American oil leaders say no to NOPEC

Encana Corp President and Chief Executive Officer Doug Suttles takes part in a panel discussion at the CERAWeek energy conference in Houston. (Reuters/File Photo)
Updated 18 March 2019

American oil leaders say no to NOPEC

  • The possible legislation under the act was subject of frenzied discussion at CERAWeek
  • Virtual unanimity in Houston among industry representatives that NOPEC would threaten booming US oil industry

HOUSTON: US oil industry leaders are concerned by the potential damage that could be done to their businesses if the Trump administration passes the so-called NOPEC act, opening up oil producers to legal action in the US.
A representative of the American Petroleum Institute (API), the trade organization for the US oil and gas industry, wrote: “The act’s extraterritorial overreach would harm core US economic and energy interests.”
The possible legislation under the No Oil Producing and Exporting Cartels Act was the subject of intense discussion at the CERAWeek by IHS Markit conference in Houston, Texas, where the Organization of the Oil Exporting Countries (OPEC) lobbied US financiers against it.
“NOPEC legislation won’t serve the US interest,” Mohammed Barkindo, OPEC’s secretary-general, told Wall Street bankers at the event.
The bill, currently before Congress, is backed by an alliance of Democrats and Republicans, and some US analysts believe it has a chance of passing. However, similar laws have previously been blocked by the threat of a presidential veto.
“There is no guarantee (US President Donald) Trump would veto it. He has shown himself to be against OPEC in numerous tweeted messages, and is critical of OPEC policy of maintaining stable oil prices,” said one Washington-based energy lobbyist, who asked not to be identified.
There was virtual unanimity in Houston among industry representatives that NOPEC would threaten the booming US oil industry.
In an article published to coincide with the CERAWeek gathering, the API’s Jessica Lutz said: “This legislation would only create significant detrimental exposure to US diplomatic, military and business interests — and, ultimately, consumer economic interests — while having limited impact on the market concerns driving the legislation to begin with.”
Other oil professionals also took aim at the bill. Dan Eberhart, CEO of independent oil services group Canary, said the law would seriously damage US and global oil. “OPEC’s moderating role has allowed the US oil sector to achieve record oil production, and has made America a major energy exporter — something that seemed impossible less than a decade ago.
“Saudi Arabia remains the world’s only real swing producer — capable of adding or subtracting several hundred thousand barrels a day of production in a matter of weeks. With its hand on the taps, Saudi Arabia has considerable power over oil prices — even while the United States has surpassed it as the world’s largest producer thanks to the shale boom,” he added.
Apart from his anti-OPEC tweets, Trump has not given any firm indication of how he would react if the bill passed Congress.
But other American policymakers oppose it. Rick Perry, the energy secretary, said before the CERAWeek forum opened: “We need to be really careful before we pass legislation that may have an impact that goes way past its intended consequence.
“I’m for a stable pricing, which is directly related to supply. If you remove that and there is no coordination of supply to the market you could have a massive amount of energy supply come into the marketplace and impact producers.”
On the final day of CERAWeek, John Cornyn, Republican senator for Texas and a political ally of the president, said that he did not think it was a good thing to use lawsuits in business, and instead, US oil producers should prove their merit by competing with OPEC.
One Houston-based financier, who also asked not be named, said: “If OPEC producers were open to lawsuits in the US under anti-trust legislation it could lead to the breakup of the organization. Without OPEC supply agreements the market could be flooded with oil and the price would crash. That would be no good for the shale industry.”

Boeing abandons 2019 outlook after 737 MAX aircraft groundings

Updated 2 min 18 sec ago

Boeing abandons 2019 outlook after 737 MAX aircraft groundings

  • Boeing’s core earnings fell to $1.99 billion, or $3.16 per share
  • The planemaker said it faced $1 billion in increased costs in the first-quarter ended March 31

Boeing missed sharply-lowered Wall Street estimates for revenue and cashflow in the first quarter and suspended its 2019 outlook, as the world’s largest planemaker continued to suffer from the grounding of its 737 MAX jets.

The company said it faced $1 billion in increased costs in the first-quarter ended March 31, related to the 737 aircraft as it halted deliveries of the grounded planes to customers around the globe.

The company also said it was halting share buybacks.

The fallout of a second deadly crash within months in March has seen Boeing cut production of the jets to 42 aircraft per month, down from 52, and its operating cash flow in the first quarter was around $350 million lower than a year earlier.

Boeing is also spending on developing a fix for an anti-stall software known by the acronym MCAS, which has been a common link in the separate chains of events leading to the two crashes within a span of five months.

The company said it would be issuing a new forecast in the future when it has more clarity around the issues surrounding the 737 MAX.

First-quarter operating cash flow declined to $2.79 billion, from $3.14 billion, missing the Wall Street’s average estimate of $2.82 billion.

Revenue fell 2 percent to $22.92 billion, below analysts’ average estimate of $22.98 billion.

Excluding certain items, Boeing said its core earnings fell to $3.16 per share, in the quarter from $3.64 per share, a year earlier. Analysts had expected Boeing to earn $3.16 per share.