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[ariane] 07/10/2018 18:28

Is The U.S. Using Force To Sell Its LNG To The World?
By Robert Berke - Oct 07, 2018, 12:00 PM CDT Middle East

The Trump Administration trade policy is nowhere so clear as in the energy area. For years it was thought that the younger Bush Administration was one of the most energy industry friendly in history. But the Trump Administration has gone far beyond that.

Hiring Ray Tillerson, the former CEO of ExxonMobil, as U.S. Secretary of State, sent a strong signal to the entire industry, even though his tenure proved to be temporary.

Prior to that, the Administration withdrew from the Paris Climate Agreement, a long-held priority of Exxon and the entire oil industry. Following hard upon that, the Environmental Protection Agency (EPA) has reduced or eliminated regulations limiting carbon and other pollutants.

Exxon has for more than a decade underwritten the now discredited, right wing attack on climate change as a hoax. Although the energy industry has now publicly acknowledged climate change as a global threat, in practice the subject is still largely ignored.

Going further, the Trump Administration has removed and reduced regulations that hampered the industry expansion, including allowing drilling on both ocean coast, while easing safety regulations that were brought into effect after BP’s Gulf of Mexico disastrous spill, the worst in U.S. history.

Government protected nature preserves are being opened to exploration and drilling for the first time in generations. Added to that was the dropping of regulations that for many years prohibited export of U.S. crude. Since then, the U.S. has become a major player in the global energy industry.

The Administration currently plans to rescind and lower fuel efficiency standards for autos and trucks. That is likely to encourage increased purchase of larger SUVs, increased oil consumption, and rising gasoline prices.

The Administration corporate tax cut, one of the largest in U.S. history, also strongly benefitted the energy industry, as it did other industries.

From the moment he chose to run for President, Trump has embraced the new shale revolution in the U.S. as a major contributor to the country’s economic growth and energy independence.

Increasingly, Trump has become the top promoter for increasing exports of U.S. Liquid Natural Gas (LNG) to world markets. He openly threatened to place economic sanctions on Germany if it went ahead with the deal for Russia’s new Nordstream 2 pipeline, that would nearly double natural gas supplies from Russia, Germany’s largest supplier.

As most observers noted, the U.S. sanction threat was accompanied by the offer of U.S. LNG to Germany and Europe, as a replacement of Russian gas.

No doubt that Trump’s bullying offended European sensibility, but despite the German protest regarding outside interference in its domestic economic affairs, and its intention to complete the Russian pipeline, Germany is quietly building up LNG importing facilities, "as a gesture to American friends."

Most energy experts agree that it is inevitable that U.S. LNG will eventually become a component of European markets, despite its significantly higher price to Russian and Norwegian gas, if for no other reasons to keep the peace with America, Europe's largest ally, and assure Europe’s access to the U.S. market.

This will also serve to assuage the U.S. complaints about unfair trade. It matters little that the U.S. trade deficit with Germany centers on its auto industry rather than energy, if the sale of natural gas serves to reduce the U.S. trade deficit.

Related: U.S. Will Not Release Oil From SPR To Offset Iran Sanctions

The same could be said about the U.S./China trade deficit. China, the largest energy consumer, is the one country where solutions to the trade deficit is clearly at hand, involving increased U.S. LNG imports. China already has a long-term, 20-year deal to import LNG from the leading U.S. LNG company, Cheniere Energy.

China could easily reduce the amount of gas imports from variety of other suppliers (i.e., Qatar, Australia, New Guinea, Iran, Russia) and replace these with U.S. supplies. That would be a near costless transaction for China, as it is already paying other producers for natural gas and LNG supplies.

Consider the effects of a possible LNG deal could have on the trade dispute. In terms of the current deficit, China sales to the U.S. is estimated at around $350 billion, while U.S. sales to the China is around $150 billion.

Last May, the China signed a $25 billion deal for importing U.S. LNG. If we assumed that in current negotiations the two countries could strike a modest deal for another $25 billion in annual U.S. LNG sales to China, U.S. sales to China increases to $200 billion, reducing China’s surplus to $300 billion.

If that were to take place, the trade deficit would reduce to around $100 billion, and Trump would no doubt return to the election campaign trail to boast of the first U.S. trade victory over China.
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The risk to this scenario is the presumption that everyone involved really wants a solution to the trade dispute, but there is widespread suspicions that U.S. tariffs on China may be less about fair trade and more about economic warfare to contain China’s growth.

George Friedman's "Geopolitical Futures" recently noted that "The U.S. is beginning to see it [tariffs] more as a strategic opportunity to contain Chinese assertiveness than as a play to invigorate U.S. manufacturing."

On various Asian websites, there remains a stalwart band of journalists, led by Pepe Escobar, who maintain that Europe, Russia, China, and Iran will band together to thwart U.S. sanctions on Iran, and that 'Iran's oil sales will be totally unaffected. They also hold strongly to the opinion that China will not yield to U.S. threats and ultimatum.

This despite the fact that major energy companies, like Royal Dutch Shell and Total have already fled Iran in fear of US sanctions, while major countries are severely cutting Iran imports.

Sanctions against Iran will certainly reduce its exports substantially, with the worst case estimates of a loss to the markets of 1.5 million barrels of oil per day. This will also open opportunities in under supplied markets that will almost certainly be exploited by U.S. and other competitors.

Currently, Japan and India have agreed to major reductions of energy imports from Iran. Recent news has it that Sinopec, China’s largest oil and gas refiner, under threats of US sanctions, also agreed to severely cut imports from Iran. It's no secret that nearly all of Iran’s competitors, it's OPEC 'partners', will go after those under supplied markets, as will the U.S.

Some observers believe that because the upcoming election is uppermost in the minds of both U.S. political parties, a trade victory with China is extremely important to the Republican election campaign. If so, their thinking goes, a deal will result in easing tariffs with China by November.

Trump himself recently stated that he's ready to talk trade with China, but continues to add the qualifier, "not now." Many Trump watchers interpret this to mean that 'getting tough with China' plays well to Trump's base, boosts the Republican election prospects, and afterwards a trade deal is likely to be struck.

Any trade deal with China could also be used by the U.S. as a template for deals with Japan, India, and South Korea, the next largest Asian importers of natural gas. It can hardly be coincidence that, as in Europe, these energy importing countries are threatened by US tariffs over unfair trade.

However, Geopolitical Futures states that "the broad impression in China appears to be that Trump isn’t actually interested in a deal – certainly not one that China could accept – and that this is just the first major salvo in an emerging Cold War and that instead ... the world needs to get ready for a new cold war with China.

Related: Gazprom's Bid To Maintain European Energy Dominance

In a recent speech, Richard Haas, president of New York-based think tank Council on Foreign Relations stated that "...the Trump administration initially focused just on trade, “but now it’s broadening, and it almost seems as if the administration wants to have something of a cold war with China.”

What about Venezuela, a country estimated to have the largest oil reserves in the world, also laboring under U.S. sanctions? It's also a country about which the Administration has made no secret of its plans for a possible U.S. military invasion to topple the Maduro government.

Why go public with that story now, with only a little more than a month towards U.S. Congressional elections?

There is widespread speculation that this announcement may be a trial balloon, as part of the preparation for laying the ground work for an invasion aimed at bolstering Republican election prospects. To date, there has been no sign of opposition to these threats from Democrats.

Conclusion:

It's no accident that sanctions are aimed at the U.S. largest energy competitors, Russia and Iran, nor is it coincidence that the largest energy importers, Europe, China, Japan, south Korea are also under threat of U.S. tariffs or sanctions.

Instead, it clearly shows that the U.S. is using the threat of economic warfare and possible military conflict as leverage to open markets to the newest player on the world's energy market, American LNG.

If the U.S. is successful in these deals, it's likely that in future, there will be a parallel attempt to make inroads for US crude export to the very same oil importing countries, relying upon the very same LNG game plan.

By Robert Berke for Oilprice.com

[the grumpy old men] 07/10/2018 09:10

Exxon To Drill Offshore Cyrpus Despite Turkey Protests
By Tsvetana Paraskova - Oct 05, 2018, 10:00 PM CDT Offshore

ExxonMobil plans to begin drilling for oil and gas offshore Cyprus sometime this quarter, a senior executive said on Friday, while Turkey warned again on Thursday against exploration offshore Cyprus in what it says is ignoring the rights of the Turkish Cypriot people.

Turkey, which recognizes the northern Turkish Cypriot government and doesn’t have diplomatic relations with the internationally recognized government of Cyprus, claims that part of the Cyprus offshore area is under the jurisdiction of Turkish Cypriots or Turkey.

Exxon will start drilling in block 10 offshore Cyrpus by the end of the year, Senior Vice President Neil Chapman said on Friday after a meeting with the President of Cyprus Nicos Anastasiades, the press office of the president said in a statement today.

“We discussed our plans for the drilling and the exploration wells, and I informed Mr President that our plan is to drill sometime in the fourth quarter, we don’t have an exact date right now,” the press service quoted Chapman as telling reporters after the meeting.

In April last year, Exxon and Qatar Petroleum signed an exploration and production (E&P) sharing contract with the Cyprus government to start drilling in block 10 offshore Cyprus in 2018.

Exxon’s focus “now is exclusively on block 10 exploration with our partner Qatar Petroleum,” Chapman noted, when asked if Exxon would be bidding for block 7, for which Cyprus invited on Thursday international companies to bid.

Exxon hasn’t looked into any detail with regard to block 7, Chapman said.

It was the invitation to bid for a drilling license at block 7 that irritated Turkey, which issued a statement warning companies against exploration in the area.

“As it has been emphasized by our side regarding this issue, Turkey has never allowed and will never allow any foreign country, company or ship to conduct unauthorized research activities regarding natural resources within its maritime jurisdiction areas,” Turkey’s Ministry Of Foreign Affairs said.

“Turkey will continue to take necessary measures, and will maintain all initiatives and activities, including drilling exercises, with a view to protecting its rights and interests in its continental shelf,” the ministry said, adding “We invite all countries and companies that might be interested in participating in the tender to act with common sense and to duly consider the realities on the ground.”

By Tsvetana Paraskova for Oilprice.com

[the grumpy old men] 07/10/2018 09:06

Why The Oil Price Rally May Soon End
By Nick Cunningham - Oct 03, 2018, 6:00 PM CDT oil rig

Oil forecasters are falling over themselves, publishing new estimates on how high they think prices can go. The rise of Brent to $85 per barrel has forced a rethink among a long line of commodity analysts and investment banks, and the predictions for $100 oil are proliferating.

However, not everyone agrees. Barclays decided to take a contrarian approach, and went against the grain in recent note with its prediction that oil prices will begin to fall before the end of the year. “The recent increase in prices has gone too far, in our view. Although prices may continue to rise from current levels in October, the market is ripe for a correction,” the bank said in a note.

Before that, however, prices could rise in the near-term. But that may only accentuate, or at least bring on, the price correction. “The rally could go even further this month, leading US policymakers, consumers, OPEC, and Saudi Arabia to react,” Barclays said in a note.

There are several reasons why the investment bank says oil prices will fall. First, demand will “soften” at a time when supply should continue to rise. That seems to be the same fear that Saudi officials currently have, at least according to recent press reports. Saudi Arabia is hesitant to increase production now because the oil market will hit a seasonal lull this coming winter, which could take the edge off of the market.

The latest OPEC report suggests that the slowdown in demand due to seasonal factors, combined with rising non-OPEC production, could translate into a decline in the “call on OPEC” by 600,000 bpd in the first half of 2019 relative to August levels.

Saudi Arabia may unilaterally increase production in order to fine-tune the market, hoping to offset Iranian outages, but it did not want to pressure the entire OPEC+ group into increasing output. A formal increase in output may only lead to a situation of oversupply, rising inventories and another downturn in prices, Saudi officials reportedly fear.
Related: $200 Billion Saudi Solar Megaproject Might Never Happen

Moreover, it would create a situation where OPEC+ might need to agree to cut production once again at some point next year in response to the glut, and getting more than a dozen oil-producing countries to agree to any change, let alone a production cut, takes a tremendous effort. Thus, OPEC+ did nothing at its latest meeting in Algiers, expecting the market to sort itself out by early next year.

Nevertheless, the market looks rather tight over the next few months. Iran may have already lost about 1 million barrels per day in oil exports, compared to its April peak. News that China may be forced into cutting imports from Iran raises the odds that Iran could lose much more supply in the weeks ahead, forcing oil prices to move even higher as global supplies start to feel the strain.
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However, that merely increases the odds of a reaction from the U.S. government. Barclays believes that the Trump administration will either issue more waivers to countries from secondary sanctions, allowing them to continue importing Iranian oil, or absent that, the U.S. could release oil from the strategic petroleum reserve (SPR). “We expect that the White House and State Department will issue significant reduction exemption guidance before the November 4 deadline,” Barclays said. That could include India, Japan and South Korea.

Still, because confrontation with Iran is a high strategic priority for the Trump administration, and maintaining the integrity of the SPR does not seem to garner as much enthusiasm from inside the White House, it would seem that an SPR release is more likely than Iran waivers.
Related: $200 Billion Saudi Solar Megaproject Might Never Happen

Another reason why Barclays says that the current oil price rally may be overstretched is that the bank is not as skeptical of OPEC’s spare capacity as some other market watchers. They pointed to the potential restart of the Neutral Zone oil fields on the Saudi-Kuwaiti border, which is often not included in spare capacity estimates thrown around in the press. Those fields could produce as much as 500,000 bpd. Iraq too has ramped up production over the past few months, an increase that few analysts saw coming.

Finally, Barclays says the macroeconomic picture “continues to deteriorate,” with an end to global synchronous growth and turmoil in emerging markets. EM countries face a “one-two punch of weaker currencies and higher oil prices,” the bank wrote. The result could be that oil demand continues to “miss expectations.”

Barclays says oil prices could potentially rise towards $90 per barrel as the November 4 deadline for U.S. sanctions on Iran approaches, but prices decline thereafter. The banks sees Brent crude averaging just $77 per barrel in the fourth quarter, down significantly from the price today. From there, Brent continues to fall, averaging $75 in Q1 2019, $71 in Q2 2019, and just $70 in Q3 2019.

Absent a major supply disruption, Barclays says oil prices will be “anchored̶1; below $80 per barrel.

By Nick Cunningham of Oilprice.com

[adrian j boris] 06/10/2018 08:55

Billions in oil-company buybacks down the drain? Yes, Citi says

Alex Nussbaum, Bloomberg 11:01 pm CDT, Thursday, October 4, 2018

Oil storage tanks line the Port of Corpus Chrisit, Wednesday, March 7, 2018. ( Mark Mulligan / Houston Chronicle ) Photo: Mark Mulligan, Houston Chronicle

Photo: Mark Mulligan, Houston Chronicle
Image 1 of 23
Oil storage tanks line the Port of Corpus Chrisit, Wednesday, March 7, 2018. ( Mark Mulligan / Houston Chronicle )

U.S. oil drillers started the year ushering in a new era of shareholder returns with promises of billions of dollars in share buybacks. To that they added debt repurchases, then shoveled money into drilling budgets as they raced to sink more wells.

None of it mattered, according to Citigroup Inc., compared with the price they could collect for their oil.

A study of 31 exploration and production companies found the “predominant variable” for the best-performing stocks in the group this year has been the price companies realized for their barrels after adjusting for shipping costs and other factors, Citi analyst Robert Morris said in a note to clients Wednesday.

SUPPLY: Crude inventories jump

Despite a lot of earnest talk from oil executives this year about shareholder returns and fiscal discipline, little else -- not cash flow growth, production and capital-spending guidance, debt metrics, dividends or buybacks -- was a “distinguishable factor” in performance, Morris wrote.

“Oil prices reign above all,” he concluded.

“Interestingly, return of capital to shareholders has not exhibited any clear correlation since Q2 earnings kicked off,” Morris wrote. Companies that announced share repurchases as well as the three that increased dividends underperformed a Citi index tracking the sector.

“Thus far in 2018, E&Ps with higher oil-price realizations and higher oil-production mixes have generally outperformed,” Morris wrote. “No such clear pattern exists with the other operating parameters.”

[adrian j boris] 06/10/2018 08:53

Billions in oil-company buybacks down the drain? Yes, Citi says

Alex Nussbaum, Bloomberg 11:01 pm CDT, Thursday, October 4, 2018

Oil storage tanks line the Port of Corpus Chrisit, Wednesday, March 7, 2018. ( Mark Mulligan / Houston Chronicle ) Photo: Mark Mulligan, Houston Chronicle

Photo: Mark Mulligan, Houston Chronicle
Image 1 of 23
Oil storage tanks line the Port of Corpus Chrisit, Wednesday, March 7, 2018. ( Mark Mulligan / Houston Chronicle )

U.S. oil drillers started the year ushering in a new era of shareholder returns with promises of billions of dollars in share buybacks. To that they added debt repurchases, then shoveled money into drilling budgets as they raced to sink more wells.

None of it mattered, according to Citigroup Inc., compared with the price they could collect for their oil.

A study of 31 exploration and production companies found the “predominant variable” for the best-performing stocks in the group this year has been the price companies realized for their barrels after adjusting for shipping costs and other factors, Citi analyst Robert Morris said in a note to clients Wednesday.

SUPPLY: Crude inventories jump

Despite a lot of earnest talk from oil executives this year about shareholder returns and fiscal discipline, little else -- not cash flow growth, production and capital-spending guidance, debt metrics, dividends or buybacks -- was a “distinguishable factor” in performance, Morris wrote.

“Oil prices reign above all,” he concluded.

“Interestingly, return of capital to shareholders has not exhibited any clear correlation since Q2 earnings kicked off,” Morris wrote. Companies that announced share repurchases as well as the three that increased dividends underperformed a Citi index tracking the sector.

“Thus far in 2018, E&Ps with higher oil-price realizations and higher oil-production mixes have generally outperformed,” Morris wrote. “No such clear pattern exists with the other operating parameters.”

[sarkasm] 06/10/2018 06:59

Why It's Worth Adding BP Stock to Your Portfolio Right Away
October 05, 2018, 05:30:00 PM EDT By Zacks Equity Research, Zacks.com

Shutterstock photo

BP plc 's BP upbeat prospects make it a promising pick.

The company currently has a Zacks Rank #2 (Buy) and a VGM Score of A. Our research shows that stocks with a VGM Score of A or B when combined with a Zacks Rank #1 (Strong Buy) or 2 offer the best opportunities for investors.

Let's delve deeper to analyze the factors that make this British integrated energy player an attractive investment option.

The company has been gaining on a strong portfolio of upstream projects. Since 2016, BP has brought 15 key upstream developments online, including Atoll Phase 1, Shah Deniz 2 and Taas-Yuryakh oil expansion in Russia.

Apart from starting three more projects in 2018, BP is planning to bring online 10 more key upstream developments beyond 2018. All these developments are helping the British energy giant to boost production by 900 thousand barrel of oil equivalent per day (MBOE/D) by 2021.

Being a leading producer of oil and natural gas, BP is well placed to capitalize on strengthening oil prices and rising natural gas demand for clean energy needs. It is to be noted that through first-half 2018, BP's worldwide production comprised 1,267 thousand barrels per day (MB/D) of liquids and 7,352 million cubic feet per day (MMCF/D) of natural gas.

Importantly, owing to an integrated business model, the company has been steadily rewarding investors with handsome dividend yield. BP's current dividend yield of 5.2% is higher than 4.2% of the stocks belonging to the industry . Notably, over the past 10 years, the company has been consistently paying higher dividends than the broader industry.

BP's pricing chart is impressive as the stock has rallied 22.2% over the past year, outperforming the 14.1% collective gain of the stocks belonging to the industry.

Other Stocks to Consider

Other prospective players in the energy space are Shell Midstream Partners LP SHLX , Oasis Midstream Partners LP OMP and Petroleo Brasileiro S.A. or Petrobras PBR . All the stocks sport a Zacks Rank #1. You can see the complete list of today's Zacks #1 Rank stocks here .

Shell Midstream Partners has an average positive earnings surprise of 7.9% for the last four quarters.

Oasis Midstream will likely see earnings growth of 323.3% and 60.1% in 2018 and 2019, respectively.

Petrobras' bottom line beat the Zacks Consensus Estimate in three of the trailing four quarters, the average beat being 10.4%.

[waldron] 05/10/2018 17:23

Total
56.04 -0.05%


Engie
12.645 -0.47%

Orange
13.655 -0.55%

FTSE 100
7,318.54 -1.35%
Dow Jones
26,374.77 -0.95%
CAC 40
5,359.36 -0.95%


Brent Crude Oil NYMEX 84.45 -0.48%
Gasoline NYMEX 2.09 -0.93%
Natural Gas NYMEX 3.14 -1.57%



BP
588.5 -1.64%


Shell A
2,598 -2.22%



Shell B
2,635 -2.19%

[sarkasm] 05/10/2018 15:20

Shell, Siemens Gamesa and innogy back novel floating offshore wind concept

Fri 05 Oct 2018 by David Foxwell

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Shell, Siemens Gamesa and innogy back novel floating offshore wind concept
The TetraSpar has a modular layout consisting of a tubular steel main structure with a suspended keel

Floating offshore wind has received a major boost with news that oil company Shell, turbine manufacturer Siemens Gamesa Renewable Energy and energy company innogy are undertaking a demonstration project using an innovative floating foundation.

Oil major Shell, innogy and Stiesdal Offshore Technologies (SOT) have signed an investment and co-operation agreement committing them to build a demonstration project using SOT’s TetraSpar floating foundation concept.

The TetraSpar’s modular layout consists of a tubular steel main structure with a suspended keel. It is expected to offer important competitive advantages over existing floating wind concepts, with the potential for leaner manufacturing, assembly and installation processes with lower material costs. The project has a budget of approximately €18M (US$21M).

Innogy chief operating officer renewables Hans Bünting said “These are exciting times. The floating offshore wind market is evolving, but until now, floating foundations have been stubbornly expensive.

“This demonstration project will give us a better understanding of how the cost can be driven down. The industrialised approach of the TetraSpar design, combined with innogy’s experience in delivering offshore wind projects, will enable large-scale, cost-effective deployment of floating wind projects around the world.”

Shell Wind Development vice president Dorine Bosman said “This initiative could help to lower the cost of offshore wind energy while providing more options for development locations, giving access to higher wind speeds and deeper water depths. Building our offshore wind business is a key part of the Shell New Energies strategy. Investing in innovative projects such as TetraSpar gives us early access to a new technology that could help us become a leading player in this field.”

The demonstration project will use a 3.6-MW Siemens Gamesa Renewable Energy direct drive offshore wind turbine and is due to be deployed in 2019. It will be located approximately 10 km from shore in water depths of 200 m at the test site of the Marine Energy Test Centre near Stavanger in Norway.

The foundation will be manufactured and assembled in Denmark and the turbine will be installed in the port of Grenaa, from where it will be towed to site. At the site the floating structure will be moored to the seabed with three anchor lines and connected to the electrical grid.

SOT chief executive Henrik Stiesdal said “We are very excited about the prospect of carrying out the deployment and test of our full-scale demonstration project in collaboration with leading industry players. We have already benefited greatly from the dialogue with innogy, Shell and Siemens Gamesa Renewable Energy during the project planning. Their experience combined with the competencies of our manufacturing and installation partners, Welcon and Blue Power Partners will put us on the fast-track for rapid commercialisation.”

The partners will set up a company with a 33% share each for innogy and Shell with the rest held by SOT and its parent company. Siemens Gamesa is contributing to the project as a technology partner and will provide the wind turbine and required services. The partners will be part of a project team that will gain detailed, practical insights into the construction, installation and operation of the TetraSpar concept as well as detailed performance data.