Russian governement tries to steady battered oil industry

Oilprice.com writes:

"Russia’s President Vladimir Putin has tasked the government with implementing a set of measures aimed at supporting the oil industry for the duration of the OPEC+ production cut agreement.

According to a document published on the website of the Russian presidency, the measures include a prescription not to sanction companies that stray outside their production quotas and a temporary lifting of penalties for state oil companies for not sticking to their 2020/2021 investment programs.

The document also lists “special rates” to be implemented by pipeline operator Transneft and Russian Railways for transporting crude oil and oil products for the duration of the OPEC+ deal."

You can read the rest of the piece via the below link:

https://oilprice.com/Energy/Crude-Oil/Putin-To-Bail-Out-Russian-Oil-Industry.html 

    

Syria receives Iranian oil in large amounts

Radio Farda reports that tankers delivers oil in large quantities to Syria:

"Tanker tracking sources say Iran’s oil exports to Syria have increased substantially in recent weeks and currently several cargoes have reached the Baniyas port in Syria.

Tanker Trackers reported on Tuesday April 28 that several Iranian vessels are near port in Syria and the Middle East Economic Survey (MEES) reports that these tankers are carrying 6.8 million barrels of oil.

Since full U.S. sanctions were imposed on Iran in May 2019, Syria has been receiving an average of around 2 million barrels of crude monthly from Iran, and now more than three times is being delivered at once.

In January and February, Iran’s biggest oil customer, China reduced its imports and with this large cargo arriving in Syria, that country has become the largest oil importer from Iran.

There can be several reasons why this is happening. Excess oil stocks in the midst of sanctions and a global oil glut is forcing Iran to ship and perhaps store the oil in a friendly country. Another reason is that Bashar Assad’s government and Hezbollah can be conduits to sell the oil on the black market. One place Hezbollah can manage to do this is Lebanon, where it has sway over the government."

Saudi Arabia's crownprince's miscalculations

An interesting article by David Hearst about MBS's bad decisions and misperceptions that may lead to an economic downturn of the kindom:

"Both pillars of Mohammed bin Salman’s plan to modernise and reform his country are crumbling. His plan to generate foreign investment by selling off five percent of Aramco on foreign stock exchanges has gone and now PIF, the main vehicle for diversifying his economy away from oil, is in chaos too.  

Many in the region would cheer MBS's demise. He has simply done so much harm to so many people, particularly in Egypt. In a post-oil era, MBS would lose his power of patronage, the power of an oligarch who can spend a billion pounds a minute and not blink.  

But the collapse of Saudi Arabia’s economy, which for decades has been the engine room of the economy of the whole region, would quickly be felt in Egypt, Sudan, Jordan, Lebanon, Syria, Tunisia - all of which send millions of their workers and professionals to the kingdom and whose economies have grown to depend on their remittances."

The repercussions of the oil glut on russian foreign policy

The magazine The American Interest analyzes the impact of the oil glut on strategic aspects of russian foreign policy: 

"While the economic pain may have yet to cross Putin’s threshold, Russia, like every other country, will succumb to this new reality. Putin’s official popularity ratings have dropped to the low 60 percent range and, perhaps more importantly, for over a year polls have shown that a large majority of the Russian people think the country is going in the wrong direction. They also think that more resources should be spent on domestic problems and that Russia should pursue policies that improve relations with the West.

Putin, of course, is no democrat; he can choose to ignore public opinion. But with oil prices at inconceivable lows, the Kremlin will have to make serious decisions on where to invest what will be increasingly limited resources. Russia’s military has historically been more active when fossil fuel energy prices soar and less so when they fall. When the economic crunch hits, Russia tends to cut back on training and exercises (often with devastating consequences) before it disrupts actual operations. But this is no ordinary shift in market forces. It is a combination of Putin’s hubris in starting an oil war he thought he could win combined with a crisis nobody saw coming. Something will have to give. Recovery will be difficult for almost every country, but especially so for a country almost solely dependent on carbon earnings."

You can read the rest of the piece via the below link:

https://www.the-american-interest.com/2020/04/22/how-the-oil-shock-will-contain-putin/ 

Oil war: Russia hit by threefold calamity

Russia is afflicted by the low oil prices but also by the economic downturn due to the Covid-19-pandemia and the stagnation of the national economy that ist hurt by sanctions; russian business leaders are becoming impatient writes german newpaper Die Welt:

"The fact that Vladimir Putin was so quick after a phone call with his counterpart Donald Trump to participate in an oil cut together with Opec and other oil countries speaks volumes. Just a month earlier, he had the Saudis blown away with this request - and thus triggered an unprecedented drop in prices from $ 66 to $ 22 per barrel of the Brent variety, because Riyadh flooded the market out of anger.

Maybe he had simply underestimated the Saudis. Just as he had underestimated the corona virus. For a long time, the Kremlin had been unimpressed and kept relatively quiet. On March 17, Putin had declared in Crimea that everything was actually under control.

In the meantime, like many other countries, things blow up in his face. More precisely: in contrast to most countries even more. It is now becoming clear that Russia is getting a triple blow. On the one hand, the economy was stagnating, among other things because of the Western sanctions and the associated isolation, with growth of 1.3 percent."

Shouting match between Putin and MBS sparked oil war

The Middle East Eye writes:

"A telephone call last month between Russian President Vladimir Putin and Saudi Crown Prince Mohammed bin Salman degenerated into a shouting match just before Riyadh decided to flood the market with oil in a move which sent prices spiralling.

Saudi officials with knowledge of the disastrous call told Middle East Eye that the row threatened to undo months of detente between the two countries, in which a significant arms trade was also agreed."

When Galicia was a petroleum power

Few people know that barely one hundred years ago Galicia was a petroleum superpower.Who knew that this remote part of the Austro-Hungarian Empire, now a region in western Ukraine, was third in the rank of oil producers in the world by the turn of the century?
The blog "Forgotten Galicia" - worth reading - took this interesting article from the blog https://kehilalinks.jewishgen.org/Drohobycz/index.html

"From the middle of the nineteenth century, the history of the Jews of the Drohobycz

Administrative District was closely connected with the history of the petroleum industry. As

the demand for naphtha lamp oil grew, the oil-rich areas on the northern slopes of the

Carpathian Mountains, including Drohobycz, Borysław, Tustanowice,Schodnica, and other

towns in the district became known as "Galician California." The discovery of black gold 

attracted hundreds of speculators and people seeking their fortunes. The Jews of the area

were directly involved in this business from its early beginnings. Hundreds found 

employment as labourers and later as skilled workers in the industry. Some made and 

some lost fortunes; most laboured under appalling conditions."

US pressurizes KSA in petrol price war

Saudi-Arabia opened the floodgates in march inundating the market with cheap petrol. It is a bold move with the aim to get rid of competitors, especially american shale oil producer, even though all stakeholders will bleed severely writes french newspaper Le Monde:

"The Trump administration is stepping up pressure on Riyadh and Prince Mohammed Ben Salman, known as "MBS", to stop increasing production. On Wednesday March 25, in a telephone conversation with the crown prince, US Secretary of State Mike Pompeo urged Riyadh "to rise to the brink of the situation and reassure" the markets.

But for the Saudis, this chaos is the perfect opportunity to get rid of American competitors. The rapid development of shale oil, in Texas in particular, has put the United States back at the center of the game and created an inextricable situation for the kingdom. Since 2014, the increase in American production is such that it always threatens to lower prices."

Saudi Arabias dangerous bet

After an agreement with Russia about the reduction of the oil production failed, KSA took the decision to flood the marked with cheap oil and start a price war.
The plan is to eliminate competitors, especially american shale oil producer. The plan is audacious and dangerous things french specialized blog "Transitions énergies":

"So it all started on March 4. Prince Abdulaziz ben Salman, Saudi Minister of Petroleum, is preparing in his suite at the Park Hyatt hotel what is arguably the most important negotiation of his career. He is experienced in exercise, subtle diplomacy as well as power relations and agreements negotiated in the anterooms. Oil producers are hated rivals and often have conflicting political interests, but they have something in common, their addiction to petrodollars.

But when Prince Abdulaziz meets his Russian counterpart, Alexander Novak, to negotiate a further joint drop in production to limit the fall in prices, the latter does not want to hear about it. And this will lead to one of the biggest earthquakes in the oil market since the shocks of the 1970s. Because Saudi Arabia then decides to launch its plan B, no longer limiting the quantities to keep the prices, but breaking the market to better control it afterwards.

The Kingdom has thus decided to monetize its gigantic reserves as quickly as possible rather than seeking to enhance them over time. It is also an indication that Saudi Arabia believes that the future of oil is bleak over the next few decades due to the energy transition. The world's leading oil exporter therefore deliberately chose to change the situation. He prefers to sell a lot of oil at low prices rather than a little oil at high prices. And can also bet that cheap oil will slow the energy transition. The Kingdom is the third producer (see below) but holds 25% of the world reserves, 70% of the additional production capacities and is by far the first exporter."

Rhein Petroleum: oilfield found in Weingarten

German company Rhein Petroleum GmbH announces that according to their estimations
the oilfield "Steig 1" near Weingarten in south Germany can be exploited profitably.

British company Neptune Energy for her part announces further drilling operations and the extension of the production facility on the field "Ringe" near Nordhorn in Lower Saxony.

See more information via the below link:

https://www.erdoel-erdgas-deutschland.de/bohrung-steig-1-wirtschaftlich-oelfuendig/