Day II or Tuesday (March 12) of CERAWeek zipped by, Wednesday is about to come to a close here in Houston and there have been several discussion points. Where to start when penning thoughts on the last 48 hours - a lot of plaudits were won by BP boss Bob Dudley's dinner speech overnight on the evolving oil landscape.
"Oil and gas majors need to recognise the world's low carbon future. They need to be progressive for society and pragmatic for investors," he noted to considerable applause.
Earlier on Tuesday, OPEC Secretary General Mohammed Barkindo took to briefing journalists and analysts. Key points made included being 'apolitical' on the Venezuelan situation and launching a polite but firm attack on efforts by US lawmakers to hit OPEC with antitrust action - dubbed the No Oil Producing and Exporting Cartels (NOPEC) Act. Here's yours truly's full report for Forbes.
The UAE government envoys were also in town promoting their catchy 'Oil and Gas 4.0' drive ranging from investing in digital assets to upskilling and hiring, from AI to robotics. William Clay Ford Jr was around too telling CERAWeek when Ford's F-150 truck's electric version is available it'll be a "completely different animal" and also admitted he had a soft sport for the Mustang.
On Wednesday (March 13), Centrica Group CEO Iain Conn said societal pressures, e.g. UK government's energy price cap, are eating into utilities sector's operating margins, and that (yes) natural gas will serve as a bridging fuel for decades.
Away from Brexit chaos back home, he also noted: "While the energy market will not be materially disrupted by Brexit; UK energy consumers would be left worse off if a declining GBP contributes to higher domestic energy bills linked to global markets."
US Energy Secretary Rick Perry also turned up for his second successive CERAWeek making a wide range of points from sanctions on Venezuela to President Donald Trump's opposition to NordStream 2.
The Oilholic is back in Houston Town for CERAWeek 2019 with talk of Saudi Arabia extending its oil export cuts to April, an OPEC summit due on April 17, and of course oil benchmarks still remaining largely range-bound.
The tone of the first day for IHS Markit's industry jamboree was set by the International Energy Agency's annual five-year market assessment. The agency's Executive Director Dr Fatih Birol, said here in Houston that there should be no doubt that a second wave of the US shale revolution was coming, with American production tipped to cap that of the Russians and the Saudis by 2024.
Later, speaking to the Oilholic, Birol said the agency's take does factor in rates of decline. Here's a full report for Forbes. There were loads of other catchy soundbites yours truly tweeted regularly from Day I of CERAWeek (welcome to follow here), but really Birol's words set the tone.
As for oil benchmarks; both Brent and WTI were down last week, and are up this week but haven't spiked in the strictest sense. For the Oilholic, Brent futures sentiment still isn't decisively bullish.
One reckons $64.50 per barrel support level is key over the coming weeks. If breached meaningfully, a drop to $60-62 likely; if held decisively an uptick to $70 might be on the horizon. But for all the kerfuffle oil futures are largely where they were 12 months ago stuck in a range-bound market. Here is one's pre-CERAWeek analysis in an interview with Victoria Scholar of IG Markets TV:
Oil news | A trade deal could push Brent to $70 - YouTube
More from Houston soon! Keep reading, keep it crude!
A fascinating few days of debates and deliberations at the Energy Institute's International Petroleum Week 2019 came to a close in London earlier today.
For yet another year, the Oilholic was delighted to have spoken and moderated at the event as part of the Gulf Intelligence Middle East Energy Summit. Industry 4.0, investment climate, US shale and OPEC were all under the radar. Delegates were fairly evenly split on the direction of the oil price; but yours truly maintains that the phase of range-bound crude prices is here to stay.
From where this blogger sits, it is appearing hard for Brent to escape the $65-75 per barrel range, and for the WTI to escape the $55-65 range this year.
There were interesting soundbites aplenty, but BP Boss Bob Dudley's quip that US shale is a price responsive "brainless" market stood out among them all. Here's the Oilholic's full report and analysis on it for Forbes. That's all for the moment folks! Next stop - Houston, Texas for IHS CERAWeek 2019. Keep reading, keep it crude!
The Oilholic has had a hectic start to 2019 for sure, even though the crude market has behaved pretty predictably in January, having recovered ground it lost towards the end of 2019.
That's because yours truly has started providing insight on a regular basis to three more avenues alongside Forbes. These include The Energy Post and Energy Post Weekly, industry recruitment and insight portal Rigzone, and London-based financial start-up ReachX.
Here are a few snippets:
Energy Post: Commentary on energy sector investment in blockchain - January 23, 2019 (Behind Paywall / Subscribers' login)
The current situation in the natural gas market has several variables as we enter the first quarter of 2019. But before anything else, what price levels we are at would be a good conversation starter. Using the US Henry Hub as a benchmark, it remains stuck around $3/mmbtu. For Europe, adding an average $2+ mmbtu would be about par.
After a late December collapse, natural gas prices were seemingly being held down by higher than normal winter temperatures, before a big freeze hits several parts of Europe and North America. As for the market itself, most of the chatter these days is about how US LNG - both small and large scale - will add to the global supply pool, with the country's capacity tipped to cap 40 million tonnes per annum (tpa) in 2019.
As the Americans increasingly tussle with other major LNG exporters such as Qatar, Malaysia and Australia for a slice of the global market, Morocco - a net energy importer, albeit with substantial natural gas reserves - is in a reasonably positive position.
The country has proven reserves of some 1.44 billion cubic meters (bcf) of natural gas, according to the CIA World Factbook, but domestic production is not even a tenth of that volume. Rabat is attempting to alter that dynamic via several independent upstarts led by SDX Energy, and accompanied by the likes of Sound Energy (which recently said it would focus exclusively on Morocco) and Chariot Oil & Gas.
Seeing potential, the government is offering attractive terms to exploration and production companies (refer to the Oilholic's previous post on the subject). But until Morocco meaningfully discovers its domestic production mojo, the US shale gas bonanza couldn't have come at a more opportune time, as Rabat looks ensure security of supply over the medium-term. In October 2018, Energy Minister Aziz Rabbah confirmed that Morocco is preparing to invite bids for a LNG project in Jorf Lasfar worth $4.5 billion.
It includes construction of a jetty, terminal, pipelines and gas-fired power plants, ultimately leading to the import of up to 7 billion cubic metres of gas by 2025, in a very competitive global gas buyers' market.
The announcement follows state-owned power utility ONEE announcement in 2017 that it had picked HSBC Middle East as a financial adviser for its plan to boost imports of LNG. The scenario provides plenty of talking points, which is why the Oilholic is heading to Morocco in February to speak and deliberate at the 2nd Morocco Oil & Gas Summit in Marrakesh, February 6-7, 2019, being organised by IN-VR Oil & Gas.
It's all set up nicely, and this blogger early awaits the summit. But that’s all for the moment folks! Keep reading, keep it ‘crude’!
By any stretch of the imagination, 2018 is coming to a very volatile end for the oil and gas markets. The month of November saw three declines of over 7% in a short space of 10 sessions, and the OPEC summit in December has (so far) failed to calm the market. Of course, oil and gas investment has never been about the here and now, but rather about the longer term.
Wider market expectations are that oil, using Brent as benchmark, will continue to oscillate in the $50-70 per barrel range, while natural gas markets will benefit over the medium-term courtesy of the power sector's need for a bridging fuel in its inexorable march to a low-carbon future. Among investment hubs on the market's radar is Morocco. The country's Office of Hydrocarbons and Mining (ONHYM) is optimistic about oil and gas reserves both onshore and offshore.
Furthermore, as a country of around 40 million people, Morocco is also a healthy energy consumption market that imports over 90% of its hydrocarbon needs. Align the two, and upstream and midstream opportunities become clearer.
Unsurprisingly, as is often the case with nascent energy hubs, independent exploration and production (E&P) companies are leading the Upstream charge – including London-listed ones such as SDX Energy, Chariot Oil & Gas and Europa. That said majors such as Eni are also rubbing shoulders with the upstarts.
With an aim of reconciling thoughts over global market permutations and ongoing developments in the Moroccan oil and gas sector, the Oilholic is delighted to be speaking at the 2nd Morocco Oil & Gas Summit in Marrakesh, February 6-7, 2019, being organised by IN-VR Oil & Gas.
Holistically speaking, Rabat – given its eagerness to develop the domestic oil & gas industry – offers some some of the most cost competitive fiscal and commercial terms in the global market. ONHYM, which by Moroccan law is a partner in the licences usually via 25% general carried interest in phase one explorations, offers reliable partnerships and the operating climate is underpinned by a stable regulatory regime.
During the exploration phase 100% of the costs are paid by the contractor without any reimbursement from ONHYM, while during the exploitation period the costs are shared between the parties in accordance with their participation interest in the production concession. There is no corporation tax for the first 10 years of production. Operators also benefit from solid infrastructure.
Of particular significance is the ONHYM pipeline system with a total length of 213 km in the Gharb basin and 160 Km in the Essaouira Basin. Capacity increments have followed via a new pipeline project of 55 km in the region of Gharb. Overall, a destination to watch out for, and this blogger early awaits the summit. But that’s all for the moment folks! Keep reading, keep it ‘crude’!
As promised post-OPEC, the Oilholic is putting forward some more composed crude thoughts, following the Non-OPEC and OPEC declaration of a 1.2 million barrels per day (bpd) oil production cut last week.
Here they are via a Forbes piece. One's verdict - it won't be enough, even if further Iranian declines increase the cuts to 1.5 million bpd. There's always the issue of compliance and demand side pressures too. Crude oil benchmarks are not spiking anytime soon.
In case you haven't heard dear readers, which the Oilholic doubts or wouldn't be reading an oil market blog - OPEC has calmed the oil market with a 1.2 million barrels per day cut, in concert with 10 non-OPEC producers led by Russia.
Both Brent and WTI are up by over 4% at the time of writing, and Iran is smiling all the way to the bank having secured an "exemption."
Will provide some more composed thoughts upon my return to London from Vienna, later this evening.
So here we are back again at Helferstorferstrasse 17 on Friday (December 7), for another packed room at the "5th OPEC and non-OPEC Ministerial Meeting." That's after having received no formal announcement on the level of OPEC cuts overnight at the "conclusion" of the 175th OPEC Ministers Meeting, and Saudi Oil Minister Khalid Al-Falih having told CNN a deal on a production cut may not materialise.
The morning after extreme volatility in the oil markets, OPEC's numbers game continues. The latest that multiple sources seem to suggest is that OPEC is inclined to cut 650,000 barrels per day (bpd), and non-OPEC countries another 350,000 barrels per day, all tallying up to a possible 1 million bpd cut proposed overnight.
Question is - will the market be convinced, especially if Iran and a few smaller members decline to participate? The Oilholic doesn't think so (and Iran continues to play hardball and the formal OPEC /non-OPEC meeting has not even begun yet @12:46 GMT).
To support a $70 oil price, a 1 million bpd cut won't do, but may serve to de-risk a huge decline. Anything above that appears unlikely. We wait and see! More from Vienna soon. Keep reading, keep it 'crude'!