Daily Digest: March 10th, 2020
OIL PRICE THREATENS SERVICES SECTOR: REPORT
Exploration and production (E&P) firms are likely to slash their capital and operational expenditure by $100bn in 2020 and a further $150bn in 2021 if oil prices remain at $30/barrel, Oslo-based Rystad Energy warned in a research note. The cuts will heavily affect the oilfield services sector, it said, forcing some players out of the market.
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The Big Picture:
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Russia last week refused to commit to further Opec+ cuts, prompting Saudi Arabia to retaliate by seeking to flood the market. Oil prices, already low because of the impact of the coronavirus (Covid-19) outbreak, subsequently plunged on March 9.
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A supply war will likely continue until Opec+'s next scheduled meeting in June, Rystad said, and if no deal is reached then, E&P will adjust their budgets to account for the bearish market conditions.
PAVILION, SLNG RENEW LNG STORAGE PACT
Pavilion Energy and Singapore LNG Corporation (SLNG) have signed a new five-year agreement for LNG storage and reload services at the SLNG terminal on Jurong Island, the companies said March 10 in a joint statement. Pavilion and SLNG first signed a two-year deal in August 2017.
The Big Picture:
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Under the agreement, Pavilion Energy will have access to a tank capacity of 180,000 m3 on a segregated basis at the SLNG terminal over the next five years.
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The companies expect such capacity will support a higher volume of LNG trading activities, including LNG breakbulk and vessel cool-down services.
SONATRACH, ENI STRIKE GAS DEAL
Algeria's Sonatrach and Italy's Eni have signed a deal on the marketing of dry gas from the Zemoul El Kbar licence at block 403, the former said in a statement on March 9.
The Big Picture:
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Eni and Sonatrach earlier this month announced the completion of a pipeline connecting MLE and the Bir Rebaa Nord (BRN) field, also at block 403, enabling the export of BRN's associated gas.
WOOD POSTS PROFIT ON HIGHER MARGINS IN 2019
UK-based services provider Wood has swung back to profit in 2019 despite a drop in revenues, the company reported.
The Big Picture:
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The Aberdeen-headquartered firm posted an income of $73mn for the year, versus a $8mn loss in 2018. The reversal was thanks to a 84% growth in operating profit to $303mn, which offset higher interest rates.
- "Our strategy has driven decisive action to align Wood with the significant growth opportunities in energy transition and sustainable infrastructure", CEO Robin Watson said in a statement.
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DUTCH GOV APPROVES NITROGEN PLANT: UPDATE
The Dutch government has signed off on plans for a nitrogen plant that will help prepare the Netherlands for the closure of the giant Groningen gas field, national grid operator Gasunie said on March 9. On the same day the European Investment Bank (EIB) also announced it would provide a €240mn ($273mn) loan to Gasunie to fund the plant's construction.
The Big Picture:
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The Netherlands recently decided to bring forward Groningen's planned shutdown by eight years to 2022.
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"This plant is a necessary measure that will eliminate the need for gas from the Groningen field in order to guarantee security of supply from 2022 onwards", Gasunie CEO Han Fennema said in a statement.