It is too early to assess the implications of the UK’s referendum last week to leave the European Union (Brexit).  In the short term crude oil prices will likely fall a bit as the US dollar strengthens against the pound and Britain sinks into a period of political chaos. Over the longer term, there are so many issues that could emerge from the Brexit vote that it is pointless to speculate. Several other countries are talking about holding exit referendums. The major EU members are pushing for Britain to leave quickly and plan to drive such a hard trade bargain with the British that no other country will see an advantage in leaving. Some are foreseeing that the fallout from last week even could be the beginning of an end to globalization as countries turn in on themselves and become more isolationist.

Russia and China signed new energy agreements, bringing the two countries closer together. Russia and China are becoming more interdependent all the time as Russia becomes biggest oil supplier. The two countries have mutual interests. As China becomes increasingly dependent on imported crude oil, it seeks to diversify its sources away from the unstable Middle East, which could easily erupt at any time and reduce oil exports as it has several times in the past. For its part, Russia has been suffering from the low crude oil prices and economic sanctions imposed by the European Union and has turned to China as a replacement for EU financing of energy projects.  The Chinese drive hard bargains and Russian is not getting as good terms as it has been getting from the West but simply has nowhere else to go.

OPEC said its oil revenue plunged by $438 billion to a 10-year low of $518.2 billion last year as an increase in export volumes failed to compensate for the collapse in prices.

The number of liquefied natural gas (LNG) importing countries may more than double as a glut of the produce lowers prices and encourages nations to substitute it for crude oil, according to Wood Mackenzie Ltd. More than 50 countries may switch from oil to LNG.

For the first time, Asian gasoline is heading to South and Central America in large quantities as higher oil prices and a supply shortfall in those regions—caused in part by refinery outages and the fires in Alberta, Canada—opened the Americas trade route to Asia. More movements of gasoline could be expected in future as Asia works to export its large stockpiles,

India’s largest oil and gas explorer is launching a $5-billion development program in the Krishna-Godavari Basin off the east coast of India.

Kenya said oil from the Lokichar Basin will begin reaching foreign markets at a rate of 2,000 barrels of crude oil per day by July 2017. So far, the East African nation has confirmed 750 million barrels of recoverable crude oil in the basin, since the discovery was made public in 2012.

Angola’s state-run Sonangol announced a natural gas discovery in the offshore Kwanza Basin that could hold 813 million barrels of oil equivalent.  According to Sonangol, the block holds an estimated 2.8 trillion cubic feet of natural gas.

The export of US natural gas — including both pipeline and LNG exports — is expected to skyrocket through the next few decades, a US Department of Energy official said. The country is on a path to become a top supplier to the international market. The energy department predicts that US natural gas exports would reach 10 billion cubic feet per day by 2022 and double that volume to 20 Bcf/d by 2040. By 2022 only Qatar would have larger export volumes.

Electric vehicles sales in the US have only totaled 442,000 (including plug-in hybrids) since President Obama took office, well short of his target of 1 million EVs by 2015.

Energy consulting firm Wood Mackenzie said electric cars are poised to reduce US  gasoline demand by 5% over the next two decades—and could cut it by as much as 20%. The country currently uses more than nine million barrels of gasoline a day but could see that demand drop by as much as two million barrels a day if EV gain more than 35% market share by 2035.

In the US hi-tech firm Apple has created a new subsidiary called Apple Energy, and has asked to obtain a license to sell electricity directly to consumers, rather than back to the grid via the wholesale market.

 

 

 

with h/t Tom Whipple

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