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Tom Kool

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Tom majored in International Business at Amsterdam’s Higher School of Economics, he is Oilprice.com's Head of Operations

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Biden's Bid To Lower Oil Prices Fails

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Chart of the Week

- Russian gas exports into Europe remain roughly on par with last year’s readings when the second wave of covid was battering the continent's demand, currently hovering around a 3000 GWh/day rate.

- Following the suspension of the Nord Stream 2 approval process, doubts are mounting that the pipeline would be commissioned this winter as it also needs the approval of the European Commission.   

- Moreover, ever since Gazprom started to replenish European gas inventories, it has done so at a meager 5 million cubic meters per day rate, keeping current Gazprom gas stocks at a third of their usual level. 

- Against this background, Europe’s main benchmark, the Dutch TTF, saw its day-ahead prices edge up to 85 per MWh ($95/MWh), equivalent to $25 per mmBtu, i.e. lower than Asia’s spot LNG assessments. 

Market Movers

- ADNOC, the state oil company of the UAE, is reportedly discussing the floating of its logistics and marine services unit (ADNOC L&S) in 2022, in what might become one of the most-followed IPOs in the Middle East next year.

- ConocoPhillips (NYSE:COP) reiterated its commitment to see the 600 million-barrel Willow field on Alaska’s North Slope developed, despite a recent court ruling forcing the US firm to stop construction works on the project. 

- Buoyed by its retail expansion in the UK following this year’s energy crunch, Shell (NYSE:RDS.A) announced its move into Australia’s power sector, buying the New Zealand utility firm Meridian Energy (NZE:MEL) for $729 million.

Tuesday, November 23, 2021

The White House has finally walked the talk and announced the release of 50 million barrels from the US SPR, backed up by a series of agreements with key Asian crude importers who, in turn, would also release strategic inventories to tame outright crude prices. India already stated it would release 5 million barrels, South Korea and Japan are expected to come up with their numbers over the course of this week. Whilst cognizant that such bold moves might trigger OPEC+ to produce even less crude, the White House failed to trigger the expected immediate effect. In fact, the crude price surged upon hearing the news - primarily because of the loan nature of the SPR release and the potential of an OPEC+ backlash - with ICE Brent comfortably back above the $80 per barrel mark and WTI trading around $78 per barrel. 

The US Launches 50 Million-Barrel Emergency Release. The US government approved an emergency release of 50 million barrels from the US Strategic Petroleum Reserves, with 32 million barrels loaned out for future replenishment (and the rest being part of an already-agreed-upon release). 

OPEC+ Ready to Lower Production to Counter Releases. Media reports indicate OPEC+ countries could decrease their joint production in light of the US-coordinated strategic inventory release when they meet on December 02. 

EU Prepares to Roll Out Methane Emissions Legislation. Brussels is working on draft legislation that would aim to reduce methane emissions by forcing oil firms to start lowering their footprint following two years of mandatory reporting.  

Shell Halves Singapore Refinery Capacity. In a move to curb emissions and optimize production, Shell (NYSE:RDS.A) has halved the production capacity of its 500,000 b/d Pulau Bukom refinery in Singapore, curbing fuel availability in Asia’s main shipping hub. 

Australia’s $12 Billion LNG Megaproject Given Green Light. Australia’s BHP Group and Woodside Petroleum both approved the development of the Scarborough offshore gas field, a project expected to double the capacity of the 4.9mtpa Pluto LNG facility once it is commissioned in 2026.

Soaring Lithium Prices Compel Buyers to Go Long-Term. With lithium carbonate prices reaching $30,000 per metric ton in China, up some 275% since the beginning of the year, key lithium buyers are now increasingly focusing on concluding long-term supply contracts for several years in advance. 

Libya’s Upstream is Becoming Increasingly European. As we have already forecasted in these pages, France’s TotalEnergies (NYSE:TTE) and Italy’s ENI (NYSE:E) have expressed their interest to invest billions of dollars into Libya and ramp up production at their acreage there, with a view on further expansion into renewable energy. 

Iran Talks Up Joint Offshore Projects with Azerbaijan. According to Iran’s oil minister Javad Owji, Teheran and Baku are expected to finalize several energy agreements soon, including an extension to the still-ongoing gas swap deal in place since 2004 as well as potentially aiming for Iran’s offshore sector, underutilized due to lack of deepwater expertise.  

North Sea Countries Link Up Power Grids. The transmission system operators of Germany, Denmark, and Belgium have agreed to build interconnectors between planned wind energy islands in the North Sea, seeking to avoid power price spikes seen this autumn. 

Reliance Backs Off from Saudi Aramco Stake Sale. India’s refinery giant Reliance Industries (RELI) said it would reevaluate the proposed $15 billion stake sale from Saudi Aramco into its oil-to-chemicals business, first announced in 2019, citing “changed context” as the underlying reason. 

Chinese Coal Output Remains at Elevated Levels. China’s nationwide coal production has stabilized around 12 million tons per day, with stocks at ports and power plants reaching almost 129 million tons by mid-November, pushing thermal coal futures to some ¥800 per metric ton ($125/mt). 

Colombia Continues Search for Reserves. Colombia will seek to add 3 bboe to its hydrocarbon reserves by 2040 as Bogotá right now wields a mere 6.3 years of proven oil reserves, pinning hopes on an ambitious pace of seeing 200 blocks awarded and 800 wells drilled in the upcoming years. 

Jordan and Israel Sign Rare Water-for-Energy Deal. In a rare glimpse of how energy deals of the future might look like, Jordan promised to provide Israel with electricity from a 600MW solar power plant currently built in return for 200 million cubic meters of desalinated water.

By Tom Kool for Oilprice.com

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Leave a comment
  • George Doolittle on November 23 2021 said:
    Well this is only the beginning so it's hard to know what to think other than obviously *IT'S TRUCK DRIVERS THAT DELIVER THE ACTUAL FUEL.*

    This isn't true of natural gas and solar power of course...nor in theory hydrogen fuel interestingly.

    Long $plug Plug Power
    Strong buy

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