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Market Watch

Headline crude prices for the week beginning 16 April 2017 – Brent: US$71/b; WTI: US$66/b

  • Military action is Syria boosted crude oil prices last week, as the industry fretted that the US-led strikes on Syrian chemical weapons targets could spill over in a long-lasting conflict between the US and Russia.
  • Brent jumped as high as US$73/b and WTI to US$68/b as American, British and French missiles struck Syrian targets; but by the end of the week, it was clear that the strikes had stopped, leading to a more muted start to the week.
  • The US-China trade spat also continues, with China targeting American sorghum exports with a 141.7% duty in response to the US banning sales of equipment to a Chinese telco company. Though smaller in scale than previous threats, this also shows that the risk of a trade war is there.
  • As prices abated from last week’s high at the start of this week, Iran’s Oil Minister Bijan Zangeneh stated that US$60/b is a ‘good price’ for oil, adding that the market should focus on stability and not volatility. He believes US$70/b Brent is ‘too high’, given that it encourages additional American shale drilling.
  • Previously confined to Saudi Arabia and Russia, other OPEC members like the UAE are speaking up about the benefits of a long-term alliance between OPEC and the 24-country NOPEC block led by the Russia.
  • Kuwait kept open the possibility of extending the current supply agreements – which expires December 2018 -  depending on ‘the strength of market conditions’.
  • American output continues to rise, with the EIA predicting a 125,000 barrel climb in May, while US crude inventories came in lower.
  • Seven new oil rigs entered service in the US last week, bringing the total active rig count up to 1008, as drillers continued to respond to strong price signals.
  • Crude price outlook: Prices should ease given that military tensions are abating, with Brent likely to move down to US$70/b and WTI/Shanghai to US$64/b.


Headlines of the week

Upstream

  • Fresh off selling stakes in key oilfields to international partners to revitalise its upstream, ADNOC will be launching its first ever oil and gas auction, offering six blocks – two offshore, four onshore.
  • Kenya’s National Oil Corporation has tapped Schlumberger to create a development plan for oil reserves discovered in the Lokichar basin in 2012, to be used to evaluate work by Tullow and Maersk in the area.
  • Kinder Morgan Canada has suspended almost all work on the US$5.8 billion expansion of the Trans Mountain pipeline, connecting Alberta to British Columbia, as the resource transport industry complains about challenges to building new infrastructure in Canada.
  • Repsol has struck oil in Gabon, reporting encouraging assessments from the Ivela-1 well in the Luna Muetse block, part of the Lower Congo Basin.
  • Canada will be offering 16 new offshore blocks in an upcoming auction round, include the first ever licence from Newfoundland & Labrador.

Downstream

  • Just after its joint venture with Petronas in Malaysia’s RAPID refinery has been confirmed, Saudi Aramco is now looking to take a stake in a massive oil refinery in India’s western coast. Aramco could take some 50% of the 1.2 mmb/d joint venture project between India’s three state oil firms .
  • Uganda has enlisted a consortium, which includes General Electric, to build and operate a US$3-4 billion 60 kb/d oil refinery in western Uganda, that could make use of crude reserves discovered in the Albertine basin.

Natural Gas/LNG

  • BP is moving ahead with the second phase of the giant Khazzan natural gas field in Oman, with Ghazeer planned to produce some 1 bcf/d of gas and around 35,000 b/d of condensate by 2021.
  • The US LNG export industry is heating up. With Cheniere’s Sabine Pass and Dominion Energy’s Cove Point now operational, Texas LNG aims to be next, having signed 8 non-binding sales deals with potential buyers – 5 in China, 2 in Southeast Asia and 1 in Europe – for its Brownsville project.
  • China is cutting the revenue tax for its shale gas sector by 30% in a bid to increase development of unconventional resources.
  • Egypt remains a hotbed of new discoveries, as SDX Energy announced its struck gas at the Ibn Yunus-1X well in the onshore South Disouq block.
  • India’s GAIL will be purchasing an additional 500,000 tons or 8 LNG cargos from Russia’s Gazprom in the 2018/19 period, beginning May.
  • Although Germany is still pushing for the Nord Stream 2 gas pipeline to go ahead, Angela Merkel has now stated that the project will not pass unless clarity is given on ‘Ukraine’s role as a transit route for gas.’
  • ExxonMobil is reportedly in talks with Qatar in a deal that could see the latter investing ExxonMobil’s American shale resources, which would be the first time a Middle Eastern country invested significantly in US shale.
  • PTTEP has officially been handed the SK410B and SK316 shallow water blocks in Sarawak, as the Thai first pushes further into international upstream, having already taken a 10% stake in MLNG Train 9.
  • Chevron is proceeded with its planned second stage of the Gorgon LNG project in Australia, beginning to drill new subsea wells to expand supply.

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After 2020 decline, EIA expects energy-related CO2 emissions to increase in 2021 and 2022

In its January 2021 Short-Term Energy Outlook (STEO), the U.S. Energy Information Administration (EIA) expects that energy-related carbon dioxide (CO2) emissions in the United States will increase in 2021. Economic growth and the lessening of pandemic-related restrictions result in more energy consumption and associated CO2 emissions. EIA expects total energy-related CO2 emissions to increase to 4.8 billion metric tons in 2021 and 4.9 billion metric tons in 2022.

U.S. energy-related CO2 emissions fell by an estimated 11% in 2020, largely because of reduced travel and other factors that have led to less energy consumption during the COVID-19 pandemic. In the short term, EIA forecasts rising CO2 emissions as a result of economic recovery from the COVID-19 pandemic, changes in fuel mix, and greater demand for residential electricity as colder winter weather leads to more heating demand in 2021.

EIA expects petroleum to account for about 46% of total U.S. energy-related CO2 emissions in 2021 and 47% of total energy-related CO2 emissions in 2022. Most of these emissions come from the transportation sector as a result of increased travel as the economy recovers from the effects of the COVID-19 pandemic.

EIA expects natural gas, which accounted for about 36% of total energy-related CO2 emissions in 2020, to decline to about 34% of total emissions in 2021. Emissions from natural gas are declining mainly because natural gas consumption is declining as natural gas prices increase relative to coal prices. EIA expects natural gas prices to increase by 98 cents per million British thermal units (MMBtu) in 2021 while prices for coal increase by 12 cents/MMBtu. As a result, EIA forecasts that natural gas’s share of total energy-related CO2 emissions will decline to 32% in 2022 as natural gas prices rise.

Coal accounted for 19% of total U.S. energy-related CO2 emissions in 2020. EIA expects this share of total emissions to rise to 21% in 2021 and 2022 as coal becomes more economical for use in electricity generation amid higher natural gas prices.

More information on EIA’s forecasts is available in the January Short-Term Energy Outlook.

January, 28 2021
LG XBOOM GO PL2 Review


The LG XBOOM Go PL2 is the smallest and least expensive offering in LG's latest speaker trio including larger PL7 and PL5 models. All three models share the same design language and all have Meridian-tuned audio.

LG XBOOM PL2 is portable, small and light enough to be transported easily and offers 10 hours of battery life so it can run almost for a full day without being plugged in.


Ratings: 7.2

+ IPX5 water resistant

+ Easy to setup and use

+ Meridian tuned sound

- No integrated voice assistant

- No EQ adjustments


The LG XBOOM PL2 has IPX5 splash proof rating, which means it can withstand being sprayed with water but should not be submerged. We ran it under a faucet for a few seconds and the speaker kept working as it should.


The PL2 is based on version 5.0 of the Bluetooth standard and the range is quite similar to that of other speakers in the same price range. It can remain connected to more than 25 feet indoors from the audio source.

January, 26 2021
The Growing Divergence In Energy

Two acquisitions in the energy sector were announced in the last week that illustrate the growing divergence in approaching the future of oil and gas between Europe and the USA. In France, Total announced that it had bought Fonroche Biogaz, the market leader in the production of renewable gas in France. In North America, ConocoPhillips completed its acquisition of Concho Resources, deepening the upstream major’s foothold into the lucrative Permian Basin and its shale riches. One is heading towards renewables, and the other is doubling down on conventional oil and gas.

What does this say about the direction of the energy industry?

Total’s move is unsurprising. Like almost all of its European peers operating in the oil and gas sector, Total has announced ambitious targets to become carbon-neutral by 2050. It is an ambition supported by the European population and pushed for by European governments, so in that sense, Total is following the wishes of its investors and stakeholders – just like BP, Shell, Repsol, Eni and others are doing. Fonroche Biogaz is therefore a canny acquisition. The company designs, builds and operates anaerobic digestion units that convert organic waste such as farming manure into biomethane to serve a gas feedstock for power generation. Fonroche Biogaz already has close to 500 GWh of installed capacity through seven power generation units with four in the pipeline. This feeds into Total’s recent moves to expand its renewable power generation capacity, with the stated intention of increasing the group’s biomethane capacity to 1.5 terawatts per hour (TWh) by 2025. Through this, Total vaults into a leading position within the renewable gas market in Europe, which is already active through affiliates such as Méthanergy, PitPoint and Clean Energy.

In parallel to this move, Total also announced that it has decided not to renew its membership in the American Petroleum Institute for 2021. Citing that it is only ‘partially aligned’ with the API on climate change issues in the past, Total has now decided that those positions have now ‘diverged’ particularly on rolling back methane emission regulations, carbon pricing and decarbonising transport. The French supermajor is not alone in its stance. BP, which has ditched the supermajor moniker in favour of turning itself into a clean energy giant, has also expressed reservations over the API’s stance over climate issues, and may very well choose to resign from the trade group as well. Other European upstream players might follow suit.

However, the core of the API will remain American energy firms. And the stance among these companies remains pro-oil and gas, despite shareholder pressure to bring climate issues and clean energy to the forefront. While the likes of ExxonMobil and Chevron have balanced significant investments into prolific shale patches in North America with public overtures to embrace renewables, no major US firm has made a public commitment to a carbon-neutral future as their European counterparts have. And so ConocoPhillips acquisition of Concho Resources, which boosts its value to some US$60 billion is not an outlier, but a preview of the ongoing consolidation happening in US shale as the free-for-all days give way to big boy acquisitions following the price-upheaval there since 2019.

That could change. In fact, it will change. The incoming Biden administration marks a significant break from the Trump administration’s embrace of oil and gas. Instead of opening of protected federal lands to exploration, especially in Alaska and sensitive coastal areas and loosening environmental regulations, the US will now pivot to putting climate change at the top of the agenda. Although political realities may water it down, the progressive faction of the Democrats are pushing for a Green New Deal embracing sustainability as the future for the US. Biden has already hinted that he may cancel the controversial and long-running Keystone XL pipeline via executive order on his first day in the office. His nominees for key positions including the Department of the Interior, Department of Energy, Environmental Protection Agency and Council on Environmental Quality suggest that there will be a major push on low-carbon and renewable initiatives, at least for the next 4 years. A pledge to reach net zero fossil fuel emissions from the power sector by 2035 has been mooted. More will come.

The landscape is changing. But the two approaches still apply, the aggressive acceleration adopted by European majors, and the slower movement favoured by US firms. Political changes in the USA might hasten the change, but it is unlikely that convergence will happen anytime soon. There is room in the world for both approaches for now, but the future seems inevitable. It just depends on how energy companies want to get there.

Market Outlook:

  • Crude price trading range: Brent – US$54-56/b, WTI – US$51-53/b
  • Global crude oil benchmarks retreated slightly, as concerns of rising supplies and coronavirus spread impact consumption anticipations; in particular, new Covid-19 outbreaks in key countries such as Japan and China are menacing demand
  • Mapped against the new OPEC+ supply quotas, there is a risk that demand will retreat more than anticipated, weakening prices; however, a leaking pipeline in Libya has reduced oil output there by about 200,000 b/d, which could provide some price support
  • However, the longer-term prognosis remains healthier for oil prices factoring out these short-term concerns; the US EIA has raised its predicted average prices for Brent and WTI to US$52.70 and US$49.70 for the whole of 2021

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January, 22 2021