December 18, 2018 07:46 PM / Oilprice Intelligence Report
Today, 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.
- Regulations from the International Maritime Organization
(IMO) are set to take effect in January 2020, lowering the allowed limit of
sulfur emissions from maritime fuels.
- Sulfur concentration will drop from 3.5 percent on the open
seas to just 0.5 percent.
- These regulations will affect 3.9 million barrels per day
of maritime fuels. The regulations will increase demand for low-sulfur
distillates at a time when demand is already high.
- Crestwood Equity Partners (NYSE: CEQP) was
upgraded to Buy from Neutral by Goldman Sachs, with a $43 per share price
target. That came as EQT Midstream Partners (NYSE: EQM)
was downgraded to Neutral from Buy.
- BP (NYSE: BP) signed an agreement with Angola’s Sonangol for
the development of its offshore Platina field, a step that pushes the British
oil giant closer to a final investment decision. - Royal Dutch Shell (NYSE: RDS.A)
is in talks to purchase Endeavor Energy Resources for $8
billion, or about half as much as Endeavor had hoped to sell for earlier this
year, according to Bloomberg.
Tuesday December 18, 2018
Oil prices crash to one-year low. Oil prices plunged by more than 4 percent on Monday,
and the selloff continued in early trading on Tuesday, pushing WTI down below
$48 per barrel. The proximate cause this time was a report of rising U.S. oil
inventories at a time when global equities were sharply down. “A large part of
the move (lower) is due to a broader market sell-off, with both U.S. and Asian
equity markets coming under pressure,” Warren Patterson of ING, told Reuters. “Specifically for the oil market, there are no clear
signs yet of the market tightening,” he added. Stock market turmoil. U.S. equities fell sharply
on Monday, and the selloff continued in Asia on Tuesday. Concerns about slowing
growth in China and elsewhere are starting to magnify investor anxiety. Chinese
President Xi Jingping gave a speech Tuesday, declining to offer new stimulus
measures or proposals to ratchet down trade tensions with Washington. Asian
markets fell after the address.
ConocoPhillips backs carbon tax. ConocoPhillips
(NYSE: COP) will reportedly join ExxonMobil (NYSE: XOM) in putting
money into a lobbying effort backing a carbon tax. The oil majors have huge
stakes in natural gas, which stands to benefit from a light carbon tax.
Qatar to invest $20 billion in U.S. energy. Qatar said on Sunday that it would spend $20 billion on U.S. energy assets over
the next five years. One of the initiatives will be to revive the Golden Pass
LNG terminal in Texas. The investment would also presumably yield political
benefits – Qatar has been the target of an economic blockade by Saudi Arabia, a
move that received tacit backing by some in the Trump administration. Qatar’s
investment plans for the U.S. could create new American ties. Meanwhile, Qatar
also plans on buying three offshore oil blocks in Mexico from Eni (NYSE:
New discoveries up in 2018. The oil and gas
industry is expected to log the largest set of new discoveries this year since
2015. Discovered resources stand at about 8.8 billion barrels of oil
equivalent, and could close out the year at about 9.4 billion boe, according to
Rystad Energy. “We at Rystad expect this discovery trend to continue
into 2019 with many promising high-impact wells targeting vast potential,”
Palzor Shenga, senior analyst on Rystad Energy’s Upstream team, said in a
New oil and gas projects jump in 2019. The number
of new oil and gas projects to move forward next year could jump five-fold from 2015 levels, according to a report from Wood Mackenzie.
At the same time, industry spending could remain mostly flat at $425 billion,
down sharply from the $770 billion in global spending back in 2014. Many oil
and gas companies have cut costs and can do more with less. But WoodMac says
that the industry is still far short of the $600 billion in spending needed to
meet future demand.
Oilfield services look to rebound. Offshore
oilfield services and contractors have seen four consecutive years of declining
revenues, but could bounce back in 2019. More than 100 projects could move
forward in 2019, and an estimated $210 billion could be spent on offshore
oilfield services next year, according to Rystad Energy. “The offshore service
market is like a super tanker: It takes time to accelerate. The uptick in new
projects in 2017, 2018 and now 2019 will be enough to turn revenue growth
positive to mid-single digits as offshore capex is set to increase due to the
recent years of capital commitments,” Audun Martinsen, head of oilfield service
research at Rystad Energy, said in a statement.
offshore wind bidding. The U.S. government held a highly
successful bidding round for offshore wind projects off the coast of
Massachusetts last week. The winning leases could support 4.1 gigawatts of
wind, and the auction took in $405 million in winning bids. The winners were Equinor Wind
US; Mayflower Wind Energy, LLC, a
50-50 joint venture between Shell and EDP
Renewables; and Vineyard Wind, LLC,
a 50-50 joint venture between Copenhagen Infrastructure Partners
and Avangrid Renewables, according to Greentech Media.
Pennsylvania to curb emissions from oil and gas. Pennsylvania’s
governor unveiled proposed regulations to cut smog-forming pollutants and force
companies to plug methane leaks. The proposal comes as the federal EPA has
sought to rollback emissions regulations.
Mexico hopes to boost oil and gas production by 50 percent. Mexico’s
government aims to boost oil and gas output by 50 percent over the next six
years. The new government wants to revive Pemex and has planned to increase the
state-owned oil company’s exploration budget by 10 percent. “It’s a new Pemex
rescue,” President Lopez Obrador said.
California mandates electric buses. California
regulators passed a rule that will require public transit agencies to phase out gas
and diesel-powered transit buses. By 2029, agencies will only be allowed to
purchase zero-emissions buses, with the phase out completed by 2040. There will
be interim targets as well, so electric buses could begin rolling out across
California in the near future.
ExxonMobil becomes top Permian driller. ExxonMobil
(NYSE: XOM) was late to the game, but now has the most drilling rigs in the Permian basin. The development highlights the lure
of the Permian as well as the shale-focused strategies deployed by the oil
Enbridge completes takeover of Spectra Energy Partners.
(NYSE: ENB) completed its $3.3 billion acquisition of Spectra Energy Partners,
creating one of the largest midstream companies in North America.
European Union agreed to cut carbon emissions from cars. The
EU agreed to a goal of cutting carbon emissions from cars by 37.5
percent within a decade, with an interim target of 15 percent by 2025.
Germany’s auto manufacturers opposed strict requirements and warned that the
new goals do little to provide incentives for the switch to electric
Previous Oilprice Intelligence Reports
1. Has OPEC Stabilized Oil Markets? – OIR 141218
2. Uncertainty Lingers In Oil Markets Despite OPEC Cuts – OIR 121218
3. OPEC Surprises Markets With Last Minute Deal - OIR 081218
4. Oil Makes Gains Ahead Of OPEC Summit - OIR 041218
5. Can Saudi Arabia Counter The Oil Price Crash? - OIR 281118
6. OPEC Drowning Under Oil Supply Glut - OIR 231118
7. Oil Companies Lose $1 Trillion As Prices Crash - OIR 201118
8. Oil Rebounds On Hopes Of OPEC and Action – OIR 171118
1. Oil Prices Slide as OPEC is Seen Cutting Output Less Than Expected
2. The Saudi Dilemma: To Cut or Not To Cut
3. Africa Oil and Gas State of Play
4. Are Oil Prices Heading For The Rocks?
5. 4.37bn Litres of PMS Imported into Nigeria in Q3 2018 - NBS
6. Average Prices of PMS, AGO, HHK and Cooking Gas – October 2018
7. Can We Expect A Major Rebound In Oil Prices?
8. Is Oil Price At Its Point of Inflection?
9. NNPC, NCDMB, Oando, Seplat And Many More Push The Nigerian Agenda At The 25th Africa Oil Week
10. Outlook for Africa’s Oil and Gas Industry Improves – PwC Report