Discussing Algeria’s 2019 oil & gas potential

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

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

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

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

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

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

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

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

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Being careful of what Hedge Funds wish for

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

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

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

Replicating a favourite pastime of the inimitable former Saudi Oil Minister Ali Al-Naimi, on this sunny day in Vienna - I could think of nothing better than a brisk walk down the city's Ring Road from the Intercontinental to Rathaus, before the flight home : ) pic.twitter.com/xyEn9IQd9F

— Gaurav Sharma (@The_Oilholic) April 19, 2019

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

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

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

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

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© Gaurav Sharma 2019. Photo © Gaurav Sharma, 2019

Meeting & greeting Emerson's inimitable boss

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

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

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

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

Interested in more? Read the Oilholic's full interview with Farr for Forbes here.

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

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To email: gaurav.sharma@oilholicssynonymous.com

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

Crude 'smart' tech & 'Silicon Bayou'

Days IV and V of CERAWeek 2019 have zipped by with an emphasis on power markets and technology. Since it was all about electricity and technology; here's a photo of ABB's Formula E car on display here in Houston, and yes the Swiss automation and robotics giant's YuMi robot was here too.

Day IV of #CERAWeek2019 is pretty #power & #electricity heavy, so here's a glimpse of an electric Formula E car courtesy @ABBgroupnews pic.twitter.com/a53wu9FV4h

— Gaurav Sharma (@The_Oilholic) March 14, 2019

And here is the Oilholic's full report for Forbes on how technology is making rigs 'smarter'. Its not just the greenfield sites we see this at play in, as a number of brownfield sites are being retrofitted as well to optimise performance and efficiencies. 

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

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

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© Gaurav Sharma 2019. 

Another two 'crude' days at CERAWeek '19

Day II or Tuesday (March 12) of CERAWeek zipped by, Wednesday is about to come to a close here in Houston and there have been several discussion points. Where to start when penning thoughts on the last 48 hours - a lot of plaudits were won by BP boss Bob Dudley's dinner speech overnight on the evolving oil landscape. 

"Oil and gas majors need to recognise the world's low carbon future. They need to be progressive for society and pragmatic for investors," he noted to considerable applause.

Earlier on Tuesday, OPEC Secretary General Mohammed Barkindo took to briefing journalists and analysts. Key points made included being 'apolitical' on the Venezuelan situation and launching a polite but firm attack on efforts by US lawmakers to hit OPEC with antitrust action - dubbed the No Oil Producing and Exporting Cartels (NOPEC) Act. Here's yours truly's full report for Forbes. 

The UAE government envoys were also in town promoting their catchy 'Oil and Gas 4.0' drive ranging from investing in digital assets to upskilling and hiring, from AI to robotics. William Clay Ford Jr was around too telling CERAWeek when Ford's F-150 truck's electric version is available it'll be a "completely different animal" and also admitted he had a soft sport for the Mustang. 

On Wednesday (March 13), Centrica Group CEO Iain Conn said societal pressures, e.g. UK government's energy price cap, are eating into utilities sector's operating margins, and that (yes) natural gas will serve as a bridging fuel for decades. 

Away from Brexit chaos back home, he also noted: "While the energy market will not be materially disrupted by Brexit; UK energy consumers would be left worse off if a declining GBP contributes to higher domestic energy bills linked to global markets."

US Energy Secretary Rick Perry also turned up for his second successive CERAWeek making a wide range of points from sanctions on Venezuela to President Donald Trump's opposition to NordStream 2. 

.@SecretaryPerry at #CERAWeek: What is afoot in #Venezuela is 'inhumane' & 'unconscionable' and the US will use every economic tool available against the Maduro regime in support of the Venezuelan people #OOTT #oilandgas #CERAWeek2019 pic.twitter.com/g2bKzUBv5t

— Gaurav Sharma (@The_Oilholic) March 13, 2019

Finally, here is the Oilholic's take on what ExxonMobil's Marine Fuels business makes of the approaching IMO 2020 rule. Well that's all for the moment, more from Houston soon. Keep reading, keep it 'crude'!

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To email: gaurav.sharma@oilholicssynonymous.com

© Gaurav Sharma 2019. Photo: BP CEO Bob Dudley addresses CERAWeek 2019 © Gaurav Sharma 2019.