Last week in world oil:
Oil prices started the week on a stronger note, as new tensions between the US and Iran raised fears that crude supplies could be affected. The spat has escalated recently with the US re-imposing sanctions in response to Iranian ballistic missile tests. This will colour crude prices over the rest of the quarter, with Brent currently at US$56/b and WTI at US$54/b.
Upstream & Midstream
Defying protest attempts, Energy Transfer Partners’ Dakota Access crude oil pipeline linking Bakken shale oil to terminals in Illinois will begin pumping crude as early as June 2017, barring any new legal obstacles. None are anticipated, with President Trump already signaling his support, moving the US$3.8 billion pipeline ahead after it was stalled last September by the Obama administration for environmental review.
The US oil and gas rig count has exceeded 700 for the first time since December 2015, as strength in oil prices prompted 17 new oil rigs to start up, bringing the total to 729. All but one of the rigs were onshore, with shale plays in Oklahoma, Texas and New Mexico comprising the bulk of the additions.
Perhaps a little too late, Algeria is attempting to ape its OPEC allies in the Middle East by expanding into petrochemicals. It has launched tenders to build four large petrochemical plants linked to state firm Sonatrach’s four existing refineries in Tiaret, Hassi Messaoud and Skikda. The investment plans, valued at up to US$6 billion, includes a fuel oil cracking plant and a naphtha processing plant, with a planned petrochemical capacity exceeding 10 million tons per year.
Natural Gas and LNG
Despite wariness over Russia’s ambitions, the town of Karlshamn in southern Sweden has agreed to let Russia’s Gazprom use its port for the construction of the Nord Stream 2 gas pipeline. The decision is supported by the Swedish government after the island of Gotland rejected hosting the pipeline last year, despite lingering national security concerns. The Nord Stream 2 pipeline is Russias latest way of feeding Western Europes appetite for natural gas, running from Russia through the Baltic Sea. Some resistance has been mounted over Russian dependence, and Ukraine has also objected over the possible loss of transit revenues from existing pipelines that run through the country.
Germany’s Uniper is selling its stake in the OLT offshore LNG Toscana terminal in Italy, divesting its 48.24% share in a deal that could value the entire business at 1 billion. The other stakeholders in OLT are Italian utility group Iren (49.07%) and US shipping group Golar LNG (2.69%).
After disappointing results from Chevron and ExxonMobil, Anglo-Dutch supermajor Shell reported its results for 2016, with full-year profits down by 37% to US$7.185 billion, but 2H16 profits exceeded ExxonMobils, a rare occurrence. Its debt-to-equity ratio fell from 29.2% to 28%, as it makes progress in its post-BG Group acquisition debt reduction program, with assets sales of some US$3 billion in 4Q16.