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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European Commission Vice President Maroš Šefčovič said on May 23 that the time has come for another round of trilateral talks with Russia and Ukraine to find a “Constructive and stable co-operation between Russia and Ukraine in the field of energy is of utmost importance for the European Union.” Source: New Europe
China will take in more natural gas from the United States to satisfy growing domestic demand, a Chinese consultancy has said amid trade talks between Washington and Beijing seeking to settle differences about a major U.S. trade deficit with Asia’s second-largest economy. Source: Oil Price
BP has stopped work on the Rhum gas field in the North Sea, which it has a 50-percent stake in, sharing it with the National Iranian Oil Company. The company cited the reintroduction of U.S. sanctions against Tehran as reason for the suspension. Source: Oil Price
PetroChina supplied 14 percent more natural gas to its customers last month, parent CNPC said, in response to growing demand. Over the first four months of the year, PetroChina increased gas production at key domestic fields by 2 percent on the year to 30.5 billion cubic meters, but imports grew much more substantially, by 29 percent. Source: Oil Price
French energy company Total says it is looking to expand its search for natural gas off Cyprus’ south coast and seeks to secure another exploratory drilling license, days after warning it could exit Iran over renewed U.S. sanctions there. Source: Hürriyet Daily News
Bulgarian President Rumen Radev used the first day of an official trip to Moscow on Monday (21 May) to try and resurrect plans for a pipeline that would bring gas directly from Russia to Bulgaria’s Black Sea coast, after it was cancelled in 2014. Source: Euractiv
Russia’s Rosneft earlier this week announced that it had started drilling a production well off the coast of Vietnam in the South China Sea. Today, two sources close to the Vietnamese unit of the Russian company told Reuters there were concerns there about China’s possible reaction to the drilling. Source: Reuters
The UK government announced on Thursday plans to facilitate timely decisions on shale gas exploration planning applications in England as part of a plan to reduce dependence on gas imports amid an ongoing decline in the UK North Sea’s conventional gas production. Source: Oil Price
A close ally of German Chancellor Angela Merkel issued a stark warning to the United States about the risks of placing “America First”, accusing Washington of seeking to block a planned Russia-Germany gas pipeline to shore up its own exports. Source: Reuters
Rosatom, the Russian state nuclear corporation, yesterday signed a series of agreements with overseas companies during the Atomexpo conference and exhibition being held this week in Sochi, Russia. The agreements, with Chile, China, Cuba, Finland, Hungary, Iran, Italy, Kazakhstan, Saudi Arabia, Serbia, Spain and Zambia, include the engineering and medical sectors, among others. Source: World Nuclear News
The planned Nord Stream 2 gas pipeline from Russia to Germany raises U.S. intelligence and military concerns since it would allow Moscow to place new listening and monitoring technology in the Baltic Sea, an U.S. official said on Thursday. Source: Reuters
Norway’s largest oil company Statoil officially changed its name to Equinor on Wednesday as it forges ahead with its drive into renewable energy. Source: The Local
Chinese state-owned oil company CNPC will replace Total on a major gas field project in Iran if the French energy giant pulls out over renewed US sanctions against Tehran, Iran’s oil minister has said. Source: Agence France Presse
- Potential oil supply disruptions in Iran and Venezuela have prompted oil traders to focus on geopolitics rather than fundamentals, the International Energy Agency (IEA) said Wednesday.
- President Donald Trump’s decision to withdraw the U.S. from the Iran nuclear deal coupled with political and economic disorder in Venezuela has cast their oil supply into doubt. Source CNBC
Norway expects its gas export prices to drop next year from the 2017 and 2018 levels as Europe will buy more liquefied natural gas (LNG) from other sources, the Norwegian government said in its revised 2018 budget on Tuesday. Source: Oil Price
For the first time, the Netherlands became a net importer of gas last year, reflecting the inexorable decline in production from Europe’s North Sea fields – an issue EU policymakers are only starting to come to terms with. Source: Euractiv
A consortium of western companies and Russia’s Gazprom that is due to build the controversial subsea Nord Stream 2 gas pipeline to Germany said on Tuesday it was starting preparatory work in the Greifswald bay off Germany’s Baltic coast. Source Marine Link
Germany’s economy grew at the weakest pace in more than a year at the start of 2018, part of a slowdown across the euro area that the European Central Bank says may prove temporary. Source: Bloomberg
OPEC revised up on Monday its forecast for global oil demand growth this year, but noted that sanctions, tariffs, and the U.S. withdrawal from the Iran nuclear deal point to rising uncertainty over the global economic growth momentum. Source: Oil Price
Russia’s largest oil producer, state-controlled Rosneft, reported on Monday a sevenfold jump in its net profit for Q1 2018, on the back of significantly higher oil prices compared to the same period of 2017. Source: Oil Price
A corruption trial against oil giants Shell and Eni and Nigeria’s ex-oil minister Dan Etete is getting started in Milan. The case deals with alleged bribes valuing millions, and the Italian trial is not the only one. Source: Deutsche Welle
Russia’s second-biggest oil producer, Lukoil, has signed a development plan for the West Qurna-2 oil field in Iraq with local Basra Oil Company, targeting to double oil production from the field to 800,000 bpd by 2025, the Russian firm said on Friday. Source: Oil Price
Nigeria’s oil production, including condensates, increased to 2.07 million bpd in April from 2.02 million bpd in March, and rose by 11 percent from April 2017, Platts reported on Thursday, citing estimates by Nigeria’s oil ministry. Source: Oil Price
Iranian crude oil has landed an unlikely buyer in the South American country of Chile that occasionally buys Middle Eastern crude, shipping and trading sources told Platts on Thursday, two days after the U.S. withdrew from the Iran deal and said it was re-imposing sanctions on Iran, including on its energy sector and crude oil sales. Source: Oil Price
