Nov 2016

OPEC Agrees to Cut Production in Drive to End Record Glut - Grant Smith, Wael Mahdi, and Javier Blas (30 November 2016): OPEC clinched a deal to curtail oil supply, confounding skeptics as the need to clear a record global crude glut -- and prove the group’s credibility -- brought its first cuts in eight years. Crude rose as much as 8.8 percent in London. OPEC will reduce output to 32.5 million barrels a day, Iranian Oil Minister Bijan Namdar Zanganeh told reporters in Vienna Wednesday. The breakthrough deal showed an apparent acceptance by Saudi Arabia that Iran, as a special case, can still raise production.

OPEC’s Last Cut Shows Oil Market Could Get a Whole Lot Messier - Angelina Rascouet and Grant Smith (28 November 2016): Anyone planning to trade the outcome of this week’s OPEC meeting might consider the lessons of the group’s last production cut. Then take a deep breath. In December 2008, as oil demand and prices slumped during the global financial crisis, the Organization of Petroleum Exporting Countries, announced a record output reduction. What was supposed to stabilize the market initially sowed more confusion as the group’s statement bundled together previously announced supply curbs and omitted a breakdown of how much each member would cut -- details of which leaked out days later.

OPEC's Oil Deal Is No Sure Thing - By Julian Lee (27 November 2016): OPEC oil ministers will meet on Nov 30 to agree their first output cut since the 2008 financial crisis. The deal will be "a total success," according to Venezuela's president. His oil minister had already called it "a historic agreement, one that's never been seen before." Stirring stuff to be sure, but can they deliver? The balance of expectations favors an agreement. OPEC has invested too much credibility to fail. That may be so, but a similar investment didn't save the deal to freeze output that collapsed at the last minute earlier this year.

Four critically injured in fire at Exxon's giant Baton Rouge refinery (23 November 2016): HOUSTON (Reuters) -- Four people were in critical condition after a fire hit a giant Exxon Mobil refinery in Baton Rouge, Louisiana, on Tuesday, a local hospital said. The incident was the fourth in two days to hit Gulf refineries, cutting fuel production in the region at plants with combined capacity of over 1 MMbpd. January gasoline futures jumped as much as 0.75 percent late on Tuesday. Exxon said the fire was extinguished around 4 p.m. and the company had accounted for all staff at the refinery.

OPEC to agree details of oil-supply cuts today, Nigeria says By GRANT SMITH, ANGELINA RASCOUET (22 November 2016): VIENNA (Bloomberg) -- OPEC is on course to finalize the details of the Algiers accord to cut oil production at a meeting in Vienna on Tuesday, said a delegate from Nigeria. "There is certainty that everybody is on board,” Ibrahim Waya told reporters on his way into a meeting at the secretariat of the Organization of Petroleum Exporting Countries. “Everyone knows that the stakes are high."

Goldman says OPEC deal probable, raises WTI price forecast By BRIAN WINGFIELD (21 November 2016): NEW YORK (Bloomberg) -- Goldman Sachs Group raised its oil-price forecast for early next year, saying it is “tactically bullish” on the likelihood that OPEC will be able to reach a deal to curb output to steady global markets. The investment bank said it expects oil prices in New York to rise to an average $55/bbl during the first half of 2017—from $45 and $50 previously—on the assumption that OPEC will agree to cut output to 33 MMbpd and that Russia will freeze production.

China, Russia to Push for Free-Trade Area in Asia-Pacific (20 November 2016): Bloomberg News - China and Russia will push for a free-trade area in the Asia-Pacific region, China’s foreign ministry said in a statement after the leaders of the two nations met Saturday in Lima, Peru. President Xi Jinping and Russia’s Vladimir Putin met during the Asia-Pacific Economic Cooperation summit in the South American city. Leaders of both the countries should communicate frequently, according to the statement on Sunday.

Drillers add most rigs in 16 months amid market optimism By SONY KASSAM (19 November 2016): HOUSTON (Bloomberg) -- Growing confidence that crude prices will rise in coming months is sustaining the expansion of oil drilling in the shale patch. Rigs targeting crude rose 19 to 471 this week, the biggest increase in the last 16 months, according to Baker Hughes data reported Friday. Shale drillers have now added 155 rigs since an expansion started at the end of May. Natural gas rigs rose by 1 to 116, bringing the total for oil and gas up by 20 to 588.

EIA: Coal may surpass natural gas as most common electricity generation fuel this winter (18 November 2016): After declining for several months, the share of U.S. electricity fueled by coal is expected to slowly begin growing when compared to the same period last year. In contrast, the share of generation from natural gas is expected to experience year-over-year declines. Based on expected temperatures and market conditions, coal is expected to surpass natural gas as the most common electricity generating fuel in December, January and February.

Lotte’s Louisiana MEG plant due ASU unit (15 November 2016): OGJ Downstream Technology Editor - Lotte Chemical Louisiana LLC, a subsidiary of South Korea’s Lotte Chemical Corp., has let a contract to Taiyo Nippon Sanso Corp. (TNSC) of Japan’s subsidiary Matheson Tri-Gas Inc., Basking Ridge, NJ, to build an air separation unit (ASU) at Lotte’s monoethylene glycol (MEG) plant under construction next to its 1 million-tonne/year ethane cracker project with Axiall Corp. in Lake Charles, La.

Crude seen reaching up to $70 by year-end 2017, By ALEX NUSSBAUM, SIMONE FOXMAN (15 November 2016): LONDON (Bloomberg) -- Hedge fund manager Pierre Andurand says OPEC is still likely to agree on an output freeze this month and prompt a sharp rally in oil prices, despite disputes among its members. The years-long supply glut that hammered oil prices is gone with no sign that production will grow next year, Andurand said in a note to investors obtained by Bloomberg News. The founder Andurand Capital Management, which oversees $1.4 billion in its main strategy, put the chance of an agreement by the Organization of Petroleum Exporting Countries at 70%.

Analyst who foresaw oil crash sees OPEC uniting in self-interest, By SHARON CHO, SERENE CHEONG (14 November 2016): NEW YORK (Bloomberg) -- OPEC members need to stop bickering over output curbs or risk the group becoming irrelevant to global oil markets, according to an analyst who predicted the biggest price crash in a generation. It’s in the interest of all producers to reach a deal that’s aimed at stabilizing prices, which are 61% lower than their 2014-highs, said Gary Ross, executive chairman at PIRA Energy Group, which is now a part of S&P Global Platts. A failure to implement an agreement could drag down crude to as low as $35/bbl, while success at the group’s meeting later this month may push oil to $60, almost 35% higher than current levels, he said.

Oil Tankers Used to Store Millions of Barrels as Land Sites Fill - Bloomberg (11 November 2016): Oil companies booked tankers to store as many as 9 million barrels of crude in northwest Europe amid signs that space in on-land depots is filling up, a ship-operator said. The glut could get bigger still, given the region is scheduled to load the most cargoes in 4 1/2 years next month. There are 14 to 16 Aframax-class tankers now storing crude in the region, Jonathan Lee, chief executive officer of Tankers International, operator of the world’s biggest pool of supertankers, said by phone Friday. Standard cargoes are normally almost 600,000 barrels. Lack of on-land capacity to hold the oil is the most likely cause of the buildup, he said.

Gazprom says Japanese lender JBIC may help finance Sakhalin-2 LNG expansion (11 November 2016): (Reuters) Gazprom said that it has discussed possible financing with the Japan Bank for International Cooperation for the expansion of the Sakhalin-2 LNG plant. It also said that it discussed with JBIC financing for the Amur gas processing plant in Russia. Gazprom plans to add a third LNG production train at the Sakhalin-2 plant in 2021, possibly fed by a newly drilled gas field, as Russian companies seek to boost their share of the global LNG market.

Iran tells OPEC it boosted output by most since sanctions ended: By Grant Smith (11 November 2016): VIENNA (Bloomberg) -- Iran, which wants an exemption from OPEC’s accord to cut production, told the group it raised output by the most since international sanctions were lifted, while Iraq—also insisting it should be spared—gave no reading at all. Freed from curbs on its oil trade in January, Iran said it increased output by 210,000 bpd to 3.92 MMbpd in October, according to a report from the Organization of Petroleum Exporting Countries. That’s 230,000 bopd more than estimated by OPEC itself, whose members are due to finalize how much each will cut when they gather on Nov. 30. Production from Saudi Arabia, which typically declines at this time of year, remained near record levels.

Trump win revives Keystone hopes, boosts Dakota Access outlook (10 November 2016): WASHINGTON, D.C. (Bloomberg) -- Donald Trump’s U.S. presidential election victory came as a positive surprise for pipeline proponents. Energy Transfer Partners’ controversial Dakota Access Pipeline is likely to be the immediate beneficiary. TransCanada Corp.’s Keystone XL project, rejected by the Obama administration a year ago, could be resurrected. A Republican-controlled government would likely expedite project approvals and permitting by regulators.

OPEC Deal Becomes More Urgent, Harder to Reach on Trump Win - Bloomberg (9 November 2016): OPEC was already struggling to finalize a deal on production cuts this month. And then Donald Trump was elected President of the U.S. The Organization of Petroleum Exporting Countries faces increasing urgency to take measures that will support oil prices as Trump’s surprise victory threatens to deepen a market sell-off, said UBS Group AG. Yet the uncertainty arising from the President-Elect’s policies -- from climate change to the U.S. shale industry and sanctions on Iran -- will make resolving differences between producers even harder.

Eustream applies for EC grants to co-finance SK-PL interconnection and Eastring (8 November 2016): Eustream, together with its Polish partner Gaz-System, applied for an EC grant to co-finance construction works of Poland-Slovakia interconnection, a new pipeline to connect markets and increase regional security of gas supply. Eustream (with support from its Hungarian, Romanian and Bulgarian partners) also submitted an application to co-finance feasibility study for the Eastring pipeline connecting Western European hubs and South-eastern/Balkan region. Both projects are recognized by the EU as projects of common interest.

Matrix Service Awarded EPC of 2-MM gal LNG tank for JAX LNG (7 November 2016): Matrix Service Company has been awarded the engineering, procurement, fabrication and construction of a 2-MM gal LNG tank for the JAX LNG Bunker Facility, a new LNG liquefaction and storage facility located at Dames Point near the Port of Jacksonville. JAX LNG is a joint venture formed by Pivotal LNG a wholly-owned subsidiary of Southern Company Gas, NorthStar Midstream LLC. and Clean Marine Energy LLC. JAX LNG is the long-term supplier of LNG to the world's first LNG dual fuel container ships, the Isla Bella and Perla del Caribe, operated by TOTE Maritime Puerto Rico.

Eni to BP CEOs Limit Oil Spending for 2017 to Cope With Glut - Bloomberg (7 Movember 2016): From Eni SpA to BP Plc, the biggest international oil companies are reining in capital spending for 2017 and possibly longer as they try to squeeze profits from a crude market battered by a global glut. Eni, which posted a greater-than-expected third-quarter loss, is reducing capital expenditure at least through next year, CEO Claudio Descalzi said Monday in a Bloomberg TV interview from Abu Dhabi, where energy companies are meeting to discuss the industry’s future.

How analytics can improve asset management in electric-power networks: McKinsey & Company By Carlos de la Peña, David González Fernández, and Jesús Rodríguez González: Electric utilities face regulatory and public pressure to achieve two opposing goals: making overdue upgrades while holding down costs and rates to customers. Following an investment wave during the 1970s and 1980s, transmission and distribution (T&D) companies put far less money into improving their networks over the next few decades. Now those networks are nearly obsolete and need enhancements to improve grid availability and security and to bring renewable energy, distributed generation, and other advanced technologies online. And as T&D companies look at whether to make certain upgrades, they may be without essential technical knowledge because many of their experienced workers are retiring.

Energy 2050: Insights from the ground up: McKinsey & Company By Scott Nyquist - When it comes to energy, there is one matter everyone agrees on. For the near future, at least, the world will need more of it—and how it is produced and used will be a critical factor in the future of the global economy, geopolitics, and the environment. With that in mind, McKinsey took a hard look at the data, modeling energy demand from the bottom up, by country, sector, and fuel mix, with an analysis of current conditions, historical data, and country-level assessments. On this basis, McKinsey’s Global Energy Insights team has put together a description of the global energy landscape to 2050.

OPEC output deal ‘more likely than not,’ Citigroup says: By Mark Shenk, Anthony DiPaola (4 November 2016): NEW YORK (Bloomberg) -- OPEC and Russia will probably be able to reach an accord to reduce crude production and boost prices, according to Ed Morse, head of commodity research at Citigroup. Saudi Arabia and Russia are “hungry for an agreement,” Morse said by telephone. "We’re expecting the parties that need to do something to boost prices to be serious about deciding something."

Climate Headed for Catastrophic Change Despite Paris Accord - Bloomberg (3 November 2016): This week’s early entry into force of the Paris Agreement on climate change won’t save the planet from rising seas, superstorms and deadly drought, according to the United Nations. Without further pledges to curb emissions, temperatures are set to rise by as much as 3.4 degrees Celsius (6.1 degrees Fahrenheit) compared to pre-industrial levels, according to a report by the UN Environment Program on Thursday. The findings risk making December’s Paris Agreement outdated even before it takes effect on Friday, two years earlier than envisioned.

Europe’s Biggest Oil Giant Thinks Demand May Peak in 5 Years (2 November 2016) Rakteem Katakey - Royal Dutch Shell Plc, the world’s second-biggest oil company by market value, thinks demand for oil could peak in as little as five years. “We’ve long been of the opinion that demand will peak before supply,” Chief Financial Officer Simon Henry said on a conference call on Tuesday. “And that peak may be somewhere between 5 and 15 years hence, and it will be driven by efficiency and substitution, more than offsetting the new demand for transport.”

Petronas and Tokyo Gas sign memorandum of collaboration (2 November 2016): Petronas LNG Ltd. (PLL) and Tokyo Gas Co. have signed a memorandum of collaboration (MOC) in a ceremony held at Tokyo Gas’ headquarters in Japan on October 28, 2016. The MOC aims to establish a platform to enhance the 33-year business relationship between Petronas and Tokyo Gas which began as Malaysia was embarking on its initial LNG project in Bintulu, Sarawak through MLNG Satu, and sustained throughout the development of MLNG Dua and MLNG Tiga.

Explosion, fire in Alabama on gasoline pipeline kills one (1 November 2016): (Reuters) Colonial Pipeline Co. shut down its main gasoline and distillates pipelines on Monday after an explosion and fire in Shelby, Alabama, killing a worker and sending five to the hospital - the second time in two months it had to close the crucial supply line to the US East Coast. A nine-man crew was conducting work on the Colonial pipeline system at the time of the explosion, Alabama Governor Robert Bentley told a briefing. Seven of the crew members were injured, with two evacuated by air.

Goldman sees oil in low $40s if OPEC deal fails as odds fade (1 November 2016): By BEN SHARPLES - NEW YORK (Bloomberg) -- An OPEC deal to cut oil output at a meeting this month is looking increasingly unlikely, with failure warranting prices in the low-$40s, according to Goldman Sachs Group Inc. “The lack of progress on implementing production quotas and the growing discord between OPEC producers suggests a declining probability of reaching a deal on November 30,” Goldman analysts including Damien Courvalin wrote in a note dated Oct. 31. Obstacles to a supply agreement remain formidable, Greg Sharenow, a Pimco portfolio manager, said in an emailed note on Tuesday.