The Alberta Energy Regulator has ordered the immediate suspension of 15 pipeline licenses issued to Nexen, the Canadian unit of China’s Cnooc Ltd., after finding “noncompliant activities” at the company’s Long Lake oil-sands operations. The order results in the closing of 95 pipelines carrying natural gas, crude oil, salt water, fresh water and emulsion, the regulator said in a statement late Friday.
Democrat Tom Carper became the 30th U.S. senator to support the nuclear agreement with Iran, leaving President Barack Obama just four votes short of preventing Congress from blocking the deal.
Russia took another step toward changing how it taxes the oil industry after the Finance Ministry proposed reducing its reliance on duties tied to crude production with a new levy on earnings. The ministry sent this month a preliminary plan on new taxes to oil producers and officials, two people with direct knowledge of the matter said, who asked not to be identified because the matter is private. The proposal would keep Russia’s export tax, reduce its production levy and introduce a charge of 70 percent on profit from oil projects, they said. “Discussions will continue, but this is an important step forward,” Alexey Kondrashov, Ernst & Young LLP’s global oil and gas tax leader based in Dubai, said by phone. “Russia taxes primarily oil production and export, thus heavily relying on a royalty-based system. The share of profit-based taxes is almost negligible,” which prevents development of more sophisticated extraction projects, he said.
Oil has lost a third of its value in two months, bringing U.S. drivers within pennies’ reach of $2.50 gasoline. And there’s at least one thing standing in the way of a steeper decline at the pumps: ethanol. While the crude rout dragged gasoline futures down about 60 cents a gallon, ethanol’s dropped a mere 15 cents -- making it costlier than gasoline this week for the first time since January.
China’s biggest oil companies say they’ll cut costs, but not employees. As the collapse in crude prices curbs profits and prompts a wave of layoffs in the energy industry from Schlumberger Ltd. to Royal Dutch Shell Plc, Chinese state energy giants say their employees are safe. The oil and gas industry has cut more than 176,000 jobs globally this year and more reductions are likely, according to Swift Worldwide Resources. While eschewing those layoffs may avoid a repeat of protests early last decade when China Petroleum & Chemical Corp. and PetroChina Co. fired tens of thousands of workers, it’s going to make further cost savings a challenge, said Gordon Kwan, a Hong Kong-based analyst at Nomura Holdings Inc.
While OPEC’s fight to snatch market share from rival oil producers might look like a costly failure as prices languish below $50 a barrel, an entirely different picture could emerge next year. Supplies outside OPEC are expected to contract in 2016 for the first time since 2008, sliding by 200,000 barrels a day, according to the International Energy Agency. With consumption set to grow by 1.4 million barrels a day, OPEC and its de facto leader Saudi Arabia could seize the chance to broaden their market as competitors damaged by the price slump fall off. “To declare their policy a failure is a pretty big leap,” said Greg Sharenow, who manages $15 billion as executive vice president of Pacific Investment Management Co. “I don’t think you could view Saudi and OPEC’s business plan and model as being a six- or 12-month view. In the long-run, what you’re going to see is lower non-OPEC supply, higher demand and greater market share for them.”
Oil headed for its biggest weekly advance since April after rising the most in more than six years as U.S. economic growth beat forecasts. Futures climbed as much as 2.1 percent in New York, extending a 10 percent rally on Thursday. U.S. gross domestic product increased at a 3.7 percent annualized rate in the second quarter, exceeding all projections in a Bloomberg survey of economists. The nation’s crude stockpiles declined last week, paring a surplus, government data showed Wednesday. Oil is poised for its first weekly gain in nine weeks, sustaining a rebound above $40 a barrel as concerns eased over a slowdown in the U.S. and China. Prices fell Monday to the lowest close since February 2009 and are still down almost 20 percent this year on signs a global supply glut will persist.
The UK proposed to end an assistance program for small-scale renewable energy projects as part of a drive to cut the costs to consumers of subsidizing clean technologies. Ministers plan to cap the budget for the assistance and end it for new entrants after March 2019, according to the proposals outlined Thursday on the Department of Energy and Climate Change website. If it isn’t possible to rein in spending, the program of guaranteed electricity prices, known as feed-in tariffs, may close in January, it said. The tariff program “has exceeded all renewable energy deployment expectations,” the government said. “However, this deployment success has also come with costs exceeding our projections.”
Norway’s sovereign wealth fund, the world’s biggest, lost more than 5% on its investments in the past month, the head of the $830billion fund said. The revelation follows the biggest selloff in Chinese stocks in two decades. The most recent developments suggest China’s transition to a more consumer-driven economy is proving difficult, Chief Executive Officer Yngve Slyngstad said Wednesday in the Staavi and Valebrokk podcast for newspaper VG. “We can’t put everything away safely into the bank -- we need to invest in risk,” Slyngstad said in the podcast. “We invest in bonds, we invest in stocks and we invest in real estate, in the world economy.”
If there was any question over whether this year’s oil crash would give rise to a new era of energy megadeals, there isn’t anymore.
At a time when the oil price is languishing at its lowest level in six years, producers need to find half a trillion dollars to repay debt. Some might not make it. The number of oil and gas company bonds with yields of 10 percent or more, a sign of distress, tripled in the past year, leaving 168 firms in North America, Europe and Asia holding this debt, data compiled by Bloomberg show. The ratio of net debt to earnings is the highest in two decades. If oil stays at about $40 a barrel, the shakeout could be profound, according to Kimberley Wood, a partner for oil mergers and acquisitions at Norton Rose Fulbright LLP in London. West Texas Intermediate crude was up 2.3 percent at $39.47 a barrel at 1:43 p.m. in Singapore.
Norway’s krone slid the most in more than two months against the dollar as a report showed the unemployment rate rate unexpectedly rose in June.
Investors sent a surprising message to U.S. shale producers as crude fell almost 20 percent in August: keep calm and drill on.
Transocean Ltd., the world’s top offshore rig operator, plans to halt investor payouts and book 2 billion Swiss francs ($2.1 billion) in asset impairments as an oil price crash weakens demand for its drillships.
Oil swung between gains and losses, staying below $40 a barrel, amid speculation U.S. crude stockpiles expanded for a second week. Futures were little changed in New York after rising 2.8 percent Tuesday. Inventories probably increased by 1.45 million barrels through Aug. 21, a Bloomberg survey showed before a report from the Energy Information Administration on Wednesday. Venezuela is seeking to promote cooperation between OPEC and Russia, the world’s biggest crude producer, according to President Nicolas Maduro.
Oil at $77? It is in Argentina.
Russia’s Federal Security Service, the main successor to the KGB, is holding up Schlumberger Ltd.’s acquisition of a 46 percent stake in Eurasia Drilling Co., according to two people with knowledge of the matter. The FSB, as the service is known, is concerned that Schlumberger would have too much influence in Russia’s oil- services market, according to the people, who asked not to be identified because the talks are private. Schlumberger, based in Houston and Paris, offered to buy the Eurasia stake for $1.7 billion in January, with an option to acquire the rest of the country’s largest oil-services company. “It is very much a political rather than a practical thing that can be addressed by Schlumberger and ourselves,” Eurasia Vice President Tom O’Gallagher said on a conference call Aug. 20. “We don’t know what the concerns are.” Eurasia Drilling’s global depositary receipts dropped 13 percent to $10.47 on the London Stock Exchange by 9:23 a.m., the lowest intraday price since December. The acquisition would give a Western company increasing influence in Russia’s most important industry as relations with the U.S. and European Union suffer because of the conflict in Ukraine. Both have already banned exports of some drilling technology to Russia.
The global oil market is healthier than it looks, signaling that crude’s plunge to six-year lows has probably gone too far. While futures tumbled below $45 a barrel in London for the first time since 2009, Morgan Stanley and Standard Chartered Plc say other measures suggest physical markets for crude have stabilized or even strengthened in recent weeks. China, the world’s second-biggest oil consumer, will keep buying extra barrels to fill its strategic reserve this year, according to Goldman Sachs Group Inc. “While oil fundamentals aren’t strong, physical markets do not corroborate the substantial weakness in flat price,” New York-based Morgan Stanley analyst Adam Longson said in a report Monday. The “latest oil pricing pressure appears more financial than physical.”
Indian money managers are starting to see the glass as half full in their company earnings outlook. Falling oil prices are underpinning expectations that the worst is over for corporate profits as savings translate into higher investment and consumer spending, despite the worst equity losses in six years on Monday amid a global rout. The S&P BSE Sensex earnings climbed 1 percent in the quarter to June, following a 45 percent drop in the prior three months, data compiled by Bloomberg show. The 57 percent drop in Brent crude in the past 12 months will save the government about $50 billion a year, estimates Ramesh Damani, an investor and a member of BSE Ltd., Asia’s oldest bourse. Sensex earnings will jump more than 40 percent in the coming year, forecasts compiled by Bloomberg show.
America’s suffering shale patch is about the only place in the U.S. where there’s nostalgia for the dark days of the financial crisis. While the global economy started to unravel in 2008, it was also the beginning of the biggest oil boom in U.S. history.
The global selloff in riskier assets deepened, spurring the biggest drop in Asian shares since 2013 and sending emerging-market currencies to the weakest levels on record. U.S. 10-year yields dropped below 2 percent. Commodity prices sank to a 16-year low, while credit risk in Asia increased to the highest since March 2014. The yen rallied and government bonds rose as investors sought haven assets. China’s Shanghai Composite Index tumbled 8 percent, while U.S. equity-index futures signaled a fifth straight day of losses. The rand and ringgit both dropped more than 2 percent.
Oil in London slid below $45 a barrel for the first time since March 2009 as Iran reiterated it will boost production and U.S. drillers showed no signs of slowing. Brent futures fell as much as 2.7 percent, extending a 7.3 percent drop last week, the most in five months. Iran will expand output “at any cost” to defend market share, Oil Minister Bijan Namdar Zanganeh said, according to his ministry’s news website. The number of active oil rigs in the U.S. rose for the seventh time in eight weeks, Baker Hughes Inc. data showed Friday.
Santos Ltd., Australia’s third-largest oil and gas producer, posted an 82 percent slump in first-half profit after a fall in oil prices. Net income fell to A$37 million ($27 million) in the six months ending in June, from A$206 million a year earlier, the Adelaide-based company said Friday in a statement. That compared with an estimate of A$41 million from Macquarie Group Ltd.
The oil price was near its lowest in more than a decade, cash reserves were being depleted, emerging markets were in turmoil and Saudi Arabia was beginning to panic. “It was a very scary moment,” said Khalid Alsweilem, former head of investment at the Saudi Arabian Monetary Agency, the country’s central bank. “And luckily at that point, oil prices started going up. Not by design, by good luck.” That was 1998, and now Saudi Arabia’s fortunes threaten to turn again. This time, luck might not be enough as the government tries to protect the wealth of a nation whose economy has swelled by five times since then. The bastion of conservative Sunni Islam also is paying for an expanding role in regional conflicts in the face of a resurgent Iran and Islamic State extremists who have bombed Saudi mosques.
Santos Ltd. Chief Executive Officer David Knox will step down after seven years in the role as the Australian oil producer reviews its options amid a plunge in crude prices, the company said Friday. Knox will depart once a successor has been named, the Adelaide-based company said in a statement after reporting an 82 percent drop in first-half profit. The slide in oil prices has put pressure on Santos as the company prepares to start its $18.5 billion liquefied natural gas project in Queensland state. The Australian energy producer has cut spending and jobs while flagging the possibility of asset sales as it copes with the oil market downturn. Santos shares have fallen 62 percent in the last year.
