Page 13 - MEOG Week 13

MEOG
neWs In brIeF
MEOG
Meanwhile in the Russian capital, officials have indicated that a new OPEC+ supply
pact would only be possible if other countries joined the group. Even if the group was enlarged, the main factor that has undermined OPEC+ efforts to rebalance the market since 2017 has been rising US shale oil production. It is very unlikely that the US would ever consider enforcing a cap on its output. And such a move likely could not be implemented anyway, given that the country’s shale industry consists of hundreds of individual operators.
This said, Washington is considering intervening in the supply war. This could potentially involve using diplomacy with Saudi Arabia and the threat of sanctions with Russia to force both countries to cut their production.
Norwegian consultancy Rystad Energy estimated on March 30 that efforts to combat the coronavirus would cause a loss of 16mn bpd to global oil demand. S&P Global Platts Analytics predicted the same, along with a year-on-year drop of 4.5mn bpd in 2020 as a whole. The world’s oil consumption averaged 100.5mn bpd in 2019.
Others are forecasting an even sharper drop.
“Cars not on the road, aeroplanes not in the air, factories not working, people not going to work. We see, in this month of
April that’s coming, what could be a 20mn bpd decline in oil demand,” IHS Markit’s vice-president Dan Yergin told CNBC on March 30. “It’s unprecedented. That’s six times larger than the biggest downturn during the financial crisis period [in 2008].”
Platts believes Brent could be trading at as low as $12 per barrel in May, but “prices could easily dip into the single digits, whatever it takes to get significant supply off the market and quickly.”
The unprecedented downturn is set to cause global upstream capital spending to plummet by up to $100bn this year, or around
17%, Rystad wrote this week, from $546bn in 2019. In a low-case scenario where Brent averaged $25 per barrel this year, investment could drop by around $165bn, it warned.
“As companies are now losing solid oil market ground for a second time in recent years, it will be far more challenging to act quickly and reach the same high level of investment revision without taking a heavy toll on E&P’s performance,” Rystad analyst Olga Savenkova said.
bnI
Iraq seen boosting oil
output in April in spite of
coronavirus
OPEC’s second-biggest producer plans to boost oil output in April, as the demise of a global production-cuts agreement frees it up to pump at will.
Iraq plans to raise output by about 200,000 barrels a day, reaching 4.8 million barrels a day in average production, according to a person with knowledge of the matter. The country would join Saudi Arabia, Russia
and others in adding more barrels to a sated market amid a price war – even as the coronavirus saps global demand.
Iraq will ship 3.6 million barrels a day in April, using its pipelines at maximum export capacity, the person said, asking not to be identified because the information isn’t public. By comparison, Iraq’s exports for March averaged 3.4 million as of Sunday.
The nation sees no constraints on its April shipments but may face issues if the pandemic persists and if customers’ storage tanks become full, the person said.
Iraq’s oil ministry didn’t immediately respond when asked to comment.
The Organization of Petroleum Exporting Countries failed earlier in March to persuade
Russia to join it in making deeper cuts in output. The collapse of their coalition, known as OPEC+, has led to an oil-price war, and several producers are poised to uncork
a torrent of new supply once their cuts agreement expires at the end of the month.
The relative shares of Iraq’s sales to Asia, Europe and U.S. haven’t been affected by
the coronavirus. Asia is still Iraq’s largest regional market, and China remains its biggest single buyer, accounting for 800,000 to 900,000 barrels a day in March exports. Some refineries in China are increasing their processing as life starts returning to normal in some cities there, according to the person.
Iraq so far isn’t planning to fill storage tanks at the regional trading hub of Fujairah in the United Arab Emirates, the person said. bloomberG
Gas
Explosion in Turkey
damages natural gas
pipeline from Iran
An explosion in eastern Turkey Tuesday damaged a natural gas pipeline and halted gas flows from Iran, Turkey’s state-run news agency reported.
The explosion occurred in the town of Dogubayazit, near the Gurbulak border gate with Iran, Anadolu Agency reported. Flames caused by the explosion could be seen from nearby villages before the fire was extinguished.
The agency said the cause of the explosion was under investigation.
Iran’s state-run IRNA news agency quoted National Iranian Gas Co. gas dispatching director Mahdi Jamshidi Dana as saying authorities suspected the Kurdistan Workers’ Party, or PKK, likely attacked the pipeline.
Kurdish militants belonging to the outlawed PKK have targeted oil and gas pipelines from Iraq and Iran as part of their more than three-decade old campaign for self- rule in southeast Turkey.
IRNA said previous attacks required up to four days of repair before gas shipments could resume.
aP
Week 13 01•April•2020
w w w . N E W S B A S E . c o m
P13