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WoodMac: Global Oil Demand to Rise by 2 Million Bpd in 2024

Oil demand will continue to set records this year, with global demand growth expected at nearly 2 million barrels per day (bpd) compared to 2023, Wood Mackenzie said in a report on Thursday.

China will account for around 25% of the worldwide growth in oil demand, according to the energy consultancy.

Total global oil demand will average 103.5 million bpd for 2024, WoodMac said.

OPEC’s December Production Up, Not Down: Survey

“Much of the growth [in oil demand] will be coming in the second half of the year,” Alan Gelder, Senior Vice President of Research at Wood Mackenzie, said in a statement.

“This will be fuelled by improving economic growth and lower interest rates.”

WoodMac expects oil supply to lag demand growth as OPEC+ supply cuts slow growth across 2024. However, the report adds that “without this production restraint the market could tilt into oversupply, especially if demand growth is below expectations.”

Wood Mackenzie’s oil demand assessment is close to OPEC’s latest outlook in its December monthly report, in which the cartel expected world oil demand growth at 2.2 million bpd for 2024, for an average of 104.4 million bpd, unchanged from the November assessment.

“Oil demand is expected to be supported by resilient global GDP growth, amid continued improvements in economic activity in China,” the cartel said in its closely-watched Monthly Oil Market Report (MOMR) for December.

“Continuous improvements in economic activity, steady manufacturing, and transportation activity mostly in China, Other Asia, and the Middle East, as well as in India and Latin America, are expected to account for the bulk of oil consumption,” according to OPEC.

The organization also noted that the “Economic growth seen in the first three quarters this year in most key economies had been better than expected.”

OPEC said that last year’s “robust economic growth is expected to extend into 2024,” and sees global economic growth at 2.6% this year.

By Tsvetana Paraskova for Oilprice.com

O&G prices looking bullish and nicely on the rise today:

https://tradingeconomics.com/commodity/brent-crude-oil

Post a successful HBR-Wintershall Dea deal competition in Q4 this year, emerging Harbour Energy will be equivalent to the likes of Aker BP which currently has a market capitalization of around £14 Billion!

@NSS22, Just reviewing the days trades, volumes are looking good including £2M Buy orders at 306 here, unsurprisingly, someone(s) seem to be slowly loading up here while SP remains suppressed, and post Wintershall Dea merger with New HBR firmly back in the FTSE 100 (and looking something like Aker BP), hence with a bit of patience, market cap here should then easily be more than double of what it is today at the very least, some folks here see the longer term opportunities.

Looks like someone(s) are loading up here, GLA.

Today, HBR is fortunate in having numerous ongoing exploration (and development) projects amongst its current prolific assets wether in Indonesia, Mexico, Norway, UK,……along with great partners, now add to that the nicely diversified and rich Wintershall Dea assets and we then have a fantastic combination which at today’s company market capitalization seems like a truly grand bargain/opportunity!

@Neversellshell22, please click on the 1 month performance for Natural Gas, it’s gone up significantly in the past 1 month, especially since ~13 Dec., you maybe looking at today’s performance when it has gone down by ~5.5% on the day.

https://tradingeconomics.com/commodity/natural-gas

Natural Gas has rallied in the past one month, hopefully UK & European Gas prices will follow suit:

https://tradingeconomics.com/commodity/natural-gas

Article continuation from previous post:

Investment leaving the sector over windfall tax

Job cuts have been made recently by Harbour Energy and Apache, both citing the windfall tax, while the levy has also been pointed to for accelerated decommissioning of key hubs.

Flows from the Forties pipeline system have also decreased, again being blamed on the levy, and Scotland’s only oil refinery, Grangemouth, faces an uncertain future.

Some firms, like Harbour, have been looking internationally to grow their portfolios with the recently-announced acquisition of Wintershall DEA of Germany.

Mr Crighton said: “We need the remove the EPL to secure the investment required in the energy sector to enhance our energy security today, and to help fund the new technologies of tomorrow.”

https://www.energyvoice.com/oilandgas/north-sea/545157/uk-government-concession-windfall-tax/

ENERGY VOICE 10/01/2024

UK Government makes ‘concession’ on North Sea windfall tax

The UK Government will make a change to the windfall tax in the coming months, but fresh calls have been made to scrap the North Sea levy.

From April, the “price floor” mechanism – the point which would end the tax if oil and gas prices drop far enough – will include an adjustment for inflation.

Exchequer Secretary Gareth Davies confirmed the move in a letter to the Aberdeen and Grampian Chamber of Commerce (AGCC), who said the measure was a “concession to protect North Sea jobs” following its campaigning.

However, it is not ultimately expected to be enough to see the levy dropped. Even with the adjustment, prices are unlikely to reach the trigger threshold of $71.40 per barrel for oil and £.054 pence for gas.

The business organisation has issued a fresh call to scrap the tax, with policy director Ryan Crighton saying “the government needs to go further”.

It comes as the UK Government is pushing through legislation for annual North Sea licences, which Mr Crighton said “will achieve nothing when accompanied by a fiscal regime which is driving companies, investment and jobs away from the UKCS”.

He added: “By their own admission, the original price floor will not be triggered. And even when it is adjusted for CPI inflation that remains the case.

“Put simply, the windfall tax needs to go if we are to avoid a cliff-edge end to our domestic oil and gas industry and the 215,000 jobs it supports across these isles.”

The windfall tax is due to end in March 2028 under current legislation, though it’s not clear how a looming general election – and a potential new government – may impact that.

It comes as the Chamber pointed to investment leaving the sector and the windfall tax causing issues for borrowing, based on the traditional reserves-based lending model.

Price floor

A price floor for the tax, which has seen the headline rate in the North Sea rise to 75%, was announced in June after industry lobbying.

The Energy Security Investment Mechanism (ESIM) – or price floor, which based on a 20-year average to the end of 2022 – will now be adjusted in line with inflation for future tax years.

When the price floor was announced, analysts said forward price curves indicate the relief will never kick in – something that’s not changing with this new measure.

Article continued via next post here….

ADNOC Buys A 10% Stake In Carbon Capture Company Storegga

The UAE state-owned oil giant ADNOC has just purchased a 10% stake in the carbon capture and storage (CCS) firm Storegga.

The purchase was made as part of Storegga’s latest funding round, which saw investments from other major players, as well.

For instance, Australian asset manager Macquarie and Singapore’s sovereign wealth fund GIC also invested in the UK carbon capture firm.

Storegga is one of the joint venture partners facilitating the Acorn CCS project in Aberdeenshire, along with Harbour Energy, Shell and others.

“Carbon capture is an important tool to responsibly reduce carbon emissions and meet global climate goals and ADNOC will continue to scale-up this technology as we work towards net zero by 2045,” Mr Al Kaabi said.

Nick Cooper, CEO of Storegga, also commented on the new partnership, saying that such collaborations are an integral part of the world’s transition to a low-carbon future.

https://carbonherald.com/adnoc-buys-a-10-stake-in-carbon-capture-company-storegga/

FPSO gets contract extension for North Sea Catcher Field work

The BW Catcher FPSO contract has been extended beyond fixed term.

OSLO, Norway — The BW Catcher FPSO is owned and operated by BW Offshore and is leased out under a seven-year fixed term contract, with extension options for an additional 18 years.

The original seven-year base term of the contract expires on Jan. 6, 2025, and from Jan. 6, 2024, the contract is subject to a rolling 12-month termination right. Until such a termination notice is received, the contract automatically extends on a day-to-day basis beyond Jan. 6, 2025, into the option period.

The Catcher Field partnership is made up of Premier Oil UK Ltd. (Harbour Energy) (50%), Waldorf CNS (I) Ltd., Waldorf Production UK Plc (40%) and ONE-Dyas E&P Ltd. (10%).

BW Catcher has an oil processing capacity of 60,000 bbld/d and a gas handling capacity of 60 MMscf/d. The vessel also has a water injection caapcity of 125,000 bbl/d and a storage caoacity of 650,000 bbl.

Last year Amarinth supplied skimming pumps for the Catcher FPSO in the North Sea.

In January 2023, Harbour Energy was targeting average production in 2023 from its offshore projects of 185,000 to 200,000 boe/d, with new wells coming onstream at the J-Area, Beryl and Catcher developments.

First oil was produced from the Catcher Area in the UK central North Sea in December 2017.

https://www.offshore-mag.com/vessels/article/14303429/fpso-gets-contract-extension-for-north-sea-catcher-field-work

Reuters, January 6, 2024

BP investors want oil firm to approach BAE chief as CEO, Sky News reports

Jan 6 (Reuters) - Some of BP's (BP.L) largest shareholders have urged the company to approach BAE Systems (BAES.L) Chief Executive Charles Woodburn about becoming the British oil giant's next boss, Sky News reported on Saturday, citing unidentified sources.

Several large investors believe that BP should target the appointment of an external candidate as its CEO, according to the report.

It is unclear whether Woodburn had been formally approached by BP, according to Sky, adding he had been sounded out in recent weeks.

"Charles is chief executive of BAE Systems and we have no comment on BP personnel matters," a BAE Systems spokesperson said.

BP was thrown into turmoil after Chief Executive Bernard Looney resigned on Sept. 12 for failing to disclose relationships with employees, leaving no clear succession plan in place.

BP's board has short-listed interim CEO Murray Auchincloss and two senior female executives as internal candidates to replace Looney, three company and industry sources told Reuters last month.

"The process to appoint BP's next CEO is ongoing. We won't comment on speculation regarding potential candidates," a spokesperson for BP said when asked about the Sky report.

https://www.reuters.com/business/energy/bp-investors-want-oil-behemoth-target-bae-chief-ceo-sky-news-2024-01-06/

CITYA.M. MONDAY 08 JANUARY 2024

The $11.2bn acquisition: Wintershall be better with Harbour Energy

News of London-listed Harbour Energy’s blockbuster $11.2bn buy of Wintershall Dea’s oil and gas assets closed at 3pm GMT on 21st December.

A hefty sum at a weird time, but not one born of ‘FOMO’ or panic. Rather, a move expanding Harbour’s global influence and catapulting the company into the league of the UK’s largest oil producers.

Aggressive deals are in Harbour’s DNA; the company was born by the merger of two North Sea oil giants, Chrysaor and Premier Oil in 2021, which brought about a new era of private financing for North Sea oil.

And though the $11bn price tag creates visions of a Brink’s truck, the deal is broken down into multiple moving parts; a $2.5bn cash payment and $4.9bn of debt in the form of existing Wintershall bonds.

Approximately £921m new Harbour shares will also be dispersed to BASF and Letterone at a 60 per cent premium amounting to $4.15bn in value.

As the largest oil and gas producer in the North Sea, the uncomfortable reality of the UK’s decommissioning ambitions there – responsible for around 90 per cent of both Harbour’s oil and gas reserves and production – meant diversification was urgently needed.

Wintershall Dea is owned by European multinational Badische Anilin- und Sodafabrik (BASF), is the world’s largest chemical producer. With €3.4bn (£2.9bn) in operating cash flow in 2022, the company owns oil and gas operations in Norway, Denmark, UK, Netherlands, Germany, Algeria, Libya, Egypt, UAE, Mexico and Argentina.

This doubles Harbour’s presence geographically, adding to its own projects in the UK, Norway, Mexico, Vietnam and Indonesia. Correspondingly, oil production is expected to double from 190,000 barrels a day to 500,000.

The deal makes Harbour simultaneously greener and dirtier – more production will spike emissions but it also diversifies the portfolio, reducing oil projects as a percentage of its total portfolio while upping gas production.

But perhaps most importantly, the deal takes Harbour into waters not ventured by BP and Shell in 2023; a megamerger.

The US oil and gas sector had a bumper M&A year; Exxon Mobil’s $60bn (£47bn) deal for Pioneer Natural Resources and Chevron’s $53bn (£42bn) deal for Hess Corp.

https://www.cityam.com/the-11-2bn-acquisition-wintershall-be-better-with-harbour-energy/

Nice to note Brent, UK and European Gas prices all now up once again here and looking bullish at the moment while awaiting the US Non Farm Payrolls:

https://tradingeconomics.com/commodities

Article continuation from previous post:

Some final thoughts

Setting aside the issue of what the fair value of the new group should be, the directors have promised to increase the dividend per share by 5%.

And there will be other benefits too.

The deal will help expand Harbour’s geographical footprint.

Also, its reserves will more than double.

And it will lower the operating cost per barrel of oil equivalent by over 25%.

Even if the share price doesn’t get close to 407p, as an existing shareholder, I’ll be happy with the additional passive income. The improved earnings potential should also help ensure that the dividend is sustainable over the long term.

https://www.fool.co.uk/2024/01/05/this-ftse-250-stock-could-soar-30-in-2024/

This FTSE 250 stock could soar 30% in 2024!

Our writer explains why he’s expecting big things — over the next 12 months — from the stock of the FTSE 250’s largest oil and gas producer.

Harbour Energy (LSE:HBR) was the second-best performer on the FTSE 250 in December 2023.

Its shares ended the month 38% higher, largely due to the announcement of an acquisition that will transform the scale of the energy producer.

But I think the stock has the potential to climb higher.

If my reasoning is correct, it could soar by 30% in 2024.

Here’s why.

The sum of the parts

On 21 December 2023, Harbour announced that it was to acquire the upstream assets of Wintershall Dea in a deal worth $11.2bn (£8.86bn at current exchange rates).

The transaction will be funded through a combination of cash (£1.71bn), the issue of new shares (£3.28bn), and the taking on of some of Wintershall’s debt (£3.87bn).

Prior to the news being released, Harbour was valued by the stock market at £1.89bn.

Therefore, in theory, the new group should be worth £6.88bn — the combined pre-acquisition value of both companies (£10.75bn) less the value of the loan notes.

The current owners of Wintershall will receive 921.2m new shares, bringing the total post-transaction number in issue to approximately 1.69bn.

The share price should therefore be 407p — a premium of approximately 30% to its current value.

Am I missing something?

But this begs the question, why are Harbour’s shares still changing hands for around 315p?

I think there are six possible explanations for this.

Firstly, the deal has yet to be finalised. Completion is not expected until the final quarter of 2024.

Second, the acquisition is to be part-funded through the issue of new shares, which have been valued at 360p. Although higher than today’s share price, it’s still well below my theoretical price.

The third reason could be that profits from the North Sea are subject to a huge tax rate of 75%. And there’s no commitment from the UK’s two largest political parties to reduce this.

Next, earnings from the oil and gas industry are notoriously volatile.

Fifthly, ethical investors don’t want anything to do with the sector.

And finally, the target company is privately owned. There’s less information in the public domain about its financial performance. It might take investors some time to assess whether the deal is a good one.

To try and help overcome this problem, figures have been produced by the two companies illustrating what the group would have looked like in 2022. Combined EBITDAX (earnings before interest, tax, depreciation, amortisation, and exploration costs) would have been $10.3bn (£8.15bn) for the 12 months ended 31 December 2022.

That’s a 157% uplift on Harbour’s earnings.

If its pre-acquisition share price was increased by the same amount, its stock would be changing hands for over 600p!

Article continued v

There is Jumbo Gas Potential, Minister of Energy and Mineral Resources: Need to Build a New LNG Refinery in Aceh

Bisnis.com, JAKARTA — Minister of Energy and Natural Resources (ESDM) Arifin Tasrif is considering building a new liquefied natural gas (LNG) refinery around Aceh.

Arifin conveyed this thought to anticipate excess gas supplies that might emerge from onstream a number of fields in the Andaman Sea portfolio, off the coast of Aceh in the future.

Harbour Energy's subsidiary, Premier Oil, has succeeded in identifying additional contingent resources (2C) of 80 million barrels of oil equivalent (MMboe) and significant gas potential (multi-TCF play) in the Andaman II Working Area (WK) in 2022. The Ministry of Energy and Mineral Resources estimates the potential Gas resources in the oil and gas block are around 5 trillion cubic feet (Tcf) to 6 Tcf.

Furthermore, at the end of 2023, Mubadala Energy succeeded in discovering potential gas resources of 6 Tcf in the Layaran-1 Well exploration activity in the South Andaman Block, around 100 kilometers off the coast of northern Sumatra.

In this well, a gas column was found with a thickness of more than 230 meters in the Oligocene sandstone reservoir. Complete data acquisition including wireline, coring, sampling and production test (DST) was carried out. The well successfully delivered excellent quality gas with a capacity of 30 million standard cubic feet per day (MMscfd).

Based on a report from Mubadala Energy (South Andaman) RSC LTD which states that the Layaran-1 well discovery has the potential to reach 6 Tcf gas-in-place, so this discovery could exceed the discovery of the Geng North-1 well, Kutai basin and enter the the world's top three.

Through the potential of these two fields, Arifin said, his ministry is also pursuing work on the transmission of the natural gas pipeline to continue the Dumai-Sei Mangke section in northern Sumatra.

The pipeline section is planned to be fully financed through the state revenue and expenditure budget (APBN) with a multi-year contract scheme.

Later the gas pipeline infrastructure will be connected from East Java to North Sumatra.

https://m.bisnis.com/amp/read/20240105/44/1729736/ada-potensi-gas-jumbo-menteri-esdm-perlu-bangun-kilang-lng-baru-di-aceh

https://aogdigital.com/news/510555-harbour-energy-starts-drilling-***o1-well-off-indonesia

harbour energy starts drilling ***o-1 well off indonesia

oil and gas company harbour energy has started drilling the ***o-1 exploration well in the andaman ii block, offshore indonesia.

drilling started on december 31, 2023, using west capella ultra-deepwater drillship.

according to skk migas, indonesia’s government regulator, the efforts are being made to re-explore potential oil and gas reserves in the andaman ii, inspired by discovery of significant oil and gas reserves through the timpan-1 exploration well in 2022.

the west capella is the 6th generation seadrill drillship that was recently employed by mubadala energy on layaran-1 exploration well in south andaman, where it made a major gas discovery.

layaran-1 is the first of a four well exploration campaign targeting the same oligocene play as the successful timpan-1 well. aside from larayan-1 and ***o-1, the rig will work on halwa exploration too, harbour energy said.

the partners in the anadaman ii license are premier oil andaman, a harbour energy company (40%, operator), bp (30%), and mubadala (30%).

harbour energy's offshore well in indonesia hits 'material gas accumulation'

https://www.oedigital.com/news/497985-harbour-energy-s-offshore-well-in-indonesia-hits-material-gas-accumulation

Nice to note Brent, UK and European Gas prices all now up once again here and looking pretty bullish at the moment:

https://tradingeconomics.com/commodities