OPEC’s decision to keep its crude oil output at 30 million barrels per day until at least next December essentially tells its members to produce as much oil as they can. Opposition to the decision came from Venezuela, Angola, and Iran whose economies are hurting badly from the low oil prices and would like others to make production cuts so they can benefit from higher prices.  These counties maintain that the new “fair price” for crude is $80 a barrel and that OPEC should cut production until prices reach this level.

It is dawning on many international oil market participants that that there is no “Minister of Shale Oil” in the US who can raise or lower production as is done in most crude oil exporting countries. In the US production decisions are made by dozens of producers, with different costs of production and financial strength.

China is a clear winner from low world oil prices. The world’s second-largest economy become the top crude oil importer in April. The key reason is that the Asian country is taking advantage of cheap oil to boost its strategic reserves, including storing oil offshore in supertankers as it expands its onshore strategic petroleum reserve.

US crude oil exports hit a record high of 586,000 barrels per day in April, which was 169,000 higher than in March.  The bulk of this crude went to Canada. Many in the US congress want the existing ban on crude oil exports to be changed so that the US can supply more countries around the world.

The Ukrainian crisis continues to influence energy policies. The European Union now wants to reduce or eliminate its dependence on Russian natural gas as quickly as possible and Russia would like to sell its crude oil and gas to China and other eastern nations with which it has fewer political problems.  The recently announced deal between Russia and Iran to help Iran avoid Western  sanctions by taking 500,000 barrels per day of its oil is an example of the fallout from the Ukrainian situation.

Russian crude oil output remained unchanged in May at a post-Soviet high of 10.71 million barrels per day. Oil revenues are the cornerstone this country’s national budget.

The US Energy Information Administration says US crude oil production will increase to over 10 million barrels per day and then stay level. It could only get to 11 million barrels per day if prices drift lower. If oil prices strengthen and/or oil recovery technology improves more, then the US crude oil production could head to 14 million barrels per day by 2025.

ConocoPhillips is withdrawing from shale gas exploration in Poland as it has not encountered commercial volumes of the gas. ConocoPhillips said its subsidiary Lane Energy Poland has invested around $220 million in Poland since 2009. It drilled seven wells over its three Western Baltic concessions, all with disappointing results.

A report from consulting firm IHS says that China may take the lead, along with the North American trucking sector, in the shift from oil to compressed natural gas (CNG) and liquefied natural gas (LNG) as a transportation fuel.

The International Energy Agency says prospects for liquified natural gas (LNG) export projects by 2020 on the West Coast of Canada have ‘darkened’ and deferrals are likely if crude oil and natural gas prices do not increase. As many as 19 consortiums have proposed export projects, but none has taken a final investment decision. A combination of a global supply glut of LNG and low natural gas prices in North America are the cause of the low prices.

Solar power costs to generate electricity have halved in just three years according to energy consultant Robin Mills. He said solar can now beat all conventional electric generation apart from the very cheapest natural gas. At Jordan’s recent solar auction, solar’s bid was just over 6 US cents per kilowatt-hour. These were just slightly above the record 5.84 cents from Acwa Power last November for the 200 MW second phase of Dubai’s solar park.

A Chinese construction company has been chosen to build the world’s first tidal lagoon project for generating renewable electricity in the UK.  The state-owned China Harbor Engineering Company has won the tender to undertake marine works on the £1 billion Swansea Bay Tidal Project, which will deliver electricity to the National Grid, potentially enough to power 120,000 homes.

Ethiopia plans to launch hydropower dams and other renewable energy projects over the five years to 2020 that will add an additional 12 gigawatts (GW) of electricity upon completion, a senior official said this week. Experts say the Horn of Africa nation has the potential to generate 45 GW of hydropower by tapping the numerous rivers that cascade through its highlands. Solar, wind and geothermal projects are also planned.

 

with h/t Tom Whipple

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