09/17 Weekly oil & gas update

Oil supply reaches a record 100 MMb/d

Global oil supply reached a record 100 MMb/d in August according to the IEA, as OPEC additions offset seasonal non-OPEC declines, despite Iranian and Venezuelan production slumping to 3.63 MMb/d and 1.24 MMb/d respectively. The IEA warned that further disruptions may be harder to address as it remains unclear how fast OPEC, Russia, or the US could respond to them

UK North Sea drilling activity faces lowest record in 40 years

The UK North Sea is on track to record its lowest drilling activity for the past 40 years. Brexit is also creating uncertainty for the industry, with annual trading costs estimated to either fall by GBP100 million or increase by GBP500 million depending on the outcome of the final deal

Iran stores unsold crude offshore ahead of impending sanctions

With US sanctions looming, purchases of Iranian crude have slowed, leaving ~16 MMbbl of crude and condensate stored in tankers. This may present further challenges as international tanker operators struggle to insure shipments of Iranian crude, while Iran may be forced to use its own fleet which is currently being used for floating storage

Fujairah bunker prices rise USD18/mt as a result of tight supply

From late August, the delivered bunker price in Fujairah has risen USD18/mt compared to Singapore’s price—the widest spread since July 2014—due to tighter supply as more bunker fuel moves to Singapore. Some demand was rumored to shift to Fujairah after concerns over off-spec bunker fuel in Singapore

Eni hits 2-bcfd gas production milestone at Egyptian Zohr field

Italian Eni has seen production reach 2 bcfd (20.7 bcma) at the giant Egyptian Zohr field 10 months after the field’s first gas output. The Zohr field holds an estimated 850 bcm of gas and has a targeted final output of 2.7 bcfd (28 bcma)

Gazprom and Mitsui sign Baltic LNG MoU

Russian Gazprom and Japanese Mitsui have signed an MoU on the Baltic LNG project, their second joint venture after Sakhalin LNG. The 14-bcma Baltic LNG project, west of St. Petersburg, is led by Gazprom and Shell. The plant’s FID is expected in 2019 with startup in 2023

Alaska LNG secures feedgas agreements with ExxonMobil and BP

Alaska LNG has signed a preliminary agreement with ExxonMobil for gas purchases from the Prudhoe Bay and Point Thomson developments, with FID expected in 2019. A similar deal has been struck with BP, another shareholder of fields containing an estimated total of 850 bcm of gas

EU carbon prices spike to 10-year high, followed by steep decline

The carbon allowance price under the EU Emissions Trading Scheme spiked last Monday to an intra-day high of EUR25.8 per ton. Since then, the price began falling, dipping below EUR20 per ton on Friday. Volatility is most likely the result of the expected market reforms to reduce supply surplus

European oil majors pledge to invest in Brazilian renewables

Total SA commissioned its first 25-MW solar plant in Brazil and has partnered with Petrobras to explore renewable projects. Petrobras is also in talks with Equinor ASA to replicate Norwegian wind power units. Royal Dutch Shell Plc is evaluating Brazilian wind energy projects

Average weekly oil & gas prices

Brent (USD/bbl): 78.49 ▲ (1.10)
WTI (USD/bbl): 68.95 ▲ (0.42)
Henry Hub (USD/mmbtu): 2.81 (0.02)
TTF (USD/mmbtu): 9.47 (0.26)

New insight

Read more

The impact of rising US LNG exports on global markets

Earlier this year, the opening of Cove Point marked a turning point for US LNG exports, placing the US 5th in the 2018 export ranking, and creating major shifts in demand, supply, and pricing dynamics.

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