Wednesday, March 20, 2024
CERAWeek Day III: On peak oil demand & more
Tuesday, March 19, 2024
CERAWeek Day II: OPEC ministerial no shows & more
However, many of the bosses of their state-owned oil and gas companies are here in fine voice, most notably, Amin Nasser, CEO of Aramco, Nawaf Al-Sabah, CEO of Kuwait Petroleum Corporation, and Mele Kyari, CEO of Nigerian National Petroleum Company.
One notable absentee among their ranks was Sultan Al Jaber - the President of COP28, UAE Special Envoy for Climate Change and Minister of Industry and Advanced Technology and Managing Director and - Group CEO of ADNOC.
However, he did appear virtually to receive the CERAWeek Leadership Award recognizing his leadership at COP28 to deliver the UAE Consensus for a global agreement on a sustainable energy future.
"I am deeply honored to accept the CERAWeek Leadership Award for the UAE Consensus," Al Jaber said upon receiving the award. "In a world too often held back by conflict, the UAE Consensus brought nations together to take a giant step forward for climate progress.
"Multilateralism overcame geopolitics to produce an unprecedented agreement to produce a fair, orderly and responsible energy transition. In short, COP28 was a success because of its full inclusivity. Everyone had a seat at the table, everyone was invited to contribute, and everyone did contribute."
Meanwhile, Mike Wirth, CEO of Chevron, appeared at CERAWeek to express his "surprise" when ExxonMobil moved to arbitration over Guyana. Wirth also flagged his company's ongoing geothermal pilot program. Murray Auchincloss, CEO of BP, chose to big up his upstream business, while Ryan Lance, CEO of ConocoPhilips, said the wave of upstream oil and gas M&A "is not done yet".
That wave saw $234 billion worth of deals in 2023. Additionally, and quite interestingly, Lance seemed to suggest that US oil production will likely rise from its current level of 13 million barrels per day to 14 million bpd before it plateaus.
Monday, March 18, 2024
CERAWeek Day I: Aramco sets its stall in Houston
Sunday, March 17, 2024
Heading to CERAWeek with oil north of $85/bbl
Looking like another rainy morning departure from @HeathrowAirport; waiting @British_Airways South Galleries Lounge for BA195 to Houston, watching hustle & bustle of airport. Cheers to a productive week ahead. Looking forward to meeting old friends & making news ones at #CERAWeek pic.twitter.com/WKR5DdXZfd
— Gaurav Sharma (@The_Oilholic) March 17, 2024
Brent crude oil is lurking north of $85 per barrel as the Oilholic heads down south (from London) to Houston for CERAWeek 2024. The current level would make it a 4-month high. It's what two geopolitical variables and tight inventories can 'crudely' do. More musings to follow from H-Town soon folks. Looking forward to it, meeting old friends, making new ones (and news ones too!). Keep reading, keep it here, keep it 'crude'!
Friday, March 15, 2024
Chat on software-led sustainability with AVEVA's CEO
Thursday, March 14, 2024
Onsite with Coolbrook and its 'electric factory' pilot
Yes indeed, you read that one correctly dear readers - an 'electric factory' concept that could in the fullness of time lead us to re-imagine the industrial complex and substantially lower the carbon footprint of heavy industries and petrochemical plants.
To make sense of it all, the company's CEO Joonas Rauramo kindly agreed to explain the process and take this blogger around. The idea is to substitute heat sources / furnaces in use at heavy industries currently running on fossil fuels with an electrical power source.
For that Rauramo and Coolbrook have come up with the company's patented RotoDynamic technology - which uses a rotating device powered by electricity to generate heat without burning anything. "So basically air or for that matter a large range of gaseous substances / inert gasses go in where a high-speed 0.8 MW electric motor accelerates them with mounted rotating blades. Subsequent deceleration leads to the generation of a shock wave that converts kinetic energy to thermal energy," Rauramo explained.
The heat generation is in milliseconds and is not transferred from outside through a surface, rather volumertically inside the gas. And we are talking temperatures of up to 1700 C. Now the Oilholic knows the questions on many of your lips - does it really work and did this blogger get to look under the hood of the machine? The firm answer to both questions is yes.
While photography was not permitted in certain areas of the project, The Oilholic was given full access to view and examine both the project set-up as well as its key components, and interview a range of personnel working onsite. It's doubtful a company would open its doors to your truly and provide this level of access if it had to something hide, or was still faking it till it made it.
Furthermore, the test pilot has already achieved temperatures of around 1000 C. Project research and development is constantly independently verified (and monitored both onsite and remotely), several universities including Cambridge, Oxford and Ghent are involved, while Swiss industrial giant ABB is the technical partner on the project. Finally, the commercial launch appears to be on the horizon early in 2025.
Now just re-imagine old versus the new industrial energy chain as illustrated by Coolbrook below (click to enlarge):
Makes you think about the immense possibilities it offers for lowering the global industrial complex's carbon footprint if the electricity that's powering the machine comes from renewable sources as well.
Coolbrook's RotoDynamic has two modes - one a heating only machine and the other a reactor aimed at the petrochemical industry wherein the technology can be deployed not just for heating but cracking hydrocarbons as well. The kit can be fitted on both greenfield as well as brownfield sites.
Coolbrook has identified over 40 uses cases but the most obvious ones would be cement, iron, steel, glass, chemicals and petrochemicals. The company's modeling points to a reduction of 2 billion tonnes in CO2 emissions annually if traditional heat sources are substituted by its technology.
Of course, the transition will not be easy and there are other low to zero carbon techniques being explored. Rauramo was quick to assert that what Coolbrook is attempting is "50% more efficient" than hydrogen predicated alternatives and is "cheaper too."
As for those in the industry looking at RotoDynamic from an outside-in perspective, The Oilholic observed quite a few tangible benefits.
Process efficiency is an obvious one and comes in many forms ranging from lower energy bills and a carbon footprint to potentially higher plant throughput. The compact size of Coolbrook's offering is also an attractive one. So, by this blogger's reckoning, for say a petrochemical plant, we're talking roughly one-tenth the space needed for the company's reactor kit versus a traditional reactor.
Capex and opex considerations matter hugely and the product is yet to hit the commercial world. But should the RotoDynamic technology meet its full potential, capex and opex will likely be competitive near-term, and could be way lower over the medium-term.
Tuesday, March 05, 2024
Quickfire visit to the Economist Sustainability Week
In a day packed with interesting sessions, three of which this blogger found time to attend, the expected conjecture was that there aren't any viable commercial models to leave things as they are in a world facing climate change. So, should you buy that supposition, the next inevitable question is how to finance the energy transition? To this end, an afternoon session - Financing net zero: assessing and accelerating green finance - really stood out.
Some of the profound discussion slants included - how are companies building on the progress of previous years and what strategies are they implementing to boost the deployment of green finance further? What kinds of green investment funds are helping to "finance an inclusive climate transition"?
The panel included Heather Buchanan, Chief Executive and Co-founder, Bankers for Net Zero, Nicki Harrison, Director, Sustainable Finance, Europe, Environmental Defense Fund Europe, Evelina Olago, Managing Director of Client and Strategy, Just Climate, and, of course, The Economist's very own global energy and climate innovation editor Vijay Vaitheeswaran.
There was plenty of interesting chatter among the panellists about asset managers making informed decisions based on data, predictive analytics, IIoT, and all the rest, as well as genuinely linking transition finance to greener pathways, including green bonds and equity investments.
But all is not plain sailing, and quite frankly no one expects it to be so. For starters corporate balance sheets are stretched. We are in a high interest rate climate, and will likely remain so near-term. Both will trigger caution when it comes investing petrodollars towards green causes. Private equity players - typically keen backers of viable cleantech forays - are also holding back given the uncertain climate.
However, products and services aimed at decarbonisation continue to strengthen, said the panellists. But they also made one key observation that chimes with market intel obtained by the Oilholic - the anti-ESG backlash (or movement if you wish) has indeed had a chilling effect of late on financing greener initiatives.
That is particularly true in the US in an election year that is going to be a rematch between incumbent Joe Biden and the man he ousted from the White House - Donald Trump. Therefore, a lot may depend on the post-November discourse, and a possible Trump presidency could materially alter the green finance landscape both in the US and abroad.
And on that thought, it's time to say goodbye. There are two energy site visits coming up plus the little matter of CERAWeek in Houston. So more musings to follow soon. Keep reading, keep it here, keep it 'crude'!
Monday, March 04, 2024
OEG Energy site visit & a 'crude' chat with its boss
The scene of the walkabout was the global mission critical offshore logistics group's state-of-the-art Cairnrobin chemical plant.
This impressive six acre site, just south of Aberdeen's city centre, serves as OEG's storage, servicing and processing hub for a wide range of chemicals and aviation fuel on behalf of a veritable-who's-who of the energy business. It was fascinating to observe the place, its personnel, their processes and top-notch North Sea standard protocols on safe and secure handling of their operational tanks.
The site visit was followed by a long overdue conversation with Heiton about how he is reshaping OEG along two offshore business silos under one group umbrella - traditional offshore energy and renewables. As it appears, after three years of painstaking work and over a dozen acquisitions, in 2023 the company managed the milestone of a near 50%/50% split in revenue between its traditional and renewables units.
Heiton described it as the inexorable direction of travel for OEG, with double-digit growth expected for OEG's renewables business over the near-term, and solid single-digit growth for traditional energy boosted by operations in emerging oil and gas extraction hubs like Guyana and Suriname, and established ones in Africa and the Middle East.
"However, shipping rates from Australia to China have also gone up and there are no security issues there! So while some of the cost hike (since November) is related to the troubles in the Red Sea, shipping lines may also be using it as an excuse," Heiton said.
On the subject of oil demand growth in 2024, OEG is going with the International Energy Agency's conservative forecast of 1.1 million barrels per day (bpd). "Part of it has to do with operational prudence in going for the lower end of global oil demand growth forecasts, rather than much higher forecasts out there.
"However, where demand growth goes this year does not materially impact us as a business because a lot of global spare capacity is onshore based. Volume produced by the offshore fields we service doesn't make much of a difference to us as a critical logistics provider. They'd ultimately still require broadly similar levels of outsourced services we provide to the facility/platform in question."
Sunday, February 18, 2024
Rising shale output & oil's recovery to November levels
Wednesday, February 14, 2024
On modest crude price gains and more
In fact, it's something yours truly agreed with former BP boss Bob Dudley back in 2017 at the World Petroleum Congress in Istanbul, who if the Oilholic recollects well, was positioning his company to even weather a $30 per barrel oil price. Speaking of CEOs, Occidental's boss Vicki Hollub told Business Insider that oil oversupply may well be keeping prices low, but the situation is about to flip!
And of course, Goldman Sachs analysts reckon we may be about to enter a commodities supercycle with a potential for driving oil prices as high as - yup you guessed it - $100 per barrel. Well we shall see, but for now $70-$80 will do, and the Oilholic seriously doubts we'll hit $100 imminently! Elsewhere, oil giant BP hiked its dividend by 10% and accelerated the pace of share buybacks in a bid - by its new CEO Murray Auchincloss - to woo investors.
And finally, here is one's take via Forbes on US President Joe Biden's arguably barmy plan to pause the approvals of new LNG export projects for a review. All at a time when his country has become the world's largest LNG exporter! Clever eh? Well that's all for now folks. More market thoughts to follow later in the month. Keep reading, keep it here, keep it 'crude'!
Wednesday, January 31, 2024
The mad first month of crude trading year 2024
As the first month of the current oil trading year nears its end, the Oilholic's thoughts on the direction of crude prices hasn't materially altered. We're likely to see prices oscillate in the range of $70 and $85 per barrel in 2024, using Brent as a benchmark. And that's because the bearish bias in wider market fundamentals remains the same in a different trading year, despite all the geopolitical flare-ups we've seen October. We'll touch on those later in this blog. However, admittedly it has been the maddest possible start to trading.
Feeling the pulse of the market and tepid demand, the Saudis made two profound short- and medium-term decisions. The first came early in the month after Aramco - the Saudi state-owned behemoth - announced a cut to official selling prices (OSPs) for all regions, including lucrative Asian markets, for several crude grades. These included Aramco's flagship Arab Light crude oil. Aramco said cuts in Asia would be as high as $2 per barrel versus the Dubai Oman regional crude benchmark from January levels.
The Saudis, having voluntarily cut their headline production down to 9 million barrels per day (bpd), want to make sure every single drop of it gets sold in a competitive market receiving plenty of barrels, especially of US light crude.
The second move came late-January, after Aramco said it was stopping its expansion plans and concentrating on a maximum sustained capacity of 12 million bpd. This immediately generated headlines along the lines of the Saudis acknowledging the end of oil, which, as the Oilholic said via market commentary on several broadcasters, is a load of rubbish.
Aramco plans to finish the oilfields it has started - namely Berri (250,000 bpd), Dammam (75,000 bpd), Marjan (300,000 bpd) and Zuluf (600,000 bpd). There's only one project cancellation and the company intends to let some other existing fields decline. So with respect, it is nothing more than a pragmatic business move faced with changing medium- to long-term demand in a market the Saudis hope to tap with aplomb for as long as they can.
Away from Saudi moves there were geopolitical flash points aplenty. But none of these managed to move the oil price quite like they used to back when US crude barrels weren't keeping the global markets honest. Following weeks of attacks by Yemen's Iran-backed Houthi rebels on energy and commercial shipping in the Red Sea, the US and UK pounded Houthi positions and infrastructure. The Houthis vowed a response and their sporadic attacks on shipping continued.
Then on January 28, after over 170 drone and missile attacks on US bases in Syria, Jordan and Iraq since October by Iran-backed proxies in the Middle East, one got through and killed three service personnel. The US' imminent response is to be expected and could mark a dangerous escalation. Where this goes is anybody's guess. But an attack by the US on Iranian soil appears unlikely. (Should it happen, and its hasn't since the 1980s, we could see crude prices around the $90s).
As things stand, crude prices remain range bound. January offered precious little to alter this despite it being one of the most volatile starts to a trading year. Well that's all for now folks. More market thoughts to follow. Keep reading, keep it here, keep it 'crude'!
Saturday, January 20, 2024
Getting going in 2024 after a break!
Saturday, November 11, 2023
Can oil really hit $150? (And more!)
With hostilities in the Middle East failing to lift crude prices despite all the talk of risk premiums and potential supply disruptions, being bullish about oil early in 2024 is proving hard. That's because concerns over crude demand are outweighing concerns over supply.
We're talking muted demand from the economic powerhouses of Germany and China, lower consumer confidence levels in key OECD markets and elevated interest rate levels kept there by major global central banks, especially the US Federal Reserve.
It therefore came as a surprise to The Oilholic when the World Bank opined that crude prices could hit $150 if hostilities in the Middle East escalate! Here are this blogger's thoughts on that via Forbes. Simply put - don't hold your breath!
And let's not forget, Brent hasn't even capped a more realistic $100 per barrel level the bulls crave. The benchmark's January 2024 contract is barely higher than current levels, and contracts further out into the summer of next year are even lower. That implies Brent remains in backwardation mode.
Away from the crude price, the latest quarterly earnings posted by energy majors provided plenty of talking points. More so, after the return of megadeals as ExxonMobil swooped for Pioneer Natural Resources and Chevron swooped for Hess Corp.
Other deals may follow as the energy majors fish for viable plays. It's led many, including this blogger, to wonder if a supermajor itself could be vulnerable? The prime candidate for finding itself in this position is BP; a chronically undervalued supermajor in the Oilholic's opinion. More on the subject here via Forbes.
Is it possible? Yes, especially in a industry built on big ticket deals. Will it happen? Probably no, not least down to BP's $100 billion plus valuation (however discounted that may appear to some). But as yours truly noted on Forbes - that the company has had to bat away questions about being a takeover target is pretty extraordinary and indicative of how far it has fallen. Well that's all for now folks. Keep reading, keep it here, keep it 'crude'!
Wednesday, November 01, 2023
The challenge of producing more industrially with less
From the standpoint of the hosts - industrial software solutions and consulting firm AVEVA - the pathway forward is all about creating a connected industrial ecosystem. One that offers a gateway to an unlimited world of data analytics, including third party analytics, with everything focused on one key priority - how to efficiently, safely and diligently improve throughput whilst using less energy and resources.
AVEVA's corporate take goes along the lines of "working to build a new industrial ecosystem, defined by agility, resilience and sustainability. By connecting [clients'] teams with trusted information and insights, powered by the cloud, and finding new ways to deliver life’s essentials – while driving responsible use of the world’s resources."
There was also plenty of chatter on deriving multifaceted value from AI, and viewing it as an ally or enabler rather than a threat. Both AVEVA and its customers, including the likes of Mitsubishi Power, Yinson and Henkel, appeared to be pretty candid about the constructive deployment of AI. Read more about it in The Oilholic's latest Forbes post here.
Part of being bold or having bold aspirations - especially for the energy, oil and gas sector - is embracing the technological solutions of our age provided by the likes of AVEVA, and of course, its peers. Going by the interest AVEVA's software products suite generated in San Francisco and the number of energy players in town, The Oilholic reckons that the message is cutting through big time. Well that's all for now folks. Keep reading, keep it here, keep it 'crude'!
Wednesday, October 25, 2023
Connected energy solutions at AVEVA World 2023
A content packed start to the conference, being held at San Francisco's Moscone Center, has seen wide ranging discussions on connected solutions in the industrial software space, cloud-based applications and how the energy industry can turn volatility and challenges over meeting sustainability targets into opportunities. Afterall, the sector is pursuing a deep transformation to become more sustainable as well as ensure that the world's needs are met. Technology provides many, if not all, of the answers.
Kicking off proceedings, Caspar Herzberg, CEO of AVEVA, talked of exploring use cases for a sustainable industrial ecosystem - one that's connected and utilizes the power of big data and a seemingly unlimited world of data analytics. And of course, placing the company's platform agnostic AVEVA Connect product suite at the heart of this connected industrial ecosystem.
"Those that master this art [of a connected, sustainable industrial ecosystem] will outperform other systems," Herzberg said in his keynote. The AVEVA boss' pitch is a clear and simple one to energy, heavy industrials, mining, metals, companies, and indeed other sectors - tie in process efficiencies, improved throughout and sustainability, take learnings from data using AI solutions, and the results would become evident.
Those results include energy efficiency pathways that are 20% better and would invariably help in lowering carbon emissions. One enabling solution is digital twin technology. Read more about it and this blogger's conversation with AVEVA's Head of Research and Innovation Simon Bennett on Forbes.
There's more to come from AVEVA World 2023 - an event Herzberg himself described on Tuesday as one of the largest gathering of industrial software professionals and specialists in the world. That appears to be around 2,500 attendees and counting.
Away from the event, here is the Oilholic's latest piece for The Motley Fool on BP's share price direction, and how significant the appointment of its next CEO could be. That's all for now folks. Keep reading, keep it here, keep it 'crude'!
Thursday, October 19, 2023
'Crude' chat with Afentra Plc CEO Paul McDade
Here are some thoughts via Forbes on what may or may not move the risk premium needle, and it must be noted that crude benchmarks are still way short of the perma-bull pipedream level of $100 per barrel.
As volatility bites, what do industry operators do to cut out the noise? The Oilholic recently turned to one industry stalwart for his thoughts on the near to medium-term direction of the crude market and approach to a volatile pricing environment - Paul McDade, CEO of West Africa focussed Afentra Plc (LON: AET), and former boss of Tullow Oil.
According to McDade there's no such thing as an optimum or ideal oil price. "I often get asked what is the right oil price assumption for my business, and my answer is wherever our carefully considered hedging strategy takes us. I place a lot of faith in hedging because we operate in a cyclical industry.
"We see hedging [or shall I say our hedging program] not as a tool for market bets but rather as a form of business insurance, and it all depends on the payback period. If the payback period is a year, you are OK to assume a base of $80 per barrel. But if its five years you would be crazy not to be a little bit conservative, workout what does the downside looks like and be prudent."
More generally speaking, McDade is bullish on the oil price for 2024 and indeed the next five years. "However, there will always be market noise and volatility that's typically associated with our industry. So if you ask me, could oil slip down to $60 per barrel at some point in 2024? Yes that's likely, but the upside would ultimately go further."
To read the Oilholic's full interview with McDade for Forbes, and learn more about Afentra's journey please click here. More on market developments to follow over the weekend, but that's all for now folks. Keep reading, keep it here, keep it 'crude'!
Wednesday, October 11, 2023
Media missives from ADIPEC 2023
Yours truly also hit the airwaves to discuss the various soundbites coming out of the conference and various developments in Abu Dhabi, all in the midst of a very volatile crude oil market riddled with demand concerns, supply-side tightening and geopolitical complications. The final broadcasting call before departing was with Asharq Bloomberg News, with this blogger's week out in Abu Dhabi peppered with plenty of other missives via the keyboard for Forbes, the Motley Fool, and of course via this blog.
All blog entries for each ADIPEC day may be found here.
Some commentary on Shell's share price direction via the Motley Fool may be found here. And here are selected Forbes copies in chronological order based on soundbites and insight from ADIPEC 2023.
- Emirati COP28 President Calls For A "Just, Orderly, Equitable And Responsible" Energy Transition, October 2, 2023.
- India "Will Manage" And Won't Panic If Oil Rises Above $100, Says Energy Minister, October 3, 2023.
- Abu Dhabi To Unveil World’s Fourth Largest Solar Farm "Very Soon", October 4, 2023.
- Oil Futures Slump Further On Uncertain Global Demand Outlook, October 5, 2023.
- Abu Dhabi In First Wind Farm Launch As 2GW Solar Project Nears Completion, October 8, 2023.
- 4 Middle East Geopolitical Scenarios That May Hike Oil Market Risk Premiums, October 9, 2023.
- Scaling Technology And Willpower Critical For 'Fast-Tracking' Global Energy Transition, October 10, 2023.