Thursday, January 31, 2019

New avenues for 'crude' analysis

The Oilholic has had a hectic start to 2019 for sure, even though the crude market has behaved pretty predictably in January, having recovered ground it lost towards the end of 2019.

That's because yours truly has started providing insight on a regular basis to three more avenues alongside Forbes. These include The Energy Post and Energy Post Weekly, industry recruitment and insight portal Rigzone, and London-based financial start-up ReachX.

Here are a few snippets:
  • Energy Post: Commentary on energy sector investment in blockchain - January 23, 2019 (Behind Paywall / Subscribers' login)
  • Rigzone: Commentary on direction of the oil price in 2019 - January 28, 2019
  • ReachX: Podcast with Paul Welch, CEO of North Africa focussed independent upstart SDX Energy - January 22, 2019

Plenty more to follow. But that's all for the moment folks! Keep reading, keep it crude!

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© Gaurav Sharma 2019. 

Friday, January 11, 2019

Moroccan perspective on natural gas market

The current situation in the natural gas market has several variables as we enter the first quarter of 2019. But before anything else, what price levels we are at would be a good conversation starter. Using the US Henry Hub as a benchmark, it remains stuck around $3/mmbtu. For Europe, adding an average $2+ mmbtu would be about par.

After a late December collapse, natural gas prices were seemingly being held down by higher than normal winter temperatures, before a big freeze hits several parts of Europe and North America. As for the market itself, most of the chatter these days is about how US LNG - both small and large scale - will add to the global supply pool with the country's capacity tipped to cap 40 million tonnes per annum (tpa) in 2019. 

As the Americans increasingly tussle with other major LNG exporters such as Qatar, Malaysia and Australia for a slice of the global market, Morocco - a net energy importer, albeit with substantial natural gas reserves - is in a reasonably positive position. 

The country has proven reserves of some 1.44 billion cubic meters (bcf) of natural gas, according to the CIA World Factbook, but domestic production is not even a tenth of that volume. Rabat is attempting to alter that dynamic via several independent upstarts led by SDX Energy, and accompanied by the likes of Sound Energy (which recently said it would focus exclusively on Morocco) and Chariot Oil & Gas. 

Seeing potential, the government is offering attractive terms to exploration and production companies (refer to the Oilholic's previous post on the subject). But until Morocco meaningfully discovers its domestic production mojo, the US shale gas bonanza couldn't have come at a more opportune time, as Rabat looks ensure security of supply over the medium-term. In October 2018, Energy Minister Aziz Rabbah confirmed that Morocco is preparing to invite bids for a LNG project in Jorf Lasfar worth $4.5 billion.

It includes construction of a jetty, terminal, pipelines and gas-fired power plants, ultimately leading to the import of up to 7 billion cubic metres of gas by 2025, in a very competitive global gas buyers' market. 

The announcement follows state-owned power utility ONEE announcement in 2017 that it had picked HSBC Middle East as a financial adviser for its plan to boost imports of LNG. The scenario provides plenty of talking points, which is why the Oilholic is heading to Morocco in February to speak and deliberate at the 2nd Morocco Oil & Gas Summit in Marrakesh, February 6-7, 2019, being organised by IN-VR Oil & Gas

It's all set up nicely, and this blogger early awaits the summit. But that’s all for the moment folks! Keep reading, keep it ‘crude’!

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© Gaurav Sharma 2019. Photos: Cairn Energy / IN-VR Oil & Gas

Monday, December 31, 2018

Year-end benchmark Friday closing levels chart

Here's how the 2018 oil market shaped up (click to enlarge chart below), and some thoughts on what OPEC's shale dilemma means for this crude world via Forbes (click here).


That's all for 2018 folks, lets see what 2019 brings. Keep reading, keep it 'crude'!

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To email: gaurav.sharma@oilholicssynonymous.com

Chart: 2018 Friday closing levels of oil benchmarks © Gaurav Sharma 2018. 

Wednesday, December 19, 2018

Moroccan promise: Emerging oil & gas market beckons

By any stretch of the imagination 2018 is coming to a very volatile end for the oil and gas markets. The month of November saw three declines of over 7% in a short space of 10 sessions, and the OPEC summit in December has (so far) failed to calm the market. Of course, oil and gas investment has never been about the here and now, but rather about the longer term. 

Wider market expectations are that oil, using Brent as benchmark, will continue to oscillate in the $50-70 per barrel range, while natural gas markets will benefit over the medium-term courtesy of the power sector's need for a bridging fuel in its inexorable march to a low-carbon future. Among investment hubs on the market's radar is Morocco. The country's Office of Hydrocarbons and Mining (ONHYM) is optimistic about oil and gas reserves both onshore and offshore. 

Furthermore, as a country of around 40 million people, Morocco is also a healthy energy consumption market that imports over 90% of its hydrocarbon needs. Align the two, and upstream and midstream opportunities become clearer. 

Unsurprisingly, as is often the case with nascent energy hubs, independent exploration and production (E&P) companies are leading the Upstream charge – including London-listed ones such as SDX Energy, Chariot Oil & Gas and Europa. That said majors such as Eni are also rubbing shoulders with the upstarts.   

With an aim of reconciling thoughts over global market permutations and ongoing developments in the Moroccan oil and gas sector, the Oilholic is delighted to be speaking at the 2nd Morocco Oil & Gas Summit in Marrakesh, February 6-7, 2019, being organised by IN-VR Oil & Gas

Holistically speaking, Rabat – given its eagerness to develop the domestic oil & gas industry – offers some some of the most cost competitive fiscal and commercial terms in the global market. ONHYM, which by Moroccan law is a partner in the licences usually via 25% general carried interest in phase one explorations, offers reliable partnerships and the operating climate is underpinned by a stable regulatory regime. 

During the exploration phase 100% of the costs are paid by the contractor without any reimbursement from ONHYM, while during the exploitation period the costs are shared between the parties in accordance with their participation interest in the production concession. There is no corporation tax for the first 10 years of production. Operators also benefit from solid infrastructure. 

Of particular significance is the ONHYM pipeline system with a total length of 213 km in the Gharb basin and 160 Km in the Essaouira Basin. Capacity increments have followed via a new pipeline project of 55 km in the region of Gharb. Overall, a destination to watch out for, and this blogger early awaits the summit. But that’s all for the moment folks! Keep reading, keep it ‘crude’!

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© Gaurav Sharma 2018. Photos: Royal Dutch Shell / IN-VR Oil & Gas

Tuesday, December 11, 2018

More composed 'crude' thoughts on Forbes

As promised post-OPEC, the Oilholic is putting forward some more composed crude thoughts, following the Non-OPEC and OPEC declaration of a 1.2 million barrels per day (bpd) oil production cut last week. 

Here they are via a Forbes piece. One's verdict - it won't be enough, even if further Iranian declines increase the cuts to 1.5 million bpd. There's always the issue of compliance and demand side pressures too. Crude oil benchmarks are not spiking anytime soon.

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© Gaurav Sharma 2018. 

Contact:

For comments or for professional queries, please email: gaurav.sharma@oilholicssynonymous.com

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