Page 9 - NorthAmOil Week 34 2022
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NorthAmOil POLICY NorthAmOil
Prince Abdulaziz: OPEC ready to
make cuts to correct price drop
GLOBAL SAUDI Arabia’s Energy Minister and OPEC because without sufficient liquidity, markets
kingpin Prince Abdulaziz bin Salman Al Saud can’t reflect the realities of the physical funda-
said this week that the OPEC+ group is prepared mentals in a meaningful way and can give a false
to reduce oil output as a means to correct the sense of security at times when spare capacity is
recent fall in prices. severely limited and the risk of severe disrup-
Speaking to Bloomberg, he said the group tions remains high.”
had shown that it was prepared to act to coun- Noting that the paper and physical markets
teract market volatility and was committed to do are becoming increasingly disconnected, he
so again if required. added that the market is “in a state of schizo-
Noting that oil futures have dropped owing phrenia”, with “erroneous signals” being sent
to perception rather than physical shortages, “at times when greater visibility and clarity and
Prince Abdulaziz said: “The paper oil market well-functioning markets are needed more than
has fallen into a self-perpetuating vicious cir- ever to allow market participants to efficiently
cle of very thin liquidity and extreme volatility hedge and manage the huge risks and uncertain-
undermining the market’s essential function of ties they face.”
efficient price discovery, [which makes] the cost Having announced a quota increase of just
of hedging and managing risks for physical users 100,000 barrels per day (bpd) following its latest
prohibitive.” meeting, OPEC and its deal with non-member
Concerns about Chinese demand and reces- producing nations have come under increasing
sion in the West have seen crude prices fall by scrutiny. Prince Abdulaziz said that the group
around $25 per barrel in recent weeks, down by would begin working on a new deal “beyond
more than a third since the early year highs of 2022 which will build on our previous experi-
the mid $140s. ences, achievements and successes”, seeking to
The minister said: “This is detrimental prevent market volatility.
PROJECTS & COMPANIES
Shell, Energy Transfer sign Lake
Charles LNG offtake agreement
LOUISIANA SHELL and Energy Transfer have signed a LNG market had taken a knock owing to the
20-year sales and purchase agreement (SPA) for coronavirus (COVID-19) pandemic.
2.1mn tonnes per year (tpy) of LNG produced Energy Transfer anticipates reaching a final
at the planned Lake Charles LNG project in investment decision (FID) on Lake Charles by
Louisiana. the end of this year. The company also notes on
The move represents the latest in a series of its website that Lake Charles LNG is the only
binding offtake agreements signed by Energy brownfield project among the proposed US LNG
Lake Charles is the Transfer over the past few months. The Lake terminals at the pre-FID stage, which it believes
only brownfield project Charles LNG project, which involves conversion gives the development a cost advantage.
among the current crop of an existing import facility to exports, had not “We believe that Lake Charles is the most
of pre-FID US LNG been viewed as a development that was likely to competitive LNG project on the Gulf Coast,”
export proposals. move forward soon until recently, when rising stated Energy Transfer LNG’s president, Tom
LNG demand revived its fortunes. As a result, Mason. “And we are particularly pleased that
Energy Transfer has now signed six offtake deals one of the most prominent LNG industry par-
covering nearly 8mn tpy of output from the facil- ticipants has selected Lake Charles LNG as a
ity, or almost half of the project’s planned capac- supplier. We have had a long-standing relation-
ity of 16.45mn tpy. ship with Shell and its predecessor BG Group, as
The latest SPA is also notable because Shell a customer of our regasification facility at Lake
was previously a partner in Lake Charles LNG Charles. It is great to have Shell re-engaged in the
but pulled out around two years ago, when the project as an LNG offtake customer.”
Week 34 25•August•2022 www. NEWSBASE .com P9
