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Russian gas giant Gazprom has agreed to build a new pipeline to Germany under the Baltic Sea with a trio of Western energy companies, bringing Europe closer into Moscow's energy orbit. The Russian gas company is trying to find new ways to deliver gas to Europe bypassing conflict-stricken Ukraine.
UPDATE 2-Russia's Gazprom to expand Nord Stream gas pipeline with E.ON, Shell, OMV | Reuters
Russia—Greece and Russia signed a preliminary agreement Friday for cooperation on a pipeline that will bring Russian gas to Europe through Greece and Turkey. The agreement, which isn’t legally binding
Greece, Russia Strike Preliminary Gas Pipeline Deal - WSJ
As oil prices declined—falling more than 50% from June 2014 to January 2015, before increasing slightly in spring 2015—energy production companies focused efforts on increasing operating efficiencies. While production, rig counts, and employment statistics are good indicators of the expansion or contraction of the oil and natural gas industry, the Bureau of Labor Statistics Producer Price Index (PPI) tracks the rates oil and natural gas service firms are receiving for goods and services used in producing oil and natural gas. Changes in the PPI can be used to examine how prices charged by firms throughout the oil and natural gas industry respond to fluctuations in commodity prices.
Oilfield costs fall following decline in oil prices - Today in Energy - U.S. Energy Information Administration (EIA)
China now consumes 23.2% of all energy consumed on Earth and clearly what happens in China will impact the whole world. Figure 1, lifted from the 2015 BP Statistical Review, shows how dramatically growth has slowed in China. Energy intensive steel and cement are barely growing as the era of industrialization and building infrastructure comes to an end. So may this, in part, explain the 2014 oil price crash?
China’s Energy Demand May Not Increase Until 2017 | OilPrice.com
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Oil speculators accelerated their retreat from both bullish and bearish wagers before OPEC ministers held firm in their plan to pump ever more crude. Speculators reduced short wagers in West Texas Intermediate crude by 8.6 percent and long bets by 2 percent, for an overall 0.2 percent contraction in the net-long position, U.S. Commodity Futures Trading Commission data through June 2 show. Brent crude net-long positions dropped.
OPEC’s Open Oil Spigots Spur Retreat for Bulls and Bears Alike - Bloomberg Business
India was one of the biggest importers of LNG in Asia buying approximately10.4 million tonnes in 2014. India’s LNG sector is undergoing a major transformation as it is set to occupy a crucial part in the country’s energy portfolio after the federal government approved the use of imported gas for power generation and fertilizer production.
Growing India Becomes Major LNG Player | OilPrice.com
The debt that fueled the U.S. shale boom now threatens to be its undoing. Drillers are devoting more revenue than ever to interest payments. In one example, Continental Resources Inc., the company credited with making North Dakota’s Bakken Shale one of the biggest oil-producing regions in the world, spent almost as much as Exxon Mobil Corp., a company 20 times its size.
The Shale Industry Could Be Swallowed By Its Own Debt - Bloomberg Business
The U.S. rig count dropped for the 28th straight week Friday, according to the latest data from Baker Hughes. The Houston-based service company reported 857 rigs turning to the right on Friday, down two from the week prior. The fall represents the smallest drop since the rig count began falling in December.
U.S. rig count falls for 28th straight week: Baker Hughes
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The debt that fueled the U.S. shale boom now threatens to be its undoing. Drillers are devoting more revenue than ever to interest payments. In one example, Continental Resources Inc., the company credited with making North Dakota’s Bakken shale one of the biggest oil-producing regions in the world, spent almost as much as Exxon Mobil Corp., a company 20 times its size.
Next threat to U.S. shale: Interest expense on $235 billion debt
Not content with the blow it’s dealt to U.S. oil drillers, Saudi Arabia is set to escalate the battle for market share by raising production to maximum levels. The world’s largest oil exporter has already increased output to a 30-year high of 10.3 MMbpd in a bid to check growth from nations including the U.S., Canada and Brazil. It will add even more to the global glut, according to Goldman Sachs Group Inc. Citigroup Inc. predicts the kingdom will push toward its maximum daily capacity, which the bank estimates at about 11 MMbopd, in the second half of 2015.
Saudi Arabia pumps oil flat out in Citi, Goldman’s new oil order
Russia signed a preliminary agreement on building a natural-gas pipeline through Greece, a deal that signals strengthening ties between the countries as the crisis-stricken government in Athens is increasingly isolated from the rest of Europe. Russia’s development bank, known as VEB, will own 50% of the 2 billion-euro link and provide all financing, Greek Energy Minister Panagiotis Lafazanis told reporters after the signing in St. Petersburg, Russia, on Friday. Greece will own the rest, Russian Energy Minister Alexander Novak said.
Russia clinches Greece accord to build gas pipeline to Europe
BP Plc’s $750 million purchase of a Siberian oilfield stake is as much a bet on China as it is on Russia. Taas-Yuriakh Neftegazodobycha LLC’s blocks near China’s northern border will supply the planned Tianjin refinery on the east coast, according to OAO Rosneft, which sold the 20% holding last week. BP CEO Bob Dudley predicts the unit’s natural gas reserves will prove strategic as Russia develops its Far East and builds ties with the world’s biggest energy consumer.
Siberian oil deal sees BP bet on Russia’s pivot toward China
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U.S. Sen. Lisa Murkowski (R – Alaska) advanced her efforts to lift the current ban on most U.S. crude oil exports on Tuesday by releasing a report making the case that sanctions on Iranian oil should not be lifted without also lifting the current ban on U.S. crude oil exports. The report, Cross-Currents: Iranian Oil and the U.S. Export Ban, connects the dots between Obama Administration statements to support this argument.
Iran deal will disadvantage U.S. oil, Murkowski says
Oil futures rose for a second day before a government report that may show U.S. inventories fell for an eighth week, the longest stretch of declines in seven years. U.S. crude inventories probably shrank by 2 MMbbl through June 19, according to a Bloomberg survey before an Energy Information Administration report Wednesday. Gasoline prices climbed for the first time in three days.
Crude oil rises as U.S. supplies seen falling for eighth week
The global oil market is tightening slowly from a peak supply and demand imbalance in second-quarter 2015, according to Rystad Energy’s latest research. The June Global Oil Market Trends Report sees insufficient oil demand growth to prevent further counter-seasonal stock building in the third and fourth quarters.
Brent forward curve is too low, Rystad says
The export ban is a decades old relic from another era, originally intended to help the U.S. avoid oil shortages by keeping production within the country. That’s no longer a serious concern as the U.S. is now producing more fossil fuels than any other country in the world thanks to technological innovations that build on the country’s available natural resources. What’s unclear though, is whether the export ban is still helpful to the country as a whole in light of recent developments.
What Oil Export Ban Means for Investors | OilPrice.com
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Russia surpassed Saudi Arabia to become China’s top crude supplier as the fight for market share in the world’s second-largest oil consumer intensifies. China imported a record 3.92 million metric tons from its northern neighbor in May, according to data emailed by the Beijing-based General Administration of Customs on Tuesday. That’s equivalent to 927,000 bopd, a 20% increase from the previous month. Saudi sales slumped 42% from April to 3.05 million tons.
Russia pips Saudi Arabia in race to grab China oil market share
OPEC said its share of the global crude oil market last year declined to the lowest level since 2003, underscoring the motive for the group’s current push to defend sales volumes. The Organization of Petroleum Exporting Countries’ share of the global crude market dwindled to 41.8% in 2014, from 43.3% the previous year, according to the group’s Annual Statistical Bulletin. Libya accounted for more than half the output reduction. OPEC’s 12 members pumped an average of 30.68 MMbopd last year, according to the report by the group’s Vienna-based secretariat.
OPEC’s crude market share fell to lowest since ’03 last year
Qatar Petroleum, the world’s biggest producer of LNG, plans to expand overseas after a restructuring that included the takeover of its foreign investment arm and the firing of some workers. The unspecified job cuts were one part of an eight-month reorganization that has seen QP take over Qatar Petroleum International, divest non-energy units, including a catering company, and impose stricter conditions on foreign partners.
Qatar Petroleum expanding overseas with focus on production
Some people talk about peak energy (or oil) supply. They expect high prices and more demand than supply. Other people talk about energy demand hitting a peak many years from now, perhaps when most of us have electric cars. Neither of these views is correct. The real situation is that we right now seem to be reaching peak energy demand through low commodity prices. I see evidence of this in the historical energy data recently updated by BP (BP Statistical Review of World Energy 2015).
BP Data Suggests We Are Reaching Peak Energy Demand | OilPrice.com
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But recently the so-called supermajors have been doing a little housecleaning of their own, and more is expected given lower commodity prices, which are leading to weaker cash flow and sliding earnings. "It was like a wake-up call," said Dennis Cassidy, a managing director at advisory firm AlixPartners. "The big multinationals are all rethinking their strategies." Last week, Chevron (CVX - Get Report) exited Vietnam with the sale of its stakes in natural-gas properties and a pipeline project to state-owned partner Vietnam Oil & Gas Group, known as PetroVietnam.
Why Chevron (CHV), Shell (RDS.A) and Even the Mighty ExxonMobil (XOM) Are Retrenching - TheStreet
Oil from Canada’s oil sands is around 20 percent more carbon-intensive on average than crude from elsewhere. That is the damming conclusion from a forthcoming new study by the U.S. Department of Energy’s Argonne National Laboratory and its partners.
Latest DOE Report Slams Canada’s Oil Sands | OilPrice.com
For Chevron Corp., every ripple in the global crude oil market makes a major splash. The 15% jump in the price of crude this quarter represents a $2.8 billion windfall. That’s because every time the average quarterly price of Brent—the benchmark for most international oil sales—increases by a dollar, Chevron scoops up an extra $325 million to $350 million in cash beyond certain expenses.
Chevron turns a dollar into $325 million windfall amid oil rally
Iran will probably struggle to restore lost crude production if it secures a deal to ease sanctions because the condition of halted fields will have deteriorated and more investment will be needed, according to Wood Mackenzie Ltd. The country would be able to increase crude output by 120,000 bopd by the end of the year if it reaches an agreement on its nuclear program, according to a report by the Edinburgh-based consultant and Verisk Maplecroft. The report forecasts a further increase of 260,000 bopd by the end of 2016 and 220,000 bopd the following year.
Iran seen struggling by WoodMac to restore lost oil after deal
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Brazil’s state-controlled oil company Petroleo Brasileiro abandoned exploration at the Caramba prospect in a deepwater region that holds the country’s biggest discoveries. Petrobras has returned the BM-S-21 concession, where Caramba is located, to Brazil’s National Petroleum Agency, the Rio de Janeiro-based producer said in an email Wednesday. The company operated the concession in the so-called pre-salt region with an 80% stake. Galp Energia SGPS was its partner with a 20% stake.
Petrobras abandons deepwater prospect in Brazil’s top region
Rystad Energy’s latest research indicates that 88 units within the floater market will have to be taken out between 2015 and 2017, making it the largest ever retirement cycle in the history of offshore drilling. Research shows that this retirement is a consequence of demand reduction from 262 units in 2014 to an expected 220 units in 2016 as a result of lower activity from E&P companies and despite the oil price stabilizing around $65/bbl over the past quarter. Yet, between 2015 and 2017, the floater market awaits an influx of 64 new units.
Floater retirements to reach historical high, Rystad says
Across Quebec, cardboard signs are popping up on lawns depicting a broken pipe gushing black crude. “Don’t flow near us,” they warn in French. That sums up Benoit Pigeon’s feelings about TransCanada Corp.’s proposed C$12 billion ($9.7 billion) pipeline that would traverse the province on its way to connect Alberta oil-sands fields with the Atlantic Coast. In addition to his yard sign, Pigeon has marched with street protesters and helped rally opposition to the project on Facebook.
Quebec becomes latest hurdle to Canada’s plans for oil exports
Total said Wednesday it had pulled out of the Shtokman natural gas project in the Barents Sea, with development of one of the world's largest untouched gas fields apparently falling victim to Western sanctions in Russia.
Total pulls out of Russian gas project - Yahoo News
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In the latest weekly production data from the EIA, on the back of recent March revisions, the U.S. managed to post a 76,000 barrel per day increase in the lower 48. Production from Alaska fell by 61,000 barrels per day, putting overall U.S. output 15,000 barrels per day higher for the week ending June 12 compared to the previous week. This comes at a time when multimillion barrel draws have become the norm. It is important to note that lower 48 production is estimated based on an EIA black box model, while Alaska is virtually real time data. That suggests that the weekly supply estimates are hugely overestimated.
U.S. Oil Glut An EIA Invention? | OilPrice.com
This Week in Petroleum
This Week In Petroleum Crude Oil Section
The surge in shale drilling that has made the U.S. the world’s No. 1 oil producer has started to slow under the weight of a global crude collapse, and that downturn is likely to stick around for a while, BP’s chief U.S. economist said Wednesday. Amid falling oil prices that plummeted by more than half in a few short months, the global oil giant has readjusted its business as it settles in for a prolonged crude slump, Mark Finley told an audience gathered in downtown Houston to hear his presentation of BP’s annual statistical review of world energy, a wide-ranging analysis of global demand and supply.
BP economist: Oil industry should hunker down for “a couple of years” as prices recover - Fuel Fix
Executives from Royal Dutch Shell and Eni have met Iranian officials in Tehran to discuss investing in the country’s energy industry, the first time international oil firms have publicly confirmed such talks ahead of a possible nuclear deal with the West, the Financial Times has reported.
Oil Firms In Talks With Iran Ahead Of Nuclear Deal | OilPrice.com
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Oil held losses below $60/bbl as near-record U.S. production prolonged an oversupply amid the lowest trading volatility in eight months. West Texas Intermediate futures fell 0.4% in New York, extending a decline of 2.1% over the previous two days. U.S. crude stockpiles remained 84 MMbbl above the five-year average for this time of the year while the nation pumped near the fastest pace in more than three decades of weekly government data. A measure of price fluctuations dropped to the lowest level since Oct. 29.
Oil holds losses below $60 amid oversupply as volatility sinks
The U.S. rig count has ended a 28-week slide with Baker Hughes reporting the first addition of rigs since Dec. 5. And while the overall count may have increased, the number of oil-directed rigs continued to drop. According to Baker Hughes, 859 rigs were turning to the right on Friday, two more than the previous week.
U.S. rig count rises as oil-directed rigs drop for 29th week: Baker Hughes
U.S. Secretary of State John Kerry said on Thursday he was hopeful about nuclear negotiations with Iran but that he did not wish to convey optimism ahead of a June 30 deadline for a deal. "I am always hopeful. Yes, I am hopeful, but I am not conferring optimism," Kerry told reporters in response to a question after presenting an annual U.S. report on human rights.
UPDATE 3-Kerry cautiously hopeful before Iran nuclear talks | Reuters
In a move that will reverberate throughout the country, the local Lancashire County Council in the United Kingdom rejected a permit for a shale gas project. We discussed the pending case in Tuesday’s newsletter. The landmark decision will delay – if not derail entirely – Britain’s shale gas hopes.
This Week In Energy: Oil Prices Under Pressure From All Sides | OilPrice.com
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The world’s largest oil companies need to change their business model to increase shareholder returns during a period of depressed crude prices, a report published by Morgan Stanley and The Boston Consulting Group said. “The days of Big Oil are by no means over, but today’s environment requires a change to the model,” according to the report published on Monday.
Big Oil needs new model to endure $60 crude, Morgan Stanley says
How is this price stability possible when the common wisdom was that oil prices below $70/bbl will force most US producers to close shop and North American production would collapse? After all we've seen a spectacular decline in active oil rig count. The answer has less to do with rigs that have been taken offline and more with the technology that remains. After the inefficient rigs have been shut, US rig count is starting to stabilize.
US oil producers using technology to outsmart Saudis - Business Insider
From multi-well padding (multiple wells in a single location) to superior drill bits, technology is helping to keep production levels high. Well completion costs and the speed of drilling have improved to levels many thought were not possible.
US oil producers using technology to outsmart Saudis - Business Insider
The oil price collapse of 2014-2015 began one year ago this month (Figure 1). The world crossed a boundary in which prices are not only lower now but will probably remain lower for some time. It represents a phase change like when water turns into ice: the composition is the same as before but the physical state and governing laws are different.
Current Oil Price Slump Far From Over | OilPrice.com
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