Oil stages Strong recovery

With fundamentals largely unchanged from last week, oil prices are nonetheless poised to record significant gains, with a global benchmark Brent trading above $72 a barrel and the WTI rising to just south of $69 a barrel.

The fire at the Ku-Maloob-Zaap offshore rig in Mexico was the start, causing approximately 400,000 b/d of crude oil to be taken off the market for the time being, and the forced evacuation of personnel from production platforms in the Gulf of Mexico ahead of Tropical Storm Ida ended the supply disruption, overcoming concerns about COVID and the weakness of the physical market.

Congo tries to revise Chinese metal deals. The government of the Democratic Republic of the Congo (DRC) is reviewing its 6 billion infrastructure-for-metals deals, citing concerns that they will not bring “sufficient benefit to Congo” as China controls 70% of DRC’s mining sector.

Phillips 66 puts Louisiana refinery up for sale. US refiner Phillips 66 (NYSE:PSX) has announced that market its 255 kbpd Alliance refinery in Louisiana, citing the “evolving energy landscape” as the primary trigger for such a decision. The 50-year-old factory produces petrol and diesel for the domestic market.

PDVSA offers 20 million barrels to the market in September. Venezuelan state oil company PDVSA is offering international buyers 20 MMbbls of heavy crude for September, with prices ranging from $35 to $41 a barrel, S&P Platts reports. Venezuela is trying to ramp up exports as outflows totaled 520 kbpd in July.

Related: Oil Gluten In Asia Is Deteriorating

India to increase LNG import potential. India will see commissioning of a 5mtpa LNG import terminal in the western state of Gujarat next year, with private investor Swan Energy (NS:SWAN) aiming to complete it by March next year. State-owned companies IOC, Bharat Petroleum and ONGC have all leased 1 million tons per year of Swan’s capacity.

CNPC Announces Major Shale Search China’s state oil company CNPC reported the discovery of a large oil shale field in close proximity to the Daqing oil field (the largest ever field in China), with expected reserves of up to 1.27 billion tons. It remains to be seen whether CNPC would be able to manage the complex geology of the given acreage, let alone the waxiness.

EU rules that apply to Nord Stream 2. The Regional Court of Düsseldorf in Germany ruled that EU gas unbundling rules (ie pipeline owners must be different from suppliers) should apply to the nearly entire Nord Stream 2 pipeline, meaning that Gazprom (MCX:GAZP) will have to auction its volumes.

BP drops Rumaila into a separate entity. UK-based major BP (NYSE:BP) rounded the spin-off of its Iraqi subsidiary that operates Rumaila, one of the world’s largest oil fields, into a joint venture with PetroChina called Basra Energy Company, which aims to reduce its carbon footprint across the spectrum of its operations.

Rosneft wants to export pipeline gas. Russian state oil company Rosneft (MCX:ROSN) has asked Russian President Putin to grant them access to pipeline gas exports, to export 10 bcm per year through an agent agreement with Gazprom.

China wants more pipeline gas China’s CNPC (SHA:601857) to drill three new “complex” production wells in Turkmenistan’s supergiant Galkynysh gas field, in a agreement through which it would receive produced gas as a means of payment for its drilling. Amid rising LNG prices, China has ramped up its (cheaper) pipeline gas imports.

Europe’s largest lithium project sparks anger. Anglo-Australian miner Rio Tinto’s 2.4 billion Jadar project (ASX:RIO) fueled controversy in Serbia as locals fear potential environmental damage from the mine, which is believed to become Europe’s largest once it reaches its peak production capacity of 58,000 tons of battery-grade lithium carbonate.

Asian coal could decouple from gas prices While gas prices fell after a steep rise in the summer, coal prices may remain high in the coming weeks, especially in Asia, where Indonesia’s decision to ban several major producers from exporting (because they fail to meet domestic demand on a preferential basis ) will deepen the tightness even further to deliveries by sea.

Equinor wants to leave the Mexican offshore. Norwegian oil giant Equinor (NYSE:EQNR) plans to exit Mexico’s upstream sector as part of its 2050 ambition to become net zero by 2050, but has so far been unable to find suitable buyers for its assets — the self-managed Block 01 and Block 03 in the Salina Basin.

China is promoting its own sodium ion technology. After CATL (SHE:300750), China’s largest battery manufacturer, revealed its new sodium-ion batteries last month, the country’s government has set its sights on promoting the new technology within its 14e economic five-year plan as it seeks to diversify from traditional battery metals such as cobalt or lithium.

South Africa wants more nuclear energy. South Africa’s energy regulator supported a government plan to build more nuclear reactors in the country as Pretoria moves away from coal-fired power (still about 80% of total production). Previous attempts to switch to nuclear power have been marred by corruption scandals.

Santos sued for his Net Zero goals. An Australian environmental group is suing the country’s second-largest gas producer, Santos (ASX:STO), arguing that the 2040 net zero was “deceptive”. This is the very first case to challenge the validity of one’s emissions targets.

By Michael Kern for Oilprice.com

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