Oil prices are on track to close out the week with strong gains.
Friday, August 24th, 2018
Oil prices are on track to close out the week with strong gains, after several weeks of declines. The EIA data showing a steep decline in crude stocks helped push prices up on Wednesday and return a sense of bullishness to the market. “Both crude markers are on track to end a steady run of weekly declines. This is largely due to a tightening fundamental outlook on the back of looming Iranian supply shortages,” Stephen Brennock analyst at London brokerage PVM Oil Associates, told Reuters.
Saudi Aramco IPO shelved; Saudi officials deny report. Reuters reported that the Saudi Aramco IPO has officially been scrapped and financial advisers working on the planned listing have been “disbanded,” ending what would have been the largest public offering in history. “The decision to call off the IPO was taken some time ago, but no-one can disclose this, so statements are gradually going that way - first delay then calling off,” a Saudi source familiar with the IPO plans told Reuters. Both the domestic and international listing have apparently been called off and instead Saudi Aramco may take a large stake in SABIC, the state-owned petrochemical company. Saudi officials deny the exports, and insist that the IPO has not been shelved.
Iran shipments already declining. U.S. sanctions on Iran’s oil take effect in November, but already countries around the world have been slashing purchases, which are affecting Iran’s exports. “Third-party reports indicate that Iranian tanker loadings are already down by around 700,000 bpd in the first half of August relative to July, which if it holds will exceed most expectations,” investment bank Jefferies said on Friday. “We expect that by Q4 the market will be dealing with either undersupply, dwindling spare capacity - or both.”
U.S.-China trade talks end without breakthrough. Lower level trade talks between the U.S. and China ended on Thursday with no major breakthrough. Meanwhile, the $16 billion in tariffs, from both sides, went into effect this week. China’s slate of tariffs targeted U.S. energy products, including butane, propane, naptha, jet fuel and coal, among other items. But because China has declined to include crude oil on the list of tariffs, for now at least, state-owned Unipec may resume buying U.S. crude in October, according to Reuters.
Escalating water costs in Permian. The cost of handling and disposing of “produced” water that comes out of an oil well is rising in the Permian, just another in a long line of stretched services. Companies typically truck the water away for disposal, but more recently have been building pipelines, according to the Wall Street Journal. In some parts of the Permian wells produce ten times as much water as they do oil and gas, according to WoodMac. Costs are rising, and water management can add as much as $6 per barrel to the cost of producing a barrel of oil. As a result, water costs alone could shave off 400,000 bpd of supply from the Permian by 2025.
AMLO to scrap oil auctions for two years. Mexico’s incoming president Andres Manuel Lopez Obrador (AMLO) is planning to hold off on new oil and gas auctions for two years while also modifying the laws to bolster the role of Pemex, according to the Wall Street Journal. Instead of rolling back the energy reforms, which would require a constitutional change, AMLO will reportedly pursue tweaks to the laws through legislation. Such changes include allowing Pemex to choose partners without needing regulatory approval, allowing the government to directly hand Pemex oil blocks, and making Pemex the sole marketer for oil produced by private firms.
Tesla hires Morgan Stanley to take company private. Elon Musk has reportedly hired Morgan Stanley to officially take Tesla (NASDAQ: TSLA) private.
Norwegian panel advises against dumping fossil fuel investments. Norway’s $1 trillion sovereign wealth fund had proposed divesting from fossil fuel investments, but a government appointed commission has advised against the move. “This investment strategy is simple, well founded and has served the fund well,” the commission report said. “If energy stocks are excluded from the fund, the composition of the investments will differ from market weights, and the fund will be expected to either achieve lower return or higher risk.”
U.S. considering sanctions on Venezuela once again. The Trump administration had previously scrapped plans to sanction Venezuela over fears of deepening the economic crisis, but McClatchy reports that U.S. sanctions are back on the table. The report suggests that while the administration is considering the so-called “nuclear option” of banning purchases of Venezuela’s oil, the more likely scenario will be a narrower ban on the export of U.S. diluent to Venezuela. The move would make it harder for PDVSA to process its heavy oil. McClatchy reports that the administration is preparing options to be released within the next three months.
China considers restrictions on production of gasoline and diesel vehicles. Argus Media reports that China is considering new regulations that would limit the production of gasoline- and diesel-fueled vehicles in favor of electric vehicles. The rules would block the construction of new factories that only focus on gasoline or diesel vehicles.
ExxonMobil plans $1.9 billion expansion of Baytown refinery. ExxonMobil (NYSE: XOM) is planning a $1.9 billion expansion of its Baytown refinery and petrochemical complex. The expansion would add a two-unit plastics processing plant, according to the Houston Chronicle. Separately, Exxon is already working with Saudi Arabia’s SABIC to build a $10 billion chemicals and plastics complex near Corpus Christi.
Oil prices are on track to close out the week with strong gains, after several weeks of declines. The EIA data showing a steep decline in crude stocks helped push prices up on Wednesday and return a sense of bullishness to the market. “Both crude markers are on track to end a steady run of weekly declines. This is largely due to a tightening fundamental outlook on the back of looming Iranian supply shortages,” Stephen Brennock analyst at London brokerage PVM Oil Associates, told Reuters.
Saudi Aramco IPO shelved; Saudi officials deny report. Reuters reported that the Saudi Aramco IPO has officially been scrapped and financial advisers working on the planned listing have been “disbanded,” ending what would have been the largest public offering in history. “The decision to call off the IPO was taken some time ago, but no-one can disclose this, so statements are gradually going that way - first delay then calling off,” a Saudi source familiar with the IPO plans told Reuters. Both the domestic and international listing have apparently been called off and instead Saudi Aramco may take a large stake in SABIC, the state-owned petrochemical company. Saudi officials deny the exports, and insist that the IPO has not been shelved.
Iran shipments already declining. U.S. sanctions on Iran’s oil take effect in November, but already countries around the world have been slashing purchases, which are affecting Iran’s exports. “Third-party reports indicate that Iranian tanker loadings are already down by around 700,000 bpd in the first half of August relative to July, which if it holds will exceed most expectations,” investment bank Jefferies said on Friday. “We expect that by Q4 the market will be dealing with either undersupply, dwindling spare capacity - or both.”
U.S.-China trade talks end without breakthrough. Lower level trade talks between the U.S. and China ended on Thursday with no major breakthrough. Meanwhile, the $16 billion in tariffs, from both sides, went into effect this week. China’s slate of tariffs targeted U.S. energy products, including butane, propane, naptha, jet fuel and coal, among other items. But because China has declined to include crude oil on the list of tariffs, for now at least, state-owned Unipec may resume buying U.S. crude in October, according to Reuters.
Escalating water costs in Permian. The cost of handling and disposing of “produced” water that comes out of an oil well is rising in the Permian, just another in a long line of stretched services. Companies typically truck the water away for disposal, but more recently have been building pipelines, according to the Wall Street Journal. In some parts of the Permian wells produce ten times as much water as they do oil and gas, according to WoodMac. Costs are rising, and water management can add as much as $6 per barrel to the cost of producing a barrel of oil. As a result, water costs alone could shave off 400,000 bpd of supply from the Permian by 2025.
AMLO to scrap oil auctions for two years. Mexico’s incoming president Andres Manuel Lopez Obrador (AMLO) is planning to hold off on new oil and gas auctions for two years while also modifying the laws to bolster the role of Pemex, according to the Wall Street Journal. Instead of rolling back the energy reforms, which would require a constitutional change, AMLO will reportedly pursue tweaks to the laws through legislation. Such changes include allowing Pemex to choose partners without needing regulatory approval, allowing the government to directly hand Pemex oil blocks, and making Pemex the sole marketer for oil produced by private firms.
Tesla hires Morgan Stanley to take company private. Elon Musk has reportedly hired Morgan Stanley to officially take Tesla (NASDAQ: TSLA) private.
Norwegian panel advises against dumping fossil fuel investments. Norway’s $1 trillion sovereign wealth fund had proposed divesting from fossil fuel investments, but a government appointed commission has advised against the move. “This investment strategy is simple, well founded and has served the fund well,” the commission report said. “If energy stocks are excluded from the fund, the composition of the investments will differ from market weights, and the fund will be expected to either achieve lower return or higher risk.”
U.S. considering sanctions on Venezuela once again. The Trump administration had previously scrapped plans to sanction Venezuela over fears of deepening the economic crisis, but McClatchy reports that U.S. sanctions are back on the table. The report suggests that while the administration is considering the so-called “nuclear option” of banning purchases of Venezuela’s oil, the more likely scenario will be a narrower ban on the export of U.S. diluent to Venezuela. The move would make it harder for PDVSA to process its heavy oil. McClatchy reports that the administration is preparing options to be released within the next three months.
China considers restrictions on production of gasoline and diesel vehicles. Argus Media reports that China is considering new regulations that would limit the production of gasoline- and diesel-fueled vehicles in favor of electric vehicles. The rules would block the construction of new factories that only focus on gasoline or diesel vehicles.
ExxonMobil plans $1.9 billion expansion of Baytown refinery. ExxonMobil (NYSE: XOM) is planning a $1.9 billion expansion of its Baytown refinery and petrochemical complex. The expansion would add a two-unit plastics processing plant, according to the Houston Chronicle. Separately, Exxon is already working with Saudi Arabia’s SABIC to build a $10 billion chemicals and plastics complex near Corpus Christi.
Redigert 19.01.2021 kl 07:47
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Volf
25.08.2018 kl 09:30
1902
Global Energy Advisory - 24th August 2018
Aramco’s initial public offering may never happen, after four industry sources told Reuters earlier this week that the company had disbanded its financial advisors on the listing. While Oil Minister Khalid al-Falih rejected the report, saying the Aramco listing was on track and a lot of the preparation work had been completed, the Reuters report is likely to deepen skepticism, since Falih also said that conditions for the listing had to be optimal, although he did not elaborate.
What was initially touted as the biggest IPO in the history of stock exchanges over the last year lost a lot of its spark as doubts began to emerge and then deepen that there will not be an international listing due to a number of challenges with financial transparency and the prospect of litigation in the United States following 9/11 legislation allowing U.S. citizens to sue Saudi ones.
Indeed, a while ago Aramco confirmed it would initially list on the Saudi exchange, Tadawul, and consider its international listing in the future. However, even a local listing was challenging, giving a disproportionate weight to oil stocks on the exchange and possibly pushing away investors in other Saudi industries, not to mention the sheer size of the Aramco float, which at 5% was estimated to be worth $200 billion.
The value of the stock has also been challenged more than once on the grounds that a lot of factors needed to align for this valuation to become real, with the top one being oil prices, of course. As these are still below the level where Riyadh needs them to be—$80 or more—nobody was really surprised when it emerged Aramco was planning to buy a majority stake in another Saudi state giant, Sabic, from the Kingdom’s sovereign investment fund. Indeed, this deal would bring in a lot less than $100 billion, around $50-70 billion, but it will be money in the coffers. Aramco will fund the purchase with a bond, the latest reports said.
Deals, Mergers & Acquisitions:
• Austrian OMV and Thai PTTEP are among the companies interested in acquiring Hess Corp’s offshore oil and gas assets in Southeast Asia, which are concentrated off the coast of Malaysia. Although the U.S. company has not yet decided whether it will divest from the assets, estimates put their value at between $4 and $5 billion.
• Australia’s energy major Santos will acquire local sector player Quadrant Energy for $2.15 billion, gaining access to the biggest oil find in Western Australia since at least 2000. The announcement acquisition follows a failed attempt by Harbour Energy to buy Santos itself for $10.8 billion. Quadrant shares the exploration rights for the Dorado field with Carnarvon, which recently said the partners had struck an oil deposit that could contain more than 150 million barrels of crude.
• Canada’s largest pipeline operator Enbridge Inc. has reached a deal to buy the rest of Spectra Energy Partners LP for about $3.3 billion in stock. It follows by two years Enbridge’s acquisition of Spectra for $28 billion. Enbridge raised its offer to 1.111 of its common shares for each Spectra unit, compared with its previous offer of 1.0123 of its shares.
• UK’s oilfield services provider Petrofac Ltd has agreed to sell its 20% interest in the North Sea to oil and gas operator Ithaca Energy, owned by Israel-based Delek Group, in a deal worth up to $292 million. Petrofac owns 20% interest in the Greater Stella Area development and 25% interest in the FPF1 floating production facility. The transaction, which is expected to be completed in 2019, would increase Ithaca’s production by approximately 50% to 22,000 barrels of oil equivalent per day.
Tenders, Auctions & Contracts:
• French Total has officially pulled out of the South Pars Phase 11 development project, in which it partnered with Chinese CNPC to develop the world’s largest gas field shared by Iran and Qatar. The French company had earlier said it would seek a sanction waiver from the U.S. but has apparently been discouraged in this respect. Now the Chinese company will take over Total’s share in South Pars.
• Mexico would suspend crude oil tenders for two years as per the plans of newly elected president Andres Manuel Lopez Obrador, who also intends to tweak the laws to boost the role of state energy company Pemex in the local oil and gas industry, sources told the Wall Street Journal this week. The changes, however, will not involve amendments to the constitution, which was last amended in 2013 to allow the entry of foreign oil and gas companies in the country.
Discovery & Development:
• Norway’s Petroleum Directorate revised upwards the estimated reserves of a new oil discovery that state energy major Equinor made recently in the North Sea. While Equinor’s initial estimate was of between 1.8 and 8.8 million barrels of crude, the NPD upgraded this to between 6.9 and 12.5 million barrels. The discovery is important as oil production in Norway is declining and the government is looking for ways to reverse the trend.
• Premier Oil has made the final investment decision on the Tolmount natural gas project in the North Sea, which is seen to produce some 500 billion cubic feet of gas beginning in late 2020. The project is a joint undertaking by Premier and Dana Petroleum, each with 50%.
• Exxon plans to spend $1.9 billion on the expansion of a petrochemical complex in Baytown. The expansion is scheduled to begin in 2021 and finish by 2023. The project is the latest in a string of investments by the supermajor in the expansion of its petrochemical production capacity: earlier this year Exxon completed the construction of an ethylene cracker at the Baytown complex and the expansion of the capacity at another facility, in Mont Belvieu. Exxon also recently inked a deal with Saudi Sabic for the construction of a $10-billion petrochemicals and plastics complex in Corpus Christi.
• Crude oil output from the North Slope in Alaska could expand by as much as 40% over the next eight years, IHS Markit has forecast, noting the recoverable oil reserves of the area have recently swelled to more than 28 billion barrels of crude and 50 trillion cubic feet of natural gas thanks to new discoveries.
Company News:
• UK-based Premier Oil booked a twofold increase in net profits for the first half of the year, to $98.4 million on the back of higher oil prices. Production is seen to average 80,000-85,000 barrels of oil equivalent daily.
• ConocoPhillips and Venezuela’s PDVSA have agreed on a settlement that will see the U.S. supermajor receive $2 billion awarded to it by an international arbitration court as compensation for the forced nationalization of its operations in Venezuela.
Regulatory Updates:
• A former Swiss banker has pleaded guilty for his participation in a money-laundering scheme involving embezzled funds from Venezuela’s oil company PDVSA. According to the banker, the currency exchange scheme started in 2014 and aimed to siphon out and hide some $600 million from PDVSA.
Politics, Geopolitics & Conflict:
• Philippine President Eduardo Duterte has warned China to avoid drilling for oil and gas in the West Philippine Sea or there will be trouble. West Philippine Sea is the name of the Philippine part of the South China Sea. China is claiming ownership to as much as 90% of the basin.
• The trade war between the United States and China moved to the next level after mutual tariffs of 25% on goods worth $16 billion from each of the countries took effect on Thursday despite ongoing talks in an attempt to put an end to the heated dispute.
Aramco’s initial public offering may never happen, after four industry sources told Reuters earlier this week that the company had disbanded its financial advisors on the listing. While Oil Minister Khalid al-Falih rejected the report, saying the Aramco listing was on track and a lot of the preparation work had been completed, the Reuters report is likely to deepen skepticism, since Falih also said that conditions for the listing had to be optimal, although he did not elaborate.
What was initially touted as the biggest IPO in the history of stock exchanges over the last year lost a lot of its spark as doubts began to emerge and then deepen that there will not be an international listing due to a number of challenges with financial transparency and the prospect of litigation in the United States following 9/11 legislation allowing U.S. citizens to sue Saudi ones.
Indeed, a while ago Aramco confirmed it would initially list on the Saudi exchange, Tadawul, and consider its international listing in the future. However, even a local listing was challenging, giving a disproportionate weight to oil stocks on the exchange and possibly pushing away investors in other Saudi industries, not to mention the sheer size of the Aramco float, which at 5% was estimated to be worth $200 billion.
The value of the stock has also been challenged more than once on the grounds that a lot of factors needed to align for this valuation to become real, with the top one being oil prices, of course. As these are still below the level where Riyadh needs them to be—$80 or more—nobody was really surprised when it emerged Aramco was planning to buy a majority stake in another Saudi state giant, Sabic, from the Kingdom’s sovereign investment fund. Indeed, this deal would bring in a lot less than $100 billion, around $50-70 billion, but it will be money in the coffers. Aramco will fund the purchase with a bond, the latest reports said.
Deals, Mergers & Acquisitions:
• Austrian OMV and Thai PTTEP are among the companies interested in acquiring Hess Corp’s offshore oil and gas assets in Southeast Asia, which are concentrated off the coast of Malaysia. Although the U.S. company has not yet decided whether it will divest from the assets, estimates put their value at between $4 and $5 billion.
• Australia’s energy major Santos will acquire local sector player Quadrant Energy for $2.15 billion, gaining access to the biggest oil find in Western Australia since at least 2000. The announcement acquisition follows a failed attempt by Harbour Energy to buy Santos itself for $10.8 billion. Quadrant shares the exploration rights for the Dorado field with Carnarvon, which recently said the partners had struck an oil deposit that could contain more than 150 million barrels of crude.
• Canada’s largest pipeline operator Enbridge Inc. has reached a deal to buy the rest of Spectra Energy Partners LP for about $3.3 billion in stock. It follows by two years Enbridge’s acquisition of Spectra for $28 billion. Enbridge raised its offer to 1.111 of its common shares for each Spectra unit, compared with its previous offer of 1.0123 of its shares.
• UK’s oilfield services provider Petrofac Ltd has agreed to sell its 20% interest in the North Sea to oil and gas operator Ithaca Energy, owned by Israel-based Delek Group, in a deal worth up to $292 million. Petrofac owns 20% interest in the Greater Stella Area development and 25% interest in the FPF1 floating production facility. The transaction, which is expected to be completed in 2019, would increase Ithaca’s production by approximately 50% to 22,000 barrels of oil equivalent per day.
Tenders, Auctions & Contracts:
• French Total has officially pulled out of the South Pars Phase 11 development project, in which it partnered with Chinese CNPC to develop the world’s largest gas field shared by Iran and Qatar. The French company had earlier said it would seek a sanction waiver from the U.S. but has apparently been discouraged in this respect. Now the Chinese company will take over Total’s share in South Pars.
• Mexico would suspend crude oil tenders for two years as per the plans of newly elected president Andres Manuel Lopez Obrador, who also intends to tweak the laws to boost the role of state energy company Pemex in the local oil and gas industry, sources told the Wall Street Journal this week. The changes, however, will not involve amendments to the constitution, which was last amended in 2013 to allow the entry of foreign oil and gas companies in the country.
Discovery & Development:
• Norway’s Petroleum Directorate revised upwards the estimated reserves of a new oil discovery that state energy major Equinor made recently in the North Sea. While Equinor’s initial estimate was of between 1.8 and 8.8 million barrels of crude, the NPD upgraded this to between 6.9 and 12.5 million barrels. The discovery is important as oil production in Norway is declining and the government is looking for ways to reverse the trend.
• Premier Oil has made the final investment decision on the Tolmount natural gas project in the North Sea, which is seen to produce some 500 billion cubic feet of gas beginning in late 2020. The project is a joint undertaking by Premier and Dana Petroleum, each with 50%.
• Exxon plans to spend $1.9 billion on the expansion of a petrochemical complex in Baytown. The expansion is scheduled to begin in 2021 and finish by 2023. The project is the latest in a string of investments by the supermajor in the expansion of its petrochemical production capacity: earlier this year Exxon completed the construction of an ethylene cracker at the Baytown complex and the expansion of the capacity at another facility, in Mont Belvieu. Exxon also recently inked a deal with Saudi Sabic for the construction of a $10-billion petrochemicals and plastics complex in Corpus Christi.
• Crude oil output from the North Slope in Alaska could expand by as much as 40% over the next eight years, IHS Markit has forecast, noting the recoverable oil reserves of the area have recently swelled to more than 28 billion barrels of crude and 50 trillion cubic feet of natural gas thanks to new discoveries.
Company News:
• UK-based Premier Oil booked a twofold increase in net profits for the first half of the year, to $98.4 million on the back of higher oil prices. Production is seen to average 80,000-85,000 barrels of oil equivalent daily.
• ConocoPhillips and Venezuela’s PDVSA have agreed on a settlement that will see the U.S. supermajor receive $2 billion awarded to it by an international arbitration court as compensation for the forced nationalization of its operations in Venezuela.
Regulatory Updates:
• A former Swiss banker has pleaded guilty for his participation in a money-laundering scheme involving embezzled funds from Venezuela’s oil company PDVSA. According to the banker, the currency exchange scheme started in 2014 and aimed to siphon out and hide some $600 million from PDVSA.
Politics, Geopolitics & Conflict:
• Philippine President Eduardo Duterte has warned China to avoid drilling for oil and gas in the West Philippine Sea or there will be trouble. West Philippine Sea is the name of the Philippine part of the South China Sea. China is claiming ownership to as much as 90% of the basin.
• The trade war between the United States and China moved to the next level after mutual tariffs of 25% on goods worth $16 billion from each of the countries took effect on Thursday despite ongoing talks in an attempt to put an end to the heated dispute.
kapteinkjeks
25.08.2018 kl 10:22
1853
Hvor går FRO utover høsten Volf? Du har jo kastet dine analytiske øyne på tankrederiet? ?
Volf
25.08.2018 kl 14:34
1718
På kort sikt (2 mnd) skal den opp til kr 50 max kr 55 alt avhengig av rateutviklingen.
Utviklingen etter det er avhengig av skraping,oljepris og etterspørsel er en heldig ser en kanskje kr 60 i januar,februar.
Blir US og Kina enige og Kina begynner å importere olje fra US vil det hjelpe på kursen betraktelig.
Ha en fin helg.
Utviklingen etter det er avhengig av skraping,oljepris og etterspørsel er en heldig ser en kanskje kr 60 i januar,februar.
Blir US og Kina enige og Kina begynner å importere olje fra US vil det hjelpe på kursen betraktelig.
Ha en fin helg.
2 sider om frontline i dagens FA.
Ganske bullish lesning.
Ganske bullish lesning.
Redigert 25.08.2018 kl 17:22
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