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Deepwater drilling front and centre as shale flags

  • Spanish Market: Crude oil, Natural gas
  • 20/01/25

Deepwater drilling is back in vogue after years of taking a backseat to shale, spurred by a revival of interest in the Gulf of Mexico as well as massive discoveries from Guyana to Namibia.

Technology breakthroughs and forecasts for oil demand to keep rising through the end of the decade at least have resulted in a growing appetite for deepwater projects that shows no sign of easing. Industry executives at the Goldman Sachs Energy, CleanTech & Utilities Conference in Miami, Florida, earlier this month said more will be needed to fill the gap as the shale boom slows.

"Shale has certainly played a key role, but now it's maturing," US independent Hess chief executive John Hess said. "You're going to need offshore, deepwater resources to give the world the oil production that it needs as you look out five and 10 years from now."

The deepwater Gulf of Mexico can look forward to a "standout" year in 2025, with projects such as Shenandoah, Whale, Anchor and Ballymore likely to account for half of the expected capacity increase, energy consultancy Wood Mackenzie estimates. That will mark a turnaround from a decline in 2024.

Having steadily built up its offshore position in the years since the pandemic, Hess now boasts a strong inventory of leases in the Gulf of Mexico. The firm has focused on tie-backs to existing infrastructure to keep costs down, as well as what it dubs "hub-class" exploration prospects.

In contrast, shale's best days might be behind it, even though producers are coming up with ever more innovative ways to boost efficiencies and squeeze more out of the remaining acreage. In such a scenario, projects such as Hess' 30pc stake in a giant offshore project in Guyana are gaining traction and more will be needed to meet future demand. "That's where the deep water comes in — and that has a longer cycle to it," Hess said. "That oil is going to be needed from the deep water, but you are also going to need it from Opec."

US president-elect Donald Trump's campaign promise to hold more offshore oil and natural gas lease sales to buoy US production could also help, although it remains unclear whether operators will rush to take him up on his offer.

Chevron, the second-biggest US major, is embarking on new projects to boost output from the Gulf of Mexico by 50pc to 300,000 net b/d of oil equivalent by 2026. That goal moved a step closer last week with start-up of the Whale semi-submersible platform, in which the company has a 40pc stake. "The deep water has a large resource bounty that has been explored, but not fully explored, and we're the second-largest lease holder out there, and believe there's a lot more still to be done," Chevron chief executive Mike Wirth said.

Anchor investment

Chevron last year started production from Anchor, the first ultra-high pressure deepwater development, to tap previously hard-to-reach resources in the region. It is also deploying new technology in sub-sea pumping and compression to speed drilling. "There is still a lot of running room in the deep water for us," Wirth said.

The increasing allure of deepwater drilling can be seen in a contractual dispute over the future of Hess' stake in the offshore Guyanese discovery. ExxonMobil and Chinese state-controlled CNOOC argue that they have the right of first refusal over the interest, which is the key attraction in Chevron's $53bn agreed takeover of Hess. The issue will be resolved in an arbitration hearing in May. "We continue to be very confident in Hess' position in the arbitration," Wirth said. "This has been studied extensively, and we feel like they clearly have the right side of this argument."


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13/02/25

Sanctions complicate Syria’s access to crude, products

Sanctions complicate Syria’s access to crude, products

Dubai, 13 February (Argus) — Syria is struggling to secure crude and refined oil products through public tenders because shipowners remain cautious about sending vessels there in case they are detained, traders say. Syria's transitional government issued tenders seeking 4.2mn bl of crude, 80,000t of 90 Ron gasoline and 100,000t each of fuel oil and gasoil last month — the first since the fall of Bashar al-Assad's regime in December last year. The tenders closed earlier this month after minimal participation from trading firms and were mostly awarded to local companies which will effectively act as intermediaries, market participants said. Market participants have hinted to Argus that small and medium-sized Turkish firms were likely on the list of bidders . But the delivery of the cargoes is under threat, with shipping companies avoiding the route over concerns about tankers being "sanctioned or stranded". Last month the US waived sanctions prohibiting energy trade with Syria, but the country is still under EU and UK sanctions, which could have narrowed the pool for bidding, although EU foreign ministers have agreed on a roadmap to ease restrictions. The bidding pool was also limited by a clause in the tender document that noted "the seller should not have any direct or indirect trade relations with any country that is in war with Syria", a market source said, adding that this could have discouraged some companies from taking part. Before Assad's removal, Syria relied heavily on Iran for crude and product supplies. But Tehran — the Assad regime's closest ally — ceased shipments after the Islamist group Hayat Tahrir al-Sham took control last month, leaving the new transitional government under pressure to find alternative suppliers. Neighbouring Arab countries are stepping in to help the new government deal with acute fuel shortages. State-owned Jordan Petroleum Refinery Company has begun exporting around 500 t/d of LPG to Syria. The ministry also issued two LPG import tenders seeking a total of 86,000t, but the winner has not been confirmed By Rithika Krishna Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Better Opec+ compliance narrowing supply surplus: IEA


13/02/25
13/02/25

Better Opec+ compliance narrowing supply surplus: IEA

London, 13 February (Argus) — The IEA said today that the Opec+ alliance's improving compliance with agreed crude production targets is "slowly chipping away" at its projected supply surplus this year. In its latest Oil Market Report (OMR), the Paris-based agency again lowered its forecasted surplus for this year, this time by 270,000 b/d to 450,000 b/d. This is the agency's third consecutive downgrade since November, when it saw 2025 supply outstripping demand by 1.15mn b/d. These forecasts are subject to change. With data now "largely complete" for 2024, the agency's balances show supply matching and demand exactly at 102.9mn b/d. This is a long way off the 800,000 b/d supply surplus the IEA forecast for 2024 this time last year. Opec+ is implementing three sets of crude production cuts, and is scheduled to start unwinding one of these — totalling 2.2mn b/d — starting in April. A recent meeting of the group's key producers signalled no change to this plan . The IEA continues to assume all Opec+ cuts will remain in place this year. But the agency said that should production return as planned, this would add 430,000 b/d to its 2025 supply forecast. Aside from Opec+, there are other key supply uncertainties this year. These range from new US sanctions targeting Russian and Iranian oil exports to US tariffs on some of its key trading partners. "It is still too early to tell how trade flows will respond to new US tariffs or the prospect thereof, and what the impact of the escalation of sanctions on Iran and Russia may be in the longer run," the IEA said. As thing stand, the IEA sees global oil supply growing by 1.56mn b/d this year to 104.45mn b/d, compared with growth of 1.76mn b/d projected in its January report. This slower growth was largely driven by Opec+, which the agency now sees supplying 170,000 b/d less than previously thought this year. It also noted a 950,000 b/d fall in global oil supply in January, "with extreme cold weather hitting North American supply, compounding large declines in Nigerian and Libyan production." On demand, the agency upgraded its growth forecast this year by 50,000 b/d to 1.1mn b/d. It sees oil demand at 104mn b/d in 2025, driven by "a minor pickup in GDP growth and lower oil prices as per the current forward curve." The IEA said global observed oil stocks fell by 17.1mn bl in December. Crude stocks fell by 63.5mn bl and products stocks rose by 46.4mn bl. It said preliminary data show global stocks falling by 49.3mn bl in January, led by large draw in China. By Aydin Calik Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Mexico factory output dips 1.4pc in December


12/02/25
12/02/25

Mexico factory output dips 1.4pc in December

Mexico City, 12 February (Argus) — Mexico's industrial production fell 1.4pc in December from the previous month with broad weakness across multiple sectors on tariff uncertainty and weak domestic demand. The result marks the largest monthly decline of 2024 and was weaker than the 1pc decline forecast by Mexican bank Banorte. It followed a nearly flat reading in November. Trade uncertainty and low domestic demand weighed on industrial production in December, said Banorte, with industry "sluggishness" likely through mid-2025. Manufacturing, which represents 63pc of Inegi's seasonally adjusted industrial activity indicator (IMAI), decreased by 1.2pc after rising 0.7pc in November. Transportation equipment manufacturing output, which comprises 24pc of the manufacturing component, has fluctuated in recent months, falling 6.4pc in December after a 3.6pc uptick in November and a 4.4pc decline in October. Despite this, Mexico's auto sector achieved record annual light vehicle production and exports in 2024. However, Mexican auto industry associations confirm investment in the sector has begun to slow on uncertainty tied to concerns over potential US tariffs and slow economic growth in 2025. Taking the base case that tariffs do not materialize, Banorte expects manufacturing to rebound in the second half of the year as uncertainty lifts and interest rates fall with rate cuts at the central bank. Mining, which makes up 12pc of the IMAI, was lower by 1pc in December, following a 0.5pc increase in November. The decline was again driven by the oil and gas production, falling by 2.5pc in December to mark a sixth consecutive monthly decline for hydrocarbons output. Construction, representing 19pc of the IMAI, contracted by 2.1pc in December with setbacks in all categories. This matched the November result, with Inegi recording declines in construction in five of the last seven months. From a year prior, industrial production fell by 2.4pc in December , while manufacturing fell by 0.3pc and construction declined by 7.1pc in December. Mining was down by 6.2pc. B y James Young Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Italy mulling changes to EU gas stock targets: Boschi


12/02/25
12/02/25

Italy mulling changes to EU gas stock targets: Boschi

London, 12 February (Argus) — Italy is exploring the idea of lower EU gas storage targets, but no decisions have yet been made, the energy chief at Italy's environment and energy security ministry told Argus . A decision on whether to scrap, change or renew the EU rules implemented in 2022 that required a 90pc EU stockfill on 1 November last year and require the same this coming November could be taken in the coming weeks, energy department head Federico Boschi said. "The [existing] stockfill obligations end on 31 December 2025 and as such, there is space for either a halt, a change or an extension," Boschi said, without specifying whether Italy might advocate for a lower target on 1 November 2025 or beyond, or both. Asked whether Italy was seeking a capacity target for gas storage injections, Boschi said the government had also not yet taken a position. "As far as I know, we have no specific target in mind," he said. Filling storage capacity would benefit energy security, but it could also affect prices and favour speculation by increasing demand when it might otherwise be low, Boschi said. The EU stockfill regulations aim to ensure adequate winter gas reserves. But European summer-winter gas price spreads remain inverted out several years, providing no incentive to book storage capacity during that time. PSV summer 2025 prices closed €4.81/MWh above the winter 2025-26 contract on Tuesday. Seasonal contracts on Argus Italian curve do not extend beyond that, but EU benchmark Dutch TTF summer-winter spreads for storage years 2026-27 and 2027-28 closed at +€2.805/MWh and +€0.20/MWh, respectively, on Tuesday. Italy — the EU member with the second-largest storage capacity after Germany — has been looking at a raft of options to curb energy prices for businesses and households, which are among the highest in Europe. The Italian government approved legislation last week to bring forward storage auctions for the 2025-26 year to allow the market to book capacity if price spreads become favourable in February-March. Italian storage operator Stogit plans to offer 2.5bn m³ of capacity starting from 1 April across products lasting 1-5 years on 17 February-19 March. Compatriot storage operator Edison Stoccaggio plans to offer around 900mn m³ of 2025-26 capacity, but has yet to announce auction dates. In any event, the EU's Gas Co-ordination Group is scheduled to meet on Thursday and may discuss gas storage targets. By Stephen Jewkes and Jeff Kuntz Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

US inflation quickens to 3pc in January


12/02/25
12/02/25

US inflation quickens to 3pc in January

Houston, 12 February (Argus) — US consumer inflation accelerated in January to the fastest pace in half a year, supporting the Federal Reserve's recent decision to pause in its course of rate cuts. The consumer price index (CPI) rose by 3pc in January from a year before, accelerating from 2.9pc in December, the Bureau of Labor Statistics reported today. That marked a fourth month of annual gains from a low of 2.4pc in September. Core inflation, which strips out volatile food and energy, rose by an annual 3.3pc in January from 3.2pc in December. The acceleration in inflation reinforces the Fed's decision last month to hold its target rate steady after three prior rate cuts. The Fed has said it does "not need to be in a hurry" to change its stance while it weighs the impacts of President Donald Trump's tariff policies and other "incoming information". Trump won the November election partly on a pledge to bring down inflation. The energy index rose by 1pc in January following a 0.5pc contraction through December. Gasoline fell by 0.2pc in January after a 3.5pc contraction through December. Piped gas rose by 4.9pc for a second month. Food rose by an annual 2.5pc, matching the prior month's annual gain. Eggs surged by an annual 53pc, as avian flu has slashed supply. Shelter rose by 4.4pc, accounting for 30pc of the overall monthly gain in CPI, slowing from 4.6pc in December. Services less energy services rose by 4.3pc in January following a 4.4pc gain New vehicles fell by 0.3pc after a 0.4pc contraction. Transportation services rose by an annual 8pc in January after a 7.3pc gain in December. Car insurance was up by an annual 11.8pc and airline fares were up by 7.1pc. CPI accelerated to 0.5pc in January from the prior month, the most since August 2023. That followed a monthly gain of 0.4pc in December, 0.3pc in November and three prior months of 0.2pc gains. By Bob Willis Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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