Category Archives: Oil

(BBG) Venezuela’s Oil Capital Ransacked When the Lights Went Out

(BBG) By Andrew Rosati

  •  In Maracaibo, hundreds of businesses were looted in blackout
  •  The pillage shows that anyone’s grip on the nation is tenuous

The sack of Maracaibo was almost over Thursday after a frenzy of violence and looting that showed just how close Venezuela is to total chaos.

In the country’s sweltering oil capital, about 500 businesses — bakeries, tire shops, entire shopping malls — were pillaged during the nationwide power blackout that began March 7. Looting continued even after the lights flickered on as residents overwhelmed the security forces of the Nicolas Maduro regime. Storekeepers are just beginning to clean up as the desperate keep sifting through the rubble.

“If people made enough to make ends meet, we wouldn’t be trying to get by like this,’’ said Enrique Gonzalez, 18, a bus conductor whose driver was scavenging at a Pepsi warehouse. Thousands of bottles had been removed in mere hours, and people were now ripping out copper wire and scrap metal. The hulks of delivery trucks sat on pallets, tires long removed.

“This country has gone to hell.”

Lawless Land

Venezuela’s great blackout threw the crisis-ridden nation into fresh tumult. Maduro has presided over an epic descent, prompting the U.S. and scores of other nations to recognize opposition leader Juan Guaido as the rightful head of state. Maduro has concentrated resources and troops in Caracas, the capital. The ravaging of Maracaibo, population 1.6 million, shows that anyone’s control over the vast nation is tenuous.

Maduro blamed the blackout on a U.S. cyber attack, without supplying proof. Experts blamed decaying infrastructure. In Maracaibo, many transformers and substations burst into flames after power was restored this week and large sections of the city remained in the dark. Long lines of people bearing jugs and barrels formed at leaky water trucks, streams and burst pipes.

On Guajira Avenue, the four-lane main drag where much of the mayhem occurred, there was little security. During a daylong tour of looted malls, warehouses and shopping centers, a single municipal squad car was seen. Officers inside warned profanely that no protection would be forthcoming.

Hot Ice

The unrest began in the Saturday-afternoon heat when an ice company began demanding payment in dollars. A desperate crowd tore through its factory, then emptied nearby pharmacies and shoe stores. By nightfall, the heart of Maracaibo was engulfed as people deprived of life’s necessities took whatever they could get.

Empresas Polar SA, a Venezuelan food giant, said that its Pepsi plant, brewery and pasta factory were almost destroyed; people carried off thousands of cases of beer and soda and 160 pallets of food. The company lost 22 trucks and five forklifts. Holes were punched through cinder-block walls around the soda warehouse.

On Monday, Ferre Mall, a home-improvement shopping center of more than 50 stores, was emptied by people who burst through its iron gates and glass doors. In darkness, they lit scraps for illumination. A paper-goods store caught fire and the blaze spread.

Travel agencies, cosmetic stands and snack shops were mere shells Thursday. The building reeked of smoke and melted asphalt from the roof had hardened on the floor. Workers carried debris over broken porcelain and glass.

No Resistance

“It’s hard to swallow,’’ said Bernardo Morillo, 60, who built and manages the mall. “The national guard stood by as this vandalism happened and the firefighters didn’t even show.’’

Throughout the city, security forces were useless as people took anything of value, including cash machines, door frames, ovens, computers and surveillance cameras, said Ricardo Costa, vice president of the Zulia state chapter of the Fedecamaras business group. The organization has been bitterly opposed to the Maduro regime, which Costa said reserves its strength to quash demonstrators.

“How is it possible that a thousand guardsmen are deployed to repel 50,000 protesters, but when a thousand looters come to a mall only 50 were sent?’’ he said.

“You could say this began because people are hungry, but the looters didn’t take just food — it morphed into aimless vandalism.’’

Fat City

At a Centro 99 supermarket, shelves were picked clean and the floor was carpeted with pieces of pasta, plastic spoons and dried tomato sauce. Manager Luis Parra said 10 of the chain’s 12 locations were looted.

“They even carried off the lard and flour to bake bread in their bare hands,’’ he said.

Maracaibo once was a city of excess. The preferred drink was whiskey and food was fried and plentiful. Sitting on a massive lake that bears its name, Maracaibo was home to big-talking oilmen and ranchers — Houston’s Venezuelan doppelganger.

The nation’s commercial oil production started in the region in the 1910s after locals noticed crude seeping out of the ground. For a century, deposits below Lake Maracaibo ensured that governments were flush. Chevron Corp.Royal Dutch Shell Plc and Exxon Mobil Corp. fueled a boom of shopping malls, warehouses and supermarkets in the former fishing village.

Dwindling Flow

After two decades of socialist rule, big oil has all but vanished. Zulia’s production has plunged to 325,000 barrels a day in 2018 from 624,000 in 2010, according to the state oil company. Production in Venezuela as a whole fell last year to a 69-year low, according to OPEC data compiled by Bloomberg.

Maracaibo’s new-money glitz now feels like a lifetime ago. Fedecamaras estimated that damage during the blackout could easily surpass $200 million.

Requests to interview Omar Prieto, Zulia’s governor and a member of the ruling socialist party, went unanswered. He told reporters Wednesday that 570 looters were arrested. He also implored businesses to reopen and said more than 200 officers were deployed. “It’s our turn to protect you,’’ he said.

But few police were to be seen Thursday as owners repaired security shutters and sealed entries with cinder blocks and cement.

Standing By

Ovidio Oscano stood in his watchman’s post at a Makro market, the Venezuelan equivalent of Costco, as dozens of people denuded the structure.

“They’ve been at it since Monday,’’ said Oscano, a rail-thin 59-year-old who shrugged rather than intervene. “They’re pulling wires, air conditioners, pipes — they’re literally running off with the roof.’’

When the looters realized they were being photographed, they charged and threw rocks.

“A business can be rebuilt,” said Costa of Fedecamaras. But “everyone knows that working here means working in anarchy, that anything can happen to you at any moment.’’

On Thursday, Yajira Bernier left home to search for provisions for the first time since the lights went out. Vendors at the Los Plataneros market demanded dollars or Colombian pesos, and the butcher shop had only two products: cheese and pig feet. Bernier chose the latter.

“We’re panic buying today,” she said. “We don’t know what will come tomorrow.”

(BBG) OPEC to Be Squeezed by U.S. Shale Until Mid-2020s, IEA Says

(BBG) By Grant Smith11 de março de 2019, 08:00 WET Updated on 11 de março de 2019, 11:08 WET

  •  Declines in Iran, Venezuela to reduce cartel’s output capacity
  •  Demand for group’s crude stays below pre-cuts level until 2024

OPEC’s loss of market power to what was once its biggest customer will continue until the middle of the next decade as U.S. shale oil thrives.

By 2024, the Organization of Petroleum Exporting Countries’ capacity to pump crude will actually shrink because of declines in Iran and Venezuela, according to the International Energy Agency. As rivals grow, the amount of oil the world needs from the cartel each year won’t recover to pre-2016 levels — before OPEC started cutting production — throughout the period.

The report may be sobering reading for OPEC, which has capped its production for the past two years to stave off a global glut that would depress prices. Although its cutbacks have mostly achieved those aims, they’ve also invigorated the shale-oil boom in the U.S., helping the country become the world’s biggest crude producer.

America’s energy expansion will proceed, accounting for 70 percent of the growth in global production capacity through to 2024, the Paris-based IEA said in its medium-term report. By that time, the nation could be able to export 9 million barrels a day, exceeding the export capabilities of Russia and coming close to those of Saudi Arabia, the agency said.

“The United States continues to dominate supply growth in the medium term,” said the IEA, which advises most of the world’s major economies on energy policy.

With U.S. supply growth to be supplemented by Brazil, Norway and Guyana, the IEA substantially raised forecasts for new crude from outside OPEC, by as much as 3.3 million barrels a day by 2024.

As a result, estimates for the crude needed from OPEC’s 14 members were slashed. By 2024, the world will still need less crude from the group than it was pumping before production cuts started. That suggests that the group will need to persist with its current output restraints into the next decade, the IEA said.

The amount of crude OPEC is capable of pumping is also set to deteriorate, declining by 380,000 barrels a day by 2024 to 34.53 million. U.S. sanctions will hem in Iran’s oil industry and economic turmoil will take its toll on Venezuela’s, the agency said.

Assuming American restrictions remain in place on Iran, the Islamic Republic’s production capacity will sink by 1.2 million barrels a day to 2.65 million in 2024, and Venezuela’s by 56,000 a day to 750,000.

Among OPEC nations, only Iraq and the United Arab Emirates are set to implement significant additions to its production capacity, the IEA forecasts. Iraq will add 900,000 barrels a day to 2024 to reach 5.8 million a day, while the U.A.E will boost by 500,000 to reach 3.85 million a day. If the sanctions on Iran are removed, OPEC’s collective capacity will expand by 820,000 barrels a day.

The agency kept its view on the rate of growth in global oil demand steady, projecting an annual increase of 1.2 million barrels a day, or 1.1 percent, through to 2024. Trade disputes and the prospect of a “disorderly Brexit” pose risks to these projections, it said.

(Axios) A petro-tipping point: U.S. to surpass Saudi oil exports

(Axios)

Oil and gas wells on Denver International Airport property as seen from a passenger plane landing at the airport in Denver, Colorado.
Oil and gas wells on Denver International Airport property. Photo: Robert Alexander/Getty Images

Rising U.S. exports of crude oil and petroleum products (like gasoline) combined are poised to overtake Saudi Arabia’s by the end of the year, Rystad Energy predicts in a new analysis.

Why it matters: It’s a testament to how the U.S. oil boom is increasingly affecting global trade. And it’s just symbolically interesting.Show less

What they’re saying: “This remarkable turnaround is made possible by the continued rise in oil production from [U.S.] shale plays and the increased oil export capacity from the Gulf Coast,” the consultancy said in a brief report.

But, but, but: The U.S. is not rivaling the Saudis when it comes to crude oil exports anytime soon, even as the U.S. crude shipments grow.

  • Numbers bounce around but overall the Saudis are exporting around 7 million barrels per day of crude. The U.S. levels — which have grown sharply in recent years — are still typically much less than half that amount.
  • But the U.S. exports lots of gasoline, diesel and other petroleum products.

The bottom line: The Saudis are at around 9 million barrels per day when you combine crude, natural gas liquids and other petroleum products. The U.S. is at around 8 million and rising.

(CNBC) World’s largest sovereign wealth fund to scrap oil and gas stocks

(CNBC)

  • The exclusion will affect companies that explore and produce oil and will not impact integrated oil and gas companies such as BP and Shell.
  • The move, initiated by Norges Bank which manages the fund, is designed to make the Norwegian government’s wealth less exposed to a lasting drop in oil prices.
  • Oil and gas stocks represented 5.9 percent of equity investments by the end of 2018, Reuters reported, citing fund data. That’s the equivalent to approximately $37 billion.

Sam Meredith@smeredith19Published 11 Hours Ago  Updated 7 Hours AgoCNBC.com

An offshore oil rig off the coast of Norway.

Nerijus Adomaitis | ReutersAn offshore oil rig off the coast of Norway.

Norway’s trillion-dollar sovereign wealth fund plans to dump oil and gas companies from its benchmark index, the finance ministry announced on Friday.

The move, initiated by Norges Bank which manages the fund, is designed to make the Norwegian government’s wealth less exposed to a lasting drop in oil prices.

“The Government is proposing to exclude companies classified as exploration and production companies within the energy sector from the Government Pension Fund Global to reduce the aggregate oil price risk in the Norwegian economy,” the finance ministry said in a statement published on its website.

The exclusion will affect companies that explore and produce oil and will not impact integrated oil and gas companies such as BP and Shell. The Norwegian government also said that the companies to be excluded are those belonging to FTSE Russel’s Index sub sector called exploration and production. According to the government, the value of 134 stocks to be excluded from fund amounted to NOK 70 billion ($7.9 billion), Reuters reported.

Shortly after the announcement, energy stocks worldwide extended losses on Friday morning.

International benchmark Brent crude traded at around $65.18 on Friday, down around 1.7 percent, while U.S. West Texas Intermediate (WTI) stood at around $55.78, more than 1.6 percent lower.

Energy stocks are notoriously volatile. Brent crude collapsed from a near four-year high of $86.29 in early October down to $50.47 in late December — marking a fall of more than 40 percent in less than three months.

Energy stocks

Norway’s government said on Friday that the fund would still be allowed to invest in oil and gas firms so long as they were committed to activities concerning renewable energy.

Oil and gas stocks represented 5.9 percent of equity investments by the end of 2018, Reuters reported, citing fund data. That’s the equivalent to approximately $37 billion.

Norway has faced criticism over its attempts to balance environmentally-focused policies and being one of the world’s largest petroleum producers.

It has become one of the world’s leading countries for electric vehicles while putting pressure on emerging market economies, such as Brazil and Indonesia, to better protect their rainforests.

After a strong start to 2019 for stocks, the Norges Bank website said late last month that the fund is currently valued at $1.03 trillion.

At the end of 2018, the fund’s biggest equity holdings were in Microsoft ($7.5 billion), Apple ($7.3 billion), Alphabet ($6.7 billion), Amazon ($6.4 billion), Nestle ($6.3 billion) and Royal Dutch Shell ($6 billion).

(Reuters) The battle for Citgo: How Venezuela’s opposition leaders seized control

(Reuters)

(Reuters) – Asdrubal Chavez, chief executive of Houston-based Citgo Petroleum Corp, boarded the Venezuelan-owned firm’s corporate jet in Caracas on Jan. 30, after meeting with top officials of the embattled administration of socialist President Nicolas Maduro about the latest U.S. oil sanctions.FILE PHOTO: The corporate logos of the state oil company PDVSA and Citgo Petroleum Corp are seen in Caracas, Venezuela April 30, 2018. REUTERS/Marco Bello/File Photo

Upon landing in the Bahamas – where Chavez has worked for about a year after being denied a U.S. visa – he had received word from Houston that it would be his last trip on a company plane and that his Citgo email account had been shut off.

Day-to-day control of the company had passed to Citgo’s top U.S. executive, Rick Esser, who with the backing of Venezuela’s rising political opposition and the U.S. government would begin clearing the way for a new, anti-Maduro board of directors at Citgo. Esser oversaw the moves to isolate Chavez – a cousin of the late Venezuelan President Hugo Chavez – and would soon start ousting other Citgo executives close to the Maduro administration.

The house-cleaning at the prized U.S.-based subsidiary of Venezuela’s state-owned oil firm, Petroleos de Venezuela (PDVSA), marked a crucial early victory for the country’s rising opposition government – led by self-declared president Juan Guaido – as it struggles to remove Maduro from office and break his grip on the OPEC nation’s oil assets.

The account of the transition of power at Citgo is based on Reuters interviews with more than a dozen current and former Citgo and PDVSA executives, employees, and U.S. and Latin American advisors.

Guaido, head of the Venezuelan congress, announced he would seize the presidency on Jan. 23 because Maduro’s re-election last year was a sham, rendering the socialist leader illegitimate under Venezuela law. Guaido’s claim to interim leadership, until fair elections can be held, was quickly backed by the United States and dozens of other nations.

But Maduro remains in control of the military and PDVSA – making Citgo the obvious first target among national asset for Guaido’s opposition movement to claim, with the help of the U.S. government. The battle for Citgo could prove pivotal in the effort to unseat Maduro because full control of a major U.S. refiner would provide a crucial source of revenue to a post-Maduro administration.

Citgo, with more than $23 billion in annual sales and operations that supply about 4 percent of U.S. fuels, may be the last remaining asset owned by PDVSA with a healthy balance sheet. As PDVSA’s oil production and revenue have plummeted amid crippling debt, mismanagement and international political pressure, Citgo’s U.S. location and financial independence have shielded the firm from the worst of its parent company’s meltdown.

At the end of September, Citgo had net income of about $500 million, according to a creditor with access to financial statements that are not public. The company had almost $500 million in cash and an available credit line of $900 million.

(Graphic: An interactive look at Venezuela’s crude exports to the United States – tmsnrt.rs/2S4YIXB)

Inside Citgo’s Houston headquarters, many employees weary of operating under the control of a failing socialist state eagerly awaited an expected official announcement of the appointments of new company directors, who were chosen by Venezuela’s congress.

“We are not expecting any resistance” to the new board inside the company, said one manager who spoke on condition of anonymity. “On the contrary, we are waiting for directions to lay out the red carpet.”

The new board met together for the first time in Houston on Thursday and named executives to replace those who were ousted.

Board directors and a new executive team was confirmed by Citgo in a statement on Friday. Esser assumed responsibility for day-to-day strategic decisions and operations while a search for a new CEO has begun, it said, without mentioning former CEO Chavez.

“These officers were chosen not only for their experience and knowledge, but also because of their demonstrated commitment to the company over the years,” said Chairwoman Luisa Palacios in the statement.

PDVSA and the White House did not respond to requests for comment.

(Graphic: Citgo’s Louisiana refinery was 2018’s top U.S. consumer of Venezuela’s crude – tmsnrt.rs/2t4ullS.)

SHIFTING ALLEGIANCES

As U.S. sanctions on Jan. 28 shifted the balance of power to Citgo’s anti-Maduro faction of executives, Maduro loyalists scrambled to find their place in the emerging corporate structure.

Two of four senior executives appointed by Chavez openly pledged support for the incoming board of directors in meetings with employees, said two sources who attended the meetings.

But all four – Frank Gygax, Nepmar Escalona, Simon Suarez and Eladio Perez – were escorted out of the building on Monday, according to four people with knowledge of their departures. Gygax declined to comment and the others did not respond to requests.

It is unclear whether Chavez has yet been formally terminated, an action that can only be taken by company directors, but he has been effectively shut out of the firm, Citgo employees said. Chavez did not respond to a request for comment.

Esser has essentially run the company since Chavez’ ouster, in close consultation with U.S. government officials, according to three Citgo employees and two people close to the incoming company board.

A Jan. 30 meeting between White House National Security Advisor John Bolton and Citgo executives thrust the low-key Esser into the spotlight after Bolton tweeted a photo of the meeting, calling it “very productive.”

U.S. officials have voiced concern that Guaido and his supporters had been too slow in seizing control of Citgo and also have pushed for a say in choosing members of the refiner’s new board – a request Guaido’s team declined, according to two people familiar with the talks.

Since clearing Citgo’s upper ranks of Maduro allies, Esser has focused on securing alternatives to the Venezuelan oil that feeds its refineries. Recent U.S. sanctions prevent the firm from importing Venezuelan crude after April 28, which could cripple the company unless it can ensure it has the cash, credit and contracts for alternate supplies.

Advisors to the incoming Citgo board have separately urged U.S. officials to exempt Citgo from sanctions and protect its assets from creditors once it is officially controlled by Guaido’s team.

Esser saw this crisis coming two years ago and put together a group to find new suppliers and test their oils in the event Venezuelan crudes were restricted by sanctions, according to a person familiar with the effort.

The firm’s efforts to sustain operations face a threat from creditors owed money by Venezuela and PDVSA, who could try to use that leverage to hamstring Citgo’s finances, said Carlos Jorda, a former Citgo chairman and now a Houston business consultant. The U.S. government could help the company hold off that threat, he said.

“The U.S. Treasury could say, ‘Hold your horses, you’ll get paid – but not paid by Citgo, but by Venezuela – when the Maduro regime exits,’” Jorda said.

Esser and Citgo finance executive Curtis Rowe traveled to Washington this week to meet with U.S. government officials for at least the second time in three weeks, according to two Citgo employees.Slideshow (2 Images)

‘FROGS AND SNAKES’

Opposition leaders had difficulty recruiting candidates willing to join the new Citgo board, according to three people familiar with the recruitments.

“There are many risks,” one of the people said, “and if these people have family members in Venezuela, they could be putting them at risk, too.”

In late 2017, six Citgo executives were called to Caracas and jailed amid a graft probe over a failed debt refinancing. Their detention led to Chavez’s appointment as CEO and the arrival of several Maduro loyalists at Citgo’s Houston headquarters.

New Citgo Chairwoman Palacios has been huddling with newly appointed directors and legal advisers to guard against the threat of a potential U.S. court challenge by PDVSA to the new board’s legitimacy, according to two sources close to her team.

Palacios and other board members, which include former Citgo and PDVSA executives living in the United States, did not respond to requests for comment.

One of their priorities will be to audit the finances of a refinery project in Aruba, said the two people close to Palacios. PDVSA and Citgo agreed to a $685 million overhaul of the idled facility in 2016, causing some Citgo executives to resign in protest, arguing the deal made no business sense.

On Monday, Citgo Aruba Refining officially put the money-losing venture on hold and laid off workers, citing the impact of U.S. sanctions on PDVSA. The project has been clouded by corruption allegations, according to four former and current Citgo employees and two people close to the new Citgo board.

“There is also worry about the audits to come. We are expecting ‘frogs and snakes’ to come from there,” said a Citgo employee, using a Venezuelan figure of speech similar in meaning to the opening of a Pandora’s box.

REDECORATING

Since Esser took over Citgo operations, the company has sent clear signals of a return to its century-old American roots.

“We the people of Citgo have a story to tell you” read an advertisement in Tuesday’s Washington Post, borrowing language from the U.S. constitution. The text emphasized the firm’s 6,000 U.S. workers, fiscal strength and U.S. charity work.

Workers at the company’s Houston headquarters also have purged the company website and marketing materials of references to PDVSA and stripped the building of the symbols of Venezuela’s socialist government.

For years, the hallways have been decorated with renderings of a controversial painting of Latin American independence leader Simon Bolivar that had been commissioned by former president Hugo Chavez – and looked more like Chavez than any historical Bolivar painting.

The portraits began to disappear, Citgo employees said, soon after Venezuela’s congress appointed the company’s new board of directors.

(Reuters) Venezuela open to barter trade with India to boost oil sales

(Reuters)

NEW DELHI (Reuters) – Venezuela is open to barter-like payments from India to boost oil sales to the world’s third-biggest oil consumer, the South American country’s oil minister Manuel Quevedu said on Monday.Venezuela’s Oil Minister and President of Venezuelan state-run oil company PDVSA Manuel Quevedo (C) arrives to attend the Petrotech conference in Greater Noida, India, February 11, 2019. REUTERS/Anushree Fadnavis

Venezuela buys a slew of products including medicines from India, and it is looking for alternative payment mechanisms after application of the latest stringent U.S. sanctions.

The administration of U.S. President Donald Trump has imposed sweeping sanctions on Venezuelan state-owned oil firm PDVSA, aimed at severely curbing the OPEC member’s crude exports to the United States to pressure socialist President Nicolas Maduro to step down.

“The relationships with India will continue, the trade will continue and we will simply expand all the trade and relationship,” Quevedu told reporters on the sidelines of Petrotech conference, without giving any further details on how a barter mechanism with India would work.

Venezuela’s oil production has dwindled in the last two decades, from more than 3 million barrels per day (bpd) at the beginning of the century to between 1.2 million and 1.4 million bpd by late 2018. Most of the crude oil it produces now is heavy or extra heavy.

Venezuela’s oil output is now at 1.57 million bpd, Quevedu said.

The Venezuelan oil minister, who now holds the rotating presidency of the Organization of the Petroleum Exporting Countries (OPEC), said it was important to listen to all the consuming countries that represent oil demand to maintain the balance of demand and supply in the markets.

“Inventory levels, demand, supply are the elements taken into account while trying to maintain the balance the global industry needs,” Quevedu said.

Unilateral sanctions by the United States have reduced PDVSA’s oil output and caused a loss of about $20 billion to its oil revenue-dependent economy, he said.

“U.S. exercises kidnapping of resources around the world … It is financial persecution. Now they want to steal Citgo Petroleum from Venezuela,” he said.

Citgo Petroleum Corp is a unit of PDVSA and Venezuela’s top foreign asset. Citgo operates three U.S. refineries that supply about 4 percent of total U.S. fuel production, and it is PDVSA’s largest U.S. customer for its oil exports.

Following the U.S. decision to impose sanctions on Venezuela’s oil industry, both sides have engaged in aggressive moves for control of Citgo, which has roots in the United States dating back 100 years, but has been owned by Venezuela’s state-owned Petroleos de Venezuela, or PDVSA, for three decades.

Sanctions have forced Citgo and other U.S. refiners to seek crude oil supplies from other nations.

(CNBC) Treasury sanctions Venezuela state-owned oil firm in bid to transfer control to Maduro opposition

(CNBC)

  • The Trump administration announces sanctions against Venezuela’s state-owned energy company PDVSA.
  • The sanctions aim to transfer control of Venezuela’s oil wealth to the forces that oppose socialist dictator Nicolas Maduro.
  • U.S. companies can continue to import oil from Venezuela, but the funds must be held in accounts that are not accessible to the Maduro regime.

The Trump administration will sanction Venezuela’s state-owned oil firm, a move the White House has long put off for fear that it would raise oil prices and hurt American refiners.

The move comes after a turbulent week for Venezuela that has created a standoff over the country’s leadership. The sanctions aim to transfer control of Venezuela’s oil wealth to forces that oppose socialist dictator Nicolas Maduro and deprive the strongman of resources that could prolong his grip on power.

Last week, the opposition leader of Venezuela’s National Assembly, Juan Guaido, named himself interim president amid street protests. President Donald Trump soon recognized Guaido as the nation’s leader and his administration has been marshaling international support for the opposition figure since then.

Maduro, having recently started another term after highly disputed elections, is refusing to back down. He is supported by the country’s minister of defense and Russia.

Nicolas Maduro, president of Venezuela, speaks during a swearing in ceremony for the new board of directors of Petroleos de Venezuela SA (PDVSA), Venezuela's state oil company, in Caracas, Venezuela, on Tuesday, Jan. 31, 2017.

Carlos Becerra | Bloomberg | Getty ImagesNicolas Maduro, president of Venezuela, speaks during a swearing in ceremony for the new board of directors of Petroleos de Venezuela SA (PDVSA), Venezuela’s state oil company, in Caracas, Venezuela, on Tuesday, Jan. 31, 2017.

Treasury Secretary Steven Mnuchin on Monday determined that people operating in Venezuela’s oil sector are subject to U.S. sanctions.The nation’s energy industry is dominated by state-owned Petroleos de Venezuela, better known as PDVSA.

Mnuchin said PDVSA has long been a vehicle for embezzlement and corruption by officials and businessmen. The sanctions will prevent the nation’s oil wealth from being diverted to Maduro and will only be lifted when his regime hands control of PDVSA to a successor government, he added.

“The path to sanctions relief for PDVSA is through the expeditious transfer of control to the interim president or a subsequent democratically elected government who is committed to taking concrete and meaningful actions to combat corruption,” Mnuchin said during a White House news briefing.

Under the sanctions, U.S. companies can continue to purchase Venezuelan oil, but the payments must be held in an account that cannot be accessed by the Maduro regime.

“If the people in Venezuela want to continue to sell us oil, as long as that money goes into blocked accounts, we’ll continue to take it,” Mnuchin said. “Otherwise we will not be buying it.”

Oil prices pared some losses after news of the sanctions broke, but major benchmarks were still down more than 2.5 percent following the official announcement. U.S. crude ended Monday’s session 3.2 percent lower earlier in the day.

In order to minimize disruptions and support for humanitarian aid, the Treasury’s Office of Foreign Assets Control has issued general licenses that authorize some transactions and activities with PDVSA to continue for a limited time, Mnuchin said. European and Caribbean companies will also be granted licenses so they can wind down business with PDVSA in an orderly fashion.

PDVSA’s Citgo refineries in the U.S. will be allowed to continue to operate, but revenue must be placed in an escrow account in the United States. Citgo operates three U.S. refineries with a combined ability to process about 750,000 barrels per day of crude oil into fuels.

Earlier Monday, Reuters reported that Guaido’s coalition is racing to take control of Citgo before an interest payment linked to PDVSA’s bonds maturing in 2020 comes due in April. If PDVSA fails to make the payment, it would open a path for creditors to make a claim on Citgo’s assets.

Venezuela’s oil production has cratered in recent years after a long stretch of mismanagement and economic crisis that has prevented PDVSA from maintaining output, creating a vicious cycle of falling supplies and revenue.

Still, Venezuela remains one of the largest suppliers to U.S. refineries. Venezuela shipped an average of 580,000 bpd of crude oil and petroleum products to the country in the year through October 2018, the last month data were available.

Venezuela is a major supplier of heavy oil, which is largely used to produce distillates like diesel and jet fuel. PDVSA relies on imports of super light oil to dilute its heavy crude before its shipped out.

The U.S. sanctions will place limits on selling oil products, Mnuchin said, but the Treasury is not currently pursuing an embargo against sales to Venezuela.

Confirmation of the administration’s intent to sanction PDVSA came from Sen. Marco Rubio before to the news conference, after Axios earlier reported the impending actions.

“The Maduro crime family has used PDVSA to buy and keep the support of many military leaders,” Rubio said in a statement. “The oil belongs to the Venezuelan people, and therefore the money PDVSA earns from its export will now be returned to the people through their legitimate constitutional government.”

(DN) Como Salazar ofereceu a imortalidade a Gulbenkian

(DN) A primeira biografia sobre o multimilionário Calouste Gulbenkian chega no dia 3 às livrarias e conta minuciosamente a história de como Salazar capturou a maior fortuna que veio para Portugal. Jonathan Conlin é o autor.

No ano em que se comemoram 150 anos do nascimento de Calouste Gulbenkian (a 23/2/1869), o mundo – e principalmente os portugueses – têm finalmente uma investigação completa que relata a vida do homem que proporcionou ao país uma evolução cultural que nem o Estado foi capaz de fazer. “Dinheiro” foi a palavra-chave da vida do arménio que legou a sua fortuna a Portugal e estabeleceu uma fundação com o seu nome, que se substituiu ao próprio Ministério da Cultura durante muitas décadas, e que a biografia mostra o rasto bem visível dessa fortuna e a mão de Salazar no esforço gigantesco para não perder a fortuna que Azeredo Perdigão começara por conseguir.

Apesar de a história da futura Fundação Calouste Gulbenkian só ocupar 37 páginas das 500 de O Homem Mais Rico do Mundo – As Muitas Vidas de Calouste Gulbenkian, é na Conclusão e no Epílogo que o maior negócio do Estado Novo vem contado pela primeira vez com todos os detalhes que a investigação e consulta de documentos, correspondência e arquivos da época, proporcionaram ao autor e historiador norte-americano.

Em entrevista ao DN, o biógrafo Jonathan Conlin acrescenta mais pormenores sobre o cerco feito a Gulbenkian e aos seus homens de confiança que o futuro presidente da Fundação, Azeredo Perdigão, elabora de modo a que a imensa fortuna fique em Portugal: “Tornou-se um assunto de Estado”, é como o autor define a situação para que Gulbenkian tinha sido avisado por Cyril Radcliffe (o braço direito do milionário neste assunto) “por estar em causa uma soma tão grande.” E sentencia: “Não foram tomadas todas ou as devidas precauções.”

O que significa este desabafo? Que a ausência de um testamento “além do redigido apressadamente” em maio de 1950 permitia que o Governo português tentasse ganhar a corrida para receber a fortuna de Gulbenkian, na qual estavam envolvidas poderosas nações como a Inglaterra, a França e os Estados Unidos.

Mais, o biógrafo apresenta uma versão suportada em muitos documentos e que até agora nunca fora tão explícita quanto aos meios envolvidos para trazer até Portugal a fortuna de Gulbenkian, em que estiveram envolvidas as maiores forças políticas da altura – os presidentes do Conselho, Salazar e posteriormente Marcelo Caetano -, bem como dois embaixadores, numa disputa de poderes entre o advogado português de Gulbenkian, Azeredo Perdigão, o homem que fora apresentado em janeiro de 1952 pelo próprio braço direito do milionário, Cyril Radcliffe, sendo que este viria a ser afastado por lhe ter sido retirada toda a capacidade de manobra pelo conluio governativo e diplomático português.

Ao futuro homem forte durante décadas da Fundação, Azeredo Perdigão, cabia garantir a Calouste Gulbenkian a principal questão que o afligia: não pagar impostos sobre a sua fortuna após a morte. Perdigão não tinha resposta no início porque a legislação portuguesa nunca se confrontara com uma situação de tão grande dimensão financeira, mas quando Radcliffe se apercebe que o solicitador estava em contacto direto com Salazar para encontrarem uma forma de satisfazer os desejos de Gulbenkian já era tarde de mais. Segundo o biógrafo, chega um momento em que Radcliffe se questiona se “as exigências de Perdigão eram realmente dele ou do governo português. Estaria a falar como executor de Gulbenkian ou seria um porta-voz de Salazar?”

Calouste Gulbenkian© DN

Apatia perigosa no momento da grande decisão

A ajudar Portugal esteve uma outra situação, refere o biógrafo: “A apatia de Gulbenkian [por questões de saúde que o tornavam cada vez mais débil] foi boa para Portugal. Sem essa apatia, o país poderia não ter a Fundação.” Acrescenta: “A combinação da sua doença e os momentos ocasionais de apatia faziam com que a sua resposta aos que lhe pediam para planear [o legado] fosse a de responder ‘Deixem isso com Radcliffe’. Essa pressão para que clarificasse o destino da herança era muito violenta e ele, devido à apatia, comportava-se como se estivesse num carro e desistisse de o guiar e alguém tivesse de pegar no volante.” O que aconteceu, continua, “foi que Perdigão foi capaz de convencer Gulbenkian que não seria taxado em Portugal e fê-lo avançar num novo testamento, que ainda era muito vago. Se tivesse vivido mais tempo, provavelmente teria alterado e definido os contornos da Fundação que eram muito pouco exatos.”

Jonathan Conlin conclui: “É uma história complexa, mas sabe-se que Perdigão estava a trabalhar com Salazar de modo a cumprir a intenção que o governante queria, a de que a Fundação [e a herança] ficasse em Portugal.” Ainda por cima, diz Conlin, “a abertura de um novo oleoduto tinha tornado Gulbenkian tão rico que era imaginável para as pessoas daquela época perceberem a dimensão da fortuna e o próprio nem tinha noção do que seria a dotação que deixaria à Fundação.”

Porquê doar uma fortuna inimaginável a Portugal?

Quando se insiste na pergunta do porquê de ter a sede da Fundação em Portugal ao biógrafo Jonathan Conlin, este recorda que “Gulbenkian considerou vários locais a partir de 1937 e, com com sir Radcliffe, até 1953 continuou a debater a questão”. Foi então que o último testamento prevaleceu, explica: “Sabemos pela correspondência com os seus vários advogados que Gulbenkian queria evitar um Estado onde fosse penalizado com impostos. Era o caso da Inglaterra, onde tentou negociar a oferta de obras de arte para ter melhores condições ou ser até uma exceção, mas o clima político não lhe era favorável após a II Guerra Mundial”. O mesmo se passou em França, diz: “O Código Napoleónico dava aos filhos o direito de reclamar a herança e ele tinha tornado claro a Nubar e a Rita que nunca iriam receber a totalidade da vasta fortuna, apenas a garantia de que viveriam desafogadamente – e eles nunca se opuseram a essa decisão paternal.”

Gulbenkian, recorda, “também pensou no Panamá e no Lichtenstein”. Uma outra solução seria os Estados Unidos, no entanto não houve nunca uma resposta clara nas “negociações com o governo americano para que o isentassem de impostos em troca da fortuna.”

Diga-se que Gulbenkian era um homem com uma perspetiva diferente em relação aos impostos que o queriam fazer pagar, como esclarece o biógrafo: “As suas origens eram de famílias ricas da Arménia e a sua visão era muito próxima dessa elite do império Otomano que tinha privilégios especiais. Ele era contra o pagamento de impostos porque vinha de famílias que não o faziam.”

Em relação aos Estados Unidos, Gulbenkian também não se esqueceria de como fora bem recebido em Portugal e suspeito nos Estados Unidos. Afirma o biógrafo que “Gulbenkian tinha algum amor a Lisboa porque quando veio cá pela primeira vez estava a caminho dos EUA, mas soube que a autoridade tributária estava à sua espera para o investigar de forma mais rigorosa”. Ao saber pelo seu próprio serviço de espionagem desse facto, Gulbenkian “preferiu não viajar para os EUA e ficou por Lisboa, que era a Casablanca-dois nessa altura e onde estavam exilados milionários como Rothschild, cidade onde a temperatura era amena, não existia racionamento e de onde seria fácil fugir se os alemães avançassem para a ocupação de Portugal. Após a II Guerra Mundial, Gulbenkian regressou à sua vida normal mas nunca construiu ou comprou uma casa em Lisboa como as que possuía em Paris ou Londres”.

Segundo Conlin, o apreço de Gulbenkian por Lisboa era grande: “Gostava da cidade, provavelmente apreciava a censura à imprensa que era impedida de publicar notícias sobre a sua vida privada e uma polícia que zelava para o manter livre dentro do Hotel Aviz, impedindo qualquer jornalista de o importunar. Ele gastava muito dinheiro com a polícia portuguesa para manter os jornalistas afastados do hotel, mesmo que muitos se disfarçassem de empregados ou subornassem os criados para saberem pormenores dos seus dias. Mas o ambiente em Lisboa compensava a sua prisão pelos nazis em 1942.”

Contudo, diz o biógrafo, Gulbenkian “tinha vários mundos dentro de si e falava várias línguas, daí que tenha tentado dar aos leitores pistas sobre o seu pensamento, como o momento em que está muito doente numa das estadas no Hotel Aviz e em que, apesar de agradecer ao médico português, Dr. Fonseca, pela recuperação manda ao mesmo tempo sacrificar um carneiro em Istambul e distribuir a sua carne aos pobres da paróquia. Este era um homem que não ia a Istambul há 50 anos, mas pensa como os arménios tradicionais de seu tempo. Acredita noutras crenças, não está em contradição.”

Para o biógrafo não foi difícil recolher informações sobre a estada em Portugal pois com a sua família dividida entre Londres e Paris nessa época escreviam e falavam todos os dias: “Se quisermos saber o que Gulbenkian fazia ou lia em certo dia no Hotel Aviz é fácil saber. O que pensava ou sentia é diferente, aí temos de confiar nos testemunhos de quem era mais íntimo. No entanto, foi preciso estar muito atento à agenda de interesses pessoais de cada um dos que estavam à sua volta e triangular os relatos para perceber o que é verdade em quem o diz.”

Entre os depoimentos presentes no livro sobre o dia-a-dia de Gulbenkian em Lisboa está este, bem curioso: “Todas as manhãs, quando os médicos consentiam, um automóvel levava-o para Montes Claros, em Monsanto, que Salazar transformara em parque. Aí, Gulbenkian dava o seu passeio solitário, após o que se sentava debaixo da ‘minha árvore’, tendo primeiro descalçado sapatos e meias para poder sentir a relva debaixo dos pés”. Também apoiava financeiramente o Jardim Zoológico: “Compraz-me mostrar desta maneira a minha viva simpatia pois os animais que habitam o belo jardim são também, de certa maneira, meus anfitriões.”

A construção do principal auditório da Fundação© DN

A “imortalidade” oferecida por Portugal

Para Cyril Radcliffe, o adiar da decisão de Gulbenkian que ia favorecendo o estabelecimento da Fundação em Portugal “tornara-se uma obsessão” porque “isolava [Gulbenkian] definitivamente dos dois países que mais haviam feito no mundo para o formar e para lhe dar as suas oportunidades, a Inglaterra e a França”. Portugal era, na opinião de Radcliffe, “um refúgio agradável e atencioso, mas nunca poderia ocupar o lugar das outras nações”. O que Radcliffe observava era fácil de entender: “Já vi demasiado de governos para confiar que algum deles deixasse fontes como essa por explorar”. Numa espécie de obituário/testemunho publicado no jornal The Sunday Times, Radcliffe considerou que “Gulbenkian só tinha orgulho na ‘estrutura intrincada e complexa (…) que erguera como fortaleza e templo da sua riqueza” e, afirma o biógrafo, que “foi através dessa estrutura que Gulbenkian procurou a imortalidade” ao querer deixar uma fundação.

Azeredo Perdigão, seguindo as instruções de Salazar e mantendo este sempre informado das negociações, levou avante o processo e deu corpo ao que estava parcialmente escrito no testamento e que podia ter várias interpretações: “O enunciado do testamento de Gulbenkian deixava igualmente claro que o desejo do fundador fora que Portugal beneficiasse mais do que qualquer outro país”. E, ainda não estava concretizada a Fundação, já Radcliffe se queixava de Perdigão “começar a atribuir bolsas de estudo em nome da Fundação.” A batalha estava perdida, Salazar concedera a “imortalidade” a Gulbenkian e a Fundação mudou o rosto cultural de um país atrasado.

Apagar os “5%” do título da edição portuguesa

O título da edição portuguesa não corresponde ao original,O Senhor cinco por cento, e foi alterado para O Homem Mais rico do Mundo – As muitas vidas de Calouste Gulbenkian. Jonathan Conlin refere que “foi responsabilidade da editora Objectiva porque, creio, já havia um livro com esse título”. Uma situação que não incomodou o editor inglês, pois a anterior ‘espécie’ de biografia com esse título data de 1957, de autoria de Ralph Hewins. “Como foi traduzido para Portugal em 2009, poderia fazer confusão com este livro, que é fruto de investigação enquanto o de Hewins era uma recolha de histórias que ele teve conhecimento”, acrescenta Conlin.

Os cinco anos de investigação da biografia que agora é publicada foi integralmente subsidiada pela Fundação Calouste Gulbenkian que, garante, não interferiu no projeto apresentado por Jonathan Conlin. O próprio assegurou ao DN que “o livro foi publicado de acordo com o seu original e não houve pressão ou sugestão de alterações”.

Entre as situações mais delicadas está o capítulo em que se relata o hábito de Gulbenkian ter sexo com mulheres jovens, situação que Conlin desdramatiza: “Não via isso como prazer, antes como um caso de saúde como é habitual na Turquia e que muita gente praticava na época. O seu casamento era apaixonado, mesmo que também fosse uma união empresarial porque casara-se com a filha de uma família ainda mais rica que ele próprio. Era tão bom para o negócio como para o amor e ela nunca esperou que o marido lhe fosse fiel, até brincava com o assunto em cartas enquanto namorados ao dizer que se tivesse de ser assim era melhor acostumar-se. Ela tinha 17 anos, mas é fácil dizer hoje que o mundo oriental é muito sexualizado, só que eram outros tempos e assim deve ser contextualizado”.

Quanto ao seu interesse em escrever uma biografia de Calouste Gulbenkian, Jonathan Conlin revela que sentiu curiosidade pela primeira vez no protagonista em 2000 quando trabalhava na história da National Gallery, em Londres, e descobriu a amizade entre Kenneth Clark, o glamoroso diretor da National Gallery na altura, e Gulbenkian: “Com a chegada dos nazis e a ocupação de Paris, Gulbenkian ponderou levar parte da sua coleção de arte para a National Gallery e tive de escrever sobre este assunto. Essa foi a primeira vez em que Gulbenkian me interessou. Depois, ao dar uma conferência sobre a filantropia de Gulbenkian, vim em 2002 a Portugal consultar os arquivos na Fundação e fiquei ainda mais interessado.”

Calouste Gulbenkian

A estátua de Diana que comprou a Estaline

Garante que não escreveu a biografia para os leitores portugueses: “O meu leitor ideal é quem lê a revista The Economist. Em Portugal toda a gente sabe quem é Gulbenkian, mas na Inglaterra ou nos EUA o nome é mais ligado ao filho Nubar, porque era um membro da sociedade muito famoso, conhecido pelo monóculo ou pelo táxi adaptado em que se deslocava, sempre rodeado de belas companhias, amante de bom vinho e boa comida – exatamente o contrário do seu pai. Seria um livro diferente se fosse para o leitor português, mas Gulbenkian é uma figura mundial e é necessário pensar na audiência internacional.”

Ao perguntar-se se o Gulbenkian colecionador de arte tinha bom gosto, Jonathan Conlin responde assim: “Ele achava que o gosto tem de ser educado e desde cedo rodeou-se de curadores que o ensinaram, comprava revistas especializadas e lia livros de arte. Mesmo sendo um homem muito ocupado, conseguia arranjar tempo para estudar. O seu gosto vai até Degas, Picasso já estava além. Mas nunca disse que a arte contemporânea era lixo, apenas que não a apreciava e precisava de ser educado para gostar dela.” Entre os bons exemplos de peças que adquiriu está a estátua de Diana, a Caçadora, que comprou a Estaline: “Essa estátua mostra como Gulbenkian era um caçador de tesouros, mesmo que após os adquirir depositava as peças longe do olhar de todos durante muitos anos. A caça era o que lhe interessava, talvez o relaxasse das tarefas empresariais.”

O manuscrito original era muito maior e repleto de detalhes da vida empresarial de Gulbenkian, mas teve de o reduzir aquém das mil páginas repletas de negócios e das suas muitas vidas no livro. Os dois encartes e os mapas completam a informação escrita.

O Homem Mais Rico do Mundo – As muitas vidas de Calouste Gulbenkian

Jonathan Conlin

Editora Objectiva, 495 páginas

(EurActiv) Biofuels and electromobility are key in Portugal’s transport decarbonisation

(EurActiv)

EURACTIV.com interviewed José Mendes, Portuguese First Secretary of State for Mobility – Environment and Energy Transition, on the sidelines of COP24 climate talks in Katowice, Poland. [Sarantis Michalopoulos]

This article is part of our special report COP24: Options to decarbonise transport.

Portugal will use both electromobility and biofuels to decarbonise its transport sector by 2050, José Mendes, Portuguese first secretary of state for mobility – environment and energy transition, told EURACTIV.com in an interview.

Last week, the Portuguese government presented a plan which aims to make the Mediterranean country carbon-neutral by 2050.

The plan provides several pathways for the different sectors of the economy. For transport, Portugal aims for a 50% emissions reduction by 2030, 84% by 2040 and 98.5% by 2050, which means it will be almost fully decarbonised.

“In 2050, we will still have some few emissions that will be compensated by the forest sector,” the Portuguese mobility vice-minister said on the sidelines of the COP24 in Katowice.

All options needed

Mendes said his government had considered the circumstances and tried to adopt an integrated approach instead of making a sudden energy shift to electric vehicles.

He explained that all available renewable options should be used. These options range from reducing unnecessary trips to using more public transport and even shared transportation and mobility models.

Part of the plan was also to explore ways to integrate energy that is renewable.

The Portuguese politician said electromobility technology advancement in the run-up to 2050 does not seem enough to fully decarbonise the transport sector and therefore biofuel will also have a role to play.

He said certain types of vehicles and transport means, such as aviation, shipping and long-distance transportation, were not easy to electrify.

“If we need fuel, this should be biofuels that are renewable,” he said.

“What we believe is that by 2030, we will have one-quarter of the consumption being biofuel; this is important mainly for aviation considering that it’s not easy to fully electrify an airplane,” he said.

He added that on average in Europe, a car is not in motion 92% of the time and when it runs, it transports only 1.5 people per trip. “We believe that by 2040, the country can have 1/3 of its trips using shared mobility,” he said.

“By 2043, all vehicles running in Portugal will be fully electric,” he emphasised.

Paris Agreement and the US

Referring to the ongoing climate negotiations in Katowice, Mendes said a global commitment is still feasible even without the US.

“There is a clear sign from the US community of states, companies and cities, which are willing to stay on board when it comes to the Paris Agreement,” he said, adding that it was crucial in this COP to involve subnational entities.

“The answer is there,” he added and cited as an example the State of California, which in September became the first North-American member of the International Transport Decarbonisation Alliance (TDA).

California has set a goal of 1.5 million zero-emission vehicles by 2025, and 5 million by 2030.

“Of course, we would like a clear political statement by the President of the US but we have to respect his different opinion. In any event, this is an effort that will take decades and I am sure the US will be fully committed in the future,” Mendes added.

Building bridges with China

Mendes also referred to Chinese President Xi Jinpin’s visit to Lisbon on 5 December, which raised eyebrows in Brussels, regarding Beijing’s “One Belt, One Road” strategy.

The two countries signed a memorandum of understanding which focused on transport connections and energy. For Mendes, it is positive that China is investing heavily in electromobility mainly to tackle massive air pollution.

“The largest fleet of e-buses is in China. Beijing is really willing to contribute to the effort to decarbonise economy and transport and in many fields, the Chinese are even advanced when it comes to technology development,” the Portuguese politician said.

He added that it’s important for the EU and Portugal to partner with China.

“What has to be clear is that we all follow the same international rules and regulations and agree on the principle to decarbonise our economies around 2050,” he said.

He said Europe should be aware of China’s “enormous problems” mainly related to the dimension of its cities as well as of some leapfrogging technologies in some parts of China, which aim to advance through the adoption of modern systems without going through intermediary steps.

“We should also deploy this concept in other parts of the world, including Africa. It’s a matter of the planet and it’s important to build bridges with China,” Mendes concluded.

(NR) Feds Discover Largest Oil, Natural-Gas Reserve in History

(NR)

Drill pipe is seen on a drilling site in the Permian Basin oil and natural gas production area near Wink, Texas, August 22, 2018.(Nick Oxford/REUTERS )

The federal government has discovered a massive new reserve of oil and natural gas in Texas and New Mexico that it says has the “largest continuous oil and gas resource potential ever assessed.”

“Christmas came a few weeks early this year,” Secretary of the Interior Ryan Zinke said of the new reserve, which is believed to have enough energy to fuel the U.S. for nearly seven years.

USGS Energy Program

@usgsenergy

Our latest resource assessment-Texas & New Mexico’s Delaware Basin: https://go.usa.gov/xPz5a  We estimate 46.3 billion barrels of & 281 trillion cubic feet of . That’s our largest continuous assessment ever!

286 people are talking about this

In all, the new reserve is said to contain 281 trillion cubic feet of natural gas, 46.3 billion barrels of oil, and 20 billion barrels of natural-gas liquids, the Interior Department’s U.S. Geological Survey said.

Almost a third of the U.S.’s total crude-oil production comes from the Permian Basin where the reserve was found, making it the biggest shale-oil-producing region in the U.S.

“American strength flows from American energy, and as it turns out, we have a lot of American energy,” said Zinke. “Before this assessment came down, I was bullish on oil and gas production in the United States. Now, I know for a fact that American energy dominance is within our grasp as a nation.”

(BBG) Qatar to Leave OPEC as Politics Finally Rupture Oil Cartel

(BBG) Qatar said it will leave OPEC next month, a rare example of the toxic politics of the Middle East rupturing a group that had held together for decades through war and sanctions.

Qatar, a member since 1961, is leaving to focus on its liquefied natural gas production, Energy Minister Saad Sherida Al-Kaabi told a news conference in Doha on Monday. He didn’t mention the political backdrop to the decision: dire relations with Saudi Arabia, which has led a blockade against his country since 2017; and a rhetorical onslaught from U.S. President Donald Trump against the cartel.

“The symbolism is profound,” said Helima Croft, commodities strategist at RBC Capital Markets LLC and a former analyst at the Central Intelligence Agency. “Given that the concentrating on LNG should not be incompatible with OPEC membership, the move will invariably lead many to conclude that the geopolitical divisions had become too intractable.”

A spokesman for the Organization of Petroleum Exporting Countries declined to comment.

Qatar is OPEC’s 11th-biggest oil producer, accounting for less than 2 percent of total output, so its departure may not have a significant impact on discussions this week to cut production in conjunction with allies including Russia. Yet it sets a troubling precedent for a group that prides itself on putting shared economic interests above external politics — even extreme events like the Iran-Iraq war in the 1980s or Saddam Hussein’s 1991 invasion of Kuwait.

“Quitting OPEC is largely symbolic for Qatar,” said Amrita Sen, chief oil analyst at consultant Energy Aspects Ltd. in London. “Its oil production has been steady with limited prospects for increases.”

Qatar is a minnow in oil and a giant in natural gas. Counting both its production of crude and condensate — a form of ultra-light oil — the nation pumps about 1 million barrels a day, less than a 10th of Saudi Arabia’s output. In the 2016 production-cuts deal between OPEC and non-members including Russia, Qatar made a reduction of 30,000 barrels a day, just 1.7 percent of the total.

Add in natural gas, supplied to its neighbors by pipeline and globally as LNG, and the nation’s output rises to the equivalent of 4.8 million barrels of oil a day, with plans to expand that to 6.5 million, according to Al-Kaabi.

“Achieving our ambitious strategy will undoubtedly require focused efforts, commitment and dedication to maintain and strengthen Qatar’s position as the leading LNG producer,” Al-Kaabi said in a statement. “I would like to reaffirm Qatar’s pride in its international standing at the forefront of natural gas producers, and as the biggest exporter of LNG.”

Frayed Relations

Relations within OPEC are sometimes frayed and observers have often speculated that the group could fracture. Yet oil ministers from Iran and Iraq continued to attend the same meetings even as their nations fought a bloody war that included the use of chemical weapons.

In the mid-1990s, Venezuela appeared at times on the brink of pulling out. Some U.S. right-wing politicians also tried to convince Iraq to withdraw after the 2003 invasion, but Baghdad resisted the pressure. Iran and Saudi Arabia have been bitter regional rivals for many years, backing opposite sides in civil wars in Syria and Yemen, but have still been able to negotiate compromises within the group’s Vienna headquarters.

In the history of the cartel, three nations have left the organization, although two later re-joined. Most recently, Indonesia suspended its OPEC membership because its status as a net importer of oil made joining the 2016 production cuts impractical.

Founding Nations

Qatar was the first country to join OPEC after the five founding nations — Iran, Iraq, Kuwait, Saudi Arabia and Venezuela — formed the group in 1960. It’s the first Middle Eastern nation to leave the group.

Its departure comes amid a standoff between Gulf Arab nations. A Saudi-led coalition implemented a blockade on Qatar in June last year, severing diplomatic, trade and transport links as they accused Doha of funding extremist groups and being too close to Iran.

Qatar is also leaving at a time when being an OPEC member carries wider political risks. In addition to the verbal attacks from Trump, the U.S. Department of Justice is formally reviewing legislation to rein in the cartel’s power. If passed, the NOPEC bill could open up members of the group to legal attacks under the Sherman Antitrust Act of 1890, used more than a century ago to break up the oil empire of John Rockefeller.

The departure of Qatar “presents a public relations and perhaps a sentiment problem” for OPEC at a crucial time, said Joe McMonigle, an oil analyst at Hedgeye Risk Management LLC and a former senior official at the U.S. Energy Department.

(BBG) Oil Advances as Russia Shows Willingness to Join Saudis On Cuts

(BBG) Oil climbed for the first time in three days as Russia expressed a willingness to join Saudi Arabia in curbing global supplies.

Russia wants more predictability and “smooth price dynamics” in world crude markets, Deputy Foreign Minister Sergei Ryabkov said in an interview in Argentina. The remarks presaged a G-20 summit where Russia’s Vladimir Putin and Saudi Arabia’s Mohammed bin Salman are expected to discuss oil supplies ahead of a broader meeting of top petroleum exporters next week.

West Texas Intermediate crude has fallen 21 percent this month, on track for its its worst monthly showing in a decade. Yet after sliding below $50 a barrel earlier on Thursday — a key budgetary marker for U.S. shale drillers — some traders saw an oversold market, said Bart Melek, head commodity strategist at TD Securities in Toronto.

“Sub-$50 crude would stress shale producer finances,” Melek said, “suggesting the upward production trajectory could slow.”

For an OPEC live blog with Bloomberg News oil strategist Julian Lee, click here

West Texas Intermediate for January added $1.16 to settle at $51.45 a barrel on the New York Mercantile Exchange.

Brent for January settlement, which expires Friday, gained 75 cents to $59.51 on London’s ICE Futures Europe exchange. The global benchmark traded at an $8.06 premium to WTI. The more-active February contract rose 82 cents to $59.51.

See also: Resilient Russian Oil Companies Give Putin Leverage With OPEC

Putin praised the Saudi crown prince on Wednesday and said Moscow is ready to cooperate further. He also said crude around $60 a barrel is “balanced and fair” and well above the level needed to keep his government’s budget in surplus. By contrast, Saudi Arabia needs oil at more than $80 a barrel to balance its budget.

“Nobody is interested in either an artificial deficit or an oversupply,” Ryabkov said.

 

(ZH) Brazil Eyes $30 Billion Offshore Oil Boom

(ZH) Over the past few years, Brazil has held several very successful oil auctions under production-sharing contracts in its pre-salt layer, attracting major oil companies to its prized offshore oil area.

Now President-elect Jair Bolsonaro wants to open more of the pre-salt assets – an area currently exclusively in the hands of state oil firm Petrobras – to private investors, hoping to earn US$31 billion (120 billion Brazilian reais) that could help narrow Brazil’s massive budget deficit.

However, as Bolsonaro prepares to take office on January 1, 2019, his transition team may need to negotiate how different Brazilian states and municipalities could divide the revenues from the potential sale of stakes in more pre-salt fields to foreign oil firms. This uncertainty is not welcome news for Big Oil, which has expressed interest in the area that has been explored to some extent and proven to hold much more oil than initially thought.

The area at stake is the so-called ‘transfer of rights’ area, where Petrobras holds 100 percent of the rights to produce 5 billion barrels of oil. The state oil firm has explored the area and found that a lot more oil lies in this low-risk offshore zone. There are estimates that the ‘transfer of rights’ area could hold up to 15 billion barrels of oil in excess of the 5 billion barrels to which Petrobras is entitled to produce when the government transferred the area to the state firm in 2010.

Brazil has been looking to pass legislation to remove the obligation that only Petrobras can produce oil in the ‘transfer of rights’ area. Far-right President-elect Bolsonaro, who had supported state control over the oil assets in the past, now plans to sell oil and other energy assets and supports the bill to allow foreign participation in the currently Petrobras-only ‘transfer of rights’ area, Bolsonaro’s advisor Luciano de Castro told Bloomberg earlier this month.

But last week, the head of Brazil’s Senate Eunicio Oliveira put on hold a bill authorizing oil auctions in the zone, dealing a blow to the president-elect and potentially stalling the bill further. At a meeting with mayors on Friday, Oliveira said that the bill to authorize the sale of stakes in the ‘transfer of rights’ area to foreign firms would be approved if it guarantees that part of the revenues would go to states and municipalities.

Bolsonaro’s plan for the oil auction in this area hit a snag even before the President-elect takes office. Bolsonaro is the third Brazilian president looking to authorize sales to foreign firms in the ‘transfer of rights’ area. But his transition team will probably have to negotiate with various states and municipalities how future revenues would be divided, if the plan is to pass in Parliament.

In the past, Bolsonaro favored state control over energy assets, but he has changed his stance before the presidential election race and now he is lining up a pro-business team to lead the country and picked a privatization advocate, Roberto Castello Branco, to be Petrobras’s new chief executive officer.

If Bolsonaro and his team manage to push the ‘transfer of rights’ area bill through Brazilian politicians from all sides, the potential resources opening for Big Oil to bid are huge.

The area is low-risk—Petrobras has explored parts of it and has found much more oil than originally thought. According to UBS analyst Luiz Carvalho, projects in the area can be viable even if oil prices were to drop to $20 a barrel, Bloomberg quoted the analyst as saying at an event in Rio last week.

Brazil can become an even more attractive destination for Big Oil than it is now if it manages to remove regulatory and political hurdles to auctioning more of its coveted pre-salt oil fields.

(Reuters) Venezuela settles $1.2 billion creditor claim to protect Citgo

(Reuters) Cash-strapped Venezuela settled a $1.2 billion arbitration claim that will prevent a creditor from stripping away its crown jewel foreign asset, the U.S.-based Citgo Petroleum Corp refining business, according to Canadian court documents.

The deal with Crystallex International Corp suspends the Canadian mining company’s push for a court-ordered auction of control of Citgo as a way of collecting on an arbitration award against Venezuela that has grown to more than $1.4 billion with interest. Citgo is based in Houston, Texas.

Venezuela completed an initial payment of $425 million, mostly in the form of “liquid securities,” on Nov. 23, according to a filing in the Ontario Court of Justice, where Crystallex sought protection from creditors in 2011.

Part of the payment was made in bonds issued by Venezuela and its state oil company, PDVSA, according to a Venezuelan finance industry source with knowledge of the issue.

Venezuela agreed to pay the remainder in installments by early 2021. If Venezuela fails to post collateral by Jan. 10 for the remaining payments, Crystallex can restart legal proceedings.

A U.S. judge in Delaware was scheduled to hear on Dec. 20 Crystallex’s arguments for a court-ordered auction of control of Citgo. The company’s three U.S. refineries are a key destination for Venezuela’s crude exports, and Citgo has been valued in the billions of dollars.

Venezuela has managed to protect Citgo even though the country has been crippled by an economic crisis and U.S. sanctions, and has halted payments on tens of billions of dollars of debt. Caracas made payments last month to investors who hold bonds secured by Citgo shares.

China goes bananas for world’s smelliest fruit

Venezuela expropriated a Crystallex gold mining project in 2011, which led to the 2016 arbitration award. Crystallex and Venezuela reached an agreement last year, but Caracas failed to maintain payments after transferring $75 million.

As Venezuela’s debt defaults have piled up and U.S. sanctions have isolated the country, creditors have closed in on overseas assets of PDVSA.

ConocoPhillips said in October it had received $345 million in the third quarter from PDVSA as part of a four-year deal to settle a $2 billion arbitration award stemming from the loss of assets during a 2007 nationalization drive.

Rusoro Mining Ltd reached a settlement with Venezuela in October. The Canadian mining company began pursuing Citgo this year to collect on a $1.3 billion arbitration award over the nationalization of its gold assets in the country.

(NYT) What’s Happening to the Price of Oil?

(NYT

Oil production in North Dakota. Prices have fallen to their lowest levels of the year with traders increasingly focused on trade tensions and rising interest rates.CreditCreditJim Wilson/The New York Times

Oil prices have plummeted in recent days, months after surging to their highest point since 2014. After topping $75 a barrel in early October, the price of West Texas intermediate, the North American benchmark, has fallen by roughly one-quarter. Brent crude, the international standard, has had a comparable decline.

A one-day drop of nearly 7 percent on Tuesday was among the sharpest in recent years, taking prices to the lowest levels of 2018.

The abrupt retreat, which inevitably brings back memories of the industry-rattling crash in 2014, is a big worry for members of the Organization of the Petroleum Exporting Countries, whose economies are closely tied to oil revenues. Saudi Arabia, the most powerful OPEC member, said on Nov. 11 that it would cut output by half a million barrels a day to bolster prices.

That announcement seemed to prompt a warning from President Trump, who said on Twitter a day later: “Hopefully, Saudi Arabia and OPEC will not be cutting oil production. Oil prices should be much lower based on supply!” Analysts say Mr. Trump’s comment may have accentuated the price trend by creating doubt about whether OPEC would enact cuts.

On Wednesday, Mr. Trump cheered the most recent drop on Twitter, with a call to “go lower.”

Donald J. Trump

@realDonaldTrump

Oil prices getting lower. Great! Like a big Tax Cut for America and the World. Enjoy! $54, was just $82. Thank you to Saudi Arabia, but let’s go lower!

48.7K people are talking about this

But analysts say pressure is building on OPEC to shore up prices when the organization gathers in Vienna — along with Russia and other producers — in early December. Here’s a look at the situation the group will face.

The focus of the oil market has shifted sharply in recent months. When the big producers, including OPEC and Russia, met in Vienna in June, the major concerns were about the potential for price spikes and whether supplies would be adequate. Mr. Trump’s decision to reimpose sanctions on Iran threatened to take a large amount of oil from one of the biggest producers off the market.

Over the summer, the Saudis and other producers, who had been restraining output since 2017, opened up the taps, aiming to ease consumers’ worries and placate Mr. Trump. They may have been overly proactive. Traders have shifted their focus from Iran to other factors, like whether Mr. Trump’s trade battles with China and rising interest rates might dampen global economic growth and demand for oil.

At the same time, production in the United States has been rising faster than expected. Output has also risen in Libya, despite continuing warfare, and it has held up better than expected in another troubled country, Venezuela. Volumes of oil held in storage tanks around the world are beginning to build again, raising fears of a renewed glut, analysts say.

The sanctions have had less effect on Iranian output than some analysts had predicted, but expectations may have been too dire. The measures, which impose penalties on companies buying Iranian oil, came into effect on Nov. 5. Buyers had been expected to reduce purchases of Iranian crude oil before the sanctions, but that activity seems to have curbed Iran’s output only modestly. For instance, OPEC reported that Iranian production in October was down 4.5 percent from the previous month, to about 3.3 million barrels a day.

Some background on why the impact has been muted: The Trump administration granted temporary waivers to Iran’s largest customers, including China, India and Japan. Oil traders took the administration’s generosity to mean that the eventual cuts to Iranian exports might be less than expected. “The market was quite surprised to see that waivers were granted,” said Homayoun Falakshahi, an Iran analyst at Wood Mackenzie, an energy research firm.

Mr. Falakshahi said the granting of exemptions to Japan and South Korea, which had stopped buying Iranian oil, was particularly striking. It might indicate, he said, that the administration’s priorities leaned more to keeping prices low for American consumers than squeezing Iran. If so, the strategy seems to be working. The price of regular gasoline in the United States on Tuesday was $2.61, compared with $2.85 a month earlier, according to AAA.

When OPEC members meet in Vienna next month, analysts expect the group to announce production cuts of around one million barrels a day, about 1 percent of world supplies.

There is little doubt that the Saudis can make cuts of this scale. After all, they have lifted production by almost 700,000 barrels a day compared with their average output in 2017.

Saudi Arabia, which tries to avoid taking the pain on its own, may struggle to persuade producers like Russia and Iraq to join in making cuts, analysts said. The Saudis may also need to navigate a tricky path between the pressures from the Trump administration for lower oil prices and their economy’s need for higher revenues.

There is a good chance, analysts added, that producers such as Russia and Iraq may decide that going along with cuts is in their self-interest. “In the end we think Putin will make the same call as he did in November 2016 and opt to join the OPEC producers because of domestic fiscal considerations,” Helima Croft, an analyst at RBC Capital Markets, wrote in a note to clients on Nov. 14.

A few months ago the Saudis seemed to have steered the market back to what were, for their purposes, more comfortable price levels by orchestrating output cuts with Russia and other producers. Now the Saudis and their oil allies are again in the uncomfortable spot of being squeezed, mainly by shale-oil producers in the United States.

“They are back having to stop the market from falling rather than having to worry about the market rising,” said James Davis, an analyst at FGE, an energy consulting firm.

(Economist) The oil price swings dramatically

(EconomistThe oil price was supposed to be soaring around now. With American sanctions against Iran taking effect earlier this month, exports from that country, the world’s fourth-largest producer of crude oil last year, were expected to shrink to close to zero. In anticipation the price of Brent crude, the international benchmark, went above $86 in early October, a four-year-high, and some warned of prices above $100 a barrel.

Instead, by November 8th oil had entered a bear market. The price of Brent crude stood at $66.53 on November 14th. West Texas Intermediate, the American oil benchmark, dropped for 12 straight trading sessions, until November 14th, when it at last ticked up (see chart). That was the longest uninterrupted decline in over three decades. American crude futures have plunged by 20% from their recent peak.

Some of the reasons for the slump are standard fare. In October the imf lowered its forecast for global economic growth. Trouble in emerging markets has an outsize effect on their demand for dollar-denominated oil, as it becomes more expensive in weakening local currencies. But the oil market’s recent volatility also reflects new forces, including the limits of conventional producers and the peculiar impact of America’s president, Donald Trump.

The Organisation of Petroleum Exporting Countries (opec), led by Saudi Arabia, aspires to cosy stability. Prices should be high enough to sustain its members’ budgets and low enough to support global demand. But its grip has slipped. There are now three dominant oil producers: America, Saudi Arabia and Russia, only one of which is a member. As America’s shale industry has boomed, Saudi Arabia has turned to Russia to help co-ordinate production. Their interests are not perfectly aligned. Saudi Arabia’s oil minister, Khalid al-Falih, this week said the kingdom would lower output by 500,000 barrels a day in December; Russia’s oil minister doubted that there would be oversupply.

But it is America that has had the greatest destabilising effect. This year it became the world’s top producer of crude. Its shale companies are pumping out oil at a phenomenal rate. Output in August was 23% above the level 12 months earlier. But the shale industry is beholden to investors, not an oil minister, and production may taper if oil prices continue to slide and investors demand higher returns. On top of that come Mr Trump’s policies, which are helping to shove oil markets this way and that.

After he announced sanctions on Iran in May, opec and its allies agreed to increase output. Production from Saudi Arabia and Russia has climbed to record highs. Then, on November 5th, America announced that it would grant 180-day waivers to China, India and six other countries to continue to import from Iran—countries that together account for more than 75% of Iranian exports, according to Sanford C. Bernstein, a research firm.

Mr Trump’s trade policies are also depressing demand for oil. The imf’s lower forecast for growth is due in part to a slowdown in emerging markets, but also to rising tensions between America and its trading partners, a strain that further weakens emerging economies. The growth in air freight and shipping has fallen by about half in the past year, says Edward Morse of Citigroup, depressing demand for diesel fuel. Mr Trump’s trade war with China is particularly important for oil markets, as China accounted for about 40% of the growth in demand for oil last year. On November 13th opec lowered its forecast for global oil demand next year.

But even as oil prices fall, there is reason to think they could spike again soon. More production cuts may come next month, after opec and its partners meet in Vienna. On top of uncertainty in Iran, disruption in Venezuela, Libya, Nigeria or Iraq could squeeze global supply. These “fragile five”, as some investors call them, accounted for 12% of global oil production from July to September, more than Saudi Arabia.

Then there is always the possibility that Mr Trump could reverse course—striking a trade deal with China, for instance, or tightening restrictions on Iran once more. Or he might simply write a tweet. On November 12th he took to Twitter to call on opec to refrain from cutting production. The oil price fell.

(CNBC) Venezuelan inflation approaches 150,000% as Maduro’s efforts to curb huge price increases fail

(CNBC)

  • The Bloomberg Café Con Leche Index, which gauges Venezuela’s inflation through the price of a cup of coffee, showed an annual inflation rate of 149,900 percent after its latest reading.
  • The staggering inflation print comes after the Venezuelan government issued a new currency, the “sovereign bolivar.” One sovereign bolivar was worth 100,000 “old” bolivars.
  • These efforts initially helped, but the currency has recently plunged, however.

Venezuela's President Nicolas Maduro 

Marco Bello | Reuters
Venezuela’s President Nicolas Maduro

Venezuelan President Nicolas Maduro‘s most-recent attempt to stop his country’s massive inflation problems is failing, at least according to one measure.

The Bloomberg Café Con Leche Index, which gauges Venezuela’s inflation through the price of a cup of coffee, showed an annual inflation rate of 149,900 percent after its latest reading.

The staggering inflation print comes after the Venezuelan government issued a new currency, the “sovereign bolivar.” One sovereign bolivar was worth 100,000 “old” bolivars. The purpose of the new currency was to normalize day-to-day transactions as the country battles through years of hyperinflation. The new currency is also pegged to petro, a digital currency issued by the Venezuelan government that many consider is illegal.

These efforts initially helped as the sovereign bolivar held in a range between 95 and 115 per U.S. dollar, Bloomberg reported citing data from Monitor Dolar. On Monday, however, the bolivar traded at 276.53 per dollar, Monitor Dolar data showed.

Venezuela’s troubles come as the country with the biggest oil reserves in the world deals with an ongoing humanitarian crisis. Venezuela faces shortages of food, medicine and other basic goods.

On top of that, the Trump administration has sanctioned dozens of Venezuelans associated with Maduro’s regime, including his wife, Cilia Flores. The Treasury Department also seized a $20 million private jet belonging to Diosdado Cabello — the vice president of Venezuela’s socialist party — back in September.

Venezuela’s inflation is expected to keep spiraling out of control, too. The International Monetary Fund said in June it expected inflation in Venezuela to hit 1 million present in 2018, noting the country is “stuck in a profound economic and social crisis.”

(CNBC) US crude falls for 11th straight session, its longest losing streak on record

(CNBC)

  • Oil prices turned negative amid a sell-off in the U.S stock market and renewed dollar strength, which makes crude more expensive in emerging markets.
  • U.S. crude fell for an 11th straight day, posting its longest longest losing streak on record.
  • Crude futures fell despite growing signs that OPEC and its allies are moving towards a fresh round of production cuts aimed at preventing oversupply.

Trump ‘keeping people guessing’ when it comes to oil, BP’s Dudley says

BP CEO: Looks like oil demand is starting to come off a bit  

Oil prices turned negative amid a sell-off in the U.S stock market on Monday, with U.S. crude posting an 11th straight day of losses, its longest longest losing streak on record.

Crude futures looked set to break the streak earlier on Monday after Saudi energy minister Khalid al Falih said OPEC and its allies may need to cut crude production by about 1 million barrels per day to prevent the market from swinging into oversupply. On Sunday, Falih said the kingdom’s shipments would fall by 500,000 bpd in December.

But the recent strong correlation between stocks and crude futures reasserted itself on Monday as the Dow Jones Industrial Average fell more than 500 points.

“The stock market was pulling at the oil complex all day. We should have gotten more of rally at that Saudi commentary over the weekend,” said John Kilduff, founding partner at energy hedge fund Again Capital.

U.S. West Texas Intermediate crude settled 26 cents lower at $59.93 on Monday, falling deeper into bear market territory. The contract has never fallen for 11 straight days since it began trading in New York more than three decades ago.

The losses continued after the settlement, with WTI falling more than 2 percent and dipping below $59 a barrel for the first time since February.

Brent crude was down $1.13, or 1.6 percent, to $69.05 a barrel by 3:37 p.m. ET on Monday. The international benchmark for oil prices settled at $70.18 on Friday, its weakest closing price in seven months.

Crude futures have pulled back sharply during the last five weeks, as oil got swept up in a broader market sell-off that saw investors shed risk assets in October. Rising oil supplies from the United States, OPEC and Russia and forecasts for weaker-than-expected demand growth have kept pressure on the market.

“It does look like demand is starting to come off a bit,” BP CEO Bob Dudley told CNBC at the ADIPEC oil and gas conference in Abu Dhabi on Monday.

The world’s appetite for oil now looks set to grow by about 1.3 million bpd, compared with BP’s earlier expectations for 1.4 million to 1.5 million bpd of growth, Dudley said.

Compounding concerns about demand, the U.S. dollar hit a 16-month peak on Monday. Currency weakness in emerging markets, including India, has significantly increased the cost of crude in those countries. A stronger greenback makes dollar-denominated oil more expensive to holders of other currencies.

Oil oversupply a ‘double-edged sword’ for OPEC, analyst says

Oil oversupply a ‘double-edged sword’ for OPEC, analyst says  

Those factors are now forcing OPEC, Russia and several other exporting nations to consider a fresh round of supply cuts.

The alliance of roughly two dozen producers has cut its output since January 2017 in order to drain a global crude glut. The group agreed in June to restore some of that production to rein in rising commodity prices.

However, a committee tasked with monitoring the group’s production agreement concluded on Sunday that oil supplies are growing faster than demand requires, threatening to leave the market oversupplied.The Joint Ministerial Monitoring Committee said the current oil market situation “may require new strategies to balance the market,” after warning last month that the group may have to reverse course and begin cutting output once again.

Falih put a number to the potential scale of cuts on Monday.

“If all things remain equal, and they almost certainly will not as things will change — it is a dynamic market — then the technical analysis we saw yesterday … tells us that there will need to be a reduction of supply from October levels approaching a million barrels,” Falih told the crowd at ADIPEC on Monday.

President Donald Trump on Monday afternoon sought to dissuade OPEC from taking supply off the market in his latest tweet at the cartel.

Donald J. Trump

@realDonaldTrump

Hopefully, Saudi Arabia and OPEC will not be cutting oil production. Oil prices should be much lower based on supply!

16.4K people are talking about this

“Hopefully, Saudi Arabia and OPEC will not be cutting oil production. Oil prices should be much lower based on supply!” he wrote on Twitter.

But Russia, the world’s second biggest producer and an influential voice inside the alliance, is signaling some opposition to supply cuts. Russian Energy Minister Alexander Novak said Sunday he wasn’t sure the oil market would be oversupplied next year. He told CNBC crude prices remains volatile.

“Therefore, right now we shouldn’t be making any hasty decisions,” Novak said. “We need to look at the situation very carefully to see how it will develop so that we don’t end up changing our course by 180 degrees every month.”

OPEC is scheduled to release its monthly production report on Tuesday, which will detail the group’s October output. In September, the 15-member cartel pumped nearly 32.8 million barrels per day.

Russian energy min: Early to talk about oil supply cuts

Russian energy min: Early to talk about oil supply cuts  

The oil market does not appear to be headed for another bull run, said Daniel Lacalle, chief economist at wealth management firm Tressis Gestion. Lacalle notes that indicators of global economic growth are softening as U.S. production growth ramps up faster than previously anticipated.

“The forces behind the slowdown in demand are stronger than what we are already discounting in the price, which is that OPEC will do whatever they can do in order to reduce the oversupply,” he told CNBC on Monday.

The United States recently topped Russia as the world’s biggest oil producer. The country is now producing about 11.6 million barrels per day, more than 10 percent of global demand, according to the latest preliminary weekly figures.

(ZH) Why Oil Prices Will Fall In 2019 And Beyond

(ZH) The decision by the U.S. to grant waivers to eight countries, allowing them to continue to import oil from Iran, has helped ease the tension in the oil market. No longer are oil traders talking about $100 oil.

Iran’s oil exports stood at 1.7 million barrels per day in October and won’t fall to zero anytime soon. But that may not be the end of the story. “While consistent with our expectations, the granting of waivers does not imply that Iran exports will stabilize near current levels,” Goldman Sachs said in a research note on November 1. As more Iranian supply goes offline, the market will continue to tighten. Iran could lose nearly 600,000 bpd of exports by the end of the year, relative to October levels, the bank predicts.

“As a result, we still expect that the global oil market will be in deficit in 4Q18, leading to a strengthening in Brent timespreads,” Goldman said.

In fact, while everyone focuses on the short-term movements in oil prices, Goldman says it’s important to look at the futures curve.

“In our view, the most interesting takeaway from today’s oil price sell-off is the parallel shift in the crude forward curve. This is consistent with a move down on the oil cost curve as recent supply news (less Iran losses, more US and Saudi production) point to fewer high-cost marginal barrels needed in 2019,” the bank said.

That’s a bit of financial jargon, but the gist is that traders are suddenly less concerned that high-cost producers will be needed to supply the marginal barrel. Earlier this year, when Iran sanctions were announced and fears about Permian bottlenecks permeated into the market, oil futures prices rose sharply, with Brent five-year prices rising from $57 per barrel in May to $68 per barrel in September. This can be boiled down to investors believing that the oil market will need high-cost production in the years ahead to supply the marginal barrel, as low-cost producers are at their maximum levels.

However, over the last few weeks, the five-year Brent price fell back.

“The retracing of this last move higher reflects the realization that such high cost marginal barrels may no longer be needed,” Goldman Sachs analysts wrote.

That was due to several reasons. The EIA revealedthat U.S. shale production surged in August, rising by an astounding 400,000 bpd compared to a month earlier. That’s obviously important to the immediate present, since it means a lot more supply has been brought online than previously thought, just as Iranian exports go offline.

But it also suggests that U.S. shale can grow more at a given price level than many analysts had thought. It shows that “US shale is able to deliver more production at the lower 1H18 incentive price than previously expected and that Permian constraints are not as binding as initially feared.” WTI averaged just $65 per barrel in the first half of the year, with some producers in the Permian likely fetching less than that because of discounts related to pipeline bottlenecks. Goldman’s logic is that if U.S. shale can grow as quickly as it did this year, with WTI in the $60s per barrel, then that means it can continue to grow briskly, which means that oil prices in the years ahead will be lower than previously thought.

Another reason longer-dated futures prices fell back was because Saudi Arabia and Libya added new supplies. Low-cost production from these two countries could lower the price of the marginal barrel in the years ahead. The same is true for Iran – the losses from Iran are going to be more gradual than previously thought.

The result is a steeper backwardation in the futures curve, Goldman argues. A long bet on oil is more profitable, which could induce investors to jump in. That, in turn, could help edge up spot prices and near-term futures. Goldman sees Brent rebounding to $80 per barrel by the end of the year.

However, the longer-dated price is still lower. The investment bank sees Brent falling back to about $65 per barrel by the end of 2019 as midstream bottlenecks in the Permian clear up. That may allow OPEC to dial back on production and rebuild spare capacity. Goldman calls this a “re-anchoring of long-term oil prices.”

(Reuters) Rouhani says Iran to sell oil, defy U.S. sanctions: TV

(Reuters) Iran will sell its oil and break sanctions reimposed by the United States on its vital energy and banking sectors, Iranian President Hassan Rouhani said on Monday.

“America wanted to cut to zero Iran’s oil sales … but we will continue to sell our oil … to break sanctions,” Rouhani told economists at a meeting broadcast live on state television.

The United States said on Friday it will temporarily allow eight importers to keep buying Iranian oil when it re-imposes sanctions on Monday aimed at forcing Tehran to curb its nuclear, missile and regional activities.

China, India, South Korea, Japan and Turkey – all top importers of Iranian oil – are among eight countries expected to be given temporary exemptions from the sanctions to ensure crude oil prices are not destabilised.

The restoration of sanctions is part of a wider effort by U.S. President Donald Trump to force Iran to curb its nuclear and missile programs as well as its support for proxy forces in Yemen, Syria, Lebanon and other parts of the Middle East.

“Today the enemy (the United States) is targeting our economy … the main target of sanctions is our people,” Rouhani said.

In May, Trump exited Iran’s 2015 nuclear deal with six powers and Washington reimposed first round of sanctions on Iran in August.

The deal had seen most international financial and economic sanctions on Iran lifted in return for Tehran curbing its disputed nuclear activity under U.N. surveillance.

“ECONOMIC WAR”

U.S. Secretary of State Mike Pompeo said on Sunday the penalties set to return on Monday “are the toughest sanctions ever put in place on the Islamic Republic of Iran.”

However, Iran’s clerical rulers have dismissed concerns about the impact of sanctions on the country’s economy.

“This is an economic war against Iran but … America should learn that it can not use the language of force against Iran … We are prepared to resist any pressure,” Rouhani said.

To keep the deal alive, the remaining parties to the Iran nuclear deal are trying to maintain trade with Tehran despite scepticism this is possible despite U.S. sanctions to choke off Iranian oil sales.

Khashoggi probe will exonerate leader: Alwaleed

Diplomats told Reuters last month that the new EU mechanism to facilitate payments for Iranian oil exports should be legally in place by Nov. 4 but not operational until early next year.

They cautioned, however, that no country had volunteered to host the entity, which was delaying the process.

“We are in regular contact with other signatories of the nuclear deal … setting up (a) mechanism to continue trade with the European Union will take time,” Iran’s Foreign Ministry spokesman Bahram Qasemi told a weekly news conference on in Tehran.

He also said the reimposed U.S. sanctions were part of a psychological war launched by Washington against Tehran, adding that “America’s economic pressure on Iran is futile.”