Wednesday, November 28, 2018 08:32 AM / 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.
- Natural gas production in the Gulf of Mexico has been
declining for two decades. But 10 new projects are expected to begin operations
in 2018, according to the EIA, followed by another 8 in 2019.
- These 18 projects have a combined resource estimate of 836
billion cubic feet.
- Together, they could allow Gulf of Mexico gas production to
- Cheniere Energy (NYSE: LNG) has produced just about enough LNG at
its Corpus Christi export terminal to ship its first cargo, according to
S&P Global Platts. - Kosmos Energy (NYSE: KOS) fell nearly 3 percent after-hours
on Monday when it announced the sale of 15 million common shares in a secondary
- Total SA (NYSE: TOT) announced a shutdown of its 253,000-bpd
Gonfreville refinery in Normandy because of a strike.
Tuesday November 27, 2018
Oil prices are struggling to find a bottom, moving up on Monday but floundering
in early trading on Tuesday.
Saudi Arabia pushes for “quiet cut.” A few weeks
ago, rumors floated of a potential aggressive production cut at the upcoming
OPEC+ meeting, perhaps as large as 1.4 million barrels per day. However, that
now looks unlikely, as President Trump has simultaneously protected Saudi
Arabia from international outrage over the Khashoggi murder, at the same time
that he has pressured them into keeping oil prices low. Russia is also not keen
on a large production cut. That leaves Saudi Arabia looking for a “quiet cut,” which
would mean taking production back down to previously agreed upon production
limit – around 10 mb/d, down from the current 11 mb/d.
Trump wants low oil prices, but U.S. shale could take a hit.
The pressure campaign by the White House to deter OPEC+ from cutting production
could succeed in keeping crude prices low, but prices are approaching a level
that could damage U.S. shale companies. “We're at the point where we're nearing
full cycle break-evens for Permian producers and depending on how long this
lasts, we might see an impact on capex budgets over the next few months,”
Muhammed Ghulam, senior research associate at Raymond James, told CNBC.
Saudi Aramco eyes $500 billion makeover. Saudi
Aramco’s CEO told Bloomberg that the company will
spend $500 billion over the next decade to transform itself into a major
refiner and petrochemical maker, not just an oil producer. “Saudi Aramco will
make the most of those prospects with global investments in the chemicals space
of roughly $100 billion over the next 10 years -- in addition to prospective
acquisitions,” Aramco CEO Amin Nasser said. In total, Nasser outlined $500
billion in spending plans. Long-term oil demand is looking increasingly
fragile, but the petrochemical sector is where most demand growth will be
concentrated, according to the IEA.
Russia-Saudi oil alliance faces a test. Saudi
Arabia is clearly itching for a production cut at the OPEC+ meeting next week,
but Russia is much more hesitant. Russian oil firms are opposed to curtailing
output, and the Russian economy does not benefit as much from higher prices
than the Saudi economy does. Still, President Vladimir Putin has strategic
reasons to keep up the partnership with Saudi Arabia. But after the production
increases in June backfired, Moscow and Riyadh are
not exactly on the same page anymore.
Venezuela reaches deal with Crystallex. Canadian
mining company Crystallex has been trying to force Venezuela’s PDVSA to sell
Citgo as compensation for an expropriated gold mining project back in 2011.
However, Venezuela and Crystallex just struck a deal that will
allow PDVSA to hold onto Citgo. Under the terms, Venezuela paid an initial $425
million to Crystallex, and will pay the remaining balance in installments
Venezuela rejects BP offer. BP (NYSE:
BP) reportedly proposed buying Total SA’s (NYSE: TOT) stake
in a moribund natural gas project in Venezuelan waters. The project is located
along the maritime border of Venezuela and Trinidad and Tobago. BP owns the
rights to the Trinidadian side and wanted to buy Total’s stake on the
Venezuelan side, and could use the gas to expand operations in Trinidad.
Caracas blocked the offer, according to Reuters.
Goldman Sachs: Oil shortage in 2020s. The oil
market may be oversupplied now, but Goldman Sachs says a shortage is coming in
the 2020s. “In the 2020's we are going to have a clear physical shortage of oil
because nobody is allowed to fully invest in future oil production,” Michele
Della Vigna, Head of EMEA Natural Resources Research at Goldman Sachs told CNBC Friday.
Nigeria lost $6 billion to Shell and Eni. A new
report finds that Nigeria missed out on
nearly $6 billion in projected revenues because of the odd structure of a 2011
oil deal it made with Royal Dutch Shell (NYSE: RDS.A)
and Eni (NYSE: E). The deal is now in focus because of a
corruption trial in Milan, where Eni executives are in the hot seat.
France and Germany move to keep business with Iran alive.
The EU previously proposed to setup the special purpose vehicle (SPV) to allow
European companies to continue to do business with Iran, working around U.S.
sanctions. France and Germany have agreed to jointly host the
financing arrangement, and are taking aggressive moves to try to keep the Iran
nuclear agreement alive even as the U.S. continues to pressure European
capitals not to move forward.
U.S. pressures Iraq to break from Iran. The U.S.
is trying to pressure Iraq to wean itself off of Iranian energy, according to the Wall Street Journal. Iraq
depends on Iran for natural gas, which is used to generate electricity. The
U.S. granted Iraq a 45-day waiver on sanctions on gas imports, but Iraq says it
will need more time. Iraq warns that the U.S. could destabilize the country if
it presses too hard.
China imports from Russia amid Iran sanctions. China
cut oil imports from Iran ahead of U.S. sanctions, and instead is leaning more
on Russia. China’s imports of Russian oil hit a record high in October.
Chevron announces first oil from Gulf of Mexico project. Chevron
(NYSE: CVX) announced first oil from its Big
Foot project in the Gulf of Mexico last week. The project is located 225 miles
south of New Orleans and has a projected lifespan of 35 years.
France fuel protests. France has seen a second week of protests over a
proposed tax hike on diesel. Diesel prices have climbed around 20 percent this
year in France, although that is largely due to the increase in crude oil
prices (until recently). The tax is intended to harmonize gasoline and diesel
prices – diesel has long been undertaxed relative to gasoline in France.
Trump maintains hard line on China. Trump is set to meet with Xi Jingping this
week, but on Monday he suggested that he would move forward with a tariff hike
in January. The 10 percent tariff on $200 billion of Chinese imports is set to
jump to 25 percent at the start of 2019. Trump said it was “highly unlikely”
that he would hold off on that increase. He also said he was ready to move
forward with additional tariffs on another $267 billion of Chinese goods if the
two leaders don’t reach an agreement this week.
Drowning Under Oil Supply Glut - OIR 231118
Companies Lose $1 Trillion As Prices Crash - OIR 201118
Rebounds On Hopes Of OPEC and Action – OIR 171118
Prices Collapse To One-Year Lows – OIR 131118
Behind The Oil Price Crash? – OIR 091118
Prices Tumble On Iran Uncertainty – OIR 061118
U.S. Oil Production Forces Prices Down – OIR 021118
8. Oil Markets Uncertain
As Iran Sanctions Loom – OIR 301018
9. Oil Markets Gripped By Supply
Glut Fears – OIR 271018
10. Oil Prices Crash As Iran Fears Fade – OIR 231018
Where Have The Oil Bulls Gone? – OIR 191018
Oil Prices Under Pressure As U.S. Shale Supply Soars
– OIR 161018
Oil Markets Take A Bearish Turn – OIR 121018
Oil Prices Rise On Iran, Hurricane Outages – OIR 091018
The Oil Price Rally Is Under Threat –
Why Brent Broke $85 – OIR 021018
The $100 Oil Debate – OIR 280918
Prices of PMS, AGO, HHK and Cooking Gas – October 2018
We Expect A Major Rebound In Oil Prices?
Oil Price At Its Point of Inflection?
NCDMB, Oando, Seplat And Many More Push The Nigerian Agenda At The 25th Africa
for Africa’s Oil and Gas Industry Improves – PwC Report
Kachikwu, Adewale Tinubu And Others Represent Nigeria At The 25th Africa Oil
7. Oil Price Rises
in 2019 to be Modest as U.S. Production Constraints Ease - World Bank
8. What’s Behind
The Continued Selloff In Oil?
9. Dangote Refinery to
Save Nigeria from Dirty Fuels With Euro V Specification
10. The World Bank, Red Flags And
the Looting of Nigeria’s Oil Revenues - The Seven Energy Web
U.S. Shale Has A Glaring
12. The Illogical World of Nigeria’s Oil And Gas Industry
13. Average Prices of PMS, AGO, HHK and Cooking Gas –
14. Nigeria’s Fuel Subsidies Bill Set To Soar On Rising
What Oil At $100 A Barrel Would Mean For The Global
16. Oil Prices: The Saudi Chess Game