Written by rjs, MarketWatch 666
Here are some more selected news articles about the oil and gas industry from the week ended 17 October 2020. Go here for Part 1.
This is a feature at Global Economic Intersection every Monday evening.
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Good Times Bad Times – RBN’s Outlook for Oil, Gas, and NGL Supply, Demand, And Prices | RBN Energy – Six months on from the height of the crude oil price rout of April 2020 and the unprecedented market convulsions that followed, energy markets appear to be settling into a state of hyper-uncertainty amidst the ongoing pandemic. Crude oil prices have been downright equanimous, stabilizing near $40/bbl in recent months. Volatility has reigned in the gas market, but it has thus far managed to avoid a major collapse, and the NGLs market has dodged a complete derailment from norms, if barely. The relative calm provides the perfect opportunity to assess how COVID-era energy markets are operating and what lies ahead – which is what we’ll be doing next week at RBN’s Virtual School of Energy. There’s a new order taking shape, and we’re rolling out RBN’s freshly updated outlooks for U.S. crude oil, natural gas and NGL markets. As always, we’ll pull back the curtain on the fundamental analysis and models behind our forecasts, so you can understand how we arrived at our answers, and gain the skills and tools to adjust the assumptions as markets evolve. As you’ve gathered by now, today’s blog is an unabashed advertorial for our virtual conference, but read on if you’d like to hear more about the underlying premise behind our latest outlook. The last time we held our School of Energy online was in April – pretty much in the middle of the COVID meltdown. Crude prices dropped below $20/bbl that week, propane prices were up by a dime a gallon, gas was bouncing up and down 5-10% each day, and the market was hard-pressed to know what would happen in the next five days, much less six months or a year. In some ways, not much has changed since then; COVID is still with us, the toll in human lives has been horrendous, big pieces of the economy are still shut down, air travel is still comatose, and conferences are still virtual. The market has also since weathered a wipeout in LNG exports. What has changed, though, is that energy markets, like the rest of the world, have learned to adapt to life in a pandemic. So has RBN’s framework for understanding how energy markets are behaving. Ever since the collapse of OPEC+ and COVID struck, the RBN team has been retooling our production, infrastructure, and supply/demand models to reflect the new world order. Now that the market has gotten a breather from the rapid-fire punches of early 2020 and is operating somewhat more rationally, it’s a good time to assess what the recovery will look like longer term, in the upcoming months and years. That is what our Fall Virtual School of Energy is all about. Before we get to the highlights of our findings, here’s a little bit about the format. While this will be our 14th School of Energy, it’s our third time going virtual, and what that means is that you’ll not only be able to attend the conference online in real time on October 20-21, asking questions as we go, but after the conference, all the materials will be available for replay, in whatever order you choose. So you can view the modules you want during the online sessions and go back to look at any other modules after the fact. That way, you can view the sessions that are of most interest to you RIGHT NOW! And it’s not too late to sign up. You can register, here.
US oil, gas rig count up by 13 to 336 on week, resuming double-digit leap: Enverus – The US oil and gas rig count rose by 13 to 336 on the week, rig data provider Enverus said Oct. 15, as activity ticked up on the heels of what experts say may be a final push to complete projects in 2020 with remaining capital budgets. Stay up to date with the latest commodity content. Sign up for our free daily Commodities Bulletin. Sign Up Oil rigs accounted for the bulk of increases, up 10 to 238, but natural gas rigs were also up by three to 98. “These modest week-on-week gains were expected,” analyst Matthew Andre of S&P Global Platts Analytics said. “Relative to what we’ve seen for growth it’s pretty good. I’m not sure we’ll see [double-digit] rig gains every week for the rest of the year.” Horizontal activity, a better indicator of shale activity since it focus on players drilling larger, more productive wells, has climbed recently and is now at 265, up by seven on the week – far past its long rangebound period in the 230s-240s from June through most of September. Since then, the horizontal rig count has ticked up steadily. “This relatively widespread recent stability increases our confidence that the horizontal activity trough is now indeed behind us, and we continue to expect to see further modest gains into year-end 2020,” Tudor Pickering Holt said in its daily investor note Oct. 12. This past week is the highest the horizontal rig count has been since June, although it’s still just about a third of its recent peak of 734 in late February 2020. Most domestic basins saw multiple rig gains on the week and none lost rigs. Biggest were the Permian Basin and the Marcellus Shale, which each increased by four rigs. That resulted in totals of 143 rigs in the Permian, sited in West Texas/New Mexico, and 29 in the Marcellus, a largely gas-prone basin mostly in Pennsylvania and neighboring states. In addition, the Eagle Ford Shale of South Texas was up by three to 21, a volume not seen in the basin since mid-May. Also, the Bakken Shale of North Dakota/Montana and DJ Basin of Colorado were each up by two rigs, for respective totals of 13 and six. The SCOOP/STACK play in Oklahoma and Utica Shale of Ohio held steady at 12 and seven rigs respectively. The gassy Haynesville Shale of East Texas/Northwest Louisiana was up one to 39, the most activity posted in that play since late March. All things considered, the relatively buoyant rig activity of the last week comes a week before Q3 earnings begin, which typically provides a glimpse into activity outlooks during the following few months and the rest of the year. This year’s Q3 outlooks will be especially scrutinized since activity is sluggish from two full quarters of activity tamped down by the coronavirus pandemic, as operators slashed drilling rigs and their 2020 capital budgets beginning in March. The oil and gas rig count, at its July trough of 279, was down more than 65% from early March.
Is U.S. Shale Finally Bouncing Back? – – As the oil price dropped through the first and second quarters of this year, oil companies closed in wells and laid off drilling and fracking crews. Activity bottomed in late May and has mounted a steady recovery in the months since. Rig count increases have been moderate, rising from low of 251 in May to 269 as of the 5thof October. What has been more spectacular is the increase in the deployment of frac crews as operators have allocated capex to bring Drilled by Uncompleted, (DUCs) out of inventory and into production. The graph above shows the true impact of this trend, with frac crews more than doubling since May’s lows. The question before us now, is what can we expect through the rest of the year and on into 2021? In a recent OilPrice article I documented a relevant industry consolidation move by Schlumberger and Liberty Oilfield Services, I’ll let you follow the link provided for relevant details on the joint venture between these two companies. For a quick reference this creates the largest player in U.S. shale fracking with an estimated twenty percent of the available hydraulic horsepower, HHP in the industry today. In this article we are going to concentrate on some broader industry trends and I will have an updated recommendation for shares of LBRT as well. I was cautious on LBRT immediately after this merger as the share rocketed 40% higher in a single day. That move wasn’t something I wanted to chase. As the chart below indicates this caution was well advised as the stock sold off over the next few weeks, before regaining most of its early value. Over the last week the market action has taken the general oilfield lower, and now we think that LBRT represents a compelling value at current prices.
US Oil Production Has Already Passed Its Peak, Occidental (OXY) Says – America’s oil production will never again reach the record 13 million barrels a day set earlier this year, just before the pandemic devastated global demand, according to Occidental Petroleum Corp.“It’s just going to be too difficult to replace the 2 million barrels a day of production that we’ve lost, and then to further grow beyond that,” Chief Executive Officer Vicki Hollub said Wednesday at the Energy Intelligence Forum. “Over the next three to four years there’s going to be moderate restoration of production, but not at high growth.”Occidental is one of the biggest producers in the U.S. shale industry, which added wells at such a rate prior to the spread of Covid-19 that the country became the world’s top crude producer, overtaking Saudi Arabia and Russia, ushering in an era that President Donald Trump called “American energy dominance.”Shale’s debt-fueled expansion came to a juddering halt due to lower gasoline demand and oil prices, but also because of Wall Street’s increasing reluctance to fund growth at any cost. Shale operators are increasingly prioritizing cash flow and returns to investors over production growth.Occidental, which vies with Chevron Corp. to be the biggest producer in the Permian Basin, has been forced to throttle back capital spending, lower growth targets and cut its dividend in a bid to save cash during the downturn. Its finances were already severely challenged by the debt taken on through its $37 billion purchase of rival Anadarko Petroleum Corp. last year.Hollub said global consumption stands at about 94 billion barrels a day, and it will take a Covid-19 vaccine before it returns to 100 million barrels. Due to cutbacks around the world, supply and demand for oil will likely balance again by the end of 2021, she said. Unlike some of her European peers, Hollub sees strong long-term demand for oil. “I expect we’ll get to peak supply before we get to peak demand,” she said.
With Bankruptcies Mounting, Faltering Oil and Gas Firms Are Leaving a Multi-billion Dollar Cleanup Bill to the Public | DeSmog – Amid a record wave of bankruptcies, the U.S. oil and gas industry is on the verge of defaulting on billions of dollars in environmental cleanup obligations. Even the largest companies in the industry appear to have few plans to properly clean up and plug oil and gas wells after the wells stop producing – despite being legally required to do so. While the bankruptcy process could be an opportunity to hold accountable either these firms, or the firms acquiring the assets via bankruptcy, it instead has offered more opportunities for companies to walk away from cleanup responsibilities – while often rewarding the same executives who bankrupted them. The results may be publicly funded cleanups of the millions of oil and gas wells that these companies have left behind. In a new report, Carbon Tracker, an independent climate-focused financial think tank, has estimated the costs to plug the 2.6 million documented onshore wells in the U.S. at $280 billion. This estimate does not include the costs to address an estimated 1.2 million undocumented wells.Greg Rogers, a former Big Oil advisor, and co-author of a previous Carbon Tracker report on the likely costs of properly shutting down shale wells, suggested to DeSmog that oil and gas companies have factored walking away from their cleanup responsibilities into their business planning.“The plan is that these costs will be transferred, these obligations will be transferred to the state at some point,” Rogers told DeSmog, “Why would a company want to go out and spend hundreds of millions of dollars plugging all of these wells when it could instead pay its executives?”Despite federal and state laws requiring oil and gas companies to clean up and properly cap and abandon wells, there is overwhelming evidence that this is not happening. One major reason why is that often, regulators lack the power to enforce compliance once the permits to drill the wells have been issued. The best method to guarantee the wells are properly capped and abandoned is for regulators to require the companies to put up the money to do that before the well is drilled. This is most often done via a process known as surety bonding. However, if the amount of money required for bonding is small enough, there is no incentive for companies to spend the additional money to properly cap the wells once the wells are no longer producing oil or gas. From a business standpoint, it is smarter for the well owner to walk away from the obligations at that point. The new report from Carbon Tracker also notes that current bonding monies allocated for well cleanup are equal to roughly only 1 percent of that total expected cost.
Oil, gas deal tracker: COVID-19 fallout stifled Q3’20 M&A -The pace of oil and gas M&A deal-making in the third quarter of 2020 remained well below year-ago levels as the industry reckoned with COVID-19’s negative impacts on consumer demand and company balance sheets, according to S&P Global Market Intelligence data. The sector announced 25 fewer whole-company and minority-stake deals than in the third quarter of 2019 – 88 deals compared to 113. In the same period, the combined value of deals rose by just over $100 million to $27.14 billion. The number of announced asset transactions, meanwhile, fell from 134 to 100 and their aggregate value declined $1.09 billion to $14.54 billion. The quarter saw five billion-dollar-plus transactions, with Chevron Corp. and Noble Energy Inc.’s $13.76 billion combination topping the list of biggest whole-company and minority-stake deals in 2020 so far and Berkshire Hathaway Energy’s $9.75 billion purchase of Dominion Energy Inc.’s gas transmission and storage assets taking the first spot among asset-level deals. During the period, Devon Energy Corp. also announced a $5.79 billion acquisition of fellow independent driller WPX Energy Inc. and The Blackstone Group Inc. sold its roughly 40% stake in Cheniere Energy Partners LP to Brookfield Infrastructure Partners LP for $3.48 billion. Smaller transactions included Southwestern Energy Co.’s $893.5 million purchase of Marcellus and Utica Shale driller Montage Resources Corp. and gas liquids producer Painted Pony Energy Ltd.’s $377.3 million merger with Canadian Natural Resources Ltd. In September, Schlumberger Ltd. agreed to merge its integrated completions services business with Liberty Oilfield Services Inc.’s fracturing and engineering operations for $427.8 million. According to 55% of oil and gas firms polled for the Kansas City Federal Reserve’s third-quarter Energy Survey, constrained profitability will drive a massive increase in mergers and acquisitions through 2021. Momentum from upstream combinations is not expected to trickle down to the pipeline sector, however. Replicating that activity farther downstream presents “a lot more headwinds than tailwinds,” according to Raymond James & Associates
Exxon’s Latest Business Plan — Drill, Baby, Drill – While many of the world’s largest oil companies are rushing ahead with plans to slash carbon emissions and transition to renewable energy, ExxonMobil is charting its own course, one that will help heat the Earth’s environment to the point where human beings will no longer be able to survive. One would think a business corporation would want to keep its customers alive but Exxon sees things differently. Scientific American, citing a report by E&E News, says Exxon’s latest business plan calls for a massive increase in drilling operations, all in the name of profits. Bloomberg did some digging and found the company’s internal projections suggest the new strategy will increase Exxon’s carbon emissions from 122 million metric tons in 2017 to 143 million metric tons by 2025. To put that in perspective, that’s the equivalent of 5 new coal powered generating facilities every year for the next 5 years. But that’s not the half of it. Those projections are for the company’s operations, not for the carbon released when all that lovely new oil is burned or turned into plastics, known in the industry as Scope 3 emissions. But wait, Exxon says. The emissions would be much higher if the company was not taking bold and decisive action to reduce methane leaks and lower emissions from its extraction technologies. Casey Norton, an Exxon spokesperson, challenged Bloomberg’s description of the numbers, saying they represented a projection of future greenhouse gas levels rather than a plan to increase emissions. “The emissions projection you cite is an early assessment that does not include additional mitigation and abatement measures that would have been considered as the next step in the process,” he said. “The same planning document illustrates how we have been successful in mitigating emissions in the past. As demand returns and capital investments resume, our growth plans will continue to include meaningful emission mitigation efforts.” Exxon is actually begging political leaders to impose a carbon tax. That may sound really progressive but it’s not. As Bloomberg points out in an e-mail, even with a carbon price of $40 a ton, average global temperatures will soar by 3º C or more, making the Earth inhospitable to most human life. But there’s a kicker. In exchange for accepting a carbon tax, it wants all regulations governing its industry dismantled. “For more than a decade, ExxonMobil has supported an economy-wide price on CO₂ emissions as an efficient policy mechanism to address greenhouse gas emissions,” Exxon said in a statement. “An effective carbon policy should replace the patchwork of literally thousands of regulations, laws and mandates today that have the effect of putting a price on carbon in a costly, inefficient way.”
Goldman says a Biden win could be a ‘positive catalyst’ for oil prices – Despite a grim demand outlook for energy as the coronavirus pandemic continues to weigh down the global economy, Goldman Sachs remains bullish on both oil and gas prices – regardless of the U.S. presidential election outcome in November. “We do not expect the upcoming U.S. elections to derail our bullish forecasts for oil and gas prices, with a Blue Wave likely to be in fact a positive catalyst,” the bank’s commodities team wrote in a research note Sunday. “Headwinds to U.S. oil and gas production would rise further under a Joe Biden administration, even if the candidate has struck a centrist tone,” the note said. Goldman sees improved demand in 2021 and tighter supply for both gas and shale oil superseding election results, though a Biden administration could provide a further boost to oil prices by making production – especially for shale – more expensive and more regulated. If elected, Biden seeks to achieve a carbon pollution-free energy sector by 2035, and analysts expect his administration to impose regulations that would increase shale production costs with things like taxes and methane restrictions, which the Donald Trump administration had eased. Goldman estimates such taxes could increase costs by as much as $5 per barrel. And expected dollar weakness under Biden also provides upside risk to prices. VIDEO01:27 Oil prices to stay in $40-$45 range for the rest of 2020: Analyst While Biden has said that fracking would not be “on the chopping block,” a Democratic administration could also move to reduce the scope for shale exploration with restrictions on federal land drilling and approvals for pipelines. The former vice president is currently leading incumbent Trump by double digits in major national polls. If Trump is re-elected, while pro-oil and gas policies would remain in place, “its impact would likely remain modest at best,” Goldman’s analysts wrote, “given the more powerful shift in investor focus to incorporate ESG metrics and the associated corporate
What the Frack? Why Waste Political Capital on a Pyrrhic Victory? – These days American politics are a little like Russian nesting dolls – there are stories, within stories, within stories. With just 22 days, 07 hours, and 30 minutes left until the November elections and Biden’s rising poll numbers, I’ve begun thinking in earnest about the chances of getting his $2 trillion[i] climate plan – or a reasonable facsimile – through Congress and back on the presidential desk for his signature. How Biden and progressive climate activists deal with fracking in the coming months could largely determine the possibility of putting the nation squarely on the path to long-term sustainability. I fear that too great a focus on fracking bans outside of federal lands – which is the current Biden position – could cancel the possibility of putting in place the government policies needed to decarbonize the economy in a timely fashion.As I will explain in a moment, the way forward need not force a binary vote on fracking. How is this possible? By doing what governments have always done best – kicking the can down the road – at least on this one issue. It may not be optimum, but it is likely to happen in a much shorter time than waiting for political forces finally to resolve.First off, to have any chance of that happening depends upon the Democrats keeping the House and flipping the Senate. All are well within the realm of possibilities. Should the Senate remain in the hands of Republicans, the nation would be looking at another two to four years of virtual gridlock and not just in the area of climate policy.Ill feelings run deep these days, and any pretense of bipartisan cooperation has been cast aside.Absent a deus ex machina or call to war against a common foreign enemy, it is difficult to conceive of any scenario in which a Republican Senate and a Democratic House and administration would work together to put an aggressive climate defense plan into motion. We already know what it means for the environment with a Democratic House, a Republican Senate, and Trump in the White House. It hurts me to write that. However, as President Trump likes to say – it is what it is.
US-Venezuela dispute delays oil storage transfer — Eni’s plan to drain a Venezuelan floating oil storage vessel considered a potential environmental risk has been delayed for weeks because of concerns over US sanctions on the Opec country.The Venezuela-flagged Nabarima floating storage and offloading unit (FSO) had been listing in August, with flooding reported by workers on and off the vessel. In early September, Eni said the vessel had been stabilized and a water leak resolved.The FSO, which is carrying at capacity of up to 1.3mn bl of crude, has been moored at the offshore Corocoro field in Venezuela’s Gulf of Paria for 10 years.The field belongs to PetroSucre, a joint venture operated by Venezuelan state-owned PdV. Eni holds a minority 26pc stake.Caracas has denied any problems with the vessel. In a 5 September statement, PdV-controlled PetroSucre said the vessel posed no environmental risk and deemed the information about its lack of structural integrity as “fake news” aimed at justifying US sanctions. Since then, neither PdV nor the Venezuelan government has commented. It is not clear if a ship-to-ship transfer would require a specific OFAC waiver, or explicit assurances that the operation, carried out on safety and environmental grounds, would not violate the US sanctions regime. Nor is it clear if Eni would retain title to the oil to be able to use or sell it, and how PetroSucre would be paid. Venezuela’s wary neighbor, Trinidad and Tobago, says it is waiting for Caracas to allow its inspectors on to the vessel.The inspection has been delayed “until a late-October date” that has yet to be agreed on with Caracas, the energy ministry told Argus yesterday.Trinidad had hoped a government team could have inspected the Nabarimabefore the end of September, but is still awaiting Venezuelan permission, the ministry said.The inspection is intended to ensure that Trinidad’s waters are not in danger of a major oil spill, the ministry said.
Idled Venezuelan floating oil facility under repairs amid environmental concerns – source (Reuters) – An idled floating oil facility off Venezuela’s eastern coast is undergoing repairs, according to a person familiar with the matter, as images showing the crude-laden vessel at an incline have raised concerns about possible environmental hazards. The Nabarima floating storage and offloading (FSO) facility is operated by the Petrosucre joint venture between Venezuelan state oil company Petroleos de Venezuela [PDVSA.UL] and Italy’s Eni ENI.MI. Petrosucre suspended output shortly after Washington sanctioned PDVSA in January 2019. About 1.3 million barrels of Corocoro crude have remained stuck on the vessel, which is located in the Paria Gulf between Venezuela and Trinidad and Tobago. The sanctions have deprived Petrosucre of its former main crude buyer, PDVSA’s U.S.-based refining subsidiary Citgo Petroleum Corp [PDVSAC.UL]. Gary Aboud, the corporate secretary of Trinidadian environmental group Fishermen and Friends of the Sea, said he was concerned about a potential oil spill, which would devastate the livelihoods of the country’s fishermen. “If this thing flips we will all pay the consequences for decades to come,” Aboud said in a Friday telephone interview. “This should be red alert.” A crew is currently replacing the vessel’s valves, according to a person familiar with the matter who spoke on the condition of anonymity. The source said the vessel is leaning to one side in order to facilitate the repairs.
Hundreds of liters of oil poured into the river in the Krasnoyarsk Territory – Hundreds of liters of oil products poured from the barge into the Angara in the Kezhemsky district of the Krasnoyarsk Territory. This is reported on website regional Ministry of Emergency Situations.The local administration has declared a state of emergency from 9 October. According to preliminary data, about 500 liters of diesel fuel got into the river. “There are no oil stains, the consequences have been eliminated. A group of representatives of the Investigative Committee, OMVD, UBEP, administration plus three rescuers left for the scene, ” RIA News in the administration of Kezhemsky district.According to the Ministry of Emergency Situations, an emergency regime was also introduced on the territory of the Bolshemurtinsky District of the Yukseevsky Village Council in connection with an oil spill on the territory of the Sever enterprise. In early October, it became known about the appearance of a lot of dead fish and sea animals on the shore of Khalaktyrsky beach in Kamchatka and in three other bays. Phenol and oil products were detected in three areas of the Avacha Bay water area. Rosprirodnadzor did not rule out that the incident may have man-made reasons. The authorities in the region are considering the possibility of leakage of toxic substances or the release of toxins of biological origin.
Large oil slick discovered on Russias Volga River – The Volga River slick is at least the second oil spill reported in Russia this week. Vladimir Smirnov / TASS An oil slick the size of a hockey rink has been discovered on the Volga River north of Moscow, authorities said Wednesday, the latest instance of pollution to hit Russia’s waterways this year. The 5,000 square meter layer of fuel was spotted near the port of Kimry some 150 kilometers north of the Russian capital, Moscow transport investigators said in a statement. “The discharge of petrochemical products from a vessel currently being identified has presumably occurred,” it said. On the opposite end of the Volga River more than 1,000 kilometers to the south, residents of the city of Volgograd were reported to have found hundreds of dead catfish washed up on the shore of a local reservoir. They linked it to poachers discarding small fish. The Volga River slick is at least the second oil spill reported this week and comes less than five months after a massive diesel fuel-tank leak in the Arctic city of Norilsk triggered by melting permafrost. The oil spill discovery also comes amid continuing questions over what caused a mass die-off of sea creatures, including seals, octopuses, starfish and sea urchins, in the Far East Kamchatka region last month. Scientists said the event, increasingly believed to be caused by toxins from microalgae known as algal bloom, wiped out up to 95% of seabed life. The governor of the Kamchatka region said this week that scientists and witnesses reported seeing more dead marine animals washing up to the shore south of the initial discovery. He suggested the mass die-off was linked to climate change and other polluting effects on the Pacific Ocean. Greenpeace Russia said Wednesday that “none of the compounds found in water samples could have caused the serious consequences we’re observing.” “This means that both man-made and natural theories remain in the search for the cause of the environmental disaster,” the organization said.
Russia Expanding Energy Influence in Africa – Part of Russia’s engagement with Africa is military. The Russian army and Russian private military contractors linked to the Kremlin have expanded their global military footprint in Africa, seeking basing rights in a half dozen countries and inking military cooperation agreements with 28 African governments, according to an analysis by the Institute for the Study of War. U.S. officials estimate that around 400 Russian mercenaries operating in the Central African Republic (CAR), and Moscow recently delivered military equipment to support counterinsurgency operations in northern Mozambique. Russia is the largest arms exporter to Africa, accounting for 39 percent of arms transfers to the region in 2013-2017.The fact that the Russian ambassador to Mali, Igor Gromyko, was one of the first officials to be received by the Junta is thus unsurprising. Local media source aBamako.com reports that the military leaders of the coup had just spent a year training in Russia. While this kind of activity is not extraordinary, with countries such as the U.S. training armies from more than 20 African countries and shaping its military leaders, it indicates that Russia considers its security presence in Africa necessary. The coup is a blow to French diplomacy, as Paris had heavily invested in Mali security through a tight alliance with former Mali President, Ibrahim Boubacar Keita. Keita’s time in office, which began in 2013 after a coup in 2012 ousted Amadou Toumani Toure, coincided with a French peacekeeping mission, and the Kremlin may seek to supplant France in West African countries whereParis has a stronghold and influence. Russia could also leverage the Mali coup to secure economic deals while bolstering its geopolitical standing in West Africa. According to FPRI, Russian nuclear energy giant Rosatom, which directly competeswith its French counterpart for contracts in the Sahel, could benefit from favorable relations with Mali’s new political authorities. Nordgold, a Russian gold company that has investments in Guinea and Burkina Faso, could also expand its extraction initiatives in Mali’s gold reserves.However, Professor Irina Filatova, Research Professor at the Higher School of Economics in Moscow, who specializes in Russian Foreign Policy, insists on caution about assuming Russian interference in Malian politics: “It’s difficult for me to judge how reliable this information is because Moscow has said nothing about it.”
Methane emissions up in 2020 amid turbulent year for oil and gas – Methane emissions have jumped so far this year even as oil and gas production has been hit hard by the coronavirus pandemic. The report from Kayrros, which analyzes methane leaks through satellite imagery, found visible methane emissions jumped 32 percent in the first eight months of 2020 when compared with the same period in 2019. The increase in methane is concerning because of its heat trapping powers – the gas is more than 80 times more potent than carbon emissions over a 20-year period. “Despite much talk of climate action by energy industry stakeholders, global methane emissions continue to increase steeply,” Antoine Rostand, president of Kayrros, said in a release. The U.S., Russia, Algeria, Turkmenistan, Iran and Iraq were the largest contributors according to the company’s analysis. Though the U.S. is a leading contributor, the Environmental Protection Agency (EPA) in August rescinded its regulations on methane emissions. “Regulatory burdens put into place by the Obama-Biden Administration fell heavily on small and medium-sized energy businesses,” EPA Administrator Andrew Wheeler said at the time, adding that doing so would give oil and gas companies “flexibility to satisfy leak-control requirements by complying with equivalent state rules.” Methane figures grew even higher in other oil and gas hot spots such as Algeria, Russia and Turkmenistan, where methane emissions jumped by more than 40 percent. The high methane levels come even as many companies agreed to scale back the production of oil as prices for the commodity plummeted amid a trade war and a halt on human activity due to the spread of the virus. Though greenhouse gas emissions, in general, dropped in the early days of the pandemic, scientists say they have nearly returned to pre-March levels.
MMEA- Oil spill detected in Tanjung Tuan waters up to – Contamination of seawater due to an oil spill was detected about three nautical miles off Tanjung Tuan here up to Teluk Kemang, Negri Sembilan, yesterday, according to the Melaka and Negri Sembilan Malaysian Maritime Enforcement Agency (MMEA). Its director, Maritime Captain Haris Fadzillah Abdullah said the incident was detected by a Maritime patrol boat while patrolling the waters of Tanjung Tuan at about 11am yesterday. “The oil spill was detected in the waters of Tanjung Tuan about 1.3 nautical miles towards Pulau Perjudi and initial investigations found that the contamination was up to the waters of Teluk Kemang. “However, it did not appear that ships were dumping oil into the sea according to monitoring and patrolling by Maritime personnel around the scene,” he said in a statement here today. He said the Melaka Department of Environment (DOE), Negri Sembilan DOE and Teluk Kemang Fire Station had been informed of the incident, besides taking of the oil spill samples and cleaning up works being carried out. Commenting further, Haris Fadzillah said they have yet to confirm whether it was ships or other parties involved in the pollution and further investigations were ongoing. Meanwhile, he said monitoring, patrolling and enforcement operations to combat and prevent cross-border criminal activities in the waters of Melaka and Negri Sembilan would continue to be enhanced from time to time. The public could channel any criminal activities and emergencies at sea to the Maritime Operations Centre at 06-3876730 or 999 which operates 24 hours, he added.
Negri oil spill suspected to be from passing vessel – Clearing of an oil slick that was swept ashore at Pantai Cermin here will commence full-scale today and work is expected to take at least a week to complete. Sources at the Negri Sembilan Department of Environment (DOE) said the contamination’s origin is yet to be ascertained although it is suspected to be from a passing vessel. It is learnt that the DOE is expected to carry out an assessment to determine if the oil spill had caused any damage to marine life in the affected area. The DOE also collected samples of the spill for testing. The Malaysian Maritime Enforcement Agency reported it had carried out patrols in the area but did not spot any vessel responsible for dumping oil products into the sea. The strong fumes from the oil slick extending over 2km between Tanjung Tuan and Teluk Kemang drew the attention of passers-by early on Monday before the authorities were alerted. The fine for polluting the environment will be raised 20 times to RM10 million under an amendment to the Environmental Quality Act 1974, Environment and Water Minister Datuk Seri Tuan Ibrahim Tuan Man said, after visiting the oil spill site yesterday The amendment is expected to be tabled for debate in the Dewan Rakyat next month. The current maximum fine for the same offence is RM500,000. “The jail term will also be lengthened under the proposed amendment,” Tuan Ibrahim said, adding that the case is being investigated under Section 27 of the Environmental Quality Act.
Lanka court imposes fine of USD 64,972 on Greek captain of fire-damaged oil tanker – A Sri Lankan high court on Wednesday ordered the Greek captain of an oil tanker, which carried crude oil from Kuwait to India and caught fire off the country”s eastern Ampara coast, to pay a fine of USD 64,972 after he pleaded guilty to the marine environment pollution charge. The Panamanian-registered New Diamond was carrying 270,000 metric tonnes of crude oil from Kuwait to India when a boiler explosion in its engine room caused fire on September 3. The Sri Lanka Navy with the help from the Indian Navy and coast guards doused the fire after three days. Two Sri Lankan naval ships, one Indian naval ship and three Indian coast guard vessels were deployed in the operations. Last week, Sri Lanka indicted the Greek captain for causing the oil spill under the country’s Marine Pollution Prevention Act. Captain Sterio Illias pleaded guilty to the marine environment pollution charge at the Colombo High Court. Accordingly, a fine of Sri Lankan Rs 12 million (USD 64,972) was levied, court officials said. He appeared before the court on September 28 for negligence and not putting in place safety measures to prevent fire on board. The captain was barred from leaving the country although no remand order was served on him in spite of a state request. The tanker had 23 crew members – 18 Filipinos and five Greeks. Twenty-two of its 23-member crew had been safely rescued off the tanker.
BP and Petronas Achieve First Gas from Oman Field – BP reported Monday that it has begun production from the Ghazeer field in the Omani desert ahead of schedule. The Ghazeer start-up occurred less than three years after production began from another field in Oman’s Block 61: the Khazzan field, BP noted in a written statement. BP holds a 60-percent stake in Block 61, located in Oman’s remote interior. The company’s partners include Makarim Gas Development Limited (OQ) (30-percent interest) and PETRONAS (10 percent). According to BP, the Ghazeer field development incorporates major advances in efficiency and working practices. It added the project also features flaring reduction techniques similar to those developed in the U.S. onshore, reducing emissions during on-site well testing. The company stated that “green completions” sent hydrocarbons during testing to a production facility rather than flaring them. “When we introduced our plans to reinvent BP, we were clear that to deliver them, we have to perform as we transform,” commented BP CEO Bernard Looney. “There are few better examples of how we are doing just that than Ghazeer. This project has been delivered with capital discipline four months early, wells are being drilled in record times and, importantly, safety performance has been excellent.” With Ghazeer online, BP pointed out that Block 61’s production capacity should rise to 1.5 billion cubic feet of gas per day and more than 65,000 barrels per day of associated condensate. The firm also noted the block’s estimated recoverable gas resources amount to an estimated 10.5 trillion cubic feet.
Uptick in LNG demand this winter – LNG demand is expected to increase by 4 billion cubic metres (bcm) this winter and that’s led by growth in China, Japan, and South Asia. “LNG supply is expected to grow by 3 bcm led by the United States. And when we put together demand and supply forecast, we expect the LNG market to be slightly tighter than last winter by 1 bcm,” noted Refinitiv Representatives at the latest GECF Monthly Gas Lecture. However, there remained several risks to the forecasts, foremost of which are winter temperatures and coronavirus pandemic. The former was unusually warm last winter for the northern hemisphere, dampening LNG demand. In the case of the latter, the full-blown effect of Covid-19 is unclear particularly as it is currently worsening in many countries and levelling off in others. Held via videoconference on October 6 and entitled ‘Winter Outlook for Global LNG – Cautiously Optimistic’, company analysts sifted through the demand and supply outlook and their relationship with market’s balance and pricing dynamics. Recognising the importance of scientifically drawn forecasts – a hallmark of the GECF and epitomised in its annual Global Gas Outlook 20050 – Secretary General Yury Sentyurin said: “In many ways, Covid-19 has highlighted the importance of data so we can map and understand the economic and social effects of pandemic-related measures. This belief in the supremacy of data to generate valuable insights can be found in the DNA of both the Forum and Refinitiv.” “The GECF data is distinguished, for it is based on our Member Countries’ primary sources of information. This is why we regularly share our data externally, such as in the Opec World Oil Outlook, at the IEA-IEF-Opec Symposiums on Energy Outlooks, and through our participation in JODI-Gas World Database, so the gas industry can grow and thrive.” The audience at the lecture series further heard that accurate planning for the period ahead depends on not just weather but myriad factors such as government policies that can often change the course of LNG demand and pricing. For instance, the team of lecturers shared that the story of LNG played out vastly differently last winter in Japan and South Korea, the world’s largest and third largest LNG buyers, respectively. In Japan, LNG import declined by about 4% due to the mildest winter on record in addition to an industrial demand that was hit by Covid-19 in Q1 of 2020. In contrast, South Korea saw an uptick of about 7% in LNG import due to the government policy of turning off coal-fired power plants between December and March to improve air quality; March alone witnessed the shuttering of 28 coal-fired power plants, stimulating gas for power demand.
Turkey to revise upward estimate of Black Sea gas discovery – Turkey is preparing to revise upward its estimate of its natural gas discovery in the Black Sea, Bloomberg reported, citing sources with direct knowledge of the plans. The country is said to be preparing to update the amount as soon as this week after further exploration drilling is completed, Bloomberg said on Friday, citing the sources. The Turkish government is about to disclose a “sizable revision” to the initial estimate, they noted. Turkey in August announced its biggest natural gas discovery, a 320 billion-cubic-meter field in the Black Sea that President Recep Tayyip Erdoğan said is part of even bigger reserves and could come onstream as soon as 2023. “This reserve is actually part of a much bigger source. God willing, much more will come,” Erdoğan said. “There will be no stopping until we become a net exporter in energy.” Turkey currently imports nearly all of its energy needs, and the discovery is promised to help drive down its current account deficit. Energy and Natural Resources Minister Fatih Dönmez on several occasions said data suggested more natural gas would be found as drilling continues deeper under the seabed. A senior energy ministry official in September said that Turkey hopes to announce the new discovery in October. Earlier this month, Dönmez said that Turkey’s third drillship would also be deployed and begin exploration for natural resources in the Black Sea in the first months of 2021. “We hope to begin operations in the first months of next year, and with that, Kanuni will be working together with the Fatih drillship in the Black Sea,” Dönmez said. Kanuni will support the Fatih drillship, which found the 320 billion-cubic-meter natural gas field some 100 nautical miles north of the Turkish coast.
Libya May Double Oil Output Next Week — Libya took a major step toward reviving its battered oil industry by reopening its biggest field, presenting a new headache for OPEC+ as the alliance of major producers tries to curb global supplies. The National Oil Corp., Libya’s state energy company, lifted force majeure on the western deposit of Sharara and instructed its operator to resume production, according to a statement on Sunday. The field will initially pump 40,000 barrels of crude a day, before reaching its capacity of almost 300,000 barrels next week, a person with knowledge of the situation said. That would double overall output in Libya to around 600,000 barrels daily, said the person, who asked not to be identified because they aren’t authorized to speak to media. Crude from Sharara has begun reaching storage tanks at the port of Zawiya, another person said. Sharara’s reopening follows a truce in Libya’s long-running civil war that’s already led to many oil fields and ports in the east starting up after an almost total shutdown since January. The NOC didn’t mention the nearby deposit of El Feel, or Elephant in Arabic. The 70,000-barrel-a-day field normally follows Sharara’s shutdowns and restarts because it relies on electricity from its bigger neighbor to operate. Libya is an OPEC+ member and home to Africa’s largest crude reserves. But it’s exempt from the group’s supply cuts, initiated in May as the coronavirus pandemic stifled economies and caused oil prices to tank. The alliance, led by Saudi Arabia and Russia, planned to ease the curbs by 2 millions barrels a day from the start of 2021. Yet with virus cases accelerating in many countries, the cartel faces a difficult decision at its next policy meeting on Nov. 30-Dec. 1: whether to stay the course or delay the increase in production. Benchmark Brent crude has more than doubled to around $42.25 a barrel since May, but it’s still down 36% this year. “The Libyan oil restart is gaining momentum faster than most people expected,” The likelihood of more Libyan exports is “an additional headwind for OPEC at a time when it is already grappling with softer than expected demand as the second wave of Covid-19 intensifies.” JPMorgan Chase & Co. forecasts that production will rise to 1 million barrels daily by March.
J.P. Morgan sees Saudi Arabia offering deeper oil cuts –A worsening global oil demand outlook will prompt OPEC to reverse a planned easing of oil cuts in 2021 with Saudi Arabia offering deeper cuts below its current quota, J.P. Morgan said in a research note.“Against relatively bearish investor sentiment on the near-term demand outlook as COVID-19 potentially accelerates infections into winter, we highlight the potential for Saudi to drive incremental cuts at the Nov. 30 OPEC meeting,” analysts including Christyan Malek said in a note. “Our base case is a reversal of the 1.9 million barrels per day output increase slated for 2021 with an upside scenario of a deeper cut whereby Saudi reduces its own quotas even lower (in the event of a worsening demand outlook),” J.P. Morgan said.
Why Saudi Arabia May Be Forced To Start Another Oil Price War – The ongoing weakness of global oil markets seems to be stoking tensions within OPEC+, and a split within its leadership is now imminent. From the start of this year’s Moscow-Riyadh brokered OPEC+ production cut deal, internal differences have been kept at bay by a global pandemic and high crude oil storage volume. Market optimism now seems to be growing, from bullish reports about next year’s crude oil prices and even today’s IEA World Energy 2020 Report. But the reality of oil markets is far bleaker. The threat of European lockdowns is real, hitting global demand again while taking a heavy toll on the economy.Nobody is speaking about a new oil price war yet, but the writing is on the wall with some producers now fed up with strangling their own production to counter the overproduction of others. Asian importers, especially China and India, have been reaping the rewards of this low price environment, filling their oil storage tanks to the brim. Although most Asian importers now seem to be content with storage. An OECD economic downturn will put several million barrels per day of expected Asian demand at risk. It is a worrying time for the two main architects of the OPEC+ agreement. One could say that Riyadh and Moscow are caught in a Catch22 situation, as whatever they try to do, the market is likely too weak to react and will come back to hurt both parties. Saudi Arabia, supported by its main ally UAE, and Russia are both looking at a financial crash of unknown magnitude if oil markets don’t recover soon. Oil prices are currently too low to sustain the government strategy of both nations. The latest reports on the Saudi government budget, which is based on a $50 per barrel scenario, is realistically too optimistic, as prices right now are in the low $40s. For Russia, its economy has been hit from all sides, as oil and gas is weak, demand worldwide is down, and the diversification of its economy is stalling. Putin’s maneuverability, however, is higher than that of the Saudi rulers. Russia’s global power position still opens doors to make life bearable in the coming months. Saudi Arabia, however, is looking at a situation in which a straightforward strategy does not seem to exist. Without higher crude oil prices, not only is the Kingdom’s flagship Saudi Aramco suffering but most government projects too. The world’s largest oil company has already put several major new projects on hold, while at the same time reassessing investment levels of others. High-profile offshore projects, such as the Red Sea or the setup of the new shipyard in Ras Al Khair, are not progressing as fast anymore, showing some internal constraints.
Oil prices extend slide as U.S. producers restore output (Reuters) – Oil prices fell on Monday as force majeure at Libya’s largest oilfield was lifted, a Norwegian strike affecting production ended and U.S. producers began restoring output after Hurricane Delta. Brent crude fell 52 cents, or 1.2%, to $42.33 a barrel by 1052 GMT and U.S. West Texas Intermediate CLc1 was down 58 cents, or 1.4%, at $40.02. Production in Libya, a member of the Organization of the Petroleum Exporting Countries (OPEC), is expected to rise to 355,000 barrels per day (bpd) after force majeure at the Sharara oilfield was lifted on Sunday. Rising Libyan output will pose a challenge to OPEC+ – a group comprising OPEC and allies including Russia – and its efforts to curb supply to support prices. “If oil demand recovery continues to struggle due to new or stricter COVID-related mitigation measures, the (OPEC+) producer group may need to reconsider the planned tapering of their voluntary supply cuts,” Front-month prices for both contracts gained more than 9% last week in the biggest weekly rise for Brent since June. But both fell on Friday after Norwegian oil companies struck a deal with labour union officials to end a strike that had threatened to cut the country’s oil and gas output by close to 25%. Hurricane Delta, which dealt the greatest blow to U.S. Gulf of Mexico energy production in 15 years, was downgraded to a post-tropical cyclone at the weekend. Workers headed back to production platforms on Sunday and French oil major Total TOTF.PA was working to restart its 225,500 barrel per day Port Arthur refinery in Texas. Prices were also pressured by a jump in new COVID-19 cases, which has raised the spectre of more lockdowns. Infections are at record levels in the U.S. Midwest and in Britain Prime Minister Boris Johnson is expected to announce new measures on Monday while Italy is preparing fresh nationwide restrictions. Goldman Sachs, meanwhile, said that the outcome of the U.S. presidential election would not impact its bullish oil and natural gas outlook and that an overwhelming Democratic victory could be a positive catalyst for these sectors.
Oil falls nearly 3% as production comes back online – Oil prices fell about 3% on Monday as force majeure at Libya’s largest oilfield was lifted, a Norwegian strike affecting production ended and U.S. producers began restoring output after Hurricane Delta. Brent crude fell $1.21, or 2.8%, to $41.64 a barrel West Texas Intermediate fell 2.88%, or $1.17, to settle at $39.43 per barrel. “Renewed post hurricane production in the Gulf of Mexico, an apparent restart over the weekend of Libya’s largest oil field and today’s strength in the U.S. dollar increase the possibility of a WTI downswing back to the early October lows,” said Jim Ritterbusch, president of Ritterbusch and Associates. Hurricane Delta, which inflicted the biggest blow in 15 years to energy production in the U.S. Gulf of Mexico last week, was downgraded to a post-tropical cyclone at the weekend. Workers headed back to production platforms on Sunday and French oil major Total restarted its 225,500 barrel per day Port Arthur refinery in Texas. Front-month prices for both contracts gained more than 9% last week in the biggest weekly rise for Brent since June. But both fell on Friday after Norwegian oil companies struck a deal with labour union officials to end a strike that had threatened to cut the country’s oil and gas output by close to 25%. Production in Libya, a member of the Organization of the Petroleum Exporting Countries (OPEC), is expected to rise to 355,000 barrels per day (bpd) after force majeure at the Sharara oilfield was lifted on Sunday. Rising Libyan output will pose a challenge to OPEC+ – a group comprising OPEC and allies including Russia – and its efforts to curb supply to support prices. Prices were also pressured by a jump in new COVID-19 cases, which has raised the spectre of more lockdowns which could dampen demand for oil. Infections are at record levels in the U.S. Midwest. In Europe, British Prime Minister Boris Johnson announced new coronavirus lockdown measures and Italy is preparing fresh nationwide restrictions.
Oil gains nearly 2% as robust China trade data offsets returning supply Oil prices rebounded on Tuesday, supported by robust economic data from China that offset returning supply in other regions but gains were capped by forecasts for a slow recovery in global oil demand as coronavirus cases rise. Brent crude futures were up 72 cents, or 1.7%, to $42.44 a barrel. West Texas Intermediate crude futures settled 77 cents, or 1.95%, higher at $40.20 per barrel. On Monday, both benchmarks fell nearly 3%. China, the world’s top crude oil importer, took in 11.8 million barrels per day (bpd) of oil in September, up 5.5% from August and up 17.5% from a year earlier, but still below the record high level of 12.94 mln bpd in June, customs data showed. “Oil prices, which suffered quite a blow the previous day, were looking for a bright spot and Tuesday offered just that,” said Rystad Energy’s senior oil markets analyst Paola Rodriguez-Masiu. “We find that China’s record haul of crude growth is poised to cease as independent refineries have nearly fully utilized their state-issued import quotas and companies struggle with extremely high crude inventories. Therefore, despite the initial enthusiasm, we find that the uptick in oil prices today is unjustified.” The International Energy Agency (IEA) – which advises Western governments on energy policy – said in its World Energy Outlook that in its central scenario a vaccine and therapeutics could mean the global economy rebounds in 2021 and energy demand recovers by 2023. But under a “delayed recovery scenario,” it said the energy demand recovery is pushed back to 2025. “The era of global oil demand growth will come to an end within the next 10 years, but in the absence in a large shift in government policies, I don’t see a clear sign of a peak,” IEA chief Fatih Birol told Reuters. The Organization of the Petroleum Exporting Countries (OPEC) also forecast a slower demand recovery on Tuesday. In a monthly report, it said oil demand will rise by 6.54 million bpd next year to 96.84 million bpd, 80,000 bpd less than expected a month ago. Social restrictions were being tightened in Britain and the Czech Republic to battle rising cases of COVID-19, and French Prime Minister Jean Castex said he could not rule out local lockdowns. On the supply side, workers have been returning to U.S. Gulf of Mexico platforms after Hurricane Delta and Norwegian workers to offshore rigs after ending a strike. The energy minister from the United Arab Emirates (UAE) said on Tuesday that OPEC+ oil producers will stick to their plans to taper oil production cuts from January. OPEC member Libya on Sunday also lifted force majeure at its Sharara oilfield. Libya’s total output on Monday was expected to hit 355,000 bpd while a full return of the 300,000 bpd Sharara field would nearly double that.
Oil rises 2% as OPEC complies with production cuts (Reuters) – Oil prices strengthened on Wednesday, as OPEC and its allies were seen complying with a pact to cut oil supply in September, even as concerns loomed that recovery in fuel demand will be stalled by soaring global coronavirus cases. Early in the day crude was boosted by a bullish stock market. Even as equities whipsawed on pandemic worries, oil stayed higher, buoyed by expectations that OPEC could staunch a supply glut. Wall Street’s main indexes opened higher on Wednesday, supported by heavyweight technology stocks. The dollar traded lower, which can boost oil as investors switch asset classes. “Between the dollar, the EIA and the warning from the IEA that may impact future OPEC policy, the tone has turned bullish here,” said Bob Yawger, director of energy futures at Mizuho in New York. Data from the U.S. Energy Information Administration (EIA)is expected to show crude oil stockpiles moving lower in the latest week, according to analysts polled by Reuters. The American Petroleum Institute said U.S. crude inventories fell more than expected in the latest week, according to a report released after market close on Wednesday. Analysts expect the U.S. Energy Information Administration data to confirm that draw on Thursday, a Reuters poll showed. Brent crude futures LCOc1 for December delivery settled up 87 cents, or 2.05%, at $43.32 a barrel. U.S. West Texas Intermediate CLc1 futures also traded higher, settling up 84 cents, 2.09%, at $41.04 a barrel. OPEC+ had 100% compliance with a pact to cut oil supply in September was seen at 102%, two OPEC+ sources told Reuters.
WTI Holds Above $41 After Large Crude & Product Inventory Draws – Oil prices rallied today on the back of a weaker dollar and somewhat optimistic report from IEA, which decided to leave its 2020 forecast for oil demand unchanged at 91.7 million barrels per day while painting a picture of contracting supply, penciling in a 4-million-barrel-a-day drop in the fourth quarter.But there is a lot of noise in the data still… “Inventories are famously all over the board as a hurricane comes in,” . Hurricane Delta made landfall on Louisiana’s Gulf Coast last week. The supply numbers “will be skewed enough and will cause more confusion than really shed any light.” But the algos will get triggered one way of the other… API
- Crude -5.422mm (-2.3mm exp)
- Cushing +2.199mm
- Gasoline -1.513mm (-1.8mm exp)
- Distillates -3.93mm (-2.5mm exp)
After last week’s surprise crude build, analysts continue to expect another draw and got a really big one (-5.42mm vs 2.3mm exp). Products also showed notable draws… Graphs Source: Bloomberg WTI hovered around $41 ahead of the print and held those gains after the bigf draws… Going forward, OPEC+ members “will likely adopt a wait-and-see approach and not pursue new policies, since the market seems to be in balance and they will be cautious not to mess with the fragile recovery recently achieved,” said Manish Raj, chief financial officer at Velandera Energy.”OPEC+ has shown its willingness to step in to rebalance the market, should that be necessary, but they will not risk prematurely tilting the balance in either direction,” he told MarketWatch.
Oil jumps 2% ahead of U.S. inventory data – Oil prices strengthened on Wednesday, as equities also rose and the dollar traded lower, even as concerns loomed that recovery in fuel demand will be stalled by soaring global coronavirus cases. Wall Street’s main indexes opened higher on Wednesday, supported by heavyweight technology stocks. The dollar traded lower, which can boost oil as investors switch asset classes. “Between the dollar, the EIA and the warning from the IEA that may impact future OPEC policy, the tone has turned bullish here,” said Bob Yawger, director of energy futures at Mizuho in New York. Data from the U.S. Energy Information Administration (EIA) is expected to show crude oil stockpiles moving lower in the latest week, according to analysts polled by Reuters Brent crude futures for December delivery were up 49 cents, or 1.18%, at $42.94 a barrel. West Texas Intermediate futures settled 84 cents, or 2.1%, higher at $41.04 per barrel. “There is a risk that the demand recovery is stalled by the recent increase in COVID-19 cases in many countries,” the International Energy Agency said on Wednesday. “The longer term offers little encouragement for producers; the curve shows prices not reaching $50 per barrel until 2023. Truly, those wishing to bring about a tighter oil market are looking at a moving target.” The Organization of the Petroleum Exporting Countries (OPEC) cut its oil demand forecast on Tuesday, citing economic dislocations caused by the virus. Russian Energy Minister Alexander Novak said that leading oil producers will start easing output curbs as planned in January despite a spike in coronavirus cases. U.S. crude oil inventories were seen falling last week while distillate stockpiles are likely to have declined for a fourth week, a preliminary Reuters poll showed on Tuesday. The poll was conducted ahead of reports from the American Petroleum Institute and the Energy Information Administration. Both reports were delayed by a day because of a public holiday in the United States on Monday.
Oil slips as new lockdown measures threaten demand recovery – Oil prices slipped on Thursday as new restrictions to stem a surge in COVID-19 infections increased uncertainty over the outlook for economic growth and a recovery in fuel demand. But prices bounced off their lows after better-than-expected inventory data. Brent futures fell 25 cents, or 0.6%, to trade at $43.06 per barrel, while U.S. West Texas Intermediate (WTI) crude was down 21 cents, or 0.5%, at $40.83 per barrel. Traders noted the price decline was limited by industry data showing a fall in U.S. oil inventories last week. The U.S. Energy Information Administration said Thursday that inventory declined by 3.818 million barrels in the prior week, larger than the 1.9 million barrel draw analysts polled by FactSet had been expecting. The American Petroleum Institute industry group on Wednesday said U.S. crude, gasoline and distillate inventories all fell in the week to Oct. 9. Some European countries are reviving curfews and lockdowns to try to contain the rise in new coronavirus cases, with Britain expected to impose tougher COVID-19 restrictions on London from midnight on Friday. “If demand weakens noticeably, OPEC+ will have no choice but to call off its production increase if it does not want to risk a renewed oversupply and another price slide,” Commerzbank said. OPEC and its allies, together called OPEC+, are due to taper production cuts by 2 million barrels per day (bpd), from 7.7 million bpd currently, in January. OPEC+ had 102% compliance with its agreement to cut oil supply in September, two OPEC+ sources told Reuters ahead of a technical committee meeting on Thursday. The group will ensure oil prices do not plunge steeply again when it meets to set policy at the end of November, OPEC’s Secretary General said, adding that demand has been recovering more slowly than expected. Top global oil traders Vitol, Trafigura and Gunvor said they saw slow oil demand recovery because of a second coronavirus wave with oil prices rising to or above $50 per barrel only by October next year. “Toxic brew of COVID-19 lockdowns, especially in Europe, and the apparent end of any hopes for a U.S. stimulus deal before the election are weighing on risk assets,” said Bob Yawger, director of energy futures at Mizuho in New York.
WTI Pops Back Above $40 After Biggest Distillates Draw Since 2003 -Oil prices plunged overnight, with WTI back below $40, as last night’s bullish API-reported bigger-than-expected draw was trumped by traders fears that weaker than expected US jobs data and new virus restrictions in Europe will further threaten any sustained demand rebound. U.S. labor market data is providing “more fuel for the fire of a sour economic outlook,” said Gary Cunningham, a director at Tradition Energy. “If there are further restrictions or new restrictions put in place in Europe or here in the U.S., then that further decreases travel demand for petroleum.” DOE
- Crude -3.818mm (-2.3mm exp)
- Cushing +2.906mm
- Gasoline -1.626mm (-1.8mm exp)
- Distillates -7.245mm (-2.5mm exp) – biggest draw since 2003
Official data showed a crude draw that was smaller than API reported, a big build at Cushing, and a huge draw in Distillates (biggest since 2003)… US Crude production remains noisy given the storm-related impacts, with shut-ins sending production levels down 500k barrels per day… Latest EIA data indicate drilling activities remain anemic in September, even as WTI recovered to near $40 per barrel. WTI traded just below $40 ahead of the official inventory data, popping back above $40 after the draws…
Oil eases as new lockdowns raise concern about fuel demand – (Reuters) – Oil prices eased on Thursday as new restrictions to stem a surge in COVID-19 infections dimmed the outlook for economic growth and fuel demand. Traders said prices pared earlier losses after the U.S. Energy Information Administration (EIA) reported an increase in U.S. petroleum demand last week that helped reduce crude stockpiles, while distillate inventories dropped by the most since 2003 as Hurricane Delta cut oil production and shut Gulf Coast refineries. “The (EIA) report halted the (price) slide, which was threatening to turn into an avalanche earlier this morning,” said Robert Yawger, director of energy futures at Mizuho in New York. Brent LCOc1 futures fell 16 cents, or 0.4%, to settle at $43.16 a barrel, while U.S. crude CLc1 fell 8 cents, or 0.2%, to settle at $40.96. Earlier, both benchmarks were down more than $1 a barrel. In Europe, some countries were reviving curfews and lockdowns to fight a surge in new coronavirus cases, with Britain imposing tougher COVID-19 restrictions in London on Friday. “The coronavirus surge is forcing Europe to reinstate pandemic restrictions and that is … crippling short-term crude demand forecasts,” said Edward Moya, senior market analyst at OANDA in New York. “Anemic demand will force (OPEC+) to delay any easing of oil production cuts.” OPEC and allies in a group called OPEC+ are due to taper production cuts in January by 2 million barrels per day (bpd), from 7.7 million bpd currently. A Joint Technical Committee, which includes representatives from key OPEC+ producers such as Saudi Arabia and Russia, met to review compliance with its global oil output cuts. OPEC+ made little progress in September in compensating for over-production in previous months, figures given to Reuters by OPEC sources showed on Thursday. “It’s apparent … that Saudi Arabia is getting impatient, both with the lack of compliance by others and “low” oil prices,” said Bjornar Tonhaugen, head of oil markets at Rystad Energy. OPEC’s Secretary General said demand was recovering more slowly than expected and OPEC+ will ensure oil prices do not plunge steeply again when it meets at the end of November. Top global oil traders Vitol, Trafigura and Gunvor said they saw slow oil demand recovery because of the resurgent pandemic.
Oil prices end a bit lower, but nearly erase their losses as U.S. supplies decline – Oil futures settled a bit lower on Thursday, as rising cases of COVID-19 sparked new lockdowns in Europe, raising worries about further slowdowns in energy demand. Prices, however, nearly erased the day’s losses, buoyed by U.S. government data showing a bigger-than-expected 3.8 million-barrel weekly decline in domestic crude inventories reported MarketWatch. November West Texas Intermediate crude fell 8 cents, or 0.2%, to settle at $40.96 a barrel on the New York Mercantile Exchange. The global benchmark, December Brent crude shed 16 cents, or 0.4%, to $43.16 a barrel on ICE Futures Europe. “COVID-19 reports will continue to rule the daily volatility,” said James Williams, energy economist at WTRG Economics. “In the longer term, there is a lot of upward pressure building,” as prices are not high enough to “encourage sufficient drilling to offset U.S. production declines,” he said, adding that demand will likely recover faster than U.S. output.
Oil slides on Covid-19 resurgence, strong dollar – Oil prices slid on Friday dragged down by concerns that a spike in Covid-19 cases in Europe and the United States is curtailing demand in two of the world’s biggest fuel consuming regions, while a stronger U.S. dollar also added to pressure. Brent crude futures for December dropped 46 cents, or 1.07%, to $42.70 a barrel, while U.S. West Texas Intermediate (WTI) crude futures for November delivery slid 43 cents, or 1.05%, to $40.53 a barrel. Both benchmarks fell slightly the previous day and are on track to remain little changed for the week. “Worries over weakening fuel demand in Europe due to a resurgence in COVID-19 cases and a higher U.S. dollar against the euro weighed on investor sentiment,” said Kazuhiko Saito, chief analyst at Fujitomi Co. In Europe, some countries were reviving curfews and lockdowns to fight a surge in new coronavirus cases, with Britain imposing tougher Covid-19 restrictions in London on Friday. Pandemic cases have surged in the U.S. Midwest and beyond, with new infections and hospitalizations rising to record levels in an ominous sign of a nationwide resurgence as temperatures get colder. The dollar was headed for its best week of the month on Friday, as surging coronavirus cases and stalled progress toward U.S. stimulus had nervous investors seeking safe assets. A technical committee of the Organization of the Petroleum Exporting Countries (OPEC) and allied oil producers, a group know as OPEC+, also ended a meeting on Thursday expressing concerns about rising oil supply as social restrictions to curb the spread of COVID-19 limit fuel usage. “All eyes are on OPEC+ move from January,” said Hiroyuki Kikukawa, general manager of research at Nissan Securities. OPEC+ is set to reduce its current supply cuts of 7.7 million barrels per day (bpd) by 2 million bpd in January even as OPEC Secretary General Mohammed Barkindo admits fuel demand is looking “anemic.” The bearish demand outlook and rising supply from Libya may mean OPEC+ could roll over the existing cuts into next year, OPEC+ sources said on Thursday. There is an OPEC+ meeting scheduled for Nov. 30 to Dec. 1 to set policy. “With uncertainty over OPEC+ future policy and the U.S. presidential election, oil prices will likely remain in a tight range for a while,”
Oil ends lower on demand concerns, but prices score a gain on the week – Oil futures slipped a bit on Friday as rising COVID-19 cases in the U.S. and Europe heightened worries about demand for crude, but prices finished higher for the week, partly due to assurances from OPEC+ that it remains committed to production cuts. The Organization of the Petroleum Exporting Countries and their allies, together known as OPEC+, seem “to have comforted markets that they are leading the oil market to balance,” s Oil prices found support for the week after Saudi Arabia and Russia reportedly reiterated their commitment to the OPEC+ production cut agreement. That raised expectations that “the alliance might take further action to either address some of its members’ undercompliance or re-evaluate its plan to boost production again from January,” “If these hopes prove futile then prices may be in danger again next week after the OPEC+ meeting.” The Joint OPEC-Non-OPEC Ministerial Monitoring Committee, or JMMC, which monitors compliance with production cuts, is scheduled to meet on Monday. West Texas Intermediate crude for November delivery CL.1, -0.24% fell 8 cents, or 0.2%, to $40.88 a barrel on the New York Mercantile Exchange. Prices for the front-month contract, which expires at Tuesday’s settlement, posted a weekly rise of 0.7%. Read: Here’s how the U.S. presidential election could shake up the oil market December Brent crude, the global benchmark, lost 23 cents, or 0.5%, to $42.93 a barrel on ICE Futures Europe. Brent saw a 0.2% weekly climb. Moya warned, however, that “Libya’s oil production revival might complicate the supply side narrative.” Bloomberg reported Thursday that Libya’s output has climbed to around 500,000 barrels per day, after the reopening of facilities last month that had been shutdown since January due to a blockade related to the civil war. Meanwhile, “the market is worried about how the increasing lockdown measures in Europe will affect demand,” . “Mobility data suggests that travel has only recovered to 60% of its pre-pandemic levels in Europe, and it’s about to get a new hit as several European countries restrict gatherings again.” “The not-too distant memory of negative oil prices still stings traders across the space as the threat of another supply chain crunch would rise exponentially with expectations of new lockdown measures being imposed in the U.S.,” Still, “more widespread lockdowns do remain rather unlikely.”
Lebanon explosion: Deadly fuel tank blast rocks Beirut – BBC – A fuel tank has exploded in a densely populated area of the Lebanese capital, Beirut, killing at least four people and injuring 20. The blast occurred after the tank caught fire in Tariq-al-Jdide district. TV footage showed flames leaping up buildings in the area’s narrow streets. There is no word on the cause of the fire. The rescue efforts are ongoing. The blast caused panic in a city scarred by the explosion that killed 203 people in the port area in August. The latest fire and explosion also comes amid a severe financial crisis and the coronavirus pandemic – which have fuelled widespread discontent. On Friday firefighters used ladders to scale the outside of apartment buildings to rescue residents from their balconies. “The sound and our house shaking made us panic and the whole street I live in started screaming. I had flashbacks,” tweeted one woman.
Aden seaport authorities demand hire charge before dumping fertilizers — Seaport authorities in Aden continue to store urea fertilizer despite an order to dump the hazardous material, government officials said Saturday. In August, a committee assigned by Yemen’s attorney general to investigate reports of thousands of tons of ammonium nitrate being stored at the port found that the material was in fact a different fertilizer, urea. It ordered the seaport authority to get rid of it as it could explode if mixed with other materials. The investigation followed a media report about ammonium nitrate gathering dust at the port that could cause a massive explosion, similar to the one that ravaged Beirut on Aug. 4. The story caused uproar and panic in Yemen, prompting lawmakers, government officials and the public into demanding a quick investigation. When asked why the judiciary order had not been followed, Mohammed Amzrabeh, chairman of the Yemen Gulf of Aden Ports Corporation, told Arab News that the case was in court, without giving further details. But, according to two local government officials familiar with knowledge of the case, seaport authorities are demanding that a local trader who imported the materials pay hundreds of thousands of dollars in hire charge for storing the urea. “The seaport authorities seek a financial settlement with the trader,” one of the officials, who requested anonymity, told Arab News. “The materials have expired and no longer pose a threat to anyone.” The Saudi-led Arab coalition and the internationally recognized government have asked local traders to get permission before importing urea fertilizer, widely seen as an explosive material that could be used by the Houthis for military purposes.
U.N. access to decaying Yemen tanker could take weeks – (Reuters) – A United Nations team will have to wait several weeks to access a deteriorating tanker off Yemen’s shore that is threatening to spill 1.1 million barrels of crude oil in the Red Sea, two U.N. sources told Reuters. The United Nations has warned that the Safer, stranded since 2015, could spill four times as much oil as the 1989 Exxon Valdez disaster near Alaska, but access to the vessel has been complicated by the war in Yemen. Yemen’s Houthi movement, which controls the area where the tanker is moored and the national oil firm that owns it, agreed in July to allow a technical team to assess the ship and conduct whatever repairs may be feasible. But the two sources said that it could take another seven weeks to finalise details of the agreement and logistics, with the coronavirus pandemic further complicating planning. The deal includes the eventual sale of the oil on board with proceeds divided between Houthi authorities and Yemen’s internationally recognised government, which the movement ousted from the capital, Sanaa, in late 2014. Some diplomats say there are still doubts about the mission as Houthi officials had last year reneged on granting access. The Safer, built in 1974, is moored off the Ras Issa oil terminal, 60 km (40 miles) north of the port of Hodeidah. The area is held by the Houthis, but the high seas are controlled by a Saudi-led coalition that intervened in Yemen in 2015 against the movement and has prevented it from selling oil. U.N. and Houthi officials say water has entered the Safer’s engine room at least twice since 2015. The latest leak in May was plugged by Safer Corp divers and Houthi naval units. While the Houthis can fix small leaks it remains unclear how long such repairs can hold, U.N. officials and experts said. Last month, Riyadh warned that an “oil spot” was seen in a shipping transit area 31 miles (50 km) west of the tanker. The United Nations says a major rupture could severely harm Red Sea ecosystems and shut Hodeidah port, Yemen’s main entry point for imports and aid.
Aframax mine blast off Yemen puts shipping on alert – Shipping has been put on alert to be highly vigilant when transiting the Gulf of Aden with news of an aframax tanker suffering sizeable damage after it struck a sea mine in Yemeni waters. Significant pollution has been spotted in satellite images in the wake of the Syra, a 10-year-old Maltese-flagged ship, hitting a mine just before midnight on October 3.The ship was taking on crude at the Bir Ali crude single buoy mooring system, located in central Yemeni waters when the explosion happened. Security consultant Ambrey Intelligence has suggested the incident was likely a symptom of the ongoing battle between the Yemeni government and the Southern Transitional Council, a secessionist organisation. Ambrey senior analyst Jake Longworth told Splash that no group has claimed responsibility for the attack.“The war risk rating for Bir Ali and Ash Shihr – Yemen’s only operational export terminals – has been raised to elevated. This is due to the credible risk that the actor behind the attack on the Syra attempts to disrupt any future exports from Yemen using the same tactic,” Longworth said.. Officials at Eastmed declined to comment on the damages sustained to the ship when contacted by Splash today. Splash understands the tanker suffered damage to its forward ballast tanks, but has been able to move on its own power and is due to arrive in Fujairah in the United Arab Emirates later today where its cargo will be transferred and then the ship will head for repairs. Eyewitness reports sent to Splash show significant hull damage to the ship, which is carrying around 65,000 tons of crude.
Britain: The world’s second largest arms exporter and friend to warmongers and despots – According to data released by the Department for International Trade (DIT), the UK government was the world’s second biggest arms exporter behind the US between 2010-2019. Britain signed £86 billion worth of contracts for military equipment and services. Last year, Britain exported £11 billion worth of fighter jets, radar, missiles, arms, and materiel, the second highest year for UK arms sales since 1983. While the US was by far the largest arms exporter, accounting for 47 percent of the global arms trade, the UK accounted for 16 percent, while Russia and France had 11 percent and 10 percent respectively. Sales were down from 2018’s £14 billion due to what DIT said was “the volatile nature of the global export market for defence.” The UK won “no major platform orders in 2019″ and arms exports to Saudi Arabia were halted in June last year, following the Court of Appeal’s ruling that the UK government had failed to take into account whether Saudi airstrikes in Yemen that targeted civilians broke humanitarian law. While the US is Britain’s largest single arms customer, most of Britain’s arms exports (60 percent) go to the Middle East, with Saudi Arabia by far the largest buyer along with Oman, Turkey, the United Arab Emirates (UAE), Qatar, Israel, Bahrain, and Egypt. The UK government had no hesitation in greenlighting the sale of arms to countries waging war at home or abroad, including to Saudi Arabia, the Philippines, Afghanistan, UAE, Nigeria, Mexico, Iraq, Ukraine, the Democratic Republic of Congo, Kenya, and South Sudan. The list of Britain’s customers reads like a roll call of the most corrupt and blood-soaked regimes on the planet. The UK has licensed more than £6.5 billion worth of arms to the Saudi-led coalition in the five years since March 26, 2015, when the bombing began. According to the Armed Conflict Location & Event Data Project (ACLED), the Saudi-led war against Yemen – waged with the full backing of Washington and London – has killed over 100,000 people, mostly civilians.
Delivery Of 2 Million Flu Vaccines To Iran Blocked By US Sanctions On Banks -Last Thursday the US Treasury announced fresh sanctions on 18 Iranian banks in order to “stop illicit access to U.S. dollars” – a move widely seen as the most aggressive and devastating measure against Iran’s financial sector to date. Given it effectively blacklists the entire Iranian financial system, Treasury Secretary Steven Mnuchin tried to proactively address European allies and international critics’ concerns that this would only massively increase the suffering of the common Iranian people amid a raging pandemic. His statement last week vowed that certain exemptions will “continue to allow for humanitarian transactions to support the Iranian people.”But now Iranian health officials say they’ve been prevented by US sanctions from importing 2 million influenza vaccines, amid a desperate and deteriorating health crisis inside the country.Iran’s Red Crescent says due to the new US sanctions against Iranian banks, the humanitarian organization is not able to purchase two million doses of flu vaccines that were supposed to be distributed for vaccination of medical staff, high risk patients and pregnant mothers. https://t.co/7Tl9Wgw8wh – Zahra Shafei (@shafei_d) October 14, 2020 Iran’s Red Crescent Society announced on Twitter that new US sanctions on Shahr Bank are to blame. The bank is reportedly largely responsible for foreign-currency purchases of drugs, but has now “been sanctioned by the U.S. government and the vaccines haven’t reached the Red Crescent.”According to Bloomberg, this has left the health organization scrambling: The Red Crescent said it was attempting to source replacement vaccines through neighboring countries. Some 200,000 flu doses had been delivered to the ministries of health and education, the organization said in a subsequent tweet, without giving more details.Iran’s leaders have been outraged, also alleging over the past days the United States has intentionally severely exacerbated the impact of the coronavirus pandemic inside the Islamic Republic, essentially kicking the country while it’s already down, choking off even humanitarian and medical supplies via sanctions and threats against those willing to trade with Iran.“Amid Covid19 pandemic, U.S. regime wants to blow up our remaining channels to pay for food & medicine,” Foreign Minister Javad Zarif tweeted last week. “Iranians WILL survive this latest of cruelties.”
Russian-brokered ceasefire in Azeri-Armenian war collapses – Russian President Vladimir Putin’s attempt to broker a truce in the two-week-old war between Azerbaijan and Armenia collapsed over the weekend. Fighting erupted between the two former Soviet republics in the Caucasus five minutes after the agreement reached by Azeri and Armenian diplomats in Moscow was to go into effect, at noon on Saturday. Bombings of civilian targets on both sides, and bloodshed along the front and in the disputed Nagorno-Karabakh region all continue to mount. The Kremlin had invited delegations from the Azeri and Armenian foreign ministries on October 9 to Moscow, declaring: “The President of Russia is issuing a call to halt the fighting in the Nagorno-Karabakh on humanitarian grounds in order to exchange dead bodies and prisoners.” French President Emmanuel Macron, who has aggressively backed Armenia, also called for a cease-fire. Armenian officials went to the talks, reversing their stated position that they would only attend talks if a cease-fire was first agreed to. Shortly before talks began in Moscow, however, officials in both Azerbaijan and its main regional backer, Turkey, said they would make no compromises. Turkish presidential spokesman Ibrahim Kalin bluntly predicted that the Moscow talks would be a failure. “If they’re calling only for a ceasefire, if they’re working only towards a ceasefire, it will be nothing more than a repeat of what went on for the last 30 years or so,” he said. Restating the Turkish government’s position that Armenia illegally occupies the Karabakh, Kalin added: “It is almost certain to fail if it doesn’t also involve a detailed plan to end the occupation.” Azeri President Ilham Aliyev gave a televised address to the nation insisting he would make no concessions to Armenia. Aliyev said, “Azerbaijan’s use of force had changed the facts on the ground” and that has “proved there was a military solution to the dispute,” Reuters reported. He added that these negotiations were Armenia’s “last chance” to peacefully resolve the conflict. Aliyev added that Azeri forces had taken the communities of Hadrut, Chayli, Yukhari Guzlak, Gorazilli, Gishlag, Garajalli, Afandilar, Suleymanli and Sur in the Karabakh, calling it a “historic victory.” He reported that Armenian-held Fuzuli province in Azerbaijan had also been surrounded, and that Azeri forces had left a small escape route through which Armenians were leaving.
Turkey Weapons Sales To Azerbaijan Witnessed Huge Surge Just Before Armenia Conflict – New figures produced by the Turkish Exporters’ Assembly and subject of an investigation by Reuters show a massive surge in Turkish weapons exports to its ally Azerbaijan just ahead of the raging conflict sparked late last month in the disputed Nagorno-Karabakh region.”Turkey’s military exports to its ally Azerbaijan have risen six-fold this year, with sales of drones and other military equipment rising to $77 million last month alone before fighting broke out over the Nagorno-Karabakh region, according to exports data,” reports Reuters. It’s a massive figure for the tiny Caucasus country of just less than ten million people. The data shows that over the first nine months of 2020 Turkey sold Azerbaijan $123 million in defense and aviation equipment. But this ramped up significantly by August once clashes between Armenian and Azeri forces, which have been sporadic and fierce since the early 1990’s collapse of the Soviet Union and self-declared autonomy of ethnic Armenian Nagorno-Karabakh, grew more intense at the end of the summer. According to the report: Most of the purchases of drones, rocket launchers, ammunition and other weapons arrived were after July, when border clashes between Armenian and Azeri forces prompted Turkey and Azerbaijan to conduct joint military exercises. Sales jumped from $278,880 in the month of July to $36 million in the month of August, and $77.1 million in just September, the data showed. Other major suppliers of Azerbaijan’s military have included Russia and Israel. Russia also has a defense pact with Armenia, including a major base in the country’s north.
In “Major Escalation” Turkey Renews Gas Exploration Off Greece, Vows Military Escort – In late September into early this month for a brief moment it looked as if the Turkey-Greece East Mediterranean dispute over Turkish hydrocarbons exploration was cooling, given intense diplomatic contacts and negotiations among the major players, which includes Cyprus and the EU. This after in August and earlier last month the rival sides conducted increased war games which threatened at any moment to become ‘live’ fighting.But now this momentary calm has been shattered, as Turkey’s navy late Sunday issued a public advisory saying it will sail the Oruc Reis survey ship to conduct exploration activities just off Greece’s easternmost island of Kastellorizo. Turkey indicated the mission is planned over the next ten days, until October 22. Predictably, Athens was swift to condemn the move as a “major escalation and a direct threat to peace and security in the region,” according to a Foreign Ministry statement. Greek Prime Minister Kyriakos Mitsotakis notified the European Council by phone, at a moment the EU has threatened sanctions on NATO country Turkey. “This new unilateral act is a severe escalation on Turkey’s part,” Mitsotakis said.Like in prior instances of Turkish oil and gas vessels being sent into Greek and Cypriot waters widely recognized internationally as their Exclusive Economic Zones (EEZ), Ankara has vowed a military escort could be present if “support and protection” are necessary, according to Turkish Defense Minister Hulusi Akar.Greek Foreign Minister Nikos Dendias has used this latest provocative act to highlight a pattern of Turkish aggression spanning the entire near East region: “I explained the obvious, who is the common denominator in all problematic situations in the area: Nagorno-Karabakh, Syria, Iraq, Cyprus, the southeastern Mediterranean,” he said.
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