Sat, 27th May 2017

Anirudh Sethi Report


Archives of “oil producer” Tag

Shale: come the revolution

It’s everywhere, this shale stuff. The latest study of the world’s resources of shale oil and gas – published on Tuesday by the consulting firm IHS – suggests that there could be four times as much of it around the world as in the US. Shale is transforming the US energy industry; perhaps it will do the same elsewhere. Talk of a shale revolution is common. But there is a risk that, financially, the shale revolution will turn out to be all hat and no cattle, as they say in shale-rich Texas.

Few companies are currently making good returns from shale. The pioneers that invested early, and therefore cheaply, have done the best. Continental Resources and Whiting Petroleum are among the small US oil and gas companies that have enjoyed first-mover advantage. Big Oil, on the other hand, cannot seem to buy, discover or create value. ExxonMobil’s $41bn purchase of XTO Energy in 2010 turned it into a shale gas heavyweight just as spiking shale production sent gas prices tumbling. Shell took a writedown of $2bn on its $24bn of capital employed in US shale gas assets in the second quarter. Read More 

Shell profit tumbles 57% in Q2

Energy giant Royal Dutch Shell  on Thursday said its net profits plunged by 57 percent in the second quarter compared with the equivalent period a year earlier.

The Anglo-Dutch group said earnings after tax slumped to $1.737 billion (1.308 billion euros) in the three months to June 30 compared with $4.1 billion in the second quarter of 2012.

“These results were undermined by a number of factors — but they were clearly disappointing for Shell  “, chief executive Peter Voser said in an earnings statement.

Voser said the group’s bottom line was hit by higher costs, exploration charges, adverse currency exchange rates and unrest in major oil producer Nigeria.

IEA forecasts steeper-than-normal summer spike in crude demand

The oil market will experience a larger-than-usual rise in seasonal demand this summer with the opening of new refineries in the Middle East and Asia putting pressure on prices, the International Energy Agency has warned.

The Paris-based IEA, the western countries’ oil watchdog, said on Wednesday that refinery “throughputs look set for a step change” over the summer, adding: “Crude supply would struggle to keep up with refining demand until price effects helped rebalance the market.”

 Oil demand usually rises over the northern hemisphere summer as Americans take to their cars for the holiday season. Moreover, Middle East nations burn crude to generate extra electricity to meet a surge in air conditioning demand.

But the IEA believes the seasonal effects on demand will be “steeper than normal” this summer due to the opening of new refineries in Saudi Arabia, increasing Chinese refining activity after a heavy maintenance season over the spring, and other factors.

The large increase in demand during the third quarter will coincide with seasonal maintenance in the North Sea, home of Brent crude, potentially putting pressure on global oil prices. North Sea operators use the summer months of good weather to carry out maintenance on the ageing offshore platforms. Read More 

US shale revolution rattles OPEC: Is it or is it not a threat?

OPEC, the oil producer cartel, is shrugging off talk of its weakening influence sparked by booming US shale energy production, according to analysts.

“OPEC will be around after shale oil finishes,” Secretary-general Abdullah El-Badri said with a smile Friday as the 12-nation Organization of Petroleum Exporting Countries (OPEC) met in Vienna.

An explosion in hard-to-reach energy trapped in shale, or sedimentary rock, has sparked doubts about OPEC’s standing in the global oil market, analysts say.

However, El-Badri played down talk that the so-called shale oil and gas revolution in the United States could diminish the global influence of a group that pumps about 35 percent of global oil. Read More 

Chesapeake foresees higher gas prices

Chesapeake Energy is locking in prices for next year’s gas sales at “well above” today’s levels, the US shale gas and oil producer said, in the latest sign of how the market is beginning to tighten.

Steve Dixon, Chesapeake’s acting chief executive, told analysts on Monday that the company had “taken advantage of the recent surge in natural gas prices” to lock in prices for more of its planned sales in 2013. It had also begun hedging for 2014 at prices “well above $4” per million British thermal units, “a level the market has not seen for quite some time”, he said.

However, he said Chesapeake would not be taking advantage of the higher prices to step up its gas production, and would instead continue to focus on developing its more profitable oil reserves.

Benchmark US natural gas last week closed above $4 per mBTU for the first time in a year and a half, having doubled over the past 12 months, thanks to cold weather and production that has been roughly flat for more than a year. Read More 

Opec cartel to reap record $1tn

The Opec oil cartel, led by Saudi Arabia, will pocket a record of more than US$1tn in net oil revenues in 2012 as the annual average price for Brent, the benchmark, heads to an all-time high in spite of weak economic growth.

The windfall will provide fresh capital to some of the world’s largest sovereign wealth funds. United Arab Emirates, Saudi Arabia and Kuwait, the most influential members of the cartel, are home to three of the world’s 10 largest SWFs by assets under management, according to estimates by the SWF Institute.

With one trading day left before the year-end, Brent oil prices are on the point of seeing an average for the year of about $111.5 a barrel, higher than the previous all-time high set in 2011 of $110.9. Read More 

U.S. set to overtake Saudi in oil output: IEA

A shale oil boom means the U.S. will overtake Saudi Arabia as the world’s largest oil producer by 2020, a radical shift that could profoundly transform not just the world’s energy supplies, but also its geopolitics, the International Energy Agency said Monday.

In its closely watched annual World Energy Outlook, the IEA, which advises industrialized nations on their energy policies, said the global energy map, “is being redrawn by the resurgence in oil and gas production in the United States.”

The assessment is in stark contrast with last year, when it envisioned Russia and Saudi Arabia vying for the top position.

“By around 2020, the United States is projected to become the largest global oil producer” and overtake Saudi Arabia for a time, the agency said. “The result is a continued fall in U.S. oil imports (currently at 20% of its needs) to the extent that North America becomes a net oil exporter around 2030.” Read More 

Saudi Arabia May Run Out Of Oil To Export By 2030

A report by Citigroup has warned that Saudi Arabia could run out of oil to export by 2030, raising fears that oil prices may rise significantly in coming years.

 A report by Citigroup has warned that Saudi Arabia could run out of oil to export by 2030, raising fears that oil prices may rise significantly in coming years.

The Kingdom is the world’s largest oil producer, accounting for about 13pc of global supply, but it may need to use a growing share of its production for power generation to meet rising electricity demand, Citi said. Read More 

Saudi Arabia’s Prince Nayef, Next In Line To Throne, Dies; Saudi Shares Plunge Drop To January Low After Death

Coming into the weekend, most were focusing on key events coming out of Greece and France, possibly Egypt, but nobody expected that Saudi Arabia would be thrown into the fray. That just happened, however, following news that Saudi Arabia’s Crown Prince Nayef bin Abdulaziz al-Saud has died in Geneva, according to Saudi state television, citing a royal court statement. The news has sent Saudi shares sliding, because now 89-year-old King Abdullah must nominate a new heir for the second time in nine months. And the last thing the middle-east region needs, not to mention the world’s biggest oil producer, needs is more geopolitical uncertainty.

From Reuters: 

Nayef, interior minister since 1975 and thought to be 78, was the heir to Saudi King Abdullah and was appointed crown prince in October after the death of his elder brother and predecessor in the role, Crown Prince Sultan.


State television said the burial would be in Mecca on Sunday. 

Defence Minister Prince Salman, 76, seen as likely to continue King Abdullah’s cautious reforms, has long been viewed as the next most senior prince in the kingdom’s succession.

 Nayef had a reputation as a steely conservative who opposed King Abdullah’s reforms and developed a formidable security infrastructure that crushed al Qaeda but also locked up some political activists. 

He, King Abdullah and Salman are among the nearly 40 sons of Saudi Arabia’s founder, Abdulaziz ibn Saud, who established the kingdom in 1935. Read More 

Iran warns EU oil embargo would be ‘economic suicide’ for Europe

 Iran’s OPEC governor said Tuesday a European Union embargo on Iranian oil would be “economic suicide” for Europe, the latest stiff statement reflecting Iranian concern about the prospect of deeper sanctions over its nuclear program.

Iran is OPEC’s second largest oil producer, and oil exports account for 80 per cent of Iran’s foreign currency income. Iran sells about 20 per cent of its oil exports to Europe.

European nations are considering whether to go along with new U.S. legislation outlawing transactions with Iran’s central bank, indirectly limiting Iranian oil shipments by making it harder for customers to pay for them. The law takes effect later this year.

Iran has reacted with a string of strong pronouncements. It threatened to close the Strait of Hormuz, where most of the Gulf’s oil exports pass, it scheduled war games in the area of the strait, it warned the U.S. not to send an aircraft carrier back into the Gulf — and now it is cautioning Europe over the consequences of abandoning Iranian oil.

“Applying the scenario of sanctions on Iran’s oil exports to EU members would be economic suicide for the member countries,” the semiofficial Mehr news agency quoted OPEC governor Mohammad Ali Khatibi as saying.

“Regarding the economic crisis in the eurozone, imposing any sanction on Iran’s oil will push European countries into a deeper crisis,” Khatibi said. The European currency is already under pressure because of debt and financing problems facing some of its members. Read More