Asia
• The structural decline in Asia’s crude oil production will remain over the next decade, while natural gas plays continue to prosper, Fitch’s research unit, BMI, said in a March 22 note. Crude oil production in Asia is seen falling at an average annual rate of 1.1 percent over 2017-2026 as price volatility in the global oil market will keep driving upstream spending cuts, BMI said. Crude output in China will continue to deteriorate alongside depleting conventional reserves, shifting government policy focus toward cleaner energy alternatives. Indonesia and Malaysia are also poised to see long-term decline in crude production due to a dearth of new large-scale projects post-2018, it said. On the natural gas production side in Asia, BMI sees output to continue growing over the next decade, rising to 665 billion cubic meters by 2026 from 557 billion cubic meters in 2016. Combined gas production by Australia and Papua New Guinea will increase nearly twofold between 2017 and 2026. The growth in production will lead to a surge in LNG exports over next four years through to 2020 in the region’s five net exporters: Australia, Malaysia, Indonesia, Brunei and Papua New Guinea. The natural gas consumption in Asia will expand at an annual growth rate of 3.4 percent over 2017-2026, BMI estimated.
• India expects progress on the integration of its state-run oil companies in the fiscal year 2018. The government has asked state-run oil companies to come up with a roadmap for the integration, Oil Minister Dharmendra Pradhan said in New Delhi on March 24. He said that India might cooperate with China, Korea and Japan to purchase LNG, adding that joint LNG purchases by Asian buyers will help consumers.
l Chinese independent refineries — the so-called “teapot” refiners who are responsible for the surge in the country’s oil imports — are still consuming more oil this year. The operating rate at independent refineries in eastern Shandong province rose to record 60.39 percent of capacity in the week ending March 23, according to industry website Oilchem.net. The rate is seen to be little changed this week, the website said.
North America
• US oil explorers continue to add drilling rigs, paving the way for further gains in the country’s output. Rigs used for producing crude oil rose by 21 to 652 this week, the highest level since September 2015, according to Baker Hughes’ data released March 24. US crude production increased to 9.13 million barrels per day in the week ended March 17, the most since February 2016, according to an Energy Information Administration (EIA) report Wednesday.
• US crude oil stockpiles rose by 4.95 million to 533.1 million barrels last week, the EIA report showed on March 22. Gasoline inventories fell to 243.5 million barrels, while supplies of distillate fuel, which includes diesel and heating oil, slipped to 155.4 million barrels.
• Canada will accelerate efforts to shift its economy to lower-carbon growth with more than C$2.2 billion ($1.7 billion) in proposed clean energy investments over the next five years, an agenda the country’s biggest business group called “very worrisome” for companies trying to compete in the Donald Trump era. The funding was part of a budget plan announced March 22 for the fiscal year that begins April 1. The government also indicated it would start phasing out some federal subsidies for fossil fuel exploration and development.
• Barclays sees large-capitalization US exploration and production companies as having hedged around 28 percent of their oil production in 2017 and 3 percent of their oil output in 2018. Small, mid-capitalization companies hedged around 50 percent and 75 percent of this year’s output, while they hedged 20 percent of 2018 production. Hedging is a process to avoid risk by locking in a current price.
• The structural decline in Asia’s crude oil production will remain over the next decade, while natural gas plays continue to prosper, Fitch’s research unit, BMI, said in a March 22 note. Crude oil production in Asia is seen falling at an average annual rate of 1.1 percent over 2017-2026 as price volatility in the global oil market will keep driving upstream spending cuts, BMI said. Crude output in China will continue to deteriorate alongside depleting conventional reserves, shifting government policy focus toward cleaner energy alternatives. Indonesia and Malaysia are also poised to see long-term decline in crude production due to a dearth of new large-scale projects post-2018, it said. On the natural gas production side in Asia, BMI sees output to continue growing over the next decade, rising to 665 billion cubic meters by 2026 from 557 billion cubic meters in 2016. Combined gas production by Australia and Papua New Guinea will increase nearly twofold between 2017 and 2026. The growth in production will lead to a surge in LNG exports over next four years through to 2020 in the region’s five net exporters: Australia, Malaysia, Indonesia, Brunei and Papua New Guinea. The natural gas consumption in Asia will expand at an annual growth rate of 3.4 percent over 2017-2026, BMI estimated.
• India expects progress on the integration of its state-run oil companies in the fiscal year 2018. The government has asked state-run oil companies to come up with a roadmap for the integration, Oil Minister Dharmendra Pradhan said in New Delhi on March 24. He said that India might cooperate with China, Korea and Japan to purchase LNG, adding that joint LNG purchases by Asian buyers will help consumers.
l Chinese independent refineries — the so-called “teapot” refiners who are responsible for the surge in the country’s oil imports — are still consuming more oil this year. The operating rate at independent refineries in eastern Shandong province rose to record 60.39 percent of capacity in the week ending March 23, according to industry website Oilchem.net. The rate is seen to be little changed this week, the website said.
North America
• US oil explorers continue to add drilling rigs, paving the way for further gains in the country’s output. Rigs used for producing crude oil rose by 21 to 652 this week, the highest level since September 2015, according to Baker Hughes’ data released March 24. US crude production increased to 9.13 million barrels per day in the week ended March 17, the most since February 2016, according to an Energy Information Administration (EIA) report Wednesday.
• US crude oil stockpiles rose by 4.95 million to 533.1 million barrels last week, the EIA report showed on March 22. Gasoline inventories fell to 243.5 million barrels, while supplies of distillate fuel, which includes diesel and heating oil, slipped to 155.4 million barrels.
• Canada will accelerate efforts to shift its economy to lower-carbon growth with more than C$2.2 billion ($1.7 billion) in proposed clean energy investments over the next five years, an agenda the country’s biggest business group called “very worrisome” for companies trying to compete in the Donald Trump era. The funding was part of a budget plan announced March 22 for the fiscal year that begins April 1. The government also indicated it would start phasing out some federal subsidies for fossil fuel exploration and development.
• Barclays sees large-capitalization US exploration and production companies as having hedged around 28 percent of their oil production in 2017 and 3 percent of their oil output in 2018. Small, mid-capitalization companies hedged around 50 percent and 75 percent of this year’s output, while they hedged 20 percent of 2018 production. Hedging is a process to avoid risk by locking in a current price.
