Daily Digest: April 10th, 2020
Opec Deal Disappoints, But Buys Time
Saudi Arabia, Russia and other leading oil producers have reached a tentative agreement to cut supply by 10mn b/d – equal to around 10% of global production – in an effort to bolster oil prices, Opec has announced.
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The Big Picture:
- Norway's Rystad Energy said the agreed reduction "will keep the world from physically testing the limits of storage capacity and save prices from falling into a deep abyss, but it will still not restore the desired market balance."
US Banks to Seize Indebted Shale Fields: Press
US banks JPMorgan Chase & Co, Wells Fargo & Co, Bank of America Corp and Citigroup Inc are setting up independent companies to operate oil and gas to avoid losses on loans to producers that could go bankrupt, Reuters reported on April 9 citing sources.
The Big Picture:
- The heavily leveraged US shale industry has been hit hard by the oil price crash.
- While banks typically seek to sell bankrupt assets relatively quickly, current low oil prices would force them to do so at a fraction of their former worth.
Novatek Overseas Sales Slump 28.4% in Q1
Russia's Novatek reduced its international gas sales by 28.4% yr/yr in the first quarter to 2.45bn m3, it said on April 9. The year-on-year drop reflected the start-up of long-term sales contracts which came at the expense of spot sales, it said.
The Big Picture:
- Yamal LNG, a 16.5mn mt/yr LNG export plant in the Russia Arctic, is operated by Novatek but also counts France's Total and China's CNPC and Silk Road Fund as shareholders.
US Rig Count at Lowest Level Since 2016: Baker Hughes
The US rig count fell by 62 rigs in the week ended April 9, to 602 from 664 the previous week, the lowest level since December 2016, Baker Hughes said in its closely-watched weekly report. It was released a day ahead of the usual date owing to the Good Friday holiday.
The Big Picture:
- The falling active rig count – especially in high-decline basins like the Permian where continuous drilling is needed to maintain production levels – has contributed to a forecast 500,000 b/d decline in average US oil production this year, the US Energy Information Administration (EIA) said in its latest Short Term Energy Outlook.
Lloyd’s Register Secures LNG Canada Contract
UK-based Lloyd’s Register (LR) has secured a 55-month contract to perform third party verification and Canadian Registration Number (CRN) services at the Anglo-Dutch Shell-led LNG Canada project in Kitimat, on BC’s northern coast.
The Big Picture:
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The Shell-led LNG Canada project at Kitimat is Canada’s only active liquefaction project.
