OEF REVIEW:U.S. monthly crude oil production in December 2015 continued to decline, as oil production reached its lowest level since November 2014. Production also declined from year-ago levels for the first time in more than four years.
OEF REVIEW:“We expect legacy assets such as Gorgon will drive long-term growth and create shareholder value for decades to come,” said Chairman and CEO John Watson. “The long-term fundamentals for LNG are attractive, particularly in the Asia-Pacific region, and this is a significant milestone for all involved.”
OEF REVIEW:U.S. Gulf of Mexico (GOM) crude oil production is estimated to increase to record high levels in 2017, even as oil prices remain low. EIA projects GOM production will average 1.63 million barrels per day (b/d) in 2016 and 1.79 million b/d in 2017, reaching 1.91 million b/d in December 2017. GOM production is expected to account for 18% and 21% of total forecast U.S. crude oil production in 2016 and 2017, respectively.
OEF REVIEW:Saudi Arabia and Russia have taken the first step to stem the slide in oil prices. There’s just one problem: If they are successful — and that’s a big if — the wildcatters of Texas, Oklahoma and North Dakota are waiting to pounce. With 4,000 wells drilled and just waiting for better prices to be brought on stream, the so-called fracklog could act as a cap to any oil rally, industry executives, traders and OPEC officials said. Worse, a price recovery could effectively bail out dozens of shale companies now struggling with $30-a-barrel oil, allowing them to return to the capital market.
OEF REVIEW:Drilling activity in the deepest parts of the world’s waters can yield tremendous oil volumes, but exploring thousands of feet below sea level is also the most expensive of energy’s high tech endeavors. And in an environment of $30 oil, investment in deepwater production is pouring out. Beyond a rebound in oil prices, recovery of the deepwater sector could take an additional two years, Sajjad Alam, senior vice president at Moody’s Investors Service told Rigzone.
OEF REVIEW:Mexico President Enrique Peña Nieto said his nation’s energy reform stemmed from an intense, collective effort early in his administration. Mexico’s energy reform legislation was passed in 2014 and will continue to be implemented on a timely basis. “With this reform, the Mexican state retains ownership of the underground hydrocarbons,” and opens up the hydrocarbon value chain to outside investors, Peña Nieto said. “It is being implemented with success and faster than expected.”
OEF REVIEW:The current crash in oil prices is sowing the seeds of a powerful rebound and a potential supply crunch by the end of the decade, but the prize may go to the US shale industry rather Opec, the world’s energy watchdog has predicted. America’s shale oil producers and Canada’s oil sands will come roaring back from late 2017 onward once the current brutal purge is over, a cycle it described as the “rise, fall and rise again” of the fracking industry. “Anybody who believes the US revolution has stalled should think again. We have been very surprised at how resilient it is,” said Neil Atkinson, head of oil markets at the International Energy Agency.
OEF REVIEW:“In this post we first confirm the positive correlation between stocks and oil prices, noting that it is not just a recent phenomenon. We then investigate the hypothesis that underlying changes in aggregate demand explain the oil-stocks relationship. We find that an underlying demand factor does account for much of the positive relationship, and that if, in addition, we account for shifts in market risk preferences, we can explain still more. However, even with these two factors included, a significant part of the oil-stocks correlation remains unexplained.”
OEF REVIEW:Iraq was the second-leading contributor to the growth in global oil supply in 2015, behind only the United States. Crude oil production in Iraq, including fields in the Kurdistan Region of northern Iraq, averaged 4.0 million barrels per day in 2015, almost 700,000 barrels per day above the 2014 level. Iraq is the second-largest oil producer in the Organization of the Petroleum Exporting Countries (OPEC) and accounted for about 75% of total OPEC production growth in 2015.
OEF REVIEW:The Nikkei spoke with Takashi Tsukioka, CEO at Idemitsu Kosan, a major Japanese oil refiner, about the future direction of crude prices, the outlook for shale oil players and industry realignments in Japan.
OEF REVIEW:With a rainy day “reserve fund” of only 4.5 percent of GDP and scant access to international financial markets, Russia urgently needs a fiscal Plan B. In January, the authorities announced additional cuts amounting to about 1 percent of GDP. More important, the government will try to raise another 1.5 percent of GDP — 1 trillion rubles ($13 billion) — by privatizing state-owned firms, including “crown jewels” such as Rosneft (Russia’s largest oil company), the diamond monopoly Alrosa and the flagship airline Aeroflot.
OEF REVIEW:The jump in imports, if realised, could see China overtaking the United States as the world’s largest crude importer after China’s average crude imports hit a record 6.71 million barrels per day in 2015, up 8.8 percent from a year ago. China is expected to import 860,000 barrels per day more crude this year, Yao Li, chief executive of SIA Energy said at a Platts conference.
OEF REVIEW:“For the first time, we are unbundling the subset of the NNPC (Nigerian National Petroleum Corporation) to 30 independent companies with their own managing directors,” Emmanuel Ibe Kachikwu, also minister of state for petroleum who was appointed head of NNPC last year to overhaul the company, told a conference in Abuja.Nigerian President Muhammadu Buhari has made reforming the nation’s oil sector a priority as a slump in oil prices has hammered the economy, since crude exports account for around 95 percent of foreign earnings.
OEF REVIEW:Although countries saying they’ll freeze oil production account for 25% of global supply, conditions of their Feb. 16 agreement and history offer little reason to expect much change in an oversupplied market. Of four countries agreeing not to raise production beyond January levels, Saudi Arabia, Russia, Qatar, and Venezuela, only one has enough spare capacity to do so meaningfully. Saudi Arabia produced at an average rate of 10.19 million barrels a day in January, according to the International Energy Agency.
OEF REVIEW:Ali al-Naimi, Saudi Arabia’s oil minister, called the agreement by the four producers “simply the beginning of a process to assess in the next few months and decide whether we need other steps to stabilize and improve the market.” Analysts noted, however, that the agreement still needs the cooperation of Iran and Iraq.
OEF REVIEW:Ministers from Saudi Arabia and Russia met in Doha along with their counterparts from Venezuela and Qatar. Saudi Arabian oil minister Ali al-Naimi said: “Freezing now at the January level is adequate for the market. We don’t want significant gyrations in prices, we want to meet demand. We want a stable oil price.”
OEF REVIEW:The world’s two most powerful oil producers have reached a tentative agreement to freeze oil production at its current levels, dashing hopes of a supply cut for the world’s glutted market. Meeting in Doha, Russian, Venezuelan, Qatari and Saudi Arabian oil ministers reached a deal to not exceed production from their January levels, but only if it was followed suit by other producers such as Iran and Iraq. Forward prices for Bent crude plunged by as much as 3 percent on the news to $33.68 a barrel, reversing days of gains.
OEF REVIEW:Tight oil production in the United States increased from 2007 through April 2015, based on estimates in Energy Information Agency’s (EIA) Drilling Productivity Report, and accounted for more than half of total U.S. oil production in 2015. Tight oil growth has been driven by increasing initial production rates from tight wells in regions analyzed in the report. As drilling techniques and technology improve, producers are able to extract more oil during the initial months of production from new wells.
OEF REVIEW:The United Arab Emirates’ energy minister has said that OPEC was willing to cooperate on an output cut. Many traders were skeptical noting that Venezuela and Russia had tried in vain to stir Saudi Arabia and other major producers into agreeing to cuts, but after a price slump that has taken crude prices to more than 12-year lows, many of these traders were inclined to believe that a rebound was due sooner or later. “We expect declining U.S. oil production, in particular, to drive the oil price back up to $50 per barrel by the end of the year,” Frankfurt-based Commerzbank said in a note.
OEF REVIEW:Venezuela President Nicolas Maduro moved to increase the military’s involvement in the country’s oil and mining industries with the creation of a new state company that will report to the Defense Ministry. The military company, “Camimpeg”, was authorized to participate in a range of oil services and mining activities including the maintenance of wells and drilling rigs, transport and the commercialization of chemicals.
