Page 13 - MEOG Week 12

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Energy Department to send
adviser to Saudi amid oil
tensions
A senior adviser to Energy Secretary Dan Brouillette will be reassigned to Saudi Arabia as the country’s increased oil production is contributing to decreasing prices in the US.
An Energy Department official confirmed to The Hill that Victoria Coates will be
based in Saudi Arabia to make sure that the department has additional presence in the region. The official added that Coates’s new assignment had been in the works for some time and that it is unknown when she will start. Reuters first reported that Coates would be appointed as special energy representative to Saudi Arabia.
Brouillette recently told Bloomberg TV that the idea for Saudi Arabia to leave OPEC and form an alliance with the U.S. has been floated.
“There are many, many ideas that are floated around the policy space. That is one of them. I don’t know that that’s going to be presented in any formal way,” he said.
US oil prices have plunged in recent weeks amid decreased demand due to the coronavirus and an increase in Saudi output following a dispute with Russia.
Coates recently joined the Energy Department after service as President Trump’s deputy national security adviser.
The White House said in February that plans for her to join the Energy Department had been ongoing “for several weeks”
and rejected rumours that Coates is the anonymous person who wrote a New York Times op-ed and subsequent book critical of President Trump.
the hILL
ComPanIes
Shell cuts 2020 spending
by $5bn, suspends share
buyback
Royal Dutch Shell will lower spending by
$5 billion and suspended its vast $25 billion share buyback plan in an effort to weather the recent collapse in oil prices, it said on Monday.
The Anglo-Dutch oil major said it would reduce capital expenditure to $20 billion
or below from a planned level of about $25 billion while seeking to reduce operating costs by an additional $3 billion to $4 billion over the next 12 months.
The cuts are expected to boost Shell’s cash generation by between $8 billion and $9 billion on a pretax basis. Shell’s shares were down 3.5% in early London trading, against 3% for the broader European energy sector.
Oil prices have crashed by more than 60% since January, hit by global demand destruction because of the coronavirus pandemic and a price war between top producers Saudi Arabia and Russia after this month’s collapse of a supply pact between the Organization of the Petroleum Exporting Countries (OPEC) and its allies.
The Shell cuts mirror moves by rivals such as Exxon Mobil, Chevron, BP and France’s Total, who have all announced plans for sharp reductions in spending.
Shell CEO Ben van Beurden in January said that the company requires $20 billion
of its capital spending to sustain operations
at current output levels, with additional spending dedicated to growing its business, including $2 billion to $3 billion for building up its power and low-carbon energy business. All of Shell’s business segments are reviewing spending to achieve the targeted cuts, a company spokeswoman said.
“The combination of steeply falling oil demand and rapidly increasing supply may
be unique, but Shell has weathered market volatility many times in the past,” van Beurden said in a statement.
Even before the coronavirus outbreak, Shell faced weaker revenue because of slowing demand for petrochemicals, which led it to slow its $25 billion three-year share buyback program late last year.
Shell has so far purchased $15.5 billion
of shares since the buyback program started in July 2018, it said. “We will continue to review the dynamically evolving business environment and are prepared to take further strategic decisions and consider changes to the overall financial framework as necessary,” the company said.
ADNOC tells contractors
it plans cost cuts after oil
price crash
Abu Dhabi National Oil Company (ADNOC) has notified contractors and suppliers that
it will review existing deals to find ways to
cut costs due to the steep slide in oil prices, according to three industry sources and a letter seen by Reuters.
The benchmark Brent oil price has more than halved in value since the start of the year, trading around $28 a barrel on Tuesday, driven down by the impact of the coronavirus and the end of supply restraint by OPEC
and Russia. “While our corporate strategy currently remains unchanged, we remain focused on delivering our important growth projects and are proactively identifying opportunities for cost optimisation across the ADNOC group,” the ADNOC letter said.
“Our procurement function will, in the coming days, reach out to you to begin
a comprehensive review of your existing engagement with ADNOC with the goal
of identifying cost savings,” the letter dated March 17 said. The letter was sent to many companies dealing with ADNOC including firms involved in oil and technical services, engineering, project services and drilling, the sources said.
ADNOC is the state-run oil company of Abu Dhabi, the wealthiest emirate in the United Arab Emirates.
“ADNOC is engaging with our partners and suppliers as we responsibly progress
our projects. We are focused on driving performance, efficiency and value across our portfolio in response to market conditions,” an ADNOC spokesman said.
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