Oil market volatility will continue into 2019, but will settle at solid price

While OPEC has in the past underestimated the growth of the US shale industry, the CEOs of two energy firms on Wednesday stressed that output from the sector would likely slow down. (AFP)
Updated 24 January 2019
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Oil market volatility will continue into 2019, but will settle at solid price

  • Expectation oil prices could settle within the $60 to $70 range
  • OPEC and its allies have been cutting output since 2017 to help support prices

LONDON: Oil market volatility is expected to continue in 2019, but there are expectation prices could settle within the $60 to $70 range — seen as a sweet spot for both producers and consumers.
That was the message that emerged from a panel of global energy leaders at the World Economic Forum in Davos on Wednesday which also heard that US shale output would likely slow.
OPEC and its allies have been cutting output since 2017 to help support prices while US producers looked to ramp up production.
The US has overtaken Russia and Saudi Arabia to become the world’s biggest crude producer, with output approaching 12 million barrels per day (bpd).

 

But while OPEC has in the past underestimated the growth of the US shale industry, the CEOs of energy firms Occidental Petroleum and Hess Corp. on Wednesday stressed that output from the sector would likely slow down.
“I believe not as much money will be pouring into the Permian basin this time. I believe investors will hold companies accountable for returns and a lot of this didn’t happen previously,” Occidental CEO Vicki Hollub said.
Hess Corp. CEO John Hess said shale production now accounted for about 6 percent of global production and would rise to about 10 percent before plateauing.
“Shale is not the next Saudi Arabia. It is an important short-cycle component,” he said.
OPEC Secretary-General Mohammed Barkindo said OPEC wanted to balance supply and demand in the market and had helped the US oil industry by acting to support prices.

FASTFACTS

The US has overtaken Russia and Saudi Arabia to become the world’s biggest crude producer.


BP and SOCAR sign new Azeri oil deal

Updated 28 min 42 sec ago
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BP and SOCAR sign new Azeri oil deal

  • The Azeri Central East (ACE) platform, the latest phase of Azerbaijan’s giant Azeri-Chirag-Guneshli (ACG) oilfields extension program, is expected to produce 100,000 barrels of oil a day
  • BP and the government of Azerbaijan extended their agreement to continue developing the ACG fields until 2050 in a major deal in 2017

BAKU: Oil major BP and Azerbaijan’s state energy company SOCAR signed an agreement on Friday to build a new exploration platform for the South Caucasus nation’s three major oilfields, BP-Azerbaijan said in a statement.
The Azeri Central East (ACE) platform, the latest phase of Azerbaijan’s giant Azeri-Chirag-Guneshli (ACG) oilfields extension program, is expected to produce 100,000 barrels of oil a day and cost $6 billion to build, the company said.
The project is one of the biggest upstream investment decisions to have been signed in Azerbaijan so far this year.
The ACG fields, which to date have produced around 3.5 billion barrels of oil, are estimated to have the potential to yield another 3 billion barrels.
BP’s main aim now would be to maximize the extraction of remaining reserves, Robert Morris, senior analyst at Wood Mackenzie, said in a statement.
“ACE is central to those plans, adding 100,000 barrels per day of production at peak in the mid-2020s,” he said.
BP and the government of Azerbaijan extended their agreement to continue developing the ACG fields until 2050 in a major deal in 2017.
Separately, SOCAR and its partners at the BP-led ACG consortium plan to participate in a tender to acquire stakes being sold by two of its members, ExxonMobil and Chevron.
SOCAR President Rovnag Abdullayev made the announcement to reporters following a meeting of senior SOCAR figures on Friday.