Page 9 - NorthAmOil Week 12 2022

NorthAmOil POLICY NorthAmOil

FxPro: US restrictions on Russian oil

imports could benefit Mexican economy

NORTH AMERICA CYPRUS-BASED FxPro Group Ltd has said that “Now the replacements [for Russian crude]
it expects the Mexican economy to reap benefits will be Canadian and Mexican, which should
in the medium term from the US government’s benefit production levels and support [the Mex-
decision to ban imports of Russian crude oil and ican peso’s] strength through higher export rev-
natural gas. enues,” it said.
In a market comment published on March FxPro also noted, though, that the Mexican
18, FxPro pointed out that restrictions that peso had already realised some gains in the short
the administration of President Joe Biden has term, even though it had not had enough time to
imposed on Russian oil imports in response see US refiners make a shift toward buying Mex-
The ban on Russian oil to the invasion of Ukraine were likely to leave ican crude oil.
imports could lead US US refineries short of the heavier crudes they “The Mexican [peso] has added more than
refiners to look for other frequently use for feedstocks. The plants have 4% over the last nine days against the US dollar ...
heavier crude grades, traditionally used extra-heavy crude or syn- At first glance, this rally does not seem logical, as
and both Mexico and thetic blends from Venezuela, but these have oil [prices have lost ground] for most of this time,
Canada are well- been unavailable since early 2019 because of hurting oil-exporting Mexico. Nevertheless, in
positioned to meet the the sanctions introduced by the administra- the short term, the [peso] has been steadily gain-
shortfall. tion of former President Donald Trump, it ing ... following signs of a recovery in demand for
noted. risky assets in global markets,” it said.
Russian grades have helped these refiners FxPro did not say whether it expected
compensate for the loss of Venezuelan feedstock, Mexico’s government to adhere to its pre-
but now another substitute will be needed, and viously announced timetable for reducing
Canada and Mexico are the most likely candi- crude oil exports to zero by the end of 2023 or
dates, FxPro said. This is likely to benefit Mexico’s move forward with more recent suggestions
oil industry – and Mexico’s national currency – to continue delivering oil to world markets for
in the medium term, it commented. a longer time.™

PROJECTS & COMPANIES

Hess to strongly consider

fourth rig for North Dakota

NORTH DAKOTA HESS has revealed it is giving “strong considera- last week that it made the decision to pay about
tion” to adding a fourth drilling rig this year to its $325mn to remove Brent $105 call options and
Bakken operations in North Dakota if oil prices WTI $100 call options in an attempt to profit
remain high. Such a move would push its Bakken from soaring oil prices.
production to 200,000 barrels per day (bpd). Amid calls for the US to increase crude pro-
West Texas Intermediate (WTI) crude was duction as Western countries consider – but thus
trading above $113 per barrel on March 25, far hold back from – banning imports of Russian
and the spike in prices has led the company to oil, US tight oil output is anticipated to rise in
consider ramping up drilling. However, despite April. According to the US Energy Information
considering adding a fourth rig, Hess executives Administration (EIA), oil production from the
have said that the company’s priority remains country’s seven largest shale regions is forecast
increasing shareholder returns rather than to rise by 117,000 bpd between March and April
expenditure on production growth. to reach a total of 8.71mn bpd. If this plays out, it
“As our portfolio becomes increasingly cash would represent the US’ largest increase in shale
flow positive, you have our commitment that we production since March 2020.
will prioritise significant increases in our cash However, supply chain and inflation con-
returns to shareholders,” Hess’ CEO, John Hess, straints are expected to hamper US oil production
said at the Scotia Howard Weil Energy Confer- growth even as prices remain at multi-year highs.
ence this week. Industry experts project that only single-digit
Hess expects to boost cash returns in the percentage growth is likely this year. The EIA
future via increases to its regular dividend, as estimates that output will hit 12mn bpd in 2022,
well as share buybacks. The company revealed up from 11.6 million bpd in December 2021.™

Week 12 24•March•2022 www. NEWSBASE .com P9