Of long calls and more Colombian barrels

Despite an awful lot of bearishness in the market, and global inventories showing no tangible signs of rebalancing, the Oilholic finds the number of long plays in the market to be astounding.

In fact, US shale producers are in their element, and producing comfortably at the current oil price range. 

As the International Energy Agency noted at the recently concluded 22nd World Petroleum Congress - "the only oil producing region that has actually seen a rise in investment has been American shale, where compared to 2016, investments are up 53%."

Here are yours truly's thoughts in greater detail via a Forbes op-ed. Away from the oil price, given  a sequence of the OPEC meeting, a trip to New York and the World Petroleum Congress, a report on Colombian oil production - published by GlobalData earlier in the month - escaped this blogger's attention. 

It is well worth a crude read, for the research and analysis outfit suggests Colombia is well on track to reinvigorate its upstream sector after the oil price shock. 

"Improvements already made to the country's royalty framework will benefit licenses currently held in the exploration phase, which may provide some stimulus in the short to medium term, and more flexible licensing procedures are likely to lead to greater uptake of available exploration acreage. However, based on recent life-cycles from exploration to production any newly awarded areas over the next two years will be unlikely to add significant production before 2025," GlobalData notes. 

This could change; and as for offshore development, Colombia represents one of the most competitive regimes in Latin America and interest in its Caribbean exploration has been steadily growing over recent years. 

The fiscal regime, according to GlobalData, is currently geared to foster investment with a regionally and internationally low fiscal take. The government is reportedly planning to include areas in the Caribbean Sea as part of the open areas to be made available in 2018, and a recent large gas discovery in the area by Anadarko highlights the potential of this underexplored region.

Colombia's Agencia Nacional de Hidrocarburos (ANH) is set to open onshore areas in the North and Northwest of the country in the Sinú-San Jacinto, Llanos Orientales and Medio Valle del Magdalena basins on an open basis and adding areas in the Caguan-Putamayo basin in 2018, with the number of areas available for exploration potentially rising from 20 to 40. 

The country's current production level is in the region of 706,000 barrels per day (bpd). While that is considerably below its 2015 peak of 1.005 million bpd, more barrels are imminent over the medium term. That's all for the moment folks! Keep reading, keep it crude!

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© Gaurav Sharma 2017. Photo: Oil tankers in the Persian Gulf off Musandam Peninsula, Oman © Gaurav Sharma 2013.

IPWeek & a crude 'will they, won't they'

The Oilholic joined the great and good of the oil and gas business at the 2017 International Petroleum Week being held in London, with the question on everyone's mind - will OPEC and its new found 11 non-OPEC pals extend their agreed production cuts - in place until the summer - beyond June?

Opec Secretary General Mohammed Sanusi Barkindo promised a "high" level of compliance with the cuts, and dismissed the sceptics. 

Later in the week, Qatari Energy Minister Mohammed Bin Saleh Al Sada, in town to collect his gong as the 'International Energy Diplomat of the Year', hinted that OPEC could indeed extend the cuts beyond the summer by suggesting the oil market might not rebalance before the third quarter of the year. 

Although, the minister did attach a caveat, claiming it was "premature" to indulge in chatter about what may or may not happen in the summer. Who knows for now, but as the oil price is stuck in the $50s and is going nowhere fast, many of the long bets are indeed predicated on OPEC extending its cuts for another three months beyond June. 

Away from the 'will they, won't they' of producers, yours truly was also delighted debate the level of transformation Arab National Oil Companies are likely to undergo over the coming years at an IPWeek debate, organised by our old friends at Gulf Intelligence. With the industry on the cusp of profound change, it is worth watching this space. However, it will take time. 

That's all for the moment folks. Next major event on the horizon - IHS CERAWeek in Houston, Texas. Keep reading, keep it 'crude'!

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To email: gaurav.sharma@oilholicssynonymous.com

© Gaurav Sharma 2017. Photo: Gaurav Sharma (left) with Paul Young of the Dubai Mercantile Exchange at the International Petroleum Week 2017, GI debate on transformation of Arab NOCs, February 22, 2017 © Gulf Intelligence.