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Oil prices are struggling to find a bottom, rising on Monday but collapsing early in trading on Tuesday.
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– Natural gas production in the Gulf of Mexico has been declining for two decades. Ten new projects are expected to be commissioned in 2018, according to the EIS, and another eight in 2019.
– These 18 projects have a combined resource estimate of 836 billion cubic feet.
– Together, they could allow gas production in the Gulf of Mexico to rebound.
Market relocation
• Cheniere Energy (NYSE: LNG) S & P Global Platts has produced roughly enough LNG at its Corpus Christi export terminal to ship its first cargo.
• Kosmos Energy (NYSE: KOS) dropped nearly 3% after working hours on Monday, when it announced the sale of 15 million common shares as part of a secondary public offering.
• Total SA (NYSE: TOT) announced the closure of its refinery of 253,000 barrels a day in Gonfreville, Normandy, due to a strike.
Tuesday, November 27, 2018
Saudi Arabia advocates a "silent cut". A few weeks ago, rumors were circulating about a possible reduction in aggressive production at the next OPEC + meeting, which could reach 1.4 million barrels a day. This seems unlikely, however, as President Trump simultaneously protected Saudi Arabia from the international scandal provoked by Khashoggi's murder, while exerting pressure to keep oil prices low. Russia does not want a significant reduction in production either. This leaves Saudi Arabia in search of a "silent cut", which would mean bringing production back to the previously agreed production limit of about 10 mb / d instead of the current 11 mb / d.
Trump wants low oil prices, but American shale could suffer the consequences. The White House's pressure campaign to dissuade OPEC + from cutting production could help keep crude prices low, but prices are approaching a level that could hurt American shale companies . "We are at the point where Permian producers have almost reached the breakeven point of their cycle and, depending on their duration, we could see an impact on investment budgets in the coming months," said Muhammed Ghulam, partner lead researcher at Raymond James, told CNBC. Related: Could oil prices fall to $ 40?
Saudi Aramco is considering a $ 500 billion transformation. Saudi Aramco's CEO told Bloomberg that the company would spend $ 500 billion over the next decade to become a major refiner and manufacturer of petrochemicals, not just an oil producer. "Saudi Aramco will make the most of this opportunity through global investments of approximately $ 100 billion in the chemicals sector over the next ten years, in addition to potential acquisitions," said Amin. Nbader, CEO of Aramco. In total, Nbader presented $ 500 billion spending plans. Demand for oil in the long run seems increasingly fragile, but the petrochemical sector is where the demand growth will be most focused, according to the IEA.
The Russo-Saudi oil alliance is being put to the test. Saudi Arabia clearly wants to cut production at the OPEC + meeting next week, but Russia is much more hesitant. Russian oil companies oppose the reduction of production and the Russian economy does not benefit as much from the higher prices as the Saudi economy. Nevertheless, President Vladimir Putin has strategic reasons to continue his partnership with Saudi Arabia. But after the increase in production in June, the two cities are no longer on the same length of wave.
Venezuela concludes an agreement with Crystallex. Canadian mining company Crystallex has attempted to force Venezuela's PDVSA to sell Citgo as compensation for an expropriated gold mining project in 2011. However, Venezuela and Crystallex have reached an agreement that will allow PDVSA to retain Citgo. Under the terms of the contract, Venezuela has paid $ 425 million to Crystallex and will pay the remaining balance in installments until 2021.
Venezuela rejects BP's offer. BP (NYSE: BP) would have offered to buy Total SA (NYSE: TOT) participation in a moribund natural gas project in Venezuelan waters. The project is located along the maritime border between Venezuela and Trinidad and Tobago. BP holds the rights of the Trinidadian side and wanted to buy Total's Venezuelan share. He could use gas to expand his business in Trinidad. Caracas has blocked the offer, according to Reuters.
Goldman Sachs: Oil Shortage in 2020. The oil market may be saturated, but Goldman Sachs estimates that a shortage is being felt in the 2020s. "In the 2020s, we are going to have a serious physical oil shortage because no one is allowed." to invest fully in future oil production, "Michele Della Vigna, EMEA Natural Resources Research Manager at Goldman Sachs, told CNBC on Friday.
Nigeria lost $ 6 billion to Shell and Eni. A new report reveals that Nigeria has missed nearly $ 6 billion in projected revenues due to the strange structure of an oil deal signed in 2011 with that country. Royal Dutch Shell (NYSE: RDS.A) and Eni (NYSE: E). The agreement is now at the center of concern because of a lawsuit for corruption in Milan, where Eni executives are on the hot seat.
France and Germany maintain relations with Iran. The EU had previously proposed to install the Special Purpose Vehicle (SPV) to allow European companies to continue doing business with Iran, bypbading the sanctions imposed by the United States. France and Germany have agreed to jointly host the funding agreement and are taking aggressive action to try to keep the Iranian nuclear deal alive, even though the US continues to put pressure on European capitals to they do not progress.
The United States is pressuring Iraq to break away from Iran. According to the Wall Street Journal, the United States is trying to put pressure on Iraq to dissipate Iran's energy. Iraq depends on Iran for natural gas, which is used to produce electricity. The United States has granted Iraq a 45-day waiver on sanctions relating to gas imports, but Iraq has said it would take more time. Iraq warns that the United States could destabilize the country if it exerts excessive pressure.
Related: Goldman: oil prices should rebound in 2019
China imports from Russia despite the sanctions imposed by Iran. China has cut Iranian oil imports ahead of US sanctions and is relying more on Russia. Chinese imports of Russian oil reached a record in October.
Chevron Announces First Gulf Oil Project Chevron (NYSE: CVX) announced the first oil of its Big Foot project in the Gulf of Mexico last week. The project is located 225 km south of New Orleans and is expected to last 35 years.
France feeds the demonstrations. France witnessed a second week of protests against a proposal to raise the diesel tax. Diesel prices have risen about 20% this year in France, but this is largely due to rising crude oil prices (until recently). The tax is intended to harmonize the prices of gasoline and diesel – diesel has long been overtaxed compared to gasoline in France.
Trump keeps the hard line on China. Trump is scheduled to meet Xi Jingping this week, but on Monday he suggested he go ahead with a rise in tariffs in January. Customs duties of 10% on the $ 200 billion of Chinese imports are expected to rise to 25% by the beginning of 2019. Trump said it was "very unlikely" that he retain this increase . He also said he was ready to apply additional tariffs on an additional $ 267 billion of Chinese products if the two leaders fail to reach an agreement this week.
By Tom Kool for Oilprice.com
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