Higher U.S. shale output could spark an OPEC price war, warns Pioneer CEO.

HOUSTON (Bloomberg) –U.S. shale producers risk another oil-price war with OPEC and its allies if they resume the breakneck production growth of the last decade, according to Pioneer Natural Resources Co.

Shale, and not the pandemic, was responsible for the initial oil-market crash of 2020, CEO Scott Sheffield said at BloombergNEF’s annual summit. The cartel, frustrated at U.S. producers’ success in taking market share from OPEC, allowed prices to tumble, he said.

“OPEC and Russia were upset that we grew too much,” said Sheffield. “If we ever start growing again too much, we’re going to have another price war.”

U.S. producers responded to last year’s oil collapse by reducing capital spending, drilling and jobs as well as merging with rivals to shore up balance sheets. The result has been lost production of about 2 million barrels a day, or more than output from the entire Gulf of Mexico. But as prices rebound this year, due to both the economic recovery and Saudi Arabia’s unilateral output cuts, temptation is growing for U.S. shale to ramp up output.

The Energy Information Administration sees U.S. oil production averaging 11.9 million barrels a day in 2022, up about 1 million barrels, or 9%, from the average this quarter. Sheffield is “totally against” the EIA’s forecast, saying that producers now know the stakes and will stick to their mantra of capital discipline.

“If we grow another million barrels a day next year, we’re going to have another price war in my opinion going into ‘23,” he said.

So far there hasn’t been much evidence of producers significantly boosting activity in the field, but investors will get a clearer picture once companies begin reporting first-quarter earnings in the coming weeks. West Texas Intermediate crude oil traded at about $62.80 a barrel on Wednesday, about triple from a year ago.

Sheffield sees overall U.S. production growing at a annual rate of 2% to 3%, with most of the increases coming from the Permian Basin of West Texas and New Mexico, where Pioneer is one of the largest producers. All other shale fields will decline, he said.

Source: https://www.worldoil.com/news/2021/4/16/higher-us-shale-output-could-spark-an-opec-price-war-warns-pioneer-ceo

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U.S. Gulf of Mexico oil production set to increase through 2022, says EIA

WASHINGTON – The U.S. Energy Information Administration forecasts U.S. crude oil production in the U.S. Federal Gulf of Mexico to increase in the next two years, according to the latest Short-Term Energy Outlook (STEO). By the end of 2022, 13 new projects could account for about 12% of total GOM crude oil production, or about 200,000 barrels per day (bpd).

The GOM accounts for 15%–16% of U.S. crude oil production. In 2020, GOM crude oil production averaged 1.65 million bpd. Production is forecast to exceed 2020 levels, reaching 1.71 million bpd in 2021 and 1.75 million bpd in 2022. Since 2000, the highest crude oil production year was 2019 at 1.9 million bpd.

Large offshore projects take several years to develop. Four of the new projects will likely begin production in 2021 and nine more in 2022, according to Rystad Energy. Crude oil production is subject to geologic conditions, economics, and project timelines. The future oil markets still remain uncertain, so future projects’ timelines may change accordingly.

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Hurricanes are a critical element in the GOM forecast. The Atlantic hurricane season is typically June 1–November 30. Although eight new projects started crude oil production in 2020, annual production was lower than 2019 levels because of pandemic-related shut-ins and the most active Atlantic hurricane season on record. Hurricane Delta shut in 1.6 million barrels of oil production over two days in October, the highest peak shut-in of the hurricane season. However, the combined effects of Tropical Storm Marco, followed quickly by Hurricane Laura, led to 15 days of shut-ins, which more than doubled the total shut-in production from Hurricane Delta and resulted in the most shut-ins since 2008.

Colorado State University’s Seasonal Hurricane Forecasting forecasts that the 2021 Atlantic hurricane season will be above average, compared with the 40-year average. The university estimates 8 hurricanes and 17 named storms.

The National Oceanic and Atmospheric Administration will release its Atlantic Hurricane Season Outlook for 2021 in May. A hurricane’s actual impact on the GOM oil and natural gas industry is challenging to determine because the hurricane path has a significant effect on the size of the impact. Hurricane paths cannot be determined until the weather pattern is established, which happens days before the hurricane hits.

To forecast hurricane outages in STEO, we use historical data to determine an average percentage of outages for the Atlantic hurricane season. Historically, most GOM shut-ins occur in October. In 2020, hurricane-related disruptions started earlier than normal with Tropical Storm Marco and Hurricane Laura in August.

Source: https://www.worldoil.com/news/2021/4/14/us-gulf-of-mexico-oil-production-set-to-increase-through-2022-says-eia

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Total’s latest African deal will position Uganda among major oil exporters.

(Bloomberg) – Total SE signed agreements along with Ugandan officials for an oil development set to transform the East African nation into a significant crude producer and exporter.

Total CEO Patrick Pouyanne was among those who signed deals Sunday, according to a broadcast of the ceremony attended by Ugandan President Yoweri Museveni and Tanzanian President Samia Suluhu Hassan. The agreements faced multiple delays since the first commercial discoveries of oil were made 15 years ago. China’s biggest offshore oil and gas producer, Cnooc Ltd., and Uganda National Oil Co. are also partners who participated.

Uganda National Oil Co. said late on Thursday that it expected a final investment decision related to the pipeline to be announced on Sunday.

Pouyanne called the signing of pacts a historic milestone for the production work and export pipeline that will draw more than $10 billion of investment. “It’s a very large development, one of the largest that will be developed on this continent,” though just the beginning of a process that will see oil flow in early 2025, he said.

Total’s own $5.1 billion bet on the project is for the rare frontier oil development that’s moving forward as most major companies are cutting spending. It also cements the French energy giant’s position as the leading player in Africa.

The partners will develop the Tilenga and Kingfisher discoveries near Lake Albert, as well as a 1,443-kilometer (897-mile) heated pipeline to transport Uganda’s waxy crude for export at the port of Tanga in Tanzania. The French explorer holds 57% of the oil field licenses and a large stake in the pipeline project.

Total expects production to reach a plateau of 230,000 barrels per day. That’s higher than the output of Equatorial Guinea and Gabon, two of Africa’s OPEC members, according to data compiled by Bloomberg.

Source: https://www.worldoil.com/news/2021/4/10/total-s-latest-african-deal-will-position-uganda-among-major-oil-exporters

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4 foreign investment companies begin work in Alborz

Director General of Economic and Financial Affairs of Alborz Province announced that four big foreign investment companies started their work in the province. The four companies have totally gained a $104 million investment license in Alborz Province, Abolfazl Fallah said, adding: They are from Germany, Italy, UAE and China.

The companies are now implementing their projects in the field of medicine production, equipment for steel mills, automotive parts and so on, Fallah stated.

The German company is active in the field of medicine (Vita) with 85% share, Italian company in the production of equipment for steel mills, Emirati and Chinese companies in manufacturing automotive parts in Alborz, he said:

Stating that so far these four foreign investment companies have entered $20 million into the country, he said: We hope that next year the four companies will fully implement their productive projects.

To develop the province, our approach is foreign direct investment with gaining technical knowledge and achieving international markets, he added.

In terms of foreign investment, infrastructural works have been done in the province and a foreign investment information system has been launched in different languages, Fallah said.

Source: http://www.iraneconomy.news/maket/4-foreign-investment-companies-begin-work-alborz

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Great economic potential for investment in Iran

Afkhami: there is a significant economic potential for foreign investors in Iran

Ali-Ashraf Afkhami, The chairman of the board of directors as well as the governor of Bank of Industry and Mine

Afkhami, Managing Director of Bank of Industry and Mine, says there is a significant economic potential for foreign investors in Iran that can create precious achievements for bilateral cooperation.

Afkhami, Managing Director of Bank of Industry and Mine, says there is a significant economic potential for foreign investors in Iran that can create precious achievements for bilateral cooperation.
In a meeting with the state of Lower Saxony’s economic delegation Afkhami said: with a population of about 80 million people, Iran is the second most populous country in the Middle East which possesses 9% of oil reserves and 18 % of world gas reserves and abundant mineral resources; therefore, such very important factors in the economy are the best stimulus for the participation of foreign investors in Iran.
It is time that global banks resolve their concerns regarding the Iranian market and financial cooperation and economic exchanges by adopting a reasonable policy and use the opportunities to participate in the competitive market of Iran, he added.

Pointing to the actions taken by the Iran-Europe Commercial Bank during the post-sanctions era, Afkhami said: Iran-Europe Commercial Bank — a German bank with a history of over 40 years of activity which has a very active role in international financial transactions of our country — started brokerage relationships and financial transactions through SWIFT immediately after the implementation of JCPOA, which can be a model for other German banks.
The presence of Iran-Europe Commercial Bank in the global banking market can play a very constructive role in Iran’s economic prosperity by facilitating bank transactions between Iran and European companies, especially German companies, Managing Director of Bank of Industry and Mine stressed.

Source: http://www.iraneconomy.news/banking/industry-and-mine-bank/great-economic-potential-investment-iran

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Supreme Council of Non-oil Exports approves facilitating regulations

TEHRAN – Iran’s Supreme Council of Non-oil Exports Promotion, in a decree, has approved new regulations for facilitating the country’s non-oil trade, especially with the neighboring countries, in the current Iranian calendar year (started on March 21).

The mentioned decree which was issued in the 10th meeting of the council is addressed to the related government bodies and organizations to follow in the current year, the portal of Tehran Chamber of Commerce, Industries, Mines and Agriculture (TCCIMA) reported on Monday.

In the meeting, it was also decided to hold another meeting with the presence of the head of the Trade Promotion Organization (TPO) and the deputy governor of the Central Bank of Iran (CBI) to prepare a proposal package for resolving the issues related to the foreign currency obligations of the country’s exporters.

The council also agreed to allow the exporters of technical and engineering services to sell the machinery and equipment necessary for their projects in the destination market if the mentioned machinery and equipment are damaged or worn out and cannot be returned to the country.

It was also decided to provide bank facilities to the owners of traditional wooden ships active in the Persian Gulf in order for them to be able to buy new small-scale commercial vessels.

To expand non-oil exports during the sanctions and the coronavirus pandemic, Iranian government has defined some new strategies and has been pursuing them vigorously.

The major strategy is to focus on the neighboring countries and the trade partners in the region, and it is, in fact, one of the top priorities of the government for defying the U.S. sanctions.

Earlier this month, TPO Head Hamid Zadboum announced the allocation of eight trillion rials (about $190.5 million) for supporting non-oil export activities in the current Iranian calendar year (started on March 21).

Mentioning the current year’s motto which is “Production: Support and the Elimination of Obstacles”, the official underlined planning for the development and expansion of non-oil exports as well as the promotion of export culture as the TPO’s main priority in the current year.

Source: https://www.tehrantimes.com/news/459746/Supreme-Council-of-Non-oil-Exports-approves-facilitating-regulations

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Iran planning to export electricity to Oman

TEHRAN – Iranian Energy Ministry’s Spokesman for Electricity Industry Mostafa Rajabi Mashhadi said the country is pursuing a plan for exporting electricity to the southern Arab neighbor Oman through the sea, ILNA reported.

“For the countries that we share a water border with, studies are underway that need to be completed so that the two countries can reach a conclusion on technical issues, and the plan for the export of electricity to Oman is also at this stage,” Rajabi Mashhadi said.

According to the official, the Energy Ministry’s priority plan is to have electricity exchange with all the neighboring countries that share land borders with Iran, and this plan is currently in place.

Regarding the southern Arab neighbors, Rajabi Mashhadi said: “Technical talks have been held between consultants and contractors and some solutions have been considered, but no energy exchange contract has been signed yet.”

Mentioning the electricity exports to Afghanistan and Iraq, the official noted that exports to Afghanistan and Iraq are carried out as before.

“There are good capacities in the country for increasing exports to Afghanistan, which has new demands to supply electricity to its industries and increasing exports to Iraq is also a matter of negotiation,” he added.

“Currently, we have energy exchanges with both countries within the contractual capacity, and we have not had any specific negotiations to increase exports. Requests have been made by both Iraq and Afghanistan to do so, but have not yet led to a new contract,” Rajabi-Mashhadi reminded.

Earlier this month, the head of Trade Promotion Organization of Iran (TPO)’s Arab and African office announced that Iran is planning to commence exports of gas and electricity to Oman in near future.

Referring to the development of Iran’s trade program with neighboring Arab countries, Farzad Piltan said, “We are pursuing the exports of gas and electricity as two Iranian export projects to Oman.”

Iran has developed into an electricity hub in the region, having power exchanges with many of its neighbors.

“We are an energy hub in the region and seek to have electricity exchange with all the neighboring countries,” Iran’s Deputy Energy Minister Homayoun Haeri said back in June 2020.

Source: https://www.tehrantimes.com/news/459736/Iran-planning-to-export-electricity-to-Oman

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Oxy CEO opposes carbon tax plans, in contrast to API and rival operators

HOUSTON (Bloomberg) –Occidental Petroleum Corp. split with some of its larger rivals in rejecting a U.S. carbon tax, preferring the existing system of tax credits designed to encourage oil companies to store carbon dioxide and reduce emissions.

“A carbon tax would be bad for a lot of the industry, a carbon tax would be bad for the consumers and especially for those consumers who are more disadvantaged from an economic standpoint,” Occidental Chief Executive Officer Vicki Hollub said at a conference hosted by Texas Independent Producers & Royalty Owners Association Tuesday. “A carbon tax is not what we’re pushing at all.”

The position appears to stand in contrast with that of larger players like Exxon Mobil Corp. and the American Petroleum Institute industry group, which voted last month to endorse putting a tax or other price on carbon dioxide emissions. Occidental was a key proponent of the 45Q tax credit that benefits companies that capture carbon and store the pollutant in the ground.

“We in Texas kind of criticize California a bit,” but the state is “addressing carbon the right way,” Hollub said. California’s fuel standards, along with the 45Q carbon storage tax credit, is “incentivizing the use of technology and rewarding the use of technology,” she said.

President Joe Biden made clean energy a key pledge in his election campaign last year and took the oil industry by surprise in the first months of his presidency by canceling the Keystone XL crude pipeline and restricting drilling on federal land.

Oil producers must provide palatable options for the Biden administration or risk having “extreme measures” forced upon them, Hollub said.

“In the absence of a good plan on how to continue to lower emissions from the existing production that we have in the U.S., President Biden and his administration are going to feel forced to do something on their own,” she said. “And I think that something would be to further limit leasing on federal lands. There could be a production impact.”

Source: https://www.worldoil.com/news/2021/4/6/oxy-ceo-opposes-carbon-tax-plans-in-contrast-to-api-and-rival-operators

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While OPEC ramps up production, U.S. oil output is projected to fall

(Bloomberg) –The U.S. slashed its oil production forecast through next year just as OPEC and its allies begin to rollback their production cuts in the coming months.

U.S. oil output is set to reach 11.04 million barrels day this year, down from last month’s forecast at 11.15 million after a deep freeze in February that shutdown the oil industry in Texas, according to U.S. government data. The Energy Information Administration also lowered its output forecast for 2022 by 100,000 barrels a day.

The lower output forecast comes as Wall Street has grown reluctant to fund growth while shale operators are focused on increasing cash flow and return to investors rather than adding production. With the U.S. unlikely to return to previous output levels, OPEC+ is moving to roll back part of their supply cuts in the coming months.

“It would be very hard for the US oil and gas industry to get back to over 13 million barrels a day. I don’t think that’s going to happen,” Occidental Petroleum Corp. Chief Executive Officer Vicki Hollub said at a conference Tuesday. “Too much investment would be required,” she said, reiterating her view that U.S. has past peak oil production.

The OPEC+ decision expressed growing confidence in the economic recovery and higher oil prices. In the past four months, benchmark U.S. crude oil prices have gained over 36%.

Even though the EIA is lowered its forecast, production will likely expand modestly from current levels. American explorers are still moving to add supply, last week they to add the most rigs in more than a year. Still, the oil rig count stands at about half of what it was when the pandemic began.

With the U.S. unlikely to return supply to pre-pandemic levels, some market observers don’t expect global crude supplies to grow fast enough to satisfy demand as vaccinations proliferate and economies reopen.

Oil supply is proving to be “mostly inelastic” in the very near-term, as shown by the lack of production growth after Saudi Arabia’s cut prices rallied this year, Jeff Currie, head of commodities research at Goldman Sachs Group Inc., said in a Bloomberg Television interview last week.

Source: https://www.worldoil.com/news/2021/4/7/while-opec-ramps-up-production-us-oil-output-is-projected-to-fall

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Energy Ministry grants 100% discount to low-consuming subscribers

TEHRAN – As announced by the managing director of Iran’s Power Generation and Distribution Company (TAVANIR), seven million subscribers have received 100-percent discount on their electricity bills in the framework of the “Power of Hope” program.

Mohammad-Hassan Motevalizadeh said, “Since the start of this program in last August, the subscribers have had some good cooperation with us, and we hope that the hot season coming this cooperation will increase.”

Implementation of a program by the Iranian Energy Ministry for rewarding efficient electricity subscribers with a 100 percent discount on their bills, has reduced the number of high-consuming subscribers across the country by 6.1 percent.

According to TAVANIR, this program called “Power of Hope”, was aimed to change the attitudes of household consumers towards the proper use of energy resources and consequently protect the environment.

The Energy Ministry started the implementation of the mentioned program in mid-August 2020.

In late August 2020, Iranian Energy Minister Reza Ardakanian had announced that the Power of Hope program was expected to reduce the country’s electricity consumption by 10 percent.

“This program will be implemented to both reward low-consuming subscribers and to encourage others to consume less and it is expected to reduce power consumption by 10 percent,” Ardakanian said in a press conference on the occasion of the Government Week (August 23-29, 2020).

The minister noted that according to a cabinet decision, all the subscribers that cooperated well with the Energy Ministry’s consumption management programs this summer are to be awarded.

“To do so, home subscribers were divided into three categories, which include low-consumers, normal-consumers, and high-consumers,” he said.

He noted that two programs have been prepared for high-consuming subscribers so that by implementing these plans, these subscribers would also join the low-consumer group.

The official described the first program as a training course to teach consumption management methods with the help of knowledge-based companies and start-ups, and said: “Start-up companies will be formed in this field and will help us optimize the consumption of high-consuming subscribers by providing simple solutions.”

The second plan is to install solar panels on the roofs of high-consuming subscribers’ houses so that such subscribers would meet their electricity needs by installing these PV stations, Ardakanian explained.

Managing electricity consumption by various sectors including households, agriculture, and industry, and reducing the consumption of fossil fuels used by power plants has become one of the major priorities for the government in recent years.

Earlier, the Energy Ministry Spokesman for the electricity sector Mostafa Rajabi Mashhadi had told Tehran Times that the ministry’s specialists and experts defined different packages for different sectors to manage the country’s electricity consumption.

Rajabi Mashhadi said that since the households account for the majority of the electricity consumption, the main part of the Energy Ministry’s program was focused on encouraging the households in metropolitan areas like Tehran to reduce their consumption in peak hours.

Source: https://www.tehrantimes.com/news/459478/Energy-Ministry-grants-100-discount-to-low-consuming-subscribers

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