Given Europe’s energy crisis prompted by the war in Ukraine and US Assistant Secretary of State Donald Lu’s supportive comments while in Ashgabat, I was recently asked to discuss whether particular countries, such as Turkmenistan, in Central Asia might possibly become suppliers of gas to Europe. What are the prospects for transporting Turkmen gas toContinue reading “Turkmen Gas to Europe?”
Author Archives: Stephen O'Sullivan
Europe’s Energy Crisis
I recently did an interview with the Baku Tribune on the current energy crisis and related issues. I thought it might be interesting to post this here given that the crisis seems unlikely to be resolved in the near future. Q: What is the outlook for the G7’s proposed price cap? First of all, weContinue reading “Europe’s Energy Crisis”
OPEC+ cuts output, Russian oil price cap proposals move forward
Three weeks ago, we noted that sanctions continued to tighten on Russia and asked whether China would come to Moscow’s rescue (no it wouldn’t we concluded). However, three weeks on from the initial question and it appears that OPEC+ has instead decided to come to Russia’s aid. That may not be too surprising – RussiaContinue reading “OPEC+ cuts output, Russian oil price cap proposals move forward”
Nord Stream Too? Russian gas to Europe further disrupted
This morning we are all reading headlines about a series of explosions on both the existing Nord Stream 1 pipeline between Russia and Germany and its almost-complete – but dead in the water – counterpart, Nord Stream 2. Three explosions took place and large volumes of gas have been released from the shut-down pipelines intoContinue reading “Nord Stream Too? Russian gas to Europe further disrupted”
German takeover of Rosneft assets – sanctions continue to tighten around Russia. China to the rescue?
The front-page headline of Saturday’s Weekend FT reads “Germany seizes Rosneft oil refineries”, which in normal circumstances would certainly also seize people’s attention. These are not normal times of course and German Chancellor Olaf Scholz called it “an unavoidable step”. Rosneft’s main PCK refinery is located on the Druzhba pipeline from Russia, is 54% ownedContinue reading “German takeover of Rosneft assets – sanctions continue to tighten around Russia. China to the rescue?”
China’s latest Natural Gas Development Report – focus on market dislocation
China recently released its Natural Gas Development Report for 2021, which reviews recent developments in the country’s gas sector and sets out plans for the years ahead. This is the seventh in the series to date. The focus of the report is different from that of last year. In 2020 the focus was largely onContinue reading “China’s latest Natural Gas Development Report – focus on market dislocation“
The gas genie out of the bottle
Recent comments by the head of the IEA about the security of Russian gas supplies have been widely reported. Fatih Birol warned European governments and gas consumers that they should prepare for a complete shutdown of gas supplies from Russia this winter. He warned that governments should take steps now to reduce gas demand andContinue reading “The gas genie out of the bottle”
Political risks in global energy
Energy companies around the world face a wide variety of risks and deal with these in their everyday course of business. These risks include technical, commercial and financial risks, all of which companies attempt to model, analyse and mitigate before taking investment decisions with substantial up-front costs and long-lasting payback periods. One other important challengeContinue reading “Political risks in global energy”
Outlook for oil prices and the LNG market
I was recently interviewed by a European business magazine on the outlook for oil prices and the global gas market, which I thought I could usefully turn into a blog this week. What’s happening in the oil market, production was first cut and now it’s been increased again. How much of this is about politics?Continue reading “Outlook for oil prices and the LNG market”
OPEC+ raises output – no surprise & price outlook positive
Oil prices have been in the news again – mainly because the OPEC+ Joint Ministerial Monitoring Committee (JMMC) met yesterday to decide what to do with the cartel’s output. Ignore the headlines that they’ve opened the taps and prices are only going one way – down. So far, from what I can see, there’s nothingContinue reading “OPEC+ raises output – no surprise & price outlook positive”
Big Oil and the Energy Transition: Out of their comfort zone?
The Energy Transition is upon us and one of the key challenges facing today’s oil and gas companies is: how do they address the fundamental changes that are needed in their business to adapt to, take part in and thrive in this radically new environment for energy companies? Governments and increasing numbers of shareholders areContinue reading “Big Oil and the Energy Transition: Out of their comfort zone?”
Oil demand weak into next year…at least
The collapse in global oil demand looks set to continue into 2021 according to the International Energy Agency’s latest analysis. They conclude that demand won’t rise above the 2019 level of 99.8 mbd before 2022 or even 2023 depending on the path the coronavirus takes. If there is a second wave – as many fearContinue reading “Oil demand weak into next year…at least”
OPEC+ extends output cuts for a month
Prices rising but a challenge from compliance and a threat from the shale recovery Late last Friday night I was asked to comment by a well-known journal on what OPEC+ might do about oil production, given that their next meeting was fast approaching. I said I thought they would extend their 9.7 mbd cut fromContinue reading “OPEC+ extends output cuts for a month”
Capex challenges for the oil and gas sector
Negative outlook for US domestic production and its energy strategyEarlier this week I realised that output levels, and the profitability of production at these depressed price levels, was an interesting topic to look into since current oil prices appear too low to enable most producing countries and companies to operate profitably. Capital expenditure features heavilyContinue reading “Capex challenges for the oil and gas sector”
Is Peak Oil now behind us?
In the last blog on energy a couple of weeks ago I highlighted two different views about Peak Oil out in the market: those who thought that the moment of Peak Oil (as in maximum oil demand rather than worries about maximum oil supply – which today seems a somewhat outdated concern) was now behindContinue reading “Is Peak Oil now behind us?”
A bad week for Big Oil – price collapse takes its toll…with worse to come?
The last week was quieter in the oil markets as far as prices were concerned and there was a steady drift upwards on the back of some economies partially reopening. It was, however, reporting week for the oil companies and their results showed just how badly each of them had been affected by the collapseContinue reading “A bad week for Big Oil – price collapse takes its toll…with worse to come?”
After oil at -$40, what next?
Last Monday we warned that oil prices could turn negative. That evening they did just that, with the main US domestic grade WTI trading as low as -$40/bbl for the May contract (sellers were paying buyers to take the oil). There were very specific circumstances surrounding that price move: the May contract was expiring thatContinue reading “After oil at -$40, what next?”
Oil price crisis intensifies
We said last week that lower oil prices were inevitable. We based that assessment on the ongoing mismatch between collapsing demand (forecast to have fallen by between 25-30 mbd) and supply cuts (of just 9.7 mbd) which have not even been implemented yet. The OPEC+ agreement falls short of what needed to be done andContinue reading “Oil price crisis intensifies”
OPEC+ agree output cuts
Over the past weekend OPEC+ (OPEC plus Russia – and now plus a few other countries as well) announced that it had reached an agreement to cut oil production in response to the dramatic falls in oil demand following the economic dislocation caused by the Covid-19 virus. Supply/DemandGlobal oil demand is around 100 million barrelsContinue reading “OPEC+ agree output cuts”
Prospects for the recovery of the global oil market
On January 1, Brent crude oil was trading above $66/bbl. Three months later, it had fallen by more than 60% from that level. A coronavirus-driven decline was followed by a collapse when the three-year old agreement between OPEC and Russia to cut production and raise prices broke down. The root cause was a three-way tussleContinue reading “Prospects for the recovery of the global oil market”
Oil price declines and the impact on China’s energy complex
Oil prices have been steadily declining in recent weeks as the impact of the coronavirus on energy demand in China and the rest of the world has become evident. This slide accelerated significantly at the beginning of this week when Russia decided to end its cooperation with OPEC on reducing world oil production, which hadContinue reading “Oil price declines and the impact on China’s energy complex”
Medium-term demand outlook bright, short-term very weak
The medium-term outlook for China’s gas demand remains bright. Most observers – companies, governments, consultants – see gas as a replacement for carbon-intensive coal in China’s energy mix or, at worst, as a bridge fuel towards a lower-carbon future for China. The short-term – 2020 – however is looking a lot less certain. Gas demandContinue reading “Medium-term demand outlook bright, short-term very weak”
China focuses on increasing gas output in an era of trade wars
Faced with rising gas demand – albeit now rising at a slower pace – China has been seeking to boost domestic gas production to stem its growing dependency on imports. Given the ongoing trade war with the US, energy supply security will clearly have assumed an increased level of importance in Beijing. There has certainlyContinue reading “China focuses on increasing gas output in an era of trade wars”
Slowdown in Chinese gas demand growth linked to changing power generation outlook
China’s gas demand growth has risen steadily – and rapidly – in recent years. There was particularly strong growth in 2017 and 2018 as the government’s coal-to-gas switching programme drove demand higher. In 2019, however, it looks as if demand growth has eased significantly with some estimates suggesting that it has fallen below 10%. WithContinue reading “Slowdown in Chinese gas demand growth linked to changing power generation outlook”
China’s new pipeline company moves ahead
China yesterday announced the formal creation of a state-owned enterprise to manage the country’s oil and gas pipelines. This is a reform that has been under discussion for some time and has long been rumoured to be imminent. Now, it has finally arrived – on paper at least. StructureChina’s oil and gas pipelines are owned,Continue reading “China’s new pipeline company moves ahead”
The end of China’s gas demand surge?
China’s dramatic growth in gas demand in 2017 and 2018, surpassing all expectations, may be coming to an end, with widespread implications for the global gas market and a number of energy companies around the world developing gas export projects with an eye to the Chinese market. Air pollution is one area where Beijing hasContinue reading “The end of China’s gas demand surge?”
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