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Last Updated: May 11, 2020
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Headline crude prices for the week beginning 4 May 2020 – Brent: US$27/b; WTI: US$20/b

  • Crude oil prices have rallied to levels last seen before the oil price meltdown in mid-April, as OPEC+ begins the largest supply cut deal in its history and signs that global oil demand is slowly recovering
  • The start of OPEC+ 9.7 mmb/d supply reduction has also been accompanied by a huge ‘voluntary’ reduction by private players in the US, with ExxonMobil, Chevron and ConocoPhillips alone shutting some as much as 660,000 b/d of their US capacity through June
  • The combination of the OPEC+ cuts and the market-enforced reductions on international players should halve the global oil glut in May, but the overhang will still be a considerable 6 mmb/d, generating concern over the pressure on storage capacity globally
  • In the US, inventory builds at the key hub of Cushing, Oklahoma rose by 1.8 million barrels, the smallest rise in 6 weeks, and triggering a recovery in WTI prices since this could see the storage crunch and oversupply situation easing
  • However, the storage situation is not equal worldwide: while Petrobras has ample space in Brazil to store crude, reports suggest that South Korea has run out of commercial storage space, with the 38 million barrels of capacity held by Korea National Oil Corp and Oilhub Korea Yeosu completely tapped out in one of Asia’s largest refining markets
  • Crude and refined product storage space in India and Singapore are also reportedly filling up fast, which will force buyers to look into offshore storage
  • The US active rig count, according to Baker Hughes, has lost another 57 rigs over the week, shaving off 53 oil rigs and 4 gas rigs to a new total of 408 sites, the lowest count since May 2016
  • Crude oil prices have roughly doubled over the past two weeks, buoyed by optimism that demand will gradually return and OPEC+ will keep adherence high to hold back a supply flood; this might be premature, since a supply glut still exists, particularly ahead of the expiry of the June WTI contract May 20, but should be enough to keep Brent and WTI in the US$$-26-30/b and US$20-24/b range for now

Headlines of the week


  • Lebanon’s ambition of joining the ranks of the Eastern Mediterranean’s oil and gas bonanza have come up empty for now, with Total’s maiden test drilling campaign in the offshore Block 4 having come up dry
  • Jadestone Energy will be delaying its Australian drilling campaign planned for the Stag and Montara oil fields offshore northwest Australia until 2021, having already deferred planned upstream development campaigns in Vietnam
  • Neptune Energy is reporting that it has made two ‘important’ hydrocarbon discoveries in northwestern Germany – with the Ringe 6 well striking oil while the Adorf Z15 well in Emlichheim struck gas flows
  • Neptune Energy has also kicked off its drilling campaign on the offshore Fenja field in Norway, estimated to deliver some 40,000 b/d at peak production
  • Despite major uncertainty in the market, BP has reaffirmed its commitment to complete the sale of its Alaskan upstream business to Hilcorp, with the initial consideration of US$5.6 billion having been renegotiated
  • Mubadala Petroleum has reduced capex for its Manora offshore oil development project in Thailand by some US$14 million
  • UK independent Coro Energy has bailed out of a plan to acquire a 42.5% stake in the Bulu production sharing contract in Indonesia that encompasses the Lengo gas field, citing ‘increasing concerns’ over operator KrisEnergy


  • China will issue its first ever export quotas for very low sulfur fuel oil (VLSFO) later this year, with the first batch expected for 10 million tonnes of the marine fuel as Chinese refiners aims to capture a huge slice of the new market
  • As crashing oil prices and the Covid-19 pandemic impacting production and promotimg nationalism, Lukoil is reporting that its 3 refineries in Europe (Italy, Romania and Bulgaria) are now processing only Russian crude
  • Thailand’s IRPC has officially delayed a planned US$1 billion petrochemicals project that would add 1.3 million tonnes per year of paraxylene and 400,000 tons of benzene production capacity to the country’s third-largest refiner

Natural Gas/LNG

  • ExxonMobil is now looking to sanction FID for its US$25 billion Rovuma LNG project in Mozambique in 2021, which will now be the hub for all future trains
  • France’s Total and Japan’s Mitsui have individually signed up for long-term LNG purchases for Sempra’s Energia Costa Azul project in Baja California, Mexico, which will total some 2.5 million tons per annum
  • Aker BPs’s Ærfugl Phase 2 development plans kicks off in grand style, with the first well drilled three years ahead of schedule, tapping into a reservoir containing some 300 million boe of natural gas
  • Sempra has postponed FID on its Port Arthur LNG export project from 2020 to 2021, citing ‘weakened global demand’ due to the Covid-19 pandemic
  • Arrow Energy has kicked off the first phase of its Surat Gas Project in Australia’s southern Queensland area, which is expected to deliver some 5 tcf of natural gas for Arrow and its partners Shell and PetroChina

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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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