Written by rjs, MarketWatch 666
Here are some more selected news articles about the oil and gas industry from the week ended 24 October 2020. Go here for Part 1.
This is a feature at Global Economic Intersection every Monday evening.
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Judge denies tribes’ bid to halt Keystone oil pipeline work (AP) – A federal judge has denied a request by Native American tribes to halt construction of the Keystone XL oil pipeline from Canada over worries about potential spills and damage to cultural sites. Work started this spring on the long-stalled pipeline that would carry oil sands crude from Hardisty, Alberta to Steele City, Nebraska. The Assiniboine and Gros Ventre tribes of the Fort Belknap Indian Community in Montana and Rosebud Sioux Tribe in South Dakota have challenged President Donald Trump’s 2019 permit for the project. The tribes say Trump’s permit violated their rights under treaties from the mid-1800s. U.S. District Judge Brian Morris said in an Oct. 16 ruling that the tribes did not show they would suffer irreparable harm from the work that’s been done so far. Morris said he had “serious questions” about the legal claims being made by the tribes. He did not make a final ruling, and invited further arguments. More than 1,000 people are working on the $9 billion project including building 12 pump stations for the 1,200-mile (1,900-kilometer) line, said Terry Cunha with TC Energy, the Calgary-based company behind the project. However, work on much of the pipeline itself remains stalled. That’s because the U.S. Supreme Court in July upheld a lower court ruling that invalidated a permit needed for the pipeline to cross hundreds of rivers and other water bodies along its route. Keystone XL was first proposed in 2008 and rejected under former President Barack Obama. It was revived by Trump as part of the Republican’s efforts to boost fossil fuel industries.
Tribes again ask federal judge to shut down Dakota Access Pipeline – American Indian tribes who oppose the Dakota Access Pipeline have again asked a federal judge to stop the flow of oil while the battle over the line’s future plays out in several venues. The Standing Rock Sioux and other tribes in the Dakotas succeeded on their first attempt, only to have an appeals court overturn U.S. District Judge James Boasberg’s shutdown order earlier this year. Now, they’re asking the judge to clarify his earlier ruling to satisfy the appellate judges and then order the line to cease operations. The tribes argue that potential harm to their water supply outweighs any economic impacts of shutting down the line that’s been moving North Dakota oil to a shipping point in Illinois for more than three years. “The Tribes are irreparably harmed by the ongoing operation of the pipeline, through the exposure to catastrophic risk, through the ongoing trauma of the government’s refusal to comply with the law, and through undermining the Tribes’ sovereign governmental role to protect their members and respond to potential disasters,” attorneys Jan Hasselman and Nicole Ducheneaux wrote. The Friday filing in U.S. District Court in Washington, D.C., came as the federal agency that permitted the pipeline was wrapping up a two-day public meeting to help determine the scope of an environmental study U.S. District Judge James Boasberg ordered in March. The U.S. Army Corps of Engineers launched the study about a month ago. It’s expected to take more than a year to complete, and will help determine whether the Corps reissues an easement for the pipeline’s Missouri River crossing in the Lake Oahe reservoir just north of the Standing Rock Reservation. Tribes fear a spill into the river would pollute their water supply. Pipeline operator Energy Transfer and the Corps both maintain the pipeline is safe. Prolonged protests in 2016 and 2017 drew thousands of people to camps near the river crossing and resulted in hundreds of arrests. “From the beginning of this litigation, the Tribes have sought to reinforce the centrality of Lake Oahe to their ceremonies, their economy, and their identity,” Hasselman and Ducheneaux wrote. Boasberg, who is overseeing the four-year-old lawsuit filed by the tribes, ordered the extensive environmental study last spring because he felt previous, less-extensive environmental analysis by the Corps left lingering questions. Boasberg in July revoked the easement that allows for the river crossing and ordered the pipeline shut down until its environmental soundness was proven. A federal appeals court allowed oil to keep flowing, however, ruling that Boasberg hadn’t justified a shutdown. That same appeals court is now determining whether to uphold his decision regarding the study.
North Dakota’s oil output up 12% in Aug as more wells resume output (Reuters) – North Dakota’s oil production rose about 12% to 1.16 million barrels per day (bpd) in August as more wells and drilling rigs resumed production after a drop earlier this year, the state’s regulator said on Friday. Producers in the state shut about 5,000 wells pumping 300,000 bpd as prices tumbled into negative territory in April. Output in the United States, while still well below the peak 13 million bpd reached in January, has been gradually rising with U.S. crude futures holding around $40 a barrel over the past several months. The additional U.S. oil production is adding to uncertainty over what the Organization of the Petroleum Exporting Countries will do next month. OPEC and allies are scheduled to meet Nov. 30 to review a plan to ease curbs on production, potentially adding 2 million bpd next year. North Dakota’s crude oil output rose to 1.16 million bpd from 1.04 million bpd in July, state regulator North Dakota Department of Mineral Resources reported. Peak production in the state was 1.4 million bpd in 2019. Officials said 16 drilling rigs are active in the state, up from 10 in July. Crude oil produced in the state was selling for $31.75 a barrel, compared with $9.16 per barrel in April when the COVID-19 pandemic and a market glut knocked prices lower.
Regulators report 12,180-gallon oil spill near Watford City . (AP) – North Dakota regulators say an equipment failure at a well near Watford City led to the release of about 12,180 gallons of oil. The state’s Oil and Gas Division said it was notified of the spill on Sunday at the Newfield Production Co. well located about 5 miles west of Watford City. Regulators said none of the oil escaped the oil well site. The company reported that it has recovered all but about 420 gallons of the oil. Regulators said a state inspector has been at the site and is monitoring cleanup.
State looks to put $16M in federal virus funds toward fracking grants – State officials say there isn’t enough time left to clean up every abandoned oil field well site they had intended to this year using federal coronavirus aid, so they want to repurpose $16 million and put it toward grants for fracking. Regulators present the proposal as a way to create jobs and help stabilize state revenue, while some in the environmental community view it as a bailout for the oil industry. Under the proposal that the North Dakota Emergency Commission will consider Friday, oil companies would be eligible for a $200,000 reimbursement per well they complete. The money would go toward acquiring and disposing of water used in the hydraulic fracturing process, in which water, sand and chemicals are injected deep underground to crack rock and release oil. The proposal evolved through discussions between state officials and oil industry representatives. State Mineral Resources Director Lynn Helms said he recently spoke to oil companies who have been hit hard by the price drop brought on during the pandemic, which has curtailed global travel and oil demand. “They had been talking about how slow work was and how bad it was going to get during the coming winter months,” he said. “They were really excited by this. That’s what this really is, to generate these jobs for the next couple months.” A representative with the Sierra Club, however, called it “totally inappropriate” to put some of the $1.25 billion the state received through the federal Coronavirus Relief Fund toward fracking. “A direct subsidy payment to oil companies to drill for oil is outrageous,” said Wayde Schafer, spokesman for the organization in North Dakota. State leaders have doled out the money from the fund, which was established by the CARES Act, throughout the course of 2020. It must be used by the end of the year. When the six-member Emergency Commission meets Friday, members will consider proposals from a host of state agencies to spend another $221 million in fund dollars. If approved by the all-Republican commission, which consists of the governor, secretary of state and legislative leaders, the proposals then go to the larger legislative Budget Section for a final vote.
Testing for oil in Arctic wildlife refuge proposed for this winter – Testing for oil deposits at the Arctic National Wildlife Refuge (ANWR) could begin in December, according to a proposed plan for such testing that was posted online Friday. The government posted a plan submitted by the Kaktovik Inupiat Corporation to conduct seismic testing in the refuge, including in an area where polar bears and other wildlife may be found. Seismic testing uses acoustic waves that bounce off formations beneath the surface, generating images that help detect oil deposits. This type of surveying can cause damage to tundra vegetation and soils. According to the plan, the Kaktovik Inupiat Corporation hopes to conduct the surveys in a 847.8 square mile area of the refuge. Politico first reported on the corporation’s application earlier this month. The Alaska-based corporation anticipates conducting surveys in December and January. It said that wildlife that can be found in the area during the winter might include polar bears, caribou, grizzly bears, wolverines and arctic foxes. “Although encounters with polar bears or grizzly bears are unlikely, the operator and its contractors will exercise caution during the project,” the plan states. Critics have expressed concern that drilling could harm animal species that are found there, negatively affect the landscape, exacerbate climate change and harm the Gwich’in people who hunt caribou there. “Allowing huge thumper trucks and camps onto sacred lands where they leave deep and lasting wounds is a threat to my people, the animals, our food, and our way of life,” Bernadette Demientieff, the executive director of the Gwich’in Steering Committee, said in a statement. “We have raised concerns repeatedly about this administration rushing the process and shortcutting our review.” A provision in the 2017 Trump tax bill approved by a GOP-controlled Congress opened ANWR to drilling following years of debate over the matter.
Judge tosses land management plans after ousting Pendley from role – A federal judge unraveled the work of former Bureau of Land Management (BLM) acting director William Perry Pendley, throwing out land management plans in Montana in a case that could have consequences for the agency’s work elsewhere across the country.The late Friday ruling is a win for the state of Montana, with Montana-based U.S. District Court Judge Brian Morris criticizing the Department of the Interior for “novel and last-ditch legal arguments.” It’s the second major decision in the case after Morris last month determined Pendley had violated federal vacancy laws by “serv[ing] unlawfully … for 424 days” through a series of temporary orders. He gave the Department of the Interior 10 days to justify why it shouldn’t throw out many of the decisions Pendley has made during his tenure.The decision holds promise for environmental groups, who have a list of at least 30 land management plans overseen by Pendley they’d like to see reversed, many of which limit the scope of national monuments or open up significant portions of federal lands to oil and gas drilling. Pendley, a controversial figure due to his history of opposing federal ownership of public lands, remains with the agency in a deputy role after his nomination to lead the BLM was withdrawn from the Senate this summer.Pendley “had not been properly appointed to the position, and instead had exercised authority as acting BLM director through a series of unlawful delegations,” Morris wrote in reference to the maneuvers that kept him in the acting director role for over a year.”Any exclusive function of the BLM director performed by Pendley is invalid.”Morris’s decision invalidates three land management plans Pendley supervised in Montana, including one that would open 95 percent of 650,000-acres of BLM land to resource extraction like mining and drilling. But he stopped short of applying the ruling to any of Pendley’s other decisions, despite devoting much of the decision to castigating Interior for failing to comply with his order to supply a list of actions that he may have taken illegally. “Despite Federal Defendants’ disagreement with the exercise and apparent refusal to engage in such a search in good faith, it remains probable that additional actions taken by Pendley that should be set aside as unlawful,” Morris wrote. Interior had argued that Pendley took “no relevant acts . . . within the director’s exclusive authority.”
INTERIOR: Wave of lawsuits coming over Pendley’s BLM decisions — Monday, October 19, 2020 — A federal judge’s order invalidating three land use plans approved by the Bureau of Land Management during William Perry Pendley’s “unlawful” tenure could spark a wave of litigation challenging oversight of millions of acres.That’s according to legal experts and Montana District Chief Judge Brian Morris, who wrote in his order issued late Friday that it is “probable” there are “additional actions taken by Pendley that should be set aside as unlawful” across the West.”Conservation Groups remain free to file suit in the appropriate federal district court to challenge land management decisions they have identified as potentially unlawful,” Morris wrote.They’re planning to do so. “We’ll go to court to make sure Pendley’s illegal decisions end up in the dumpster where they belong,” said Taylor McKinnon, a senior campaigner at the Center for Biological Diversity.The center and other groups have already put Interior Secretary David Bernhardt on notice in a letter that detailed dozens of amended land use plans and other BLM policy decisions that may now be invalid (E&E News PM, Oct. 6).They include numerous “rulemakings, guidelines, programs and internal memorandum” issued since July 2019, when Bernhardt delegated “exercising the authority of director” to Pendley.Morris’ latest order is the second in less than a month. The judge ruled last month that Pendley had illegally performed the duties of BLM’s director for more than a year, and barred him from continuing to do so (Greenwire, Sept. 25). BLM has since removed “exercising the authority of director” from his formal title of deputy director of policy and programs. Specifically, Morris’ latest order tossed aside the amended Lewistown, Missoula and Miles City resource management plans (RMPs) because, the judge wrote, Pendley lacked the authority to resolve dozens of protests that were filed against the amended plans. Montana Gov. Steve Bullock (D) and the state – which filed the original lawsuit against Pendley that led to Morris’ September order – asked the judge to throw out the three RMPs covering about 800,000 surface acres and 12 million acres of subsurface mineral estate. The Interior Department, which has vowed to appeal, has labeled Morris’ orders “outrageous,” and it maintains that Pendley did not sign the protest resolutions at issue. But legal scholars who have read Morris’ latest order say BLM is now exposed to legal challenges that could undermine numerous other RMPs and planning documents approved during Pendley’s tenure as de facto acting director. It’s likely that “other judges could rule similarly to Morris and possibly upset a number of plans,”
Biden calls for ‘transition’ from oil, GOP sees opening – Democrat Joe Biden’s remark that he would “transition” away from oil in the U.S. in favor of renewable energy drew quick attention Thursday night from President Donald Trump, who saw it as a boon to his election chances in key states.”I would transition away from the oil industry, yes,” Biden said in the presidential debate’s closing minutes under peppering from Trump. “The oil industry pollutes, significantly. It has to be replaced by renewable energy over time.”The Biden campaign’s climate plan calls for the U.S. to have net-zero greenhouse gas emissions by 2050. And he repeated his pledge to end federal subsidies for the oil and gas industry. However, Biden’s plan does not call for a ban on climate-damaging fossil fuels, focusing instead on technologies that can capture pollution from oil and other sources.ADStill, Trump seemed surprised and pleased by Biden’s comment, declaring it a “big statement,” and suggesting it would come with political blowback in oil-producing states that stand to lose jobs.”Basically what he is saying is he is going to destroy the oil industry,” Trump said. “Will you remember that Texas? Pennsylvania? Oklahoma? Ohio?”Trump won all four states in 2016, but Pennsylvania in particular is a pivotal swing state this cycle, with both candidates investing heavily. Ohio is also in play, and Democrats even see Texas as a longshot pickup on an expanded electoral map.After the debate, Biden told reporters he would not “ban” fossil fuels or move away from them for “a long time.”Tackling climate change means sharply cutting oil, gas and coal emissions, scientists say, and that means eliminating most burning of fossil fuels. Biden talks of a 30-year transition to a carbon-free economy, by encouraging more wind and solar power and more energy efficiency.AD
Here’s Why Biden Couldn’t Ban Fracking, But Could Restrict It – BNN— While Biden has called for prohibiting new oil and gas projects on federal land, the candidate has made it clear he does not support a widespread ban on fracking. Even if Biden wanted to, he couldn’t unilaterally ban fracking on private lands. Under a 2005 law, the Environmental Protection Agency has almost no regulatory power over fracking. Changing that would require an act of Congress. There are several ways Biden could halt fracking on federal lands using executive power. He could ban new oil and gas leases, halt new permits, or seek a specific regulatory ban on fracking, all of which Biden has telegraphed at one point or another on the campaign trail. That doesn’t mean it will be easy. A regulation banning fracking on federal land would have to go through a process that would likely be challenged in court as a violation of federal law that encourages oil and gas development. Even an Obama-era Interior Department rule that merely set standards for fracking on federal lands — while still allowing the activity — was tossed out. Instead, it’s more likely Biden would go through the “side door” that could include a combination of rewriting drilling and land management plans and the use of emergency authority to achieve a cessation on leasing and permitting, Book said. “With the stroke of a pen without any delay Bureau of Land Management staff could be allocated away from leasing and permitting activities,” said Book. “It takes people to write permits, it takes people to write production and drilling plans.” The impact of Biden’s plan would be limited since most fracking occurs on private land, not public. Onshore oil production on federally owned land was approximately 6.5% of the U.S. total in 2019, and onshore federal gas production made up 10% of the U.S. total, according to consulting firm ClearView Energy Partners. The impact would hit at least one blue state hard. In New Mexico, roughly 90% of all production in the in the state’s portion of the oil rich Permian shale basin was on state and federal lands last year, according to the New Mexico Oil & Gas Association. In 2017 more than half of New Mexico’s oil production and nearly 67% of its natural gas production occurred on federal lands, according to the same group. In the swing state of Pennsylvania the amount of gas produced from federal land accounts for less than a one hundredth of 1%, according to ClearView. A ban on offshore drilling in federal waters, which Biden has also proposed, would be much more impactful nationwide. It accounts for roughly 16% of total production. A more narrow ban on fracking solely focused on federal land, could provide Biden political cover among progressive environmental groups and others stringently opposed to fossil fuels. At the same time the limited nature of the ban means it is unlikely to hurt him among voters in swing states where fracking takes place on private lands such as Pennsylvania and Ohio.
EPA Chief: You Don’t Have To Ban Fracking If You Regulate It To Death -The Federalist – 2020 Democratic presidential candidate Joe Biden wants to ban fracking.He doesn’t say it like he used to a few months ago, but he doesn’t have to. He made his position clear enough to the American people throughout the 12-month primary.Since capturing the Democratic nomination however, the former vice president has appeared to shift his tone on the innovative practice for oil and natural gas extraction as not to spoil his chances in the critical rust-belt swing states such as Pennsylvania and Ohio. “I do not propose banning fracking,” Biden tried to clarify during last week’s ABC town hall with former Clinton White House Communications Director George Stephanopoulos, going on to argue that emissions just have to be eliminated if its going to continue under a Biden administration. “It has to be managed very, very well.”In other words, Biden is going to regulate it into oblivion.Ban or no ban, EPA Administrator Andrew Wheeler told The Federalist in an exclusive interview published Monday it doesn’t matter given the rhetoric from the Democratic ticket.”I’ve heard him talking about fracking multiple times and every time it seems a little different,” Wheeler said. “But you don’t have to ban something if you regulate it to death. And the Obama administration was regulating it to death.”Wheeler’s right of course. There are endless ways an administration run by Biden and California Sen. Kamala Harris could effectively weaponize federal regulatory agencies to functionally ban the the controversial practice without ever crafting explicit legislation doing so. They can tighten rules under the Clean Air Act, draw out permit application processes, axe tax incentives, pass burdensome red tape, halt the construction of new pipelines, and perhaps most consequentially, bar it on federal lands. The Democratic ticket’s platform indeed prominently endorses the elimination of new oil and gas permits on public lands and waters while setting a goal for net-zero emissions by 2050, an ambitious and nearly impossible timeline set 30 years from now.According to the Bureau of Land Management, onshore federal lands provide 8 percent of the nation’s oil and 9 percent of its natural gas, while offshore production produces 15 percent of American oil and 3 percent of its gas. Myron Ebell, an energy and environmental expert at the conservative-leaning Competitive Enterprise Institute (CEI), agreed with Wheeler’s assessment and emphasized that the Biden-Harris platform is more about eliminating oil and natural gas altogether, which, in turn, includes fracking. He highlighted how a potential Biden-Harris administration would already have all the regulatory tools at their disposal to crack down on fossil fuel production. “My expectation is that it will be at least as bad as the Obama-Biden administration, but probably quite a lot worse.”
Barrett punts on climate, oil industry recusals in written responses – Supreme Court nominee Amy Coney Barrett declined to weigh in on climate change or say whether she’d recuse herself from cases involving the oil industry in written responses to questions from the Senate Judiciary Committee ahead of its Thursday vote on her confirmation. In response to several questions on climate, Barrett gave responses including “The Supreme Court has described ‘climate change’ as a ‘controversial subject’ and ‘sensitive political topic.’ ” “As a sitting judge, it would be inappropriate for me to weigh in further on the matter,” she added. The response echoed statements that Barrett made during her confirmation hearing last week, when she said that she did not hold “firm views” on climate change. She added that her opinion on climate is not “relevant” and called the subject a “contentious matter of public debate.” The vast majority of scientists believe that climate change is happening and human-caused. Barrett also punted on questions about whether she’d recuse herself from oil companies other than Shell and why the American Petroleum Institute, which her father was involved with, was not on her recusal list. She said that four Shell entities were on her recusal list “in an abundance of caution” because her father worked for Shell Oil Company. She did not directly say why she didn’t similarly recuse herself from any other oil or energy companies or the American Petroleum Institute, saying that “the question of recusal is a threshold question of law that must be addressed in the context of the facts of each case.” “As Justice [Ruth Bader] Ginsburg described the process that Supreme Court justices go through in deciding whether to recuse, it involves reading the statute, reviewing precedents, and consulting with colleagues. As a sitting judge and as a judicial nominee, it would not be appropriate for me to offer an opinion on abstract legal issues or hypotheticals. Such questions can only be answered through the judicial process,” she added.
Indigenous Women to Financial CEOs: Stop Abetting ‘Climate-Wrecking’ Tar Sands Industry – A group of Indigenous women and their allies on Monday urged the heads of major global financial institutions to stop propping up the tar sands industry and sever all ties with the sector’s “climate-wrecking pipelines, as well as the massively destructive extraction projects that feed them.” The demand to the CEOs comes in an open letter signed by more than 40 Indigenous leaders including Rebecca Adamson, Cherokee and founder of First Nations and First Peoples Worldwide; Tara Houska, Couchiching First Nation and founder of the Giniw Collective; and Winona LaDuke, White Earth Nation and executive director of Honor the Earth. Supporting the call is a diverse group of over 150 organizations such as Another Gulf Is Possible Collaborative, Global Exchange, and Indigenous Environmental Network. “It’s time to move on. The most destructive and expensive oil in the world needs to stay in the ground,” LaDuke said in a statement. Beyond the tar sands sector’s “grave threats to Indigenous rights, cultural survival, local waterways and environments, the global climate, and public health,” the open letter says continued financing and insuring of tar sands projects just makes bad economic sense, noting that “no subsector has had a worse financial prognosis than tar sands oil.” “Tar sands is one of the most carbon-intensive, expensive extraction processes in the industry, and these pipelines are likely to be stranded assets soon after they are built,” the women wrote, referring to a scenario in which fossil fuels will have to stay in the ground. While the ecological harm of tar sands extraction and infrastructure has been repeatedly noted by fossil fuel critics, the letter points to new threats brought by the coronavirus crisis. The signatories point to the multiple work sites in Alberta that have seen outbreaks of COVID-19 as extremely bad news for Indigenous communities who “are uniquely vulnerable to the virus’ spread due to historically underfunded healthcare programs and significant health disparities.” In addition, an influx of project workers and so-called “man camps” brings particularly acute harm to Indigenous women: Indigenous women in these rural areas are in peril. There is growing evidence that the epidemic of missing and murdered Indigenous women (MMIW) is directly linked to fossil fuel production. Workers relocate to construction sites to build pipelines, creating temporary housing communities known as “man camps” near the pipeline route, which is oftentimes on or next to tribal nation lands. Studies, reports, and Congressional hearings have found that man camps lead to increased rates of sexual violence and sexual trafficking.
Stena to Drill Offshore Canada Well for CNOOC – CNOOC International Petroleum North America ULC has contracted the Stena Forth drillship for a one-well campaign offshore Atlantic Canada, vessel owner Stena Drilling reported Monday. Under the approximately 90-day drilling program, the Stena Forth will mobilize to the Flemish Pass offshore Newfoundland and Labrador, according to a post on Stena Drilling’s LinkedIn page. The drilling contractor noted the region is classified as a harsh environment, with unpredictable weather conditions and water depths ranging from 1,083 to 3,937 feet (330 to 1,200 meters). As Rigzone reported last December, CNOOC owns a 100-percent working interest in the Flemish Pass acreage – located in exploration licenses 1144 and 1150, east of St. John’s, Newfoundland and Labrador. CNOOC’s website states the company had planned to spud its first exploration well within Exploration License 1144 in the second quarter of this year but had to defer it as a result of the COVID-19 pandemic. “The Flemish Pass Basin has proven world-class source rocks, providing a large hydrocarbon potential on which we aim to build long-term, sustainable success in the region,” CNOOC notes on its website. The Stena Forth is one of Stena Drilling’s four drillships. The UK-flagged, harsh-environment, dynamically positioned drillship can operate in 10,000 (3,048 meters) of water and drill to 35,000 feet (10,668 meters), according to the drilling contractor’s website.
80 Million Gallons of Oil, Larger Than Exxon Spill, Dangerously Close to Pouring into Caribbean – The U.S. embassy in Trinidad and Tobago has urged “immediate actions” to prevent a potentially catastrophic oil spill in the Gulf of Paria, off the coast of Venezuela, where a floating storage and offloading facility is reportedly undergoing repairs. The Venezuelan-flagged Nabarima vessel has been sat idle off the Venezuelan coast since January 2019. Pictures recently emerged showing the FSO vessel floating at an incline, raising fears that it could spill its load into the gulf devastating the regional fishing industry and delicate ecosystems. The Nabarima is operated by the Petrosucre company, a joint venture between the Venezuelan state oil company Petroleos de Venezuela (PDVSA) and the Italian Eni oil giant. Petrosucre froze oil extraction in January 2019 after being sanctioned by President Donald Trump’s administration, leaving 1.3 million barrels of crude oil, some 80 million gallons, aboard the Nabarima. The infamous Exxon Valdez oil spill – widely considered the worst in history by the amount of environmental damage done – involved around 10.8 million gallons of crude. The U.S. embassy in Trinidad and Tobago released a statement Friday expressing its unease at the Nabarima’s situation. “The United States remains concerned by the potential risk to safety and environment posed by the Venezuelan-flagged vessel, Nabarima, in the Gulf of Paria,” the statement said. “We strongly support immediate actions to bring the Nabarima up to international safety standards and avoid possible environmental harm, which could negatively impact not only the Venezuelan people but also those in nearby countries. PDVSA has a responsibility to take action to avoid an environmental disaster in Venezuelan waters.”
Trinidad continues to press for access to tilting oil vessel – The Ministry of Foreign and Caricom Affairs has dispelled any thoughts that it has not been taking action on the tilting Nabarima. In a statement yesterday, the ministry detailed the action taken by the Government, after it learned about the impending environmental danger the vessel poses. It said it communicated swiftly with the Venezuelan Government and has been pressing for information regarding the status of the vessel. According to the ministry, it along with the Ministries of Energy and Energy Industries, and the Ministry of National Security has been actively working on solutions to the Nabarima issue. It said Venezuelan claimed it conducted initial stabilisation works on the Nabarima and that it is no longer in any danger. However, the ministry said it has been persistently pressing the Venezuelan government for Trinidad and Tobago to do its own verification but laments that without permission this cannot happen. The ministry said this Government has also engaged discussions with several Ambassadors including the Ambassador of the United States of America to Port of Spain on the matter. It added, while Venezuela agreed to permit a team of local experts to cross the border and assess the Nabarima, it later moved the date from the end of September to the current position that the inspection team would receive permission to visit on 20th October. It added that Venezuela has also denied a recent photograph circulating which purports to represent severe tilting of the Nabarima. The ministry said this country will continue to lobby to assess the vessel itself.
PDVSA vessel approaches floating facility to load crude (Reuters) – An oil tanker operated by Venezuelan state oil company Petroleos de Venezuela [PDVSA.UL] on Tuesday approached a floating oil facility where it is expected to receive crude via transfer at sea amid environmental concerns, Refinitiv Eikon data showed. Environmental groups have in the past two weeks expressed concern about a potential spill of the 1.3 million barrels of crude aboard the Nabarima oil facility – part of the Petrosucre joint venture between PDVSA and Italy’s Eni SpA – after images showed the vessel tilting to its side. PDVSA now plans to offload some of the crude on board via a ship-to-ship (STS) transfer involving the Icaro, an Aframax vessel it owns, a person familiar with the matter told Reuters on Monday. The Refinitiv Eikon data showed the Icaro approached the Nabarima at 2:37 p.m. local time (1837 GMT). The Venezuela-flagged barge Inmaculada was also expected to participate in the STS operation, which carries its own set of risks, according to a person familiar with the matter and a document seen by Reuters. PDVSA did not immediately respond to a request for comment. Authorities in neighboring Trinidad and Tobago have said they planned to inspect the vessel, which is located in the Paria Gulf separating the two countries. Petrosucre, which is 74% owned by PDVSA and 26% owned by Eni, suspended output shortly after Washington sanctioned PDVSA in January 2019, as the sanctions deprived the company of its former main crude buyer, PDVSA’s U.S.-based refining subsidiary, Citgo Petroleum Corp [PDVSAC.UL.] The United States in December 2019 placed additional sanctions on the Icaro vessel itself for delivering Venezuelan petroleum products to Cuba, one of President Nicolas Maduro’s main overseas allies. The Trump administration is trying to oust Maduro, whom it labels a dictator.
Caribbean threatened by 1.3 million barrels of oil from sinking oil tanker – A state of environmental emergency is being called for by fishermen in Trinidad and Tobago over a sinking oil tanker with 1.3 million barrels of oil. If the oil spills, it would threaten the entire Southern Caribbean. At 264 meters in length and a capacity of 1.4 million barrels, the spill would be five times worse than the Exxon Valdez oil spill in Alaska in 1989, which was the worst in history until the 2010 BP Deepwater Horizon. Officials have been criticized for allowing the situation to evolve for three months without taking sufficient action. The Nabarima is a Venezuelan oil tanker but part-operated by Italian energy giant, $55 billion ENI, and has been caught up in US sanctions since disputed elections questioned the legitimacy of the Venezuelan President. The tilting had been of concern since it was first noticed in July and crews later discovered water leaking on board. The situation has gotten progressively worse since then. It was only last week that a representative of the fishing community in Trinidad, Gary Aboud, was able to get close enough to the heavily listing Venezuelan oil tanker to show first hand how serious the risk is, especially with the Caribbean in a particularly active 2020 hurricane season that is only due to end by November 30. Combined with drone footage to show the angle of tilting, his two and a half minute video (link below) shows the risk that poor weather would have on the tanker, and what he highlights as a lack of urgency by the Trinidad and Tobago Government or the international community to act. Gary Aboud, Corporate Secretary of Trinidad and Tobago based environmental group, Fishermen and Friends of the Sea, went to the site of the Nabarima, moored in Venezuelan waters, to highlight the risk posed to the over 50,000 fishermen of Trinidad and Tobago that rely on the sea, the potential long term ecological harm to species in this coral reef and biodiversity rich region, as well as the broader regional risk to the Caribbean given the direction of the currents and wind at this time of year.. Reports from the Trinidad and Tobago Guardian had been calling for action since early September. An emotional video by Gary Aboud first posted on September 7, six weeks ago, had highlighted the growing risk of the tilting oil tanker, combined with the ongoing hurricane season – the second most active on record. The Nabarima has a capacity of 1.4 million barrels, and was abandoned without a crew by the Venezuelan state and a joint venture with Italian energy giant, ENI, following sanctions from the United States in late 2019.
Damaged Venezuelan oil tanker poses minimal spill risk -A damaged Venezuelan oil tanker recently tilting to one side in the Caribbean after taking on water poses no significant risk of spilling and causing an environmental catastrophe, officials of Trinidad and Tobago said Thursday. Minister of Energy and Energy Industries Franklin Khan said a team of experts from his country inspected the Nabarima – a floating storage and offloading facility (FSO) – on Tuesday, allaying previous fears that it was on the brink of sinking and spewing 1.3 million barrels of oil. The double-hulled tanker is “intact and poses a minimum risk of any oil spills at this time”, Khan said. He said Venezuela had started the slow process of unloading oil to further avoid disaster, an operation expected to take up to 35 days. “The team confirm that major maintenance is ongoing,” Khan said. “Pumps and electrical motors are being repaired and replaced as needed.” Trinidad officials said they will continue to monitor the effort, and have applied for permission from Venezuela for a follow-up inspection in a month.
US Expands Nord Stream 2 Sanctions As Germany Vows Pipeline Completion Not If, But When –Secretary of State Mike Pompeo has long vowed he’ll “do everything” to stop Nord Stream 2, last month indicating the US is building a coalition of countries to fight against it, given Washington sees it as a massive compromise to Russia, giving it leverage over Europe as well as Ukraine. “From the US point of view, Nord Stream 2 endangers Europe because it makes it dependent on Russian gas and endangers Ukraine – which in my opinion worries many Germans,” Pompeo said weeks ago.On Tuesday the State Department expanded US sanctions targeting companies working on the Russia to Germany gas pipeline. While sanctions already target the specific European companies and their executives directly at work on the project, they’ve now been extended to include sanctions even on firms upgrading, servicing, or installing equipment on the ships laying the pipeline. “Such activities subject to sanctions pursuant to PEESA (the Protecting Europe’s Energy Security Act of 2019) or other authorities may include, but are not limited to, providing services or facilities for upgrades or installation of equipment for those vessels, or funding for upgrades or installation of equipment for those vessels.”There remain some exceptions, however, out of environmental concerns. The State Department says the sanctions “will not apply to persons providing provisions to a relevant vessel if such provisions are intended for the safety and care of the crew aboard the vessel, the protection of human life aboard the vessel, or the maintenance of the vessel to avoid any environmental or other significant damage.”Likely this would be the loophole any such company put on notice over the new sanctions will use to evade punishment, given any repair or upgrade to a ship could be argued necessary over future “safety” and “environmental” concerns.Though Washington in a sense has won particular “battles” on the NS2 front, Russia and Germany have indicated the US will not win the “war” given that by all appearances the pipeline will be pursued to completion.One major victory for US sanctions was that Swiss pipelay company Allseas had abandoned its central roll in the project in December 2019 under threat of US punitive action. Russian gas giant Gazprom then outfitted its own ships to lay the last 100 miles of the pipeline.
Losing control? Norway’s oil workers fear for future as rigs go remote (Reuters) – A shift to operating oil rigs remotely from land, which has been accelerated by lower crude prices, has rekindled concerns among Norwegian unions over the impact on the safety of offshore workers and the loss of well-paid jobs. These fears were highlighted by Lederne, one of three unions representing offshore workers, which this month shut six fields in a strike that threatened a quarter of Norway’s oil and gas output, rattling global oil markets. “The strike was not against moving controls onshore. But we needed to get the deal for our members to also be a part of the discussions about moving controls onshore and their safety,” Lederne leader Audun Ingvartsen told Reuters. Lederne, whose strike ended on Oct. 9, is the only Norwegian oil and gas workers union which did not have an agreement for its members at onshore control rooms. Oil companies started experimenting with remote controls about seven years ago, first with smaller, unmanned installations off the coast of Norway. Europe’s largest oil and gas producer has since become a testing ground for industry attempts to turn this technology to larger, manned platforms. Lower oil prices and the coronavirus crisis are accelerating this shift, prompting concerns about the safety of staff still working offshore on rigs. “Our members still wonder whether this (onshore controls) is good enough, whether it is safe enough,” Ingvartsen said.
Total Delivers First Carbon Neutral LNG Shipment – Total announced Tuesday that it has delivered its first shipment of carbon neutral liquefied natural gas (LNG) to the Chinese National Offshore Oil Corporation (CNOOC). The loading operation was carried out at the Ichthys liquefaction plant in Australia and the shipment was delivered on September 29 to the Dapeng terminal in China, Total revealed. The company noted that the carbon footprint of the LNG shipment was offset with Verified Carbon Standards emissions certificates financing two projects; the Hebei Guyuan Wind Power Project and the Kariba REDD+ Forest Protection Project.”We are proud to have completed this first shipment of carbon neutral LNG with CNOOC, a long-standing partner of Total,” Laurent Vivier, the president for gas at Total, said in a company statement.”This first LNG shipment, whose carbon emissions have been offset throughout the value chain, represents a new step as we seek to support our customers towards carbon neutrality,” Vivier added.”The development of LNG is essential to meet the growth in global demand for energy while reducing the carbon intensity of the energy products consumed,” the Total president went on to say. Total is the second largest private global LNG player, according to its website, which highlights that the group has made natural gas a “cornerstone” of its strategy to meet a growing global demand for energy while helping to mitigate climate change. The company is present across the entire LNG value chain, from production and liquefaction of natural gas to LNG shipping and trading, regasification using terminals and floating storage regasification units.
Emergency declared as oil spill spotted in Russian river Authorities in the Komi region in the north of Russia have declared a regional emergency after oil spilled into the Kolva river, a major water artery in the neighboring hydrocarbons-producing Nenets region. Energy explored: Gain valuable insight into the global oil and gas industry’s energy transition from Accelerate, the new weekly newsletter from Upstream and Recharge. Sign up here. A regional subsidiary of Russian oil producer Lukoil said the accident occurred at a crossing between the river and a pipeline carrying oil from the Kharyaga field. According to the company’s estimate, only a small number of barrels of oil spilled into the river. However, according to accounts on a Russian social network, oil was spotted on the water surface some 40 kilometres downstream from where the spillage occured. The regional department of the Russian Emergency Situations Ministry said that four rows of containment booms have been installed at the Kolva river since the accident was publicly revealed on 17 October. Preparations to put in a fifth row of booms are ongoing, the department said. The Kolva river starts in the Nenets region and flows into the Usa river that in turn flows into the Pechora river in the Komi region. Via Pechora, the spilled oil could potentially reach the Barents Sea. The emergency measure applies mainly to the city of Usinsk, which is home to about 37,000 people, and whose water supply system is based on the Usa river. Lukoil-Komi is the operator of the Kharyaga oilfield, which is one of the largest deposits in the Nenets region, however, part of the field is being developed by a consortium of Russian state Zarubezhneft and France’s Total.
In the Tomsk region, oil spilled on the river after a collision of barges – On October 18, barges collided in the backwater of the Ob River in the Tomsk Region, one of which was carrying oil products, according to the website of the West Siberian Transport Prosecutor’s Office. According to the ministry, an empty barge, standing near the coast, was blown away by a gust of wind to the loaded one. One of the reservoirs of oil products has received a hole. It is noted that no one was injured as a result of the incident. At the moment, the spill has been localized, the spilled oil products are being collected, “no significant environmental damage was allowed”.
Oil Steady Before OPEC+ Meeting — Oil was steady near $41 a barrel in New York before an OPEC+ meeting to assess the state of the market as demand comes under pressure once again from a resurgent coronavirus. The Joint Ministerial Monitoring Committee, which typically reviews compliance to the group’s pledged output cuts, will meet online Monday. While no supply decisions are expected until the conclusion of a gathering on Dec. 1, leading members Saudi Arabia and Russia are stepping up diplomacy as the market faces more crude from Libya and OPEC predicts less demand for its oil. House Speaker Nancy Pelosi, meanwhile, set a Tuesday deadline for more progress with the White House on a fiscal stimulus deal before the Nov. 3 election, raising optimism a relief package may finally be completed. Oil is holding around current levels after briefly dropping below $40 a barrel earlier this month with rising infections raising concerns about a sustained recovery in consumption. OPEC Secretary-General Mohammad Barkindo last week described demand as anemic, while the International Energy Agency said the outlook for the market remains fragile due to the pandemic. It’s looking increasingly likely that OPEC+ will have to scrap the idea of easing cuts from next year given the resurgence in Covid-19 cases and stalling demand, said Warren Patterson, head of commodities strategy at ING Group. U.S. stimulus talks continue to go back and forth but it’s looking a bit more positive in terms of a potential deal, he added. West Texas Intermediate for November delivery fell 0.3% to $40.76 a barrel on the New York Mercantile Exchange as of 7:50 a.m. London time after dropping 0.2% on Friday. Brent for December settlement slid 0.3% to $42.81 on the ICE Futures Europe exchange after losing 0.5% in the previous session. Crude futures was little changed at 271.6 yuan a barrel on the Shanghai International Energy Exchange after slipping 0.6% Friday. Brent’s prompt timespread was 33 cents a barrel in contango, compared with 48 cents a week earlier. The narrowing spread indicates that concerns about over-supply have eased. President Vladimir Putin and Saudi Arabia Crown Prince Mohammed Bin Salman have spoken twice by phone in a week, the first time the leaders have done that since the depths of the oil crisis in April, when they were hashing out a deal to cut supply and bring a price war to an end. Larger ministerial meetings that will decide the direction on output cuts are scheduled for Nov. 20-Dec. 1.
Oil little changed, despite OPEC+ members stressing compliance – Oil steadied on Monday, weighed by concerns over surging coronavirus cases globally and by Libya’s plan to boost output, but supported by hopes for a U.S. fiscal package. Analysts also focused on an OPEC+ ministerial monitoring committee meeting on Monday. Russian Energy Minister Alexander Novak said the committee recommended to stick in full to the group’s global deal to reduce oil production. Brent crude futures fell 22 cents to $42.71 a barrel. U.S. West Texas Intermediate (WTI) crude futures settled 5 cents, or 0.1%, lower at $40.83 per barrel. Saudi Arabia, the biggest member of the Organization of the Petroleum Exporting Countries, said no one should doubt the group’s commitment to providing support, while three sources from producing countries said a planned output increase from January could be reversed if necessary. OPEC+, a grouping of OPEC and allies including Russia, is curbing oil production by 7.7 million barrels per day (bpd), down from cuts totaling 9.7 million bpd, and are due to reduce the cuts by a further 2 million bpd in January. “This group has shown, especially in this year, that it has the flexibility to adapt to changing circumstances when required. We will not dodge our responsibilities in this regard,” Saudi Energy Minister Prince Abdulaziz bin Salman said. Weighing on markets, Libya has significantly boosted its output after the easing of a blockade by eastern forces in September. The 70,000-bpd Abu Attifel oilfield was expected to begin its restart on Oct. 24 after being shut down for months, two engineers said. Meanwhile, worldwide coronavirus cases crossed 40 million on Monday, according to a Reuters tally. Many European governments are tightening lockdowns to curb the spread of the virus, renewing concerns about oil demand. “This latest swathe of stringent restrictions will inevitably impede economic growth and undermine the fuel demand recovery,” said Stephen Brennock of oil broker PVM. Hopes for a new U.S. stimulus package lent some support to prices as House Speaker Nancy Pelosi said on Sunday she was optimistic that legislation on a wide-ranging relief package could be pushed through before the election. Bank of America projected Brent and WTI would average $44 and $40 per barrel in 2020, respectively, and $50 and $47 per barrel in 2021. Meanwhile, China’s oil-buying frenzy earlier this year is expected to slow in the fourth quarter. Chinese refiners slowed their processing rates in September.
Oil Traders Struggle to Make up Minds – Tuesday found oil traders struggling to make up their minds on how to interpret the result of the previous day’s OPEC+ meeting. That’s what Rystad Energy’s head of oil markets, Bjornar Tonhaugen, said in a statement sent to Rigzone today, adding that prices have swung from gains to losses and back to gains. “Members said that they will do what is needed if the situation requires, that they would do whatever it takes,” Tonhaugen said in the statement. “But are words providing a relief on their own? No, action is needed and the lack of it is the reason that prices are not seeing any meaningful increase today,” he added. According to Tonhaugen, uncertainty is now the word and until new demand indicators signal a direction, he believes prices are not likely to move significantly. “Another reason for uncertainty is the outcome of the coming U.S. election, as the two candidates have conflicting plans for the future of energy,” Tonhaugen stated. “The election is around the corner and it could also have consequences for foreign policy depending on the results. This uncertainty is probably also a reason that OPEC+ chose to wait rather than take an early decision to continue the current deep cuts into 2021,” he added. “Furthermore, markets are still left guessing if the U.S. stimulus negotiations will bear fruit today before Nancy Pelosi’s self-imposed deadline,” Tonhaugen went on to say. The Rystad Energy representative highlighted that a stimulus deal would be a positive surprise for markets and could also support oil prices if confirmed. “It seems unlikely though as the presidential candidates are preoccupied with preparing for the final debate on Thursday ahead of the elections,” Tonhaugen said. Tonhaugen outlined that the next thing on oil traders’ calendars is how U.S. oil stocks were altered last week. Should there be a build on crude stocks, this will be a warning sign that supply is overflowing again because demand can’t take more oil, he noted. If we see draws prices could rise on confidence about the market’s resilience, Tonhaugen said.
Oil rises on U.S. stimulus hopes, but Covid-19 cases keep gains in check – Oil edged up on Tuesday on hopes that the United States was nearing a stimulus deal, but the threat to demand from rising coronavirus cases worldwide and increased Libyan output kept prices from moving higher. Brent crude futures gained 20 cents to $42.82 a barrel. November U.S. West Texas Intermediate crude futures settled 63 cents, or 1.54%, higher at $41.46 per barrel. Investors are following negotiations between U.S. House of Representatives Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin over another U.S. coronavirus aid package, said John Kilduff, partner at Again Capital in New York. “If we get a deal, I think that would be supportive, and if we don’t get a deal, I think that’s going to be somewhat punishing for prices,” Kilduff said. Prices ticked up after Pelosi said in an interview with Bloomberg TV on Tuesday she was optimistic Democrats could reach a deal with the Trump administration and aid could go out by early next month. The rebound in COVID-19 cases in Europe and North America that has sparked renewed lockdown measures is weighing on oil prices, Kilduff said. “It undermines sentiment, it undermines economic activity, it undermines demand,” he said. A ministerial panel of the Organization of the Petroleum Exporting Countries (OPEC) and its allies, together known as OPEC+, pledged on Monday to support the market. However, those countries plan on scaling back the size of its production cuts in January from a current 7.7 million barrels per day (bpd) to roughly 5.7 million bpd in January. OPEC member Libya, which is exempt from the cuts, is also ramping up production after armed conflict shut almost all of the country’s output in January, pumping more oil into an oversupplied market. Output from its biggest field, Sharara, resumed on Oct. 11 and is now at about 150,000 bpd, about half its capacity, two industry sources told Reuters. Another 70,000 bpd oilfield is expected to restart on Oct. 24.
Oil up on U.S. stimulus hopes, rising virus cases keep prices in check (Reuters) – Oil gained more than 1% on Tuesday on the prospect the United States was nearing a deal on coronavirus relief, but the threat to demand from rising COVID-19 cases worldwide and increased Libyan output kept prices from moving higher. November U.S. West Texas Intermediate (WTI) crude futures settled at $41.46 a barrel, up 63 cents, or 1.54%. The more active December contract settled at $41.70, gaining 64 cents. Brent crude futures for December delivery settled at $43.16 a barrel, rising 54 cents, or 1.27%. Investors are following negotiations between U.S. House of Representatives Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin over another U.S. coronavirus aid package, said John Kilduff, partner at Again Capital in New York. “If we get a deal, I think that would be supportive, and if we don’t get a deal, I think that’s going to be somewhat punishing for prices,” Kilduff said. Prices picked up after Pelosi said she was optimistic Democrats could reach an agreement with the White House that could get aid out by early next month. She added there should be an indication of a possible agreement later on Tuesday. Still, skepticism over the impact of a deal on oil markets lingered. “Even allowing for a fresh stimulus package, risk appetite could take a hit from an unfolding of the ‘buy the rumor/sell the news’ phenomena,'” said Jim Ritterbusch of Ritterbusch and Associates. “With this possibility in mind, we will be looking to short December crude at or above the $42 mark for a trading turn to the downside.” The rebound in COVID-19 cases in Europe and North America that has sparked renewed lockdown measures kept prices from moving higher. A ministerial panel of the Organization of the Petroleum Exporting Countries (OPEC) and its allies, together known as OPEC+, pledged on Monday to support the market in the face of the pandemic’s hit to demand. However, those countries plan on scaling back the size of its production cuts in January from a current 7.7 million barrels per day (bpd) to roughly 5.7 million bpd in January. OPEC member Libya, which is exempt from the cuts, is also ramping up production after armed conflict shut almost all of the country’s output in January, pumping more oil into an oversupplied market. Adding to supply worries, crude inventories rose by 584,000 barrels in the week to Oct. 16 to about 490.6 million barrels, data from industry group the American Petroleum Institute showed, compared with analysts’ expectations in a Reuters poll for a draw of 1 million barrels.
WTI Dips After Surprise Crude Build -Oil prices rallied to seven-week highs today (WTI above $41.50) on the back of hope-filled headlines about US stimulus talks (and nothing out of the OPEC+ discussions). “Anything that helps the economy do better is going to be helpful for crude,” said Bill O’Grady, executive vice president at Confluence Investment Management in St. Louis.“Still, driving activity is down and people are not as global as they were. It may get better, but not back to where it was before.” API
- Crude +584k (-1.9mm exp)
- Cushing +1.174mm
- Gasoline -1.622mm (1.6mm exp)
- Distillates -5.938mm (-3.0mm exp)
Analysts expect more inventory draws (even after the previous week’s big drop in crude and distillates stocks), but API reports that crude stocks actually rose by 584k barrels. API also reported another big distillates draw.Notably, according to the EIA’s Today in Energy report, increased demand from the agricultural and residential sectors will help draw down distillate fuel stocks in coming months but not by enough to boost prices:“These initially relatively high inventories, along with lower crude oil prices, will continue putting downward pressure on distillate fuel oil prices through the 2020 – 21 winter season,” EIA says.EIA says inventories remained high through the summer as production outpaced demand.As Bloomberg notes, U.S. crude futures have struggled to make a sustained break above $40 as governments try to control new flareups of the virus. The worsening virus in Europe is sapping momentum from an already fragile demand recovery. Still, the prospect of a long-awaited stimulus deal in Washington would provide a much-needed boost to demand in the U.S.
WTI Extends Losses After Smaller Than Expected Crude Draw – prices extended their losses overnight after API reported a surprise crude build, and while stocks are rebounding on stimulus “optimism”, WTI refuses to chase it as a resurgent COVID-19 and expanding Libyan supply are keeping oil in check.Brent “remains stuck in the low $40s with the weaker dollar and the potential for a stimulus having no positive impact,” said Ole Hansen, head of commodities strategy at Saxo Bank. The market is focusing on inventories, and “overall it makes sense that crude is struggling while the demand outlook remains murky.” DOE
- Crude -1.002mm (-1.9mm exp)
- Cushing +975k
- Gasoline +1.895mm (1.6mm exp) – biggest build since May
- Distillates -3.832mm (-3.0mm exp)
Official inventory data shows that crude stocks fell by a modest 1mm barrels last week (less than expected) but still a draw compared to API’s build. Additionally, there was a noteworthy Gasoline build (the biggest since May)… US crude production remains noisy due to the storm-driven shut-ins (most recently Hurricane Delta) and saw a 600k b/d drop last week… WTI was hovering around $41 ahead of the official inventory data. Bloomberg Intelligence Energy Analyst Fernando Valle concludes that “concerns over global trade and the ramp-up in coronavirus cases in Europe and the U.S. may continue to weigh on refiners. Crack spreads have dipped despite last week’s report of a massive drop in diesel inventories. The market may keep looking past short-term indicators until there’s more clarity on fiscal stimulus, and on whether a second virus wave will lead to further lockdowns.”
Oil prices slip as U.S. inventory build stokes fears of supply glut – Oil drops 4% on weak U.S. gasoline demand – Oil prices dropped Wednesday after U.S. inventory figures showed demand weakening for refined products as global COVID-19 cases spiked. Brent crude futures were at $41.64 a barrel, down $1.51, or 3.5%. West Texas Intermediate (WTI) crude futures settled 4%, or $1.67, lower at $40.03. Both benchmarks rose in the previous session. Crude inventories fell by 1 million barrels in the week to Oct. 16 to 488.1 million barrels, while gasoline stocks rose in another weak showing for fuel demand. Overall product supplied, a proxy for demand, remained down 13% on the year and over the past four weeks when compared with the year-ago period. “The market is seriously grappling with demand in the wake of a continued rise in COVID-19 cases,” said Tony Headrick, energy markets analyst at CHS Hedging. Adding to pressure, worldwide COVID-19 cases crossed 40 million on Tuesday, with some parts of Europe imposing renewed lockdown measures. “Brent is particularly exposed to European regions which are undergoing new lockdowns,” Headrick said, On the supply side, Russia’s energy minister said on Tuesday it was too early to discuss the future of global oil production curbs beyond December, less than a week after saying plans to scale back existing output restrictions should proceed. Earlier this year the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia – together known as OPEC+ – agreed to trim production cuts in January from a current 7.7 million barrels per day (bpd) to roughly 5.7 million bpd. At the same time, OPEC member Libya, which is exempt from the cuts, is also ramping up production after armed conflict shut almost all its output in January. Production has recovered to about 500,000 bpd with Tripoli expecting that figure to double by year-end. The battle over a hefty, new U.S. coronavirus aid bill was set to spill into Wednesday as the White House and Democrats try to strike a deal before the Nov. 3 presidential and congressional elections, now with the encouragement of President Donald Trump.
Oil Prices Slump on US Fuel Supply Build – — Oil and gasoline futures tumbled the most in more than two weeks after a U.S. government report showed swelling fuel stockpiles and slowing demand as the coronavirus pandemic rages. Both crude and gasoline futures in New York declined 4% on Wednesday. Domestic gasoline inventories rose 1.9 million barrels last week, the biggest increase since May, while a measure of gasoline consumption slid to the lowest since late September, according to an Energy Information Administration report. The mounting fuel supplies and lackluster demand may worsen during the normally sluggish winter driving months. “The lockdowns, the higher Covid cases and travel restrictions in Western Europe and elsewhere are clearly bearish for petroleum demand,” said Andrew Lebow, senior partner at Commodity Research Group. “That trend doesn’t look like it’s going to get any better in the upcoming weeks. If anything, it’s probably going to get worse.” Rising coronavirus infections worldwide are putting a damper on an already murky demand outlook, with governments imposing or considering tighter restrictions. Milan, Italy’s financial capital, will be under night-time curfew beginning this week, while Germany’s new infections reached a record. In the U.S., New York posted more than 2,000 new Covid-19 cases for the first time since May. JBC Energy cut its outlook for oil-products demand this year and early 2021, saying that “the persistent lack of recovery in U.S. gasoline demand remains particularly worrisome.” Flagging fuel demand highlights the importance of ongoing discussions over the next round of U.S. virus aid to reviving energy consumption. House Speaker Nancy Pelosi said she “has a prospect for an agreement” with Treasury Secretary Steven Mnuchin on a coronavirus stimulus package, although it may not come together in time to pass both chambers before the Nov. 3 election. “There’s concern about the growing virus caseload in a lot of places hitting demand, especially if there’s not some fiscal stimulus,” said Michael Lynch, president of Strategic Energy & Economic Research. “Global inventories are still quite high and they’re not going to come down until we get a stronger demand recovery. Now, it looks like that will be pushed further out into the future.” West Texas Intermediate for December delivery fell $1.67 to settle at $40.03 a barrel. Brent for December settlement lost $1.43 to end the session at $41.73 a barrel. Both crude benchmarks dropped to the lowest since Oct. 12. Gasoline futures fell 4% to settle at $1.1403 a gallon. The surprise gasoline build led to another leg lower for refining margins. The so-called crack spread for combined gasoline and diesel against WTI futures slumped to the lowest since early April, providing little incentive for refiners to churn out more product in the midst of depressed demand. “There’s no reason for these guys to run the refinery. It’s a losing proposition,” said Bob Yawger, head of the futures division at Mizuho Securities. “There’s nobody that’s in a hurry to bring refinery utilization rates back up.”
Oil prices end at 1-week low as demand worries overshadow decline in U.S. crude supplies – Oil futures declined Wednesday, sending U.S. and global benchmark prices to their lowest settlements in over a week. U.S. government data showed that domestic crude supplies fell for a second week in a row, but by less than the market expected and failing to ease pressure from concerns over weaker demand. The rising cases of COVID-19 in the U.S. and Europe, in particular, have led to the potential for more economic shutdowns, which can impede demand for energy. The less-than-expected crude inventory draw reported by the U.S. Energy Information Administration Wednesday is “relevant” to the market, Lukman Otunuga, senior research analyst at FXTM, told MarketWatch. However, “oil prices remain more concerned with rising coronavirus cases across the globe and demand-side fears.” West Texas Intermediate crude for December delivery fell $1.67, or 4%, to settle at $40.03 a barrel on the New York Mercantile Exchange. From a technical perspective, a “move back below $40 could re-open the doors towards $38,” said Otunuga. December Brent crude, the global benchmark, lost $1.43, or 3.3%, at $41.73 a barrel on ICE Futures Europe. Both WTI and Brent crude saw their lowest front-month settlements since Oct. 12, according to Dow Jones Market Data. On Wednesday, the EIA reported that U.S. crude inventories fell by 1 million barrels for the week ended Oct. 16. That followed a 3.8 million-barrel decline the week before. On average, analysts polled by S&P Global Platts forecast a weekly decrease of 1.9 million barrels, while the American Petroleum Institute on Tuesday reported an increase of 584,000 barrels.
Oil struggles to recover after U.S. gasoline stocks build – Oil prices ticked up on Thursday but struggled to fully recover from the previous session’s losses when a build in U.S. gasoline inventories signaled a deteriorating outlook for fuel demand as coronavirus cases soar. Brent crude futures were up 44 cents at $42.17 a barrel. U.S. West Texas Intermediate (WTI) crude futures ticked up 43 cents to $40.46 a barrel. Both contracts shed more than 3% on Wednesday in their steepest daily falls in three weeks. U.S. gasoline stocks rose by 1.9 million barrels in the week to Oct. 16, the Energy Information Administration (EIA) said on Wednesday, compared with expectations for a 1.8 million-barrel drop. Overall product supplied, a proxy for demand, averaged 18.3 million barrels per day in the four weeks to Oct. 16, the EIA said – down 13% from the same period a year earlier. New daily COVID-19 infections hitting records in several U.S. states and in Europe, new lockdowns and China’s clamp-down on outbound travel to help stem the spread of the disease, all bode ill for fuel demand. Worsening the outlook, hopes that U.S. lawmakers would reach an agreement with the White House on an economic stimulus package dimmed late on Wednesday after President Donald Trump accused Democrats of holding up a compromise deal. “(A deal) might improve the demand tone for a week or two,” said Lachlan Shaw, head of commodity research at National Australia Bank. Adding to the supply concerns, Libyan oil exports are quickly accelerating into October as loading restarts following the easing of a blockade by eastern forces. Libya has seen production recover to about 500,000 barrels per day and the government in Tripoli expects that to double by year-end. Goldman Sachs said it saw average Brent prices rising from $43.9 per barrel this year to $59.4 next year, and WTI from $40.1 to $55.9 per barrel.
Oil ends higher, boosted by U.S. stimulus hopes (Reuters) – Oil prices ticked up on Thursday, boosted by the possibility of an economic stimulus package in the United States, but struggled to recover fully from the previous session’s losses when higher U.S. gasoline inventories signalled a deteriorating demand outlook as coronavirus cases soar. Brent crude futures settled 73 cents higher at $42.46 a barrel and U.S. West Texas Intermediate (WTI) crude futures gained 61 cents to $40.64. Both crude contracts shed more than 3% on Wednesday in their steepest daily falls in three weeks. Futures gained momentum early Thursday as U.S. House Speaker Nancy Pelosi said the two sides were nearing an economic stimulus package, boosting expectations that demand could improve, said Bob Yawger, director of Energy Futures at Mizuho in New York. Shares on Wall Street also gained on Thursday in choppy trading, as investors cheered the prospect of more fiscal stimulus to support a pandemic-damaged U.S. economy, with more data pointing to a slowing labor market recovery. U.S. gasoline stocks rose by 1.9 million barrels last week, the Energy Information Administration (EIA) said on Wednesday, compared with expectations for a drop of 1.8 million barrels.[EIA/S] Overall product supplied – a proxy for demand – averaged 18.3 million barrels per day (bpd) in the four weeks to Oct. 16, the EIA said, down 13% from the same period a year earlier. Record new daily COVID-19 infection numbers in several U.S. states and in Europe, along with further coronavirus lockdowns and China’s crackdown on outbound travel, all bode ill for fuel demand. Worsening the outlook, hopes that U.S. lawmakers would reach agreement with the White House on an economic stimulus package dimmed late on Wednesday after President Donald Trump accused Democrats of holding up a compromise deal.
Oil steady as Russia holds out prospect of output cut extension (Reuters) – Oil prices held on to gains made on the previous session on Friday, after Russian President Vladimir Putin indicated he would be prepared to extend record supply cuts in the face of the COVID-19 pandemic. Brent crude was off 1 cent at $42.45 a barrel by 0040 GMT having risen 1.7% on Thursday, while U.S. oil was 2 cents lower at $40.62, following a 1.5% gain in the previous session. Both contracts are heading for their first weekly loss in three. Putin said on Thursday that Russia did not see a need for major oil producers to alter a deal on cutting global supply, but did not rule out extending oil cuts if market conditions warranted. His comments were the clearest indication so far from Russia, one of the world’s top oil producers, that it is prepared to extend unprecedented curbs on output to meet the demand slump caused by the pandemic. Russia has allied with the Organization of the Petroleum Exporters (OPEC) led by Saudi Arabia in making the cuts to production that are due to be lifted at the end of year. “Putin is reinforcing that Saudi/Russian unity is firmly intact and that they will continue to keep the oil prices firm,”
Oil falls about 2% on Libyan output, COVID-19 demand concerns (Reuters) – Oil fell nearly 2% on Friday, finishing lower for the week, in anticipation of a surge in Libyan crude supply and demand concerns caused by surging coronavirus cases in the United States and Europe. Crude prices sank after Libya’s National Oil Corp (NOC) said it lifted force majeure on exports from key ports and output would reach 1 million barrels per day in four weeks. “As soon as that came out, the market cratered,” . U.S. crude settled at $39.85 a barrel, falling 79 cents, or 1.9%. Brent crude settled at $41.77 a barrel, losing 69 cents, or 1.6%. For the week, U.S. crude futures lost 2.5% and Brent futures shed 2.7%. Italy and several U.S. states reported record daily increases in infections, while France extended curfews for about two-thirds of its population as the second wave of the COVID-19 pandemic sweeps across Europe. “What’s holding us back is the uncertainty about demand – when we’re going to get a vaccine, when things are going to get back to normal, concerns about more shutdowns,” said Phil Flynn, senior analyst at Price Futures Group in Chicago. Russian President Vladimir Putin on Thursday said Moscow did not rule out extending OPEC+ oil output cuts, but that assurance did not offset the expectations for rising Libyan output and demand worries, analysts said. “They need to say, ‘We are not going to bring back those two million barrels,'” Yawger said. OPEC+, which includes Russia and the Organization of the Petroleum Exporting Countries, is due to increase production by 2 million bpd in January 2021. U.S. energy companies added five oil rigs to raise the total rig count to 287 in the week to Oct. 23, the highest since May, energy services firm Baker Hughes said. The rig count is an indicator of future supply.
Oil drops nearly 2% on demand concerns, snaps 2-week win streak – Oil fell nearly 2% on Friday and headed for a weekly drop as demand concerns raised by surging coronavirus cases in the United States and Europe overshadowed the prospect of an extension to OPEC-led supply curbs. Italy and several U.S. states reported record daily increases in infections, while France extended curfews for about two thirds of its population as the second wave of the COVID-19 pandemic sweeps across Europe. Brent crude lost 69 cents, or 1.63%, to settle at $41.77 a barrel. U.S. crude shed 79 cents, or 1.94%, to settle at $39.85 per barrel. “What’s holding us back is the uncertainty about demand – when we’re going to get a vaccine, when things are going to get back to normal, concerns about more shutdowns versus concerns about tightening supplies,” said Phil Flynn, senior analyst at Price Futures Group in Chicago. Also weighing on the market, Libyan output, which had been mostly offline since January, has reached 500,000 barrels per day (bpd) and will rise further by the end of October. Comments by Russian President Vladimir Putin on Thursday that Moscow did not rule out extending OPEC+ oil output cuts supported oil prices. “The only bullish piece of news comes from Russia,” said Bjornar Tonhaugen of Rystad Energy. OPEC+, a group that includes Russia and the Organization of the Petroleum Exporting Countries, is due to increase production by 2 million bpd in January 2021 as part of a plan to pump more as demand recovers. However, the second wave of the pandemic and resulting slowdown in the demand recovery have raised the question of whether the increase is premature. OPEC+ made a record supply cut from May, which boosted prices from historic lows. Brent is up from a 21-year low below $16 in April.
Oil Prices Finish Lower for the Week — Oil retreated as a further increase in Libyan output threatens to return more supply to a market that’s already grappling with a pandemic-induced slump in demand. Crude futures fell 1.9% in New York on Friday and posted their first weekly decline in three. Libya lifted force majeure on its Ras Lanuf and Es Sider ports and oil output will surpass 1 million barrels a day in four weeks, according to the state-run National Oil Corp. The announcement came as prospects for more Libyan output increased following the signing of a permanent cease-fire agreement. Prices were already on the decline as talks appeared to stall on a U.S. stimulus deal before the election, with House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin trading blame for the impasse. A deal would have injected a sorely needed boost to demand, with positive catalysts for prices harder to come by heading into the end of the year. “The apparent nationwide ceasefire in Libya is only going to encourage more production there and keep it steady, at least for a while,” said John Kilduff, a partner at Again Capital LLC. Meanwhile, “the Covid situation is not really improving, if not getting worse. So we’re continuing to deal with that as well.” U.S. benchmark crude futures declined 2.5% over the week as a resurgence of coronavirus infections spurred governments around the world to renew tighter lockdown restrictions. While comments from Russian President Vladimir Putin signaling openness to delaying a planned OPEC+ output hike helped bolster prices, the continued return of Libyan production complicates the group’s tapering strategy. “Until we get a vaccine, prices are probably going to hang out around this range,” said Jay Hatfield, CEO at InfraCap in New York. “We need airline travel, and we’re not going to have airline travel until we have a vaccine.” West Texas Intermediate for December delivery declined 79 cents to settle at $39.85 a barrel. Brent for the same month declined 69 cents to end the session at $41.77 a barrel. The contract fell 2.7% over the week. Despite the prospect of more Libyan supply returning to the market, Brent’s structure remained firm. The spread between the global benchmark’s nearest contracts strengthened on Friday to its narrowest contango since late July.
Saudi Arabia Is Suffering The Consequences Of Its Failed Oil Price War –Nine months on from Saudi Arabia’s second major oil price war in the last five years, more negative consequences are manifesting themselves. Aside from the irrevocably damaged core relationship with the U.S., the permanent distrust of international investors, and the further alienation of many of its fellow OPEC members, Saudi Arabia is now beginning to discover the true depth and breadth of damage that it has done to its own economy, which will endure for many years to come. Figures released at the end of September show that Saudi Arabia’s economy contracted 7 per cent year-on-year (y-o-y) in the second quarter of 2020, with the Kingdom’s private sector showing a negative growth rate of 10.1 per cent, while the public sector recorded negative growth of 3.5 per cent. Saudi’s oil revenue in the first half of the year was 35 per cent lower than a year earlier, while non-oil revenue fell by 37 per cent. Moreover, in the second quarter of 2020 alone, the Kingdom’s petroleum refining activities recorded a 14 per cent y-o-y drop. All of this resulted in a current account deficit of SAR67.4 billion (US$18 billion), or 12 per cent of GDP, in Q220 compared with a surplus of SAR42.9 billion, or 5.8 per cent of GDP, a year earlier, according to Saudi Arabia’s General Authority for Statistics. The official line being peddled by various Saudi agencies to explain these appalling numbers is that they are the result of the COVID-19 pandemic outbreak that destroyed demand for oil around the globe. That, of course, is only partly true, as the key element that made this factor exponentially worse was that Saudi Arabia decided to launch yet another oil price war at the same time, the key feature of which was to crash oil prices by ramping up oil production from itself and other OPEC members, plus Russia. For a market already saturated with oil as demand continued to fall away, the price effect on the supply side of the oil price equation was catastrophic and led to unprecedented negative pricing on WTI futures contracts for May. The additional factor that has been overlooked by market commentators is that by the beginning of March, when Saudi launched the last oil price war, it was becoming clear that the COVID-19 outbreak would not be as containable as many had thought even a month or so before. It would have been entirely understandable to the senior Saudis with whom Saudi Crown Prince Mohammed bin Salman (MbS) had shared his plan to try to destroy and/or disable the U.S. shale oil sector again (albeit with exactly the same strategy that had failed so disastrously just four years earlier) that the new oil price war would be put on hold.
IMF reveals 2021 forecasts for oil prices and the Middle East economy – The International Monetary Fund downgraded its outlook for Middle East and Central Asian economic recovery, predicting a 4.1% contraction for the region as a whole – 1.3 percentage points worse than its previous assessment in April – in its latest regional outlook report released Monday. Jihad Azour, director of the IMF’s Middle East and Central Asia department, noted a large disparity in economic loss between oil importing and exporting countries as the region has been hit by the coronavirus pandemic and a plunge in oil prices. “Combined together, those two shocks led to a sharp decline in economic activity that is different between oil exporting and oil importing countries,” Azour told CNBC’s Hadley Gamble via video call on Sunday. “On average, we will see growth going negative by 6.6% for oil exporting countries, and negative growth of 1% for all importing countries,” he said, adding that there will be differences between the countries within each group. Oil prices will be the most important factor for oil exporters’ recovery, particularly states like Saudi Arabia, Iraq, Iran, the UAE, Bahrain and Kuwait, for whom the commodity makes up the majority of revenue. While prices have recovered from their historic plunge in March of this year, international benchmark Brent crude is still trading nearly 40% below pre-pandemic levels. Brent stood at $42.87 per barrel on Monday morning in London. And the IMF doesn’t see oil prices staging a dramatic recovery anytime soon, predicting prices in the $40 to $50 range in 2021. That’s still half the $80 per barrel figure OPEC kingpin Saudi Arabia needs to balance its budget, according to the fund. “The projections for oil prices are in the corridor between $40 to $45 for … early next year, and will be between $40 to $50” next year overall, Azour said. “I think what is going to be also important to watch is the recovery in demand. That proved to be an important factor in what we saw this year, in addition to the supply that could come from alternative energies.” The oil demand outlook remains grim amid new waves of coronavirus gripping regions of the world and uncertainty about U.S. fiscal stimulus and the U.S. presidential election. The International Energy Agency in September cut its outlook for worldwide oil demand to 91.7 million barrels per day this year, a daily contraction of 8.4 million barrels year-on-year and more than the contraction of 8.1 million predicted in the agency’s August report. OPEC posted an even worse outlook for this year, slashing its view for global oil demand last month to an average of 90.2 million barrels per day in 2020, a contraction of 9.5 million barrels per day year-on-year. The group of 13 oil-producing countries described the outlook for the commodity’s demand as “anemic,” and warned that risks remain “elevated and skewed to the downside.”
Switzerland of the Middle East: Economic crisis threatens Oman’s neutrality – Sandwiched between Saudi Arabia and Iran, Oman has long prized its neutrality, garnering a reputation as the Middle East’s Switzerland. But the Gulf state’s ability to steer clear of regional power struggles has been put at risk by economic woes that have been exacerbated by the coronavirus pandemic and the slump in oil prices. The IMF forecasts an economic contraction of 10 per cent this year, far steeper than the Middle Eastern average. The crisis has been a baptism of fire for Sultan Haitham bin Tariq Al Said, who succeeded Qaboos bin Said Al Said in January after the death of the leader who shaped modern Oman during his half century on the throne. Archived. The sultanate’s budget deficit is forecast to hit 20 per cent of gross domestic product this year after revenues tumbled. With modest hydrocarbon resources, Oman has around $16bn in foreign exchange reserves and another $16bn in readily available overseas assets, but the fiscal shortfall and maturing global bonds amount to more than $13bn a year for the next three years. The sultanate, which borrowed $2bn from global banks in August, will need to draw down domestic deposits including from the sovereign wealth fund, asset sales and more loans in order to steady the budget. It is considering a return to bond markets to raise $2bn-$4bn.
OPEC+ Kingpins Try to Sell Obedience – Saudi Arabia and Russia, de factor leaders of the OPEC+ alliance of oil-producing countries, have been urging fellow members of the group to comply with agreed-upon output levels for the benefit of oil market stability. How successful the OPEC+ kingpins’ efforts will be should become clearer this week after an OPEC+ panel meets to discuss the matter. In this installment of what to watch in the oil market, two of Rigzone’s regular panelists offer their perspectives on the OPEC+ issue. Keep reading for their insights, along with other views on near-term oil market trends.
- Tom McNulty, Houston-based Principal and Energy Practice leader with Valuescope, Inc.: The Saudis and the Russians will continue to cajole all oil-producing countries to keep to the OPEC+ agreement to maintain production levels where they are so that prices do not fall further. They will not succeed.
- Tom Seng, Director – School of Energy Economics, Policy and Commerce, University of Tulsa’s Collins College of Business: Will anything of substance come out of OPEC’s Compliance Committee meeting on Monday that would change the global supply/demand balance? Will $40 hold and, if so, could that support level lead to a rally?
- Andrew Goldstein, President, Atlas commodities LLC: Consolidation within the oil and gas industry has started, dating back to last year with Occidental’s purchase of Anadarko. More recently the merger of Devon Energy and WPX Energy, and talks of ConocoPhillips’ potential acquisition of Concho Resources, have started the long-anticipated consolidation within the shale patch.
Israeli Pipeline Operator Signs Preliminary Deal to Transport UAE Oil to Europe -In what could become one of the most significant deals to emerge since Israel and the United Arab Emirates normalized relations, the Israeli state-owned pipeline company Europe Asia Pipeline Company, or EAPC, said on Tuesday that it had signed a memorandum of understanding to store and transport oil and distillates from the UAE to Europe.Under the preliminary agreement with MED-RED Land Bridge, a company controlled by Israelis and Emiratis, EAPC will manage storing and transmitting the oil. The oil will be shipped via EAPC’s pipeline, which connects the Red Sea city of Eilat and the Mediterranean port of Ashkelon. The MOU was signed in Abu Dhabi on Monday during a ceremony attended by U.S. Treasury Secretary Steve Mnuchin.” MRLB will deliver petroleum distillates originating in the Gulf through the EPAC pipeline and sell them to European customers. MRLB will also source petroleum products for delivery through the pipeline to and from other countries.MLRB is a closely held company, jointly controlled by Petromal, a unit of the Abu Dhabi-based firm National Holding; Israeli-based AF Entrepreneurship, which develops energy projects; and Lubber Line, a Gibraltar-based group focused on infrastructure and energy.EAPC operates its eponymous pipeline, and deals in oil storage and the export and import of distillates. It was formed in 1968 as a joint venture between Israel and the National Iranian Oil Co., to build and operate an oil pipeline from Eilat to Ashkelon, plus ports for tankers and storage facilities.
US Oversees Unprecedented Preliminary Deal To Transport UAE Oil To Europe Via Southern Israel – It didn’t take long for the historic US-brokered peace and ‘normalization’ of ties between Israel and the United Arab Emirates to shift focus to a potential major oil pipeline project in the works.Israel’s Haaretz newspaper reports, “In what could become one of the most significant deals to emerge since Israel and the United Arab Emirates normalized relations, the Israeli state-owned pipeline company Europe Asia Pipeline Company, or EAPC, said on Tuesday that it had signed a memorandum of understanding to store and transport oil and distillates from the UAE to Europe.”Below is the EAPC route through southern Israel from the Red Sea to the Mediterranean port of Ashkelon. This is unprecedented considering that up until just months ago the Arab Gulf states and Israel were official enemies, as they had been for decades especially over the fate of Palestinians. Haaretz reports further that the memorandum of understanding was signed in Abu Dhabi on Monday, in a ceremony attended by US Treasury Secretary Steve Mnuchin.”This is a historic agreement that will increase cooperation between EAPC and regional and international players. Without a doubt, this agreement has great importance for the Israeli economy both economically and strategically, because it involves long-term joint investments,” EACP Chairman Erez Kalfon said.The Saudi-owned media outlet based on Dubai, al-Arabiya, also confirmed the preliminary deal. And Reuters cited an inside source who speculated it could be worth an estimated $700-$800 million in the coming years. The arrangement “is likely to increase the transferred quantities by tens of millions of tons per year,” the source said. Supplies could start being delivered via the Red Sea to Mediterranean route by early 2021.
Armenian Forces Use Their Last Chance To Turn Tide Of War With Azerbaijan –The Azerbaijani Armed Forces have been developing their advance on Armenian positions in the contested Nagorno-Karabakh region. On October 19, they captured 13 more villages in the Jabrayil district. The capturing of Soltanli, Amirvarli, Mashanli, Hasanli, Alikeykhanli, Gumlag, Hajili, Goyarchinveysalli, Niyazgullar, Kechal Mammadli, Shahvalli, Haji Ismayilli and Isagli was personally announced by Azerbaijani President Ilham Aliyev. Early on October 20, Azerbaijani forces also reached the town of Tumas and engaged Armenian units deployed there. Pro-Azerbaijani sources insist that the town already fell into the hands of Baku.The country’s defense ministry claims that in the recent clashes Azerbaijani forces destroyed a number of enemy troops, at least 2 T-72 tanks, 2 BM-21 “Grad” MLRS, 1 D-30, 1 D-20 gun-howitzers, and 11 auto vehicles.On October 19, pro-Armenian sources for the first time provided video evidence that they had shot down at least one of the Bayraktar TB2 combat drones operated by the Azerbaijani military and Turkish specialists. Meanwhile, the Armenian Defense Ministry claimed that 5 unmanned aerial vehicles were shot down during the evening of that day only.According to the Armenian side, the total number of Azerbaijani casualties in the war reached 6,259. 195 UAVs, 16 helicopters, 22 military planes, 566 armoured vehicles and 4 multiple rocket launchers of the Armed Forces of Azerbaijan were allegedly destroyed. Yerevan claims that the Armenian forces have repelled two powerful attacks in the northern part of Karabakh, while intense fighting has been ongoing in the south. Nonetheless, Armenian military officials avoid confirming the recent Azerbaijani advances and insist that the recent developments are just a part of modern maneuver warfare. By these claims, the political leadership of Armenia tries to hide that the Azerbaijani advance along the Iranian border faced little resistance.The Azerbaijani progress was mostly complicated by a limited number of mobile Armenian units, which were avoiding a direct confrontation and focusing on ambushes and mine warfare. According to reports, the Armenian side is now reinforcing its positions in the area of the Akari River seeking to prevent the further Azerbaijani advance towards the Armenian state border and the Lachin corridor.On the other hand, the goal of the Azerbaijani-Turkish bloc is to overcome this resistance and to develop the current momentum to reach the Lachin mountain pass thus threatening to cut off the shortest route between Armenia and the Republic of Artsakh. In the event of success, this would predetermine the Azerbaijani victory in the war. Military hostilities are ongoing amid another round of international diplomatic efforts to de-escalate the situation and return the sides to the negotiating table.President Ilham Aliyev and Armenian Prime Minister Nikol Pashinyan declared that they are ready to meet in Moscow. The Azerbaijani leader even said that his country is ready to halt the operation if Armenia demonstrates a constructive approach. Nonetheless, the ‘constructive approach of Armenia’ in the view of Azerbaijan is the full and public surrender of Karabakh. Such an agreement will mark the collapse of the current political leadership of Armenia and is unlikely to be accepted.Therefore, the war will likely continue until the military victory of one of the sides and that side would likely be Azerbaijan.
Iran rules out weapons ‘buying spree’ as UN embargo is set to expire – Iran said it was self-reliant in its defense and had no need to go on a weapons buying spree as a United Nations conventional arms embargo was due to expire on Sunday despite strong U.S. opposition. “Iran’s defense doctrine is premised on strong reliance on its people and indigenous capabilities … Unconventional arms, weapons of mass destruction and a buying spree of conventional arms have no place in Iran’s defense doctrine,” said a Foreign Ministry statement carried by state media. The 2007 Security Council arms embargo on Iran was due to expire on Sunday, as agreed to under the 2015 nuclear deal among Iran, Russia, China, Germany, Britain, France and the United States that sought to prevent Tehran from developing nuclear weapons in return for economic sanctions relief. Tensions between Washington and Tehran have soared since U.S. President Donald Trump in 2018 unilaterally withdrew from the deal, however. In August, the Trump administration triggered a process aimed at restoring all U.N. sanctions, after the U.N. Security Council rejected a U.S. bid to extend the conventional arms embargo on the country. “Today’s normalization of Iran’s defense cooperation with the world is a win for the cause of multilateralism and peace and security in our region,” Iranian Foreign Minister Mohammad Javad Zarif said on Twitter. Days after triggering the process, U.S. Secretary of State Mike Pompeo warned Russia and China not to disregard the reimposition of all U.N. sanctions on Iran which Washington has demanded. When asked whether the United States would target Russia and China with sanctions if they refuse to reimpose the U.N. measures on Iran, Pompeo said: “Absolutely.”
Iran To Import North Korean Missiles In 25-Year Military Deal With China -Following the end on the 18th of October of the 13-year United Nations’ embargo on Iran buying or selling weapons, the roll-out of the military component of the 25-year deal between China and Iran will begin in November, as exclusively revealed by Oil Price.com. After a series of meetings in China on the 9th and 10th of October between Iran’s Foreign Minister, Mohammad Zarif, and his China counterpart, Wang Yi, this military component may now also feature the deployment in Iran of North Korean weaponry and technology, in exchange for oil, according to sources very close to the Iranian government spoken to by OilPrice.com last week. Most notably this would include Hwasong-12 mobile ballistic missiles, with a range of 4,500 kilometres, and the development of liquid propellant rocket engines suitable for intercontinental ballistic missiles (ICBMs) or satellite launch vehicles (SLVs). This will all be part of a broader triangular relationship co-ordinated by Beijing and further facilitated by the imminent launch of a new digitised currency system by China. This sort of co-ordination – between North Korea and Iran and also between North Korea, Iran, and China – is nothing new, although its resumption at such a scale and in such products is. According to a number of defence industry sources – and recorded in various ‘Jane’s Intelligence Reviews’ (JIR) – over the first five-year period from the onset of Iran’s ballistic missile program in 1987, Iran bought up to 300 Scud B missiles from North Korea. Pyongyang, though, did not just sell Iran weapons but it was also instrumental in helping Iran to build-out the infrastructure for what has become an extremely high-level ballistic missile program, beginning with the creation in Iran of a Scud B missile plant that became operational by the end of 1988.According to JIR and other defence sources, this early-stage co-operation in this area between North Korea and Iran also included Iranian personnel travelling to North Korea for training in the operation and manufacture of these missiles and the stationing of North Korean personnel in Iran during the build-out of missile plants. This model of knowledge and skills transference, of course, has been a key part of the 25-year deal between Iran and China since it was formally agreed back in 2016, including the training of up to 130 young, fast-tracked officers from the Islamic Revolutionary Guard Corps (IRGC) every year at various military institutions across mainland China. The simple idea of paying North Korea in oil is also far from new, having been a key method by which Iran helped to fund the development of North Korea’s more powerful Nodong series of missiles as early as the 1990s, according to Kenneth Katzman, Middle Eastern affairs specialist at the Congressional Research Service, in Washington. According to sources close to Iran’s Petroleum Ministry spoken to by OilPrice.com last week, oil shipments are the number one suggestion from North Korea to any country that has oil and wants weapons as a means of payment for any weaponry that Pyonyang has available.
Exclusive: Indonesia rejected U.S. request to host spy planes – officials (Reuters) – Indonesia rejected this year a proposal by the United States to allow its P-8 Poseidon maritime surveillance planes to land and refuel there, according to four senior Indonesian officials familiar with the matter. U.S. officials made multiple “high-level” approaches in July and August to Indonesia’s defence and foreign ministers before Indonesia’s president, Joko Widodo, rebuffed the request, the officials said. Representatives for Indonesia’s president and defence minister, the U.S. State Department press office and the U.S. embassy in Jakarta did not respond to requests for comment. Representatives for the U.S. Department of Defence and Indonesia’s foreign minister Retno Marsudi declined to comment. The proposition, which came as the U.S. and China escalated their contest for influence in Southeast Asia, surprised Indonesia’s government, the officials said, because Indonesia has a long-standing policy of foreign policy neutrality. The country has never allowed foreign militaries to operate there. The P-8 plays a central role in keeping an eye on China’s military activity in the South China Sea, most of which Beijing claims as sovereign territory. Vietnam, Malaysia, the Philippines and Brunei have rival claims to the resource-rich waters, through which $3 trillion worth of trade passes each year.Indonesia is not a formal claimant in the strategically important waterway, but considers a portion of the South China Sea as its own. It has regularly repelled Chinese coast guard vessels and fishing boats from an area to which Beijing says it has a historic claim. But the country also has growing economic and investment links with China. It does not want to take sides in the conflict and is alarmed by growing tensions between the two superpowers, and by the militarisation of the South China Sea, Retno told Reuters.
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