Shots Fired As Protesters Fail To Stop Oil Tanker From Loading In Libya

By Charles Kennedy - May 19, 2022,

Protesters on Thursday fired shots outside Libya’s Hariga port in a failed attempt to stop the loading of 1 million barrels of crude oil bound for the UK, in an incident that comes just one day after Libyan prime minister-designate Fathi Bashagha entered Tripoli in a failed attempt to assume control of the government from his rival.

According to Hariga port authorities in Tobruk, cited by Libya Update, protesters fired shots after being prevented from entering the port after the docking of a tanker scheduled to be loaded with 1 million barrels of oil. 

The tanker was not hit in the crossfire. No injuries were reported, and the tanker–the British Ridgebury–successfully departed the port on Thursday. 

Libya has been suffering from a loss of some 600,000 bpd of production and exports after protests led the National Oil Company (NOC) to declare force majeure on the Al-Sharara oilfield, the country’s largest, along with the El Feel oilfield and two key export terminals. 

Hariga port has continued to operate normally. 

Tensions rose on Wednesday when Bashagha entered Tripoli with his militia forces providing security, prompting an armed response from militias loyal to current interim prime minister Abdul Hamid Dbeibah, who has refused to step down and hand over power to his parliament-backed rival. 

Bashagha retreated from Tripoli only hours after entering and said later on Wednesday that his new government would set up in Sirte, halfway between the powers in the east and the west. Sirte is also the gateway to the ‘Oil Crescent', and this move potentially represents a reminder by Bashagha that his militias control this region. 

The rivalry is between two legislative branches of government in Libya, the Tobruk-based parliament in the east, which has appointed Bashagha the new prime minister, and the high council of state in the west, which supports Dbeibah. The east controls much of Libya’s ‘Oil Crescent’ and the west controls the Central Bank in Tripoli. 

Libyan Oil Deadlocked As Clashes Force PM-Designate Out of Tripoli

By Charles Kennedy - May 17, 2022

Libyan prime minister-designate Fathi Bashagha was forced out of the capital Tripoli on Tuesday by armed militias backed by current interim Prime Minister Adbdul Hamid Dbeibah, who refuses to step down and cede power as a significant amount of the country’s oil production capacity remains shut-in.

Armed clashes shook Tripoli on Tuesday as Bashagha, backed by the eastern-based parliament, entered the capital to assume power from Dbeibah, forcing the prime minister-designate to leave the city only hours after entering.

Clashes erupted when Bashagha entered the city with militia forces, prompting a response from Dbeibah’s militias.

One staff member of the Italian embassy was wounded during the clashes.

The rival prime ministers blame each other for starting the clashes, with Bashagha calling the Dbeibah government “hysterical”.

“Despite our peaceful entry to Tripoli, without use of violence and force of arms, and our reception by honorable people of Tripoli, we were surprised by dangerous military escalation carried out by armed groups affiliated with the outgoing government,” Bashagha tweeted.

“We are not seeking authority, but rather determined to build democratic civil state with elected authority, state governed by law, not governed by logic of violence and chaos sponsored by the outgoing government,” the new Prime Minister added.

The United Nations and the United States have urged calm.

“We urge all armed groups to refrain from violence and for political leaders to recognize that seizing or retaining power through violence will only hurt the people of Libya,” the U.S. Embassy in Libya said in a statement.

Some 600,000 bpd of Libyan oil production remains shut-in due to rivalry between Bashagha and Dbeibah over the distribution of oil revenues. The Libyan National OIl Company (NOC) was forced in mid-April to declare force majeure on two oilfields, including its largest–Al Sharara–as well as on key export terminals. Libyan production is now hovering around 800,00 bpd.

Bashagha holds the key to resuming oil production. However, with no agreements forthcoming over oil revenues, without taking Tripoli and controlling the central bank, the prime minister-designate cannot force a new revenue distribution setup. 

How Allegations Of Bullying And Abuse Caused A Slump In Canadian Oil Trading

By Charles Kennedy - May 19, 2022

Trading activity on one Canadian heavy crude contract dropped significantly in mid-April when most brokers at Calgary-based NE2 Group resigned, and the firm is now being sued for alleged workplace harassment and bullying, Bloomberg reported on Thursday, citing sources with knowledge of the issue.

NE2 Group's trading activities have played a key role in the price-setting used to determine the benchmark prices of several crude grades from Canada as the firm handled enough volume of futures trades. After a mass exodus of employees around Easter weekend, when an estimated two-thirds of the company's brokers resigned, the number of open interest on Western Canadian Select (WCS) on CME Group slumped from around 10,000 contracts in the middle of April to around 7,000 contracts in early May and to 6,000 contracts on May 17, according to data compiled by Bloomberg.

After the resignations, traders were concerned that NE2 Group would not have the staff to ensure accurate prices. Some of those traders exited at least one CME contract, they told Bloomberg.

The resignations took place more or less around the time when the firm was paying out annual bonuses after a very profitable year, Bloomberg's sources said. 

The reasons for the resignations are generally the same as the allegations that Mark Bennett, NE2's former vice-president of North American energy, details in a lawsuit against the firm. The lawsuit alleges that president and owner Timothy Gunn bullied staff and physically and verbally abused employees and clients.

Bennett, who declined to comment for Bloomberg, says he was wrongfully dismissed in February after raising concerns about the "toxic work environment" and "unilateral changes to employee compensation."

"As we explore the allegations made in this claim, we expect additional facts will be revealed. NE2 will openly and transparently address these allegations through the Court process," the company said in a statement carried by Bloomberg.

Refinery Explosion And Fire Threatens Supply In South Korea

By Tsvetana Paraskova - May 19, 2022

At least eight people were injured in an explosion and a fire on Thursday at a major 580,000-bpd refinery in South Korea, local news agency Yonhap reports.

The fire and the possible shutdown of a large refinery come at a time when global refining margins are sky-high amid insufficient refinery capacity worldwide.

Refinery capacity globally is now lower than before the pandemic after some refineries closed permanently after COVID crippled fuel demand in early 2020.

Firefighters received a report of an explosion at the refinery in the Onsan Industrial Complex in Ulsan owned by S-Oil shortly before 9 p.m. local time on Thursday. The explosion took place during the processing of crude oil into petroleum, Yonhap quoted authorities as saying.  

The Onsan refinery has three crude distillation units with a combined capacity of 580,000 barrels per day (bpd), according to Argus, which reports that market participants say a full shutdown of the refinery is likely.

Firefighters at the scene appeared to be having trouble controlling the fire, per local reports quoted by The Korea Herald.

The eight people who sustained injuries were rushed to hospital and are being treated for second-degree burns to the face and palms, authorities told The Korea Herald.

Globally, around 3 million bpd of refining capacity has been shut down since early 2020, according to estimates from Wood Mackenzie. 

“For companies with aging refineries that required significant investment to remain viable, it has been difficult to justify the spending in the face of a weak demand outlook, particularly for gasoline as a result of increased fuel efficiency and the rise of electric vehicles,” Ed Crooks, Vice-Chair, Americas, at WoodMac wrote last week.

At the same time, new refining capacity in the Middle East and Asia is only now entering the market after being delayed, in part because of the pandemic and weak refining margins, Crooks noted.  

Americans Drive More Than Pre-Covid Despite Record Gas Prices

By Tsvetana Paraskova - May 20, 2022, 

Americans are driving more this year than in the same period in 2019, the last ‘normal’ year before COVID, despite the fact that U.S. gasoline prices have been soaring and hitting records every day in the past week, data from the Federal Highway Administration show.

Travel on all roads and streets rose to 277.4 billion vehicle miles, up by 2.9% in March 2022 compared with March 2021, according to the latest data. The Travel in Vehicle Miles in March was higher not only compared to 2021 and 2020, but also to 2019, meaning that Americans are driving more than before the pandemic, the data showed.

Year to date in March, cumulative travel for 2022 rose by 5.6% to 753.7 billion vehicle miles of travel, and this is also slightly higher than the 753.1 billion vehicle miles in the first quarter of 2019. The past 12 months of travel data also shows higher mileage than the 12-month period that ended in March 2019.

U.S. drivers are back on the roads and streets despite the fact that it was in March this year when gasoline prices started soaring after crude prices hit $100 per barrel following the Russian invasion of Ukraine.

These days, gasoline prices are beating all-time high records every day. On Friday, May 20, the average cost nationwide for a gallon of regular gasoline was $4.593—an all-time high and up from $4.589 on May 19, and up from $3.043 on this day last year, per AAA data.

Still, U.S. gasoline demand is not going down despite record-high gasoline prices, and signs point to further rising demand as the summer driving season begins with the Memorial Day weekend, despite what will be the most expensive holiday weekend at the pump ever.

GasBuddy released its annual summer travel survey on Thursday, suggesting that the percentage of Americans planning on road trips this summer has increased over last year, indicating that crude oil demand destruction—at least from the transportation sector—isn’t on the horizon even at today’s high gasoline prices.  

Banks Rush To Assure Texas They Like Oil And Gas

By Irina Slav - May 20, 2022, 

More than two dozen banks and other financial firms have declared themselves as non-hostile to the Texas energy industry after the state went after the financial industry threatening to shut off its access to the Texas financial system.

In March, Texas Comptroller Glenn Hager asked 19 financial companies, including the world’s biggest asset manager and some of the top U.S. banks, whether they are boycotting the fossil fuel industry as America’s largest oil-producing state seeks to clarify the financial institutions’ fossil fuel investment policies and procedures.

“A company that fails to provide clarification 60 days after receiving this letter will be presumed to be boycotting energy companies,” Hager said.

It seems the financial firms have wasted no time in responding to the letter, with more than 20 of them doing so before the deadline given them by the Texas Comptroller, Bloomberg reported, citing their responses.

One small asset manager based in Dallas actually responded with “Hell no”, the report said.

The other companies targeted by the Texas authorities include BlackRock, JP Morgan, Wells Fargo, and HSBC.

“We would like to note at the outset that we provide financial products and services to many companies that engage in the exploration, production, utilization, transportation, sale, or manufacturing of fossil fuel-based energy (“energy companies”), and intend to do so in the future,” wrote JP Morgan executive vice president and general counsel Stacey Friedman, as quoted by Bloomberg.

HSBC wrote that it “does not consider itself to be a company which ‘boycotts’ financing of energy companies,” and proceeded to explain that “HSBC believes it can have the biggest impact on climate action by actively engaging with its clients on their transition, focusing on the need for robust and credible transition plans, and by providing the financing and advisory solutions that help unlock the investments needed.” 

By Irina Slav for Oilprice.com

Sanctions Force Foreign Executives At Rosneft To Quit

By Tsvetana Paraskova - May 20, 2022,

European-born executives at Rosneft quit the Russian oil giant days before the EU sanctions banning European citizens from working at the state-held Russian firm entered into force, Reuters reported on Friday, quoting six sources with knowledge of the matter.

The departure of the five now-former executives at Rosneft could stall the development plans of the Russian oil giant and the ambition of its CEO, Igor Sechin, to have a multi-national executive team to lead various divisions at the company.  

Rosneft’s vice presidents Eric Liron, Zeljko Runje, Didier Casimiro, Avril Conroy, and Otabek Karimov—who are citizens of Belgium, France, Croatia, and Uzbekistan—resigned from Rosneft days before the sanctions against Russia and dealings with Russian oil firms entered into force on May 15, according to Reuters’ sources.

All these managers joined Rosneft either in 2012 or 2013, including Croatian Runje, who moved to Rosneft from Exxon’s Russian branch ten years ago.

The sanctions and the departure of foreign executives are expected to slow the development growth at Russia’s largest oil producer, Rosneft, and its ongoing projects, especially those for hard-to-recover oil deposits, which need foreign equipment and expertise, which Russia is now losing because of the sanctions.

Russia’s oil production is already falling and will continue dropping in the coming months and years as Moscow will not be able to redirect to China and India all the volumes it is losing in the West, analysts say. Sanctions and embargoes over Putin’s war in Ukraine will cripple Russian oil production for years to come. Restrictions, combined with the lack of access to Western technology to pump harder-to-recover oil and enhance production from maturing wells will hit Russia’s oil industry not only in the near term but also in the long term, analysts say. Many wells may never be revived to pump crude again, they add.  

By Tsvetana Paraskova for Oilprice.com

Heat Wave Tests the Limits Of Texas Power Grid

By Julianne Geiger - May 20, 2022, 

Power demand in Texas amid the current heatwave reached a new record on Thursday and was set to break that record on Friday.

The Electric Reliability Council of Texas, or ERCOT, reported that conditions on Friday were normal, so far.

But the grid’s capabilities in times of extreme weather have been again called into question as last week, ERCOT asked customers to scale back their energy usage as several power plants in the state shut down, causing prices to soar to more than $4,000 / MWh. ERCOT has maintained that it was merely a proactive request and not an emergency alert.

ERCOT has devoted much time and effort to reassuring the public that the lights will stay on this summer, and that its generation capacity is sufficient to fulfill the lofty demands throughout the summer months under normal conditions and under most extreme weather and grid scenarios.

Earlier in May, there was a spattering of outages in Texas as the heatwave took hold.

ERCOT has also asked power generators to defer scheduled maintenance—scheduled maintenance that is typically completed in the runup to the hot months.

Critics of ERCOT—which grew in number after the horrific Texas freeze that resulted in blackouts that claimed the lives of 246 people—argue that calls for decreased power usage in the middle of May, well below typical peak summer temperatures, is a worrisome sign.

Several grid operators have warned this summer will see electricity shortages as they anticipate they will be unable to cope with the call for power. California warned that it would need to produce more electricity if it is to avoid blackouts, and The Midcontinent Independent System Operator (MISO), the nonprofit charged with operating the power grid in 15 U.S. states and Manitoba, issued a warning about outages during the summer.

The WSJ cited grid operators as a warning recently that the pace of progress in battery storage capacity development was too slow to compensate for the closures of fossil fuel power plants in favor of wind and solar installations.

By Julianne Geiger for Oilprice.com

If Tesla isn’t good enough for an ESG index, then who is?

Bloomberg News | May 19, 2022 | 

The first Tesla Model S. (Image by Steve Jurvetson, Flickr).

Tesla Inc.’s removal this week from an industry benchmark index is raising new questions about what ESG actually means to investors.


The strategy, widely seen as favoring industries ostensibly interested in sustainability (of the environmental, social and governance sort) started about two decades ago as a way to protect investors from risks tied to things like global warming, labor violations and discrimination. Since then, it’s morphed into a $35 trillion industry of its own and—as the market exploded—sown confusion about what metrics should be used to gauge it, and fury over the tsunami of what’s come to be called greenwashing.

Enter Tesla. While many would agree few automakers have done more than Elon Musk’s company in the global shift away from fossil fuels, the company’s management and workplace issues have been at times problematic. So much so that S&P Dow Jones Indices, while acknowledging Tesla’s environmental prowess, nevertheless decided to remove the electric vehicle maker from the S&P 500 ESG Index over safety and labor issues.

“How can a company whose self-declared mission is to ‘accelerate the world’s transition to sustainable energy’ not make the cut in an ESG index?” wrote Margaret Dorn, senior director and head of ESG indexes for S&P Dow Jones in North America, in a blog post. Answering her own question, she said “there are many reasons,” including that Tesla “has fallen behind its peers when examined through a wider ESG lens.”

Dorn focused on social and governance factors at the company, which had a negative impact on its overall ESG score. She singled out two events centered around allegations of racial discrimination and poor working conditions at Tesla’s factory in Fremont, California, as well as its handling of a U.S. National Highway Traffic Safety Administration investigation after multiple deaths and injuries were linked to its “autopilot” function.

Academics like Todd Cort of Yale University agree with Dorn. The S&P methodology focuses on corporate performance, and Tesla’s “management systems and controls are still pretty undeveloped” relative to industry leaders, he said.

But investors including Cathie Wood of ARK Investment Management have strenuously disagreed. In a post on Twitter, she called S&P’s decision “ridiculous.” It’s “not worthy of any other response.”

Paul Watchman, an industry consultant who wrote a seminal report in the mid-2000s that helped spur ESG investing, said Tesla should be part of ESG indexes. “Not all breaches of ESG are equal, and this assessment shows just how warped the S&P assessment is,” he said.

Tesla does have multiple problems related to corporate governance and health and safety, but Watchman said they should be viewed in context. “However relevant these failures and shortcomings may be, they aren’t nearly as bad other companies.” Fossil fuel giants being one example, he said.

MSCI Inc., the leading provider of ESG ratings, still includes Tesla (as well as Exxon Mobil Corp.) in its more widely tracked ESG-focused indexes, adding to the confusion about what ESG actually is. (The methodologies MSCI and S&P use for their ESG indexes are very similar.)

MSCI said its ESG-focused indexes are designed to “maximize their exposure to positive ESG factors” while “exhibiting risk and return characteristics” similar to the overall market. Companies with links to the tobacco, “controversial” weapons, civilian firearms, oil sands and thermal coal are excluded from the indexes.

S&P Dow Jones Indices said its S&P 500 ESG Index is “a broad-based, market-cap-weighted index that’s designed to measure the performance of securities meeting sustainability criteria, while maintaining similar overall industry weights as the S&P 500.” The index also excludes companies engaged in the thermal coal, tobacco and controversial weapons industries.

“The market continues to conflate ESG with sustainability, and you’re certainly seeing that play out here.”

From a market standpoint, ESG indexes matter because investors have poured $410 billion into passively run ESG-labeled funds, according to data compiled by Bloomberg Intelligence. “The market continues to conflate ESG with sustainability, and you’re certainly seeing that play out here,” said Rob Du Boff, senior ESG analyst at BI. “Our ETF team likes to note Tesla is the ultimate Rorschach test for ESG investors.”

Tesla has made the world a greener place with their innovative electric vehicles, and investors have been rewarded as a result, Du Boff said. But they’ve also been stung by Musk’s tussles with the US Securities and Exchange Commission and his recent takeover approach to Twitter Inc., he said.

“Turns out investors should have been paying closer attention to signs of poor corporate governance,” Du Boff said.

And that brings the conversation back to trying to define ESG. Hours after it emerged that S&P Dow Jones had expelled Tesla, Shaheen Contractor and Eric Balchunas from BI published a note with this headline: “Is Tesla ESG? Many Funds Think So Even as S&P ESG Index Drops It.”

Contractor and Balchunas said their analysis ranks Tesla 46th in the S&P 500 for inclusion in ESG-focused funds. “The automaker’s ESG status remains among the most debated for any stock,” they wrote.

(By Tim Quinson and Saijel Kishan)

Woodside shareholders back BHP petroleum merger

Cecilia Jamasmie | May 19, 2022 | 

Pluto LNG processes gas from the offshore Pluto and Xena gas fields in Western Australia. (Image courtesy of Woodside.)

Woodside Petroleum’s (ASX: WPL) shareholders have almost unanimously backed a merger with BHP’s (ASX, LON, NYSE: BHP) petroleum division, cementing the world’s top miner’s exit from the oil and gas industry amid increasing global pressure to curb emissions.


The 98.66% approval for the all-stock deal with BHP at a shareholder vote in Perth creates a top ten global independent oil and gas producer worth $40 billion.

The companies expect to complete the merger on June 1, BHP said in a separate statement. The business combination will give BHP investors a 48% stake in the expanded Woodside, which will have assets in Australia, the United States, Mexico, Senegal and Trinidad.

“The merger is an opportunity for Woodside to increase its contribution to the world’s growing energy needs and build the scale, resilience and diversity to thrive through the energy transition,” Chief Executive Officer Meg O’Neill told shareholders.

Chairman Richard Goyder acknowledged there was “work to be done” on the climate report, which received an almost 49% rejection from environmental Proxy adviser CGI Glass Lewis, saying that Woodside lagged behind its peers and appeared to “overly rely on carbon offsets” to meet emissions targets.

“Our shareholders’ views are important to us and will continue to inform our approach as it evolves,” Goyder said, but declined to guarantee the company would ever again put a climate report to the AGM.

BHP’s oil and gas assets will boost Woodside’s annual output to 200 million barrels of oil equivalent. That is almost double the combined volume produced by rivals Santos (ASX: STO) and Oil Search (ASX: OSH), which merged in December last year.