Gas Matters Today | news roundup | w/c 27 Apr 2020

Editorial

ExxonMobil posted its first quarterly loss in decades in jaw-dropping financial results that underscore just how far the once-almighty US titan has fallen out of fortune, the same week that Shell reluctantly cut its dividend for the first time since the WWII.

Analysis

US Gulf Coast regas conversions are staring at highly unusual price signals potentially calling for them to import cargoes of LNG that fail to find a home in European markets decimated by the Covid-19 pandemic.

International

Houston-based Diamond Offshore Drilling has become the latest services firm to file for bankruptcy due to the oil price downturn and Covid-19 pandemic, which is hitting demand for capital-intensive offshore drilling.

BP profits crashed by two-thirds in Q1’20 as lower prices, coronavirus-fuelled demand destruction, collapsing dividends from Rosneft, lower oil trading returns and FX impacts from its Brazilian bioenergy joint venture weighed heavily on the bottom line.

The world is witnessing investors fleeing long positions in crude oil more quickly than at any point in the history of traded commodities, US investment bank Morgan Stanley said in an unambiguous research note last week.

Workers at Gazprom’s Chayanda field in Siberia have staged an impromptu protest, demanding better living conditions and protections against Covid-19, as the company reported a 17% drop in annual profit.

Royal Dutch Shell has taken the pivotal decision to cut its dividend by two-thirds, its first reduction since the second world war, in the face of spiralling uncertainties arising from the Covid-19 pandemic that has crashed oil and gas prices and plunged Big Oil revenues.

Renewables will thrive and gas will fare better than coal or oil during the coronavirus pandemic, the IEA has predicted, as the energy sector is battered by the biggest demand shock in more than seven decades that will dwarf the impact of the 2008 financial crisis.

Africa

Mozambique – Security forces killed 128 Islamic insurgents in the first half of April in Cabo Delgado province where the country’s huge LNG export projects are located, while mass-testing has began at the Afungi LNG park, the epicentre for coronavirus in the east African country.

Europe

Spain – Utility firm Naturgy is reportedly planning a management revamp to tackle operational challenges thrown up by the coronavirus pandemic, as the company posts lacklustre financial results for Q1’20.

Poland – Gazprom has agreed to retroactively amend the pricing terms of gas supply to state-run PGNiG, in line with a USD 1.5 billion arbitration award in late March, the Polish company announced last week.

UK – A coalition of trade unions representing the UK’s offshore oil and gas industry has called on the UK government to “invest in projects… as equity partners” to prevent the imminent “meltdown” of the North Sea oil and gas industry.

Mediterranean

Greece / Italy – The Greek-Italian joint venture backing the EastMed gas pipeline has begun a tender for EPCI work on the proposed 1,500 km subsea portion of the line meant to connect the Levant Basin with Europe.

Lebanon – The first exploration well drilled offshore Lebanon failed to make a commercial gas discovery, energy minister Raymond Ghajar told reporters in Beirut on Monday after nearly two months of work on the Byblos-1 well.

North America

US – BP has salvaged its blockbuster USD 5.6 billion sale of its Alaska business to Hilcorp after the pair revised the terms of the deal in light of the Covid-19 pandemic and oil price crash, with Hilcorp set to pay “lower completion payments” this year.

LNG pioneer Cheniere Energy more than doubled its net income in Q1’20 despite USD 53 million worth of cargo cancellations – suggesting customers could have cancelled up to five cargoes in Q1’20, rather than the two that Cheniere has confirmed publicly.

Oil producers are being hammered by crashing prices, with ConocoPhillips swinging to its first quarterly loss in almost three years and prompting bosses to deepen voluntary production cuts, while fracker Concho Resources took a multi-billion-dollar impairment.

US majors have reported contrasting Q1’20 results, with ExxonMobil falling to its first quarterly loss in over three decades, while Chevron’s earnings increased 38% on the year, although the firm warned that future results could be “depressed”.