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Last Updated: January 25, 2019
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Market Watch

Headline crude prices for the week beginning 21 January 2019 – Brent: US$62/b; WTI: US$53/b

  • Oil prices continue to edge up, as the market took cues from a large pullback in US drilling activity – a sign that US crude output growth might slow in the near term – although demand continues to be a concern, with the US-China trade talks at a stalemate
  • The truce between the US and China is now more than halfway through the 90-day period, and there has been no sign of concrete progress ahead of the March 1, 2019 deadline – when tariffs on US$200 billion on Chinese imports kick in
  • With the Chinese economy growing at its slowest pace in 28 years, a trade deal is likely, but fundamental differences with America could scupper a deal, leading to a further slowdown in the global economy, with recession a growing possibility
  • The OPEC+ supply cut continues to support the market, with Russia and Saudi Arabia signalling that they are on track with their production cut targets
  • While the US is now signalling that no new waivers will be granted to buyers of Iranian crude in May, market analysts believe that waivers will be renewed, but at a lower volume or to a lower number of countries
  • The US is also considering harsher sanctions on Venezuela, in response to what it is calling an illegitimate election by President Nicolas Maduro, which could further reduce Venezuela’s already declining crude exports
  • With Iran and Venezuela, oil supply on the OPEC+ side will see a downward trend in 2019, but the EIA expects US production to rise to a 12.9 mmb/d by 2020, with production for 2019 averaging at 12.07 mmb/d
  • However, American drillers may have been put off by the recent weakening of prices – exacerbated by insufficient inland pipeline infrastructure – with the active rig count losing 21 oil rigs and 4 gas rigs for a net loss of 25 rigs
  • Crude price outlook: Competing bullish/bearish factors will keep crude oil prices in their current range, as worries about the health of energy demand keep a lid on prices. Brent should range in US$61-63/b, and WTI trading at US$52-54/b

Headlines of the week


  • BP and Eni have signed a new Heads of Agreement with Oman, aimed at developing Block 77 in central Oman, a project that is considered ‘significant’
  • CNOOC has started production at the Huizhou 32-5/Huizhou 33-1 integrated development in the eastern South China Sea, with projected output of 19,200 b/d in 2020 aimed to arresting China’s upstream output decline
  • Petrobras announced that its total production of oil and gas in 2018 was 2.63 mmboe/d, including NGLs, with 96.2% of output located in Brazil
  • Pemex has received a fast-track approval from the Mexican government for the US$1 billion development of the shallow-water Esah field
  • Undeterred by previous lukewarm response, Indonesia is offering up five blocks – including two former production areas – in early 2019
  • Angola is launching its first licensing round in eight years this June, focusing on marginal fields that will open up new exploration areas
  • Shell has appointed a new Upstream Director, with Wael Sawan taking over from Andy Brown from July 1, 2019


  • Russia has expanded its list of oil refineries eligible for a newly introduced excise tax relief, as a sweetener after nine of the sites agreed to invest US$4.5 billion to upgrade capacity and fuels quality by 2026
  • China has granted the country’s first crude oil import licence to a private trader, with Zhejiang Wuchan Zhongda Petroleum’s approval seen as a step in opening up its crude market and support the new Shanghai crude futures contract
  • Algeria’s Sonatrach expected to conclude the formation of its trading joint venture with ExxonMobil within the first half of 2019
  • BP and Korean petrochemical firm Lotte have agreed to a major expansion at the joint Lotte BP Chemical Company site in Ulsan, adding 100,000 tpa of acetic acid and 200,000 tpa of vinyal acetate monomer capacity by 2020
  • Europe’s largest refinery – the 404 kb/d Pernis site in Rotterdam – will close for two months for major maintenance work
  • Curacao’s search for a new operator for its 335 kb/d Isla refinery – rumoured to be handed to Motiva – has been suspended pending a corruption investigation
  • Sinopec has been given approval by the Chinese government to launch an IPO for its fuels retail unit, with listing set for Hong Kong this year
  • South Africa and Saudi Arabia have signed a cooperation agreement focusing on US$10 billion in oil and gas projects, including a new refinery and usage of oil storage facilities near Cape Town as a strategic location for trading

Natural Gas/LNG

  • Russia’s Novatek is looking to building two new LNG storage tanks at Saibu Gas’ storage facility in the Japanese island of Kyushu, which would allow it greater flexibility to deliver Arctic LNG to China and South Korea
  • Equinor, with Petoro, ExxonMobil and Total, have announced a new discovery in the Norwegian Sea, with the Ragnfrid North (6406/2-9 S) exploration well estimated to hold 6-25 mmboe of gas and condensate
  • Talks to build an underwater natural gas pipeline between Israel and Egypt are progressing, transferring gas from the Leviathan and Tamar fields to Egyptian LNG processing facilities to create a new energy export hub
  • Shell is looking at starting work on a new natural gas/condensate prospect in Australia’s Northern Browse Basin, eyeing a future tie-back to its Prelude FLNG unit that just began production in December

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December, 01 2021
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 

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