What Critical Data Does Mid-February Bring To Energy Market?

The White House’s unsuccessful attempt to cancel the fiscal year 2023 sale of 26 million barrels of crude kept in US strategic petroleum stocks has provided an unexpected downside for oil price this week, with the ICE Brent-WTI spread widening further to $6.5 per barrel. On the other side, OPEC’s monthly report confirmed its upbeat view of 2023 global oil demand, with the IEA publishing its report on Wednesday.

According to the EIA’s latest Drilling Productivity Report, crude output from the US’ seven biggest shale basins will rise to a record 9.36 million b/d in March on higher Permian production, up 75,000 b/d from this month, setting a new all-time high.

The Russian government is seeking to mandate the lowest possible discounts for its oil exports, setting the price floor for its benchmark Urals grade at a $20 per barrel discount to dated Brent to maximize government revenues from crude sales.

Pursuant to a federal budget mandate enacted in 2015, the Biden administration will be prompted to sell 26 MMbbls of crude from the US strategic petroleum reserves this month, pushing overall SPR stocks as low as 345 MMbbls.

Biden’s administration is in talks with Japan and Britain to form a narrow critical minerals-focused coalition, potentially also joined by the EU, to counter China’s dominance in market segments like lithium, cobalt or graphite refining.

Saudi Arabia Warns Against ESG Bias. Saudi Aramco CEO Amin Nasser stated that environmental, social and governance (ESG) investments are a move in the right direction, however, if implemented with a bias against conventional energy projects they would undermine future energy security.

The EU’s gas market correction mechanism is taking effect tomorrow, Wednesday February 15, launching regulatory intervention whenever front-month TTF prices happen to exceed the LNG reference price by more than €35 per MWh. As the mechanism is becoming effective, natural gas prices in Europe reached 18-month lows on the back of regular LNG shipment arrivals and warmer winter weather, trending at €53-54 per MWh ($18/mmBtu).

The Intercontinental Exchange has come up with an alternative to the EU-controlled TTF prices as a hedge against regulatory intervention, to be launched from February 20 onwards.

French oil major TotalEnergies announced its sixth oil discovery in Suriname’s offshore Block 58, with its Sapakara South-2 well-confirming reserves of some 200 MMbbls at the larger Sapakara play.

Portugal’s national oil company Galp sold all its exploration and production assets in Angola to local firm SOMOIL for $830 million, undergirding its upstream focus on Brazil.

The revision of BP’s cut in hydrocarbon production by 2030 and its newly confirmed intent to produce more oil for longer have angered climate-focused investors who will challenge the decision at the May 2023 shareholder vote.

China’s national oil and gas company CNPC (SHA:601857) is nearing a 30-year LNG supply deal with QatarEnergy that would lock in key volumes from the North Field expansion project, making it the longest term deal ever to be signed.

Exxon Starts Building Guyana Pipeline. US oil major ExxonMobil (NYSE:XOM) has started work on a $1 billion gas-to-shore pipeline stretching from the offshore Stabroek Block some 130 miles towards the continent, set to feed a 300 MW power plant expected to be commissioned in 2024.

In its quest to discover another supergiant field akin to the 30 TCf Zohr, the Egyptian government is planning to hold three oil and gas licensing rounds in 2023, with the first auction already offering acreage in the Mediterranean Sea. The European Union has brokered a deal between Israel and Egypt that could see Israeli offshore gas being sent to the latter’s liquefaction facilities in Idku and Damietta, however, its prospects are murky as the interconnection requires infrastructure upgrades.

Iran builds new tankers for Venezuela. Building on the blossoming relationship with Tehran, Venezuela is reportedly finalizing a deal to contract two oil tankers, to be named India Urquia and India Mara, from Iran’s Marine Industrial Company as part of a revived 2006 deal. Pakistan intends to quadruple coal Capacity. After Europe’s increased LNG buying made liquefied gas too expensive for Pakistan, the South Asian country is planning to quadruple its coal-fired generation capacity to 10 GW (currently at 2.3 GW) to reduce power costs.