Aramco CEO Says The Worst Is Over For Oil (30 June): By Tsvetana Paraskova - The worst in the oil market is over, Amin Nasser, president and CEO of the world’s biggest oil company, Saudi Aramco, says, adding that he is “very optimistic” for the second half of this year. Currently, global oil demand is somewhere around 90 million barrels per day (bpd), up from 75-80 million bpd in April, Nasser told IHS Markit Vice Chairman Daniel Yergin in an interview for CERAWeek Conversations. “We see it in China today – it’s almost at 90%. In gasoline it’s around 95% in China. Gasoline and diesel are picking up to pre-COVID levels,” the top executive at Saudi Arabia’s state-owned oil giant said. Recovery in oil demand will depend on whether there will be a second wave of infections, Nasser said, but noted that he is not overly concerned about that because countries and medical professionals will be much better prepared if a second COVID-19 wave hits. (Source: Oil Price)
India Confident Fuel Demand Will Return To Normal By September (29 June 2020): By Tsvetana Paraskova - Fuel demand in India, the world’s third-largest oil importer and third-largest oil consumer, is set to rebound to pre-crisis levels by the end of September, Indian Oil Minister Dharmendra Pradhan said at the virtual BloombergNEF Summit in New Delhi. Judging from the trend in recent weeks after India lifted its lockdown, fuel demand will be “as usual” by the end of the quarter ending in September, the minister said, expressing a more optimistic view on demand than both OPEC and the International Energy Agency (IEA) which see India’s demand taking at least until the end of this year to recover. “At the end of June, we have already achieved 85% of our demand compared to June 2019,” Pradhan said at the BloombergNEF Summit. (Source: Oil Price)
Peak Fuel Demand Will Occur Within 10 Years (27 June 2020): By Irina Slav - It has been a tough few months for the oil industry, and there’s more pain on the way as the industry struggles with disruptive forces that could completely transform it. Now, according to BloombergNEF, oil and gas companies have one more thing to worry about: peak fuel demand. In an outlook for road fuels published earlier this month, BloombergNEF forecasts that gasoline demand will peak in 2030, with diesel following three years later. As a result, demand for crude oil from the road transport sector is seen peaking in 2031, BloombergNEF said, at 47 million barrels daily. That’s higher than BloombergNEF’s 2019 projection, which saw oil demand from light and heavy-duty vehicles peaking at 45.1 million bpd. To fully realize the implications of this trend, here is some context. As of 2019, road transport accounted for more than 40 percent of overall global oil demand. What’s more, road transport has accounted for more than half of total oil demand growth over the past two decades. Peak demand for road transport fuels, therefore, is a harbinger of peak oil demand. (Source: Oil price)
ExxonMobil Readies To Make Major Job Cuts (26 June 2020): By Julianne Geiger - The largest oil company in the United States is preparing to let go between 5% and 10% of its US-based employees subject to performance reviewed, anonymous sources told BNN Bloomberg. Exxon’s job cuts will be characterized as performance-based, and not considered layoffs, technically speaking. Employees who are not subject to performance reviews will not be affected, the source said. Exxon told Bloomberg in a statement that there was no specific reduction target. Exxon has not been immune to the drastic effects of the coronavirus pandemic and the oil price war that has destroyed demand for crude oil and eaten into profit margins for that reduced demand, and it has attempted to tighten its belt in response. (Source: Oil Price)
Oil Prices Fall Back Below $40 On New COVID Fears (26 June 2020): By Tom Kool - Oil prices have fallen below $40 as the U.S. sees a record spike in COVID-19 cases and fears of demand weakness increase. The two-month oil rally has stalled, with WTI falling back to $38 per barrel. The resurgence of Covid-19 across the U.S. has halted the market’s positive momentum. In many ways, the rally was already overdone. Coronavirus spread a big oil risk. Texas Governor Greg Abbott ordered bars to shut down on Friday as the spread of the coronavirus continues to accelerate. With several states – and the U.S. as a whole – setting new daily records for positive cases, fuel demand faces enormous downside risk in the weeks ahead. For instance, Texas gasoline demand on June 24 was 17.8 percent lower than on June 17. (Source: Oil Price)
How Viable Are Net Zero Strategies For Energy Companies? (25 June 2020): By Leonard Hyman & William Tilles - This sounds like the old motto of the 1859 Colorado gold rush, “Pike’s Peak or Bust!” But regardless of potential riches, “Net Zero by 2050” has become the unofficial environmental motto of much of the utility and fossil fuel industry. The list of corporations aiming for net zero carbon emissions in thirty years includes BP, Royal Dutch Shell, Total, and Repsol, as well as US and foreign electricity producers CMS Energy, DTE, Dominion Resources, Duke, Enel, Iberdrola, National Grid, Pinnacle West, Public Service Energy Group, Southern Co. and XCEL. A few companies are aiming to reach this environmental target sooner while two major holdouts, ExxonMobil and Chevron, have yet to commit. Keep in mind that these senior managers who today commit their organizations to this path do not say that they will stop producing or using carbon emitting fuels. No oil wells are being prematurely abandoned or power plants shuttered. The key term for us today in the net zero phrase is the “net” part. This implies that the carbon polluters or emitters will not cease their activity by 2050. Instead they promise to fully offset the greenhouse gases they produce in some manner. (Source: Oil Price)
The Next Step In The Electric Vehicle Evolution (24 June 2020): By Irina Slav - Many believe electric vehicles are the only future of road transportation. Equally, many are confident they will never replace internal combustion engines—not entirely, anyway. The so-called EV revolution, with sales of electric cars going through the roof and overtaking the sales of ICE cars, has failed to materialize. What the EV industry has instead been going through has been more stable and reliable: an evolution. During this evolution, cutting battery costs and extending the range have been the two focal points of the EV industry. Now that there are some reliable results in these two respects, it is time to move to the next level: making EVs profitable. It might come as a surprise that not all EVs are profitable, given that most EV-related headlines in the mainstream media are dedicated to Tesla, and Tesla continues to surprise the market with robust profits. But industry-wide, EVs have yet to turn in a profit, a new report from Lux Research says. (Source: Oil Price)
What's Next For Oil Prices? (22 June 2020): By Nick Cunningham - Crude oil has rebounded to $40 per barrel and hoping to stay there. Some analysts have come out with more bullish forecasts for the near-term, but plenty of risks remain. “Good production discipline on the part of OPEC+ coupled with a massive involuntary reduction in production in the US on the one hand, plus the rapid recovery of demand on the other, have caused supply surpluses to be eroded significantly more quickly than anticipated,” Commerzbank wrote in a note on Monday. WTI hit $40 and retreated a bit in recent days, but appears to be stabilizing for the time being at around that threshold. Rystad Energy says that $40 is the new normal. “Further gains or 45-50 dollars would not be justified at this stage despite the supply curtailments as there are still valid concerns on the demand side,” said Rystad Energy’s head of oil markets, Bjornar Tonhaugen. “Infections are rising in key markets around the world and there are valid concerns that the world is in for a prolonged period of dealing with its consequences.” (Source: Oil Price)
Is This The Future Of Energy Storage? (22 June 2020): By Tsvetana Paraskova - Scientists have been trying for years to make lithium-oxygen batteries a viable energy storage solution by overcoming some of the challenges to the commercial use of this type of batteries. So far, the challenges have been greater than the sum of the potential solutions. In what could be a breakthrough in this type of battery technology, researchers from the Korea Advanced Institute of Science and Technology (KAIST) say that they have developed a new strategy to address the limitations of the lithium-oxygen battery by stabilizing the electrocatalysts at the atomic level within metal-organic frameworks (MOFs). According to the team of scientists led by Professor Jeung Ku Kang, "This new strategy ensures high performance for lithium-oxygen batteries, acclaimed as a next-generation energy storage technology." Typically, lithium-oxygen batteries are known for their much higher energy density than the much more popular lithium-ion batteries, which are widely used in electronics, electric vehicles, and energy storage. (Source: Oil Price)
Taxpayers Are Footing The Bill For 100-Year Old Oil Wells (21 June 2020): By Nick Cunningham - Plugging old oil and gas wells may cost as much as ten times what the industry routinely estimates, according to a new report from Carbon Tracker. As oil and gas companies walk away from their “stranded liabilities,” the public may be left to pick up the tab. When oil and gas companies are finished with old wells, they are supposed to close them and pay for the cleanup. However, often the wells are abandoned, or “orphaned,” left idled but not plugged up for good. In many cases, these wells are dumped onto local and state governments, leaving taxpayers to pay for the cleanup. The problem is not new, however. “Bonding” for oil and gas wells have been around for many years, but the actual requirements are lax almost everywhere. Companies are not required to pay the full cleanup costs upfront, the logic often being that they will earn money as they go, better equipping them to pay for cleanup later on. (Source: Oil Price)
OPEC’s No.2 Is Planning To Develop Huge Gas Reserves (20 June 2020): By Simon Watkins - Iraq is finally moving ahead with plans to develop its associated and non-associated gas resources in the next two to three years, according to a statement last week from its Deputy Oil Minister, Hamed Younis. In total, he said, the Oil Ministry is looking at projects to develop 1.2 billion standard cubic feet per day (scf/d) of associated gas out of the 2.7 billion scf/d produced as an adjunct to oil excavation. It is also looking to develop a number of standalone gas fields, beginning with the combined estimated 700 million scf/d production of Akkas and Mansouriyah. There are three very good reasons why it should do so but, given its history on achieving objectives in this area, whether it will accomplish anything at all is a moot point. The first reason is political, in so far as it needs to have some evidence to show the U.S. that it is intending to reduce its dependence on Iran for electricity and gas imports at some point in the future. (Source: Oil Price)
Oil Prices Climb Despite Fears Of A “Second Wave” (19 June 2020): By Tom Kool - Oil prices have shrugged off concerns about rising coronavirus infections, with WTI hitting $40 per barrel in early trading on Friday, a three-month high; Saudi Aramco is cutting hundreds of jobs as it hopes to reduce costs. First-quarter profit for Aramco was down 25 percent from a year earlier; U.S. shale production could fall by half over the next year due to the massive drop in the rig count, putting overall American oil production below 8 mb/d within a year’s time. (Source: Oil Price)
For How Long Can China Prop Up The Oil Market? (18 June 2020): By Tsvetana Paraskova - China's crude oil imports jumped to a record high in May, while refinery throughput increased to near-peak levels, suggesting a strong recovery in oil demand after the coronavirus outbreak. Indeed, recovery is there, but it is not the sole reason why China – through relatively strong crude oil imports even during the lockdown – helped the otherwise weak global oil demand when other countries went on lockdown in March and April. Oil demand in China is rebounding, but it may be softer than what headline figures suggest because China stepped up its crude oil stockpiling this year and boosted exports of refined oil products, Reuters columnist Clyde Russell notes. Regardless of the reasons for China's seemingly insatiable appetite for crude oil, one question looms over the market—how long will China keep up oil imports that generally support global oil demand recovery, which is still fragile elsewhere. (Source: Oil Price)
Oil Markets May Not Fully Recover Until 2022 (16 June 2020): By Nick Cunningham - Oil demand may not recover to pre-pandemic levels until 2022 at the earliest, according to a new report from the International Energy Agency (IEA). The surplus of crude oil sloshing around the world has narrowed quicker than expected, owing to a severe drop in supply and a quick rebound in demand in some parts of the world after a record drop in consumption. Global supply fell by 12 million barrels per day (mb/d) in May, year-on-year, due to the roughly 9.4 mb/d of cuts from OPEC+ along with sharp curtailments from non-OPEC countries. China’s “strong exit from lockdown measures” saw Chinese demand in April almost back to normal levels, the agency said. The further easing of lockdown protocols around the world will likely lead to rebound in demand in the second half of 2020, although Beijing said on Tuesday that all schools will temporarily shut down in the capital due to new coronavirus cases, highlighting the persistent danger of the pandemic. It’s unclear what this means for the Chinese economy going forward. (Source: Oil Peice)
U.S. Needs To Overhaul Grid To Boost Renewable Energy (16 June 2020): By Tsvetana Paraskova - The U.S. will need more long-haul interstate power lines to support the installation of large amounts of solar and wind energy in places where resources are abundant, industry experts tell Bloomberg, noting that additional power lines are critical to achieving any ambitions of zero-carbon energy sources in any U.S. state. While the share of wind and solar power generation continues to set records, the U.S. urgently needs power transmission lines to take the electricity produced in the sunny Southwest or the windy Great Plains to the cities, analysts say. “It’s going to be impossible to build new renewables in Kansas unless we do something with the grid,” Michael Skelly, who founded the now defunct Clean Line Energy Partners to build some transmission projects, told Bloomberg. According to BloombergNEF U.S. analyst Ethan Zindler, without power lines, there couldn’t be any 100-percent renewables power generation anywhere in the United States. (Source: Oil Price)
Hydrogen Fuel Economy Is Finally Going Mainstream (14 June 2020): By Alex Kimani - Hydrogen power has been on the market for decades but has never really been able to break the glass ceiling of mass-market appeal, mainly due to a host of technical and cost issues. Indeed, battery power appears to be winning the race to replace the internal combustion engine (ICE) more than any other alternative fuel type. EV companies like Tesla Inc. (NASDAQ:TSLA) have already hit the fast lane while hydrogen-powered fuel cell electric vehicles (FCEVs) appear to have stalled on the start line. Case in point is California, one of the greenest states in the United States. The golden state boasts a grand total of 20,992 EV charging stations compared to just 40 public hydrogen fueling stations. But now some experts believe that the hydrogen fuel economy has finally reached a tipping point, and hydrogen could soon develop into a globally-traded energy source, just like oil and gas. The revelation comes as dozens of countries have started committing billions of dollars, especially to green hydrogen, in a bid to combat climate change. (Source: Oil Price)
Morgan Stanley And Goldman Sachs Downgrade Tesla: The $1,000 handle for Tesla may turn out to be short-lived, as investment banks Morgan Stanley and Goldman Sachs have both downgraded the equity since yesterday's close. Perpetual bull Adam Jonas at MS downgraded Tesla from Equalweight to Underweight with a price target of $650.00, down from $680. Among his concerns, Jonas noted capital needs and near-term demand - issues we feel like we have been hearing about for years, all the while Tesla stock has squeezed higher and higher. "We're Underweight due to our concerns around China, competition, capital needs and near term demand. The RR skew for TSLA is consistent with an Underweight rating," the note reads. (Source: Oil Price)
Alberta To Cut Red Tape For New Oil Projects (12 June 2020): By Charles Kennedy - Canada’s oil-producing province of Alberta is moving to cut red tape under a new bill that will no longer require the cabinet to approve new oil sands projects once they have already been approved by the Alberta Energy Regulator (AER). Grant Hunter, Associate Minister of Red Tape Reduction, introduced in Alberta’s legislature on Thursday the new Bill 22, the Red Tape Reduction Implementation Act, 2020. “As we work to reopen Alberta we must ensure that job creators have the utmost support from government. They are the ones who will get Albertans bank to work and in many cases, the best support we as government can offer is to get out of their way,” Hunter said. (Source: Oil Price)
Who Will Pay For Russia’s Unprecedented Oil Spill? (11 June 2020): By Alex Kimani - Five days ago, Russia suffered its worst oil spill in modern history after a fuel storage tank owned by Russian nickel and palladium mining company, Nornickel, collapsed and spilled 21,000 tonnes (about 158,000 barrels) of diesel into the nearby Ambarnaya river outside the Siberian city of Norilsk. The accident--which has drawn comparisons to the Exxon Valdez accident off Alaska in 1989-- is being regarded as the worst of its kind in Russia's Arctic region. One source has reported that as much as 29,000 tonnes (about 218,000 barrels) of diesel could have found its way into the soil and nearby water bodies. President Vladimir Putin declared a state of federal emergency in the Krasnoyarsk region as Nornickel scrambled to try and contain the spill from contaminating the Arctic zone. But their best efforts have failed, and now there are reports that the oil has flowed 12 miles north and seeped into a nearby Arctic Lake where it might cause untold damage to marine ecosystems. (Source: Oil Price)
The Secret To A Low-Carbon Future (10 June 2020): By Robert Rapier - The world is transitioning to a low-carbon future. This transition is being aided by policies aimed at curbing greenhouse gas emissions, as well as rapidly declining costs for renewables like wind and solar power. In fact, in the last decade, no country has seen its carbon dioxide emissions decline more than the United States. But the primary reason for that decline often surprises many people. The shale gas boom in the U.S. caused nearly a 90% increase in U.S. natural gas production between 2005 and 2020. This resulted in a collapse in U.S. natural gas prices and helped drive coal-fired power plants to switch to natural gas to generate firm power. That has been the primary driver in the drop in U.S. carbon dioxide emissions, with the growth of renewables actually making the second-largest contribution. (Source: Oil Price)
Mexico Bails On OPEC+ Deal (9 June 2020): By Tsvetana Paraskova - Non-OPEC Mexico, which was the surprise holdout in the OPEC+ meeting in April, bailed out of the group’s one-month extension of the record production cuts. But Mexico’s share of the overall 9.7 million bpd cut is negligible and it has already—inadvertently—over-complied with the cuts in May, so the fresh dissent wouldn’t matter much in the big picture of oil supply and demand in the coming months, IHS Markit said on Tuesday. Mexico made quite an impact at the April meeting of the OPEC+ group, after disagreeing with proposals that it should reduce its production by 400,000 bpd from its October 2018 baseline, offering only a 100,000-bpd cut. After days of negotiations, Mexico won and its leftist President Andrés Manuel López Obrador said that the United States was ready to help Mexico reach its production cut quota as part of the OPEC+ deal. (Source: Oil Price)
Morgan Stanley: This Oil Rally Won’t Last (8 June 2020): By Tsvetana Paraskova - Oil prices have likely risen too fast too soon with the market focusing on supply cuts, while global oil demand may not return to pre-COVID-19 levels before the end of 2021, according to Morgan Stanley. The oil price rally in recent weeks “appears mostly supply- rather than demand-driven, and it is questionable how strong refinery runs can increase against this backdrop,” the investment bank said in a note on Monday, as carried by Reuters. While the market is heading for deficit in the second half of the year, there are a lot of inventories – at an unusually high level – which will start shrinking in Q4 and in the first quarter next year, Morgan Stanley said. Despite the continuous market-fixing efforts in supply by the OPEC+ group, the world’s consumption of oil is unlikely to return to the levels before the coronavirus pandemic until late next year, according to the bank. (Source: Oil Price)
How 3D Printing Is Tackling Big Oil’s Supply Chain Crisis (7 June 2020): By Irina Slav - Oil company X had problems this spring. It was time for field maintenance, but company X couldn't go ahead with it because it needed spare parts that weren't coming anytime soon. Coronavirus-prompted lockdowns were breaking down international supply chains. Refinery Y had the same problem. It was maintenance time, and maintenance could not begin because of that same disruption to the supply chain. Refinery Y had to delay its maintenance, risking outages. The problems of X and Y are very real and also dangerous. They also reveal one of the less pleasant aspects of the globalized economy: an overdependence on long international supply chains. But there is an alternative to these long supply chains: additive manufacturing or 3D printing. (Source: Oil price)
U.S. Shale Outperforms Expectations In Q1 - Following the publication of the energy industry’s first quarterly results since the Covid-19 outbreak, a Rystad Energy analysis reveals a surprising contrast. While the oilfield service (OFS) market has taken a massive hit in earnings and profit margins, US shale operators had an impressive quarter under the circumstances, which even ended up in increased dividends. A preliminary analysis of 204 service companies finds that revenues are down 6% compared to the same period last year, while impairment charges have skyrocketed. Profit margins for January through the end of March 2020 were down by almost 90%, and the top 50 public service companies recorded total net losses exceeding $35 billion – far greater than the quarterly losses incurred during the previous industry crisis five years ago. (Source: Oil Price)
China Begins Consolidation Of $100+ Billion Oil & Gas Pipeline Industry (5 June 2020): By Tsvetana Paraskova - China has required the three biggest state-held oil corporations to transfer the management of half of their liquefied natural gas (LNG) terminals to the newly created state-controlled midstream firm, Caixin Global reported, citing industry insiders. The transfer of 10 LNG terminals owned by China National Petroleum Corporation (CNPC), Sinopec, and China National Offshore Oil Corporation (CNOOC) is the first step in China’s plan to consolidate the oil and gas pipeline infrastructure into a new giant state-held midstream company. At the end of last year, China launched the long-mooted state oil and gas pipeline group combining the infrastructure assets of the state-owned energy majors into one huge midstream group, which analysts say could be worth between US$80 billion and US$105 billion. (Source: Oil Price)
China’s Crude Oil Imports Rebound To Near Record High (4 June 2020): By Tsvetana Paraskova - China’s crude oil imports jumped by 13 percent from April to near record-highs of 11.11 million bpd in May, due to favorable spreads of the Shanghai-traded yuan-denominated oil futures and a ramp-up in refinery throughput, oil analytics firm OilX said in a report this week. There has been a steady recovery in Chinese refinery crude processing rates in recent weeks to warrant higher imports, but at least some of the increased crude intake can be attributed to the Shanghai INE crude futures trading at a premium over other deliverable grades, OilX said. Since April, Chinese hedge funds have been betting big on an oil price recovery on the Shanghai crude futures, which has led to major Chinese state oil firms, including PetroChina and Sinopec, delivering oil into the crude oil futures contract. (Source: Oil Price)
China Leads The Global Oil Demand Recovery (3 June 2020): By Tsvetana Paraskova - Global oil demand has improved over the past few weeks, led by China’s demand which has rebounded to 90 percent of its pre-coronavirus levels, while tentative signs of improvement emerge in other major economies, including the United States and India, as lockdowns are eased. In China, oil demand was at 90 percent of the pre-COVID-19 levels in April, and was expected at 92 percent of ‘normal’ demand in May, according to data from IHS Markit. “The brisk resumption of Chinese oil demand, 90 percent of pre-COVID levels by the end of April and moving higher, is a welcome signpost for the global economy. When you consider that oil demand in China—the first country impacted by the virus—had fallen by more than 40% in February—the degree to which it is snapping back offers reason for some optimism about economic and demand recovery trends in other markets such as Europe and North America,” said Jim Burkhard, vice president and head of oil markets, IHS Markit. (Source: Oil Price)
Breaking Down Biden's Energy Policy - The Trump administration’s energy policy, as we consider the two candidates for our nation’s highest office, has been very clear. It rests on three conceptual pillars. Remove regulatory and governmental obstacles to the development of fossil fuels. Roll back environmental restrictions on emissions from both energy production and transportation. Reverse government policies to reduce consumption of fossil fuels. This is a policy of unfettered development significantly deemphasizing environmental concerns while encouraging increased fossil fuel consumption. Despite what we might call the “all clear” signal for energy development, these policies have yielded mixed results. During the years 2017-2019 US GDP rose 7.8% while domestic fossil fuel production rose only 2.2%. At the same time renewable energy production increased 7.5%. But it seems the real problem for the US energy sector is the tepid usage of consumers. Energy consumption increased only 3.0% overall, less than 50% of the rate of GDP growth. Coal usage also fell 20.4% while natural gas consumption increased 13.0%. Oil use fell also 2.8% perhaps reflecting modest EV penetration, increased public transportation usage and trends in tele-commuting. (Source: Oil Price)
Oil Majors Face Another Impossible Decision (1 June 2020): By Tsvetana Paraskova - The oil industry only has two choices as it reshapes itself after the oil price crash — either become broader energy firms or pursue a narrower specialization in oil and gas, Energy Voice reported, citing a new report from PwC. The coronavirus pandemic brought a collapse in oil prices and demand which makes the choice for oil firms more urgent than before the crisis. Oil companies have “years, not decades” to decide which strategy to pursue and they should start choosing now, according to PwC as quoted by Energy Voice. In a recent analysis of the UK offshore oil and gas industry, PwC said that crises have forced the oil sector to reinvent itself many times in the past, but this time around, the COVID-19 pandemic has brought the energy transition to the forefront with more urgent choices for the industry to make. (Source: Oil Price)