Fitch Ratings Agency is forecasting that global crude oil prices will average $52.50 this year, up from $45.10 in 2016. This figure is still believed to be below the breakeven point for most Middle Eastern oil exporters. Only Kuwait, which is said to have a breakeven point of $45 a barrel is well below the $52 figure. All the other exporters are either close to $52 or well above it Most, especially Saudi Arabia, are slowly losing currency reserves by operating at a loss. Most oil industry experts believe the current situation where crude oil is being sold below true costs of production simply cannot obtain indefinitely.

Saudi Arabia’s foreign currency reserves have fallen from a peak of $737 billion in 2014 to just over $500 billion today. At the current rate of decline, $6.5 billion a year, these reserves could drop to zero in about 6-7 years. Moreover, Saudi Arabia’s crude oil reserves have declined from 267 billion barrels in October 2015 to around 260 billion today.

To replace the revenue from their crude oil revenues, members of the Gulf Cooperation Council (including Saudi Arabia) have turned to the bond markets. Bond sales by council members during the first quarter increased by 359% to $24.2 billion. This included an $8 billion issue by Kuwait and a $5 billion issue by Oman. Financial observers are predicting that large bond issues will become the norm for Gulf oil producers in coming years, unless there is a major surge in crude oil prices.

Nigeria is the world’s worst off crude oil producer, needing a world oil price of $139 a barrel to balance its budget.

According to Norwegian government estimates, there are some 18 billion barrels of crude oil equivalent yet to be discovered in Norwegian waters. Half of that is in the Barents Sea in the Arctic.

In February, China was the largest buyer of US light crude oil, overtaking Canada as the top destination of US crude exports. US crude oil exports reached a record high of 31.2 million barrels in February.

3 US companies are considering building natural gas pipelines from the Permian basin in the state of Texas to the US Gulf Coast where other companies have set up facilities to export liquefied natural gas (LNG) to Europe and Asia.

The crude oil price collapse that sent several hundred US oil and gas companies into bankruptcy seems to be largely over.  A recent spate of hiring announcements suggests oilfield services companies are building up a workforce to tap into North American shale oil and gas fields.

It is expected that later this month the US President will approve the drilling for crude oil and natural gas in drilling in US Arctic waters and a large area of its Atlantic coast waters.

Energy consultant Wood Mackenzie Ltd. estimates global merchant fleets will have to spend $60 billion in the next 2 1/2 years to meet new global sulfur emission standards. In Europe, which has already introduced tougher emission standards for its coastal waters, many ships are converting from diesel to liquefied natural gas (LNG).

The Canadian government estimates it has the eighth largest wind-energy capacity in the world, with nearly 12 gigawatts of installed capacity.

 

 

with h/t Tom Wipple

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