Saturday, April 27, 2019

Webcasting for ReachX & Trump's OPEC call

It's been quite a week in the oil market with Brent touching $75 per barrel for the first time in 2019, amid exaggerated long calls reminiscent of Q4 2018, and we all know how that ended. In this backdrop, the Oilholic did his first oil market webcast for independent financial platform ReachX.

The company is working to shake-up traditional financial market research and investment banking services via its technology platform. The idea was born out of creating an unbiased research, information and services hub fit for a post-MiFID II investment and operating environment, and the Oilholic has been involved in its progress since the summer of last year with co-founders Rafael S. Lajeunesse and Olivier Beau de Loménie.

The topic of the webcast was what's in store for the oil market in H2 2019, especially as the Oilholic believes the current set of market fundamentals suggest there's not much further for Brent to go than beyond $75 per barrel, and in fact it is likely to average towards the lower range of $70-75 per barrel this year.

Here's a recording of the webcast on YouTube, which has been converted into a podcast by the good folks at ReachX:



And should you wish to listen to it on SoundCloud; here's a link to that as well.

Away from the webcast, just as Brent hit $75, US President Donald Trump hit it. Ahead of a political rally, the President said he'd "called OPEC" and that oil prices were coming down. Cue a slide on that pretext in this Goldilocks Economy, where crude has little room to go further up. Here are the Oilholic's thoughts in more detail via a Forbes post. That's all for the moment folks, keep reading, keep it 'crude'!

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© Gaurav Sharma 2019.

Wednesday, April 24, 2019

Discussing Algeria’s 2019 oil & gas potential

In the wider context of the global oil and gas industry and that of the continent of Africa, OPEC member Algeria is right up there. In volume terms, it is the number one producer of natural gas in Africa, and among the top three when it comes to crude oil.

The oil and gas sector accounts for 20% of the country's GDP and bulk of its exports. But of late Algeria has faced production challenges, including a double-digit decline in oil production last year; something the government is looking to change. 

The need for investment is pressing, and courting foreign direct investment (FDI) in the current climate of a fairly high oil price range [~$65-75 per barrel] could be timely. To further FDI, the government is drafting a new hydrocarbon exploration law that is expected to be released in July 2019.

The idea is a simple one - make Algeria more competitive in terms of royalties and taxation, simplify licensing and bidding procedures, and most importantly reduce red-tape. How this all pans out would matter because from an outside-in perspective the country is still relatively underexplored with less than 25 wells per 10.000 square metres. 

This for a nation which has the tenth-largest proven reserves of natural gas and the third largest proven reserves of shale gas in the world. Not to mention the fact that it is also the sixth-largest natural gas exporter in the world.

With an objective of reconciling thoughts over global market permutations and ongoing developments in the Algerian oil and gas sector, the Oilholic is delighted to be speaking at the Algeria Oil & Gas Summit in Algiers, November 19-21, 2019, being organised by IN-VR Oil & Gas

Arbiters of the country’s potential are the National Agency for Hydrocarbon Resources Valorization (ALNAFT) and Hydrocarbons Regulatory Authority (ARH). The domestic exploration project partner, as mandated by law, is state-owned national oil company Sonatrach, which holds around 80% of total hydrocarbon production in Algeria, with International Oil Companies (IOCs) tapping the remainder. 

BP, Equinor, Eni and Total, are among the many IOCs looking to expand within Algeria. So at this fitting time there should be no shortage of talking points, and this blogger keenly awaits the summit. But that’s all for the moment folks! Keep reading, keep it ‘crude’!

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Friday, April 19, 2019

Being careful of what Hedge Funds wish for

So it is that OPEC has moved its ministers meeting, and the OPEC/non-OPEC from April 17/18 to June 25/26, but the Oilholic decided to come to the Austrian capital anyway given that other 'crude' meetings could not be moved, and because Vienna is lovely in the spring anyway!

While spring might be in the air in Vienna, a bit of craziness has surfaced in the Oil market trading sphere. Yet again, no sooner has Brent crossed $70, chatter of three-figure crude prices is again rearing its head. Here's the Oilholic warning from very recent history (via Forbes); and why caution is merited.

There is nothing on the horizon to be overtly bullish about the oil market – bearish variables (i.e. China, President Donald Trump's trade salvos, Brexit, German slowdown and changing consumption patterns haven't materially moved yet) and bullish quips based on geopolitics (i.e. Libya, Venezuela and Nigeria) matter but are being countered partially, if not wholly, with sentiment around rising US production.

Few in Vienna, think an oil price spike is on the cards, having had three days of deliberations over, let's face it more than three friendly beers. That sentiment is echoed by both heavy sour and light sweet physical traders the Oilholic has spoken to in Shanghai and Rotterdam. 

Not many believe OPEC wants three-figure prices; and even if they do, more light sweet American crude is hitting the market heading to Asia. Yours truly has long maintained that we are stuck in a boring oscillation between $60-80 per barrel prices; a predictability that hedge funds find boring for very different monetary reasons. Let's leave it at that!

As for OPEC, it is not going to move until Trump decides on if and what kind/level of waivers he is going to grant importers of Iranian crude or not. That and balancing Russia’s concerns are probably the primary reasons behind postponing its ministers' meeting. That's that from Vienna until June.

Interspersed between crude meetings, the Oilholic also found time for a mooch about Vienna's Ring Road on a sunny afternoon, starting from the Intercontinental Hotel to the Rathaus up to Karlskirche; partially replicating the past-time of Ali Al-Naimi, the inimitable former Saudi Oil Minister. Keep reading, keep it ‘crude’! 

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© Gaurav Sharma 2019. Photo © Gaurav Sharma, 2019

Monday, March 18, 2019

Meeting & greeting Emerson's inimitable boss

Before the Oilholic called time on CERAWeek 2019, this blogger had the absolute pleasure of meeting and greeting David Farr, the inimitable Chief Executive and Chairman of energy industry vendor Emerson Electric (NYSE:EMR) on the sidelines of the event on March 13. 

Farr, who has been Emerson's boss since 2000, has overseen the company's market valuation double under his stewardship. In a wide-ranging discussion, the industry captain touched on Emerson's performance, the Industry 4.0 challenge, change management, and more. 

No conversation would have been complete without touching on the portfolio shake-up that Farr has brought about at Emerson, and the unsuccessful bid for Rockwell Automation that did not turn out to be so bad in the end!

Ultimately, it all bottles down to corporate agility, and Farr said Emerson's two broad business streams - Automation and Commercial and Residential solutions - encompassing a diverse range of brands and businesses is working out pretty well. 


That's all for the moment folks! Keep reading, keep it crude!

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© Gaurav Sharma 2019. Photo: David Farr (left) with Gaurav Sharma on March 13, 2019 at CERAWeek in Houston, Texas, USA. 

Friday, March 15, 2019

Crude 'smart' tech & 'Silicon Bayou'

Days IV and V of CERAWeek 2019 have zipped by with an emphasis on power markets and technology. Since it was all about electricity and technology; here's a photo of ABB's Formula E car on display here in Houston, and yes the Swiss automation and robotics giant's YuMi robot was here too.
And here is the Oilholic's full report for Forbes on how technology is making rigs 'smarter'. Its not just the greenfield sites we see this at play in, as a number of brownfield sites are being retrofitted as well to optimise performance and efficiencies. 

Finally, as is customary at CERAWeek, the Mayor of Houston Sylvester Turner turned up, and this year he reminded delegates that H-Town has sufficiently diversified to have the spheres of education, medicine and information technology sit happily alongside the City's energy sector.

In fact, the IT industry here is growing at such a rapid place that you can call it 'Silicon Bayou' and promote #SiliconBayou, he added. The Oilholic promptly did so. And that's all from CERAWeek 2019 and Houston. Keep reading, keep it crude!

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© Gaurav Sharma 2019. 

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