• 2 minutes Oil Price Could Fall To $30 If Global Deal Not Extended
  • 5 minutes Middle East on brink: Oil tankers attacked off Oman
  • 8 minutes CNN:America's oil boom will break more records this year. OPEC is stuck in retreat
  • 15 mins Emissions Need To Be Halved To Avoid 3C Warming
  • 3 hours The Pope: "Climate change ... doomsday predictions can no longer be met with irony or disdain."
  • 12 hours Hormuz and surrounding waters: Energy Threats to the World: Oil, LNG, shipping markets digest new risks after Strait of Hormuz attack
  • 1 hour Solar Panels at 26 cents per watt
  • 4 hours Coal Boom in Asia is Real and a Long Trend
  • 8 hours Pioneer CEO Said U.S. Oil Production would be up to 15 mm bbls/day NOW if we had the pipelines. Permian pipelines STARTING Q3
  • 13 hours OPEC, GEO-POLITICS & OIL SUPPLY & PRICES
  • 7 hours The Magic and Wonders of US Shale Supply: Keeping energy price shock minimised: US oil supply keeping lid on prices despite global risks: IEA chief
  • 11 hours Trudeau approves Trans Mountain Pipeline
  • 13 hours The Plastics Problem
  • 6 hours US to become net oil exporter in November: EIA
  • 4 hours US Shale Drilling lacks regulatory body.
  • 5 hours Huge UK Gas Discovery
  • 5 hours Ireland To Ban New Petrol And Diesel Vehicles From 2030

Global Energy Advisory May 11th 2018

Iran

The U.S. withdrawal from the Iran nuclear deal is now a fact and the market has reacted as expected, namely with a knee-jerk reaction that saw Brent and WTI both jump by over 2 percent a day after President Trump made his announcement and continue climbing up.

The implications of the U.S. withdrawal are multi-faceted. That sanctions will return, cutting a portion of Iranian exports off global markets is only one facet. Another is that Trump’s decision sets U.S. Middle Eastern policy on a different course from the United States’ Western European allies, who are still committed to upholding the deal. A third, and perhaps the most serious, is that tensions in the Middle East will rise now.

With regard to oil prices and fundamentals, most analysts agree that the gravity of the effect U.S. sanctions against Iran will have is questionable. While some U.S. allies such as Japan and South Korea will likely opt not to anger their Big Brother and stop importing oil from Iran, others, such as China and India, will continue buying Iranian crude as they are not dependent on the United States for their national security.

Yet interestingly enough, South Korea is now looking for ways to continue importing Iranian crude, its economic ministry said a day after Trump’s announcement. Japan, for its part, has joined the European signatories in the Iran deal in condemning the U.S. President’s decision.

Meanwhile, Saudi Arabia has signaled it is ready to start pumping more oil again in order to prevent a shortage on oil markets caused by the reduction in Iranian exports. It is still too early, however, to talk about a shortage: there is a 30-million-barrel overhang in global crude supplies. It is obvious, though, how the U.S. withdrawal from the Iran deal will benefit Saudi Arabia, which has been sacrificing market share to prop up prices with deeper than agreed cuts under the OPEC+ agreement.

Deals, Mergers & Acquisitions

• Shell will sell its stake in Canadian Natural; Resources for $3.3 billion, the Anglo-Dutch company said. Shell has already cut its presence in the Canadian oil sands considerably as it seeks to generate asset sales proceeds of $30 billion over three years to cut its debt load, which swelled significantly after the acquisition of BG Group.

• Chinese CEFC has dropped its bid for most of the stake that Glencore and the Qatar Investment Authority agreed to sell it last year. CEFC is the target of an aggressive investigation by the Chinese authorities and its CEO is missing. Glencore and QIA bought 19.5% in Rosneft in 2016 for $12.2 billion and last year inked an agreement to sell 14.16% to CEFC.

• Total will sell its retail operations in Haiti to a consortium from Haitian and other Caribbean firms. The move, according to the company, is part of its efforts to streamline its operations in the region.

• Petrobras is negotiating the sale of its fertilizer business with Russian Acron—a major internationally present fertilizer producer. The talks are exclusive for 90 days, the Brazilian company said. The sale would be part of Petrobras’ divestment plan seeking to reduce its sizeable debt.

Tenders, Auctions & Contracts

• Saudi Arabia will ship 1.8 million tons of crude oil to fuel-starved Sudan this year and will increase the shipments by 7% annually over the next four years. Sudan is suffering a shortage of cash and maintenance delays at an important refinery, which the government has blamed for the fuel shortage that has seen people queuing at filling stations for hours and black market fuel prices skyrocketing. After the split with South Sudan, Sudan was left with the smaller portion of the bigger country’s oil reserves.

• Italy’s Eni and the Egyptian government signed an agreement worth $105 million concerning oil and gas exploration off the Egyptian coast in the north. The six-year agreement envisages the drilling of two exploration wells. Eni already has a sizeable presence in Egypt, notably in the giant Zohr gas field.

• The fifth auction for oil and gas reserves in Brazil’s pre-salt zone will likely take place on September 28 and will include four fields in the Campos and Santos basins. The pre-salt zone is one of the hot spots in global oil today, containing billions of barrels of untapped crude.

• Pemex has signed four contracts for the development of fields it won at the January offshore auction carried out by the national oil and gas regulator. Two of these fields the state-owned Mexican company will operate on its own. On the third one it will partner with Shell, and on the fourth one it will operate jointly with Chevron and Japanese Inpex.

• Norway will accept bids for the development of over a hundred offshore fields in the North Sea, the Norwegian Sea, and the Barents Sea by September in its latest round of offshore licensing. The licenses will be awarded in early 2019. Norway urgently needs new oil discoveries in order to maintain and hopefully even expand its crude oil and gas output.

Discovery & Development

• Iraqi North Oil Company has finally signed a contract with BP for the expansion of output from the oil fields around Kirkuk, in northern Iraq. The contract covers six fields, where production is planned to be boosted from around 300,000 bpd to over a million barrels daily. Iraq regained control of these fields last fall, after it moved to take control of Kirkuk from the Kurdish autonomous region following an ill-fated independence referendum.

• Iran and Spain have signed a preliminary agreement for the joint development of Iranian oil and gas resources that will see Spain share with Iran its technical knowhow in upstream, an downstream operations, transfer of knowledge, and deliveries of equipment. European countries have been eager to take part in Iran’s revival of its oil and gas industry, although this enthusiasm could be now dampened somewhat after the United States’ withdrawal from the Joint Comprehensive Plan of Action, commonly know as the Iran nuclear deal.

• Eni announced an oil discovery in the Western Desert in Egypt, where it operates a license in the Faghur Basin. The discovery was made from the first well the Italian company drilled in the license plot and consisted of 2,300 barrels of light crude daily and 400,000 cu ft of associated gas.

Company News

• ConocoPhillips has obtained two court orders giving it the right to seize PDVSA property in the Caribbean as it seeks to enforce a court ruling that awarded it $2 billion in compensation for the nationalization of its Venezuelan operations by the government of the late Hugo Chavez. In response, PDVSA is diverting loaded oil tankers from their original course to the Caribbean.

Politics, Geopolitics & Conflict

• In a flare-up of aggression in the Middle East Israeli jets targeted Iranian positions in Syria in response to an attack from these positions on Israeli ones in the Golan Heights.

• North Korean authorities freed three Americans as the country prepares for a summit between its leader Kim Jong Un and U.S. President Trump, which will most likely take place in Singapore.

• Malaysia’s ruling coalition surprisingly lost the parliamentary elections this week, with the most likely next Prime Minister 92-year-old Mahathir Mohamad, who already ruled between 1981 and 2003.





Oilprice - The No. 1 Source for Oil & Energy News