WTI $94.99 -1.05; Brent $102.31 -1.05; Natural Gas $3.93 +2c
Good morning
A short blog today as we are all out on the road a lot this week, also it’s the day of the BG strategy show which I will attend a bit of.
One or two people missed my comments yesterday about Lord Brown who was on the Andrew Marr show on Sunday, if you were one of them the link is here, it’s a short and compelling defence of fraccing.
http://www.bbc.co.uk/go/em/fr/-/news/uk-politics-22499891
Oil Price
Some big picture stuff around the oil price today, the IEA half yearly report is out and concentrates on the rise in production in US shale oil . It suggests that as a result of this, demand for OPEC crude will remain largely unchanged during this period. They expect US output to reach 11.9m b/d by 2018 which will be 20% of non-OPEC supply which by then will be 59.3m b/d.
Also in an article in the FT today the Chief Executive of Saudi Aramco ‘welcomes the boom in US shale production because it will reassure consumers about the reliability of oil supplies’. Of course.
The article also picks up on something that I have mentioned a number of times and we featured in the January resources quarterly, viz Saudi internal demand for its own supplies. If recent trends continue, in twenty or so years’ time Saudi Arabia will be using all of its production and have none to export, particularly if they don’t increase capacity as they said they wouldn’t recently.
Kurdistan
Back to the FT again but available all over the trade press for weeks, an article entitled ‘ Turkey defies Washington with energy deal in Northern Iraq’. Now, we have been saying for a long time that it is likely that a formal energy deal will be agreed and that despite the US continuing to try and play middle east politics, it will find it difficult and probably unwise to back Iraq over Turkey in the region. We believe that the pipelines, and thus Kurdish exports through Turkey, will happen and the major players in the country will benefit.
Afren – From Daily Flow Test – DY
The company has farmed down a 17.14% interest in OPL 310 in Nigeria to Lekoil in receipt for a US$50m carry in the ongoing exploration well on the Ogo prospect. Afren will retain a 40% economic interest in the licence post this transaction.
The Ogo prospect is targeting 124mmboe of gross P50 prospective resources and drilling will take 90 days (spudded on 23 April) which includes a sidetrack.
This is a positive transaction for Afren as it helps to de-risk its exposure as well as see a cash injection into the company.
And finally…
It was not the most difficult prediction about Henry Mancini going into Middle Eastlands with a blue scarf on and come out with a Hermes one on….
Much more tomorrow, apologies!
Kind regards
Malcolm
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