oil jumps $15 to a 13½ year high, then falls $21; US oil supplies at a 13 year low; SPR at a 19½ year low, total oil + products supplies at a 94 month low after across the board draws; distillate supplies at a 7½ year low after biggest draw in a year; natural gas drilling at a 29 month high..
oil prices fell for just the second time since November this week, but not before jumping nearly $15 to a new 13½ year high before the market even opened for the week...after rising 26.3% to a 13½ year high of $115.68 a barrel last week after much of Russia's oil was sanctioned or eschewed by the market, the contract price for US light sweet crude for April delivery shot up nearly $15 to $130.50 a barrel in off market trading on Sunday on the prospect for a full embargo of Russian oil and products by aligned Western countries, but pulled back from that peak in Asian trading after it became clear to oil traders that Germany and other European countries were not on board with a full cut off of Russian oil to open the week at $121.33 in New York, and then eased further in volatile trading on Monday to settle with a modest $3.72 gain at $119.40 a barrel, after several EU countries pushed back against the proposed embargo on fears it would accelerate inflation and plunge their overexposed economies into recession...oil opened higher again on Tuesday with a Biden announcement that the US would ban Russian oil imports pending, and then spiked as much as $10 to $129.44 as fears of formal sanctions against Russian oil and fuel exports spurred concerns about supply availability, before falling more than halfway back to settle $4.30 higher on the session at $123.70 a barrel, after Putin signed an obscure decree restricting exports of "certain products and raw materials" until Dec. 31, without specifying which products and materials would be included or how severe the restrictions would be...oil opened higher and briefly punched to a 3% increase early Wednesday after the EIA reported across the board inventories drawdowns, but then tumbled nearly 15% to close $15.00 lower at $108.70 a barrel after the United Arab Emirates and Iraq stated they would be encouraging OPEC to consider higher production levels...however, oil prices rebounded almost 6% to nearly $115 a barrel early Thursday,as the fallout from Russia’s invasion of Ukraine continued to rattle the market. but later tumbled 8% to close $2.68 lower at $106.02 a barrel, after Russia pledged to fulfill contractual obligations and some traders told the media that supply disruption concerns were overdone...oil prices pushed higher in early morning trading on Friday after the highest-level talks between Russia and Ukraine since the start of the war failed to yield progress, and then moved to new highs on the day after the US and its European partners paused negotiations on a nuclear deal with Iran, impeding sanctions relief for the Islamic Republic's oil exports, while hostilities in Ukraine fanned concerns over further disruptions to global supply chains and deeper inflation in global economies, before finishing the session $3.31 higher at $109.33 a barrel as traders weighed ongoing worries about global energy supplies against a move by the U.S. to revoke Russia's favor nation trade status, but still ended with a loss of 6.2% on the week..
With oil prices hitting another 13 1/2 year high, we're going to include a price graph, but this time we're going to narrow our focus so that you can see that the new high was actually set on Sunday, before markets opened for the week...
The above is a screenshot of the current interactive and continuously updated oil price chart from barchart.com, which i have reset to show front month oil prices in 2 hours increments over the most recent 15 day period, the same oil prices that were quoted by the media over that period....this interactive chart can also be reset to show prices of front month or individual monthly oil contracts over time periods ranging from 1 day to 30 years, as the menu bar on the top indicates, and also to show oil prices by the minute, hour, day, week or month for each....each bar in the graph above represents the range of oil prices over 120 minutes, with those two hour periods when prices rose indicated in green, with the starting price at the bottom of the green bars and the ending price at the top, and periods when prices fell indicated in red, with the starting price at the top of red bars and the ending price at the bottom, while the small sticks above or below each monthly bar represent the extent of the price change above or below the opening and closing price during the period in question....meanwhile, the bars across the bottom show trading volume for cited oil contract for the two hour period in question, again with rising price periods indicated by green bars and falling price periods indicated in red....
By setting my cursor over Sunday afternoon at 4 PM on that graph, i was able to bring up a readout of the prices during that 2 hour period in the upper left of the graph...there you can see that oil prices started at $121.33 a barrel at the beginning of that period, rose to as high as $130.50 a barrel during the period, and then finished at $126.99 a barrel at 6PM Sunday evening...while oil prices again approached $130 a barrel during the 8AM and 10AM periods on Tuesday, they never topped it, leaving Sunday afternoon's price the highest point on the graph...we can further establish that as the highest since July 2008 by viewing the 20 year oil price graph that we posted last week...
Meanwhile, natural gas prices also finished lower for the first time in four weeks, as traders refocused on the domestic supply and demand situation and forecasts turned warmer....after rising 12.2% to $5.016 per mmBTU last week on record European gas prices and on a colder forecast for mid-March, the contract price of natural gas for April delivery opened higher on Monday but quickly slid more than 3% to close 18.3 cents lower at $4.833 per mmBTU, as revised forecasts indicated less cold weather and lower heating demand next week than they had previously indicated...with even milder forecasts and spring weather approaching, natural gas prices sunk 30.6 cents or more than 6% to $4.527 per mmBTU on Tuesday, and then slipped another tenth of a cent to $4.526 per mmBTU on Wednesday, as rising domestic demand offset the impact of tanking global gas prices... natural gas prices rebounded a bit on Thursday, rising 10.5 cents to $4.631 mmBTU, boosted by a triple-digit decline in inventories and by near-record LNG exports which were causing a larger draw from storage than had been expected...natural gas prices then increased another 9.4 cents to settle at $4.725 per mmBTU on Friday, as a rash of freezing air in the Rocky Mountains, Midcontinent and into Texas forced freeze-offs that cut into production, just as near-term heating demand escalated ahead of the weekend, but still settled 5.8% lower on the week...
The EIA's natural gas storage report for the week ending March 4th indicated that the amount of working natural gas held in underground storage in the US fell by 124 billion cubic feet to 1,519 billion cubic feet by the end of the week, which left our gas supplies 281 billion cubic feet, or 15.6% below the 1,800 billion cubic feet that were in storage on March 4th of last year, and 290 billion cubic feet, or 16.0% below the five-year average of 1,809 billion cubic feet of natural gas that have been in storage as of the 4th of March over the most recent five years....the 124 billion cubic foot withdrawal from US natural gas working storage for the cited week was a bit more than the average forecast for a 120 billion cubic foot withdrawal expected by an S&P Global Platts survey of analysts, while it was more than double the 59 billion cubic feet that were pulled from natural gas storage during the corresponding week of 2021, and was also much more than the average withdrawal of 89 billion cubic feet of natural gas that have typically been pulled out natural gas storage during the same week over the past 5 years…
The Latest US Oil Supply and Disposition Data from the EIA
US oil data from the US Energy Information Administration for the week ending March 4th indicated that even after a big drop in our oil exports and an increase in our oil imports, we had to pull oil out of our stored commercial crude supplies for the eleventh time in 15 weeks and for the 27th time in the past forty-one weeks because of a big increase in demand that could not be unaccounted for …our imports of crude oil rose by an average of 552,000 barrels per day to an average of 6,319,000 barrels per day, after falling by an average of 1,061,000 barrels per day during the prior week, while our exports of crude oil fell by an average of 1,374,000 barrels per day to an average of 2,422,000 barrels per day during the week, which together meant that our effective trade in oil worked out to a net import average of 3,897,000 barrels of per day during the week ending March 4th, 1,926,000 more barrels per day than the net of our imports minus our exports during the prior week…over the same period, production of crude oil from US wells was reportedly unchanged at 11,600,000 barrels per day, and hence our daily supply of oil from the net of our international trade in oil and from domestic well production appears to have totaled an average of 15,497,000 barrels per day during the cited reporting week…
Meanwhile, US oil refineries reported they were processing an average of 15,377,000 barrels of crude per day during the week ending March 4th, an average of 21,000 fewer barrels per day than the amount of oil than our refineries processed during the prior week, while over the same period the EIA’s surveys indicated that a net of 627,000 barrels of oil per day were being pulled out of the supplies of oil stored in the US….so based on that reported & estimated data, this week’s crude oil figures from the EIA appear to indicate that our total working supply of oil from storage, from net imports and from oilfield production was 746,000 barrels per day more than what our oil refineries reported they used during the week…to account for that disparity between the apparent supply of oil and the apparent disposition of it, the EIA just inserted a (-746,000) barrel per day figure onto line 13 of the weekly U.S. Petroleum Balance Sheet in order to make the reported data for the daily supply of oil and for the consumption of it balance out, essentially a balance sheet fudge factor that they label in their footnotes as “unaccounted for crude oil”, thus suggesting there must have been a error or omission of that magnitude in this week’s oil supply & demand figures that we have just transcribed.... moreover, since last week’s EIA fudge factor was at (+1,119,000) barrels per day, that means there was still a 1,865,000 barrel per day difference between this week's balance sheet error and the EIA's crude oil balance sheet error from a week ago, and hence the week over week supply and demand changes indicated by this week's report are completely worthless....however, since most everyone treats these weekly EIA reports as gospel and since these figures often drive oil pricing, and hence decisions to drill or complete oil wells, we’ll continue to report this data just as it's published, and just as it's watched & believed to be reasonably accurate by most everyone in the industry...(for more on how this weekly oil data is gathered, and the possible reasons for that “unaccounted for” oil, see this EIA explainer)….
This week's 627,000 barrel per day decrease in our overall crude oil inventories left our total oil supplies at 989,058,000 barrels at the end of the week, the lowest since October 3rd, 2008, and therefore at a new 13 year low...this week's oil inventory decrease came as 266,000 barrels per day were being pulled our commercially available stocks of crude oil, while 361,000 barrels per day of oil were being pulled out of our Strategic Petroleum Reserve, still part of the Biden administration's original plan to release 50 million barrels from the SPR to incentivize US gasoline consumption....including other withdrawals from the Strategic Petroleum Reserve under similar recent programs, a total of 78,651,000 barrels have now been removed from the Strategic Petroleum Reserve over the past 19 months, and as a result the 577,496,000 barrels of oil remaining in our Strategic Petroleum Reserve is now the lowest since July 5th, 2002, or at a new 19 1/2 year low, as repeated tapping of our emergency supplies for non-emergencies has already drained those supplies considerably over the past dozen years...with Biden's recent announcement that a further 30,000,000 million barrels will be pulled out of the SPR in the wake of the Ukraine situation, the US will have roughly 28 1/2 days of oil supply left in the Strategic Petroleum Reserve when the current SPR withdrawal programs are complete...
Further details from the weekly Petroleum Status Report (pdf) indicate that the 4 week average of our oil imports slipped to an average of 6,176,000 barrels per day last week, which was still 10.1% more than the 5,611,000 barrel per day average that we were importing over the same four-week period last year….this week’s crude oil production was reported to be unchanged at 11,600,000 barrels per day as the EIA's rounded estimate of the output from wells in the lower 48 states was unchanged at 11,200,000 barrels per day, while Alaska’s oil production was 1,000 barrels per day higher at 441,000 barrels per day and had no impact on the rounded national production total....US crude oil production had reached a pre-pandemic high of 13,100,000 barrels per day during the week ending March 13th 2020, so this week’s reported oil production figure was 11.5% below that of our pre-pandemic production peak, but 37.6% above the interim low of 8,428,000 barrels per day that US oil production had fallen to during the last week of June of 2016...
US oil refineries were operating at 89.3% of their capacity while using those 15,377,000 barrels of crude per day during the week ending March 4th, up from a utilization rate of 87.7% the prior week, and in line with the historical utilization rate for early March refinery operations, when the need for seasonal maintenance typically causes rotating shutdowns…the 15,377,000 barrels per day of oil that were refined this week were 24.9% more barrels than the 12,310,000 barrels of crude that were being processed daily in the wake of winter storm Uri during week ending March 5th of 2021, but 2.1% less than the 15,701,000 barrels of crude that were being processed daily during the week ending February 28th, 2020, when US refineries were operating at what was then a lower than normal 86.4% of capacity at the onset of the pandemic...
With the amount of oil being refined this week little changed from a week earlier, gasoline output from our refineries was somewhat higher, increasing by 303,000 barrels per day to 9,577,000 barrels per day during the week ending March 4th, after our gasoline output had increased by 4,000 barrels per day over the prior week.…this week’s gasoline production was 6.4% more than the 9,005,000 barrels of gasoline that were being produced daily over the same week of last year, but 3.2% less than the gasoline production of 9,956,000 barrels per day during the week ending March 6th, 2020....on the other hand, our refineries’ production of distillate fuels (diesel fuel and heat oil) decreased by 73,000 barrels per day to 4,640,000 barrels per day, after our distillates output had increased by 20,000 barrels per day over the prior week…but even with this week's decrease, our distillates output was 25.3% more than the 3,704,000 barrels of distillates that were being produced daily during the storm impacted week ending March 5th of 2021, while 1.4% less than the 4,705,000 barrels of distillates that were being produced daily during the week ending March 6th, 2020...
Even with the increase in our gasoline production, our supplies of gasoline in storage at the end of the week fell for the fifth consecutive week, decreasing by 1,405,000 barrels to 244,606,000 barrels during the week ending March 4th, after our gasoline inventories had decreased by 458,000 barrels over the prior week....our gasoline supplies decreased by more this week than last because the amount of gasoline supplied to US users increased by 219,000 barrels per day to 8,962,000 barrels per day, while our imports of gasoline rose by 157,000 barrels per day to 760,000 barrels per day, and while our exports of gasoline rose by 7,000 barrels per day to 667,000 barrels per day.…even after 5 straight inventory drawdowns, our gasoline supplies were still 5.6% higher than last March 5th's gasoline inventories of 231,603,000 barrels, after last year's Winter Storm Uri had resulted back to back record draws, and hence about 1% above the five year average of our gasoline supplies for this time of the year…
Meanwhile, with this week's decrease in our distillates production, our supplies of distillate fuels decreased for the eighth consecutive week and for the twentieth time in twenty-seven weeks, falling by 5,230,000 barrels to a seven and a half year low of 113,874,000 barrels during the week ending March 4th, after our distillates supplies had decreased by 574,000 barrels during the prior week….our distillates supplies saw the largest drawdown since last year's Winter Storm Uri this week because the amount of distillates supplied to US markets, an indicator of our domestic demand, rose by 137,000 barrels per day to 4,587,000 barrels per day, and because our exports of distillates rose by 325,000 barrels per day to 1,074,000 barrels per day, and because our imports of distillates fell by 129,000 barrels per day to 274,000 barrels per day....and after thirty-four inventory decreases over the past forty-eight weeks, our distillate supplies at the end of the week were 17.2% below the 137,492,000 barrels of distillates that we had in storage on March 5th of 2021, and about 18% below the five year average of distillates inventories for this time of the year…
Meanwhile, despite the drop in our oil exports and the increase in our imports, our commercial supplies of crude oil in storage fell for the 20th time in 31 weeks and for the 35th time in the past year, decreasing by 1,863,000 barrels over the week, from 413,425,000 barrels on February 25th to 411,562,000 barrels on March 4th, after our commercial crude supplies had decreased by 2,597,000 barrels over the prior week…with this week’s decrease, our commercial crude oil inventories fell to about 13% below the most recent five-year average of crude oil supplies for this time of year, but were still almost 25% above the average of our crude oil stocks as of fourth weekend of February over the 5 years at the beginning of the past decade, with the disparity between those comparisons arising because it wasn’t until early 2015 that our oil inventories first topped 400 million barrels....since our crude oil inventories had jumped to record highs during the Covid lockdowns of spring 2020 and remained elevated for more than a year after that, our commercial crude oil supplies as of this March 4th were 17.4% less than the 498,403,000 barrels of oil we had in commercial storage on March 5th of 2021, and are now also 8.9% less than the 451,783,000 barrels of oil that we had in storage on March 6th of 2020, and also 8.4% less than the 449,072,000 barrels of oil we had in commercial storage on March 8th of 2019…
Finally, with our inventory of crude oil and our supplies of all products made from oil remaining near multi year lows, we are continuing to keep track of the total of all U.S. Stocks of Crude Oil and Petroleum Products, including those in the SPR....the EIA's data shows that the total of our oil and oil product inventories, including those in the Strategic Petroleum Reserve and those held by the oil industry, and thus including everything from gasoline and jet fuel to propane/propylene and residual fuel oil, fell by 10,619,000 barrels this week, from 1,735,213,000 barrels on February 25th to 1,724,594,000 barrels on March 4th to 1,735,213,000 barrels on February 25th, after our total supply had decreased by 6,301,000 barrels over the prior week...that left our total supplies of oil & its products now at the lowest since April 11th, 2014, or at a new 94 month low, following the second straight weekly across the board drawdown of all of our oil & oil product inventories...
This Week's Rig Count
The number of drilling rigs running in the US rose for the 65th time over the prior 77 weeks during the week ending March 11th, but still remains 16.4% below the prepandemic rig count....Baker Hughes reported that the total count of rotary rigs drilling in the US rose by 13 rigs to 663 rigs this past week, which was also 261 more rigs than the pandemic hit 402 rigs that were in use as of the March 12th report of 2021, but was still 1,266 fewer rigs than the shale era high of 1,929 drilling rigs that were deployed on November 21st of 2014, a week before OPEC began to flood the global market with oil in an attempt to put US shale out of business….
The number of rigs drilling for oil was up by 8 to 519 oil rigs during this week, after oil rigs had decreased by 3 during the prior week, and there are now 218 more oil rigs active now than were running a year ago, even as they still amount to just 32.8% of the shale era high of 1609 rigs that were drilling for oil on October 10th, 2014, and are still down 22.8% from the prepandemic oil rig count….at the same time, the number of drilling rigs targeting natural gas bearing formations increased by 5 rigs to 135 natural gas rigs, which was the most natural gas rigs drilling since October 18th, 2019, and was also up by 43 natural gas rigs from the 92 natural gas rigs that were drilling during the same week a year ago, but was still only 8.4% of the modern high of 1,606 rigs targeting natural gas that were deployed on September 7th, 2008…in addition, Baker Hughes continues to list a rig drilling vertically for a well intended to store CO2 emissions in Mercer county North Dakota as 'miscellaneous', which thus matches the 'miscellaneous' rig count of one of a year ago
The offshore rig count in the Gulf of Mexico was down by one to eleven rigs this week, with ten of this week's Gulf rigs drilling for oil in Louisiana waters and another rig drilling for oil in Alaminos Canyon, offshore from Texas....that's down by 2 from the 13 offshore rigs that were active in the Gulf a year ago, when 11 Gulf rigs were drilling for oil offshore from Louisiana and two were deployed for oil in Texas waters…since there is not any drilling off our other coasts at this time, nor was there a year ago, those Gulf of Mexico rig counts are equal to the national offshore totals for both years....
In addition to those rigs offshore, we continue to have 3 water based rigs drilling inland; one is a horizontal rig targeting oil at a depth of between 5000 and 10,000 feet, drilling from inland waters in Plaquemines Parish, Louisiana, near the mouth of the Mississippi, another is a directional rig drilling for oil at a depth of over 15,000 feet in the Galveston Bay area, while the third inland waters rig is a directional rig targeting oil at a depth of between 10,000 and 15,000 feet in St. Mary Parish, Louisiana...during the same week a year ago, there were no inland waters rigs deployed..
The count of active horizontal drilling rigs was up by 12 to 607 horizontal rigs this week, which was also 245 more rigs than the 362 horizontal rigs that were in use in the US on March 12th of last year, but still 55.8% less than the record 1,374 horizontal rigs that were drilling on November 21st of 2014...at the same time, the directional rig count was up by 3 to 33 directional rigs this week, and those were also up by 18 from the 15 directional rigs that were operating during the same week a year ago….on the other hand, the vertical rig count was down by 2 rig to 23 vertical rigs this week, and those are also down by 2 from the 25 vertical rigs that were in use on March 12th of 2021….
The details on this week’s changes in drilling activity by state and by major shale basin are shown in our screenshot below of that part of the rig count summary pdf from Baker Hughes that gives us those changes…the first table below shows weekly and year over year rig count changes for the major oil & gas producing states, and the table below that shows the weekly and year over year rig count changes for the major US geological oil and gas basins…in both tables, the first column shows the active rig count as of March 11th, the second column shows the change in the number of working rigs between last week’s count (March 4th) and this week’s (March 11th) count, the third column shows last week’s March 4th active rig count, the 4th column shows the change between the number of rigs running on Friday and the number running on the Friday before the same weekend of a year ago, and the 5th column shows the number of rigs that were drilling at the end of that reporting week a year ago, which in this week’s case was the 12th of March, 2021...
with the lion's share of this week's increase in Texas, we'll again start by checking the Rigs by State file at Baker Hughes to see what's going on there...there we find that four rigs were added in Texas Oil District 8, which encompasses the core Permian Delaware, that two more rigs were added in Texas Oil District 7C, which includes the counties of the southern part of the Permian Midland, and another rig was added in Texas Oil District 8A, which includes the counties of the northern part of the Permian Midland...with the Texas Permian thus showing a seven rig increase while the national Permian basin count was just up by six, we have to figure that the rig that was pulled out of New Mexico had been drilling the far western Permian Delaware, in the southeast corner of that state...elsewhere in Texas, two rigs were added in Texas Oil District 1 and two more rigs were added in Texas Oil District 2, two of which account for the 2 rig increase in the Eagle Ford and two other rig additions in an "other" associated basin that Baker Hughes doesn't identify...there was also a rig added in Texas Oil District 6, which accounts for one of the natural gas rigs added in the Haynesville shale, with the other being added in adjacent northwest Louisiana...note that the Louisiana rig count remained unchanged because a rig was pulled out of the state's offshore waters at the same time...another natural gas rig was added in Ohio's Utica shale, while two more natural gas rigs were added to "other" basins that Baker Hughes doesn't track, most likely the previously unallocated rigs we had previous noted in Texas Districts 1 and 2...
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PTTGCA seeks renewal of permit for proposed Ohio site - Plastics News - PTTGC America, part of Thailand-based PTT Global Chemical Public Co. Ltd., plans to renew an air permit for a proposed plastics and petrochemical complex in Ohio. PTTGC America, part of Thailand-based PTT Global Chemical Public Co. Ltd., plans to renew an air permit for a proposed plastics and petrochemical complex in Ohio. PTTGC has cleared land at the site and received $70 million in funding from Ohio, but the company hasn't made a final decision on the project. Company officials said Feb. 23 on the firm's website that PTTGCA "is in the process of drafting an application for an air permit from the Ohio EPA in accordance with its parent company's Net Zero commitment." An existing air permit for the site in Dilles Bottom was issued in late 2018, but expired Feb. 24. Officials added that the resubmission "will be consistent with the ambitious environmental protection goal" announced last year by PTT Global Chemical, PTTGCA's Thai-based parent company. PTTGCA has invested more than $300 million in the Ohio project and "has prioritized identifying potential partners in order to move the project forward," officials said. Daelim Industrial Co. of South Korea withdrew from the project in mid-2020. "The support and patience of the Ohio River Valley has been crucial to the progress PTTGCA has made toward making the proposed petrochemical complex a reality," officials added. The project — first proposed in 2015 — would include polyethylene resin production and would take advantage of low-priced shale gas feedstock that's been developed in the region in the last decade. If the plant is built, it would be the second major PE resin complex to be built in the region to take advantage of shale gas feedstocks. Shell Polymers will open PE plant with 3 billion pounds of annual capacity in Monaca, Pa., later this year. Shell chose the site because of its access to the Marcellus and Utica shale-based natural gas deposits. Natural gas can be converted into ethane and then into ethylene and PE resin. The site will be the first U.S. PE plant built outside of the Gulf Coast in at least 40 years. In June 2020, a group of engineers, economists and other professionals sent a letter advising against the Dilles Bottom project to the governors of Ohio, Pennsylvania and West Virginia. Dilles Bottom is in close proximity to all three states. The group included professors from Ohio State University, Carnegie Mellon University and the University of Akron. In the letter, they wrote in favor of clean energy policies, including electric vehicles, energy storage, wind power and solar power. The letter also stated that "our goals for economic growth and job creation are being undermined by the mistaken belief that the region's petrochemical and plastics manufacturing industries are poised to greatly expand and … generate large numbers of new jobs." PTTGC responded at the time by saying through a spokesman that the proposed petrochemical complex "would be a multibillion-dollar investment that would yield a positive economic impact for generations to come" and that a final investment decision "will be based upon a long view of industry and consumer markets, not temporary fluctuations and trends.";
Not in Anyone's Backyard? - Cincinnati Magazine - Justin and Ann Feldman used to love their home in Reading, until Duke Energy constructed a high-pressure natural gas pipeline under Market Street in front of it. “The scariest part is that if that line was cracked and would catch fire and would explode,” says Justin Feldman, his voice rising, “we could be incinerated.” The Feldmans’ daughter and grandchildren also live on the pipeline route, deepening their fears. For nearly six years, the Feldmans fought Duke Energy over the construction of the C314V Central Corridor Pipeline. Many in Hamilton County did, from local high schoolers to seniors to politicians. Nearly every community on the route intervened. But the fight came to an end in September, with a decision by the Supreme Court of Ohio to side with the Ohio Power Siting Board and grant Duke a certificate to build. “The decision is a disappointment,” said a statement from city leaders in Blue Ash, who, along with the municipalities of Reading and Evendale and a grassroots opposition group, argued their case to the state supreme court. “The City put up a strong fight to protect the community and its residents.” Now it’s done. The final weld of the approximately 13-mile pipeline was made on December 14, and it now lies a minimum of four feet underground from the southern border of Butler County through the Hamilton County communities of Sycamore Township, Blue Ash, Sharonville, Evendale, Reading, Amberley Village, Golf Manor, and Cincinnati, ending at Duke’s C350 Norwood Station. Safety has always been opponents’ biggest concern. An average of 11 people die each year in pipeline incidents, according to 10- year tracking by the U.S. Department of Transportation’s Pipeline and Hazardous Materials Safety Administration. Duke plans to have the pipeline operational by early March, with restoration projects along the route wrapping up this spring. Company leaders reiterate that they’ve exceeded federal safety requirements and have the track record to operate the pipeline safely. Statistically, now that the pipeline is in the ground, the biggest danger may be, well, the rest of us.
Oil and gas industry groups try to block implementation of rule to better protect the Great Lakes -A new rule went into effect last month, requiring oil and gas companies to better monitor their pipelines if they are in sensitive coastal areas such as the Great Lakes.Two industry groups, the American Petroleum Institute and GPA Midstream have petitioned the U.S. Court of Appeals to review the rule and, until that’s done, stop the rule from being enforced.Congress passed laws in 2016 and 2020 requiring the Pipeline and Hazardous Materials Safety Administration to amend its rules to help prevent catastrophic oil spills that damage shorelines and beaches, and lawmakers specifically named the Great Lakes as an area to be protected.The “Pipeline Safety: Unusually Sensitive Areas for the Great Lakes, Coastal Beaches, and Certain Coastal Waters” interim final rule went into effect in late February.“Unusually Sensitive Areas fall under stricter regulations as to how an operator has to maintain the integrity of the pipe, which would lower the possibility of a failure,” explained Bill Caram, executive director of the watchdog group Pipeline Safety Trust.Caram said the filing by the industry groups came as a surprise for many because it was clear that the Great Lakes should have been better protected all along.“I certainly didn't expect it. This [the previous rule] was an obvious shortfall of the definition. Senator [Gary] Peters and other lawmakers mandated the federal agency that that this loophole be fixed. PHMSA, the regulator, did that in a relatively straightforward manner, and so this definitely took us by surprise.”The rule specifically cited events involving Enbridge pipelines in its introduction of the rule. It stated the rule “will provide enhanced protections for hazardous liquid pipeline accidents similar to the 2010 Marshall, MI and the 2015 Refugio Beach, CA oil spills and ensure that events like the anchor strict that damaged Enbridge’s LineThe two industry groups requesting a stay and review of the rule argued that they had not been given adequate opportunity to comment. The petition to the court said the agency issued the rule without first publishing the proposal, providing the public a chance to comment and the agency a chance to amend the Unusually Sensitive Areas definition.This could delay implementation of the rule for months or longer, because if the petition is denied, then the two industry groups can file suit.“We certainly hope this is just a matter of months and the agency can sort it out. We certainly hope that the agency denies this request, and the rule stays in place,” said Caram.
U.S. Coast Guard called in for oil spill in Oswego Harbor - The U.S. Coast Guard says they were called in from Buffalo for an oil spill in the Oswego Harbor Wednesday. They are joined by the New York Department of Environmental Conservation to monitor an oil sheen that was seen near Breitbeck Park and Oswego Harbor Power LLC facility’s dock. Officials with the DEC say the source of the spoll is believed to be the Oswego Harbor Generating Station. The city has closed the lower trail of Breitbeck Park. Management from the Oswego Harbor Generating Station has closed off the affected area to prevent spread and has contracted agencies to help with the cleanup effort. “Clean water in Oswego Harbor and Lake Ontario are critically important to our residents and wildlife.” Oswego Mayor Billy Barlow said in response to the spill. “We will do our part to ensure that the oil spread is limited and that as much of the fuel that can be captured is.”
Residents near Mariner East say ‘restoration’ work looks like more construction to them - Residents near a section of the Mariner East natural gas liquids pipeline in Middletown, Delaware County, say construction is continuing, despite anannouncement by builder Energy Transfer that work has been finished. The company announced the pipeline’s completion to shareholders in its February quarterly earnings call as well as its March investor presentation. A spokesperson for Energy Transfer said this week that any additional work is not “construction.”“As we said on our most recent earnings call, construction of the final phase of the Mariner East project was completed in February and commissioning is in progress,” said Energy Transfer’s Lisa Coleman. “There are other activities underway, such as restoration and remediation.”Energy Transfer says it has completed the troubled 350-mile-long natural gas liquids pipeline, two years behind the initial schedule. But Edgmont resident Lora Snyder said she watched this past week as a section of pipe was removed and replaced by another — to her, that’s construction.“It’s an ongoing lack of transparency to the community and their own investors,” she said. “It’s not restoration.”Snyder has documented pipeline construction in Delaware and Chester counties with photos and drone footage. She said the stretch in question had issues from the time the pipe was laid, when drilling in 2017 led to “frac-outs.” Those occur when attempts to drill into the bedrock hit more porous geology instead and subsurface water and fluid used in the process rise to the surface and cause flooding.The pipeline project was delayed by multiple construction mishaps across its entire length, including this section. Energy Transfer then created a workaround to ship the natural gas liquids to Marcus Hook by repurposing decades-old gasoline pipelines. Mariner East opponents like Snyder dubbed this the “Frankenpipe.” She worries about safety issues, especially with regard to the older pipe.
Manchin: Biden could invoke Defense Production Act to complete natural gas pipeline- Sen. Joe Manchin (D-W.Va.) on Thursday called on President Biden to invoke the Defense Production Act (DPA) if necessary to complete a U.S. natural gas pipeline following the ban on oil imports from Russia. The West Virginia Democrat — at a Thursday hearing of the Senate Energy Committee, which he chairs — called the 303-mile Mountain Valley Pipeline “the quickest thing that we can get, it’s more energy into the market that’s going to be needed. “I’ve been preaching to the heavens for a long time on this one. It can be done with the Defense Production Act,” Manchin added. “What we do know is that Russia has weaponized energy. They have used it as a geopolitical weapon. The thing I know about an adversary or a bully is if they have a weapon, you better have one that will match it or be better than theirs. And we do, we just haven’t used it,” Manchin said, in reference to American energy stores. Manchin was a leading proponent of the U.S. barring Russian oil imports after the nation invaded Ukraine, a step the Biden administration eventually took last week. Manchin, a pivotal vote who has frequently bucked his party’s legislative agenda, called the Biden administration’s opposition at the time “so wrong.” The Mountain Valley Pipeline began construction in 2014, and once completed is set to carry natural gas between southwestern Virginia and northwestern West Virginia. Manchin said at the hearing that the pipeline could be completed in four to six months and added that he has also introduced legislation to remove regulatory hurdles. Under the DPA, which Biden has previously used for matters relating to wildfires and the COVID-19 pandemic, the president can direct private companies to prioritize developing materials crucial to national defense interests. As gas prices spike, environmentalist groups and Democrats to Manchin’s left on climate issues have also called on Biden to invoke the DPA to deploy renewable energy. Press secretary Jen Psaki was asked at the Thursday White House press briefing whether use of the law is under consideration to increase oil production domestically, and she suggested the administration was not inclined to pay oil companies for “what they probably already have the capacity to do.”
Dallas-based Chief Oil & Gas strikes $2.6 billion deal with Chesapeake Energy - Dallas billionaire and fracking pioneer Trevor Rees-Jones struck a massive deal with Chesapeake Energy Corp. on Tuesday, selling his privately held natural gas producer Chief Oil & Gas and associated assets. The nearly $2.6 billion cash-and-stock deal grows Chesapeake’s foothold in the Marcellus Shale of Pennsylvania, the largest gas play in the U.S. It also marks Chesapeake’s second multibillion-dollar acquisition of a North Texas firm. It paid $2.2 billion last year for rival gas driller Plano-based Vine Energy Inc. Rees-Jones’ Chief Oil & Gas had been exploring a sale amid a surge in energy prices that boosted its valuation, Reuters reported. Shale drillers have been under investor pressure to consolidate in order to gain scale, cut costs and boost production without investing in drilling new wells. Oklahoma City-based Chesapeake has been a buyer since emerging from bankruptcy a year ago and shedding $7.8 billion in debt. To help finance the Chief purchase, Chesapeake also agreed to sell its Powder River Basin assets in Wyoming to Continental Resources Inc. for about $450 million in cash. “Chesapeake is recasting itself as a smaller, geographically concentrated operator,” according to a Bloomberg Intelligence report after the Vine Energy acquisition. “The company can target the vast majority of capital in Appalachia and Haynesville, the two most prolific, lower-cost gas plays.” Rees-Jones’ Chief Oil & Gas, founded in 1994, was among the companies that made the horizontal drilling technology known as fracking an industry standard for extracting natural gas reserves from the Barnett Shale in North Texas. After selling most of those assets, Chief moved into the Marcellus Shale in Appalachia in 2007 and became one of the biggest producers there. Oklahoma City-based Chesapeake Energy is an active driller in shale plays such as the Marcellus in Pennsylvania and Ohio, the Haynesville in Louisiana and the Eagle Ford in South Texas. The deal is expected to immediately increase Chesapeake’s operating and free-cash flow, while growing its Marcellus gas production capacity by up to 200 million cubic feet a day. The transaction also will allow Chesapeake to increase its annual base dividend by 14% beginning in the second quarter of this year.
U.S. natgas slides over 3% on milder forecasts despite soaring global prices (Reuters) - U.S. natural gas futures slid over 3% on Monday on forecasts for less cold weather and lower heating demand next week than previously expected. That price decline came even though soaring global oil and gas prices kept demand for U.S. liquefied natural gas (LNG) exports strong as the Russia-Ukraine conflict stokes energy supply concerns, especially with the United States and Europe considering a ban on Russian energy imports. U.S. gas futures, however, remain shielded from record European prices because the United States, the world's biggest gas producer, has all the fuel it needs for domestic use and the country's ability to export more gas as liquefied natural gas (LNG) is limited by capacity constraints. The United States is already producing LNG near full capacity, so no matter how high global gas prices rise, the U.S. can't produce much more of the supercooled fuel. European futures rose as much as 60% over Friday's record close at one point on Monday, putting European prices about 21 times over U.S. futures. Since the start of the year, the U.S. gas market has mostly shrugged off what was happening in Europe, focusing more on domestic weather and supply and demand, with U.S. gas prices moving in the opposite direction of Europe more than half the time. But it has been hard for the U.S. market to ignore the massive gains in global energy prices in recent weeks. Since Russia invaded Ukraine on Feb. 24, European gas futures have spiked over 280% and were at the record high, while U.S. crude futures jumped as much as 42% to their highest since 2008. Front-month gas futures fell 18.3 cents, or 3.6%, to settle at $4.833 per million British thermal units. On Friday, the contract closed at its highest since Feb. 2. Data provider Refinitiv said average gas output in the U.S. Lower 48 states was on track to rise to 93.6 bcfd in March from 92.5 bcfd in February as more oil and gas wells return to service after freezing earlier in the year. That compares with a monthly record of 96.2 bcfd in December. With the coming of colder weather next week, Refinitiv projected average U.S. gas demand, including exports, would rise from 109.8 bcfd this week to 115.1 bcfd next week. The forecast for next week, however, was lower than Refinitiv's outlook on Friday. The amount of gas flowing to U.S. LNG export plants rose to 12.60 bcfd so far in March from 12.43 bcfd in February and a record 12.44 bcfd in January. The United States has the capacity to turn about 12.5 bcfd of gas into LNG. The rest of the fuel flowing to the facilities is used to operate the plants.
With Spring Weather Approaching, April Natural Gas Futures Extend Losses - Natural gas futures slipped lower for a second consecutive day, as traders continued to focus on bearish shifts in domestic weather outlooks even as war raged in Ukraine and Western sanctions against Russia threatened to send global commodity prices to record highs. The April Nymex natural gas futures contract settled at $4.527/MMBtu, down 30.6 cents day/day. May shed 29.5 cents to $4.563. NGI’s Spot Gas National Avg. fell 17.0 cents to $4.520. NatGasWeather attributed declines to “an increasingly bearish setup” in the weather outlook for next week. Both the American and European weather models extended warmer trends Tuesday, according to the firm. “While the coming six days are rather bullish with stronger-than-normal national demand, the March 15-22 U.S. pattern has trended increasingly bearish as above-normal temperatures over the southern U.S. expand to cover most of the northern U.S.,” NatGasWeather said. This would drop national demand to “the lightest levels in months,” and the data as of Tuesday suggested the milder pattern could stick around through late March. Still, even as bears appeared to have “wrestled momentum away from bulls,” Russia’s invasion of Ukraine remains a source of uncertainty, destabilizing markets, the firm said. This “could again be a reason if U.S. gas prices rally” in coming days, NatGasWeather said. Production dipped to 93 Bcf on Tuesday from nearly 95 Bcf a day earlier, according to Bloomberg’s estimate. Exports of U.S. liquefied natural gas (LNG) have hovered around 13.5 Bcf most of March – near record levels amid robust demand from Europe, NGI estimates show. And, of course, the Russia-Ukraine war looms large. Rystad Energy analyst Kaushal Ramesh noted that European gas prices reached an all-time intraday high on Monday in anticipation of the ban and amid intensifying worries that the war in Ukraine could disrupt or even cut off gas flow from Russia to Europe. “The West has emphasized that all options for sanctions remain on the table” and, as such, “upside risk” to oil and gas prices remains elevated, Ramesh said. In a worst-case scenario, Barclays analyst Amarpreet Singh said Brent prices could surge beyond $200. EBW Analytics Group noted that Russian Deputy Prime Minister Alexander Novak warned of $300 oil, “if not more,” should the West, as a whole, embargo Russian oil exports. Novak also threatened to turn off natural gas to Europe in retaliation.
US natural gas storage fields post another above-average draw as season nears end US natural gas inventories tumbled well above average levels once again as the heating season enters its final weeks before summer injections begin. Storage fields withdrew 124 Bcf for the week ended March 4, according to data released by the US Energy Information Administration on March 10. Working gas inventories decreased to 1.519 Tcf. US storage volumes now stand 281 Bcf, or 15.6%, less than the year-ago level of 1.8 Tcf and 290 Bcf, or 16%, less than the five-year average of 1.809 Tcf. The withdrawal was more than the 120 Bcf draw expected by an S&P Global Commodity Insights' survey of analysts. It also outpaced the five-year average withdrawal of 89 Bcf and more than doubled last year's 59 Bcf pull in the corresponding week. The Midwest region accounted for 40 Bcf of the weekly pulled, as it is now the most undersupplied of all five EIA storage regions relative to the five-year average. Despite the shortage, the Midwest is expected to receive higher imports from Canada this summer, which should allow it to inject plenty of gas this summer. S&P Global Commodity Insights expects imports into the Midwest will be strong at 3.9 Bcf/d this summer. Western Canada storage inventories sit at 210 Bcf, which is 50 Bcf below the five-year low for this time. However, strong production is expected to drive constraints on NGTL pipeline this summer, and limit injections. Even during periods when there are no constraints, the AECO winter 22-23 strip is likely too weak to incentivize strong injections. Technically, the spread between AECO's summer 22 and winter 22-23 strip is 37 cents/MMBtu, which should be enough to rapidly fill storage. However, AECO's summer 22 strip is trading 90 cents to $1 behind Chicago, implying the market expects constraints on the NGTL system. The NYMEX Henry Hub April contract added 10 cents to $4.63/MMBtu on March 10, down 7 cents from one week prior. The summer strip, April through October, climbed 11 cents to average $4.73/MMBtu, down 4 cents week over week. A forecast by S&P Global calls for a 49 Bcf draw for the week ending March 11, which would measure 16 Bcf less than the average draw. The week after points to a drawdown in line with the average. The last net withdrawal of the season typically occurs for the week ending March 25. US storage forecast for the end of March was lowered 200 Bcf from last month's forecast to 1.46 Tcf following multiple 200-plus Bcf withdrawals in 2022, according to S&P Global. The resumed uptrend in US production will allow inventories to inject at a stronger pace this summer, building to an expected 3.65 Tcf, 100 Bcf lower than the previous forecast but in-line with five-year averages. US production is forecast to rebound to 95 Bcf/d in March with the balance of 2022 averaging 96.1 Bcf/d following low January and February levels where well freeze-offs dropped output to average below 93 Bcf/d.
U.S. natgas futures up 2% on lower output, record LNG exports (Reuters) - U.S. natural gas futures gained around 2% on Thursday as near-record liquefied natural gas (LNG) exports caused utilities to pull more of the fuel from storage last week than expected and on forecasts for more heating demand over the next two weeks. U.S. LNG exports have been strong in recent months because global oil and gas prices have traded at or near record highs - especially since Russia's invasion of Ukraine on Feb. 24 stoked new energy supply concerns. Russia is the world's second-biggest producer of gas behind the United States. After soaring to an all-time high over $106 per million British thermal units (mmBtu) on Monday, European gas futures collapsed 30% on Wednesday and were down about 10% on Thursday as gas supplies stabilized with continued high flows from Russia and massive LNG imports from around the world. That supply stabilization prompted traders to take profits. The U.S. Energy Information Administration (EIA) said utilities pulled 124 billion cubic feet (bcf) of gas from storage during the week ended March 4. That was higher than the 117-bcf withdrawal analysts forecast in a Reuters poll and compares with a decline of 59 bcf in the same week last year and a five-year (2017-2021) average decline of 89 bcf. U.S. front-month gas futures rose 10.5 cents, or 2.3%, to settle at $4.631 per mmBtu. U.S. gas futures remain shielded from record European prices because the United States has all the fuel it needs for domestic use and the country's ability to export more LNG is limited by capacity constraints. The United States is already producing LNG near full capacity, so no matter how high global gas prices rise, it would not be able to produce much more of the supercooled fuel any time soon. Since U.S. LNG exports were already near maximum capacity, some analysts said soaring global energy prices would actually cause American gas prices to decline as U.S. drillers seek more oil supplies. That would boost the amount of associated gas that comes out of the ground with that oil. Data provider Refinitiv said average gas output in the U.S. Lower 48 states was on track to rise to 93.4 bcfd in March from 92.5 bcfd in February as more oil and gas wells return to service after freezing earlier in the year. That compares with a monthly record of 96.2 bcfd in December. On a daily basis, gas output was on track to drop to 92.3 bcfd on Thursday as cold weather in some producing basins reduces output. Refinitiv projected average U.S. gas demand, including exports, would hold around 112.0 bcfd this week and next. Those forecast were higher than Refinitiv's outlook on Wednesday. The amount of gas flowing to U.S. LNG export plants rose to 12.58 bcfd so far in March from 12.43 bcfd in February and a record 12.44 bcfd in January.
Natural Gas Futures Advance Amid U.S. Production Drop, Global Supply Uncertainty Natural gas futures forged higher on Friday as production dropped amid blasts of late-winter cold, marking a second consecutive day of gains but not enough to offset losses earlier in the week. The April Nymex gas futures contract gained 9.4 cents day/day and settled at $4.725/MMBtu. May rose 9.7 cents to $4.766. The prompt month had gained 10.5 cents Thursday but finished the week down 6% after forecasts for warm weather later in March fueled losses to start the week. NGI’s Spot Gas National Avg. gained 35.5 cents on Friday to $4.805. Production dipped below 92 Bcf, according to Bloomberg’s Friday estimate, down from around 93 Bcf much of the week – and down from near 95 Bcf the previous week. A rash of freezing air in the Rocky Mountains, Midcontinent and into Texas forced freeze-offs that cut into output just as near-term heating demand escalated ahead of the weekend. Forecast data “held strong national demand through the weekend as a frosty weather system with rain, snow and chilly temperatures sweeps across the interior U.S. and into the East,” NatGasWeather said Friday. The firm said markets also continued to favorably digest a bullish government inventory report that showed supplies at an increased deficit to historic norms. U.S. utilities withdrew 124 Bcf natural gas from storage during the week ended March 4, the Energy Information Administration (EIA) reported on Thursday. The latest decrease lowered inventories to 1,519 Bcf, leaving stocks well below the five-year average of 1,809 Bcf. Analysts at Tudor, Pickering, Holt & Co. (TPH) viewed the market as undersupplied during the EIA report week, estimating a 3.4 Bcf/d weather-adjusted shortfall, versus an undersupply of 0.4 Bcf/d in the prior week. TPH noted modest supply this week as well, as output from both the Midcontinent and the Permian Basin “trended lower through the week.” [Ripple Effect: How Russia’s war on Ukraine has amplified the global conversation about energy independence and shifting natural gas fundamentals, while boosting prospects for LNG export and project development in Mexico. Listen to NGI’s Hub & Flow podcast now.] Exports and Global Tumult Steady calls for American exports of liquefied natural gas (LNG) proved another catalyst throughout the week for futures. U.S. feed gas volumes topped 13 Bcf for the 10th consecutive day on Friday, according to NGI estimates, keeping LNG facilities working near capacity to meet demand. With the war in Ukraine entrenched – and the reliability of Russian gas flows to Europe in question – the LNG demand trend is expected to endure. Europe counts on Russia for a third or more of its natural gas. Flows from Russia had held up through the 16th day of the Kremlin’s invasion of Ukraine on Friday. But the European Commission set a target to slash Russian gas imports by two-thirds before the close of 2022.
Russia crisis may drive a U.S. natural gas surge - The tragedy of Russia’s invasion of Ukraine presents a business opportunity for the U.S. natural gas industry if Europe turns sharply away from Russian gas. Prior to the war, Europe got more than a third of its gas from Russia. If Europeans wean themselves from that, American gas producers and exporters of liquefied natural gas say they can help fill the gap in the years ahead. “There’s a huge opportunity to counter Russian aggression,” said Anne Bradbury, CEO of the American Exploration & Production Council (AXPC), which represents large independent oil and gas producers. “It’s important that we’re able to step up and support our allies.” The issue is at the forefront after the European Commission unveiled proposals yesterday to reduce its dependence on Russian energy, including increasing LNG imports from countries other than Russia and increasing use of renewable energy. President Biden’s ban on U.S. imports of Russian oil also includes gas imports from the country, although the U.S. doesn’t currently import any Russian gas. In a joint letter to Biden last month, AXPC and other industry groups including LNG Allies compared supplying more gas to some of the biggest U.S. foreign policy successes of the postwar era — the Berlin Airlift and the Marshall Plan. But the LNG developers don’t need much help from the Biden administration to boost exports in the next few years. With 14 LNG projects federally approved but not yet built, the U.S. industry could roughly double its exports without need for major regulatory approval. While they don’t need approval from the Federal Energy Regulatory Commission or Department of Energy, the projects do need support from investors. Those 14 projects are awaiting a “final investment decision” from the companies developing them. By extension that means the fate of U.S. gas exports largely hinges on utilities and other gas providers in Europe — if they won’t commit to long-term agreements to buy the fuel, the terminals won’t get built in the United States. “That’s got to happen to get Europe the gas it’s going to need,” said Charlie Riedl, executive director of the Center for Liquefied Natural Gas (CLNG), which represents major LNG companies. Germany, which until the invasion had been planning on importing more gas from Russia, has signaled an increased interest in importing gas by sea. German Chancellor Olaf Scholz announced plans on Feb. 27 to quickly build two import terminals to reduce its dependence on Russia. According to Rystad Energy, Germany has set aside $1.7 billion to buy LNG from countries other than Russia. It hasn’t said where all the LNG will come from. In the short term, the United States can’t send much more gas to Europe. Its imports nearly doubled from November to January, and U.S. terminals are shipping just about all the gas they have. According to CLNG, Europe in February received almost 70 percent of all LNG exported from the United States. “U.S. exports are going at full steam,” .
EQT's Chief Wants U.S. LNG Unleashed for 'Largest Green Initiative on Planet' - The CEO of EQT Corp., the largest natural gas producer in the United States, on Wednesday said leveraging the nation’s natural gas exports could aid foreign allies and reduce global emissions. On the third day of CERAWeek by S&P Global as natural gas took center stage, CEO Toby Z. Rice made the case to use domestic liquefied natural gas (LNG) supply to cut coal use and address global climate change.“Unleashing U.S. LNG to target international coal consumption is not only proven, the opportunity represents the largest green initiative on the planet,” Rice said in unveiling the plan. “By providing a solution to the principal driver of international emissions – emissions that must be addressed if we are to succeed in our climate efforts – we have the ability to extend our influence in addressing climate change beyond our borders.”Rice in February – and also late last year – cautioned against limiting U.S. LNG exports. He said limiting exports would raise prices in the Northeast and harm the environment. EQT produced 527 Bcfe in the fourth quarter across its Marcellus and Utica shale assets in Ohio, Pennsylvania and West Virginia. That’s up from 401 Bcfe in 4Q2020. Full year production was 1.9 Tcfe, up from 1.5 Tcfe in 2020. The United States has the “largest economically developable resource in the world,” the EQT chief said Wednesday. He noted that Iran, Qatar, the United States and Russia “collectively have approximately two-thirds of the world’s natural gas resources. And the substantial majority of the world is reliant on coal. “We need to provide solutions, and to do that, we need to prioritize LNG and pipeline infrastructure to allow us to connect our resources to end-users.”Domestic LNG supply could be one of the “world’s largest weapons to combat climate change,” Rice said. “Unleashing it would enable the United States to replace up to one-third of international coal in the next 20 years. “But equally important, as the recent invasion of Ukraine by Russia highlights, it would allow us to provide energy security to our allies while weakening the energy dominance of our adversaries.”
Tourmaline Sets Sights on Taking Montney Natural Gas to Cheniere LNG Terminal - The No. 1 natural gas producer in Canada, Tourmaline Oil Corp., said it is diversifying its marketing portfolio to fetch the “best pricing possible” for all of its hydrocarbon streams, including an agreement with Cheniere Energy Inc. to participate in the Gulf Coast liquefied natural gas (LNG) export market. AECO The Calgary-based producer, whose focus is in the gassy Montney Shale, Alberta Deep Basin and in Peace River, recently issued its fourth quarter and full-year 2021 results. Last year, the exploration and production (E&P) company established a Gulf Coast LNG long-term netback supply agreement with Cheniere, the leading U.S. gas exporter. The deal is for delivery to Cheniere’s Corpus Christi export terminal in South Texas. “In 2023, Tourmaline will become the first Canadian E&P company participating in the LNG business,” The deal, they said, would provide “a material increase to anticipated 2023 cash flow” based on mid-February JKM strip pricing. In addition, by November, Tourmaline plans to increase gas volumes exported to the U.S. West Coast to 445 MMcf/d from 345 MMcf/d, “with approximately 67% of the gas accessing the premium-priced PG&E California market.” At that time, “western U.S. market exposure will increase by an incremental 50 MMcf/d.” Last year a trio of Montney acquisitions, combined with improved commodity prices, helped to fuel a three-fold jump in profits for Tourmaline. The independent, whose production is 80% weighted to natural gas, centers most of its development in the Western Canadian Sedimentary Basin’s Montney, Alberta Deep Basin and in the Peace River area. In late 2021 and to date this year, Tourmaline said it has spent $63.8 million to beef up its combined gas and liquids production to 2,400 boe/d. Included are 238 drilling locations on 295 square miles of resource rights. Average natural gas production in 2021 grew to 2 Bcf/d from 1.47 Bcf/d in 2020. Oil output rose year/year to 10,145 b/d from 8,308 b/d. Natural gas liquids (NGL) production rose to 59,602 b/d from 36,445 in 2020. Tourmaline’s natural gas volumes fetched an average of $3.94/Mcf 2021, up from $2.68 in 2020. Realized oil prices improved to $67.77/bbl from $47.05. NGL prices jumped to $32.85/bbl from $14.80. .
Baker Hughes Scores Work On Plaquemines LNG Project -Baker Hughes has won a contract from Venture Global LNG to provide an LNG system for Phase 1 of the Plaquemines LNG project in Louisiana. Energy technology company and services provider Baker Hughes has been awarded a contract and a notice to proceed by Venture Global LNG to provide a liquefied natural gas (LNG) system for the first phase of the Plaquemines LNG project in Louisiana. The liquefaction train system supplied by Baker Hughes is modularized, helping to lower construction and operational costs with a plug-and-play approach that enables faster installation. Baker Hughes manufactures, tests, and transports the pre-assembled and fully integrated modular turbomachinery units for Venture Global LNG at its manufacturing and assembly facilities in Italy. As part of the scope, Baker Hughes will also provide field services to assist in the commissioning of the supplied equipment. According to the company, the order builds on an award in the fourth quarter of 2021 for Baker Hughes to provide power generation and electrical distribution equipment for the comprehensive power island system of Venture Global LNG’s Plaquemines LNG project. When fully developed, Plaquemines LNG will have an export capacity of up to 20 million metric tonnes per year. The Plaquemines LNG project order follows a similar contract for a comprehensive LNG technology solution supplied by Baker Hughes for Venture Global’s Calcasieu Pass LNG terminal in 2019, also in Louisiana. In 2021, Baker Hughes completed delivery of the ninth and final block for Calcasieu Pass with all shipments finalized ahead of schedule. Calcasieu Pass holds the global record for the fastest construction of a large-scale greenfield LNG project, moving from FID to first LNG in 29 months.
BKV Working on Certified Natural Gas Label; Seneca E&P Operations Gain Designation -- Thailand’s Banpu Kalnin Ventures Corp. (BKV) and BKV-BPP Power LLC are working to certify natural gas produced in the Lower 48 initially to fuel a power plant in Central Texas. Denver-based exploration and production (E&P) company BKV purchased the Temple I power plant north of Austin for $430 million in November with Banpu Power US Corp. The facility, which powers 750,000 homes across Central Texas, is equipped with emissions-control technology. BKV-BPP Power, a joint venture between Banpu Power plc and Banpu Group, said Project Canary is overseeing the certification process to designate production as responsibly sourced gas, or RSG. Further emissions-monitoring technology for the Temple facility also is being considered as the partnership works to source RSG for the power plant. The E&P also noted it plans to further evaluate midstream infrastructure associated with delivering natural gas to Temple I in the future. Natural gas certified from the upstream operations that is not consumed at Temple I is to be marketed as RSG, BKV said. Project Canary’s TrustWell certification is to be deployed to nearly 100 BKV pad locations in the Barnett and Marcellus shales. BKV said it already has continuous monitoring units at pad location across its Marcellus operations and would continue to add units through 2023. BKV was formed in 2015 by Thailand’s Banpu PCL, a diversified energy company. In 2019, BKV purchased Devon Energy Corp.’s Barnett Shale assets for $770 million. Through the deal, BKV acquired 320,000 gross acres and 4,200 producing wells. BKV recently reported gross natural gas production of 550,000 Mcf/d from the Barnett assets. In Pennsylvania, BKV said it holds 50,000 gross acres across the Marcellus, with 138 wells in operation and 150,000 Mcf/d gross production. Meanwhile, Seneca Resources Co. LLC announced it had expanded its RSG certification to 300 MMcf/d of the company’s Appalachian natural gas production with Project Canary. In September 2021, the E&P arm of National Fuel Gas Co. entered Project Canary’s assessment process for 121 of its Pennsylvania wells, about 30% of Seneca’s total production in the region. The E&P said it had also deployed Canary X continuous emissions monitoring units on select pads in addition to its existing leak detection monitors. Project Canary’s certification expands upon Seneca’s prior RSG certification from Equitable Origin’s (EO) Standard for Responsible Energy Development. In mid-January, EO certified 100% of Seneca’s Appalachian natural gas production, representing more than 1 Bcf/d. Seneca explores for natural gas and oil in the Marcellus and Utica shales, as well as in California.
Crescent Point to Hold Spending in Check Despite Stronger Oil, Natural Gas Prices - After regaining financial strength thanks to improved oil and gas prices for growing production, Calgary-based Crescent Point Energy Corp. plans to increase stockholder loyalty rewards instead of accelerating field activity. Crescent Point, which reports in Canadian dollars (C$1.00/US 79 cents), expects spending in 2022 will stay in a range of $825-$900 million set last November, the company said. “This budget remains unchanged, despite a stronger commodity price environment,” said Crescent Point. “Management remains disciplined and focused on generating significant excess cash flow to create shareholder value.” A planned first-half 2022 share buy-back will increase by 50% to $150 million, said the firm. The investor loyalty rewards began with a $60 million Crescent Point purchase of its own stock in December. The firm also repaid $815 million of corporate debt. Annual average daily Crescent Point production rose to 114.4 MMcf/d of natural gas in 2021 from 67.4 MMcf/d in 2020 and to 17,769 b/d of natural gas liquids (NGL) from 14,542 b/d. Oil hovered at 95,839 b/d, slipping slightly from 95,859 b/d. The annual average price received for Crescent Point gas improved to $4.51/Mcf in 2021 from $3.02/Mcf in 2020. NGLs more than doubled to $42.33/bbl from $17.18/bbl. Oil jumped to $78.43/bbl from $43.50/bbl.
Oxy’s Hollub says More Capital Needed to Sustain Production in 2022 - Occidental Petroleum Corp. will need to spend more capital in 2022 to maintain oil production at 2021 levels, CEO Vicki Hollub said. Houston-based Oxy is one of the largest U.S. oil producers, with a leading footprint in the Permian and Denver-Julesburg basins, as well as in the Gulf of Mexico (GOM). Internationally, Oxy has operations in the Middle East and North Africa. Oxy expects oil and gas capital expenditures (capex) to total $3.2-3.4 billion in 2022, up from $2.41 billion in 2021. The firm is allocating $1.7-1.9 billion of the capex total to the Permian, up from $1.09 billion last year. Another $500 million is earmarked for the GOM, along with $500 for the international segment and $400 million for the “Rockies and other” segment in the Lower 48. Oxy is targeting flattish oil and gas production, however, at a range of 1.14-1.17 million boe/d in 2022 with a roughly 54.5% oil cut. Comparable production in 2021 was 1.17 million boe.“Our 2022 capital plan invests in cash flow longevity while building on the capital intensity leadership we demonstrated in 2021,” Hollub said. “We have sized our capital plan to sustain production in 2022 at 1.155 million Boe per day while investing in high-return projects that will provide cash flow stability throughout the cycle.” Hollub added, “We have also incorporated an expectation for inflation and a capital range to reflect the potential for fluctuations in our third-party-operated assets and our low-carbon opportunities during the year.” Oxy expects sustaining capital, which it defines as the capital required to sustain production in a $40/bbl West Texas Intermediate oil price environment over a multiyear period, to increase to about $3.2 billion in 2022 from $2.9 billion in 2021. The expected increase is driven by Oxy’s reduced inventory of drilled but uncompleted wells, along with additional investment in its GOM and enhanced oil recovery assets “to optimize the long-term productivity of our reservoirs and facilities,” Hollub said.She added, “If the macro environment requires spending below our multi-year sustaining capital, we have the ability to reduce it further and hold production flat for shorter periods of time, as we’ve demonstrated.” In the Permian, Oxy is developing what it touts as the world’s largest direct air capture (DAC) facility to remove carbon dioxide (CO2) emissions from the atmosphere. Oxy is partnering on the facility with developer 1PointFive Inc. through its Oxy Low Carbon Ventures unit. Hollub said Oxy is “one of only a few oil and gas companies with net-zero goals that are aligned with the Paris Agreement’s 1.5-degree Celsius pathway.”
Phillips 66 says refiners will need to find a way to mitigate carbon emissions - (Reuters) - Oil refiners will have to develop ways to mitigate carbon emissions in the future, the chief operating officer of U.S. refiner Phillips 66 said at an energy conference on Tuesday. In remarks at the CERAWeek energy conference, Mark Lashier said renewable fuels will not replace diesel and jet fuels in the transportation fuel mix, requiring the industry to come up with a means of cutting carbon dioxide emissions. “You’re not going to able replace all the diesel and all the jet fuel the world uses with renewables,” Lashier said. Total renewable feedstocks are between 2.5 million and 3 million barrels per day (bpd) available to refiners with plants to process them, he said. Phillips 66 is converting a crude oil refinery in Rodeo, California into a renewable fuels refinery that will produce about 50,000 bpd of fuels from sources like animal fats and used cooking oils. The conversion will cost $850 million.
United Steelworkers union calls on oil companies to end Russian crude imports - United Steelworkers (USW) International President Tom Conway said the union, which is the largest labor union operating U.S.-based oil refineries, terminals and pipelines, calls on their government and employers to cut off all Russian imports of crude oil that would be processed in our domestic refineries. “We must act now to begin replacing Russian oil in our systems and plan for long-term alternatives for our refineries, including increasing efforts to secure domestic crude oil and importing oil from other global sources,” Conway said. “Our union will begin to oppose with every lever available to us the processing of this Russian-sourced oil, and we call upon our unionized colleagues in other oil-processing nations to also help cut off the income stream Vladimir Putin generates through exporting Russian crude.” The union recently concluded labor contract negotiations through its National Oil Bargaining Program (NOBP) with the domestic oil industry covering the vast majority of U.S.-based oil refining. The union watched, over the past year, the growing profits of its employers, and it constantly monitors the prices of oil markets. “We negotiated a responsible contract that does not add to price gouging or inflationary pressures,” Conway said. “We now urge our employers to avoid the impulse to use this crisis to increase gasoline and diesel prices at the pump, adding to current price spikes.” USW acknowledge some employers have already announced that they will cease purchases of Russian crude going forward, but also note that those companies who are the largest purchasers of Russian oil have yet to take such steps. “Our union does not seek a confrontation with those employers, but we call on them to act immediately to avoid provoking unnecessary disputes over the issue of processing Russian-sourced oil,” Conway said. “The USW stands in unity and solidarity with the people of Ukraine and our colleagues in the Ukrainian labor movement. It is incumbent upon our government and employers to do the same and do everything in their power to assist the Ukrainian people in their hour of need.”
What do US refineries import from Russia? And what if they stop? - Russia’s unprovoked war against Ukraine has posed a dilemma regarding Russian crude oil. Russia is the world’s second-largest oil exporter after Saudi Arabia, sending out an average of more than 7 MMb/d last year, or about 7% of global demand. And the world needs more oil — demand for crude has rebounded from its COVID lows, and OPEC+ (of which Russia is part) and U.S. producers alike have been ramping up production only gradually. So the dilemma is, does the U.S. continue importing Russian crude oil to help hold down gasoline, diesel, and heating oil prices, or does the U.S. ban such imports as an additional rebuke to Russia’s actions in Ukraine? In today’s RBN blog, we look at which refiners and refineries have been importing Russian crude oil, heavy gasoil, and resid and what would happen if the U.S. said “Nyet” to Russian imports.The debate over Russian imports of crude oil and other refinery feedstocks is reaching a fever pitch. The Biden administration, which with U.S. allies has implemented sanctions against Russian banks, Putin, and his billionaire friends, has been reluctant so far to push for a ban on Russian crude oil exports, citing concern about the impact such an action would have on U.S. refined products prices. That stand may not last long. Last week, Senator Joe Manchin, the West Virginia Democrat and chairman of the Senate Energy & Natural Resources Committee, and Senator Lisa Murkowski, the Alaska Republican and ranking member on the same panel, introduced the proposed Ban Russian Energy Imports Act. The measure quickly garnered support from both sides of the aisle, including Speaker Nancy Pelosi, the California Democrat, and Senator Lindsay Graham, the South Carolina Republican, suggesting the kind of bipartisan consensus usually reserved for bills praising Thanksgiving, baseball, or international icons like Nelson Mandela and Mother Theresa.Whether imports of Russian crude oil are banned — or individual companies decide on their own they just don’t want the stuff — we think a look at just how much the U.S. depends on Russia for crude oil and refined products merits a closer look.For many years, Russia has been a key supplier of crude oil, unfinished intermediate products, and refined products to the world. In 2021, Russia exported a little more than 7 MMb/d of these products, with about 60% going to Europe, 20% to China, and 17% to the OECD Americas. Of that 17%, the U.S. imported 685 Mb/d of crude oil and refined products from Russia last year (multicolored bar to far right in Figure 1), including 199 Mb/d of crude oil (red segment in bar to far right) and 356 Mb/d of “other products” (light-green bar segment) such as topped crude oil, heavy vacuum gasoil (HGO), and fuel oil (see Complex Refining 101). Russia accounted for about 8% of total U.S. crude oil, intermediates, and refined product imports.Most Russian petroleum imports (~55%) come into ports along the U.S. Gulf Coast (PADD 3), where more than half of U.S. refining capacity is located. About 25% of Russian imports arrive at East Coast (PADD 1) docks, with the West Coast (PADD 5) making up the ~20% balance.Assuming, as we are now seeing signs of, there is an imminent shift away from Russian imports (whether by a U.S. ban or decisions by individual companies), the companies with the greatest exposure include Valero Energy, with 2021 Russian feedstock imports averaging 220 Mb/d (blue slice of pie chart to left in Figure 2); ExxonMobil, with 87 Mb/d (red slice); Marathon Petroleum, with 48 Mb/d (green slice); and PBF Energy, with 45 Mb/d (purple slice). As for the specific refineries receiving Russian feedstocks — either HGO and resid (red bar segments in graph to right) or crude oil (blue bar segments) — the biggest consumers have been Valero St. Charles, ExxonMobil Baytown, Valero Port Arthur, and Valero Corpus Christi (tallest bars in graph to right). These four sites accounted for more than 40% of all Russian feedstock imports in 2021. Another 12 U.S. refineries (smaller bars in graph to right) also received HGO and/or resid (red bar segments), Russian crude oil (blue bar segments), or some of each at quantities greater than 10 Mb/d.
Biden says U.S. will ban Russian oil imports in response to Putin's invasion of Ukraine - President Joe Biden on Tuesday announced that the U.S. will ban imports of Russian oil, a major escalation in the international response to Moscow's invasion of Ukraine. The move came as Western-allied nations work to sever Moscow from the global economy to punish Russian President Vladimir Putin for his unprovoked aggression. "Today I am announcing the United States is targeting the main artery of Russia's economy. We're banning all imports of Russian oil and gas and energy," Biden said at the White House. "That means Russian oil will no longer be acceptable at U.S. ports and the American people will deal another powerful blow to Putin's war machine." "This is a step we're taking to inflict further pain on Putin," Biden said. The United Kingdom announced its own restrictions on buying Russian oil imports just before Biden spoke, saying it will phase out the country's imports by the end of the year. The European Union earlier Tuesday morning unveiled a plan to wean itself off of Russian fossil fuels. "We simply cannot rely on a supplier who explicitly threatens us," European Commission President Ursula von der Leyen said in a press release announcing the plan. The U.S. imported about 672,000 barrels a day from Russia in 2021, according to figures from the Energy Information Administration. That amount comprises roughly 8% of the total U.S. imports of oil and refined products. Most of the country's crude oil and petroleum imports come from Canada, Mexico and Saudi Arabia, making the U.S. far less dependent on Russian oil than many of its European partners. The news of the ban, confirmed to CNBC by two people familiar with the matter prior to Biden's speech, sent oil markets soaring Tuesday morning. The price on West Texas Intermediate crude futures, contracts for April oil deliveries, hit $129.44 a barrel. That level is just below a recent high of $130.50 a barrel hit on March 7, which at the time was the highest price on oil futures since 2008. Putin's actions have provoked an unprecedented international reaction, as dozens of countries slap crippling sanctions on the Kremlin, its ultra-rich oligarchs and even Putin himself. Russia's currency has plummeted in value and its stock market has closed, while a growing list of companies have pulled their business out of the country. U.S. gas prices touched all-time highs following news of the ban on Russian oil imports. The national average for a gallon of regular gas rose to a record $4.173 on Tuesday, according to AAA. The prior record was $4.114 from July 2008, not adjusted for inflation.
GOP senator outlines proposal for 'Energy Operation Warp Speed' -Sen. Bill Cassidy on Wednesday unveiled an energy policy proposal he equated to the Trump administration’s “Operation Warp Speed” vaccine development program to address soaring energy prices. The Louisiana Republican’s proposal included streamlining the permitting process for energy development at agencies such as the Environmental Protection Agency, similar to the regulatory streamlining put in place to rapidly develop the COVID-19 vaccine over 2020. It would also incorporate a streamlined process for advanced nuclear permits and finalize a 5-year plan for future oil and natural gas development. Cassidy also proposed to eliminate regulatory barriers for technology that reduces emissions and create a strict timeline for feedback and approval of permits and handling of complaints. Responding to the fact that less than 10 percent of U.S. oil drilling is on federal lands, Cassidy replied saying “energy is very susceptible to margins. So a little bit of extra margin drives down cost pretty quickly, and a little bit of a short margin." "So when they say 'oh, it's just a little bit on federal lands,' that's the margin that makes the difference,” he added, referring to the Biden administration. Cassidy told reporters that he “absolutely” saw a place for renewable energy in the solution but pointed out that such technology is not ready for full-scale rapid deployment. “We're seeking common ground with those who are concerned about climate, absolutely. We've also spoken to Europeans that have seen a large-scale rapid deployment of solar energy on the African North Shore, that that could free up natural gas. They're currently using for domestic use in kind of antiquated natural gas plants. And you could ship that by pipeline to Europe,” he said. Cassidy also presented the proposal outline as beneficial with regard to emissions, saying it would remove regulatory obstacles to renewable development and speed up the permitting process for installing emissions-lowering technology.
U.S. crude oil and fuel stockpiles fall last week; SPR at 2002 low - U.S. oil stockpiles fell across the board last week, the Energy Information Administration said on Wednesday, at the same time the energy market contends with worries of globally tight supply after Russia’s invasion of Ukraine. Crude inventories fell by 1.9 million barrels in the week to March 4 to 411.6 million barrels, compared with analysts’ expectations in a Reuters poll for a 657,000-barrel drop. Crude stocks at the Cushing, Oklahoma, delivery hub fell by 585,000 barrels in the week to their lowest since August 2018, EIA said. U.S. crude stocks in the Strategic Petroleum Reserve fell to 577.5 million barrels, the lowest since July 2002. Last week, U.S. President Joe Biden authorized an initial release of 30 million barrels of oil from the SPR amid the ongoing conflict involving Russia, a top oil exporter. In fuel inventories, distillate stockpiles, which include diesel and heating oil, fell by 5.2 million barrels in the week to 113.9 million barrels, their lowest since November 2014. Analysts had expected a 1.9 million-barrel drop. Distillate stockpiles in the East Coast and the Gulf Coast regions fell to their lowest since June 2018 and June 2019, respectively. U.S. gasoline stocks fell by 1.4 million barrels to 244.6 million barrels, the EIA said, compared with analysts’ expectations for a 2.1 million-barrel drop. “Gas and distillate inventories dropped as implied demand rose for both, while distillate exports rose strongly – helped by a rise bound for Europe, which could be to replace the impending loss of Russian supplies amid self-sanctioning,” said Matt Smith, lead oil analyst Kpler. Refinery crude runs fell by 21,000 barrels per day in the last week, while utilization rates rose by 1.6 percentage points, EIA data showed. Net U.S. crude imports rose by 1.93 million bpd per day, EIA said.
U.S. Energy Secretary Granholm calls on oil and gas companies to raise output - With oil prices recently hitting the highest level since 2008, Secretary of Energy Jennifer Granholm took to the stage in front of a room full of energy executives with a simple message: raise output. "We are in an emergency, and we have to responsibly increase short-term supply where we can right now to stabilize the market and minimize harm to American families," she said Wednesday at CERAWeek by S&P Global. The U.S. has tapped the Strategic Petroleum Reserve twice in recent months — last week and in November — and Granholm said a third release is not off the table. But she also called on the private sector — and Wall Street — to play a role at this pivotal time. "I hope your investors are saying these words to you as well: In this moment of crisis, we need more supply ... right now, we need oil and gas production to rise to meet current demand," she said. s Oil and gas companies have fundamentally shifted their business models in the wake of the pandemic. While once it was about growth at all costs, capital discipline now reigns supreme. Companies are paying down debt, announcing share buybacks and hiking dividends. Along with those measures, they've pledged to keep supply in check. In her appeal to an industry that has felt alienated by the administration, Granholm said the Department of Energy and the Biden administration broadly are ready to work with producers. She said that increasing output now doesn't detract from the White House's longer-term clean energy goals, declaring "we can walk and chew gum at the same time" in reference to pursuing both fossil fuel and renewable energy pathways. The oil and gas industry has said the White House is holding back drilling with unfriendly policies. Officials have dismissed these claims. The industry also is struggling with the same supply chain issues that are reverberating throughout the broad economy. Occidental Petroleum CEO Vicki Hollub said Tuesday that it's difficult to find raw materials like sand and that the labor market remains tight. Hollub also stressed that output can't just be raised on a dime. While the industry had prepared for supply chain bottlenecks, it had not prepared for a sudden call to raise production, she said.
PolitiFact | Fact-checking Biden’s claim that there are 9,000 unused oil drilling permits President Joe Biden said that his policies have not made the U.S. less equipped to withstand the impact of the ban on Russian energy imports. He contended that the onus is on U.S. oil and gas companies that have permits to begin drilling, but haven’t started."It’s simply not true that my administration or policies are holding back domestic energy production," Biden said March 8 in a speech announcing a U.S. ban on Russian oil imports. Biden said that companies pumped more oil in the U.S. during his first year in office than during his predecessor’s first year and that we were on track for record oil production next year. Then Biden pivoted to point the finger at the industry:"In the United States, 90% of onshore oil production takes place on land that isn’t owned by the federal government. And of the remaining 10% that occurs on federal land, the oil and gas industry has millions of acres leased," Biden said. "They have 9,000 permits to drill now. They could be drilling right now, yesterday, last week, last year. They have 9,000 to drill onshore that are already approved." Biden said that the companies are not using these permits to drill. "These are the facts. We should be honest about the facts." He’s right on the numbers of permits but what that means is a little more complicated than his statement suggests.The industry could move forward with the permits that it has that are currently unused and could ramp up domestic oil production to replace Russian oil, but these moves take time.Before drilling can occur, the lease holder has to get a federal permit. At the end of 2021, there were 9,173 approved and available permitsto drill on federal and Indian lands. Those permits include those issued under Biden and those still active from Trump’s administration and potentially before, said Josh Axelrod, of the National Resources Defense Council. Companies don’t have to immediately begin drilling as their leases last 10 years and can be extended beyond that. From a federal regulatory standpoint, once a permit is approved, industry can proceed. The president suggested the onus is on the industry to start drilling. But it’s not as simple as Biden made it seem, because there are some steps before companies begin production.Companies have to contract rigs to drill the wells, and build a sufficient inventory of permits before rigs are contracted, said Jennifer Pett, a spokesperson for the Independent Petroleum Association of America, a trade group that represents oil and natural gas producers. Douglas Holtz-Eakin, an economist and president of the American Action Forum, a center-right think tank, said firms are trying to assess the durability of the global rebound. "They have to be sure that the costly investment (and time) that it takes to turn a lease into a producing well is worth it."
Biden wants U.S. oil to drill more. Here’s why they’re holding back— The war in Ukraine has touched off a feud between the White House and U.S. oil industry as many companies reap record profits from rising prices despite pumping less crude than before the pandemic, leaving American consumers beset by surging gasoline costs. President Joe Biden has urged U.S. oil companies to step up production -- but they are wary given his historic hostility toward fossil fuels and the risk that new drilling won’t pay off over the long term. The political dangers are stacking up for an administration set to lose ground in midterm elections in November with record-high inflation stinging voters even before Russia’s invasion of Ukraine. For now, polls show most Americans support the U.S. ban on Russian crude even if it means higher prices at the pump. Biden has pinned the surge directly on Vladimir Putin. This is “Putin’s price hike,” he said. “His logic of where to point the blame is probably justifiable and politically smart,” said Charles Franklin, director of the Marquette Law School Poll. “But does it make people ignore the fact that it’s costing them an extra 12 or 15 bucks to fill up the average car? I don’t think it makes those economic concerns to households go away.” The Biden administration finds itself in the uncomfortable position of pleading with oil companies to boost crude production, despite its long-term goal of shifting the U.S. away from the fossil fuels that worsen climate change. “We are on a war footing,” Energy Secretary Jennifer Granholm told oil executives at the CERAWeek by S&P Global conference Wednesday. “We need oil and gas production to rise.” But it’s not as simple as oil companies turning on a spigot. These businesses make drilling plans based on economic forecasts for at least a year out, when OPEC+ may have boosted output and prices may have long since peaked. That leaves Biden in a political bind. Republicans are confident that inflation and gas prices will help deliver them control of Congress despite White House attempts to steer voters’ anger elsewhere. “Biden’s attempt to deflect blame is an insult to every American and small business owner struggling to afford the cost of everyday goods,” RNC Chairwoman Ronna McDaniel said Thursday in an emailed statement. Franklin, the Marquette pollster, said inflation and gas prices are “made-to-order issues for the opposition party” because “people feel them and you can point blame at the president.”
The Real Reason Big Oil Won't Save Us From High Gas Prices - As gas prices spike for American drivers, fossil fuel boosters have slammed President Joe Biden for policies they say constrain U.S. energy production. “We have the reserves here and this is preventable,” Rep. Garret Graves of Louisiana, the ranking Republican on the House Select Committee on Climate Crisis, told reporters in Washington Tuesday. “No leasing or energy production—that’s not an energy policy.” But to understand why the industry really isn’t ramping up production, it helps to hear what its leaders are telling each other off camera. In Houston this week, where oil and gas executives are gathered for the industry’s most influential annual conference, CERAWeek by S&P Global, industry insiders are having a very different conversation than the one broadcast on cable TV. The primary thing holding back more production isn’t government policies, they say. It’s money. Getting more oil flowing requires capital and comes with high risks in a volatile oil market. With steep losses in recent memory, the investors who control the purse strings are keeping the companies on a tight leash. “Ultimately, companies have to make a decision to risk their capital… nobody knows how this episode is going to play out,” Mark Viviano, managing partner at Kimmeridge, a private equity firm focused on oil and gas, told a packed conference room on March 8. “I don’t think it’s realistic to think there’s going to be a collective industry response to this crisis. Unfortunately, it’s just not the way the industry is.” In theory, that’s not how the market is supposed to work. Typically, a steep rise in oil prices would drive a steep uptick in drilling, but this time around may be different. After the industry suffered huge losses in the years leading up to the COVID-19 pandemic, investors continue to prioritize safe profits. And even though the Biden administration has enacted few climate regulations restricting oil and gas, industry leaders say they continue to feel the climate pressure from investors. Upset at their returns, investors started demanding changes, imposing what is widely referred to as “capital discipline.” Instead of financing drilling anywhere and everywhere, investors told oil companies to focus on their most profitable oil projects and shelve the others. The COVID-19 pandemic, and the resulting lockdown that briefly sent oil prices negative, confirmed the wisdom of that strategy. Jeff Ritenour, Chief Financial Officer at Devon Energy, an Oklahoma City-based oil and gas company, described at CERAWeek a “fundamental shift” that his business made to use profits to pay down debt, provide a reliable dividend to shareholders and buy back shares. In order to do that, the company has maintained a “low reinvestment ratio”—meaning it limits its investment in new production. Similar approaches have played out at firms across the industry and made “capital discipline” industry orthodoxy.
What's next for oil: Drilling boom, recession or more EVs? - Oil is flirting with danger. Crude prices continued to soar yesterday, raising concerns about their impact on the global economy. But it’s an open question as to what will happen next. Analysts said the surge in oil prices could spur any number of outcomes, from a drilling boom to a worldwide recession to an accelerated shift to electric vehicles. The range of consequences reflects the volatility in oil markets sparked by Russia’s invasion of Ukraine and the crippling sanctions issued by Western governments in response. The penalties notably exempted energy, but that has not prevented traders from voluntarily shunning Russian barrels. Two analysts estimated that about 3 million barrels a day of Russian production has been stranded by traders, which would amount to almost 40 percent of the country’s oil exports. Brent, the international crude benchmark, has risen from around $100 a barrel when Russia launched its attack in late February to almost $130 a barrel yesterday. “You have already seen a huge drop in Russian crude into the market, and the market has already caused a disruption without any of these bans,” said Marianne Kah, a former chief economist at ConocoPhillips who now tracks the industry at Columbia University’s Center on Global Energy Policy. The price surge came as the United States and United Kingdom yesterday announced bans on imports of Russian oil. Analysts said the bans were a secondary factor in the price spike. Both countries are relatively small importers of Russian oil. The United States imported 626,000 barrels a day of Russian oil in November while British purchases stood at 170,000 barrels a day, according to the International Energy Agency. Russia, by comparison, exported 7.8 million barrels a day that month. The American and British bans notably stopped short of preventing companies in other countries from buying Russian hydrocarbons. That’s important because Europe accounts for 60 percent of Russian oil exports. China represents another 20 percent. More consequential to the price spike has been the voluntary embargo that traders appear to have placed on Russian exports, analysts said. While energy has been exempt from Western sanctions so far, many oil purchases require buyers to secure a letter of credit from financial institutions. Buyers have reported difficulty obtaining those letters, Houser said. “There is some confusion in the market about what is sanctionable and what is not,” he said, noting the Treasury Department issued guidance last week to help answer those questions.
Oil producers in a 'dire situation' and unable to ramp up output, says Oxy CEO - As oil prices surge to the highest levels since 2008, Occidental Petroleum CEO Vicki Hollub said U.S. producers cannot increase output right away. "We're in a really dire situation," she said Tuesday at CERAWeek by S&P Global. "We've never faced a scenario where we need to grow production, when actually supply chains not only in our industry but every industry in the world [are] being impacted by the pandemic." U.S producers were largely expecting to keep production flat this year, and in the face of surging crude prices, output can't just be ramped up right away, Hollub said. "Now, with supply chain challenges, it makes any kind of attempt to grow now — and at a rapid pace — very, very difficult," she said. Production in the oil-rich Permian Basin is back around its pre-pandemic peak, according to Hollub, who noted the region faces significant challenges in boosting output. It's the only shale basin in the U.S. that can increase production, she said. Part of the difficulty is the need to offset declines from wells in the region that are past their peak. Other obstacles to growth are reverberating throughout the economy, including labor shortages and issues securing raw materials. While the industry had prepared for these hurdles, it had not accounted for a scenario in which it needed to rapidly crank out oil supply. "The call for incremental production in the United States, at this point, especially with the supply chain challenges, can't happen at the level that's needed not only for our country but for the world. We're in a significantly challenging scenario today," she said. Energy companies have emerged from the pandemic within a wholly different industry. While in previous years, it was all about growth, now capital discipline is king. In the wake of the pandemic, companies focused on paying down debt, returning cash to shareholders and reining in spending.
CEO of a major oil company: Even if we start drilling today, we won't have oil for a year -ConocoPhillips CEO Ryan Lance told CNBC on Tuesday that a decision now to start drilling for new oil will not bring immediate relief to the elevated prices seen around the globe. Lance's comments, made in an interview on "TechCheck," come shortly after the President Joe Biden announced the U.S. was banning Russian oil imports in a time when fears of supply shortages have caused prices to surge to their highest levels since 2008. The increasingly disciplined oil industry has faced some calls to hike production, in hopes that more drilling could alleviate the supply worries. But Lance said that is not an instant solution. CNBC's Brian Sullivan asked Lance how long it would take for ConocoPhillips to see the "first drop of new oil" from the ground if Lance called the company's board Tuesday and said "let's pump more oil, let's go for it." "Eight to 12 months," Lance said. "It's not that quick. Again, that's why we have to be thinking about the medium and longer term here to try to decide. We're spending 20% more capital this year than we did last year. We're going to grow our production this year over what we produced last year." ConocoPhillips could decide to put even more capital to work, the CEO said, adding the Houston-based exploration and production company "needs to make sure the returns are there." "We're dealing with the same inflation and supply chain every other manufacturer is dealing with in the U.S.," Lance said, echoing comments made earlier Tuesday by Occidental Petroleum CEO Vicki Hollub. Speaking at CERAWeek by S&P Global, Hollub said the industry was "in a really dire situation." She added, "We've never faced a scenario where we need to grow production, when actually supply chains not only in our industry but every industry in the world [are] being impacted by the pandemic." Lance, who's led ConocoPhillips for the past decade, described some of that dire situation facing companies operating in the oil-rich Permian Basin in West Texas and southeastern New Mexico. "You're seeing double-digit inflation rates" across a range of commodities and categories, Lance said, including land, trucking and chemicals imported from Europe. "All those supply chain issues are impacting our ability." "The question is, the price is high enough to incentivize more capital to go in and grow, but we have to watch the returns," Lance said. "We're just like any other business. We've got to make sure the capital we spend generates an adequate return for our shareholders." Russian import ban
U.S. oil industry prepares to boost production — but with a giant warning - — Executives at some of the world’s biggest oil and gas producers said on Monday they are ramping up their crude production as U.S. gasoline prices surge to $4 a gallon amid expectations that President Joe Biden and Congress would ban imports of Russian petroleum — but the companies warned not to expect new supplies overnight. Exxon Mobil and Chevron are both boosting oil production at the mammoth Permian Basin field in West Texas and New Mexico, strategies that both oil majors laid out last year but that have taken on new urgency because of the surge in oil prices to their highest level in 14 years. U.S. crude oil prices jumped more than $10 overnight to $130 a barrel on news that the U.S. was considering prohibiting Russian oil imports, though prices backed off later during Monday trading. That rally has driven retail gasoline prices up more than 46 cents in the past week, reaching a national average of $4.06 a gallon, according to fuel price service GasBuddy. Exxon has said it expected to increase its production from the Permian by 100,000 barrels per day this year, on top of a sharp ramp up last year to 460,000 barrels per day. “We’re well on our way to that,” CEO Darren Woods told an industry conference in Houston on Monday. Chevron has also said it would increase its production there by 60,000 barrels per day this year. But even with those sharp increases, keeping a lid on oil and gasoline prices will be difficult if Russia’s 5 million barrels per day of oil exports are taken off the market. The U.S. industry imports only a modest amount of Russian oil and refined products, but trading firms around the world are beginning to shun Russian supplies as governments tighten the financial sanctions on Russia in response to President Vladimir Putin’s invasion of Ukraine.
Permian Headlines Double-Digit Increase in U.S. Drilling Activity - --A big drilling activity increase in Texas, and in the Permian Basin in particular, sent the U.S. rig count soaring 13 units higher to 663 for the week ended Friday (March 11), according to updated numbers from Baker Hughes Co. (BKR).Increases of eight oil-directed rigs and five natural gas-directed rigs saw the United States exit the week with 261 more active units than in the year-earlier period. U.S. land rigs increased by 14, partially offset by a one-rig decline in the Gulf of Mexico, according to the BKR numbers, which are based in part on data from Enverus.Horizontal rigs increased by 12 week/week, while directional rigs increased by three. Partially offsetting was a two-rig decrease in vertical rigs.The Canadian rig count, meanwhile, fell 11 units to end the week at 206, up from 116 in the year-earlier period. Declines there included seven oil-directed rigs, three natural gas-directed rigs and one miscellaneous unit.Looking at changes among major drilling regions, the Permian led with an increase of six rigs week/week, raising its total to 316, up from 212 a year ago. The Eagle Ford and Haynesville shales each added two rigs to their respective totals for the week, while one rig was added in the Utica Shale, the BKR data show.Broken down by state, Texas saw a 12-rig increase overall, according to BKR. Ohio and Wyoming each added a rig, while New Mexico saw a net decline of one rig for the period.Earlier in the week, the Energy Information Administration (EIA) released its latest Short-Term Energy Outlook, in which it forecast Brent crude oil prices of $116/bbl for 2Q2022. However, the agency cautioned that Russia’s invasion of Ukraine has clouded the outlook for energy markets. The Covid-19 pandemic had already created “greater-than-usual uncertainty” in EIA’s forecasting, and “this uncertainty has increased significantly following Russia’s further invasion of Ukraine,” according to the agency.Among the key developments that could impact oil markets moving forward, researchers said nations besides the United States could ban imports of Russian energy or announce further sanctions. Independent actions by corporations could also impact Russia’s oil production, they said. Meanwhile, producers not working in Russia could increase output in response to higher prices, according to the agency.
US oil, gas rig count up 10 to 770; Eagle Ford, SCOOP-STACK at 2-year highs - S&P Global - The US oil and gas rig count jumped by 10 to 770 in the week ending March 9, energy analytics and software company Enverus said, as activity in the Eagle Ford Shale and SCOOP-STACK hit two-year highs. Not registered? Receive daily email alerts, subscriber notes & personalize your experience. Register Now Rigs chasing oil plays totaled 599, up 12, while rigs directed to natural gas fields slipped by two to 171. Eagle Ford rigs tallied 67, up by four, a figure that hasn't been matched since 68 rigs in the week ended March 25, 2020. In January-February 2020, Eagle Ford rigs totals were in the low 80s. Sited in South Texas, the Eagle Ford is one of the largest domestic basins with production of 1.14 million b/d of oil and about 5.2 Bcf/d of natural gas, according to the most recent S&P Global Commodity Insights estimates. In February, the play averaged internal return rates in the low 60%s, S&P Global data showed, slightly lower than the Delaware Basin in the western Permian Basin of West Texas/New Mexico. Among the eight largest US basins, the SCOOP-STACK play of Oklahoma and the Marcellus Shale, found mostly in Pennsylvania and West Virginia, also gained rigs. The SCOOP-STACK rose by two to 45, a level last seen in late October 2019, while the Marcellus Shale was up by one rig to 41. The giant Permian Basin shed two rigs, leaving 318, while the Bakken Shale of North Dakota/Montana and the Utica Shale mostly of Ohio each lost one rig, leaving 20 in the Bakken and 12 in the Utica. The DJ Basin in Colorado and the Haynesville each remained stable on the week at 17 and 71 rigs, respectively. Drilling and oil and gas production made headlines not only at the CERAWeek by S&P Global energy conference over the past week but in mainstream news outlets. A major question at White House press conferences was whether the US could raise oil production in the wake of Russia's invasion of the Ukraine in February. While White House press secretary Jen Psaki claimed E&P operators already have in hand thousands of approved permits but aren't using them, the reasons companies aren't drilling mostly center around operators' unwillingness to over-drill and lack of adequate crews and materials, analysts say. "A North American accelerated oil supply response is unlikely due to 1) continued [upstream operators'] capital discipline, 2) labor tightness, and 3) equipment and materials tightness/lack of supply (sand, drill pipe, casing, high-spec land rigs, frac spreads, chemicals, etc.)," Evercore ISI analyst James West said in a March 9 investor note. "While capital can solve for many of these issues, it will amplify an already highly inflationary environment." Experts say it could take a while to ready industry for large production increases. "It would take a good 18 months to get the industry going again to grow a lot more than the projections" by analysts of up to 1 million b/d production growth in 2022, Scott Sheffield, CEO of Pioneer Natural Resources, said March 9 at CERAWeek. Whether US active but unused permits actually number 9,000 as Psaki claimed or not, given a low permit cost, many operators will get permits for an "abundance" of wells, said Nathan Hasbrook, energy analyst-supply and production for S&P Global. Each geologic play or region has unique challenges with getting drill locations determined and permits approved, so companies try to have extra permitted well locations to provide flexibility, Hasbrook said. But a fair number of those "extra" permits are never drilled. "They [are] for 'just in case'," he said. "If there are delays with permitting or land issues, the management team will have flexibility in deciding where they want to drill and not run short on options."
California county rejects ExxonMobil plan to truck oil (AP) — The defeat of an ExxonMobil proposal to run thousands of truck trips a year in central California to transport oil from now-idled offshore platforms has intensified the focus on an even larger dispute: building a pipeline across the state to move the crude. The Santa Barbara County Board of Supervisors rejected the interim trucking plan Tuesday on a 3-2 vote, denying the company a crucial step in its hopes of resuming production at the decades-old trio of drilling platforms. The company has said trucking was the only option to transport crude to markets until a pipeline is available. In a separate proposal under review by regulators, Houston-based Plains All American Pipeline wants to replace a pipeline that was shut down in 2015 after causing California’s worst coastal spill in 25 years. For decades, that line had been the link between the platforms in the Pacific and processing plants on shore. A complex environmental review of the pipeline plan is not expected until October. The emerging debate is playing out amid the global climate crisis, as the state moves toward banning gas-powered vehicles and oil drilling, while record gas prices have left consumers with sticker shock at the pumps. It wasn't immediately clear if ExxonMobil would try to challenge the decision in court. Ben Oakley, manager of the California coastal region for the Western States Petroleum Association, said the supervisors “chose to make California even more reliant on imported energy at a time when Californians are already struggling with some of the highest energy costs on record.” The trucking proposal and the pipeline development have been opposed by environmentalists, who want the state's transition to renewables accelerated and point to recent spills and potential threats from aging equipment.
Santa Barbara County to consider restarting offshore oil production -The Santa Barbara County Board of Supervisors on Tuesday will consider a proposal by Exxon-Mobil to restart oil production off the county’s coast.Supervisor Das Williams said the oil company wants to “restart an oil operation that was going previous to the oil spill in 2015.”In 2015, the county’s Refugio State Beach was hit hard as more than 140,000 gallons of crude oil spilled into the ocean after an underground pipeline cracked.“That kind of disaster is not something that the people of the community forget very easily, and we’re pretty suspicious of new and expanded oil projects,” Williams said. Environmentalists are also wary. Bill Hickman, regional manager of the the ocean-and-beach-focused Surfrider Foundation, brought up last year’s oil spill off the Orange County coast. “The oil spill in Orange County was a reminder of past oil spills in Santa Barbara and the need to phase out offshore oil drilling for cleaner energy solutions,” he said.
Some shale deals stall after Russian ban whipsaws oil prices — Some oil and gas dealmakers are hitting the pause button as prices whipsaw following the ban on Russian oil imports. Companies are concerned about overpaying for assets while focused on cutting debt and rewarding shareholders. For example, the owners of Sequitur Energy Resources are holding onto 83,000 net acres in part of the Permian Basin the company began marketing about six months ago, according to people familiar with the matter. The closely held company sought a higher valuation than what the market gave, said the people, who asked to not be identified because the matter isn’t public. Sundance Energy, an explorer in the Eagle Ford shale that started a sale process late last year, also saw widening valuation gaps as oil prices surged following Russia’s invasion of Ukraine, the people said. While the company is talking with three bidders, its owners are keen to continue drilling and reap free cash flow for the time being, they said. Representatives for Sequitur and private equity sponsor ACON Investments didn’t respond to requests for comment. Sundance didn’t respond to requests for comment. To be sure, some deals are still getting done in the oil patch, despite the volatility. Oasis Petroleum Inc. and Whiting Petroleum Corp. agreed to a $6 billion merger this week, while Chevron Corp. agreed last month to buy a biofuels producer for about $3.1 billion. But the Sundance and Sequitur situations underscore how seesawing commodity prices can muddle dealmaking, especially if the transaction requires new money to be invested. In response to the surge in oil prices, domestic oil and gas companies are being called to ramp up production to help fill a supply shortfall and soften the blow to the economy. Still, it will likely take time to see a meaningful output growth as most producers are maintaining greater capital discipline than before, while supply-chain issues and labor shortage remain. Oil futures in New York rebounded to nearly $115 a barrel Thursday, after slumping the most in almost two years as the fallout from Russia’s invasion of Ukraine continues to rattle the market. The sharp intraday swings came as the United Arab Emirates sent conflicting signals on whether OPEC+ would increase output to help fill a supply shortfall.
Whiting, Oasis to Join Forces in Bakken Through ‘Merger of Equals’ - Bakken Shale independents Whiting Petroleum Corp. and Oasis Petroleum Inc. have agreed to join forces in a “merger of equals” transaction, the companies said Monday. “The combined company will have a premier Williston Basin position with top tier assets across approximately 972,000 net acres, combined production of 167,800 boe/d, significant scale and enhanced free cash flow generation to return capital to shareholders,” the companies said. Whiting CEO Lynn Peterson will serve as executive chair of the new company’s board, while Oasis CEO Danny Brown will be its CEO. “The combination will bring together two excellent operators with complementary and high-quality assets to create a leader in the Williston Basin, poised for significant and resilient cash flow generation,” said Brown. Peterson said the transaction brings together “two like-minded companies” with assets in North Dakota and Montana. He added, “We look forward to unlocking the enormous potential of our assets and organizations for the benefit of our stakeholders.” The management teams highlighted each company’s environmental, social and governance (ESG) efforts, including what they called a “top tier gas capture track record in North Dakota.” Brown added, “Over the last year, both companies have executed a series of deliberate strategic transactions, reducing costs and establishing a leading framework for ESG and return of capital. “The combination of the two companies, together with the ongoing momentum from these strategic actions, will accelerate our efforts and ideally position the combined company to generate strong free cash flow, execute a focused strategy and enhance the return of capital.” Upon closing, which is expected in the second half of 2022, Whiting and Oasis shareholders will own about 53% and 47% of the combined company, respectively. The transaction will combine “high quality assets with low breakeven pricing,” the firms said, with expected production of 164,000-169,000 boe/d in 2022. “The combined company is expected to generate significant free cash flow from its high-quality assets and disciplined capital spending across a wide range of commodity price scenarios,” the management teams said.
North Dakotans weigh in on methane emissions proposal - North Dakotans have a lot to say about the Biden administration’s plans to curb methane emissions, weighing in on how often oil field inspections should occur and how much the federal government can legally regulate. Comments submitted earlier this year by state officials, the oil industry, the Three Affiliated Tribes and environmentalists are among those the Environmental Protection Agency will consider as it develops regulations surrounding the potent greenhouse gas that can leak from oil field infrastructure. North Dakota officials say the EPA proposal has “significant technical and legal flaws” and that the agency “must drastically rework” its plans. The North Dakota Petroleum Council argues for more flexibility in leak inspections, while an environmental advocate says inspections should occur more frequently than what the EPA is considering. The tribe, meanwhile, says any new national standards “should not burden or prevent production of tribal trust minerals.” Methane is the main component of natural gas produced in the Bakken oil fields. It has been the subject of a legal and political tug-of-war, particularly after the Obama administration proposed more stringent regulations in 2015. North Dakota is among a number of oil- and gas-producing states that sued the federal government over the Obama-era regulations. The Trump administration rolled back those rules, but Congress last year eliminated the Trump-era rule. The Biden administration in late 2021 proposed regulations that include what it calls a “comprehensive monitoring program for new and existing well sites and compressor stations.” It suggests a number of steps that it says would reduce 41 million tons of methane emissions by 2035. That amount is equal to 920 million metric tons of carbon dioxide, another greenhouse gas. The EPA says that is more than the amount of carbon dioxide emitted by all passenger cars and commercial aircraft in the United States in 2019. Comments submitted by two North Dakota regulators said the EPA’s proposal is unlawful in part because it relies upon presidential executive orders, whereas regulations must be based on authority granted by the Clean Air Act. State Mineral Resources Director Lynn Helms and state Air Quality Director Jim Semerad added that the federal government lacks authority to impose requirements for limiting emissions from existing infrastructure and can do so only for new facilities. The EPA can set guidelines for existing sites, but it’s states that have authority over the matter, they said. The state also takes issue with the EPA’s idea to establish a community monitoring program that would allow members of the public to detect and report emissions in addition to the industry's own inspections and those performed by government officials.
Bakken energy industry is getting a moment to push for more American oil production - The Bakken’s energy industry has long pushed back against green energy movements, promoting the narrative that its oil and gas production is vitally important to American energy security. The recent invasion of the Ukraine could help it further that narrative, and congressional delegations in both North Dakota and Montana are both busy using it to win some political points for the energy sectors in their state.Montana Republican Sen. Steve Daines and North Dakota Republican Sens. John Hoeven and Kevin Cramer are all signatories to a letter the Senate Committee on Energy and Natural Resources sent to President Joe Biden outlining 10 steps he and Congress should take to restore America’s energy independence.“Russia’s invasion of Ukraine has laid bare a broken U.S. energy policy,” the senators wrote in the letter. “It is time to change course and return America to its dominant role in global energy. It is no secret that we have been opposed to the approach you have taken towards American energy production. Your administration’s focus on ending the production and use of traditional sources of American energy has contributed to soaring inflation. It also has left the U.S. and our allies vulnerable to the malicious maneuverings of Vladimir Putin.”Insult was added to injury, the Senators suggested, when climate envoy John Kerry, despite Russia’s invasion of Ukraine, was saying, ‘I hope President Putin will help us to stay on track with respect to what we need to do for the climate.’”Cancelling Keystone XL pipeline was among the first steps the Biden Administration took that started the ball rolling on inflationary measures that have aggravated market uncertainty, and caused underinvestment in oil and natural gas that is leading to high energy costs. That’s exacerbating inflation that’s been brought on by supply chain issues in the wake of the COVID-19 pandemic.“(This) has hurt American families and our economy,” the letter continues. “Those decisions have also weakened our ability to addresss the immediate crisis in Ukraine and support our North Atlantic Treaty Organization allies.”American policies need to make America and her allies less dependent on Russian oil, the letter continues.“It is time for your administration to develop a new approach that embraces America’s energy abundance,” the senators wrote. “American-produced energy is not just good for our economy and international competitiveness. Making America energy dominant will increase our nation’s and our allies’ security.”
Canada Says Its Oil Could Replace U.S. Imports Of Russian Crude - Canada’s oil could replace American imports of Russian crude, the top officials of the oil-producing province Alberta said this weekend.As talks about banning Russian oil imports in the United States and its European allies intensify, reports have started to emerge that the U.S. Administration could be looking to persuade Saudi Arabia to pump more oil or lift some sanctions on Venezuela to help fill the gap that a Russian oil embargo would open.On Sunday, U.S. Secretary of State Antony Blinken said that the United States and its European allies were in “very active discussions” about banning the import of Russian oil over Putin’s war in Ukraine.Even without sanctions on Russian oil, some of the biggest U.S. importers of Russian crude oil have started suspending their purchases of the commodity.Canada has long pitched its crude as one that is not produced in rogue government regimes such as Venezuela, Iran, or Russia, and Alberta’s top officials now say that its crude could be the answer to more supply from allied nations to the United States.Retweeting Elon Musk’s comments that “we need to increase oil & gas output immediately,” Alberta’s Energy Minister Sonya Savage said on Saturday:“Agreed. And it should come from Alberta, home of the 3rd largest oil reserves. Alberta is the answer to US Energy security. Real emissions reductions, reliable, right next door.”Alberta’s Premier Jason Kenney said that he and Savage would be attending the CERAWeek conference in Houston this week, where “We will be meeting with decision-makers to secure access to markets, attract job-creating investment to our province, and argue for Canadian energy to displace Russian conflict oil.” Kenney also said that Alberta would be delighted to welcome a visit from U.S. President Joe Biden, as one reportedly being considered to Saudi Arabia.
Alberta's Premier Pushes for Revival of Trump-Backed Keystone Pipeline -A Canadian politician is pushing for the the revival of the Keystone XL oil pipeline project that President Joe Biden canceled in January 2021. The move would boost US energy security amid the war in Ukraine."If the United States is serious about this, they could come back to the table and help us build Keystone XL," Alberta Premier Jason Kenney said at a news conference on Monday, according to a video posted to Canada's Global News website.Kenney added that had Biden not shut down plans for the pipeline, the "democratic energy" it provided could have, by the end of the year, been displacing the "Russian conflict oil that's filled with the blood of Ukrainians."The Obama administration rejected the pipeline due to environmental concerns, but President Donald Trump revived the project in 2017 and construction started in 2020. The pipeline's developer, TC Energy, terminated the $9 billion project in June. Less than 10% of the pipeline had been constructed when Biden revoked a key permit last January, according to the Reuters Fact Check team.The Keystone XL pipeline was slated to cover about 1,240 miles from Alberta to Nebraska, and to be able to carry 830,000 barrels of crude oil a day, per the Alberta government's website. The US imported about 209,000 barrels of crude oil each day from Russia in 2021, according to the American Fuel and Petrochemical Manufacturers trade association.Kenney said the Keystone XL pipeline could be built by the first quarter of 2023 if the Biden administration gives the go ahead, according to Global News. Calgary-based TC Energy told Insider the existing Keystone pipeline system "will continue to provide unique, stable and safe source of energy to meet increasing US energy demands." The US is now considering a ban on Russian oil imports on its own, according to Reuters, citing two people familiar with the matter. This would come at a sensitive time as oil prices have surged 60% this year to a multiyear high.White House press secretary Jen Psaki suggested Monday that resuming the Keystone XL pipeline project would not affect gas prices. This is as "the oil is continuing to flow in, just through other means. So it actually would have nothing to do with the current supply imbalance," Psaki said, according to an official transcript."What we can do to prevent this from being a challenge in future crises, the best thing we can do, is reduce our dependence on fossil fuels and foreign oil, because that will help us have a reliable source of energy so that we're not worried about gas prices going up because of the whims of a foreign dictator," Psaki added.US crude oil production reached 11.8 million barrels a day inNovember and is set to rise to record highs at 12 million barrels a day in 2022 and 12.6 million barrels a day in 2013, according to theEnergy Information Administration.
Republicans want Keystone XL Pipeline but company says the project 'will not proceed' -- Republicans across the country are calling for the Keystone XL Pipeline to restart construction to help combat high oil prices, but the company says the canceled project 'will not proceed' as it ends permits and pulls infrastructure out of the ground. "The Keystone XL pipeline project was terminated in June 2021 and will not proceed," TC Energy said in an email. "TC Energy has now disposed of almost all of its project-related assets in South Dakota," the Canadian company said in a new report that lists the steps it's taken to exit the state. The company is also asking the South Dakota Public Utilities Commission for permission to terminate its $15.6 million road bond. Canceling this bond would be TC Energy's "final step in front of the PUC," according to staff attorney Kristen Edwards. But Gov. Kristi Noem, South Dakota's congressional delegation, and other Republicans across the country are calling for pipeline construction to restart after Russia invaded Ukraine. U.S. House Republicans have even introduced a bill, co-sponsored by South Dakota Rep. Dusty Johnson, that would allow TC Energy to restart the pipeline without a presidential permit. Republicans say Biden's energy policies — including canceling the KXL Pipeline — mean less leverage and high gas prices for the United States as well as more money and power for Russia's war effort. But TC Energy is not budging from the decision it made to shutter the project after President Joe Biden revoked the permit it needs to cross into the U.S. The KXL Pipeline would have connected to the existing Keystone Pipeline to help transport Alberta tar sands oil in Canada to the Gulf of Mexico. The 1,200-mile pipeline would have traveled southeast through nine South Dakota counties. The company says it's already helping the U.S. meet its energy needs. "The existing Keystone Pipeline System is strategically located and continues to be fully utilized," TC Energy said in an email. "It has delivered over 3.3 billion barrels of crude oil to market since 2010. It will continue to provide unique, stable and safe source of energy to meet increasing U.S. energy demands."
Energy policy handcuffs Canada amid Russian oil ban: Ex-TransCanada CEO - As more and more countries shun Russian oil, it might seem like a big opportunity for Canada’s energy industry to sell more of its crude to the world, but an industry veteran says it’s not as easy as it sounds. In fact, it could take years. Hal Kvisle, a former chief executive of TransCanada Corp. and Talisman Energy Inc., said Canada could increase its crude production in certain high-productivity oil basins in Alberta and Saskatchewan, but “not by much.” “The reality is Canada could add three or four million barrels a day if we were called upon, but it takes more than five years lead time to do projects like that,” he said in an interview Tuesday. “It's the tragedy of North American energy policy over the last 10 or 15 years,” added Kvisle. An increasing number of countries are banning imports of Russian oil to put pressure on President Vladimir Putin after he directed an invasion of Ukraine. The United States and United Kingdom announced plans Tuesday to wind down their exposure to Russian fossil fuels over the coming weeks and months. But that will leave these countries on the hunt for replacement barrels, which will likely put further strain on global crude inventories and push oil prices even higher. On Tuesday, American benchmark crude West Texas Intermediate rose another 3.6 per cent to settle at US$123.70 per barrel, its highest since August 2008. Kvisle said Canada has the resources, but energy policies have hampered development of the oil sands and the infrastructure needed to transport crude to market. “Even to add the first half million barrels a day would take five years because of regulatory processes,” he said. “These things take a long time.” Alberta Premier Jason Kenney has taken the opportunity to raise the idea of reviving TC Energy Corp.’s Keystone XL pipeline, which was effectively killed by U.S. President Biden over environmental concerns, as a way to get more oil to the U.S. market. However, in an emailed statement late Tuesday, a TC Energy spokesperson confirmed the Keystone XL pipeline project was terminated and “will not proceed.” Kvisle said he’s not optimistic that the Canadian and American governments will quickly change their tune on big oil because of pressure from environmental groups. “I think even politicians who know that we need to take some urgent steps are going to be restrained in doing what they understand we need to do because of their political constituencies,” he said.
Gas leak at ConocoPhillips' field in Alaska prompts evacuations -local media - Slope, Alaska,local media reportedon Tuesday, with one local official saying the gas was still leaking. The leak was discovered Friday at a drill site in ConocoPhillips' Alpine oil field, one of the largest on the North Slope, reported the Fairbanks Daily News-Miner. The gas was still leaking as of Tuesday, said Rosemary Ahtuangaruak, mayor of Nuiqsut, an Inupiat village about seven miles south of the oil field. As of now, it is unclear if there is an effect on the village of about 450 people, she said. ConocoPhillips evacuated non-essential workers at the drill site and at the Alpine Central Facility, the newspaper reported. The Alaska Oil and Gas Conservation Commission, a state regulatory agency, is monitoring the leak and ConocoPhillips' response, an official said. "Based on its investigation to date, the Commission is unaware of any threats to public safety," Jeremy Price, chairman of the commission, said in a statement, adding that due to the open investigation the commission could not comment further. ConocoPhillips did not respond to queries as of Tuesday afternoon. In Nuiqsut, residents are uneasy despite the official assurances, Ahtuangaruak said. "We have community members that have reported smelling gas since Friday," she said. Since Nuiqsut is edged by oil development, there are longtime concerns about chronic air pollution from the operations, Ahtuangaruak said. Over the years, there have been "gains and losses" in local efforts to better control air pollution, she said. Nuiqsut residents are vulnerable to air pollution for a variety of factors, the mayor said. Those include past epidemics of tuberculosis and other diseases that weakened respiratory systems, along with poor housing with bad indoor air quality.
As BP, Shell, ExxonMobil Announce Cutting Ties to Russia, Oil Baron Charles Koch Remains Silent About His Sprawling Russian Operations By Pam and Russ Martens -British Petroleum (BP), Shell, ExxonMobil and Norwegian oil and gas producer, Equinor, have all released statements indicating they are severing business ties with Russia in response to its invasion of Ukraine. But billionaire oil baron Charles Koch, who has sat at the helm of Koch Industries for more than half a century, has been unusually quiet about his plans for his sprawling Russian operations.According to Koch Industries, one of the largest private corporations in the world, three of its companies operate in Russia: Molex, a manufacturer of semi-conductors, printed circuits, fiber optics and a multitude of other electrical components; Koch Engineered Solutions, which makes process and pollution control equipment; and Guardian Industries, a glass and auto parts manufacturer. Another unit of Koch Industries, Koch Supply and Trading, has a history of trading Russian oil.Guardian Industries’ division, Guardian Glass, has two large plants in Russia: one in Ryazan and one in Rostov. The Rostov plant was described as follows in a 2011 press release from Guardian Glass: “The $220-million plant will be Guardian’s largest, producing 900 tons of glass per day, and will include a technologically advanced glass coater”Should Charles Koch be supplying glass for “homes, offices, retail, health care” in Russia while Russian President Vladimir Putin, in the name of Russia, is bombing homes, offices and hospitals into rubble in Ukraine and ruthlessly killing innocent children and families? According to ImportGenius.com, in the past eight years Koch Supply and Trading has purchased large amounts of oil from two Russian companies, Gazprom Neft and Surgutex. Koch Supply and Trading is a sprawling trading octopus that operates in the dark for the most part. For all anyone knows, it could be trading Russian oil on world markets, which could be propping up the price of Russian oil and helping to finance Putin’s brutal and murderous campaign in Ukraine.According to the Wall Street Journal, the first-ever shipments of Russian crude oil purchased by the U.S. Strategic Petroleum Reserve in 2002 were supplied by Koch Industries.
Peru faces risk of aviation fuel supply drying up in a week-The prolonged closure of a Repsol refinery could lead to fuel supply for commercial airlines in Peru drying up soon, warned the country’s aviation sector. The country will be able to supply fuel only till 17 March. As a result, with stock already depleting due to the shut-down, fuel supply could run out within a week, as per the aviation sector. The airline operators union has requested for “urgent support” from the government to mitigate this scarcity of fuel, reported Reuters.
Natural gas prices in Europe hit an all-time high — The price of natural gas in Europe hit an all-time high on March 7, briefly touching €345 per megawatt-hour. That’s equivalent, in terms of British thermal units of energy, to oil prices of $600 per barrel. Late in the day, the price had settled back to about €190, still a record. Before the last 12 months—when the European gas market was rocked first by a compounding series of market trends and mishaps, and now by Russia’s invasion of Ukraine—the price had stayed roughly in the range of €15-25 per MWh for a decade. “The eye-watering risk premium suggests expectations that gas flows will potentially be disrupted by sanctions on Russian energy exports or damage to pipeline infrastructure,” Kaushal Ramesh, senior analyst at intelligence firm Rystad Energy, said in a note. “At these prices, we are likely approaching the limits of affordability in Western Europe.” Prices like this are fueling momentum for Europe to reduce its gas consumption as quickly as possible—and to levy new windfall taxeson gas companies to help finance the transition to renewable energy.
Angry dock workers in the UK are refusing to unload Russian oil due to Ukraine invasion— Dock workers in Britain are taking a stand against Russia's invasion of Ukraine with ports in the country refusing to unload Russian oil and gas. Tough sanctions from the U.K. government mean that Russian ships are not allowed to dock at British ports. However, a loophole means that Russian goods and energy can still be transported into the country using foreign ships — there is currently no blockade on oil and gas from Russia. It appears that workers at these ports are now taking matters into their own hands. Essar Group, which runs the Stanlow refinery in northwest England, said a German-flagged vessel had been given approval to berth at the nearby Tranmere Oil Terminal on the River Mersey. However, Sharon Graham, the general secretary of U.K. union Unite, said that her members will "under no circumstances unload any Russian oil regardless of the nationality of the vessel which delivers it.""I am very proud of @unitetheunion's members taking a principled stand to prevent Russian oil coming to our ports," she added via a tweet early on Sunday. "But it is appalling that they have been put in this position by the @GOVUK, which is still dragging its feet on sanctions." Meanwhile, two Russian ships that were due to dock in Kent, in southeast England, were turned away this weekend due to the sanctions. Staff at the Grain LNG port had expressed their anger that they might be asked to unload the ships' cargoes.
Gas Prices: Why EU and UK Sanctions Game Will See No Winners - 06.03.2022, Sputnik International -- Eight and half million households may end up in fuel poverty, being forced to pay over £3,000 (about $4,000) a year to heat their homes amid the European energy crisis, which has been further exacerbated by sweeping anti-Russian sanctions. However, it's only the beginning, economic observers have warned."It was already a very big burden – on which the [UK] government has offered subsidies – before the imposition of the latest sanctions. Any 'wartime boost' to [UK Prime Minister Boris] Johnson’s popularity (went from -17% to + 17% among Conservatives!) will not survive the inevitable dramatic rises due to the new sanctions", says Rodney Atkinson, a British academic as well as political and economic commentator.Last month, British industry regulator Ofgem signalled that the energy price cap would be increased by £693 ($916.67) from April 2022 as a result of an unprecedented 54% spike in global wholesale gas prices. British households on default tariffs will now be facing bills of £1,971 ($2,607) a year, according to iNews. Still, the rally in natural gas prices has been accelerated by the West's sweeping sanctions over Moscow's special operation to demilitarise and de-Nazify Ukraine, which started on 24 February.On 4 March, European gas futures prices increased by 30% reaching a record high of $2,400 per 1,000 cubic metres, according to the London-based ICE exchange. Even though the UK is less reliant on Russian gas than other EU states, Europe-wide sanctions are driving British energy prices higher as part of a knock-on effect."Whether Britain is inside or outside the EU, the energy prices it pays are indeed linked to the EU since it gets a lot of its gas needs from the EU", explains Dr Mamdouh G. Salameh, an international oil economist and visiting professor of energy economics at ESCP Europe Business School, London.Foreign secretary Liz Truss on 27 February told the BBC's Sunday Morning that "fighting for freedom" in Ukraine "has a very high cost for us", insisting that it's a price worth paying."Liz Truss has lost any credibility she ever had with her disastrous failure to understand even basic geography (confusing the Baltic with the Black Sea and Russian regions with the Donbass) and her penchant for making others pay for her 'price worth paying'", says Atkinson. "The horrendous energy price rises will not be seen as a price worth paying by anyone. And the Government’s own finances post COVID cannot do a lot to help".Meanwhile, British businesses have already been affected, according to him. He singles out the steel industry, which has been crippled both by rising energy prices and carbon taxes, as well as the failure of the Biden administration to lift tariffs on British steel exports. Chemical firms, which are energy intensive, are also badly hit, according to the economic commentator.To complicate matters further, the Johnson government on 1 March imposed a ban on Russian vessels docking in the UK. This "will have additional disastrous effects on the economy", says Atkinson, adding that all this is happening before Russia introduces its potential energy counter-sanctions.
Imports of Russian Oil: U.S., European allies discuss banning imports of Russian oil --The United States and European allies are exploring banning imports of Russian oil, U.S. Secretary of State Antony Blinken said on Sunday, and the White House coordinated with key Congressional committees moving forward with their own ban. Europe relies on Russia for crude oil and natural gas but has become more open to the idea of banning Russian products in the past 24 hours, a source familiar with the discussions told Reuters on Sunday. Meanwhile, U.S. House of Representatives Speaker Nancy Pelosi also said in a Sunday letter that the chamber is "exploring" legislation to ban the import of Russian oil and that Congress intends to enact this week $10 billion in aid for Ukraine in response to Moscow's military invasion of its neighbour. The White House is also talking with the Senate Finance Committee and House of Representatives Ways and Means Committee about a potential ban, the source said. Still, Blinken also stressed the importance of maintaining steady oil supplies globally. "We are now in very active discussions with our European partners about banning the import of Russian oil to our countries, while of course, at the same time, maintaining a steady global supply of oil," Blinken said in an interview on NBC's "Meet the Press" show. Blinken, who is on a trip across Europe to coordinate with allies the response to Russia's invasion of Ukraine, also said he discussed oil imports with President Joe Biden and his cabinet on Saturday. Japan, which counts Russia as its fifth-biggest supplier of crude oil, is also in discussion with the United States and European countries about possibly banning Russian oil imports, Kyodo News reported on Monday. Asked about a potential embargo on Russian oil imports at a regular news conference on Monday, Japan's top government spokesperson Hirokazu Matsuno declined to comment on its communication with the United States. Oil prices have soared over the past week after the United States and its allies sanctioned Russia over the invasion. A bipartisan group of U.S. senators introduced a bill on Thursday to ban U.S. imports of Russian oil. The bill is getting fast-tracked and could ultimately become the vehicle for the sanctions.
Shell to buy Russian crude and use profits to help Ukraine - Shell, Europe’s largest oil company, said Saturday that it would probably continue to buy Russian crude oil to feed into its refineries and supply customers with gasoline and diesel but would donate any profits to a fund dedicated to “the people of Ukraine.” Shell had said last Monday that it was pulling out of operations in Russia. It issued a statement on its oil purchases Saturday, a day after an article in the Financial Times revealed that the company had bought a ccargo of Russian crude oil. Shell said in the statement that it understood that governments wanted energy flows to continue from Russia for the time being. The company described the purchase of the oil as “a difficult decision” taken to “avoid disruptions to market supply.” It went on, “Without an uninterrupted supply of crude oil to refineries, the energy industry cannot assure continued provision of essential products to people across Europe in the weeks ahead.”
Shell defends decision to buy discounted oil from Russia -Oil major Shell has sought to defend its decision to buy a heavily-discounted consignment of oil from Russia, saying it would commit the profits to a fund dedicated to humanitarian aid for Ukraine. On Friday, Shell purchased 100,000 metric tons of flagship Urals crude from Russia. It was reportedly bought at a record discount, with many firms shunning Russian oil due to Moscow's unprovoked invasion of its neighbor. The purchase did not violate any Western sanctions. Shell said in a statement late Saturday that it had been in "intense talks with governments and continue to follow their guidance around this issue of security of supply, and are acutely aware we have to navigate this dilemma with the utmost care." "We didn't take this decision lightly and we understand the strength of feeling around it," the statement read. The company has faced heavy criticism from Ukraine's Foreign Minister Dmytro Kuleba, who wants companies to cut all business ties with Russia. "One question to Shell: doesn't Russian oil smell Ukrainian blood for you?" Kuleba said in a tweet Saturday. Speaking to CNBC Monday, Kuleba launched a scathing attack on firms still doing business with Russia, saying that some major oil companies could find themselves on the wrong side of history. "The world will judge them accordingly. And history will judge them accordingly," he told CNBC's Hadley Gamble. Shell said earlier this week that it intended to exit its joint ventures with Russian gas giant Gazprom and its related entities. Meanwhile, rival BP announced Sunday last week that it was offloading its 19.75% stake in Rosneft, a Russian-controlled oil company, potentially hitting the British oil major with a costly $25 billion charge. In its new statement, Shell said Saturday that the company welcomed "any direction or insights" from governments or policymakers. "We will continue to choose alternatives to Russian oil wherever possible, but this cannot happen overnight because of how significant Russia is to global supply," the company said in the statement.
Here are the countries that import the most Russian oil --The vast majority of Russia's oil exports are purchased by Europe and China, which together account for 90 percent of the country's total exports. That's made it tougher for Europe to enact similar bans as the U.S. on Russian imports and lessens the economic hit to Moscow from the Biden administration's decision this week to cut off Russian oil. Russia is the world’s biggest exporter of oil to global markets and the second-largest exporter of crude oil behind Saudi Arabia, exporting about 2.85 million barrels per day by sea lanes and pipelines, according to the International Energy Agency (IEA). European nations are the largest collective buyer of that oil, while China is the petro-state's largest single purchaser. In 2021, Europe bought up about 42 percent of Russia's total oil production, while China purchased 14 percent and 30 percent stayed in Russia. Other major countries to purchase Russian oil include Germany, the Netherlands, the U.S., Poland and South Korea. Russia’s customers are varied, and outside of Europe, most — like China and the United States — draw from a wide variety of sources. But European nations, which in November 2021 imported about seven times as much Russian oil as the United States, are far more reliant on Russian oil imports and some Eastern European countries are almost entirely dependent on Russian oil. Lithuania, for example, gets 83 percent of its oil imports from Russia, followed by Finland (80 percent), Slovakia (74 percent), Poland (58 percent), Hungary (43 percent) and Estonia (34 percent). Germany follows at 30 percent, joined by Norway (25 percent), Belgium (23 percent), Turkey (21 percent), Denmark (15 percent) and Spain (11 percent). On that list, only Norway has a substantial oil industry of its own — it’s the world’s 13th largest producer — and the 45,000 barrels it imported from Russia every day in 2021 paled in comparison to the more than 2 million barrels it produced itself. Russia is a major producer, consumer and exporter of not just oil but also coal and natural gas, and the various refined products made from them. Russia's fossil fuel industry produced the energy equivalent of 11 billion barrels of oil in 2019, according to the IEA. For many European countries, Russian oil and natural gas are vital sources of power and heat, and Russian oil is the dominant source of gasoline and other refined petroleum products. The country exported about 54 percent of its coal, 31 percent of its natural gas and 70 percent of its oil in 2019, according to the IEA, with the coal primarily exported to China’s power and metallurgy industries and the oil and natural gas primarily going to Europe.
Saudi Aramco pipeline receives $13.4bln loan from a multi-bank consortium: Alarabiya - A multi-bank consortium has agreed $13.4 billion of financing to purchase a stake in Saudi Aramco's gas pipelines, Alarabiya reported citing unnamed sources. A total of 19 banks were involved in the deal, led by BlackRock Real Assets and Hassana Investment Co., and including HSBC, JP Morgan, BNP Paribas, Societe Generale, Citibank, Credit Agricole. Three Gulf banks participated in the deal including First Abu Dhabi Bank, Riyad Bank and Abu Dhabi Commercial Bank. Pricing for the 7-year financing will start at 50 basis points and increase annually to 175 basis points by the end of the financing period, according to Alarabiya Earlier last month, the Saudi oil giant completed a deal to sell a 49 percent stake in its natural-gas pipelines for $15.5 billion to the consortium.
Saudi, Emirati Leaders Decline Calls With Biden During Ukraine Crisis – WSJ - The White House unsuccessfully tried to arrange calls between President Biden and the de facto leaders of Saudi Arabia and the United Arab Emirates as the U.S. was working to build international support for Ukraine and contain a surge in oil prices, said Middle East and U.S. officials. Saudi Crown Prince Mohammed bin Salman and the U.A.E.’s Sheikh Mohammed bin Zayed al Nahyan both declined U.S. requests to speak to Mr. Biden in recent weeks, the officials said, as Saudi and Emirati officials have become more vocal in recent weeks in their criticism of American policy in the Gulf. “There was some expectation of a phone call, but it didn’t happen,” said a U.S. official of the planned discussion between the Saudi Prince Mohammed and Mr. Biden. “It was part of turning on the spigot [of Saudi oil].” Mr. Biden did speak with Prince Mohammed’s 86-year-old father, King Salman, on Feb. 9, when the two men reiterated their countries’ longstanding partnership. The U.A.E.’s Ministry of Foreign Affairs said the call between Mr. Biden and Sheikh Mohammed would be rescheduled. The Saudis have signaled that their relationship with Washington has deteriorated under the Biden administration, and they want more support for their intervention in Yemen’s civil war, help with their own civilian nuclear program as Iran’s moves ahead, and legal immunity for Prince Mohammed in the U.S., Saudi officials said. The crown prince faces multiple lawsuits in the U.S., including over the killing of journalist Jamal Khashoggi in 2018.The Emiratis share Saudi concerns about the restrained U.S. response to recent missile strikes by Iran-backed Houthi militants in Yemen against the U.A.E. and Saudi Arabia, officials said. Both governments are also concerned about the revival of the Iran nuclear deal, which doesn’t address other security concerns of theirs and has entered the final stages of negotiations in recent weeks. The White House has worked to repair relations with two key Middle Eastern countries it needs on its side as oil prices push over $130 a barrel for the first time in almost 14 years. Saudi Arabia and the U.A.E. are the only two major oil producers that can pump millions of more barrels of more oil—a capacity that, if used, could help calm the crude market at a time when American gasoline prices are at high levels.
De facto leaders of Saudi Arabia, UAE refused calls with Biden -- report | The Times of Israel - The crown princes of Saudi Arabia and the United Arab Emirates both refused to take calls with US President Joe Biden in recent weeks, the Wall Street Journal reports.The reported snubs by Riyadh’s Mohammed bin Salman and Abu Dhabi’s Mohammed bin Zayed al-Nahyan, both the de facto leaders of their countries, came as Biden was attempting to rally allies around sanctions against Russian President Vladimir Putin before he invaded Ukraine while keeping oil flowing. The two were said to have been reacting to unhappiness about Biden’s policies in the region.According to the report, both agreed to take calls with Putin. Saudi Arabia has said it is not abandoning an agreement with Russia to control oil prices, even as sanctions have sent costs at the pump rocketing to near-record highs.
Russia Set to Ban Commodity Exports Following Western Sanctions – WSJ - Russian President Vladimir Putin is banning exports of certain commodities and raw materials, according to a decree issued Tuesday evening in Moscow. The actual commodities that will be banned from export will be determined by the Russian cabinet, the decree said. Mr. Putin gave them two days to come up with a list of countries subject to the ban. The decree came hours after President Biden said that the U.S. would ban imports of Russian oil over the country’s invasion of Ukraine and the European Union said it would aim to cut imports of Russian natural gas by two-thirds this year. The U.K. government also said Tuesday it was phasing out Russian oil imports by the end of 2022 and is exploring options to end Russian gas imports altogether. Russia is the third-largest oil producer in the world and the biggest exporter of natural gas. The exports fuel Russia’s economy and the West was believed to be too dependent on them to quit easily. The invasion of Ukraine changed that dynamic. Oil prices rose following Mr. Putin’s decree. Brent-crude prices, the international benchmark, extended earlier gains to trade 5.9% higher at $130.50 a barrel, before slipping back. They remained below the high of about $139 a barrel recorded on Monday. Russia is also a major supplier of grains and metals such as aluminum, nickel and palladium. A sweeping ban on exports could upend global commodity markets. Nickel hit an all-time high today. The decree was a follow-up to earlier measures taken by the Kremlin in retaliation for Western sanctions. It described the goal of the commodity-export ban as “ensuring the security of the Russian Federation and the uninterrupted functioning of industry.” The ban will be in effect until Dec. 31, according to the decree.
Dueling Sanctions: U.S. Bans Russian Oil, Putin Halts Exports of Key Products Until Dec. 31 -- Tit-for-tat sanctions continue relative to Russia, with the latest being a U.S. executive order banning fresh energy purchases from Russia and a 45-day winding-down period for existing contracts. “Russian oil will no longer be accepted at U.S. ports,” President Biden said in a speech from the White House. “We will not be part of subsidizing Putin’s war.” Meanwhile, Russian President Vladimir Putin countered by announcing some bans of his own. The announcements came as Ukrainian President Volodymyr Zelenskyy delivered an impassioned speech via video link to the British Parliament, where he received a boisterous standing ovation. There are also signs that Ukraine is willing to move on its ambition for NATO membership, but that seems to have done nothing to reduce Russian attacks. Western allies have been attempting to equip Ukraine’s thinly spread and outmatched military, some of whose soldiers are without boots. Poland said it would immediately give its fleet of Soviet-made MiG-29 jet fighters to the U.S., but the Pentagon said that would raise concerns for NATO. U.S. intelligence agency chiefs said Russia will be hard-pressed to control territory and install a pro-Moscow regime.Both Russia and China made statements regarding prioritizing certain agricultural commodities. Beijing has given the word to get coverage on as many major commodities and key inputs as it confronts a volatile trade and market atmosphere.USDA daily export sales for marketing year 2021-22:— 100,000 MT corn to Colombia and 20,000 MT soybean oil to unknown destinations..As for ag markets, wheat futures slumped by almost 5% the day after a hugely volatile session as traders assess the global supply outlook with war ravaging one of the world’s top grain-growing regions.The House early this morning reached a bipartisan deal on a $1.5 trillion fiscal year 2022 spending bill needed to avert a government shutdown. The legislation includes $13.6 billion in aid to Ukraine and European allies, and $15.6 billion in funding for Covid-19 vaccines, testing, and treatments in the U.S. and abroad. It also includes an extension of the mandatory livestock price reporting program. We have more details below.
Oil market to get even tighter on Russia disruptions, says Vitol — Global oil markets could tighten even more with Russian flows being disrupted and producers such as Libya experiencing supply problems, according to Vitol Group, the world’s biggest independent crude trader. That could push prices higher still after they soared to more than $115 a barrel in the wake of Russia’s invasion of Ukraine. “We have plenty of twists and turns to come,” Mike Muller, Vitol’s head of Asia, said Sunday on a podcast produced by Dubai-based consultant and publisher Gulf Intelligence. “While I think the world is already pricing in the fact there’ll be an inability to take in a serious amount of Russian oil in the western hemisphere, I don’t think we’ve priced in everything yet.” His views echo those of several commodity hedge funds and Wall Street banks such as Goldman Sachs Group Inc., which says oil could reach $150 in the next three months. The market could see “steeper backwardation,” Muller said, referring to a bullish pattern whereby near-term futures are more expensive than later ones because physical traders are rushing to secure supplies as soon as possible. The one-month time spread for Brent is already at the highest level of backwardation in at least a decade. Crude surged last year as global economies and energy demand rebounded from the coronavirus pandemic. It’s up another 50% in 2022. Energy exports have been exempted from U.S. and European sanctions on Moscow. But traders, shippers, insurers and banks are increasingly wary of taking on or funding purchases of Russian barrels. The country, which normally exports about 5 million barrels of crude every day, saw its Urals grade offered at record discounts last week. “It is not illegal to purchase Russian oil yet,” said Muller. “However, the means to do so are being tightened.”
Only OPEC Can Help The West Replace Russian Oil - Last week, oil and commodity markets recorded their biggest weekly gains in years as shuttering of Ukrainian ports, sanctions against Russia, and disruption in Libyan oil production sent energy, crop, and metal buyers scrambling for replacement supplies. Crude prices have spiked again this week on fears that the U.S. and its allies were seriously mulling a ban on Russian oil and gas. Well, the Russian boogeyman has not been imaginary, after all: on Tuesday, President Biden imposed an immediate ban on Russian energy imports while the United Kingdom said it would phase out imports by the end of 2022.In a speech on Tuesday, President Biden announced measures to eliminate Russian oil imports into the United States, and also addressed the U.S. oil & gas industry directly while also alluding to further conversations with producers. "To the oil and gas companies and finance firms that back them, we understand war is causing prices to rise, but it's no excuse to exercise excessive price increases ... it's no time for profiteering or price gouging. it's not true my policies are withholding production ... companies are making the decision not to drill," the president said in his speech.In 2021, the U.S. imported an average of 209,000 bpd of crude oil and 500,000 bpd of other petroleum products from Russia, according to the American Fuel and Petrochemical Manufacturers trade association. This represented 3% of US crude oil imports and 1% of the total crude oil processed by U.S. refineries. For Russia, this represented 3% of its total exports.While Biden's statement alludes to the need for more production, it does not point to a coordinated effort from the White House. At a time when the majority of U.S. producers are opting to return excess cash to shareholders, a few like Exxon Mobil are planning to significantly grow production. Exxon says it plans to increase Permian production by as much as 25% in 2022. Meanwhile, Devon Energy and Pioneer Natural Resources have indicated a willingness to increase production, with Pioneer CEO Scott Sheffield recently saying that the industry could grow production by ~1mb/d annually for three years. Sheffield went on to say his firm would participate in a coordinated effort to accelerate U.S. production growth. And now a cross-section of analysts is warning to expect even higher oil prices. Indeed, energy analysts have warned that prices could go as high as $160 or even $200 a barrel if buyers continue shunning Russian crude, leading to U.S. gas prices of more than $5 a gallon.
'There's just no way': Analysts say alternative supplies wouldn't be able to fully replace Russian oil -- While there are alternatives to Russian oil, they would be insufficient or difficult logistically if the U.S. and its allies were to ban Russian energy imports, analysts said Tuesday. "There's just no way even OPEC+ and even combined Iran and Venezuela could make up for it," Vandana Hari, founder of energy intelligence firm Vanda Insights, told CNBC's "Squawk Box Asia." Russia's war in Ukraine shows no sign of abating as the U.S. and its allies weigh banning Russian oil and natural gas imports. Oil prices spiked to highs not seen since 2008, though later pared those gains. There was also concern that Russia could retaliate by cutting natural gas supplies to Europe. Russia exports about 5 million barrels of crude oil per day, according to the International Energy Agency. Of that, Hari said about 2 million could be replaced if OPEC members Saudi Arabia, Iraq, Kuwait and the United Arab Emirates "were able to simultaneously stretch themselves to their maximum capacity." Hari said, however, a lot of the spare capacity within OPEC and its allies, known as OPEC+, is also Russian. The problem is OPEC+ would have to "reopen" their production quota system and it "just does not seem inclined to do anything of that sort just yet," she said. Any cuts or increases to the output of OPEC+ countries are measured against a baseline — the higher that number, the more oil a country is allowed to pump. Regina Mayor, KPMG's U.S. national sector leader of energy and natural resources, also added that OPEC+ has been "incredibly disciplined around how they return crude to the market.""There are other sources of oil supply. It's just really questionable about how quickly they can come online, the logistics of getting them to where they're actually needed," she told CNBC on Tuesday. Elsewhere, the U.S. was reportedly also in discussions with Venezuela to lift sanctions on its oil, as it sources for alternatives to Russia.But even if those sanctions were lifted, Hari said that would only free up another 100,000 barrels a day from Venezuela — "certainly nothing that would come even close to offsetting the disruption in Russian supplies."Russia is the world's third-largest oil producer after the U.S. and Saudi Arabia. It's also the biggest exporter of crude oil to global markets and the top supplier of natural gas to the European Union, about 43%.
OPEC+ output boost unlikely to come from UAE pressure alone - The United Arab Emirates will try to convince OPEC+ to increase oil output faster, but there’s little the Gulf country can do if Saudi Arabia isn’t on board. “Boosting production is not so much an OPEC discussion, it’s a Gulf discussion,” said Bill Farren-Price, a director at Enverus Intelligence Research and veteran observer of the group. “Only Saudi Arabia and UAE have meaningful spare capacity. Which is why the White House is focusing its efforts on Abu Dhabi and Riyadh.” The current agreement between the Organization of Petroleum Exporting Countries and its allies set out a schedule of monthly production increases -- currently 400,000 barrels a day -- all the way out until September. Doing anything different would require agreement from all other members of the group. OPEC+ delegates have said that the recent surge in prices to almost US$140 a barrel in London reflects geopolitical tensions, not the kind of supply and demand fundamentals that the producer group addresses. Saudi Arabia has rebuffed pressures from the U.S. and other consumers to pump more. The kingdom is so far prioritizing its relationship with Russia over oil market stability, said Farren-Price. Yet Russia’s invasion of Ukraine has upended the oil market in a way that OPEC+ may not be able to ignore. The UAE’s proposal was a reversal from the cartel’s last meeting, when the group avoided entirely any discussion of the growing international energy crisis. The pressure to accelerate production increases may become too strong to ignore as sanctions, a buyers strike or outright bans curb Russian oil production. The shift in the UAE’s stance, which was announced by Yousef al-Otaiba, the country’s ambassador to Washington, reflects the degree to which geopolitics are intruding into OPEC+ conversations. “The U.S. may have persuaded UAE to surge output,” said Farren-Price. “Saudi leaders look determined to win a political concession from Biden before offering up extra barrels.”
U.S. crude oil briefly tops $130 a barrel, a 13-year high on possible Western ban of Russian oil - Oil prices continued to surge in Monday morning trade as the market reacted to supply disruptions stemming from Russia's ongoing invasion of Ukraine and the possibility of a ban on Russian oil and natural gas.West Texas Intermediate crude futures, the U.S. oil benchmark, spiked nearly 9% higher to $126.05 per barrel. At one point the price rose to $130.50 Sunday evening, its highest since July 2008, before retreating.The international benchmark, Brent crude, soared 9.9% higher to $129.75. Brent hit a high of $139.13 at one point overnight, also its highest since July 2008. "Oil is rising on the prospect for a full embargo of Russian oil and products," "Already high gasoline prices are going to keep going up in a jarring fashion. Prices in some states will be pushing $5 pretty quickly."The U.S. and its allies are considering banning Russian oil and natural gas imports, Secretary of State Antony Blinken said in an interview with CNN's "State of the Union" on Sunday."We are now talking to our European partners and allies to look in a coordinated way at the prospect of banning the import of Russian oil while making sure that there is still an appropriate supply of oil on world markets," he said. "That's a very active discussion as we speak."Meanwhile, Speaker Nancy Pelosi said in a letter to Democratic colleagues on Sunday evening that the U.S. House of Representatives is "exploring strong legislation" to ban the import of Russian oil — a move which would "further isolate Russia from the global economy.""Our bill would ban the import of Russian oil and energy products into the United States, repeal normal trade relations with Russia and Belarus, and take the first step to deny Russia access to the World Trade Organization. We would also empower the Executive branch to raise tariffs on Russian imports," she wrote.While Western sanctions against Russia have so far allowed the country's energy trade to continue, most buyers are avoiding Russian products already. Sixty-six percent of Russian oil is struggling to find buyers, according to JPMorgan analysis. The U.S. average for a gallon of gas topped $4 on Sunday, according to AAA, in a rapid move due to the conflict. The underlying cost of oil accounts for more than 50% of the cost of gas that consumers put in their cars.
Hedge funds anticipate oil price spike, possible recession: Kemp - (Reuters) - Oil traders are anticipating a sharp spike in prices that will likely bring on a business cycle slowdown after Russia’s invasion of Ukraine was met by severe sanctions that are disrupting the country’s petroleum exports.Hedge funds and other money managers purchased the equivalent of 16 million barrels in the six most important petroleum futures and options contracts in the week to March 1, according to exchange and regulatory data.Portfolio managers remain strongly bullish towards petroleum, with a net long position of 731 million barrels, which lies in the 65th percentile for all weeks since 2013 (https://tmsnrt.rs/3hH1BJv).Bullish long positions outnumber bearish short ones by a ratio of almost 7:1, in the 84th percentile, but the overall position has not changed much since the middle of January.Last week’s position changes were driven primarily by the reduction of previous bearish short positions (-20 million barrels) rather than creation of new bullish long ones (-4 million barrels).The disruption to Russia’s exports caused by the invasion and sanctions has significantly increased the probability of a spike in oil prices and forced the closure of short positions.After adjusting for inflation, Brent prices are trading at the highest level since July 2014 and are in the 87th percentile for all months since 1990. If sustained, oil prices at this level are consistent with a reduction in oil demand through fuel conservation or a recessionary adjustment in the level of economic activity. The combination of high energy prices and other disruptions to global supply chains has significantly increased the threat of a mid-cycle slowdown or an end-of-cycle recession in Europe and the United States. In response, portfolio managers sold middle distillates such as European gas oil and U.S. diesel last week for the fourth week in a row, reflecting the worsening outlook for the global economy.Middle distillates are mostly used in freight transport, passenger aviation, manufacturing and agriculture, so they are the most sensitive to changes in the business cycle and international flying. Fund managers cut their overall bullish long position in distillates to 118 million barrels last week from a peak of 144 million barrels at the start of February. If prices remain at their current level for the next few months, the probability of a recession in North America and Europe would be high, which would force oil consumption back into line with production.
Global diesel shortage raises risk of oil price spike: Kemp - (Reuters) - Global stocks of diesel and other middle distillates have fallen to the lowest seasonal level since 2008, when similar shortages of these transport and industrial fuels helped to propel oil prices to a record high. Distillate fuel oil inventories in the United States are 30 million barrels (21%) below the pre-pandemic five-year seasonal average and at the lowest level since 2005, the U.S. Energy Information Administration said. Stocks in Europe are 35 million barrels (8%) below the pre-pandemic five-year average at the lowest level since 2008, Euroilstock, which compiles inventory data on behalf of the European Union, found. And middle distillate stocks in Singapore are 4 million barrels (32%) below the pre-pandemic five-year average and also at the lowest since 2008, according to the country’s Ministry of Trade and Industry. Combined inventories across the three locations have fallen by 110 million barrels compared with the same point last year, as consumption has persistently outpaced production (https://tmsnrt.rs/37aVdIf). Demand for diesel and other middle distillates is highly geared to the economic cycle since they are mainly used in freight transportation, manufacturing, farming, mining and oil and gas extraction. The rapid rebound in economic activity after the first wave of the pandemic and associated lockdowns, and its focus on diesel-intensive manufacturing and freight, has boosted use of the fuel. At the same time, refiners have restrained crude processing to deplete the excess stocks that built up during the coronavirus recession and adapt to lower demand from passenger airlines for jet fuel. But the continued depletion of distillate inventories has become unsustainable. Russia’s invasion of Ukraine and the subsequent boycott of Russian fuel threatens to make diesel shortages worse (“Shell, BP halt spot German diesel sales on scarcity fears”, Reuters, March 10). Actual or potential fuel shortages have been reported in France, Germany, Hungary and Sweden (“Austria's OMV restricts Hungary fuel sales as supply fears grip Europe”, Reuters, March 11).Distillate production will have to be raised above consumption for a period to rebuild stocks to a more comfortable level. There is some scope for refiners to boost distillate output by increasing crude processing back to pre-pandemic rates but that will transform a shortage of distillate into a shortage of crude oil. Pressure to stabilise and rebuild distillate inventories will cause refiners’ crude consumption to accelerate later this year and into 2023. But the global crude market is already exceptionally tight and the extra crude demand will cause it to tighten further. The global distillate shortage is threatening to create a severe spike in oil prices just as it did in the first half of 2008.
U.S. crude oil jumps to $125 a barrel, a 13-year high on possible Western ban of Russian oil -- U.S. oil surged on Sunday evening as the market continued to weigh supply disruptions from Russia in its ongoing war with Ukraine. U.S. crude oil spikes to 13-year high of $130 overnight, then gives up most of that gain - Oil prices gave up most of their big overnight gains in a wild session, briefly dipping into negative territory after surging above $130 earlier in the session. On Sunday evening, prices jumped as trading began with the market reacting to supply disruptions stemming from Russia's ongoing invasion of Ukraine and the possibility of a ban on Russian oil and natural gas. But prices later retreated, in a move that Rebecca Babin, senior energy trader at CIBC Private Wealth, attributed to comments out of Germany that the nation is reluctant to ban Russia energy imports. "Crude is coming off the highs following comments from Germany saying they have no plans to halt Russian energy imports, indications that the US is exploring replacement barrels from Venezuela and Saudi Arabia," she said. West Texas Intermediate crude futures, the U.S. oil benchmark, at one point spiked to $130.50 Sunday evening, its highest since July 2008, before retreating. WTI futures settled up 3.2% at $119.40, the highest settle since September 2008. The international benchmark, Brent crude, settled up 4.3% at $123.21 per barrel. Brent hit a high of $139.13 at one point overnight, also its highest since July 2008. The U.S. and its allies are considering banning Russian oil and natural gas imports, Secretary of State Antony Blinken said in an interview with CNN's "State of the Union" on Sunday. "We are now talking to our European partners and allies to look in a coordinated way at the prospect of banning the import of Russian oil while making sure that there is still an appropriate supply of oil on world markets," he said. "That's a very active discussion as we speak." Meanwhile, Speaker Nancy Pelosi said in a letter to Democratic colleagues on Sunday evening that the U.S. House of Representatives is "exploring strong legislation" to ban the import of Russian oil — a move which would "further isolate Russia from the global economy." "Our bill would ban the import of Russian oil and energy products into the United States, repeal normal trade relations with Russia and Belarus, and take the first step to deny Russia access to the World Trade Organization. We would also empower the Executive branch to raise tariffs on Russian imports," she wrote. While Western sanctions against Russia have so far allowed the country's energy trade to continue, most buyers are avoiding Russian products already. Sixty-six percent of Russian oil is struggling to find buyers, according to JPMorgan analysis.
Oil Prices Break $130 As EU And U.S. Allies Consider Ban On Russian Crude -The United States has confirmed that it is in talks with European allies topotentially sanction Russian crude oil in response to Moscow's ongoing aggression in Ukraine, sending oil prices briefly above $130. US Secretary of State Antony Blinken noted on Sunday during the NBC talk show Meet the Press on Sunday, “We are now in very active discussions with our European partners about banning the import of Russian oil to our countries, while of course at the same time maintaining a steady global supply of oil."The latest considerations follow a stream of sanctions that have already had a significant impact on the Russian economy but have not yet been able to halt Putin's advance into Ukraine. European Commission President Ursula von Der Leyen has yet not fully supported the idea as of yet, though she has expressed that one of their primary goals in the sanctions that have been levied thus far is to cut Putin's funding streams. The European Commission President noted on CNN, “The goal is to isolate Russia and to make it impossible for Putin to finance his wars,” adding “For us, there is a strong strategy now to say we have to get rid of the dependency of fossil fuels from Russia.” The move, if agreed upon, has long been considered the "nuclear option" as a ban on Russian oil could weigh on global supply in an already tight market.Bank of America analysts noted that if Russia's oil is cut off, the market could face a 5 million barrel shortfall which could push oil prices to $200 per barrel.The situation is compacted by stalling talks with Iran over a potential new nuclear deal.Amrita Sen, the co-founder of Energy Aspects, a think tank, explained, "Iran was the only real bearish factor hanging over the market but if now the Iranian deal gets delayed, we could get to tank bottoms a lot quicker especially if Russian barrels remain off the market for long."
Oil Tops $130 a Barrel as Russian Attacks Escalate – WSJ - Oil buyers racing to replace Russia’ taboo crude are paying record premiums for barrels that can be delivered now rather than later, reflecting worries about adequate near-term fuel supplies and expectations that high prices will reduce consumption and encourage drilling.Prices for April deliveries of crude have shot up since Russia invaded Ukraine and buyers began shunning the aggressor’s oil exports. The main U.S. price last week topped $110 a barrel for the first time in more than a decade and in off-hours trading late Sunday, they burst above $130 following fresh attacks, mounting civilian casualties and a push by U.S. lawmakers to ban Russian oil imports. Futures contracts for delivery in subsequent months have risen as well, but not by nearly as much. When U.S. futures for delivery next month ended Wednesday at $110.60 a barrel, contracts for next March settled at $84.53. The $26.07 difference has never been greater in favor of the front month. Prices ended the week a little closer together, yet the sharp rise Sunday night in near-term futures suggests a widening gap in the week ahead. The pattern is mirrored in international markets, where the 12-month price spread on benchmark Brent crude futures also surpassed $20 a barrel last week for the first time on record and blew out even wider Sunday night when front-month futures also rose above $130. “It’s hoarding,” said RBC Capital Markets analyst Michael Tran. He points to an 83% week-over-week jump in lease rates for very large crude carriers on the Persian Gulf to Asia route as further evidence that buyers are paying whatever they must to stock up in case Russian exports dry up. “People are saying, ‘Give me as much as you’ve got, I’ll buy as much as I can,’” he said. Over nearly four decades of trading in West Texas Intermediate futures, a barrel on average has cost 40 cents more than one delivered a year later. The difference rarely exceeds $10 in either direction, and when it does, the blowout is usually related to a war, hurricane, market crash or pandemic. The widest spread on record came in April 2020, when the global economy was locking down to slow the spread of Covid-19 and front-month U.S. oil-futures prices plunged into negative territory. The worry was that fuel consumption was falling faster than oil producers couldshut off the spigots, leading to trades in which sellers effectively paid buyers to take oil off their hands. Prompt-month futures settled at negative $37.63 after one historic trading session, while contracts for barrels one year out stayed above water at $34.35, for a spread of negative $71.98. Producers eventually choked back before the world’s oil-storage facilities overflowed. Now as economies reopen, producers—from the Organization of the Petroleum Exporting Countries to Texas frackers—have been slow to meet rising demand. The imbalance has drained fuel stockpiles around the world and sparked forecasts on Wall Street for $100 oilthis summer, during peak driving season. Triple-digit oil prices arrived sooner than expected when Russian tanks rolled into Ukraine. Analysts and Wall Street strategists are upping their price forecasts even higher now that Russia’s oil exports are being treated as off-limits by many buyers. OPEC and its market allies, including Russia, have chosen to maintain the cartel’s production quotas despite surging prices. U.S. oil output has remained flat since autumn at around 11.6 million barrels a day, yet there are signs that free-market producers are ramping up to capture higher prices. There were 519 rigs drilling in the U.S. for crude last week, up from 480 at the start of the year, when oil was $76 a barrel, according to oil-field-services firm Baker Hughes Co.Allowing for time to permit and drill wells, it could be six to nine months before increased domestic drilling, even with government incentives, adds meaningful supply, Jefferies nalysts estimate. Until then—and barring diplomatic deals that would allow more oil to flow from erstwhile petro powers Venezuela and Iran—analysts say prices are likely to rise until consumers can no longer bear the expense and reduce consumption.
Brent hits $139/bbl over fears of ban on Russian oil - Global crude oil prices neared record highs in early deals on Monday after reports said that the US and European allies are looking at banning Russian oil imports following its invasion of Ukraine. Brent crude hit a high of $139.13 per barrel, before easing a bit. Around 0930am, Brent May futures on the Intercontinental Exchange traded at $128.46, up 8.76% rom previous close. The April contract of West Texas Intermediate (WTI) on the NYMEX jumped 7.47% to $124.32 a barrel. Prices soared after US Secretary of State Antony Blinken during an interview on Sunday said, “We are now talking to our European partners and allies to look in a coordinated way at the prospect of banning the import of Russian oil, while making sure that there is still an appropriate supply of oil on world markets." Rahul Kalantri, vice president, commodities, Mehta Equities, said along with concerns over a likely ban on Russian oil, delays in the potential return of Iranian crude to global markets also pushed prices higher. "Russia exports 4 million to 5 million barrels of oil daily, making it the second-largest crude exporter in the world after Saudi Arabia. We expect crude oil prices to remain firm amid geo-political tensions and rising demand," he said. International Energy Agency's (IEA) announcement on 4 March that its member countries will release 61.7 million barrels of oil, higher than the initial commitment of 60 million barrel, failed to soothe prices. IEA member countries had unanimously agreed on 1 March for an initial emergency response plan to alleviate the increasing tightness in oil markets resulting from Russia’s invasion of Ukraine. The incessant rise in global crude prices have lifted the Indian energy basket, comprising of Oman, Dubai and Brent crude. It was at $111.61 per barrel on 4 March, according to data from the Petroleum Planning & Analysis Cell of the Ministry of Petroleum and Natural Gas. Spiraling oil prices are a cause of concern for India as the country imports 85% of its oil demand. Although, the increase in crude oil prices has not been transferred to the consumers so far, with retail fuel prices unchanged for the over three months now on the buildup to the ongoing state assembly elections. Market experts, however, believe that with elections scheduled to end this week, retail prices of petrol and diesel will be increased going ahead. In the national capital, the retail price of petrol on Monday was ₹95.41 a litre, while diesel sold for ₹86.67 per litre.
Commodities go crazy - The news around Russia’s invasion of Ukraine is moving fast. To the extent that almost any article that one starts becomes horribly out of date by the time it’s finished.But one thing that can’t be denied is the volatility in commodity prices at the moment. This Monday morning, Brent hit almost $140-a-barrel, gold $2,000 per ounce and European natural gas €345 per megawatt hour. Wheat, palladium and tin, to name but a few, are also going parabolic.The movements come after Antony Blinken, the US secretary of state, said over the weekend that Washington was considering a ban on Russian oil imports.To get a sense of how volatile commodity markets are right now, take a look at the chart below from Deutsche Bank’s Jim Reid, based on Thomson Reuters’ core commodity index.The moves we’ve seen this morning make this, as far as commodity markets go, “the biggest week on record”, Reid says.If things remain as rocky as they have been this morning, then it will, as Reid points out, be difficult to ignore comparisons with the energy price shocks of the 1970s.Before today’s move the rolling 3-month move in this overall commodity index was at +35.9%, just below the highest ever which was the +41.9% seen in the three months to August 11th 1973 . . .... While oil hasn’t spiked by as much as in the 1970s (it more than tripled during the first oil shock from late1973), gas has increased by a much greater amount than at any point in history and the broader pace of the commodity rally is in many cases now beyond that seen in the 1970s. We should start reading up on stagflation eh?
What a ban on Russian oil may mean for an already chaotic market — Brent crude soared almost 18% to just shy of $140 a barrel at the open in Asia following news over the weekend that the U.S. and its European allies are discussing a possible ban on Russian oil exports. It’s the latest development in an eye-watering surge in prices since the invasion of Ukraine, which has thrown energy markets into disarray and has the world bracing for a major inflationary shock. Here’s what analysts are saying about the likely implications of a prohibition on Russian oil.
- S&P Global: “One of the greatest uncertainties is if and how the escalation of economic warfare between Russia and the West will impact the flow of oil and gas,” said Victor Shum, vice president at IHS Markit, under S&P Global. “NATO members currently buy more than half of the 7.5 million barrels a day of crude oil and refined products that Russia exports,” and inventories are already low in the U.S. and at record-low levels in OECD Europe and Asia, he said. “The multiple dimensions to this war will lead to unexpected disturbances and outcomes.”
- ANZ Banking Group: Around 5 million barrels a day of oil supply, both crude sent by pipeline and seaborne cargoes, could be impacted by new sanctions, Daniel Hynes, a senior commodity strategist at Australia & New Zealand Banking Group Ltd., said in an interview. “We are potentially already seeing the likely impact of those sanctions, and so this reaction could be viewed as a bit knee-jerk,” he said. Given that this is happening across the entire energy complex, Europe doesn’t have many options and is likely going to be paying a lot more for its oil and gas and other fuels over the short term, Hynes said.
- JTD Energy Services: “With the surge in geopolitical tensions, uncertainty and anxiety, it would be quite difficult to accurately gauge the top of this rally,” John Driscoll, founder of JTD Energy Services in Singapore, said in an interview. “During the 2008-2009 financial crisis, demand destruction kicked in around $150 a barrel in July 2008,” he said. “However, this spike is supply-driven and may send prices beyond that level before we settle down.”
- Vanda Insights: An embargo on Russian imports could push the energy markets into the worst chaos of our lifetimes, Vandana Hari, founder of Singapore-based Vanda Insights, said in an interview. “Nothing is fully priced in because all bets are off in this war,” she said. It is difficult to see the European Union agreeing to a ban of Russian oil imports, even if the U.S. goes ahead with this, as it would be “lights out” in Europe if Moscow retaliates, Hari said.
- Citigroup: Exports of Russian crude and gasoil are already being shunned, Citigroup Inc. analysts including Ed Morse said in the bank’s quarterly outlook for commodities. Citi’s base case is for a drop of 500,000 barrels a day of Russian production and a 60 million barrel reserves release. Its bull case sees Russian output falling by 2 million barrels a day by end-2022, with around 120 million barrels of reserves releases from the U.S. and other nations. In Citi’s super-bull scenario, Moscow will only be sending its crude to China and there won’t be a response from OPEC+. The Russia-Ukraine crisis also means there’s a high probability of multiple disruption risks including damage to pipelines and ports, higher tanker rates, export frictions and cyber-attacks, it said.
Analysis: Ukraine crisis could boost ballooning fossil fuel subsidies (Reuters) - Sky-high oil prices resulting from a potential Russian oil import ban could force governments to pour more cash into fossil fuel subsidies to shield consumers from rising energy bills, rather than use the money to fight climate change. Even before Russia's invasion of Ukraine, rising energy costs had triggered a wave of subsidies despite countries agreeing to rein them in at the COP26 climate conference in November. "The last thing that governments want to do is increase any subsidies for fossil fuel use but they have to be sensitive to the price shock," "It's an economic problem we have to deal with today." Oil has soared to around $140 a barrel as the United States and Europe weigh a Russian oil import ban as part of measures against Russia over the Ukraine crisis. Oil had already surged last year as demand rebounded from a pandemic slump and supply remained relatively tight, exacerbating multi-decade high inflation. Coal and natural gas are also near all-time highs. Governments are using tax breaks, price caps and other measures aim to help consumers to cope with the huge jump in energy prices. During the pandemic, lockdowns cut demand for fossil fuel in 2020, sending consumption subsidies worldwide to an all-time low of $180 billion - down by nearly half compared with the year before, the International Energy Agency said. But when demand and prices yo-yoed back up, so did the subsidies. The Paris-based agency projected in November that subsidies soared by the highest annual rate ever in 2021 to $440 billion, with the final figure certainly higher than that, it told Reuters. The IEA said renewables are expected to receive $42 billion in government economic recovery spending worldwide, mostly dedicated to solar energy and offshore wind.
Russia's war on Ukraine a 'defining moment' of the century, says John Kerry -Volatile energy prices are here to stay with Russia's war on Ukraine set to be a "defining moment" for this century, John Kerry, special presidential envoy for climate, said Monday at CERAWeek by S&P Global. His comments come as the Russian invasion has upended global energy markets and supply chains. Oil shot above $130 Sunday evening for the first time since 2008 and natural gas in Europe is trading at levels that have never been seen before. Kerry, who served as secretary of state during the Obama administration, said volatility is "something we're going to live with for a little while," with nations around the world having to come together to counter President Vladimir Putin's "illegal, unprovoked, profoundly dangerous" war. "People realize this is a serious moment for all of us in the world. And it's also serious, needless to say," in regards to "what's happening to our planet," Kerry said. In terms of the energy transition, companies and nations are not doing enough in the here and now, he said. Many emissions-reduction targets focus on 2050, but an emphasis on goals three decades away is misguided, Kerry said. The current decade is the critical one — only action now will achieve 2050's stated goals, he said. "You can't get there … if you don't do what you need to do between 2020 and 2030," he said. Kerry added that the Biden administration is committed to an "all of the above" approach when it comes to future energy policy.
World is facing a 'game changer' as Russia's war roils energy markets, says OPEC's Barkindo -Mohammad Barkindo, secretary general of OPEC, said Monday that in the face of skyrocketing energy prices the group's mission remains to act as a reliable supplier. He said the oil-producing alliance has "no control over current events" and that geopolitics have now taken over and are "dictating the pace of the market." Barkindo's comments, made at CERAWeek by S&P Global, come as the energy industry is roiled after Russia invaded Ukraine, prompting supply concerns and sending prices to record highs. Oil broke above $130 Sunday evening for the first time since 2008, and European natural gas prices are now trading at record highs. Still, OPEC and its allies, a group known as OPEC+, have opted to keep production steady. The group last met on March 2, deciding to stick to a previously agreed-upon schedule to increase output by 400,000 barrels per day in April. The move is part of the group's unwinding of the almost 10 million barrels per day it pulled from the market in April 2020 as the pandemic sapped demand for petroleum products. Russia, which is part of OPEC+, is one of the world's largest oil-producing nations and the world's second-largest producer of natural gas. Financial sanctions against the country by the U.S. and allies have had indirect consequences on the country's energy complex, and officials have said more sanctions could be coming. "We are facing what is likely to be a global game-changer in terms of the energy transition," he said. He added that he was hesitant to appear at CERAWeek, before saying that it's "important to keep communication lines open, especially in times of crisis like the one the world is facing today." "All we can do is to stay the course," he said.
Oil Prices Could Hit $240 This Summer - Oil prices could hit $240 per barrel this summer in the worst-case scenario if Western countries roll out sanctions on Russia’s oil exports en masse. That’s according to Rystad Energy’s head of oil markets, Bjørnar Tonhaugen, who made the statement in an extraordinary market note sent to Rigzone on Wednesday. “Market volatility is at an all-time high, with prices surging on the expectation that supply will further tighten due to restrictive sanctions on Russian energy from the West,” Tonhaugen said in the statement. “Although fortunately not the most likely scenario, traders, analysts and decision-makers alike should prepare for elevated prices based on the current landscape,” he added in the statement. “This is the largest energy crisis in decades and the impact on the world’s most important commodity is going to be unprecedented,” Tonhaugen continued. In the note, the Rystad head outlined that if more Western countries join the U.S. and impose oil embargoes on Russia, it would create a 4.3 million barrel per day hole in the market “that simply cannot be quickly replaced by other sources of supply”. “Oil prices must therefore rise to destroy sufficient demand and incentivize a supply response through higher activity – both of which happen with a time lag of several months – to rebalance the market at a higher supply/demand/price intersection,” Tonhaugen said in the note. “If 4.3 million barrels per day of Russian oil exports to the West are halted by April 2022, and where China and India only keep current import levels intact, Brent would need to spike to $240 per barrel by the summer of 2022 to destroy demand,” Tonhaugen added. Oil at $240 per barrel would curb international market demand sufficiently over the coming six months through both a direct price impact and an indirect GDP impact, the Rystad head noted. “The higher prices go, the larger the chances of the global economy entering a recession already in the fourth quarter of 2022,” Tonhaugen said. “Oil at $240 per barrel would trigger a global recession and self-destruct the price level within just a few months, after which prices would fall sharply,” he added. “In the worst potential crisis for the oil market since the 1990 Kuwait invasion by Iraq, prices may again need to double in the coming months if all western exports of Russian-associated crude is either embargoed, shunned or by other means needs to be replaced,” Tonhaugen continued. Citing an address on Russian state television, CNBC reported Wednesday that Russian Deputy Prime Minister Alexander Novak warned of $300+ oil if Russian oil is rejected. In a statement sent to Rigzone on Monday, data analytics company Enverus noted that if proposed bans on oil imports from Russia in the U.S. and Europe come to fruition, $150 per barrel is not out of the question.
Oil Eases From 14-Year High After EU Repels Russian Oil Ban --Reversing a portion of overnight gains, oil futures nearest delivery on the New York Mercantile Exchange and Brent crude traded on the Intercontinental Exchange settled Monday's session 3% higher after several European countries pushed back against a proposed embargo on Russian oil and gas exports -- a step that would accelerate inflation and plunge overexposed EU economies into recession. The German chancellor, Olaf Scholz, pushed back against calls to ban Russian oil and gas imports, as part of Western sanctions against Moscow over its invasion of Ukraine, warning that such a move could put Europe's energy security at risk. "Supplying Europe with energy for heat generation, mobility, electricity supply and industry cannot be secured in any other way at the moment. It is therefore of essential importance for the provision of public services and the daily lives of our citizens," said Scholz. With the European Union drawing as much as 23% of its oil imports from Russia, it could take up to a year to diversify its supplies away from Moscow and build new energy infrastructure. Much of Russia's oil imports into the EU is shipped via a vast pipeline network, including the Druzhba pipeline with capacity of 1.4 million barrels per day (bpd), that could not be quickly replaced by another supply route. European refiners imported some 1.7 million bpd of Russian crude oil via tankers last year, 85% of which consisted of Urals crude, according to data from Kpler. In terms of gas imports, Europe is using more natural gas than ever. Russia's share of total EU natural gas imports has risen from 31% in 2010 to 38% in 2020, according to Eurostat. For Russia, the move would be catastrophic for its economy, cutting a vital artery for the government and military budget. Oil and gas make up 60% of Russia's exports, accounting for nearly 20% of Russian gross domestic product and 40% of Russian government revenues. The EU is Russia's largest trading partner and accounts for nearly 40% of Russia's global trade. A series of dire forecasts have flooded media airwaves, including Russia's Energy Minister, Alexander Novak, saying oil prices would climb above $300 bbl, which would almost certainly crush the global economy. Scholz's comments come a day after U.S. Secretary of State Antony Blinken said the United States was in talks with European allies about banning imports of Russian oil in an effort to intensify the pressure on Moscow to halt its invasion of Ukraine. For the U.S., the move could be viable since the share of Russian oil imports accounts for only 3% of total oil imports. The vast majority of U.S. imports of Russian oil, some 354,000 bpd, are of unfinished oil products, alongside small volumes of residual fuel oil and distillate fuel oil. These could be easily replaced with Venezuelan and Canadian imports of heavy grade oil. On the session, NYMEX April West Texas Intermediate rallied $3.72 or 3.8% to $119.40 barrel (bbl), and ICE Brent May contract advanced $5.10 to $123.21 bbl. NYMEX April RBOB futures gained 2.81 cents to $3.5721 gallon, and April ULSD futures spiked 14.52 cents to $3.9215 gallon.
Saudi Arabia raises April crude prices to Asia to all-time highs – CNA - Saudi Arabia's state oil producer Aramco raised the April official selling prices (OSPs) for crude it sells to Asia by more than US$2 a barrel, with some grades hitting all-time highs, as global markets struggled with Russian oil disruption. Record Saudi crude prices come on the back of an expected rise in Middle East oil demand as surging spot premiums and freight rates put supplies from Europe, Africa and the Americas out of Asia's reach. Global oil prices have soared to their highest since 2008, adding to inflation concerns, as the United States and the European explore banning imports of Russian oil in the wake of Moscow's invasion of Ukraine. Russia calls its actions in Ukraine a "special operation". The world's top oil exporter lifted its April OSP to Asia for its flagship Arab Light crude to US$4.95 a barrel versus the average of DME Oman and Platts Dubai crude prices, up US$2.15 from March, Saudi Aramco said late on Friday. This is the highest premium for the grade ever, Refinitiv data showed. The April OSPs for Arab Medium and Arab Heavy crude in Asia are also all-time highs. "The prices are higher than expected, but (I) can understand Saudi's mindset," a trader said, adding that prices of rival grades such as Abu Dhabi's Murban crude were also at record levels. The spot premium for Murban crude futures to Dubai quotes hit a record of nearly US$18 a barrel last week while premiums for other benchmark grades such as DME Oman and Dubai were at all-time highs of US$15 a barrel. Separately, Saudi Aramco set the Arab Light OSP to Northwestern Europe at plus US$1.60 per barrel versus ICE Brent, an increase of US$1.70 compared with March and to the United States at plus US$3.45 per barrel over ASCI (Argus Sour Crude Index), an increase of US$1 over the previous month.
Oil Prices Rise Amid Fears of Russian Oil Sanctions (Reuters) - Oil prices rose on Tuesday, with Brent surging past $126 a barrel, as fears of formal sanctions against Russian oil and fuel exports spurred concerns about supply availability. Benchmark Brent crude futures for May climbed $3.07, or 2.49%, to $126.28 a barrel at 0756 GMT. U.S. West Texas Intermediate (WTI) crude futures for April delivery rose $2.29, or 1.92%, to 121.69 a barrel. Russia is the world's second-biggest oil exporter and ships out about 7 million barrels per day of crude and oil products combined. The United States, the world's biggest oil consumer, may move on its own to ban Russian oil imports following Russia's invasion of Ukraine on Feb. 24. However, Germany, the biggest buyer of Russian crude oil, has rejected plans for an energy embargo. Replacing the vast quantities of Russian fuel and oil in the market if they has raised supply concerns about oil traders, prompting the surge in prices. A senior U.S. official, speaking on condition of anonymity, told Reuters on Monday that no final decision had been made but "it is likely (to be) just the U.S. if it happens." A Russian halt to its energy exports in response to the sanctions already enacted has also pushed prices higher. Russia on Monday warned it could stop the flow of natural gas through pipelines from Russia to Germany in response to Berlin's decision last month to halt the opening of the controversial new Nord Stream 2 pipeline. If all of Russia's oil exports were blocked from global markets, analysts have said prices could rise to $200 a barrel, while Russia's deputy prime minister said oil could soar to more than $300. "There is no capacity in the world in the moment that can replace 7 million barrels of exports," Mohammad Barkindo, the Secretary General of the Organization of the Petroleum Exporting Countries (OPEC) told reporters at an industry conference in Houston on Monday. An apparent slowdown in talks with Iran over its nuclear programme, which would end sanctions against its oil sales, is also adding to price pressures after the European Union envoy on the talks said it was up to Iran and the U.S. to make political decisions to reach a deal. Oil supply disruptions come as inventories continue to fall worldwide. Five analysts polled by Reuters estimated on average that U.S. crude stockpiles decreased by about 800,000 barrels in the week to March 4.
Oil prices remain elevated as Russia warns to cut Europe gas supplies - Oil prices remained elevated on Tuesday after hitting a 14-year high a day earlier, as Russia has warned that it retains the option to cut natural gas supplies to Europe if the US and its EU allies ban its crude imports. As of 1300 hours GMT, Brent, the international benchmark for two-thirds of the world’s oil, gained $3.02 (+2.45 percent) to reach 126.23 a barrel. Brent hit the mark of $139.13 a barrel a day earlier before settling lower. Brent had hit a record high of $147.02 on July 11, 2008. The West Texas Intermediate (WTI), the main oil benchmark for North America, reached $121.73 a barrel, up by $2.33 (+1.95 percent). The contract hit $130.50 a barrel a day earlier. WTI had soared to its highest level of $146.90 on July 11, 2008 amid the global financial crisis. The price for Opec Basket was recorded at $113.15 a barrel with a decrease of 3.34 percent, Arab Light was available at $124.83 a barrel with an increase of 1 percent and the price of Russian Sokol jumped to $114.64 a barrel with 0.38 percent increase. Russian Deputy Prime Minister Alexander Novak, who is also in charge of energy affairs, said in a televised speech on Monday that Moscow could stop the flow of gas through pipelines from the country to Germany after Berlin decided to stop the opening of the new Nord Stream 2 pipeline. “We understand that in connection with the unfounded accusations against Russia regarding the energy crisis in Europe and the imposition of a ban on Nord Stream 2, we have every right to take a mirror decision and impose an embargo on gas pumping through the Nord Stream 1 gas pipeline,” Novak said. “So far, we are not making this decision. No one will benefit from this. Although European politicians are pushing us to this with their statements and accusations against Russia,” he said. He further said that a ban on Russian crude would lead to catastrophic consequences for the global market. He added that oil prices could soar to $300 a barrel or more.
WTI Flash-Crashes After UAE Urges Increased OPEC Production, Ukraine/Russia 'Diplomacy' - The UAE will reportedly encourage its fellow members of OPEC to increase oil production levels, becoming the first OPEC member to call for the alliance to increase production since Russia invaded Ukraine, according to the Financial Times.The FT quotes Yousef al-Otaiba, the UAE's ambassador to Washington, as having said:"We favour production increases and will be encouraging Opec to consider higher production levels. The UAE has been a reliable and responsible supplier of energy to global markets for more than 50 years and believes that stability in energy markets is critical to the global economy."We suspect strongly this will make no difference whatsoever to OPEC+'s decisions in the short-term (especially given the fact that UAE refused to take Biden's calls earlier), but for now, it was enough for the algos to take crude to the lows of the day... Building on reports of Putin and Scholz discussing diplomatic solutions, and Ukraine signaling its desire for a "diplomatic solution," WTI is now down around 10%, back to one-week lows (but still notably elevated since Putin's invasion began)...OPEC+ has so far resisted calls from the White House and other major oil consumers to ramp up production faster, arguing that the recent surge in prices to almost $140 a barrel in London is driven by geopolitical tensions rather than a genuine supply shortage. However, Bloomberg reports that the last time the UAE called for a change in OPEC+ output policy was July 2021, when the country was pushing for a higher individual production quota. Saudi Arabia initially rejected the proposal and the spat threatened to break apart the alliance. Eventually a compromise was achieved.As we detailed earlier, oil prices are lower this morning on some potentially optimistic comments from Ukraine, after earlier rallying toward $127/bbl as President Biden said his nation would ban the import of Russian crude.Bloomberg's Valle notes that "fewer refined-product imports are compounding already tight inventory, particularly along the U.S. East Coast." DOE:
- Crude -1.863mm
- Cushing -585k - 9th weekly draw in a row
- Gasoline -1.405mm
- Distillates -5.23mm
Inventories tumbled across the board according to the latest official DOE data with Cushing stocks down for a 9th straight week... Distillates inventories registered a 5.23 million barrel drop last week, the biggest decline in about a year, to the lowest level since November 2014.Cushing stocks continue to drop near operational lows... Never one to miss an opportunity, Senator Elizabeth Warren has just tweeted a proposal to unleash a windfall profits tax on what she calls 'Big Oil'... Big Oil’s first priority is to maximize profits. It’s also their second priority, third priority, and on and on. We can’t let them use Putin’s invasion as an excuse to pad their bottom line with war-fueled profits. So I’m working with Senate Democrats on a windfall profits tax. — Elizabeth Warren (@ewarren) March 9, 2022 I wonder how she will deal with the fact that oil prices are suddenly plunging? And does she not see how 'taxing' oil more just screws the end-user (cough California cough) and in the case of 'windfall profits tax' will quickly be passed on to the poorest via the pump!
Oil Prices Tumble Double-Digits as UAE, Iraq Call for Higher OPEC Output -- Crude prices were down double digits on Wednesday after the United Arab Emirates’ ambassador to Washington, Yousef Al Otaiba, said in a widely-circulated statement to the media that the number two energy producer in the Gulf “favors oil production increases." The UAE “will be encouraging OPEC to consider higher production levels," Otaiba said, referring to the 13-member Saudi-led Organization of the Petroleum Exporting Countries. “The UAE has been a reliable and responsible supplier of energy to global markets for more than 50 years and believes that stability in energy markets is critical to the global economy,” Otaiba said. His remarks were followed by Iraq’s Oil Minister Ihsan Abdul-Jabbar Ismail who said OPEC+ will strive to achieve market balance. “If OPEC+ requires it, we can increase output,” he said, saying that the global oil producers alliance will discuss supply decisions at its next meeting in April. Brent, the global benchmark for oil, settled down $16.84, or 13.2%, at $111.14 a barrel. It was its sharpest one-day percentage drop since April 2020. U.S. crude’s West Texas Intermediate, or WTI, benchmark settled down $15, or 13%, at $108.70. Like Brent, it was also WTI’s biggest one-day percentage slump since April 2020. OPEC has been raising output by only a nominal 400,000 barrels daily for each month since last year through its pact with another 10 oil producers steered by Russia under a combined alliance known as OPEC+. That alliance is still withholding some 5 million barrels of daily supply under pandemic-era production cuts initiated in May 2020. Biden announced a U.S.-only ban on Russian oil imports on Tuesday in an action aimed at further isolating a country that on its own provides 10% of world supply. Analysts widely viewed the U.S. ban as little more than “noise." Russian oil made up 3% of U.S. consumption last year. But the UAE-sponsored boost and the UAE/Iraq plan to ask the same of OPEC could be a “game-changer of sorts,” said John Kilduff, partner at New York energy hedge fund Again Capital. “This is the music Biden has been wanting to hear from OPEC, but it could come at a political price eventually that hurts the nuclear deal with Iran,” said Kilduff. The UAE, like Saudi Arabia, is technically a U.S. ally that most recently received additional U.S. military defensive support to help them against Houthi threats from Yemen. But the UAE has also been calling on the United States to re-designate the Iran-backed militia on the Foreign Terror Organization list, which the White House appears unwilling to do. The demand that Tehran’s Islamic Revolutionary Guards Corp stays off Washington’s terror list is one of those put by Iranian negotiators to the nuclear talks with world powers. The talks that have dragged on for months are at their final stages and could pave the way for the legitimate return of Iranian oil to the global export market, without the U.S. sanctions they have faced since 2018. It is not known if the Emiratis will insist on their demand for the redesignation of the IRGC as a terror group as a condition for adding meaningfully to their oil supplies.
Oil Sinks as Zelensky Signals Concessions, UAE Output Talk -- Following surging values this week into overnight trading triggered by escalating sanctions on Russia's financial and energy sectors, oil futures plummeted more than 10% on Wednesday after Ukrainian President Volodymyr Zelensky indicated Kyiv may abandon its request for membership in the National Atlantic Treaty Organization in exchange for an immediate ceasefire ahead of peace talks between Russian Foreign Minister Sergey Lavrov and Ukrainian counterpart Dmytro Kuleba. Both ministers are scheduled to meet on Thursday in the resort city Antalya in southern Turkey for the first Cabinet-level meeting between the two countries since Russia invaded Ukraine on Feb. 24. The stakes could not be higher. Nearly two million Ukrainians have fled the country since the beginning of hostilities, several Ukrainian cities turned into rubble, and the number of civilian casualties unacceptably high for an unprovoked and asymmetrical conflict instigated by Russian President Vladimir Putin. Faced with this dire situation, Zelensky said his country is ready for a diplomatic solution and compromise regarding Ukraine's membership in NATO along with status of Crimea and breakaway republics of Donbass and Lugansk. He also added that Ukraine will require additional security guarantees from any aggression in the future. The list of Russian demands for an immediate ceasefire includes formal recognition of Crimea as part of Russia and independence of Donbass and Lugansk in eastern Ukraine. The third demand is a guarantee of neutral status for Ukraine, meaning Kyiv would never join NATO or the European Union. Putin's stated war goals were originally to "demilitarize and de-Nazify" Ukraine, both of which implied installing a pro-Russian puppet regime in Kyiv, but it now appears he's prepared to abandon both objectives. Investors are cautiously optimistic that these might be the first signs of an emerging compromise that could end a brutal conflict that has led to the worst humanitarian crisis on the European continent since World War II. Accelerating the selloff, United Arab Emirates indicated on Wednesday that the country wants to increase oil production and will encourage fellow members of the Organization of the Petroleum Exporting Countries to ramp up output. If the UAE convinces partners to turn on the spigots it would mark a turnaround for the cartel policy's gradual supply increase, which at its meeting last week agreed to increase production by only 400,000 barrels per day (bpd) in April, defying expectations for a larger supply hike. Saudi Arabia and the UAE are seen as the only two members within OPEC+ that could quickly boost production without logistical challenges. Oil futures briefly trimmed losses after inventory report from the EIA that showed across-the-board draws from domestic petroleum stockpiles. Total crude and oil products supplies plunged by 8.1 million barrels (bbl) from the previous week, with 1.9 million bbl of the draw realized in commercial crude oil inventories. Oil stored at Cushing tank farm in Oklahoma, the delivery point for West Texas Intermediate fell by 585,000 bbl from the previous week to 22.2 million bbl, according to EIA. The report was also supportive for refined products, showing commercial gasoline inventories fell by 1.4 million bbl and demand for motor gasoline surged by 219,000 bpd to 8.962 million bpd -- the second highest weekly rate since the start of the year. Distillate stocks fell by 5.2 million bbl to 113.9 million bbl, and are now about 18% below the five-year average, the EIA said. On the session, NYMEX April WTI fell $15 or 12% to $108.70 bbl, and ICE Brent May contract declined $16.84 for a $111.14 bbl settlement. NYMEX April RBOB futures fell 38.88 cents to $3.2938 gallon, and April ULSD futures plunged 97.30 cents or 20% to $3.4643 gallon.
Oil prices settle lower as Russia pledges to fulfil supply contracts - Oil prices settled lower on Thursday after a volatile session, a day after its biggest daily dive in two years, as Russia pledged to fulfil contractual obligations and some traders said supply disruption concerns were overdone. Since Russia's Feb. 24 invasion of Ukraine, oil markets have been the most volatile in two years. On Wednesday, global benchmark Brent crude posted its biggest daily decline since April, 2020. Two days earlier, it hit a 14-year high at over $139 a barrel. Brent futures fell $1.81, or 1.6%, to settle at $109.33 a barrel after gaining as much as 6.5% earlier in the session. U.S. West Texas Intermediate (WTI) crude fell $2.68, or 2.5%, to settle at $106.02 a barrel, giving up over 5.7% of intraday gains. "I think some of the 'war angst' is coming out of the market," "We rejected $130 twice this week. People are beginning to ask if there really is too much of a supply problem. There's still plenty of Russian supply," he said. Russian President Vladimir Putin told a meeting that the country, a major energy producer which supplies a third of Europe's gas and 7% of global oil, would continue to meet its contractual obligations on energy supplies. However, oil from the world's second-largest crude exporter is being shunned over its invasion of Ukraine, and many are uncertain where replacement supply will come from. Comments from United Arab Emirates (UAE) officials sent conflicting signals, adding to the volatility. On Wednesday, Brent slumped 13% after the UAE's ambassador to Washington said his country would encourage the Organization of the Petroleum Exporting Countries to consider higher output. UAE Energy Minister Suhail al-Mazrouei backtracked on the ambassador's statement and said the OPEC member is committed to existing agreements with the group to boost output by only 400,000 barrels per day (bpd) each month. While the UAE and Saudi Arabia have spare capacity, some other producers in the OPEC+ alliance are struggling to meet output targets because of infrastructure underinvestment in recent years. The United States made moves to ease sanctions on Venezuelan oil and efforts to seal a nuclear deal with Tehran, which could lead to increased oil supply. The market also anticipates further stockpile releases coordinated by the International Energy Agency and growing U.S. output.
Oil Edges Higher As High-level Talks To Stop War Fail -Oil prices rose on Friday after the highest-level talks between Russia and Ukraine since the start of the war failed to yield progress and Russia warned Europe of 'wave of consequences' against massive Western sanctions. U.S. President Joe Biden is set to call for an end to normal trade relations with Russia as the Senate passed a $1.5 trillion funding bill Thursday night to keep the government running through September and bolster both humanitarian and military efforts in Ukraine. Benchmark Brent crude futures rose 1.4 percent to $110.84 per barrel, while WTI crude futures were up 1.3 percent at $107.41. Login Prices were rising after the UAE took a step back from assurances it would encourage fellow OPEC members to boost their production above their agreed quotas. UAE Energy Minister Suhail al-Mazrouei backtracked on the ambassador's statement and said the OPEC member is committed to existing agreements with the group to boost output by only 400,000 barrels per day (bpd) each month.
Crudes Gain as Iran Talks Hit Snag, Russian Sanctions Bite -- Oil futures settled Friday's session higher after the United States and European partners paused negotiations on a nuclear deal with Iran, impeding sanctions relief for the Islamic Republic's oil exports, while growing pressure on Russia's economy and hostilities in neighboring Ukraine fanned concerns over further disruptions to global supply chains and deeper inflation in global economies.Talks in Vienna, Austria, addressing Iran's nuclear program that Tehran has pursued since the early 2000s broke off Friday without an agreement. The European Union's chief diplomat Joseph Borrel said "a pause" is needed in ongoing negotiations due to "external factors." While not explicitly stated, it is believed that Russia upended talks with demands to soften Western sanctions on Moscow for its invasion of Ukraine.The unexpected pause could unravel the whole deal, according to British negotiator Stephanie Al-Qaq, who called the outcome "extremely disappointing." The talks have focused on the steps the United States and Iran would take to return into compliance with the Joint Comprehensive Plan of action, which would lift most international sanctions on Iran in exchange for restrictions on Tehran's nuclear program. If oil sanctions are lifted, analysts believe Iran could quickly boost its oil exports by 700,000 barrels per day (bpd), tapping supply held in floating storage.TankerTrackers, a company which consults satellite imagery to unveil hidden loadings, assessed Iranian crude and condensate exports of 1.4 million bpd over the last two months with most of these volumes going to China.A diplomatic push to ease the sanction regime on Iranian oil comes as Russian crude shipments are being increasingly shunned by Western traders as a response to an unjustified war against Ukraine and its people. U.S. President Joe Biden announced on Friday that Russia no longer has the status of "most favored nation" -- an action that would allow new tariffs on Russian imports. Biden's action puts Moscow's trade relationship with the United States in the same category as North Korea and Cuba. Escalating sanctions and tariffs on Russia, the world's second largest oil and gas producer, are raising costs for energy and food in the United States and Europe, accelerating already overheated inflationary pressure. Markets breathed a sigh of relief midweek after the Russian government excluded energy from its sweeping export ban that prohibits trade of over 200 products and draw materials to all countries except for members states of the Eurasian Economic Union, Abkhazia, and South Ossetia. Imports of Russian energy commodities are integral to the European economy, European oil refiners, and the continent's electricity generation. The EU is Russia's largest trading partner and accounts for nearly 40% of Russia's total global trade, with about half of Russia's oil exports and 70% of their natural gas exports going to Europe. On the session, NYMEX April West Texas Intermediate rallied $3.31 to $109.33 barrel (bbl), and ICE Brent May contract advanced $3.34 to $112.67 bbl. NYMEX April RBOB futures surged 15.54 cents to $3.3121 gallon, and April ULSD futures jumped 12.14 cents to $3.4176 gallon.
Oil settles up but posts biggest weekly decline since Nov - Oil prices settled higher on Friday but posted their steepest weekly decline since November, as traders assessed potential improvements to the supply outlook that has been disrupted by Russia's invasion of Ukraine. Crude prices have soared since the invasion, which Moscow calls a "special military operation." This week, futures benchmarks hit their highest levels since 2008, then pulled back sharply as some producing countries signalled they may boost supply. On Friday, supply concerns grew when talks to revive the 2015 Iran nuclear deal faced the threat of collapse after a last-minute Russian demand forced world powers to pause negotiations. Brent crude futures rose $3.34, or 3.1%, on Friday, settling at $112.67 a barrel, after hitting a session low of $107.13. U.S. West Texas Intermediate (WTI) crude futures rose $3.31, or 3.1%, to settle at $109.33 a barrel, off the session low of $104.48. "Iran talks on hold is one factor supporting markets," said UBS analyst Giovanni Staunovo, adding that "market participants will now closely track Russian export data to get a sense how much (supply) is disrupted." U.S. President Joe Biden said the G7 industrialized nations will revoke Russia's "most favored nation" trade status, and announced a U.S. ban on Russian seafood, alcohol and diamonds. The United States banned Russian oil this week. Next week, Staunovo said, the focus will shift to oil market reports from the International Energy Administration (IEA) and the Organization of the Petroleum Exporting Countries (OPEC). Both have indicated the market should be oversupplied this year. U.S. rig data from energy services firm Baker Hughes Co showed drillers added 13 oil and natural gas rigs, bringing the total to 663, the ninth increase in 10 weeks. The data is an early indicator of future output. U.S. government officials have called on domestic and global producers to ramp up output. Brent, which rose over 20% last week, was down 4.8% this week after hitting $139.13 on Monday. U.S. crude recorded a weekly drop of 5.7% after touching a high of $130.50 on Monday. Both contracts last touched these price peaks in 2008. This week, the Russia-Ukraine conflict pushed the United States and many Western oil firms to stop buying Russian oil. There was talk of potential supply additions from Iran, Venezuela and the United Arab Emirates. "We have a close eye on the pressure valves that will absorb the supply shock," said UBS head of economics Norbert Ruecker. In the near term, supply gaps are unlikely to be filled by extra output from members of the OPEC and allies, together called OPEC+, given Russia is part of the grouping, Commonwealth Bank analyst Vivek Dhar said. Some OPEC+ producers, including Angola and Nigeria, have struggled to meet production targets, limiting the group's ability to offset Russian supply losses.
Russian refineries start to feel impact of buyers shunning oil products --Russia's refineries have started feeling the effect of a sharp fall in export sales of oil products in the wake of the country's invasion of Ukraine. Rosneft's 240,000 b/d Tuapse on the Black Sea halted crude uptake March 4 because it cannot ship its production, while the company's 342,000 b/d Ryazan refinery in central Russia has reduced the volume it is accepting. While there are no sanctions on exports of Russian crude or refined oil products, limited access to credit for Russian-related deals and the fear of energy sanctions being imposed have resulted in typical buyers avoiding Russian cargoes where possible, sources said. Related story: Buyers shun Black Sea loadings of Kazakh CPC crude due to Russia-Ukraine conflict Thus, while Russian refineries have maintained normal processing rates, concerns have been rising that they would be forced to cut runs as storages become full on declining exports. Tuapse produces feedstock such as fuel oil, naphtha and vacuum gasoil for export, rather than finished-grade products. They are subsequently processed further at refineries in Europe and elsewhere and, as Portuguese Galp's CEO Andy Brown said last week, if VGO supply from Russia was disrupted, "European refiners would be in "uncharted territory". However earlier this week, Galp said it will suspend all imports of Russian oil products, in particular VGO, in response to the invasion of Ukraine. Others are following and feedstock traders have started searching for alternative supply, with refineries in the Persian Gulf and Asia seen as potential source of material, sources said. "Yes, Jazan is an alternative source but I honestly have no idea at the moment about what can be the solution to replacing the Russian barrels," one feedstock trader said. Saudi Arabia's Jazan refinery is in the process of starting up, and was running at half capacity in January. Some sources said refineries in Europe will need to increase runs in their vacuum distillation units. That said, the market will have difficulty replacing the fallout from the missing Russian volumes because there was "nowhere else to get VGO from", according to a second trader. Meanwhile, fuel oil, which despite years of upgrades in Russia, remains a significant part of refinery yields and oil product exports, has also seen typical buyers reluctant to take cargoes. "The credit issues ... are causing supply disruptions to fuel oil supply" from the Black Sea, according to a fuel oil trader. Letters of credit have been difficult to secure for Russian-origin products, according to sources. While there were still tankers fixed for lifting products from Russia's Black Sea ports, a large portion of shipping companies have stated their unwillingness to load at Russian ports, particularly in the Black Sea, amid the risk of potential new sanctions. "We are not entering into new business to or from Russian until we have further clarity on what further sanctions could be imposed," one shipowner said. However, other shipowners were prepared to capitalize on higher rates resulting from the reduced pool of available tonnage. "Under certain conditions we can still look at Russian ports," a second shipowner said. Rates for Black Sea-Mediterranean shipments, basis 30,000 mt, reached a multi-year high at Worldscale 475 on March 3.
Turkey has no plans to cut Russian oil buys, welcomes Iran supply -minister - (Reuters) - Turkey will continue to buy Russian oil and hopes sanctions on Iran are lifted, bringing additional supplies to meet global demand, Energy Minister Alparslan Bayraktar said on Tuesday. Turkey relies on Russia for 45% of its natural gas demand, 17% of oil and 40% of its gasoline, he said in remarks on the sidelines of the CERAWeek energy conference. “The world needs more oil,” he said. “It needs to come from somewhere, from the U.S., from Venezuela, from Iran, Saudi Arabia, or wherever we need it to be.” Bayraktar said Turkey could not easily replace its Russian oil supply from elsewhere, adding “they have been old, reliable suppliers”. Turkey previously imported about 200,000 bpd of Iranian crude before Washington decided in 2018 it would pull out of the 2015 Iran nuclear deal and reinstate sanctions. “All of a sudden we went down to zero,” he said. “And now we cannot have another supply disruption, this time in Russia.” Turkey is hoping Washington and Tehran will reach a deal soon that will bring Iran back into compliance with the 2015 nuclear accord. The two countries have been in talks for almost an year to restore the deal which lifted sanctions on Iran. “I hope this Iran issue will be sorted out soon,” Bayraktar said. “It will be much easier for us to cope with (supply).”
Iran Nuclear Deal Awaits Final Decision As Negotiators Return To Their Capitals - Diplomats familiar with the situation say that the Vienna talks on the Iranian nuclear deal are effectively over, and that the top Iranian negotiator has returned to Tehran for consultations, which are effectively the final decision on making the deal or not. Iran downplayed the consultations, but EU officials say that over the next few days, the real focus is on political decisions. It was a long time getting here, but a deal is within reach, finally.Exact terms aren’t clear, but its been said to be close, minus a few specifics. Details resolving concerns from Russia were one of the last issues, and it’s not clear what they did about it.US officials warn there is little time left to make a deal, while French officials say everyone needs to make a deal while they still can, and that delays could risk the position they found themselves in.Any number of things can come up and derail the talks, with things like the Ukraine War suddenly becoming an issue just because Russia is involved in the talks. There are high hopes in the US that an Iran deal could ease oil prices, something needed as they surge to medium-term highs.Everything out of the EU nations suggest they’re satisfied, and assuming nothing prevents Russia sanctions getting in the way, they and China should similarly be comfortable. That leaves the decision to Iran, which stands to benefit most from sanctions relief.Meanwhile Israel is working hard to derail the likely imminent deal. Israeli officials have at times tried to present themselves as neutral to the ongoing Iran nuclear talks, but they also regularly step up to angrily condemn diplomacy and issue calls to action.Monday was Defense Minister Benny Gantz’s turn, as he called for the world to mobilize against Iran, and said Israeli actions against Iran, including military action, would happen whether or not a nuclear deal was reached. Israeli officials have been saying that for awhile, but it may not be so easy. If Israel indeed attacks Iran unilaterally after a functioning nuclear deal is reached with the P5+1, they’d face a substantial backlash.Israel has spent decades lobbying against deals with Iran, and agitating for military action. The US has suggested they are on the eve of a deal, and while the Biden Administration has warned Israel against being too hostile to the deal, no one could be surprised at the response so far.
Russia may hold Iran nuke deal hostage over Ukraine - Before Russian President Vladimir Putin launched the largest military attack on the European continent since World War II, the Joint Comprehensive Plan of Action (JCPOA) was arguably the West’s most urgent diplomatic priority.Representatives from Iran and six world powers have in recent weeks shuttled to Vienna to regenerate the 2015 nuclear deal that was shattered when then-US president Donald Trump unilaterally withdrew from the pact and reinstated punishing sanctions against Tehran in 2018.Now, the Tehran hardliners who once berated the deal largely because it was negotiated by the moderate president Hassan Rouhani are in charge of resurrecting the pact under the ultra-conservative Ebrahim Raisi, who has made it clear since taking office last August that he is committed to diplomacy.Iran’s senior nuclear negotiator, Ali Bagheri Kani, departed Vienna for Tehran on February 23 for a “short trip” to seek final advice from top authorities on sticking points but is now on his way back to Vienna, where he will meet P4+1 (Britain, China, France and Russia along with Germany) delegates this week at his opulent 19th-century hotel Palais Coburg residence.On Sunday, Russia’s main envoy in the talks, Mikhail Ulyanov, tweeted there was a “very high probability” of a deal within a week. That followed unusually optimistic comments from Washington that an agreement was “close.” Sticking points have prevented Tehran and Washington from resolving their differences and it’s unclear exactly how Russia’s invasion of Ukraine might influence the discussions.News reports noted Iran could possibly ramp up shipments beyond 1 million barrels a day within months of a revived accord, offering potential relief as the Ukraine conflict pushed oil above $100 a barrel. The Chinese representative, Wang Qun, has also said that the talks are at a “last stage,” telling reporters last week that interlocutors are “only a small step away from the final agreement.” European diplomats and US officials don’t share the same level of optimism, maintaining that there are fault lines that haven’t been bridged and that they risk imploding the talks altogether.
Yemen’s Houthis accept UN proposal to avert oil spill - Global Times - Yemen's Houthi movement has signed an agreement with the United Nations to deal with a decaying oil tanker threatening to spill 1.1 million barrels of crude oil off the war-torn country's coast, a Houthi official said. The Safer has been stranded off Yemen's Red Sea oil terminal of Ras Issa for more than six years, and UN officials have warned it could spill four times as much oil as the 1989 Exxon Valdez disaster off Alaska. "A memorandum of understanding has been signed with the United Nations for the Safer tanker," Mohammed Ali al-Houthi, head of the Houthi supreme revolutionary committee, said in a Twitter post late on Saturday. The Houthis, who are battling Yemen's internationally recognized government, control the area where the tanker is moored and the national oil firm that owns it. A deal had previously been reached for a technical UN team to inspect the deteriorating vessel, built in 1976, and conduct whatever repairs may be feasible, but final agreement on logistical arrangements did not materialize. No maintenance operations have been carried out on the Safer since 2015, when a Saudi-led coalition intervened in Yemen against the Iran-aligned Houthis after they ousted the internationally recognized government from the capital, Sanaa. The coalition controls the high seas off Yemen.
UN and Yemen rebels agree to transfer oil from Yemen tanker (AP) — The United Nations and Yemen’s Houthi rebels have signed a memorandum of understanding aimed at resolving the environmental threat posed by a tanker carrying more than 1 million barrels of crude oil that has been moored off the coast of the war-torn Arab nation since the 1980s, the U.N. said Monday.The FSO Safer tanker’s long-term presence in the Red Sea has raised fears of a massive oil spill or explosion that could cause an environmental catastrophe. U.N. spokesman Stephane Dujarric said the U.N. mission in Yemen “confirmed that the risk of imminent catastrophe is very real indeed, as we have been saying here for quite some time.” Under the MOU, a short-term solution would transfer the oil from the Safer to another ship, along with a longer-term solution, he said. But the MOU, dated March 5, makes clear the proposal’s implementation is contingent on mobilizing donor funds. Yemen has been convulsed by civil war since 2014, when Iranian-backed Houthi rebels took control of the capital and much of the country’s north, forcing the government to flee to the south, then to Saudi Arabia. A Saudi-led coalition entered the war in March 2015, backed by the United States and the United Arab Emirates, to try to restore President Abed Rabbo Mansour Hadi to power.
China's Xi Objects To Russian Sanctions In Summit With France And Germany --With every passing day, China is making it clear that as World Cold War 3 gets hotter by the day, the world's most populous country will not be siding with the West. During a virtual summit on Tuesday with French President Emmanuel Macron and German Chancellor Olaf Scholz, Chinese President Xi Jinping criticized sweeping sanctions against Russia while urging "maximum restraint" in Ukraine to avoid a humanitarian crisis,the Nikkei reported. Xi said that the punitive measures by the U.S., the European Union, Japan and others will "affect global finance, energy, transportation and stability of supply chains,", as reported by China Central Television. Xi warned that dragging down a world economy already burdened by the coronavirus pandemic is "in no one's interest." While China has not endorsed Russia's invasion of Ukraine, which Moscow calls a "special operation," Beijing has emphasized its solid ties with Russia and pushed back against sanctions that threaten to debilitate its economy. Xi called for dialogue on equal footing among the European Union, Russia, the U.S. and NATO. "The pressing task at the moment is to prevent the tense situation from escalating or even getting out of control," he said. China will remain in communication with France, Germany and the EU on the matter, he said. The Chinese leader continued to avoid committing Beijing to a mediator role, only praising efforts by Paris and Berlin to resolve the conflict through negotiation. Ukraine has asked China to help mediate a ceasefire. This came after Foreign Minister Wang Yi told reporters Monday that "China is prepared to continue playing a constructive role to facilitate dialogue for peace and work alongside the international community when needed to carry out necessary mediation," without providing further details. Echoing Xi's comments, this morning Chinese foreign ministry addressed the US ban of CHinese oil imports and said that China "opposes unilateral sanctions, which do not bring peace and security but only cause serious difficulties to economies and people's livelihoods in countries concerned, bring about a lose-lose situation and intensify confrontation."
Australia to ban oil, coal and gas imports from Russia in 45 days - - TASS - Australia will ban imports of Russian oil and oil products as well as gas and coal, Australian Foreign Minister Marise Payne announced on Friday."The Australian government is prohibiting the import into Australia of Russian oil, refined petroleum products, gas and coal. These energy products are Russia’s largest global source of export revenue. <...> This decision does not risk Australia’s fuel security. Australia has diverse and resilient oil supply chains, and adequate fuel supplies," Payne told the Guardian Australia, noting that Australia does not import Russian oil in large quantities and the measures it has taken "with key partners will collectively curtail Russia’s revenue".The Australian government's decision is expected to take effect in 45 days, after the country receives shipments of crude oil from Russia that have already been purchased.Earlier, it was reported that Australia's largest oil refining company Ampol had refused to buy crude oil and oil products from Russian suppliers, saying it will completely switch to raw materials from Southeast Asia, Africa, North America and the Middle East. In 2020, Australia imported A$59 million ($43 million) worth of oil and oil products from Russia.
World Bank official says war-driven oil price hikes to slash growth for big importers - (Reuters) - Persistent high oil prices prompted by Russia's invasion of Ukraine could cut a full percentage point off the growth off large oil-importing developing economies like China, Indonesia, South Africa and Turkey, a World Bank official said on Tuesday. Indermit Gill, the bank's Vice President for Equitable Growth, Finance and Institutions, said in a blog posting that the war will deal further setbacks to growth for emerging markets already lagging in recovery from the COVID-19 pandemic and struggling with a range of uncertainties from debt to inflation. "The war has aggravated those uncertainties in ways that will reverberate across the world, harming the most vulnerable people in the most fragile places," Gill said. [ read more ] "It's too soon to tell the degree to which the conflict will alter the global economic outlook." Some countries in the Middle East, Central Asia, Africa and Europe are heavily reliant on Russia and Ukraine for food, as the countries together make up more than 20% of global wheat exports. Gill said estimates from a forthcoming World Bank publication suggest that a 10% oil price increase that persists for several years can cut growth in commodity-importing developing economies by a tenth of a percentage point. Oil prices have more than doubled over the last six months. "If this lasts, oil could shave a full percentage point of growth from oil importers like China, Indonesia, South Africa, and Turkey," he said. "Before the war broke out, South Africa was expected to grow by about 2% annually in 2022 and 2023, Turkey by 2-3%, and China and Indonesia by 5%." Russia calls its actions in Ukraine a "special operation".
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