Connect with us

Energy

OpEd: Where were you when Gazprom dethroned ExxonMobil?

Published

on

(FinancialPress) — Isn’t this a day to remember not unlike the lunar landing or the day Kennedy was shot? Well, perhaps not that significant or is it?

I’m talking about that point in time where ExxonMobil (NYSE: XOM) was dethroned. Dethroned you say? Well yes according to an article published in Oilprice.com. ExxonMobil has been a mainstay in that space.

Who you say slayed the king?  Well that is Russian Gazprom (MCX: GAZP).  This the state sponsored energy giant which dominates Europe and is making inroads in China.

Since the seventies (the rise of OPEC) we have seen where state owned, or controlled, entities have been muscling their way to gain a significantly larger voice in energy.  They have now risen to where we have little choice, but take them into account.

Russia has nudged, shoved or pushed their way to control the European space for natural gas.  Many a curse whispered in European capitals as the name Gazprom is mentioned.  Natural gas is a tool used to flex muscle in Europe.  This was best illustrated by the dispute between Russia and the Ukraine long before the Crimean invasion.

As the natural gas production begins to see decline (naturally) things like LNG become in focus for Europe.  The first sales arrived in England this year.  No one in the European market will acquiesce and LNG offers an alternative.  Australia, Qatar and now the U.S.A. are alternatives to Gazprom.  In several years the infrastructure will diversify the alternatives from Gazprom.

Other alternatives will immerge such as discoveries such as the developments in Israel come to mind.  Gas servicing the country can see movement of excess volumes to a hungry Europe.  A consortium of companies including Noble Energy (NYSE: NBL), Delek Drilling (TLV: DLEKG), Avner Oil Exploration LP, and Ratio Oil Exploration LP are developing the facilities to move gas to shore.  This is a massive find in a friendlier place than Russia or the Middle East.

Renewable sources are another alternative but have proven unreliable and did see massive investment.  This investment has shown signs of decline as the end result may have been disappointing.

Where does that leave this space?  Well do not count ExxonMobil out of the game.  They are a very well-managed company as illustrated by an article in an article written by Reuben Gregg Brewer on Sep 29, 2017. Certainly they are growing their world wide asset base whether acquiring new Permian assets or bidding for offshore Brazilian offshore rights auction.  Will ExxonMobil lose sleep over waking up being Number Two.  They will continue to be a force to recon with.  You’re not number one by some fluke of nature and I for one am not going lose sleep over ExxonMobil surrendering the mantle to Gazprom.

 

 

Energy

Oil prices up on expectations of production cut extension

Published

on

(FinancialPress) — A major meeting set for the upcoming week has oil on the rise, as traders look towards it to cement an extension on production cuts – even when gains were capped by rising U.S. output.

Brent crude was up $0.47, reaching $62.69 a barrel by 09:32 GMT. U.S. light crude oil rose $0.32, up to $56.74.

Brent moved within range, with analysts expecting it to move between the $61 and $63 price gap. This happens as the market looks forward to what comes of the OPEC (Organization of the Petroleum Exporting Countries) meeting set for November 30th.

The Organization, allied with other non-members that have Russia at the helm, has managed to orchestrate an effort to end globe-wide oversupply with output restrictions – hoping that this will help prices get off of their current slump. Next week‘s meeting is expected to erase the March 2018 expiry date and thus extend the agreement.

Ole Hansen, Saxo Bank senior manager, stated on the topic: “There’s a general belief that anything but an extension could have a significant negative impact … So the market is just waiting for confirmation that OPEC wants to move on with the extension.“

The fact that storage levels remain consistently high even in light of the recent measures feeds expectations of the OPEC and its allies extending the cuts. However, some believe not all participants will be willing to continue to restrict their production.

Even so, that‘s not the biggest headache OPEC is experiencing – it‘s actually the rise of U.S. drilling that‘s being led by shale oil producers.

But the biggest headache for OPEC has been a rise in U.S. drilling, led by shale oil producers.

Westwood Global Energy Group, which specializes in energy consultancy, noted that the rising rig count is an inaccurate measure of how quickly U.S. output would climb – as producers become even more productive per well. Rig count has risen from 316 rigs in mid-2016 to 738 last week.

“Westwood Global Energy forecasts an 18 percent increase in active rigs in 2018, but more rapid demand growth in certain service areas as operators focus on efficiency and delivering more for less,” the consultancy said.

Continue Reading

Energy

Oil manages to stabilize after prior day‘s slump

Published

on

(FinancialPress) — Crude oil is beginning to slide after reaching 2-year highs through the first days of November. It experienced a slump in Wednesday‘s session, on the heels of a surprise jump in U.S. supplies. On Thursday, however, prices experienced little change
January Brent crude went down by 13 cents (0.2%) to $61.74 a barrel. December West Texas Intermediate crude, which originally experienced a minor gain, ultimately had 6 cents shaved off of its price (0.1%), to reach $55.27. In the prior session, WTI dropped a heavier 37 cents (0.7%), reaching a price of $55.33 – its lowest close since early November.
U.S. domestic crude supplies rose by 1.9 million barrels by the end of the week of Nov. 10th, as informed by the country‘s Energy Information Administration. This prove the prediction by S&P Global Platts analysts wrong – as it forecasted a drop of 1 million barrels in supply. The American Petroleum Institute (API) reported a 6.5 million barrel a week rise on late Tuesday.
Gasoline stockpile also rose to the tune of 900,000 for the week. Meanwhile, according to the EIA, distillate stockpiles, fell 800,000 barrels. The survey forecast by S&P Global Platts indicates dips in distillates stockpiles of 2 million barrels, and 1 million barrels for gasoline.
Tama Varga, a PVM analyst, said that the recent oil slump is being seen by some traders as “as a healthy and inevitable correction triggered by bulls taking profit,” on a Thursday note. He added that while sentiment looks bearish at the moment, they may believe that the positive trend for crude “should resume shortly“.
Up to the date, WTI has risen 3% overall – propelled by a rally begun in June. Crude hit a two-year high in its benchmark in early November, and recently began pulling back.

Continue Reading

Energy

Venezuela can no loger pay its debts; oil could be seized

Published

on

 

(FinancialPress) — Venezuelan President Nicolás Maduro finally admitted, during a Thursday televised speech, that his government can no longer keep up with the payments of its piling debt. Venezuela is now officially working towards restructuring its debt payments, as is PDVSA – the state-run oil company.

Considering that the country has only $10 billion left in the bank, the $1.1 billion payment made by the oil company on Thursday is very substantial to the country‘s reserves. Maduro said in the speech that “After this payment, starting today, I decree a refinancing and a restructuring of the external debt.“

A deep humanitarian crisis is already whipping the embattled South American nation, as people experience deep shortages of food and medical supplies. Basic items are becoming less and less attainable for the population, as prices skyrocket and wages fail to rise at  a rate that would paliate the inflation. The bolivar – Venezuela‘s currency – is now worth less than a tenth of a U.S. penny.
Should Maduro‘s government fail in its attempt to restructure debt owned by bondholders — a very real possibility, as often it means that they‘d agree to be paid less money —, the country will enter into default.
A potential default could trigger a series of very unfortunate events. Those same bondholders could choose to seize Venezuelan oil as collateral.
Seeing that oil is the only significant external revenue source the government has, this would cut the financial means it has to acquire medical supplies and food. While the country has vast farmlands, it was mismanaged by their office which forces the country to import almost the totality of its food products.
Even if it were a viable course of action, debt restructuring is a long and excruciating process. Venezuela‘s neighboring country Argentina battled in international courts for 15 years to get resolution over its unpaid debts.

Continue Reading

Most Popular