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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A federal judge has temporarily blocked new drilling on 300,000 acres of land in Wyoming after ruling that the US Department of the Interior “did not sufficiently consider climate change” when allowing oil and gas companies to lease federal land in the state. Source: The Verge.
The Kharasaveyskoye gas field is located in the Yamal-Nenets autonomous district, a key gas-producing region in an economy that heavily relies on gas exports. This month, Russia’s Natural Resources and Environment Ministry estimated that the country’s natural resource reserves are worth 60 percent of its GDP. Source: The Moscow Times
Russia’s state-owned gas giant Gazprom will start filling the Power of Siberia (Sila Sibiri) natural gas pipeline that connects Russia to China from September 1, Gazprom Transgaz Tomsk said in its corporate magazine on March 14, as cited by Prime. Source: Intellinews
Speaking to CNA, Government Spokesman Prodromos Prodromou said a bilateral meeting between Anastasiades and Pompeo is expected to take place on the sidelines of the Cyprus-Israel-Greece trilateral Summit, in order to discuss Turkish threats in Cyprus’ exclusive economic zone, among others. Source: Financial Mirror
Norway’s government is proposing to expand the area that will be offered for oil and gas exploration in the 2019 licensing round of acreage in mature areas, Petroleum and Energy Minister Kjell-Børge Freiberg said on Thursday. Source: Oilprice
The Norwegian government announced Friday that the fund, which is worth about $1 trillion, will gradually phase out its investments in exploration and production companies including Chesapeake Energy and China’s CNOOC. Source: CNN
As widely expected, ExxonMobil said on Thursday that it had made a natural gas discovery southwest off Cyprus, which Cypriot authorities hailed as the largest find offshore the eastern Mediterranean island to date. Source: Oilprice.com
Gazprom’s share of the European gas market rose to a record high 36.7 percent last year from 34.7 percent in 2017, the company said. This, despite calls from the European Commission for EU states to diversify away from Russian energy in the wake of Moscow’s annexation of Crimea in 2014. Source Reuters
Saudi Crown Prince Mohammed bin Salman cemented a $10 billion (7.7 billion pounds) deal for a refining and petrochemical complex in China on Friday, meeting Chinese President Xi Jinping who urged joint efforts to counter extremism and terror. Source Reuters
Trump reiterated that he’s opposing the Nord Stream 2 gas pipeline.
“More gas supply routes to Europe wouldn’t have any negative effects for the United States,” Sebastian Kurz said. “Europe would buy more natural gas from the U.S. if the price was competitive.”
Turkey is about to start offshore drilling with two vessels around the island of Cyprus, Turkish foreign minister said on Feb. 21. “Let those who come to the region from far away, and their companies, see that nothing can be done in that region without us. Nothing at all can be done in the Mediterranean without Turkey, we will not allow that,” Mevlüt Çavuşoğlu told at an event gathering business people in Turkey’s western Aydın province. Source Daily News
Russia’s Gazprom will start gas supplies to China from Dec. 1, a month earlier than planned, the gas producer said on Friday. Deliveries of gas to China via the Power of Siberia pipeline were due to begin at the end of December 2019, but the project is only expected to reach full capacity in 2025. Source: Reuters
Turkish exploration ships will soon start drilling for oil and gas offshore the northern part of Cyprus, the energy minister of the Turkish Cypriots told Turkish Anadolu Agency on Wednesday, a move that could reignite tension between Turkey, Cyprus, and Greece regarding the exploration rights off the eastern Mediterranean island. Source: Oilprice
In a boost to firms like ONGCNSE -2.95 % and Reliance IndustriesNSE -0.83 %, the government is likely to raise the price of domestically produced natural gas by over 10 per cent to over $3.72 per million British thermal unit with effect from April 1, sources in know of the development said. Source: Economic Times
OPEC said on Tuesday it had cut oil production steeply under a global supply deal, although it flagged headwinds confronting its efforts to prevent a glut this year including weaker demand and higher rival output. Source: Reuters
Russian natural gas volumes piped via Ukraine to European consumers rose 26 percent year-on-year in January to 7.6 billion cubic metres (bcm), the Ukrainian gas transport monopoly Ukrtransgaz said on Tuesday. No reason was given for the increase. Source: Reuters
Iran’s oil customers should not expect new US waivers in May, the US Special Representative for Iran, Brian Hook, said this week, urging buyers to stop importing Iranian oil. “What we have announced is the policy to get to zero imports of Iranian crude as quickly as possible. We are not looking to grant any future waivers or exceptions to our sanctions regime, whether it is oil or anything else,” Hook told Japanese public broadcaster NHK while on a visit to Japan. Source RT
- Shortly before an important decision, France is against the planned gas pipeline Nord Stream 2, which advocates Germany.
- The decision is an amendment to an EU rule that would allow the Commission to take greater action against Nord Stream 2.
- The project of the Russian energy company Gazprom raises problems in the strained relationship between Moscow and the Europeans, France justifies.
France’s Foreign Ministry has signaled its intention to vote for changes to the EU’s Third Energy Package Gas Directive regulating gas imports when the topic comes up for discussion Friday in Brussels. The proposed changes would effectively extend existing rules to cover offshore pipelines. The posture signals a direct confrontation with Germany over the construction and operation of the controversial Nord Stream 2 pipeline that Berlin is currently building with Russia. Source Deutsche Welle
German gas demand could rise by up to 8 percent in the period to 2022 to replace orchestrated closures of coal-fired power plants recently recommended by a government-appointed commission, gas lobby group Zukunft Erdgas said on Wednesday. Source: Reuters
Saudi Arabia and its allies in the Organization of the Petroleum Exporting Countries (OPEC) are reportedly trying to deepen partnership with Russia-led oil producers, seeking to seal a new formal pact with Moscow. Source: RT
China’s state energy giants are set to raise spending on domestic drilling this year to the highest levels since 2016, focusing on adding natural gas reserves in a concerted drive to boost local supplies. Source: Reuters
Gazprom pumped 6.4 bcm of gas into underground gas storage facilities in the summer of 2018 after a peak indicator of 8.6 bcm in 2017, the gas major said in a memorandum to its eurobond prospectus. Source: Kyiv Post
Brent crude and West Texas Intermediate started the day today with gains, albeit modest, following yesterday’s Weekly Petroleum Inventory Report by the Energy Information Administration that said Saudi oil exports to the United States had declined as OPEC’s de facto leader cuts production deeper than agreed to accelerate a hesitant rise in prices. Source: OilPrice
