THE BLOG WILL TAKE A BREAK FOR A WHILE, DUE TO TRAVEL AND OTHER COMMITMENTS Editorial And when we come back we look forward to seeing: The successful IPO of Aramco, with full reserves disclosure, impeccable ongoing corporate governance and happy investors. Oil prices rising to reflect the long term cost of replacing current production. LNG prices being fully reflective of gas – not oil – markets. Greenies and farmers, having read the scientific literature, being persuaded that fracking is in fact a mundane, long term and safe practice. Solar PV costs continuing to follow Moore’s Law (but in w ..read more

Editorial One largely unreported aspect of the recent escalation of tensions in the Middle East over Qatar’s blatant bribery to secure the FIFA World Cup, err, we mean its support for terrorism, is its likely to have flow on consequences for the pricing of Saudi Arabia’s planned IPO of 5% of Aramco.  To the downside, naturally – given the publicity it gives to the high level of regional sovereign risk, capricious medieval rule, etc. Even before this erupted last week, we noted reports coming out from the LSE in London of key parties’ in the City’s desire to not have Aramco listed there ..read more

Editorial Last Friday saw the release of a long awaited report on Australia’s electricity systems and markets by the country’s Chief Scientist, Alan Finkel.  To us this sought to find a middle ground of what might work politically whilst subsuming optimal economic efficiency to what might garner the most support.  That approach has not surprisingly enraged the extremes of both the left and the right who want to sacrifice the good for their versions of the unattainable perfects. At the heart of the recommendations in the report is a system replacing the current renewable energy target ..read more

Editorial The Game of Thrones over in the Middle East continues to rapidly notch up its conflicts, violence and intensity – with potentially very consequential impacts on energy markets. Immediately following on from the unexpected embargo imposed on Qatar by the Saudis and friends (an expanding group – now including African Muslim nations, etc) has been a series of suicide attacks against major targets in Iran – its Parliament and possibly the even more sensitive (in religious terms anyway) – the tomb of Ayatollah Khomeini.  These events are arguably related – and threaten major escalati ..read more

Editorial Oil – and LNG – markets have over the last few days been focused on the medieval – dare we say Game of Thrones-ish – political “events” in the Middle East.  It seems that House Baratheon has taken offence with the Eastern Kingdom, at the urging of the Mad King over the water.  Or something. That something maybe being to think twice when someone says “hey lads, lets go and do a bit of hunting with our cool pet Falcons in ISIS controlled Iraq. If we get caught then Daddy can pay dip into his small change jar and pay >US$1B to release us.” Upon news breaking of the Saudi le ..read more

Editorial Last week President Trump generated much news-flow following his “you’re fired!” response to the Paris climate agreement.   This over-shadowed a development that could have a more material impact on changes to the global energy system – a strong signal about priorities to Exxon from its institutional shareholders, in terms of a vote being overwhelmingly carried at a shareholder meeting that will require the oil and gas giant to publish analysis on the risks of climate change to its business. As we have noted from time to time, the likes of super-giant fund manager Blackrock ..read more

Editorial The Australian Government is seeking to change the scope of what its Clean Energy Finance Corporation (CEFC) can advance concessional funding to, to include carbon capture and storage (CCS) projects.  The media narrative that has ensued has typically been driven by political allegiances rather than science – with on the one hand the left concerned that CCS will extend the life of its disliked fossil fuels (coal in particular) and on the other hand the right seeing this as a panacea for its beloved coal. What is missing (in the Australian context anyway) is an answer to the quest ..read more

Editorial One of the less reported outcomes that emerged from last week’s OPEC meeting was an explicit plan by the Saudis to divert cargoes away from the US, with Energy and Industry Minister Khalid Al-Falih saying: “Exports to the U.S. will drop measurably.” The rationale for this move was captured well by Bart Melek, a commodity strategist at Toronto Dominion Bank, who concluded: “With OPEC now consciously trying to reduce flows into North America, it’s suggesting a faster than expected inventory unwind.  There may be a bigger upside as we go into summer driving season.” Our v ..read more

Editorial One of our recurring themes has been that capital markets might well drive more change in the future energy mix than politicians and regulators.  In this light we note the potential significance of a recent interview with the global head of BlackRock’s infrastructure investment group, Jim Barry, who said: “Coal is dead. That’s not to say all the coal plants are going to shut tomorrow. But anyone who’s looking to take beyond a 10-year view on coal is gambling very significantly.” Some in the oil and gas industry might say – “that’s coal – we are much cleaner” (and indeed the ..read more

Editorial The industry press has contained a fair bit of comment on how the recent regulatory relaxation that allows the direct sale of US LNG to China might shake up the global LNG industry. Research group Rystad Energy has joined the fray – concluding that new Chinese sales will allow North American production to increase to well over 100 Bcf per day (in comparison, domestic East Coast consumption in Australia is around 700 Bcf per year). Additional volumes were thought to largely come from the prolific Marcellus/Utica Basins – at current Henry Hub prices of just over US$3/mcf. How ..read more