It’s possible that I shall make an ass of myself. But in that case one can always get out of it with a little dialectic. I have, of course, so worded my proposition as to be right either way (K.Marx, Letter to F.Engels on the Indian Mutiny)
Friday, August 12, 2022
Glencore Announces $3 Billion Share Buyback As Profits Soar
Mining and commodities giant Glencore announced it would put $4.5bn back in shareholders pockets today after it reported record half-yearly profits of $18.9bn on the back of soaring metal prices and market volatility.
The group’s adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) rose to $18.92bn in the six months to June, compared with $8.7bn a year earlier.
Part of the return to shareholders will be made up of a bumper buyback programme of $3bn as bosses put excess cash to use.
It comes as prices for much of Glencore’s metals including thermal coal used in electricity production have reached record highs due to wild swings in the markets which have been exacerbated by war in Ukraine.
Bosses said today the volatility was likely to continue in the period ahead.
“Global macroeconomic and geopolitical events during the half created extraordinary energy market dislocation, volatility, risk, and supply disruption, resulting in record pricing for many coal and gas benchmarks and physical premia, underpinning a $10.3bnincrease in Group Adjusted EBITDA to $18.9bn,” chief executive Gary Nagle said today.
He added that with few short-term solutions to rebalance global energy markets, coal and LNG prices look “set to remain elevated” during the period ahead.
Permian’s Natural Gas Takeaway Capacity Set To Rise
U.S. pipeline operators and developers have recently announced five natural gas pipeline projects which are expected to increase the takeaway capacity from the Permian basin to demand centers near the U.S. Gulf Coast, the Energy Information Administration (EIA) said on Thursday.
Four newly announced projects and one optimization project under construction are set to boost takeaway capacity out of the Permian Basin by a combined 4.18 billion cubic feet per day (Bcf/d) over the next two years if they are completed as planned.
Of the four newly announced projects, three are capacity expansions of existing pipelines, while one is a new pipeline project which has reached a final investment decision (FID), the EIA says in its latest Natural Gas Pipeline Project Tracker.
The expansion projects include Kinder Morgan’s Gulf Coast Express Pipeline Expansion which will boost capacity by 0.57 Bcf/d to 2.55 Bcf/d and is planned to enter service in December 2023. Another Kinder Morgan project, the Permian Highway Pipeline Expansion, will also expand capacity, by 0.55 Bcf/d to 2.65 Bcf/d. The project is expected to enter service in November 2023. The third expansion is the Whistler Pipeline Capacity Expansion by WhiteWater and MPLX, expected to enter service in September 2023.
The new pipeline project is the Matterhorn Express Pipeline, planned to transport up to 2.5 Bcf/d of natural gas through approximately 490 miles of pipeline from Waha, Texas, to the Katy area near Houston, Texas.
Gas production in the Permian Basin is expected to increase by 2.3 Bcf/d in 2022 and an additional 1.4 Bcf/d in 2023, the EIA has estimated.
Increased takeaway capacity and production out of the Permian could further boost supply for U.S. LNG exports in the coming years.
In the first half of 2022, the United States became the world’s largest LNG exporter, thanks to high demand in Europe, high natural gas prices, and increased export capacity, the EIA said last week.
By Tsvetana Paraskova for Oilprice.com
Yemen’s Houthis Claim Saudi-Backed Coalition Looted $13B In Oil
Yemen’s Houthi-led government has accused the country’s Saudi-backed coalition forces of siphoning off $13 billion in Yemeni oil revenues over the past five years, with reports claiming that another $180 million in looted oil left the country this week on a Greek oil tanker.
In a tweet published by local media sources, Houthi National Negotiation Delegation official Abdul Malik Al-Ajri claimed that the $13 billion “looted” from Yemen’s oil revenues is based on figures from an OAPEC (Organization of Arab Petroleum Exporting Countries) and maritime traffic data.
Yemen has been embroiled in a civil conflict since 2014, when Houthi insurgents, backed by Iran, attempted to overthrow the Sunni government, taking over the capital and the country’s largest city. A coalition led by Saudi Arabia launched a counteroffensive in 2015, and the conflict has continued since and is considered a proxy war largely between Saudi Arabia and Iran. The Houthis now control most of Yemen’s north, while a four-month ceasefire deal is expiring.
Al-Ajri’s accusations were echoed in July by Yemeni Oil Company spokesman Issam Al-Mutawakkil, who claimed that Yemen’s oil revenues are diverted to the Saudi National Commercial Bank, depriving the country of its oil wealth. "Yemen as an oil producing nation is suffering the same as countries that don't possess any oil wealth", adding that "Yemen doesn't benefit from the crude oil revenues that are exported to the Saudi National Commercial Bank,” Al-Mutawakkill said.
Yemen produces oil in the provinces of Marib, Shabwa and Hadhramaut, and the revenues from those operations bypass Yemen’s Central Bank, diverted to accounts controlled by officials tied to the Saudi-backed coalition, he added.
On Thursday, the Yemen Press Agency, cited by the Middle East Monitor, alleged that Saudi coalition-backed sources had recently sold another two million barrels of Yemen’s Al-Masila crude worth $180 million at current prices, and is expected to be loaded this week on a Greek vessel at the port of Dhaba.
Also on Thursday, the United Nations announced that both sides in this conflict had agreed to extend a truce for two months, with the current four-month ceasefire deal coming to an end and sparking fears of a return to bloodshed.
By Charles Kennedy for Oilprice.com
Japan Asks Mitsui, Mitsubishi To Stay On In Crucial Sakhalin-2 Project
The Japanese industry ministry has asked Mitsui and Mitsubishi to "think positively" about their participation in the Russian Sakhalin-2 oil and gas project after the Russian government announced it would boost state ownership.
Reuters reports that industry minister Koichi Hagiuda today asked the two companies, which are minority shareholders in Sakhalin-2, to consider staying on, saying he was due to discuss the matter with a Mitsubishi executive in the coming days.
"The public and private sectors will work together to protect the interests of Japanese companies and ensure a stable supply of LNG," Hagiuda said.
A day earlier, Hagiuda told media that "The Sakhalin-2 project is extremely important for stable energy supply to Japan, and we will basically continue to maintain the stakes."
Japan is one of the biggest LNG importers in the world and gets about a tenth of the LNG it consumes from Russia.
Earlier this year, the Japanese industry minister said that the Sakhalin-1 and Sakhalin-2 projects "are essentially important for energy security because the projects allow Japan to procure supplies below the market price, especially amid current high energy prices."
In early July, Moscow said it would set up a new state-owned company to take over the assets and debt of the Sakhalin-2 consortium, with Gazprom to get a little over 50 percent of the new entity.
Shell, the third foreign minority shareholder in the project, has already announced it would be leaving it and is looking for buyers. The Japanese shareholders, however, were in no rush to leave.
"We continue to work on finding an acceptable arrangement that enables us to withdraw from our share in Sakhalin Energy in line with applicable legal requirements and project agreements," the supermajor said earlier this week, per Reuters.
Under the terms of a new decree announced earlier this month, Mitsui and Mitsubishi could claim their stakes in the new company within the next month.
The two companies said today they will cooperate with the Japanese government and with their business partners "to decide on whether or not they would join the new entity," Reuters reported.
Gulf of Mexico offshore oil producers are working to restart output after damages to a pipeline halted operations at seven platforms, with Reuters reporting that the pipeline could be replaced by the end of today. The Mars and Amberjack pipelines in the Gulf of Mexico that had shuttered earlier in the week could be restarted today, a Louisiana port official Chett Chiasson told Reuters on Friday. The shutdown of the Mars and Amberjack pipelines triggered platform shutdowns on Thursday from Shell, Equinor, and Chevron across seven platforms following a leak in the Fourchon booster station. An estimated 600,000 bpd of production has been halted, according to Reuters sources. Shell halted production at three offshore platforms in the Gulf of Mexico on Thursday following damage to a pipeline, shuttering Mars, Ursa and Olympus with a combined capacity of 410,000 barrels per day. Early on Friday, Chevron followed suit, shuttering three of its Gulf platforms with combined capacities of around 134,000 boepd. Chevron said on Friday that it was in the process of restarting those platforms. On Thursday, announcing the shutdown, Shell had indicated that the repairs would likely be completed on Friday, though no estimate was given for the resumption of production at the time. The shutdown potentially adds to the tight situation in the crude oil and refined products markets in the United States, which has been forced to tap into its Strategic Petroleum Reserve to bring prices down at the gas pumps. The United States is witnessing crude oil inventories that are 5% below the five-year average, with production now 900,000 bpd below its peak prior to the COVID pandemic. Crude oil prices were trading down 1.56% as of 1:25 EST on Friday.
At least two other oil majors shuttered their Gulf of Mexico platforms on Friday following a leak in the Fourchon booster station, shutting down the flow of crude through the Amberjack Pipelines.
On Thursday, Shell halted production at its Mars, Ursa, and Olympus platforms, which can produce 410,000 bpd. Shell did not provide an estimate for when the platforms would resume production.
On Friday, Shell was joined by Chevron, which shuttered Jack/St. Malo (57,000 boepd), Tahiti, and Bigfoot (75,000 bpd) platforms, which also feed into the Amberjack lines. Equinor joined Shell and Chevron on Friday, shuttering its Titan platform—a minor platform in the Gulf of Mexico that typically produces just 2,000 boepd.
The Fourchon booster station, which leaked two barrels of oil before being shut down, is expected to be repaired later today. It is not yet clear when platforms will resume production.
The shutdown, which now spans seven platforms in the Gulf of Mexico, comes at a time when the United States is battling high retail gasoline prices and tight crude oil and refined products markets. Already the United States has tapped into its Strategic Petroleum Reserve to the tune of 800,000 and 1 million barrels per day to alleviate the prices at the pump.
Crude oil inventories in the United States remain 5% below the five-year average. U.S. crude oil production currently sits at 12.2 million barrels per day, 900,000 bpd shy of its pre-Covid peak.
Crude oil prices were trading down on Friday, but still up week over week—a reality that could arrest the pattern of falling retail gasoline prices in the United States. The Biden administration has lobbied OPEC and Saudi Arabia specifically to raise oil production in the runup to midterm elections.
By Julianne Geiger for Oilprice.com
Shell Halts Oil Output At Three Gulf Of Mexico Platforms
Shell has halted production at three of its deepwater platforms in the Gulf of Mexico, Shell said in a statement to Reuters on Thursday.
Shell has halted production at its Mars, Ursa, and Olympus platforms, which combined can produce 410,000 barrels of Mars sour crude oil per day, after a leak shut in the Mars and Amberjack Pipelines that connect to the platforms. Shell has not provided a timetable for restart, although the company said it was evaluating "alternative flow paths" to bring the oil to shore through other pipeline routes.
"Shell is coordinating with local authorities and mobilizing personnel and equipment to assess the situation," Shell said in a statement.
The leak was detected at the Fourchon booster station, which increases the pressure and the flow of crude on its way to the Clovelly Dome Storage Terminal in LOOP. The Clovelly Dome terminal stores crude oil in underground salt caverns before heading to a refinery. The terminal is capable of holding 40 million barrels.
The United States is already releasing between 800,000 and 1 million barrels of crude oil per day from its Strategic Petroleum Reserves in an attempt to alleviate the tight market and bring down prices. Crude oil inventories in the United States are 5% below the five-year average, with crude oil production in the United States failing to return to pre-Covid levels.
Current crude oil production in the United States is at 12.2 million barrels per day, compared to the pre-Covid peak of 13.1 million bpd reached in March 2020.
