Chatting to Bob Dudley & host broadcaster TRT

As the 22nd WPC approaches its end, more interesting soundbites have emerged, especially from International Energy Agency (IEA) Executive Director Dr Fatih Birol who has been on several panels and forums, energised no doubt in his hometown of Istanbul.

According to Birol, despite all the noise about electric cars, automobiles aren’t the primary drivers for oil demand. “That comes from trucks, aviation and petrochemicals. So even if one in every two cars is an electric vehicle, oil demand will still grow.”

On average, most analysts, including many at the IEA, expect that global demand growth to be in the region of 1.2 to 1.3 million barrels per day (bpd). That’s hardly the stuff of dreams for those placing long bets on the crude stuff. 

Getting away from Birol, the Oilholic also had the pleasure of spending a few minutes in the company of BP boss Bob Dudley, who said the oil giant was preparing for a $30 per barrel oil price breakeven. Here’s one’s exclusive interview for IBTimes UK. 

In another major development, the geopolitical significance of which cannot be understated, India has imported its first ever consignment of US crude oil. For a country largely reliant on Middle Eastern oil, the US is now an avenue.

The Oilholic is reliably informed the consignment has been drawn from conventional sources, but to quote Indian Oil Minister Dharmendra Pradhan - New Delhi would not be averse to importing “shale oil in the future.”

Finally, before one takes your leave and calls time on the 22nd WPC, it was a pleasure appearing on host broadcaster TRT World, and discussing the crude state of affairs on the channel’s Money Talks programme. Here’s a clip dear readers, but that’s all from Istanbul! Keep reading, keep it ‘crude’!

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© Gaurav Sharma 2017. Photo: The Oilholic (right) on TRT World’s Money Talks with Azhar Sukri © Gaurav Sharma 2017.

Oilholic’s photo clicks @ the 22nd WPC host city

The Oilholic is by no means a photojournalist, but akin to the last congress in Moscow, and in keeping with a tradition dating back to WPC 20 in Doha, there is no harm in pretending to be one, this time armed with a BlackBerry DTEK here in Istanbul!

The 22nd World Petroleum Congress also marked this blogger's return to Turkey and the vibrant city of Istanbul after a gap of three years. 

The massive Istanbul Congress Center (left) happens to be the Turkish venue for the Congress from July 9-13, 2017. Hope you enjoy the virtual views of the venue as well as Istanbul, as the Oilholic is enjoying them here on the ground. (Click on images to enlarge). 

© Gaurav Sharma 2017. Photos from the 22nd World Petroleum Congress, Istanbul, Turkey © Gaurav Sharma, July 2017, as captioned.

US Secretary of State Rex Tillerson at WPC

Decorations in the ICC front garden

Crooners entertain diners on opening night

IEA's Fatih Birol (centre) speaks at WPC

BP stand at WPC Exhibition

Oil supply chain model at WPC Exhibition

Istanbul 

Istanbul Modern

The Bosphorus, Istanbul

Oil tanker in the Bosphorus

Traditional dancers at WPC's Turkish night

Two WPC days, umpteen 'crude' angles

In typical fashion, two packed days have zipped by at the 22nd World Petroleum Congress in Istanbul, Turkey and the Oilholic could count at least a dozen talking points, few of which are duly noted here. 

Let's start with Total's boss Patrick Poyanne, whom this blogger has not had the pleasure of listening to since the International Petroleum Week in London.

Pouyanne told WPC delegates that Brazil's mammoth offshore deepwater fields could one fine day be "as profitable as US shale". That's providing operators and consortium partners keep a tight handle on break-even costs.

"Maybe they are long-cycle, and shale is short-cycle, but in terms of profitability, in the giant deepwater fields it is easy to make money, provided a handle is kept on the break-even," he quipped. 

Another industry captain - Shell's CEO Ben van Beurden - correctly opined that discussions over the global energy mix and the transition to a low carbon global economy should not only focus on Western perspectives.

van Beurden also said energy transition is regularly portrayed in terms that compare it to a revolution; a moment in time when everything changes. "In truth, different countries and different sectors will advance at different speeds. In truth, we are not talking about a moment in time, but of change that will take place over generations." (For IBTimes UK report, click here)

Meanwhile, murmurs in the Congress background suggest Abu Dhabi National Oil Company may beat Saudi Aramco to a mega stock floatation. The planned IPO would be of ADNOC's distribution business, which manages 460 petrol stations and accompanying convenience stores across the United Arab Emirates.

According to sources, ADNOC's expected valuation for the business is around $14bn, which if realised could net it $1.5bn to $2bn via a 10-15% equity float which many say might be on the immediate horizon. Still early days though. (Read all about it here).

Finally before one takes your leave, it seems 'Crude' history has been made, with India poised to buy its first consignment of US oil. Indian Minister Dharmendra Pradhan told the Oilholic the crude sourced is conventional, but New Delhi might consider going for shale oil too in the future. Here is one's full report for IBTimes UK. Well that's all for the moment from Istanbul folks! Keep reading, keep it crude!

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© Gaurav Sharma 2017. Photo: Front entrance garden of the Istanbul Congress Center, Turkey - venue of the 22nd World Petroleum Congress © Gaurav Sharma 2017.

Tillerson kicks things off with a bit of nostalgia

The current US Secretary of State and the former ExxonMobil boss Rex Tillerson got things off to a nostalgic start by telling the 22nd World Petroleum Congress he misses the industry. 

In town to collect the Dewhurst Award, Tillerson joked he’d be heading to retirement by now, but things just didn’t turn out that way, when President Donald Trump came calling. (Here’s a full IBTimes UK report).

If things didn’t quite turn out the way Tillerson imagined, the WPC – so far – is turning out to be exactly the way half the world’s media thought it would between the Saudis and Qataris who are entrenched in a diplomatic row and keeping their distance from each other.

Qatar’s energy minister Mohammed Saleh Al Sada said his country’s exports of liquefied natural gas (LNG) to major partners remain unaffected by the boycott of Doha by Saudi Arabia and its allies United Arab Emirates, Bahrain and Egypt.

The Qatari minister told the WPC its LNG exports to the UAE, Saudi Arabia and Bahrain accounted for less than 8% of its total. The country's exports to Japan, India, South Korea and China – accounting for nearly 75% of the total - have not been affected.

"Qatar remains committed to all its agreements with its partners and is determined to maintain this status despite the illegal and unjust embargo imposed on it," he added. What’s more, the Qataris are taking legal action against the aforementioned blockaders. (More here).

And just before for one takes your leave, it’s also worth mentioning that OPEC Secretary General Mohammed Sanusi Barkindo has said there would be no further discussion on crude production cuts, since it would be “premature” to discuss this. 

Concurrently, Kuwait's Oil Minister Issam Almarzooq has told Bloomberg that Libya and Nigeria – the two OPEC members exempt from production cuts – may be invited to consider capping production pretty soon.That’s all from Istanbul for the moment folks! Keep reading, keep it ‘crude’!

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© Gaurav Sharma 2017. Graph: Oil benchmark prices year to date © Gaurav Sharma 2017.

Time for Istanbul and WPC 22

The Oilholic has arrived in Istanbul, Turkey for 22^nd World Petroleum Congress, with the 2017 edition being this blogger’s third. 

Oh how time flies! Many in the industry must be wondering the same – from Doha (2011) to Moscow (2014) to Istanbul in 2017, the price of crude, using Brent as a benchmark, has fallen considerably, even if it was not a steady downward trajectory.

In 2011, the industry was looking at three-figure prices following a recovery from the global financial crisis. In 2014, the signs of an oil price slump were visible and in here in Istanbul we see it crudely languishing in the $40s despite an OPEC production cut - of 1.8 million barrels per day - in concert with 10 non-OPEC players, at least on paper, and in place until March 2018.

With customary aplomb over 6,000 delegates are expected at the industry’s premier jamboree with 500 chief executive officers, 50 ministers and around 25,000 visitors for the World Petroleum Exhibition; one of the largest strategic oil and gas expos in the world.

Over coming days we can expect to hear from the bosses of Shell, BP, Total, ExxonMobil, Chevron and many more, and ministerial soundbites from India to Iran, Kuwait to Russia and then some. Watch this space, but that’s all from Istanbul for the moment folks! Keep reading, keep it ‘crude’!

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© Gaurav Sharma 2017. Photo: Istanbul Congress Center, venue of the 22nd World Petroleum Congress © Gaurav Sharma 2017.

A bearish view from New York

Its great to be back in New York on a part business, part pleasure adventure.

Of course, on visits like these, yours truly almost, always catches up with known crude traders and analysts to get a sense of how they are feeling about the direction of the market.

More so as market mood is a fickle thing,  and we are currently staring at an oil price jump predicated on the first single-digit decline in US rig counts for over 22 weeks. But seriously is that enough to go long? 

Not quite according to majority of traders yours truly has met in Manhattan; some 8 out of 10 remain net short and say the rally won't last. Almost all believe that US production would cap 10 million barrels per day (bpd) in 2018, and that we should not read much into the price uptick of the past week. Consensus here is that while the market is showing nominal signs of rebalancing, a short-term bounce of appreciable magnitude is not on the horizon. 

Furthermore, OPEC faces a damned if you do and damned if you don't dilemma. Much of its cuts are coming at the expense of market share based on raw data. Whenever that has happened in recent history, the oil price has slipped too in most cases, in step with OPEC's lower market share, as the Oilholic noted in a recent Forbes piece authored last week from here. 

The other problem is - should OPEC decide to pump more, or move to protect its market share, that would mean more barrels on the market and a subsequent bearish impact. 

And on that note, and armed with some bearish feedback from the Big Apple, its time for the Olympics of the oil and gas business; yup that would be the 22nd World Petroleum Congress in Istanbul, Turkey. Goodbye from NYC folks, and more from Istanbul soon! Keep reading, keep it crude!

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© Gaurav Sharma 2017. Photo: Skyline of New York, USA photographed from the city's Empire State Building © Gaurav Sharma 2017. 

To boldly go where no US oil patch has gone before!

The NASA inspired car showroom photographed by the Oilholic some months ago in Houston, Texas could sum up the US oil patch's inspirational streak. Its going where, quite possibly, no US oil patch has gone before. 

Sentiment is rapidly rising in favour of US production capping an all time high in 2018 of (well in excess of) 10 million barrels per day (bpd). 

If achieved, that would be the highest US production on record, well above 1980s Texan boom and more recently, when both Dakotas put the word ‘revolution’ and in the shale revolution we’ve now become so accustomed to. 

The other leveller of course, is innovation. With extraction costs having declined dramatically and oilfield services firms' offerings to exploration and production companies getting ever more competitive, some with viable shale plays can keep going even at a $30 per barrel oil price. 

Here’s the Oilholic’s assessment in a recent Forbes post. Inventories may not have quite rebalanced, while more oil is on the way. That's all for the moment folks! Keep reading, keep it crude!

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© Gaurav Sharma 2017. Photo: Exterior of NASA-themed car dealership in Houston, Texas, USA © Gaurav Sharma 2017. 

No surprises! OPEC & non-OPEC cuts rolled over for 9 months

If you were secretly hoping for a surprise at the 172nd OPEC ministers' meeting, consider your hopes dashed, as things went perfectly according to script.

Except of course Equatorial Guinea became the 14th member of OPEC out of the blue, and with little prior intimation to half of the world's press. 

That meant 24 oil producers - including 10 non-OPEC nations led by Russia, and 14 OPEC participants headed by kingpin Saudi Arabia - rolled over their 1.8 million barrels per day (bpd) output cut to March 2018. 

Libya and Nigeria were exempt, Iran will be given some leeway, and Russia reaffirmed it was sticking to its 300,000 bpd pledge; the largest non-OPEC output cut of its kind on paper. (Here's the full IBTimes UK report). 

Big question is where from here? If Saudi Oil Minister Khalid Al-Falih is to be believed, this is all about rebalancing the market back to its five-year average. Problem here is that a buffer producer in the shape of the US keeps plugging away with some predicting its output to touch 10 million bpd in 2018. 

Were that to be the case, is OPEC not in effect subsidising shale players? Thrice yours truly asked Al-Falih whether that was the case, and thrice the question was ignored. The Oilholic is not convinced the extension of this cut would provide short-term support to the oil price that some are hoping for. 

In fact the initial response of the market has been something of a mini selloff, as many were hoping the cuts would either be deepened or be extended by 12 months. Nether happened, but the market got plenty of food for thought. That's all from Vienna in this instance folks. More when the Oilholic can make a more considered assessment and has gathered his thoughts. Till then, keep reading, keep it crude!

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© Gaurav Sharma 2017. Exterior of OPEC Secretariat, Vienna, Austria © Gaurav Sharma 2017. 

Two summits, one 'crude' venue

Holy mackerel! Was there an almighty crush, or was there an almighty crush getting into Helferstorferstrasse 17 this morning. 

So many scribes and analysts, or in the case of yours truly, those who wear both hats, trying to get in before the whole jamboree began. 

Not bad for a place struggling to get this crude world's attention, according to some, to attract so many people. Of course, it’s not a regular occurrence that non-OPEC Russia’s Energy Minister and the Saudi Energy Minister hold a joint press conference after an OPEC ministers’ meeting ends; that's exactly what is on the agenda today. In the morning we’ll have the OPEC ministers’ meeting and then in the afternoon, we will have the OPEC and non-OPEC ministers’ meeting.

So here's to more than 150 of us all trying to get that elusive crude exclusive, including, if the Oilholic may add, quite a few Russian journalists here to cover the 2nd OPEC and non-OPEC ministers meeting after the 172nd OPEC meeting ends. 

And if you were in any doubt whether or not, its a done deal here, Saudi Oil Minister Khalid Al-Falih has said Opec's plan was to "stay steady" and go through the next nine months of oil production cuts. (Here's the full report). 

"The drawdown of inventories has clearly begun. OPEC and non-OPEC producers will work to bring inventories down to 5-year averages," Al-Falih added, saying he looks forward to working with non-OPEC colleagues.

That's all from Vienna, for the moment folks! More shortly! Keep reading, keep it 'crude'!

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© Gaurav Sharma 2017. Photo: Media Scrums at OPEC Secretariat, Vienna, Austria © Gaurav Sharma 2017. 

Seems to be a done deal at OPEC

The Oilholic is back in Vienna, Austria for the 172nd OPEC Ministers meeting, and this blogger's 10th year of covering 'crude' matters. Oh how time flies! 

However, on this occasion, it looks like a done deal here at Helferstorferstrasse 17, even before things have begun. 

Crude sources suggest Opec's ministerial committee has proposed an extension of output cuts ahead of a formal announcement on the matter. Here's one's IBTimes UK report on the matter. 

The source also suggested that leading oil market power brokers Saudi Arabia, Iraq and Russia have given the proposal their backing. Meanwhile, non-Opec producer Oman has said it is "not opposed" to the deal, but was seeking "more clarity and discussion" on the matter, according to newswire Reuters.

Elsewhere, the Kuwaitis are wondering if a 12-month extension to cuts was worth contemplating, something the Saudis and Russians would probably not agree to.

At 2:58pm BST, both oil benchmarks were broadly flat staying close to overnight ranges, with the Brent front-month contract at $54.24 per barrel, up 0.17% or 9 cents, and West Texas Intermediate up 0.02% or a cent at $51.46 per barrel.

Opec's formal announcement is expected at 4pm BST on Thursday. That's all for the moment from Vienna folks. Keep reading, keep it crude! 

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© Gaurav Sharma 2017. Photo: OPEC secretariat, Vienna, Austria © Gaurav Sharma 2017.

Oil up by over 5.5% ahead of OPEC meeting

By all accounts, it appears to be a done deal - that's OPEC etending its oil production cut of 1.3 million barrels per day (bpd) in conjunction with 11 non-OPEC producers including Russia, who'll add around another 500,000 bpd, taking the headline cut nearer to 1.8 million bpd. 

The said cuts were set to expire in June, but could likely be extended to March 2018 if some soundbites coming out of OPEC are to be believed. The long bets are certainly rising, with both Brent and WTI futures ending last week up by over 5.5% on a week-over-week basis, comfortably above $50 per barrel level. 

The accompanying chart (see left, click to enlarge) tells its own story, ahead of OPEC's 172nd Ministers' Meeting in Vienna on 25 May which the Oilholic is heading to. That's all for the moment folks as another fascinating week awaits in Austria. Keep reading, keep it 'crude'!

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© Gaurav Sharma 2017. Graph: Oil benchmark Friday closing prices from Jan 6, 2017 till date © Gaurav Sharma May, 2017.

OPEC quips send oil futures $1.50 or 3% higher

Its official OPEC ministers' and Russia's quips in favour of extending oil production cuts beyond June appear to have worked. Oil benchmark prices perked up by a princely $1.50 or just over 3% in week-over-week terms. 

Brent, the global proxy benchmark is well clear of $50 per barrel. If anything else, it's good news for the US oil patch, with independents plugging away, as another weekly uptick in the Baker Hughes rig count suggests. 

Away from it all, US President Donald Trump is perplexing the oil and gas industry in Texas. For a man who claims to be a champion of the 'crude' world, Trump's jibes against NAFTA are causing dismay in the oil and gas capital of the world, where people understand more than most, the cross border nature of the industry. 

Here's the Oilholic's reading of the situation in a detailed analysis and commentary piece for IBTimes UK. In a nutshell, if NAFTA is ripped up and Trump provides little or no clarity on US taxation - the oil and gas business would be hurt disproportionately. 

Most think its unlikely Trump will stir too much on the the NAFTA front. However, Trump being Trump you never know. That's all from Houston folks! Keep reading, keep it 'crude'!

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© Gaurav Sharma 2017. 

Onto blockchains and barrels in Houston Town

Greetings dear readers, the Oilholic is back in Houston, the oil and gas capital of the world, with OPEC soundbites from far afield having ensured Brent is back above $50 and on track to end the week higher than where it began. 

Meanwhile here, upstream innovations helping the US oil patch in this era of ‘lower for longer’ oil prices are the talk of the town, but among the digitisation platforms the crude world has started taking to with increased ferocity – the subject of blockchains – keeps propping up.

Don’t worry, yours truly was bit foxed too at the start, wondering what on earth is a blockchain, let alone its platform deployment in an industry thatm let’s face it, lags others in digitisation. 

So in simple terms, a blockchain is akin to a digitally distributed ledger that can be replicated and spread across many nodes in a peer-to-peer network, thereby minimising the need for oversight and governance of a single ledger. 

Each transaction on the ledger is recorded and added to the previous one. These additions result in a growing 'chain' of information. 

At the 2017 Baker & McKenzie Oil & Gas Institute, it was a much discussed subject, albeit included in the wider discussion on digitisation in the sector.

Here’s the Oilholic’s full report on the deliberations for IBTimes UK, which is well worth reading. While nothing is foolproof, there is growing consensus within the industry that blockchain ledgers can help fight fraud and corruption. 

As if that wasn’t enough for you on the subject of ‘crude’ digitisation, Shell’s top lawyer David Brinley also told institute delegates the oil major’s technology hub in Bangalore, India has never been more integral to its business than it is now.

"From automation to 3D printing of project prototypes, to an app on how to locate your car in a car park – Shell would like to be at the forefront of inexorable technological changes we are seeing in the 21st century." 

Away from crude chatter, the Oilholic leaves you with a glimpse of a refreshing pint at The Richmond Arms pub, which tasted even better after yours truly cheered on Manchester United to the UEFA Europa League final. 

If you happen to be in Houston, and need to watch English Premier League clubs in play, or European football (er...called socccer here) there’s no better place to watch in The Galleria area for starters, and in the whole city in some ways too.  

That’s all for the moment from Houston folks! Keep reading, keep it ‘crude’!

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© Gaurav Sharma 2017. Photo 1: Chevron Towers, Downtown Houston. Photo 2: Pint at the Richmond Arms Pub, Houston. Texas, USA. © Gaurav Sharma 2017.

Of soundbites and buffer crude producers

If sounbites were the sole influencers of the oil market direction, Brent ought to be near $60 per barrel. (see chart on the left, click to enlarge) 

The fact that it isn’t, and couldn’t be any further from that promised level despite OPEC cuts tells you that verbal quips from oil producers matter little when the market is trying to readjust to a new normal; i.e. the impact of a buffer producer in the shape of the US of A.  

When OPEC and 11 non-OPEC producers came together last December to announce a headline production cut of 1.8 million barrels per day (bpd), it was done in the knowledge that inevitably US shale producers would benefit from higher prices too. 

However, the economic paradox of that was additional US barrels replacing barrels taken out by the OPEC and non-OPEC agreement. In March, Saudi Energy Minister Khalid Al-Falih ensured that the OPEC put unravelled by quipping that his country would not subsidise non-OPEC margin plays by supporting an extension of the OPEC and non-OPEC agreement, due to expire in June. 

The result was a near instantaneous drop in both benchmarks as the market factored in the possibility of more OPEC barrels. Soon thereafter, on witnessing the ensuing oil price slide, ministers of several OPEC member nations, including Al-Falih himself, issued soundbites claiming an extension to the cut was in fact possible. However, in the Oilholic’s humble opinion, the damage had already been done by that time. 

This blogger's interaction with the wider market – whether we are talking spot or futures traders – leads one to believe that sentiment is in favour of higher US production, with each OPEC and non-OPEC barrel taken out of the market subsidising an American barrel. Of course, it’s not as linear or simple but the market’s reasoning isn’t flawed.  

All OPEC soundbites in favour of extending the cartel’s cut further are fuelling such sentiment further. Should OPEC extend its cut, the artificial support to the oil price would again be short-lived, as US barrels will continue to flood into the market. 

Finally, the Oilholic believes the market is showing signs of rebalancing unless it is artificially tampered with, and there could be some semblance of normalcy by September-end. So as such neither is an OPEC cut needed nor are the soundbites in its favour. Perhaps the cartel might consider keeping mum for a change! That's all for the moment folks! Keep reading, keep it 'crude'!

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© Gaurav Sharma 2017. Graph: Oil benchmark prices year to date © Gaurav Sharma 2017.

Two Forbes posts on very different matters

Dear readers, it has been an exceptionally busy month of April courtesy travel, speaking engagements and IBTimes UK affairs that have kept the Oilholic severely occupied to the near blasphemous point of ignoring this blog! Sincere apologies! However, one did pen thoughts down on two key matters via regular posts on Forbes. 

Earlier this month, petrochemical giant Ineos bought the UK's North Sea Forties pipeline system from BP. Obviously, its huge for Ineos which would have control of 40% of UK's oil and gas output, but the development is also indicative of a strategic shift of oil majors away from mature prospects to emerging ones. (Read more here). 

The second key matter is US President Donald Trump’s recent airstrikes on Syria, Afghanistan and his dispatching of an aircraft carrier group to the Korean Peninsula to square up to a belligerent North Korea and in defense of the South. As safe-haven asset prices soared, Brent has also marched back up to $55 and WTI back above $50. Go long if you want to, but the rally won't last - there's still too much oil in the system. (Read more here). 

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

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© Gaurav Sharma 2017.