Iraq Nov crude output below Opec+ target: Somo
Iraq's crude production dropped by 96,000 b/d on the month to 4.093mn b/d in November, according to state-owned Somo, leaving output 127,000 b/d below its Opec+ output target.
Iraq has been one of the Opec+ group's serial overproducers, exceeding its target by an average of 123,000 b/d between August-October. But Baghdad in November confirmed its commitment to its pledged output target and gave repeated assurances during the Opec+ meeting on 30 November that it will fully comply with the cuts.
The recent Opec+ meeting resulted in Iraq's output target being reduced to 4mn b/d, effective from 1 January.
Export loadings from the southern Basrah oil terminal averaged 3.393mn b/d in November, a 92,000 b/d decrease from 3.485mn b/d in October, Somo said. Neighbouring Jordan received 6,000 b/d of Iraqi crude in November, down from 15,000 b/d in October. Bad weather at Basrah ports and demonstrations at the Iraqi-Jordanian border have resulted in interruptions to oil exports, Somo said, resulting in a 11,000 b/d stock build.
The amount of Iraqi crude supplied to domestic refineries fell 406,000 b/d from 600,000 b/d. Somo said Iraq burned around 128,000 b/d for power in November, as temperatures fell. Somo in previous months provided a generic 15,000 b/d to 20,000 b/d figure for crude burn, depending on the months of the year and temperatures.
Somo estimates put production in the northern semi-autonomous Kurdistan region at 116,000 b/d, all delivered to refineries in the north as exports have been shut in since 25 March.
"Iraqi government is not aware of and responsible for any extra quantities produced and smuggled from [the Kurdistan region]," an oil ministry source told Argus.
The Association of the Petroleum Industry of Kurdistan (Apikur), an industry body representing IOCs operating in Iraqi Kurdistan, today said it is ready to discuss the return of crude exports through the Iraq-Turkey Pipeline [ITP], but said it has neither been included in the meetings between Iraq's federal government and the KRG nor invited to participate in any future meetings.
"We believe concrete solutions can be implemented immediately that will satisfy all parties, protect the contractual rights of the IOCs and enable the resumption of oil exports from the Kurdistan Region of Iraq," Apikur said.
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Libyan oil blockade offers support for rival crudes
Libyan oil blockade offers support for rival crudes
London, 27 August (Argus) — The latest blockade on Libyan oil production and exports could support prices for rival crude grades in the near term as European refiners seek alternatives. But any rise in demand will probably be short-lived given refining margins in Europe are falling. The blockade — announced by the country's eastern-based administration on 26 August following rising tensions with the UN-recognised government based in Tripoli — appears to be taking effect at some oil fields, with at least two subsidiaries of state-owned oil firm NOC gradually cutting output already . But according to one port agent, the blockade has yet to be implemented at export terminals. Although ship tracking data show no tankers have left any of Libya's ports since 25 August, two vessels are waiting. The Ohio is close to the Es Sider terminal and the New Amorgos is idling near the Zueitina terminal. These tankers, and possibly others, could still load in the short term as it will take a few days for Libyan crude production to wind down from its recent level of 1mn b/d. Traders think September supplies are unlikely to load though, which means buyers of Libyan crude would need to find substitutes. The biggest impact will be felt by Libya's core customers in Europe, which accounted for more than 85pc of the country's 1mn b/d of crude exports in January-July this year, according to Argus tracking data. European refiners have plenty of alternative options while the Libyan blockade is in place. Traders estimate 10-18 cargoes of September-loading Nigerian crude are unsold. Azeri BTC Blend is another possible replacement. The amount of US WTI arriving in Europe in September is expected to be lower than in August, but there could still be at least 1mn b/d of that available. Supplies from South America, which have become more popular in Europe this year, can also act as substitutes for Libyan crude. Brazilian crude deliveries to Europe have averaged around 380,000 b/d so far in 2024, up by more than a quarter on the year, according to Vortexa, while crude imports from Guyana have shot up by 40pc to more than 310,000 b/d over the same period. The blockade-driven uptick in demand could push the value of these replacements up by $0.50-1.00/bl relative to the North Sea Dated benchmark over the next week, according to traders. BTC Blend prices already jumped to a $4.55/bl premium against Dated on 27 August, up from a $2.70/bl premium on 23 August. This support to prices is likely to be sustained for a short period only while European buyers cover their immediate needs, traders said. Crude demand in Europe is seasonally lower during the autumn and refining margins in the region are already falling, with diesel and gasoline cracks in the Mediterranean dropping by a respective 21pc and 30pc last week compared to 1-16 August. Higher crude prices would squeeze margins further, putting pressure on European refiners to cut crude runs, market sources said. History repeating How long Libyan crude might be out of the market is unclear, but events of the last few days bear some similarities to a previous blockade in 2020 when exports fell to just 68,000 b/d over an eight-month period. In both cases, the management of the country's central bank and the distribution of oil revenues are central to the tensions. The latest blockade is a response to moves by the Tripoli-based administration to replace the bank's governor. While eastern Libya is home to most of the country's oil reserves and four of its oil export terminals, revenues from crude exports flow into the central bank, making it one of the country's most powerful institutions. Buyers of Libyan crude pay NOC but the funds cannot be liquidated without the central bank, according to sources. If these funds are blocked, it is difficult to restart production and exports, the sources said. By Kuganiga Kuganeswaran and Lina Bulyk Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
VLCC seeks diesel loading in US Gulf coast
VLCC seeks diesel loading in US Gulf coast
New York, 26 August (Argus) — A very large crude carrier (VLCC) is available to load ultra-low sulphur diesel in the US Gulf coast, with the 270,000t cargo size likely to draw cargoes away from the 38,000t medium range (MR) tanker-dominated market for US Gulf coast refined products shipments, if its owner can secure a deal. The operator of the Nissos Kea VLCC, owned by Okeanis Eco Tankers (OET), began seeking a diesel cargo in the US Gulf coast on 23 August, and the vessel remained available on Monday, according to shipbrokers. It is uncertain whether the vessel can secure a deal for a diesel voyage. Another of OET's VLCCs, the Nissos Kikouria, similarly cleaned up for a potential diesel loading from the Mideast Gulf in late July, but ended up loading a crude cargo from the region instead. The rare crossover in the US Gulf coast from the crude vessel segment comes in the wake of VLCC owners cleaning their vessels thoroughly to ship diesel cargoes into Europe around the Cape of Good Hope from the Mideast Gulf amid the ongoing Houthi rebel threat for Suez Canal transits. The Argus -assessed rate for a US Gulf coast-Europe voyage loaded onto an MR tanker stands at $31.12/t, while the rate for a VLCC carrying a typical 270,000t crude cargo to Europe from the US Gulf coast is at $11.48/t based on a lumpsum rate of $3.1mn, without considering lightering costs necessary to physically load the vessel and likely demurrage costs associated with that loading. The rate proposed for the potential diesel cargo loaded onto the Nissos Kea was at $3.95mn on Friday, according to some shipbrokers, which could reflect a premium sought by the shipowner for the atypical loading. A major US refiner considered chartering the VLCC to take diesel, the refiner confirmed to Argus today, while noting that the cost discussed for the Europe-bound voyage was well below $3.95mn. The global VLCC market has been under pressure since mid-May amid weaker crude demand in Asia-Pacific, especially in China, the world's biggest oil importer. VLCC rates from the US Gulf coast to Europe fell to $2.7mn on 13 August, down from from $4.95mn on 20 May, which could entice shipowners to consider more lucrative opportunities in the refined products market. European buyers are not the only ones in the market for large diesel cargoes loaded onto crude tankers. Petrobras shipped two diesel cargoes loaded onto Suezmax crude tankers from the Mideast Gulf to Brazil in late July. Brazilian buyers showed a propensity for larger cargoes as recently as 20 August, when Brazil's demand for long range 1 (LR1) clean tankers from the US Gulf coast boosted physical activity for the 60,000t tanker segment to its highest in 2024 for a single day. The jump in demand from Brazil for US Gulf coast-loading products comes as Russian focuses on domestic stockpiling, making US Gulf coast-loadings much more competitively priced for Brazilian buyers than during most of the period since Russia's invasion of Ukraine in February 2022. By Ross Griffith and Tray Swanson Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
US shale firms boost output goals on efficiency gains
US shale firms boost output goals on efficiency gains
New York, 26 August (Argus) — The efficiency gains that were one of the key drivers behind last year's surprise jump in US crude output are now back, and are spurring shale producers to increase 2024 targets just as Opec is gearing up to unwind its supply cuts. Upward revisions from publicly-traded US operators including Diamondback Energy, Devon Energy and Permian Resources are modest for the most part, but they may still be enough to ruffle some feathers in Vienna as Opec+ prepares to start reversing a combined 2.2mn b/d of production cuts in the coming months. "With domestic energy production a key topic in the 2024 US presidential election and Opec+ perhaps having prematurely expected lower shale oil volumes, [second-quarter] earnings serve as a reminder that shale will continue to be a growing, albeit perhaps more predictable, supply source on the global stage," consultancy Rystad senior analyst Matthew Bernstein says. Overall US crude production growth is still expected to slow in 2024 after last year's 1mn b/d gain defied all expectations. But improved techniques that have sped up the drilling process are helping operators get more bang for their buck, and are leaving more cash on the table for shareholder returns. Such gains are also bolstering the case for further consolidation in the shale patch as firms benefit from lower costs for oil field services. "What was unexpected is the scale of efficiency gains that have helped deliver lower [capital expenditure] as operators drop rigs and hydraulic fracturing (frac) spreads," analysts at bank Jefferies say. The gains have come from drilling three-mile lateral wells along with the adoption of electric fracking fleets, which has increased pumped hours and led to faster cycle times when it comes to well completions. Diamondback typifies the new industry spirit after boosting its full-year production outlook despite reducing drilling activity to 10 rigs from 12 and its frac fleet count to three from four. "We are clearly doing more with less and becoming more operationally efficient each quarter," chief executive Travis Stice says. Frac competition Healthy competition among crews is driving productivity gains, Devon Energy says. The producer has 16 rigs and three frac crews active in the prolific Permian basin of west Texas and southeast New Mexico. "We rack and stack all 16 rigs every day on how they're doing," chief operating officer Clay Gaspar says. "There's a first place and there's a last place... and those companies know, those engineers know exactly where they stand." The US majors are also getting in on the act, with Chevron upping its full-year production growth outlook for the Permian to about 15pc from 10pc, after flagging new techniques such as the ability to frac three wells at the same time. "We're one of the first operators to deploy triple-frac, delivering cost reductions of more than 10pc and shortening completion times by 25pc," chief executive Mike Wirth says. The downside to efficiency gains can be seen when it comes to natural gas, where production remains robust even as activity slows in response to lower prices. "But the industry appears ready to respond by pulling the curtailment lever again," bank Citigroup analysts say. US independent EOG Resources expects oil output from the lower 48 states will exit this year the same as at the end of 2023, with limited gains expected for total US supplies from offshore operations. "Activity levels, as reflected in the rig count, indicate continued lower oil production growth through to at least mid-2025," EOG chief executive Ezra Yacob says. Yet that did not stop the company from increasing its own full-year output guidance while keeping spending unchanged. By Stephen Cunningham US tight oil production Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Middle East tensions ease after Israel-Hezbollah clash
Middle East tensions ease after Israel-Hezbollah clash
Dubai, 26 August (Argus) — The risk of a wider regional conflict in the Middle East increased with Lebanon's Iran-backed militant group Hezbollah and Israel trading large-scale blows on 25 August. But tensions eased later in the day as Hezbollah's leader signalled the end of the "first phase" of their response to the elimination of its top military commander last month. "It is an initial response," Hezbollah's secretary-general Hassan Nasrallah said in a televised speech, adding that they'll assess results to see if the intended goal of the attack is satisfactory. "We consider the response to the assassination of Fuad Shukr has been completed ." "If the result is not sufficient, we will reserve the right to respond until a time we choose. Now the country [Lebanon] can rest and people can return to their homes and lives," Nasrallah said. He noted the group's main target was a military intelligence base about 110km inside Israeli territory, the deepest attack yet and just 1.5km north of Tel Aviv. The risk of a wider conflict, which could draw Iran in, pushed oil prices up, especially with Israel carrying out what it said is a "pre-emptive strike" against Hezbollah positions in southern Lebanon less than an hour before the latter launched its operation. As of 08:20 GMT the Ice front-month October Brent contract was at $79.97/bl, higher by 95¢/bl from its settlement on 23 August when the contract ended $79.02/bl. Israel's assault was based, Israeli officials said, on intelligence that Hezbollah was about to fire thousands of missiles at northern Israel, as well as drones at a key intelligence centre just north of Tel Aviv in retaliation for the killing of its commander in July. Nasrallah admitted the pre-emptive strike noting that, "[Israel's] focus was to reveal this operation in advance, and [say] that Israel took proactive action and thwarted the operation." "This narrative is full of lies. But if this narrative helps calm the madness of the Israelis, then there is nothing wrong with it," he said, adding that the group had been able to carry out its attack "as planned," denying statements by the Israeli military that its pre-emptive strikes had stopped a wider attack. There was no damage to any Israeli military base, Israel's military spokesperson brigadier general Daniel Hagari said. Israel's foreign minister Israel Katz stated that the country was not seeking a full-scale war, although Israeli prime minister Benjamin Netanyahu issued a warning, suggesting that further action might be forthcoming. Stalling the ceasefire The timing of these strikes coincided with high-stakes negotiations in Egypt's Cairo aimed at brokering a ceasefire in Gaza between Israel and the Palestinian militant group Hamas. The conflict has dragged on for 10 months and pushed the region to the brink of a wider war multiple times, with Iran and Israel directly targeting each other for the first time in April. The talks have not achieved a breakthrough, with Hamas claiming that Israel has "set new conditions for a ceasefire" and "is still procrastinating." The group also accused the US administration of President Joe Biden of "planting false hope by talking about an imminent agreement for electoral purposes." One key sticking point in the continuing talks mediated by the US, Egypt and Qatar is Netanyahu's insistence on the Israeli presence in the so-called Philadelphi Corridor, a narrow stretch of land along Gaza's southern border with Egypt. By Bachar Halabi Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
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