natural gas prices hit a 14 year high but closed lower; US oil exports were at a record high; US oil supplies were at new 18 year low, Strategic Petroleum Reserve was at a 37 year low; 4 week average of distillate exports hit a 47 month high
oil prices rose for the first time in four weeks due to falling Russian oil exports and a larger than expected drop in U.S. crude inventories,....after oil prices fell 3% to $94.70 a barrel last week following the expiration of the higher priced August oil contract, the contract price for the benchmark US light sweet crude for September delivery fell in Asian trading early on Monday on concerns that the expected Fed interest rate hike would impact fuel demand, but opened higher in New York in step with rebounding equity markets, as US traders anticipated the Fed hike, and then rallied to close $2.00 higher at $96.70 a barrel on reports that Russian crude oil exports fell by more than 13% over the past month, a sign that global oil supplies were too tight to ignore....oil prices moved higher for a second day on Tuesday after Russia cut gas supplies to Europe through a major pipeline, but turned lower after the EIA lowered its oil price forecasts for 2022 and 2023 in its latest short term energy outlook and settled down $1.72 at $94.98 a barrel after consumer confidence data showed Americans were more pessimistic about the economy than at any point in the last 18 months, and after International Monetary Fund cut its global growth projections for this year by 0.4%...oil prices moved modestly higher overnight after the American Petroleum Institute reported a larger-than-expected drawdown in U.S. crude inventories, and then steadied early Wednesday as concerns about weaker demand offset the bullish API inventory data, but rose again after the EIA report showed demand for US crude was rising globally amid an oil supply crunch, and settled $2.28 higher at $97.26 a barrel, as the EIA report of lower inventories and cuts in Russian gas flows to Europe offset concern about weaker demand and the 0.75% Fed interest rate hike....oil prices edged up in Asian trading on Thursday, buoyed by lower crude inventories and higher gasoline demand in the US, but then reversed a gain of more than 2% early in the New York session after data from the US Bureau of Economic Analysis showed the U.S. economy shrunk for the second consecutive quarter in ending June, entering into what many economists call a technical recession, and settled 84 cents lower at $96.42 a barrel as concerns about a potential global recession that would hit energy demand offset lower U.S. crude inventories and a rebound in gasoline consumption...oil prices moved higher in mid-morning Asian trade on Friday, as traders continued to weigh signs of macroeconomic weakness against a tight physical market, and then jumped more than $4 a barrel in New York trading as the market's attention turned to next week’s OPEC+ meeting, and the dimming expectations that the cartel would boost supplies, before settling for a $2.20 gain at $98.62 a barrel on the day, as traders shrugged off recession fears to focus on the tight supply situation that currently exists worldwide... oil thus finished 4.1% higher on the week, but still ended July 7.4% lower, after it had fallen 7.2% in June...
Meanwhile, natural gas prices finished a bit lower for the first time in four weeks, but not before hitting a 14 year high mid-week...after rising 15.5% to $8.299 per mmBTU last week on record power demand and on forecasts for further records, the contract price of natural gas for August delivery moved higher early Monday as traders weighed ongoing strong summer cooling demand against the coming Wednesday expiration of the contract, and rallied to settle 42.8 cents higher at $8.727 per mmBTU, as a persistent heat wave drove up demand for gas-powered electricity for air conditioning....natural gas prices then surged more than 11% to a 14 year high early Tuesday, after Russia's Gazprom said it would reduce gas flows to Europe to 20% through the key Nord Stream 1 pipeline, but backed off that high to settle just 26.6 cents, or 3.0% higher at $8.993 per mmBTU....with trading in the August natural gas contract expiring, prices retreated a further 30.6 cents to $8.687 per mmBTU on Wednesday on record gas output and forecasts for less demand next week than had been expected, while the contract price of natural gas for September delivery, which would be the quoted front month the next day, fell 27.1 cents to $8.554 per mmBTU...now quoting the September contract, natural gas prices fell 42.0 cents, or nearly 5%, to $8.134 on Thursday, on forecasts for less hot weather through mid-August than previously forecast, and on an increase in output to near-record levels...natural gas prices finished the week with a modest gain of 9.5 cents to $8.229 per mmBTU on Friday, but still finished the week 0.8% lower, while the September contract, which had finished last week priced at $8.195, actually finished 0.4% higher...
The EIA's natural gas storage report for the week ending July 22nd indicated that the amount of working natural gas held in underground storage in the US rose by 15 billion cubic feet to 2,416 billion cubic feet by the end of the week, which left our gas supplies 293 billion cubic feet, or 10.8% below the 2,709 billion cubic feet that were in storage on July 22nd of last year, and 345 billion cubic feet, or 12.5% below the five-year average of 2,761 billion cubic feet of natural gas that have been in storage as of the 22nd of July over the most recent five years....the 15 billion cubic foot injection into US natural gas working storage for the cited week was below the average forecast by an S&P Global Platts survey of analysts for a 25 billion cubic foot injection, and much less than the 38 billion cubic feet that were added to natural gas storage during the corresponding week of 2021, and also well below the average injection of 32 billion cubic feet of natural gas that has typically been added to our natural gas storage during the same week over the past 5 years....
The Latest US Oil Supply and Disposition Data from the EIA
US oil data from the US Energy Information Administration for the week ending July 22nd indicated that despite another large oil withdrawal from the SPR, increased production from our wells, and a refinery slowdown, we still needed to withdraw oil from our stored commercial crude supplies for the 4th time in 6 weeks, and for the 21st time over the past 35 weeks, mostly because of another big increase in our oil exports. Our imports of crude oil fell by an average of 355,000 barrels per day to an average of 6,164,000 barrels per day, after falling by an average of 156,000 barrels per day during the prior week, while our exports of crude oil rose by 789,000 barrels per day to a record high of 4,548,000 barrels per day, which meant that our trade in oil worked out to a net import average of 1,616,000 barrels of oil per day during the week ending July 22nd, 1,144,000 fewer barrels per day than the net of our imports minus our exports during the prior week Over the same period, production of crude from US wells was reportedly 200,000 barrels per day lower at 12,100,000 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 13,716,000 barrels per day during the July 22nd reporting week…
With our oil exports at a record high, we'll include a historical graph of them below, where you can see that prior to the end of 2014, US oil exports, except for those allowed under NAFTA, had been negligible because they had been banned 40 years earlier, in the wake of the Arab oil embargo. The ban on US oil exports was lifted in a spending bill that Congress passed during the last week of 2015, part of a compromise that Obama agreed to in order to avoid a government shutdown...
Meanwhile, US oil refineries reported they were processing an average of 16,027,000 barrels of crude per day during the week ending July 22nd, an average of 292,000 fewer barrels per day than the amount of oil than our refineries processed during the prior week, while over the same period the EIA’s surveys indicated that a net average of 1,447,000 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, the crude oil figures from the EIA for the week ending July 22nd appear to indicate that our total working supply of oil from net imports, from oilfield production, and from storage was 864,000 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 just inserted a (+864,000) 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 fudge factor that they label in their footnotes as “unaccounted for crude oil”, thus suggesting there must have been an omission or error of that magnitude in this week’s oil supply & demand figures that we have just transcribed... however, since most everyone treats these weekly EIA reports as gospel, and since these figures often drive oil pricing, and hence decisions to drill or complete oil wells, we’ll continue to report this data just as it's published, and just as it's watched & believed to be reasonably accurate by most everyone in the industry...(for more on how this weekly oil data is gathered, and the possible reasons for that “unaccounted for” oil, see this EIA explainer)….
This week's 1,447,000 barrel per day decrease in our overall crude oil inventories left our oil supplies at 896,631,000 barrels at the end of the week, which is our lowest total oil inventory level since February 6th, 2004, and therefore at a new 18 year low (see graph below)….our oil inventories decreased this week as 646,000 barrels per day were being pulled out of our commercially available stocks of crude oil and 801,000 barrels per day of oil were being pulled out of our Strategic Petroleum Reserve. The draw on the SPR was part of the emergency withdrawal under Biden's "Plan to Respond to Putin’s Price Hike at the Pump" (sic), that was expected to supply 1,000,000 barrels of oil per day to commercial interests over a six month period up to the midterm elections in November, in the hope of keeping gasoline and diesel fuel prices from rising further at least up until that time. The administration's previous 30,000,000 million barrel release from the SPR to address Russian supply related shortfalls wrapped up in June, and his earlier release of 50 million barrels from the SPR to incentivize US gasoline consumption was completed in May. Including those, and other withdrawals from the Strategic Petroleum Reserve under recent release programs, a total of 181,602,000 barrels of oil have now been removed from the Strategic Petroleum Reserve over the past 24 months, and as a result the 474,545,000 barrels of oil still remaining in our Strategic Petroleum Reserve is now the lowest since June 14th, 1985, or at a new 37 year low, as repeated tapping of our emergency supplies for non-emergencies or to pay for other programs had already drained those supplies considerably over the past dozen years, even before the Biden administration's SPR releases. Now the total 180,000,000 barrel drawdown expected over the current six month release program to November will remove almost a third of what remained in the SPR when the program started, and leave us with what would be less than a 20 day supply of oil at today's consumption rate...
Further details from the weekly Petroleum Status Report (pdf) indicate that the 4 week average of our oil imports rose to an average of 6,550,000 barrels per day last week, which was 1.9% more than the 6,425,000 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 200,000 barrels per day higher at 12,100,000 barrels per day because the EIA's rounded estimate of the output from wells in the lower 48 states was 200,000 barrels per day higher at 11,700,000 barrels per day, while Alaska’s oil production was 2,000 barrels per day lower at 435,000 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 7.6% below that of our pre-pandemic production peak, but was 24.7% above the pandemic low of 9,700,000 barrels per day that US oil production had fallen to during the third week of February of 2021...
US oil refineries were operating at 92.2% of their capacity while using those 16,027,000 barrels of crude per day during the week ending July 22nd, down from their 93.7% utilization rate during the prior week, and a refinery utilization rate that's below normal for mid summer. The 16,027,000 barrels per day of oil that were refined this week were 1.0% more than the 15,875,000 barrels of crude that were being processed daily during week ending July 23rd of 2021, but 5.7% less than the 16,991,000 barrels that were being refined during the prepandemic week ending July 26th, 2019, when our refinery utilization was at 93.0%, a rate also slightly below normal for mid-July...
Even with the decrease in the amount of oil being refined this week, gasoline output from our refineries was still higher, increasing by 290,000 barrels per day to 9,658,000 barrels per day during the week ending July 22nd, after our gasoline output had increased by 447,000 barrels per day during the prior week. However, this week’s gasoline production was still 1.2% less than the 9,779,000 barrels of gasoline that were being produced daily over the same week of last year, while 7.3% less than our gasoline production of 10,416,000 barrels per day during the week ending July 26th, 2019, ie, a comparable week during the year before the pandemic impacted US gasoline output. Meanwhile, our refineries’ production of distillate fuels (diesel fuel and heat oil) decreased by 22,000 barrels per day to 5,009,000 barrels per day, after our distillates output had decreased by 102,000 barrels per day during the prior week. But even after those decreases, our distillates output was still 5.7% more than the 4,739,000 barrels of distillates that were being produced daily during the week ending July 23rd of 2021, while 3.0% less than the 5,164,000 barrels of distillates that were being produced daily during the week ending July 26th, 2019...
Even with the increase in our gasoline production, our supplies of gasoline in storage at the end of the week fell for the 2nd time in six weeks; but for 20th time out of the past twenty-five weeks, decreasing by 3,304,000 barrels to 225,131,000 barrels during the week ending July 22nd, after our gasoline inventories had increased by 3,489,000 barrels during the prior week. Our gasoline supplies decreased this week because the amount of gasoline supplied to US users increased by 724,000 barrels per day to 9,245,000 barrels per day, and because our imports of gasoline fell by 266,000 barrels per day to 599,000 barrels per day, while our exports of gasoline fell by 38,000 barrels per day to 768,000 barrels per day. After 20 inventory drawdowns over the past 25 weeks, our gasoline supplies were 3.9% lower than last July 23rd's gasoline inventories of 234,161,000 barrels, and about 4% below the five year average of our gasoline supplies for this time of the year…
Following the recent decreases in our distillates production, our supplies of distillate fuels decreased for the 4th time in eleven weeks and for the 29th time in forty-seven weeks, falling by 784,000 barrels to 111,724,000 barrels during the week ending July 22nd, after our distillates supplies had decreased by 1,295,000 barrels during the prior week. Our distillates supplies fell again this week as the amount of distillates supplied to US markets, an indicator of our domestic demand, increased by 53,000 barrels per day to 3,750,000 barrels per day, and even though our exports of distillates fell by 147,000 barrels per day to 1,495,000 barrels per day, while our imports of distillates rose by 2,000 barrels per day to 124,000 barrels per day.. But after forty-five inventory withdrawals over the past sixty-seven weeks, our distillate supplies at the end of the week were 19.0% below the 137,912,000 barrels of distillates that we had in storage on July 23rd of 2021, and about 23% below the five year average of distillates inventories for this time of the year…
Meanwhile, with this week's increase in our oil exports and decrease in our imports, our commercial supplies of crude oil in storage fell for the 7th time in 11 weeks and for the 31st time in the past year, decreasing by 4,523,000 barrels over the week, from 426,609,000 barrels on July 15th to 422,086,000 barrels on July 22nd, after our commercial crude supplies had decreased by 445,000 barrels over the prior week. After that decrease, our commercial crude oil inventories were 9.1% below the most recent five-year average of crude oil supplies for this time of year, but 24.8% above the average of our crude oil stocks as of the fourth weekend of July 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 commercial crude oil inventories had jumped to record highs during the Covid lockdowns of the Spring of 2020, and then jumped again after last year's winter storm Uri froze off US Gulf Coast refining, our commercial crude supplies as of this July 22nd were still 3.1% less than the 435,598,000 barrels of oil we had in commercial storage on July 23rd of 2021, and were 19.7% less than the 525,969,000 barrels of oil that we had in storage on July 24th of 2020, and 3.3% less than the 436,545,000 barrels of oil we had in commercial storage on July 26th of 2019…
Finally, with our inventories of crude oil and our supplies of all products made from oil near multi year lows in recent months, 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 8,857,000 barrels this week, from 1,688,796,000 barrels on July 15th to 1,679,939,000 barrels on July 22nd, after our total inventories had fallen by 3,862,000 barrels during the prior week. That left our total liquids inventories down by 108,494,000 barrels over the first 28 weeks of this year, and only 2.1 million barrels from hitting a new 13 1/2 year low...
This Week's Rig Count
The number of drilling rigs running in the US increased for the 81st time over the prior 96 weeks during the week ending July 29th, but still remained 3.3% below the prepandemic rig count....Baker Hughes reported that the total count of rotary rigs drilling in the US increased by 9 to 767 rigs this past week, which was also 279 more rigs than the 488 rigs that were in use as of the July 30th report of 2021, but was still 1,162 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 rose by 6 to 605 oil rigs during the past week, after the number of rigs targeting oil had been unchanged during the prior week, and there are now 220 more oil rigs active now than were running a year ago, even as they still amount to just 37.6% of the shale era high of 1609 rigs that were drilling for oil on October 10th, 2014, and as they are still down 11.4% from the prepandemic oil rig count….at the same time, the number of drilling rigs targeting natural gas bearing formations increased by 2 to 157 natural gas rigs, which was also up by 54 natural gas rigs from the 103 natural gas rigs that were drilling during the same week a year ago, even as they were still only 9.8% 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 natural gas, Baker Hughes is now reporting five "miscellaneous" rigs active; the legacy miscellaneous rigs include a horizontal rig drilling to between 5,000 and 10,000 feet into the Permian basin in Dawson county Texas, a directional rig drilling between 5,000 and 10,000 feet on the big island of Hawaii, a rig drilling vertically to between 10,000 and 15,000 feet for a well or wells intended to store CO2 emissions in Mercer county North Dakota, and another vertical rig, drilling more than 15,000 feet into a formation in Humboldt county Nevada that Baker Hughes doesn't track...the new miscellaneous rig is also a vertical rig, targeting the Marcellus shale at a depth of between 5,000 and 10,000 feet in Tompkins County, New York; that might be a exploratory geothermal well now being drilled on the Cornell University campus....a year ago, there were no such "miscellaneous" rigs running...
The offshore rig count in the Gulf of Mexico was up by 1 to 15 rigs this week, with all of this week's Gulf rigs drilling for oil in Louisiana's offshore waters....that's now 1 more than the 14 offshore rigs that were active in the Gulf a year ago, when 13 Gulf rigs were drilling for oil offshore from Louisiana and one rig was deployed for oil offshore from Texas.…in addition to rigs drilling in the Gulf, we also have two offshore directional rigs drilling for natural gas in the Cook Inlet of Alaska; one is indicated to be drilling to between 10,000 and 15,000 feet, while the other one is indicated to be drilling to between 5,000 and 10,000 feet...a year ago, there were no offshore rigs other than those deployed in the Gulf of Mexico....
in addition to rigs running offshore, there are now 4 water based rigs drilling through inland bodies of water....one is a directional rig targeting oil at a depth of 10,000 to 15,000 feet in Cameron parish, Louisiana; others include a directional rig targeting oil at a depth greater than 15,000 feet on Grand Isle, Louisiana, and two directional inland water rigs drilling for oil in Terrebonne Parish, Louisiana, one of which is targeting a formation greater than 15,000 feet in depth, while the other is shown to be drilling to between 10,000 and 15,000 feet... during the same week of a year ago, there was just one such "inland waters" rig deployed...
The count of active horizontal drilling rigs was up by ten to 697 horizontal rigs this week, which was also 255 more rigs than the 442 horizontal rigs that were in use in the US on July 30th of last year, but just over half of the record 1,374 horizontal rigs that were drilling on November 21st of 2014....at the same time, the vertical rig count was up by 1 to 32 vertical rigs this week, and those were also up by 15 from the 17 vertical rigs that were operating during the same week a year ago…on the other hand, the directional rig count was down by 2 to 38 directional rigs this week, but those were still up by 9 from the 29 directional rigs that were in use on July 30th 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 July 29th, the second column shows the change in the number of working rigs between last week’s count (July 22nd) and this week’s (July 29th) count, the third column shows last week’s July 22nd 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 30th of July, 2021...
checking the Rigs by State file at Baker Hughes for the changes in Texas, we find that there were 2 rigs pulled out of Texas Oil District 1, but that there was a rig was added in Texas Oil District 2, there were 2 rigs added in Texas Oil District 3, and there were 3 rigs added Texas Oil District 4 at the same time; two of those rig additions account for the two oil rigs that were added in the Eagle Ford shale, and it's likely two more were also in the Eagle Ford, offsetting the two rigs shut down in District 1....that would still mean 2 rigs were added in a basin in the same area that Baker Hughes doesn't track...in Texas's Permian basin districts, there was an oil rig added in Texas Oil District 8, which covers the core Permian Delaware, and no changes elsewhere; hence with the Texas Permian rig count up by just 1, the rig that was added in New Mexico had to be in the far western Permian Delaware for the national Permian count to be up by 2 rigs...Texas also saw a natural gas rig added in Texas Oil District 6, which accounts for the addition in the Haynesville shale...
in Oklahoma, 5 oil rigs were pulled out of the Cana Woodford, while one oil rig and one natural gas rig were added in the Arkoma Woodford, which now has four natural gas rigs and three oil rigs deployed...since the Oklahoma rig count was up by one, that means there were 4 rigs added in Oklahoma in a basin or basins that Baker Hughes doesn't track...meanwhile, the rig count increase in Louisiana came by way of the oil rig added in the state's offshore waters...while a natural gas rig was added in Pennsylvania's Marcellus, two natural gas rigs were pulled out of West Virginia's Marcellus at the same time....the Marcellus count remained unchanged, however, because the miscellaneous rig added in New York state is considered to be targeting the Marcellus...since the loss of a Marcellus natural gas rig brings our identified natural gas rig increase down to one, we have to figure one of those aforementioned rigs added to basins that Baker Hughes doesn't track was a natural gas rig, which bears out as Baker Hughes shows the "other" natural gas rigs up by one to 25...
EOG Resources Returns to Utica Oil Window After Exiting in 2020 --In 2020 EOG Resources, one of the largest oil and gas drillers in the U.S. (with operations in Trinidad and China too), sold *all* of its Marcellus assets, which were located in Bradford County, PA, to Tilden Resources for $130 million (see EOG Resources Sells Marcellus Assets for $130M, Exits Basin). EOG left the M-U building, so to speak. But what’s this? EOG is ramping up its drilling program and increasing its acreage once again in the Marcellus/Utica, this time along the edge of the Utica’s oil window in Ohio, according to an investigation by The Capitol Forum (TCF).
16 New Shale Well Permits Issued for PA-OH-WV Jul 18-24 | Marcellus Drilling News - For the week of July 18-24, the three Marcellus/Utica states issued just 16 permits to drill new shale wells, down from 43 the prior week. Pennsylvania and West Virginia both issued eight new permits each. Ohio issued a big, fat, goose egg. PA issued three permits each to Greylock Energy (Green County) and Pennsylvania General Energy (Tioga County), and one each to EQT and Seneca Resources. WV issued four permits each to Jay-Bee Oil & Gas (Tyler County) and Tug Hill Operating (Wetzel County).
Shale M&A active in 2022, but not in Appalachia - Mergers and acquisitions in the oil and gas industry remain at an active level in the first half of 2022, but for the most part the deals have all been outside of Appalachia after a relatively active 2021. There have been $12 billion in reported M&A deals in oil and gas during the second quarter of 2022, down slightly from the $14.7 billion in the first quarter, according a report from energy analysis firm Enverus Intelligence Research. That's despite a volatile energy market so far in 2022 with commodity prices being up and the stock market on a roller coaster. Enverus said that most of the deals done in 2022 have been involving private equity firms wanting to exit amid high commodity prices; the deals represented about 80% of the $12 billion in total in the second quarter. Just under half of the deals involved the Permian Basin in Texas and almost another third involved multiple basins. "The spike in commodity prices that followed Russia's invasion of Ukraine temporarily stalled M&A as buyers and sellers disagreed on the value of assets," said Andrew Dittmar, Enverus Intelligence Research director. High oil and gas prices are what has led to the private equity firms selling, Dittmar said. Yet Appalachia, which has been a region where some big M&A were made in 2021, has been relatively quiet in 2022. There was $2.8 billion in the first quarter of 2022 but nothing reported in the second quarter, following about $4 billion in deals in 2021. Dittmar told the Business Times that there's no shortage of potential acquisition opportunities in the Marcellus and Utica shale. But he said that pricing is one of the factors that might be holding things back. "The bid/ask spread, which is persistently high across the E&P space, is even more challenging on the gas side of the business given higher volatility for that commodity," Dittmar said. "Additionally buyers in Appalachia in particular have to be aware of constraints on pipeline capacity. It limits your ability to pay for an asset if you are unable tap inventory because you don't have the takeaway capacity to move the gas out." Dittmar said that it might also be that there are fewer potential buyers in Appalachia than there is in the Permian Basin. The Permian Basin has the highest percentage of deals in the second quarter, as companies invest more into the prolific basin as demand continues to outpace supply domestically and around the country. The largest was the $7 billion merger between Colgate Energy Partners III and Centennial Resource Development, in the Permian. A $1.3 billion deal between Grey Rock Energy Partners and Executive Network Partnering Corp. will create Granite Ridge Resources. Dittmar said that he believes private equity companies will continue to be sellers in the high price environment. “The challenge is finding buyers willing to pay their asking prices. Public E&Ps remain chiefly concerned with getting capital back to shareholders and being too aggressive on M&A can smack of growth investors don’t want," he said. "That said, the flood of offerings should create opportunities for shrewd deal makers to unlock value with M&A and, if we avoid a major recession, the fundamentals for energy prices still look strong.”
Billions Spent on Abandoned Oil Wells Scratch at Ignored Problem -- Cheryl Thomas stood in the woods near her northwestern Pennsylvania home on a rainy afternoon in June, watching black crude drip from an abandoned oil well just steps from a creek leading to the Allegheny River. She and her husband have counted about 60 derelict oil wells on their land east of Bradford, where companies began drilling one of America’s first oil fields in 1871.The couple live with that legacy daily: Oil and methane have leached into their water supply and they filter water from their kitchen tap. They once emptied a gallon of crude from their hot-water heater; another time, tests found such high methane levels in their water that a state inspector warned them, “Don’t have a leisurely bath with a lit candle and a cigar.”Abandoned wells are often called orphans because they were left behind by drillers before the state started regulating them in the 1950s. Pennsylvania, where the industry was born, has more than any other state—possibly hundreds of thousands.Congress is spending $4.7 billion from last year’s infrastructure law on a five-year program to clean up orphaned wells, maybe tens of thousands of them. States usually only plug a handful each year, and they’re hoping the cash will kick-start the cleanup when the money begins flowing this fall.It’s a small and unprecedented mark of environmental progress, particularly at a time when Sen. Joe Manchin (D-W.Va.) said hewouldn’t support more ambitious climate legislation.“It really is an opportunity to rewrite Pennsylvania’s oil and gas well legacy,” said Kurt Klapkowski, an acting deputy secretary in the state’s Department of Environmental Protection.But the infrastructure law funding only scratches the surface of the orphan well problem. Billions more will be needed to plug all the nation’s forgotten wells. Nobody knows exactly how much—because nobody knows how many exist.States have records for about 131,000 orphan wells, mostly concentrated in Pennsylvania, Ohio and Oklahoma. The Interior Department estimates at least 3.5 million nationwide, but “the total scope of the problem is unknown,” spokesman John Grandy said.Their effects are clear: The gas and oil they leak contribute to climate change, threaten homes, and are routinely blamed for water contamination. Critics worry about the pace of the cleanup.West Virginia says its $25 million federal grant will pay to plug 160 orphaned wells, barely 1% of the roughly 15,000 abandoned wells statewide. At that rate, it would take more than 95 years to plug them all, a state spokesperson said.
Could gas leak fixes thwart climate goals? - Boston University ecologist Nathan Phillips used to push for the rapid replacement of aging pipelines, convinced that the practice was a win-win: It snuffed out natural gas leaks and protected nearby trees from those leaks. But today, Phillips — who has spent years researching leaks in the Boston area — is skeptical of such replacement, worried that it will thwart his state’s goal to achieve net-zero greenhouse gas emissions by 2050. “I was telling people that the way to fix the problem is to replace the pipelines,” Phillips said. “Now, I completely feel opposite to that.” Phillips is among a growing number of climate advocates, researchers and state officials who worry that accelerated pipe replacement programs aimed at preventing gas leaks and explosions could complicate efforts to switch to electric heating and renewable energy. Massachusetts is among 42 states with policies that encourage gas utilities to proactively replace aging or leaking pipes, according to the American Gas Association, a trade association for gas utilities and companies. It also is among a growing number of states that aim to transition away from fossil fuels. The tension surrounding pipeline replacements and clean energy is part of a broader debate on the future of the natural gas system that heats many homes and businesses across the United States. About a dozen states have set goals to achieve net-zero greenhouse gas emissions in less than 30 years — and analysts say meeting those targets will likely mean using less natural gas. Gas utilities may ultimately have “a much smaller role” in the overall energy system of states that hit those targets, said Adithya Bhashyam, a hydrogen analyst at BloombergNEF. That means that today’s installed pipes — often made of durable, long-lasting plastic materials — could become “stranded assets,” left unused before their decadeslong life span is over. For climate advocates, that raises questions about whether it’s prudent to encourage the replacement of large networks of pipe and make ratepayers foot the bill.
N.C. pipeline caused largest U.S. gasoline spill, records say - The Colonial Pipeline released just shy of 2 million gallons of gasoline in a 2020 leak, according to new estimates that make it the largest U.S. gasoline pipeline spill on record.The spill was discovered on Aug. 14, 2020, in a suburban nature preserve near Charlotte, N.C.. But the Colonial Pipeline Co. has now determined that the leak began 18 days before that discovery — and that the amount that spilled is 30 times the original estimate of 63,000 gallons and significantly more than the last updated figure of 1.2 million gallons.The changing figures have drawn suspicion from people who live near the leak and criticism from state officials. Colonial says about three-quarters of the gasoline has been sucked out of the ground.“Plenty of people, myself included, are deeply disappointed in the 18 day delay, which we now know allowed at least two million gallons of gasoline to seep into the ground,” said state Sen. Natasha Marcus, a Democrat who represents the area where the leak occurred, in a statement to E&E News. “It’s been two years since the leak and it’s frustrating to hear that 25 percent of the spilled gasoline is still on site.”The cleanup effort is continuing and will likely continue for years, although it is far smaller than the months immediately after the spill.Colonial’s new estimate comes after a judge recently approved a consent decree between the pipeline company and the N.C. Department of Environmental Quality. The agreement required the pipeline company to provide an updated estimate on the amount of leaked gasoline and to pay nearly $5 million in penalties and investigative costs (Greenwire, July 1). Colonial, owned by subsidiaries of Koch Industries Inc., Royal Dutch Shell PLC and other investors, is a 5,500-mile system of pipe connecting Houston and New York. It delivers 100 million gallons of jet fuel, gasoline and other fuel every day. People and businesses across the Southeast and the Eastern Seaboard depend on it to supply airports, military bases and gas stations.
Crude Oil Catastrophes Part 3: "A Tale of Two Treaties" (podcast and transcript; Parts one and two of this series give context to the Line 5 dispute and tell stories of oil transportation gone horribly wrong ) The Constitution refers to treaties with other sovereign nations as “the supreme law of the land.” But what happens when promises have been made that are potentially in conflict?Two different treaties with the U.S. could lead to very different outcomes for Line 5 – a controversial pipeline in the Great Lakes. One treaty is with Canada, promising not to disrupt the flow of hydrocarbons across the border. The other one is with Tribal nations in what’s now northern Michigan; it guarantees the right to hunt and fish throughout their ceded territory.At a Senate hearing in May, Canadian officials called on the U.S. to join them in demanding the governor of Michigan “abandon her efforts” to shut down Line 5 – an important link in a series of pipelines moving crude oil from western to eastern Canada.But Tribal nations in northern Michigan see the pipeline as a threat to their treaty rights – specifically, fishing in the Straits of Mackinac. A spill could devastate important spawning grounds for lake trout, whitefish and other species that are key to Tribal fisheries.
U.S. Oil Production Hits New 2022 Peak, but More Runway Ahead for Growth - Domestic crude output reached a new high for the year as producers continue to gradually ramp up to meet summer demand, the U.S. Energy Information Administration (EIA) reported Wednesday. Production climbed to 12.1 million b/d for the week ended June 24, up 100,000 b/d week/week, according to the EIA’s Weekly Petroleum Status Report (WSPR).Exploration and production (E&P) companies are trying to strike a balance between investments in long-term renewable energy projects and quenching the world’s current thirst for oil. “Global oil demand is expected to breach 100 million b/d this summer for the first time since before the pandemic,” said Rystad Energy analyst Louise Dickson. Production is on track to hold just below that level through the summer months.The Biden administration has at once pushed E&Ps to pursue greener energy and bolster crude output, causing confusion and leaving operators dubious about aggressive investment plans. Dickson noted that both U.S. producers and members of OPEC have modestly increased output this year, with supplies from Russia uncertain amid that country’s invasion of Ukraine. Western sanctions against Russia have limited its export options and required European countries to rely more on the United States and Saudi Arabia-led OPEC for crude supplies as the summer travel season heats up.Russia, the world’s third-largest oil producer, was generating about 10 million b/d of crude prior to its invasion of Ukraine. Rystad estimated that about 800,000 b/d of Russian crude capacity emerged following Western sanctions this spring. These penalties included U.S. and European Union embargoes on Kremlin-backed oil.
TotalEnergies, Borealis Start Up Texas Ethane Cracker - TotalEnergies SE and Borealis AG reported last week they have begun commercial operations at their nearly $2 billion ethane cracker in Port Arthur, TX. The companies built the ethane cracker, with an ethylene production capacity of 1 Mt/y, at TotalEnergies’ refinery in Port Arthur via their Bayport Polymers LLC 50/50 joint venture (JV). “This investment is in perfect alignment with our strategy to develop petrochemicals at our integrated platforms,” said TotalEnergies’ Bernard Pinatel, Refining & Chemicals president. “At Port Arthur, we take advantage of the abundance of ethane in the U.S.”The U.S. petrochemicals industry relies heavily on dry gas and natural gas liquids such as ethane for fuel and feedstocks, respectively. Ethylene produced at the new TotalEnergies-operated ethane cracker is to be used as feedstock to supply Baystar’s existing 400,000-t/y polyethylene (PE) units at Bayport, TX, as well as a new 625,000-t/y PE unit under construction at the Houston-area facility, the JV members said.Pinatel called the new cracker “another milestone strengthening TotalEnergies’ presence in the United States,” citing investments earlier this year in U.S. liquefied natural gas and renewable electricity.The Port Arthur project start-up marks a major step toward Baystar “becoming a fully integrated polyethylene company” aiming to grow the North American polymers market, according to Borealis.
The US has become the world's top LNG exporter as it funnels supply to European consumers at the mercy of Russia --- The US has risen to become the world's largest liquefied-natural gas exporter during the first half of 2022, according to the Energy Information Administration. According to an EIA report, US LNG exports increased by 12% in the first half of this year compared with the second half of 2021. In total, exports averaged out to 11.2 billion cubic feet a day. At least 71% of US' LNG exports went to the EU and the UK during the first five months of the year, the EIA said, as energy tensions with Russia mount. "US LNG exports continued to grow for three reasons—increased LNG export capacity, increased international natural gas and LNG prices, and increased global demand, particularly in Europe," the EIA said. Europe has been suffering lately, as it struggles to store up energy before the winter months approach due to reduced Russian supply. European natural gas prices have soared by almost 200% so far this year. Dutch TTF futures, the European benchmark, jumped more than on 10% Tuesday to trade above 180 euros per megawatt hour ($191), marking their biggest one day-rise since early July"Recently, Russia terminated the flow of natural gas via a key pipeline, Nord Stream 1, to carry out maintenance for 10 days. The temporary closure sent waves of fear among European leaders as they believed it would become permanent, which would have a dire effect on the euro area economy. After much anxiety, Russia resumed gas flows albeit at reduced levels. The reopening however hardly provided relief after Russia's state-run energy giant Gazprom said just days later it would cut natural gas flows through the pipeline to Europe to just 20% of capacity by Wednesday, down from 40% previously. Many European officials have accused Moscow of weaponizing energy after Western nations imposed aggressive sanctions on the country over its war with Ukraine. In response, the EU has had to pursue alternative sources of energy to stock up ahead of the upcoming winter months. "Since the end of last year, countries in Europe have increasingly imported more LNG to compensate for lower pipeline imports from Russia and to fill historically low natural gas storage inventories," the EIA said. The US has consequently stepped into the breach to help its EU allies, with its LNG export capacity expanding by 1.9 billion cubic feet per day since November 2021. This has partly helped offset a drop of 2.0 billion cubic feet per day in export capacity that is offline at the Freeport LNG terminal in Texas, which has been shuttered since early June after a fire broke out at the plant.
US becomes world's largest LNG exporter amid Ukraine war-driven demand, rising gas and power prices - Amid rising global energy prices and higher demand, the United States has become the world’s largest exporter of liquefied natural gas, the U.S. Energy Information Administration said Monday. Exports grew 12% in the first half of this year, compared with the latter half of 2021.“Since the end of last year, countries in Europe have increasingly imported more LNG to compensate for lower pipeline imports from Russia and to fill historically low natural gas storage inventories,” EIA said.Exports from the United States averaged 11.2 billion cubic feet per day, or Bcf/d, in the first half of this year, EIA said. Total U.S. export capacity has expanded by about 2 Bcf/d since November 2021, the agency said.“Most U.S. LNG exports went to the EU and the UK during the first five months of this year, accounting for 71%, or 8.2 Bcf/d, of the total U.S. LNG exports,” EIA said.According to EIA’s latest Short-Term Energy Outlook, LNG exports are expected to average 12.7 Bcf/d in 2023.The growth in LNG exports has raised some concern, and it comes as domestic gas and electricity prices are rising.Sen. Angus King, I-Maine, at a May Senate Energy and Natural Resources Committee hearing, pointed to the increase in LNG exports as a cause for rising electricity prices. He said the U.S. exports about 15% of its gas production today, but approved applications would push that north of 50%.Short-term increases to send gas to Europe may be necessary,particularly due to the war in Ukraine, but “the problem is we’re building 35-year assets,” King said.EIA said the cost of natural gas to U.S. power generators will rise from $4.97/MMBtu in 2021 to $6.35/MMBtu in 2022. “Despite the increase, we forecast the share of natural gas in U.S. generation will average 37% in 2022, about the same as last year,” according to the agency’s outlook.EIA is also anticipating U.S. residential electricity prices to average $0.144/kWh in 2022, up 5.3% from 2021. “Higher retail electricity prices largely reflect an increase in wholesale power prices driven by rising natural gas prices,” the agency said.
LNG Exports and the Rising Cost of U.S. Natural Gas – Listen Now to NGI’s Hub & Flow - Click here to listen to the latest episode of NGI’s Hub & Flow podcast. Paul Cicio, CEO of the Industrial Energy Consumers of America (IECA), joins Jamison Cocklin, NGI’s senior editor of LNG, to discuss the role that rising LNG exports have had in pushing U.S. natural gas prices higher. IECA represents thousands of energy-intensive facilities across the country. The organization has been working for years to curb the rapid pace of LNG export growth as the manufacturing sector faces rising prices and stronger competition from overseas.
Crude, LNG Drive New Tonnage Record at Corpus Christi Port - The Port of Corpus Christi in South Texas, with an expansion project nearing completion, moved a record 46.4 million tons in the second quarter, it said Monday. Driven by growth in crude and refined products, along with LNG and dry bulk cargo, the port’s tonnage in the quarter surpassed the prior record set in 4Q2021 by 4.8%. During the first six months of 2022 (1H2022), the port’s customers moved 90.1 million tons of commodities through its waterway, up 11.9% from the first half of 2021. “The Port of Corpus Christi continues to break records and reach new heights due to its laser focus on developing the requisite maritime infrastructure to accommodate the growing demand for American energy commodities,” said CEO Sean Strawbridge. Crude oil shipments for 1H2022 totaled 52.4 million tons, up more than 12% over the prior record set in the same period last year, according to the port. Refined products were 15.8 million tons, an increase of 26.6% from 2021. Dry bulk cargo came in at 3.9 million tons, 21.5% above the first half of 2021, and liquefied natural gas shipments rose by 11% to 8.1 million tons. “These numbers are a testament to the role the Port of Corpus Christi and its industry partners play in the global marketplace, providing certainty in uncertain times,” said Port of Corpus Christi Commission Chairman Charles W. Zahn Jr. Rystad Energy last month painted a rosy outlook for Gulf Coast oil exports, in particular. The consultancy said its base case model anticipates volumes nearing 4 million b/d in 1Q2023 and crossing that threshold by 2Q2023, thanks to strong draws from the Strategic Petroleum Reserve and a strong domestic supply outlook.
Kinder Morgan Records Stronger Natural Gas Volumes in Texas - Rising natural gas gathering volumes in the Haynesville and Eagle Ford shales boosted the bottom line during the second quarter for Kinder Morgan Inc., which is now looking to grow its supplies for U.S. LNG exports. Gas gathering volumes during 2Q2022 were up 12% year/year, led by a 15% increase in Haynesville volumes and a 10% increase in Eagle Ford volumes. However, some growth was offset by lower volumes in the Bakken Shale.During a call last week with investors, President Kim Dang said Kinder was on track to beat the 10% full-year gathering volume increase that was previously budgeted. The midstreamer continues to anticipate growth in liquefied natural gas and Mexico exports, along with power and industrial consumption. For LNG demand in particular, it is projecting 11-15 Bcf/d by 2028.Kinder currently has around 7 Bcf/d contracted on its pipelines to serve LNG export demand. That represents about 50% of the total feed gas being delivered to U.S. terminals.The Houston-based company has another 2.6 Bcf/d of “highly likely” contracts for LNG export projects that have reached a positive final investment decision (FID) or that are expected to reach FID in the near future.
Howard Energy Looking to Double Natural Gas Capacity in South Texas to 2 Bcf/d -- Lower 48 midstream giant Howard Energy Partners (HEP), through joint venture Dos Caminos LLC, plans to double its natural gas gathering, treatment and transport services in Texas to 2 Bcf/d as it eyes opportunities for LNG and Mexico exports. The expansion, planned in the Austin Chalk formation and Eagle Ford Shale in South Texas, would be done through HEP’s partnership with an affiliate of Eagle Ford Midstream LP (EFM). “Given our unique pipeline footprint and history in South Texas, we are best situated to respond to the significant natural gas production growth in the Webb County area,” said HEP CEO Mike Howard. “These projects will be completed in phases with the initial phase anticipated to be completed in the third quarter of next year and the remainder in 2024.” Dos Caminos throughput would be expanded by enhancing existing systems and greenfield projects. San Antonio-based HEP operates Dos Caminos. Together with EFM, whose 158-mile pipeline runs through the Eagle Ford, HEP now gathers, treats and transports up to 1 Bcf/d, which is destined for Mexico and Gulf Coast liquefied natural gas exports. HEP owns and operates a long list of energy infrastructure across the Lower 48 including gas pipelines, gas processing plants, refined products storage terminals, deepwater dock/rail facilities, fractionation facilities and hydrogen production facilities.
Texas Upstream Natural Gas, Oil Industry Adds 6,100 Direct Jobs in June -Texas’ direct upstream natural gas and oil industry job count was 194,900 in June, translating into a 6,100-job gain from May, the Texas Independent Producers and Royalty Owners Association (TIPRO) reported last week. “As expected, the dip in May upstream employment appeared to be an anomaly, and June numbers reflect continued demand for talent and increasing exploration and production activities in the Texas oil and natural gas industry,” said TIPRO’s President Ed Longanecker. TIPRO, which obtains its employment data from the U.S. Bureau of Labor Statistics, also noted that Texas’ June upstream job count represents a 31,000 year/year increase. The oilfield services (OFS) sector accounted for 22,700 of those new jobs, with the remaining 8,300 ascribed to oil and gas extraction, the trade group added. The 31,000-job gain occurred in tandem with a 55% year/year increase in statewide drilling permits issued by the Railroad Commission of Texas. TIPRO reported that the Houston metropolitan area, Texas’ largest region for oil and gas employment, added 2,000 upstream jobs from May to June to hit 67,000 direct positions. The trade group noted the June Houston metro upstream job count reflects a 10,000-position year/year increase, with 5,600 of those jobs in OFS and 4,400 in extraction-related roles. OFS companies accounted for the top three spots in TIPRO’s June ranking of unique job postings statewide. Taking the lead was OFS giant Baker Hughes Co. (BKR) with 1,073 listings, followed by KBR Inc. with 490 and Halliburton Co. with 436. “Of the top 10 companies listed by unique job postings last month, six companies were in the services sector, followed by two companies in midstream and two in oil and natural gas extracting,” said TIPRO. Statewide, the organization observed 12,391 active unique job postings across Texas’ upstream, midstream and downstream oil and gas sectors in June – up 6% month/month.
U.S. Natural Gas Shackled by ‘Short-Sighted’ Energy Policy, Says Range Resources CEO - The top executive of Range Resources Corp., one of the largest natural gas producers in the United States, said again on Tuesday that not enough is being done by the country to ease the global energy crisis. “Energy policy will need to be rooted in market realities,” said CEO Jeff Ventura. “If infrastructure projects, mainly pipelines and LNG terminals, are not prioritized and given reasonable regulatory reviews, then I believe it’s simply impossible to meet the growing global demand for reliable, safe and affordable fuels.” Ventura said unwarranted permitting delays, adverse policy decisions and the global push for more renewable energy have resulted in underinvestment in the oil and gas sector, helping to stifle domestic gas supplies and inflate energy costs worldwide. “The current situation will not change unless there is support for the necessary infrastructure that would allow for increased supply – plain and simple,” Ventura said during a call to discuss the company’s second quarter financial results. He said nearly the same after the company’s 1Q2022 results were released in April, calling on federal and state policymakers to better support natural gas infrastructure as other executives across the space have. Their pleas come at a time when Europe is preparing to cut gas consumption through next spring. Russia has significantly reduced deliveries to the continent in retaliation to sanctions for its war in Ukraine.
Strong Demand, Inconsistent Production Launch Natural Gas Futures Above $8.70 - Natural gas futures powered further ahead on Monday as summer demand held strong and global supply challenges festered. The August Nymex gas futures contract settled at $8.727, up 42.8 cents day/day. September gained 37.6 cents to $8.571. The bull run followed a 36.7-cent prompt month advance on Friday.NGI’s Spot Gas National Avg. climbed 19.5 cents on Monday to $8.580.Bespoke Weather Services noted some cooler changes in weather forecasts over the weekend for the balance of July, given a break from above-average heat in the northern reaches of the central and eastern areas of the country. But widespread heat persists across most of the rest of the Lower 48, and this month is still on pace to be the fourth-hottest July on record, the firm said.The August contract expires Wednesday. “As we all know,” Bespoke added, “expirations can bring wild volatility, and a continued move higher would not be a surprise.” U.S. production, meanwhile, continued to hover around 96 Bcf Monday as it did late last week – about 1 Bcf from summer highs. Many analysts have estimated that, given the intensity of domestic heat and global demand, output needs to be sustained at around 97 Bcf to ensure utilities can meet summer demand and inject enough gas into storage for the coming winter. As for the production outlook, “intra-month pipeline nomination trends suggest elevated likelihood of gains at the end of July, with the potential for record high production figures within the next week,” said EBW Analytics Group senior analyst Eli Rubin. “Until a more comprehensive natural gas supply increase occurs, however, upward momentum may continue to outweigh downside risks for Nymex gas futures.”For now, he added, “the market is focusing on reloading, intense heat in the second week of August, which would flirt with triple-digit cooling-degree days (CDD).”Global demand for American LNG exports also remains elevated. U.S. liquefied natural gas plants have operated near capacity most of July, save for the temporarily shuttered Freeport LNG facility following a June fire. Demand is strong from Europe, which had until this year largely depended on Russia for its gas supplies. But amid Russia’s war in Ukraine and Europe’s opposition to it, the Kremlin has reduced flows to the continent and threatened to further limit supplies via pipeline. The International Energy Agency’s (IEA) Fatih Birol, executive director, warned in a report Monday that Europe is in the midst of a perilous gas crisis that has been building for many months as Russia has held back supplies.” He added that the Kremlin could halt gas flows “completely at any moment” to retaliate against European sanctions imposed against Russia because of the war.This has put upward pressure on demand for U.S. LNG. At the same time, as Asian countries such as South Korea and Japan prepare for the winter ahead, they have begun to compete more for American LNG, adding to demand and supporting prices.
U.S. natgas futures up over 5% as heat wave boosts cooling demand (Reuters) - U.S. natural gas futures rose more than 5% on Monday as a persistent heat wave in the United States drove up demand for gas-powered electricity for air conditioning. Front-month gas futures on the New York Mercantile Exchange (NYMEX) were up 42.8 cents, or 5.2%, to settle at $8.727 per million British thermal units (mmBtu). The session high was the contract's highest in over a month. Virtually all the contiguous United States experienced above-normal temperatures in the past week, with further dangerously hot weather forecast. The U.S. heat wave followed record heat that killed hundreds if not thousands of people and sparked wildfires in Europe. Data provider Refinitiv said average gas output in the U.S. Lower 48 states has risen to 96.1 bcfd so far in July from 95.3 bcfd in June "Once the short term heat wave is over, traders will be focused on weather end of summer injection season levels are relative to the five year norm, which we're forecasting to be behind the five year average causing some fundamental tightness heading into the winter," The U.S. oil and natural gas rig count last week rose for a third week as high prices encouraged spending at the wellpad, boosting demand for some oilfield services companies.
Natural gas hits highest level since 2008, on pace for best month ever - Natural gas prices are surging around the world as scorching temperatures stoke demand for the fuel, and as Europe's push to move away from Russian fuel roils global energy markets. U.S. natural gas futures surged more than 11% at one point on Tuesday to $9.75 per million British thermal units (MMBtu), the highest level since July 2008. The contract drifted lower over the course of the day, ending the dat at $8.99 per MMBtu for a gain of 3.05%. Natural gas is now up roughly 66% for July, putting it on track for the best month going back to the contract's inception in 1990. "Although the magnitude and speed of recent natural gas price gains point to contributing non-fundamental market dynamics, supportive fundamentals are nonetheless the primary driver," EBW Analytics Group wrote in a note to clients. "Fundamentally, scorching hot weather is the predominant bullish driver," the firm added. The contract for August delivery expires Wednesday, which is heightening volatility ahead of the roll. Volume is typically thin ahead of expiration, which means that individual trades can lead to outsized market moves. David Givens, head of natural gas and power services for North America at Argus Media, added that production growth this year has been "pitifully small." "There are significant pipeline constraints that are creating price disparities in the physical markets that we have not seen before," he noted. In Europe, Dutch TTF natural gas futures jumped 19.8% to 211.70 euros per megawatt hour, the highest level since March. The move follows a 10% gain on Monday after Gazprom said it would further reduce flows through the vital Nord Stream 1 pipeline. Beginning Wednesday, the pipeline will operate at just 20% of its capacity. Gazprom has said the cuts are related to turbine maintenance. "This is not the end of Russia's weaponization of natural gas flows, in our view, and there remain few near-term alternatives for even current reduced flows to the [European Union] — lending [to] ongoing upside price risks," RBC wrote last week in a note to clients. EU countries on Tuesday reached a deal to voluntarily reduce gas consumption by 15% starting next month. In an emergency, the suggested cuts would become mandatory. "The purpose of the gas demand reduction is to make savings ahead of winter in order to prepare for possible disruptions of gas supplies from Russia that is continuously using energy supplies as a weapon," the bloc said in a statement. U.K. natural gas futures added 17.3% on Tuesday.
August Natural Gas Futures Lose Momentum Heading into Expiry; Bull Case Intact - August Nymex natural gas futures faltered Wednesday, snapping a furious rally that dated to last week amid robust cooling demand and global supply worries. The prompt month gas futures contract settled at $8.687/MMBtu, down 30.6 cents day/day. September fell 27.1 cents to $8.554. NGI’s Spot Gas National Avg. followed suit, dropping 60.5 cents to $8.570. The August contract expired at the close Wednesday following volatile trading over its final two sessions at the front of the curve. Volatility is common ahead of expiry. Still, analysts said the demand drivers that had sent futures to the doorstep of a $9.00 settle on Tuesday remain firmly intact. These include intense summer heat and mounting global calls for American LNG. More rallies may lie ahead as a result. European demand for U.S. liquefied natural gas continues to accelerate amid a rare heatwave on the continent. The exceptional cooling demand comes on top of waning gas supplies from Russia. The Kremlin has dramatically cut gas flows to Europe – down to 20% of capacity this week — citing repair and equipment delays that it blamed on Western sanctions imposed to protest Russia’s invasion of Ukraine. The International Energy Agency called Russia’s actions retaliatory and cautioned the Kremlin could at any time halt all flows of gas to Europe. This amplified the continent’s already pressing need for LNG, supporting U.S. prices. Asian countries are also now ramping up demand for the super-chilled fuel as they bolster storage for the winter ahead, according to Rystad Energy. “The uncertainty and confusion over Russian flows and their disruption is not going away soon and will therefore continue to support and push up gas prices,” Rystad analyst Karolina Siemieniuk said. U.S. production, meanwhile, topped 97 Bcf on Wednesday, according to Bloomberg estimates, putting output near the 2022 high. However, producers have struggled to sustain that level this summer, and output has held closer to 95-96 Bcf much of the season. Analysts at Bespoke Weather Services said output needs to hold at 97 Bcf, or perhaps higher, to match exceptional summer demand and enable utilities to also inject gas into storage for the coming winter. Bespoke said the current month is on pace to be the fourth hottest July on record and, based on the mid-range weather forecast, next month could rank among the five hottest Augusts on record. The outlook calls for widespread highs in the 90s and 100s through at least the first third of August, building on heat waves that canvassed the Lower 48 in both June and July.
US working natural gas in underground storage increases by 15 Bcf: EIA | S&P Global Commodity Insights --US natural gas working stocks rose by 15 Bcf during the week ended July 22, substantially below market expectations, but gas futures shrugged in response as NYMEX Henry Hub September steps up as the prompt-month contract. Storage inventories increased to 2.416 Tcf for the week ended July 22, the US Energy Information Administration reported on July 28. The weekly build was smaller than an S&P Global Commodity Insights' survey of analysts calling for a 25 Bcf draw, but within the wide range of responses between 2 Bcf and 47 Bcf. The net injection was also substantially less than the 38 Bcf build reported during the corresponding week in 2021 and the five-year average build of 32 Bcf, according to EIA data. As a result, stocks sit 293 Bcf, or 10.8%, below the year-ago level of 2.709 Tcf and 345 Bcf, or 12.5%, less than the five-year average of 2.416 Tcf. Volumetrically, the build puts storage levels at their widest distance to the five-year average so far in 2022, and the widest, percentage-wise, since June. Despite the ostensibly bullish nature of a smaller build that widens the deficit, the NYMEX Henry Hub September contract dropped more than 40 cents in July 28 trading. The prompt-month contract did not see much of a response in the first ten minutes after the report published, remaining in a range of $8.52-$8.55/MMBtu, near its prior-day settlement of $8.554/MMBtu. By mid-session, however, the contract had fallen toward the $8.20s/MMBtu, before ultimately settling 42 cents lower at $8.134/MMBtu. The market may have already priced in expectations of a smaller build, analysts said. NYMEX Henry Hub August hurtled nearly 60% higher from its July 1 settlement of $5.73/MMBtu to its recent peak of $8.993/MMBtu on July 26. Part of the drop in US gas futures could also be attributed to seasonal changes, as traders now look ahead to September supply and demand fundamentals instead of August. Soaring gas-fired power demand from multiple heat waves has been a major driver of the recent streak of smaller weekly storage builds and provided support to higher prices. While National Weather Service outlooks show above-normal temperatures continuing through at least October, typically gas-fired power demand peaks in July and August. A forecast by S&P Global's supply and demand model calls for a larger 27 Bcf build for the week ending July 29, which would be larger than the five-year average build of 33 Bcf but below the 16 Bcf observed for that week in 2021. As a result, the deficit to the five-year average would widen slightly to 12.6% while also reducing the distance to year-ago levels to 10.3%.
High natural gas prices may ripple across the energy sector - Fallout from Russia’s war in Ukraine and hot weather are sending U.S. natural gas prices to some of the highest points in years. Exports are up as the nation tries to ship more liquefied natural gas to allied countries in Europe while a heat wave boosts demand for gas to generate electricity domestically. Analysts said the bump in natural gas prices will have long-term impacts on the U.S. economy as the fuel’s high costs push up summer electric bills and winter heating costs, as well as the price of everything from food to plastics. Natural gas prices have risen faster this year on a percentage basis than crude oil, gasoline or diesel. The benchmark U.S. price topped $9 per million British thermal units on Tuesday, more than double the price last summer, as Russia cut back shipments to European countries and the European Union’s members agreed on a plan to ration their own gas use (Climatewire, July 27). Gas is the largest source of electric power in the U.S., and gas prices help set the cost of electricity around the country, said Tyson Slocum, director of the energy program at the consumer advocacy group Public Citizen. In all, gas fueled about 38 percent of utility-scale power generation in the country last year, according to the U.S. Energy Information Administration. This year’s gas price increase will mean higher electric bills at a time when consumers are already coping with the highest inflation rate since the 1980s. “It could be several months, it could be a year, but at some point 100 percent of those costs are going to find their way into utility bills,” Slocum said.
Texas oil and gas employment may not rebound to pre-COVID levels | IEEFA - Employment in the Texas oil and gas sector has rebounded since its September 2020 nadir, and industry leaders are touting the new jobs as an indication that the industry will continue to create jobs over the long term. However, a wider view of the landscape reveals that the oil and gas industry, at slightly more than one-fifth the pace of the statewide average, has been a laggard in Texas employment growth over the past 30 years. It’s true that oil and gas businesses have added 39,400 jobs, but that’s only a little more than half the number lost during the COVID-19 pandemic. And those figures may be about as good as it gets in the wake of a May report indicating that the job additions may have already plateaued. Between September 2019 and September 2020, Texas employment for oil and gas extraction, support activities for mining, natural gas distribution, petroleum and coal products manufacturing, pipeline transportation, and gasoline stations industries (all key oil and gas industries) shed 21% of their collective workforce, or 76,300 jobs. If April 2022 employment of 333,900 jobs holds as the plateau for this latest cycle, then peak employment could wind up resembling previous oil and gas busts (see red dashed line in Figure 1).While the current environment presents some unique labor challenges, an identifiable long-term employment pattern also exists. In contrast to the overall employment picture—as represented by the Texas Nonfarm Employment, which has steadily risen over the past decade (with the exception of the COVID-19 slump) at a faster clip than the national figure—Texas oil and gas employment has declined over the last two boom-and-bust cycles for oil prices.Industrial activities driven by the normal phases of resource extraction have changed since 2014. The industry has moved from the exploratory phase of the unconventional drilling of shale and tight oil formations to the development phase. Accompanying the development phase, oil and gas producers have been keenly focused on deploying technologies that drive down their unit costs for production volumes. Multiple wells drilled on a single pad (instead of just one well per pad) and innovations that include automation have combined to squeeze many days out of the drilling and completion process. The advances help explain how similar levels of production can be achieved with fewer rigs and fewer people in the field than a decade ago. The innovation also explains how the industry’s production continues to grow while size of the oil and gas workforce is moving in the opposite direction.
'Not the same oil industry.' Record profits don't create jobs. -Oil field jobs, which plummeted during the pandemic and recession two years ago, haven’t recovered even though the oil industry itself is back on its feet and many companies are recording healthy profits.Overall employment in the sector increased to about 633,000 jobs in June, which is still about 10 percent lower than the pre-pandemic level of about 707,000, according to the Energy Workforce and Technology Council, a trade group.In Texas, the biggest oil producing state, the industry employed about 334,000 workers in April, compared to about 371,000 before the pandemic, according to the Institute for Energy Economics and Financial Analysis. In comparison, Texas’ crude output, at 5 million barrels a day, has almost fully recovered to its pre-pandemic high.Exxon Mobil Corp. has told investors it could report record some of its best earnings when it releases financial results this week, driven by surging gasoline and diesel prices (Energywire, July 5).While the oil industry is having the same trouble as other industries finding qualified workers, the trend shows that oil field employment is undergoing a structural change, said Trey Cowan, an analyst at IEEFA who studied the Texas numbers.“The oil and gas industry has served Texas well, but it’s not the same oil and gas industry that people still perceive it to be,” Cowan said.The Biden administration’s plans to curb fossil fuel use and address climate-warming pollution have driven some workers away from the oil industry, said Leslie Beyer, CEO of the Energy Workforce and Technology Council.She agreed with Cowan, though, that the industry is embracing new technology that will reduce the number of jobs in the oil patch (Energywire, April 23, 2019). For example, drilling rig operators now routinely steer their drill bits from control rooms that are located miles from the oil field. Companies are experimenting with drones and other high-tech equipment to inspect pipelines and other installations.The trend toward technology will create jobs for workers with different skills, even if overall employment drops, Beyer said.
Exxon and Chevron Report Record Profits on High Oil Prices - Exxon Mobil and Chevron, the two largest energy companies in the United States, said on Friday that profits rose to record levels in the second quarter as they continued to reap the benefits of soaring oil and gas prices. Exxon reported income of $17.9 billion for the three months through June, more than three times what it earned in the same quarter a year ago. Revenue at the energy giant jumped to $115.6 billion, from $67.7 billion a year ago. Chevron’s performance was similar, with profit more than tripling to $11.6 billion as sales rose to $65 billion, compared with $36 billion a year ago. Coming after oil prices nearly doubled from a year ago, the results were expected, but Exxon and Chevron still beat analysts’ predictions for profits in the quarter. The results mean that five of the biggest Western oil companies — including Britain’s BP and Shell, as well as France’s TotalEnergies — are likely to have generated some $60 billion in earnings for the second quarter. Shell and Total also reported bumper earnings on Thursday, and analysts are expecting similarly strong results from BP next week. With oil and gas prices as high as they are, the profit results could increase political pressure on oil companies to do more to boost production and lower costs to consumers. They have already faced harsh criticism from political leaders, including President Biden, over the windfall earnings at a time when consumer prices in the United States are spiking. On Friday, the companies said they would expand production somewhat, but they also announced a big increase in share buyback programs that reward shareholders. The surge in profits followed a spike in crude oil, natural gas and gasoline prices this year, resulting mostly from Russia’s invasion of Ukraine and efforts to punish Moscow by cutting off its petroleum sales to the rest of the world. A global economy that was rebounding from the coronavirus pandemic and hesitation among oil producers to quickly ramp up production also contributed to the jump in prices. In the three months from April to June, the American crude oil benchmark averaged about $109 a barrel, or 64 percent more than it did in the same period a year earlier, data from Bloomberg shows. On Friday, the price of West Texas Intermediate crude was closer to $98 a barrel. The average price of gasoline in the United States reached a record of just over $5 a gallon on June 14, according to AAA. But the price has been falling in recent weeks. On Friday, the national average was about $4.26 a gallon. Exxon on Friday said that its refining profits — earnings that come from processing crude oil into gasoline and other fuels — surged to $5.3 billion, from a loss of $865 million a year ago. At Chevron, refining profits were $3.5 billion in the second quarter, up from $839 million the year before. Rising energy costs have become a major contributor to inflation around the world, and have triggered sharp criticism of the energy producers. In June, Mr. Biden said that “Exxon made more money than God this year,” as he chastised the company for not investing enough to increase production. Britain, home of BP and Shell, has announced a special tax on the “extraordinary” profits of oil and gas companies.
U.S. crude stockpiles drop as exports surge to record high- EIA (Reuters) - U.S. crude oil stockpiles fell last week, driven by a surge in exports to an all-time high due to the big discount for U.S. crude when compared with international benchmark Brent. Crude inventories dropped 4.5 million barrels to 422.1 million barrels in the week ended July 22, compared with analysts' expectations in a Reuters poll for a 1 million-barrel drop, the U.S. Energy Information Administration said on Wednesday. The decline was in large part the result of a surge in crude exports to a record 4.5 million barrels per day in the latest week. The spread, or arbitrage between Brent and the U.S. West Texas Intermediate crude futures has widened out to more than $9 a barrel, making it more attractive for U.S. companies to sell crude overseas and for international refiners to bear the costs of transport to get the cheaper U.S. oil. "The arb has only increased so you may actually see us challenge 5 million barrels in coming reports," said Robert Yawger, executive director of energy futures at Mizuho. U.S. crude production rebounded to 12.1 million bpd after two weeks of declines, rising 200,000 bpd in its biggest increase since December. U.S. gasoline stocks USOILG=ECI fell by 3.3 million barrels on the week. After a couple of weeks of lackluster demand, gasoline product supplied by refiners rebounded, though overall gasoline demand is down 7% over the last four weeks when compared with the year-ago period.
Record US Oil Exports Set to Grow as WTI Discount Deepens – Bloomberg - The US is exporting more oil than ever before, with shipments poised to climb even higher. A key factor: The widening gap between West Texas Intermediate and Brent oil futures, which means traders can profit more from each American barrel shipped to energy-starved Europe and elsewhere. The spread this week blew out to a level not seen since 2020, incentivizing exports that are already at a record. Crude shipments climbed 21% last week to an all-time high of 4.55 million barrels a day while total petroleum exports also hit a record, Energy Information Administration data show. Tight supplies in Europe following Russia’s growing isolation have kept Brent oil futures elevated and stoked demand for US crude. At the same time, releases from the US strategic petroleum reserve have kept a lid on WTI prices.
United States announces to sell additional 20 million barrels of oil from strategic reserve -- The United States will sell an additional 20 million barrels of oil from the Strategic Petroleum Reserve, reported Reuters. The Joe Biden administration said that the it would use the oil from Strategic Petroleum Reserve as part of the previous plan to counter the prices hiked due to the Russian invasion of Ukraine.Earlier in March this year, the Biden administration announced to release one million barrels of oil per day from the Strategic Petroleum Reserve from the coasts of Louisiana and Texas. According to reports, the US had already sold 125 million barrels from the reserve. As per the US Energy Department, oil output in the country will rise to more than 11.9 million barrels per day (bpd) in 2022 and to nearly 12.8 million bpd in 2023. In 2021, the oil output in the US was 11.2 million. In 2019, it was 12.3 million bpd.The US will invite bids in autumn this year to begin the process of buying back 60 million barrels of crude for reserve, reported Reuters. It is the first in refilling the stockpile after the 180 million barrel release."What it means in practice is that producers would have more certainty about future demand for their product, and that would encourage investment in production today, reported Reuters quoting Reuters.Notably, the oil level in the SPR dropped to 475.5 million barrels. It is the lowest since 1985. An analysis by the US Treasury Department showed that gasoline prices at the pump have been reduced by as much as 40 cents per gallon due to the SPR releases, along with coordinated releases from international partners.
US Actually Sold 6 Million Barrels From SPR To Hunter Biden-Tied China Firm -The Biden administration has sold nearly 6 million barrels of oil from the U.S. strategic reserve to an entity tied with the Chinese Communist Party, records show.From September 2021 to July, the Department of Energy (DOE) has awarded three crude oil contracts with a combined value of roughly $464 million to Unipec America, the U.S. trading arm of Chinese state-owned oil company Sinopec, according to a review by The Epoch Times of the DOE documents. A Chinese firm with ties to Hunter Biden had made an investment in the national oil giant.The sale would tap 5.9 million barrels in total from the U.S. Strategic Petroleum Reserve (SPR) to export to the Chinese firm. The latest contract was unveiled on July 10, consisting of 950,000 barrels sold for around $113.5 million.The two most recent sales to Unipec came out of an emergency drawdown of the U.S. oil stockpile, initiated under President Joe Biden on March 31 in what he said would offset the loss of Russian oil in global markets and tame rising fuel costs at home. But the Unipec contracts have been a subject of heavy criticism since the firm’s connections to the younger Biden came into focus in recent weeks. With Americans nationwide still reeling from the $5 per gallon gas prices in June, the selling of oil reserves to foreign adversaries such as China is at odds with U.S. energy and security needs, Republican lawmakers and analysts have said.“Biden is draining our strategic reserves at an unprecedented rate. This is an abuse of the SPR, far beyond its intended purpose. Sending U.S. petroleum reserves to foreign adversaries is wrong, and it undermines our national security,” Rep. Clay Higgins (R-La.) told The Epoch Times.What the United States should do, he argued, is to “unleash American energy production and ensure that our strategic reserves are stocked and able to meet the demands of a national emergency.”
Keystone Pipeline won't lower gas prices - Ever since boycotts started blocking Russian petroleum products, social media has been rife with memes that blame rising gasoline prices on “the cancellation of the Keystone Pipeline.”Example: “Sooo, if shutting down Russia’s pipeline(s) will hurt their economy, wouldn’t shutting down ours hurt our economy? Asking for a buddy.”Most of the criticism comes from people who recycle truthiness. Former Vice President Mike Pence: “Gas prices have risen across the country because of this administration’s war on energy — shutting down the Keystone Pipeline.”Rep. Jim Jordan, R-Ohio: “Biden shut off the Keystone Pipeline.”Here’s what really happened: No one shut down, canceled, or shut off the Keystone Pipeline. It is fully operational, daily delivering 590,000 barrels of tar-sands oil in Canada to U.S. refineries.What some pipeline advocates think is the “Keystone Pipeline” is a 1,700-mile “shortcut” called Keystone XL, or KXL. It would have sliced through Montana, South Dakota, Nebraska, Kansas and Oklahoma to the Texas Gulf Coast, delivering 830,000 barrels of tar sands oil per day. Many residents of those states fought fiercely against the pipeline cutting through their land.Now, “Build the Keystone Pipeline” has become a social media mantra, as if the United States could so decree. It is the Canadian firm, TC Energy, formerly Trans-Canada, that officially terminated the project once President Joe Biden withdrew its permits. Even if construction on the pipeline began tomorrow, KXL could not be up and running in less than five years. The KXL pipeline was a project developed by a foreign company that would have delivered foreign oil products to mostly foreign markets.When President Donald Trump repermitted KXL in 2017, his own State Department reported that it would not lower gasoline prices. The price of oil is set by the global market and certainly not by U.S. presidents. What’s more, the project was just about dead for a number of reasons, including litigation from aggrieved property owners whose land TC Energy seized by eminent domain.We should also remember that rendering gasoline from tar-sands oil, the planet’s dirtiest petroleum, is far more polluting and energy-intensive than conventional refining. Some carbon content is burned off in a process that belches greenhouse gases and generates toxic waste called petcoke, which is dumped around the country in piles six stories high. Petcoke billows through neighborhoods and infiltrates schools and houses even when windows are shut.
Keystone Pipeline volumes rise to about 610,000 b/d from capacity hike - TC Energy said its Keystone Pipeline crude volumes rose to roughly 610,000 b/d in the second quarter from a previous baseline capacity of 590,000 b/d as the Canadian pipeline operator aims to increase volumes from the Alberta oil sands to the US Gulf Coast through more modest optimization efforts.TC Energy said July 28 that, using an open season that dates all the way back to 2019, it aims to continue to ramp up Keystone volumes through the end of 2022, but declined to provide specific volumes, citing commercially sensitive deals. TC said it placed almost one-third of its open season contracts into service during the past quarter. The goal also is to grow the southern leg of the Keystone network, the Marketlink Pipeline, which runs from the Cushing, Oklahoma storage hub to the Texas Gulf Coast."We safely reached nearly 610,000 b/d a day as we placed about 30% of the 2019 open season contracts into service," CEO François Poirier said during a July 28 earnings call. "We're increasing long-haul volumes on Keystone, and we're also working to increase utilizations on Marketlink."The earnings call comes just five days after Keystone returned to normal service following a nearly weeklong reduction in capacity triggered by damage at a third-party electric substation.
Oil, Natural Gas Activity Creeping Upward in North Dakota as Labor Challenges Persist - Active drilling rigs, hydraulic fracturing crews and drilling permits all are creeping upward in North Dakota, though workforce challenges remain a hindrance to faster growth, the state’s top oil regulator said Tuesday (July 19). North Dakota had 42 active rigs as of Tuesday (July 19), which also was the monthly average for June. This is up from 40 in May and 38 in April, according to the state’s Department of Mineral Resources (DMR).The number of active fracturing crews stood at 18, up from 16 a month earlier, but below the pre-covid number of 25. Drilling permits totaled 77 in June, up from 68 in May and 55 in April. Permitting “continues to rise, as does the rig count,” DMR Director Lynn Helms told reporters on Tuesday. “So those are both major positives for t he industry.”The industry, however, is “still really struggling to find [a] workforce.”To maintain a slow and steady pace of production growth in North Dakota, 50-55 active rigs and 20-25 hydraulic fracturing crews would be ideal, said Helms. The Permian Basin of West Texas and Southeastern New Mexico, for example, is far outpacing North Dakota’s Williston Basin in terms of incremental drilling and fracturing activity, Helms noted.Oil and natural gas production in North Dakota mostly recovered in May after back-to-back snowstorms in April severely curtailed output.Oil output rose 17% to 1.06 million b/d in May from 905,357 b/d in April. Natural gas production increased 14% to 2.79 Bcf/d, DMR data show. The natural gas capture rate, meanwhile, improved to 94% from 93%, reflecting industry efforts and state regulations to curb routine flaring.In the Bakken Shale, which accounts for 96% of North Dakota’s oil output, the Energy Information Administration is forecasting natural gas and oil production to rise by 31 MMcf/d and 19,000 b/d, respectively, in August versus July.
O.C. supervisors approve settlement in oil spill response – LATimes - Orange County supervisors voted today to accept nearly $1 million from Amplify Energy to cover expenses incurred responding to the oil spill off the waters of Huntington Beach in October. The supervisors voted 4-1, with Supervisor Andrew Do dissenting, to accept $956,352 from the oil company to cover expenses related to the emergency response and cleanup efforts. “We basically have made whole in terms of our expenses, which was the goal — to get reimbursed for all of our expenses related to the oil spill, and those expenses are nearly $1 million, so it was a very effective, timely turnaround to get the county reimbursed,” Supervisor Katrina Foley told City News Service. Do said he voted against the settlement because it could leave the county potentially liable for more uncovered expenses down the line. “Getting $900,000 or even $1 million for potential claims to comedown in the future is peanuts,” Do told CNS. “If we have lawsuits in the future and cannot go to Amplify to indemnify us then $1 million in legal fees will be gone in six months. I think it’s premature. The incident happened about 10 months ago. Until we see with more clarity the number of claims, but also the type of claims, we also have to keep in mind we might have claims that might not materialize for years to come. For that reason I would defer— that we take our time.” Foley said she felt comfortable that the risk of any future claims would be low. A statute of limitations on most claims has already passed, she added. “I think it’s a win for the taxpayers,” she said. “We got the cleanup done ... It’s a good settlement for the county.” The settlement removes the county from the federal litigation before U.S. District Court Judge David Carter in Santa Ana. Amplify Energy owns the oil rig that spewed thousands of gallons of crude into the waters off Huntington Beach last October. Federal investigators have said it appears the pipeline was damaged by a ship’s anchor likely belonging to one of dozens of cargo ships that were backed up in traffic over several months outside the Los Angeles-Long Beach port complex.
Pipeline company to pay nearly $1M over California oil spill -The owner of an underwater oil pipeline that spilled some 25,000 gallons of crude into the ocean off Southern California last year will pay nearly $1 million in cleanup costs. The Orange County Board of Supervisors on Tuesday agreed to accept a proposed claim settlement with Amplify Energy Corp. over the costs of dealing with last October's spill off of Huntington Beach. The ruptured pipeline spilled the oil, equal to about 94,600 liters, about 4 miles (6.4 kilometers) offshore. While less severe than initially feared, the spill shuttered beaches for a week and fisheries for more than a month, oiled birds and threatened wetlands that Orange County communities have been striving to restore. Investigators believe the San Pedro Bay Pipeline that ferried crude from offshore oil platforms to the coast was weakened when a cargo ship’s anchor snagged it in high winds in January 2021, months before it ultimately ruptured Oct. 1 Houston-based Amplify Energy sued two container ship operators and an organization that helps oversee marine traffic, saying they failed to prevent the spill. The suit alleges that in January 2021 two ships dragged their anchors across the pipeline. The $956,352 settlement with Orange County includes about $238,000 for the county Public Works Department, which built sand berms and placed booms to prevent oil from polluting sensitive wetlands, the Orange County Register reported. Money also will go to the county's health agency, the Sheriff's Department that operates the Harbor Patrol, and reimburse the county for legal costs and the hiring of contractors and environmental consultants. Meanwhile, Amplify and two subsidiaries were indicted by a federal grand jury last year on a misdemeanor count of illegally discharging oil. The indictment alleges that fatigued workers failed to properly act when repeated alarms signaled an offshore pipeline rupture and continued operating the pipeline for hours. Amplify has said company workers on and offshore believed they were responding to false alarms from a malfunctioning system.
President Biden can (still) defuse the climate bomb in America’s Arctic - All eyes are on the president to deliver on his climate promises, now that the chance at climate legislation seems to be slipping away yet again. The resident finds himself in an increasingly hot seat to address the climate crisis on all fronts — and the ticking climate bomb that only the White House can defuse is a development proposal so massive it would equal the annual output of nearly one-third of U.S. coal power plants.ConocoPhillips Willow oil and gas development project would be the largest in the nation, proposed on some of America’s most biodiverse and sensitive public lands. The administration recently initiated a process to consider the project’s environmental impact, giving the public and local communities just 45 days to weigh in, the shortest period legally allowable. A project of this magnitude deserves longer, as no single oil and gas proposal has more potential to impact this administration’s climate and public lands legacy. Furthermore, the enormous proposal is just the tip of the iceberg, laying a foundation for expensive oil and gas infrastructure for decades to come. Our climate would pay the price, and yet — as the project wouldn’t come online for years — it would have zero impact on current gas prices.Most Americans may not ever get to experience firsthand the rich ecosystem and biodiversity at risk under the proposal, but for decades people from around the country and world have raised their voices to protect the unique and unspoiled lands of our American Arctic. On a recent visit to the Utukok River (southwest of the proposed drilling area), I had the remarkable experience of seeing what’s at stake: caribou roaming, grizzly bears feeding and mating, and endless carpets of wildflowers blooming across the expansive landscape. We discovered a mammoth tusk near camp, which made us think about how rich of an ecosystem this area has been for thousands of years. It was a stark reminder of these critical wilderness areas, and how sensitive and pristine Arctic ecosystems would be pushed past tipping points by industrial development, potentially risking extinction of keystone species such as caribou and polar bears.As the single biggest oil and gas proposal on federal lands — by far — Willow represents an existential climate threat. It would further accelerate climate change effects in a region already being ravaged by climate change (warming 3-4 times the global average). If President Biden is serious about honoring the climate and public lands protection commitments that helped elect him, this is the real litmus test.
Fossil fuel industry lobbying increases as ConocoPhillips fights for more oil drilling in Alaska --Oil and gas companies spent more than $63.5 million lobbying the federal government in the first six months of 2022, an increase of 11% compared to the same period last year when industry spending hit a 10-year low.Driving much of this increase is ConocoPhillips, which reported spending more on federal lobbying in the first half of 2022 than it has annually for any year since 2011. The Texas-based oil company spent roughly $5.9 million on lobbying in the first half of 2022, three times what it spent in the same period last year, as it sought final approval for its long-delayed Willow project — an $8 billion plan to extract oil from the federally-administered National Petroleum Reserve in Alaska’s North Slope.A federal judge last year vacatedconstruction permits for Willow, approved in the final months of former President Donald Trump’s administration because the government did not properly assess Willow’s impact on global temperatures and Arctic wildlife. Rather than challenge the decision, the Bureau of Land Management revisited the review, a draft of which was released earlier this month.Environmental groups urged President Joe Biden to block development permanently, arguing that Willow will commit the U.S. to 30 years of fossil fuel extraction, prolonging American dependence on oil and undercutting the president’s goal of reducing planet-warming greenhouse gas emissions by at least 50% by 2030. Supporters of the project, including Sens. Lisa Murkowski (R-Alaska) and Dan Sullivan (R-Alaska), say Willow will bring jobs to Alaska, enrich the state, reduce energy costs and increase global energy security.As a presidential candidate, Biden promised sweeping action on climate change, including a ban on new oil and gas permitting on public lands and waters that became a target of industry lobbying. But his administration, under pressure to lower rising gas prices, resumed federal oil and gas leasing in April, infuriating climate activists. Three months later, it put out a plan opening federal waters off the coast of southern Alaska and in the Gulf of Mexico to offshore drilling. Several climate activists have characterized the Bureau of Land Management’s release of a revised environmental assessment as a step toward Willow’s approval — and blow to the climate. “[Willow] poses an unparalleled climate and biodiversity threat,” Kristen Miller, conservation director of the Alaska Wilderness League, said a statement.“This project is proposed in America’s Western Arctic, an area that is already being ravaged by climate change, this project would put critical wildlife and subsistence resources in the crosshairs, and it would lock us into decades of carbon intensive oil and gas extraction.” The bureau calculates ConocoPhillips’ plan for Willow will release more than 284 million metric tons of greenhouse gasses — nearly 24 million metric tons from building and operating the project and nearly 261 million metric tons from transporting, refining, and burning the produced oil. The effect these emissions will have on the climate is amplified in the Arctic, which is warming at more than double the global rate, according to the bureau’s assessment.
De Beers fined $350,000 over diesel spill at Snap Lake -De Beers must pay $350,000 after being prosecuted over a diesel spill at its now-defunct Snap Lake diamond mine in December 2017. Environment and Climate Change Canada, heralding Monday’s sentence, said the money will be placed in a fund that supports “projects that benefit the natural environment.” De Beers was charged under the Canadian Environmental Protection Act, a prosecution considered significant as one of the first since the act’s regulations were amended in 2020. Environment and Climate Change Canada said on Monday that up to 1,125 litres of diesel had spilled during a fuel transfer between two above-ground storage tanks at the mine. However, a spill report from De Beers at the time suggested around five times that quantity of diesel had spilled. According to that report, an attendant had forgotten to close a tank outlet valve ahead of a shift change while trying to move diesel from one tank to another. The attendant had worked late the previous night restoring power following an outage. During cleanup, the spill report stated, staff discovered an estimated 5,903 litres of diesel had been released into the environment after overflowing the containment berm. Under the Environmental Protection Act, De Beers faced a fine of between $100,000 and $4 million. Following the spill, De Beers told the Mackenzie Valley Land and Water Board it had reviewed work procedures and training with staff, told the site crew not to start refuelling until crew changes were complete, and reviewed risk assessments and critical controls for winter camp conditions.
Diesel Spill off Bahamas Resort Island - Ship & Bunker -A cargo ship delivering fuel to the Bahamas resort island of Great Exuma has spilled around 35,000 gallons (159,000 litres) diesel fuel, according to media reports. The incidence happened a week ago when the ship, the Arabian, was discharging its cargo,according to a Euronews report. Containment action was taken by crew and, according to a local politician quoted in the report, pollution from the spill did not appear to be widespread. While the extent and number of oil spills from ships has declined since the Exxon Valdez disaster of 1989, smaller spills of fuel oil and crude oil persist. Typically, these happen when fuel is being loaded onto or discharged from a ship
Emergency operation after large oil spill off Kent coast averts serious shoreline impact -An emergency operation to prevent an oil spill reaching Kent's coastline has helped prevent serious shoreline impact. Pollution experts and Maritime Coastguard Agency teams have been dealing with an oil slick which first appeared 12 nautical miles off the coast. Modelling on Friday afternoon showed that, due to the changing direction of offshore winds, the oil slick is unlikely to make landfall. Instead, the slick will come within five nautical miles of the coast near Dover this evening, before continuing to move away from shore. The cause of the spill is still unknown and being investigated, but at ITV News Meridian understand a wreck on the seabed is thought to be one possible source. Two large vessels have been sent with high-speed containment, decanting and recovery systems have been sent to capture as much of the oil slick as possible – with efforts focussed in Deal and Ramsgate. The spill was first reported to the Maritime and Coastguard Agency by a Royal Navy vessel. A spokesperson for the Maritime and Coastguard Agency said: "We believe we have now identified the source of the oil observed on the water off the Kent coast over the past few days and are in process of putting together a robust containment plan to ensure the oil will not reach our shores or harm the local wildlife in any way.
E.U. emergency plan over Russian gas adds exemptions despite resistance - — European Union governments Tuesday agreed on a plan to reduce natural gas consumption amid looming shortages, although after resistance from southern European countries the measures are more limited than originally conceived. The 27 member states will broadly aim to cut gas use through the winter by 15 percent compared with previous years, as they seek to keep the heat on through the coldest months and insulate themselves from destabilizing disruptions of imports from Russia.But they introduced exemptions that could apply in a wide range of cases and had not been part of the initial plan. They also raised the bar for transitioning from voluntary to mandatory cuts.The nations most opposed to the strict original proposal — SpainandPortugal, supported by France and other countries — argued that uniform curbs without exemptions would have been an illogical sacrifice, given that their economies aren’t reliant on Russian gas and they expect to have sufficient supplies. It’s Germany — which ignored warnings and grew to depend on Russia for more than half of its gas supply — that should carry the biggest burden, they said.“Unlike other countries, we Spaniards have not lived beyond our means from an energy point of view,” Spanish Ecological Transition Minister Teresa Ribera Rodríguez said last week, in an apparent reference to Germany.Fault lines between northern and southern Europe are a recurring theme in E.U. debates. But in this case, the usual power dynamics are flipped.Germany’s political establishment for years has viewed itself as a prudent guardian of European economic and political stability. German officials pushed for tough austerity measures in Spain, Greece and Portugal in the wake of financial and sovereign debt crises.And at times they have condemned southern nations for supposedly living off the hard-earned income of northern and central Europeans. People in Spain and Portugal should stop taking siestas and retiring early, leading German politicians and commentators repeatedly advised. Germany now finds itself in a very different position: Criticized for having behaved irresponsibly with its long-standing reliance on Russian gas, and now in need of solidarity and forbearance from nations it has sometimes only begrudgingly supported. Despite an effort to diversify its energy, Berlin remains at the mercy of the whims of Moscow. Tuesday’s meeting of E.U. energy ministers came a day after Russian energy giant Gazprom said it would halve the natural gas flowing through its main pipeline to Germany. Gazprom cited problems with a turbine, but German officials said they saw no legitimate reason for the reduction.
Russia’s Gazprom to slash gas to Germany, as Putin fosters uncertainty in Europe — Russian energy giant Gazprom on Monday said it would halve the natural gas flowing through its main pipeline to Germany, keeping European countries in a state of uncertainty as they scramble to build up energy supplies for winter. Starting Wednesday, the daily gas flow through the Nord Stream 1 pipeline — the biggest between Russia and Western Europe — will be set at 33 million cubic meters, Gazprom said. That amounts to about 20 percent of capacity, down from 40 percent. Gazprom cited problems with a turbine.Germany’s Ministry for the Economy and Climate said it saw no technical reason for the reduction in deliveries. “We are monitoring the situation very closely,” it said in a statement.German officials have accused Russia of using repairs as a pretext to squeeze Europe, causing prices to soar and giving President Vladimir Putin leverage against Western countries backing Ukraine in the war. Last week, it was unclear if Russia would turn the gas back on after the end of scheduled maintenance work on Nord Stream 1, which stretches 760 miles under the Baltic Sea. The gas did start pumping again on Thursday, providing some relief to global energy markets and concerned European officials. But even then, the flow was at the reduced level the pipeline had been delivering at since June, when Gazprom first cited technical problems with its turbines. Germany is still dependent on Russia for around a third of its supplies and has been racing to fill up its gas storage facilities before gas is needed to heat homes this winter. This week’s further reduction will hamper German plans to have storage capacity 75 percent full by September and 95 percent by November. Germany has begun to cut consumption wherever it can. Some landlords are already rationing hot water, which has been turned off in many public buildings, while lights have been dimmed and public fountains lie still.
European Gas Soars As Russia Throttles NS1 Flows To just 20% Of Capacity - Less than 24 hours after EU countries approved the European executive's emergency natural gas consumption proposed cut of 15%, Russia further throttled gas supplies Wednesday, bringing deliveries through Nord Stream 1 to merely 20% of its total capacity, or roughly half of recent flows. Reuters recorded that physical flows via Nord Stream 1 pipeline have fallen to 14.42mln KWH/H between 0900-1000BST (vs. 14.41mln KWH/H between 0800-0900BST; 27.77mln kWh/H between 05:00-06:00BST), noting further citing Germany’s gas network operator Gascade that since 07:00BST on Wednesday, 1.28MCM/hr - 20% of Nord Stream 1 maximum capacity has been transported in accordance with nominations. This sent prices soaring further to reach earlier all-time highs set immediately in the wake of the Ukraine invasion. The Kremlin was cited as saying Wednesday that it is supply "as much gas to Europe as possible" but again stressed it's unable to guarantee supplies due to Western sanctions on vital equipment needed for proper maintenance and functioning. Uniper and Italy's Eni have acknowledged receiving less gas from Gazprom through the start of this week into today, also with German Economy Minister Robert Habeck saying amid the scramble to stave off full-blown emergency rationing measures, "It is true that Germany, with its dependence on Russian gas, has made a strategic mistake but our government is working... to correct this."Berlin accounts for 40% of all EU gas imports from Russia last year, and has been plunged into supply crisis since mid-June, when Gazprom initially halved its flows to the leading EU country (first cutting to 40% of capacity), with the federal government lately having to rescue its major gas importer Uniper with a $15 billion euro bailout.Benchmark NatGas prices in Europe at the Dutch TTF hub...on track to reach new record closing high, after having already risen by more than a third on the week.European gas prices Wednesday accelerated to reach earlier all-time highs just after Russia invaded Ukraine, rising 12% early in the day.As FT also observes, "The European benchmark TTF contract has reached €220 a megawatt hour, leaving it on track to hit a new record closing high, exceeding the previous peak in the immediate wake of Russia’s invasion of Ukraine.""The surge has left gas prices at roughly 10 times their level prior to the start of Russia’s squeeze on supplies last year. Gascade, Germany’s gas network operator, said flows on Nord Stream 1 had roughly halved to 20 per cent of capacity as of Wednesday morning," notes FT.And from the Russian side, some of the latest out of Gazprom's executive leadership indicating the standoff over sanctioned foreign parts, crucial turbines in particular, looks to continue:
The End of Cheap Russian Gas: Turning the Lights Out in Europe by Yves Smith - Even though Putin had warned that the Nord Stream 1 gas pipeline had another sick turbine that needed repair, had offered Europe supply through Nord Stream 2, and had also said that Russia would need to test the Canadian-vacationing part when it returned (it still is not back in Russian hands), EU leaders instead obsessed about the one thing Russia repeatedly insisted was not happening: Russia keeping Nord Stream 1 turned off after its long-scheduled annual maintenance in July. Interfax provided a bland update of what is an attention-focusing event for Europe, that Russia is cutting the Nord Stream 1 gas flow further, to roughly 20% of capacity, because the other sick part is too sick and the globe-trotting part isn’t back in St. Petersburg, much the less put through tests so it can be restored to service. Presumably after that happens, the shipments over Nord Stream 1 can go back to the 40% level. But that is up in the air. From Interfax:Gazprom said on Monday that it was shutting down another Siemens gas turbine engine at the Portovaya compressor station as it was reaching the end of its operating period before overhaul (in accordance with Rostekhnadzor regulations and taking into account the technical condition of the engine).As a result, the daily capacity of the Portovaya station from 07:00 Moscow time on July 27 will be up to 33 million cubic meters per day compared to the current 67 million cubic meters per day (40% of the capacity). The underlying problem is the unrealistic thinking of the West, and particularly the EU. Whether you think Russia’s response was justified or not, the West had set out to destabilize Russia by turning Ukraine into NATO-lite. If the US reacted badly to the prospect of nuclear missiles in Cuba, just imagine how it would have reacted if Mexico joined a military alliance with Russia and accepted Russian training, funding, and armaments, and funded a civil war on its border, killing 14,000 English-speakers and creating over 1 million refugees. Despite the aggressive Western sanctions, including seizing hundreds of billions of central bank assets, seizing Gazprom infrastructure, and explicitly trying to break the Russian banking system and even breaking up Russia itself, Russia has been very restrained as far as counter-measures are concerned. So after loudly saying that the EU wants nothing to do with Russian energy or Russian pipelines, the EU should hardly be upset if Russia is tired of laboring not to give them what they asked for, an economic divorce. The problem is Europe is now upset that it’s getting what it acted like it wanted. Putin complained in at least two speeches about another turbine having a crumbling lining, confirmed by Siemens. He seemed pretty exasperated. Recall that Germany put Nord Stream 2 on hold when Russia recognized the breakaway republics. As you will see, this is proving to be yet another “Punish ourselves to hurt Russia” move. Per Bloomberg in May, Gazrpom indicates that it would start using the pipeline domestically. From Putin’s Q&A with the press in Iran on July 19. Note I have yet to see anywhere else an unpacking of the various ways Russian gas once got to Europe: [….] Putin was basically saying “What are we do to?” Even though Siemens is theoretically on the hook, it appears that all significant repairs are made outside Russia, evoking the specter of yet more parts stranded outside Russia. And after the doubts about when if ever Gazprom would get its peripatetic turbine back, if I were them, I wouldn’t let the other in-need-of-fixing part leave Russia until I had at least gotten the other one back.RT has a tidbit that is not pretty:Gazprom said earlier on Monday that the paperwork it had received from Canada and Siemens regarding the shipment of the turbine did not clear up sanctions-related questions.This is what Gazprom had sought, per Reuters:Gazprom said on Friday that it still had not obtained necessary documentation from Siemens Energy confirming the exemption from European Union and Canadian sanctions for a key turbine for the pipeline to be returned to Nord Stream’s Portovaya compressor station.Canada and the EU can’t gin up a short note on official stationery? Without some documentation of a sanctions waiver (after having gone on noisily about how because sanctions the part was held hostage in Canada), what assurance does Russia have that 1. there won’t be some punishment vis a vis the part delivery and 2. it won’t be subject to the same run-around if the second busted Nord Stream 1 part has to go to the EU or Canada, which seems likely?
European Union demands rationing of natural gas to wage war The European Union has committed its member states to reduce their natural gas consumption by 15 percent from next month until March next year. The energy ministers of the 27 EU countries adopted an EU Commission proposal on Tuesday. The way in which the cuts are implemented is up to the individual states and the targeted savings are voluntary. However, if an acute emergency occurs, mandatory savings targets can also be adopted if at least 15 member states representing 65 percent of the population agree. Originally, the EU Commission wanted to reserve the right to declare an energy emergency, but could not enforce this position. The austerity decision is being sold as an act of “solidarity” because all countries, regardless of how much they are affected by possible supply shortfalls, have to make the same savings. The reduction of demand across the EU is an expression of the “principle of solidarity enshrined in the EU Treaty,” the Commission’s text states. In fact, it is a war measure that was enforced by the EU Commission and the German government with brute force. The aim is to enable Europe to continue the proxy war against Russia in Ukraine for months and years, until Russia’s military defeat. Brussels and Berlin fear that resistance to energy scarcity, inflation and horrendous rearmament costs could lead to resistance and that social pressure on governments could jeopardize the EU’s cohesion. Therefore, the concentrated power of the EU apparatus is used to push through the austerity measures and to bring all members into line. Like any war, the war against Russia, driven by the United States and the European powers with billions of dollars in arms, requires unity, discipline, material sacrifice and the suppression of any internal opposition. The massive energy crisis, which has caused the prices of gas and petrol to explode and threatens to lead to a massive energy outage during the coming winter, is a direct result of the war in Ukraine. Even before the reactionary Russian attack on Ukraine, the commissioning of the completed Nord Stream 2 pipeline, which, with an annual capacity of 55 billion cubic metres, could meet 15 percent of the total European demand, was permanently cancelled. Other pipelines, which have been supplying Russian gas to the EU through Ukraine or Belarus for decades, stopped operating due to the war. Nord Stream 1, which has the same capacity as Nord Stream 2, currently supplies 40 percent of its capacity and only 20 percent from Thursday. Moscow has justified the supply reduction with the necessary maintenance of turbines, some of which fell victim to Western sanctions, and has denied the intention of wanting to stop operations altogether. The EU has rejected this as an excuse and accused Russia of deliberately trying to “use gas as a political weapon.” German Economics Minister Robert Habeck accused Russian President Vladimir Putin of playing a “perfidious game”: he tried to weaken the great support for Ukraine and drive a wedge into German society.
E.U. will ration natural gas to counter Russian threats - The European Union agreed yesterday to ration natural gas to help prevent a severe shortage of fuel for heating as the threat of a complete gas shutoff by Russia hangs over the 27-member bloc.Under the initiative, E.U. countries would voluntarily cut gas consumption by 15 percent between August and next April compared to annual averages over the same period. Mandatory cuts could be triggered in exceptional circumstances, according to the regulation.E.U. energy ministers endorsed the plan less than a week after the European Commission first proposed it — earning praise from European Commission President Ursula von der Leyen, who called the move a “decisive step” to blunt the threat of a full gas disruption by Russian President Vladimir Putin.The move comes as Moscow continues to reduce flows of gas to Europe through the Nord Stream 1 pipeline to Germany.Gas prices have soared amid fears over supply shocks.“Reducing gas demand proactively allows us to avoid rushed or unilateral decisions when it is too late,” European Energy Commissioner Kadri Simson said yesterday during a press conference. “It will make it possible to plan the savings in the most efficient way, minimizing the impact on our people and businesses.”As much as the plan is aimed at ensuring energy security, it also could help nudge the E.U. closer to cutting its planet-warming pollution — if the move results in a sustained drop in demand and not just a shift to other suppliers of gas or other forms of energy, such as coal.Rationing gas is the only real option Europe has to address short-term supply shocks.New drilling or switching to new technologies are all medium-term efforts.Nearly 60 percent of the E.U.’s energy supplies are imported, and Russia has been its main supplier of fossil fuels. The bloc has set a goal of cutting emissions by 55 percent by 2030 under its climate law, and many countries have set coal phaseout targets, but it has been slower to build out renewable alternatives. The E.U. measure endorsed yesterday only applies for this winter, and member states can decide individually how best to cut their consumption.
Putin's new gas squeeze condemns Europe to recession and a hard winter of rationing - Europe's descent into an economic contraction looks to have been confirmed with Russia squeezing natural gas supplies to the region and heavy industry facing tough rationing in the coming months. Just days after Europeans breathed a sigh of relief as Russian gas giant Gazprom announced it would resume supplies through the Nord Stream 1 pipeline, it then announced Monday that flows would be reduced yet again. The announcement, with Gazprom saying it would be for maintenance of a turbine along the pipeline, was greeted with incredulity and condemnation in Europe. Ukraine's president, Volodymyr Zelenskyy, said the move — which will see flows to Germany fall to 20% of its capacity from an already low level of 40% — was tantamount to a "gas war" with Europe. Germany's economy minister, Robert Habeck, said the excuse that maintenance was the reason for the supply cut was a "farce." It puts Europe in a tricky situation as it contends with rampant inflation, the war in Ukraine and an already troubled supply chain following the Covid-19 pandemic. Germany, the region's largest economy and traditional growth driver, has a particular reason to worry. It's largely reliant on Russian gas and is sliding toward a recession. The government is particularly concerned about how it will keep the lights on over the winter: Habeck said Monday evening that "we have a serious situation. It is time for everyone to understand that," during an interview with broadcaster ARD. Habeck also said that Germany must reduce its gas consumption, noting "we're working on that." He said that in a scenario of low supplies, gas for industries will be reduced before private residences or critical infrastructure such as hospitals. "Of course it's a big concern, which I also share, that this can happen. Then certain production chains in Germany or Europe would simply no longer be manufactured. We have to avoid that with all the strength we have," Habeck said. With Russia under a raft of international sanctions in response to its war on Ukraine, gas is one weapon it can use against Europe. The region has previously received around 45% of its annual supplies from Russia and while it desperately tries to seek alternatives, such as U.S. liquefied natural gas, it cannot replace its Russian hydrocarbons fast enough. Unless the situation dramatically changes, analysts are predicting a difficult winter ahead for the Continent. "High energy costs are pushing Western Europe toward recession," S&P Global Market Intelligence said in a report Sunday.
Cold showers and more: German city turns off the hot water to survive Putin's gas cuts - The German city of Hanover has cut off hot water in public buildings, swimming pools, sports halls and gyms as Russian reductions in gas supplies fuel fears of a winter energy crisis.The city will also switch off public fountains and stop lighting up large buildings at night, as the city aims to reduce its energy consumption by 15%, according to a tweet from Hanover Mayor Belit Onay."This is a reaction to the impending gas shortage, which poses a major challenge for the municipalities - especially for a large city like Hanover," Onay said.The city will also reduce the times when heating is on in municipal buildings between October and March — excluding day care centers — convert all lamps to LED, ban mobile air conditioners, fan heaters or radiators, and install motion detectors in place of permanent lighting in public toilets, bicycle sheds, corridors and parking lots.Russian gas giant Gazprom announced Monday that it was halting another turbine in the Nord Stream 1 pipeline to Germany for maintenance purposes. The further cut meant gas flows, which were already operating at just 40% of capacity, fell to just 20%, prompting incredulity in Europe.German Economy Minister Robert Habeck called the maintenance justification a "farce" and EU leaders have accused the Kremlin of using state-owned Gazprom as a weapon in retaliation for Western sanctions over Russia's war in Ukraine. Cities around Germany, which is heavily reliant on Russian gas, have introduced similar measures, including Munich, Leipzig, Cologne and Nuremberg.
Russian gas cut to Europe hits economic hopes, Ukraine reports attacks on coastal regions(Reuters) - Russia said it will cut gas supplies to Europe from Wednesday in a blow to countries that have backed Ukraine, while missile attacks in Black Sea coastal regions raised doubts about whether Russia stick to a deal to let Ukraine export grain. The first ships from Ukraine may set sail in days under a deal agreed on Friday, the United Nations said, despite a Russian missile attack on the Ukrainian port of Odesa over the weekend, and a spokesman for the military administration in the saying another missile had hit the Odesa region on Tuesday morning. Soaring energy costs and the threat of hunger faced by millions in poorer nations show how the biggest conflict in Europe since World War Two, now in its sixth month, is having an impact far beyond Ukraine. European Union countries are set to approve on Tuesday a weakened emergency proposal to curb their gas demand as they try to wean themselves off Russian energy and prepare for a possible total cut-off. The Ukrainian military on Tuesday reported Russian cruise missile strikes in the south and that Ukrainian forces had hit enemy targets. Serhiy Bratchuk, a spokesman from the military administration in Odesa, told a Ukrainian television channel that a missile fired from the direction of the Black Sea had struck the region, but gave no information on casualties. East of Odesa along the Black Sea coast, port infrastructure at Mykolaiv was damaged by an attack, according to the mayor Oleksandr Senkevich. A major fire broke out at an oil depot in the Budyonnovsky district of Russian-backed Donetsk People's Republic in eastern Ukraine after Ukrainian troops shelled the province, Russia's TASS reported, quoting a reporter at the scene. No casualties or injuries have been reported. Russian energy giant Gazprom, citing instructions from an industry watchdog, on Monday said gas flows to Germany through the Nord Stream 1 pipeline would fall to 33 million cubic metres per day from Wednesday. That is half of the current flows, which are already only 40% of normal capacity. Prior to the war, Europe imported about 40% of its gas and 30% of its oil from Russia.
Algerian gas supply to Spain suspended due to pipeline incident- (Xinhua) -- Algerian state-run company Sonatrach on Sunday announced the temporary suspension of natural gas supply to Spain, due to an incident that occurred this morning in the gas pipeline on the Spanish side. The gas supply of Medgaz pipeline will resume as soon as possible, as "the Spanish technical teams are carrying out the necessary repairs", Sonatrach said in a statement. Medgaz is a 210 km gas pipeline that connects the Algerian gas facilities of Beni Saf, to the port of Almeria in Spain, passing under the Mediterranean Sea. It can transport an annual volume of 8 billion cubic meters.
EU Looks To Replace Gas From Russia With Nigerian Supplies - The European Union is seeking additional gas supplies from Nigeria as the bloc prepares for potential Russian supply cuts, Matthew Baldwin, deputy director general of the European Commission's energy department, said on Saturday. Baldwin was speaking in Nigeria where he held meetings with officials from Africa's largest oil producer this week. He was told that Nigeria was improving security in the Niger Delta and planned to re-open the Trans Niger pipeline after August, which would yield more gas exports to Europe. The EU imports 14% of its total LNG supplies from Nigeria and there is potential to more than double this, Baldwin told Reuters by phone. Oil and gas output in Nigeria is being throttled by theft and vandalism of pipelines, leaving gas producer Nigeria LNG Ltd's terminal at Bonny Island operating at 60% capacity. "If we can get up to beyond 80%, at that point, there might be additional LNG that could be available for spot cargoes to come to Europe," Baldwin said. "They (Nigerian officials) said to us, 'Come and talk to us again at the end of August because we think we can deliver real progress on this'." Nigeria NLG is owned by state-oil company NNPC Ltd, Shell, TotalEnergies and Eni. The European Commission said on Wednesday that EU member states should cut their gas use by 15% from August to March. The target would initially be voluntary, but would become mandatory if the Commission declared an emergency. Last year, Nigeria exported 23 billion cubic metres (bcm) of gas to the EU, but the figure has been declining over the years. In 2018 the bloc bought 36 bcm of LNG from Nigeria, Baldwin said.
Nigeria-Morocco Gas Pipeline (NMGP) Project Updates - Two consulting firms have been chosen to conduct phase II of the FEED (Front End Engineering Design) study of the Nigeria-Morocco Gas Pipeline (NMGP) Project. The firms in question are the ILF Group and DORIS Engineering.ILF is an international engineering and consulting firm that helps its clients successfully execute technically demanding industrial and infrastructure projects. DORIS on the other hand is the “international reference for delivering high-quality engineering to the oil & gas and renewable markets.”The ILF and DORIS studies will focus on the onshore & offshore pipeline and compressor station engineering. It will also focus on the engineering surveys, the environmental & social impact assessment (ESIA) and land acquisition studies (LAS), and the project implementation framework.This appointment comes a few days after the Federal Executive Council (FEC), allowedNNPC Ltd to sign a memorandum of understanding with ECOWAS for the implementation of the project.Timipre Sylva, Minister of State for Petroleum Resources, briefed State House officials on the decision following the FEC meeting at the Presidential Palace in Abuja, which was led by Vice President Yemi Osinbajo.The minister revealed that the Nigeria-Morocco pipeline project was still in the early stages of engineering design, after which the project’s estimated cost would be determined. According to him, the pipeline will supply Nigerian gas to 15 countries in West Africa, up to Morocco, and then to Spain and Europe via the Kingdom.The Nigeria-Morocco Gas Pipeline (“NMGP”) is a new regional onshore and offshore gas pipeline that is intended to deliver natural gas resources of Nigeria to 13 countries in the West and North Africa as a continuation of the existing West Africa Gas Pipeline (“WAGP”)between Nigeria, Benin, Togo, and Ghana.Starting from Nigeria, the 5,660 kilometers long NMGP will pass through Benin, Togo, Ghana, Cote d’Ivoire, Liberia, Sierra Leone, Guinea, Guinea-Bissau, Gambia, Senegal, and Mauritania, to end at Tangiers, a Moroccan port on the Strait of Gibraltar, with a possible extension to Europe through Spain. The Nigeria-Morocco Gas Pipeline Project is estimated to cost US$ 25bn and it will be completed in stages over 25 years.
Russia’s New Gas Deals With Iran Are A Threat To The West - Russian President, Vladimir Putin, arrived in Tehran last week for the second time since he ordered the invasion of Ukraine on 24 February. Just before his arrival, Russia’s state gas giant, Gazprom, signed a US$40 billion memorandum of understanding (MoU) with the National Iranian Oil Company (NIOC) that is part of a wide-ranging agenda of increased cooperation between Russia and Iran. It builds upon ideas discussed in January between Putin and Iranian President, Ebrahim Raisi, and the visit early in June of Russian Deputy Prime Minister, Alexander Novak, both analysed in full by OilPrice.com, and is crucial to the current global gas crisis. Among other deals contained in the MoU, Gazprom has pledged its full assistance to the NIOC in the US$10 billion development of the Kish and North Pars gas fields with a view to their producing more than 10 million cubic metres of gas per day. The MoU also contains details of a US$15 billion project to increase pressure in the supergiant South Pars gas field on the maritime border between Iran and Qatar. Gazprom will additionally be involved in the completion of various liquefied natural gas (LNG) projects and the construction of gas export pipelines, according to Iranian news sources. This is designed by the Kremlin to give it even more control over future gas supplies coming out of Iran that might have found a home in southern Europe initially, before being transported north, to help alleviate the current gas supply crunch in major European countries. By also becoming more deeply involved in the huge South Pars gas field Russia has also positioned itself to disrupt LNG supplies coming out of Qatar and destined for Europe. The South Pars field is a 3,700 square kilometre area of the world’s largest gas reservoir that holds at least 1,800 trillion cubic feet of gas and at least 50 billion barrels of natural gas condensates, with the remaining 6,000 square kilometre North Field site belonging to Qatar. This takes on even broader geopolitical importance, given the ongoing interest of Russian and Iranian sponsor, China, in the perennially-controversial Phase 11 of the South Pars gas site.Gazprom’s focus on expanding Iran’s LNG capabilities comes at exactly the time when dramatically increasing LNG supplies is vital for European states to compensate for shortfalls in gas supplies resulting from bans on Russian gas imports. It is plainly identifiable as a tried-and-tested core KGB strategy that relies on a combination of gradually increasing pressure on an enemy and then just waiting for as long as it takes for him to give up as often being an excellent way of achieving victory. The Kremlin knows that from the very start of talk about banning gas imports from Russia, Germany – the de facto leader of the European Union (EU) and its executive branch, the European Commission (EC) – did not want to cut itself off from Russian gas imports. Indeed, Germany’s response for some time after Russia’s invasion of Ukraine in February appeared much less concerned with halting oil and gas imports from Russia and much more concerned with working out how best to continue to pay for them so that Russia would not stop them due to lack of payment. This followed the 31 March decree signed by Putin that required EU buyers to pay in roubles for Russian gas via a new currency conversion mechanism or risk having supplies suspended. Then, in a directive circulated to all EU member states on 21 April, the EC said that: “It appears possible [to pay for Russian gas after the adoption of the new decree without being in conflict with EU law].” The EC added: “EU companies can ask their Russian counterparts to fulfil their contractual obligations in the same manner as before the adoption of the decree, i.e. by depositing the due amount in euros or dollars.” The EC also stated that existing EU sanctions against Russia do not prohibit engagement with Gazprom or Gazprombank, beyond the refinancing prohibitions relating to the bank. “Likewise, they do not prohibit opening an account with Gazprombank, [although] such engagement or account should not lead to the violation of other prohibitions.”
Major fire erupts at Donetsk oil depot after Ukraine shelling - Russia's TASS (Reuters) - A major fire broke out at an oil depot in the Budyonnovsky district of Russian-backed Donetsk People's Republic in eastern Ukraine after Ukrainian troops shelled the province, Russia's TASS reported on Tuesday, quoting a reporter at the scene. No casualties or injuries have been reported so far due to the fire, which was tens of meters high, TASS added. (Link) Reuters could not immediately verify the TASS report.
Saudi Arabia, Iraq helping Europe’s oil refineries with more crude supply - Saudi Arabia and Iraq are helping Europe’s oil refiners with more crude in an effort to help the continent reduce its reliance on Russia, Bloomberg reported. According to data compiled by Bloomberg, over 1 million barrels a day of crude has made its way during the first three weeks of July to Europe from the Middle East through a pipeline that crosses Egypt. Volumes have almost doubled compared to a year earlier. This comes as European companies are halting dealing with Moscow, following Russia’s invasion of Ukraine.
Iraq, Saudi Arabia send crude oil to Europe through Egypt - – Iraq and Saudi Arabia are working on sending their crude oil to Europe in an effort to help the continent’s oil refineries which are desperately trying to give up the oil supplies from Russia. According to a report recently published by Bloomberg, more than one million barrels per day of crude oil arrive in Europe coming from the Middle East in the first three weeks of July through a pipeline that passes from Egypt. This amount represents twice the volume sent to Europe a year ago. Shipments from Saudi Arabia dominate the flows through the pipeline, but Iraq is also increasing the quantities delivered to Europe, according to Bloomberg. Companies can either deliver their oil shipments via SUMED pipeline (also known as the Suez-Mediterranean Pipeline), an oil pipeline in Egypt running from the Ain Sokhna terminal in the Gulf of Suez to offshore Sidi Kerir, Alexandria in the Mediterranean Sea, or if their ships are small enough, oil shipments can be transported directly through the Suez Canal, which is how Iraq transports its oil shipments. Export volumes through the pipeline increased from about 800 thousand barrels per day in the previous month to the highest level since April 2020. In addition to these flows, about 1.2 million barrels per day were shipped from the Arabian Gulf toward the canal in the first three weeks of July, mostly from Iraq. This could raise the total flows from the Middle East to Europe to 2.2 million barrels per day, an increase of nearly 90 percent since January, just before the Ukrainian crisis.
Putin Promises to Keep the Gas Flowing to Europe - for Now - July 27, 2022 -Russian President Vladimir Putin said Russia would continue to supply Europe with natural gas, but warned that deliveries via the Nord Stream 1 pipeline could become constrained if sanctions prevent further maintenance on the pipeline, according to The Wall Street Journal. Putin asserted that the pipeline’s owner, the Moscow-controlled energy firm Gazprom, will honor and fulfill its responsibilities to Europe in remarks that he made late Tuesday after his visit to Tehran, reported the WSJ. Putin’s comments come amid the reduced flow of natural gas into Europe due to sanctions and other supply chain disruptions caused by Russia’s invasion of Ukraine. The Russian president stated that if a pipeline turbine sent to Canada for maintenance wasn’t sent back to Russia immediately, pipeline flows may quickly drop to 20% of capacity. Putin also noted that another turbine will require maintenance on July 26. The main Russian gas pipeline to Europe, Nord Stream 1, is presently offline due to maintenance and European nations are concerned that Moscow will not restart the pipeline after the scheduled repairs finish on Thursday. Amid soaring fuel prices and record levels of inflation, the European Union is already moving to ration fuel in the event of a protracted outage, according to the WSJ The European Union also unveiled new plans for potential rationing on Wednesday in an effort to pressure states to intensify their energy-conservation initiatives, reported the WSJ. The commission’s strategy includes limits on air conditioning and central heating as well as information on which businesses the government will prioritize when gas supplies run low. Before maintenance began, Gazprom reduced pipeline deliveries to 40% of their capacity last month and blamed Canadian sanctions for preventing the return of the turbine that was being serviced there. European officials rejected the turbine explanation as a political ruse to drive up energy prices and punish the EU for the sanctions that it imposed on Russia following its invasion of Ukraine, reported The Independent.
Russian Gas Supply Uncertainty Sends Asia LNG Prices Surging - Asian natural gas prices are rallying on fears that Russia will slash supply again and worsen a global fuel shortage. The North Asia liquefied natural gas benchmark jumped 12% Friday, and is trading near the highest level since Russia’s war in Ukraine upended the global market, according to data from S&P Global. Prices have room to rally further as several Asian importers are desperate for supply through the rest of the year. The natural gas market is on edge after Russia threatened to curb supply to Europe as soon as this week, only days after the restart of the crucial Nord Stream pipeline. LNG buyers in Japan and South Korea need to secure supply to refill inventories before winter, and are starting to outbid rivals in Europe. President Vladimir Putin has warned shipments via the Nord Stream pipeline could drop to 20% of capacity, from a current rate of 40%
Global gasoline cracks collapse, blow to refiners’ profits – - A sudden crash in global gasoline prices in the past two weeks has dented refiners’ profits, pushing up inventories in key trading hubs around the world while looming exports from China and India also add to pressure on growing stockpiles. Refiners will be forced to cut gasoline output to safeguard themselves against losses and switch to producing more profitable fuels, traders say, but summer demand is also being hurt by high pump prices in the United States and Europe, and by instability and easing seasonal demand in some parts of Asia This has led to a rise in inventories from Singapore to Amsterdam-Rotterdam-Antwerp and the United States, according to traders, analysts and inventory data. Asia’s top fuel exporter Taiwan’s Formosa Petrochemical Corp (6505.T) could reduce operating rates at their residue fluid catalytic cracking (RFCC) units, which are now running at full capacity, by 5% in the coming weeks. “We will sell more VLSFO (very low sulphur fuel oil) because their margins are better,” Formosa’s spokesperson K.Y. Lin told Reuters. VLSFO can be used as a feedstock for RFCC units to produce gasoline or sold as marine fuel. Asian gasoline margins have plunged more than 102% in July to a discount of 14 cents a barrel to Brent crude after hitting a record at a premium of $38.05 a barrel in June, Refinitiv data showed. They are also at the lowest for this time of the year since at least 2000. That has depressed Asian refining margins to 88 cents a barrel over Dubai crude on Monday, tumbling from a record $30.49 in June. Chinese state refiners are expected to raise refinery runs in August-September and increase exports to lower high domestic stocks after receiving new quotas, industry sources said.
Oil refining margins collapse in Asia, cheaper crude needed: Russell (Reuters) - Refining margins in Asia have collapsed in recent weeks, leaving refiners on the precipice of making losses on every barrel of crude oil processed. The question is how will refiners, crude oil producers and consumers respond to this rapid shift in market dynamics. Refiners are likely to be tempted to cut processing rates in order to reduce the supply of refined products, thus boosting the price. Crude oil exporters, such as Saudi Arabia, may reverse recent hikes in their official selling prices (OSPs), which were largely believed by market watchers to be related to the now-vanishing high refinery margins. Consumers are likely to only increase demand if retail prices retreat significantly, a process that generally takes some time as the more expensive fuel has to work its way through the supply chain first. The profit margin at a typical Singapore refinery processing Dubai crude dropped to just 83 cents a barrel on Monday, down 97.3% from the record high of $30.49 a barrel reached on June 21. That peak was driven by several factors including strong demand for diesel and jet fuel as Asian economies recovered from the COVID-19 pandemic, the sharp decline in refined product exports from China, as well as those from Russia as Western buyers shunned cargoes after Moscow's Feb. 24 invasion of Ukraine. But the surge to record refinery profits was largely a middle distillates story, with the Singapore margin for refining a barrel of gasoil, the building block for diesel and jet kerosene, reaching a record high of $71.69 a barrel on June 24. It has since slipped to end at $38.54 a barrel on Monday, and while the decline looks precipitous, it's worth noting that the margin was just $8 this time last year, and $6.69 in July 2020. However, while the profit, or crack, for making gasoil remains relatively strong, the margins on gasoline and naphtha are considerably weaker. The profit for making a barrel of 92-RON gasoline in Singapore from Brent crude was $2.56 on Monday, a recovery from a loss of 16 cents at the end of last week, which was the lowest since May 2020, at the height of the economic slowdown caused by the initial COVID-19 outbreak.
India: Crude oil imports jump 89% to $47.5 billion in Q1 -India’s crude oil imports in Q1FY23 rose 17% on year to 60.2 million tonne (MT) as refineries stepped up processing to meet higher domestic demand for petroleum products including diesel. Exports of petroleum products also rose by 7.2% during the period. Imports, in value terms, were higher by 89% in Q1FY23 to $47.5 billion on year mainly due to costlier crude. India meets around 85% of its crude need through imports. In the whole of FY22, India’s crude oil import was 212 MT, valued at $120.4 billion. Domestic production of crude oil including condensate during the April-June period was flat at 7.45 MT, just 0.62% higher than in the corresponding period of last year. According to Petroleum Planning and Analysis Cell (PPAC), an attached office of the ministry of petroleum and natural gas, domestic refiners processed 65.8 MT crude during April-June period of the current fiscal which was 14.8% higher compared with the corresponding period of last fiscal. The consumption of petroleum products during April-Jun 2022 at 55.1 MT was higher 16.8% compared to 47.2 MT during the same period of the previous year, led by higher consumption of diesel to 22.2 MT from 18.4 MT in Q1FY22. Import of petroleum products was also higher by 21.6% at 10.7 MT in the first quarter of the current fiscal compared with the same period last fiscal. Exports, on the other hand, also increased by 7.2% to 16.3 MT.
Sri Lanka Introduces Fuel Rationing Via QR Code - Last week, the Minister of Power and Energy of the economic wasteland that is Sri Lanka,introduced "National Fuel Pass", a fuel rationing scheme amid the raging economic crisis and shortage of fuel in the island country.According to minister Kanchana Wijesekera, the new pass will guarantee the allocation of fuel quota on weekly basis. A QR code will be given for each National Identity Card number (NIC), once the vehicle identification number and other details are verified. As NDTV reports, people with registered vehicles will get their turns based on the last digit of their registration number. Tourists and foreigners will be given priority to take fuel in Colombo."Introduction to the National Fuel Pass will be held at 12.30 pm. A guaranteed weekly fuel quota will be allocated. 1 Vehicle per 1 NIC, QR code allocated once Vehicle Chassis number & details verified. 2 days of the week according to Last Digit of number plate for fueling with QR," Wijesekara said in an earlier tweet.
One day queuing for cooking gas in Embilipitiya, Sri Lanka – I recently visited my sister and her family in Embilipitiya, situated 190 kilometres from Colombo, during a holiday in Sri Lanka. The rural town is totally different to what I witnessed three years ago in 2019. The economic, social and political crisis engulfing Sri Lanka, as a part of the global crisis of capitalism, has devastated the area. Millions of people have been forced into grinding poverty because of the big business policies of the Rajapakse government, now ousted by a mass uprising, and its predecessors over the last seven decades. The severe scarcity of fertilisers and fuel has drastically disrupted the cultivation of banana, papaya, guava and other crops grown around Embilipitiya. Consequently, the vibrant market of small farmers and vendors in the town is all but empty. The bustling town, which previously operated 24 hours a day, is a ghost town by around 5pm, especially after the evening power cuts. Dozens of lorries that used to queue up and be loaded to transport crops to other cities are nowhere to be seen. Hundreds of small businesses that depended on agriculture have been wiped out. Even those farmers who managed to have a small harvest using limited amounts of fertilisers and traditional methods, struggle to bring their crops to the market and transport them to other parts of the country because of the severe fuel shortages. Across the island people have to wait in lines for days, in some cases over 10 days, to get a rationed amount of fuel. While I was there, my sister’s family received a phone call early in the morning telling her that the “yellow gas” (yellow coloured cooking gas cylinders distributed by Laugfs gas company) had arrived in town, and that the Police Station was distributing it. The previous Laugfs gas delivery happened last year. We quickly rushed there with our empty cylinder. By the time we arrived at 8am there were already about 300 people ahead of us. I saw the desperation of those in line because gas was the only alternative to cooking with firewood, a time consuming and laborious experience. Many families have already been forced to use firewood because of the severe gas shortages. I saw that numbers of health workers, including nurses, had joined the queue in their uniforms. Many people had also travelled long distances from surrounding areas. With utter contempt for those in line, the police and their accomplices were serving themselves from the back of the gas lorry while shouting and threatening villagers in the queue. We managed to buy a gas cylinder at about 2.30 pm. The price of a 12.5 kg gas cylinder was 6,895 rupees ($US19), up from 1,800 rupees ($US5), four times higher than six months ago.
This map shows the massive gas pipeline that Russia and China are building — China and Russia are in the final stages of building the first pipeline that can send gas from Siberia to Shanghai."Power of Siberia" — as the portion located in Russia is called — began delivering natural gas to northern China in December 2019, according to Chinese state media.In China, the pipeline runs down the eastern side of the country, past the capital city of Beijing and down to Shanghai. The middle phase started operations in December 2020, and the final southern section is set to begin gas deliveries in 2025, state media said.State-owned energy companies, Russia's Gazprom and China National Petroleum Corp., have been building the pipeline for about eight years.The China-Russia pipeline comes as Moscow faces the threat of losing natural gas purchases from the European Union, a big customer that aims to cut two-thirds of its Russian gas imports in the wake of the Ukraine war.China has been looking to diversify its energy sources. Beijing has refused to condemn Moscow for its unprovoked invasion of Ukraine in late February.The scale of the China-Russia gas pipeline indicates it is just one of many energy options for Beijing.Although Russia has reportedly invested $55 billion into its pipeline deal with China, natural gas imports through the pipeline have only totaled $3.81 billion since December 2019, according to China customs data as of June, accessed through Wind Information.The pace of Chinese purchases picked up in the first half of this year — nearly tripling from a year ago to $1.66 billion, the data showed.But China's gas imports from Turkmenistan during that time were far higher at $4.52 billion, up 52% from a year ago, the data showed.Natural gas remains a tiny fraction of China's energy imports, which are mostly of crude oil.By volume, Gazprom's gas exports to China via the pipeline rose by 63.4% to 7.5 billion cubic meters during the first half of the year, according to Russian news agency Interfax. The original deal aimed for 38 billion cubic meters in annual deliveries in the coming decades.The Interfax report said Gazprom's overall exports to countries not formerly part of the Soviet Union fell 31% to 68.9 billion cubic meters in the first six months of the year.In early February, China and Russia expanded their annual gas purchase agreement by 10 billion cubic meters — they did not specify when that would occur but said it was a "long-term agreement." Reuters estimated additional sales worth $37.5 billion over 25 years.The two countries have discussed building additional gas pipelines, including one expected to run from Siberia through the country of Mongolia. The Financial Times reported this month that Mongolia expects the new gas pipeline, known as the "Power of Siberia 2," to begin construction within two years.
Rosneft Begins Arctic Oil Terminal Construction -Russia’s oil giant Rosneft on Tuesday said it had launched construction works on an oil terminal for its Vostok Oil project in the Arctic, expecting the port to become the country’s biggest oil terminal by the end of this decade.Vostok Oil, in Russia’s Far East, comprises several groups of oil fields holding an estimated 44 billion barrels of oil. Initial work on the project began in January 2021. The total cost of its development has been estimated at $170 billion over the lifetime of the fields. The Vostok Oil project in Russia’s Far North is close to the Northern Sea Route that Rosneft wants to use to ship oil to Asia.Rosneft has also started drilling at the Payyakhskoye field, part of the massive Vostok Oil, the project’s chief executive Vladimir Chernov told Russian media on Tuesday. Rosneft expects oil to start flowing from the field in 2024, and the project Vostok Oil to deliver crude via the Northern Sea Route by 2027, Chernov was quoted as saying. Western analysts, however, doubt that Rosneft will be able to keep the timeline for the massive project’s development as Western sanctions are depriving Russia and its state-owned oil and gas firms of access to capital and technology. Last year, Rosneft was looking to attract some of the world’s largest oil trading houses to the Vostok Oil project, offering them to become investors in exchange for oil supply contracts.This year, investors are abandoning Russian projects after Putin invaded Ukraine. One of those major traders, Trafigura, said earlier this month that it had exited its 10-percent non-operational passive shareholding in Vostok Oil, selling the stake to a Hong Kong-registered trading company for an undisclosed price. The Western sanctions, which ban exports of technology for oil and gas to Russia, will also affect the timeline of the Vostok Oil development, analysts say.The Payyakhskoye field, at which Rosneft started drilling today, could see first production by 2029 instead of in 2024, the Russian giant says, according to research firm Rystad Energy.“Any delays in one part of the huge supply chain involved in the project will lead to the delay of the whole project,” Daria Melnik, senior analyst at Rystad Energy, told The Wall Street Journal earlier this month.
Nigeria’s Petroleum Import-Export Reveals $43bn Disparity -Nigeria’s petroleum imports has currently outweighed the value of its petroleum exports to the tune of $43 billion, according to report. This is coming as the Budget Office revealed that Nigeria’s debt has exceeded its revenue in the first four months of the year despite high oil prices. Nigeria, unlike other crude oil producers, has found it impossible to reap the benefits of today’s high oil prices, with oil revenues coming in 61 per cent below target during the period. That’s despite crude oil trading at highs not seen in years. The country’s crude oil production was relatively steady at 1.376 million bpd in the first quarter of this year compared to the previous quarter, according to the Organisation of Petroleum Exporting Countries(OPEC’s) Monthly Oil Market Report, and 34,000 bpd below the same quarter last year. While Nigeria’s production slipped further in June 2022 to 1.238 million bpd, Nigeria’s oil revenue problem didn’t stem from a drop in production. The federal government has continued to battle oil theft, pipeline vandalism, and most critically, high petrol prices, which the country subsidizes.
Nigeria Unable To Benefit From High Oil Prices - Nigeria’s debt has exceeded its revenue in the first four months of the year despite high oil prices, Nigeria’s Budget Office has revealed on its website. Oil-rich Nigeria, unlike other crude oil producers, has found it impossible to reap the benefits of today’s high oil prices, with oil revenues coming in 61% below target during the period. That’s despite crude oil trading at highs not seen in years.Nigeria’s crude oil production was relatively steady at 1.376 million bpd in the first quarter of this year compared to the previous quarter, according to OPEC’s Monthly Oil Market Report, and 34,000 bpd below the same quarter last year. While Nigiera’s production slipped further in June 2022 to 1.238 million bpd, Nigeria’s oil revenue problem didn’t stem from a drop in production.Instead, Nigeria continues to battle oil theft, pipeline vandalism, and most critically, high gasoline prices, which the country subsidizes. The severe revenue shortfall does not allow Nigeria to service its debt. The cost of Nigeria’s gasoline subsidy will be about 10 times what it had originally budgeted, Nigeria’s President Muhammadu Buhari revealed in an April letter to lawmakers. That cost of that subsidy is expected to be just south of $10 billion.Unlike other major oil producers that have benefited handsomely from higher crude oil prices, Nigeria has negligible refining capacity, forcing it to import nearly all of the gasoline it consumes. And Nigeria must pay today’s high costs for that gasoline while continuing to sell it onto the consumer for much less in order to keep prices at 39 cents.The value of Nigeria’s petroleum imports far outweighs the value of its petroleum exports—to the tune of $43 billion. Nigeria has toyed with the idea of ending the gasoline subsidies, but the specter of fuel protests caused the President to scrap those plans.
Nigerian Oil Pipeline Runs Dry As Rampant Oil Theft Plagues Country -A 180,000-bpd pipeline in Nigeria hasn’t transported any crude across Africa’s top oil producer since the middle of June due to oil theft, a source with knowledge of the matter told Bloomberg on Wednesday.OPEC member Nigeria has been suffering for years of rampant oil theft from pipelines which has often forced operators to shut down crude links for repairs and even declare force majeure on crude loadings because oil couldn’t reach terminals on time.The pipeline targeted in the latest oil theft, Trans-Niger Pipeline, has not been formally shut yet, Bloomberg’s source said on condition of anonymity because they were sharing information that has not been made public yet.Per Bloomberg’s estimates, the Trans-Niger Pipeline, with its capacity of transporting 180,000 barrels per day (bpd), accounts for around 15% of Nigeria’s latest daily average oil production. Oil theft has been a never-ending issue in Nigeria’s oil industry for years, crippling supply and production and making international majors warier of investing in production assets in Nigeria’s onshore.A lack of investment and capacity has prevented Nigeria from reaching its target production under the OPEC+ agreement for more than a year. Nigeria has been the biggest laggard in the production pact for several months. As of June, Nigeria was already pumping 500,000 bpd below its OPEC+ target. Nigerian crude oil production averaged 1.238 million bpd last month, according to OPEC’s latest Monthly Oil Market Report (MOMR), while Nigeria’s June quota was 1.772 million bpd. Unlike other crude oil producers, Nigeria has not been able to take advantage of the multi-year high oil prices this year. Nigerian oil revenues have come in 61% below target for the first four months of 2022. That’s despite crude oil trading at highs not seen in years. Nigeria continues to battle oil theft, pipeline vandalism, and most critically, high gasoline prices, which the country subsidizes.
After lifting of force majeure, NOC increases oil production to 860,000 bpd --Libya’s state National Oil Corporation (NOC) announced yesterday that since it has lifted the state of force majeure last week, it has increased oil production from 560,000 barrels per day (bpd) to 860,000 bpd. It considers this a ‘‘relatively high volume of production’’ in such a short period of time. It further stated that it is striving to increase production and return it to its normal rates of 1.2 million bpd within two weeks.
Iran's Oil Revenues Soar By 580% As Crude Prices Rally - Iran's revenues from exports of oil and condensate surged by 580% during the first four months of the current Iranian year that begins on March 21, Iranian Minister of Economic Affairs and Finance, Seyyed Ehsan Khandouzi, said on Tuesday. Between March 21 and July 21, international crude oil prices have largely held above $100 per barrel after the Russian invasion of Ukraine and the sanctions on Russian oil exports upended global trade flows."Due to the increase in oil exports and our new budget's currency conversion rate, we saw a 580% increase in the treasury's income from the export of oil and condensate in the first four months of this year," the Iranian finance minister was quoted as saying by local news agency IRNA.Overall, Iran's budget income jumped by 48% in March-July compared to the same period of 2021, while government expenditures rose by 16%, the minister added."The government was focused on this issue to be able to earn a more stable income. This means that compensating the budget deficit was on the agenda of the government and it was realized in the first 4 months of this year," the minister said.Iran's 12-month inflation rate hit 40% in July, Iranian statistics showed last week. Prices of goods have soared since the government removed some subsidies earlier this year. Despite the diplomatic impasse over the nuclear deal, Iran has been preparing to rejoin the global oil market. The country has boosted production, as well as exports to its main market, China. If a new deal is reached between Iran and the world powers, the flow of Iranian oil abroad could increase by between 500,000 bpd and 1 million bpd, according to analysts. China has been the main outlet for Iranian crude oil exports since the U.S. re-imposed sanctions on the Islamic Republic's oil industry in 2018 when then-President Donald Trump pulled the United States out of the so-called Iranian nuclear deal, officially known as the Joint Comprehensive Plan of Action (JCPOA).
Oil and Gas Produces $2.8B in Daily Profits Over 50 Years, Staggering New Analysis Shows -The global oil and gas sector has been clearing US$2.8 billion per day in profits over the last 50 years, concludes a new analysis based on World Bank data. Produced by Aviel Verbruggen, an energy economist at the University of Antwerp, the analysis is the first global assessment of Big Oil’s long-term profits, reports The Guardian. Out of the gobsmacking total pocketed by Big Oil—amounting to $52 trillion since 1970—86% is the pure profit grab of “oil rents”, which the World Bank defines as “the difference between the value of crude oil production at regional prices and total costs of production.” Fossil companies have been assured of perpetually sky-high profit margins, even after royalties are paid out to the countries in which they operate, thanks to political interference in the oil markets, the Guardian writes. “The huge profits were inflated by cartels of countries artificially restricting supply.” Bolstering those huge profits, the fossil industry benefits from subsidies amounting to a staggering $16 billion per day, according to the latest International Monetary Fund figures. While Verbruggen’s analysis has yet to be published, its accuracy was confirmed by experts from University College London, the London School of Economics, and Carbon Tracker. “You can buy every politician, every system with all this money, and I think this happened,” Verbruggen told the Guardian, contending that the trillions in profits pocketed by Big Oil since the 1970s have been weaponized to maintain the fossil status quo. What is certain, he added, is that “over the last 50 years, companies have made a huge amount of money by producing fossil fuels, the burning of which is the major cause of climate change. This is already causing untold misery around the world and is a major threat to future human civilization.”
OPEC+ Is Now 2.84 Million Bpd Below Its Oil Production Target --The OPEC+ group had a massive shortfall of 2.84 million barrels per day (bpd) in June between actual production and the target oil output level as part of the deal, two delegates at the alliance told Argus on Monday. As OPEC+ is unwinding its cuts, more and more members are falling further behind their quotas due to a lack of capacity or investment in supply. In June, the compliance rate at the OPEC+ group soared to 320% from an estimated 256% in May, according to Argus’s sources, suggesting that the gap between nameplate production per the agreement and actual production continues to widen. Per an Argus survey from earlier this month, OPEC+ pumped more than 2.5 million bpd below its target in June, despite a rebound in Russia’s oil production that helped the group’s output rise by 730,000 bpd from May. Russia’s oil production rose in June and was approaching the levels last seen in February, just before the Russian invasion of Ukraine. Most of the rebound was due to higher intake from domestic refiners. The ten OPEC producers in the OPEC+ pact pumped 24.8 million bpd of crude oil in June, OPEC data showed in the Monthly Oil Market Report (MOMR), with production falling 1 million bpd short of the target levels. Top OPEC producer Saudi Arabia naturally raised its crude oil production by the most in June compared to May. Yet, per OPEC’s secondary sources, even the Saudis were lagging behind their quota for June. Saudi Arabia’s oil production rose by 159,000 bpd to 10.585 million bpd. To compare, the Saudi target was 10.663 million bpd, so the Kingdom was 78,000 bpd below its quota last month using secondary source figures. OPEC+ is expected to continue to underperform by a lot compared to its production targets for July and August after the group decided to accelerate the rollback of the cuts and have those completely unwound by the end of August.
OPEC+ to weigh holding oil output steady or small hike, sources say -- OPEC and its allies will consider keeping oil output unchanged for September when they meet next week, despite calls from the United States for more supply, although a modest output increase is also likely to be discussed, eight sources said. The Organization of the Petroleum Exporting Countries (OPEC) and allies led by Russia, collectively known as OPEC+, will by August have fully unwound record output cuts in place since the COVID-19 pandemic took hold in 2020. Oil has soared in 2022 to its highest since 2008, climbing above $139 a barrel in March, after the United States and Europe imposed sanctions on Russia over its invasion of Ukraine. Prices have since eased to around $108, as soaring inflation and higher interest rates raise fears of a recession that would erode demand. Of eight OPEC+ sources spoken to by Reuters, two said a modest increase for September will be discussed at the Aug. 3 meeting and five said output would likely be held steady. "There are various talks ranging from a small increase to a freeze on current levels," one of the OPEC+ sources said. A lack of an output increase would disappoint the United States, whose President Joe Biden visited Saudi Arabia this month, hoping to strike a deal on oil production. A senior US administration official said on Thursday extra supply would help to stabilise the market. Given the easing in oil prices since this year's March peak, some in OPEC+ do not believe there is a strong argument for a further hike in supply. "I expect production to not increase for September," another OPEC+ source said, adding the meeting was unlikely to discuss output beyond that. Any further supply increase by OPEC+ would be likely to fall short of pledged levels given that many producers have struggled to meet output targets following a lack of investment in oilfields. Saudi Arabia and the United Arab Emirates are believed to hold the world's only sizeable amounts of unused production capacity. Some industry sources have questioned whether even Saudi output can easily reach maximum stated levels.
Bargain-hunting hedge funds boost oil positions: Kemp (Reuters) - Portfolio investors purchased oil futures and options for the second week running as at least some fund managers concluded that expectations of a recession and a recent sell-off were overdone. Hedge funds and other money managers purchased the equivalent of 31 million barrels in the six most important petroleum futures and options contracts in the week ending on July 19 (Link). Buying was heavily weighted towards the initiation of new bullish long positions (+26 million barrels) rather than liquidation of existing bearish shorts (-5 million). It was focused on crude rather than products with purchases of both Brent (+15 million barrels) and NYMEX and ICE WTI (+15 million). There were only minor adjustments in U.S. gasoline (+2 million barrels), U.S. diesel (+1 million) and European gas oil (-3 million). Even after the buying, the net position across all six contracts is relatively low at just 485 million barrels (28th percentile for all weeks since 2013). Crude positions are especially low at just 381 million barrels (21st percentile). Relatively bearish positioning, combined with the retreat in prices that set in after the middle of June, has improved the risk-reward ratio and encouraged at least some investors to re-enter the market to profit from any rebound.
USA EIA Lowers Oil Price Forecasts -- The U.S. Energy Information Administration (EIA) lowered its Brent crude oil price forecasts for 2022 and 2023 in its latest short term energy outlook (STEO). According to its July STEO, the EIA now sees the average Brent spot price coming in at $104.05 per barrel this year and $93.75 per barrel in 2023. The EIA’s previous STEO, which was released in June, forecasted that the average Brent spot price would be $107.37 per barrel in 2022 and $97.24 per barrel in 2023. In its July STEO, the EIA predicts that the average Brent spot price will be $104.27 per barrel in the third quarter of this year and $96.97 per barrel in the fourth quarter. In its previous STEO, the EIA saw the 3Q and 4Q averages coming in at $111.28 per barrel and $104.97 per barrel, respectively. Looking at 2023 quarterly figures, the EIA’s latest STEO sees 1Q, 2Q, 3Q, and 4Q Brent spot prices averaging $95 per barrel, $94 per barrel, $93 per barrel, and $93 per barrel, respectively. The EIA’s June STEO saw 1Q, 2Q, 3Q, and 4Q Brent spot prices coming in at $99.30 per barrel, $96.65 per barrel, $96 per barrel, and $97 per barrel, respectively. “We expect the Brent crude oil price will average $101 per barrel in 2H22 and then fall to $94 per barrel in 2023,” the EIA stated in its latest STEO. “The forecast price declines are the result of expected increases in global oil inventories in late 2022. Most of the price declines in our forecast occur in 2H22, with prices falling from $123 per barrel on average in June to $97 per barrel in 4Q22,” the EIA added. “Although inventories build in our forecast, they are currently lower than in 2019, which may limit some of the downward price pressures associated with rising inventories and raises the potential for continuing volatility. In addition, we expect more balanced markets in 2023. As a result of this balance, crude oil prices in our forecast decline slowly through 2023, falling from $97 per barrel in 4Q22 to $93 per barrel in 4Q23,” the EIA continued. The EIA noted that its July STEO is subject to heightened uncertainty resulting from a variety of factors, including Russia’s “full-scale invasion of Ukraine”. “The possibility of economic activity being less robust than assumed in our forecast could result in lower-than-forecast energy consumption,” the EIA added. “Factors driving uncertainty about energy supply include how sanctions affect Russia’s oil production, the production decisions of OPEC+, and the rate at which U.S. oil and natural gas production rises,” the EIA continued. At the time of writing, the price of Brent crude oil stood at $106.99 per barrel. Brent has closed above $120 on several occasions this year but closed under $100 per barrel on July 12 for the first time since April.
Oil falls on concerns expected Fed hike will impact fuel demand --- Oil fell on Monday, reversing earlier gains but continuing a recent losing streak, on concerns that an expected increase in interest rates in the U.S., the world's biggest oil user, may limit fuel demand growth. Brent crude futures for September settlement dropped 48 cents, or 0.5%, to $102.72 a barrel at 0205 GMT, down for a fourth day. U.S. West Texas Intermediate (WTI) crude futures for September delivery fell 65 cents, or 0.7%, to $94.05 a barrel, also down for a fourth day. "The market tone is likely to remain bearish amid worries that interest rate hikes would slash global fuel demand and that the resumption of some Libyan crude oil output would ease tightness in global supply," said Kazuhiko Saito, chief analyst at Fujitomi Securities Co Ltd. Oil futures have been volatile in recent weeks as traders try to reconcile the possibilities of further interest rate hikes that could limit economic activity, and thus cut fuel demand growth, against tight supply from the disruptions in the trading of Russian barrels because of the Western sanctions amid the Ukraine conflict. Officials at the U.S. Federal Reserve have indicated that the central bank would likely raise rates by 75 basis points at its July 26-27 meeting. On the supply side, Libya's National Oil Corporation (NOC) aims to bring back production to 1.2 million barrels per day (bpd) in two weeks, NOC said in a statement early on Saturday. The European Union said last week that it would allow Russian state-owned companies to ship oil to third countries under an adjustment of sanctions agreed by member states last week aimed at limiting the risks to global energy security. However, Russian Central Bank Governor Elvira Nabiullina said on Friday that Russia will not supply oil to countries that decide to impose a price cap on its oil.
WTI, Brent Futures Gain 2% as Russia's Oil Exports Fall -- Oil futures nearest delivery settled Monday's session higher following reports Russian crude oil exports fell by more than 13% this month amid a tightening grip of Western sanctions that are set to come into full force by the end of the year, while risk-on sentiment in the financial markets lent additional support. Russia's oil shipments have declined for five consecutive weeks, according to Bloomberg estimates, taking them down by 480,000 barrels per day (bpd) since mid-June. That's based on a four-week average that helps to provide a better picture of the trend than the observation of flows from one week to the next. Shipments to China and India are down by somewhere between 15% and almost 40% from their post-invasion peak. The final scale of the decline will depend on where almost 4 million barrels (bbl) of crude on tankers that are yet to show final destinations is discharged. Much may eventually go to Asia, say analysts. Asian countries, dominated by China and India, are still taking more than half of all the crude shipped from Russia, up from about one-third before the invasion. Flows to Asia have accounted for between 55% and 56% of Russia's total seaborne exports since early June. Several economic indicators have highlighted slowing U.S. growth, although a strong labor market has offered a conflicting market signal. According to a transportation equipment manufacturer responding to the Dallas Federal Reserve Bank's Texas Manufacturing Outlook Survey released Monday, "Broad-based inflation, together with difficulties in recruiting while our customers' activity is strong, creates a puzzling and uncertain environment." The Dallas Fed survey showed a slowing manufacturing sector in Texas in July, albeit still growing. Business conditions were seen worsening for a fifth consecutive month in July in the Lone Star state. Worsening economic conditions do offer some respite in that they cool demand and, with it, inflationary pressure that could mean the Federal Reserve won't have to be as aggressive as some market analysts have suggested. To be sure, after this month's expected 75 point basis hike, FOMC are expected to agree to a 50 point basis hike in the federal funds rate at their meeting in September. Still, expectations have dialed down even higher rate hikes, which coincides with a weaker U.S. dollar. The U.S. Dollar Index settled down 0.25% at 106.355 after inside trade, holding above Friday's 105.99 three-week low. At settlement, NYMEX September West Texas Intermediate futures were up $2 at $96.70 bbl, with ICE September Brent advancing $1.95 to $105.15 bbl. NYMEX August RBOB futures rallied 15.92 cents to $3.3820 gallon, and August ULSD futures registered a 6.1 cents gain to $3.5166 gallon.
Oil rises as Russian gas cut to Europe may encourage switching to crude (Reuters) - Oil rose on Tuesday on expectations Russia's reduction in natural gas supply to Europe could encourage a switch to crude, though concerns over weakening fuel demand because of an expected increase in U.S. interest rates limited gains. Brent crude LCOc1 futures for September settlement climbed 45 cents, or 0.4%, to $105.60 a barrel by 0112 GMT, following a 1.9% gain in the previous day. U.S. West Texas Intermediate (WTI) crude CLc1 futures for September delivery increased 34 cents, or 0.4%, to $97.04 a barrel, having gained 2.1% on Monday. Russia tightened its gas squeeze on Europe on Monday as Gazprom GAZP.MM said supplies through the Nord Stream 1 pipeline to Germany would drop to just 20% of capacity. Russia's cut in supplies will leave countries unable to meet its goals to refill natural gas storage ahead of the winter demand period. Germany, Europe's biggest economy, faces potentially rationing gas to industry to keep its citizens warm during the winter months. "Higher gas prices, triggered by Russia's gas squeeze, could lead to additional switching to crude from gas and support oil prices," said Hiroyuki Kikukawa, general manager of research at Nissan Securities. "But a tug-of-war between concerns about weakening demand due to the economic slowdown amid rising U.S. interest rates and fears of supply risk because of prolonged Russia-Ukraine conflict will likely to continue for some time," he said, predicting WTI to remain in a trading range centred on $100 a barrel. The U.S. central bank is widely expected to raise interest rates by 75 basis points at the conclusion of its policy meeting on Wednesday. A hike of that magnitude would effectively close out pandemic-era support for the economy. The gap between Brent and WTI has widened to levels not seen since June 2019 as easing gasoline demand in the United States weighs on U.S. crude while tight supply supports the international Brent benchmark.
Crudes Fall as IMF Again Cuts Growth Outlook, USD Firms -- Except for the ULSD contract that settled the session 1.5% higher on rallying natural gas, oil futures moved lower Tuesday, after the consumer confidence data showed Americans feel more pessimistic about the economy than at any point in the last 18 months, dimming the outlook for discretionary spending while lending support for the U.S. dollar index ahead of an expected rate hike by the U.S. Federal Open Market Committee. Additionally, International Monetary Fund cut its global growth projections to 3.2% this year, down 0.4% from the previous outlook, citing the lingering impact of inflation and the war in Ukraine as two major factors behind the downgrade. In the United States, reduced household purchasing power and tighter monetary policy is likely to drive economic growth down to 2.3% this year and 1% in 2023, estimates IMF. In China, further lockdowns, and deepening real estate crisis would press growth down to 3.3% this year -- the slowest in more than four decades, excluding the pandemic, if realized. And in the euro area, growth is revised down to 2.6% this year and 1.2% in 2023. "The world may soon be teetering on the edge of a recession," said Jeff Kearns, managing editor of the IMF blog. Further evidence of economic slowdown could be found in U.S. consumer confidence data released Tuesday morning that showed Americans feel increasingly unhappy about the outlook for the economy and personal finances. The confidence index fell for the third straight month in July, slipping a larger-than-expected 2.7% to 95.7 compared with expectations for a 96.8 reading. The decline in confidence surprised some economists who felt gasoline prices that have declined from record highs in mid-June might spark some economic optimism. Earlier in the session, the oil complex got a leg up on reports that Russia cut natural gas flow to Europe on the key Nord Stream 1 pipeline to 20% of capacity, potentially deepening an energy crisis across the continent while triggering gas-to-oil switching in heating and power generation. With Russian gas flow through Gazprom's Nord Stream 1 pipeline now cut to 20% 33 million cubic meters a day, it is increasingly likely the European Union will face a gas supply shortage and potentially gas rationing this winter, according to analysts. At settlement, NYMEX September West Texas Intermediate futures fell $1.72 to $94.98 per bbl, with ICE September Brent declining $0.75 to $104.40 per bbl. NYMEX August RBOB futures dropped 2.70 cents to $3.3550 gallon, and August ULSD futures registered a 6.73-cent gain to $3.5839 gallon.
WTI Rises Modestly After Second Straight Weekly Crude Draw -- Oil prices ended the day lower as worries about a recession dulled demand expectations and increased supply threats from the Biden admin's SPR. The oil market market continues to show "significant downside risk and fear of recession," said Robbie Fraser, manager, global research & analytics at Schneider Electric.The "supply side headline about an additional 20 million barrels of oil being made available from the [Strategic Petroleum Reserve] between September and October was also a bearish catalyst for oil," Tyler Richey, co-editor of Sevens Report Research, told MarketWatch, adding that the planned SPR releases have been "largely on schedule in recent months." For now all eyes will be on tonight's API data and tomorrow's official data to see if these trends are continuing.API
- Crude -4.073mm (-1.121mm exp)
Acccording to API, Crude stocks fell significantly more than expected last week (the second straight weekly draw if it carries over into the official data tomorrow)...WTI was hovering around $95.25 ahead of the API print and moved very modestly higher after the crude draw...We note that WTI found support again for now at its 200DMA...Finally, we note that the gap between global oil benchmarks has blown out in recent days...“The slackening of gasoline demand is weighing on the WTI complex,” brokerage PVM Oil Associates Ltd wrote this week. “At the same time, Brent prices have found support from a plethora of sources,” including underproduction by key oil producers.WTI-Brent is now over $9 - the widest spread since April 2020 when WTI went negative...
The Large Rate Hike Fueled Concerns about the Demand Outlook Oil rose by $2 a barrel on Wednesday as a report of lower inventories in the United States and cuts in Russian gas flows to Europe offset concern about weaker demand and the 0.75% U.S. interest rate hike. The large rate hike fueled concerns about the demand outlook and would probably boost the U.S. dollar, making dollar-denominated commodities, such as crude oil, more expensive for other currency holders. Oil has soared in 2022, reaching a 14-year high of $139 a barrel in March after Russia's invasion of Ukraine added to supply worries and as demand recovered from the pandemic. Since then, concerns of economic slowdown and rising interest rates have weighed, despite supply outages in Libya and Nigeria and cuts in Russian gas flows to Europe. After a sharp drop in the last two weeks, U.S. gasoline demand rebounded by 8.5% week on week, according to the data. WTI for September delivery gained $2.28 per barrel, or 2.40% to $97.26. September Brent gained $2.22 per barrel, or 2.13% to $106.62. RBOB for August delivery gained 7.38 cents per gallon, or 2.20% to $3.4288 The EIA reported that crude oil stocks held in the SPR in the week ending July 27th fell by 4.5 million barrels to 474.5 million barrels, the lowest level since June 1985. It also reported that U.S. crude oil output increased by the most since December 2021. Output increased by 200,000 bpd on the week to 12.1 million bpd. Meanwhile, U.S. weekly crude exports increased to the highest level on record of 4.548 million bpd, up 789,000 bpd on the week. A senior G7 official said the Group of Seven, including the United States, Canada, Japan, Germany, France, Italy and Britain, aim to have a price-capping mechanism on Russian oil exports in place by December 5th, when European Union sanctions banning seaborne imports of Russian crude come into force. The G7 want the price on Russian crude to be set by members of the buyers' cartel at a level above Russian production costs, so as to provide an incentive for the Kremlin to keep pumping, but much below the current high market prices. IIR Energy reported that U.S. oil refiners are expected to shut in about 391,000 bpd of capacity in the week ending July 29th, increasing available refining capacity by 245,000 bpd. Offline capacity is expected to fall to 344,000 bpd in the week ending August 5th. The Federal Reserve increased its benchmark overnight interest rate by three-quarters of a percentage point on Wednesday in an effort to cool the most intense breakout of inflation since the 1980s, with "ongoing increases" in borrowing costs still ahead despite evidence of a slowing economy. The Federal Open Market Committee said "Inflation remains elevated, reflecting supply and demand imbalances related to the pandemic, higher food and energy prices, and broader price pressures."
Oil Rises as US Exports Soar and Stockpiles Tumble | Rigzone - Oil rose after a government report showed demand for US crude rising globally amid a supply crunch and traders shrugged off the Federal Reserve’s decision to raise interest rates by 75 basis points. West Texas Intermediate rose 2.4% to settle at $97.26 a barrel, while gasoline futures climbed 2.2%. US crude stockpiles dropped the most since the end of May, falling by 4.52 million barrels last week, according to the Energy Information Administration. Adding to bullish sentiment, crude exports rose to a record as the spread between US- and London-traded futures widened with Europe scrambling to replace Russian barrels. The Fed lifted interest rates by 75 basis points for a second straight month in the most aggressive measures to combat inflation since the early 1980s. Fears over an economic slowdown have whipsawed commodity markets as traders weigh a tight physical crude market against a weaker long-term outlook. “The Fed’s decision was not a catalyst for the crude market but did remove some fears” of an even-higher rate hike, said Rebecca Babin, a senior energy trader at CIBC Private Wealth Management. “Crude trading recently has been highly correlated with macro headlines, but it should be noted that physical fundamentals improved meaningfully today and is the real driver of price action today.” Oil has jumped more than 25% since the start of the year, although the bulk of the gains triggered by Russia’s invasion of Ukraine have been reversed. The supermajor oil explorers such as Shell Plc and Exxon Mobil Corp. are scheduled to report second-quarter earnings this week that will show bumper profits after energy prices surged. Adding to tight supply concerns, a power outage in Kazakhstan reduced electricity deliveries to a pumping station on a key crude pipeline, according to the nation’s Energy Ministry. The CPC pipeline is scheduled to handle about 1.4 million barrels a day in August, according to data compiled by Bloomberg WTI for September delivery rose $2.28 to settle at $97.26 a barrel in New York. Brent for September settlement gained $2.22 to settle at $106.62 a barrel. One of the most significant oil-market moves this week has been the widening gap between the West Texas Intermediate and Brent contracts. On Wednesday, the US benchmark was trading at more than $9 below Brent, after closing the day before with the biggest discount since 2019.
Oil mixed as U.S. gasoline demand rebounds but recessionary fears loom (Reuters) -Oil prices were mixed on Thursday as concerns about a potential global recession that would knock energy demand offset lower U.S. crude inventories and a rebound in gasoline consumption. Brent crude futures rose 52 cents to settle at $107.14 a barrel, after gaining $2.22 on Wednesday. U.S. West Texas Intermediate crude (WTI) fell 84 cents to settle at $96.42 a barrel, after rising $2.28 in the previous session. Prices pared gains in mid-morning trade after the U.S. Commerce Department reported the world's biggest economy unexpectedly contracted in the second quarter, fuelling concerns about a recession that could hit energy demand. Consumer spending grew at its slowest pace in two years and business spending declined. Investors focused on U.S. oil data from Wednesday that showed crude stockpiles fell by 4.5 million barrels last week, more than quadruple forecasts, while gasoline demand rebounded by 8.5% week on week.[EIA/S] "The U.S. consolidated its position as the world's largest petroleum exporter," Citi analysts said in a note, as combined gross exports of crude oil and refined products stood at a record 10.9 million barrels per day. U.S. crude exports reached a record 4.5 million bpd last week as WTI traded at a steep discount to Brent. However, in a bullish signal, U.S. crude oil production growth could stall due to a lack of fracking equipment and crews, as well as capital constraints, executives said this week. Prices found further support from the energy supply battle between the West and Russia. The Group of Seven richest economies aims to have a price-capping mechanism on Russian oil exports in place by Dec. 5, a senior G7 official said. Meanwhile, Russia has cut gas supplies via Nord Stream 1, its main gas link to Europe, to just 20% of capacity. That could lead to switching to crude from gas and prop up oil prices in the short term, analysts said. "We increase our total estimates for additional oil demand from gas to oil switching by 700,000 bpd from October 2022 through March 2023," JP Morgan analysts said in a note. However, this could be offset by normalising Libyan supply, leading to a largely balanced global oil market in the fourth quarter, followed by a 1 million bpd stockbuild in the first quarter of 2023, they added. The Organization of the Petroleum Exporting Countries and its allies will consider keeping oil output unchanged for September when they meet next week, despite calls from the United States for more supply, although a modest output increase is also likely to be discussed, eight sources said.
Oil Futures Wobble as US Economy Again Shrinks in Q2 - After rallying more than 2% early in the session, oil futures settled Thursday with mixed results. That came after government data from Bureau of Economic Analysis showed the U.S. economy shrunk for the second consecutive quarter in ending June, entering into what many economists call a technical recession under pressure from soaring inflation, rising interest rates, and downtrend in consumer spending. These headwinds among others are thought to increasingly weigh on a still-resilient labor market that has added more than 1 million jobs in the second quarter at a time when the U.S. economy shrunk by 0.9%, according to BEA estimates released Thursday morning. Gross domestic product, a broad measure of the goods and services produced across the economy, contracted by a steeper 1.6% annualized pace in the first three months of 2022. The consecutive quarters with negative GDP mark a rare contraction that many economists attribute to the distortions created by excessive government spending during 2 1/2 years of the pandemic. Whether or not the United States is facing a recession, former Treasury Secretary Larry Summers warned that when inflation is as high as it is, at 9.1% in June according to the consumer price index, and the labor market is very tight, a recession has always followed, adding that "a soft landing represents a kind of triumph of hope over experience." Pushing back against that view, Treasury Secretary Janet Yellen on Thursday gave a glass-half-full assessment of the economy, acknowledging a slowdown that she called necessary to tame inflation while rejecting the notion the country had entered a recession. "We do see a significant slowdown in growth," Yellen said at a news conference on Thursday. She said a true recession is a "broad-based weakening of the economy. That is not what we're seeing right now." Despite the negative GDP print, stocks on Wall Street rallied again on Thursday as the U.S. dollar softened in afternoon trading to settle the session 0.09% lower at 106.236, initially boosting the oil complex. West Texas Intermediate futures for September delivery fell to $96.42 per barrel (bbl) at settlement after trading as high as $99.84. Brent September futures registered a $0.52 gain for a $107.14-per-bbl settlement ahead of the contract's expiration Friday afternoon, while the next-month delivery October futures expanded its discount to September delivery to $5.31 per bbl. NYMEX August RBOB contact settled the session 3.58 cents higher at $3.4646 gallon, while sharply expanding its premium to September contact to 36.28 cents, suggesting a short squeeze ahead of the contract's expiration Friday afternoon. NYMEX August ULSD futures declined 3.10 cents to $3.6863 per gallon, while the September contract settled the session with a 7.25-cent discount.
Crude oil futures inch higher in rangebound trade amid US GDP contraction - Crude oil futures were higher in mid-morning Asian trade July 29, though it remains trapped in a well-worn range, as investors continued to weigh signs of macroeconomic weakness against a tight physical market. At 10:28 am Singapore time (0228 GMT), the ICE October Brent futures contract was up 48 cents/b (0.47%) from the previous close at $102.31/b, while the NYMEX September light sweet crude contract rose 73 cents/b (0.76%) at $97.15/b.Despite notching intraday rises of $2/b or more on most days this week, oil prices have mostly failed to hold onto those gains as investors continued to fret over weakening demand. US data continued to show signs of economic weakness, with the US GDP contracting for a second straight quarter in the three months ended June, data from the Commerce Department showed July 28. While the data appeared to confirm a technical recession for the US economy, analysts nonetheless noted that the labor market remains tight with hundreds of thousands of jobs added each month. "The technical recession was not declared official, considering that the US labor market remains healthy, but tighter conditions ahead suggest that such risks remain prominent,"
Oil prices surge $4/bbl as chances of OPEC+ supply boost dim — Oil prices jumped more than $4 a barrel on Friday as attention turned to next week’s OPEC+ meeting and dimming expectations that the producer group will boost supply. Brent crude futures for September settlement, due to expire on Friday, gained $3.29, or 3.1%, to trade at $110.43 a barrel by 11:05 a.m. (1505 GMT) after touching their highest since July 5. The more active October contract was up $4.42 at $106.25. U.S. West Texas Intermediate (WTI) crude futures rose $4.85, or 5%, to $101.27 a barrel. Both contracts were set for a weekly rise of about 7% but also on track for a second monthly loss, with Brent down 3.8% for July and WTI down 4.2%. Stronger stock markets supported oil on Friday, as did a weaker dollar, which makes oil cheaper for buyers with other currencies. “These days, there has been a lot of macro influences on the oil market with the stock market making a nice rebound and a similar fall in the dollar feeding into (today’s prices),” Global equities, which often move in tandem with oil prices, were up on the hope that disappointing growth figures would encourage the U.S. Federal Reserve to ease up on monetary tightening. A Reuters survey forecast Brent would average $105.75 a barrel this year with U.S. crude averaging $101.28. Front-month Brent futures are selling at a rising premium to later-loading months, a market structure known as backwardation, indicating tight current supply. “The oil market in Europe is considerably tighter than in the U.S., which is also reflected in the sharply falling Brent forward curve,” said Commerzbank analyst Carsten Fritsch. Investors will watch the next meeting of the Aug. 3 meeting of the Organization of the Petroleum Exporting Countries (OPEC) and allies led by Russia, together known as OPEC+. OPEC+ sources said the group will consider keeping oil output unchanged for September, with two saying a modest increase would be discussed. A decision not to raise output would disappoint the United States after President Joe Biden visited Saudi Arabia this month hoping for a deal to open the taps. Analysts said it would be difficult for OPEC+ to boost supply, given that many producers are already struggling to meet production quotas.
Oil Prices Soar As Market Shrugs Off Recession Fears - The price of crude oil skyrocketed on Friday as the market generally ignored the crude oil demand implications from worries about the technical recession.At 11:40 p.m., ET, WTI crude was trading near $100 at $99.94 per barrel, an increase of $3.52 (+3.65%) on the day. Brent crude was trading above $110 per barrel at $110.20, up $3.06 (+2.86%) on the day.The market cannot seem to brush off the tight supply situation that currently exists. Another bullish factor for crude oil on Friday was the Energy Information Administration’s publication of its numbers for U.S. crude oil production for May, which showed that U.S. crude oil production actually fell in May instead of rose, contrary to the EIA’s latest estimates from its Short Term Energy Outlook.The news that OPEC+’s meeting next week would likely end with no significant production target increase also bolstered prices to a significant degree. On Thursday, five OPEC+ sources suggested that OPEC+ was likely to keep its production targets for September steady with August levels. Two OPEC+ sources said that the group could discuss a small output hike. The market is aware, however, that even a hike in production targets is unlikely to result in an actual OPEC+ production boost due to chronic underproduction compared to the group’s current targets.WTI prices are not only up on the day but also up on the week. Prices have come down over the past month, however. WTI traded at nearly $110 per barrel this time last month. Prices are up more than $20 per barrel so far this year.Despite the high price of crude oil and the recession, global oil demand doesn’t seem to be declining, Amrita Sen, director of research at Energy Aspects, told Bloomberg on Friday.With indications that crude demand hasn’t yet fully recovered from its Covid days, inventories are tight, even with millions of barrels of crude oil leaving Strategic Petroleum Reserves around the globe. When this flow of crude stops flowing from the SPR in October, the market could get even tighter.
ICE Brent Futures Climb Above $110 Ahead of OPEC Meeting- Oil futures nearest delivery on the New York Mercantile Exchange and Brent crude traded on the Intercontinental Exchange settled the last trading session of July mostly higher, with the international crude benchmark Brent contract for September delivery expiring near a one-month high. The gains came ahead of next week's meeting among the Organization of the Petroleum Exporting Countries and Russia-led producers, with sources close to the ongoing negotiations suggesting the 23-nation alliance plans to keep crude production steady. OPEC+ ministerial meeting scheduled for Aug. 3 is unlikely to result in a sizable production increase for September, according to media reports, countering claims by the White House that Saudi Arabia would boost oil production following President Joe Biden's visit to the Middle East earlier this month. Sources close to OPEC+ talks suggest the group is leaning toward keeping their crude output target unchanged at 43.85 million barrels per day (bpd) for September or to increase production slightly as laggard members attempt to catch up on missed quotas. The OPEC+ agreement calls for both Saudi Arabia and Russia to produce 11 million bpd in August, followed by Iraq with a daily production quota of 4.7 million bpd and the United Arab Emirates at roughly 3.2 million bpd, according to OPEC+ following their June 30 meeting. Speculation has swirled for weeks as to whether Saudi Arabia is capable to boost and sustain production capacity above 11 million bpd. Saudi Crown Prince Mohamed bin Salman recently said the kingdom will seek to increase its oil production to 13 million bpd as early as next year. The reality is that Saudi Arabia produced near 12 million bpd for only a brief period in April 2020 when Riyadh was locked in a bitter price war with Moscow. Further supporting the oil complex is weakening U.S. dollar index that came under pressure from better-than-expected economic data in the Eurozone where the economy expanded by 0.7% during the second quarter compared with expectations for a modest 0.2% expansion. The drivers of the growth were Italy and Spain, where tourism industries boosted GDP growth by 1% and 1.1%, respectively. However, Germany, a traditional engine of the European economy, came to a standstill at 0% growth following a miniscule 0.2% expansion during the first three months of the year. At settlement, West Texas Intermediate futures for September delivery rallied $2.20 to $98.62 per barrel (bbl). Brent September futures expired $2.87 higher at $110.01 per bbl, while the next-month delivery October futures expanded its discount to the now expired contract to $6.04 per bbl with a settlement at $103.97 per bbl. NYMEX August RBOB contract advanced 2.35 cents for a $3.4881-per-gallon expiration while expanding its premium to the September contract to 37.49 cents -- a fresh 10-year high backwardation for the prompt gasoline spread. NYMEX August ULSD futures expired at $3.6247 gallon, down 6.16 cents on the session, while the September contract settled at $3.5490 per gallon.
Oil Has Another Monthly Loss for July, Bulls Hedge on OPEC Meet -U.S. crude rose for a third time this week but still settled below the key $100 per barrel level while Brent remained above the three-digit mark amid concerns about what global oil producing alliance OPEC+ might do with output quotas when it holds its August meeting next week. As trading for July closed, New York-based West Texas Intermediate, or WTI, posted a monthly loss of 7.2%, after June’s 7.4% slide. For the day and week though, WTI was up. The U.S. crude benchmark settled Friday's session up $2.20, or 2.3%, at $98.62 for its September delivery contract. For the week, September WTI was up 4.1%, after a decline of 13% over three preceding weeks. London-traded Brent for October delivery showed a decline of about 4.5% for July, after June’s 5.7% drop. For Friday itself, the global crude benchmark settled up $2.14, or 2.1%, at $103.97. For the week, October Brent was up 5.7%, extending last week’s 2.7%. Prior to that, Brent had fallen a cumulative 17% over five weeks. Oil’s rise on the day and week came as attention turned towards OPEC+’s Aug. 3 meeting, which will decide on the group’s September production. Sources within the 23-nation OPEC+ told media on Friday that the alliance might hold production unchanged or raise it only slightly for September — despite arduous efforts by the Biden administration to cajole the Saudi-led and Russian-supported alliance in boosting output appreciably. “All eyes are now on that meeting which will take place against the backdrop of lower economic growth forecasts, heightened recession risks and a U.S. economy that may or may not already be in recession, depending on who you're talking to,” Oil prices took a tumble earlier in July on worries of an oncoming recession — confirmed this week by anemic second-quarter U.S. economic data. The Commerce Department reported on Thursday that US GDP posted a negative 0.9% growth in the second quarter, after a contraction of 1.6% in the first quarter. The back-to-back negative quarters technically places the economy in a recession. Separately, the Commerce Department said Friday that the Personal Consumption Expenditure Index — an inflation indicator closely followed by the Federal Reserve — grew 6.8% in the year to June after being dormant in two earlier months, intensifying the central bank’s fight against price growth. US consumer sentiment, meanwhile, hovered near all-time lows towards end-July, the University of Michigan said in its closely-followed consumer poll on Friday. Consumer spending accounts for 70% of U.S. GDP.
Saudi Arabia plans to build 75-mile-long mirrored skyscrapers that will cut through mountains and feature high-speed rail, a sports stadium, and a yacht marina — and cost up to $1 trillion - Saudi Arabia is planning to build the Mirror Line — two parallel skyscrapers that will stretch for 75 miles over varied terrain — at a cost of up to $1 trillion, or the entire GDP of Indonesia. The Wall Street Journal reported details about the project on Saturday after obtaining confidential planning documents. The skyscrapers, which are set to have mirrored sides, will cut through mountains and desert, span all the way to the coast and into the water. Artist renderings of the project were published by The Journal. The outlet reported the project is expected to cost up to $1 trillion, according to sources close to the project. It's intended to house 5 million people and feature a high-speed train running under the buildings, vertical farming, a sports stadium, and a yacht marina, according to The Journal. The Mirror Line is part of plan for a linear community that was previously announced by Saudi Crown Prince Mohammed bin Salman, who directed officials to create something on the scale of the pyramids of Egypt.
Saudi crown prince MBS meets Emmanuel Macron on European rehabilitation tour - — Saudi Arabia’s Mohammed bin Salman engaged in a long handshake with French President Emmanuel Macron at the Élysée Palace on Thursday, in the latest sign of the crown prince’s rehabilitation nearly four years after the killing of journalist Jamal Khashoggi. Mohammed’s trip to France, where he was attending a working dinner with Macron, followed a stop in Greece this week to sign a flurry of bilateral agreements. He also met this month in Riyadh with President Biden, who as a candidate had pledged to make the prince a pariah. And he made a state visit in June to Turkey, which once led the charge to hold Saudi Arabia responsible for the killing of Khashoggi — a Saudi citizen, Washington Post opinion columnist and critic of the crown prince — who was dismembered in his country’s consulate in Istanbul in 2018. These high-level encounters with Mohammed would have been hard to imagine not long ago. But the war in Ukraine and a downturn in the global economy have reaffirmed the Saudi kingdom’s status as a critical source of global energy and investment and brought world leaders pleading for assistance, including an increase in oil production. Macron, Biden and some other Western leaders have also argued there is no way to address global crises, such as the war in Yemen, without the help of the crown prince, who could rule Saudi Arabia for decades.
Russia Fired On Israeli Jets Over Syria In "One-Off": Israel's Defense Chief -On Tuesday Israel's defense chief issued a surprise admission connected to the war in Syria, specifically related to the literally hundreds of strikes Israel's air force has conducted on targets in Syria over the past few years.Defense Minister Benny Gantz described an incident in May wherein Israeli military jets operating over Syria were engaged and fired on by a Russian anti-aircraft battery. He said the Russian missiles missed their target, downplaying it as a "one-off incident". Israel has of late semi-regularly attacked positions in and around Damascus, especially to the south and near the Golan Heights, claiming to be targeting "Iranian assets" and weaponry. Last month for example, Syria was forced to halt all flights from Damascus international airport, the country's largest, following Israeli airstrikes that destroyed runways and crucial infrastructure, earning severe condemnation from Moscow.Reuters presents the context behind Defense Minister Gantz's disclosure in the following: But Israel's Channel 13 TV reported that, on May 13, a Russian-operated S-300 air defense battery fired on Israeli jets as they carried out a Syria sortie - without hitting any."It was a one-off incident," Gantz told a conference hosted by Channel 13, when asked to confirm the report. The Russian launch happened when the aircraft "were no longer around", he said.The Syrian Army regularly seeks to repel Israeli raids via its own Russian-supplied anti-air defense systems, but the unprecedented aspect to the May incident is that it was an S-300 unit operated by the Russian military in Syria that targeted the Israeli aircraft. It may have been the Russians giving Israeli forces a severe and final warning.Russia has been getting more forceful in its denunciations of these airstrikes, with a similar July 2 daytime attack that reportedly killed two Syrian civilians resulting in Russian Foreign Ministry spokesperson Maria Zakharova saying the following: "We strongly condemn such irresponsible actions that violate the sovereignty of Syria and the basic norms of international law, and we demand their unconditional cessation."
US and Taliban enter talks to release $3.5 billion in central bank currency reserves amid humanitarian crisis - The summit comes as the humanitarian crisis in Afghanistan worsens since the militant group took power almost a year ago.Afghanistan's sanctioned economy has lost significant international capital since the US withdrew from the country. US and Taliban officials met in Uzbekistan for talks to unlock roughly $3.5 billion in central bank foreign exchange reserves amid a worsening humanitarian situation in Afghanistan. A US delegation told the Taliban senior officials that the move to unlock reserve funds needed to speed up, and they said the funds had to be used to benefit Afghan people, according to a Thursday readout from the State Department. Additionally, the meeting aimed to resolve how to allow Afghanistan's government to access its central bank reserves while also stemming the Taliban's access. Afghanistan's central bank holds about $9 billion in foreign exchange reserves outside the country, with about $7 billion sitting in the US. Last month, the Taliban's foreign minister, Amir Khan Muttaqi, met US officials in Qatar to discuss releasing the frozen Afghan funds. Since the US pulled out of Afghanistan last summer and the Taliban took power, the country has lost international aid which accounted for more than 40% of its GDP. Now, there's been ongoing crises and the UN said millions in Afghanistan face severe hunger. Earlier this year, President Joe Biden signed an executive order to allow some of the Afghan central bank's US-based assets to be deployed as aid.