Venezuela faces sharper output drop in August
Venezuela faces an even steeper decline in oil production in August as a result of an extensive blackout around Lake Maracaibo. The country's official July output averaged 1.469mn b/d, a loss of 62,000 b/d from 1.531mn b/d a month earlier, according to energy ministry data provided to Opec. The official figure is 57,000 b/d lower than the 1.526mn b/d state-owned PdV reported for July in an internal upstream report. The average of secondary sources reported by Opec was 1.278mn b/d in July, down from 1.325mn b/d in June. Venezuela's waning oil output has accelerated over the past year because of falling oil revenues, steep cuts in maintenance and investment, frequent blackouts and labour shortages. "There are many reasons to believe that production is a lot lower than [PdV is reporting]," a company official says.
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Chevron’s oily DJ basin buy boosts gas output
Chevron’s oily DJ basin buy boosts gas output
New York, 3 May (Argus) — Chevron's US natural gas production has surged in recent quarters due to its crude-focused acquisition of Denver-based PDC Energy last August, increasing the oil major's exposure to the US gas market months after that market entered an extended price slump. Chevron's US gas production in the first quarter was 2.7 Bcf/d (76mn m3/d), up by 53pc from the year-earlier quarter and the highest since at least 2021, according to company production data. Chevron's total US output rose by 35pc year-over-year to 1.57 b/d of oil equivalent (boe/d), while US crude output increased by 21pc to 779,000 b/d. The acreage Chevron picked up last year in the DJ basin of northeast Colorado and southeast Wyoming has higher gas-oil ratios than the rest of its US portfolio. Chevron mostly focuses US production in the crude-rich Permian basin of west Texas and southeast New Mexico. Since Chevron closed its acquisition of PDC on 7 August, US gas prices have mostly languished in loss-making territory. Prompt-month Nymex gas settlements at the US benchmark Henry Hub from 7 August 2023 to 2 May 2024 averaged $2.46/mmBtu, down from an average of $4.999/mmBtu in the year-earlier period. In a May 2023 conference call over Chevron's acquisition of PDC, chief executive Mike Wirth expressed optimism for the long-run outlook for natural gas, despite the more immediately dim outlook. "There's going to be stronger global demand for gas growth than there will be for oil over the next decade and beyond as the world looks to decarbonize," Wirth said. Despite lower US gas prices, Chevron has captured $600mn in cost savings from the PDC acquisition between capital and operational expenditures, the company told Argus . Crude prices have also been more resilient. Chevron's profit in the first quarter was $5.5bn, down from $6.6bn in the year-earlier quarter, partly due to lower gas prices. US gas prices have been lower this year as unseasonably warm winter weather and resilient production have created an oversupplied US gas market. A government report Thursday showed US gas inventories up by 35pc from the five-year average. By Julian Hast Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Kazakhstan outlines Opec+ compensation plan
Kazakhstan outlines Opec+ compensation plan
London, 3 May (Argus) — Opec+ member Kazakhstan has submitted a plan to Opec detailing how it intends to compensate for producing above its crude production target in the first four months of the year. Kazakhstan and Iraq — which has also submitted a compensation plan — are the Opec+ alliance's largest overproducers and a key reason why the group exceeded its overall production in the first three months of the year . Kazakhstan's energy ministry said it produced above its target by 129,000 b/d in January, 128,000 b/d in February, and 131,000 b/d in March, according to secondary source estimates. Opec secondary sources, of which Argus is one, have yet to formally submit their production estimates for April, but Kazakhstan said it is factoring preliminarily overproduction of 100,000 b/d for April. The ministry said it kept oil production high because of high winter demand for natural gas — much of its gas production is associated and is produced alongside its oil. Kazakhstan said it would start its compensation plan in May with an initial cut of 18,000 b/d below its official target of 1.468mn b/d. It would then stick to its target in June and July before implementing a cut of 131,000 b/d in August, none in September, 299,000 b/d in October, 40,000 b/d in November and zero in December. The cuts have been designed to coincide with scheduled maintenance at the country's key oil fields of Kashagan and Tengiz, the ministry said. Kazakhstan would have to reduce its output by 149,000 b/d in May compared with its March production of 1.599mn b/d to meet its pledge, according to Argus calculations. The compensation plan is set to be adjusted once a final figure for April is available. The plan would be further adjusted to accommodate any change in the Opec+ alliance's output policy — for which a meeting is scheduled to take place on 1 June in Vienna. Opec has been increasing pressure on members exceeding their targets. It called last month on countries that have overproduced to submit detailed compensation plans by the end of April. The Opec+ alliance has implemented a series of cuts — voluntary or collective — worth a combined 5.4mn b/d since October 2022 in a self-described bid to "support the stability and balance of the oil market". The latest round of "voluntary" output reductions by several members came into force in January and is due to run until the end of June. By Aydin Calik and Nader Itayim Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Iraq sets plan to compensate for excess Opec oil output
Iraq sets plan to compensate for excess Opec oil output
Dubai, 3 May (Argus) — Iraq, Opec's second-largest oil producer, has submitted a plan to the Opec secretariat outlining how it will compensate for producing above quota in the first quarter of 2024. The plan indicates that Baghdad will make compensatory cuts from May through to the end of this year, although its breakdown could be tweaked if its April production is again above quota, based on average production estimates issued by the seven Opec secondary sources, including Argus . Opec+'s Joint Ministerial Monitoring Committee (JMMC) said in its 3 April meeting that members that have produced above their quotas so far this year would need to submit plans to compensate for the excess. Iraq and Kazakhstan, which Opec said has also submitted its own compensation plan, have produced the most excess excess volumes in the Opec+ group since the beginning of the year. The JMMC oversees compliance to the coalition's crude production cuts and studies market dynamics. Iraq produced 194,000 b/d above target in January, and overshot by 217,000 b/d and 193,000 b/d in February and March, respectively. To compensate for this, Baghdad plans to produce 50,000 b/d below its quota between May and September, 100,000 b/d below quota for October and November, and 152,000 b/d below its quota for December. Iraq has been working to a quota of 4mn b/d since the start of the year, including two rounds of voluntary cuts it made in April and November last year. Baghdad will submit its crude production figure for April later this week, it said. Any extra volumes produced will also be factored into the country's compensation plan. To meet obligations, Baghdad says it will cap its crude burn at 75,000 b/d and maintain refining intake to between 400,000 b/d and 500,000 b/d through to the end of this year, according to Iraq's Opec national representative Mohammed Adnan Ibrahim Al-Najjar. But Iraq has yet to decide whether it will extend a 3.3mn b/d cap on exports, in place since April , beyond the second half, as it will depend on "Opec+ agreements [in the June meeting] and [the needs of] Iraq's economy over the coming months," the oil ministry told Argus last week. When needs must With the summer season around the corner in the Mideast Gulf region, Iraq has pushed the majority of its compensation into the last three months of the year. Iraq in summer often experiences extreme heatwaves resulting in a major spike in electricity demand. Power shortages during the summer season have fuelled political unrest in Iraq in recent years. To strike a balance between its Opec+ commitments and avoid similar scenarios this year, Iraq says it will import higher levels of gas from neighbouring Iran, with Baghdad also beginning to benefit from electricity supply from Jordan through a newly-established power line which became operational at the beginning of April. Iran and Iraq finalised a five-year supply agreement at the end of March, which will see Tehran send "up to 50mn m³/d" of gas to Iraq, Iraq's electricity minister Ziad Ali Fadel said. But Iraq's persistent overproduction, which has drawn scrutiny within Opec+, might be difficult to address, especially as Iraq blames it on its inability to oversee production in the semi-autonomous Kurdistan region in the north of the country. Most Iraqi Kurdish crude output is directed to local refineries or sold on the black market following the closure of the export pipeline that links oil fields in northern Iraq to the Turkish port of Ceyhan just over a year ago. Iraq's federal oil ministry says its Kurdish counterpart has stopped providing production data, but on 3 May said it estimates Kurdistan Regional Government (KRG) crude production to be between 40,000 b/d and 50,000 b/d. Meanwhile, Iraq's oil minister Hayyan Abdulghani on 2 May announced that two joint Baghdad-Erbil committees have been formed to resolve the issue of contracts between Erbil and the international oil companies operating in the Kurdistan region. By Bachar Halabi Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
US regulator slams executive over Opec 'collusion'
US regulator slams executive over Opec 'collusion'
Washington, 2 May (Argus) — US antitrust regulators for the first time took action against a leading US oil executive over his alleged "collusion" with Opec, but the producers' alliance itself was not a target of investigation. The Federal Trade Commission (FTC) today issued a proposed consent order barring former Pioneer Natural Resources chief executive Scott Sheffield from joining the board of ExxonMobil following its $59.5bn takeover of Pioneer. FTC accused Sheffield of organizing "anti-competitive coordinated output reductions between and among US crude oil producers" and members of Opec and the broader Opec+ alliance. "Opec and Opec+ are cartels that exist to control global crude oil production and reserves," FTC said. The specific charges against Sheffield relate to the outspoken executive's frequent public appearances where he opined on US companies' desired production levels, his meetings and frequent communications with Opec officials since 2017 and his advocacy of drastic production cuts by US companies as global demand fell sharply at the beginning of the Covid-19 pandemic in 2020. Opec under then secretary general Mohammed Barkindo began active outreach to independent US producers, starting in March 2017 with private dinner discussions held on the sidelines of IHS CERAWeek conferences in Houston, Texas. Barkindo hosted similar discussions at CERAWeek in 2018 and 2019, in addition to hosting some of the US companies' chief executives at Opec seminars in Vienna. FTC references Sheffield's public comments following those meetings and alleges that Sheffield kept in frequent touch with Opec officials via messaging service WhatsApp and other means to discuss production levels and prices. Barkindo at the time said that production cuts and prices were never on the agenda of his meetings with the US shale producers and that his organization wanted to better understand the US companies' technological innovation and to compare market outlooks and forecast models. Barkindo in the same time frame held similar discussions with major US hedge funds and money managers. US oil executives polled by Argus in 2017-20 also said that their discussions with Barkindo and other Opec officials revolved around market fundamentals. The US oil industry broadly felt that it was benefiting from a policy of production cuts Opec was implementing as it supported prices at a time when the US domestic production and crude exports grew uninterrupted. Former president Donald Trump took credit for engineering a breakthrough agreement in April 2020 to remove more than 10mn b/d of global crude supply by brokering an agreement between Saudi Arabia, Russia and other Opec+ producers. Even without prodding from Trump, US producers cut back production cuts in 2020 as transportation fuel demand and prices fell sharply in the first months of the pandemic. FTC singled out Sheffield for allegedly coordinating his company's production levels with Opec. Sheffield "held repeated, private conversations with high-ranking Opec representatives assuring them that Pioneer and its Permian basin rivals were working hard to keep oil output artificially low," according to the FTC order. Sheffield, who helped found Pioneer and was its longtime chairman, served as chief executive from 1997 to 2016 and from 2019 through 2023. He remains on the company's board, serving as special adviser to the chief executive since 1 January. The son of an oil executive, Sheffield attended high school in Tehran, Iran. Pioneer shrugged off what it termed a "fundamental misunderstanding" of global oil markets and said that FTC misread "the nature and intent" of Sheffield's actions. Opec declined to comment on FTC's action against Sheffield. FTC is so far the only US regulator to set sights on Opec, even if indirectly. President Joe Biden in 2021 separately tasked FTC with leading an investigation into whether there is price manipulation in gasoline markets. Biden, like many of his predecessors at a time of high gasoline prices, in 2022 accused Opec of uncompetitive behavior in oil markets and expressed support for US legislation allowing antitrust action against the organization by the US Department of Justice. But that acrimony has largely dissipated after global oil and US gasoline prices fell in 2023 from unusually high levels in the previous year. US Congress has not taken significant steps to advance the anti-Opec legislation since 2022. By Haik Gugarats Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
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