Oil edged back from two-month highs this week as ambiguous signals from the
US-China trade talks continue to hinder global trade prospects. News of an
OPEC+ production cut extension into the mid-2020s and a more stringent export
control system for Nigeria and Iraq added some short-term bullish sentiment to
oil markets, but both Brent and WTI have since fallen back into their
respective comfort zones. Prices were up slightly on Tuesday morning as a
little OPEC-driven optimism returned to markets.
President
Trump Still Keen on Opening up Alaska. The US Bureau of
Land Management has issued a draft environmental impact statement on opening up
30 percent of protected areas in the Alaskan National Petroleum Reserve (NPR).
The Trump Administration seeks to rekindle North Slope oil field development as
production rates went into decline. Previous lease sales in Alaska's NPR were largely
unsuccessful as companies were frightened off by prolonged environmental
permits. If pushed through, this legislation would revise 2013 Obama-era
protections for the nature reserve.
EU
Promotes Carbon-Neutral Green Deal. As the European
Parliament braces for a series of votes on new EU commissioners this Wednesday,
the political pressure intensifies for EU members to embrace the New European
Green Deal which seeks to make Europe the world's first-ever "climate-neutral
continent". In addition to fulfilling its Paris Agreement commitments, Brussels
wants to use Emission Trading income to fund the fossil-dependent countries' transformation, simultaneously intending to issue a carbon border tax on
imported goods. Interestingly, nuclear energy will be considered clean under
the Green Deal.
European
Wind Industry Needs More Space. Acting upon the European
Commission's Green Deal, Europe's wind energy associations have asserted
exclusion zones ought to be curbed in order to accommodate more wind farms.
WindEurope CEO Giles Dickson told Reuters that Europe
would need to reassess its maritime spatial planning approach and take on resolving
the compatibility of wind energy with fishing and shipping lanes if it wants to
speed up its current rate of 3 GWh annual capacity additions.
Plans
To Expand The Houston Ship Channel. Port Houston is
actively courting private investors in a 1 billion expansion of the Houston
Ship Channel that could increase the waterway's capacity by up to 50 percent.
Wary of delays in Congress fund allocations, Port officials envision private
investors, mostly major pipeline operators active in Texas, covering up to 65
percent of total costs. The expansion would see the Houston Ship Channel
widened to 700ft and deepened to 45ft so as to allow for a higher export
traffic rate for the ever-increasing volume of Permian Basin barrels.
India
to Divest Refinery Stakes. The Indian government agreed to
divest its controlling stakes in Bharat Petroleum and Hindustan Petroleum, as
well as the national Shipping Corporation (SCI) and other energy assets. Middle
Eastern majors Saudi Aramco and ADNOC are seen as top contenders yet even they
are wary of overpaying as New Delhi seeks to meet its hefty $15 billion
divestment plan for 2019-2020.
Russia
to Stick with OPEC+ Deal. Russian President Vladimir Putin
stated that Moscow will continue to work with OPEC in what he sees as their
common task, stabilizing oil markets. Russian officials have recently started
to raise the possibility of increasing the amount of gas condensate exports
being exempted from the country's production quota. Labelling the US shale
growth's environmental consequences "barbaric"
, Putin has
pledged to maintain Russia's oil output without resorting to shale
drilling.
Chevron
Leading the Way in Upstream Cost-Cutting. Chevron
(NYSE:CVX) CEO Michael Wirth stated the US major is preparing
sweeping changes in streamlining upstream operations in order to boost
profitability. Chevron is pushing ahead with plans to carve its global upstream
group into individual units, to be effectuated in parallel to its divestment
plans on mature conventional assets.
Swiss
Authorities Search Vitol and Trafigura. The Swiss Public
Prosecutor's Office has searched the offices of top trading houses Vitol and
Trafigura, acting upon the request from the Brazilian Lava Jato task force that
investigates corruption schemes at Brazilian NOC Petrobras
(NYSE:PBR). Most international trading houses remain barred
from dealing with Petrobras. Brazilian authorities contend that the two
Swiss-based companies were complicit in handing out millions of dollars in
bribes to Petrobras employees in return for below-market prices on the
Brazilian NOC's black products.
Pirates
Attack Exxon's Zafiro Project. In the offshore waters of
Equatorial Guinea pirates have attacked one of the ExxonMobil-led
(NYSE:XOM) project's support vessels, kidnapping 7 out of the
15 people crew. Production at the 70kbpd oil field has so far been stable.
ExxonMobil was previously reported to reassess its petroleum operations in
Equatorial Guinea, with a full exit remaining a real possibility.
China
Gasoline Exports Hit All-Time High. Buttressed by this
year's downstream capacity additions of two 0.4mbpd oil-to-chemicals refineries
in Hengli and Zhejiang, China's gasoline exports have reached a record level of
1.73 million tons in October 2019. Year-on-year gasoline exports are up 16.7
percent.
Icahn
Seeks Oxy Board Takeover. Activist investor is reported to
nominate a slate of 10 directors to Occidental Petroleum's board of directors
in an attempt to intercept the Oxy-Anadarko merger, Bloomberg reports. Occidental
Petroleum (NYSE:OXY) has been one of the worst S&P 500
performers this year, with its stock dropping almost 40% since the first news
on the merger sprang up. OXY shares rose more than 2 percent over the weekend,
while still cognizant of Icahn's unsuccessful previous attempts to revamp the
directors' lineup.
Qatar
Hyping Up LNG Expansion Scope. Qatar Petroleum claims it
intends to raise its LNG production capacity by 50mtpa by 2027 from its current
level of 77mtpa. Qatar has started work on two new 8mtpa LNG "megatrains",
confident its low production costs would allow it to withstand prolonged LNG
market saturation.
Australian
Crude Trading at Astronomic Highs. Australia's heavy sweet
crude Pyrenees (19° API, 0.2 percent Sulphur) continues to make history, having
been traded at an unseen $17 per barrel premium against Dated Brent last week.
Asian demand for crudes that yield substantial volumes of low sulphur fuel oil
that might be used for IMO 2020-compliant bunker fuel blending has been pushing
Pyrenees prices up for several consecutive months already.
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