Europe is planning on recolonizing Libya, and so it will send in armed forces in the coming months to restore order and stem the flow of migrants coming from Africa. If this expedition army succeeds in securing parts of the country and restoring law and order, Italian and German engineers from ENI and Wintershall will follow suit to help resume the country’s oil production, which will add 1.3 million barrels per day (Libya produced 1.7 million barrels per day before Muammar Gaddafi was toppled in 2011) to the world oil glut . Continue reading
Oil and Gas
Last month we saw the iPath S&P GSCI Crude Oil ETN (USA) making an unusual dive, doing completely the opposite of what it was designed to do. Exchange Traded Funds (ETF) and Exchange Traded Notes (ETN) are mainly designed to follow an index. To explain the basic principles of an ETF real quick, we take the AEX index as an example. The AEX is formed out of 25 funds each with their own weighing. The ETF issuer buys the shares of the companies according to their weighing in the AEX index. One is able to track the index pretty accurately this way. The ETF issuer buys it on a big scale and sells shares of their basket of AEX shares. The share that they are selling are called ETFs. The difference between an ETF and an ETN is the fact that the ETN is a note. The problem is the third party risk, with an ETN you’re facing the risk of the issuing party going bankrupt. If they do, the chances are that you will lose your money. Continue reading
World oil consumption is more than 90 million barrels a day. Between 2009 and 2014 oil was traded for about 110 dollars a barrel; now oil is changing hands for 32 dollars a barrel. Roughly a 7-billion-dollar cash flow a day is vanishing from the global market. Norway’s sovereign wealth fund that has accumulated a stake of 4.5 billion dollars in Apple over the past years1, will turn from an Apple buyer into an Apple seller.
The China Development Bank (a Chinese policy bank) has poured nearly 50 billion dollars into Venezuela in return for oil, with the country now collapsing under the Chinese debt, having no other choice but to drill for more oil. These are just some of the challenges the world is facing in 2016 as oil prices are heading towards 20 dollars a barrel.
Speculators and manipulators were able to manipulate the oil price to more than 120 dollars a barrel, with the production cost being roughly between 20 and 80 dollars. With a huge profit margin the world was digging for more and more liquid gold. Continue reading
Oil price has collapsed and is not going to rebound quickly. But not all the oil-consumer countries benefit from low prices in the same way. And not all oil-producer countries suffer equally.
Oil prices change as the values of currencies do. Purchase or sale contracts for oil are usually long term ones, the price of oil in such contracts does not change very frequently. Fluctuating exchange rates of currencies are still enormously important for the economies. Oil for $40 per barrel does not mean that this barrel is also as cheap in all countries as consumers have to buy dollars in order to purchase a barrel. Or producers sell their barrels for dollars and then exchange these dollars for their own currency. The domestic price based on the exchange rate is not always stable. Continue reading
Ukraine does not plan any additional purchases of gas from Russia by the end of this year. The reversed flow from the EU and the falling consumption have allowed gas storage tanks to be filled up to 53 percent, from about 46 percent last year, according to Gas Infrastructure Europe data. Russia is losing its blackmailing-tool on Ukraine.
Source: Ukrtransgaz statictics
After many years of prosperity, the tough time has come for the US shale industry. Dramatic US oil production decline is inevitable and many shale companies face bankruptcy. Their assets can end up to larger producers, reinforcing market concentration. US energy independence can only be saved by government intervention. US government will remove exports limitation and FED September rate hike suspension is related to the unsustainable debt levels US oil industry is keeping afloat. But that is simply not enough to prevent a collapse of the US oil industry. From our research we learn that cost per barrel declined slightly but decreasing production cost is not enough to compensate for lower oil price. US oil production already declined 400K barrels per day from its April peak. We estimate an other 2 to 3 Million barrels can be wiped out the coming year.
A few months ago, when the oil price rise again before the June crush, the US oil industry seemed to be able to go through the difficult times. „It is too late for OPEC to stop the shale revolution”1, „OPEC can’t stop the shale industry”2 – roared the headlines. However, after last publications of Energy Information Administration (EIA) the OPEC and Saudi Arabia are the only one to triumph. Continue reading
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The BP-owned Suezmax British Heritage is reported to be waiting out an Iranian threat to seize a UK tanker, anchoring up off the coast of Saudi Arabia instead of transiting close to Iran’s shores. Source Maritime-Executive
Indicating that there is still some confusion in India’s position on stopping oil imports from Iran in line with sanctions by the United States, the government said on Wednesday that it does not propose to cancel trade, including oil imports, from Iran. Source The Hindu
Saudi Arabia still plans to launch the long-delayed initial public offering of Saudi Aramco, the world’s largest crude oil exporter, in 2020 or 2021, oil minister Khalid al-Falih said Tuesday. Source S&P Global
The controversial Nord Stream 2 pipeline set to supply Europe with Russian gas via the Baltic is “past the point of no return” despite obstacles including the threat of US sanctions, the head of Gazprom said Friday. Source France24
The House of Representatives’ Foreign Affairs Committee approved Wednesday the Protecting European Energy Security Act, HR 3206. The sanctions are specifically aimed at Russia’s Nord Stream 2 and Turk Stream pipelines. “By targeting the pipe-laying ships we would stop the work in its tracks, but not allow for unintended consequences of our allies in Europe,” Representative Adam Kinzinger, Republican-Illinois, said during a House Foreign Affairs Committee hearing Wednesday. Source S&P
Russia became the largest crude oil supplier to China in May, supported by robust demand from private refiners and alongside a fall in supplies from Iran. Imports from Russia came in at 6.36 million tonnes in May, or 1.50 million barrels per day (bpd), data from the General Administration of Customs showed on Tuesday. Source: Reuters
Turkey’s second drill ship Yavuz will operate in a borehole near Cyprus’ Karpas peninsula, to the northeast of the island, for around three months and reach a depth of 3,300 metres (3,609 yards), Energy Minister Fatih Donmez said on Thursday. Source: Ekathimerini
Construction of the Nord Stream 2 gas pipeline has been completed for 58.7% of its total length, the Russian gas holding said on Monday. “Construction of the Nord Stream 2 gas pipeline continues. 1,441 km of the gas pipeline were laid on the bottom of the Baltic Sea by now – 58.7% of its total length,” Gazprom says. Source Tass.
The Japanese owner of a tanker attacked in the Gulf of Oman claimed Friday that it was struck by a flying projectile, contradicting reports by U.S. officials and the military on the source of the blast. Source: NBC
Two Turkish fighter jets entered Greek air space above the islet of Kinaros on Tuesday morning, according to the state-run Athens-Macedonian News Agency. Source: Ekathimerini
U.S. President Donald Trump said on Wednesday he was considering sanctions over Russia’s Nord Stream 2 natural gas pipeline project and warned Germany against being dependent on Russia for the fuel. Source: Reuters
Washington is disappointed the Netherlands allowed Dutch companies to participate in the Nord Stream 2 gas pipeline project, which Washington deems a threat to European security, U.S. Ambassador Pete Hoekstra said on Wednesday.Source: Reuters
Turkey will be dispatching a second drillship to the eastern Mediterranean in the middle of the month, the country’s energy minister has said. Fatih Donmez said the drillship, dubbed the ‘Yavuz’, would be ready to start a new drill by July. “Thus in the eastern Mediterranean our flag will be waving aboard our two giants, the Fatih and the Yavuz,” he added, alluding to the two drillships owned by Turkey. Source: Cyprus Mail
The government of Hong Kong has rejected a warning from the U.S. Department of State that it could be penalized if it does business with a specific tanker, the Pacific Bravo, which is believed to be under way for China. Source: The Maritime-Executive
China’s crude imports from Iran jumped by a fifth last month before the US removed sanction waivers on oil purchases from the Middle Eastern country, Financial Times calculations show. Data from China’s General Administration of Customs show the country imported 3.24m tonnes of crude from Iran in April, a year-on-year rise of 21 per cent. The figure soared 46 per cent in April from March. Source: Financial Times
Russian state gas producer Gazprom plans to supply 38 billion cubic metres (bcm) of natural gas to China in 2025, Elena Burmistrova, head of Gazprom Export, said on Tuesday. Source: Reuters
Exxon Mobil has evacuated all of its foreign staff from Iraq’s West Qurna 1 oilfield and is flying them out to Dubai, a senior Iraqi official and three other sources told Reuters on Saturday. Source: Reuters
A tanker carrying Iranian fuel oil in violation of U.S. sanctions has unloaded the cargo into storage tanks near the Chinese city of Zhoushan, according to ship tracking data on Refinitiv Eikon. Source: Reuters
Cypriot Defense Minister Savvas Angelides and French counterpart Florence Parly reportedly signed a statement of intent on Wednesday to allow the French Navy to use a naval station at Mari to permanently service its warships, according to news website politis.com.cy. Source: Ekathimerini
Saudi Arabia’s 200 billion-riyal ($53 billion) lifeline to its non-oil economy may be in place for longer than planned as the kingdom supports industries struggling to cope with reforms that pushed up costs and dampened demand. Source: The Star
The stock closed 16.4 per cent higher at an over seven-year high of Rbs189.7 and lifted the company’s market value to Rbs4.49tn (€61.8bn). That is enough to help it surpass Rosneft and Lukoil, the country’s top two crude producers, to become the second most valuable company on the exchange. Sberbank, the country’s biggest lender remains the biggest with a market capitalisation of Rbs4.92tn. Source: Financial Times
Armed drones attacked two oil pumping stations in Saudi Arabia on Tuesday in what Riyadh called a “cowardly” act by Yemen’s Houthi rebels, two days after Saudi oil tankers were sabotaged off the coast of the United Arab Emirates. Source: Al Jazeera
A group of Republican and Democratic U.S. senators will introduce legislation as soon as Tuesday seeking sanctions targeting the Nord Stream 2, a gas pipeline from Russia to Germany under fire from the United States and some European Union countries. Source: Reuters
Turkey’s Treasury ministry is working on legislation to transfer the central bank’s 40 billion lira ($6.6 billion) in legal reserves to the government’s budget to shore it up, three economic officials told Reuters. Source: Reuters
