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RE: OPEC, for some quiet moments.. - admin - 04-24-2016

Europe is awash with low-priced natural gas, thanks to Russia and Norway using a Saudi-like tactic to hold market share. Utilities from EON SE to Centrica Plc are beneficiaries as Europe’s two biggest gas suppliers provided a record amount of the fuel in the first quarter, according to Societe Generale SA. The glut discouraged cargoes of U.S. liquefied natural gas and contained growth of imports from Qatar.

Russia and Norway use Saudi oil strategy in Europe's gas market

For two years, encouraged by the king, the prince had been quietly planning a major restructuring of Saudi Arabia’s government and economy, aiming to fulfill what he calls his generation’s “different dreams” for a postcarbon future. King Abdullah died shortly after his visit, in January 2015. Prince Mohammed’s father, Salman, assumed the throne, named his son the deputy crown prince—second in line—and gave him unprecedented control over the state oil monopoly, the national investment fund, economic policy, and the Ministry of Defense. That’s a larger portfolio than that of the crown prince, the only man ahead of him on the succession chart. Effectively, Prince Mohammed is today the power behind the world’s most powerful throne. Western diplomats in Riyadh call him Mr. Everything. He’s 31 years old.

The $2 Trillion Project to Get Saudi Arabia’s Economy Off Oil - Bloomberg

The LNG will be re-gasified at the new terminal and then supplied to household consumers in the regions of Guangdong and Guangxi, in southern China. The facility has an annual processing capacity of three million tons of LNG. The first cargo, from Australia-Pacific LNG, was 160,000 cubic meters. Beihai is the second LNG import terminal of a total of five terminals Sinopec plans to build across the country. The first started operations last year, at the port on Qingdao, and the other three will be built at Tianjin, Jiangsu and Zhejiang.

China’s Transfer From Gas To Coal Is Well Under Way |

A study by Wood Mackenzie highlights that the trend of lower investment is set to persist. Their study projects $91 billion in capex cuts across 121 upstream companies this year:

$91 Billion In Capex Cuts, A Serious Hangover For Oil |

RE: OPEC, for some quiet moments.. - admin - 04-27-2016

How's that OPEC strategy working? Well..

Oil exporting countries in the Middle East lost a staggering $390 billion in revenue due to lower oil prices last year, and should brace for even deeper losses of around $500 billion this year, the International Monetary Fund said Monday.

IMF forecasts Middle East oil exporters will miss out on $500B in 2016 - Business - CBC News

Angola has recently sought support from the International Monetary Fund (IMF). Venezuela’s struggles started well before crude prices dropped to 12-year lows and is fighting to avoid a disaster. Azerbaijan has also approached the IMF and the World Bank for help. Nigeria is also seeking the World Bank’s support. Without external support, Iraq will find it difficult to continue its war against the Islamic State (ISIS). Lower oil prices continue to make matters worse, and Iraqi Kurdistan has taken advantage of the situation and works towards independence and beefing up its unilateral export plans. Ecuador is the worst hit, and now the devastating earthquake has crippled the nation. It will need help from the IMF, the World Bank and a few other lenders to reconstruct. After a 3.5 percent contraction in 2015, Russia’s gross domestic product will take a further 1.5 percent hit in 2016, as projected by the Central Bank. Kazakhstan is faring no better. Its growth shrunk to 1.2 percent in 2015 from an impressive 6 percent in 2013 and is expected to slow down further to 0.1 percent in 2016. Most of the participating nations are financially ruined. They have to undertake drastic measures to reduce their dependence on oil. Disaster is imminent.

The Real Reason Saudi Arabia Killed Doha |

A central tenet in the thesis by analysts about the oil markets rebalancing has been that as prices declined, oil companies would be forced into bankruptcy. That in turn would lead to declining production, and eventually a rebalancing of supply and demand in the market, followed by higher prices. That process is already taking longer than many expected, and it looks like more time is needed. That additional time to balance the market is being driven by an unexpected factor; bankrupt oil companies are still pumping.

Why Are Bankrupt Oil Companies Still Pumping? |

The first U.S. LNG shipment will soon arrive in Europe, marking a new era for energy on the continent. Cheniere Energy’s newly completed Sabine Pass facility on the U.S. Gulf Coast recently sent a shipment of American liquefied natural gas, which should arrive in Portugal within a few days. “LNG coming out of the U.S. is probably the single most important thing that will transform the future LNG market,” Melissa Stark, energy managing director at Accenture, told Bloomberg. “It heralds the arrival of a global market.” European LNG demand is rising as domestic natural gas production is falling. Europe’s LNG imports climbed by 16 percent in 2015 compared to a year earlier.

U.S. To Undermine Russia’s Gas Monopoly In Europe |

RE: OPEC, for some quiet moments.. - Li'loilady - 04-28-2016

Why Saudi Arabia May be the Next Middle Eastern Mess
By Ryan Cooper,
April 27, 2016

Saudi Arabia has been a hot bed of bad news recently. First, there was their horrifying war in Yemen, then their empty threat to start selling off U.S. debt. Most recently, the 30-year-old Deputy Crown Prince Mohammad bin Salman, who heads the Saudi Council for Economic and Development Affairs (and also serves as defense minister) laid out a new plan, dubbed "Vision 2030," to transition the country away from selling oil. While it may sound positive — vision! less oil! — the plan is actually pretty ominous.
--I wonder what our resident economist thinks of this proposed shake up--

RE: OPEC, for some quiet moments.. - Putncalls - 04-28-2016

The stock market alone is 300 trillion. Saudi can't buy 3% of that even if they sold all of Aramco which is valued at less than 10 trillion.

RE: OPEC, for some quiet moments.. - admin - 04-29-2016

From what I've seen is that Aramco might be worth $2 trillion, and the Saudi's are only going to sell a fraction of it as they don't want to lose control

I don't think I've ever witnessed people shooting themselves in the foot the way the Saudi's have done recently. They could have kept the oil price up. Yes, they would have gradually lost market share and control, but if you make back of the envelope calculations of the rents they could have accumulated at $90-$100 oil, they would have had their sovereign wealth fund right there. It's an extraordinary mistake, IMHO and I've argued this before (here)

RE: OPEC, for some quiet moments.. - admin - 05-03-2016

Today the Petroleum Services Association of Canada (PSAC), in its second update to the 2016 Canadian Drilling Activity Forecast, announced it revised the forecasted number of wells drilled (rig releases) across Canada for 2016 to 3,315 wells. This represents a decrease of 1,835 wells and an approximate 36% decline from PSAC’s original 2016 Drilling Activity Forecast released in early November 2015.

PSAC revises 2016 drilling forecast, significantly lowering activity

Leftist guerrillas in Colombia, rebels in Libya and militants in Nigeria are succeeding where the world’s biggest oil producers failed, helping keep a 1.5 MMbpd surplus from expanding.

Guerrillas and rebels do for oil market what producers couldn't

Oil prices plunged to their lowest levels in more than a decade earlier this year, but have since rallied by more than 70 percent from their February lows. Now oil is at a crossroads: the market is balancing, but not quickly enough. Oil traders are gaining confidence, but with oil trading at $45 per barrel, is the risk more to the upside or downside? Will the rally continue or will prices fall back again? And what about the long-term? Will today’s investment cuts lead to future shortages? To get some answers to these questions, decided to check in with Neil Atkinson, the Head of the Oil Markets Division at the International Energy Agency based in Paris, and also the Editor of the IEA’s closely watched Monthly Oil Market Report.

Can Oil Continue To Rally? An Interview with the IEA’s Neil Atkinson |

Ship tracking data from Bloomberg shows that 83 supertankers carrying around 166 million barrels of oil are headed to China, which has stockpiled an impressive 787,000 barrels a day in the first quarter of 2016—the highest stockpiling rate since 2014. While the world was speculating about oil prices plunging to $20 and $10 per barrel, China was busy stockpiling its reserves.

Why China Is Really Dictating the Oil Supply Glut |

RE: OPEC, for some quiet moments.. - admin - 05-06-2016

Oil rose for a second day as wildfires in Canada cut oil-sands production and U.S. output declined the most in eight months. A wildfire in the heart of Canada’s oil-sands-producing region has forced oil companies to cut production. U.S. output slid to the lowest since September 2014 last week, according to government data released Wednesday. Iran, which refused to join other nations in a push to freeze output in April, could be ready to start discussions on production quotas within one or two months, according to an official from the state oil company.

Oil rises amid Canadian wildfires, U.S. output drop

At first blush, the rally in oil to start 2016 bears some resemblance to the rally at the start of last year, which ultimately ended in tears. This time, though, analysts at Citigroup Inc. led by Seth Kleinman say the rally has legs. "The extra year of low prices has finally derailed the supply resilience that defined markets last year," writes Kleinman.

Why this year's oil rally might be for real

When OPEC members couldn't agree at their April meeting to cap oil output in an effort to boost prices, did it signal the end of the cartel's reign as the world's energy swing producer—leaving the door open for American shale producers to take over the crown? It's a distinct possibility, according to Dan K. Eberhart, CEO, Canary, LLC and an expert on U.S. and international energy policy.

As OPEC infighting continues, U.S. becomes swing producer

Iran said it may be ready for joint action with members of the Organization of Petroleum Exporting Countries in as little as one or two months, once it regains the market share it had before sanctions were imposed. Iran, which refused to join other nations in a push to freeze output last month, could reach pre-sanctions export levels of 2.2 MMbpd in one to two months or by the end of the summer, National Iranian Oil Co. Managing Director Rokneddin Javadi said in Tehran. Exports averaged 2.1 MMbpd last month out of total production of 3.7 million, he said.

Iran ready for action with OPEC once it restores earlier output

RE: OPEC, for some quiet moments.. - admin - 05-08-2016

The current oil price rally will only lure global producers into boosting output if it appears to be sustainable, according to the U.S. Secretary of Energy. "We have had the move up in prices recently, but I don’t think the capital investment decisions are going to be influenced until people are convinced there is a much more sustained increase,” Ernest Moniz said in an interview on Tuesday in Tokyo.

Producers need ‘sustained price signal’ before output boost

Ultra Petroleum Corp. filed for bankruptcy protection, the latest oil and gas explorer to fall victim to the prolonged slump in energy prices. Ultra listed $1.3 billion in assets and $3.9 billion in debt in court papers filed in Houston on Friday. The Houston-based company has 159 employees and its main assets are gas-producing properties in Wyoming, as well as some assets in Pennsylvania and crude oil properties in Utah, according to court papers.

Ultra Petroleum files for bankruptcy, citing $3.9 billion debt

Hedge funds are rooting for a quick collapse of the U.S. shale boom. Money managers turned the most bullish since May as West Texas Intermediate crude climbed to a five-month high on optimism that falling U.S. production and rising fuel demand will trim the global glut. Investors shrugged off an inventory gain that left supplies at the highest since 1929.  “The market’s focused not on current oversupply but on predictions of a balance in the second half of the year,” said Mike Wittner, head of oil markets at Societe Generale SA in New York. “Managed money is just adding to the upward momentum.”

Oil bulls bet the waning U.S. shale boom will curb global glut

Analyst estimates on Thursday put the total amount of oil shut in from the fires at one million bpd, or roughly 40 per cent of total oilsands production. But the amount of production affected is now expected to exceed those numbers as the fire grew significantly into Friday and as additional companies have reduced production.

More oilsands production shutdown as Fort McMurray fire continues to rage, knocking one million barrels offline | Financial Post

RE: OPEC, for some quiet moments.. - admin - 05-11-2016

Discoveries of new oil reserves have dropped to their lowest level for more than 60 years, pointing to potential supply shortages in the next decade. Oil explorers found 2.8bn barrels of crude and related liquids last year, according to IHS, a consultancy. This is the lowest annual volume recorded since 1954, reflecting a slowdown in exploration activity as hard-pressed oil companies seek to conserve cash.

Oil discoveries slump to 60-year low -

Most of the new reserves that have been found are offshore in deep water, where oilfields take an of average seven years to bring into production, so the declining rate of exploration success points to reduced supplies from the mid-2020s. The dwindling rate of discoveries does not mean that the world is running out of oil; in recent years most of the increase in global production has come from existing fields, not new finds, according to Wood Mackenzie, another consultancy. But if the rate of oil discoveries does not improve, it will create a shortfall in global supplies of about 4.5m barrels per day by 2035, Wood Mackenzie said.

Oil discoveries slump to 60-year low -

The Telegraph reported that Saudi Aramco plans a three-way listing, with shares listed in London, New York, and Hong Kong. Also, Aramco hopes to convince some of the oil majors, including ExxonMobil, BP and China’s Sinopec, into taking “strategic stakes” in Aramco, “offering them long-term access to upstream operations in return for cutting-edge technology or refinery deals,” a Saudi source told The Telegraph... The IPO is slated for 2017 or 2018, and the Deputy Crown Prince previously said that he believes Aramco is worth somewhere around $2.5 trillion. If true, that would mean the proposed privatization of 5 percent of the company would be worth roughly $100 to $150 billion. The IPO would be worth five times more than any other offering in London’s history. However, many analysts question the Prince’s figure. Robin Mills of Qamar Energy, for example, says Aramco is probably only worth $250 to $400 billion.

Saudi Arabia To List Aramco Shares In New York, London, Hong Kong |

Libya's crude oil output has fallen to a trickle amid a standoff over export rights that prevented trading giant Glencore from loading a tanker. Libya's production was down to 212,000 barrels on Monday, after the largest National Oil Corp (NOC) subsidiary, AGOCO, was forced to slash output by one-third from southeastern fields, an NOC spokesman in Tripoli said. The NOC warned that storage tanks at the eastern port of Hariga would fill up in less than three weeks if no oil is exported and that output would fall further.

Libya's oil output slashed as export row rages | Reuters

RE: OPEC, for some quiet moments.. - admin - 05-14-2016

Natural gas futures have soared since March on speculation that supplies are finally falling after a decade of gains. Production numbers tell a different story. Prices have gained about 30% from a 17-year low in March, the biggest advance for the period since 2002, as investors including Greenlight Capital’s David Einhorn bet the market would put a dent in supply. While money managers turned bullish on the fuel last month for the first time since 2014, government forecasts show output climbing for the next seven quarters. Explorers including Cabot Oil & Gas Corp. and EQT Corp. outpaced their own production outlooks.

Stubborn natural gas supply imperils best U.S. rally in 14 years

Iran says it’s almost ready to talk with other OPEC members about limiting oil production as the country’s exports recover to levels reached before international sanctions crippled crude sales. Morgan Stanley and Barclays Plc say no agreement is on the cards for now.

Iran seen taking its time on joint action with OPEC members

Saudi Arabia, the world’s biggest oil exporter, plans “significant growth” in output in 2016 and further international expansion, the head of the country’s state-run producer said, even as global oversupply contributed to a drop in crude prices from a year ago. Saudi Arabian Oil Co., also known as Saudi Aramco, will boost capacity at Shaybah oil field by 33% to 1 MMbpd in the next couple of weeks and will double natural gas production over the next decade, Amin Nasser, CEO, told reporters Tuesday at the company's headquarters in Dhahran, eastern Saudi Arabia.

Saudi Aramco CEO sees ‘significant growth’ in oil output in 2016

Global oil demand is catching up with supply and the market should see a “rebalancing” in the second half of the year as cheaper crude has forced some production to close, Qatar’s Energy Minister Mohammad Al Sada said. The rate of production shutdowns is accelerating and global demand is increasing, especially for products such as gasoline, Al Sada said in an emailed statement on Tuesday. “This trend is likely to increase further from next month due to the onset of the summer driving season,” the minister said.

Oil market ‘rebalancing’ for Qatar as OPEC heads for Vienna