Gazprom Soldiers on With Nord Stream II

Poland has achieved a significant victory in its battle against German and Russian energy collaboration. Daunted by Polish regulations, five international giants in the natural gas industry announced Aug. 12 that they had pulled out of an agreement to join Russian state-owned gas company Gazprom in the Nord Stream II AG consortium. The consortium — which Gazprom currently owns in its entirety — will oversee the construction and operation of the controversial Nord Stream II pipeline, which is set to enter service in 2019. The pullout leaves Gazprom to move forward with the 55 billion-cubic-meter natural gas pipeline project, estimated to cost between $8 billion and $11 billion, by itself, and it could have serious consequences across Northern and Central Europe. Even so, Gazprom will persevere.

Oil Sanctions Risk Pushing An Unstable North Korea Over The Edge

A new round of United Nations sanctions on North Korea has a lot of loopholes, and China is only enforcing those that hit at Pyongyang’s weapons-making capabilities. The rogue nation, that is once again making nuclear threats, is using its hostage population as a human shield in order to get Chinese oil and food.

In January, Pyongyang conducted its forth nuclear test. In February, it launched a long-range rocket. In early March, North Korean leader Kim Jong-un reportedly ordered the military to deploy the country’s nuclear warheads on standby.

Can Scotland Save Its Oil Industry?

The Scottish city of Aberdeen is built upon the successes of the oil and gas industry. A walk round the city centre reveals the level of investment, with every street festooned with luxury hotels, classy restaurants, and even a golf course, courtesy of Donald Trump.

Recently, however, there has been an increasing sense of uncertainty in ‘the granite city’. At the start of the year, it was reported that the price of crude had slumped to a twelve-year low with the likes of Shell warning of a 50 percent cut in profits. Across the city, oil workers have been facing redundancy from a variety of companies including Petrofac, Gulfmark, ConocoPhillips and Sparrows.

About That "Oil Freeze": Russian Crude Production Sets New Post-Soviet Record In February

As noted earlier, among the catalysts for the overnight leg higher in oil was a statement by Venezuelan Oil Minister Eulogio Del Pino who triggered the headline-scanning algos yesterday when he said, during a television broadcast on TeleSur, that oil producing countries were discussing a March meeting site (which apparently is sufficient to instill confidence in future cuts), and that Venezuela, Russia, Qatar and Saudi Arabia are planning to meet in July. He added that "There’s no capacity to continue putting oil on the market. If this situation continues we’ll have a collapse in oil prices" which is quite clear to everyone and certainly the Saudi oil-minister who a week ago explicitly said that Saudi Arabia would not cut production.

US LNG reaches out to global markets

With the first LNG export terminal in Sabina Pass, Louisiana now in operation, the US LNG export is becoming a reality, but low oil prices are constraining its future prospects.

Opportunities and challenges

The effects of the US LNG exports on global markets are still very much unknown, but there are both opportunities and challenges. LNG export terminals give the US economy a tremendous opportunity to take full advantage of the new resource that came with the era of hydraulic fracturing, and to join the competitive global game worth around $160 billion annually.

The World Is Not Running Out Of Storage Space For Oil

The IEA struck a dour tone on the state of the global economy in 2016 in its latest monthly Oil Market Report, and even included a stark warning that the markets could “drown in over-supply” because of rising storage levels around the world.

Oil analysts have closely watched storage levels as an important barometer of where the markets were heading. The thinking was that inventories would rise as the supply overhang persisted, but storage facilities would then drawdown relatively quickly as production slowed. But in early 2015 a funny thing happened: Inventory levels surged to their highest levels in 80 years in the U.S., pushing oil prices down into the $40s per barrel.

The World Just Lost One Of Its Biggest Oil Plays To Low Prices

Energy analysts Wood MacKenzie said last week that low oil prices have now caused the delay of 68 planned petroleum projects globally. Representing $380 billion in frozen capital expenditures.

And news late last week shows it’s not just the private sector shutting things down in oil development. 

Oil Companies Shun South Chinese Sea As Geopolitical Tensions Rise

The South China Sea is continually paraded as a region rich in oil and gas deposits; however, no one really knows what’s there with any degree of accuracy. Furthermore, these possible deposits are shrouded in conflict that will not abate anytime soon, and will most likely worsen with an intensification of the security competition between China and the United States along with its regional allies, which is tightly related to these disputes.

The available exploration information in the South China Sea is either limited or old. So, there are assumptions, but evidence is shaky. The EIA estimates there may be nearly 11 billion barrels of oil and 190 trillion cubic feet of natural gas in proved and probable reserves all based on 2013 estimates and of course, 2013 prices. Not only were these reserves thought to be somewhat inflated at the time, but given the lower pricing currently available, this is potentially far less.

This Could Become The Most Promising Arctic Oil Basin

I described last month how one country on the planet recently bucked the trend of declining petroleum drilling: Ireland, which saw a record number of bids for offshore acreage in November. 

And this week, one of the neighbors of that rising oil and gas hotspot turned in another strong bid round.

Alaska Facing Tough Choices Without Arctic Oil

The disappointing exploration results in the Chukchi Sea for Royal Dutch Shell was a huge blow to the company, and will set back oil development in the Arctic indefinitely. After spending $7 billion and eight years, walking away with nothing is hard to stomach.

But, Shell can always go elsewhere. Shortly after Shell announced that it was scrapping its entire Arctic Alaska campaign, Reuters reported that Shell won a bid to explore for oil and gas in the Black Sea in Bulgarian waters. An exploration deal could be finalized in October.

China seeks to secure oil supply in the South China Sea

China’s land reclamation is not just rooted in erecting a military and political presence in the South China Sea, but in its desire to safeguard the security of its petroleum supply.

China’s land reclamation project among the disputed islands in the South China Sea has drawn extensive international attention. While focus has been on China’s military presence, there seems to be another implication of China’s provocative behaviour. In fact, erecting bases within the region is an extension of China’s oil supply security strategy.

Is Natural Gas As Clean As We Think?

This week U.S. President Barack Obama took aim at the American coal industry as part of a comprehensive climate change plan to limit air emissions from what many consider the country's worst polluter.

Under the plan, states will have until 2030 to cut CO2 levels by a third from what they were in 2005. Outside the United States, Europe is using less coal, the Canadian province of Ontario shut down its coal-fired power generation (albeit in favor of more expensive renewables), and the World Bank last week rejected the notion that coal can cure poverty.

Energy Security and the Cyprus Question: “Securitization” of Energy in the Eastern Mediterranean

In February 2014, Nikos Anastasiades, the President of the Republic of Cyprus (RoC) and Dervis Eroglu, the Turkish-Cypriot leader, signed a Joint Declaration establishing certain “ground-rules” upon which the then stalled peace talks -aiming at the island’s reunificationcould be revived. This evolution was arguably prompted by the discovery of new energy sources in the Eastern Mediterranean, and especially offshore the RoC. Gas had initially been portrayed as a potential catalyst for a restart of the long-standing peace process, and possibly for its successful conclusion. Nevertheless, a couple of months later, it seemed that these discoveries had worked against these aspirations and added chill to the Cyprus conflict. In October 2014, a Turkish navigational warning notified mariners that Turkey would soon perform its seismic surveys in sea areas that encroach on Cyprus’s EEZ, raising concerns on the escalation of the existing protracted conflict. Anastasiades withdrew from the negotiations, attributing his decision to these activities.

Despite sanctions, Russia remains global energy player

Sanctions may have damaged the Russian energy sector, but Russian energy diplomacy is still scoring goals and helping Russia to retain its global power status. By seeking out alternative markets – often in overlooked countries – Russia is seeking to diversify its export portfolio to counter sour relations with the EU.

In the past year, many Russian energy companies and their executives (including the oil giants Roseneft, Gazprom Neft and Novatek) found themselves on American and European sanction lists. Yet despite sanctions and the attendant heavy financial losses imposed on the country’s energy sector, Russia continues to pursue a robust energy diplomacy.

What The Iran Deal Could Mean For Natural Gas Markets

The historic deal between Iran and the P5+1 group (The U.S., France, UK, Russia, China and Germany) has several oil majors and oil refiners considering the impacts of new Iranian crude hitting the global oil market.

“As soon as Iranian oil becomes available, we will certainly start buying again. Motor Oil was always very fond of Iranian crude,” said Loukas Tripelopoulos of Motor Oil Hellas SA. The removal of international sanctions would be a game changer for the Islamic Republic, which has one of the world’s highest crude oil reserves.

Solar Space Race Already Underway

Has space-based solar power just had a breakthrough moment?

Alternative Energy News reports that on March 12th, 2015 Mitsubishi Heavy Industries, Ltd. (MHI) successfully conducted a ground demonstration test of “wireless power transmission.” In the test, MHI successfully transmitted 10 KW of electricity via microwave to a receiver 500 meters away. This test also confirmed that advanced control technology could direct the microwave beam to stay on target. Will this success pique other countries’ interest?

Do Or Die For Mexico’s Neglected Oil Sector

The Mexican government softened some rules on the bidding process for new oil tracts in an effort to placate private oil companies who had complained about too many restrictions. With the changes, the Mexican government gets rid of caps that would limit oil companies to bidding on only a certain number of contracts.

There were other tweaks to the auction terms that would sweeten the pot for bidding companies. Exploration companies will now be able to have more of their exploration costs recovered, with the possibility of seeing a 125 percent return for their costs if an oil discovery is commercialized. In return, oil companies will pay higher taxes to the Mexican government if their profits balloon beyond a certain threshold.

Terawatt Solar Farms By 2050?

Government policies should shift incentives in solar energy away from rooftop deployment in residences toward utility-scale use because this is the most cost-effective way to deploy solar in order to reduce greenhouse gas emissions, researchers at MIT say.

By the same token, government sponsored research and development in solar should concentrate on thin-film technologies, based on naturally abundant materials rather than on reducing costs of the crystalline silicon technology that is currently dominant in photovoltaic panels.

Can Argentina Capitalize On Its Vast Shale Reserves?

Argentina, once a regional energy leader, is now better known for financial busts and bombastic politicians than hydrocarbons prospects. Still, with a resource potential both vast and untapped, the nation has never been far from energy investors’ minds. The question today is just how much Argentina is willing to change and how this plays into a low oil price environment that is already negatively impacting investment elsewhere.

Argentina’s deliberate efforts to appease some of its international creditors, combined with an overhaul of the nation’s hydrocarbons framework have the potential to lure foreign investors back. The promise of a change of government– and potentially a more market-friendly approach – later this year should add to the country’s appeal.

Energy In Nigeria: Ghosts Of The Past, Present And Future

If electricity and the management of power sector reforms are key to Nigeria’s economic future, crude oil/gas – and the mismanagement thereof – is at the heart of its current mess. And the decline in oil prices since 2014 constrains Nigeria’s abilities to maneuver at a time when it needs maximum flexibility. Whoever wins the next election, will have to face the ghosts of Nigeria’s energy past, to set the country towards a brighter future. Add to this a volatile security situation, and the next President will face a challenging time. What happens in Nigeria will reverberate across West Africa.