.

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Providence: 311M Barrels of Recoverable Oil at Barryroe

Irish explorer Providence Resources released Friday a technical update concerning its Barryroe discovery in the Celtic Sea south of Ireland, in which the firm stated that gross 2C recoverable resources at the field amount to 346 million barrels of oil equivalent (MMboe).

These resources are comprised of 311 million barrels of oil and 207 billion cubic feet of gas. London-based investment bank Cenkos Securities said the figures were an increase on its previous estimate of 280 million barrels of oil and 196 bcf of gas.

A recent third-part audit by Netherland Sewell & Associates commissioned by Providence found that the Basal Wealden oil reservoir has recoverable resources of 266 million barrels of oil and 187 bcf of associated gas. In 2011, a third-party audit by RPS Energy of the Middle Wealden reported technically recoverable resources of 45 million barrels of oil and 21 bcf of associated gas.

Providence Technical Director John O'Sullivan commented in a company statement:

"This is another very positive step for Barryroe. This third party resource audit by Netherland Sewell & Associates further validates the significant volumetric and recoverable resources of the Basal Wealden oil reservoir in the Barryroe Field, which Providence first reported on last summer. In addition, the audit has demonstrated that there are significant volumes of associated gas in solution.

"Having now completed this audit, and having finalised Phase 2 development planning with Mott MacDonald, we will now proceed with our planned farm out discussions, where we have already received significant international industry interest. Finally, Providence will continue to work on the material resource potential associated with the Lower Wealden and Purbeckian logged hydrocarbon bearing reservoir intervals, which were encountered by previous wells drilled on the field."

Cenkos noted that Barryroe studies outlined to date suggest that a development concept involving horizontal wells has the potential to deliver production peaking at more than 100,000 bopd per platform.

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ExxonMobil: A Few Thousand Barrels of Oil Seen in Arkansas Spill Area

Exxon Mobil Corp. said Saturday that it is working to clean up thousands of barrels of oil that spilled from its pipeline into a Mayflower, Ark., residential neighborhood Friday afternoon.

The U.S. Environmental Protection Agency is categorizing the incident as a "major spill," the company said, which means that more than 250 barrels of oil have been released. Exxon said "a few thousand barrels of oil" have been observed in the area, but the company is staging a response worthy of a spill of more than 10,000 barrels "to be conservative."

Mayflower is in Faulkner County, about 25 miles outside of Little Rock, Ark. The city evacuated 22 homes Friday as oil flowed into yards and through the streets. Exxon said Saturday it had about 100 workers in the area and had deployed 2,000 feet of containment boom and had 15 vacuum trucks were at work cleaning up the oil Saturday afternoon. The company said it has recovered 4,500 barrels of oil and water.

On Saturday, Faulkner County Judge Allen Dodson said the U.S. EPA has estimated that as much as 2,000 barrels have been released into the neighborhood, but so far, responders have been able to stop that oil from flowing into Lake Conway, a nearby 6,700-acre freshwater lake. Mr. Dodson said it looks like the cleanup effort might take several weeks. On Saturday crews were working to keep the oil contained even as rain pelted the earthen dams put in place to hold the oil back, he said.

"We're dealing with added water flow from the rain," Mr. Dodson said.

If the early estimates prove to be correct, the spill could be larger than a 2011 pipeline leak into the Yellowstone River in Montana. On Monday U.S. pipeline regulators proposed a $1.7 million fine against Exxon for allegedly not doing enough to prevent that leak of about 1,500 barrels of crude into the river after the pipeline ruptured during severe flooding. The regulators also proposed that Exxon employees be required to put in place a training program to teach employees how to react to emergencies at the company's pipelines. Exxon said it was disappointed in the regulators' findings, and that it has applied lessons learned from the Montana spill to its remote control valve procedures and operator training.

In a filing with the National Response Center Friday, Exxon reported that the amount of oil released was unknown, but told regulators that the "incident may be a significant material release."

Exxon said Friday evening that the pipeline, which carries oil from a hub in Patoka, Ill. to the Texas Gulf Coast, was shut in. The pipeline delivers oil to the Sunoco Logistics terminal in Nederland, Texas, where it is then shipped to various Houston area refiners, according to the Exxon Pipeline Co.'s website.

Ben Lefebvre contributed to this article.

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Iraqi Oil Production to Rise to 4.5M Barrels per Day by 2015

DUBAI - Iraq's crude oil production is expected to rise to 4.5 million barrels a day by the end of next year, a senior Iraqi oil official said Monday.

Thamir Ghadhban, the Iraqi prime minister's top energy advisor, said in a conference in Dubai that Iraq is considering three scenarios for increasing crude oil production that will be debated in Parliament next month.

Of these, the "medium scenario" would raise Iraq's production to 9 million barrels a day by the end of 2020 from around 3.3 million barrels a day at present, while the "high scenario" would boost production to 13 million barrels per day.

"If we choose to go for medium or high scenarios, by the end of 2014, Iraq's production will be in excess of 4.5 million barrels a day," he said.

This medium scenario is seen as the most realistic, according to oil officials from Iraq, which is a member of the Organization of the Petroleum Exporting Countries.

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Premier On Track for 75,000 Barrels Per Day

UK oil and gas independent Premier Oil confirmed Thursday production guidance of between 65,000 and 70,000 barrels of oil equivalent per day (boepd) for 2013.

Reporting its final results for 2012, Premier said that it should achieve an exit rate for 2013 of 75,000 boepd once its Huntington and Rochelle fields in the North Sea come on stream. First oil is expected from Huntington at the end of this month, while Rochelle is now expected to be on stream around mid-year after storm damage occurred to the initial development well on the field.

The firm's production in 2012 increased 43 percent to 57,700 boepd from 40,400 boepd in 2011.

Key project milestones expected in 2013 include the completion of the first phase of development drilling on the Solan project and the final sanction of the Catcher project, both in the UK North Sea. Meanwhile, concept selection for the Sea Lion project off the Falkland Islands in the South Atlantic is also expected to be completed during 2013 (Premier entered the Falkland Islands by acquiring operatorship of the estimated 300 million-barrel Sea Lion field in 2012).

Premier also said that it plans 15 exploration and appraisal wells for 2013. Five of these will be high-impact wells targeting in excess of 150 million boe, including Luno II (already spud), Matang (Indonesia) and Bonneville (UK), whose well results are expected imminently.

Premier added that, as well as its Sea Lion prospect in the Falkland Islands, it has a number of maturing play-opening prospects ongoing in Kenya, Norway and Iraq that are set for drilling in 2014 and 2015.

"Premier has built a strong asset portfolio which will act as a springboard for significant further growth over the medium-term. We have a number of development projects coming on-stream in the short-term, an exploration portfolio with increasing materiality and another key leg to our business as a result of our entry into the Falkland Islands," Premier Chief Executive Simon Lockett commented in a statement.

"Over the last seven years, our team has transformed the size and profitability of our business; the strategy we put in place in 2005 has delivered this growth. The next three years will see a further transformation of the business as we increase production and generate significantly greater cash flows."

Premier reported a record profit after tax for 2012 of $252 million (2011: $171.2 million). The company also said it had increased its reserves and resources by 51 percent to 773 million boe.

Analysts at London-based investment bank finnCap described the results as containing "a good set of numbers". 

A former engineer, Jon is an award-winning editor who has covered the technology, engineering and energy sectors since the mid-1990s. Email Jon at jmainwaring@rigzone.com.

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Premier On Track for 75,000 Barrels Per Day

UK oil and gas independent Premier Oil confirmed Thursday production guidance of between 65,000 and 70,000 barrels of oil equivalent per day (boepd) for 2013.

Reporting its final results for 2012, Premier said that it should achieve an exit rate for 2013 of 75,000 boepd once its Huntington and Rochelle fields in the North Sea come on stream. First oil is expected from Huntington at the end of this month, while Rochelle is now expected to be on stream around mid-year after storm damage occurred to the initial development well on the field.

The firm's production in 2012 increased 43 percent to 57,700 boepd from 40,400 boepd in 2011.

Key project milestones expected in 2013 include the completion of the first phase of development drilling on the Solan project and the final sanction of the Catcher project, both in the UK North Sea. Meanwhile, concept selection for the Sea Lion project off the Falkland Islands in the South Atlantic is also expected to be completed during 2013 (Premier entered the Falkland Islands by acquiring operatorship of the estimated 300 million-barrel Sea Lion field in 2012).

Premier also said that it plans 15 exploration and appraisal wells for 2013. Five of these will be high-impact wells targeting in excess of 150 million boe, including Luno II (already spud), Matang (Indonesia) and Bonneville (UK), whose well results are expected imminently.

Premier added that, as well as its Sea Lion prospect in the Falkland Islands, it has a number of maturing play-opening prospects ongoing in Kenya, Norway and Iraq that are set for drilling in 2014 and 2015.

"Premier has built a strong asset portfolio which will act as a springboard for significant further growth over the medium-term. We have a number of development projects coming on-stream in the short-term, an exploration portfolio with increasing materiality and another key leg to our business as a result of our entry into the Falkland Islands," Premier Chief Executive Simon Lockett commented in a statement.

"Over the last seven years, our team has transformed the size and profitability of our business; the strategy we put in place in 2005 has delivered this growth. The next three years will see a further transformation of the business as we increase production and generate significantly greater cash flows."

Premier reported a record profit after tax for 2012 of $252 million (2011: $171.2 million). The company also said it had increased its reserves and resources by 51 percent to 773 million boe.

Analysts at London-based investment bank finnCap described the results as containing "a good set of numbers". 

A former engineer, Jon is an award-winning editor who has covered the technology, engineering and energy sectors since the mid-1990s. Email Jon at jmainwaring@rigzone.com.

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Pemex's Proven Oil Reserves Edge Up to 13.87 Billion Barrels

MEXICO CITY - Mexican President Enrique Pena Nieto announced Sunday that the nation's proven reserves of oil and gas rose slightly at the start of 2013 versus a year earlier to 13.87 billion barrels of crude-oil equivalent, while hinting that a coming energy reform proposal will include legal changes to "transform" the state-dominated industry.

Mr. Pena Nieto made the reserve announcement at a ceremony to mark the 75th anniversary of the expropriation of the oil industry from foreign owners, where he reiterated that the energy overhaul proposal--now being negotiated with lawmakers--will not privatize state oil monopoly Petroleos Mexicanos, or Pemex.

"Pemex will not be sold nor privatized; Pemex must be transformed," Mr. Pena Nieto said to the applause of unionized oil workers present at the ceremony at a Pemex refinery in central Mexico.

The Mexican president didn't given any details on the reform proposal, saying only that the industry needs more investment.

Administration officials have said the proposal will include measures to attract more private players, including international oil companies that could partner with Pemex on projects like drilling in the deep waters of the Gulf of Mexico, where Pemex has no commercial production.

Mexico's oil reserves are traditionally announced once a year at the expropriation ceremony and correspond to figures from the first of the calendar year. Mr. Pena Nieto said that Mexico's proven reserves would last about 10 years at current production rates.

In recent years, Pemex has been finding new oil each year about equal to production, meaning that for every barrel produced, another barrel has been found, so that overall reserves fluctuate little from year to year.

Proven reserves at the start of 2012 were 13.81 billion barrels of oil, Pemex said on its webpage, also equal to about 10 years of production at production rates at the time.

In a much broader measurement of oil reserves--proven, probable and possible, or 3P--Mr. Pena Nieto said the nation had 44.53 billion barrels of crude-oil equivalent at the beginning of the year, compared with the 43.84 billion barrels at the start of 2012.

Pemex's crude-oil production has fallen for eight consecutive years to about 2.55 million barrels a day in 2012 from around 3.4 million barrels in 2004.

Company officials have said new fields ramping up this year will end the string of declines, and early output numbers show that Pemex production has been higher so far this year than during the same time period last year.

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UK Buzzard Field Back Over 200,000 Barrels Per Day

LONDON - The North Sea Buzzard oil field, which had been pumping below capacity since last week, is "gearing up to full rates," and is now producing over 200,000 barrels a day, a spokeswomen from field operator Nexen said Wednesday.

The spokeswoman said that the scheduled maintenance work had been "pretty much wrapped up" on Monday.

The slow down at Buzzard didn't have a big market impact, traders said. However, a prolonged and total closure of the field in Autumn of 2012 did have major consequences for the U.K., helping to tip it back into recession in the fourth quarter.

Buzzard is the U.K.'s most productive oil field, and is therefore closely watched.

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Norway Ups Oil, Gas Estimates in Artic Areas by 2.5 Billion Barrels

OSLO - Norwegian oil officials Wednesday boosted the nation's estimate of undiscovered oil and gas by about 2.5 billion barrels of oil equivalent, or 15%, most of it gas in an area formerly disputed with Russia.

The estimates were based on data gathered in the southeastern Barents Sea and around Jan Mayen, where Russia and Iceland have already awarded several licenses.

Norway expects to decide on the opening of the southeastern Barents Sea, as well as Jan Mayen for oil drilling by this summer. Norway hasn't opened any new acreage since 1994.

The Norwegian Petroleum Directorate said the Norwegian part of the formerly disputed southeastern Barents Sea likely held 1.9 billion barrels of oil equivalent, most of it gas and about 15% crude oil. This equals slightly more than a year of Norway's total oil and gas output.

The area of 44,000 square kilometers was delineated in a 2011 deal between Norway and neighboring Russia, after four decades of dispute. The directorate said there were potential oil and gas resources on the border between the two nations. A field crossing the border would have to be shared.

The directorate's minimum estimate for the southeastern Barents Sea was 345 million barrels of undiscovered resources. There was a 5% chance that it could hold as much as 3.6 billion barrels, it said.

The Jan Mayen area was estimated to hold 566 million barrels of oil equivalent, but with higher uncertainty, the directorate said. The estimated upside in this area was 2.9 billion barrels, but there was also a chance that it was completely void of oil and gas, it added.

Russian state oil company Rosneft was recently awarded three production licenses on the Russian side of the formerly disputed area of the Barents Sea.

Norwegian state oil company Petoro AS has a 25% stake in two recently awarded Icelandic production licenses in the Dreki area near Jan Mayen, operated by Faroe Petroleum PLC and Valiant Petroleum PLC.

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Norway Ups Oil, Gas Estimates in Artic Areas by 2.5 Billion Barrels

OSLO - Norwegian oil officials Wednesday boosted the nation's estimate of undiscovered oil and gas by about 2.5 billion barrels of oil equivalent, or 15%, most of it gas in an area formerly disputed with Russia.

The estimates were based on data gathered in the southeastern Barents Sea and around Jan Mayen, where Russia and Iceland have already awarded several licenses.

Norway expects to decide on the opening of the southeastern Barents Sea, as well as Jan Mayen for oil drilling by this summer. Norway hasn't opened any new acreage since 1994.

The Norwegian Petroleum Directorate said the Norwegian part of the formerly disputed southeastern Barents Sea likely held 1.9 billion barrels of oil equivalent, most of it gas and about 15% crude oil. This equals slightly more than a year of Norway's total oil and gas output.

The area of 44,000 square kilometers was delineated in a 2011 deal between Norway and neighboring Russia, after four decades of dispute. The directorate said there were potential oil and gas resources on the border between the two nations. A field crossing the border would have to be shared.

The directorate's minimum estimate for the southeastern Barents Sea was 345 million barrels of undiscovered resources. There was a 5% chance that it could hold as much as 3.6 billion barrels, it said.

The Jan Mayen area was estimated to hold 566 million barrels of oil equivalent, but with higher uncertainty, the directorate said. The estimated upside in this area was 2.9 billion barrels, but there was also a chance that it was completely void of oil and gas, it added.

Russian state oil company Rosneft was recently awarded three production licenses on the Russian side of the formerly disputed area of the Barents Sea.

Norwegian state oil company Petoro AS has a 25% stake in two recently awarded Icelandic production licenses in the Dreki area near Jan Mayen, operated by Faroe Petroleum PLC and Valiant Petroleum PLC.

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Statoil 'On Track' to Deliver 2.5M Barrels Per Day by 2020

Norwegian major Statoil is on track to see production hit 2.5 million barrels of oil equivalent per day in 2020, according to a results statement released by the firm Thursday. The growth is expected to come from new projects in the period from 2014 to 2016.

However, Statoil CFO Torgrim Reitan cautioned in a presentation to analysts in London that the firm expects production this year to be lower than that achieved in 2012 for a variety of reasons including divestments and uncertainty about the resumption of production at the In Amenas facility in southern Algeria, which was the subject of a terrorist attack in January.

In Thursday's results statement Statoil revealed that it delivered equity production of just above two million barrels of oil equivalent per day (boepd) in 2012 – an increase of eight percent over 2011's figure of 1.85 million boepd.

Proved reserves at the end of 2012 stood at 5.422 million barrels of oil equivalent, which was close to 2011's figure of 5.426 million barrels. Statoil said that a total of 735,000 barrels were added last year through revisions, extensions, discoveries and acquisitions.

"2012 was a year of strong strategic and operational progress for Statoil. We grew our production by eight percent in 2012, in line with the target we announced in 2011, and we delivered strong earnings growth. We are well underway to deliver profitability on our ambition of producing more than 2.5 million barrels of oil equivalents per day in 2020," Statoil CEO Helge Lund commented in the statement.

Statoil is planning to spend around $19 billion on capital projects during 2013 and this will include the drilling of 50 exploration wells, the firm said.

Meanwhile, the company said it will conduct an investigation to determine the relevant chain of events before, during and after the In Amenas attack in order to enable it to improve its security, risk assessment and emergency procedures.

"The whole of Statoil is strongly affected by the terror attack. We continue to assist and support the families, friends and colleagues who have lost those dear to them. The safety of our staff and partners will remain our highest priority," Lund added. 

A former engineer, Jon is an award-winning editor who has covered the technology, engineering and energy sectors since the mid-1990s. Email Jon at jmainwaring@rigzone.com.

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Lukoil Proved Reserves Stand at 17.3B Barrels

Russia's Lukoil announced Wednesday that an audit has shown its proved hydrocarbon reserves at the end of 2012 stood at 17.3 billion barrels of oil equivalent (boe), which included 13.4 billion barrels of oil and 23.5 trillion cubic feet of gas.

Lukoil said that its replacement of production by proved reserves during the year exceeded 100 percent. Proved reserves were increased due to exploration, production drilling and acquisitions that totaled 703 million boe. Detailed field appraisal in the Northern Caspian and Komi regions were responsible for the greater part of the proved reserves increment, the firm said.

Lukoil added that its probable reserves at the end of 2012 amounted to 7.7 billion boe and possible reserves stood at 4.3 billion boe.

The audit was carried out by US firm Miller and Lents.

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Lukoil Proved Reserves Stand at 17.3B Barrels

Russia's Lukoil announced Wednesday that an audit has shown its proved hydrocarbon reserves at the end of 2012 stood at 17.3 billion barrels of oil equivalent (boe), which included 13.4 billion barrels of oil and 23.5 trillion cubic feet of gas.

Lukoil said that its replacement of production by proved reserves during the year exceeded 100 percent. Proved reserves were increased due to exploration, production drilling and acquisitions that totaled 703 million boe. Detailed field appraisal in the Northern Caspian and Komi regions were responsible for the greater part of the proved reserves increment, the firm said.

Lukoil added that its probable reserves at the end of 2012 amounted to 7.7 billion boe and possible reserves stood at 4.3 billion boe.

The audit was carried out by US firm Miller and Lents.

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Lukoil Proved Reserves Stand at 17.3B Barrels

Russia's Lukoil announced Wednesday that an audit has shown its proved hydrocarbon reserves at the end of 2012 stood at 17.3 billion barrels of oil equivalent (boe), which included 13.4 billion barrels of oil and 23.5 trillion cubic feet of gas.

Lukoil said that its replacement of production by proved reserves during the year exceeded 100 percent. Proved reserves were increased due to exploration, production drilling and acquisitions that totaled 703 million boe. Detailed field appraisal in the Northern Caspian and Komi regions were responsible for the greater part of the proved reserves increment, the firm said.

Lukoil added that its probable reserves at the end of 2012 amounted to 7.7 billion boe and possible reserves stood at 4.3 billion boe.

The audit was carried out by US firm Miller and Lents.

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Brazilian Production Hits 2M Barrels Per Day

RIO DE JANEIRO – Brazilian state-run energy giant Petroleo Brasileiro, or Petrobras, said late Monday that domestic oil output rose for a third consecutive month in December, though it still fell short of its production target for last year.

Petrobras said that domestic crude oil output rose 3.2% to 2.03 million barrels per day from 1.97 million barrels a day in November. Output from overseas operations averaged 145,158 barrels per day in December, up from 119,300 barrels in November.

Petrobras ended the year with average domestic crude oil production of 1.98 million barrels a day, short of its target of 2.02 million barrels a day despite an upward swing in production in the fourth quarter.

Domestic crude oil production was squeezed throughout 2012 by maintenance shutdowns to overhaul aging offshore platforms and falling recovery rates at mature fields.

Petrobras Chief Executive Maria das Gracas Foster said in the company's earnings release, also released late Monday, the company would probably repeat 2012's crude oil output this year. Additional offshore platform shutdowns for maintenance will limit production in the first half of 2013, Ms. Foster said.

The company, however, expects production to increase in the second half of the year. Petrobras expects six new platforms to start production in 2013, helping build momentum "for the significant increase in production forecast for 2014," Ms. Foster said. The first platform, Cidade de Sao Paulo, started pilot production from the Sapinhoa field in January, Petrobras said.

In December, Petrobras said that increased output from the Cidade de Anchieta floating platform helped boost crude oil production. The platform was installed at the Whales Park subsalt field, one of the deep-water areas where oil was found trapped under a thick layer of salt below the ocean floor, in November.

Efforts to raise recovery rates in the mature Campos Basin offshore region also generated a "positive effect" on output, Petrobras said.

Domestic natural gas output, meanwhile, rose 4.5% month-on-month in December to 64.9 million cubic meters per day, Petrobras said.

Total crude oil and natural gas production was 2.68 million barrels of oil equivalent, or BOE, in December, up from 2.575 million BOE in November, Petrobras said. For the full year, Petrobras averaged crude oil and natural gas production of 2.59 million BOE per day.

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Brazilian Production Hits 2M Barrels Per Day

RIO DE JANEIRO – Brazilian state-run energy giant Petroleo Brasileiro, or Petrobras, said late Monday that domestic oil output rose for a third consecutive month in December, though it still fell short of its production target for last year.

Petrobras said that domestic crude oil output rose 3.2% to 2.03 million barrels per day from 1.97 million barrels a day in November. Output from overseas operations averaged 145,158 barrels per day in December, up from 119,300 barrels in November.

Petrobras ended the year with average domestic crude oil production of 1.98 million barrels a day, short of its target of 2.02 million barrels a day despite an upward swing in production in the fourth quarter.

Domestic crude oil production was squeezed throughout 2012 by maintenance shutdowns to overhaul aging offshore platforms and falling recovery rates at mature fields.

Petrobras Chief Executive Maria das Gracas Foster said in the company's earnings release, also released late Monday, the company would probably repeat 2012's crude oil output this year. Additional offshore platform shutdowns for maintenance will limit production in the first half of 2013, Ms. Foster said.

The company, however, expects production to increase in the second half of the year. Petrobras expects six new platforms to start production in 2013, helping build momentum "for the significant increase in production forecast for 2014," Ms. Foster said. The first platform, Cidade de Sao Paulo, started pilot production from the Sapinhoa field in January, Petrobras said.

In December, Petrobras said that increased output from the Cidade de Anchieta floating platform helped boost crude oil production. The platform was installed at the Whales Park subsalt field, one of the deep-water areas where oil was found trapped under a thick layer of salt below the ocean floor, in November.

Efforts to raise recovery rates in the mature Campos Basin offshore region also generated a "positive effect" on output, Petrobras said.

Domestic natural gas output, meanwhile, rose 4.5% month-on-month in December to 64.9 million cubic meters per day, Petrobras said.

Total crude oil and natural gas production was 2.68 million barrels of oil equivalent, or BOE, in December, up from 2.575 million BOE in November, Petrobras said. For the full year, Petrobras averaged crude oil and natural gas production of 2.59 million BOE per day.

Copyright (c) 2012 Dow Jones & Company, Inc.

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Genel: Taq Taq Field Hits 109,000 Barrels per Day

Kurdistan-focused Genel Energy announced Friday that production from its onshore Taq Taq field hit a high Jan. 4 of 109,000 barrels of oil per day. The company added that during the first two weeks of January production from Taq Taq has averaged 89,000 bopd.

Genel, reporting an operational update, said that it expects to complete its current exploration program in the Kurdistan region of Iraq during the first half of 2013. This program comprises three high-impact wells that are targeting a gross un-risked resource of more than 750 million barrels of oil equivalent. Tawke Deep and Chia Surkh 10 are currently drilling on schedule with results expected by the end of the first quarter. A third well (Taq Taq Deep) will spud during the next couple of months.

Capital expenditure for 2013 is expected to be between $400 million and $500 million. The firm spent approximately $230 million in 2012, which was fully funded by cash generated from current operations in Kurdistan.

Genel said that its average net working interest production for 2012 was 44,500 bopd, compared with 42,000 bopd in 2011. The company said that it began reducing exports of oil in mid-November, switching sales of production back into Kurdistan's domestic market, in response to the uncertainty regarding the receipt of the second payment for historic exports owed from the Federal Government of Iraq.

Meanwhile, Genel started exporting crude oil from Taq Taq into Turkey by truck earlier this month.

Genel Chief Executive Tony Hayward commented in the statement:

"2012 saw a strong production performance and a materially expanded exploration portfolio which will provide us with significant opportunities in 2013, both in the Kurdistan Region of Iraq and Africa. We expect revenues to be ahead of previous guidance and all development and exploration activities in Kurdistan to be funded from cash flow generated locally in line with our stated strategy. We are today exporting oil to Turkey in accordance with the authority granted to us by the Kurdistan Regional Government and as the largest independent operator in Kurdistan, are well placed to take advantage of regional opportunities for a broader export market as the political situation continues to develop." 

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