Daily Digest: March 9th, 2020

OIL PRICES CRASH AS SAUDI WAGES PRICE WAR [UPDATE]

Oil prices lost more than a quarter of their value on March 9, marking the biggest single-day since the 1991 Gulf War, following Saudi Arabia's decision to slash prices to refiners and go for market share.

Advertisement: The National Gas Company of Trinidad and Tobago Limited (NGC) NGC’s HSSE strategy is reflective and supportive of the organisational vision to become a leader in the global energy business. ngc.co.tt

The Big Picture:

• Talks between Saudi Arabia, Russia and other producers in the Opec+ alliance on agreeing a co-ordinate response to the coronavirus (Covid-19) crisis broke down on March 6.

• Not only did the group fail to agree to scale back production by a further 1.5mn barrels/day, but they were also unable to agree to extend a previous cut of 2.1mn barrels/day. Russia's producers, who have grown increasingly weary of co-operation with Opec, opposed the moves.

• In what has been widely interpreted as a retaliation to Russia's refusal to commit to cuts, Saudi Arabia cut its export oil prices by almost 10% on March 7, causing benchmarks to tank.

TELLURIAN CUTS WORKFORCE, NAMES NEW CFO (UPDATE)

US LNG developer Tellurian has appointed Kian Granmayehas as CFO, replacing Antoine Lafargue who will join the marketing group, it said. Granmayeh's last job had been at Apache Corporation until January 2019 when he joined Tellurian.

The Big Picture:

• The day before, Bloomberg reported sources saying that Tellurian had laid off 70 staff, or 40% of its workforce, as part of a major restructuring effort.

• It also said that Tellurian could delay a final investment decision at its Driftwood LNG project by 12-18 months. In October last year, Tellurian told NGW that an FID on the venture would be taken in early 2020, itself a delay from earlier plans. 

MEXICAN LNG PROJECT AWARDS FEED CONTRACT

Mexico Pacific Limited (MPL), which is proposing to build a 12mn mt/yr natural gas liquefaction and export terminal on Mexico’s Pacific Coast near Sonora, said it had awarded a front-end engineering and design (Feed) contract to Technip USA.

The Big Picture:

• The terminal would be the first LNG export facility on the west coast of North America, offering shorter shipping distances to key Asian markets and access to low-cost US natural gas.

• CEO Douglas Shanda said the company is targeting early 2021 for a final investment decision on the project, with the first 4mn mt/yr module expected in-service in 2024

DUTCH GOV APPROVES NITROGEN PLANT

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.

The Big Picture:

• The Netherlands recently decided to bring forward Groningen's planned shutdown by eight years to 2022.

• The plant is due on stream in mid-2022, and will allow for a 7bn m3 reduction in production at Groningen. Gasunie also increased the capacity of its nitrogen mixing facility in Wieringermeer last year, enabling a 5bn m3 decrease in the field's output.

IEA SEES OIL DEMAND SHRINK

Global oil demand is expected to decline in 2020 as the impact of the new coronavirus (Covid-19) spreads around the world, the International Energy Agency (IEA) said as it revised its outlook.

The Big Picture:

• The new outlook comes as the world's biggest state producer Saudi Aramco said it would cut prices and go for market share, as the Opec+ alliance with Russia that aimed to keep a lid on output ended in acrimony March 6.

• In the IEA’s central base case, demand this year drops for the first time since 2009 because of the deep contraction in oil consumption in China, and major disruptions to global travel and trade. 

SERICA RESTARTS NORTH SEA GAS PLATFORM

London-listed Serica Energy reported it had restarted production at the Bruce platform in the UK North Sea, after halting operations in late January when a damaged caisson was identified.

The Big Picture:

• Serica acquired a 98% stake in Bruce, a 100% interest in Keith and a 50% share in Rhum via a series of deals with BHP Billiton, BP, France’s Total and Japan’s Marubeni in late 2018.

• The company produced 30,000 barrels of oil equivalent/day at Bruce, Keith, Rhum and Erskine in 2019, marking a 13% increase y/y.