In this week's Trillion Dispatch

• Goldman anticipates commodity supercycle

• Andurand: Oil prices to reach $140

• Fink: Oil & gas vital for energy needs

The Big Idea...

LAUSANNE, Switzerland, March 21 (Reuters) - Goldman Sachs expects a commodities supercycle driven by China and the capital flight from energy markets and investment this month after concerns triggered by the banking sector, the U.S. bank's head of commodities said.

"As losses mounted, it spilled into commodities," Jeff Currie, global head of commodities for Goldman Sachs, told the Financial Times Commodities Global Summit on Tuesday.

"Historically, when you have this kind of scarring event, it takes months to get capital back ... We will still get a deficit by June and it will drive oil prices higher."

Oil prices tanked to 15-month lows as a crisis at Switzerland's second-biggest bank Credit Suisse, which followed the collapse of two U.S. lenders, led to a takeover by bigger Swiss rival UBS.

Currie emphasised the hit was to the supply side rather than demand and he remains very bullish on copper.

"The deposits have already left ...Cash is going into money markets not into the banks."

"On copper, the forward outlook is extraordinarily postive. We'll be at the lowest observable inventories that have ever been recorded at 125,000 tonnes. We have peak supply occuring in 2024...Near term we put (the copper price) at $10,500 and longer term our price target is $15,000 a tonne."

His remarks echoed those of major copper trader Trafigura which said the price could top $12,000. Copper hit a record high $10,845 in March 2022.

By: Julia Payne for Reuters
© 2023 Reuters.

Latest in...

Oil prices will surge to $140 per barrel by the end of this year, hedge fund manager Pierre Andurand said on Tuesday, adding that the recent slump was speculative on the back of the banking sector troubles.

Oil demand, even when it peaks around the end of this decade, will not head for a fast decline, Andurand said at the FT Commodities Global Summit.

"Even when we peak, oil demand won't fall down so fast. We will reach peak demand towards 110 million barrels per day and then a slow decline from there," the hedge fund manager said at the summit, as carried by Reuters.

Early this year, Andurand said that oil could exceed $140 per barrel yet this year if China's economy fully reopens.

At the FT Commodities Global Summit today, Amrita Sen, Director of Research at Energy Aspects, also expressed a bullish view on oil demand for the second half of 2023.

Demand in China is very consumer-driven after the reopening, Sen said at the summit, adding that gasoline and jet fuel demand are set to rebound.

"Jet is going to be the big story this year," Sen added.  

Oil prices slumped by $10 per barrel in one week as the markets were roiled by the collapse of two banks in the United States and the near-collapse of Credit Suisse, which was subsequently saved by a takeover by domestic rival UBS.

By: Tsvetana Paraskova for Oilprice.com
© OilPrice.com

Latest in...

In his annual letter to businesses, BlackRock CEO Larry Fink emphasized that climate risk remains a major investment risk, but stated that the company will continue to support the oil and gas industry as part of a low-carbon energy transition.  

In what sounds like a change of tune, Fink recognized the role of oil and gas in the energy transition, stating that “Different countries and industries will move at different speeds, and oil and gas will play a vital role in meeting global energy demands through that journey,”.

The CEO of the $10 trillion behemoth said that BlackRock would “work with energy companies globally that are essential in meeting societies’ energy needs” and this would include fossil fuel and natural gas companies, provided they are taking steps to mitigate their emissions.

While energy transition-focused investments will clearly remain a priority for the asset manager, the message is much more in line with what we have seen in both the financial world and the energy industry in recent months, a focus on shareholder value creation and energy security.

Oilprice.com’s Irina Slav recently wrote that the growing backlash against ESG investing has become a material risk for the profits of asset managers and private equity firms active in that sort of investing. 

By: Tom Kool for Oilprice.com
© OilPrice.com

Latest in...

Spain Urges LNG Importers To Diversify Away From Russian Supply

(Bloomberg) -- Spain, the biggest European buyer of liquefied natural gas from Russia, is urging importers not to sign new contracts with Moscow as it seeks to crimp revenues for the Kremlin’s war machine.

LNG importers in Spain received a letter from the government asking companies not to sign up to new purchases from Russia, according to people with knowledge of the matter. The Spanish government’s request isn’t binding as there are no sanctions in place, and only refers to new contracts, according to the people, who declined to be named.

Europe’s pipeline gas flows from Russia have fallen to historic lows since the invasion of Ukraine last year. But to make up for the shortfall, LNG shipments from all over the world have surged — including from Russia.

Spain has almost doubled imports of Russian LNG since the outbreak of the war, highlighting how dependent Europe still is on Moscow.

Read more: EU Is Hooked on Russia LNG and Paying Billions to Keep It Coming

Naturgy Energy Group SA, Repsol SA, TotalEnergies SE, Axpo Holding AG, Pavilion Energy, Enagás SA, Met Energy, Enet Energy, Energias de Portugal SA, Compañía Española de Petroleos SA and BP Gas & Power Iberia were sent a letter on March 14 by Deputy Prime Minister Teresa Ribera, who’s in charge of Spain’s energy policy. 

The letter, seen by Bloomberg News, doesn’t explicitly mention spot contracts but makes a general plea to “intensify the diversification of supply of liquefied natural gas and do without those from Russia.” Ribera confirmed in an emailed response to questions that she sent the letter 10 days ago and several companies replied. 

By: Stephen Stapczynski, Thomas Gualtieri and Anna Shiryaevskaya, Bloomberg News
©2023 Bloomberg L.P.

Latest in...

The European Commission on Monday proposed extending the emergency measure which targets a 15% reduction in the bloc’s natural gas consumption by another 12 months to the end of the 2023/2024 winter heating season.

The existing regulation to have natural gas demand cut by 15% expires at the end of this month.

Today’s proposal from the European Commission for another year of gas savings will be discussed by energy ministers at the Transport, Telecommunications and Energy Council (TTE) Council on March 28. EU Commissioner for Energy Kadri Simson already signaled to Ministers in February that a proposal along these lines was to be expected.

Despite the coming end to this winter’s heating season and the historically high levels of gas in storage across Europe, global natural gas markets are expected to remain tight in the months ahead, with a number of possible risks and challenges, including weather, global LNG demand, and macroeconomic conditions, the European Commission said today.

“Commission analysis finds that, in order to fully compensate for the permanent decrease in Russian gas, a continuation of the gas demand reduction is needed to complement the additional LNG and pipeline gas sourced from other countries, and new renewable capacity installed since early 2022,” it added.  

By: Michael Kern for Oilprice.com

© OilPrice.com

Trillion Energy News

WELL: West Akcakoca-1

• Days since move: 36
• Progress: 0 metres
• Measured Depth: 3839 metres

Week Summary:

1. 7” casing liner cemented
2. Clean wellbore for packer and completion
3. Lay down drill pipes 
4. Run cement log
5. Run completion string and set production packer
6. Nipple down BOP and nipple up Christmas tree (wellhead system)
7. Dummy run prior to perforations (without explosives)

1. Perforate and test West Akaçakoca-1 well.
2. Skid back over to Guluc 2 to perforate, test and turn over to production

Trillion Energy is an oil and gas producing company with multiple assets throughout Turkey and Bulgaria. The Company is 49% owner of the SASB natural gas field, one of the Black Sea’s first and largest-scale natural gas development projects; a 19.6% (except three wells with 9.8%) interest in the Cendere oil field; and in Bulgaria, the Vranino 1-11 block, a prospective unconventional natural gas property

Dispatch is a weekly newsletter curated by Trillion Energy which offers a curated selection of articles that shape the world of oil and gas.

WEEKLY DRILLING REPORT MARCH 23, 2023

Tales from the Road: Marketing with Trillion Energy

WEEKLY DRILLING REPORT MARCH 16, 2023

In this week's Trillion Dispatch

• Russian oil price rise, buyers increase

• Oil prices to rise throughout 2023

• India to increase LNG imports

The Big Idea...

(Bloomberg) -- European energy prices soared amid concerns about France’s nuclear fleet and disruptions due to widespread strikes, along with a late-winter cold blast in other parts of the region.

Benchmark natural gas futures settled 21% higher, the biggest jump since June. French year-ahead power surged 16%, the most in more than six months. 

Traders are closely monitoring the market for any potential factors that could affect gas and power prices, after both slumped recently. Defects discovered at two French nuclear reactors have raised concerns about the long-term health of the nation’s fleet, while strikes are set to upend operations at energy facilities into next week.

France’s four liquefied natural gas terminals remain blocked by the labor action, which is currently expected to continue until March 14. 

While the country was a net power exporter on Friday — thanks partially to strong wind generation — strikes at Electricite de France SA’s facilities curbed its capacity by 11.2 gigawatt in the morning. The company’s workers also plan to strike again next week, adding to market tremors.

Separately, EDF this week announced that it discovered new defects at two nuclear reactors that were halted for maintenance and repairs. That’s renewed concerns that the company’s electricity output will remain largely constrained this year after plunging in 2022.

By: Elena Mazneva and Asad Zulfiqar, Bloomberg News
©2023 Bloomberg L.P.

Latest in...

(Bloomberg) -- The price of Russian crude and fuel is rising for buyers in Asia as a pool of bigger customers from China and India expands, putting pressure on smaller refiners that have eagerly consumed the cheap oil.

Offer levels for Russia’s Urals and ESPO crude, as well as fuel oil, surged over the past weeks, according to traders with knowledge of the matter. Increased interest from Chinese state-owned and large private refiners such as Sinopec, PetroChina Co. and Hengli Petrochemical Co., in addition to a jump in Indian demand, led cargoes to be snapped up at higher prices, they said.

The larger refiners have muscled in to a patch typically dominated by China’s smaller independent processors, known as teapots, which have been consistent consumers of discounted Russian crude. ESPO oil from the nation’s Far East has been a particular favorite due to its short shipping distance.

Offers for ESPO that’s typically loaded at Kozmino port was close to $6.50 to $7 a barrel below ICE Brent on a delivered basis to China, while flagship Urals shipped from western ports was around $10 under the same benchmark, said traders. That’s an increase of as much as $2 from last month, marking one of the steepest jumps since sanctions were imposed on Dec. 5, they added. 

China and India have become key outlets for Russian crude after most others shunned its energy due to the war in Ukraine. The pool of buyers willing to import cheap oil from the OPEC+ producer has grown as more players set aside concerns over Western sanctions that had kept them on the sidelines.

By: Bloomberg News with assistance from Elizabeth Low.
©2023 Bloomberg L.P.

Latest in...

Crude oil prices started this week with a loss. The reason for that initial weekly loss came down to overall global economic growth pessimism and expectations that the U.S. Federal Reserve will continue raising interest rates, making the dollar more expensive and sapping demand for dollar-priced crude.

But by the end of Monday, oil prices had rebounded and were trading higher, extending the rally into morning Asian trade on Tuesday. The reason—comments from attendees at the CERAWeeek industry conference—suggested that supply will tighten before too long.

Just another week in oil, some would say, and indeed, oil prices fluctuate constantly, to such an extent it is extremely difficult to predict them with any accuracy, especially over a shorter period of time. Yet it does bear pointing out that most forecasters seem to expect higher prices for oil later this year. There appears to be broad consensus on this.

Some, such as Forbes' Bill Sarubbi, note the technical data of oil trading to suggest prices are going to go higher. In a recent story, Sarubbi said that historical data shows oil prices tend to rise between March and May most of the time, so it makes sense to expect them to rise this year as well.

Others, such as Refinitiv, the data analytics firm, single out two factors that will drive prices on the supply and demand sides, respectively: Russia and China. And Refinitiv expects Brent crude to rise above $100 per barrel by the end of the year and average $90 for the full year 2023.

By: Irina Slav for Oilprice.com
© OilPrice.com

Latest in...

India’s Efforts to Avoid a Power Crisis Set to Boost LNG Imports

(Bloomberg) -- India will boost fuel imports after gas-fired power stations were asked to increase output to meet soaring demand during the summer months.

Gail India Ltd. will tap the seaborne market to supply state-run power producer NTPC Ltd., which has been asked by the government to run 5 gigawatts of plants to meet peak demand during April and May, according to people familiar with the matter, who asked not to be named as the details are private.

New Delhi-based NTPC estimates it will require 250 million metric standard cubic meters of the fuel during the two-month period, according to some of the people. An additional 4 gigawatts of capacity run by other companies will also be kept ready to operate if needed.

NTPC and a Gail spokesman didn’t immediately reply to emails seeking a comment. 

India’s government is taking action as harsher-than-expected weather threatens to create a surge in electricity demand. An early onset of hot weather has already pushed power demand to near-record levels, stoking fears of a repeat of the intense heat wave last year. 

India has already invoked an emergency rule forcing some plants running on imported coal to run at capacity. 

Nearly 25 gigawatts of India’s gas-fired capacity has been lying underutilized for years, as the electricity is too costly for the competitive market dominated by coal. Bringing these units back shows the extent of the challenge, as the nation is forced to ditch concerns over high prices to meet supply shortfalls.  

By: Rajesh Kumar Singh and Rakesh Sharma, Bloomberg News
©2023 Bloomberg L.P.

Latest in...

Norway isn’t worried about The EU’s plan to join together to purchase natural gas from global markets, the country’s oil and energy minister said on Friday.

The natural concern would be, of course, that a group of countries rallying together to collectively purchase natural gas would effectively act as an oil-buying cartel that could exert extended influence in the global markets.

Norway’s oil and energy minister Terje Aasland told reporters on Friday that the arrangement could actually benefit Norway’s energy companies through “negotiations on a commercial basis.”

Twenty-two of the 27 EU member states have shown an interest in collaborating with other member states for gas demand.

Norway is now Europe’s largest natural gas supplier after replacing much of the supplies that were previously coming from Russia.

The EU’s buyers group is prepared to offer its first tender for gas supplies next month on the international market following months of discussions on how to secure gas supplies without unwittingly jacking up the price by competing with each other.

The EU and the four neighboring countries will need 24 billion cubic meters of natural gas over the next three years—a significant amount of gas to purchase on the spot market without causing a spike in prices.  
 

By: Julianne Geiger for Oilprice.com

©2023 Bloomberg L.P.

Trillion Energy News

WELL: West Akcakoca-1

• Days since move: 23
• Progress: 587 metres
• Measured Depth: 3724 metres

Week Summary:

1. Drill 8 ½” x 9” hole to 3724

1. Drill 8 ½” x 9” hole to TD of about 3820 metres (finished by Friday)
2. Evaluate the gas readings in the mud logging
3. Run in and cement 7” casing
4. Clean borehole, perforate, test and turn over to production
5. Skid back over to Guluc 2 to perforate, test and turn over to production

Trillion Energy is an oil and gas producing company with multiple assets throughout Turkey and Bulgaria. The Company is 49% owner of the SASB natural gas field, one of the Black Sea’s first and largest-scale natural gas development projects; a 19.6% (except three wells with 9.8%) interest in the Cendere oil field; and in Bulgaria, the Vranino 1-11 block, a prospective unconventional natural gas property

Dispatch is a weekly newsletter curated by Trillion Energy which offers a curated selection of articles that shape the world of oil and gas.

WEEKLY DRILLING REPORT MARCH 10, 2023

WEEKLY DRILLING REPORT MARCH 3, 2023