oil prices drop most in two years; US oil supplies are at a 14 year low; commercial crude supplies are at a 42 month low, SPR is at a 19½ year low; total oil + products supplies are at a 95 month low; drilling for natural gas is at a 29 month high..
US oil prices fell for the third time in four weeks and by the most in two years after China locked down their largest city and Biden announced an unprecedented release of oil from our Strategic Petroleum Reserve....after rising 10.5% to $113.90 a barrel last week after a major Russian and Kazakh export pipeline was shut down while Saudi oil facilities came under missile attacks, the contract price for US light sweet crude for May delivery opened $1 lower and fell sharply in early trading Monday, after China announced new quarantine restrictions in Shanghai, the country's financial and business hub, and on the apparent recovery of a major pipeline carrying oil from Kazakhstan oilfields to the export ports on the Black Sea, and were down nearly 10% at $102.83 per barrel by midday, but recovered some losses during late afternoon trading to end the day down $7.94 at $105.96 a barrel, with the drop first and foremost due to concerns about demand, after Shanghai had entered into a partial lockdown....oil prices were down by as much as 5% again early Tuesday, after Moscow said it would sharply cut military operations near the Ukrainian capital of Kyiv following discussions in Turkey aimed at de-escalating the war, but clawed back most of their steep early losses to settle $1.72 lower at $104.24 a barrel after Russia and Ukraine failed to reach an agreement on a cease-fire and US Secretary of State Antony Blinken warned that comments from Russian officials should be met with a healthy dose of skepticism...oil prices rose in pre-inventory trading early Wednesday after preliminary data from the American Petroleum Institute indicated US oil stockpiles decreased by a larger-than-expected margin while the US dollar fell to a 13 day low, and then extended their rally after the EIA reported US crude stockpiles fell by a bigger-than-expected 3.4 million barrels, cutting available inventories to their lowest since September 2018, and finished trading $3.58 higher at $107.82 per barrel...but oil prices fell more than $5 early Thursday following reports that the Biden administration was considering the release of up to 180 million barrels of crude oil from the Strategic Petroleum Reserve over the next six months to try to lower oil prices and settled down $7.54, or 7%, at $100.28 a barrel, after touching a low of $99.66 a barrel after Biden announced the largest ever release from the Strategic Petroleum Reserve and called on oil companies to increase drilling to boost supply...oil prices moved lower again on Friday as the member nations behind the International Energy Agency (IEA) agreed to join in the largest-ever strategic oil reserves release, and settled $1.01 or 1% lower at $99.27 a barrel, after global manufacturers reported slower growth and far more pessimistic expectations for factory activity in March than at any other time this year, with US crude ending down 12.8% in its biggest weekly drop in two years, while the international benchmark price saw its largest weekly drop in over ten years...
on the other hand, natural gas prices ended higher for the sixth time in seven weeks, as wintery weather lingered across the northern tier and European gas prices jumped again... after rising every day last week and finishing 14.6% higher at $5.571 per mmBTU as forecasts turned cooler and demand for exports increased, the contract price of natural gas for April delivery slid from an 8 week high on Monday on the drop in crude prices and on a small decline in demand expected for next week, and settled 6.3 cents lower at $5.508 per mmBTU.....natural gas prices fell another 17.2 cents on Tuesday as the domestic weather outlook shifted increasingly bearish, field production ticked up and energy commodities broadly dipped lower amid pandemic flare-ups and the potential for a cease-fire in Ukraine, as trading in the April natural gas contract expired at $5.336 per mmBTU...with natural gas price quotes now referencing the contract price of natural gas for May delivery, which had closed Tuesday priced at $5.330 per mmBTU, natural gas prices jumped 27.5 cents, or more than 5%, to a 9 week high at $5.605 per mmBTU on Wednesday, as worries about Russia's plan to price its exports in rubles caused global energy prices to spike, keeping demand for US LNG exports near record highs...natural gas prices edged up another 3.7 cents to $5.642 per mmBTU on Thursday, despite a slightly bigger-than-expected storage increase, following word from Germany that they were preparing for a possible sudden drop in natural gas supplies from Russia, and then rose another 7.8 cents, or 1.4%, to settle at a nine week high of $5.720 per mmBTU on Friday, as soaring global prices pushed demand for LNG exports to record highs....natural gas prices were thus 2.7% higher on the week, while the May natural gas contract, which had ended last week priced at 5.611 per mmBTU, saw a 1.9% gain...
The EIA's natural gas storage report for the week ending March 25th logged the year's first net injection of natural gas into storage, a week earlier than normal, indicating that the amount of working natural gas held in underground storage in the US rose by 26 billion cubic feet to 1,415 billion cubic feet by the end of the week, which still left our gas supplies 347 billion cubic feet, or 19.7% below the 1,762 billion cubic feet that were in storage on March 25th of last year, and 244 billion cubic feet, or 14.7% below the five-year average of 1,659 billion cubic feet of natural gas that have been in storage as of the 25th of March over the most recent five years....the 26 billion cubic foot addition to US natural gas working storage for the cited week matched the average forecast for a 26 billion cubic foot increase from an S&P Global Platts survey of analysts, while it contrasts with the average withdrawal of 23 billion cubic feet of natural gas that have typically been pulled out natural gas storage during the same week over the past 5 years, and it was more than the 7 billion cubic feet that were added to natural gas storage during the corresponding week of 2021...
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 25th indicated that even after a big decrease in our oil exports, we had to pull oil out of our stored commercial crude supplies for the 13th time in 18 weeks and for the 29th time in the past forty-three weeks, as oil supply that could not be accounted for was largely absent…our imports of crude oil fell by an average of 227,000 barrels per day to an average of 6,259,000 barrels per day, after rising by an average of 76,000 barrels per day during the prior week, while our exports of crude oil fell by an average of 856,000 barrels per day to 2,988,000 barrels per day during the week, after our exports had risen 908,000 barrels per day to an 8 month high the prior week...applying our oil exports to offset oil supplies coming from imports to get our effective trade in oil, we find there was a net import average of 3,271,000 barrels of per day during the week ending March 25th, 629,000 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 100,000 barrels per day higher at 11,700,000 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 14,971,000 barrels per day during the cited reporting week…
Meanwhile, US oil refineries reported they were processing an average of 15,913,000 barrels of crude per day during the week ending March 25th, an average of 35,000 more 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 921,000 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 20,000 barrels per day less 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 inserted a (+20,000) 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, a factor that they label in their footnotes as “unaccounted for crude oil”, thus suggesting there must have been an omission of that magnitude in this week’s oil supply & demand figures that we have just transcribed....(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 921,000 barrel per day decrease in our overall crude oil inventories left our total oil supplies at 978,272,000 barrels at the end of the week, the lowest inventory level since January 25th, 2008, and thus a 14 year low….this week's oil inventory decrease came as 493,000 barrels per day were being pulled our commercially available stocks of crude oil, while 429,000 barrels per day of oil were being pulled out of our Strategic Petroleum Reserve, which includes the second withdrawal under the recently announced 30,000,000 million barrel release from the SPR to address Russian supply related shortfalls, as well as an ongoing withdrawal under the administration's earlier 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 87,825,000 barrels have now been removed from the Strategic Petroleum Reserve over the past 20 months, and as a result the 568,322,000 barrels of oil still remaining in our Strategic Petroleum Reserve is now the lowest since May 10th, 2002, or at a new 19 1/2 year low, as repeated tapping of our emergency supplies for non-emergencies or to pay for other programs has already drained those supplies considerably over the past dozen years....based on an estimated average daily US oil consumption of 18,000,000 barrels per day, the US will have roughly 28 1/2 days of oil supply left in the Strategic Petroleum Reserve after the first two Biden administration SPR withdrawal programs have run their course...
Further details from the weekly Petroleum Status Report (pdf) indicate that the 4 week average of our oil imports rose to an average of 6,365,000 barrels per day last week, which was 11.9% more than the 5,686,000 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 100,000 barrels per day higher at 11,700,000 barrels per day because the EIA's rounded estimate of the output from wells in the lower 48 states was 100,000 barrels per day higher at 11,300,000 barrels per day, while Alaska’s oil production rose by 14,000 barrels per day to 445,000 barrels per day, but had no impact on the final rounded national 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 10.7% below that of our pre-pandemic production peak, but 38.8% 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 92.1% of their capacity while using those 15,913,000 barrels of crude per day during the week ending March 25th, up from a utilization rate of 91.1% the prior week, and somewhat higher than the historical utilization rate for late March refinery operations, when spring refinery maintenance programs are normally still winding down…the 15,913,000 barrels per day of oil that were refined this week were 6.5% more barrels than the 14,941,000 barrels of crude that were being processed daily during week ending March 26th of 2021, when refineries were still recovering from winter storm Uri, and 6.8% more than the 14,898,000 barrels of crude that were being processed daily during the week ending March 27th, 2020, when US refineries were operating at what was then a much lower than normal 82.3% of capacity at the onset of the pandemic...
With little change in the amount of oil being refined this week, gasoline output from our refineries was nonetheless quite a bit lower, decreasing by 750,000 barrels per day to 9,054,000 barrels per day during the week ending March 25th, after our gasoline output had increased by 424,000 barrels per day over the prior week.…this week’s gasoline production was 3.1% less than the 9,339,000 barrels of gasoline that were being produced daily over the same week of last year, and 7.7% less than the gasoline production of 9,813,000 barrels per day during the week ending March 29th, 2019, to show a typical prepandemic production level...meanwhile, our refineries’ production of distillate fuels (diesel fuel and heat oil) increased by 120,000 barrels per day to 5,099,000 barrels per day, after our distillates output had increased by 329,000 barrels per day over the prior two weeks…with those increases, our distillates output was 7.6% more than the 4,738, 000 barrels of distillates that were being produced daily during the week ending March 26th of 2021, and 4.7% more than the 4,870,000 barrels of distillates that were being produced daily during the week ending March 29th, 2019...
Even with the big drop in our gasoline production, our supplies of gasoline in storage at the end of the week rose for the first time in 8 weeks, increasing by 785,000 barrels to 238,828,000 barrels during the week ending March 25th, after our gasoline inventories had decreased by 2,948,000 barrels over the prior week....our gasoline supplies increased this week because the amount of gasoline supplied to US users decreased by 138,000 barrels per day to 8,499,000 barrels per day, and because our exports of gasoline fell by 450,000 barrels per day to 608,000 barrels per day while our imports of gasoline fell by 63,000 barrels per day to 656,000 barrels per day.…and even after 7 inventory drawdowns before this week's modest increase, our gasoline supplies were 3.6% higher than last March 26th's gasoline inventories of 230,544,000 barrels, when shortages in the wake of Winter Storm Uri had resulted in back to back record draws, and they're slightly above the five year average of our gasoline supplies for this time of the year…
At the same time, with this week's increase in our distillates production, our supplies of distillate fuels increased for the second time in eleven weeks and for the ninth time in thirty weeks, rising by 1,395,000 barrels to 113,530,000 barrels during the week ending March 25th, after our distillates supplies had decreased by 2,071,000 barrels to a 95 month low during the prior week…our distillates supplies also rose this week because the amount of distillates supplied to US markets, an indicator of our domestic demand, fell by 712,000 barrels per day to 3,804,000 barrels per day, while our imports of distillates fell by 17,000 barrels per day to 155,000 barrels per day, and while our exports of distillates rose by 320,000 barrels per day to 1,251,000 barrels per day....but after thirty-five inventory decreases over the past fifty-one weeks, our distillate supplies at the end of the week were 21.2% below the 144,095,000 barrels of distillates that we had in storage on March 26th of 2021, and about 16% below the five year average of distillates inventories for this time of the year…
Meanwhile, even after the big drop in our oil exports, our commercial supplies of crude oil in storage fell for the 23rd time in 35 weeks and for the 36th time in the past year, decreasing by 3,449,000 barrels over the week, from 413,399,000 barrels on March 18th to a 42 month low of 409,950,000 barrels on March 25th, after our commercial crude supplies had decreased by 2,508,000 barrels over the prior week…with this week’s decrease, our commercial crude oil inventories slipped to roughly 14% below the most recent five-year average of crude oil supplies for this time of year, but were still about 28% above the average of our crude oil stocks as of the fourth weekend of March 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 then jumped again after last year's winter storm Uri froze off Gulf Coast refining, our commercial crude oil supplies as of this March 11th were 18.3% less than the 501,835,000 barrels of oil we had in commercial storage on March 26th of 2021, and were also 12.6% less than the 469,193,000 barrels of oil that we had in storage on March 27th of 2020, and 8.8% less than the 449,521,000 barrels of oil we had in commercial storage on March 29th 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 1,166,000 barrels this week, from 1,708,138,000 barrels on March 18th to 1,706,972,000 barrels on March 25th, after our total supply had decreased by 10,889,000 barrels over the prior week and are now down by 81,461,000 barrels so far this year...that left our total supplies of oil & its products at the lowest since April 4th, 2014, or at a new 95 month low, despite this week's increases in petroleum product inventories..
This Week's Rig Count
The number of drilling rigs running in the US rose for the 67th time over the prior 79 weeks during the week ending April 1st, but it still remained 15.2% below the prepandemic rig count....Baker Hughes reported that the total count of rotary rigs drilling in the US increased by three to 673 rigs this past week, which was also 243 more rigs than the pandemic hit 430 rigs that were in use as of the April 1st report of 2021, but was still 1,256 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 2 to 531 oil rigs during this week, after rigs targeting oil had increased by 7 during the prior week, and there are now 196 more oil rigs active now than were running a year ago, even as they still amount to just 33.0% of the shale era high of 1609 rigs that were drilling for oil on October 10th, 2014, and as they are still down 22.3% from the prepandemic oil rig count….meanwhile, the number of drilling rigs targeting natural gas bearing formations was up by 1 to 138 natural gas rigs, the most since October 11th, 2019, and up by 47 natural gas rigs from the 91 natural gas rigs that were drilling during the same week a year ago, even as they were still only 8.6% of the modern high of 1,606 rigs targeting natural gas that were deployed on September 7th, 2008…in addition to rigs targeting oil and gas, Baker Hughes lists two active "miscellaneous" rigs; one is a rig drilling vertically for a well or wells intended to store CO2 emissions in Mercer county North Dakota, and the other is also a vertical rig, drilling 5,000 to 10,000 feet into a formation in Humboldt county Nevada that Baker Hughes doesn't track...
The offshore rig count in the Gulf of Mexico was unchanged at fourteen rigs this week, with thirteen 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 equal to the 14 offshore rigs that were active in the Gulf a year ago, when 12 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 2 water based rigs drilling inland again this week; one is a directional rig drilling for oil at a depth of over 15,000 feet in the Galveston Bay area, while the other 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 of a year ago, there were no inland waters rigs deployed..
The count of active horizontal drilling rigs was up by 3 to 613 horizontal rigs this week, which was also 222 more rigs than the 391 horizontal rigs that were in use in the US on April 1st of last year, but still 55.4% less than the record 1,374 horizontal rigs that were drilling on November 21st of 2014....meanwhile, the vertical rig count was unchanged at 25 vertical rigs this week, and those were still up by 5 from the 20 vertical rigs that were operating during the same week a year ago….in addition, the directional rig count was also unchanged at 35 directional rigs this week, and those were still up by 16 from the 19 directional rig that were in use on April 1st 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 April 1st, the second column shows the change in the number of working rigs between last week’s count (March 25th) and this week’s ( April 1st) count, the third column shows last week’s March 25th 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 1st of April, 2021...
With the five rig increase in Texas and the four rig increase in the Permian basin, we'll start by checking the Rigs by State file at Baker Hughes for the Texas changes in the Permian basin...there we find that four rigs were added in Texas Oil District 8, which encompasses the core Permian Delaware, and that another rig started drlling in Texas Oil District 8A, which includes the counties of the northern part of the Permian Midland, but that a rig was pulled out of Texas Oil District 7C, which includes those Texas counties in the southern part of the Permian Midland, at the same time, thus indicating a net four rig increase in the Texas Permian... elsewhere in Texas, we find that a rig was added Texas Oil District 1, but that a rig was pulled out of Texas Oil District 2; since the Eagle Ford details show the addition of a ninth natural gas rig to that basin, and the concurrent removal of an oil rig, the changes in those two oil districts account for that switch, which shows as no net change above ...finally, Texas also saw a rig added in Texas Oil District 6, which appears to have been a natural gas rig addition in the Haynesville shale...we determined that by checking details for adjacent Louisiana, which saw 2 rigs removed from the Haynesville shale area of that state at the same time, even as the national Haynesvile shale count was down by just one....meawhile, the Louisiana rig count was down by 3 because the state also saw the removal of a horizontal rig that had been drilling from inland waters in Plaquemines Parish, Louisiana, near the mouth of the Mississippi...
other rig changes around the country include the removal of an oil rig from the Williston basin in North Dakota, the addition of an oil rig in the Cana Woodford of Oklahoma, which was offset by the removal of an oil rig from a basin elsewhere in the state that Baker Hughes doesn't track, and the addition of an oil rig in the Uintah basin of Utah, which Baker Hughes still doesn't track, despite the presence of 13 rigs in that basin....finally, the last natural gas rig addition this week was in West Virginia's Marcellus, which has just topped last year's count...
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Utica Shale gas drillers Ascent, Gulfport said to be in talks for $8B merger - S&P Global -A rumored merger between Utica Shale oil and gas drillers Gulfport Energy Corp. and privately held Ascent Resources would continue the roll-up of Appalachian shale gas producers and would be welcomed by the market, investment analysts said. The deal is said to be valued at about $8 billion. "Our conversations with investors and industry contacts suggest an all-equity reverse merger near proved-developed-producing pricing would be well-received by the market, creating a larger-scale, lower-cost entity that would appeal to investors," Truist Securities Inc. oil and gas analyst Neal Dingmann told clients March 30. "We believe scale continues to become more important, especially in areas such as Appalachia." The transaction would give Gulfport, which was fresh out of bankruptcy proceedings in 2021, more scale by combining its Ohio operations with neighbor Ascent, said Charles Johnston, senior high yield oil and gas analyst with credit research firm CreditSights. At the same time, it would allow Ascent to have publicly traded stock without an IPO, Johnston said. The bulk of Gulfport's Utica operations are in the dry gas counties along the Ohio River on the eastern edge of the state, while Ascent's wells are focused on the "wetter" counties to the west where natural gas liquids and oil are mixed into the production stream. Gulfport produces 1 Bcfe/d, 90% gas, with 77% of those volumes coming from the Utica, according to Matthew Keillor, an analyst with energy data and software company Enverus. Ascent produces nearly 2 Bcfe/d, 91% gas, all from the Utica. Truist said Ascent, backed by private equity firm First Reserve Corp. and the Energy and Minerals Group's EMG Fund II Management LP, could reasonably offer $114 per share for Gulfport, a nearly 32% premium to Gulfport's trading value at March 29 market close. Public companies have been snapping up privately held neighbors in Pennsylvania's larger Marcellus Shale over the past year. Most recently, Chesapeake Energy Corp. announced a $2.6 billion deal in January to buy northeast Pennsylvania neighbor Chief Oil & Gas LLC. EQT Corp., the largest U.S. gas producer, bought out Alta Resources LLC, another Chesapeake neighbor in Lycoming County, for $2.9 billion in July 2021. Both deals brought immediate gains in production volumes and revenues.
U.S. natural gas producer Ascent Resources said to prepare for IPO - Ascent Resources is said to prepare for an IPO could that could value the U.S. natural gas producer at about $6B.Ascent, which is owned by private equity firms Energy & Minerals Group and First Reserve Group, is working with Citi and Barclays on an IPO, according to a Reuters report. Ascent may confidentially register its IPO with the SEC as soon as next month for a potential listing in the second half of the year. The report comes after Bloomberg on Friday reported that Gulfport Energy (NYSE:GPOR) had discussed merging with Ascent Resources. A merger with Ascent Resources would value the combined company at ~$8 billion. Gulfport and Ascent are both active in the gas-rich Utica Shale of Ohio. Reuters reported that while Gulfport (GPOR) and Ascent had held talks "sporadically" since the end of last year, the discussions have broken down over valuation expectations. Gulfport Energy recently reported in-line Q4 results while guiding FY 2022 production lower.
Artera Services Acquires Ohio-based 1127 Construction Inc. - Artera Services has acquired the operating assets of Akron, Ohio-based 1127 Construction Inc. The deal expands Artera’s core gas distribution services in Northeast Ohio. A family-owned company founded in 2005 by brothers Jeff, Nick and Joe Smith, 1127 provides natural gas distribution and related infrastructure services. The company has a workforce of 75 highly-trained construction professionals.. “We look forward to welcoming Jeff, Nick and the entire 1127 team to Artera,” said CEO Brian Palmer in an April 1 company statement. “Joining our current gas distribution operations in the area with 1127 is a great way for us to expand our footprint and service capabilities in the region.” The acquisition will expand existing operations in the Ohio Region of Miller Pipeline, an Artera gas distribution business unit, and build on the core service offering of maintenance, replacement and upgrade (MRU) services. Jeff and Nick Smith will continue to lead business operations and will be overseen by Jim Wilson, Miller Pipeline vice president of construction over the Ohio Region. Headquartered in Atlanta, Artera is one of the United States’ industry-leading providers of essential infrastructure services to the natural gas and electric industries, with $2.5 billion in revenue.
Ohio GOP Senate contender Dolan vows to oppose Biden's 'war on energy' - One of the main Republican candidates in Ohio’s open Senate seat race is spotlighting inflation and taking aim at President Biden’s "energy agenda" in a new ad blitz. Ohio Senate contender Matt Dolan vows in a new campaign commercial that was shared first with Fox News Digital on Thursday that he’ll "fight Joe Biden’s energy agenda because this war on energy is really an attack your wallet." Dolan, a state senator from Cleveland and a former county chief assistant prosecutor and state assistant attorney general, is seen in his spot standing outside an oil refinery in East Toledo, Ohio, which he argues is "ground zero in the Democrats’ war on energy.""On Day One, Joe Biden canceled pipelines and banned oil exploration. Energy prices skyrocketed, causing the worst inflation in 40 years on everything from gas to groceries," Dolan emphasizes in his commercial. And pointing to his rivals in Ohio’s Senate race, he claims that "my opponents aren’t able to confront today’s crisis; I am."Dolan’s campaign told Fox News Digital they’re spending $1.5 million to run the new spot statewide. The candidate, whose family owns Major League Baseball’s Cleveland Guardians, has pledged to spend $8 million in ad spending through Ohio’s May 3 primary. In a campaign release accompanying the new commercial, Dolan points to Line 5,a nearly 70-year-old pipeline that moves oil through Wisconsin and Michigan to refineries in Ontario, Canada and Midwestern states such as Ohio, including the refinery in East Toledo. Republicans have heavily criticized the Biden administration and Democratic Gov. Gretchen Whitmer of neighboring Michigan for considering shutting down the pipeline due to environmental concerns.The dispute over the pipeline has grabbed national attention in recent months amid the spike in energy prices and the overall steep rise in inflation.Dolan warned in a statement that if Line 5 is shut down, "thousands of Ohio jobs could be lost, prices on everyday consumer goods would skyrocket, and billions of dollars in economic activity will be in jeopardy." Dolan is one of eight GOP candidates running in the race to succeed retiring Republican Sen. Rob Portman.
Conn. regulators move to end gas subsidies -Connecticut regulators want to halt a program that incentivizes homeowners and businesses to convert to natural gas as soon as the end of April. The program, which began in 2014, is authorized through the end of 2023. But in adraft decision issued Wednesday, the state Public Utility Regulatory Authority, known as PURA, called for “an immediate winding down” of the program and said it is “no longer in the best interest of ratepayers.” PURA has been reviewing the utility-run gas expansion program, which is subsidized by ratepayers, for more than a year. Established under former Gov. Dannel Malloy at a time when natural gas was considerably cheaper than oil, it called for the state’s three natural gas distribution companies to convert 280,000 customers over 10 years. After eight years of using marketing and incentives to persuade new customers to sign on, the companies have only reached about 32% of their goal. At the same time, average costs per new service and new customer have tripled for Eversource, and doubled for Connecticut Natural Gas and Southern Connecticut Natural Gas, according to PURA.In their draft decision, regulators cited the companies’ failure to meet their conversion goals and the rising costs as key reasons for ending the program. In addition, they noted, the price differential between oil and gas has lessened considerably since the program’s start. And finally, regulators concluded that the program no longer furthers the state’s climate goals. They cited Gov. Ned Lamont’s recent executive order on climate, which recognizes that the greenhouse gas emissions from the state’s building sector have increased in recent years, and calls for a cleaner energy strategy that reconsiders the continued expansion of the natural gas network.
NJ Supreme Court to consider if pipeline company can be part of construction permit appeal - The fate of a controversial project to build a natural gas compressor station along a pipeline in North Jersey could lie with the New Jersey Supreme Court. The court justices are due to hear arguments regarding the circumstances of an ongoing challenge to the Tennessee Gas Pipeline project's Highlands Act exemption from environmental advocacy groups. The federally regulated pipeline project would install an electric powered 19,000-horsepower compressor turbine near the Monksville Reservoir. Combined with two other compressor station upgrades, including one in Sussex County, the project would expand capacity on the Tennessee Gas system enough to allow Consolidated Edison to end its moratorium on natural gas connections in Westchester County, New York, records show. On Monday, the Supreme Court is expected to consider the ability of Tennessee Gas to intervene in a 2021 legal challenge to the project from nonprofits Food & Water Watch and the New Jersey Highlands Coalition. The groups have challenged the project's Highlands Applicability Determination and Water Quality Management Plan Consistency Determination, which essentially granted the company a permit to build the station and affiliated facilities in spite of Highlands Water Protection and Planning Act restrictions on development. The challenge from the nonprofits seeks to intervene and nullify the permit. It is, however, being held up. Tennessee Gas Pipeline officials argue that they should have been included in the appeal process, as an interested party. The state's Appellate Division denied the company's requests to intervene, records show. Michael Gross, a Red Bank attorney, said the court should not have denied the company its due process rights. Gross is arguing on behalf of a collection of interested parties, including the New Jersey State Chamber of Commerce and the New Jersey Business and Industry Association, who are alarmed by the appeals court’s denial of the pipeline company's desire to be involved in the appeal and seeking to intervene to prevent a precedent, he said. The appeal would have “a profound effect on the business and development community if the Supreme Court denies the right of a property owner to participate in an appeal involving its property," Gross said. Representatives from Food & Water Watch and the New Jersey Highlands Coalition declined to comment on the permit challenge or the pipeline company's appeal.
Environmental law group sues TVA over gas pipeline documents (AP) — The Southern Environmental Law Center has sued the nation’s largest public utility for failing to disclose full contracts related to proposed natural gas pipelines.The Tennessee Valley Authority plans to shutter its remaining coal-fired power plants and get power from another fossil fuel — natural gas. The SELC requested copies of TVA contracts with two gas companies under the federal Freedom of Information Act. TVA supplied the contracts, but they were heavily redacted, according to the lawsuit last week.In explaining the redactions, TVA said that the contracts contain confidential business information that is exempt from disclosure.SELC attorney George Nolan said it appears that TVA has committed to purchasing gas before complying with its National Environmental Policy Act obligations to study alternative energy sources. TVA said in an email it has not made any final decisions.SELC is seeking unredacted copies of the contracts and a declaration that TVA violated the Freedom of Information Act.
Biden's most effective climate warrior faces potential doom in the Senate - President Joe Biden’s efforts to deliver on his ambitious climate agenda are getting a big boost from the leader of one often overlooked agency who has used his position to home in on the energy industry’s greenhouse gas impact.Now that official, Federal Energy Regulatory Commission Chair Richard Glick, may see his efforts to put climate change at the forefront of federal energy policy cost him his job.Glick, who was appointed to FERC in 2017 and elevated to the chair role last year by Biden, has pushed policies that angered prominent lawmakers, including many Republicans — and, most crucially, Senate Energy and Natural Resources Chair Joe Manchin (D-W.Va.), who as the upper chamber’s swing vote has weakened much of Biden’s climate agenda. That’s put Glick’s future at risk after his current term on the commission ends in June.Former FERC staff say Glick has launched perhaps the most far-reaching agenda of any leader ever at the commission, which regulates U.S. power markets and approves the siting of gas pipeline infrastructure. His efforts to reshape the agency’s mission include conducting closer examinations of the climate impacts of new energy infrastructure, as well as the effects of existing natural gas pipelines and fossil fuel facilities on low-income areas and minority communities where they are often located.FERC will play a key role in fostering the transition to a low-carbon economy, said Rep. Sean Casten (D-Ill.), who has sought to raise the agency’s profile. “If we are going to get carbon emissions down as quickly as we need to, we are going to have to substantially electrify huge parts of our economy, which means building a lot of generation, building a lot of transmission, doing things that are uniquely within the purview of an agency that most Americans don’t know anything about,” Casten said in a statement.New rules spearheaded by Glick could also require companies seeking to build new pipelines prove that the projects are needed to strengthen regional reliability and save customers money. That change would counter criticism that the agency has greenlit projects that sometimes weren’t justified by consumer demand but would boost utility company revenues.Red states and other opponents of FERC’s new approach flooded the commission with formal challenges to those policies earlier this month, accusing the agency of going far beyond its statutory authority. They also argue that the policies will harm the reliability of energy supplies and raise consumers’ costs, by making pipelines more expensive to site and chilling investment.
US will require valves on new pipelines to prevent disasters - (AP) — U.S. officials on Monday adopted a long delayed rule aimed at reducing deaths and environmental damage from oil and gas pipeline ruptures in response to fatal explosions and massive spills that happened in California, Michigan and other states. But safety advocates said the U.S. Transportation Department move would not have averted the accidents that prompted the rule because it applies only to new pipelines — and not the hundreds of thousands of miles of lines that already crisscross the country. The rule requires companies to install valves that can quickly shut off the flow of oil, natural gas or other hazardous fuels when pipelines rupture. It came in response to a massive gas explosion in San Bruno, California, that killed eight people in 2010, and to large oil spills into Michigan’s Kalamazoo River and Montana's Yellowstone River and other spills. The National Transportation Safety Board since the 1990s has recommended the use of automatic or remote controlled valves on large pipelines — whether they are existing or new — to reduce the severity of accidents. But pipeline companies resisted new valve requirements because of the expense of installing them and concerns they could close accidentally and shut off fuel supplies. Transportation Secretary Pete Buttigieg said the more stringent regulations for the industry were needed because too many people have been harmed by pipeline failures. He said installation of the valves would also protect against large releases of methane, a highly potent greenhouse gas blamed for helping drive climate change. "Today we are taking an important step to protect communities against hazardous pipeline leaks — helping to save the lives, property, and jobs of people in every part of the country while preventing super-polluting methane leaks.” Buttigieg said.
Oil spill concerns emerge as ship remains stuck in Chesapeake Bay -As a 1,095-foot cargo ship remained stranded in the Chesapeake Bay Friday, environmental experts raised concerns about a potential oil spill as crews worked to free the ship from the mud that it’s stuck in.“It’s so far aground that about 20 feet of the ship is buried in mud,” said Doug Myers, a scientist with the Chesapeake Bay Foundation, an advocacy group focused on improving the Bay.“That has a tendency to put stress on the hull, and even though it’s not carrying oil, a ship that big would have large amounts of fuel,” Myers added. “Until the ship is freed, we’re concerned that the stress could rupture the hull and cause a fuel leak.”The Ever Forward was headed from the Port of Baltimore to Norfolk, Virginia, on March 13 when it ran aground north of the Chesapeake Bay Bridge, the U.S. Coast Guard said.The ship, operated by Taiwan-based Evergreen Marine, became stranded outside the shipping channel. Officials have said there were no reports of injuries, damage or pollution. Myers said he is worried that not enough is being done to plan for the containment of a potential spill. “My hope is that there’s no damage or stress to the hull that might cause an oil spill, but that’s all a big unknown at this point,” Myers said. “The one thing they’re doing that did give me some comfort is that every four hours, the ship’s crew is doing routine inspections of the fuel tanks to make sure they don’t see any leaking oil.”An oil spill there could affect nearby oyster reefs and recreational fishing areas.“Any fuel that spilled would travel some distance from that as well,” Myers said.
A 'Bit of a New Market' Emerging for Natural Gas, Says ConocoPhillips Analyst - Slower-than-usual rig count growth, fewer uncompleted wells and a shrinking coal generation fleet are contributing to an atypical natural gas market recovery, according to analysts with ConocoPhillips. At the LDC Gas Forum Southeast in Savannah, GA, earlier this month, ConocoPhillips’ Matt Henderson, a senior market analyst, said the industry had entered “a bit of a new market.” To illustrate, he pointed out that exploration and production (E&P) companies added rigs at a slower rate during the 2020-2021 price recovery than in the previous rebound in 2016-2017. Rig additions for the most recent period totaled only 246 units, compared to 497 units in 2016-2017, he noted, acknowledging that fleetwide rig efficiency improvements could contribute to the slower pace. “And this is despite the fact that the run up in prices that we saw this time around has been a lot stronger for both gas and crude,” Henderson said. As of March 18, Baker Hughes Co. (BKR) counted 524 oil-directed and 137 gas-directed rigs across the United States. During the 2016-2019 “growth phase,” E&Ps “were focused on growth at all costs,” said Henderson. “And anytime we saw gas prices get above about $3.00, it seemed like we saw a pretty much instantaneous response from producers. And I just don’t think you can assume that’s going to happen anymore.” Besides highlighting the change in pace at which rig additions follow price action, Henderson said that E&Ps would likely continue to increase natural gas volumes – particularly dry gas from the Haynesville Shale and associated gas from the Permian Basin – even while publicly traded operators maintain a disciplined focus that emphasizes returning cash to shareholders. To be sure, he said that 2022 guidance from operators projects roughly 20% growth in capital spending. However, he added that production growth would likely be “pretty healthy” but “moderate” and “nowhere near where we were” during the previous recovery. Henderson also cited cost inflation on the order of “about 10-15%” as a key reason for the “moderate” growth. In addition to having their extra capex “eaten up by additional inflation,” producers “are actually having to drill wells,” he said. Henderson cited the declining inventories of drilled but uncompleted (DUC) wells. Recent Energy Information Administration (EIA) figures showed a 156-DUC well drawdown from January to February. In February, drilling permits year/year were up in the Permian and down in the Haynesville. Henderson pointed out that the EIA’s recent DUC well count does not consider an important factor: the age of the well. Citing 2017-2021 data from Enverus, he pointed out that a relatively small number of DUCs remained in inventory two years after spudding was completed. “When you’re looking at DUC numbers, you’ve got to remember that if a well is older than two years old, it’s very likely that it’s never going to be completed, ever,” the ConocoPhillips executive said.
What to expect in Louisiana following Biden’s move to boost LNG exports - As the Biden administration attempts to ramp up the United States’ liquefied natural gas exports to Europe amid Russia’s war with Ukraine, Louisiana oil and gas authorities on Friday repeated a familiar refrain: Don’t expect the state’s export totals to shoot through the roof anytime soon. Lengthy construction timelines, maxed-out capacities, regulatory pressures and opposition from environmental advocates could all prevent a short-term gain for Louisiana. President Joe Biden and European Commission President Ursula von der Leyen on Friday announced a joint effort to reduce Europe’s dependency on Russian fossil fuels. The moves are designed to weaken Russia’s economy as punishment for bombarding Ukraine. After being reluctant to sanction Russian oil and natural gas due to rising gas prices and limited oil supply, Biden has gradually targeted them recent weeks. Earlier this month, Biden announced the U.S. would no longer import oil from Russia. The White House said Friday the U.S. will “work with international partners” to boost LNG supply for the European market by at least 15 billion cubic meters in 2022 with an eye toward 50 billion cubic meters by 2030. The U.S. and Europe also intend to reduce the greenhouse gas intensity of any new LNG infrastructure by reducing methane leakage, enhancing Europe’s ability to safely handle the imports, and finding clean energy sources to both power LNG facilities and reduce global use of natural gas. U.S. Rep. Garret Graves, R-Baton Rouge, called Biden’s LNG move — along with the Department of Energy’s decision to approve increased capacity at a pair of LNG facilities, including Sabine Pass in Cameron Parish — “another step in the right direction.” However, he said the Department of Energy needs to do more. “Until they clear the backlogged export terminal permits and allow new LNG facility construction, our ability to replace dirtier Russian gas is constrained,” Graves said in a statement. “It’s good to see that the pressure put on the Biden Administration is working, but the only real, long-term solution moving forward is to permit new LNG terminal construction and utilize domestic energy production so we can provide our allies with reliable and secure energy.” The totals proposed by the White House and the European Commission aren’t nearly enough to make a dent in the global LNG stockpile, said David Dismukes, executive director of LSU’s Center for Energy Studies. He noted a standard tanker can transport 3 billion cubic meters of LNG in a day. Dismukes added that most European purchasers of natural gas would rather sign long-term contracts — a norm in the LNG industry — than make spot purchases here and there. “While this may sound great, there’s this backdrop of all these anchors around the neck of industry that have to be taken off as well to get more drill bits in the ground,” Dismukes said. Of the United States’ six LNG export terminals, Sabine Pass in Cameron Parish easily had the greatest export output in 2021 at more than 1.24 trillion cubic feet, or more than one-third of all exports, according to U.S. Energy Information Administration data. Cameron LNG, located in Hackberry, was fourth at more than 602 billion cubic feet. Mike Moncla, president of the Louisiana Oil and Gas Association, said Louisiana’s LNG terminals are at “100% maximum capacity” at the moment. Any efforts to steer more of the existing LNG to Europe would take away supply from Asian markets, Moncla said. About 70% of U.S. LNG goes to Europe, 20% to Asia and 10% to other nations. Moncla said the key is to get federal approval on permits for the new terminals waiting in the wings.
U.S. natgas slides with drop in crude prices, milder weather coming (Reuters) - U.S. natural gas futures slid on Monday from an eight-week high in the prior session on a drop in crude prices and a small decline in demand next week that should allow utilities to inject gas into storage. That price decline came despite forecasts for colder weather and higher heating demand this week than previously expected that will likely force utilities to pull gas from storage after injecting it during last week's milder weather. The U.S. price decline also came despite rising global demand for gas to replace Russian fuel as Russia's invasion of Ukraine keeps U.S. liquefied natural gas (LNG) exports near record highs and European gas prices about six times over U.S. futures. On its second to last day as the front-month, gas futures for April delivery on the New York Mercantile Exchange (NYMEX) fell 6.3 cents, or 1.1%, to settle at $5.508 per million British thermal units (mmBtu). On Friday, the contract closed at its highest since Jan. 27. Futures for May were down about 1% to around $5.55 per mmBtu. U.S. crude futures dropped over 6% on concerns about Chinese demand, while European gas prices gained about 10% to trade around $35 per mmBtu on forecasts for colder weather. Data provider Refinitiv said average gas output in the U.S. lower 48 states was up 93.3 bcfd so far in March from 92.5 bcfd in February as more oil and gas wells return to service after freezing over the winter. That compares with a monthly record of 96.2 bcfd in December. Refinitiv projected average U.S. gas demand, including exports, would drop from 106.0 bcfd this week to 98.4 bcfd next week as the weather turns seasonally milder. The forecast for this week was higher and the forecast for next week was lower than Refinitiv's outlook on Friday.
April Natural Gas Futures Finish Front-Month Run with Second Straight Loss -- Natural gas futures floundered on Tuesday as the domestic weather outlook shifted increasingly bearish, production ticked up and energy commodities broadly dipped lower amid pandemic flare-ups and the potential for a cease-fire in Ukraine. On its final day as the prompt month, the April Nymex gas futures contract lost 17.2 cents day/day and settled at $5.336/MMBtu before rolling off the board. May fell 20.8 cents to $5.330. Futures faltered for a second straight day – after rallying throughout the prior week. NGI’s Spot Gas National Avg. shed 55.0 cents to $4.970, led lower by drops across Appalachia and the East. U.S. production reached 95.5 Bcf on Tuesday, up more than a 1 Bcf from the prior week. This put output near 2022 highs of around 96 Bcf, Bloomberg data showed. At the same time, the latest weather data Tuesday extended warmer trends as both the American and European models advertised mostly mild temperatures for the northern United States this weekend and through next week, according to NatGasWeather. For the April 5-12 time frame, the latest data showed a pattern that could lead to widespread comfortable conditions for the Lower 48, according to the forecaster.
U.S. natgas rises 5% to near 9-week high on soaring global prices (Reuters) - U.S. natural gas futures rose about 5% to a near-nine week high on Wednesday as worries about Russia's plan to price energy exports in roubles caused global energy prices to spike, keeping demand for U.S. liquefied natural gas (LNG) exports near record highs. That U.S. gas price gain came despite forecasts for milder weather and lower demand than previously expected, which should allow utilities to inject gas into storage next week. Germany on Wednesday triggered an emergency plan to manage gas supplies in Europe's largest economy in an unprecedented move that could see the government ration power if there is a disruption or halt in gas supplies from Russia. That caused gas prices at the Title Transfer Facility (TTF) in the Netherlands, the European benchmark, to jump about 18% to around $41 per million British thermal units (mmBtu) earlier in the session. European prices, however, pared gains - trading around $39 per mmBtu Wednesday afternoon - after Russia said it will not immediately demand buyers pay for its gas exports in roubles, promising a gradual shift. On their first day as the front month, gas futures for May delivery rose 27.5 cents, or 5.2%, to settle at $5.605 per mmBtu, their highest close since Jan. 27. The United States, the world's top gas producer, has agreed to divert some of its LNG exports to Europe to help allies break their dependence on Russian gas after Russia invaded Ukraine on Feb. 24. Russia, the world's second-biggest gas producer, provided about 30-40% of Europe's gas, which totaled about 18.3 billion cubic feet per day (bcfd) in 2021.The United States is already producing LNG near full capacity. So it will not be able to export much more of the supercooled fuel regardless of how high global gas prices rise. The amount of gas flowing to U.S. LNG export plants rose to 12.81 bcfd so far in March, up from 12.43 bcfd in February and a monthly record of 12.44 bcfd in January. The United States can turn about 13.1 bcfd of gas into LNG. Traders said U.S. LNG exports would remain near record levels provided that global gas prices remain well above U.S. futures as utilities around the world scramble for cargoes to meet surging demand in Asia and replenish low inventories in Europe, especially with the threat of Russia possibly cutting European supplies.
US natural gas storage posts first injection of season, rises 26 Bcf to 1.4 Tcf | S&P Global Commodity Insights - US natural gas storage fields posted the first build of the season, which was one week earlier than normal, as the remaining Henry Hub summer strip continued to climb during trading on March 31. Storage fields injected 26 Bcf for the week ended March 25, according to data released by the US Energy Information Administration on March 31. The injection matched the 26 Bcf build expected by a survey of analysts from S&P Global Commodity Insights. However, it was a flip from the five-year average draw of 23 Bcf. Working gas inventories increased to 1.415 Tcf for the week ended March 25, EIA data showed. US storage volumes stood 347 Bcf, or 20%, less than the year-ago level of 1.762 Tcf and 244 Bcf, or 15%, less than the five-year average of 1.659 Tcf. The NYMEX Henry Hub May contract climbed 4 cents to $5.65/MMBtu following the EIA's storage report release March 31. The remaining summer strip, May through October, followed suit, tacked on 6 cents to $5.72/MMBtu. The 2022-23 winter strip, November through March, added 4 cents to $5.76/MMBtu. Despite the early flip to injections, a forecast by S&P Global expects a 15 Bcf draw for the week ending April 1. Weather forecast models are showing more unseasonably cold temperatures for western and eastern regions of the US over the course of the next two weeks as the calendar presses into the month of April. Total US demand dipped below 96 Bcf/d for the first time since March 25, settling at 95.8 Bcf/d for March 31, according to S&P Global data. The decline was driven by average US temperatures rising to 55 degrees Fahrenheit, the highest since March 19. Demand is forecast to rise slightly over the weekend to 98 Bcf/d. But for the week beginning April 4, total demand is forecast to continue to decline, nearing 90 Bcf/d by the end of the week. After dropping below 94 Bcf/d for the first time since March 18, total US production continued to rebound on March 31, reaching 94.9 Bcf/d. Total March production has averaged 93.8 Bcf/d, 1.5 Bcf/d above February. At the same time, production continued to grow in the prolific Permian. S&P Global sample data suggested that New Mexico Delaware has been a focal point of Permian growth, with the play's production sample 23% larger on average in March than it was one year ago, while the total Permian sample is 12% larger. This summer, it is likely that Double E Pipeline will be increasingly utilized, as price premiums in the Southeast continue to draw more of the 1.6 Bcf/d of Permian production growth forecast throughout summer 2022.
May Natural Gas Futures Rally a Second Day as Global Supply News Permeates Markets -Natural gas prices seesawed, but always in positive territory, and advanced on Thursday for a second consecutive session. The first storage injection of the year failed to freeze bulls, who have fixated on robust demand for U.S. exports to help address festering global supply challenges. The May Nymex gas futures contract gained 3.7 cents day/day and settled at $5.642/MMBtu. June rose 4.3 cents to $5.701.NGI’s Spot Gas National Avg. advanced 30.5 cents to $5.290.The U.S. Energy Information Administration (EIA) on Thursday reported an injection of 26 Bcf natural gas into storage for the week ended March 25. It marked the first inventory increase of the year, led by a 22 Bcf build in the South Central region.Wind generation was elevated and temperatures in the South were generally mild, participants on The Desk’s online energy platform Enelyst noted.The season’s initial injection arrived early by historical standards — the five-year average for the week was a withdrawal of 23 Bcf — but the print was essentially in line with market expectations for an increase in the 20s Bcf. The injection boosted inventories to 1,415 Bcf. However, stocks remained below the year-earlier level of 1,762 Bcf and the five-year average of 1,659 Bcf, according to EIA. The depleted stocks reflected steady demand through the U.S. winter, modest production to date this year and record calls for American shipments of liquefied natural gas (LNG).Those factors have fueled multiple rallies this year and lifted the May contract over the past two days by more than 30.0 cents – its initial run as the front month. News of Europe’s energy woes continued Thursday, following word from the German government that the country was preparing for the possibility of a sudden plunge in natural gas supplies from Russia. Germany, like much of the European Union, is working in haste to distance itself from Russian energy in protest of the war. It remains dependent, though, on Russian gas in the near term.At issue is a demand from Russian President Vladimir Putin that Germany and others pay for Kremlin-backed gas with rubles, rather than euros, a change that Germany may not be able to – or want to — accommodate. While Putin was short on specifics and Russian gas continued to flow to Europe this week, Germany sounded an early alarm. In doing so, it punctuated the severity of the war’s impacts on European gas supplies.Europe was already low on natural gas heading into the past winter, given waning domestic production and robust demand during the peaks of the past summer and previous winter. Europe was helping to drive record calls for U.S. LNG before the war. It now is creating expectations for a new years-long era of demand that could keep American exports running at capacity.Rystad Energy said the war-induced uncertainty is likely to continue to impact gas prices. “The gas market remains highly volatile and news driven,” This week, in particular, “the market remains anxious for clarity on rules governing ruble payments for Russian gas supplies.”
Late-Season Cold Drives Big Premiums for Weekly Natural Gas Cash Prices; War Supports Futures With winter overstaying its welcome in the Lower 48, weekly spot natural gas prices charged higher as gas demand increased during the two-day trading period from March 31-April 1, which covered gas deliveries through April 4. Price gains were stout across the country, driving NGI’s Weekly Spot Gas National Avg. up 57.5 cents to $5.285. Nymex natural gas futures also continued to strengthen amid the ongoing war in Ukraine following Russia’s invasion in late February. The continued call on U.S. supplies – along with weather-driven demand and lagging production growth – sent the May Nymex contract to $5.720 by Friday, up 18.2 cents from Monday’s close. With last week’s dramatic warm-up likely leading storage operators to flip their facilities to injection mode, the cash market was hot this week as chilly weather returned to the northern United States and buyers had to turn to the spot market for gas purchases. Overnight lows dipped below freezing across key demand regions, and NatGasWeather said Old Man Winter may still have some life in him. Although warmer weather is expected in the coming days, another cold snap was seen arriving by the April 9-10 weekend. Lows could plunge back into the 20s and 30s. At the Chicago Citygate, cash averaged 70.0 cents higher week/week at $5.415, and OGT picked up 60.5 cents to average $5.055. With balmy conditions taking hold in the southern United States, Henry Hub climbed a comparatively small 33.5 cents to $5.475, and Waha tacked on 46.0 cents to $4.745. In the Northeast, Transco Zone 6 NY picked up 86.0 cents on the week to average $5.275 amid back-to-back blasts of Arctic air that could bring snow squalls. Still, the air from early this week originated from the Arctic, while the air coming in from Friday to Saturday will originate from southern Canada and the Pacific Ocean and will not be as cold, nor as harsh as a result,” according to AccuWeather meteorologist Paul Pastelok.
Biden signals third year of offshore oil-leasing delay in gulf — The Biden administration doesn’t anticipate selling offshore drilling rights in the Gulf of Mexico through at least October 2023, effectively stretching a delay in that activity to a third year, according to economic projections included in its newly released budget proposal. The numbers show expected revenues from offshore oil auction bids and annual rental payments on existing leases are set to plummet in fiscal 2023 by about $370.4 million to just $25 million. That reflects the government’s typical haul from two auctions of oil and gas leases in the Gulf of Mexico. The anticipated offshore leasing pause comes despite the war in Ukraine and high costs for oil, gas and gasoline that have prompted administration officials to implore energy companies to pump more crude. The Gulf of Mexico generates about 15% of the nation’s crude production. Based on the revenue projections in the Biden budget, there could be at least a three-year gap in the sale of new offshore oil and gas leases, said Erik Milito, the head of the National Ocean Industries Association. “It’s pretty clear that there are no new lease sales on the horizon in their mind from a budgeting standpoint until fiscal year 2024” at least, Milito said. In practical terms, the delay could mean forfeiting hundreds of millions of dollars in federal revenue annually and eventually shrink oil production in the Gulf of Mexico. Though new leases sold today can take years to yield crude, the delay means companies will not be able to replenish existing holdings and search for more oil as existing wells are retired.
Shell starts deepwater production at PowerNap in the Gulf of Mexico -Shell Offshore Inc., a subsidiary of Shell plc, announced the start of production at PowerNap, a subsea development in the U.S. Gulf of Mexico with an estimated peak production of 20,000 barrels of oil equivalent per day (boed). PowerNap is a tie-back to the Shell-operated Olympus production hub in the prolific Mars Corridor. “Shell has been producing in the Mars Corridor for more than 25 years, and we continue to find ways to unlock even more value there,” said Zoe Yujnovich, Shell Upstream Director. “PowerNap strengthens a core Upstream position that is critical to achieving our Powering Progress strategy and ensuring we can supply the stable, secure energy resources the world needs today and in the future.” Shell is the leading deep-water operator in the U.S. Gulf of Mexico, where the production is among the lowest greenhouse gas (GHG) intensity in the world for producing oil. Shell’s global deepwater portfolio represents two core positions in its Upstream business with prolific basins in the US and Brazil, along with a frontier exploration portfolio in Mexico, Suriname, Argentina and West Africa. Shell designs and operates its deep-water projects to be competitive and economically resilient, and since 2015, has reduced unit development costs by 50% and unit operating costs by 40%.
Texas Upstream Natural Gas, Oil Workforce Growth Continued in February - Texas’ upstream oil and gas employment rose to 181,900, representing increases of 5,100 jobs month/month and 20,700 positions year/year, the Texas Independent Producers and Royalty Owners Association (TIPRO) reported last week. “Rising global energy demand and strains on oil and natural gas supply exacerbated by geopolitical conflicts necessitate…increased domestic production,” said President Ed Longanecker. February’s month/month upstream job growth is more than four times that of the 1,200 jobs Texas added from December to January. The Texas Oil and Gas Association (TXOGA) called the monthly gain “the highest spike in over a decade and the second highest jump in at least 32 years,” trailing only the 5,600-job gain in June 2011. “News of this historic job growth in Texas’ upstream sector is encouraging for all Americans, because Texas continues to lead the way in meeting our energy needs, fortifying our national security, and assuring continued environmental progress,” said TXOGA’s Todd Staples, president. TIPRO, which reviews upstream jobs data from the U.S. Bureau of Labor Statistics Current Employment Statistics report, said Texas’ oil and gas services workforce expanded by 18,800 jobs year/year. The state’s oil and gas extraction headcount grew by 1,900 during the period, the trade group added. TIPRO observed 9,985 active unique job postings across Texas’ natural gas and oil industry in February, a 20% increase from January. Based on its classification of Texas’ oil and gas industry across 14 specific sectors, TIPRO said support activities ranked highest in February with 2,712 unique job postings. Crude petroleum extraction, with 1,239 listings, and petroleum refineries, with 905, claimed the second and third spots, respectively. With 3,319 postings, Houston ranked highest among Texas cities for unique oil and gas job listings in February. Next in line were the Permian Basin hubs Midland (1,048) and neighboring Odessa (541). For February, TIPRO noted that Baker Hughes Co., with 524 listings, was the top company based on oil and gas job postings in Texas. National Oilwell Varco, Inc. (450) and Halliburton Co. (422) were second and third, respectively. With 413 listings, heavy tractor-trailer truck drivers took first place among Texas’ posted occupations in February, TIPRO said. The second most common occupational group was maintenance and repair workers (284), followed by software developers and software quality assurance analysts and testers (262).
‘You can’t just turn on the taps’: bottlenecks hit hopes of US oil output surge - Shortages of staff and supplies are weighing on the recovery of US oilfields, derailing hopes that Texas drillers could unleash gushers of crude to help bring soaring global prices under control. The Biden administration has pleaded with oil producers to raise output to ease the burden on American motorists, who are paying high prices at the pump following Russia’s invasion of Ukraine. But the service groups responsible for providing materials, drilling equipment and labour warn that extensive bottlenecks mean this cannot be done overnight. “You can’t just immediately turn on the taps,” said Ryan Hassler, senior analyst at consultancy Rystad Energy. “It will take some time to reactivate the equipment and staff the crews and bring on the additional sand capacity.” The US’s shale patch has over the past decade come to be seen as a sort of release valve for global oil supply, capable of rapidly ratcheting output up or down as needed in a relatively short period of time. In previous years this could be done in anywhere from three to six months, say analysts. But today that timeframe is likely to be double — meaning any significant growth is up to a year away. The reason is a chronic shortage of essential labor and equipment: from drilling rigs and frac sand — used to prop open shale rocks so that oil and gas can flow through — to crews and drivers. The countdown will not start until investors, who have put the clamps on spending, clear operators to return to growth mode. The bottlenecks will dampen the hopes of the Biden administration that a drilling push by US producers will temper prices. The price of Brent crude, the international oil marker, sat at around $120 a barrel on Friday, up 25 percent since Russia’s troops invaded Ukraine last month. National average petrol prices hovered just shy of record levels struck in recent weeks, at $4.24. The lack of frac sand is a key problem. In the Covid-induced downturn of 2020, when oil prices crashed below zero, many sand suppliers went bankrupt and mines were taken offline. Their recovery has been slow and supply is lagging behind demand.
Calls for increased domestic oil production met with hurdles (KBTX) - The Texas Tribune published an article with the headline “In Texas, calls to boost U.S. oil production after Russian invasion runs into hard realities.” The story details the challenges and the hurdles that Texas oil and gas companies face when looking at ramping up production. Mitchell Ferman, the author of the piece, joined First News at Four to explain why increasing domestic production is easier said than done.The beginning of the pandemic saw a mass number of people losing their jobs. Now as the future of Russian oil and gas on the global market remains uncertain in the long term, Texas energy companies are still struggling with lingering issues from the pandemic and even before.While increased domestic production seems like a good idea, putting it into practice is harder than anticipated. Ferman found that challenges facing Texas oil and gas companies include labor shortages, supply chain issues, hesitant financial bankers, and a strained relationship with the Biden administration.Labor shortages are not unusual in a number of industries across the United States. To help understand why there was a labor shortage in this particular industry, Ferman talked to former employees of the oil and gas industry. He recounted meeting Juan Cano a mechanic at an auto shop in Midland who previously worked in the oil and gas industry.“He originally entered the industry to make more money because the price of oil was rising,” but Ferman says “[Cano] has no interest in leaving his job as a mechanic to go work in the oil field because he said that everyone needs to get their car worked on and that is a steady paycheck.”Cano, like many other potential employees, sees the price of oil as too volatile.Another challenge mentioned to Ferman by people in west Texas is a “frosty” relationship with the Biden administration. Many people noted that on day one of his presidency Biden suspended further construction on the Keystone Pipeline. The Texans interviewed said this was one of the many signals from the Biden administration that they are not interested in working with the fossil fuel industry in Texas. This in turn led to Wall Street backers becoming hesitant to lend their support.“If Wall Street and other investors don’t see a long-term profitable future then they may be a little hesitant to put their money behind it,” explained Ferman.
I Can't Go For That (No Can Do), Part 2 – E&P Capex And Production Guidance, And Why They Aren't Doing More --There’s a lot of confusion out there — both in the media and the general public — about how producers in the U.S. oil and gas industry plan their operations for the months ahead and the degree to which they could ratchet up their production to help alleviate the current global supply shortfall and help bring down high prices. It’s not as simple or immediate as some might imagine. There are many reasons why E&Ps are either reluctant or unable to quickly increase their crude oil and natural gas production. Capital budgets are up in 2022 by an average of 23% over 2021. That increase seems substantial, but about two-thirds (15%) results from oilfield service inflation. And there are other headwinds as well. In today’s RBN blog, we drill down into the numbers with a look at producers’ capex and production guidance for 2022, the sharp decline in drilled-but-uncompleted wells, the impact of inflation and other factors that weigh on E&Ps today. The oil-patch is notorious for its boom-and-bust cycles. For decades, exploration and production (E&P) companies followed an investment strategy that prioritized aggressive growth, including stepping up drilling-and-completion activity when crude oil prices climbed. With oil prices exceeding $100/barrel in 2014, the 43 oil and gas producers we closely monitor invested a whopping $130 billion in drilling and completion to ramp up output. And investors went along for the ride: The S&P E&P index hit a record 12,400 at the midpoint of that year. But the bloom went off the rose when oil prices plunged through the second half of 2014 and most of 2015. Investors left in droves, stock prices cascaded and E&Ps, laden with debt, teetered financially. When COVID hit in the first few months of 2020, demand destruction of epic proportions caused prices and production to plummet, leaving the oil and gas industry virtually abandoned by investors and the S&P E&P index at 1,200 — only one-tenth its high point six years earlier. On top of that, the industry faced significant risk, not only from the pandemic, but also from the looming potential of an OPEC+ production increase and questions about the long-term prospects for producers as public perception shifted sharply against all things hydrocarbons, institutional investors divested from the sector for ideological reasons, and political opposition became a major hurdle (See Part 1 of this series for more.). […] In late 2021 and earlier this year, the 43 major public E&Ps that we track guided to 2022 capital investment of $48.6 billion (tri-colored bar to far right in Figure 1 and left axis), a 23% increase over 2021 — a headline number that appeared to indicate a return to a more aggressive strategy. But as we said at the outset about two-thirds (15%) results from oilfield service inflation and the increased spending is only forecast to generate 8% production growth, far lower than the magnitude of the spending increase though four times the 2% increase in production from 2020 to 2021. Still, closer analysis reveals that both these headline numbers are misleading — 2022 guidance shows that most publicly traded producers are continuing only maintenance-level investment. Let’s take a look at why these numbers don’t reflect a strategic change.
US oil, gas rig count drops one to 780 on week; Eagle Ford growth strongest: Enverus - The US oil and gas rig count shed one rig in the week ended March 23, leaving 780, energy analytics and software company Enverus said March 24, with the Eagle Ford Shale now at its highest level since March 2020. The week ended March 23 was also the first time the total domestic rig count recorded a loss since the end of 2021. So far in 2022, the rig count is up 73 rigs. Still, oil rigs gained three rigs to 609, while rigs chasing gas dropped by four to 171. Most basins moved little in either direction, while three basins did not change at all. The Eagle Ford, located in South Texas moved up the most, as the former gained two rigs to 68. The SCOOP-STACK in Oklahoma and the Permian Basin of West Texas/New Mexico dropped the most at two each. That left the Permian with 328 and the SCOOP-STACK with 42. Otherwise, the Williston Basin mostly in North Dakota/Montana, and the Marcellus Shale, mostly in Pennsylvania and West Virginia, moved by one each but in different directions. The Williston was up one rig to 35, while the Marcellus lost a rig for a total of 40. Three basins — the Haynesville Shale of East Texas/Northwest Louisiana, the DJ Basin mostly in Colorado and the Utica Shale largely in Ohio — stood still rig-wise. That left the Haynesville at 71, the DJ at 18 and the Utica at 14.
Permian E&Ps Not Fooling Around as US Drilling Activity Continues to Rise - Amid continued expansion in the Permian Basin, the U.S. rig count climbed three units overall to reach 673 for the week ended Friday (April 1), according to the latest numbers from Baker Hughes Co. (BKR). Two oil-directed rigs and one natural gas-directed rig were added in the United States for the period, putting the combined domestic tally nearly 250 units ahead of its year-earlier total of 430, according to the BKR numbers, which are partly based on data from Enverus. Land drilling by exploration and production (E&P) companies increased by four units for the period, offsetting a one-rig decline in inland waters drilling. The Gulf of Mexico count held steady at 14. Three horizontal rigs were added overall, with directional and vertical drilling totals unchanged week/week. The Canadian rig count fell 16 units to 124, versus 69 rigs in the year-earlier period. Changes there included declines of 12 oil-directed rigs and four natural gas-directed units. Broken down by major play, the Permian continued to lead the way in U.S. onshore activity, with E&Ps adding four rigs to raise the total to 323, up from 224 in the year-ago period. Elsewhere among plays, the Cana Woodford and Marcellus Shale each added one rig, while the Haynesville Shale and Williston Basin each posted one-rig declines for the period. In the state-by-state count, Texas led with an increase of five rigs for the period, while Utah and West Virginia each added one rig week/week. Louisiana posted a net decline of three rigs for the period, while North Dakota dropped one rig from its total, the BKR data show. The Biden administration, in a historic move, agreed Thursday to release 1 million b/d of oil from U.S. reserves over six months in a measure that paralleled a decision by OPEC to temper boosting crude output. The White House said the release from the Strategic Petroleum Reserve came after consulting “with allies and partners.” The “largest release of oil reserves in history would put 1 million b/d of additional supply on the market every day for the next six months,” officials said. The release will provide a “historic amount of supply to serve as a bridge until the end of the year when domestic production ramps up,” they added. Meanwhile, U.S. crude producers nudged output higher during the week-earlier period, the Energy Information Administration (EIA) revealed Wednesday. Production for the week ended March 25 ticked up to 11.7 million b/d after holding at 11.6 million b/d through all of February and most of March, EIA’s latest Weekly Petroleum Status Report showed. American producers have been under pressure to increase crude supplies amid mounting global demand and waning Russian oil exports during the Kremlin’s war in Ukraine.
Oil producers push Democrats to preserve key drilling deduction -Oil producers are ramping up their lobbying efforts to ensure that Democrats don’t repeal a lucrative tax deduction in the $3.5 billion reconciliation bill. The U.S. tax code allows companies to recover the cost of drilling for oil and gas and preparing oil wells for production, a provision that helps boost U.S. oil production but has drawn criticism from environmental groups and Democratic lawmakers.Senate Finance Committee Chairman Ron Wyden (D-Ore.), who wields significant influence over tax changes in the reconciliation package, is considering removing the intangible drilling costs deduction in the final bill, according to a committee spokesperson.Wyden previously proposed repealing the deduction in his bill to overhaul energy tax incentives to boost clean energy development. President Biden also proposed eliminating the tax provision in his budget plan and the American Jobs Plan. That’s alarmed oil and gas lobbyists, who are rounding up support from moderate Democrats from fracking-heavy states such as Texas, Pennsylvania and Ohio to ensure the deduction survives. “Democrats, particularly those with oil and gas operations in their districts, understand the importance of this industry, that it provides high-paying jobs and the benefits that come with domestic production,” said Anne Bradbury, president of the American Exploration and Production Council (AXPC), which represents independent oil and gas producers.The AXPC said that removing the deduction would reduce the number of wells drilled by 25 percent. That would raise gas prices and increase U.S. dependence on oil from Russia and the Middle East, the lobbying group stressed in meetings with lawmakers.Only a handful of defections among House Democrats — or one defection in the 50-50 Senate — could doom the party-line reconciliation package, which will not receive Republican support. Lobbyists are eyeing Sen. Joe Manchin (D-W.Va.), an industry ally, and moderate House Democrats who have expressed reservations about the reconciliation package. Oil and gas groups and business associations sent a flurry of letters to lawmakers this month urging them to keep the deduction intact.
Natural Resources chair says three oil execs refusing to testify --Three oil company CEOs have refused a request by the House Natural Resources Committee to testify on disparities between oil and gas prices, Chairman Raúl Grijalva (D-Ariz.) said Tuesday morning. Grijalva said in a statement that executives from EOG Resources, Devon Energy Corporation and Occidental Petroleum had declined to appear at the hearing, set for next Tuesday. The hearing will be canceled as a result of the executives’ refusal, Grijalva said. “As rising gas prices started hurting Americans, fossil fuel industry trade groups and their allies in Congress wasted no time placing blame on the Biden administration and pushing for a drilling free-for-all. But when you look at oil companies’ record profits, these claims don’t add up,” Grijalva asserted. “I invited these companies to come before the Committee and make their case, but apparently they don’t think it’s worth defending. Their silence tells us all we need to know—that cries for more drilling and looser regulations are nothing more than another age-old attempt to line their own pockets.” President Biden and Democrats in Congress have sought to blame oil companies for continued consumer pain at the pump, even after a more recent dip in oil prices. Industry experts, however, have said the lag between price drops is common and not the result of any deliberate action. House Energy and Commerce Committee Chairman Frank Pallone Jr. (D-N.J.) has called a similar hearing set for April 6. The broader list of companies asked to send a representative to that hearing — BP, Chevron, ExxonMobil, Pioneer Natural Resources and Royal Dutch Shell, along with Devon Energy — told The Hill earlier this month that they were reviewing the request.
Bankruptcy Fears Turn Into Merger Mania In U.S. Oil Patch -- How quickly fortunes can change in the oil and gas business. Last year, U.S. oil and gas companies were still filing for bankruptcy at record levels right in the midst of an oil price recovery. Smaller producers were the main victims; eight North American oil and gas producers with an aggregate debt of $1.8B filed for bankruptcy protection in Q1 2021. But it’s now official: the tidal wave triggered by the price correction that began in late 2014 is finally over.According to the final report by energy and restructuring law firm Haynes and Boone, since the beginning of 2015, a total of 274 oil and gas producers as well as 330 oilfield services and midstream companies have filed for bankruptcy involving over $321 billion in secured and unsecured debt.The U.S. Oil Patch entered rough seas facing stiff headwinds after OPEC declared its intention to take back market share from the prolific U.S. shale sector over Thanksgiving weekend in 2014. Oil prices began dropping precipitously in 2015, and it was only a matter of time before a wave of bankruptcies descended on a sector famed for epic boom and bust cycles. Aggregate debt in the oil and gas sector peaked in 2016, with the latest bust cycle of 2019/2020 failing to attain those heights thanks to a wave of Covid-19 vaccines that helped the world emerge from lockdowns and travel restrictions faster than anticipated.There was “only” $2.1 billion in total debt reported in 2021, marking the lowest amount since 2015--evidence that the tide has finally turned. The previous low was $8.5 billion reported in 2017. Only 20 oil and gas producers filed in 2021, about half of the more than 39 cases filed each year.Even more encouraging, dozens of companies have been successfully emerging from Chapter 11 bankruptcy protection, with M&A their preferred modus operandi. Here we look at several oil and gas companies that have successfully emerged from bankruptcy in recent times.
U.S. weighs largest ever draw from emergency oil reserve -The Biden administration is considering releasing up to 180 million barrels of oil over several months from the Strategic Petroleum Reserve (SPR), four U.S. sources said on March 30, as the White House tries to lower fuel prices.The latest amount of U.S. oil release being considered, which is equivalent to about two days of global demand, would mark the third time the United States has tapped its strategic reserves in the past six months, and would be the largest release in the near 50-year history of the SPR. The International Energy Agency (IEA) member countries are also set to meet on April 1 at 1200 GMT to decide on a collective oil release, a spokesperson for New Zealand energy minister said in an email, aimed at calming global crude prices that scaled 14-year highs this month amid the Russia-Ukraine conflict. Oil prices have surged since Russia invaded Ukraine in late February and theUnited States and allies responded with hefty sanctions on Russia, the second-largest exporter of crude worldwide. Brent crude, the world benchmark, soared to about $139 earlier this month, highest since 2008, and was near $110 a barrel in Asian trading on Thursday. Russia is one of the world's top producers of oil, contributing about 10% to the global market. But sanctions and buyer reluctance to buy Russian oil could remove about 3 million barrels per day (bpd) of Russian oil from the market starting in April, the International Energy Agency (IEA) has said. Russia exports 4 to 5 million bpd.The news comes just before the Organization of the Petroleum Exporting Countries and its allies, an oil producer group known as OPEC+ that includes Saudi Arabia and Russia, meets to discuss reducing supply curbs. The United States, Britain and others have previously urged OPEC+ to quickly boost output.However, OPEC+ is not expected to veer from its plan to keep boosting output gradually when it meets Thursday.The U.S. SPR currently holds 568.3 million barrels, its lowest since May 2002, according to the U.S. Energy Department.The United States is considered a net petroleum exporter by the IEA. But that status could change to net importer this year and then return to exporter again as output has been slow to recover from the COVID-19 pandemic.
The Biden Surge -- Why Now? March 30, 2022 - What prompted the Biden administration to release of one million bopd for an extended period of time and rebates for drivers to cushion the cost of gasoline at the pump? So far, this is just a rumor, but it "feels real." If the Biden administration does announce the Biden Surge, the first question is what prompted that now? Obviously, the short answer is the mid-term elections.Earlier, the administrations said the rise in the price of gasoline a) would be short-lived; b) would not cause all that much pain; c) if it did cause too much pain, folks could buy a Tesla.My hunch is that the administration can now see that the rising price of gasoline a) will not be short-lived; b) that it will cause a lot of pain for those who plan to vote in November; and, c) the Tesla option is not an option at all. So, what changed? Everyone will argue if there will be buyers for Russian oil. Of course, there will be. But sanctions on Russia are going to get worse, and for the most part have not yet begun to be felt. The fact is that Russian oil production is very much dependent on western technology and western resources. We won't see that impact for several months. But if you thought a shortage of toilet paper was a problem for Americans during the early days of the pandemic, the shortages that Russia begins to experience will make those toilet paper shortages pale in comparison. No matter how much one sugar coats it, Russian production is going to fall significantly. And Russia is not like Kashagan or Libya when it comes to temporary losses in production.
OPEC says the U.S. must trust its oil production strategy — Saudi Arabia and the United Arab Emirates said the U.S. must trust OPEC+’s strategy, as Washington and other major importers call on the group to hike oil production following Russia’s invasion of Ukraine. Crude prices surged to almost $140 a barrel soon after Moscow’s attack last month, though they’ve eased to around $110 this week amid a rise in coronavirus cases and tighter lockdowns in China. They’re still up by 40% this year. OPEC+, led by Saudi Arabia and Russia, meets on Thursday to decide on output levels for May. Members have far signaled they see no need to divert from their policy of small increases each month. “We’re experts in our field and we’ve been doing it for a very long time,” UAE Energy Minister Suhail al Mazrouei said at a conference in Dubai on Tuesday, sitting alongside his Saudi counterpart. “We’re trying to balance the market and it’s not an easy job. We’re not the only producers in the world and when we say this is the right way to do it, we know it from experience. So, trust us.” The Organization of Petroleum Exporting Countries and its partners say prices have spiked because of geopolitical tension and that there’s little evidence yet of the market being significantly under-supplied. Russian oil flows have probably fallen by 1.5 million barrels a day since the invasion, according to the International Energy Forum, a multilateral organization based in Riyadh. Still, it will take around two weeks until there’s firm evidence and OPEC+ will want to assess that data, IEF Secretary-General Joe McMonigle told Bloomberg Television. OPEC+ slashed supply by 10 million barrels a day at the start of the pandemic, which crushed oil demand, and is still unwinding those cuts. The U.S., Japan and Europe have tried to persuade the 23-nation group to accelerate its increases of around 400,000 barrels a day each month.
U.S. to release 1 million barrels of oil per day from reserves to help cut gas prices - The U.S. will release 1 million barrels of oil per day from its strategic reserves to help cut gas prices and fight inflation across the country, the White House announced Thursday. President Joe Biden plans to tap the nation's Strategic Petroleum Reserve for the next six months as domestic producers ramp up production, according to a fact sheet released by the Biden administration. "The scale of this release is unprecedented: the world has never had a release of oil reserves at this 1 million per day rate for this length of time," the White House said in a release. "This record release will provide a historic amount of supply to serve as bridge until the end of the year when domestic production ramps up." A senior administration official told reporters Thursday morning that, in combination with similar actions in other countries, the average daily amount released from global strategic reserves should exceed 1 million barrels. Oil prices dropped Thursday after reports surfaced Wednesday evening suggesting such a move was imminent. International benchmark Brent crude futures for May fell 4% to trade at $108.89 per barrel. U.S. crude futures slid 4.7% to $102.84. Earlier in the session the contract traded as low as $100.16. The announcement comes as the White House looks for ways to combat a spike in energy prices caused by Russia's invasion of Ukraine. While oil prices are well off highs seen earlier this year, the geopolitical chaos has continued to elevate petroleum costs and stir fears about oil and natural gas availability.Biden later remarked on the administration's efforts to cool oil prices and blamed Russian President Vladimir Putin for the most recent spike in energy costs."Many people are no longer buying Russian oil around the world. I banned Russian-imported oil here in America, Republicans and Democrats in Congress called for it and support it. It was the right thing to do," Biden said."But as I said at the time, it's going to come with a cost," the president added. "As Russian oil comes off the global market, supply of oil drops, and prices are rising. Now Putin's price hike is hitting Americans at the pump." The recent rise in crude prices has led to a jump in domestic gasoline prices, with the national average price of a gallon of gas at $4.23, up from $2.87 a year ago. That jump has contributed to a broader rise in the prices consumers pay for all goods and services, and a 7.9% increase in year-over-year inflation.
Biden to tap oil reserves, press oil sector to hike production - President Joe Biden will order the release of 1 million barrels of oil per day from the nation’s strategic reserves and urge Congress to press the oil industry to increase drilling on federal lands in bid to tame high gasoline prices. The move is the latest attempt by the White House and Democrats to temper the volatile oil markets that drove gasoline prices to all-time highs in the weeks since Russia invaded Ukraine. Those skyrocketing prices and the inflation they have fanned sparked criticism from voters ahead of the mid-term elections in November. While U.S. oil production has climbed since Biden entered the White House, the rate of growth has not been as quick as energy experts typically project when crude prices top $100 a barrel. “We think these companies need to be stepping up,” a senior administration official said in a background call with reporters. “There is nothing standing in their way.” The news: The U.S. will once again tap the Strategic Petroleum Reserve as it did twice before, with limited effectiveness. But this new effort will be a sustained released for six months, putting as much as 180 million barrels onto the market. The addition of 1 million barrels per day represents and increase in U.S. supply of 8.5 percent. The White House also said Biden will use the Defense Production Act to develop domestic supply chains for key minerals used in batteries for the power grid and electric vehicles as it seeks to jump-start clean energy manufacturing, in turn reducing reliance on foreign supply chains and volatile energy markets. Context: The White House said it coordinated with allies in its decision to open the reserves, noting gasoline prices have eclipsed $4.20 per gallon after averaging $3.30 to start the year. Those rising costs are a result of supply chain bottlenecks in the oil and gas sector and the U.S. move to ditch Russian imports in response to its invasion of Ukraine. Biden has had to balance his campaign promises to combat climate change — which is largely caused by burning fossil fuels — with energy market fluctuations hitting Americans’ pockets. As such, the White House’s war against gas prices and the political problems that they bring has put Biden in the position of hectoring oil companies to increase production at least in the short term. The White House is asking Congress to impose fees on oil companies for any federal acres they have leased but are not using to produce oil — citing the fact that companies are sitting on 9,000 unused permits for drilling on federal land. The White House stuck to Biden’s message that rising fuel costs underscored the need to quickly shift away from fossil fuels. But many of the resources used in clean energy are also under foreign control. China and Russia are major producers of key clean energy production minerals. The White House said Biden would use the Defense Production Act to foster a domestic supply of critical minerals such as manganese, lithium, cobalt, graphite and nickel, which are used to make large capacity batteries for the power grid and electric vehicles. The White House said the effort would not circumvent environmental reviews and permitting.
House GOP readies bills to unleash energy on federal land - House Republicans plan to introduce a package of bills today calling on the Biden administration to restart lease sales on public lands for fossil fuel production.The six bills, all from members of the Natural Resources Committee, come after months of attacks from Republicans who blame the Biden administration for rising energy prices amid the Russian attack on Ukraine.The latest attacks came yesterday in a hearing on the Biden administration's fiscal 2023 budget request, where Republicans charged that the president's energy policies were harming the country.“The president’s budget surrenders America’s energy independence and attacks American energy companies so that we are more reliant on foreign nations for our energy needs,” said Rep. Jason Smith (R-Mo.), ranking member on the House Budget Committee, at a hearing yesterday. A Republican one-pager for the new package of bills reinforced that message. “The U.S. has vast energy resources critically needed at home and abroad. Congress must take immediate action to remove barriers to domestic oil and gas development to support ourselves and our allies,” it said.
Gas flaring connected to early U.S. deaths — report --The oil industry’s practice of burning off excess gas may have contributed to as many as 53 premature deaths in the United States in 2019, according to a study from the Clean Air Task Force and Rice University.Companies often flare gas when they lack the infrastructure or the capacity to capture it. The practice releases both carbon dioxide and black carbon, a component of soot. According to EPA, black carbon is associated with a variety of health problems, from respiratory and cardiovascular disease to cancer and birth defects.The study, published recently in Atmosphere, an international journal of science related to Earth's atmosphere, was the first to use NOAA satellite data on total gas flared in the United States to model the human toll of the practice in terms of premature deaths.“The health impacts we’re seeing here are significant,” Lesley Fleischman, a senior analyst at the Clean Air Task Force and one of the study’s authors, told E&E News. “But they’re also unnecessary.”
A new report reveals how the Dakota Access Pipeline is breaking the law - The federal government and the Dakota Access Pipeline’s parent company, Energy Transfer, misled the public, used substandard science, utilized poor technology, and broke the law by not cooperating with impacted Indigenous Nations. That’s according to a new report that also criticizes the Army Corp of Engineers and the Environmental Protection Agency for not completing a realistic analysis of the environmental damage the pipeline could cause.The report, written by NDN Collective, an Indigenous nonprofit, provides the first comprehensive timeline of the controversial pipeline’s legal and environmental violations. Working with a team of engineers, the report’s authors included new information about oil quality, spills, leakage, and faulty infrastructure that NDN Collective says could be pivotal in the ongoing battle to stop the pipeline. The report comes as tribes await the Army Corps of Engineers to complete a new, court-mandated Environmental Impact Statement (EIS) on a section of pipeline under Lake Oahe, a reservoir on the Missouri River to which tribes have treaty rights. The EIS is expected to be released in September, after which a public comment period will open. NDN Collective, tribes, and other environmental groups are also calling on the Biden administration to shut down the pipeline. Meanwhile, the pipeline remains operational, carrying 750,000 barrels of oil a day. “This report shows how the Army Corps of Engineers violated their own processes, and continues to violate our human rights for the benefit of a destructive, violent, and extractive energy company,” said Nick Tilsen, Oglala Lakota and CEO of NDN Collective. “We cannot sit on the sidelines with this information. It’s time for accountability and it’s time to shut down the Dakota Access Pipeline, once and for all.”
South Gate refinery to pay $112K for violating oil spill prevention rules --A South Gate refinery and storage facility will pay $112,673 to resolve alleged violations of the Clean Water Act related to oil spill prevention, the U.S. Environmental Protection Agency announced Wednesday.World Oil is located near the Rio Hondo Channel and the Los Angeles River, which flow to the Long Beach Harbor and the Pacific Ocean, as well as the Golden Shore Marine Reserve, an environmentally sensitive site that is of the “highest concern for protection,” according to the EPA.The agency says the company violated the Clean Water Act’s Oil Pollution Prevention Regulations. They say inspections at the facility last year found that World Oil failed to implement tank and facility inspections, inspect and conduct integrity tests on tanks in accordance with industry standards, promptly correct visible discharges which result in a loss of oil from containers, and develop an adequate response plan for spills.“This enforcement action reflects EPA’s continued commitment to ensuring facilities like World Oil refinery comply with federal clean water laws and prevent unnecessary oil spills,” EPA Pacific Southwest Regional Administrator Martha Guzman said. “Actions like this are key to protecting our waterways and surrounding communities.”As a result of the agreement, World Oil developed and began implementation of an updated tank testing and inspection schedule, implemented a revised oil spill prevention training program, and updated its facility response plan, according to the EPA.
Biden's top economic advisor says restarting the Keystone XL pipeline now won't lower oil prices - President Joe Biden's top economic advisor suggested Friday the White House is not rethinking its decision to cancel the controversial Keystone XL oil pipeline in response to elevated crude and gasoline prices. National Economic Council Director Brian Deese told CNBC the Biden administration is instead concentrating on policies and strategies that can deliver lower fuel prices as soon as possible. He pointed to Biden's decision Thursday to begin releasing 1 million barrels of oil per day from the Strategic Petroleum Reserve over the next six months. "Any action on Keystone wouldn't actually increase supply, and it would transmit oil years in the future," Deese said in a "Squawk on the Street" interview. "What we're focused on right now is what we can do right now, and ... there are wells that are shut in and that can be brought back online over the course of the next couple months. What we need right now is to address the immediate supply disruption," he added. The Russia-Ukraine war delivered a supply shock to global oil markets, which had already been tight as demand recovered from Covid-pandemic related declines. As crude prices hit record highs recently so has prices at the gasoline pumps. Russia, a major energy exporter, has been hit with a wave of sanctions after it invaded neighboring Ukraine. The U.S. banned Russian oil imports, in an attempt to punish Moscow, and the U.K. also is phasing them out. Oil prices have retreated from their early March peaks, when they traded at their highest levels since 2008, However, they are still are up considerably for the year, adding to inflationary pressures in the economy. West Texas Intermediate crude, the U.S. oil benchmark, traded around $100 per barrel Friday, up 35% so far in 2022. Brent crude, the international benchmark, hovered around $104 per barrel.
As Biden looks to increase natural gas, Alaska is poised to step forward - Alaska’s plans for a $38 billion liquefied natural gas project have gained new momentum with President Biden’s pledge last week to increase European exports to replace Russian fossil fuels. “Global developments have created a sense of urgency for new projects like Alaska LNG,” “Europe has depended on Russia for 40% of its natural gas, and Russia’s invasion of Ukraine created a sudden global energy crisis, as our allies seek energy from the U.S. and other non-adversarial nations,” America is the world’s largest exporter of liquefied natural gas (LNG), but existing U.S. production is inadequate to meet new demands by Europe. Alaska’s LNG could help to change that. Alaska’s LNG project would provide cleaner-burning natural gas from the North Slope for domestic use and a rapidly expanding global market, supporters say. Alaskans also would benefit from in-state use. The state-owned Alaska Gasline Development Corp. projects that North Slope fields can deliver an average of 3.5 billion cubic feet of gas daily, with much of the supply for an international market.” Lower development costs for the LNG project may lower the cost of fuel from previous estimates. "Alaska LNG is expected to deliver LNG for approximately $6.70 per MMBtu (one million British thermal units), below the expected price from Gulf Coast projects targeting the same Asian markets," Fitzpatrick said in an email to the News-Miner. For gas customers in the Interior and Southcentral, Fitzpatrick estimated Alaska LNG could be delivered for less than $5 per per MMBtu. Driving the price down are projected lower construction costs for the project and a new finance structure, among other factors, he said. Supporters say that Alaska LNG can play a role in replacing coal and oil in Asia and Europe as the United States and other nations transition to more use of renewable energy and clean technologies. It also can have a role in moving Europe away from Russian fossil fuels. “Bringing Alaska LNG online will enable the U.S. to effectively serve allies in both Asia and Europe.” The Sierra Club and Northern Alaska Environmental Center in Fairbanks questioned the U.S. Energy Department’s approval of an environmental impact statement that did not fully examine carbon dioxide emissions. A supplemental life cycle review was ordered to estimate the project’s impact starting from North Slope extraction and production to consumption by export customers. That work is expected to be done by December. An initial study by the Alaska Gasline Development Corp. concluded that an Alaska LNG project would have significantly fewer emissions for gas exports than Gulf Coast LNG projects, which have longer shipping routes. Natural gas on the North Slope would be drawn from existing wells in the Prudhoe Bay and Point Thompson fields, which is less intensive and produces fewer emissions than drilling shale gas wells in the Lower 48. “Alaska’s LNG supply is the equivalent of about 30% of Japan’s LNG imports or 45% of South Korea’s imports,” Fitzpatrick said. “Meeting growing Asian LNG demand with Alaska’s natural gas will enable U.S. Gulf Coast LNG suppliers to focus on serving our European allies.”
Diesel spill cleanup efforts continue near Sitka -The Alaska Department of Environmental Conservation reported that the ongoing diesel fuel cleanup efforts in Neva Strait have collected 15 cubic yards over the last four days, and no major impacts to wildlife have been reported.The tugboat Western Mariner ran aground, spilling diesel fuel into Neva Strait near Sitka on March 21 The tug was towing the Chichagof Provider container ship south through Neva Strait when it lost steering capabilities, causing the Chichagof Provider to collide with the Western Mariner, which was pushed ashore and began leaking from the port forward fuel tank.According to the fourth situation report from the unified command of the U.S. Coast Guard, the Alaska Department of Environmental Conservation, and Western Towboat Company who owns the tug boat, no fuel has exited the Western Mariner since Thursday, and all remaining fuel tanks were emptied on Saturday. An additional 500 feet of containment boom were added on Friday, and two layers of containment boom remain around the Western Mariner.“There is no longer enough fuel within the secondary containment to support skimming operations,” the report said. “Any remnant sheen within the boom configuration continues to be addressed with absorbent materials. A total of 1,750 gallons of oily water was skimmed from within the containment boom.”Hanson Maritime and Global Diving and Salvage Inc. continue to work on repairs on the Western Mariner, to prepare the vessel for salvage operations. In the situation report, Global Diving and Salvage estimates that the boat carried 43,500 gallons of fuel at the time it hit the shore — 32,080 gallons of which were clean fuel and 11,625 gallons of which were mixed oil and water that were recovered from within the tug boat.Additionally, the report states that “15 cubic yards of saturated absorbents have been generated.”The report said that a flight over the spill area on March 26 saw a silver sheen that remained isolated in Neva Strait. No visible sheen was observed outside of Neva Strait on March 26.The report states that the Alaska Department of Fish and Game opened the Sitka Sound herring sac roe fishery from 11 a.m. to 12:15 p.m. on Saturday. The Alaska Department of Health and Social Services and the Department of Environmental Conservation issued multiple seafood safety recommendations for herring egg and other subsistence harvests in the area. Fish and Game’s Division of Commercial Fisheries issued a herring fishery update for Sitka Sound yesterday.
China Sells U.S. LNG to Europe at a Hefty Profit -China resold several U.S. liquefied natural gas shipments to Europe, a rare move by the world’s top buyer that highlights how sky-high prices are rerouting trade flows. Unipec, the trading arm of China’s state-owned Sinopec, sold at least three LNG cargoes for delivery through June to ports in Europe via a tender that closed late last week, according to traders with knowledge of the matter. The shipments will load from Venture Global LNG Inc.’s Calcasieu Pass export facility in Louisiana, where Sinopec has a deal to purchase LNG, they said, requesting anonymity to discuss private details. European natural gas rates surged to a record high last week on fears that the war in Ukraine will curb flows from top supplier Russia. The rally prompted Unipec’s traders to turn away from the lower-priced Chinese market, even as Beijing demand its importers secure more fuel amid concerns over wartime disruptions. European gas usually trades at a discount to LNG in North Asia, home to the top importers. But Europe’s plan to ditch Russian gas means that it will need to significantly boost LNG imports, with the continent’s prices primed to stay higher than Asian rates as it seeks to attract every last drop of fuel from the spot market.
- Sakhalin Energy, which operates the Sakhalin II project in Russia’s Far East, plans to release a tender this week offering an LNG cargo for loading around April 25
- South Korea’s LNG imports plunged 33% in February from a year earlier to 3.5 million tons as prices soared
- Eni declares force majeure on Nigeria shipments of Brass crude after a blast on a pipeline in Bayelsa state, while Nigeria LNG is also affected
Oil sands to play biggest role in Canada’s export boost pledge— Canada’s oil sands would play the biggest role in the government’s pledge to boost crude and natural gas exports by 300,000 barrels a day this year to compensate for Russian supplies, according to the lead trade organization for the industry. Oil sands companies are able to increase crude output by about 130,000 barrels a day, conventional drillers can add another 60,000 and a platform off Newfoundland could raise production by 10,000 barrels, Ben Brunnen, vice-president of oil sands, fiscal and economic policy at the Canadian Association of Petroleum Producers, said in an interview. “Will companies bring that production on-stream? It depends,” he said. “Industry is encouraged and would like to support the government but to do so they need some signals” that regulatory burdens will be relaxed and pipelines built more easily. “If we want to see production increases from Canada, we need support from the federal government.” Canada, the world’s fourth-largest oil producer, faces constraints in rapidly raising output. It currently produces more than 5 million barrels a day of liquid hydrocarbons, but the country’s pipeline network for exports is limited. The increases in conventional oil output, as well as the equivalent of 100,000 barrels a day of gas, would come from advancing drilling programs that were planned for next year, Brunnen. The crude production increases were already largely expected before the Ukraine crises. The Canada Energy Regulator in December forecast a little more than 200,000 barrels a day of increased crude production this year, exactly the extra export volume the government promised. “The incremental production is based on industry’s assessment of what can be reasonably brought online this year,” “It is mostly because of bringing forward production increases that were already anticipated for 2023 and 2024.” The seasonality of the business in Canada means the increases from conventional drillers wouldn’t happen before the second half of the year.
Exxon drills dry hole in setback to Brazilian oil exploration— Exxon Mobil Corp. drilled a so-called dry hole off the Brazilian coast, a rare setback in the oil titan’s effort to expand its South American crude reserves. The Cutthroat exploratory well failed to find significant quantities of oil or natural gas, according to Enauta Participacoes SA, an investor in the project. Exxon didn’t immediately respond to a request for comment. Exxon, which leads the project and owns a 50% stake, began drilling Cutthroat in late February in an ultra-deepwater region known as the Sergipe-Alagoas Basin off the northeast coast of Brazil. Enauta owns a 30% interest and and Murphy Oil Corp. holds the remaining 20%. The Brazilian company dropped as much as 13%, while Murphy and Exxon declined as much as 12% and 3.7%, respectively. Murphy didn’t respond to a request for comment. Brazil is one of Exxon’s top exploration targets after years of heavy investment in the country’s offshore prospects. Farther afield, the company has made massive discoveries in Guyanese waters and has plans to drill off the coast of Colombia later this year.
Exxon Again Finds No Oil In Brazil. Cutthroat Not On Target. - Oil and gas supermajor ExxonMobil has completed drilling operations on the Cutthroat prospect but failed to find any oil offshore Brazil one more time. The well, which was drilled using the Seadrill-owned ultra-deepwater drillship West Saturn, is in the Sergipe-Alagoas Basin. ExxonMobil is the operator and holds 50 percent interest there. Its partners are Enauta with 30 percent and Murphy Oil with 20 percent. The Cutthroat prospect well in Block SEAL-M-428 was spud in late February. The start of drilling followed a five-year license granted to ExxonMobil last week by the Brazilian Institute of the Environment for a drilling campaign with up to 11 exploratory wells in blocks SEAL-M-351, SEAL-M-428, SEAL-M-430, SEALM-501, SEAL-M-503, SEAL-M-573. Enauta said that, although the occurrence of hydrocarbons in this well was not verified, the consortium will conduct complementary studies, incorporating sampled data into its regional geologic interpretation, and update its vision as to the exploratory potential of the blocks located in the Sergipe-Alagoas Basin ultradeep waters. The other partner in the well – Murphy Oil – said last week that the Cutthroat well could potentially hold as much as 1 billion barrels of oil and gas. For now, no oil has been found. Although Exxon has invested a massive amount of money in Brazilian exploration it does not have a good record of drilling there. Exxon's entered Brazil offshore in the early 2000s. Namely, there was a time nearly 20 years ago when Exxon was the only international oil major that held licenses in the pre-salt area. Exxon searched for promising spots and spent over $300 million on drilling. Exxon found nothing as a dry hole was drilled in 2009 followed by two more in 2011. Cutthroat was not what Exxon expected or the start of a prolific drilling campaign in Brazil, a country which was for the company the opposite of, for example, Guyana where it made over 20 discoveries and discovered some 10 billion barrels of oil.
War turns Argentina's shale boom dream into gas-buying nightmare— Argentina, home to some of the world’s vastest gas reserves, is bracing for the unthinkable: rationing one of its chief natural resources. Despite having shale-gas deposits to rival those in Appalachia, which made the U.S. a major exporter, Argentina's domestic gas production sector has suffered from years of underinvestment that has left it unable to meet domestic demand, never mind the needs of the export market. As a result, Argentina is competing for shipments of liquefied natural gas, or LNG, along with industrial powerhouses like the U.K. and Japan. Its timing could scarcely be worse, as prices have skyrocketed. The fallout from Vladimir Putin's invasion of Ukraine has plunged energy and commodity markets into chaos, worsening the shortages, supply-chain bottlenecks and wild price swings that have roiled the world economy since the pandemic emerged. Furthermore, Argentina is only just starting to ask traders for cargoes for May and June, when winter in the southern hemisphere sets in. With the spike in prices over the last few weeks, the country — which has perennial shortages of hard currency used to pay for imports — may not be able to afford all the LNG it needs. “Argentina was planning to import 60 to 65 LNG shiploads, but these prices force it to adjust that original strategy,” Marcos Bulgheroni, chief executive officer of Pan American Energy, one of the country’s biggest gas drillers, said at an oil conference last week in Buenos Aires. To many observers, including people in the government and the gas-processing industry who asked not to be named because the matter is politically sensitive, the specter of fewer-than-needed LNG cargoes puts the country on the cusp of having to limit energy supplies to industrial consumers. "It's going to be a tough winter ahead for fuel supplies with the way access to hard currency is in Argentina,"
Declining North Sea output means UK could soon import 80% of its gas and oil, warns OEUK report - The UK will have to import almost all its gas and most of its oil from overseas suppliers unless billions of pounds are invested in new North Sea exploration and production facilities, a report from Offshore Energies UK has warned. Without new investment, by 2030 around 80% of UK gas supplies and more than 70% of oil will have to be sourced abroad, according the 2022 Business Outlook report from OEUK, whose 400 members embrace established industries like oil, gas and offshore wind, plus emerging technologies like hydrogen production and CO2 capture. It finds that, although there are enough oil and gas reserves to support the UK for at least 15 years, there has been too little investment in the platforms, pipelines and other infrastructure needed to access it. Offshore wind, whose expansion has been a major success for the industry, is still too small to be able to replace the declines in oil and gas output from the North Sea – although this is expected to change over decades. “Production of oil and gas will fall by up to 15% a year unless there is rapid investment in new infrastructure,” the report will say. “This decline is much faster than the predicted reduction in UK energy demand so, if there is no such investment then, by 2030, we will be reliant on other countries for around 80% of our gas and 70% of our oil.”
EA investigates oil spill in Richmond river --Dog walkers have been urged to keep their dogs on leads following an oil spill near Richmond Park. Thames Water say the spill, which is believed to have entered the water in Pyl brook, Morden, before flowing into Beverley Brook, was created by a “third party.” Thames Water engineers have been creating makeshift dams and are using pads to try and wipe the oil off the surface of the water. Pyl Brook is a small stream with two sources, a 5.3km main brook in Sutton Common that joins Beverley Brook in New Malden and a 3.9km East Pyl Brook that eventually joins the main Pyl east in Raynes Park. Wimbledon and Putney Commons Ranger’s office said the Environment Agency has been informed of the spillage and they, and Thames Water, are trying to identify the cause of the spillage. “Thames Water have been on site to inspect the Brook but as of yet, we have no sense of what the damage may be but we will keep you advised,” said the ranger’s office. “In the meantime, please keep out of the water and advise the Ranger’s Office if you see any wildlife in distress.” A Thames Water spokeswoman added: “Our teams are currently tracing and establishing the source of the pollution, which we believe was caused by a third party, and we have deployed booms and pads to help prevent the oil further spreading in the watercourse.
USA-Europe LNG Deal Reaction - Several U.S. oil and gas groups have responded favorably to a recent U.S.-EU LNG deal, which was announced in a White House statement on March 25. Under the deal, the U.S. will strive to ensure additional LNG volumes for the EU market of at least 15 billion cubic meters in 2022 with expected increases going forward, the White House statement outlined. According to the statement, the European Commission will also work with EU member states toward ensuring stable demand for additional U.S. LNG, until at least 2030, of approximately 50 billion cubic meters per year. “We welcome the president’s focus on expanding U.S. LNG exports to our European allies during this crisis, and we applaud the administration’s continued leadership in ensuring a unified international response to maximize pressure on Russia through additional sanctions,” American Petroleum Institute (API) President and CEO Mike Sommers said in an API statement. “Over the past few months, American producers have significantly expanded LNG shipments to our allies, establishing Europe as the top U.S. LNG export destination. With effective policies on both sides of the Atlantic, we could do even more to support Europe’s long-term energy security and reduce their reliance on Russian energy,” Sommers added in the statement. “We stand ready to work with the administration to follow this announcement with meaningful policy actions to support global energy security, including further addressing the backlog of LNG permits, reforming the permitting process, and advancing more natural gas pipeline infrastructure,” Sommers went on to say. Energy Workforce & Technology Council CEO Leslie Beyer said, “we welcome the call for more exports of LNG to Europe and for increased domestic production”. “Our industry is ready to help fill the gap as the world continues to shun Russian oil and gas. U.S. production is on the rise and can continue to ramp up, but the administration must pullback excessive regulatory hurdles, and support and encourage long-term investment in domestic oil and gas production and infrastructure,” Beyer added. According to a BofA Global Research report, the recently announced U.S.-EU LNG deal has few specifics and fails to address fundamental challenges to increasing supplies. “Specifically export capacity constraints in the U.S., import capacity constraints in Europe and limited new practical LNG capacity additions globally until 2025,” the BofA Global Research report stated. “We see no quick fix to meet REPowerEU's targets to pivot towards incremental LNG - other than bidding cargoes from other markets (as is already happening today), with inevitable price competition or to displace existing gas demand with other readily available sources of energy - which would almost certainly mean fossil fuels that directly contradicts EU’s Taxonomy and Green deal,” the Bofa Global Research report added.
U.S.-EU gas deal won’t be enough to replace Russian supply, says former U.S. energy secretary -- The gas deal between the U.S. and EU is important, but won't be able to make up the shortfall from Russia, former U.S. energy secretary Dan Brouillette said on Monday.The U.S. said it will work with international partners to provide at least 15 billion cubic meters more liquefied natural gas (LNG) to Europe this year. In 2021, the European Union imported 155 billion cubic meters of natural gas from Russia, according to the International Energy Agency."Frankly, I'm not quite sure that everyone can make up that shortfall. That's an enormous amount of gas," he said.However, the gas deal is "very important," and private industry and governments will have to fill the gap if Europe is to reduce its reliance on Russian gas, said Brouillette. He added that Germany should also build regas facilities to convert LNG from liquid into gas to support the shift away from Russian energy in the short run. In the longer term, Europe has to tap various energy sources as it tries to reach its carbon emissions goals, said Brouillette."When you look at the history of energy, it's always been in transition, but it's always been a transition of less to more," he said. That's in contrast to substituting one form of energy generation, such as burning fossil fuels, for another form of energy, like wind or solar power."To maintain the economic growth that all of these countries want, that the United States wants, it will take more energy, not less," he said. "That's the transition that we should focus on."
Prepare to switch to rubles for natural gas exports by March 31, Vladimir Putin tells Gazprom and Russia's central bank -Russian President Vladimir Putin has ordered the country's biggest gas company and central bank to prepare to start taking rubles for natural gas payments from "unfriendly" countries, saying they should outline their plans by March 31.Putin blindsided traders in the natural gas market last week by announcing Russia would make countries deemed hostile pay for the product in rubles. Russia accounts for around 45% of EU gas imports, with pipeline exports to Europe normally paid for in euros."At face value this appears to be an attempt to prop up the ruble by compelling gas buyers to buy the previously free-falling currency in order to pay," Rystad Energy senior analyst Vinicius Romano said last week. "What is clear however, is that this has added another element of uncertainty to the already chaotic European gas market by complicating gas purchases that many countries have been reluctant to cut." The President appeared keen to push ahead with the plan on Monday. He ordered Gazprom, the central bank and the government to prepare reports outlining how it will make the switch by Thursday, March 31, according to state news agency Tass. It was not immediately clear whether the switch itself would take place Thursday.Analysts have said Putin is trying to shore up the Russian currency and to make life more complicated for Western countries that have sanctioned Moscow over its war against Ukraine.The head of the European Commission, Ursula von der Leyen, accused Russia of blackmail last week and said the move would be a clear breach of contract. The boss of Italian energy company Eni, Claudio Descalzi, said at a panel in Dubai on Monday that the company would not be paying for gas in rubles.
Putin should think about the consequences of asking for energy payments in rubles, Germany says -Germany has some advice for Russian President Vladimir Putin: think about the consequences of asking for energy payments in rubles. Russia's Putin said last week that "unfriendly" nations would be asked to pay for their natural gas in rubles — causing a spike in European gas prices. By asking for payments in the Russian currency — rather than in dollars or euros, as is contracted — Putin is seeking to prop up the value of rubles, which sank in the wake of Russia's invasion of Ukraine. The U.S. dollar is up almost 13% against the Russian ruble since Feb. 24, when Russia began its invasion of Ukraine, after spiking around 85% in early March. However, Germany's Finance Minister Christian Lindner said he would not be strong-armed by Russian demands. "We are completely against any kind of blackmailing. These treaties are based on euro and [U.S.] dollar and so we suggest that private sector companies to pay [Russia] in euro or dollar," Lindner told CNBC's Annette Weisbach Monday. "If Putin is not willing to accept this, it's open to him to think about consequences," he added. Germany's Chancellor Olaf Scholz said last week that paying for oil in rubles would be a breach of contract, and Italian officials also said they would not be paying in rubles as doing so would help Russia avoid Western sanctions over its invasion of Ukraine. Nonetheless, tensions over future payments could disrupt the ongoing flow of natural gas from Russia to Europe. The region receives about 40% of its gas imports from Russia and this figure is even higher for some European nations, notably Hungary which got 95% of its gas imports in 2020 from Russia. The region's dependency on Russian energy has prevented the bloc from imposing an oil embargo on Moscow as part of its sanctions regime — in contrast the White House, which has banned Russian oil and gas imports. The European Union has said it will overhaul its approach to Russian energy and reduce its long-standing dependency. A plan put forward earlier this month suggested to cut Russian gas imports by two-thirds before the end of the year. "We will find solutions. We are working on less dependency on Russian imports and if [Putin] decides to cut his supplies, we would have to be even faster to be independent from Russia," Lindner said. The region is now scrambling to source its energy from elsewhere.
Ukraine Updates and More Discussion of the Russia “Gas for Roubles” Countersanction - by Yves Smith - Given that the war in Ukraine is the focus of a massive propaganda operation in the West, it’s telling that it’s fading a bit from attention, either by design or a need to regroup. While the business press still gives the war top billing due to the fact that energy supplies and pricing around the globe are very much in play, the level of discussion on Twitter in the last couple of days has dropped dramatically. Similarly, I don’t check into Daily Mail religiously, but not all that long ago, Russia’s campaign crowded out celebrity coverage. By contrast, the last two days, the first conflict-related story, this on a TV host in Russia calling for regime change in the US, was well below the fold. Not that there aren’t new developments, mind you. Russia and Ukraine concluded two days of talks in Istanbul. Progress was made and the two sides will meet again. As I understand it (and readers are welcome to correct me) Ukraine presented a proposal. It appears Russia didn’t, due to some combination of having already set forth its red lines and not wanting to negotiate against itself. The two sides appear to have closed the gap on some issues. Russia said it will provide more in the way of a response in the next round. So press reports that Russia is saying there was no breakthrough and a lot of work remains to be done should come as no surprise. Specifically, Ukraine says it will not join NATO. How Zelensky can commit to that when it’s been put in the Ukraine constitution is beyond me. Russia agreed that Ukraine can join the EU. The latter sounds like a non-concession. Most of the EU has cooled considerably on further expansion to the East now that Poland has turned out to be a monster headache. On top of that, having Ukraine join would have all of those supposedly temporary refugees from Ukraine have the right to live and work in their new home countries. Bloomberg reports tonight that 4 million have fled. Another Russian non-concession was offering that Russia would considerably reduce the size of its forces near Kiev. Interestingly the Western press and officials did not depict this as an admission of Russian weakness or reduction of aims, but instead first tried to portray Russia as dishonest and doing no such thing. The reality is more along the lines that reducing troop levels in Ukrainewould be a big deal, but in the Kiev environs serves mainly to give civilians some sense of relief.For instance, an early evening take from the Financial Times:Russia has decided to “dramatically” scale back its military activities in the Kyiv area, a top Moscow defence ministry official said following a fresh round of peace talks with Ukrainian counterparts in Istanbul.Alexander Fomin, Russia’s deputy defence minister, said the move was intended to “increase mutual trust” as he announced it in Turkey after face-to-face talks concluded on Tuesday.But western officials cautioned against taking Moscow’s pledge at face value. “Nothing we have seen so far suggests that Putin and his colleagues are particularly serious about the talks. They are likely just playing for time,” said one.Recall the US wouldn’t deign to negotiate with Russia before the war, refusing repeated entreaties from Russia to provide written responses to its proposals, and then accused Russia of not being willing to negotiate! So the US is hardly one to judge what good faith amounts to in this arena.
Russia Supply Interruption Risk Has Increased Gas flows will continue from Russia to the EU27, but the risk of supply interruptions has increased. That’s what Fitch Solutions Country Risk & Industry Research analysts stated in a new report sent to Rigzone on Thursday, which highlighted that Russian President Vladimir Putin demanded last week that payments for natural gas from ‘unfriendly’ countries be paid in Roubles. “The most recent escalation by Russia has increased the risk of some partial cut off due to disputes over payment for gas, but a total shut down of gas flows remains extremely unlikely, with elevated gas prices for the foreseeable future the most likely consequence,” the analysts stated in the report. “Looking to the short-term, we are not expecting European buyers to pay in Roubles, so what occurs next depends on whether Russia shuts off gas supplies in response. We do not expect Russia to shut off gas supplies, as it would be a major escalation from its previous position that this would be a response to an oil embargo,” the analysts added in the report. “If Russia were to shut off gas supplies, it would mark a serious step-change from Russia’s deference to long-term contracts as the model for gas supply agreements. Putin and other government officials have continuously stressed their preferred form of gas trade as long-term contracts with Gazprom and that existing contracts would be respected, to maintain its reputation as a reliable gas supplier,” the analysts continued. In the report, the analysts noted that they expect Russia to continue to accept Euros as payment for gas supplies covered by long-term contracts, but perhaps demand Roubles for purchases of any additional volumes. “This poses an easy route for de-escalation whilst saving face by Putin and is more aligned with the deference shown for long-term contracts historically by Russia,” the analysts stated. In a separate market note sent to Rigzone on Wednesday, Senior Rystad Energy analyst Vinicius Romano noted that the Kremlin confirmed Wednesday that Russia does not expect gas payments in Roubles immediately but added that it is expected that an initial proposal regarding payments from Russia to European importers will come by Thursday. “Germany and the wider G7 have signaled that gas supply agreements cannot be unilaterally modified,” Romano said in the note. “Should renegotiations start at the insistence of Russia, it is likely that importers will be offered value elsewhere in their deals with Russia in return for the change to Rouble payments,” he added. “The challenge to put this in practice is that each buyer may have different conditions, while some may not even be willing to alter contractual terms. This suggests that negotiations might take some time, which means there is still no abrupt deadline for the payment to switch to Roubles,” Roman went on to say.
Putin-Scholz Phone Call on “Gas for Roubles” Mechanism Conforms to Our Assessment; Disputes Over Russia Force Reduction Around Kiev; West Pressure on China, India Continues by Yves Smith - The Western press is widely describing Putin clarifying to German Chancellor Scholz how Germany could pay for gas in roubles as a climbdown. Since the Russian mechanism, of foreign gas buyers making their usual payments in the contracted currency, to an unsanctioned Russian bank, is the one we described as most likely and most consistent with Putin’s original announcement, it’s hard to see it as a retreat. And as we’ll describe, Russia accomplished several things with its move, starting with rattling Scholz enough to force him to speak to Putin.By contrast, as we’ll explain soon, in the “No polite but largely empty gesture goes unpunished” category, a Russian free non-concession about making a substantial cut in military activity around Kiev is being spun as a Russian falsehood, despite the Guardian reporting that multiple sources, both US and UK, did note some reduction in Russian action. As we’ll explain, it’s not clear if Russia was being too clever by half, or whether this is yet another example of the US and Ukraine winning the PR war irrespective of facts on the ground, or both. Back to the gas for roubles gambit. Let’s again see what Putin said” (Putin Al Arabia video) And as we stated in our post on this story when it broke:As we’ll explain, this counter-sanction does not amount to forcing (much) more demand for roubles (unless Russia sets an above-market rouble price for these gas buys). Russia has already imposed currency controls, including requiring major exporters to sell 80% of their foreign currency receipts and buy roubles. And contrary to popular mis-perceptions, the rouble is not collapsing…. So EU buyer pays Euros, to say Gazprom via one of Gazprom’s banks. Either that bank is one of the non-sanctioned Russian banks, or Gazprom transfers the funds from a Eurobank to a non-sanctioned Russian bank to convert enough of the Euros to roubles to satisfy Russian requirements. Note that there are not enough roubles circulating outside Russia for it to be very likely that a garden-variety European bank could acquire enough roubles to pay Gazprom.2 Now has anything changed from that picture? Contrast that with the report in DW, Germany says Putin agreed to keep payments for gas in euros:Olaf Scholz’s office said Russian President Vladimir Putin told the German Chancellor that European companies could continue paying in euros or dollars.In a phone call with Scholz, Putin said the money would be paid into Gazprom Bank and then transferred in rubles to Russia, a German statement said. The bank is not currently subject to sanctions.“Scholz did not agree to this procedure in the conversation, but asked for written information to better understand the procedure,” the statement added.Putin said last week that Moscow would only accept rubles as payment for gas deliveries to “unfriendly” countries, including European Union nations. Unfortunately, I had no luck in finding the readout on the German government website or the Chancellor’s subsite. This is the Russian readout: Vladimir Putin had a telephone conversation with Federal Chancellor of the Federal Republic of Germany Olaf Scholz. Vladimir Putin informed the Federal Chancellor about the substance of the decision to switch to Russian rubles in gas transactions, for Germany in particular. The change in transaction currency is being introduced due to the fact that, in violation of international law, the foreign exchange reserves of the Bank of Russia were frozen by the EU member states. It was noted that the decision should not lead to a deterioration of contractual obligations for the European companies importing Russian gas. It was agreed that the experts of the two countries would discuss this issue further. Vladimir Putin and Olaf Scholz exchanged views on the latest round of talks between Russian and Ukrainian representatives in Istanbul held the day before. Ensuring the safe evacuation of civilians from combat zones, primarily from Mariupol, was also considered.
Germany and Austria plan for gas rationing over payment stand-off with Russia - Germany and Austria have taken the first formal steps towards gas rationing as officials rushed to avoid a potential halt in deliveries from Russia because of a dispute over payments.If supplies fall short and attempts to lower consumption do not work, the German government would cut off parts of industry from its gas network and give preferential treatment to households.Russia has insisted that all “unfriendly” buyers of its natural gas pay in roublesrather than in currencies such as euros or dollars.But in a call with Germany’s chancellor Olaf Scholz on Wednesday evening, Vladimir Putin hinted at a potential compromise, saying that payments by European gas customers could continue to be made in euros — as long as they were made to Gazprombank, which has not been sanctioned by the EU, according to a readout of the call given by German officials.Germany and the G7 nations which have sanctioned Russia since it invaded Ukraine have refused to use roubles to buy gas, saying they will continue to pay in currencies specified in supply contracts.As talks to resolve the stand-off continued between Russia and EU officials, future contracts tied to TTF, the European gas price benchmark, rose 9 per cent to €118 per megawatt hour on fears of supply disruptions.Even though the UK only sources 4 per cent of its gas from Russia, supply shocks in Europe would have global ramifications. Prices in the UK gained 6 per cent to trade at 280p per therm.EU officials and their Russian counterparts have discussed using a euro-rouble swap mechanism, which would be likely to avoid forcing corporate customers to buy roubles from the central bank. Instead, payments would be routed through Gazprombank.“Neither side is ready to pull the plug, so there’s going to be a framework that’s acceptable to both sides,” said one person briefed on the matter.The German government said Scholz had not agreed to any proposals in the call with Putin but had requested more information on how it would work.Earlier in the day Robert Habeck, Germany’s economy minister, activated the “early-warning phase” of a gas emergency law put in place to deal with acute energy shortages.During that phase — the first of three stages in its emergency response — a team from the Berlin economics ministry, the regulator and the private sector will monitor imports and storage.Austria said it would implement the first part of its own three-stage emergency national contingency plan, citing a “concrete and reliable” expectation that gas supplies will drop dramatically in the coming weeks.Russia supplies 80 per cent of Austria’s domestic gas needs and the country is one of Europe’s biggest hubs for Russian gas imports.“We will do everything we can to secure the gas supply for Austria’s households and businesses,” Karl Nehammer, the country’s chancellor, said at a press conference in Vienna.Volker Wieland, a professor of economics at Frankfurt University and a member of the German council of economic advisers, said a halt in Russian energy supplies would create a “substantial” risk of a recession and bring Europe’s largest economy “close to double-digit rates of inflation”. Without energy imports from Russia, Germany’s inflation rate could rise to between 7.5 and 9 per cent, said the economists, who advise the German government.Habeck, who is also vice-chancellor, said the early-warning decision was taken in anticipation of the Russian law, which specifies that payments for gas be made in roubles. “We won’t accept a [unilateral] breach of contracts,” Habeck reiterated.
Putin talks tough on gas-for-rubles deadline. But flows continue to Europe - Russian President Vladimir Putin has sought to ratchet up the pressure on foreign buyers of natural gas, telling so-called unfriendly countries to pay in rubles from Friday — or have their supplies cut off. Perhaps surprisingly, however, the leaders of Germany and Italy appear unfazed by Putin's rhetoric. That's because they believe European customers won't be bound by the Kremlin's new mechanism and can instead continue paying for Russian gas in euros or dollars. Putin on Thursday issued a decree insisting foreign buyers of Russian gas must pay in rubles from Friday by opening a Russian bank account or have their contracts for deliveries canceled. Russia's president has repeatedly demanded that so-called unfriendly countries make the currency switch for Russian gas, targeting those behind the heavy economic sanctions designed to isolate Russia over its unprovoked onslaught in Ukraine. "Today I signed a decree that establishes the rules for trading Russian natural gas with the so-called 'unfriendly' states. We offer counter parties from such countries a clear and transparent scheme, in order to purchase Russian natural gas, they must open ruble accounts in Russian banks," Putin said in a televised address, according to a translation. "If these payments are not made, we will consider it a failure of the buyer to fulfill its obligations with all the ensuing consequences." VIDEO03:31 Russia's Putin says gas payments will have to be made in rubles Putin said existing contracts would be stopped if these terms were not met from Friday. Germany, Europe's biggest consumer of Russian gas, said Putin's decree amounted to "political blackmail," while the U.S. said the measure shows financial "desperation" on the part of the Kremlin. Instead of stoking panic in Berlin and Rome, German Chancellor Olaf Scholz and Italian Prime Minister Mario Draghi believe the decree does not apply to them. Russia's state-controlled gas giant Gazprom said Friday it was continuing to supply natural gas to Europe via Ukraine in line with requests from customers, according to Reuters. CNBC has contacted a spokesperson at Gazprom for further details.
Putin Edict on “Gas for Roubles” Consistent With Original Description (and Our Take); Western Officials Nevertheless Claim a Walkback by Yves Smith --Recall that in his original statement, Putin set forth boundary conditions, most importantly that existing pricing mechanisms would stay in place.I have to keep recycling this clip because the Russian leader made clear from the get-go that the contract terms and economics would stay in place. What was being added was the requirement that the payment be tendered in roubles:Folks, this is not hard unless you want to make it hard. It’s a mystery why the press went into MEGO (My Eyes Glaze Over) mode. If your going to leave the contract otherwise in place, all that Putin was appending was a requirement to exchange the euro/dollar/sterling amount due into roubles at the time of payment. Theoretically, Putin could have insisted on an above-market exchange rate, but that would conflict with his stipulation that price terms remain unchanged, since that would de facto change euro/dollar/sterling pricing for a new higher price stated in roubles. We listed a whole set of advantages in our post yesterday that Russia would nevertheless get from a minor-seeming, technical change. The main one was to require gas buyers to tender payments to Russian banks, since only Russian banks could get their hands on enough roubles to execute the foreign exchange transaction (more on an important fine point soon). There aren’t a lot of roubles trading outside Russia. That would prevent the West from sanctioning more Russian banks, something they seemed intent on doing at last week’s series of European summits. It would also mean the foreign currency payments would be in the hands of Russian institutions, and hence not vulnerable to being “frozen,” aka expropriated.The fact that the West seems willing to go along, and is now incorrectly depicting the Russian detailed explanation as a climbdown, makes it awfully hard for them to object when Russia, as it floated on Wednesday, extends this procedure to other commodities, like oil, lumber, wheat, metals, and fertilizer. That means in having payments from “unfriendly countries” on contracts denominated in their currencies be made to an account at an unsanctioned Russian bank with the customer also effectively ordering the currency exchange to roubles.One additional advantage of this procedure: it greases the skids for Russia requiring future contracts to be set in rouble terms, not in “unfriendly country currency” terms. Expect Russia to be smart enough not to do this right away. And expect them to do this first on a long-term contract for a must-have commodity. Gas again seems like the prime candidate but another suitable contract expiration might occur at a propitious time.At the end of this post, we’ve embedded two documents: one, the translation of Interfax’s transcription of Putin’s orders that describe the mechanics. It’s still a bit rough, but still understandable. The second is an official translation of Putin’s speech yesterday, nominally about how Russia is going to build and operate aircraft under sanctions. The opening section is devoted to operation of and rationale for the “roubles for gas” stipulation. Reader Safety First found the Russian text on Interfax. His recap is a lot smoother than the Yandex translation:
- – LNG is excluded, we are only talking about “pipeline gas”.
- – Gazprom is directly prohibited from shipping gas unless it is paid in rubles.
- – To facilitate this, a) Gazprom Bank will open an account in rubles, and a parallel account in foreign currency (termed “K-accounts”, likely for some legal reasons); b) there is a section detailing how these accounts are opened by Gazprom without the “foreign owner” actually participating in the process, basically to get around anti-laundering laws.
- – Customer will deposit euros (let’s say) with Gazprom Bank into “their” euro K-account, and instruct Gazprom to procure X rubles to make the payment for the gas. Gazprom Bank will sell the euros on the Moscow exchange, and credit the rubles thus received to the customer’s ruble K-account, and then pay Gazprom for the gas delivery from that ruble account.
- – The Russian Central Bank is directed to establish all the necessary procedures viz. these K-accounts, then the Customs Service is supposed to confirm the procedures for release of the gas, both “within 10 days” of the decree’s effective date (March 31). The Central Bank also gets leeway to develop “alternative FX trading mechanisms”.
- – There is a government official (from the Foreign Investments Commission) empowered to grant waivers to foreign customers, seemingly at will.
One change from the process we envisaged at the get-go is that Russia has stipulated one unsanctioned bank, Gazprom Bank, to be the payment recipient, as opposed to having any unsanctioned Russian bank be eligible.A second fine point is that this process has the gas buyer “owning” the rouble account as well as the initial euro/dollar/sterling account into which the contactually due payment is initially made. So the gas buyer does in the end make payment in roubles because roubles go from his rouble account to Gazprom
No One Will Win in the Russia-Ukraine Conflict -- Gail Tverberg - Most people have a preconceived notion that there will be a clear winner and loser from any war. In their view, the world economy will go on, much as before, after the war is “won” by one side or the other. In my view, we are basically dealing with a no-win situation. No matter what the outcome, the world economy will be worse off after the fighting stops.The problem the world economy is up against is the depletion of many kinds of resources simultaneously. This depletion is made worse by rising population, meaning that the resources available need to provide an adequate living for an increasing number of world inhabitants. Because of depletion, the world economy is reaching a point where it can no longer grow in the way it has in the past. Inflation, food shortages and rolling blackouts are likely to become increasing problems in many parts of the world. Eventually, the population is likely to fall. We are living in a world that is beginning to behave like the players scrambling for seats in a game of musical chairs. In each round of a musical chairs game, one chair is removed from the circle. The players in the game must walk around the outside of the circle. When the music stops, all the players scramble for the remaining chairs. Someone gets left out. In this post, I will try to explain some of the issues.
- [1] In a world with inadequate resources relative to population, conflicts are likely to become increasingly common. The Russia-Ukraine conflict is one example of a resource-associated conflict. The allies underlying the NATO organization have chosen to escalate the Russia-Ukraine conflict, in part, because the existence of the conflict helps to hide resource shortages and accompanying high prices that are already taking place. No matter how the war is stopped, the underlying resource shortage issue will continue to exist. Therefore, the conflict cannot end well.
- [2] There is a huge resource depletion issue that authorities in many countries have known about for a very long time. The issue is so frightening that authorities have chosen not to explain it to the general population. Mainstream media (MSM) practically never mentions that there is a major issue with resource depletion. Instead, MSM tells a narrative about “transitioning to a lower carbon economy,” without mentioning that this transition is out of necessity: The world is up against extraction limits for many kinds of resources. Besides oil, coal and natural gas, resources with limits include many other minerals, such as copper, lithium, and nickel. Other resources, including fresh water and minerals used for fertilizer are also only available in limited supply. MSM fails to tell us that there is no evidence that a transition to a low carbon economy can actually be made.
- [3] The big depletion issue is affordability of end products made with high priced resources. The cost of extraction rises, but the ability of the world’s citizens to pay for end products made using these high-cost resources doesn’t rise. Commodity prices do not rise enough to cover the rising cost of extraction. When this affordability limit is hit, it is the resource extracting countries, such as Russia, that find themselves in a terrible situation with respect to the financial well-being of their populations. The big issue that hits because of depletion is a price conflict. Businesses extracting resources need high prices so that they can reinvest in new mines, in ever more costly locations, but consumers cannot afford these high prices. As a result, commodity exporters, such as Russia, are caught in a bind: They cannot raise prices enough to make new investments profitable. The problem is that the world’s consumers cannot afford the resulting high prices of essentials such as food, electricity and transportation. Russia reports very high reserve amounts, especially for natural gas and coal. It is doubtful, however, that these reserves can actually be extracted. Over the long term, selling prices cannot be maintained at a sufficiently high level to cover the huge cost of extracting, transporting and refining these resources.
- [4] World economic growth very much depends on growing energy consumption. There are two ways of measuring world GDP. The standard one is with the production of each country measured in inflation-adjusted US$, with the changing relative value to the US$ considered. The other approach uses “Purchasing Power Parity” GDP. The latter is supposedly not affected by the changing level of the dollar, relative to other currencies. Inflation-Adjusted Purchasing Power Parity GDP is only available for 1990 and subsequent years. Figure 3 shows the high correlation between energy consumption and PPP GDP during the period from 1990 through 2020.
Nord Stream 2 cost $11 billion to build. Now, the Russia-Europe gas pipeline is unused and abandoned - One of the early casualties of Russia's invasion of Ukraine — and its continuing geopolitical and economic fallout — has been the Nord Stream 2 gas pipeline, a massive energy project that took several years to build and cost $11 billion. Even before Russia's unprovoked onslaught, the signs were not good for the 1,234-kilometer offshore pipeline — designed to double the flow of gas between Russia and Germany. Now, the major infrastructure project is looking like it has been "killed off," as one analyst put it. The laying of the pipeline started in 2018 but faced several stumbling blocks, becoming something of a geopolitical pinball in Europe and the U.S. before it was finally completed in September 2021. By November last year, however, there were further signs of trouble brewing when the German energy regulator temporarily halted the certification process that would allow it to start operating the pipeline. The suspension came as Russia was amassing tens of thousands of troops along Ukraine's border (although the regulator cited legalities as a reason for the suspension). The final nail in Nord Stream 2's coffin came in February following Russia's fateful decision to formally recognize two pro-Russian, breakaway regions in eastern Ukraine. That prompted the German government under Chancellor Olaf Scholz to stop the certification process altogether. As we all now know, Russia's recognition of the breakaway republics in the Donbas was a precursor to its larger invasion of Ukraine that began on Feb. 24. The war that has ensued has thrown Europe into a geopolitical crisis not seen in years and has put joint projects and business partnerships between (and in) Russia and Europe — like Nord Stream 2 — on a cliff-edge. "Russia's invasion of Ukraine has killed off the Nord Stream 2 project. In short, it would be unthinkable for Germany or any other European country to do a U-turn and authorize the pipeline after Russia's behavior," Kristine Berzina, senior fellow and head of the geopolitics team at the German Marshall Fund of the United States, told CNBC Wednesday. "Even functioning pipelines have a shaky future in Europe," Berzina noted, while for Nord Stream 2, "the pipeline is frozen in its inactive state. Besides ensuring the safety and stability of the structure, I do not anticipate other uses for it."
Germany warns of possible natural gas rationing amid dispute with Russia - Germany has declared an "early warning" that it could soon be facing a natural gas emergency as Europe's largest economy prepares for the risk of a full supply disruption from Russia. The Kremlin has repeatedly demanded that so-called "unfriendly" countries pay in rubles for gas, referring to those behind heavy economic sanctions designed to isolate Russia over its unprovoked onslaught in Ukraine. The G-7, which includes Germany, has rejected that demand. Most countries currently pay for Russian gas in euros or dollars. German Economy Minister Robert Habeck said Wednesday that the "early warning" measure was the first of three stages and does not yet imply a state intervention to ration gas supplies. However, Habeck called for consumers and companies to reduce consumption, telling a news conference that scaling back energy use is a help to both Germany and Ukraine. "We are in a situation where I have to say clearly that every kilowatt hour of energy saved helps, and that is why I would like to combine the triggering of the early warning level for gas supplies with an appeal for help to companies and private consumers," Habeck said, according to a translation by German broadcaster Deutsche Welle. "You are helping Germany, you are helping Ukraine, when you reduce your use of gas or energy in general." European countries' dependence on Russian energy exports has been thrust into the spotlight since the Kremlin launched its invasion on Feb. 24, prompting a barrage of punitive economic measures from the U.S. and international allies. The conflict has triggered a devastating humanitarian crisis and sent shockwaves through financial markets. The front-month gas price at the Dutch TTF hub, a European benchmark for natural gas trading, traded up over 11% at 120.5 euros ($134) per megawatt-hour on Wednesday, according to New York's Intercontinental Exchange. The TTF-month ahead index has traded at elevated levels in recent weeks, partly due to persistent geopolitical concerns.
OPEC warns EU over market consequences of banning Russian oil | S&P Global Commodity Insights -- OPEC has told the EU that global energy markets would be destabilized if European countries follow through with a threat to ban imports of Russian oil, sources in the producer group said, with traders warning of massive price spikes beyond the surge already seen.OPEC, which formed an alliance with Russia in late 2016 to manage the oil market, has been intensely lobbied by western countries and major consumers to increase crude output to offset the impact of sanctions imposed for the Ukraine war. But it has insisted that the disruptions to the market are not its responsibility to mitigate, and delegates say the bloc remains disinclined to cast aside its production quotas or raise them more aggressively. OPEC is scheduled to meet with Russia and its nine other allies on March 31 to discuss May production levels. "The world can't replace Russia's exports," one source said of the group's message to the EU, which was delivered in an online meeting March 16 between Energy Commissioner Kadri Simson and OPEC Secretary General Mohammed Barkindo.Ireland and Lithuania are among the EU member states calling for a ban on Russian oil.Russia is one of the top three crude producers in the world and exports more than 7 million b/d of crude and refined products.Europe imported about 2.7 million b/d of Russian crude and another 1.5 million b/d of refined products, mostly diesel, before the invasion of Ukraine.The meeting, which was requested by the EU, was called to discuss the "extraordinary times for the energy market and the unprecedented oil prices," which pose "a serious risk to the world economy," Simson said on Twitter.The Platts Dated Brent benchmark was assessed at $126.50/b on March 23 and has been extremely volatile in recent weeks, hitting a 14-year high of $137.64/b on March 8 before falling to the month's low of $107.96/b on March 16.Western sanctions targeting Russia's financial sector over the war have tightened the oil market and caused European buyers to seek alternative supplies. Some traders have warned that prices could hit $200/b or more with further hits to Russian oil flows.S&P Global analysts estimate that about 2 million b/d of Russian crude and 700,000 b/d of product exports have been disrupted so far.
Russia Cuts Refinery Output As Diesel Shortage Worsens - Europe's diesel shortage is becoming worse as Russian oil refiners have started to cut back on refinery throughput, according to the chief executive of one of the world's largest independent commodities trading houses, Gunvor. "This is a global problem but for Europe it's very hard because Europe is so short" of diesel, Gunvor CEO Torbjorn Tornqvist said at the Financial Times Commodities Global Summit as carried by Bloomberg.Trade with Russian diesel is becoming scarcer because of buyers in Europe steering clear of Russian shipments, awaiting further sanctions against Russia over its invasion of Ukraine, or simply declining to purchase Russian energy to finance Putin's war in Ukraine.The "self-sanctioning" of the buyers has already started to force Russian refiners to reduce production, according to Gunvor's Tornqvist."What does that mean? It means more crude oil will need to be exported instead of the products, and we believe that is not possible and will lead to cutbacks in Russian production," he said, as carried by Bloomberg.Diesel stocks globally were already low even before the Russian invasion of Ukraine. According to estimates from Reuters' John Kemp, diesel fuel stocks in Europe are at their lowest since 2008, and 8 percent—or 35 million barrels—lower than the five-year average for this time of the year.In the United States, the situation is graver still. There, diesel fuel inventories are 21 percent lower than the pre-pandemic five-year seasonal average, which translates into 30 million barrels.In Singapore, a global energy trade hub, diesel fuel inventories are 4 million barrels below the seasonal five-year average from before the pandemic. On top of exacerbating a global diesel supply crunch, the sanctions against Russia are also likely to force Russian firms to shut in some crude oil production, analysts say. Russia will have to shut in some of its oil production as it will not be able to sell all the volumes displaced from European markets to other regions, with Russian crude production falling and staying depressed for at least the next three years, Standard Chartered said earlier this month.
Rationing Looms As Diesel Crisis Goes Global -Earlier this week, Vitol's chief Russell Hardy warned that a diesel shortage could trigger fuel rationing in Europe. Now, those warnings are multiplying, with fuel rationing no longer looking like an abstract idea. Europe is risking a blow to its economic growth, Reuters reported on Thursday, citing experts. Diesel is what freight transport uses to deliver goods to consumers, but it is also what industrial transport uses for fuel. With Russian refiners cutting their processing rates in the wake of several waves of Western sanctions, already tight diesel supply is going to get a lot tighter."Governments have a very clear understanding that there is a clear link between diesel and GDP, because almost everything that goes into and out of a factory goes using diesel," the director general of Fuels Europe, part of the European Petroleum Refiners Association, told Reuters this week. Europe is not the only one feeling the diesel pinch, however. Middle distillate stocks are on a decline in the United States, too, Reuters' John Kemp wrote in his latest column. Distillate inventories, according to EIA data, have booked weekly declines for 52 of the last 79 weeks, Kemp reported, falling to 112 million barrels last week. The total decline for the last 79 weeks amounts to 67 million barrels. Last week's inventory level was the lowest since 2014 and 20 percent lower than the five-year average from before the pandemic."Diesel is not just a European problem, this is a global problem. It really is," The problem seems to be that diesel stocks were already tight globally when Russia invaded Ukraine and the West responded with sanctions that, although indirectly, targeted its energy industry. In addition to that, according to Vitol's Hardy, there had been a shift in Europe from gasoline to diesel, which has further exacerbated the problem.Then there are the commodity traders who are shunning Russian diesel because of the sanctions as well as payment headaches and transportation challenges as many European ports have banned Russian vessels from docking.TotalEnergies is the latest: the French supermajor has said it will be suspending purchases of Russian diesel "as soon as possible and by the end of 2022 at the latest", the company said, unless it receives other instructions from European governments.Instead of Russian diesel, TotalEnergies said it would switch to other suppliers, notably Saudi Arabia. It will hardly be the only one to look for alternative suppliers. It looks like a hunt for diesel is in the making, if not already fully underway.Meanwhile, the alternative suppliers may not have enough to respond to the spike in demand in short order: Saudi Arabia is already Europe's second-largest diesel supplier after Russia but comparedto its 50-percent share of the EU diesel import market, the Kingdom only has a 12-percent share.Per Kemp's report, Asian diesel inventories are also tighter than usual, meaning all large markets for middle distillates are experiencing a shortage. This is pushing all oil prices higher, Kemp noted in his column but this is only the beginning of a bigger problem.In addition to freight transport, diesel is the fuel used to power mining and agricultural equipment, and it is also used in manufacturing. With prices for the fuel higher, the prices of the end products will also climb higher, fueling the inflation that has turned into a major headache for Europe and the United States.Boosting local diesel production is another option, but according to experts, they would be buying their crude oil at higher prices, and the end product will, yet again be more expensive. What's more, this ramp up of middle distillate production will take time to materialize."Over the next three months, diesel output needs to accelerate significantly, consumption growth must slow, and the market must avoid a significant loss of Russian exports," Kemp wrote. That would be a best-case scenario and if it does not play out, Europe in particular is in for "a severe price spike" that would result in demand depression.
Russia's Transneft caps oil pipeline intake on brimming storage (Reuters) - Russia's Transneft, operator of the world's largest oil pipeline network, has set caps on oil received by it as storage filled up amid weak demand for Russian fuel, hit by Western sanctions, five sources familiar with the matter said on Tuesday. Russian oil exports are still flowing as sanctions imposed over the invasion of Ukraine, which Moscow calls a "special military operation", do not directly target the energy trade. However, difficulties with payments, insurance and shipping as well as curbs on dealing with several Russian oil suppliers forced many regular buyers to shun the market, leaving barrels unsold. Transneft has told several Russian oil firms it would limit intake to its system amid high volumes of stored oil, which affect flexibility and threaten normal operations, said the sources, who spoke on condition of anonymity. The curbs mostly cover oil that has yet to find buyers, while companies that have no difficulty selling cargoes would be allowed to supply all their oil to the system, said two of the sources. All the sources declined to be identified because the matter is sensitive. Transneft did not immediately reply to a Reuters request for comment. More than a dozen cargoes of Urals oil from the March loading plan were cancelled, postponed or replaced amid weak demand, traders said, while Russian firms had to divert extra volumes for export, as domestic refinery runs declined. Russian producers Surgutneftegaz SNGS.MM and Zarubezhneft did not award spot tenders this month. The Urals oil loading plan for April has been increased significantly, while nomination of cargoes for primary buyers was slow, traders said.
Lanka runs out of diesel, faces longest-ever blackout - Diesel was no longer on sale across Sri Lanka on Thursday, crippling transport as the crisis-hit country’s 22 million people endure record-long power blackouts. The South Asian nation is in the grips of its worst economic downturn since independence, sparked by an acute lack of foreign currency to pay for even the most essential imports. Diesel — the main fuel for buses and commercial vehicles — was unavailable at stations across the island, according to officials and media reports. Petrol was on sale but in short supply, forcing motorists to abandon their cars in long queues. ‘We are siphoning off fuel from buses that are in the garage for repairs and using that diesel to operate serviceable vehicles,’ transport minister Dilum Amunugama said. Owners of private buses — which account for two-thirds of the country’s fleet — said they were already out of oil and that even skeleton services may not be possible after Friday. ‘We are still using old stocks of diesel, but if we don’t get supplies by this evening, we will not be able to operate,’ chairman of the private bus operators association Gemunu Wijeratne said. The state electricity monopoly said they would be forced to enforce a 13-hour power cut from Thursday — the longest ever — because they did not have diesel for generators. ‘We are promised new supplies in two days and if that happens, we can reduce the length of power cuts,’ Ceylon Electricity Board chairman MMC Ferdinando told reporters. He said hydro reservoirs, which provide more than a third of electricity demand, were also dangerously low. The lengthy power cuts forced the Colombo Stock Exchange to limit its trading by half to two hours, while many offices asked non-essential staff to stay at home. The electricity rationing also hit mobile phone base stations and affected the quality of calls, operators said, adding that their stand-by generators were also without diesel. The shortages have sparked outrage across Sri Lanka, with local television reporting protests across the country as hundreds of motorists block main roads in several towns. Several state-run hospitals have stopped surgeries as they have run out of essential life-saving medicines, while most have stopped diagnostic tests which require imported chemicals that are in short supply. Colombo imposed a broad import ban in March 2020 in a bid to save foreign currency needed to service its $51 billion in foreign debt. But this has led to widespread shortages of essential goods and sharp price rises. The government has said it is seeking a bailout from the International Monetary Fund while asking for more loans from India and China. Sri Lanka’s predicament was exacerbated by the Covid-19 pandemic, which torpedoed tourism and remittances. Many economists also blame government mismanagement including tax cuts and years of budget deficits.
India justifies buying more Russian discounted oil - - As inflation rises in India, Prime Minister Narendra Modi's government may be set to buy more barrels of discounted Russian oil and revive rupee-rouble trade.India is the world's third-largest consumer and importer of oil, importing about 80 per cent of its oil needs. With Western sanctions imposed on Russia after its attack on Ukraine turning off some European buyers, Moscow is now offering oil at a discounted price to Indian companies. State-owned Indian Oil has reportedly bought three million barrels of Russian oil, while Hindustan Petroleum has ordered two million barrels. Nayara Energy, which is partly owned by Russian oil giant Rosneft, has ordered 1.8 million barrels. The purchase prices are not known, but the Financial Times reported that Russian Urals oil, the country's flagship crude blend, was being offered at a discount of about US$25 to US$30 a barrel. To be sure, the amounts purchased by the three Indian companies make up a drop in India's oil imports bucket. The country is estimated to need about 5.15 million barrels of oil daily this year. Most of India's oil imports come from West Asia, with nearly a quarter from Iraq, followed by Saudi Arabia and the United Arab Emirates. Less than 3 per cent comes from Russia. The Kremlin may be seeking to raise that number. On March 11, according to a Russian government statement, Deputy Prime Minister Alexander Novak told Indian Petroleum Minister Hardeep Singh Puri in a telephone call: "Russia's oil and petroleum product exports to India have approached US$1 billion (S$1.36 billion), and there are clear opportunities to increase this figure." Some of India's state-owned oil companies may welcome the bargain prices. Despite international crude prices surging to more than US$100 a barrel since the invasion, the Indian central government did not revise petrol and diesel prices for over four months, possibly to avoid annoying voters ahead of important state elections. The freeze may have cost state fuel retailers about US$2.25 billion in revenue, according to Moody's.
Accident - Oil spill barriers at Kolkata port after Bangladeshi vessel capsize - Oil spill barriers have been set up around the berth at Kolkata port where a container vessel from Bangladesh had capsized on Thursday, minutes after loading of cargo was completed.Port officials said on Friday that the barriers and other devices to soak oil from the water have been installed to prevent oil from spreading into the water if there is any oil spill. The loading of cargo on the vessel, M/v Marine Trust 1, was completed at 9am. Within 15 minutes, the vessel capsized. Several containers went into the water while many were floating.Port sources said the capsized vessel contained 10 kilolitres of oil. “The vessel’s tank would have been filled up before it set sail,” said an official of Kolkata port. The M/v Marine Trust 1 was to sail from Kolkata for Chittagong on Friday.“The port has taken all precautionary measures. Oil spill boom barriers have been rigged all around the vessel to contain oil spill or spill of any chemical in the berth. Skimmers, pumps , oil soaking pads have been kept ready to pick up oil from water, if detected,” a port spokesperson said.Port officials said the oil boom barriers, made of rubber, go two feet deep into the water. These rubber barriers prevent oil, spilled from the vessel, from spreading into the river.Oil skimmers have been deployed, too. Officials said oil skimmers are mechanical devices that skim the
Uganda Develops Oil Spill Contingency Plan - allAfrica.com — Uganda finally launched its national oil spill contingency plan, detailing its preparedness to respond in the event of an oil spill. The East African nation hopes to produce its first oil in the first quarter of 2025. An oil spill contingency plan is simply a detailed spill response and removal arrangement that addresses 'control, containment and recovery of an oil discharge in quantities that may be harmful to navigable waters or adjoining shorelines,' according to the US Environment Protection Agency (EPA). The elements of an oil spill contingency plan, EPA notes, include; definition of the authorities, responsibilities, and duties of all entities involved in oil removal operations; procedures for early detection and timely notification of an oil discharge; assurance that full resource capability is known and can be committed following a discharge; actions for after discovery and notification of a discharge and procedures to facilitate recovery of damaged areas and enforcement measures. Uganda's oil spill contingency plan highlights the responsibility of licensees and operators for prevention of oil spills and the need for investing in preparedness for response to oil spills even if unlikely within the country's territory and shared water bodies. It provides for protection of human health and the environment from oil spills and clearly defines the three different tiers of preparedness or responses. It also establishes an effective and coordinated national oil spill preparedness and response system, including designating responsible institutions. The plan further provides a system for collaboration on oil spill preparedness and response between licensees and operators, local governments and the central government, and also seeks international assistance when necessary. It also establishes an inventory system for oil spill response resources. This is in form of personnel and equipment, including training of personnel, drills and exercises. The Petroleum Authority of Uganda (PAU) in partnership with the Office of the Prime Minister (OPM), and the National Environment Management Authority (NEMA) have been working together on the plan which was approved in February last year. It is premised on the internationally recognized "people, environment, assets and reputation" priority order (PEAR).
Russia-India: India buys cheap Russian oil; China could be next - There's been a "significant uptick" in Russian oil deliveries bound for India since March after Russia's invasion of Ukraine began — and New Delhi looks set to buy even more cheap oil from Moscow, industry observers say. China, already the largest single buyer of Russian oil, is also widely expected to buy more oil from Russia at deep discounts, they say. This could mean higher crude prices to come. Major oil importing countries such as India and China have been grappling with higher crude prices, which have soared since last year. While oil prices have been volatile in recent weeks, swinging between gains and losses, they are still around 80% higher compared to a year ago. "We believe that China, and to a lesser extent, India will step up to buy heavily discounted Russian crude," This would mark a stark contrast from the rhetoric across major world powers and companies which are eschewing Russian oil. As a result of Russia's unprovoked and unjustified war on Ukraine, the U.S. has hit the rogue country with sanctions on energy, while the U.K. plans to do so by the end of the year. The European Union is also considering whether to do the same. But sanctions would leave a gap in the market with Russia finding itself with excess crude it's unable to sell, analysts said. "Urals crude from Russia is being offered at record discounts, but uptake is limited so far, with Asian oil importers for the most part sticking to traditional suppliers in the Middle East, Latin America and Africa," the International Energy Agency said on March 17. Urals crude is the main oil blend that Russia exports. "As of mid-March, we see the potential for 3 million barrels a day of Russian oil supply to be shut in starting from April, but that could increase if restrictions or public condemnation escalate," the IEA said. A couple of commodity trading firms — such as Glencore and Vitol — were offering discounts of $30 and $25 per barrel respectively two weeks ago for the Urals blend, Ellen Wald, president of Transversal Consulting, told CNBC. Cargoes of Russian crude to India were "fairly infrequent," with 12 million barrels delivered across all of 2021, Smith told CNBC. Kpler said he hasn't seen any deliveries to India from Russia since December. However, since the beginning of March, five cargoes of Russian oil, or about 6 million barrels, have been loaded and are bound for India – set to be discharged in early April, he told CNBC in an email. "This is about half the entire volume discharged last year — a significant uptick," Smith said.
Asia will become the 'default market' for Russian oil, Dan Yergin says -Asia will become the default market for Russian oil as the country tries to find buyers for its energy exports, said Dan Yergin, vice chairman of S&P Global.Major oil importers in Asia like China and India have been pressured by oil prices which have soared since Russia invaded Ukraine in late February. Besides the appeal of cheaper Russian oil, both Beijing and New Delhi have close ties with Moscow.Yergin told CNBC's "Street Signs Asia" on Monday: "It does look like Asia would be the default market for barrels of Russian oil that would have normally gone to Europe."The West has punished Moscow for the invasion economically with the U.S. banning Russian crude, the U.K. planning to do the same and the European Union weighing similar measures.Yergin added, "There's a lot of self sanctioning that's going on that's simply people not picking up oil, banks not providing letters of credit, shippers not showing up and, indeed, people in some ports not receiving Russian oil."That leaves Russia with excess crude that is difficult to sell and that situation is likely to worsen, analysts said. Russia, part of the OPEC+ alliance, is the world's largest exporter of oil to global markets and the second largest crude oil exporter behind Saudi Arabia, according to the International Energy Agency."I would have said five weeks ago Russia's an energy superpower ... I think it's still going to be an important player. But it's going to be a reduced energy power compared to where it was before," Yergin said.Earlier this month, the IEA said Russian crude is being sold at record discounts. A couple of commodity trading firms recently offered discounts of $30 and $25 per barrel for the Urals blend, according to analysts.In contrast, prices for other countries' energy exports have spiked to levels not seen in over a decade. Oil prices are around 80% higher than they were a year ago and have been volatile since the war began. Traditionally, India gets its crude from Iraq, Saudi, Arabia, the United Arab Emirates and Nigeria – but they are all dictating higher prices right now as oil prices soar.
China's Sinopec Bows Out Of Russian Petchem, Gas Projects - China's state-run oil refiner, Sinopec, has paused discussions with Russia about a petrochemical investment and a deal to market Russian gas in China, Reuters sources suggested on Friday. Reuters sources have suggested that the reason for the pause in talks is due to China's wariness over its own companies butting up against Western-levied Russian sanctions. While the petrochemical deal wasn't named, Reuters sources said it was in the site selection process and was supposed to be similar in size to the $10 billion Amur gas chemical complex in Siberia. Amur is a joint venture between Sinopec and Russian Sibur. The new investment in question—which was also a deal with Sibur—was estimated at $500 million for a gas chemical plant. Sinopec reportedly paused the talks when it realized that one of Sibur's minority shareholders and board members, Gennady Timchenko, had been sanctioned by the EU and Britain due to his ties with Russian President Vladimir Putin. Timchenko was also on Novatek's board until Monday, when he resigned. Russia is China's second-largest oil supplier and third-largest gas provider. The Amur project is also in jeopardy, as funding sources in Russia, including from Russia's state-run Sberbank, also find themselves limited due to sanctions. Sibur has denied that a new project with Sinopec similar to Amur was in the works. It did say, however, that Sibur continues to work with Sinopec on the Amur project. "Sinopec is actively participating in the issues of the project's construction management, including equipment supplies, work with suppliers and contractors. We are also jointly working on the issues of project financing," Sibur told Reuters. China's Ministry of Foreign Affairs has recently met with Sinopec, CNPC, and CNOOC—its three energy giants—to review its ties to Russia. Reuters sources have suggested that those companies have been told to tread carefully in its dealings with Russia and to not make any rash moves in buying Russian assets.
Chinese petroleum giant plans to invest $31 billion in oil, gas in 2022 --China Petroleum & Chemical Corp, better known as Sinopec, is planning its highest capital investment in history for 2022 after recording its best profit in a decade, echoing Beijing's call for energy companies to raise production. Sinopec expects to spend 198 billion yuan ($31.10 billion) in 2022, up 18% from a year ago, beating the previous record of 181.7 billion yuan set in 2013, according to a company statement filed to the Shanghai Stocks Exchange on Sunday. It plans to invest 81.5 billion yuan in upstream exploitation, especially the crude oil bases in Shunbei and Tahe fields, and natural gas fields in Sichuan province and the Inner Mongolia region. "Looking ahead in 2022, the market demand for refined oil will continued to recover, and demand for natural gas and petrochemical products will keep growing," Sinopec said in the statement. It also warned of potential impacts of geopolitical challenges and volatile oil prices on the investment and operation at overseas businesses. But the firm did not name any specific project. Reuters reported that Sinopec Group had suspended talks for a major petrochemical investment and a gas marketing venture in Russia, heeding a government call for caution as sanctions mount over the invasion of Ukraine. Brent oil prices have gained 52% so far this year and hit as high as $139 a barrel in early March, stoked by fears of supply disruption in the wake of Russia's invasion of Ukraine. Sinopec recorded its biggest profit in a decade in 2021 on the back of recovering energy demand and oil price increases in the post-COVID era, with net earnings reaching 71.21 billion yuan. It plans to produce 281.2 million barrels of crude oil and 12,567 billion cubic feet of natural gas in 2022, up from its output of 279.76 million barrels and 1,199 billion cubic feet in 2021. Beijing seeks to ensure energy safety in the country amid intensifying geopolitical risks. It wants to keep annual crude oil output at 200 million tonnes and crank up natural gas production to more than 230 billion cubic metres (bcm) by 2025 from 205 bcm in 2021. Crude throughput and production of refined oil products at Sinopec are expected to stay around the same level in 2022 from a year ago, at 258 million tonnes and 147 million tonnes, respectively. But demand for gasoline and diesel are dented in China as more than 2,000 of daily COVID cases have triggered local authorities to impose stringent travel restrictions while manufacturers suspended operations amid supply chain clogs.
Oman's oil output rises 8% as exports jump by 18% – Oman’s daily average production of crude oil exceeded 1mn barrels per day (bpd) mark during the first two months of 2022, up by more than 8 per cent in comparison to daily average output recorded in the same period of last year. Oil output during January – February period increased to 1.03mn bpd compared with 954,300 bpd in the corresponding period of 2021, the data released by National Centre for Statistics and Information (NCSI) showed. The sultanate’s total oil production in the first two months of 2022 grew by 8.2 per cent to 60.9mn barrels compared to 56.3mn barrels in the same period of last year. Of the total production, crude output jumped by 11.5 per cent year-on-year to 48.01mn barrels during January – February period, while condensates output slightly decreased 2.4 per cent to 12.9mn barrels during these two months. Oman’s oil exports grew by more than 18 per cent during January – February period of 2022 to 53.4mn barrels compared with 45.1mn barrels recorded in the corresponding period of 2021. The sultanate’s total oil exports for the full year 2021 had inched up 0.7 per cent to 288.9mn barrels from 287mn barrels in 2020. Exports to China, the biggest buyer of Oman’s crude, accounted for over 87 per cent of the sultanate’s total oil exports during the first two months of this year. Total exports to China surged 21.2 per cent at 46.5mn barrels during January – February period of this year compared to 38.4mn barrels in 2021. On the other hand, exports to India decreased by 7.6 per cent to 5.2mn barrels in the first two months of 2022 from 5.7mn barrels in the same period of 2021. The average price at which Oman sold its crude during first two months of 2022 surged by 63.5 per cent to US$76.7 per barrel against US$46.9 per barrel recorded in the same period of 2021. The highest monthly average price of Oman crude was recorded in January at US$80.3 per barrel, while the average price for February stood at US$73.1 per barrel, the NCSI data showed. With global oil prices continuing to rise amid Russia – Ukraine conflict, Oman crude prices recently rose to their highest level in more than eight years. Oman crude price on Friday stood at US$112.3 per barrel (for May delivery) at the Dubai Mercantile Exchange.
Japan, U.S., U.K. lenders loan Kuwait $1bn to boost oil output - HSBC, JPMorgan also join deal amid turbulent energy markets -- Japan's three biggest banks are teaming up with major U.S. and European lenders to loan $1 billion to help Kuwait increase oil output, seeking to calm energy markets roiled by Russia's invasion of Ukraine.
Russian weekly oil exports drop 26% as buyers look elsewhere — Russia’s oil exports shriveled by more than a quarter in the week March 17-23 compared with the prior week, according to industry data. The country’s average daily shipments reached 495,300 tons, down 26.4% from the week before, according to figures seen by Bloomberg. That’s equivalent to about 3.63 million barrels a day. While the data didn’t indicate any reasons for the change, the sharp decline came as Russia faces a growing movement by many of its usual customers to find alternative energy supplies after the country’s invasion of Ukraine. Only a handful of nations -- including the U.S. and the U.K. -- have imposed explicit bans on imports of Russian oil. Still, many of the country’s traditional customers have undertaken a self-imposed buyers’ strike in response to the war. Major companies from Shell Plc to TotalEnergies SE have said they intend to phase out purchases of crude and fuel from Russia. The decline in exports was at least partly driven by lower volumes from Russia’s ports on the Baltic Sea and in the Asia-Pacific region, according to loadings data. Total oil production over the period was little changed, dropping 0.3% from the week before, the output numbers show. The nation pumped about 11.08 million barrels a day on average in the period, according to Bloomberg calculations. Russia is still able to sell its crude due to price discounts and aims to keep output steady even amid unprecedented economic sanctions, Deputy Prime Minister Alexander Novak said last week. The nation will be able to redirect to Asian markets most of the barrels Europe won’t take, Kremlin spokesman Dmitry Peskov told reporters on Monday. “Undoubtedly, declining requests will be compensated by requests from the east,” Peskov said. “It cannot be ruled out that some volumes will be lost, but in any case the global market is more multi-faceted,” and not centered around Europe, he added.
OPEC+ still sees no need to change supply plan despite Russia crisis— OPEC and its allies signaled that they still see no need to adapt their oil-supply plans even as the Russia-Ukraine conflict threatens the biggest market disruption in decades. “We won’t add resources if the market is balanced, and the resources are in the market,” United Arab Emirates Energy Minister Suhail Al-Mazrouei said Monday at a conference in Dubai. OPEC+ isn’t focused on whether the specific loss of Russian shipments is causing an imbalance, he added. A number of delegates said privately they expect the Organization of Petroleum Exporting Countries and its partners to stick to their longstanding plan and ratify another modest supply increase when they meet on Thursday. The 23-nation coalition led by Saudi Arabia has so far rebuffed pressure to fill in for Russian supplies, which have been shunned by some buyers over the invasion of Ukraine. Riyadh and Abu Dhabi are keen to preserve ties with Moscow, indicating that they see no shortage even as Russian exports slump by a quarter and prices hold near $100 a barrel. If no alterations are made, OPEC+ will ratify the increase of 430,000 barrels a day scheduled for May. With many members struggling to fulfill their planned increases over the past few months and global demand bouncing back from the pandemic, that decision may cause markets to tighten further -- exacerbating the inflationary pressure hitting the world economy.
Russia will 'always' be a part of OPEC+, UAE energy minister says - The United Arab Emirates' energy and infrastructure minister has insisted that Russia will always be a part of OPEC+ even as governments across the globe shun the oil exporter over its war in Ukraine. Speaking to CNBC on Monday, Suhail Al Mazrouei, a former president of the oil alliance, said no other country could match Russia's energy output and argued politics should not distract from the group's efforts to manage energy markets. "Always, Russia is going to be part of that group and we need to respect them," he told Hadley Gamble at the Atlantic Council's sixth annual Global Energy Forum in Dubai. "OPEC+, when they speak to us, they need to speak to us including Russia," he said, referring to the group's negotiations with energy importers. The U.S., Europe and Japan have called on oil-producing nations to do more to tackle record-high prices amid the war in Ukraine and ongoing supply shortages. But, Al Mazrouei said Russian oil would play a vital role in achieving that. The comments come as Western allies express concern that Russian energy imports are indirectly topping up President Vladimir Putin's war chest with oil and gas revenue. "Who can replace Russia today? I cannot think of a country that can in a year, two, three, four or even 10 years replace 10 million barrels. It's not realistic," he said. OPEC+, led by Saudi Arabia and Russia, has the capacity to increase oil output and bring down crude prices, which have jumped to over $100 a barrel. "We are in agreement with their target or their objective of trying to calm the market and balance the market," Al Mazrouei said. "But you don't do it this way. You don't do it by putting sanctions on a hydrocarbon that you cannot replace — unless you want the prices to go high." "They are doing something but expecting the opposite reaction, and it's not going to happen." OPEC and non-OPEC ministers are slated to meet on Thursday via videoconference to determine the next phase of production policy. It comes amid renewed pressure for the influential alliance to boost oil supplies after G-7 energy ministers said OPEC "has a key role to play" in easing market tensions. "We call on oil and gas producing countries to act in a responsible manner and to examine their ability to increase deliveries to international markets particularly where production is not meeting full capacity noting that OPEC has a key role to play," G-7 energy ministers said in a joint statement on March 10. "This will help to ease tensions and note with appreciation announcements already made to this end."
Saudi energy minister says oil alliance OPEC+ will leave politics out of output decisions - Saudi Arabia's energy minister said Tuesday that OPEC+ will keep politics out of its decision-making in favor of the "common good" of stabilizing energy prices. Governments and international organizations around the world have imposed punitive sanctions and severed economic ties with Russia after its invasion of Ukraine, but OPEC — the intergovernmental organization of 13 oil exporting countries — does not appear willing to take action against Russia, a key partner in the wider OPEC+ alliance and itself a major exporter of oil. Speaking to CNBC on Tuesday, Saudi Energy Minister Prince Abdulaziz bin Salman bin Abdulaziz Al Saud said the organization's very existence was dependent on a separation of its mission to stabilize oil prices from other geopolitical factors, even in the event of a widely-condemned invasion. Saudi Arabia and the UAE voted in favor of a U.N. General Assembly resolution earlier this month urging Russia to abandon the invasion and withdraw all troops, and Prince Abdulaziz said there were other forums through which the Kingdom could voice its opinion on Russia's actions, which is in line with the global response. "When it comes to OPEC+ — I would take that privilege of saying I've been at it for 35 years, and I know how we managed to compartmentalize our political differences from what is for the common good of all of us," Prince Abdulaziz told CNBC's Hadley Gamble at the World Government Summit in Dubai on Tuesday. "That culture is seeped into OPEC+, so when we get into that OPEC meeting room, or OPEC building, everybody leaves his politics at the outside door of that building, and that culture has been with us." The energy minister noted that OPEC and OPEC+, which was formed after production cut deals were agreed with non-OPEC countries including Russia, had dealt with various countries embroiled in conflict or acts of aggression throughout its history, including Iraq and Iran. "The reason we have managed to maintain OPEC+ is that we discuss these matters, these issues, in an entirely siloed type of approach whereby we are much more focused on the common good, regardless of the politics," he added.
Saudis may hike oil price to record as war reroutes flows — Saudi Arabia, the largest oil exporter, will likely boost pricing of its main crude variety to a record as the impact of Russia’s invasion of Ukraine reverberates through markets more than a month after the assault. Saudi Aramco may raise the official selling price of its key Arab Light crude by $5 a barrel to Asia for May-loading cargoes, according to the median estimate in a Bloomberg survey of five refiners and traders. That would increase the overall differential to $9.95 above the Oman-Dubai benchmark, which would be the widest since Bloomberg began compiling the data in 2000. Oil soared to the highest since 2008 this quarter as the war in Ukraine lifted prices that had already been boosted by expanding global demand and fast-falling stockpiles. The expected hike in pricing for the key Saudi barrels -- which help to set the tone for other grades from the region -- is likely to come despite a spate of virus lockdowns in China, the top oil importer. Brent futures, the global benchmark, reversed intraday losses to trade near $113 a barrel on Tuesday. In the initial aftermath of the Russian invasion, prices rallied close to $140, the highest since 2008. Official selling prices, or OSPs, are the premiums or discounts to regional benchmarks for barrels, and they determine how much buyers with long-term contracts pay for cargoes. The differentials can indicate the strength or weakness of underlying demand. The biggest conflict in Europe since World War II has dented western demand for Russian oil, as well as from Japan and South Korea, boosting prospects for Middle Eastern suppliers like Saudi Arabia. At the same time, some buyers in Asia, especially India and China, have moved to take more Russian flows. As Saudi Aramco prepares to announce selling prices, Riyadh is set to join other producers including Russia at an OPEC+ meeting this week to set production policy for the alliance. Ahead of the gathering on Thursday, members have signaled they still see no need to adapt supply plans.
Saudi Arabia Hikes Oil Prices Despite Record Discounts For Russian Crude --Russia’s invasion of Ukraine has simultaneously both eased and complicated the task of Middle Eastern national oil companies. On the one hand, it had pushed the backwardation in the Brent even steeper, making any flows from Europe to Asia uneconomic, hence safeguarding the usual outlets for Saudi Arabia or Iraq. Simultaneously, the risk of seeing Russian supply sanctioned led to oil prices shooting up above $120 per barrel, making the outright basis of March cargoes remarkably profitable. On the other hand, the likes of Saudi Aramco and SOMO had to increase prices, in fact, they could do it even more substantially as arbitrage flows would be most probably weak in April 2022, however, this could antagonize even further all the Asian buyers that keep on fretting about unprecedentedly high prices. So there was a very fine line to walk, especially considering that the specter of an impending Iranian nuclear deal never really left the decision room. Chart 1. Saudi Aramco’s Official Selling Prices for Asian Cargoes (vs Oman/Dubai average). For the second time in a row, Saudi Aramco hiked all its official selling prices, regardless of the respective continent. Asia-bound April OSPs were increased by $2.15-2.70 per barrel, coming on the back of record-high Dubai backwardation as the M1-M3 Dubai spread rose above $4 per barrel, i.e. almost $2 per barrel higher than last month. The main Saudi export streams – Light, Medium, and Heavy – all saw the same $2.15 per barrel jump, breaking previous all-time highs. Whilst Saudi Arabia, in general, is still some way off bringing aggregate crude production back to pre-pandemic levels, its exports to Asia have already moved in there, hovering around 5.7 million b/d this month.Looking forward, with the Dubai forward structure steepening further, the May 2022 OSPs will inevitably see another month-on-month hike. For Asian countries that, unlike India and to a lesser extent China, are not willing to pick up heavily discounted Russian barrels, spring will bring quite the refining margins as they are compelled by the market to continue buying Middle Eastern crude.
Oil Futures Fall on Shanghai Lockdown, Kazakhstan Exports-- Oil futures fell sharply in early trade Monday, with U.S. and international crude benchmarks trading 5% lower after China announced new quarantine restrictions in Shanghai, the country's financial and business hub, as health authorities there struggle to contain a resurgence of the COVID-19 virus, underscoring ongoing risks for demand growth in a country that is the world's largest importer of crude oil. Near 7:30 a.m. EST, NYMEX May West Texas Intermediate futures plunged below $108 barrel (bbl), trading $5.61 bbl lower, and ICE May Brent futures retreated $5.32 to $114.23 bbl. NYMEX April RBOB futures plummeted 15.5 cents or 5% to $3.3150 gallon, and April ULSD futures dropped back 21.47 cents to $3.8999 gallon. Half of Shanghai, a city of 25 million people, will be locked down between today (3/28) and Friday (4/1), and the other half between April 1st and 5th, with the Huangpu River, which passes through the city, serving as the dividing line as authorities attempt to test the entire megapolis for COVID-19. The city has seen a sharp increase in daily COVID-19 infections over the past two weeks, pressuring mobility and business activity. Peak road congestion in Shanghai was down 36% on Sunday from a year earlier, according to private data, while in Beijing, which is not yet subject to restrictions, traffic levels were 25% lower, year-on-year. China has imposed more quarantine measures over the past two weeks than at any other point in the pandemic as it battles the fast-spreading strain of omicron. Despite the chatter over new sanctions, the European Union did not announce a ban on the purchase of Russian oil during talks with world powers in Europe last week. Countries that are less dependent on Russian oil, such as Sweden, Ireland, and the Czech Republic, view an oil ban as an option while some of the bloc's largest importers, like Germany and Netherlands, remain opposed to the idea. Further pressuring the complex, the operator of Caspian Pipeline Consortium on Friday (3/25) partially restarted flows after Russia throttled capacity on a major pipeline carrying oil from Kazakhstan oilfields to the export ports on the Black Sea. It remains unclear how much crude is currently being offloaded at the port of Novorossiysk. The CPC pipeline has a 1.4 million barrels per day (bpd) throughput capacity and carries crude oil from oilfields in central Asia to export terminals on the Black Sea. A prolonged disruption of the CPC pipeline could have forced Kazakhstan to shutter producing wells because of limited storage capacity that could have inflicted long-lasting damage to the country's production capacity. Kazakhstan Energy Minister Bulat Aqchulaqov indicated on Friday that one of the three moorings at the site sustained little damage from an alleged storm and partially restarted operations. Last week, Russian officials argued it could take up to six weeks to fix damaged infrastructure at the port that processes up to 90% of Kazakhstan oil exports.
Oil slides more than 7% as Shanghai lockdown prompts demand fears -- Oil declined more than 8% at the lows of the day on Monday as concerns over new lockdowns in China and the potential impact on demand sent prices tumbling. West Texas Intermediate crude futures, the U.S. oil benchmark, slipped 8.25% to trade at $104.50 per barrel. International benchmark Brent crude traded 7.4% lower at $111.61 per barrel. However, both contracts recovered some losses during afternoon trading on Wall Street. WTI ended the day at $105.96 for a loss of about 7%. Brent settled 6.77% lower at $112.48 per barrel. "Today's price slide is attributable first and foremost to concerns about demand now that the Chinese metropolis of Shanghai has entered into a partial lockdown," Commerzbank said Monday in a note to clients. China is the world's largest oil importer, so any slowdown in demand will weigh on prices. The nation uses around 15 million barrels per day, and imported 10.3 million barrels per day in 2021, "The magnitude of [the] sell-off reflects fears that Covid lockdowns in China could spread, significantly impacting on demand at a time when the oil market is trying to find alternatives to Russian oil supplies," Another round of peace talks between Ukraine and Russia is slated for this week, which Commerzbank said was also contributing to oil's slide. Crude is coming off its first positive week in the last three, with WTI and Brent ending the week 8.79% and 10.28% higher, respectively. The oil market has been marked by heightened volatility since Russia's invasion of Ukraine at the end of February. Prices shot above $100 per barrel the day of the invasion and kept climbing. WTI topped $130, rising to its highest level since 2008, while Brent almost reached $140. But prices didn't remain there for long, and on March 14 WTI traded under $100. The volatile action reflects, in part, the many unknowns around the future of Russia's oil. The International Energy Agency warned that three million barrels per day of Russian oil output is at risk come April as Western sanctions prompt buyers to shun the nation's oil. But analysts have noted that Russian oil is still finding buyers for the time being, especially from India. Traders say the recent volatility also stems from non-energy market participants using crude as an inflation hedge. In recent weeks, open interest has decreased, making the market susceptible to even larger intraday swings. Despite Monday's slide, oil held above $100. "We still expect that Brent crude will continue to rally as the market continues to price in a rise in energy supply risk amid immense supply disruptions,"
Oil Demand Showing Signs of Weakness - Global oil demand has been showing signs of weakness in March and this weakness is expected to persist through April and May due to the impact of high oil prices, the negative effects of sanctions and war in Russia and Ukraine, and the consequences of increasing lockdowns in China. That’s according to Rystad Energy’s Senior Vice President of Analysis, Claudio Galimberti, who noted that, amid the weakening in oil demand, the supply of oil products remains tight. “The ICE Gasoil-Brent crack in Europe has been trading around unprecedented levels of $25-30 per barrel for the past couple of weeks, higher than even the memorable gasoil crack spike in 2008,” Galimberti said in a Rystad market note sent to Rigzone late Monday. “Russia currently exports around 800,000 barrels per day of diesel/gasoil to Europe. As Europe imports between 1.6 to 2.0 million barrels per day of diesel/gasoil, an effective ban on Russia’s oil product exports could increase the gasoil crack further,” Galimberti added. In the note, Galimberti highlighted that road transport demand has been weakening throughout March. The Rystad analyst outlined that this was driven primarily by OECD countries and less so by China, at least so far, despite news of short-lived, Covid-related lockdowns in some provinces over the past couple of months. “However, Shanghai’s two-week-long, intermittent lockdown launched on 27 March will be amongst the most significant in China thus far this year, due to the size of the population involved (more than 25 million people), with the potential to lower demand by up to 200,000 barrels per day for the duration of the restrictions,” Galimberti said. “Shanghai’s lockdown will give us an indication on the success of China’s zero-Covid policy and whether it will be maintained or abandoned,” Galimberti added. According to the latest data from the World Health Organization (WHO), confirmed Covid-19 cases in China have dropped for the past three consecutive weeks, coming in at 46,962 in the week commencing March 21. Deaths have dropped for the last two consecutive weeks and stood at 1,453 in the week commencing March 21, WHO data showed. As of March 28, 6.23pm CEST, there have been 480.1 million confirmed cases of Covid-19 globally, with 6.1 million deaths, according to the latest WHO figures. As of March 27, a total of 11 billion vaccine doses had been administered, WHO data showed.
Oil Down Sharply on Russia De-Escalation -Oil slumped as Moscow said it would sharply cut military operations near the Ukrainian capital of Kyiv, after negotiators from Ukraine and Russia wrapped up discussions in Turkey aimed at de-escalating the war. West Texas Intermediate erased earlier gains to trade down as much as 5% in New York, before then paring some of those losses. Russia’s defense minister said his country will cut military activity near Kyiv and Chernihiv. The country’s negotiator said a meeting between Presidents Putin and Zelenskiy is possible, according to Tass. Kyiv said before the meeting it is hoping to secure a cease-fire and at least temporarily halt the 34-day war in Ukraine, but heading into the talks both sides differed vastly on disputed positions. Oil has been buffeted by wild swings in recent weeks as liquidity dwindles in the face of huge market volatility. On Monday, West Texas Intermediate lost almost $8 a barrel, while Tuesday’s enormous headline-driven price swings are yet another indication of the liquidity issues currently facing crude.
Oil Trims Losses as Market Assesses Progress in Ukraine-- Oil futures nearest delivery clawed back most of their steep early losses Tuesday, although all contracts settled the session lower amid signs of de-escalation in the Ukraine crisis after Russian officials indicated they are ready to pull back troops from the capital city of Kyiv to allow for diplomatic talks to take place as Moscow attempts a shift in strategy to claim full control over eastern Ukraine. Any comments from Russian officials should be met with a healthy dose of skepticism these days, warned U.S. Secretary of State Antony Blinken, referring to remarks from a senior Russian official who suggested Moscow is now ready to de-escalate the conflict in Ukraine. Wire services in Russia quoted Defense Minister Sergei Shoigu saying the first phase of Russia's military operations has been completed and Russian troops would now focus solely on "liberating" separatist republics of Donbass and Lugansk. Traders quickly judged de-escalation around Kyiv and Chernihiv, key cities in central Ukraine, would not automatically mean the end to the conflict that rattled commodity markets in recent weeks. Russian President Vladimir Putin is reportedly changing strategy after failing to oust Ukrainian President Volodymyr Zelensky, and instead of taking full control of the country is now seeking to divide the sovereign nation into two parts -- an unacceptable condition for Ukraine. NYMEX April ULSD futures declined 6.73 cents to $3.7161 gallon, modestly narrowing the prompt spread to a still wide 32.69 cents gallon. April RBOB futures softened to $3.2033 gallon, down 1.55 cents from the prior session, and the May contract widened its discount to April delivery to 2.66 cents gallon. The April RBOB and ULSD futures contracts expire alongside May Brent Thursday afternoon. The conflict has already led to some loss of Russian oil exports, according to private data, as Western traders and banks refuse to deal directly with Russian oil shipments. Still, it will take around two weeks until there is concrete evidence that quantifies the lost shipments and that the Organization of the Petroleum Exporting Countries would want to assess that data. There have also been reports suggesting Russia turned to selling crude at steep discounts in off-market transactions that allow buyers to shield their identities from the stigma of trading with Russian firms. DTN Refined Fuels Demand data revealed that gasoline demand in the U.S. increased by 0.8% in the reviewed week and now stands roughly in line with demand levels from the same week in 2019. With most U.S. states having rapidly exited pandemic restrictions and traffic volumes seasonally stronger heading into the summer driving season, gasoline consumption is likely to remain near or above pre-pandemic levels over the next few months. Distillate demand however continued to tumble lower, falling 5.3% during the week ended March 25 after eroding 4.5% in the prior week. Total U.S. diesel demand was down 1% year-on-year for the week and down 1.1% from the same week in 2019.
Oil Falls as no Cease-Fire Agreement was Reached | Rigzone - Oil slipped as talks between Russia and Ukraine failed to reach an agreement on a cease-fire, while the U.S. cautioned against declaring progress as they await signs of de-escalation. Futures in New York fell 1.6% to settle around $104 a barrel on Tuesday. Earlier in the session, West Texas Intermediate futures sank more than 7% and briefly traded under $100 after Moscow said it would sharply cut military operations near Kyiv and signaled a willingness to consider a presidential meeting between Vladimir Putin and Volodymyr Zelenskiy. “We are still in a $100 environment, no question,” said Paul Sankey of Sankey Research on Bloomberg Television. China’s continuing lockdowns are also relieving some pressure, but markets remain volatile, he said. “China is taking heat out of the market, but if the heat comes back, that adds $10” a barrel. Crude has largely traded above $100 a barrel since Moscow invaded Ukraine. Ensuing sanctions against Russia have caused extreme price gyrations in the oil market, leaving investors wary of trading. For the month of March, WTI has fluctuated on average over $9 per session. “Fundamental traders and investors have taken their chips off the table in crude due to extremely high volatility, leaving the primary players in the market to be traders looking to hedge geopolitical risks,” said Rebecca Babin, senior energy trader at CIBC Private Wealth Management. Following the conclusion of talks between Russian and Ukrainian negotiators in Istanbul, U.S. Secretary of State Antony Blinkin expressed skepticism about Russia’s promise to de-escalate its military activities around Kyiv. “There is what Russia says and there is what Russia does,” he told reporters. WTI for May delivery fell $1.72 to settle at $104.24 in New York. Brent for May settlement lost $2.25 to close at $110.23 a barrel. Elsewhere, China continues to grapple with its biggest Covid outbreak since the pandemic began. The latest restrictions in Shanghai could lower oil demand by as much as 200,000 barrels a day for the duration of the restrictions, consultant Rystad Energy said in a report.
Oil Rallies on Big Drop in US Inventory -- As the U.S. dollar erodes against a basket of foreign currencies to its lowest trade since March 17, oil futures nearest delivery on the New York Mercantile Exchange and Brent crude on the Intercontinental Exchange rallied in pre-inventory trade Wednesday after preliminary industry data from the American Petroleum Institute showed nationwide petroleum stockpiles decreased by a larger-than-expected margin during the week-ended March 25, while mixed signals from the Russian military on the ground in Ukraine fueled uncertainty over the next stage in the ongoing conflict.API late Tuesday reported U.S. commercial crude oil stocks plummeted 3 million bbl last week, three times calls for a 1 million bbl drop. Inventories at the NYMEX delivery point for West Texas Intermediate in Cushing, Oklahoma, experienced a 1.061 million bbl decline. Cushing stockpiles currently stand at 25.2 million bbl, down from 37.3 million bbl since the end of 2021.Gasoline stockpiles dropped 1.357 million bbl last week versus an expected 1.3 million bbl draw, while distillate supplies decreased 215,000 bbl, falling short of calls for a 1.2 million bbl draw.Wednesday's move higher is also underpinned by a rapidly declining U.S. dollar that slumped 0.4% in index trading to trade at a 97.855 two-week low. Greenback's weakness comes ahead of the release of March employment report from the Automatic Data Processing system that is expected to show U.S. businesses added 438,000 new jobs from February to March after a 475,000 gain the previous month. U.S. unemployment claims have been steadily declining in recent weeks to hit the lowest level since 1969 on March 18.Near 7:45 AM ET, NYMEX May West Texas Intermediate futures jumped $2.59 to $106.85 bbl, and ICE May Brent futures advanced $2.53 to $112.76 bbl. Next-month June Brent futures narrowed its discount to the May contract $2.53 bbl ahead of Thursday's expiration. NYMEX April ULSD futures gained 10.39 cents to $3.8200 gallon, widening the prompt spread to 34.75 cents gallon. April RBOB futures strengthened to $3.2729 gallon, up 6.96 cents from the prior session, and the May contract widened its discount to April delivery to 3 cents gallon. The April RBOB and ULSD futures contracts expire alongside May Brent Thursday afternoon.
Oil jumps 4% on tight supply, prospects of new Russia sanctions -Oil prices gained over 2% on Wednesday as another U.S. crude stock drawdown indicated tight supplies and investors worried about possible new Western sanctions against Russia. Brent futures climbed 2.9% to end the day at $113.35 per barrel. U.S. West Texas Intermediate (WTI) crude settled 3.4%, or $3.58, higher at $107.82 per barrel. U.S. crude stockpiles fell by a bigger-than-expected 3.4 million barrels last week, cutting inventories in the world's top consumer to 410 million barrels, their lowest since September 2018, government data showed. "U.S. crude inventories have shown another draw despite production ticking higher and yet one more solid SPR (Strategic Petroleum Reserve) release into commercial inventories," After seven weeks of holding steady, U.S. crude output inched up 100,000 barrels per day (bpd) last week to 11.7 million bpd, while crude stocks in SPR fell to their lowest since May 2002, and Gulf Coast refinery utilization rose to its highest since January 2020. Price gains were limited by surprise builds in U.S. gasoline and distillate stocks last week and lower demand for both products, traders said. In addition to the bullish data, prices reflected that "the oil market, at least, has a strong degree of scepticism about any 'progress'" in peace talks between Russia and Ukraine Commonwealth Bank analyst Tobin Gorey said in a note. Russian attacks continued a day after crude prices slid as Russia promised to scale down military operations around Kyiv. The United States and its allies plan new sanctions on more sectors of Russia's economy, including military supply chains. "We would see an additional 1 million barrels per day of Russian production at risk if relations with Europe worsen and an oil embargo is put in place, although we still see this as unlikely," consultancy JBC Energy said in a note. The Kremlin indicated that all of Russia's energy and commodity exports could be priced in roubles, as President Vladimir Putin seeks to make the West feel pain for the sanctions. In response to possible Russian gas supply cuts, Germany triggered an emergency plan to manage gas supplies. Other European countries also took steps to conserve gas. Keeping the market tight, major oil producers are likely to stick to their scheduled output target increase of about 432,000 bpd when OPEC+ - the Organization of the Petroleum Exporting Countries and allies including Russia - meets on Thursday, several sources close to the group said. But weakening demand in China is pressuring oil prices, as the country has tightened mobility restrictions and COVID-19-related lockdowns in multiple cities including the financial hub of Shanghai. U.S. data showed private employers maintained a brisk pace of hiring in March, leading investors to worry that a possible rapid rise in interest rates could hurt economic growth and fuel demand.
OPEC+ sticks to modest oil output hike as U.S. considers unprecedented release of reserves - Oil producer group OPEC+ on Thursday decided to stick to its strategy of gradually reopening the taps following reports the U.S. is considering the largest ever draw from its emergency oil reserve. The influential energy alliance of OPEC and non-OPEC partners swiftly agreed to raise its output targets by 432,000 barrels per day from May 1. Energy analysts had widely expected OPEC+ to rubber-stamp another modest monthly increase despite sustained pressure from top consumers calling for the group to pump more to cool soaring oil prices and aid the economic recovery. Oil prices have rallied to a near all-time high on concerns about Russian supply disruptions after the U.S. and international allies imposed a barrage of economic measures against the Kremlin as a result of its unprovoked onslaught in Ukraine. To be sure, Russia is the world's third-largest oil producer, behind the U.S. and Saudi Arabia, and the world's largest exporter of crude to global markets. It is also a major producer and exporter of natural gas. It is against this backdrop that the U.S. is considering a plan to cool soaring crude prices by releasing up to 180 million barrels from the country's strategic petroleum reserve, Reuters reported Wednesday, citing four unnamed sources. President Joe Biden is expected to deliver remarks later on Thursday. The move would mark the third time the U.S. has tapped its SPR in six months and the second since Russia's invasion of Ukraine on Feb. 24. Oil prices dropped sharply on the news. International benchmark Brent crude futures traded 5% lower at $107.69 a barrel Thursday afternoon in London, while U.S. West Texas Intermediate futures fell 5.4% to $101.96.
Oil Futures Fall 5% as Biden considers Huge SPR Release - Reversing Wednesday's advance, oil futures fell more than 5% Thursday morning in reaction to reports suggesting the Biden administration is considering the release of up to 180 million bbl of crude oil from the Strategic Petroleum Reserve over the next six months in a bid to lower oil prices that rallied to 14-year highs in the aftermath of the invasion of Ukraine. U.S. President Joe Biden's planned SPR release would be the largest draw from U.S. emergency reserves in history, with the plan to draw 1 million bpd of SPR crude to add to global oil supply. The SPR currently holds roughly 568 million bbl of crude oil. While details are not fully known, Washington is reportedly coordinating the measure with other countries that are part of the Organization for Economic Cooperation and Development, including Japan and the United Kingdom to join the effort. The United States and allies have sought to bring down prices with strategic reserves previously, but "the cooling effect" proved to be short-lived. Members of the OECD group agreed to release 60 million bbl on March 1, but Brent crude rose more than 7% that day. Goldman Sachs commodity research said this morning the reported SPR release might be different due to the sheer size of that release that would help the global market to rebalance in 2022 but would not resolve its structural deficit. The market's deficit is estimated between 1.5 and 2 million bpd currently -- a trend that is likely to accelerate due to the partial loss of Russian oil exports. For reference, International Energy Agency forecasted Russian oil production could plunge by 3 million bpd beginning in April as Western traders and banks shun from dealing with Russian oil cargoes. Russian pipeline operator Transneft has reportedly restricted oil intake into its network amid rapid buildup in storage levels. According to various estimates, Russian oil flows have fallen by 1.5 million bpd since the Feb. 24th invasion of Ukraine. In early trade, NYMEX May West Texas Intermediate futures plunged nearly $6 to $101.85 bbl, and ICE May Brent futures fell a like amount to $107.55 bbl ahead of expiration this afternoon. June Brent futures narrowed its discount to the May contract to $1.40 bbl in the backwardated market. NYMEX April ULSD futures plummeted 13.35 cents to $3.6750 gallon, but still holds a wide 33.7 cents gallon premium over the May contract ahead of its expiration Thursday afternoon. April RBOB futures declined to $3.1925 gallon, down about 13.25 cents from the prior session ahead of expiration Thursday afternoon, with the May contract trading at a 2.8-cent discount to the expiring contract.
Oil Slumps 7% as U.S. Plans Record Crude Reserve Release (Reuters) -U.S. oil prices fell 7% to close just above $100 on Thursday as President Joe Biden announced the largest ever release from the U.S. Strategic Petroleum Reserve and called on oil companies to increase drilling to boost supply. U.S. West Texas Intermediate futures for May delivery settled down $7.54, or 7%, at $100.28 a barrel, after touching a low of $99.66. Brent crude futures for May, which expired on Thursday, closed down $5.54, or 4.8%, at $107.91 a barrel. The more actively traded June futures were down 5.6% at $105.16, after falling by $7 earlier in the session. Both benchmarks posted their highest quarterly percentage gains since the second quarter of 2020, with Brent soaring 38% and WTI gaining 34%, boosted mainly after Russia's Feb. 24 invasion of Ukraine which Moscow calls a "special operation." "This is a market where every barrel counts and (the SPR release) is a significant volume of oil to be put on the market for an extended period of time," said John Kilduff, a partner at Again Capital LLC. Biden's 180 million-barrel release is equivalent to about two days of global demand, and marks the third time Washington has tapped the SPR in the past six months. Starting in May, the United States will release 1 million barrels per day of crude oil for six months from the Strategic Petroleum Reserve, Biden said, adding that 30 million to 50 million barrels of oil could be released in addition by allies and partners. "We need to increase supply... Oil firms sitting on idle wells or unused leases will have to start producing or pay for their inaction" he said. Other members of the International Energy Agency may also release barrels to offset lost Russian exports after that nation was hit with heavy sanctions for its invasion of Ukraine. IEA member countries are set to meet on Friday at 1200 GMT to decide on a potential collective oil release, a spokesperson for New Zealand's energy minister said. Goldman Sachs analysts said the move would help the oil market to rebalance in 2022 but was not a permanent fix.
Crude Oil Falls on Global Manufacturing Slowdown, Strategic Petroleum Reserve Release -- West Texas Intermediate futures on the New York Mercantile Exchange and Brent crude on the Intercontinental Exchange extended losses into a second session Friday. The moves followed the Biden administration's plan to release a record 180 million barrels (bbl) of crude oil from the Strategic Petroleum Reserve over a six-month period, easing some concern over the loss of Russian barrels on the global oil market. The unprecedented government intervention coincided with a sharp slowdown in manufacturing activity across major global economies amid the fallout from the Ukrainian war and new COVID-19 breakouts and lockdowns in China. Global manufacturers reported slower growth and far more pessimistic expectations for factory activity in March than in any other month this year, as the war in Ukraine weighed on export demand and led to renewed supply bottlenecks, according to industry surveys. In the United States and European Union, manufacturing activity fell to the lowest level since September 2020, when the Delta variant of coronavirus disrupted much of the global economy. "Business optimism in the goods producing sector has collapsed to a level indicative of manufacturing output declining in the second quarter and adding to the risk of the economy sliding into a new recession," said Chris Williamson, chief business economist at S&P Global Platts. European industries in particular have been hard hit with soaring natural gas prices and disrupted trade flows with Ukraine and Russia. For reference, high power prices resulting from the record run in gas prices have taken 900,000 tons of aluminum and 700,000 tons of zinc smelting capacity offline in Europe, according to Goldman Sachs. "Exploding energy prices, but above all a possible gas embargo, would hit energy-intensive industry -- the mother of the industrial network -- hard," Michael Vassiliadis, president of Germany's IGBCE chemical workers union said in a statement. "The consequences would not only be reduced work hours and job losses, but also the rapid collapse of the industrial production chains in Europe -- with worldwide consequences." Faced with prospects of economic slowdown, European countries that are part of the International Energy Agency today agreed to a release of oil from emergency reserves, with details of the plan to be announced early next week. The announcement by the IEA comes atop of a planned U.S. release of up to 180 million bbl of crude oil spread out over a period of six months at 1 million bpd starting in May, the biggest-ever drawdown from the country's emergency stocks which now hold 568 million bbl of crude oil. On the session, NYMEX May West Texas Intermediate futures fell $1.01 to $99.27 per bbl, and the ICE June Brent contract declined $0.32 to $104.39 per bbl. NYMEX May ULSD futures advanced 6.31 cents to $3.4240 gallon, and the May RBOB contract edged up 0.26 cent to $3.1535 gallon.
White House uses oil reserve to place a giant spread trade: Kemp (Reuters) - U.S. President Joe Biden has promised to make an average of 1 million barrels per day of crude available from the Strategic Petroleum Reserve (SPR) for the next six months after consulting with other IEA members. The unprecedented release of 180 million barrels is intended to ease concerns about supply and curb upward pressure on prices following Russia’s invasion of Ukraine and the imposition of sanctions in response.The inventory release is meant “to serve as a bridge until the end of the year when domestic production ramps up,” according to a statement issued by the White House on Thursday.Sale revenues will be used to restock the SPR in future years, ensuring it remains available to respond to future emergencies (“President Biden’s plan to respond to Putin’s price hike at the pump”, White House, March 31).The aim is to ease upward pressure on spot prices by increasing the amount of oil immediately available, while supporting long-dated futures contracts and encouraging more drilling by pledging to buy back the oil later.In effect, the White House has committed itself to a giant 180 million barrel spread trade to relieve anxiety about a sudden reduction in oil exports from Russia as a result of the war or sanctions. In recent weeks, traders have been trying to “buy” the calendar spread, purchasing futures contracts with nearby delivery dates and (in some cases) selling contracts with longer to delivery.As a result, prices for near-dated futures have risen much faster than for those expiring later in 2022 and 2023, as traders anticipate a sudden shortage of crude, heavy fuel oil and diesel exports from Russia.Brent futures for deliveries in June 2022 had climbed by almost $41 per barrel (54%) by March 25 compared with the end of 2021, while futures for deliveries in December 2023 had risen by just $19 (27%) over the same period. Brent’s six-month calendar spread reached a record backwardation of more than $21 by early March and was still trading in a backwardation of more than $18 at the end of last week.Intense upward pressure on near-dated futures contracts has rippled along the supply chain and helped drive up retail prices for gasoline and diesel (https://tmsnrt.rs/3iYeHmd).The White House plan in effect uses the SPR to take the other side of the trade, "selling" the spread by selling physical oil into the spot market with a promise to buy it back later.The main impact should therefore be on the calendar spreads themselves mostly via prices of futures contracts nearest to delivery.Following the SPR announcement, Brent’s six-month calendar spread has already narrowed to a backwardation of $9, still historically high, but the lowest since before Russia’s invasion in late February.The spread between futures contracts for June and July has halved to less than $2 per barrel from a peak of more than $4 early last month. Pledged SPR sales should reduce anxiety about a physical shortage of petroleum and relieve some of the recent illiquidity in futures markets by creating a de facto willing counterparty to traders betting on higher oil prices.
Oil prices ease as nations agree to tap reserves - Oil settled lower on Friday as members of the International Energy Agency (IEA) agreed to join in the largest-ever United States oil reserves release. Both Brent and US crude benchmarks settled down around 13 percent in their biggest weekly falls in two years after US President Joe Biden announced the release on Thursday. Brent crude futures were down 32 cents, or 0.3 percent, at $104.39 a barrel. US West Texas Intermediate (WTI) crude futures fell $1.01, or 1 percent, at $99.27. Biden announced a release of one million barrels per day (bpd) of crude oil for six months from May, which at 180 million barrels is the largest release ever from the US Strategic Petroleum Reserve (SPR). Member countries of the IEA did not agree Friday on volumes or the commitments of each country at their emergency meeting, said Hidechika Koizumi, director of the international affairs division at Japan’s Ministry of Economy, Trade and Industry. He added that additional details could be known “within next week or so.” OPEC+, which includes the Organization of the Petroleum Exporting Countries and allies including Russia, on Thursday stuck with plans for an increase of 432,000 bpd to their May output target despite Western pressure to add more. US energy firms last week added oil and natural gas rigs for a second week in a row but growth in the rig count remains slow as drillers continue to return cash to shareholders from high crude prices rather than boost production. “The looming flood of US barrels does not change the fact that the market will struggle to find enough supply in the coming months,” PVM analyst Stephen Brennock said. “The US release pales in comparison to expectations that three million bpd of Russian oil will be shut in as sanctions bite and buyers spurn purchases.” In a bearish signal for demand, China’s commercial hub of Shanghai ground to a halt on Friday after the government locked down most of the city’s 26 million residents, aiming to stop the spread of COVID-19. JPMorgan said in a note that it had kept its price forecasts unchanged at $114 a barrel for the second quarter and $101 a barrel in the second half of this year. “Crucially, we recognize that a release of oil inventories is not a persistent source of supply, and if stranded Russian barrels average more than 1 million bpd next year, this will leave 2023 in a deep deficit, rendering our $98 a barrel price forecast for the year too low,” the bank said.
Oil Heads for Big Weekly Drop as Biden Seeks to Cool Pump Prices-- Oil is poised for the biggest weekly loss in almost two years after the Biden administration ordered an unprecedented release of strategic U.S. reserves to tame rampant prices. West Texas Intermediate futures fluctuated near $100 a barrel on Friday, and are down around 12% for the week. The U.S. plans to release 1 million barrels a day for six months, although analysts warned any reprieve would be short-lived. The news filtered into the market early on Thursday, just before the OPEC+ alliance gathered to ratify a modest increase in supply for May. Russia’s war in Ukraine has roiled global commodity markets and driven up the price of everything from food to fuels, challenging governments seeking to encourage economic growth after the pandemic. It’s led to tumultuous trading in the oil market, with wild swings during sessions throughout March.President Joe Biden blamed a spike in gasoline prices this year on his Russian counterpart Vladimir Putin and the invasion of Ukraine, calling it “Putin’s price hike.” He also criticized U.S. oil companies that have been reluctant to boost production. The cost of retail gasoline at the pump was already high prior to the invasion, but the war has turbocharged prices worldwide.The market also faced pressure this week from concerns about Chinese demand as the world’s biggest oil importer implements a series of lockdowns to curb a virus resurgence. Those curbs are starting to have an impact on the economy, with manufacturing activity contracting in March.
Oil Incurs Massive Weekly Loss As Biden Drawdown Increasingly Viewed As Futile - U.S. president Joe Biden's latest planned release of emergency strategic reserves to combat high oil prices at the pump was said to have contributed on Friday to the commodity posting its biggest weekly loss in over 10 years, along with nations belonging to the International Energy Agency agreeing to release another round from stockpiles. Member countries of the IEA did not agree on volumes or commitments at an emergency meeting on Friday, but additional details could be revealed "within the next week or so, according to Hidechika Koizumi, director of the international affairs division at Japan's Ministry of Economy, Trade and Industry. Brent declined 32 cents at $104.39 per barrel, while West Texas Intermediate fell $1.01 at $99.27; both benchmarks for the week settled down around 13 percent. The market was also under pressure Friday as WTI fell below its 50-day moving average for the first time since early January (Brent approached toward that level, but only briefly). More bad news for traders came in the form of manufacturing activity in China in March reportedly taking a hit from the series of lockdowns imposed by governments to curb a resurgence of Covid-19. While Biden's latest stockpile release is making headlines, analysts insist that like his previous releases, the amount of oil released compared to the amount lost to high demand and the Russia/Ukraine war is minuscule and doubtful to Key Bunker Prices Stephen Brennock, senior analyst at PVM, said, "The looming flood of U.S. barrels does not change the fact that the market will struggle to find enough supply in the coming months. "The U.S. release pales in comparison to expectations that 3 million barrels per day [bpd] of Russian oil will be shut in as sanctions bite and buyers spurn purchases." JP Morgan agreed, and on Friday stated in a note, "Crucially, we recognize that a release of oil inventories is not a persistent source of supply, and if stranded Russian barrels average more than 1 million bpd next year, this will leave 2023 in a deep deficit, rendering our $98 a barrel price forecast for the year too low."
U.S., Israel and Arab states to expand cooperation in unprecedented meeting — The foreign ministers of the United States, Israel and four Arab governments committed to expand economic and diplomatic cooperation in an unprecedented meeting in Israel’s southern Negev desert on Monday. The presence of top diplomats from the United Arab Emirates, Bahrain, Morocco and Egypt on Israeli soil showed a new level of comfort between Israel and its Arab neighbors even though the parties did not sign any binding agreements or specific policies. Secretary of State Antony Blinken hailed the meeting as the latest indication of a realignment of Middle Eastern relations that could expand the potential for peace and conflict resolution across the region. “Just a few years ago this gathering would be impossible to imagine,” Blinken said. Israel’s foreign minister, Yair Lapid, said the countries would strive to make the summit a yearly event. Ahead of summit, U.S. Middle East allies show Ukraine limited support The six-way meeting in Israel’s southern desert, dubbed the “Negev Summit,” represents the type of rapprochement the United States has long sought. But it also came amid a growing list of tensions between Washington and its Middle East allies, including the revival of the Iran nuclear deal; mounting tensions between Israelis and Palestinians; and a lackluster response to Russia’s invasion of Ukraine from Arab and Israeli partners. Arab governments in attendance thanked Israel for hosting but also maintained that it must make progress on implementing a two-state solution for the Palestinians with East Jerusalem as its capital. “Our message should be that we’re here to defend our values, to defend our interests,” said Morocco’s foreign minister, Nasser Bourita, who said the creation of a future Palestinian state was still “possible.”
Subsidized diesel shortage hits trucking industry --A subsidized diesel shortage has disrupted trucking operations in many parts of Indonesia, as recovering domestic fuel demand meets rising global oil prices. Local news outlets have reported long lines of trucks at fueling stations operated by state-owned oil giant Pertamina across the archipelago, with drivers saying they have had to wait for up to 24 hours for the diesel fuel commonly known as “solar”. Trucking associations say the problem is particularly acute in Sumatra, Kalimantan and Sulawesi. The Indonesian Truck Operators Association (Aptrindo) said on Tuesday that the supply crunch meant drivers either waited longer to refuel or got less fuel than needed, forcing them to refuel more often than usual, causing delays.
Oil depot hit by missile attack in western Ukraine - An oil depot in western Ukraine was hit by a missile on Monday, adding to a series of similar attacks in recent days as Russia continues its military invasion of Ukraine.Ukrainian President Volodymyr Zelensky told Russian journalists on Sunday that the attacks on oil depots could be an attempt to disrupt the planting season in the country, which is a major grain producer, NBCreported.During the attacks, missiles have hit oil depots and a military plant in Lviv, a city in western Ukraine near Poland. The region, however, has not experienced combat on the ground like other parts of Ukraine, mostly in the south and far east. Poland has accepted roughly 2.3 million of the nearly 4 million refugees who have fled Ukraine amid Russia's unprovoked attacks that began more than one month ago.Since Russia began its attack on Feb. 24, the United Nations human rights office has said there have been 2,909 civilian casualties, including 1,119 deaths. The office also noted that despite its high tally, "the actual figures are considerably higher" in terms of injuries and the death toll. Now, more than a month into the invasion, delegations from Russia and Ukraine are scheduled to meet in Turkey this week for more peace negotiations, though previous talks have not yielded any breakthroughs.
Russian defence ministry says Ukrainian helicopters attacked oil facility (Reuters) - Russia's defence ministry on Friday said two Ukrainian Mi-24 helicopters were responsible for an attack on a fuel depot in the Russian city of Belgorod, but it added that the facility did not supply fuel to the military. In its statement, the ministry said the two helicopters attacked after crossing the border at an extremely low altitude.
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