Oil, Gas, And Fracking News Reads: 20September 2020 – Part 2

Written by rjs, MarketWatch 666

Here are some more selected news articles about the oil and gas industry from the week ended 19 September 2020. Go here for Part 1.

This is a feature at Global Economic Intersection every Monday evening.

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More call for pause as US weighs New Mexico drilling plan (AP) – Environmentalists want federal land managers to suspend efforts to amend a plan that would guide oil and gas development and other activities near Chaco Culture National Historical Park. They sent a letter Thursday to Interior Secretary David Bernhardt, saying the coronavirus pandemic has prevented meaningful in-person consultation with Native American tribes and others who would be affected by the decision. A coalition of more than 50 groups signed the letter. They argue that low-income and minority communities will be disproportionately harmed as they are located on the frontlines of oil and gas development in the San Juan Basin. “Environmental justice must be served,” the groups said in the letter. “In the midst of the public health and economic emergency caused by the COVID-19 crisis, we urge you to protect the most vulnerable New Mexicans from the dangers and insecurity that result from the public health crisis, not take advantage of our inability to engage in … decision making.” Legislation that would make federal land within a 10-mile (16-kilometer) radius of the park off-limits is pending in Congress. New Mexico pueblos with ancestral links to the region around Chaco park have been outspoken about their desire to halt oil and gas drilling in the area, saying they fear culturally significant sites beyond the park boundaries would be at risk with added development. In recent years, they joined with environmentalists who have long been critical of drilling in northwestern New Mexico. Meanwhile, the Navajo Nation, which controls large swaths of land in the basin, has been more reserved with its stance on amending the resource management plan for the area. The tribe supports a smaller buffer around the park, as revenue from development on adjacent tribal land and parcels owned by individual Navajos account for a significant source of revenue for the impoverished area. The request from environmentalists for a pause in the process comes just weeks after a coalition of tribes and members of New Mexico’s congressional delegation asked federal officials for more time to consider the proposal.

Colorado could OK first-of-its-kind air-quality rule for oil, gas well sites – Colorado could once again lead the way on oil and gas regulations if the state approves proposals meant to control emissions from well sites earlier than is now required under a mandate to revamp rules.The Colorado Air Quality Control Commission opened a hearing Thursday on proposed rules, including ones that would require monitoring emissions and air quality from the start of construction of a well and over the first six months of production. The nearly continuous monitoring of so-called preproduction, a phase that can produce high emissions of chemicals and health complaints from the public, would be a new requirement..”Colorado, like it did in 2014, being the first to implement methane rules, now is once again at the head of the pack on figuring out ways to incentivize new technology and address oil and gas emissions. It’s a big deal,” said Jon Goldstein with the Environmental Defense Fund in Denver.In 2014, Colorado became the first state in the nation to pass regulations limiting methane emissions from oil and gas operations. A federal methane rule, which has been loosened by the Trump administration, was modeled on Colorado’s regulation. Garry Kaufman, director of the state air pollution control division, said he’s not aware of any other state with the kind of monitoring program Colorado is considering.”These monitoring devices have been deployed in other states on a case by case basis, but it’s not something that’s been required of the whole industry, that I know of,” Kaufman said.The rule is part of the implementation of the Senate Bill 181, approved in 2019 to overhaul the regulation of oil and gas. The law changed the state’s mission from fostering oil and gas development to regulating it in a way that protects public health, safety and the environment.Both the air quality control commission and the Colorado Oil and Gas Conservation Commission are writing rules to carry out the new mandate. The air quality board proposal would require nearly continuous, or what Kaufman calls “high-frequency,” monitoring of oil and gas sites as soon as well construction starts. Monitoring would continue through drilling, hydraulic fracturing and what’s called flowback, which is when groundwater and fluids used in fracking are brought to the surface and disposed of.

DAPL court disputes could linger post-election – A federal judge overseeing a longstanding legal battle over the Dakota Access Pipeline isn’t likely to decide until late this year or early next year whether to order the flow of oil to cease. U.S. District Judge James Boasberg earlier this year issued a shutdown order that was overturned by a federal appeals court that concluded he hadn’t justified the move. American Indian tribes who sued over the pipeline four years ago are making a renewed push as the legal battle continues in both U.S. District Court and the U.S. Court of Appeals for the District of Columbia Circuit. Tribes want Boasberg to issue an “injunction on continued pipeline operations.” An injunction is an order prohibiting something. In this case, it would stop pipeline developer Energy Transfer from operating the pipeline while the legal fight plays out. Attorneys for the tribes and the U.S. Department of Justice on Wednesday submitted a proposed schedule for briefs, or written arguments, that extends to Dec. 18, after which Boasberg would rule, should he sign off on the schedule. Much could happen before then. The U.S. Army Corps of Engineers, which permitted the pipeline, is expected to decide by mid-October whether to continue allowing Dakota Access to move oil. Boasberg in July invalidated the federal easement that allows the line to cross under the Missouri River just north of the Standing Rock Sioux Reservation. The means the pipeline is now considered an “encroachment” on federal property. Tribes don’t believe the Corps will order a shutdown, so they’ve turned to Boasberg. Meanwhile, the Corps last week launched an environmental review of the pipeline that Boasberg ordered in March. It’s expected to take more than a year. The Corps and Energy Transfer have asked the appeals court to reverse Boasberg’s rulings ordering the study and revoking the easement during the review. They argued in court documents late last month that the risk of an oil spill feared by the tribes is low, and that Boasberg erred by giving too much weight to opposition of the $3.8 billion pipeline that moves North Dakota oil to a shipping point in Illinois. Tribes and environmentalists fear water pollution from a spill. Prolonged protests in 2016 and 2017 drew thousands of people to camps near the Missouri River crossing and resulted in hundreds of arrests. The tribes late Wednesday filed a response with the appeals court saying “the Corps failed to address the detailed technical critiques of its methods and assumptions that underpinned its conclusions regarding the risk of oil spills.”

Docs: Trump aides pushed EPA for fewer methane checks — Friday, September 18, 2020 — EPA bowed to White House pressure during interagency review of an oil and gas emissions rule by reducing requirements for a segment of the natural gas supply chain to monitor and repair methane leaks.Correspondence released this week after the emissions rule was published in the Federal Register on Monday shows that officials from the White House pressed EPA staff to halve the frequency of the rule’s monitoring requirements for well sites and natural gas compressor stations. It made that request in June as a rule easing restrictions on methane was being completed.The so-called technical rule EPA finalized last month rejected White House efforts to weaken the agency’s proposal to have gas producers monitor their well sites once a year. But EPA changed its requirements related to monitoring and leak repair for compressor stations, which push natural gas from the well sites through pipelines.When the rule traveled to the Office of Management and Budget for review in late May, the measure required quarterly monitoring at compressor stations. When it was released to the public three months later, the requirement had been changed to twice annually.”It’s clear that politics supersede what policy analysis would indicate is the best way to fashion EPA regulations,” said Amit Narang, a regulatory policy advocate at Public Citizen.In its written comments in June, the White House seemed determined that the final rule should differ from the Obama-era rule it was designed to replace.”This cannot stay the same as the 2016 rule,” insisted an unnamed White House official in correspondence released as part of the rule’s docket.EPA had retained the Obama-era monitoring schedule for wellheads and compressor stations in the final draft of the rule it sent to OMB. Both rules required well sites that produce at least 15 barrels of oil equivalent per day to monitor for possible leaks twice a year. And they both required compressor stations to check for fugitive emissions quarterly.But the White House urged EPA to cut monitoring requirements for both source categories in half. That tracked with comments submitted to the rule’s docket on July 1, 2019, by the Independent Petroleum Association of America. The trade group has long urged EPA to discard direct regulation of methane in favor of a more limited rule for volatile organic compounds (VOCs), to exclude transmission and storage from regulation, and to lighten monitoring requirements. But EPA’s technical support document for the rule showed that the original monitoring requirement met EPA’s standard for cost-effectiveness as measured by dollars per ton of a pollutant reduced.

A Secret Recording Reveals Oil Executives’ Private Views on Climate Change – The New York Times – Last summer, oil and gas-industry groups were lobbying to overturn federal rules on leaks of natural gas, a major contributor to climate change. Their message: The companies had emissions under control. In private, the lobbyists were saying something very different. At a discussion convened last year by the Independent Petroleum Association of America, a group that represents energy companies, participants worried that producers were intentionally flaring, or burning off, far too much natural gas, threatening the industry’s image, according to a recording of the meeting reviewed by The New York Times. “We’re just flaring a tremendous amount of gas,” said Ron Ness, president of the North Dakota Petroleum Council, at the June 2019 gathering, held in Colorado Springs. “This pesky natural gas,” he said. “The value of it is very minimal,” particularly to companies drilling mainly for oil. A well can produce both oil and natural gas, but oil commands far higher prices. Flaring it is an inexpensive way of getting rid of the gas. Yet the practice of burning it off, producing dramatic flares and attracting criticism, represented a “huge, huge threat” to the industry’s efforts to portray natural gas as a cleaner and more climate-friendly energy source, he said, and that was damaging the industry’s image, particularly among younger generations. “What’s our message going forward?” Mr. Ness said. “What’s going to stick with those young people and make them support oil and gas?” The recording runs 1 hour 22 minutes, opening with a moderator’s remarks and concluding with a panel discussion that covered a wide range of issues including job creation, the threats posed by solar and wind energy, and the federal leasing of oil and gas rights. The audio was provided by an organization dedicated to tracking climate policy that said the recording had been made by an industry official who attended the meeting.Neither the organization nor the official was willing to be identified, out of concerns for industry retaliation, but three people heard in the recording, including the event’s moderator, Ryan Ullman of the Independent Petroleum Association, said that it reflected their comments. Jennifer Pett Marsteller, an association spokeswoman, confirmed the meeting’s date, location and speakers’ list, which matched the recording. She declined to comment on the speakers’ remarks, saying there was no official recording.

California Dems Give Up On New Oil Safety Regulations – Steve Horn – Big money from Big Oil and industry-tied unions has helped to kill a legislative effort to create environmental protections for communities living near oil and gas operations in California.On August 5, a 5-4 Senate committee vote struck down consideration of legislation calling for consideration of a 2,500-foot setback between future oil wells and homes, schools and playgrounds. Only one of those votes came from a Republican. It was the second time in as many years that the bill — Assembly Bill 345 — failed to pass, and it failed to do so even after several rounds of significant amendments had watered down the legislation. With that, a years-long activist-led legislative movement went up in smoke for 2020. And then came the historically large wildfires. Within a matter of days, the state’s northern half caught fire at an epic scale, wildfires made worse from climate change and fueled by unfettered fossil fuel drilling. California oil is some of the dirtiest, from a climate change perspective, in the United States.Drilling for oil in the state also has major public health repercussions, an impetus driving AB 345. Recent studies have linked oil drilling in California to health impacts, including low birth weight and small gestational age, as well as preterm births. Research has also linked higher levels of industrial pollution to higher contraction rates of COVID-19. Despite these impacts, the bill attracted a core group of Democratic legislators who ultimately oversaw the bill’s demise. Three of those who spoke out the most strongly against AB 345 at the Senate Committee on Natural Resources and Water hearing on August 5 before voting against it — Sen. Ben Hueso, Sen. Andreas Borgeas and Senate Majority Leader Bob Hertzberg — have received high dollar contributions and other support from oil interests that lobbied against AB 345. The lobbying and influence campaign efforts waged by the oil industry and labor against AB 345 illustrates the difficulty in crafting climate policy and environmental protections — even in a state with a super-majority Democratic Party legislature that bills itself as a global leader on fighting climate change. A big part of the difficulty is the contradiction of the center of it all: California is the sixth biggest oil producer nationwide and the largest west coast oil refiner.

Shell Offshore files plans to return to Alaska’s North Slope – Anchorage Daily News –A supermajor oil company is looking to advance its position on Alaska’s North Slope. Shell Offshore Inc. has applied to form the West Harrison Bay Unit in state waters just offshore from the National Petroleum Reserve-Alaska with plans to drill the area in search of oil in the coming years, according to documents submitted to the state Division of Oil and Gas.If the Dutch oil industry giant can secure a partner to share in the costs and risks of remote offshore North Slope exploration, it expects to drill exploration wells in the West Harrison Bay Unit with at least one sidetrack each in 2023 and 2024, Shell’s initial unit plan of exploration states. According the application, Shell has been trying to find a partner to work on the West Harrison Bay leases for at least a year, and the company was making progress towards that end before the coronavirus pandemic hit in late winter. As a result, Shell is asking the state for its exploration plan to be valid for five years, which would allow the company to secure a partner and better analyze the area’s development potential. Shell holds a 100 percent working interest in 18 leases covering more than 78,000 acres in the proposed unit. The wells would target the popular Nanushuk oil formation first pinpointed by the Repsol-Armstrong Energy partnership in the Pikka Unit. The shallow, conventional Nanushuk formation also forms the basis of ConocoPhillips’ large Willow oil prospect to the south of Harrison Bay and is believed by many in the industry to be prolific across much of the western North Slope. Shell infamously spent more than $7 billion to drill the Burger J exploration well much further offshore in the Chukchi Sea before abandoning its domestic Arctic drilling program in 2015. The work was beset by legal challenges and protests where vessels and equipment were staged at Pacific Northwest ports, as well as the grounding of the Kulluk drilling rig near Kodiak Island in 2013 while being towed south from Unalaska.

Weekly Crude Inventory Data Shows Surprise Draw of 4.4 Million Barrels – U.S. crude oil refinery inputs averaged 13.5 million barrels per day during the week ending September 11, 2020 which was 0.7 million barrels per day more than the previous week’s average. Refineries operated at 75.8% of their operable capacity last week. Gasoline production decreased last week, averaging 8.8 million barrels per day. Distillate fuel production increased last week, averaging 4.4 million barrels per day. U.S. crude oil imports averaged 5.0 million barrels per day last week, down by 416,000 barrels per day from the previous week. Over the past four weeks, crude oil imports averaged about 5.3 million barrels per day, 20.1% less than the same four-week period last year. Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 600,000 barrels per day, and distillate fuel imports averaged 112,000 barrels per day. U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased by 4.4 million barrels from the previous week. At 496.0 million barrels, U.S. crude oil inventories are about 14% above the five year average for this time of year. Total motor gasoline inventories decreased by 0.4 million barrels last week and are about 3% above the five year average for this time of year. Finished gasoline inventories decreased while blending components inventories increased last week. Distillate fuel inventories increased by 3.5 million barrels last week and are about 22% above the five year average for this time of year. Propane/propylene inventories decreased by 1.2 million barrels last week and are about 9% above the five year average for this time of year. Total commercial petroleum inventories increased by 4.3 million barrels last week. Total products supplied over the last four-week period averaged 18.1 million barrels a day, down by 15.5% from the same period last year. Over the past four weeks, motor gasoline product supplied averaged 8.7 million barrels a day, down by 8.7% from the same period last year. Distillate fuel product supplied averaged 3.6 million barrels a day over the past four weeks, down by 9.1% from the same period last year. Jet fuel product supplied was down 45.6% compared with the same four-week period last year.

Fuel demand rises as schools open, commuters shun public transport (Reuters) – Traffic picked up in cities across the globe as the summer season ended and schools opened, giving a boost to fuel demand, but the prospect of recovery remained weak as many commuters still worked from home and vehicle sales were down. The reliance on isolated forms of travel including private cars seemed to be the main factor boosting demand, analysts and traders said, as most people avoided public transport for fear of the coronavirus. Road traffic in New York, London and Paris was on a slow but steady recovery, data provided to Reuters by location technology company TomTom showed. In Moscow and Beijing, traffic was as high as pre-lockdowns levels. Fuel demand usually falls in September as the summer driving season ends, but this year, analysts expect fuel demand in September to be almost on par with August. “Over the first 10 days of September road fuels demand has added 700,000 barrels per day (bpd) after remaining flat over the summer months. The acceleration is mostly visible in Europe,” said Artyom Tchen, senior oil market analyst at Rystad Energy. Traffic in some small European cities such as Geneva has even exceeded 2019 levels, TomTom data showed. Data provided to Reuters by the app Transit showed public transport in many cities making a much slower recovery in September compared to road traffic. People in the United Kingdom avoided public transport far more than French, data from Transit showed, while use of public transport in the United States remained low. (Graphic: How COVID-19 is disrupting public transport How COVID-19 is disrupting public transport, ) However, analysts and traders said they did not expect a significant rise in fuel consumption in the coming months, since short trips in cities do not burn as much fuel as long holiday journeys.

Germany won’t abandon its massive gas pipeline with Russia yet, analysts say – Germany has come under increasing pressure to pull the plug on its controversial giant gas pipeline project with Russia, following the suspected poisoning of Russian opposition politician Alexei Navalny. Experts say Berlin is unlikely to do so for now, however, given the Nord Stream 2 project is over 94% completed after almost a decade’s construction, involves major German and European companies, and is necessary for the region’s current and future energy needs. In this case, economic and commercial interests could trump political pressure to punish Russia. “I don’t see Germany pulling out of the project just yet,” Carsten Brzeski, chief economist for the euro zone and global head of macro at ING, told CNBC Thursday. “But the domestic debate of the last days has made it clear that patience is running low. Many are still in favor of it. But they will need Moscow to clearly demonstrate that pragmatic cooperation is possible and can actually bear fruit – for instance regarding managing the situation in Belarus,” he said. Germany’s Foreign Minister Heiko Maas hinted last Sunday that Russia had to play its part during the investigation into the attack on Navalny. A fierce critic of Russian President Vladimir Putin, Navalny was left critically ill after a suspected poisoning with a Novichok nerve agent. “I hope the Russians won’t force us to change our position regarding the Nord Stream 2” pipeline, Germany’s Foreign Minister Heiko Maas told the Bild am Sonntag newspaper. Germany has been reluctant to link the fate of its involvement with Nord Stream 2 to the Navalny incident so far, and Maas conceded that stopping the building of the pipeline would hurt not only Russia but German and European firms. “Anyone calling for the project to be halted needs to be aware of the consequences. Nord Stream 2 involves over 100 companies from twelve European countries, and about half of them from Germany,” he said. Jane Rangel, a gas analyst at Energy Aspects, told CNBC Wednesday that she and her colleagues are “watching the situation because it’s evolving” and noted that the Navalny poisoning “does put Germany in a tough position.” “It’s another challenge for the project to be finished and it certainly raises the risk that Germany could take action, one of the most obvious solutions could be Germany refusing to grant regulatory approval” for the pipeline, she added. German Chancellor Angela Merkel could opt to tell Bundesnetzagentur, the official body that’s responsible for authorizing the pipeline, not to grant approval for the project, Rangel said. “At that point, we’d assume that Gazprom would bring it to court if it didn’t get regulatory approval. Then the court could possibly overturn it and that means the German government scores its political point but the project eventually gets approved.”

Nornickel says it collected more than 90% of fuel leaked by Arctic spill (Reuters) – Russia’s Norilsk Nickel (Nornickel) said on Friday that it had collected more than 90% of fuel leaked into rivers during its Arctic fuel spill earlier this year, or about 12,000 tonnes. The spill occurred on May 29 after a fuel tank lost pressure and released 21,000 tonnes of diesel into rivers and subsoil near the city of Norilsk in Siberia. Greenpeace has compared the incident to the 1989 Exxon Valdez oil spill off Alaska. “As of today, it can be assumed that what we have collected and separated is exactly the (amount of) fuel that got into the water,” Nornickel first vice-president Sergey Dyachenko told reporters. Some environmental campaigners have said they doubt Nornickel’s assertions that it has been able to recover 90% of the leaked diesel, citing similar clean-ups in the past around the world. Earlier this week, Russia’s state environment watchdog, Rosprirodnadzor filed a lawsuit against a power business owned by Nornickel, the $41-billion mining giant, to claim $2 billion for environmental damage caused by the leak. Nornickel disagrees with a formula used by the watchdog to estimate the $2 billion damage from the spill, which, Nornickel said, was based on more than 19,000 tonnes of fuel leaked into the rivers, Dyachenko said. Nornickel believes that filing the lawsuit was premature as it was hoping for an out-of-court settlement. It had already set aside $2 billion in reserves, which caused a slump in its first-half net profit. The size of the damages claim is unprecedented both for Russia and emerging markets. For Russia, money from this claim would help the state budget amid the coronavirus pandemic and send a message to other companies that underinvestment in maintenance is unacceptable, analysts have said. Fitch ratings agency said earlier this week that the damage claimed from Nornickel indicates growing financial exposure of commodity companies operating in emerging markets to environmental, social and governance (ESG) factors.

Venezuela’s PDVSA confirms oil leak into sea – Venezuela’s state-owned oil company PDVSA on Saturday confirmed an oil leak from an oil line and a gas pipeline into the Caribbean Sea near the largest refining center in the country, but said it had begun repair and cleanup efforts. PDVSA discovered the spill in the Golfete de Coro area in Falcon state during an aerial inspection, a statement from the company said, adding that despite the leak it guaranteed it will continue to supply crude to the Paraguana Refining Complex (CRP), which includes the Amuay and Cardon refineries. Both Amuay and Cardon have experienced multiple outages in recent years that the opposition blames on mismanagement and lack of maintenance. In recent days fishermen and experts had sounded the alarm about a slick in the Golfete area, known for pristine beaches and nature preserves in the northwest of the country. The incident comes a month after a spill covered swathes of Morrocoy National Park. Authorities say they addressed that oil slick, but have given no details about its size or origin. Carlos Carmona, a researcher and member of the Venezuelan Ecology Society, said dead fish were found where the Golfete slick was discovered in an area that is home to shorebirds, nesting sea turtles and a black mangrove reserve. Hit by U.S. sanctions that have exacerbated an acute fuel shortage crisis, Venezuela’s government on Friday announced a new fuel distribution initiative and said it was planning new refining projects, without providing further details.

Shell recorded 46.6 per cent reduction in oil spills in 2019 – Shell Petroleum Development Company of Nigeria Limited (SPDC) has said it reduced operational spills to the lowest levels in 2019. Records made available by SPDC show that only seven operational spills were reported in 2019, a 46.6 per cent decrease over the previous year, 2018, when the company recorded 15 operational spills. The company also reported a significant reduction in breaches from wellhead, and clean-up of more spill sites than ever before, in 2019. However, there was an increase in cases of theft and sabotage in 2019, according to records made available by the company. SPDC said identified leaks were cleaned promptly, adding that it was working towards totally eliminating spills from its operations. “The data available showed that in 2019, theft and sabotage resulted in 156 spills. In 2018, the figure was 109. The SPDC JV has a policy that when a leak is identified, the team responds to contain any spilled oil and clean up. In 2019, SPDC JV remediated 130 sites. “The SPDC JV is working to eliminate spills from its operational activities, remediate past spills and prevent spills caused by crude oil theft, sabotage of pipelines or illegal oil refining. “While SPDC operates to the same technical standards as other Shell companies globally, illegal activities continue to inhibit a normal operating environment. “Past spills from operational and illegal activities have been well documented, resulting in a clean-up programme and, where appropriate, compensation,” the company added. SPDC, in the same vein, noted that there is still much work to do to get the company to its target of ‘Goal Zero’ in all spills, including those arising from operational and third-party vandalism. “But through a solid strategy, active partnerships, closer community engagements, bold security and new surveillance equipment, the company is steadily making good progress,” the company said. Specifically, SPDC said it has made progress in areas such as improving performance, preventing illegal activity, response and investigation, improving remediation and clean-up in Ogoniland. SPDC disclosed that it was working with the relevant stakeholders to implement the 2011 United Nations Environmental Programme (UNEP) Report on Ogoniland. According to the company, over the last eight years, it has taken action on all, and completed most, of the UNEP recommendations addressed specifically to it as operator of the joint venture.

Shipping authority lists causes of Mauritius oil spill – A shipping authority on Friday released a list of factors that caused a Japanese bulk carrier to hit a coral reef and cause an oil spill off Mauritius’ coast last month. The MV Wakashio was owned by a Japanese company but Panama-flagged. The Panama Maritime Authority said that the lack of supervision and control of navigation equipment, and “overconfidence” caused the ship to run aground, according to local daily Le Mauricien. The crew told investigators that the ship deviated from its planned course and that a birthday celebration was being held on board when it ran aground. “Appropriate analysis of the situation would have made it possible to take the necessary measures to correct the direction and avoid the accident, the wrong electronic nautical chart was used and with the wrong scale, which made it impossible to correctly verify the approach to the coast and shallow water,” local daily Le Mauricien quoted the Panama Maritime Authority as saying. Speaking on Friday at a press conference Junichiro Ikeda, CEO of Mitsui OSK Lines Ltd, the company that charted the ship, said that the ship was using the wrong nautical charts just as outlined in the Panama Maritime Authority report. Ikeda who blamed the lack of awareness of the crew for the accident announced funding of 1 billion yen (roughly $9.4 million) to help the East African island nation in the cleaning processes. In Mauritius, thousands of people will hold a march on Saturday to highlight the harmful effects on marine life due to the oil spill. Meanwhile, the government has put a ban on seafood caught at Pointe-d’Esny and Deux-Freres regions after a test carried out on the fish found traces of hydrocarbons.

Thousands march in Mauritius to protest disastrous oil spill – Thousands of people protested in Mauritius again Saturday over the government’s handling of an offshore oil spill that has become the Indian Ocean island nation’s worst environmental disaster in years. New details indicate the Japanese ship that struck a coral reef in late July and leaked some 1,000 tons of fuel oil near protected coastal areas had strayed miles off course because the captain wanted to move closer to shore so crew members could get a mobile phone signal to call their families. “The change of course could be related to the birthday celebration of one of the crew members,” said a report this week by the maritime authority of Panama, where the MV Wakashio is registered. It said preliminary investigations also suggested that a navigation system and a nautical chart were mishandled. Last month, nearly one-tenth of the population of Mauritius marched peacefully in the capital, Port Louis, expressing outrage over the disaster and the discovery of dozens of dead dolphins weeks after the spill. It is not immediately clear what killed the dolphins, but some experts say water-soluble chemicals in the fuel might have been to blame. The government has called it a “sad coincidence.” Protesters have called for top officials to step down. Saturday’s march took place in Mahebourg, one of the most affected coastal villages. The island nation of 1.3 million people relies heavily on tourism and already had taken a severe hit due to travel restrictions during the coronavirus pandemic. On Friday, the Japanese operator of the bulk carrier said it will provide 1 billion yen ($9 million) to fund environmental projects and support the local fishing community. Mitsui O.S.K. Lines said the Mauritius Natural Environment Recovery Fund will be used for mangrove protection, coral reef recovery, protection of seabirds and rare species, and research by private and governmental groups.

Japanese ship operator to put $9.4m toward Mauritius – The operator of a Japanese-owned bulk carrier that crashed into a reef in late July, causing a widespread oil spill in Mauritius, will pay at least $9.4 million over several years to fund environmental projects and support local fishing communities. The spill took place near the coastal areas of southeast Mauritius, an area of international importance because of its environmentally protected ecosystems and wetlands. Experts say about 1,000 tons of fuel leaked from the ship into the surrounding blue lagoons – a favorite location for the filming of numerous Bollywood movies because of its turquoise waters, which now are stained black. Mauritius previously asked Japan to provide at least $34 million to assist with the lasting ramifications of the spill. Mitsui O.S.K. Lines said Friday that the Mauritius Natural Environment Recovery Fund would be used to support mangrove protection, coral reef restoration, and the protection of seabirds and rare species. In addition, the company said, it will continue to support local fishing and tourism, though details of that support have not been announced. The Mauritius government has estimated the country has sustained $30 million in damage as a result of the spill. Early this week, the maritime authority of Panama, where the ship is registered, announced it was in the early stages of an investigation into the spill and suggested human error caused the accident. The ship’s captain and first officer have been arrested and charged with endangering safe navigation. Recently, tens of thousands of individuals protested in Mauritius over the government’s slow response to the spill and the discovery of dozens of dead dolphins, whose cause of death has not yet been determined.

Japan sending team to probe Mauritius ship grounding (Reuters) – Japan said on Friday it will send a five-person team to Mauritius to investigate the grounding of a Japanese-owned ship off the country’s coast that led to an environmental crisis. A bulk carrier owned by Japan’s Nagashiki Shipping and chartered by Mitsui OSK ran aground on a reef off Mauritius on July 25 and later began leaking oil into the pristine waters around the Indian Ocean island. The Japanese government said in a statement that it would send a team of five people to Mauritius on Sept. 20. Japan previously told Mauritius it would offer support on an “unprecedented scale.” The Panamanian-flagged MV Wakashio began spilling fuel oil on Aug. 6, prompting the Mauritian government to announce an environmental emergency. The captain and another member of the crew have been arrested by Mauritius police. Scientists say the full impact of the spill is still unfolding but the damage could affect Mauritius and its tourism-dependent economy for decades. Mitsui OSK last week said it would contribute about 1 billion yen ($9.4 million) to help Mauritius.

MbPT to upgrade its oil spill contingency plan for Mumbai – Following the devastating oil spill in Mauritius, called the country’s worst ecological disaster, authorities in Mumbai are also looking at preparing and upgrading a comprehensive oil spill contingency plan that can be put into effect, in case of an emergency in the city. The Mumbai Port Trust (MbPT), which owns the eastern waterfront area in Mumbai, has floated a tender to appoint an agency to create a Tier-1 oil spill response facility for Mumbai and the Jawaharlal Nehru Port Trust (JNPT) harbour. According to the tender details accessed by HT, the consultant will be asked to carry out a quality risk assessment of oil spill, assess the oil spill trajectory in the worst-case scenario given different weather and sea conditions, carry out sensitivity mapping of the areas most likely to be affected, do a gap analysis of the required and available sources among various other parameters. The consultant will also be asked to prepare a contingency plan with the specific role and functions of the agencies involved. Captain Bhabatosh Chand, deputy conservator, head of marine department, MbPT, said, “We have a plan in place in case of an oil spill for the past five years. As the contract is ending, we are looking for a new agency. We are looking to upgrade it [the plan] and looking at new technology. A ready plan will aid us to control the situation in case of an emergency.” Recently, a Japanese bulk carrier ran aground on a reef on the south-east coast of Mauritius. MV Wakashio struck a coral reef on July 25, spilling about 1,000 tonnes of fuel and endangering corals, fish and other marine life in what some scientists have called the country’s worst ecological disaster. India has also sent equipment and personnel to help Mauritius contain the oil spill.

IEA says oil demand recovery set to slow for rest of 2020 -(Reuters) – The International Energy Agency (IEA) trimmed its 2020 oil demand forecast on Tuesday, citing caution about the pace of economic recovery from the pandemic. The Paris-based IEA cut its 2020 outlook by 200,000 barrels per day (bpd) to 91.7 million bpd in its second downgrade in as many months. “We expect the recovery in oil demand to decelerate markedly in the second half of 2020, with most of the easy gains already achieved,” the IEA said in its monthly report. “The economic slowdown will take months to reverse completely … in addition, there is the potential that a second wave of the virus (already visible in Europe) could cut mobility once again.” Renewed rises in COVID-19 cases in many countries and related lockdown measures, continued remote working and a still weak aviation sector are all hurting demand, the IEA said. China – which emerged from lockdown sooner than other major economies and provided a strong prop to global demand – continues a strong recovery, while a virus upsurge in India contributed to the biggest demand drop since April, the IEA said. Increasing global oil output and the downgraded demand outlook also mean a slower draw on crude oil stocks which piled up at the height of lockdown measures, it added. The agency now predicts implied stock draws in the second half of the year of about 3.4 million barrels per day, nearly one million bpd less than it predicted last month, with July storage levels in developed countries again reaching record highs. However, preliminary data for August showed industry crude oil stocks fell in the United States, Europe and Japan. As output cuts eased among producers from the Organization of the Petroleum Exporting Countries (OPEC) and allies such as Russia, global oil supply rose by 1.1. million bpd in August.

IEA cuts 2020 oil demand forecast, sees ‘treacherous’ path ahead with rising coronavirus cases – The International Energy Agency on Tuesday cut its forecast for 2020 oil demand growth, citing a “treacherous” path ahead amid weakening market sentiment and an upsurge in the number of coronavirus cases reported across the globe. In a closely-watched monthly report, the IEA trimmed its outlook for worldwide oil demand growth to 91.7 million barrels per day. That marks a contraction of 8.4 million bpd year-on-year, more than the 8.1 million bpd contraction predicted in the Paris-based energy agency’s August report. “We expect the recovery in oil demand to decelerate markedly in the second half of 2020, with most of the easy gains already achieved,” the IEA said. “The economic slowdown will take months to reverse completely, while certain sectors such as aviation are unlikely to return to their pre-pandemic levels of consumption even next year.” International benchmark Brent crude traded at $40.21 a barrel on Tuesday morning, up around 1.5%, while U.S. West Texas Intermediate crude (WTI) stood at $37.90, roughly 1.7% higher. Oil prices have dropped around 40% since the start of the year. “I think the main message that we put across in the report is that sentiment seems to be weakening,” Neil Atkinson, head of the oil industry and markets division at IEA, told CNBC’s “Street Signs Europe” on Tuesday. “We have seen oil prices very, very range-bound since roughly the middle to the later part of June, between $40 and $45 a barrel for Brent. But, just recently we have seen $40 a barrel tested and it does look as if the rebound in recovery is beginning to stall.” Atkinson said the upsurge of coronavirus cases across Europe, in particular, reflected “a cause for concern,” before adding: “It does look as if we are not out of the woods yet.” Renewed weakness The report comes shortly after OPEC cut its forecast for oil demand growth in 2020, citing a weaker-than-expected recovery in India and other Asian countries. The oil-producing group also warned on Monday that risks would remain “elevated and skewed to the downside” for the first half of 2021. The IEA echoed this sentiment on Tuesday, saying “renewed weakness” in India reflected a cause for concern. However, China, which emerged from lockdown sooner than other major economies, continued to recover “strongly,” the group said. Energy market participants have become increasingly anxious about a faltering economic recovery and stumbling fuel demand in the wake of the coronavirus pandemic. The global health crisis has coincided with an unparalleled energy demand shock this year, with the IEA previously warning the fall in oil demand growth in 2020 could be the largest in history. Looking ahead, the IEA said it expected worldwide oil demand to grow by around 5.5 million bpd next year, climbing to an average of 97.1 million bpd in 2021.

Oil could see another demand shock, adding to the ‘extraordinary’ destruction this year – – The next big shock to the oil industry could be yet another hit to demand, analysts said. That would add to the destruction already seen this year as measures taken to combat the pandemic prevented people from commuting and traveling – drastically reducing oil usage. Speaking at S&P Global Platts’ Platts Asia Pacific Petroleum Virtual Conference (APPEC) 2020 on Monday, analysts pointed to the possibility of a second wave of Covid-19. “A lot of us, we’re talking about another demand shock. It’s like fighting the last battle,” said Ed Morse, managing director and global head of commodities research at Citi. During a panel discussion at the conference, he warned that oil producing countries could experience a big setback. “We’re seeing countries that are overly dependent on oil earnings, that can’t pay for the civil service, can’t pay for healthcare … education … security,” Morse said. “The rate of concern we’re going to see … dipped in demand and the gigantic build in inventories … I think the biggest worry is what happens to the fragility of the oil producing countries.” Earlier this year, the May contract for U.S. benchmark West Texas Intermediate crude dived deep into negative territory for the first time in its history, amid lockdowns and a lack of storage as oil inventory rapidly built up. “I think it is still all about the demand, the demand destruction this year has been extraordinary,” Martin Fraenkel, president of S&P Global Platts, which projected that the contraction in global oil demand will be 8 million barrels a day by the end of this year. “That’s a huge contraction year-on-year in a typical year … . Now we’ve come off the summer driving season in the U.S., we’re expecting that demand to taper off a little bit, and of course we’re seeing an uptick in infections of Covid-19 in many parts of the world … and that is a concern,” he said. “By the end of 2021, oil demand will still be below where the world was in 2019,” Fraenkel added, speaking to CNBC on Monday. OPEC+ has a “delicate maneuvering act” if demand does not bounce back, Fraenkel added, referring to the Organization of the Petroleum Exporting Countries (OPEC) and its allies.In July, OPEC+ put in place historic supply curbs of 10 million barrels a day, but agreed to ease them to 7.7 million barrels a day from August.”If demand doesn’t come back, how long is OPEC+ going to be able to sustain cohesion to keep supply under control when prices are hovering around $40 per barrel? While we think prices can go up in 2021 modestly, (will) demand growth keep coming back? It’s by no means an assured route,” he said.

Global oil demand may have passed peak, says BP energy report BP has called time on the world’s rising demand for fossil fuels after finding that demand for oil may have already reached its peak and faces an unprecedented decades-long decline. Demand for oil may never fully recover from the impact of the coronavirus pandemic, according to the oil firm, and may begin falling in absolute terms for the first time in modern history. BP’s influential annual report on the future of energy, published on Monday, says oil will be replaced by clean electricity from windfarms, solar panels and hydropower plants as renewable energy emerges as the fastest-growing energy source on record. Spencer Dale, BP’s chief economist, said the company’s vision of the world’s energy future had become greener due to a combination of the Covid-19 pandemic and the quickening pace of climate action, which has hastened “peak oil”. The report in effect sounds a death-knell for the growth of global oil demand after two of the report’s three energy scenarios for the next 30 years found that demand reached a peak in 2019. In BP’s third scenario, showing a world in which climate action does not accelerate, oil demand plateaus at similar levels seen in 2019 through the 2020s before declining from 2035. The report has confirmed a chorus of warnings from independent energy economists that the impact of coronavirus will bring forward the start of the oil industry’s terminal decline from the end of the decade. BP’s chief executive, Bernard Looney, said the findings would help the company to “better understand the changing energy landscape” and would be instrumental in helping it develop its plans to become a net zero energy company by 2050. He admitted earlier this year that he would “not write off” the possibility that coronavirus had brought forward the global peak in oil demand, and was “more convinced than ever” BP must embrace a low-carbon future.

Oil Demand May Have Peaked in 2019, BP Report Says – We may have already passed peak demand for oil. This suggestion comes from an unlikely source: fossil-fuel giant BP. The company released its annual Energy Outlook report Monday, and found that oil demand may have already peaked in 2019, as the rise inrenewable energy intersects with the impact of the coronavirus pandemic, The Guardian reported. “(The energy transition) would be an unprecedented event,” BP chief economist Spencer Dale told journalists, as Reuters reported. “Never in modern history has the demand for any traded fuel declined in absolute terms.” The report outlines three possible energy scenarios for the next 30 years.

1. The Rapid Transition Scenario (Rapid): This envisions a scenario in which energy-based greenhouse-gas emissions decline 70 percent by 2050, in line with limiting global warming to well below two degrees Celsius above pre-industrial levels by 2100.
2. The Net-Zero Scenario (Net Zero): This scenario imagines the policies adapted in the Rapid scenario are augmented by widespread lifestyle changes, and energy emissions decline by more than 95 percent by 2050, limiting warming to 1.5 degrees Celsius above pre-industrial levels.
3. The Business-as-Usual Scenario (BAU): This imagines that climate policies continue at a pace consistent with the past several years, and emissions only decline to less than 10 percent of 2018 levels by 2050.

In the first two scenarios, BP concluded oil demand would already have peaked in 2019, according to The Guardian. In the third, it would plateau after 2019 and peak sometime in the mid-2020s, according to BP. However, all three scenarios show oil and gas on the wane and renewable energy on the rise, Reuters reported. They show fossil fuels falling from 85 percent of energy demand in 2018 to 20 to 65 percent by 2050. Meanwhile, they show renewable technologies like wind and solar expanding from five percent of energy demand in 2018 to 20 to 60 percent by 2050, according to Reuters and The Guardian. “In all three of these scenarios the share of renewable energy grows more quickly than any energy fuel ever seen in history,” Dale told The Guardian.

Lost in transition: Big Oil searches for purpose as peak demand looms – The oil industry is about to enter its final phase: managed decline. Even if there is a strong post-pandemic economic recovery that boosts oil prices at some in the 2020s, it will be Big Oil’s ‘last hurrah’ before global demand peaks definitively and gradually tapers off. Some say this might have happened already thanks to Covid-19, while others see the tide turning between now and 2030.Either way, it is coming, and some oil companies are finally starting to wake up. BP acknowledged peak demand by committing to reduce its oil production by 40% within ten years, in a landmark new 2030 strategy that stole the headlines last week.The British oil major, unlike many of its peers, has realised that doubling down and chasing market share in a declining commodity is a road to ruin. Instead, it will focus only on the cheapest, least carbon-intensive barrels in its portfolio, and sell the rest – even if prices pick up in the near-term.In the first half of 2020, BP wrote off USD 9.7 billion in exploration expenditures after lowering its forward oil price assumptions by around 30% and concluding that a large chunk of its undeveloped acreage will never be commercially viable.BP previously valued its exploration intangibles at USD 14.2 billion, so the company has effectively written off almost 70% of its exploration portfolio. The write-offs were spread across Angola, Brazil, Canada, Egypt, India and the US Gulf of Mexico.On top of this, lower price assumptions prompted BP to write down the carrying value of upstream assets to the tune of USD 12 billion. And the company has identified another USD 43 billion of assets at risk of further impairment if assumed forward prices change again within the next financial year.In the meantime, BP is aiming to sell USD 25 billion of out-of-the-money assets by 2025, and is laying off some 10,000 people from its global workforce. Even for a company with a total marketcapitalisation of USD 58 billion, these are big moves. BP realises that thereafter, the risk of such assets becoming stranded increases significantly with anticipated higher carbon taxes, waning demand and softening prices as the world shifts inexorably towards cleaner fuels. The clock is already ticking, even for cleaner-burning natural gas – Big Oil’s much-heralded ‘bridge’ fuel to a net zero emissions future.

Oil Demand Has Collapsed, And It Won’t Come Back Any Time Soon – 2020 is shaping up to be an extraordinarily bad year for oil. In the spring, pandemic lockdowns sent oil demand plummeting and markets into a tailspin. At one point, U.S. oil prices even turned negative for the first time in history. But summer brought new optimism to the industry, with hopes rising for a controlled pandemic, a recovering economy and resurgent oil demand. Those hopes are now fading. In a report Tuesday, the influential advisory body called the International Energy Agency revised its forecasts for global oil consumption downward, warning that the market outlook is “even more fragile” than expected and that “the path ahead is treacherous.” It’s the latest in a flurry of diminished forecasts from major energy players. On Monday, oil cartel OPEC slashed its expectations of oil demand, just as Trafigura, a large oil trading company, warned that another large oil glut is building. And energy giant BP, which has grabbed headlines with its new carbon-neutral commitments, raised the possibility that the world might never again use as much oil as it did before the pandemic. A pair of recent OPEC reports reflect the rapid shift in mood. Its August oil forecast assumed that by 2021, “COVID-19 will largely be contained globally with no major disruptions to the global economy.” OPEC also predicted that economic activity would be rebounding steadily and oil demand would be recovering. But on Monday, OPEC released a much grimmer forecast. “[S]tructural changes to the global economy are forecast to persist,” the oil cartel wrote. Travel and tourism “are not expected to achieve pre-COVID-19 levels of activity before the end of 2021.” The IEA, a well-regarded source of global energy data, agreed with the oil cartel’s latest assessment, writing that “it is becoming increasingly apparent that COVID-19 will stay with us for some time.” “There’s some negative vibes out there,” said Neil Atkinson, the head of Oil Industry and Markets Division at the IEA. “It just doesn’t appear to be a simple case of this horrible thing comes along in the first six months of the year and then mercifully goes away again and we can all go back to normal. It’s just not happening like that.”

Oil mixed as storm threatens U.S. gulf production – Oil prices were mixed on Monday with U.S. crude rising as a tropical storm in the Gulf of Mexico forced rigs to shut down, but the gains were kept in check by wider concerns about excess supply and falling demand for fuels. U.S. West Texas Intermediate crude futures were up 9 cents, or 0.2%, at $37.42 a barrel by around 0050 GMT. Brent crude was down 3 cents at $39.80 a barrel. Both contracts ended last week lower, a second consecutive week of declines. Tropical Storm Sally gained in strength in the Gulf of Mexico west of Florida on Sunday and was poised to become a category 2 hurricane. The storm is disrupting oil production for the second time in less than a month after hurricane Laura swept through the region. Typically oil rises when production is shut but with the coronavirus pandemic getting worse demand concerns are to the fore, while global supplies continue to rise. “A lackluster driving season in the U.S. has seen the market reassess its view of U.S. demand,” ANZ Research said in a note. Also “with U.S. refiners now shutting down for maintenance, crude demand is likely to remain soft.” The U.S. is the world’s biggest oil consumer and producer. BP Plc and Equinor ASA evacuated staff from some offshore platforms on Sunday after similar moves by Chevron Corp and Murphy Oil Corp the day before. In Libya, commander Khalifa Haftar committed to ending a months-long blockade of oil facilities, a move that would add more supplies to the market, although it was unclear if oil fields and ports would begin operations.

Oil edges lower, shrugging off Gulf of Mexico shut-ins (Reuters) – Oil prices slipped slightly on Monday amid concerns about a stalled global economic recovery and with Libya poised to resume production, and failed to get support from an impending storm which has disrupted U.S. output. Brent crude settled down 22 cents, or 0.6%, at $39.61 a barrel while U.S. West Texas Intermediate (WTI) crude futures CLc1 were down 7 cents, or 0.2%, at $37.26 a barrel. Both contracts ended last week lower, falling for a second week in a row. “The storm is taking production offline in the Gulf of Mexico, and the market doesn’t care – that shows just how bad the situation is,” said Bob Yawger, director of energy futures for Mizuho in New York. Hurricane Sally gained in strength in the Gulf of Mexico, west of Florida on Sunday and was poised to become a category 2 hurricane. The storm forced energy firms to shut 21.4%, or 395,790 barrels per day (bpd), of offshore crude oil production in the northern Gulf of Mexico, the U.S. government said on Monday. The storm is disrupting oil production for the second time in less than a month after Hurricane Laura swept through the region. Typically oil prices rise when production is shut down, but with the coronavirus pandemic getting worse, demand concerns are to the fore, while global supplies continue to rise. The path towards global fuel demand recovery is likely to be rocky, several senior industry executives said. “(Coronavirus) infection rates are on the rise again, there are localized lockdowns introduced in a growing number of countries hindering regional economic growth and the number of unemployed is failing to fall significantly,” oil broker PVM’s Tamas Varga said. “This leads to dismal oil demand growth.”The Organization of the Petroleum Exporting Countries said on Monday that world oil demand would tumble by 9.46 million barrels per day (bpd) this year, a sharper decline than it predicted in a report a month ago.

Oil edges higher but bleaker demand outlook weighs – Oil prices edged slightly higher on Tuesday, but forecasts of a slower than expected recovery in global fuel demand due to the coronavirus pandemic weighed. Brent crude was up 55 cents, or 1.4%, at $40.16 a barrel, while West Texas Intermediate crude futures were up 61 cents, or 1.6%, at $37.87 a barrel. Both contracts fell on Monday. The International Energy Agency (IEA) on Tuesday trimmed its 2020 outlook by 200,000 barrels per day (bpd) to 91.7 million bpd, citing caution about the pace of economic recovery. “We expect the recovery in oil demand to decelerate markedly in the second half of 2020, with most of the easy gains already achieved,” the IEA said in its monthly report. Its revision chimes with forecasts from major oil industry producers and traders, with OPEC downgrading its oil demand forecast and BP saying demand might have peaked in 2019. World oil demand will tumble by 9.46 million bpd this year, the Organization of the Petroleum Exporting Countries said in a monthly report on Monday, more than the 9.06 million bpd decline OPEC expected a month ago. Still, a meeting of the OPEC+ joint ministerial committee on Thursday is not expected to make recommendations for deeper output cuts, but rather focus on compliance and compensation mechanisms for its current cuts, sources told Reuters. Concerns over supply disruptions in the United States from Hurricane Sally provided some price support. Energy companies, ports and refiners raced on Monday to shut down as Hurricane Sally grew stronger on its approach to the central U.S. Gulf Coast, the second significant hurricane to shutter oil and gas activity in the past month. Meanwhile, China’s crude oil throughput in August rose from a year ago, reaching its second-highest level on record, as refineries worked to digest record imports earlier this year.

Oil prices climb as Hurricane Sally nears Mississippi – Oil prices climbed Tuesday as Hurricane Sally bore down on the Mississippi coast as a Category 1 storm. West Texas Intermediate crude oil was trading up 60 cents at $37.86 per barrel while RBOB Gasoline edged up 0.82 cents to $1.115 per gallon. “Hurricane Sally is a powerful slow-moving storm that can prove to be a nightmare for the U.S. energy Infrastructure,” Hurricane Sally, which has sustained winds of 85 miles per hour, down from 110 miles per hour, is expected to make landfall in the area east of Gulfport, Miss. Sally’s path is similar to that of Hurricane Laura, which hit Louisiana as a Category 4 storm last month and took about 80% of U.S. production offline. In preparation for the storm, U.S. refineries and offshore production facilities have begun shutting down. Phillips 66 Co. on Monday shut its 255,600 barrel per day refinery in Alliance, La., while Chevron Corp. and Royal Dutch Shell plc were among the companies that idled facilities in the Gulf of Mexico. About 16% of U.S. refinery capacity, or about 3.1 million barrels per day, are in the path of the storm. “The possibility of damaging flash floods will put pipelines and refineries in jeopardy and of course will also stop imports and exports in the Gulf Of Mexico,” A refinery takes one to two weeks to return to full capacity so long as there is no flooding nor power outages. U.S. gasoline and diesel inventories are well stocked ahead of the storm due to the demand destruction caused by lockdowns aimed at slowing the spread of COVID-19. Gasoline inventories are up 1% to 2% from a year ago while diesel stockpiles are higher by 30%, according to Andrew Lipow, president of the Houston-based oil consulting firm Lipow Associates.

Oil rises over 2% as U.S. Gulf Coast braces for hurricane (Reuters) – Oil prices rose more than 2% on Tuesday, supported by hurricane supply disruptions in the United States, but demand concerns loomed as energy industry forecasters predicted a slower-than-expected recovery from the pandemic. Brent crude gained 92 cents, or 2.3%, to settle at $40.53 a barrel, while U.S. West Texas Intermediate (WTI) crude futures rose $1.02, or 2.7%, to settle at $38.28 a barrel. Both contracts fell on Monday. Futures gained ahead of Hurricane Sally’s expected landfall on the U.S. Gulf Coast. More than a quarter of U.S. offshore oil and gas production was shut and key exporting ports were closed as the storm’s trajectory shifted east toward western Alabama, sparing some Gulf Coast refineries from high winds. “Harsh weather events in the U.S. cause some unpredictability about its oil production and that’s always good news for prices,” said Bjornar Tonhaugen, Rystad Energy’s head of oil markets. The outlook for oil demand remained weak, capping price gains. The International Energy Agency (IEA) trimmed its 2020 outlook by 200,000 barrels per day (bpd) to 91.7 million bpd, citing caution about the pace of economic recovery. “We expect the recovery in oil demand to decelerate markedly in the second half of 2020, with most of the easy gains already achieved,” the IEA said in its monthly report. The agency said commercial oil stocks in the developed world hit an all-time high of 3.225 billion barrels in July, and cut its forecast for implied stock draws for the second half of the year. The IEA’s demand revision aligns with forecasts from major oil industry producers and traders. OPEC downgraded its oil demand forecast and BP BP.L said demand might have peaked in 2019. World oil demand will tumble by 9.46 million bpd this year, the Organization of the Petroleum Exporting Countries said in a monthly report on Monday, more than the 9.06 million bpd decline OPEC expected a month ago. Still, a meeting of the OPEC+ joint ministerial committee on Thursday is not expected to make recommendations for deeper output cuts, but focus rather on compliance and compensation mechanisms for its current cuts, sources told Reuters. Meanwhile, China’s crude oil throughput in August rose from a year ago, reaching its second-highest level on record, as refineries worked to digest record imports earlier this year.

Oil gains as hurricane shuts U.S. output, stockpiles fall – Oil prices rose on Wednesday, extending gains from the previous session, as a hurricane disrupted U.S. offshore oil and gas production and an industry report showed a big drop in U.S. crude stockpiles. Brent crude was trading up 15 cents, or 0.4%, at $40.68 a barrel by 0055 GMT, while U.S. crude gained 18 cents, or 0.5%, to $38.46 a barrel. Both contracts rose by more than 2% on Tuesday. More than 25% of U.S. offshore oil and gas output was shut and export ports were closed on Tuesday as Hurricane Sally sat just off the U.S. Gulf Coast. “Our current estimate for the total outage associated with the Sally weather system is between 3 million and 6 million barrels of oil over approximately 11 days,” Rystad Energy said in a note. That is likely to help reduce stockpiles although refineries were also shut down, cutting demand for oil. U.S. crude oil inventories fell by 9.5 million barrels last week, although gasoline inventories increased, data from industry group the American Petroleum Institute showed on Tuesday. Analysts had expected oil stocks to increase by 1.3 million barrels. Official data on U.S. stockpiles is due out later on Wednesday and often conflicts with the industry figures. Meanwhile, oil producers and traders are painting a bleak picture for a recovery in fuel demand globally as the Covid-19 pandemic rages on, hammering economies.

Oil Jumps On Sally and Surprise Stock Draw, But Analysts Continue Bearish Stance – Hurricane Sally may be destructive, but she worked her magic on oil prices for a second session on Wednesday, causing them to jump nearly 5 percent, supported by a surprise decline in U.S. inventories that further discredits the analytical conviction of demand declining in a Covid-19 world. Nearly 500,000 barrels per day (bpd) of offshore production has been taken offline due to the Category 2 hurricane, and this caused Brent to rise $1.69, or 4.17 percent, to $42.22 per barrel; West Texas Intermediate jumped $1.88, or 4.9 percent, to settle at $40.16 per barrel. Analysts previously convinced that rising Covid infections were causing demand destruction were jubilant when the U.S. Energy Information Administration on Wednesday reported a stock draw of 4.4 million barrels last week to 496 million barrels, compared to expectations for a 1.3 million barrel rise. Phil Flynn, senior market analyst at Price Futures Group Inc., said, “The inventory numbers are significant – refineries seemed to jump back to activity, gasoline demand jumped back, so that’s definitely positive. “It seems that we’re back on the track of the drawdown on supplies.” Still, worry persisted over demand during the pandemic, and Reuters on Wednesday published a list of oil companies – including BP, and Exxon Mobil Corp – that were either trying to maintain, considering closing, or were permanently shutting certain operations. The news agency wrote, “Consumption has not returned to pre-pandemic levels, and lower travel may be here to stay.” Concern was also expressed on Wednesday that stockpiles of diesel and jet fuel are continuing to swell and impacting profit margins, giving refiners little incentive to run their plants harder: “If they don’t crank up the run rate, they will never burn off the crude oil overhang already in storage,” said Bob Yawger, director of the future division at Mizuho Securities USA. As is rapidly becoming the norm, despite analytical hand-wringing the global economic recovery as well as a prospective end to the pandemic continued to show promise on Wednesday, with markets responding strongly to the U.S. Federal Reserve’s vow to keep interest rates near zero – a spur to economic activity – until at least 2023.

Oil jumps nearly 5% in best day since June as inventories fall, hurricane hits output – Oil prices jumped more than 4% on Wednesday, following a drawdown in U.S. crude and gasoline inventories and as Hurricane Sally forced a swath of U.S. offshore production to shut. Brent crude rose $1.69, or 4.17%, to $42.22 a barrel, while West Texas Intermediate crude gained $1.88, or 4.9%, to settle at $40.16. U.S. crude stocks fell 4.4 million barrels last week to 496 million barrels, their lowest since April, the U.S. Energy Information Administration said, compared with analysts’ expectations in a Reuters poll for a 1.3 million-barrel rise, U.S. gasoline stocks fell 400,000 barrels, the EIA said, more than double the draw forecast, despite a 4 percentage point hike in refining utilization rates. “The inventory numbers are significant – refineries seemed to jump back to activity, gasoline demand jumped back so that’s definitely positive,” said Phil Flynn, senior analyst at Price Futures Group in Chicago. “It seems that we’re back on the track of the drawdown on supplies.” Sally, which made landfall on the U.S. Gulf Coast as a Category 2 hurricane, also boosted oil prices as more than a fourth of offshore output shut due to the storm. Nearly 500,000 barrels per day (bpd) of offshore crude oil production was taken offline in the U.S. Gulf of Mexico, according to the U.S. Interior Department, roughly a third of the shut-ins caused by Hurricane Laura, which landed farther west in August. Oil collapsed to historic lows as the coronavirus crisis hit demand. A record supply cut by OPEC and its allies, a grouping known as OPEC+, and an easing of lockdowns have helped Brent recover from a 21-year low below $16 in April. Prices have sunk in September, pressured by rising coronavirus cases and concerns about demand. The Organization of the Petroleum Exporting Countries and International Energy Agency both cut their demand outlooks this week. A panel of OPEC+ oil ministers meets to review the supply pact on Thursday and is unlikely to recommend further output curbs despite the price drop, sources told Reuters.

Oil reverses losses to gain 2% as OPEC urges compliance with production cuts -Oil prices rose about 2% on Thursday, turning positive as OPEC and its allies said the producer group would crack down on countries that failed to comply with output cuts and planned to hold an extraordinary meeting in October if oil markets weaken further. Brent oil futures extended their gains to trade up 2.3% at $43.21 a barrel. U.S. crude futures settled 81 cents, or 2%, higher at $40.97 per barrel. Both contracts rose more than 4% on Wednesday. The panel of major producers, including Saudi Arabia and Russia, did not recommend any changes to their current output reduction target of 7.7 million barrels per day (bpd), or around 8% of global demand, according to a draft press release and an internal report. The panel pressed laggards such as Iraq, Nigeria and the United Arab Emirates to cut more barrels to compensate for overproduction in May-July, while extending the compensation period from September to the end of December, according to three OPEC+ sources. “They were coming down hard on the UAE,” said Phil Flynn, senior analyst at Price Futures Group in New York. The expectation that output could fall as the UAE and others trim production bolstered prices, he said. The OPEC news overshadowed the restart of U.S. offshore production after Hurricane Sally passed through the Gulf of Mexico and bearish U.S. economic news. U.S. energy companies were starting to return crews to offshore oil platforms in the Gulf of Mexico after Sally halted operations for five days, shutting down nearly 500,000 bpd of output. Prices were also under pressure from the slow economic recovery from the pandemic. Global coronavirus cases are expected to pass 30 million on Thursday, according to a Reuters tally. The U.S. Labor Department’s report showed the number of Americans filing new claims for unemployment benefits fell last week, but remained at extremely high levels as the labor market recovery shifts into low gear and consumer spending cools. Even OPEC+ cautioned that the pandemic could continue to curb demand. An OPEC+ technical panel warned that a rise in coronavirus cases in some countries may curb oil demand despite signs of economic recovery and initial indications of a decline in oil stocks, according to an internal document seen by Reuters.

Oil jumps more than 10% for the week following OPEC meeting, decline in U.S. inventory – Oil prices were mixed on Friday, weighed after a Libyan commander said a blockade on the country’s oil exports would be lifted for a month, while supportive signals from an OPEC+ meeting lifted futures. Both the U.S. and Brent crude benchmarks posted weekly gains after Saudi Arabia pressed allies to stick to production quotas, Hurricane Sally cut U.S. production, and banks including Goldman Sachs predicted a supply deficit. Brent fell 15 cents to settle at $43.15 a barrel, but rose 8.3% for the week. U.S. oil futures rose 14 cents to settle at $41.11 a barrel, and gained 10.1% for the week. Market sentiment fell on Friday after eastern Libyan commander Khalifa Haftar announced he would lift his blockade of oil output for one month. The blockade slashed Libyan production to just over 100,000 barrels per day now from around 1.2 million bpd previously. It was unclear how quickly Libya could ramp up production. Oil futures also tracked U.S. stock indexes, which broadly fell. “A risk-off mentality is sprinkling down to oil. There are still concerns demand might get worse,” said Phil Flynn, analyst at Price Futures Group in Chicago. On Thursday, though, the key panel for the Organization of the Petroleum Exporting Countries and its allies pressed for better compliance with oil output cuts against the backdrop of falling crude prices. Saudi Arabia’s Prince Abdulaziz bin Salman told a gathering on Thursday that the OPEC+ producer group could hold an extraordinary meeting in October if the oil market soured because of weak demand and rising coronavirus cases, according to an OPEC+ source. “The alliance showed strength and reassured the market that if further action will be needed to discipline sub-compliers and balance the market, it would be taken,” said Bjornar Tonhaugen, Rystad Energy’s head of oil markets. Goldman Sachs predicted a market deficit of 3 million bpd by the fourth quarter and reiterated its target for Brent to reach $49 by year end and $65 by the third quarter of 2021.

Oil sector could face more distress during coronavirus crisis as it struggles to draw investments – Oil prices have plunged during the pandemic and the sector’s crisis could get worse as new investments are unlikely to flow in, experts said at an energy conference this week. Pandemic-related movement restrictions stopped people from commuting and traveling, drastically reducing oil usage. Earlier this year, the May contract for U.S. benchmark West Texas Intermediate crude plunged deep into negative territory for the first time in its history. Overall, oil prices have dropped around 40% since the start of the year. With the poor performance across the industry, analysts at the S&P Global Platts’ Platts Asia Pacific Petroleum Virtual Conference (APPEC) 2020 this week flagged that drawing investment to the sector would be a problem. Who is going to fund our next investment cycle? Indeed, is anyone going to be incentivized to fund us? Returns on the E&P companies as an investment have been poor. Ben Luckock, co-head of oil trading at commodity trading company Trafigura, said that it might be “hard to see where the investment comes from.” Speaking at the APPEC conference, he pointed out that, as a result of the fall in oil prices and corporate valuations, capital expenditure in exploration and production (E&P) companies in the energy sector have plummeted. Such companies are involved in the early stages of energy production, which includes searching and extracting oil and gas. “Who is going to fund our next investment cycle? Indeed, is anyone going to be incentivized to fund us? Returns on the E&P companies as an investment have been poor,” Luckock said. While returns on the S&P 500 have boasted a 70% increase since 2015, he pointed out returns of E&P companies fell by 70% over the same period. “From a funding perspective, the energy sector in general faces two key problems. One is the relatively low shareholder return, and the second is the squeezed margins across the value chain,” “This phenomena in the energy sector … poses key challenges for where financing is going to come from, and particularly so in a period of acute crisis.” In a report earlier this year, research firm Rystad Energy projected that E&P companies could lose as much as $1 trillion in revenues this year – a 40% decline year on year. Last year, the industry made $2.47 trillion in revenues. “It doesn’t bear comparison, people don’t want to put their money into the E&Ps with good reason. That still leaves the world with a major problem,” Luckock said. “Regardless of when peak demand happens, which is now harder to forecast than ever, we’ll still need tens of millions of barrels of oil a day for years to come. And we need to see investment happen in order to find, develop and produce those barrels,” he concluded.

OPEC and non-OPEC allies to review oil production cuts after dire demand warnings – A group of some of the world’s most powerful oil-producing nations on Thursday met to review production policy, amid a faltering recovery from the pandemic-driven rout and a bleak outlook for energy demand. During the meeting between OPEC and non-OPEC allies, sometimes referred to as OPEC+, ongoing flexibility was emphasized as oil prices continue to trade at depressed levels. “The JMMC [Joint Ministerial Monitoring Committee] observed that the recovery has not been even across the world and an increase in COVID-19 cases has appeared in some countries,” a statement from OPEC read. “In the current environment, the JMMC emphasised the importance of being pro-active and pre-emptive and recommended that participating countries should be willing to take further necessary measures when needed.” OPEC+ did not announce additional output cuts at Thursday’s meeting, which was in-line with analyst expectations. The energy alliance agreed in July to cut output by 7.7 million barrels per day from August through to December, in an effort to prop up oil prices by limiting supply. Iraq and others also pledged to pump below their quotas in September to offset overproduction earlier in the year. “The JMMC reiterated the critical importance of adhering to full conformity and compensating overproduced volumes as soon as possible,” OPEC officials said. OPEC kingpin Saudi Arabia and non-OPEC leader Russia, the two biggest producers in the alliance, have both pushed for full conformity in recent months. Saudi Arabia’s Energy Minister Prince Abdulaziz bin Salman has previously used OPEC meetings to publicly press recalcitrant members to stick to the pledged output cuts. International benchmark Brent crude advanced nearly 3% to $43.46 a barrel on Thursday afternoon, while U.S. West Texas Intermediate crude stood at $41.12, for a gain of 2.4% Oil prices have dropped more than 35% since the start of the year. “I do not believe we should expect any material change of course out of the OPEC meeting this week when they review market fundamentals, in part because compliance with previously agreed production cuts has been high,” Tim Bray, senior portfolio manager at GuideStone Capital Management, told CNBC via email.

Sanctions against Turkey over Mediterranean gas drilling wouldn’t achieve much, former EU ambassador says – – The European Union will not go as far as to impose sanctions on Turkey, one regional expert told CNBC, despite Ankara’s controversial activity in the Mediterranean Sea. Turkey, Greece and Cyprus have been at odds over the former’s exploration of energy resources in parts of Eastern Mediterranean waters that both Athens and Nicosia claim are part of their own territory. The countries and territories of this region include Greece, Turkey, Cyprus, Syria, Lebanon, Jordan, Israel, Palestine, Egypt and Libya. The dispute, which goes back over four decades, has escalated in recent weeks. Turkey’s pursuit to expand its oil and gas resources in the Eastern Mediterranean even resulted in a minor collision between two frigates last month. Greece, increasingly angry at what it describes as “illegal” activity by Turkey, has called on its EU partners to impose “tough sanctions” on Ankara. EU leaders will be discussing the standoff between NATO members at an emergency meeting in two weeks’ time. For its part, Turkey has claimed it has every right to prospect in the contested waters and accuses Greece of trying to grab an unfair share of maritime resources. “Leaders cannot do anything else but reinstate their solidarity with Greece,” Marc Pierini, a former EU ambassador to Turkey, told CNBC earlier this month. “Sanctions would not give much result here,” he said. Turkey’s economy has struggled in recent years and the global recession has added further pressure to the embattled nation. In addition, the political party of President Recep Tayyip Erdogan has lost its traditional dominance in the country. Vassilis Ntousas, a policy expert at Chatham House, told CNBC that Erdogan was looking to “cement” his legacy by adopting a more assertive regional policy. He added that Turkey was looking “to play a stronger role in the region and it is willing to play hard ball.”

Greece buys billions in French arms amid war tensions with Turkey – On Saturday, conservative Greek Prime Minister Kyriakos Mitsotakis announced a purchase of billions of euros in French weaponry and a large increase in the size of the Greek military. This massive increase in military spending, by a country which the European Union (EU) has devastated with billions of euros in draconian cuts to social spending over the last decade, marks a major escalation in Greece’s ongoing military standoff with Turkey. Mitsotakis indicated that Greece will purchase 18 Rafale fighter jets, four French naval frigates with naval helicopters, and a large supply of anti-tank weapons, torpedoes and missiles. It will also ask French firms to upgrade four Greek frigates that are already in service. Finally, Mitsotakis said that 15,000 more soldiers would be recruited to the Greek armed forces. “The time has come to reinforce our armed forces. … This is an important program that will form a national shield,” Mitsotakis declared in a speech in Thessaloniki. The sale comes after months of escalating threats and one direct collision last month between Greek and Turkish warships in the eastern Mediterranean, as Athens and Ankara lay competing claims to territorial waters and oil-rich seabeds in the region. In this dispute, Paris has aggressively backed Athens, sending several warships and fighter jets to the eastern Mediterranean to counterbalance Turkey’s numerical superiority over Greece. Paris also is seeking to undercut Turkey’s position in Africa and specifically in Libya, where French President Emmanuel Macron backs warlord Khalifa Haftar and Turkish President Recep Tayyip ErdoÄŸan backs the Government of National Accord (GNA). Haftar and the GNA currently lead the two main factions in the decade-long civil war in Libya triggered by NATO’s war against the country in 2011. On Thursday, Macron had met other southern European heads of state in a so-called Med7 summit (with Italy, Spain, Portugal, Greece, Malta and Cyprus) in the Corsican city of Ajaccio. Beyond discussing the COVID-19 pandemic, which has seen the southern European powers seek new EU bailout funding, they pledged to renew France’s plans for a Union of the Mediterranean, vetoed by Berlin a decade ago. They also issued joint criticisms of Turkey’s maritime claims in waters also claimed by Greece or Cyprus. The Med7 states adopted a statement calling to “renew the southern partnership between the European Union, its member states and our southern neighbors. We await with interest the November 27 regional forum of the Union of the Mediterranean.” They also pledged to coordinate policy in the Sahel, where they aim to prevent African refugees from reaching Europe and to assist France’s ongoing bloody war in Mali.

Large Number Of Russian Warships Seen Deployed Between Syria & Cyprus -A large number of Russian warships were recently tracked off the coasts of Syria and Cyprus in the eastern Mediterranean region, the Russian publication Avia.Pro reported Thursday. According to the online publication, “experts are seriously concerned about the presence of at least 15 Russian warships and submarines off the coast of Syria. This is the first time such a large military formation has been seen here, which raises suspicions about whether Russia plans to engage in a military special operation against jihadists using the navy.In a maritime tracking image shared on their site, the 15 Russian warships and submarines can be seen positioned between the island nation of Cyprus and nearby Syria, along with some ships north of Egypt and another near the central part of the Mediterranean.According to the Telegram channel, Hunter Notes, “one of the last to appear off the coast of Syria was the tanker of the Northern Fleet of the Russian Navy ‘Akademik Pashin’; boats, and, obviously, this is far from the final number of ships of the Russian Navy located in the eastern part of the Mediterranean Sea.”This Russian naval buildup also comes at a time of increased tension between Turkey, Cyprus and Greece in the eastern Mediterranean, as the latter two countries have accused Ankara of encroaching on their territorial waters. Turkey’s Erdogan has recently threatened external countries, warning them not to hinder Turkish hydrocarbon exploration vessels operating off Cyprus.

The Bahrain-Israel Mutual Recognition – This freshly announced mutual recognition follows the one between the UAE and Israel, which set a new pattern, with Bahrain and possibly others (Oman?) predicted to follow. I see three reasons why Bahrain was most likely to be next, although there are really two fundamental ones with the third arising from those. The most fundamental one is that of the 6 members of the Gulf Cooperation Council (GCC), now largely in shatters due to the sanctions on one of them (Qatar) by several others (Saudi Arabia (KSA), UAE, and Bahrain), is the only one where a Sunni minority is ruling over a Shia majority, with the Sunni-Shia conflict a central part of the conflict with Iran that many of them have, with Iran run by Shia, of course, where they are a majority. The Shia of Bahrain have been restive and rose up against King Hamad during the Arab Spring that began in 2011, only to be violently put down. But, unsurprisingly, the king and those around him are especially worried about the Shia and have strongly supported the anti-Iran coalition, which includes Israel. It is this alliance that is at the heart of the new round of recognitions, with UAE leader, Prince Zayed, arguably the leader of the anti-Iran group in the GCC, along with KSA Crown Prince, MbS, although due to opposition of the Saudi religious leaders who are concerned about the Palesrtinians, MbS himself is not seen as likely to follow UAE and Bahrain to recognize Israel, although there is clearly a de facto alliance against Iran between them.A second reason Bahrain was more likely to be next is that it is more subject to US pressure as it hosts the home base in the Persian Gulf of the US Navy’s 5th fleets, something rarely mentioned in the media, and has been since the 1950s. That dates back to when what is now the UAE was still being ruled by UK as the Trucial States. On top of that Bahrain is the smallest of the GCC members and also is the one that has been running out of oil more than the others (all of them produce at least some oil). In short, King Hamad is much more susceptible to US pressure to recognize Israel, although given his unhappiness with his Shia population and support for the anti-Iran coalition, he has been more inclined to go along anyway. Another reason, which basically follows these others, is that Bahrain is indeed part of the GCC group that is sanctioning/boycotting fellow GCC member, Qatar, for its apparent unwillingness to join the anti-Iran coalition. Indeed, Qatar and Iran have a joint deal for managing certain natural gas fields in the Gulf, and Qatar, which has the world’s highest per capita income, also hosts al=Jazeera, which has reported on dissident movements in several of its GCC partners, another source of anger. Of course, while Trump initially forgot about this as MbS and Jared Kushner pushed him into supporting the anti-Qatar sanctions, Qatar hosts a major US air base, so the US military did manage to get to Trump to back off overtly supporting the anti-Qatar boycott, although the US has failed to bring that conflict to a conclusion.

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