NrgEdge Editor

Sharing content and articles for users
Last Updated: August 23, 2018
1 view
Business Trends
image

Market Watch

Headline crude prices for the week beginning 20 August 2018 – Brent: US$72/b; WTI: US$66/b

  • Trade and geopolitical worries continue to dominate the short, mid and long-term outlook for oil, with crude prices staying entrenched in their current range, sandwiched by the opposing factors.
  • China and the US are going back to the negotiating table after a two month impasse, hoping to ease the escalating trade war between the two. Most observers, however, do not expect much, if any, progress given the aggressive position of America.
  • Though LNG remains exempt from Chinese tariffs for now, news that PetroChina has considered halting spot purchases of American LNG this winter in favour of sourcing from other countries rattled US exporters, at a time when LNG infrastructure is ramping up in the Gulf Coast.
  • Despite pledging to increase output to President Trump, Saudi Arabia appears to have actually cut production, with OPEC also forecasting lower demand for its crude in 2019 due to increased supply from Russia and the US.
  • The question of how Iranian volumes will be replaced remains unanswered, though the US is now pulling back from strict interpretation of its sanctions, dangling the possibility of waivers to allies who comply. India, for example, is now aiming to halve its imports from Iran to secure a waiver based on the new American guidelines.
  • Iran is putting pressure on the EU to ‘save the nuclear deal’ to avoid companies pulling out of Iran, with reports that even Chinese ship owners may be avoiding carrying Iranian crude due to the impending sanctions.
  • In an effort to counter the removal of Iranian crude, the US Department of Energy is offering 11 million barrels of crude from the US Strategic Petroleum Reserve from October 1-November 30 2018.
  • The largest weekly stockpile build in US crude inventories since March 2017 spooked crude prices last week, underscoring the risk of slowing demand.
  • With crude prices still stuck in range, the active American rig count is flat, as no new oil and gas rigs started up, keeping the total count at 1,057.
  • Crude price outlook: The fragile global situation over trade and sanctions will remain, and with the November deadline looming for Iranian crude, we expect crude prices to inch up. Brent should trade at US$73-75/b and WTI at US$66-68/b.

Headlines of the week

Upstream

  • Iraq and Petrofac has signed a US$369 million deal to build a new 200 kb/d crude processing facility, which would boost the output at the giant Majnoon field from 230,000 b/d to 450,000 b/d by 2021; the Majnoon oilfield is now operated by Basra Oil Co after Shell departed the field in June.
  • Eni has acquired the new Nour offshore exploration licence in the East Nile Delta basin in Egypt, and has also received a 10-year extension of the Abu Madi West Development Lease, which contains the prolific Nooros field.
  • The much-touted recent Gulf of Mexico US exploration auction proved to be a damp squib with bids received for only 1% of the 14,575 blocks on offer.
  • Total is aiming to drill up to five exploration wells offshore French Guiana next year, hoping to strike similar riches that have been discovered in Guyana.

Downstream

  • New Mexican President Andres Manuel Lopez Obrador has pledged more than US$11 billion to boost the country’s refining capacity, split between a US$2.6 billion modernisation plan and a new US$8.4 billion refinery.
  • Japanese firms are cashing in on US LPG cargoes for heating, cooking and transport, after Chinese buyers began eschewing American propane and butane due to escalating trade tensions between the two countries.
  • PDVSA’s American subsidiary Citgo plans to resume long-delayed work to refurbish the idled 235,000 b/d Aruba refinery in the Caribbean.
  • Nigeria’s NNPC is mulling over a consideration to allow private investors to install new 100 kb/d refineries on the sites of its existing Port Harcourt and Warri sites to overcome chronic underutilization of its refining system.
  • Shell’s global refining boss Lori Ryerkerk will be stepping down after five years, to be replaced by Robin Mooldijk, VP of Manufacturing Americas.

Natural Gas/LNG

  • PetroChina may temporarily halt its purchases of American LNG this winter, switching to spot cargoes on the open market to feed its winter demand as the US-China trade war threatens to grow to include tariffs on LNG.
  • Cheniere’s Corpus Christi LNG project enters its commissioning phase, having been granted approval to feed first gas by energy regulator FERC.
  • Panama and the US have signed an agreement to pave way for more private investment into LNG importation and distribution, aimed at boosting US LNG exports into Central and South America.
  • Bangladesh has started up its first LNG import terminal after a three-month delay as the Excellence FSRU is now permanently moored. This will help offset a prolonged decline in the country’s natural gas production.
  • Japan’s Mitsubishi Corp has acquired 25% of the Summit LNG terminal in Bangladesh, which involves an FSRU unit to be installed off Moheshkali in Cittagong, with a target for commercial operations to begin in Q1 2019.
  • BP has inked a 5-year deal with PNG LNG, with purchases starting at 450,000 tpa over the first three years, then rising to 900,000 ton for the remaining two years.


oil oil and gas news oil and gas industry LNG oil and gas companies news weekly update market watch market trends latest oil and gas trends
3
1 0

Something interesting to share?
Join NrgEdge and create your own NrgBuzz today

Latest NrgBuzz

Royal Dutch Shell Poised To Become Just Shell

On 10 December 2021, if all goes to plan Royal Dutch Shell will become just Shell. The energy supermajor will move its headquarters from The Hague in The Netherlands to London, UK. At least three-quarters of the company’s shareholders must vote in favour of the change at the upcoming general meeting, which has been sold by Shell as a means of simplifying its corporate structure and better return value to shareholders, as well as be ‘better positioned to seize opportunities and play a leading role in the energy transition’. In doing so, it will no longer meet Dutch conditions for ‘royal’ designation, dropping a moniker that has defined the company through decades of evolution since 1907.

But why this and why now?

There is a complex web of reasons why, some internal and some external but the ultimate reason boils down to improving growth sustainability. Royal Dutch Shell was born through the merger of Shell Transport and Trading Company (based in the UK) and Royal Dutch (based in The Netherlands) in 1907, with both companies engaging in exploration activities ranging from seashells to crude oil. Unified across international borders, Royal Dutch Shell emerged as Europe’s answer to John D Rockefeller’s Standard Oil empire, as the race to exploit oil (and later natural gas) reserves spilled out over the world. Along the way, Royal Dutch Shell chalked up a number of achievements including establishing the iconic Brent field in the North Sea to striking the first commercial oil in Nigeria. Unlike Standard Oil which was dissolved into 34 smaller companies in 1911, Royal Dutch Shell remained intact, operating as two entities until 2005, when they were finally combined in a dual-nationality structure: incorporated in the UK, but residing in the Netherlands. This managed to satisfy the national claims both countries make on the supermajor, second only to ExxonMobil in revenue and profits but proved to be costly to maintain. In 2020, fellow Anglo-Dutch conglomerate Unilever also ditched its dual structure, opting to be based fully out of the City of London. In that sense, Shell is following the direction of the wind, as forces in its (soon to be former) home country turn sour.

There is a specific grievance that Royal Dutch Shell has with the Dutch government, the 15% dividend tax collected for Dutch-domiciled companies. It is the reason why Unilever abandoned Rotterdam and is now the reason why Shell is abandoning The Hague. And this point is particularly existentialist for Shell, since its share prices has been battered in recent years following the industry downturn since 2015, the global pandemic and being in the crosshairs of climate change activists as an emblem of why the world’s average temperatures are going haywire. The latter has already caused the largest Dutch state pension fund ABP to stop investing in fossil fuels, thereby divesting itself of Royal Dutch Shell. This was largely a symbolic move, but as religious figures will know, symbols themselves carry much power. To combat this, Shell has done two things. First, it has positioned itself to be at the forefront of energy transition, announcing ambitious emissions reductions plans in line with its European counterparts to become carbon neutral by 2050. Second, it is looking to bump up its dividend payouts after slashing them through the depths of the Covid-19 pandemic and accelerating share buybacks to remain the bluest of blue-chip stocks. But then, earlier this year, a Dutch court ruled that Shell’s emissions targets were ‘not ambitious enough’, ordering a stricter aim within a tighter timeframe. And the 15% dividend tax remains – even though Prime Minister Mark Rutte’s coalition government has been attempting to scrap it, with (it is presumed) some lobbying from Royal Dutch Shell and Unilever.

As simplistic it is to think that Shell is leaving for London believes the citizens of the Netherlands has turned its back on the company, the ultimate reason was the dividend tax. Reportedly, CEO Ben van Buerden called up Mark Rutte on Sunday informing him of the planned move. Rutte’s reaction, it is said was of dismay. And he embarked on a last-ditch effort to persuade Royal Dutch Shell to change its mind, by immediately lobbying his government’s coalition partners to back an abolition of the dividend tax. The reaction was perhaps not what he expected, with left-wing and green parties calling Shell’s threat ‘blackmail’. With democracy drawing a line, Shell decided to walk; or at least present an exit plan endorsed by its Board to be voted by shareholders. Many in the Netherlands see Shell’s exit and the loss of the moniker Royal Dutch – as a blow to national pride, especially since the country has been basking in the glow of expanded reputation as a result of post-Brexit migration of financial activities to Amsterdam from London. The UK, on the other hand, sees Shell’s decision and Unilever’s – as an endorsement of the country’s post-Brexit potential.

The move, if passed and in its initial stages, will be mainly structural, transferring the tax residence of Shell to London. Just ten top executives including van Buerden and CFO Jessica Uhl will be making the move to London. Three major arms – Projects and Technology, Global Upstream and Integrated Gas and Renewable Energies – will remain in The Hague. As will Shell’s massive physical reach on Dutch soil: the huge integrated refinery in Pernis, the biofuels hub in Rotterdam, the country’s first offshore wind farm and the mammoth Porthos carbon capture project that will funnel emissions from Rotterdam to be stored in empty North Sea gas fields. And Shell’s troubles with activists will still continue. British climate change activists are as, if not more aggressive as their Dutch counterpart, this being the country where Extinction Rebellion was born. Perhaps more of a threat is activist investor Third Point, which recently acquired a chunk of Shell shares and has been advocating splitting the company into two – a legacy business for fossil fuels and a futures-focused business for renewables.

So Shell’s business remains, even though its address has changed. In the grand scheme of things, never mind the small matter of Dutch national pride – Royal Dutch Shell’s roadmap to remain an investment icon and a major driver of energy transition will continue in its current form. This is a quibble about money or rather, tax – that will have little to no impact on Shell’s operations or on its ambitions. Royal Dutch Shell is poised to become just Shell. Different name and a different house, but the same contents. Unless, of course, Queen Elizabeth II decides to provide royal assent, in which case, Shell might one day become Royal British Shell.

End of Article 

Get timely updates about latest developments in oil & gas delivered to your inbox. Join our email list and get your targeted content regularly for free or follow-us on LinkedIn.

No alt text provided for this image

Download Your 2022 Energy Industry Training Calendar

November, 28 2021
high efficiency oil boiler

high efficiency oil boiler - Boyle Energy Provide best Oil Furnace Repair & Installation experts. We also provide free installation estimates for new High Efficiency oil furnaces. Oil furnaces & boilers with high efficiency save your energy & money over time

November, 18 2021