Mar 2019

Saudi Aramco’s $69bn Sabic stake acquisition to boost oil firm's value, S&P says (31 March 2019): Saudi Aramco, the world’s biggest oil producing company, is expected to benefit from a boost to its value after its acquisition of a 70 per cent stake in petrochemicals company Sabic for $69 billion, S&P Global Ratings said. Aramco bought the stake from the Public Investment Fund, the country’s sovereign wealth fund, as part of plans to grow its petrochemicals portfolio. “We believe the deal will help add value to the crude oil it produces and expand its petrochemicals business, where demand is increasing faster than for crude oil,” said S&P on Sunday. “Moreover, we consider that the transaction reinforces Sabic's role in the Saudi Arabian government's efforts to diversify the economy.” (Source: The National (UAE))

Goldman Sachs: U.S. Drillers Aren’t Hedging Enough (29 March 2019): By Irina Slav - Oil producers in the United States are not hedging enough future production while oil prices trend higher, Goldman Sachs has warned. According to the investment bank, drillers were now focusing more on shareholder returns and improving cash flows than locking in future prices in a bid to make sure they don’t get burned as badly as in 2014 if prices were to crash again. “We saw a slight uptick in 2019 hedged oil production with 31% of 2019 oil production (vs. 28% with our previous update) hedged at an average price of $57.50/bbl,” ... (Source: Oil Price)

Washington’s Secret Nuclear Deal With Saudi Arabia (28 March 2019): By Irina Slav - Washington has secretly given the go-ahead to several companies to sell nuclear power technology to Saudi Arabia, Reuters reports, citing a document it had obtained. The document featured an approval of six authorizations for nuclear power tech by Energy Secretary Rick Perry. The request for secrecy came from the companies that won the authorizations, according to the document, authored by officials from the National Nuclear Security Administrations... (Source: Oil Price)

Good News And Bad News For The Ethanol Industry (25 March 2019): By Robert Rapier - Last week the ethanol industry cheered when the EPA proposed a rule that would allow 15% ethanol blends to be sold year-round. But by the end of the week they were complaining as the EPA granted more waivers to refiners seeking exemption from ethanol-blending requirements. Ethanol supporters cheered last summer when Environmental Protection Agency (EPA) Administrator Scott Pruitt resigned. ... (Source: Oil Price)

Why No One Is Interested In Building EV Infrastructure (21 March 2019): By Haley Zaremba - Across the United States, gas stations outnumber charging stations for electric vehicles by a ratio of approximately seven to one. Large stretches of highway without charging stations and a general scarcity of places to plug in give many potential EV adopters cold feet, and understandably so. This means that building more charging stations is in the interest of consumers, who want convenience and security; automakers, who want to sell more electric vehicles; and even power utilities, who naturally want to sell more electricity. ... (Source: Oil Price)

Exxon may decide on FEED for Russian Far East LNG project in 2019 (20 March 2019): Exxon Mobil’s Russian unit may take a decision this year on the Front End Engineering Design (FEED) for its Far East Liquefied Natural Gas project with Rosneft, Alexander Popov, vice president at Exxon Neftegaz, said. The company is continuing to hold talks on gas supplies from the Sakhalin 1 oil and gas project to Sakhalin 2, a project which needs gas in order to expand its LNG production, Popov said at an LNG conference organised by Vostock Capital. (Reporting by Oksana Kobzeva; writing by Tom Balmforth; editing by Maria Kiselyova)

World’s Top Commodity Trader Sees Peak Oil Demand Looming (19 March 2019): By Tsvetana Paraskova - The world’s largest independent commodity trader, Vitol, expects global oil demand to peak after 15 years, essentially putting the ‘peak oil demand’ date somewhere in the mid-2030s like other key players in the oil industry. “We anticipate that oil demand will continue to grow for the next 15 years, even with a marked increase in the sales of electric vehicles, but that demand growth will begin to be impacted thereafter,” Vitol said in the outlook included in its 2018 trading volumes report. (Source: Oil Price)

Oil Rises As OPEC Holds Off On Production Cuts Decision (18 March 2019): By Tsvetana Paraskova - Oil prices were slightly up early on Monday as the market was assessing the news that a panel of the OPEC+ allies is recommending that partners cancel a scheduled extraordinary meeting in mid-April, leaving the decision for the cuts extension for a meeting at the end of June instead. At 08:46 a.m. EDT on Monday, WTI Crude was up 0.07 percent at $58.56, while Brent Crude was trading up 0.24 at $67.32, with both benchmarks recovering from losses earlier in the day. (Source: Oil Price)

IEA Warns Of Looming Oil Market Deficit (15 March 2019): By Irina Slav - Production outages and Iran and Venezuela will tip the global oil market into a shortage during the second quarter, the International Energy Agency said in the new edition of its monthly Oil Market Report. This will happen against the background of steadily rising demand despite a slowdown during the last quarter of 2018, the agency said, adding that it had kept its 2019 global demand forecast unchanged from the last OMR at 1.4 million bpd. (Source: Oil Price)

UK aims to harness wind farms for a third of its electricity needs by 2030 (14 March 2019): Rising from the cold waters like forests of giant metallic trees, a growing number of offshore wind farms now stand in the UK’s seas. The nation notorious for its stormy weather is looking to harness wind as a cheap and renewable source of power. With the country’s crumbling nuclear and coal power plants threatening to lead to an energy shortfall in the coming years, advocates say wind energy can be the centrepiece of the UK’s efforts to emerge as a global leader in renewables ... (Source: The National (UAE))

Italy's Eni makes major oil discovery in Angola (13 March 2019): Italian company Eni said on Wednesday it had made a major oil discovery in Angola that would boost its credentials as one of the most successful foreign oil producers in Africa in recent years. The find is Angola's largest offshore discovery in years and may help Africa's second-biggest crude producer avoid a steep decline in output due to the ageing of its other fields. Oil accounts for 95 per cent of exports and around 70 per cent of revenues, and the government has recently offered better fiscal terms and more collaboration to international energy firms in an effort to help its mostly impoverished population. (Source: The National (UAE))

Oil Majors See Shale As A Bridge To Renewables (12 March 2019): By Rystad Energy - Oil majors are readying themselves for the energy transition by investing in shale and waiting for renewable technology to be economical, according to Rystad Energy. A recent review of 2019 capital budgets reveals that oil majors are the only group to increase shale expenditure from 2018 to 2019. Big companies such as Chevron and ExxonMobil recently announced plans to significantly ramp up production in prolific shale basins, such as the Permian Basin spanning Texas and New Mexico. “Oil majors are spending more dollars on shale in an effort to evolve into renewables,” said Rystad Energy Vice President Matthew Fitzsimmons.

Big investors look past Khashoggi to opportunities in Saudi Arabia (11 March 2019): Sylvia Westall, Saeed Azhar, Stephen Kalin - DUBAI/RIYADH (Reuters) - Big investors in Saudi Arabia are pushing ahead with deals and pouring money back into its stock market as the kingdom tries to move on from the murder of Saudi journalist Jamal Khashoggi. His killing at the hands of Saudi agents in October strained ties with Western allies and Riyadh is keen to repair its image. It wants to attract foreign capital and knowhow as part of its Vision 2030 plan of reforms to diversify the economy of the world’s top oil exporter and create jobs for Saudis.

The Easy Money In European Natural Gas Is Gone (10 March 2019): By Tsvetana Paraskova - At the end of last winter’s heating season, it was an unusually cold spell that upended European natural gas markets, with storage levels falling below average and prices firming up as demand shot up. At the end of this winter’s heating season, it is the unusually mild weather in most of Western Europe for most of the winter that has driven natural gas prices down and left supplies higher than the seasonal average. The summer gas futures at the Dutch TTF hub have declined by 16 percent so far this year and have been trading lately around the lowest in 10 months. The winter gas futures contract, however, has dropped by just one third of the decline in the summer contract, according to data from ICE Endex compiled by Bloomberg.

Saudi says large quantities of gas discovered in Red Sea (8 March 2019): Saudi Arabia discovered large quantities of gas in the Red Sea, the kingdom's news agency reported, citing energy minister Khalid Al Falih. Saudi Aramco will conduct an investment feasibility study of the project and accordingly intensify exploration over the next two years, Mr Al Falih said on March 7 during an inspection tour of projects in King Salman International Complex for Maritime Industries and Services in Ras Al Khair Industrial City. (Source: The National (UAE))

Saudi Oil Minister: Aramco IPO On Track For 2021 (7 March 2019): By Irina Slav - The listing of Saudi Arabia’s energy giant Aramco is on track to take place in 2021, Energy Minister Khalid al-Falih said, echoing earlier assurances he and Aramco’s chief executive made over the past year. In January, Al-Falih said the company will issue an international bond in the second quarter of this year, mostly to fund the acquisition of a majority stake in petrochemicals major Sabic, valued at US$70 billion, but also to tap “multiple sources of capital.” Given Aramco’s reluctance to make any of its accounts public, as befits a company preparing for a listing, many were skeptical that the bond will take place, since international bond investors are ... (Source: Oil Price)

Oil Falls After EIA Reports Large Crude Build (6 March 2019): By Irina Slav - A day after the American Petroleum Institute once again took markets by surprise by reporting a crude oil inventory build of 7.29 million barrels, the Energy Information Administration said inventories were indeed up, by 7.1 million barrels for the week to March 1. At 452.9 million barrels, the EIA said, crude oil inventories were about 4 percent above the seasonal average. The authority also reported refinery runs of 16 million barrels daily for last week, versus 15.9 million bpd a week earlier. Gasoline production stood at 9.9 million bpd, up from 9.6 million bpd a week earlier. Distillate fuel production averaged 4.9 million bpd last week, compared with 4.8 million bpd a week earlier. (Source: Oil Price)

Goldman: OPEC To Clear Supply Glut By April (5 March 2019): By Irina Slav - Goldman Sachs expects OPEC to succeed in clearing what it has deemed excessive oil supply by April, when the latest production cut deal will be reviewed at a meeting of the cartel and its partners. Goldman’s commodity chief Jeffrey Currie told CNBC "OPEC is pursuing a shock and awe strategy," cutting production faster and deeper than the investment bank expected. This suggests that supply will tighten sufficiently by April for OPEC to call the mission accomplished. After that, Currie said, OPEC will probably take a month or two to announce how it will proceed with dialing back the cuts and this would discourage U.S. producers from boosting their own production further, bringing about another price crash. (Source: Oil Price)

Lower Buying Appetite May Jeopardize New LNG Projects (4 March 2019): By Irina Slav - A lower buying appetite among LNG importers in Asia may cast a shadow over the survival chances of planned LNG projects as fewer buyers are now willing to commit to the long-term deals LNG companies need to get the financing they need, S&P Global Platts writes. Lower prices for the commodity resulting from the slew of new supply that came on stream in the last couple of years is making buyers less worried about the possibility of a shortage in the future. Also, the U.S.-China trade war has further dampened appetite for long-term contracts in the world’s fastest-growing LNG import market. (Source: Oil Price)

The Latest News From Tesla Is A Game Changer (3 March 2019): By Martin Tillier - Tesla (TSLA) is a stock, indeed a company, that seems to produce extremes. Its fans, the so-called Tesleratis, will hear no criticism. They are true believers who are convinced that the company is the future and is on a crusade to save the world from the evils of fossil fuels. Its detractors tend to be a little more pragmatic, pointing to its record in the most basic function of a corporation, making money, as a reason for their dislike, but they too can be fanatical in their views. (Source: Oil Price)

LNG Oversupply May Be Looming (1 March 2019): By Tsvetana Paraskova - LNG demand growth market may not be enough to absorb all the new supply coming on stream over the next months. According to analysts at this week’s LNGgc Asia conference in Singapore, new demand this year would be lower than the expected new supply. Jason Feer, head of business intelligence at Poten & Partners, said that the company expected 33 million tons of new global LNG supply to hit the market this year, while demand is seen growing by just 16 million tons, Reuters columnist Clyde Russell writes. China will still see its LNG demand growing, but at a slower pace than the growth between 2017 and 2018. (Source: Oil Price)