Oil & Energy
Global Energy Advisory
Saudi Arabia was in the spotlight this week, after a string of arrests on corruption allegations and muscle flexing in the direction of Iran. The so-called anti-corruption sweep toppled former and current ministers and several members of the Saudi royal family, sparking worry about a possible destabilisation in OPEC’s largest oil producer.
It has emerged in the meantime, however, that the operation might be primarily focused on money-gathering: to date, some $800 billion in assets of the people arrested have been frozen by the government and some observers have suggested the money will become state property, to go into propping up the government coffers.
At the same time, Saudi Arabia is baring its teeth at Iran, accusing it of a direct military attack after earlier this week the Iran-backed Houthi rebels in Yemen fired a missile at Riyadh, which the Saudi anti-missile system intercepted. The White House is backing the Saudis in their claims against Iran. Tehran has said the missile attack came in response to Saudi intervention in Yemen. This intervention, initiated two years ago, is a heavy load on Crown Prince Mohammed.
All these events have been bullish for oil prices but the latest from Saudi Arabia may have an opposite effect. Satellite imaging services provider Orbital Insights has released data suggesting Saudi Arabia has been lying about the state of its crude oil inventories. While Riyadh has been reporting a decline in these since early 2016, Orbital Insight data suggested a slight increase.
That data only comes from storage tanks on the ground, while Saudi Arabia also stores crude abroad, at foreign ports, and underground tanks. If stockpiles declined there then the Orbital data is irrelevant. If the Orbital data does indeed show cheating on the numbers, the OPEC production cut deal could well be dead in the water.
Deals, Mergers And Acquisitions
• French Total has bought the LNG exploration and production assets of Engie for $1.45 billion. The assets include a liquefaction plant in Louisiana, a number of long-term sales and purchase agreements, a fleet of LNG carriers, and access to re-gasification terminals in Europe. The deal also involves an additional consideration of $500 million if oil prices improve in the next few years.
• Australian Elk Petroleum has finalised the acquisition of the Greater Aneth oil filed in Utah, for a total $160 million. The seller is Resolute Energy Corp, which had a 63 per cent stake in the field, which is among the biggest CO2 enhanced oil recovery projects in the country. Its remaining recoverable reserves after a 30-year productive life are about 300 million barrels.
• China Energy Investment Corp. has signed preliminary agreements to invest $83.7 billion in U.S. LNG storage, power generation, and chemical production projects. The investment will be focused on West Virginian and was agreed during President Trump’s visit to China as part of his Asian tour.
• Noble Energy has agreed to sell 30,200 acres in the Denver-Julesburg Basin to SRC Energy for $608 million. The assets produce an average 4,100 bpd of oil equivalent from 600 drilling locations.
• Anadarko is selling its Moxa gas field in Wyoming for $350 million. The field’s output has been in decline since last year, with peak production at 96 million cubic feet daily. This has now, a year later, fallen to 72 million cubic feet daily. The company did not mention the name of the buyer.
Tenders, Auctions And Contracts
• Mexico’s tender for an oil and gas marketing firm was declared void this week, as it failed to attract any bids. The government organised the tender to pick a marketer that will sell the oil and gas produced under new contracts. Until 2013, when Pemex had a monopoly of the Mexican oil and gas market, the marketing of Mexican oil and gas was the charge of a Pemex unit, P.M.I. Comercio Internacional.
• The state oil companies of Iraq and Iran are discussing joint oil field development in Iraq, local media reported-two days after news of another ongoing negotiation concerning the possibility of shipping crude oil from Kirkuk fields to an Iranian refinery.
Discovery And Development
• China is preparing to launch the world’s largest offshore drilling rig in the South China Sea, to explore for gas hydrates, a potentially promising source of energy of which there may be vast reserves, according to scientific investigations. The Blue Whale 2 is a floating platform and can operate in 11,000 feet of water. What’s more, it can drill at depths of 50,000 feet, which is unprecedented.
Source: Oilprice Report for 10/11/17.
• Nigerian Oranto Petroleum has started exploration activities in South Sudan in partnership with geophysical survey services provider BGP. The Nigerian company has pledged $500 million for the exploration project, which contains an oil and gas block with reserves estimated at over 3 billion barrels of crude oil.
• Shell has started the construction of a $6-billion petrochemical complex in Pennsylvania, whose main feedstock will be natural gas form shale plays in the area. The complex will include three polyethylene plants with a combined annual capacity of 1.6 million tons, plus a steam cracker with a capacity equal to that of the polyethylene plants.
• UK-based Tower Resources plans to resume its exploration activities in Cameroon after a $2.76-million capital injection. The company is exploring for oil in the Thali license area, which has estimated oil-in-place resources of 39 million barrels. Drilling could begin as soon as next year, so the company can take advantage of the low prices for oilfield services while they last.
Regulatory Updates
• The chairwoman of the Senate’s Energy and Natural Resources Committee, Lisa Murkowski, has released a bill that would open the Alaska Arctic National Wildlife Refuge to oil and gas drilling if passed. The bill envisages at least two large-scale lease sales over the next ten years, spanning a minimum of 400,000 acres each. Surface development, however, should not exceed 2,000 acres, according to the bill. Environmentalists are unhappy about the legislation, arguing that recent leases sales in the North Slope have failed to yield any significant finds.
Politics, Geopolitics & Conflict
• The Niger Delta Avengers have announced an end to the ceasefire they had agreed with the Nigerian government and now once again oil infrastructure is fair game for the militant group despite calls from local community chiefs for its members to lay down their arms.
• Protests from local communities continue in Peru and are likely to continue to affect all natural resources industries present in the Andean country. Late last month, indigenous villagers ended a 43-day protest that had halted production in Peru’s largest oil block after signing a deal with the government. Protesters demander cleaning up oil pollution and from government to commit to including tribes in talks on long-term oil drilling plans, and the government accepted the terms. It is not announced why the protests were renewed. Oilfield in question, Block 192 is operated by Canadian Frontera Energy Corp but has not produced any oil from it since three indigenous tribes seized oil wells in mid September.
• The latest offshore tax haven leak, the Paradise Papers, could cause a headache for Glencore as they reveal the company hid its ownership stake in SwissMarine Corporation when it was negotiating its takeover of XStrata. Also, according to leaked documents, Aberdeen, Scotland-based Ithaca Energy is said to have set up a shell company in Bermuda in 2012 to purchase its share in a $50-million North Sea oil production platform.
Traders have not been this bearish on oil in months or so bullish on United States natural gas in years.
The latest data on money managers’ positioning in the WTI and Brent crude and U.S. natural gas futures showed two contrasting trends—speculators are betting that oil prices would remain low or go even lower while increasing the bets that natural gas prices would continue marching higher.
So far this year, geopolitical and supply and demand factors have been increasingly bearish for the oil price outlook and increasingly bullish for natural gas prices.
In the oil market, hedge funds and other portfolio managers have been slashing their bullish bets since the end of January, when the U.S. sanctions on Russia’s oil trade were the primary bullish driver of managed money to bet on a tightening market.
With U.S. President, Donald Trump, now in office, the sentiment has quickly soured amid the president’s insistence on lower oil prices, his efforts to broker an end to the war in Ukraine, and – most of all – the enormous uncertainty about on-and-off tariffs and tariff threats and their potential impact on the American economy.
As a result, market participants are preparing for lower oil prices, even amid expectations of declining oil supply from Iran and Venezuela due to President Trump’s hawkish policy toward these OPEC producers.
Speaking of OPEC, the wider OPEC+ group has just said it would begin increasing supply as of April, adding further downward pressure on prices.
Faced with all these bearish drivers, money managers have been reducing their bullish bets on crude oil futures, with the U.S. WTI Crude hitting the lowest net long position – the difference between bullish and bearish bets – in 15 years at the end of February.
In the week to March 4, the latest reporting week with data released on March 7, speculators bought WTI amid a major selloff in all other commodities except for U.S. natural gas.
The net long in WTI rebounded from the 15-year low, but it wasn’t because the market suddenly started betting on higher prices going forward. The rise in WTI buying and the net long was the result of short covering in the U.S. crude futures contract.
In Brent, hedge funds cut their bullish-only bets in the week to March 4 for the biggest decline in longs since July 2024.
Unlike in crude oil, money managers have become increasingly bullish on U.S. natural gas after inventories dipped this winter to below the five-year average as demand surged in the coldest winter for six years.
The net long in natural gas further swelled in the week to March 4, as the number of new bullish bets was four times higher than the new short positions.
“Natural gas continues to benefit from rising demand, both domestically in the US and towards exports via LNG,” Ole Hansen, Head of Commodity Strategy at Saxo Bank, said, commenting on the latest Commitment of Traders report.
At the start of the winter heating season in November, U.S. natural gas inventories were higher than average for the time of the year as America entered the season with stocks at their highest level since 2016.
These stocks, however, were quickly depleted during the coldest winter for six years, with demand for space heating and power generation soaring. A month before the end of the winter heating season, U.S. natural gas inventories have now slumped to below the five-year average and well below the levels from the same time in 2024, at the end of a mild winter.
The lower inventories and the higher demand – both for domestic consumption and LNG exports – have pushed prices higher, encouraging producers to boost gas output this year. Traders bet that prices will go even higher as demand from LNG plants is set to accelerate with the ramp-up of new U.S. export plants.
Paraskova writes for Oilprice.com.
By: Tsvetana Paraskova
Renaissance Africa Energy Holdings says it has successfully completed the acquisition of 100 percent equity holding in the Shell Petroleum Development Company of Nigeria (SPDC).
Spokesperson of the company, Tony Okonedo, who disclosed this in a Press Release, Last Thursday, said Renaissance has completed all processes for the full transfer of ownership of SPDC to the consortium, adding that it will now operate as Renaissance Africa Energy Company Limited.
“Renaissance Africa Energy Holdings today announced that it has successfully completed the landmark transaction between itself and Shell for the acquisition of the entire (100%) equity holding in the Shell Petroleum Development Company of Nigeria (SPDC).
“This follows the signing of a sale and purchase agreement with Shell in January 2024 and obtaining all regulatory approvals required for the transaction. Going forward, SPDC will be renamed as ‘Renaissance Africa Energy Company Limited.
“Going forward, SPDC will be renamed as ‘Renaissance Africa Energy Company Limited’.
“Renaissance Africa Energy Holdings is a consortium consisting of four successful Nigerian independent oil and gas companies: ND Western Limited, Aradel Holdings Plc. FIRST Exploration and Petroleum Development Company Limited and the Waltersmith Group, each with considerable operations experience in the Niger Delta, and Petrolin, an international energy company with global trading experience and a pan African outlook”, the statement reads.
Speaking on the acquisition, the Managing Director/CEO, Renaissance Africa Energy Holding,Tony Attah, said Renaissance Africa Energy Company Limited has a vision to be the leading oil and gas producer in Africa and to help the continent achieve energy security.
Attah expressed gratitude to the Federal Government for its support and pledged the company’s commitment to the Petroleum Industry Act.
“We are extremely proud to have completed this strategic acquisition. The Renaissance vision is to be ‘Africa’s leading oil and gas company, enabling energy security and industrialization in a sustainable manner’.
“We and our shareholder companies are therefore pleased that the Federal Government has given the green light for this milestone acquisition in line with the provisions of the Petroleum Industry Act”, he said.
The CEO acknowledged the contributions of Nigeria’s Minister of Petroleum Resources, the Nigeria Upstream Petroleum Regulatory Commission (NUPRC), and the Nigerian National Petroleum Company Limited (NNPCL) in facilitating the deal.
He said, “we extend our appreciation to the Honourable Minister of Petroleum Resources, the CEO of the Nigeria Upstream Petroleum Regulatory Commission (NUPRC), and the CEO of Nigeria National Petroleum Company Limited (NNPCL) for their foresight and belief, paving the way for the rapid development of Nigeria’s vast oil and gas resources as strategic accelerator for the country’s industrial development”.
The Statement further revealed that Renaissance partner companies collectively have an asset base of more than $3 billion and currently safely produce approximately 100,000 barrels of oil per day (bpd) from 12 oil mining leases and operate two functioning modular refineries in Nigeria’s Niger Delta.
The Federal Government has cautioned oil-rich communities against infighting and disruption of oil production, saying it could hinder their access to the Host Community Development Fund.
Minister of State for Petroleum (Oil), Heineken Lokpobiri, made the appeal while speaking at the KEFFESO Stakeholders Forum, in Yenagoa, Bayelsa State.
Lokpobiri noted that the Petroleum Industry Act (PIA) was enacted to bring stability to the oil sector and address longstanding grievances about underdevelopment in host communities.
He lamented, however, that internal disputes among stakeholders have made it difficult for these communities to access and utilize the funds meant for their development.
Lokpobiri insisted that host communities must overcome internal conflicts that hinder their access to the funds.
“This KEFFESO Stakeholders Forum is to see how host communities can maximize the benefits from the Host Communities Trust Funds as prescribed by the PIA.
“If oil production is disrupted, everyone loses — the Federal Government, oil companies, and the host communities themselves. That is why host communities must collaborate with the government and oil companies to ensure smooth operations” Lokpobiri stated.
The Minister called on Host Community Development Trusts (HCDTs) in the Niger Delta to effectively utilize the 3% operational funds allocated to them under the PIA 2021 to drive sustainable development.
He further called that oil-producing communities should take ownership of the oil and gas facilities within their domains and work with relevant stakeholders to ensure sustainable benefits.
“As stakeholders who have their respective stakes in oil and gas operations in the country, we should work together to ensure that we maximize the benefits of oil and gas.”
The minister also emphasized the global push for cleaner energy, warning that the relevance of fossil fuels depends on their extraction and marketability.
“Don’t forget there is a global campaign against the continuation of production of fossil fuel.
“Fossil fuel will never go away. Fossil fuel will not have any value unless you bring it out of the ground or from the sea to the market, that is why we need this collaboration,” he said.
In his remarks, the Executive Secretary, Nigerian Content Development and Monitoring Board (NCDMB), Engr. Omotsola Ogbe, reaffirmed the board’s commitment to leveraging the provisions of the Nigerian Oil and Gas Industry Content Development (NOGICD) Act.
Represented by the Board’s Director of Legal Services, Naboth Onyesoh, Ogbe noted that the NCDMB’s Community Content Guidelines were designed to ensure sustained community engagement as local content is prioritized throughout the oil and gas value chain.
Ogbe praised the KEFFESO Host Community Development Trust for its efforts in ensuring that oil revenues benefit local communities.
Also speaking, the Managing Director and Chief Executive Officer, First E & P, Ademola Adeyemi-Bero, described the KEFFESO Stakeholders Forum as a crucial platform for discussing and strategizing solutions to the challenges facing marginalized communities in the Niger Delta.
He reiterated the company’s commitment to fostering meaningful and sustainable development in the region.
The forum, themed “Envisioning Sustainable Community Development in Niger Delta Host Communities: Identifying Challenges and Actualising The PIA Paradigm Shift,” brought together key stakeholders to discuss strategies for maximising the benefits of the Petroleum Industry Act(PIA).