Exxon Ends Major Drilling Campaign In Brazil After Failing To Find Oil

By Tsvetana Paraskova - Apr 05, 2023

After years of failing to make a major oil discovery offshore Brazil, ExxonMobil has ended a major drilling campaign there, but hasn't ruled out further exploration in the country, The Wall Street Journal reported on Wednesday, citing sources with knowledge of the plans.

Exxon, the first oil and gas company to set up operations in Brazil in 1912 under the name of Standard Oil Company of Brazil, bought deepwater acreage back in 2017, hoping to find oil in the prolific offshore basins where other majors and Brazilian state oil firm Petrobras have found huge oil reserves.

Exxon, however, hasn’t been successful in its years-long exploration campaign and has ended that campaign, according to the Journal’s sources.

In 2021, Exxon drilled two wells in the Opal and Tita blocks. According to Brazilian oil industry regulator ANP, Exxon found traces of oil and gas in the Tita block, Bnamericas reported in November 2021. Exxon paid the equivalent of $560 million to secure a majority stake in the block in a tender held in 2018.  

Exxon and partners have spent $4 billion on securing drilling rights in blocks offshore Brazil in tenders over the past five years. Yet, the supermajor has not made that one major discovery that would lead to sanctioning a project to pump oil.  

The drilling setback is rare for Exxon, which struck so much oil offshore Guyana, which borders Brazil to the north, that it helped make it the latest oil-producing and oil-exporting nation in late 2019.

Despite the end of the Brazilian drilling campaign, Exxon has not given up on exploration offshore the country.

“We continue to work with our co-venturers to analyze the data acquired from the extensive drilling program to assess the potential for future exploration activities in those blocks,” Exxon’s spokeswoman Michelle Gray told the Journal. 

In December, Exxon said in its latest corporate plan that more than 70% of capital investments by 2027 would be deployed in strategic developments in the U.S. Permian Basin, Guyana, Brazil, and LNG projects around the world.  

By Tsvetana Paraskova for Oilprice.com

Another Russian Energy Oligarch Dies Under Mysterious Circumstances

By Julianne Geiger - Apr 05, 2023

It’s a bad time to be an energy-related Russian oligarch with yet another mysterious death.

The body of Igor Shkurko, age 49, was found in his cell yesterday in a Yakutsk detention center. Shkurko was the First Deputy General Director/Chief Engineer of the Russian energy company Yakutskenergo and had been accused of taking a £5,000 bribe—an allegation that Shkurko denied. Russian authorities have so far proffered no explanation for his death, although they stated that there were no signs of “criminal death.”

Shkurko was also a member of the Putin-affiliated United Russia political party, with his membership suspended following the bribery allegations.

Shkurko’s death is just one in a string of Russian oligarchs that have died under mysterious circumstances since Russia’s invasion of Ukraine—many of them energy-related oligarchs.

In early 2022, Vladislav Avayev, former Kremlin official and vice president at Russian bank Gazprombank—the bank at the center of Russia’s rubles-for-gas payment scheme—was found dead in his Moscow apartment. Authorities said he killed his wife and daughter and then himself.

Days later, Novatek’s Sergey Protosenya and his family were found dead in Spain. Authorities said Protosenya hanged himself after stabbing his mother and daughter.

Leonid Shulman and Alexander Tyulyakov—former Gazprom executives—were also found dead in 2022. Both had left suicide notes.

In May, the death toll continued to mount with perhaps the strangest death yet, with former Lukoil board member and executive Alexandr Subbotin dying from cardiac arrest after allegedly willfully ingesting toad poison administered by a local shaman to alleviate a hangover.

Russian oil tycoon Mikhail Waford was also found hanged in March.

In September, Lukoil’s chairman Ravil Maganov died after falling out of his hospital window. A TASS news outlet source said that he took his own life by jumping out of the window.

To date, no official link has been found between these Russian energy oligarch deaths.

By Julianne Geiger for Oilprice.com

TIT 4 TAT

China Considers Prohibiting Exports Of Rare Earth Magnet Technology To The U.S.

By ZeroHedge - Apr 05, 2023

If China thought the trade war with Trump was bad, little did they know how much worse it would get under Joe "Big Guy" Biden.

As Rabobank's Michael Every wrote this morning, "don’t forget President Biden is already running a US trade policy far more protectionist than his predecessor’s" and the latest example of that came this morning when Japan decided to join United States and the Netherlands in restricting exports of chipmaking gear to China, as the cold chip war between China and the west enters an exciting new phase.

Of course, Beijing wasn't going to just sit there and do nothing as the US piled sanction upon sanction in hopes of sending China back into the stone age, and many expected that China would retaliate by squeezing the west where it had the most leverage, namely by limiting exports of another key tech supply-chain product: rare earth metals, and where China is the world's dominant producer.

Well, it appears they were right because as the Nikkei reports, China is considering "prohibiting exports of certain rare-earth magnet technology in a move that would counter the U.S.'s advantage in the high-tech arena." To do this, officials will file amendments to a technology export restriction list, which was last updated in 2020. In total, there are 43 amendments or additions in the draft list first announced in December by the commerce and technology ministries. Officials have finished taking public comments from experts, and the changes are expected to go into force this year.

The revisions would "either ban or restrict exports of technology to process and refine rare-earth elements. There are also proposed provisions that would prohibit or limit exports of alloy tech for making high-performance magnets derived from rare earths."

As regular readers know, high performance magnets are used in a wide range of applications, such as motors for electric vehicles and various high-tech military devices.

The last time China suspended exports of rare earths, was in 2010 when it halted shipments to Japan following tensions surrounding the Japan-administered Senkaku Islands, which Beijing claims and calls the Diaoyu. Japan specializes in making high-performance magnets from rare earths while the U.S. produces products that use the magnets. That episode led to a heightened sense of alarm in Japan and the U.S. on the economic security front.

Since then, Washington has moved to forge a rare-earth supply chain on U.S. soil. And while China's share of all rare earths produced globally dropped to roughly 70% last year from about 90% a decade earlier, according to the U.S. Geological Survey, China still remains the dominant producer of rare earths.

Furthermore, China still holds a tight grip on processing rare earths. Ironically, most rare earths extracted in the U.S. go to China for refining before being shipped back to the U.S. Good luck with that going forward.

Understandably, amid the heightened China-U.S. tensions, both Washington and Tokyo are developing rare-earth supply chains that are less dependent on China. The two countries are sharply restricting exports of advanced semiconductor technology to China with the aim of blunting the nation's rise in the high-tech field.

The Chinese government, meanwhile, is looking to turn the country into a high-tech manufacturing superpower that can compete with the U.S. Because China is behind when it comes to advanced semiconductors, "they're likely going to use rare earths as a bargaining chip since rare earths are a weak point for Japan and the U.S." said a source in the resources industry.

"Japan intends to endeavor to strengthen supply chains for critical minerals and other commodities," Japanese Chief Cabinet Secretary Hirokazu Matsuno told reporters Wednesday. "We'll continue to closely monitor the institutional impact from China," Matsuno added.

By Zerohedge.com

Canadian Oil Is Top Choice Among Oil Importers

By Charles Kennedy - Apr 05, 2023

When it comes to where the world gets its oil, a new global poll shows that importers favor Canadian crude, the majority’s top choice for reasons that are both democratic and environmental. 

Some 24,000 people surveyed across 28 countries put Canada at the top of the list of preferred oil suppliers, citing the reputation and reliability of a country so far removed from any conflict zones or risky geopolitical maneuverings. 

“That really reflects the reputation our country has as a place that does things the right way, not just producing oil and gas, but all the other elements of environment, social and governance considerations,” Global News cited Richard Masson, chair of the World Petroleum Council in Canada, as saying. 

Canada was chosen as preferred supplier by 55% of respondents, while Norway ranked second at 53%, followed by the U.S. at 52%.

The Middle East was favored by 40% of respondents, followed closely by Mexico, with Venezuela, Russia and China making up the bottom of the ranking, according to the Financial Post. 

Overall, 52% of those surveyed indicated that the peoples’ choice awards for oil supply generally go to Canada, Norway and the United States, which the report notes “have strong records of democracy and environmental safety”, rather than Russia or Saudi Arabia.

Geopolitical instability and an energy crisis has created a situation in which people are much more aware of the origins of their energy, Ipsos said in its report.  

“When we’re seeing a lot of conflict in areas that have traditionally produced oil, such as Russia, and concerns around countries such as China, the poll demonstrates that globally the world is looking to Canada and other countries like us to produce and supply the oil that they need,” Masson said. 

Still, it is a high-level ranking for a country that only produces around 4% of the world’s oil, most of which is sold to the United States. 

Exxon Launches New Unit At Beaumont Refinery

By Charles Kennedy - Apr 06, 2023

Exxon this week started a new crude oil distillation unit at its Beaumont refinery, boosting its daily capacity to almost 620,000 bpd.

This makes the Beaumont facility the second-largest refinery in the United States after Aramco’s Motiva, Reuters reported.

The new unit itself will have a capacity of 250,000 barrels of crude daily and will process light crude from the Permian.

A refinery expansion is a rarity in the United States where the trend in recent years has been to close refineries or convert them to biofuel production plants.

Since 2020, the United States’ total refining capacity has declined by as much as 1 million barrels daily due to seven refinery shutdowns, including facilities operated by Philips 66, Shell, and Marathon Petroleum.

This has crimped fuel production and contributed to a major draw in U.S. distillate stocks over the past year or so. Now, refining capacity is due for deeper cuts—luckily only temporarily.

Last year, as oil prices soared and fuel prices followed, many refineries did not shut down for regular maintenance, eager to take advantage of higher margins. This year, however, maintenance is a must, so there will be twice as many seasonal refinery closures in the U.S. as usual, Reuters reported in January.

Calculations showed that at least 15 refineries would have to shut down for between two and 11 weeks over the first five months of the year.

The expansion of the Exxon refinery in Beaumont will expand U.S. refining capacity considerably but this will also be only temporary. Later in the year, Lyondell Basell will close a refinery in Houston, basically offsetting the Exxon expansion. The Lyondell facility has a capacity of over 260,000 bpd.

Meanwhile, outside the U.S., some 2 million bpd in new refining capacity is due to come on stream this year.

Kurdistan Oil Flows Yet To Resume After Export Deal

By Tsvetana Paraskova - Apr 06, 2023

Most of Kurdistan’s large oilfields remain shut in as exports from the semi-autonomous region of Iraq to Turkey and the Turkish port of Ceyhan have yet to resume following the Iraq-Kurdistan deal on restarting oil exports, Reuters reported on Thursday, quoting anonymous sources with knowledge of the matter.

Kurdistan and the federal government of Iraq reached an agreement earlier this week to resume exports via an Iraq-Turkey pipeline and the port of Ceyhan on the Mediterranean.

Oil flows from Kurdistan were stopped at the end of March, forcing companies to either curtail or suspend production because of limited capacity at storage tanks.

Kurdistan’s crude oil exports – around 400,000 bpd shipped through an Iraqi-Turkey pipeline to Ceyhan and then on tankers to the international markets – were halted in late March by the federal government of Iraq.

A few days earlier, the International Chamber of Commerce ruled in favor of Iraq against Turkey in a dispute over crude flows from Kurdistan. Iraq argued that Turkey shouldn’t allow Kurdish oil exports via the Iraq-Turkey pipeline and Ceyhan without approval from the federal government of Iraq.

Now that an agreement between Iraq and Kurdistan is in place for the resumption of exports, Iraq is awaiting a response from Turkey, according to one of Reuters’ sources.

Pipeline operators have not yet received instructions to resume flows, another source told Reuters.

London-listed Gulf Keystone Petroleum, Norway-based DNO ASA, and Canada-based Forza Petroleum suspended output at their operated fields in Kurdistan early last week and have yet to announce the resumption of production.

“It is unfortunate it has come to this given the likely impact of a continuing supply disruption on oil prices and at a fragile time in global financial markets,” DNO’s Executive Chairman Bijan Mossavar-Rahmani said on March 29 when the company announced it had started an orderly shutdown of its operated oil fields in Kurdistan.

By Tsvetana Paraskova for Oilprice.com