February 13, 2019 08:40 AM / By Tom Kool Editor,
we will take a quick look at some of the
critical figures and data in the energy markets this week.
We will then look at some of the key market movers early this week before
providing you with the latest analysis of the top news events taking place in
the global energy complex over the past few days. We hope you enjoy.
Chart of the Week
- U.S. exports of ethane have
increased from almost nothing in 2013 to as much as 260,000 bpd on average in
the first 10 months of 2018, according to the EIA.
- Ethane is a critical feedstock for petrochemical
manufacturing, with plastics as the main end-use.
- The surge of oil and natural gas liquids production has led
to a soaring supply of ethane. That has fueled a petrochemical boom along the
U.S. Gulf Coast.
- But it has also led to a rapid increase in ethane exports.
The U.S. surpassed Norway in 2015 to become the world’s top exporter of ethane
(Norway is the only other country to ship ethane internationally).
- TransCanada’s (NYSE: TRP) Keystone
pipeline remained partially shut as of Monday after a leak was discovered
near St. Louis, MO. TransCanada has still not determined the cause and has not
provided an estimated timeline for a restart.
- Range Resources (NYSE: RRC) saw
its share price jump more than 5.5 percent on Monday after reporting an 18 percent increase in proved reserves at year-end
- BP (NYSE: BP) said that gas production started up from its second phase of the West Nile
Delta development in offshore Egypt. Peak production of around 700 mcf/d is
expected by April.
Tuesday February 12, 2019
Oil prices jumped during early trading on Tuesday on news that OPEC had sharply
cut output in January.
OPEC output falls by nearly 800,000 bpd in January. OPEC
production declined by 797,000 bpd in January from a month earlier, averaging
just 30.81 mb/d. Saudi Arabia, the UAE and Kuwait chipped in most of the
reductions. Still, Russia only lowered output by 90,000 bpd, far short of the
230,000 bpd promised as part of the December deal. Saudi Arabia said it would
continue to cut output, with plans to lower production to as low as 9.8 mb/d in March, or roughly
half a million barrels per day lower than it had promised. Oil prices jumped on
India to stop refined product sales to Venezuela. India’s
two leading refiners will continue to buy crude oil from Venezuela but will
stop selling it refined products because of U.S. sanctions, according to Argus Media. Notably, PDVSA’s head Manuel Quevedo showed up at a
conference in New Delhi. India could remain one of the few large buyers of oil
from the increasingly isolated regime of Nicolas Maduro. Quevedo said PDVSA
planned on doubling exports to India to 300,000 bpd. John Bolton issued a
veiled threat to India to not work with Maduro’s regime, saying on twitter that “Nations and firms that support Maduro’s theft of
Venezuelan resources will not be forgotten.”
Citgo in the sights of creditors. The U.S.
government is trying to keep Citgo, the U.S.-based subsidiary of PDVSA, alive
and intact so that it can be handed over to Juan Guaidó and a new Venezuelan
government. However, creditors are swarming the company to lay claim to pieces
of the company as the Maduro regime falls apart. “Citgo is the big prize,”
Francisco Monaldi, a fellow in Latin American Energy Policy at Rice
University’s Baker Institute for Public Policy, told the Houston Chronicle. “I previously said there’s going to be a sharkfest of
payments to creditors, but now there seems to be a bigger actor stopping the
sharks, which is the U.S. government.”
PDVSA presses joint venture partners. PDVSA is pressing its joint venture partners to declare whether or not they
will continue operations in the country following U.S. sanctions. Chevron
(NYSE: CVX) pledged to remain in Venezuela. Chevron received a
waiver from the U.S. government to continue working in the country until July
27. Chevron is trying to walk a fine line, pledging to remain in Venezuela
while also hedging its bets, hinting about working with the U.S. government and
a potential change in Venezuela’s government. “It’s a fluid environment,”
Chevron’s CEO Mike Wirth said. “Our strong intent is to stay on the ground in
Venezuela and be part of building a better future for the people of Venezuela,”
Wirth told Bloomberg. “We’ve got a very close coordination under way with
multiple agencies within the U.S. government.”
World will be Saudi Aramco’s “playground.” Saudi
Aramco will venture out into international oil and gas exploration for the
first time, according to Saudi oil minister Khalid al-Falih. “We are no longer
going to be inward-looking and focused only on monetising the kingdom’s
resources,” al-Falih told the FT. “Going forward the world is going to be Saudi
Aramco’s playground.” The plans also run against the plans of crown prince
Mohammed bin Salman to diversify the Kingdom’s economy.
Shale industry concerned about frac hits. A recent
shale conference in Texas was dominated by discussion about how to minimize damage to shale wells
from “frac hits,” which occurs when will situated close to each other interfere
with production of each. This kind of well interference can reduce productivity
by anywhere from 20 to 40 percent on the newer “child wells,” while also
inflicting even worse damage on the original “parent well.” The industry is
collecting data on how and when catastrophic losses can occur, but are only at
the early stages of dealing with the problem. The reason this is important is
because shale drilling will increasingly be dominated by child wells.
Climate groups threaten legal action against Shell.
A coalition of environmental groups are preparing legal action against Royal Dutch Shell (NYSE: RDS.A)
in the Netherlands to force the company to transition off of oil. The groups
say Shell is “deliberately obstructing” efforts at climate action.
Trump’s tariffs kill 8,000 solar jobs. The solar
industry lost 8,000 jobs last year, a second consecutive year of declines. One of
the main reasons for the job losses and the slower growth was due to the Trump
administration’s 30 percent tariff on imported solar panels. Nevertheless,
there are around 242,000 people employed in the solar industry, more than the
Moscow shoots down OPEC+ talk. The Kremlin dismissed reports that Russia and OEPC were discussing a formal
arrangement. Russia’s energy minister Alexander Novak said in December that a
formal OPEC+ architecture would carry risks. Reports surfaced recently that the
two sides were nearing an agreement, but the Russian government tamped down the
speculation on Tuesday.
U.S. crude exports to Europe increase. U.S.
sanctions on Iran have opened the door for more American crude oil exports to Europe. Also,
sanctions on Venezuela could result in more U.S. crude shipments abroad. Europe
imported a record 630,000 bpd from the U.S. in January.
Shell, Eni, Exxon win blocks in Egypt. Egypt held a tender for oil and gas exploration, and Royal Dutch
Shell (NYSE: RDS.A) won the most (three for oil and two for
gas). ExxonMobil (NYSE: XOM) made its debut in Egypt. BP (NYSE:
BP) and Eni (NYSE: E) also won some
concessions. Egypt is emerging as a key natural gas hub in the Eastern
1. What Is Keeping Oil
Prices Subdued? – OIR 080219
2. Bank Of America:
Oil Demand Growth To Hit Zero Within A Decade
3. Oil Rally Halts
On Economic Concerns – OIR 050219
4. Crude Oil
Trading Terms You Need to Know
5. Oil Rises 18% In
Best January On Record
6. The Nigerian
Upstream Oil and Gas Report - Wind In The Sails
7. Oversold Lithium
Could Be About To Rally
8. Oil Prices
Bounce On Venezuela Turmoil And Saudi Cuts
9. 2nd Nigeria
International Petroleum Summit Focuses on Efficiency and Innovation
10. Oil Prices
Unmoved By Venezuela Turmoil
11. Saudi Arabia:
We'll Pump The World's Very Last Barrel Of Oil
12. What’s Driving
Oil Prices Down? – OIR 220119
13. Huge Backlog
Could Trigger New Wave Of Shale Oil