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
CRUDE OIL (WTI)
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Israel Natural Gas Lines (INGL) is looking at building a natural gas pipeline to Europe under a memorandum of understanding signed with IGI Poseidon, it said on Tuesday. Source Ekathimerini.
Denmark’s energy agency said on Wednesday it had approved the Russian-led Nord Stream 2 gas pipeline project in Danish waters. Source Reuters
– Saudi Aramco aims to announce the start of its initial public offering (IPO) on Nov. 3, three people with direct knowledge of the matter told Reuters, after delaying the deal earlier this month to give advisers time to secure cornerstone investors. Source Reuters
Gazprom has completed feeding natural gas into the Power of Siberia gas pipeline. The gas from the Chayandinskoye field in Yakutia has reached the near-border gas metering station in the proximity of Blagoveshchensk. Source World Pipelines
American mechanized forces have begun deploying at Syrian oil fields, ostensibly to stop the remnants of Islamic State from seizing them, and will respond with “overwhelming force” to protect them. Following the withdrawal of US forces from northern Syria earlier this month, and the killing of Islamic State (IS, formerly ISIS) leader Abu Bakr al-Baghdadi on Saturday night, American forces in Syria apparently have a new mission: protect the oil. Source RT
Millions of Californians had no power Sunday as Pacific Gas and Electric Co. implemented its largest-ever blackout to prevent wildfires during a fierce windstorm. Source San Francisco Chronicle
The Russian Ministry of Energy sees the readiness of partners from Ukraine to begin supplying Russian gas directly starting in 2020, the Russian Energy Minister Alexander Novak said in an interview with Russia-24 TV channel following trilateral consultations on gas between Russia, the EU and Ukraine on Monday. Source Tass
Massachusetts sued Exxon Mobil Corp (XOM.N) on Thursday, with the state’s attorney general accusing the oil giant of misleading investors and consumers for decades about the role fossil fuels play in climate change. Source Reuters
Russian shipping company Sovcomflot has sent two more large-capacity, LNG-powered tankers through the Northern Sea Route. According to the company, the Aframax tankers Mendeleev Prospect and Lomonosov Prospect successfully completed eastbound voyages along the NSR from the Baltic port of Primorsk to China, on October 16 and 19, respectively, using only LNG fuel. Source GCaptain
Authorities from Turkey issued two new Navigational Telexes (NAVTEX) on Thursday, blocking off the regions of the sea west of Cyprus and southeast of the Greek island of Limnos in the Northern Aegean Sea.
According to local reports, Turkey is continuing its game of ramping up tensions in both Greece and Cyprus’ Exclusive Economic Zones, where it says it will conduct military exercises and maneuvers with its Navy, using live fire. Source Greek city times
Putin tells UAE officials they ‘will not be disappointed’ as two sides sign deals in energy, tech and health sectors. Russian President Vladimir Putin’s has told officials in the United Arab Emirates they “will not be disappointed” as he wrapped up a short Gulf tour by signing deals worth more than $1.3bn in Abu Dhabi. Source Al Jazeera
Russian gas monopoly Gazprom and Germany’s Linde signed on 3 October an agreement to create a joint engineering venture to develop process, design and engineering documentation for natural gas processing and liquefaction facilities in Russia. Source New Europe
Conventional oil and gas discoveries during the past three years are at the lowest levels in seven decades, and aren’t expected to recover, a new report said. Source Energy Voice
- Two rockets struck an Iranian tanker traveling through the Red Sea off the coast of Saudi Arabia on Friday, Iranian officials said.
- It is the latest incident in the region amid months of heightened tensions between Tehran and the U.S.
- Iranian state television said the explosion damaged two storerooms aboard the unnamed oil tanker and caused an oil leak into the Red Sea near the Saudi port city of Jiddah. Source CNBC
The chief executive of Italian energy firm Eni said Thursday his company won’t go ahead with any gas drilling in Mediterranean waters off Cyprus if warships approach the area. Source StarTribune
Saudi Arabia’s crude output fell just 660,000 b/d to average 9.13 million b/d last month, according to official figures reported to OPEC, as the world’s largest crude exporter saw its production bounce back from attacks on its key oil facilities. Source S & P Global
U.S. oilfield services firm Halliburton on Wednesday said it was cutting 650 jobs across Colorado, Wyoming, New Mexico and North Dakota amid slowing oil and gas activity. Source Reuters
“By September we will be, in terms of production capacity, at 11.3 (million barrels per day), by end of November we will be at 12 million barrels per day (bdp), which is our maximum sustained capacity,” Nasser told CNBC’s Steve Sedgwick during the Oil & Money Conference in London. Saudi Arabia is the world’s largest exporter of oil. Source CNBC
Ministers and delegates from more than 30 nations, regions and organizations pledged Wednesday in Tokyo to introduce 10 million fuel cell vehicles, trucks, buses and other hydrogen-powered systems, as well as 10,000 hydrogen refueling stations, globally over the next 10 years. Source JapanTimes
Prime Minister Shinzo Abe spoke critically on Tuesday about recent attacks on oil facilities in Saudi Arabia, describing them as an “extremely contemptible crime,” while refraining from joining other nations in naming Iran as responsible for the strikes that have roiled the Middle East. Source Japan Times
Saudi Aramco is buying oil originating in neighboring countries to meet its supply obligations to foreign refineries, sources familiar with the matter told Reuters, after crippling attacks on the company’s installations 10 days ago. source Reuters
Saudi state oil firm Aramco has told Japanese refiner JXTG Nippon Oil & Energy about a possible change in shipment, raising concern about the kingdom’s ability to supply crude oil a week after attacks on its refineries, the Nikkei Asian Review reported. Source Reuters
The Turkish Foreign Ministry on Thursday warned Greek Cyprus not to commission hydrocarbon exploration on the Turkish continental shelf in the Eastern Mediterranean. Foreign Ministry Spokesman Hami Aksoy responded Thursday to questions about Greek Cyprus’ signing of deals with France’s Total and Italy’s Eni to carry out exploration in the so-called Block 7, which includes a section of Turkey’s continental shelf. Source Daily Sabah
