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Last Updated: September 6, 2019
Business Trends

Market Watch  

Headline crude prices for the week beginning 2 September 2019 – Brent: US$60/b; WTI: US$55/b

  • The simmering trade tensions between the US and China continue to keep a lid on oil prices, as China retaliates with a 5% tariff on US crude
  • News that US-China trade talks would restart in October was no comfort to the market, which was also worried about the weakening global economy and record-high US production
  • Supply issues also continue to be a red flag as Russia indicated that its crude output in August was still above what was agreed through the OPEC+ pact; however, as a whole, the OPEC+ pact has managed to adhere to the cuts
  • Data showing the American crude inventories dropped significantly by over 10 million barrels to their lowest level since October 2018 – alluding to the stronger domestic demand seen over the summer – did manage to prop up prices
  • Meanwhile, the last US player active in Venezuelan upstream – Chevron – is reportedly laying the groundwork to exit the country if the current US waiver on its participation in Venezuela is not renewed in October, which would be another blow to Venezuela’s crude production
  • In Saudi Arabia, the Kingdom reassured the market that its oil policy would remain unchanged after a decision to shrink the Energy Ministry by splitting it into two – one for policy and one for industry/mining operations
  • After a significant 19-site loss last week, the active US rig count dropped yet again – this time by 11 rigs; most drops came from the Permian, illustrating the tough situation there where oil is trapped inland due to insufficient pipelines
  • A lack of concrete news means that oil prices will remain rangebound for now, with Bent in the US$59-61/b range and WTI in the US$55-57/b range

Headlines of the week


  • BP will be exiting Alaskan upstream completely to focus on deepwater and shale, selling its assets to Hilcorp Alaska – including the Prudhoe Bay field and shares in the Trans-Alaskan Pipeline – for US$5.6 billion
  • Total has extended its partnership with Qatar Petroleum, with the latter farming in on Total’s E&P areas in Namibia (Block 2913B and Block 2912), Guyana (Orinduik and Kanuku) and Kenya (Blocks L11A, L11B, and L12)
  • Croatia has awarded six licences in its onshore Pannonian basin, with the winners largely being small North American players
  • Eni has been granted the West Ganal exploration block in Indonesia’s Kutei Basin, which adjoins its current Muara Bakau and East Sepinggan PSCs
  • A Nigerian high court has ordered the government to renew Shell’s licence for the Oil Mineral Lease 11 field for 20 years after it was withdrawn earlier
  • Sri Lanka estimates that it could begin producing crude oil by 2023, enlisting Total and Equinor to develop a ‘promising’ field in the offshore Mannar Basin
  • Thailand’s PTTEP is reportedly looking to partner with Middle Eastern countries to ensure continued crude supply for a growing domestic market
  • Tullow Oil’s plans to sell another stake in its 230,000 b/d in Uganda to partners Total and CNOOC have fallen through due to a tax dispute with the state


  • China’s Zhejiang Satellite Petrochemical has been granted approval to begin building a US$4.2 billion petchems complex in Jiangsu, to be fed by US ethane
  • Also in Jiangsu, Sinopec has commissioned an additional 2.36 million barrels of crude oil storage at its Yizheng facility, to feed growing demand from refineries in the Yangtze and Nanjing regions
  • Russia’s gas giant Novatek has inked a pact with Indian gas importer Petronet to jointly develop LNG projects and deals in India
  • Sasol’s ethane cracker in Lake Charles, Louisiana has reached beneficial operation, bringing the 1.54 mtpa cracker one step closer to commercialisation
  • Ecuador is soliciting private investment to build a new 300 kb/d refinery, which will supplant the aging and chronically underutilised 110 kb/d Esmeraldas site

Natural Gas/LNG

  • Eni continues its streak of African success, announcing a ‘significant’ gas and condensate find in the Obiafu-Obrikom fields in the OML61 prospect of the onshore Niger Delta in Nigeria; early estimates suggest production estimates of 100 mmscf/d of natural gas and 3,000 b/d of condensates
  • Novatek has taken FID on its US$21.3 billion Arctic LNG 2 scheme, which will commercialise gas from the Gydan Peninsula to LNG by 2023
  • Qatar Petroleum has signed a new supply deal with Fluxys Belgium to supply the Zeebrugge LNG plant in Belgium, extending the current deal to 2044
  • ConocoPhillips is reportedly looking to sell off its interests in northern Australia, including the Darwin LNG facility and the Barossa gas project
  • Cyprus is moving ahead with its first LNG terminal, selecting a China-led multinational consortium to build the FSRU-based facility


  • Oil services firm TechnipFMC will be splitting into two independent units – RemainCo, focusing on technology and services, and SpinCo, focusing on engineering and construction – as approved by the Board of Directors

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September, 21 2019
Your Weekly Update: 16 - 20 September 2019

Market Watch  

Headline crude prices for the week beginning 16 September 2019 – Brent: US$69/b; WTI: US$63/b

  • Global crude oil prices surged at the start of the week as news that a successful drone strike on the Abqaiq processing plant and the Khurais oil field in Saudi Arabia took out over half of the Kingdom’s crude production capacity
  • Brent prices jumped above US$70/b at one point on fears on global supply disruption, but abated as President Donald Trump authorises the release of US strategic petroleum reserves to cover the market
  • Initial fears that the Saudi Arabian crude output would be crippled for months proved to be extreme, with Saudi Aramco announcing that some 70% of capacity at Abqaiq had been restored within days
  • But more worryingly is that this incident escalates the risk of a full-blown military confrontation with Iran; the US was quick to accuse Iran of the attack, citing data on the attack, which was denied by Iran
  • Yemen’s Iran-backed Houthi rebels claimed responsibility for the attack, although initial results of a Saudi investigation pointed to the weapons originating from Iran
  • For now, crude oil prices have retreated as the risk of widespread supply disruption abated, but tensions are still high in the region
  • This comes after President Trump signals that he was considering easing sanctions in an apparent thaw in the US-Iran relationship; this opportunity now appears to have evaporated
  • Saudi Arabia’s new oil energy minister, Prince Abdulaziz bin Salman, made a positive impression at the recent OPEC+ meeting, with errant members of the group signalling that they were now ready to adhere to the supply deal
  • In Venezuela, the oil crisis continues as ongoing US sanctions now mean that the country cannot find enough vessels to transport its crude, as shippers fear losing insurance coverage if they transport Venezuelan oil
  • Iran has released the UK-flagged Stena Impero vessel that it had impounded, a lone bright spot in a region now clouded by geopolitical tensions
  • Against this backdrop, the US active rig count recorded yet another fall, losing five oil and seven gas rigs for a net drop of 12 to a new total of 886 rigs
  • With the shock of the Saudi drone attacks abating, crude oil prices are retreating back to their previous range – US$60-63 for Brent and US$56-59/b for WTI – as the impact of global supply was minimised; another attack, however, might cause a more permanent shift in prices

Headlines of the week


  • Equinor has received consent from the Norwegian Petroleum Directorate to continue operations at the Tordis and Vigdis fields through 2036 and 2040, respectively, extending the life of the North Sea fields by 34 years
  • BP has announced that it will deploy continuous measurement of methane emissions for all future oil and gas projects in a bid to reduce emissions
  • CNOPC and Niger have agreed to collaborate on a 1,892km pipeline to carry oil from Niger’s Agadem rift basin to port facilities in Benin
  • The South African government is tabling a new law that will allow the state to take a free stake of up to 10% in all new oil and gas ventures, hoping to capitalise on a surge in upstream interest after Total’s Brulpadda discovery


  • As the IMO deadline for low-sulfur marine fuels approaches, refiners have begun stockpiling supplies of very low-sulfur fuel oil to ensure adequate supply; this includes Japan’s Cosmo Oil that aims to begin supplying VLSFO to the domestic marine market by October 2019
  • IndianOil’s Gujarat refinery stated it ready to produce 12,900 b/d of VLSFO by October while its Haldia refinery will start producing 5,500 b/d of VLSFO by December; this should be adequate to cover the India’s marine fuel demand
  • India is considering selling a stake in BPCL, the country’s second largest refiner, to an international firm to boost competition in downstream fuel retailing that has historically been dominated by state firms
  • Valero Energy and Darling Ingredients are launching the first renewable gasoil plant in Texas, focusing on producing renewable diesel and naphtha
  • In the UK, Essar Oil’s Stanlow refinery aims to increase its diet of US crude from a current 35% to 40%, leveraging on cheaper American oil
  • The after-effects of Russia’s contaminated crude through the Druzhba pipeline continues as Total issues a tender to sell 1.3 million barrels of tainted Ural crude through Rotterdam after failing to process it

Natural Gas/LNG

  • Poland has won a ruling from the EU courts to reduce Russian control over the key EU Opal pipeline that carries Russian gas from the Nord Stream link to Germany, preventing Gazprom from using most of Opal capacity in a bit to increase energy security for Eastern European countries
  • Vitol and Mozambique’s state player ENH have set up a new joint venture in Singapore to capitalise on trading opportunities for LNG, LPG, and condensate
  • Australia’s Liquefied Natural Gas Ltd and Delta Offshore Energy will supply gas from the Magnolia fields to an LNG-to-power project in Bac Lieu, Vietnam
  • Eni’s Baltim South West gas field offshore Egypt has started up production, only 3 years after discovery, producing an initial 100 mscf/d of gas
  • US gas player Sempra is looking to take FID on its Energia Costa Azul LNG project in Mexico’s Baja California region by the end of 2019
  • Egypt has announced that it expects to receive first natural gas from Israel by end-2019 through the East Mediterranean Gas pipeline, with initial supplies of 200 mscf/d that will rise to 500 mscf/d by 2020
  • The Independence floating LNG terminal in Lithuania – built to reduce the Baltic region’s dependence on Russian gas – is set to receive its first-ever cargo from Siberia, likely from Novatek’s LNG projects in Yamal
September, 20 2019
Financial Review: Second-Quarter 2019
Key findings
  • Brent crude oil daily average prices were 9% lower in second-quarter 2019 than in second-quarter 2018 and averaged $68 per barrel
  • The 117 companies in this study increased their combined liquids production 4.6% in second-quarter 2019 from second-quarter 2018, and their natural gas production increased 5.0% during the same period
  • Nearly half of the companies were free cash flow positive—that is, they generated more cash from operations than their capital expenditures
  • Dividends plus share repurchases were nearly one-third of cash from operations, slightly lower than the six-year high set in first-quarter 2019

Distributions to shareholders via dividends and share repurchases amounted to nearly 33% of cash from operations

See entire second-quarter review

September, 20 2019