Chevron Technology Ventures, LLC (CTV) has announced the launch of its $300 million Future Energy Fund II focused on technologies that have the potential to enable affordable, reliable, and ever-cleaner energy for all.

February 16, 2021, marks the listing and first day of trading of shares of Technip Energies, a leading engineering & technology company, on compartment A of Euronext’s regulated market in Paris (ticker: TE).  

Following the release of BP’s Q4 2020 financial results, Daniel Rogers, Senior Oil and Gas Analyst at GlobalData, a leading data and analytics company, offers his view:

Equinor has decided to write down the book value of its Tanzania LNG project (TLNG) on the company’s balance sheet by 982million USD. This will be reflected in adjusted earnings for EPI division in fourth quarter 2020 results to be reported on 10 February 2021.

While progress has been made in recent years on the commercial framework for TLNG, overall project economics have not yet improved sufficiently to justify keeping it on the balance sheet.

The TLNG project has an anticipated breakeven price well above the portfolio average for Equinor and is, at this time, not competitive within this portfolio. Equinor will continue to engage with the Government of Tanzania in negotiations on a commercial, fiscal and legal framework that may provide a viable business case for TLNG in the future.

Equinor maintains an attractive portfolio of project development opportunities in oil and gas as well as renewables. This portfolio requires strict prioritization, ensuring capital is allocated towards projects yielding the most competitive returns. As shown at the Capital Markets Update in February last year, Equinor’s oil and gas projects with expected start-up by 2026 have an average breakeven below $35/bbl based on today’s estimates. Similar for non-sanctioned oil and gas projects with expected start-up within this decade, the average breakeven is below $40/bbl.

Equinor has been present in Tanzania since 2007 when the company signed a Production Sharing Agreement (PSA) with the Tanzania Petroleum Development Corporation (TPDC). Equinor is the operator with a 65% participating interest, along with ExxonMobil’s working interest of 35%. TPDC has the right to participate with a 10% interest. Equinor made nine gas discoveries in Block 2 offshore Tanzania with estimated volumes of 20 Tcf of gas in place.

Global engineering and technology consultancy, Vysus Group, has completed its first acquisition following a strategic carve out from Lloyd’s Register at the end of 2020.  

 Professor David Elmes, Head of the Global Energy Research Network at Warwick Business School, said:

2020 will be remembered as one of the most challenging years in the history of the oil and gas sector.

The large offshore South African gas discoveries of late represent the potential for vast change in the country, however, as yet there is no clear route to commercialization for the partners, says GlobalData, a leading data and analytics company. 

Crude Oil:

Shell has set out its strategy to accelerate its transformation into a provider of net-zero emissions energy products and services, powered by growth in its customer-facing businesses.

As the climate is changing, the Arctic is warming four times faster than global averages, causing the circumpolar Jetstream to weaken and move southwards. Consequently, freezing cold air masses – known as the Polar Vortex – descend to more densely populated areas in the earth’s Northern Hemisphere, where humans have no other immediate choice but to increase fossil fuel consumption to keep warm.

Analyzing global temperatures and related weather phenomena, Rystad Energy believes that the increased frequency of this weather pattern – which has caused a rise in demand for coal, liquefied natural gas (LNG), electricity and even a bit of oil – is here to stay. Recent eye-popping price spikes and their spread between summer and winter will widen, especially for gas, both natural and liquefied.

With European and Asian markets hungry for natural gas and LNG, storage levels are getting depleted. And with the Polar Vortex expected to create another cold snap in February, a perfect demand storm will likely cause a spike in global demand and contribute to a 4% rise in LNG consumption this year, reaching about 377 million tonnes (MT) in 2021 versus 363 MT in 2020.

Due to the cold snap, North-east Asia has already reached an international LNG import all-time-high in December, when the region imported a record 22 MT. China in particular imported a record 66 MT in the whole of 2020, despite the effect of the Covid-19 pandemic, and is on the verge of overtaking Japan as the world’s largest LNG importer. Rystad Energy expects Chinese LNG imports in 2021 to grow to 72.9 MT, just 2 MT short of Japan’s projected 74.9 MT.

The Polar Vortex has so far hit Asian and European markets hard, causing a rise in the profitability of LNG, natural gas and coal. Rystad Energy’s price forecasts show that high gas and LNG price levels will likely remain high in coming weeks and are only likely to ease back in March and April as spring approaches in the Northern Hemisphere.

Yet US Henry Hub gas prices remain surprisingly subdued at $2.75 per MMBtu, a steep drop from the peak price of $3.40 per MMBtu registered in late October 2020. There are two main reasons US gas prices are comparatively depressed. First, the Polar Vortex has so far only drifted south over Europe and Asia, and not yet North America. Second, higher oil prices are incentivizing shale operators to tap into drilled but uncompleted wells (DUCs), which increases the domestic supply of both oil and gas.

As more wells are brought online, we see continued pressure on domestic US gas prices, even despite the surge in demand for US LNG exports. Rystad Energy expects the Henry Hub price to average $2.95 per MMBtu in 2021, in nominal terms.

The Polar Vortex, together with increased North East Asian demand for heating, has pushed up Asian LNG prices and the arbitrage window between the US and Asian markets. This has directed more US LNG volumes to the Far East compared to the US and Europe. Consequently, the long voyage from source to market is good for vessel demand, and thus also charter rates.

The increased demand for US LNG in Asia has led to congestion in the Panama Canal, the shortest route for transporting LNG from the US Gulf Coast to Asia. Maintenance and weather disruptions have further supported the current backup in the canal. Consequently, shippers may have to use alternative routes including passing through the Suez Canal or around South Africa for transporting cargoes from the US to Asia.

These routes would more than double the route distance and increase passage time from 20 to 30 days. As such, voyage costs for cargos from the US to Japan have soared as high as $5.60 per MMBtu during January 2021.

Perfect storm for coal

Japan presents an interesting case of how the attractiveness of coal has rebounded as a result of the Polar Vortex. With most of Japan’s nuclear reactors still offline in the wake of the Fukushima disaster, Japan has relied heavily on LNG to meet its power demand and is therefore vulnerable to any shock related to the supply and demand balance in the LNG market. The Japanese power sector has also been affected by heavy snowfall and a lack of sunshine, thus affecting solar power generation and worsening the overall power supply. While the shortage can be offset by increased use of coal and oil, utilities have asked the public to use less electricity, a difficult ask in the midst of freezing temperatures.

The situation is hardly better in China. On 7 January 2021, Beijing recorded its lowest temperature since 1966 – touching -19.6 degrees Celsius. This has sharply lifted Chinese coal demand for both heating and power, and to deal with the demand spike, major north Asian energy consumers have ramped up coal consumption in recent weeks. In particular, thermal coal spot prices in China have soared since the start of the new year.

The cold weather has dampened domestic coal production and transportation, though the nationwide coal shortage started to appear in early November when major domestic coal-producing areas in Inner Mongolia, Shaanxi and Shanxi provinces reported reduced supply due to the government’s crackdown on illegal production and sale of coal.

But the volatile coal market situation has also been exacerbated by the government’s own policy decisions. China's coal import quota system, plus the informal ban on Australian coal imports, has resulted in limited imported coal available to take up the domestic production shortfall, even though it is substantially cheaper. Chinese coal buyers were able to increase imports from Indonesia and Russia in December as the annual quota expanded, and have also recently turned to alternative sources of supply, including South Africa and Colombia, but these volumes are reportedly unlikely to arrive in time or in sufficient quantities to meet short-term demand requirements.

“The new round of lower temperatures can support the high energy prices in the market. As milder weather returns, we expect to see less upward pressure on energy prices. Still, the market will continue to be tight during the coming months, as challenges in the Panama Canal are yet to be resolved, Chinese coal production needs to recover, and gas storage needs to be restocked for the current market tightness to ease,” says Sindre Knutsson, vice president of gas market research at Rystad Energy.

For more analysis, insights and reports, clients and non-clients can apply for access to Rystad Energy’s Free Solutions .

Fulkrum Technical Resources (FTR), a global provider of technical personnel specialising in QA/QC, inspection and vendor surveillance services to the energy industry, has reported a successful 2020, resulting in year-on-year growth of more than 50%.

Leading online valuation and data provider, VesselsValue, announces they are now covering Liftboats. 

While the global oil and gas industry witnessed a marginal decrease in the number of contracts, from 1,283 in Q3 2020 to 1,145 in Q4, there was an almost 28% increase in terms of value from $17.58bn to $22.55bn.

Despite the devastating downturn of 2020, most global majors held up quite well during the market turmoil, a Rystad Energy comparative analysis reveals after measuring key upstream performance metrics. Total outshined all other peers, as the French company not only exceled in financial and operational performance, but also was the only major to replace all of the year’s produced resources.

Greensea Systems, Inc. creator of OPENSEA®, the open architecture robotics platform for the marine industry, announces the award of a Phase II Small Business Innovation Research (SBIR) ASAP grant totaling $1,100,000, with option for additional funding, for the continued development of Standoff Command and Control of Remotely Operated Vehicles (ROVs).