BP unveils 'giant' oil discovery in Gulf of Mexico

LONDON: Energy giant BP has made a "giant" oil discovery in the Gulf of Mexico after drilling one of the industry's deepest-ever wells, it said Wednesday, in a further boost for crude supplies.

"BP announced today a giant oil discovery at its Tiber Prospect (well) in the deepwater Gulf of Mexico," the company said in a statement.

"The Tiber well was drilled to a total depth of approximately 35,055 feet (10,685 metres) making it one of the deepest wells ever drilled by the oil and gas industry," it added.

BP's discovery comes as the industry this week marks 150 years since crude was first drilled and days after Scottish group Cairn Energy began pumping out oil in India as exploration in the North Sea dwindles.

The discovery is larger than BP's Kaskida discovery in the same geological area three years ago, which contains around three billion barrels of oil.

Peter Hutton, an analyst at NCB Oils, said BP's announcement would be seen as "confirmation of BP's strong focus on Gulf of Mexico" exploration.

Energy groups are increasingly drilling in the Gulf of Mexico and elsewhere as North Sea oil fields dry up.

Cairn Energy on Saturday began pumping crude from a vast oilfield in the Indian desert state of Rajasthan that is set to increase India's crude output by 20 percent.

Cairn's field, the country's largest onland field and the biggest find in over two decades, will increase India's oil output by a fifth once it hits its initial peak production target of 175,000 barrels a day in 2011.

This is in contrast to the North Sea, where expenditure on exploration was down 70 percent at the start of 2009 compared to a year earlier, according to industry body Oil & Gas UK.

In the Gulf of Mexico BP operates Tiber, owing to its 62-percent stake in the well. Its co-owners are Brazilian oil giant Petrobras, with a 20-percent interest and US group ConocoPhillips with 18 percent.

"Tiber represents BP's second material discovery in the emerging Lower Tertiary play in the Gulf of Mexico, following our earlier Kaskida discovery," said Andy Inglis, BP chief executive for Exploration and Production.

"These material discoveries together with our industry leading acreage position support the continuing growth of our deepwater Gulf of Mexico business into the second half of the next decade."

BP is the biggest producer of oil and gas in the Gulf of Mexico with net production of more than 400,000 barrels of oil equivalent per day, the company said in its statement.

This could rise to 650,000 barrels daily within the next 15 years thanks to the Kaskida and Tiber wells

World stocks slide despite upbeat data

LONDON: Global stock markets slid on Wednesday, with the heaviest losses seen in Asia, as investor confidence in economic recovery waned despite positive economic data from around the world.
"Compared to last months' optimism, investors seem afraid of fear itself, more than anything else," said Daniel Roy, equities analyst at Newedge brokers.
"Across market players, it is generally accepted that a correction is due on equity markets" after strong recent gains, he added.
Tokyo's benchmark Nikkei-225 index slumped 2.37 percent to close at 10,280.46 points on Wednesday, hit by the double whammy of falling US stocks and a stronger yen, which is bad for exporters, dealers said.
Europe's main stock markets also dropped but losses were less severe. The FTSE 100 fell 0.22 percent to 4,809.30 points approaching midday in London, Frankfurt's DAX 30 lost 0.53 percent to 5,299.24 points and in Paris the CAC 40 shed 0.67 percent to 3,559.37.
The falls came despite signs that economies are on the long and bumpy path to recovery from the global downturn, as the United States, the eurozone and China posted manufacturing growth while Australia said GDP grew in the June quarter.
Investors instead took their cue from an overnight slump on Wall Street, where the Dow Jones Industrial Average dived 1.96 percent to finish at 9,310.60 points.
Figures released on Tuesday showing the US manufacturing sector grew in August after 18 monthly declines in a row was hailed by President Barack Obama as "a sign that we are on the path to economic recovery."
The Institute of Supply Management said its index of the factory sector, also known as the purchasing managers index, beat analyst expectations to jump to 52.9 percent from 48.9 percent in July. Any number above 50 indicates growth.
"The year-and-a-half decline in manufacturing output has come to an end, as 11 of 18 manufacturing industries are reporting growth when comparing August to July," said ISM survey chief Norbert Ore.
However it failed to sway sceptical investors waiting to see if such upbeat data would help buoy corporate earnings, dealers said.
The US results chimed with other manufacturing reports around the world.
A widely-watched index of manufacturing activity in the 16-nation eurozone hit a 14-month high in August, still indicating contraction but continuing a gradual rise from historic lows.
Meanwhile China's manufacturing activity expanded in August at its fastest pace in 16 months. In response, Shanghai shares rose 1.16 percent on Wednesday.
The data pointed to stabilisation in the Asian giant and a boost for the many countries that rely on Beijing for their exports.
However, China shares have been volatile in recent sessions amid fears that the government may curb lending, which in turn would crimp liquidity and stymie a regional recovery.
Australia posted economic growth of 0.6 percent in the June quarter, official figures showed, confirming its status as the best performer in the developed world as massive stimulus plans boosted domestic spending.
"When every other major advanced economy has fallen into technical recession, we have not," Treasurer Wayne Swan said.
However, Sydney's benchmark S&P/ASX200 index closed down 1.69 percent on Wednesday as worries about Wall Street's losses and the so-called "September effect" instead coloured sentiment.
"Welcome to September, historically the toughest month of the year for investors," said Fred Dickson, chief market strategist at DA Davidson & Co.
"We are seeing some pullback in the market as we begin September over the concern that the market has overextended itself," said Andy Douglass of PNC Bank.

German car sector leaves life support

FRANKFURT: Germany's landmark car scrapping bonus ended on Wednesday after hitting two million auto sales and giving life support to the sector which now faces severe withdrawal pains next year.

Several analysts said the number of scrapping subsidies handed out was excessive even for Europe's biggest car market, and would leave dealers of small foreign cars in trouble when buyers shun showrooms in 2010.

But the controversial measure has clearly boosted car sales during the depths of the global economic crisis and it led to similar programmes being enacted worldwide.

German auto sales jumped by 28 percent in August from the level 12 months earlier, extending a string of strong monthly results, data released by the VDA auto federation showed.

The "cash-for-clunkers" bonus of 2,500 euros (3,550 dollars) for drivers who junked old cars and bought a new one brought total sales since January to almost 2.7 million autos, 565,000 more than in the first eight months of 2008.

Programmes in Japan and the United States pushed car sales higher in August for the first time for more than a year, while dealers in countries like China, France, Italy and Spain have also been helped by state subsidies.

The question is what lies ahead for an industry crucial to many global economies.

In Germany, "we will see a steep decline in the market," Metzler Bank analyst Juergen Pieper told AFP.

Starting in early 2010, "you will see two or three very weak quarters," he forecast.

Ferdinand Dudenhoeffer from the Center for Automotive Research forecast German sales would fall by one million to around 2.7 million cars next year.

"It will be the largest downturn ever realised by the German car industry," he warned.

Both analysts said the government had overshot the size of the scheme, with Dudenhoeffer commenting: "It makes absolutely no sense to offer two million scrapping premiums if you have a market of around three million cars per year."

The programme tripled from its initial size and will cost Berlin roughly five billion euros in all.

Used car prices were pushed lower meanwhile and small repair shops had fewer customers, Dudenhoeffer noted, while some retailers complained that other major purchases had been postponed as consumers rushed to buy new cars.

A study by the Roland Berger consultancy published last month estimated more than 90,000 jobs were in danger as the German scheme wound down unless the economy rebounds next year.

German luxury car makers did not profit greatly from the scheme however, and will probably suffer less now that it has expired.

BMW production chief Frank-Peter Arndt told the daily Passauer Neue Presse: "We were not particularly pleased by the scrapping premium because it disadvantaged premium brands like ours.

"We will be less affected by its end."

The bonus was nonetheless the most popular and visible element of a vast government economic stimulus package which included a 17.5-billion-euro credit stimulus announced on Tuesday.

Germany, which has earmarked 115 billion euros to support industry, seems to be pulling out of its worst recession for six decades as a result, and posted growth of 0.3 percent in the second quarter from the first three months of the year.

Stimulus packages are expected to push the public deficit up to six percent of output next year however, twice the eurozone limit.