Category: Nieuws

GCC countries are selling prime assets to fund economic transition.

Over the last few months, most Gulf Cooperation Council (GCC) countries have been cutting themselves multimillion-dollar deals selling energy assets or issuing bonds off the back of them.

Saudi Arabia and the United Arab Emirates (UAE) are leading the trend. In April, Saudi Aramco agreed to sell 49% of its pipeline network to a US-led consortium for $12.4 billion. In June 2020, Abu Dhabi’s national oil company, Adnoc, raised $10 billion selling gas pipeline leasing rights. The company is currently considering an IPO for its drilling and fertilizer businesses—for $1 billion each, sources close to the deal say.

In other Gulf states, national oil companies are eying the bond market. Qatar Petroleum sold $12.5 billion in bonds to help fund the North Field expansion, a megaproject that should allow the tiny Gulf state to become the world’s largest liquified natural gas producer by 2030. In April, Oman’s oil company sold $750 million in bonds; and, according to Bloomberg, Kuwait Petroleum plans to borrow up to $20 billion on international debt markets to maintain production levels. Experts expect more deals in the energy sector as pandemic-driven stimulus packages run out.

Funding Diversification

GCC countries sit on almost 30% of the world’s oil and more than 20% of its natural gas. For a few years now, governments have been trying to break free from the oil rent.

“Gulf countries appear to be taking their money out of the oil and gas market and, we hope, will invest it wisely,” says London-based David Manley, senior economic analyst at the Natural Resource Governance Institute.

Saudi Arabia and the UAE started privatizing before Covid-19. In late 2019, Saudi Aramco made the headlines by raising $25.6 billion in a record IPO. In 2017, Adnoc sold part of its fuel distribution network for $851 million in a similar deal.

A lot of the money raised by national oil and gas companies is used to fund the petro monarchies’ economic transition. In the past, Gulf states would have paid for these projects out of pocket; but governments are now forced to watch public spending, due to the steep decline in hydrocarbon revenue.

“It’s not a knee-jerk reaction. A lot of thinking has gone into this,” says Adnan Fazli, Transaction Services partner at global professional-services firm Deloitte. “This is part of a monetization initiative. The desire is to create liquidity to invest in the transformation of economies, without necessarily having to take on debt.”

Foreign investors—who have rarely been allowed to come near the Arab world’s crown jewels—are a bit more welcome now. “We are talking about some of the largest private equity and infrastructure investors globally,” says Fazli. “For them it’s a financial investment, a tool to generate quality returns for their shareholders; and the way these investments are structured precisely caters to that. The operators continue to have control over these businesses, as they had before, and investors get a return over the duration of their investment.”

If Gulf countries are allowing foreign investors in, they are also careful to structure transactions that leave themselves in control. In the upcoming Aramco pipeline deal, for instance, the Saudi giant remains the majority shareholder and keeps operational control of the pipelines. “If you look closely at what they are selling, it’s not the core business but assets that are adjacent,” says Dubai-based Bart Cornelissen, a partner at Deloitte and its Energy Resources and Industrials leader. “They would sell the pipeline, for example, but keep the oil field.”

Behind all this, the bigger worry for Gulf states is how to remain relevant in a context of the global energy transition. “The question is, which country or which company will be able to produce oil until the end?” says Cornelissen. “The only way you can ensure that is by producing as cheaply as possible, and what we are seeing now in the Middle East is a further drive down the cost curve.”

Global Finance by Chloe Domat, July 26, 2021

OPEC—as well as the entire energy industry—should be thanking Saudi Arabia for its “magnificent” job in managing their production during the Covid-19 pandemic, according to Robert Yawger, executive director of Energy Futures at Mizuho Securities, in a Bloomberg TV interview this week.

Yawger added that the entire market would be best left in Saudi Arabia’s hands to manage.

The energy commentator made no mention of Saudi Arabia’s role in the oil price war that immediately preceded the coronavirus-inspired lockdowns. At that time, Saudi Arabia (and Russia) deliberately increased production and exports, flooding the world with oil and crashing prices.

Oil prices even fell below zero.

The demand loss that followed due to Covid-19 made it nearly impossible to recover from the deluge.

The market crash, Yawger said, “left a terrible scar on the industry. It rallied back under the management of the Saudis. The rest of OPEC has a lot to thank them for.”

Indeed, the Kingdom has been instrumental in managing the market in the months that followed the crash­–even if it was helping to mitigate some of the damage that Saudi Arabia inflicted.

Of all the OPEC members, Saudi Arabia has been perhaps the most conservative when it came to adding production back in as the OPEC group tried to thread the needle between prices and market share. A delicate balancing act that Saudi Arabia felt would be best served if erring on the side of oil prices.

In the process, Saudi Arabia did have to give up some market share. It also cut even more oil production than it agreed to, while other OPEC producers—whether due to lack of ability or inclination—overproduced nearly every month that the production cut agreement was in place. The largest overproducer throughout the production cut deal was Iraq, which finds it difficult to control oil output from the semi-autonomous Kurdistan region.

Now, after much internal haggling, OPEC has agreed to bring back 400,000 bpd starting in August. Another 400,000 bpd is set to be brought back online in September and every month that follows until the cuts have been rolled back entirely.

Meanwhile, analysts and industry groups feel the inventories have been reduced and that even more barrels should be brought online.

“In my opinion, it’s best to let the Saudis manage it; they’ve done an incredible job. As long as they don’t flood the market themselves,” Yawger added.

OilPrice, by Julianne Geiger, July 24, 2021

No oil discovery narrative appears to have captured investor attention this year as much as Reconnaissance Africa’s (TSXV:RECO, OTC:RECAF) acquisition of the rights to Namibia’s giant, 6.3-million-acre Kavango Basin, which was followed in short order by two confirmations of an active petroleum system.

It’s captured our attention for several reasons; not the least of which is that onshore discoveries are pretty much a thing of the past, except in the final frontier of Africa, where Namibia—which has never produced a barrel in its history—is anxiously awaiting the possibility of its day in the energy spotlight.

It’s also captured our attention because this is a junior explorer who is sitting on what we think is a supermajor-size basin, and it’s fully-funded for its current 3-test well drill campaign.

But in recent weeks, our attention has been drawn by reports of surprise early results—twice. And now, there is a lot to potentially look forward to in the coming days and weeks.

On Monday last week, ReconAfrica announced that it had completed its second drill at its 6-1 stratigraphic test well. In a matter of days, we are expecting the results from that drill.

Expectations are high because not only did RECO show indications of an active petroleum system in its first test-well drill (6-2), but it also showed over 200 meters (over 660 feet) of oil and natural gas indicators over three discrete intervals in a stacked sequence of reservoir and source rock.

Expectations are also high because only part way into the second drill (6-1), in the shallow section, RECO again provided clear evidence of an active petroleum system, with 134 meters (440 feet) of light oil and gas shows.

Now, RECO is launching 2D seismic, and soon to release full drill results from (6-2)—the well that’s already delivered positive results in the shallow sections.

Everything Lines Up in RECO’s Favor

Everything appears to be lining up in RECO’s favor, from day one when they took the giant leap of faith to acquire the rights to this huge basin in Namibia, and then to add another huge section of the same basin in Botswana. That gave them a total of 8.5 million acres.

A huge boost of confidence came first from Bill Cathey, an industry recognized geologist for the biggest oil companies in the world, who performed the magnetic survey interpretation for RECO. Cathey came out saying that, “Nowhere in the world is there a sedimentary basin this deep that does not produce hydrocarbons.”

Then came Daniel Jarvie, a leading geochemist and source rock expert who is now all-in on RECO (TSXV:RECO, OTC:RECAF)  … Jarvie estimated, conservatively, that the basin has generated billions of barrels of oil and gas. He liked what he saw—a lot—so joined the RECO team.

The company reports it has full government support—local and national, and has been helping Namibia from the start, from drilling water wells for Kavango residents who have limited access to potable water, to helping to fund the country’s COVID-19 vaccine rollout.

Short-Selling Desperation May Have Hit Fever Pitch

So, now, with two confirmations of an active petroleum system under its belt, new results expected just days away, 2D seismic having launched… we think those who have taken on enormous short positions against RECO are thoroughly desperate.

That desperation may have led to organized media campaigns against the company, in what we think is an attempt to bring the stock down enough to give them time to cover their shorts before there is no longer any way to stop the march forward in Namibia.

One of the most important breadcrumbs comes in the latest press release from Monday, which tells us that both test wells, 6-2 and 6-1, will have a VSP (vertical seismic profile tool) run through them, connecting them along the same seismic line. And later this month, the company says casing will be run and cemented to isolate the prospective hydrocarbon bearing zones.

Investors who have no background in geology might now be able to interpret this clearly, but for us, the most important breadcrumb is this: ReconAfrica would never fund the complex operation of running a VSP to tie these two wells together along the same seismic line if there wasn’t a potential for something big there—in both wells.

There are many catalysts here that stand to make the coming days very interesting for investors:

Now that the second drill has been completed, RECO (TSXV:RECO, OTC:RECAF) reports it is making multiple logging runs and that up to 50 sidewall cores will be taken to maximize potential hydrocarbon recovery. Once that is complete, the VSP is run as part of the 2D seismic program.

RECO (with its partner NAMCOR, the state oil company) received approval from the Namibian government on July 7^th for seismic and will begin acquisition of the initial 450 km 2D seismic program across the Kavango basin any day. That will last for approx. 6-8 weeks. 

There are so many things we expect news releases on in the coming days and weeks:

• Results from the second test well
• Results from the 450km 2D seismic
• The launch of the third test well drill, most likely after the seismic acquisition
• And hopefully some potential JV farmout deals with the majors, who will no doubt be watching like hawks for the next lab and 2D results—and that could be one of the most exciting things for investors

Furthermore, we think there is reason to be excited about 2D seismic results. So does Polaris, Canada’s oldest seismic company contracted to do it:

Polaris COO, Joe Little stated, “The acquisition plan is progressing very well for a successful recording launch in mid July. Given our past success with the environmentally friendly Explorer 860 source units on past projects in Africa and given the very high resolution parameters designed by ReconAfrica’s seismic team, we anticipate getting excellent data results on the project.”

What has made an organized misinformation campaign so hard to manage on the part of short sellers is the fact that RECO isn’t a fly-by-night junior explorer and a lot of RECO’s online followers appear to be very well informed and are keeping fellow investors up to date, which for a short and distort campaign is a problem as they need uninformed investors for their strategies to work:

It’s difficult for us to second-guess results and operations when some of the biggest names in the industry are involved, including the likes of giant Schlumberger, and Polaris. None of the companies involved in this operation would be willing to associate themselves with a fraudulent oil exploration play. And we think short sellers are having a hard time covering because RECO (TSXV:RECO, OTC:RECAF) has done everything by the book, with some of the best in the industry. There may be no other way to approach a basin of this size. This is not another Canadian micro-cap plopping itself down on a random piece of Alberta and pretending to drill while taking investor money. This is the big time, and it could end up being our last big onshore oil discovery—ever.

The next time you read a story like this, it will probably be in the deep waters, where no junior company can travel alone. Oil narratives like this are potentially once-in-a-lifetime, and that’s precisely what may have short sellers so worried. They may have ended up on the wrong side of exploration history.

Other oil companies worth keeping an eye on:

Schlumberger (NYSE:SLB) is the world’s largest oilfield services company. The Schlumberger family of companies operates between 120 countries and employs more than 100,000 people. They provide a wide range of exploration, production, drilling and processing services to their customers to help them find and produce hydrocarbons more efficiently from underground reservoirs. Schlumberger has been around for almost 90 years now with its first customer being Shell in 1928.

Schlumberger is transforming itself to survive and thrive in an oilfield a fraction of the size it was only a few years ago. The emphasis is shifting from throwing big chunks of iron and a schoolyard full people at a project to minimizing capital intensity of operations through the digital PSO transformation we have discussed here. The digitalization of the global oilfield will prove to be very sticky and begin to deliver subscription-type returns to both companies.

SLB is ahead of the rest of the oilfield pack with their New Energy Genvia venture, which aims to produce carbon free blue hydrogen through a hydrogen-production technology venture in partnership with the French Alternative Energies and Atomic Energy Commission (CEA), and with Vinci Construction. This new venture will accelerate the development and first industrial deployment of the CEA high-temperature reversible solid oxide electrolyzer (SOE) technology.

Baker Hughes (NYSE:BKR) is one of the world’s leading providers of oil and gas field services, with operations in over 80 countries worldwide. They provide a wide range of products and services to upstream companies around the globe including drilling fluids, artificial lift systems, completion tools, coiled tubing techniques and equipment for use in deepwater environments. Baker Hughes has an extensive history as a pioneer in developing new technology which has led to many innovations that have helped shape the industry.

Baker Hughes is committed to helping our customers succeed by providing them with state-of-the-art technologies such as those that are designed to improve well productivity while lowering environmental impact through sustainable solutions.

Like many of its peers, Baker Hughes has also faced mounting pressure to join the green revolution. And it’s risen to the call-to-arms. Surprisingly, however, it wasn’t investor pressure that got Baker Hughes into the hydrogen boon. In fact, it’s been in the game for well over half a century. It built its first hydrogen compressor in 1962, and hasn’t stopped since.

Because it’s still primarily an oil field service company, however, Baker Hughes has had its share of ups and downs over the past year, but the $27 billion industry giant still remains a smart buy for long-term investors. Not only has it shown that it can adapt to the times, but it also pays dividends!

ConocoPhillips (NYSE:COP) a multinational energy corporation with headquarters in Houston, Texas, has been around since 1905. The company is active in the exploration and production of crude oil and natural gas. ConocoPhillips operates its own resources as well as those of others through ventures, joint operations and production sharing agreements. They also have a downstream business focused on refining and marketing products like gasoline, diesel fuel, jet fuel and other petrochemical-based products that are derived from crude oil refining processes.

ConocoPhillips, as the largest pure upstream company, has performed relatively well in this depressed market, generating ample free cash flow and returning a good chunk of it to shareholders.  Unlike many of its peers who continued to expand aggressively during the shale boom, COP has taken several steps to lower costs and fortify its balance sheet.

Thanks to a global recovery in demand, Conoco has seen an increasingly bullish look on the industry, and it was one of the few companies which did not partake in the mass-layoffs seen in the industry last year. In addition, Conoco has also seen a fairly decent about of insiders buying into its stock, which is a good sign.

Chevron (NYSE:CVX) is an American multinational energy corporation, and one of the world’s largest oil companies. They have operations in more than 180 countries, with headquarters located in San Ramon, California. Chevron has many different brands that are marketed to consumers all over the world.  Chevron’s primary areas of business are exploration and production of crude oil and natural gas, manufacturing and marketing petroleum products, transportation fuels supply chain logistics services, power generation solutions including renewable energy technologies like geothermal power plants. The company also operates one of the world’s largest marine fueling systems with locations across six continents.

Chevron is also betting big on Africa, particularly Nigeria and Angola. The supermajor ranks among the top oil producers in the two African nations. Other areas on the continent where the company holds interests include Benin, Ghana, the Republic of Congo and Togo. Chevron also holds a 36.7 percent interest in the West African Gas Pipeline Company Limited, which supplies Nigerian natural gas to customers in the region.

In the last few decades, ExxonMobil (NYSE:XOM) has been one of the most successful multinational corporations in America. This is due to a number of factors, including their ability to innovate and adapt. However, with climate change becoming an increasingly pressing issue for our world, it’s unclear how much longer this company will be able to thrive.

ExxonMobil isn’t ignoring the reality of the market, however. It has made major moves in its commitment to reduce its emissions. It claims to have about one-fifth of the world’s total carbon capture capacity. The company captures about 7 million tons per year of carbon.

ExxonMobil is also big in its commitment to reduce its emissions. It claims to have about one-fifth of the world’s total carbon capture capacity. The company captures about 7 million tons per year of carbon. This has been in place since 1970, and the company claims to have captured more CO2 than any other company — more than 40 percent of cumulative CO2 captured.

The company, Enbridge Inc.(NYSE:ENB, TSX:ENB), is a Canadian multinational energy company. Founded in 1949 by the World War II veterans Kenneth W. Dam and Arnold R. Parry, it has since grown to be one of North America’s largest pipeline companies with over 2 million miles of pipelines across Canada and the United States.  They also provide services for gas transmission, natural gas storage, distribution as well as power generation and electricity retailing. They have more than 150 years combined experience in developing energy infrastructure that provides Canadians with affordable energy that they can rely on to heat their homes during long winter months or cool them down during hot summer days.

Enbridge is in a unique position as oil and gas stages its 2021 comeback. As one of the more potentially undervalued companies in the sector, it could be set to win big this year. But that’s only if it can overcome some of the challenges in its path. Most specifically, its Line 3 project which has faced scrutiny from environmentalists.

Canadian Natural Resources (NYSE:CNQ, TSX:CNQ) is one of the biggest names in the Canadian energy sector with operations spanning across North America and Western Europe. The company has been around since 2010 but has had roots dating back to 1952 when Panarctic Oils was founded by Harold Lothrop, Kenneth Lothrop (Harold’s father), and two other partners.

Like Enbridge, Canadian Natural Resources has struggled through the pandemic, but the companyhas been able to do what many of its Canadian counterparts haven’t been able to, keep its dividend intact after swinging to a loss for the first half of the COVID pandemic, while Canada’s producers are scaling back production by around 1 million bpd amid low oil prices and demand. Though Canadian Natural Resources kept its dividend, it withdrew its production guidance for 2020, however. It also said it would curtail some production at high-cost conventional projects in North America and oil sands operations and carry out planned turnaround activities at oil sands projects in the second half of 2021.

Suncor Energy (NYSE:SU, TSX:SU) is an energy company that has a strong focus on sustainability. They work hard to ensure their products are safe, reliable, and sustainable. With the industry changing so rapidly in recent years- being able to keep up with change is key for success. Suncor has always been a leader in this area of innovation and it will continue forward as such- keeping all stakeholders happy!

Suncor is a Canadian oil and gas company that has been in business for over 75 years. They are one of the largest producers of crude oil, synthetic crude oil, natural gas liquids (NGLs), and petrochemicals in Canada. Suncor’s operations include exploration and production from more than 100 fields located across Alberta, Canada, as well as refining and marketing activities in North America.

Finally, now that oil prices are finally on the rise once again, giants like Suncor looking to capitalize. While many of the oil majors have given up on oil sands production – those who focus on technological advancements in the area have a great long-term outlook. And that upside is further amplified by the fact that it is currently looking particularly under-valued compared to its peers, especially as lithium, which is present in Canada’s oil sands, becomes an even more desirable commodity.

TC Energy Corporation (TSX:TRP) is a Calgary-based energy giant. The company owns and operates energy infrastructure throughout North America. TC Energy is one of the continent’s largest providers of gas storage and owns and has interests in approximately 11,800 megawatts of power generation. It’s also one of the continent’s most important pipeline operators. With TC Energy’s massive influence throughout North America, it is no wonder that the company is among one of Canada’s strongest and well-known companies.

Like a number of its peers, one of TC Energy’s biggest challenges in recent years was grappling with the particularly difficult approval process for its Keystone Pipeline. But that’s all history now, and with the bounce back in oil and gas demand, TC Energy could stand to benefit. While TC Energy’s stock price has yet to recover from pre-pandemic levels, it is one of the few industry giants which has managed to keep high dividends rolling in.

Westshore Terminals (TSX:WTE)  is a coal export terminal located at Roberts Bank Superport in Delta British Columbia. It is Canada’s largest coal export facility, surpassing the combined coal shipments of all other terminals in Canada. The company exports thermal and metallurgical coals to markets around the world, including Japan, South Korea, China, India and Taiwan. Westshore also offers services to ship various bulk cargoes through its marine facilities. Westshore Terminals has been operating for over 30 years and employs more than 240 employees that work 24/7 shifts to ensure continuous operation. Despite its success and longevity, however, is increasingly being targeted by short sellers.

Short sellers are looking at companies like Westshore Terminals based on a simple fact: they’re in the coal business. While the fossil fuel industry isn’t quite down for the count just yet, coal is seeing a major decline that isn’t likely to slow anytime soon. And without a significant pivot, Westshore’s days could be numbered.

Great-West Lifeco (TSX:GWO) continues to be a popular stock among short sellers on the TSX. This North American and European financial services holding company has seen its shares drop 8.9% year over year yet it still attracts interest from investors globally due to its healthy balance sheet, strong cash flows, and more.

Is the short interest justified? Their record as dividend payers is very strong: Great West has been paying out an average annualized return on investment (ROI) for stockholders since 1948 that currently sits just below 7%. It also offers a quarterly dividend yield with dividends paid every three months which equals about 6%, or more than five times what most people can expect to earn through investing in savings accounts today. This could emerge as a huge incentive to fight off the short sellers and keep the stock afloat for many loyal investors. 

Pembina Pipeline Corp. (TSX:PPL) is a company that has been around for more than 50 years and was the first pipeline company in Canada to offer gas transmission services. They are now one of the largest natural gas transmission companies in North America with an annual throughput capacity of almost 66 billion cubic feet per day.

Pembina Pipeline Corporation is a Canadian energy infrastructure business that provides products such as natural gas, oil, renewable power, and chemicals to customers primarily located on the eastern coast of North America from its operations in Alberta, British Columbia, Ontario and Quebec.

MEG Energy Corp (TSX:MEG) is a Canadian energy company that provides natural gas and renewable power products and services to customers in Canada, the United States, Europe, and Asia. The company operates in three segments: Pipeline Services; Power Generation Services; Renewable Power Production. MEG has been able to grow their pipeline business by engaging with key stakeholders on regulatory fronts across North America as well as through expansion of their existing pipeline network.

The company’s large proven resources and their cutting-edge technology make MEG a promising company for investors looking to get in to the promising oil sands in Alberta.

OilPrice, by James Stafford, July 23, 2021

Oil rose to the highest price in more than 2 1/2 years as prospects of an imminent flood of crude exports from Iran and other major producers waned while the International Energy Agency warned of a deepening supply crunch.

Futures in New York advanced 1.6% to close at $75.25 a barrel on Tuesday, the highest settlement since October 2018. Crude supplies are set to “tighten significantly” amid a deadlock among members of the OPEC+ alliance, the IEA said in a report. Meanwhile, a stalemate over whether to revive the Iranian nuclear deal has reduced the threat of a deluge of the nation’s crude onto global markets.

Bloomberg, by Jill R Shah, July 22, 2021

Oil prices fell on Thursday, extending losses as investors braced for increased supplies after a compromise deal between leading OPEC producers and as U.S. fuel stocks rose, raising concerns over demand in the world’s largest consumer.

Brent crude dipped 1.73% to settle at $73.47 per barrel and U.S. West Texas Intermediate (WTI) crude finished 2.02% lower at $71.65 per barrel.

Both benchmarks slid more than 2% on Wednesday after Reuters reported that Saudi Arabia and the United Arab Emirates (UAE) had reached a compromise that should pave the way for a deal to supply more crude to a tight oil market and cool soaring prices.

“The market is not taking any chances. Prices are very overbought anyway, so traders might want to take some money off the table before the deal is concrete,” said Avtar Sandu, senior commodity trader at Phillips Futures in Singapore.

Talks among the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, a group known as OPEC+, had broken down this month after the UAE objected to an extension to the group’s supply pact beyond April 2022.

However, analysts at Goldman Sachs, Citi and UBS expect supplies to remain tight in the coming months even if OPEC+ finalises an agreement to raise output.

“With the oil market already in deficit and demand growth outpacing supply growth, the crude market will likely tighten further this summer,” said UBS analyst Giovanni Staunovo.

“We believe ongoing declines in global oil inventories could boost Brent to $80 per barrel and WTI to $77 per barrel between now and September.”

In the United States, crude stockpiles fell for an eighth straight week last week, but gasoline and diesel inventories rose despite a drop in refinery utilisation rates, data from the Energy Information Administration showed on Wednesday.

The large drawdown in crude stocks did little to boost oil prices as traders focused on the first rise in total petroleum stocks since early June, analysts said.

Oil prices also came under pressure from data showing that China’s economy grew slightly more slowly than expected in the second quarter, weighed down by higher raw material costs and new COVID-19 outbreaks.

However, China, the world’s top crude importer, also reported record crude processing volumes at its refineries in June, easing some of the downward pressure on prices.

Elsewhere, the prospect of a quick return of Iranian oil supplies to global markets has been pushed back as negotiations over the revival of the 2015 nuclear deal will not resume until mid-August when the new president takes office.

CNBC, by Alexei Andronov, July 22, 2021

Matrix Terminal Marketplace (“Matrix”) and Insights Global are proud to announce that they have entered into a Memorandum of Understanding to integrate Matrix’s Terminal Marketplace System and Insights Global’s TankTerminals.com data services to create an electronic platform for the purchase and sale of storage for crude oil, refined products, and other bulk liquid commodities.

The Terminal Marketplace System is an innovative electronic platform that allows customers to offer, purchase and sell liquid bulk storage and related terminal services. Insights Global has developed TankTerminals.com, the preeminent database for bulk liquid storage, which currently provides in depth information on over 6,750 storage terminals worldwide.

By integrating Matrix’s Terminal Marketplace System and Insights Global’s TankTerminals.com, customers will be able to use a single electronic platform to (i) efficiently offer, purchase, and sell storage and related terminal services for crude oil, refined products and other bulk liquid commodities at any storage facility in the world, and (ii) seamlessly access data for any storage facility. The acceleration in the flow of information during the last five years has increased the complexities of purchasing and selling storage for crude oil, refined products and other bulk liquid commodities.

By creating a one stop location to analyze, compare and transact for liquid bulk storage worldwide in real time, the new platform will provide customers with a more efficient way to purchase and sell storage. The Terminal Market Place is planned to be launched through TankTerminals.com in the third quarter of 2021.

About Matrix:

Matrix is a provider of transaction services for the liquid bulk midstream sector. In addition to developing and operating the Terminal Marketplace System, Matrix and its affiliates developed the first derivatives for oil storage capacity, in the form of a storage futures contract and physical forward contract for oil storage capacity at the Louisiana Offshore Oil Port (LOOP). We have followed-up that success with storage auctions in Cushing Oklahoma, Copenhagen Denmark, Saldanha Bay South Africa and recently announced Karimun Indonesia. Over the last six years, we have sold over 520 million barrels of oil storage capacity.

About Insights Global:

Insights Global is a provider of market intelligence for the liquid bulk industry. Its mission is to reinforce transparency in energy and chemicals markets. We believe that improved market transparency and related foresight will support players in making intelligent decisions and our activities are aimed at providing insights via valuable data, tools, analytics, advice, and knowledge.For more information please contact:

Matrix Terminal Marketplace

Richard Redogliarichard.redoglia@matrix.global

chris.delvecchio@matrix.global

Insights Global

Patrick Kulsenpkulsen@insights-global.com

WWW.MATRIX.GLOBAL | WWW.INSIGHTS- GLOBAL.COM

Oil prices rose on Friday morning, fueled by strong U.S. fuel consumption data, but held back by continued uncertainty about the OPEC+ deal.

Seven straight weeks of inventory draws didn’t go unnoticed, and according to the EIA, U.S. gasoline demand rose by 870,000 bpd last week as summer driving season heats up. U.S. gasoline consumption figures reached their highest level since 2019, and yesterday’s crude inventory report helped oil prices back in the black.

Vienna Stays Silent Amid OPEC+ Impasse. While the Joint Ministerial Monitoring Committee (JMMC) of OPEC+ still has to decide on a new official meeting, behind the scenes, high-placed Russian and U.S. officials are said to have talks to convince both camps of a reasonable output hike. 

Upside For Oil Prices Limited Without OPEC+ Agreement. Despite the strong demand fundamentals in the U.S., markets continue to gauge the impact of the discord within the OPEC+ alliance. Reuters quoted Stephen Brennock of oil broker PVM as saying: “Clearly, U.S. oil markets are tight. However … the only way to prevent further losses is for the threat of an OPEC+ price war to be contained,” he added.

New Full-Blown Oil Price War Seems Unlikely. As we mentioned in Tuesday’s newsletter, the risk of a new 2020-style price war is low. The OPEC+ group as a whole is currently reaping the benefits of a much tighter oil market and it’s in no one’s interest to destroy the current price environment. According to Rystad Energy’s Louise Dickson: ‘’It is in the interest of the group to provide some leniency to the UAE and other supply hawks to produce a bit more within the framework of the deal instead of triggering a free for all supply regime of chaos.’’

China’s CNOOC Looks To Exploit Large Ultra-Deepwater Gas Field. CNOOC’s recent success in the South China Sea has been an important step for the Asian giant. In late June, the company started producing gas from its ultra-deepwater Lingshui 17-2 prospect, a deposit with proven reserves of around 100 billion cubic meters, with some wells at a depth of more than 4000 meters below the seabed. According to CNOOC, full operational capacity will be reached as of 2024 at 3 billion cubic meters per year, representing about 1% of China’s current gas demand.

France Calls For Global Carbon Price Floor. At a G20 meeting with his counterparts, French Finance Minister Bruno LeMaire said that the world needs a carbon price floor in order to efficiently tackle carbon emissions. LeMaire said that while countries cannot come to agree to a ‘’unique carbon price’’, a ‘’global floor could be a good starting point’’.

Japanese Oil Company Japex May Pull Out Of Canadian Oil Sands Project. Japan’s state-backed Japex is considering selling its 75% stake in the Hangingstone project according to Reuters. The Japanese company said that it would either consider selling its entire stake in the 20,000 bpd project or cutting production costs to improve the profitability of the project.

Soaring U.S. Economy Drives Boom In Coal Production. U.S. domestic coal production is set to increase by 15% this year compared to 2020. According to the EIA, coal output is set to rise to 617 million short tons this year, some 78 short tons more than last year, because of higher power demand and rising natural gas prices. The production boom, however, is likely to be short-lived as the agency expects production volumes to fall slightly in 2022.

Almost Half Of Oil & Gas Emissions Could Be Cut At No Cost. Analysis from the IEA Methane Tracker shows as much as 40% of current methane emissions could be avoided at no net cost. So what’s the magic? The IEA suggests governments and producers focus on cutting methane emissions by replacing pumps, valves, and compressors. CBSNews quotes the IEA’s Christophe McGlade as saying: “Natural gas is essentially just methane, and in many cases, if you can avoid that methane leak, you can sell that gas for profit,”

Japan Remains Committed To Oil & Gas. In an interview with S&P Global, Japan’s Ministry of Economy, Trade and Industry (METI) confirms that it will continue to pursue oil and gas development. Commenting on the IEA’s net-zero 2050 roadmap, METI Director of petroleum and natural gas Takeshi Soda said that “While the IEA says it is only one pathway, Japan does not intend to refrain from upstream developments based on that,”, he went on to say that “it remains extremely uncertain whether the IEA’s net-zero 2050 will be realized.”.

India’s New Oil Minister To Focus On Boosting Oil & Gas Production. Hardeep Singh Puri, India’s new Petroleum Minister looks to cut India’s mounting energy import bill by boosting domestic hydrocarbon production. Puri sees a big role for natural gas as India looks to transform itself into a $5 trillion economy. The fast-growing Asian economy is grappling with rising crude prices and falling oil production from its aging domestic oilfields.

EIA: U.S. Refining Capacity At Six-Year Low. As a result of refinery closures in 2020, total U.S. refining capacity has fallen to 18.1 million bpd at the start of 2021. EIA’s Refinery Capacity Report states that at the beginning of the year, 129 sites were operating or idle versus 135 at the beginning of last year.

Texas Oilfield Services Struggle To Find Employees. After having laid off more than 100,000 employees in 2020, the oil industry is once again hiring, and Texas oilfield services companies now report that they are struggling to find new hands. In order to contract drivers, derrickmen, floor hands, and supervisors, companies are now even offering startup bonuses as high as $20,000

OilPrice, by Tom Kool, July 15, 2021

Plant would be the first of its kind in Canada.

The company that owns the Prince George Refinery is looking to develop a plant on the refinery site to convert vegetable oils, used cooking oil and animal fats into millions of litres of renewable diesel per year.

Calgary-based Tidewater Midstream and Infrastructure Ltd. Is seeking city council’s approval to rezone part of the refinery site on PG Pulpmill Road to allow the construction of the plant. A project summery provided to city council by the company said Tidewater hopes to begin construction as early as this month and have the facility operational in two years or less.

Once complete, the plant is expected to produce 150 million litres of renewable diesel per year – nearly 25 per cent of the province’s target to produce 650 million litres of renewable fuel in B.C. by 2030.

“Renewable diesel differs from bio diesel in that it lacks the oxygen that makes bio diesel prone to separation and unsuitable for cold temperatures without blending; renewable diesel does not require blending with traditional diesel to be utilized, and is, therefore not subject to blending limitations,” Tidewater’s report said. “Once in operation, the Prince George renewable diesel facility is estimated to have a carbon intensity (CI) rating of 10-20 g CO2eq/MJ, which yields an ~80-90% reduction in greenhouse gas (GHG) emissions based on various viable feedstocks.”

Tidewater says its proprietary process produces renewable diesel that meets all the specifications for diesel in Canada and the U.S. While the technology has been commercialized in Europe, the U.S. and Asia, the Prince George Refinery project would be the first in Canada.

The project would use much of the current infrastructure of the Prince George Refinery, however the project will require the installation of a small boiler, several heaters and six additional storage tanks on the site.

“The gas fired heaters and the small boiler will utilize modern burner technology to minimize combustion emissions,” Tidewater’s report said. “The reformer gas fired heater will be equipped with a Selective Catalytic Reduction (SCR) unit to minimize emissions. SCR is a process capable of abating emissions of nitrogen oxides (NOX) to extremely low levels by utilizing an ammonia catalyst to convert the nitrogen oxides to naturally occurring nitrogen and water.”

A “minimal increase in emissions” were expected as a result of the project.

The rezoning necessary for the project are going before city council on Monday night for first and second reading. Public consultation and a public hearing will be required before council considers final approval of the rezoning.

Tidewater purchased the Prince George Refinery from Husky Energy in 2019.

PrinceGeorgeCitizen, by Arthur William, July 16, 2021