UAE's ADNOC Deepens Supply Cuts to Asia
Abu Dhabi National Oil Company (ADNOC) has deepened crude oil supply cuts to Asian customers in June to 10-15% from 5-15% in May, one week ahead of an OPEC+ meeting, several sources with knowledge of the matter said.
The supply reduction will apply to the four grades of crude that ADNOC sells to Asia, namely Murban, Das, Umm Lulu and Upper Zakum, they said.
The cuts are part of the United Arab Emirates’ (UAE) obligation under a pact between the Organization of the Petroleum Exporting Countries and their allies, known as OPEC+, to reduce output and balance global oil markets.
A spokesman for ADNOC said the company “confirmed crude oil allocations to its term customers for both May and June, in preparation for the launch of ICE Futures Abu Dhabi (IFAD)”.
“Allocated volumes of Murban are in line with the figures reported in the ADNOC Onshore ‘Murban Export Availability Forecast Report’,” he added.
ADNOC’s June allocation comes ahead of the next OPEC+ meeting scheduled on April 1, where producers will decide on May supplies.
OPEC+ sources told Reuters they expected the producer group to broadly stick to its current output cut levels, amid a deteriorating demand picture in Europe due to new lockdowns.
The UAE, the third biggest oil producer in OPEC behind Saudi Arabia and Iraq, pumps about 2.5 million to 3 million barrels per day, mostly produced by ADNOC.
Four OPEC+ sources told Reuters they expected a similar decision to the last meeting as a new wave of lockdowns across Europe to curb the spread of the COVID-19 virus has threatened to cool fuel demand. OPEC+ then broadly stuck to its cuts, allowing Russia and Kazakhstan a modest rise of 150,000 barrels per day.
CNOOC Profit Plunges 59% in 2020
China’s national offshore oil and gas producer CNOOC Ltd reported a 59% plunge in 2020 profit, hitting the lowest since 2017, as the coronavirus pandemic whacked energy prices and hammered fuel consumption.
The listed branch of China National Offshore Oil Corp reported a net profit of 24.96 billion yuan ($3.82 billion), down from 61.05 billion yuan in 2019, while revenue was 155.37 billion yuan, according to a company statement filed to the Hong Kong Stock Exchange.
The net profit was in line with analysts’ forecast of 24.338 billion yuan, according to IBES data from Refinitive. CNOOC is one of the industry’s lowest-cost explorers and producers, with all-in production cost at $26.34 per barrel in 2020.
Realized oil prices last year at CNOOC were $40.96 per barrel, down 35.3% on year, and gas prices dipped 1.6% to $6.17 per thousand cubic feet.
Output was 528.2 million barrels of oil equivalent in 2020, up 4.3% year-on-year.
The COVID-19 pandemic wrecked worldwide demand for energy in 2020, as economies locked down and travel was curtailed.
CNOOC’s capital expenditure was 79.5 billion yuan last year, meeting the adjusted target of 75-85 billion yuan. But the company has planned to raise its capital spending to 90-100 billion yuan this year, the highest since 2014.
The company’s reserve life, a measure of how long its current oil and gas reserve base can last, maintained at more than 10 years, according to the statement, with proved reserves reaching 5.373 billion barrels of oil equivalent.
CNOOC also is expected to start production at Lingshui 17-2, a large deepwater natural gas deposit in South China Sea,
PetroChina Carbon Emissions to Peak by 2025
PetroChina, Asia’s largest oil and gas producer, expects its carbon emissions to peak by around 2025, as it aims to lift output of lower-carbon natural gas to 55% of its total production by then from 47% now.
By 2035, the top Chinese energy company aims to supply more zero-carbon products than the fossil fuels it consumes, putting it on course to reach its carbon-neutral target by 2050, Chairman Dai Houliang told a virtual earnings call.
Spending on greener products including wind, solar, geothermal and hydrogen power will expand “significantly year on year,” Dai said, without giving detail.
He said the next five-to-10 years would be “the window for energy transitions” and the company was working on precise timelines.
In the near term, the company will focus on natural gas to cut emissions as China turns increasingly to the fuel to replace coal, an approach shared by domestic peers Sinopec Corp and CNOOC Ltd.
PetroChina aims to produce between 150 billion and 160 billion cubic metres of natural gas in 2025, which would be 21%-29% higher than last year.
PetroChina earlier reported a 58% fall in net income last year to 19.01 billion yuan ($2.91 billion), the lowest in four years, following falls in oil and gas prices linked to COVID-19.
Its crude oil output gained 1.4% last year to about 2.53 million barrels per day, while its gas production rose 8% to 4,221 billion cubic feet.
PetroChina, China’s second-largest refiner, recorded an 11% fall in sales of transportation fuels last year as it faced fierce competition from private refiners in an over-supplied domestic fuel market.
Western Oil Giants Quitting Tunisia
Royal Dutch Shell and Italy’s Eni are seeking to sell their oil and gas operations in Tunisia, industry sources said, as the North African country struggles to attract new investments following years of political instability.
Shell has hired investment bank Rothschild & Co. to sell its Tunisian assets, which include two offshore gas fields and an onshore production facility the Anglo-Dutch company acquired as part of its 2016 $53 billion takeover of BG Group, the sources told Reuters.
Shell tried to sell its Tunisian assets in 2017 but abandoned the process due to legal disputes with the Tunisian government.
Eni, which has operated in Tunisia since 1961, has hired investment bank Lazard to run its sale, according to the sources.
Eni produced around 5,500 barrels of oil equivalent per day (boed) in Tunisia in 2019 and has nine oil and gas production concessions and one exploration permit in Tunisia, according to its website.
The gradual departure of major western energy companies from Tunisia in recent years follows growing frustration with the country’s unstable regulatory and political environment since the 2011 revolution that has led to investments drying up.
It also comes as the world’s top oil and gas companies are seeking to sell tens of billions of dollars worth of assets to reduce debt and focus on the most competitive production.
Tunisia’s Energy Ministry told Reuters: “We have no official knowledge that these companies will sell their assets.”