Page 9 - Euroil Week 19 2020
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EurOil COMMENTARY EurOil
under cuts mandated by the government to sup- port global efforts to rebalance the market, fur- ther draining funds.
In contrast, revenues from the rest of the economy are anticipated to stay firm at NOK1.11 trillion, only 1% lower than in 2019. Looking ahead,Norwayseesitseconomyreboundingby 4-7% in 2021.
Exiting coal
Norway’s soverign wealth fund, worth around $190,000 for every Norwegian man, woman and child, invests proceeds from the oil indus- try in foreign stocks, bonds and property. By reducing its size by 4.2%, Norway will be exceeding its self-imposed cap of 3% in annual withdrawals.
Oslo has taken the opportunity provided by the withdrawal to sell some coal assets that it promised to divest from last year amid growing environmental pressure.
Norges Bank Investment Management, which manages the fund, said early on May 13 that it had sold its shares in Glencore, Anglo American, RWE, Sasol and AGL Energy. Under
guidelines introduced last year, the fund cannot invest in companies that derive at least 30% of their income from thermal coal, base at least 30% of their operations on thermal coal, extract more than 20mn tonnes per year (tpy) of thermal coal, or have a coal-fired generation capacity exceed- ing10,000MW.
The fund held a 2.4% stake in Anglo Ameri- can, a 1.2% share in Glencore and a 0.6% interest in RWE at the end of 2019. Its stocks in compa- nies not compliant with its new investment rules were worth a total of $1.6bn at that time. Based on the same rules, it has placed BHP Group, Vis- tra Energy, Enel and Uniper on an observation list.
Norges Bank added that the fund was also excluding four Canadian oil companies on account of the volume of greenhouse gas (GHG) emissions they produce, marking the first time it has blacklisted a firm on that basis. Canadian Natural Resources, Cenovus Energy, Suncor Energy and Imperial Oil were excluded for “acts or omissions that on an aggregate company level lead to unacceptable greenhouse gas emissions,” it said.
PIPELINES & TRANSPORT
Total reports 27% increase in LNG sales
FRANCE
Total attributed the growth to the ramp- up of production at Russia’s Yamal LNG.
FRANCE’S Total announced as part of its first-quarter results for 2020 that its LNG sales had increased by 27% year on year. The com- pany reported sales of 9.8mn tonnes of LNG in the first quarter of 2020, compared with 7.7mn tonnes a year ago. However, the latest figure marked a sequential decline from 10.6mn tonnes in the fourth quarter of 2020, in a potential sign of a looming slowdown.
Total’s results showed that sales from the company’s equity production rose both y/y and sequentially, reaching 4.7mn tonnes, up from 3.8mn tonnes in the first quarter of 2019 and 4.2mn tonnes in the fourth quarter. This equity production can be sold by Total or its joint ven- ture partners, the company noted. Meanwhile, sales by Total alone, including both from equity production and from third-party purchases, rose 30% y/y from 6.0mn tonnes to 7.8mn tonnes, but fell sequentially from 9.6mn tonnes.
The French company attributed the y/y increase in its sales to the ramp-up of produc- tion at Russia’s Yamal LNG and Australia’s
Ichthys LNG, as well as the start-up of the first two trains at Cameron LNG in the US. Its LNG production rose 7% y/y, Total said, adding that this was “essentially” linked to the ramp-ups at Yamal and Ichthys.
Resilient sales prices for LNG and the increased use of regasification capacity in Europe, as well as the “strong performance of trading activities” also contributed to the rise in LNG sales, the company added.
Despite the first-quarter growth in LNG production and sales, however, Total warned of challenges ahead as the market remains over- supplied with the super-chilled fuel in the face of depressed demand. The company noted that it anticipated deferments in uplifts of LNG during the second and third quarters of 2020, adding that the oil price decline would negatively affect long-term LNG contract prices from the second half of the year.
Total’s CEO, Patrick Pouyanne, said the com- pany was considering cancelling some LNG car- goes in the summer in order to limit losses.
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