Energy Tidbits Sept 1, 2019 - SAF Group · Sept 1, 2019 . The Disclaimer: Energy Tidbits is...

The Disclaimer: Energy Tidbits is intended to provide general information only and is written for an institutional or sophisticated investor audience. It is not a recommendation of, or solicitation for the purchase of securities, an offer of securities, or intended as investment research or advice. The information presented, while obtained from sources we believe reliable as of the publishing date, is not guaranteed against errors or omissions and no representation or warranty, express or implied, is made as to their accuracy, completeness or correctness. This publication is proprietary and intended for the sole use of direct recipients from Dan Tsubouchi and SAF Group. Energy Tidbits are not to be copied, transmitted, or forwarded without the prior written permission Dan Tsubouchi and SAF Group. Please advise if you have received Energy Tidbits from a source other than Dan Tsubouchi and SAF Group.

Energy Tidbits

Dan Tsubouchi

Principal, Chief Market Strategist

[email protected]

Aaron Bunting

Principal, COO, CFO

[email protected]

Ryan Dunfield

Principal, CEO [email protected]

Alan Cooper

Vice President

[email protected]

Ryan Haughn

Principal, Energy

[email protected]

EIA Form 914 June Actuals US Oil Production Only +44,000 b/d

In H1, Expect To See Analysts Lower US Oil Growth Rates

Welcome to new Energy Tidbits memo readers. We are continuing to add new readers to our Energy Tidbits

memo and energy blogs. The focus and concept for the memo was set in 1999 with input from PMs, who were

looking for research (both positive and negative items) that helped them shape their investment thesis to the energy

space, and not focusing on day to day trading. Our priority was and still is to not just report on events, but interpret

and point out implications therefrom. The best example is our review of investor days, conferences and earnings calls

focusing on sector developments that are relevant to the sector and not just a specific company results/guidance.

Our target is to write on 48 to 50 weekends per year and to send out by noon mountain time.

This week’s memo highlights:

1. EIA Form 914 actuals on Fri show US June oil was 12.082 mmb/d, only +44,000 b/d from Dec 2018 of 12.038

mmb/d. (Click Here)

2. Mexico reaches deal with gas pipeline companies allows for immediate increase in US gas pipeline exports and

needed support for HH gas prices. (Click Here)

3. India’s plan to renegotiate its long term oil linked LNG deals is another sign of weaker than expected mid term

LNG prices. (Click Here)

4. Reports Saudi Aramco could do step 1 (listing on Saudi exchange) this year, with step 2 (international listing) in

2020/2021. (Click Here)

5. We believe Saudi Arabia will need Iraq and Nigeria to comply for stronger fundamental oil prices to leave 2019.

(Click Here)

6. Please follow us on Twitter at [LINK] for breaking news that ultimately ends up in the weekly Energy Tidbits memo

that doesn’t get posted until Sunday noon MT.

7. For new readers to our Energy Tidbits and our blogs, you will need to sign up at our blog sign up to receive future

Energy Tidbits memos. The sign up is available at [LINK].

Produced by: Dan Tsubouchi

Sept 1, 2019

https://twitter.com/Energy_Tidbits

http://www.safgroup.ca/research/trends-in-the-market/


2

Energy Tidbits

Table of Contents Natural Gas – Natural gas injection of 61 bcf, storage now at 363 bcf YoY surplus ................................................5

Figure 1: US Natural Gas Storage ....................................................................................................................5

Natural Gas – US gas production in June is +9.4 bcf/d YoY ....................................................................................5

Figure 2: US Dry Natural Gas Production ........................................................................................................5

Natural Gas – US June LNG exports +2.2 bcf/d YoY, flat MoM ...............................................................................5

Figure 3: US LNG Exports (bcf/d) .............................................................................................................................6

Natural Gas - Mexico June pipeline exports +0.6 bcf/d YoY ....................................................................................6

Figure 4: US Pipeline Exports To Mexico (bcf/d) .....................................................................................................6

Natural Gas – Sur de Texas-Tuxpan 2.6 bcf/d export pipeline to Mexico starts up .................................................6

Figure 5: Mexico Gas Pipelines Map ........................................................................................................................7

Natural Gas – Golar/Delfin LNG not getting offtake to underpin financing ...............................................................7

Natural Gas – Farmers’ Almanac calls for very cold winter ......................................................................................8

Figure 6: Farmers’ Almanac 2019-20 Winter Outlook ..............................................................................................8

Natural Gas – No update on PNG Total LNG talks, PNG govt seems in crisis ........................................................8

Natural Gas – India will be looking to renegotiate LNG oil linked price once again .................................................9

India’s prior LNG price renegotiations were Petronet in Q4/15 and Q1/16 ......................................................9

Supports why we think Kitimat LNG will tie into LNG Canada construction cycle ......................................... 10

Oil – US oil rigs down 12 to 742 oil rigs ................................................................................................................. 10

Figure 7: Baker Hughes Weekly Rig Count – Total US Oil Rigs ................................................................... 10

Oil – Total Cdn rigs up 11 to 150 total rigs ............................................................................................................ 10

Figure 8: Baker Hughes Weekly Rig Count, Canadian Oil Rigs.................................................................... 11

Oil – US oil production hits new record 12.5 mmb/d ............................................................................................. 11

Figure 9: Weekly Oil Production .................................................................................................................... 11

Figure 10: US Weekly Oil Production ............................................................................................................ 12

Figure 11: YoY Change in US Weekly Oil Production ................................................................................... 12

Oil – EIA Form 914, US June oil production basically flat to Dec ......................................................................... 12

Figure 12: EIA Form 914 US Oil Production .................................................................................................. 13

We still expect analysts to lower Permian oil growth forecasts after Labor Day ........................................... 13

Oil – Permian slowdown will inevitably give more advantage to strong service co’s ............................................ 13

Figure 13: Permian Oil Rigs........................................................................................................................... 14

Oil – Cdn crude by rail to be hurt it by WCS/WTI $11.50 diff ................................................................................ 14


3

Energy Tidbits

Figure 14: WCS/WTI Differential ................................................................................................................... 14

Oil – Oil input into refineries down 295,000 b/d to 17.408 mmb/d ........................................................................ 14

Figure 15: US Refinery Crude Oil Inputs (thousand b/d) ............................................................................... 15

Oil – New Permian oil pipelines to Gulf Coast = less imports + more exports ...................................................... 15

Figure 16: Recent Permian Pipeline Developments ...................................................................................... 15

Oil – US “NET” oil imports down 1.506 mmb/d to 2.909 mmb/d ........................................................................... 15

Figure 17: US Weekly Preliminary Oil Imports By Major Countries .............................................................. 16

Oil – OPEC JMMC sees significant draws in oil inventories in H2 ........................................................................ 16

Oil demand is always up seasonally higher in Q3 and Q4 vs H1 .................................................................. 16

Figure 18: YoY increase in World and China Oil Demand .................................................................................... 17

Oil – Reuters OPEC survey, still unclear about Iran tankers gone dark destination ............................................. 17

Figure 19: Reuters Survey of OPEC Aug 2019 Production ........................................................................... 18

Oil – Russia produced 11.3 mmb/d in Aug, above quota of 11.18 mmb/d ............................................................ 18

Oil – Saudi will need to press Iraq and Nigeria to comply for stronger Q4 oil prices ............................................ 18

Oil – China official crude oil imports from Iran were 219,000 b/d in July .............................................................. 18

Figure 20: China Oil Imports From Iran, Excludes Unofficial Tankers Gone Dark ........................................ 19

Oil – Where are Iran tankers gone dark ending up? ............................................................................................. 19

Oil – Iran reminds it can be back to full production in 3 days ................................................................................ 19

Oil – Rouhani quickly shot down any post G7 potential for a Trump meeting ....................................................... 19

Macron seemed to have fairly advanced Iran proposals ............................................................................... 20

Oil – Yemen: Even worse week of fighting within the Saudi/UAE coalition vs Houthis ......................................... 20

Figure 21: Yemen Oil and Natural Gas Fields/Pipelines Circa 2016 ............................................................ 21

Oil – If US opens talks with Houthis, is this a path for Saudi to reluctantly negotiate? ......................................... 21

Oil – Bab el-Mandeb saw ~6.2 mmb/d oil/products to Europe/US/Asia in 2018 ................................................... 21

Figure 22: Red Sea and Bab el-Mandeb ....................................................................................................... 22

Oil – Surprise story Aramco looking at 2-step IPO with step 1 in late 2019 .......................................................... 22

Oil – Saudi’s anti corruption focus mid/junior level civil servants, not like Nov 2017 ............................................ 22

Oil – UN warns full out civil war in Libya is likely .................................................................................................. 23

Oil – FARC returns, says will resume fight in Colombia ........................................................................................ 23

Oil – Analysts lowering oil price and demand forecasts ........................................................................................ 23

Oil – ACC Chemical Activity Barometer shows weaker data in August ................................................................ 24

Figure 23: August Chemical Activity Barometer vs Industrial Production ..................................................... 24

Oil & Natural Gas – Hurricane Dorian, turning north, not moving into Gulf Coast ................................................ 24


4

Energy Tidbits

Figure 24: Hurricane Dorian .......................................................................................................................... 25

Reminder, peak Atlantic hurricane season is Aug 20 thru Oct 10 ................................................................. 25

Figure 25: Atlantic Peak Hurricane Season ................................................................................................... 25

Oil & Natural Gas – Bill C-69 kicks in, “Canada Energy Regulator” replaces NEB ............................................... 26

Electricity – More Trump anti wind comments ....................................................................................................... 26

Capital Markets – Top 10 sovereign wealth funds are $5.8 trillion ........................................................................ 26

Figure 26: Top 20 Sovereign Wealth Funds .................................................................................................. 26

Capital Markets – Exxon falls from S&P 500 Top 10 For First Time Ever ............................................................ 27

Governance – New Canada labour code changes ................................................................................................ 27

Energy Tidbits – Now on Twitter ............................................................................................................................ 27

Energy Tidbits – Sign up on our email distribution for tidbits and blogs ................................................................ 27

LinkedIn – Look for quick energy items from me on LinkedIn ............................................................................... 28

Misc Facts and Figures.......................................................................................................................................... 28

Figure 27: Public School Air Drill 1962 .......................................................................................................... 28

You don’t dig your way to China from North America ................................................................................... 29

Figure 28: Antipodes Of Calgary ................................................................................................................... 29


5

Energy Tidbits

Natural Gas – Natural gas injection of 61 bcf, storage now at 363 bcf YoY surplus

The EIA reported a 60 bcf natural gas injection and was just above the expectations of a 57 bcf injection to bring storage to 2.857 tcf as of August 23. This is a narrowing of the YoY surplus to 363 bcf vs 369 bcf YoY surplus last week, but storage is down 100 bcf against the 5 yr average. The continued expectation is for the YoY storage surplus to keep widening from higher YoY production which is holding HH prices well below $2.50. There are 10 weeks to get to Nov 1, the official start of the winter heating season. Below is the EIA’s storage table from its Weekly Natural Gas Storage Report. [LINK] Figure 1: US Natural Gas Storage

Source: EIA

Natural Gas – US gas production in June is +9.4 bcf/d YoY

The EIA released its Natural Gas Monthly, which includes its estimates for “actuals” for June gas production. The big negative to natural gas has been higher YoY natural gas supply, and this continues to be the case in June. June natural gas production was up 1.1 bcf/d MoM vs May, which is higher than expected given June oil production was down slightly vws May. Higher YoY natural gas production, along with continued high natural gas injections are keeping HH in the $2.25 range. Our Supplementary Documents package includes excerpts from the EIA Natural Gas Monthly. [LINK] Figure 2: US Dry Natural Gas Production

Source: EIA

Natural Gas – US June LNG exports +2.2 bcf/d YoY, flat MoM

The EIA Natural Gas Monthly also reported “actuals” for US LNG exports, which were 4.7 bcf/d in June, +2.2 bcf/d YoY and flat MoM vs May. We had expected to see June higher MoM with the first commercial deliveries from Cheniere’s Corpus Christi Train 1. However,

bcf/d 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Jan 56.0 60.0 65.9 65.3 67.8 72.6 73.8 71.0 77.9 88.7

Feb 57.3 58.8 65.2 65.9 67.5 73.7 74.7 71.6 79.4 89.5

March 57.3 61.5 65.1 65.4 68.2 74.1 74.0 73.3 80.2 90.1

Apr 57.6 62.3 65.4 66.0 68.6 75.0 73.8 73.4 80.4 90.5

May 58.0 62.4 65.6 66.3 69.5 74.2 73.5 73.3 81.3 90.1

June 57.2 62.1 65.4 66.3 69.8 74.3 72.5 73.8 81.8 91.2

July 58.3 62.5 65.8 67.0 70.6 74.3 73.1 74.7 83.4

Aug 58.9 63.2 65.4 67.0 71.6 74.3 72.3 74.7 85.2

Sept 59.1 63.1 66.2 67.2 71.7 75.0 71.9 75.8 86.4

Oct 60.1 65.1 66.5 67.6 72.2 74.1 71.4 76.9 87.2

Nov 60.1 65.9 66.6 68.6 73.1 74.1 72.1 79.0 88.6

Dec 61.0 65.6 65.8 66.6 74.7 74.0 71.2 79.5 88.9

Average 58.4 62.7 65.7 66.7 70.4 74.1 72.8 74.8 83.4

US June gas

production +9.4

bcf/d YoY

US June LNG

exports flat MoM

YoY storage at

363 bcf YoY

surplus

http://ir.eia.gov/ngs/ngs.html

https://www.eia.gov/naturalgas/monthly/pdf/table_01.pdf


6

Energy Tidbits

one offsetting June/July volume item seemed to be slightly longer periods between loadings, which we think may be linked to high Europe storage. Below is our table of EIA’s monthly LNG exports.

Figure 3: US LNG Exports (bcf/d)

Source: EIA

Natural Gas - Mexico June pipeline exports +0.6 bcf/d YoY

The EIA Natural Gas Monthly also estimates gas pipeline exports to Mexico hit an all time high of 5.2 bcf/d in June, +0.6 bcf/d YoY and +0.3 bcf/d MoM vs May. There may be no significant change in July and Aug, but we expect to see a big increase in Sept. Below is our table of the EIA’s monthly gas exports to Mexico.

Figure 4: US Pipeline Exports To Mexico (bcf/d)

Source: EIA

Natural Gas – Sur de Texas-Tuxpan 2.6 bcf/d export pipeline to Mexico starts up

We saw a key support item for HH gas prices this week with the news that Mexico had reached a deal with the gas pipeline operators. Our June 30, 2019 memo [LINK] wrote on the Mexico Federal Electricity Commission’s shocking decision to block the start of the Sur de Texas-Tuxpan JV project between IEnova and TC Energy We had expected a short term delay and it was only a two month delay. As it turned out, the issue became clear that Mexico wanted to negotiate a better deal with the gas pipeline operators. It only took two months to get that done, which isn’t bad. On Tues, Bloomberg terminal reported “Mexico’s AMLO Says a Deal is Reached With Pipeline Companies” that confirmed this. It noted “Mexico President Andres Manuel Lopez Obrador said that a deal has been reached with

(bcf/d) 2016 2017 2018 2019

Jan 0.0 1.7 2.3 4.1

Feb 0.1 1.9 2.6 3.7

March 0.3 1.4 3.0 4.2

Apr 0.3 1.7 2.9 4.2

May 0.3 2.0 3.1 4.7

June 0.5 1.7 2.5 4.7

July 0.5 1.7 3.2

Aug 0.9 1.5 3.0

Sept 0.6 1.8 2.7

Oct 0.1 2.6 2.9

Nov 1.1 2.7 3.6

Dec 1.3 2.7 4.0

Full Year 0.5 1.9 3.0

Full Year bcf 186 708 1,084

bcf/d 2014 2015 2016 2017 2018 2019

Jan 1.7 2.2 3.2 3.9 4.4 4.9

Feb 1.8 2.3 3.4 4.1 4.5 4.8

March 1.9 2.4 3.3 4.2 4.3 4.8

Apr 1.9 2.6 3.5 3.9 4.4 4.6

May 2.0 2.8 3.7 4.2 4.4 4.9

June 2.2 3.0 3.9 4.5 4.6 5.2

July 2.2 3.3 4.0 4.4 4.9

Aug 2.1 3.3 4.3 4.4 5.0

Sept 2.2 3.3 4.1 4.2 5.0

Oct 1.9 3.2 4.2 4.3 4.9

Nov 1.9 3.0 4.0 4.5 4.7

Dec 2.1 3.2 3.7 4.4 4.5

Full Year 2.0 2.9 3.8 4.2 4.6

Full Year bcf 729 1,054 1,377 1543 1688

YoY Increase bcf 325 323 166 145

US June pipeline

exports to Mexico

+0.6 bcf/d YoY

Sur de Texas-

Tuxpan 2.5 bcf/d

export pipeline

to Mexico starts

up

http://www.safgroup.ca/wp-content/uploads/2019/06/Energy-Tidbits-June-30-2019.pdf


7

Energy Tidbits

Grupo Carso SAB, Sempra Energy’s Mexico unit IEnova, and Canada’s TC Energy Corp. over natural gas pipeline contracts. The deal between the companies and the Federal Electricity Commission, or CFE, will save $4.5 billion, Lopez Obrador said during his morning press conference on Tuesday” This led to a start up of the 2.6 bcf/d TC Energy Sur de Texas-Tuxpan pipeline, which had been delayed since late June. This will provided additional support for HH gas prices. On Tuesday we tweeted [LINK] “Support f/ HH gas prices, Bloomberg “Mexico Reaches Deal With Natural Gas Pipeline Operators” allows for increased US gas pipe exports to Mexico ie. on TC Energy 2.6 bcf/d Sur de Texas-Tupan gas pipeline. SAF June 30 Energy Tidbits for background.” Our Supplemental Documents package includes the Bloomberg Terminal story.

Figure 5: Mexico Gas Pipelines Map

Source: Platts

Natural Gas – Golar/Delfin LNG not getting offtake to underpin financing

The other problem with the weaker LNG prices is the challenge to get long term offtake contracts at high enough prices to support project financing. On Thurs, we tweeted [LINK] “Advantage to big LNG suppliers ie RDS CVX, weak #LNG market makes it tougher for LNG supply projects that can't self finance. Golar LNG Q2 Q&A, ended Delfin LNG export project discussions, weren't able "to put together an offtake that underpins the financing of the project". Golar LNG’s Q2 call was a good example on how tough it is for FIDs for smaller LNG players that don’t/can’t sell finance. Bloomberg reported on the Golar LNG Q2 saying “Golar LNG Ltd. said it’s pulling out of a $7 billion project to develop a floating U.S. liquefied natural gas export terminal, a sign of how difficult it is to find long-term buyers amid a global glut of the fuel. The Bermuda-based developer of floating terminals has “decided against jointly developing” the export vessel for Delfin LNG’s project off the coast of Louisiana, Golar said in a statement Thursday. The project needed “high-caliber” customers to supply the facility with feedgas and to purchase the LNG and the project “didn’t make enough traction,” Chief Executive Officer Iain Ross said in a call with analysts.” Delfin LNG’s project overview (offshore Louisiana) says “Delfin LNG is a highly-advanced, shovel ready project that expects to be operational by 2021/2022.” We expect that timing to be impacted by Golar LNG’s decision. In the Q2 call Q&A, it was noted that they couldn’t get sufficient long term offtake to support project financing. In the Q&A, mgmt. was asked why they ended the Delfin discussions and replied “Okay, so if you refer to the screening criteria that I mentioned in that we need high caliber customers who can reliably provide feed gas and put together an offtake that underpins the financing of the project combined with co-investors to lift the project

Golar didn’t get

offtake to

underpin

financing

https://twitter.com/Energy_Tidbits/status/1166328379764826113


8

Energy Tidbits

with us. We just don't feel that the Delfin opportunity satisfied those criteria. And as we've previously said, it's really important for us to put our investment money and resources into the opportunities that have the greatest chance of getting the FID.” Our Supplemental Documents package includes the Delfin LNG project overview

Natural Gas – Farmers’ Almanac calls for very cold winter

Its still early so we don’t expect to see long term winter forecasts have much of an impact. The only time early winter forecasts tend to have an impact is when there is a clear view of an El Nino winter. But that isn’t the case this year (see our Aug 11, 2019 Energy Tidbits) and when there isn’t a clear El Nino winter view, we tend to see varying early winter forecasts. That is the case now. Our Aug 18, 2019 Energy Tidbits noted NOAA’s Aug monthly forecast [LINK] for winter that predicts above normal temperatures for most of the winter. This week, Farmers Almanac came out with their “Farmers' Almanac's Extended Forecast 2020: Polar Coaster Winter Ahead” [LINK]. The release doesn’t include some key detail such as it cold to start the winter. But a few of the key comments are “Our extended forecast is calling for yet another freezing, frigid, and frosty winter for two-thirds of the country,” “How Cold? The Farmers’ Almanac, which provides 16 months of weather forecasts for 7 zones in one compact book, is predicting that the worst of the bitterly cold winter conditions will affect areas east of the Rockies all the way to the Appalachians”, “Buckle …ER Bundle Up! The biggest drop—with the most freefalling, frigid temperatures—is forecasted to take hold from the northern Plains into the Great Lakes. The Northeast, including the densely populated corridor running from Washington to Boston, will experience colder-than-normal temperatures for much of the upcoming winter. Only the western third of the country will see near-normal winter temperatures, which means fewer shivers for them”, and “Coldest Dip in Temperatures. According to the Farmers’ Almanac’s winter prediction, the coldest outbreak of the season should arrive during the final week of January and last through the beginning of February”. Our Supplemental Documents includes the Farmers’ Almanac release. [LINK]

Figure 6: Farmers’ Almanac 2019-20 Winter Outlook

Source: Farmers’ Almanac

Natural Gas – No update on PNG Total LNG talks, PNG govt seems in crisis

No one should be surprised to see no progress or word of progress or any change of status on Papua New Guinea’s attempt to renegotiate the signed LNG deal with Total, Exxon, and Oil Search. Its now been a few weeks since the Singapore meetings between PNG and Total. PM Marape hasn’t had strong consensus support for the renegotiation and these differing views are reportedly part of the reason for this week’s PNG govt changes. This

No update on

PNG LNG talks

with Total

Farmers’

Almanac calls

for cold winter

https://www.cpc.ncep.noaa.gov/products/predictions/90day/

https://www.farmersalmanac.com/extended-forecast

https://www.farmersalmanac.com/extended-forecast

https://www.farmersalmanac.com/long-range-weather-forecast/


9

Energy Tidbits

week, it looks like PM Marape had much bigger issues to deal with than the Total LNG talks. Early this week, Marape kicked out some of the govt coalition side and invited some members of the opposition into govt. Papua New Guinea Today [LINK] had several stories on the Marape moves. Bloomberg terminals story was titled “PNG Leader Marape Purges Cabinet, Breaks From Former PM’s Party”.

Natural Gas – India will be looking to renegotiate LNG oil linked price once again

Our July 28, 2019 Energy Tidbits noted the reports that week that Osaka Gas entered arbitration with Exxon to get a lower LNG gas price on an existing long term oil linked LNG deal. We received a number of comments on that memo as we also included an excerpt from our Jan 3, 2016 Energy Tidbits on how Petronet (India) had successfully renegotiated lower prices on long term LNG prices. Apparently, most had not heard of that renegotiation We weren’t surprised to see the Platts story this week “Indian oil minister hints at long-term LNG contract price review” noting India’s oil minister Dharmendra Pradhan will be wanting to look at its oil linked LNG price long term contracts. The interesting part of his comments is that he reminded they had previously renegotiated long term contracts in the past ie.what we wrote in Jan 3, 2016. Platts reported “"We will look at reviewing long-term LNG contracts," the minister said at an industry event in New Delhi, adding that India would wait till an appropriate time to review its existing long-term LNG contracts as the country had renegotiated long-term deals in the past. Pradhan didn't say how the reviews will be conducted and whether it will lead to renegotiations, but maintained that standing long-term LNG contracts would be honored at the first instance.” Our Supplemental Documents package includes the Platts story.

India’s prior LNG price renegotiations were Petronet in Q4/15 and Q1/16 As noted above, the India oil minister confirmed India has renegotiated LNG prices lower before. Its not the first time, rather a few years ago there was a very public (and successful) long term LNG price negotiations between Petronet (India) and both QatarGas and RasGas.. Here is an excerpt of what we wrote in our Jan 3, 2016 Energy Tidbits. “Natural gas, LNG – significant LNG market development as Qatar agrees to cut by ~50% its long term LNG prices on its existing long term LNG supply deal to Petronet. One item that received a lot of comments was on our Nov 29, 2015 Energy Tidbits on the expected revised LNG price deal on an existing long term contract between Qatar and Petronet. This was mostly because it was an item that was (and still is for the most part) below the radar screen in Canada. But what caught reader attention in Nov was that Qatar would consider lowering the LNG price going forward in an existing long term LNG contract, and readers realizing that a lowering of the LNG price in an existing long term LNG contract would likely have broader implications to other LNG deals. This week, those expectations came true with the joint Petronet/Rasgas press release announcing changes to the existing long term LNG deal. The press release noted the revised deal, which included Qatar agreeing to lower the LNG price in this existing long term contract. The press release did not specify the new lower LNG price, but noted that revised LNG price, saying “As per such agreement, LNG volumes not taken by Petronet from RasGas during 2015 will be taken and paid for by Petronet during the remaining term of the SPA and will maintain its current level of oil indexation with the oil index more closely reflecting the prevailing oil prices.” But there were good reports out of India on the deal that note the price of LNG is basically cut in half going forward, and that Qatar waived the $1.5 billion penalty. These are significant developments. The New Delhi bureau of Reuters reported “Under the new contract, Rasgas will supply LNG to Petronet at $6-7 per million British thermal units (mmBtu) from January 1, sharply lower than $12-13

India wants to

renegotiate oil

linked LNG deals

https://news.pngfacts.com/


10

Energy Tidbits

per mmbtu agreed earlier, Oil Minister Dharmendra Pradhan told reporters on Thursday. The Qatari supplier has also waived off a $1.5 billion penalty against Petronet for lifting less gas than agreed, Pradhan said “

Supports why we think Kitimat LNG will tie into LNG Canada construction cycle As we wrote when the Osaka news hit in July, it is increasingly important to have low landed LNG prices in Asia, and another reason why capital cost control is even more critical for LNG projects that are facing capital commitment decisions in 2019 and 2020. Brownfield projects have an advantage of lower capital costs and the pricing pressures will place more pressure for non-brownfield projects to get as close as possible to brownfield capital costs. It is also why we believe Chevron’s Kitimat LNG project will be linking into the construction cycle for LNG Canada Phase 1 and 2, and not being a stand alone greenfield LNG project. We recognize the vast majority do not share that view, but the reality is that, unless Chevron is prepared to approve a greenfield Kitimat LNG project under higher LNG price assumptions, they will inevitably be forced into linking into to the construction cycle of LNG Canada Phase 1 and 2 to get as close to brownfield capital costs as possible.

Oil – US oil rigs down 12 to 742 oil rigs

Baker Hughes reported its weekly rig data on Friday. US oil rigs were down 12 to 742 oil rigs as of August 30. Increases were in the Williston +3 and Arkoma Woodford +1. Decreases were in Others -7, Permian -5, DJ Niobrara -2, Granite Wash -1, and Ardmore Woodford -1. This decline is in line with the recently completed Q2 earnings calls that saw the consensus service sector view change from US rigs bottoming in Q2 to a more negative view that US rigs would decline in Q3 and then again before finding a bottom in Q4. Below is our graph of the Baker Hughes weekly US oil rig data.

Figure 7: Baker Hughes Weekly Rig Count – Total US Oil Rigs

Source: Baker Hughes, SAF

Oil – Total Cdn rigs up 11 to 150 total rigs

Cdn producers continued to be very careful with capex in light of terrible gas prices, weak stock prices and no real access to capital. It has shown up in the Cdn rig count coming out of spring break up. Baker Hughes reported total Cdn rigs were up11 to 150 total rigs as of August 30. Cdn oil rigs were up 10 to 105 oil rigs (down 46 from 151 a year ago). Cdn gas rigs were +1 to 45 Cdn gas rigs. The ramp up post the break up trough in 2019 has been very slow, only +89 rigs in the 17 weeks since Cdn rigs bottomed at 61 total rigs. This compares to 2018, where Cdn rigs increased by 149 in the 17 weeks post the 2018 spring bottom. For Cdn oil rigs, they have moved from 17 to 105 oil rigs (+88 oil rigs) in 2019 vs 32 to 151 oil rigs

Total Cdn rigs

+11 this week

US oil rigs were

-12 this week


11

Energy Tidbits

(+119 oil rigs in 2018). For Cdn gas rigs, in spring break up Cdn gas rigs were at 40, but dropped down to 32 in mid July, and are now at 45 gas rigs in 2019, whereas Cdn gas rigs increased from their spring bottom of 43 to 77 gas rigs (+34 gas rigs) in 2018. Below is our graph of the Baker Hughes weekly Cdn oil rig data.

Figure 8: Baker Hughes Weekly Rig Count, Canadian Oil Rigs

Source: Baker Hughes, SAF

Oil – US oil production hits new record 12.5 mmb/d

EIA reported US oil production was up 200,000 b/d to a new record 12.5 mmb/d for the August 23 week. Lower 48 production was up 100,000 b/d to 12.1 mmb/d, which was likely due to the new Permian oil egress. US oil production has averaged 12.15 mmb/d so far in Q3 and should reach the Aug STEO forecast if oil production stays at this level for the rest of Q3. The August EIA Short Term Energy Outlook forecasted Q3/19 production to average 12.29 mmb/d, which was revised down from the July forecast due to hurricane impact. Below we pasted an excerpt from the EIA weekly oil production data. [LINK]

Figure 9: Weekly Oil Production

Source: EIA

US production

at 12.5 mmb/d

http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=WCRFPUS2&f=W


12

Energy Tidbits

Figure 10: US Weekly Oil Production

Source: EIA, SAF

Figure 11: YoY Change in US Weekly Oil Production

Source: EIA, SAF

Oil – EIA Form 914, US June oil production basically flat to Dec

We are a little surprised the EIA Form 914 June US oil production actuals didn’t get a little more attention. The Form 914 data provide what is considered “actuals” for production, albeit with the data two months lagged. On Friday, the EIA released its Form 914 oil production data for June [LINK] and the data shows a MoM decrease of 33,000 b/d. However, the headline that didn’t get as much attention was that there is very little growth in US oil production in 2019. Dec 2018 was 12.038 mmb/d and June 2019 was 12.082 mmb/d, or +44,000 b/d in the first half of 2019. A key reason has been the lack of new oil Permian oil egress, but we believe there is more to the story as noted below. The EIA reported US oil production in June of 12.082 mmb/d is still strong YoY growth of 1.433 mmb/d. One other factor to note is that the EIA Form 914 actuals came in 118,000 b/d lower than the avg of weekly estimates during the same period. The major factor for the MoM decrease was due to Oklahoma, as the state was down 58,000 b/d, meanwhile Texas partially offset the decline, as Texas was up 13,000 b/d MoM. June actuals being lower than the average of weekly estimates means Q2 actuals came in at 12.11 mmb/d, slightly lower than the EIA forecast of 12.19 mmb/d. Below is the EIA’s table of Form 914 actuals.

US June oil

production

basically flat to

Dec

https://www.eia.gov/petroleum/production/


13

Energy Tidbits

Figure 12: EIA Form 914 US Oil Production

Source: EIA

We still expect analysts to lower Permian oil growth forecasts after Labor Day Earlier this morning, we tweeted [LINK] that the Form 914 data will be a factor impacting analyst Permian (and therefore the US in total) oil growth forecasts. We still expect to see a strong ramp up in US oil production in H2/19 and more YoY US oil production growth in 2020. However, we still continue to expect analysts and energy agencies to lower their growth forecasts for the Permian (and therefore the US) now that the summer season is over. We expect to see both lower 2019 exit rates and 2020 growth ie. growth but at lower rates. Part of this will be attributed to the Form 914 June actuals showing only 44,000 b/d growth in H1/20. But we believe the more significant factor is that analysts will be tweaking their model input factors such as decline rates, EUR per well, oil/water/gas ratios, well spacings, etc. Our Aug 2 blog “Are We Seeing Pieces of The Puzzle To Support Saudi View Permian Reaches Peak Supply Years Earlier Than Most Expect?” detailed our views on what we believe is the key question that can change investor sentiment to oil in 2020. We are hoping to post an update to this blog this week. Our Supplemental Documents package includes our Aug 2 blog. [LINK]

Oil – Permian slowdown will inevitably give more advantage to strong service co’s

There has been a slowdown in the Permian in 2019. When we think of this slowdown, if anything we think the slowdown in the Permian in 2019, like happens in any other basin slowdown, should provide better opportunities for the stronger service companies to capture more of the top people and a better spread between performance from top service companies vs the bottom service companies in slow times and in busy times. In any oil and gas slowdown, people move to stronger companies. Permian oil rigs were down 5 to 429 Permian oil rigs as of Aug 30. We have seen a slowdown in the Permian activity in 2019. Not a huge slowdown but Permian oil rigs are down 12% in 2019, starting the year at 486 oil rigs and currently at 434 oil rigs. This compares to total US oil rigs excluding the Permian being down 23% in 2019 from 399 oil rigs to 308 oil rigs as of Aug 30. There are other general Permian economic indicators showing this slowdown. The Federal Reserve Bank of Dallas released its Permian Basin Economic Indicators last Friday and noted (i) “Permian Basin job growth has been sluggish this year. Through July, employment is little changed at an annualized 0.1 percent (Chart 1). This marks the first time since 2016 that Permian Basin employment has lagged Texas job growth” and (ii) “On net, the Permian Basin has added about 100 jobs this year, compared with 13,500 over the same time period a year ago”. Our Supplemental Documents package includes the Dallas Fed Permian Economic Indicators.

thousand barrels per day Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

2019 11,856 11,669 11,892 12,123 12,115 12,082

2018 10,018 10,281 10,504 10,510 10,460 10,649 10,891 11,361 11,498 11,631 11,999 12,038

2017 8,863 9,103 9,162 9,100 9,183 9,107 9,235 9,248 9,512 9,653 10,071 9,973

2016 9,197 9,055 9,081 8,866 8,824 8,670 8,635 8,670 8,519 8,787 8,888 8,778

2015 9,385 9,511 9,578 9,650 9,464 9,344 9,430 9,400 9,460 9,388 9,318 9,251

2014 8,051 8,136 8,274 8,573 8,612 8,718 8,782 8,886 9,041 9,221 9,303 9,467

2013 7,025 7,144 7,208 7,355 7,316 7,268 7,483 7,531 7,784 7,699 7,873 7,899

Permian

slowdown will

advantage strong

service co’s


http://www.safgroup.ca/wp-content/uploads/2019/08/Energy-Tidbits-Aug-4-2019.pdf


14

Energy Tidbits

Figure 13: Permian Oil Rigs

Source: Baker Hughes

Oil – Cdn crude by rail to be hurt it by WCS/WTI $11.50 diff

On Fri, we tweeted [LINK] on the even lower WCS/WTI diff, which closed at $11.50 on Fri. We wanted to remind that this low of a diff will impact Cdn crude by rail. Our tweet said that this low a diff plays into the comments made by Imperial Oil in their Q2 call on Aug 2. Our Aug 4, 2019 Energy Tidbits wrote “Imperial Oil held its Q2 call on Friday and in the Q&A, clearly said it was ramping down its crude by rail to the PADD 3 Gulf Coast because of the narrowing of the WCS/WTI differential didn’t provide the economic incentive to move the oil. Imperial mgmt. said “And I said before that we look for something that creates a sustainable rail incentive of like a differential or an arbitrage between the same barrel in two occasions of $15 to 1$12 a barrel. And we are not there”, and “But our outlook for August and September is will ramp down rail because it is not economic to move those barrels on rail.” The current WCS less WTI differential is US$12.60/b.”

Figure 14: WCS/WTI Differential

Source: Bloomberg

Oil – Oil input into refineries down 295,000 b/d to 17.408 mmb/d

For the Aug 23 week, EIA estimates crude oil inputs to refineries were -295,000 b/d to 17.408 mmb/d for the August 23 week. With this week’s decrease, crude oil inputs are still lower YoY, but still relatively strong overall. As a reminder, crude oil inputs to refineries are expected lower in 2019 vs 2018 with the closure of the PES Philadelphia refinery complex (335,000 b/d) following the Q2 fire. However, crude oil inputs should still trend a little higher

WCS/WTI diff

down to $11.50

Oil input into

refineries down

295,000 b/d



15

Energy Tidbits

to peak later in Q3. Refinery utilization was down by 0.7% this week at 95.2%. Below is our graph of the EIA weekly crude oil input to refineries.

Figure 15: US Refinery Crude Oil Inputs (thousand b/d)

Source: EIA, SAF

Oil – New Permian oil pipelines to Gulf Coast = less imports + more exports

Our recent Energy Tidbits memos have noted the start up of new Permian oil egress pipelines (Cactus II and Epic) that are bringing Permian oil to the Gulf Coast. The startup of these new Permian pipelines had a significant impact on this week’s EIA weekly oil inventory data. The EIA reported a draw this week of 10.03 mmb vs expectations of a draw of 2.85 mmb. The EIA weekly data had US “NET” imports were down 1.506 mmb/d to 2.909 mmb/d for the August 23 week, which was a combination of US imports were down 1.290 mmb/d to 5.928 mmb/d and US exports were up 216,000 b/d to 3.019 mmb/d. The new Permian oil to key Gulf Coast markets that can either increase oil exports and/or also reduce oil import needs at key Gulf Coast refineries. It looks like both happened this week. Below is an Aug 25 good map from RBN Energy.

Figure 16: Recent Permian Pipeline Developments

Source: RBN Energy

Oil – US “NET” oil imports down 1.506 mmb/d to 2.909 mmb/d

As noted above, we believe the reason for the lower US “NET” oil import data is due to the start up of new Permian pipelines to the Gulf Coast. US “NET” imports were down this week, with a 1.506 mmb/d decrease to 2.909 mmb/d. US imports were down 1.290 mmb/d to 5.928 mmb/d. US exports were up 216,000 b/d to 3.019 mmb/d. (i) Canada was down 429,000 b/d to 3.201 mmb/d for the August 23 week, which is 862,000 b/d lower compared to Canada’s

US NET oil

imports down

1.506 mmb/d

New Permian

pipelines impact

imports and

exports


16

Energy Tidbits

high this year of 4.063 mmb/d for the Jan 18 week, and PADD 2 imports were down 318,000 b/d. (ii) Saudi Arabia was up 160,000 b/d to 531,000 b/d for the August 23 week. This is just below average for Saudi imports YTD in 2019. (iii) Colombia was -213,000 b/d to 283,000 b/d, which is below average YTD imports from Colombia (iv) Iraq was -302,000 b/d to 205,000 b/d. (v) Venezuela remained at 0 due to US sanctions. (vi) Mexico was +4,000 b/d to 531,000 b/d this week. (vii) Nigeria was down 450,000 b/d to just 57,000 b/d. There is no color, but note Nigeria is working to boost oil production while reducing production costs. The Minister of State for Petroleum Resources in Nigeria said yesterday "We have to bring down our cost of production of crude oil, as we are presently a laughingstock in the way we do our business, because our cost per barrel is unsustainable. I do not see how we can sustain the losses." Below is our table of the US oil imports by major country.

Figure 17: US Weekly Preliminary Oil Imports By Major Countries

Source: EIA, SAF

Oil – OPEC JMMC sees significant draws in oil inventories in H2

A positive to oil markets is the OPEC Joint Ministerial Monitoring Committee comments in their press release on Tues [LINK]. The release noted that quota cut compliance was high in July at 159%, which brings the 2019 average compliance rate to 134%, the highest level this year. The JMMC was clearly trying to give confidence to stronger oil prices in H2/19 with their comment “along with ongoing healthy oil demand so far has arrested global oil inventories growth and should lead to significant draws in the second half of the year.” High global oil inventories have been a reason for the current weak pricing. Our Supplemental Documents package includes the JMMC statement.

Oil demand is always up seasonally higher in Q3 and Q4 vs H1 For the years and, also in 2019, we have highlighted the seasonal patterns of global oil demand and, every year, global oil demand increases on a seasonal basis very strongly in Q3 vs Q2. This means that every year, global oil demand is stronger than in H1. It is why we note above that the JMMC’s expectation on higher H2 demand should be directionally accurate. Below is a table showing the quarterly global oil demand assumptions for the latest EIA Short Term Energy Outlook, IEA Oil Market Report and OPEC Monthly Oil Market Report. For Q3/19 oil demand vs Q2/19 oil demand, the EIA is +1.25 mmb/d, IEA is +1.60 mmb/d and OPEC is +1.44 mmb/d.

June 28/19 July 5/19 July 12/19 July 19/19 July 26/19 August 2/19 August 9/19 August 16/19 August 23/19 WoW

Canada 3,642 3,945 3,535 3,725 3,463 3,728 3,848 3,630 3,201 -429

Saudi Arabia 681 501 435 466 419 277 556 371 531 160

Venezuela 0 0 0 0 0 0 0 0 0 0

Mexico 445 515 809 488 670 737 918 527 531 4

Colombia 409 406 297 341 350 235 244 496 283 -213

Iraq 365 362 342 357 424 199 218 507 205 -302

Ecuador 288 130 110 184 191 256 453 216 248 32

Nigeria 259 0 240 308 167 282 443 507 57 -450

Kuwait 0 0 0 0 0 88 107 0 47 47

Angola 0 0 0 0 0 0 0 0 0 0

Top 10 6,089 5,859 5,768 5,869 5,684 5,802 6,787 6,254 5,103 -1,151

Others 1,496 1,443 1,064 1,159 979 1,346 927 964 825 -139

Total US 7,585 7,302 6,832 7,028 6,663 7,148 7,714 7,218 5,928 -1,290

OPEC JMMC sees

significant draws

in oil inventories

in H2

https://www.opec.org/opec_web/en/press_room/5638.htm


17

Energy Tidbits

Figure 18: YoY increase in World and China Oil Demand

Source: EIA, IEA, OPEC

Oil – Reuters OPEC survey, still unclear about Iran tankers gone dark destination

Reuters released its survey of OPEC Aug Production [LINK] on Friday. (i) the major headlines were OPEC up 77,000 b/d to 29.605 mmb/d, first monthly increase since Oct 2018, and there was continued strong over compliance to quota. The quota cut countries are now 292,000 b/d below the quota. (ii) However, the over compliance continues to be driven by Saudi being 681,000 b/d and Angola 121,000 b/d below quota, whereas Iraq was 248,000 b/d above and Nigeria 245,000 b/d above quota. Note our comments later in the memo that Saudi has to push on Iraq and Nigeria if it wants to make oil stronger in H2. (iii) We still wonder if Iraq numbers are impacted by Iran barrels being trucked in and rebranded. (iv) Iran only down 50,000 b/d to 2.100 mmb/d vs July, but this was after July was revised up by 50,000 b/d. We still think there is the key question on how much oil is being snuck out by tankers gone dark and where are these tankers going? There is probably 0.7 mmb/d or more oil in unknown tanker destinations. Note our comments below on this item. (v) Libya was up to 1.130 mmb/d but that was after July was revised down by 90,000 b/d. Its hard to tell where Libya is, in particular how much Sharara oilfield is producing. One of the puzzling items about Libya is that the Libya NOC still hasn’t advised that force majeure has been lifted on crude oil loadings at Zawiya port. Recall the force majeure was reinstated on July 31. [LINK] (vi) Venezuela was down 20,000 b/d to 730,000 b/d. Note July was revised up to 750,000 b/d from originally estimated 700,000 b/d. Despite the continued chaos and uncertainty in Venezuela, the data continues to tell us that Venezuela looks to have found a bottom as its oil production really hasn’t moved in the last four months. Below is our ongoing table of Reuters survey data.

EIA STEO Aug 2019 IEA OMR Aug 2019 OPEC MOMR Aug 2019

Total mmb/d YoY mmb/d China YoY Total mmb/d YoY mmb/d China YoY Total mmb/d YoY mmb/d China YoY

Q1.18 99.14 98.60 97.93

Q2/18 99.59 98.90 98.18

Q3/18 100.47 100.00 99.48

Q4/18 100.41 99.50 99.72

2018 99.91 99.30 98.82

Q1/19 99.79 0.65 0.48 99.10 0.50 0.30 98.79 0.86 0.35

Q2/19 100.29 0.70 0.57 99.70 0.80 0.70 99.25 1.07 0.35

Q3/19 101.54 1.07 0.57 101.30 1.30 0.40 100.69 1.21 0.35

Q4/19 101.98 1.57 0.55 101.40 1.90 0.60 100.91 1.19 0.36

2019 100.91 1.00 0.55 100.40 1.10 0.50 99.92 1.10 0.35

Q1/20 101.26 1.47 0.55 100.10 1.00 0.30 99.87 1.08 0.29

Q2/20 101.79 1.50 0.46 101.10 1.40 0.20 100.33 1.08 0.32

Q3/20 103.04 1.50 0.44 102.80 1.50 0.40 101.83 1.14 0.31

Q4/20 103.25 1.27 0.48 102.70 1.30 0.20 102.14 1.23 0.35

2020 102.34 1.43 0.47 101.70 1.30 0.30 101.05 1.13 0.32

Notes : OPEC MOMR Aug did not provide quarter spl i ts for 2018, estimated based on OPEC MOMR June spl i ts

OPEC Aug

+77,000 b/d to

29.605 mmb/d

https://uk.reuters.com/article/oil-opec-survey/table-opec-oil-output-rises-by-80000-bpd-in-august-reuters-survey-idUKL5N25Q2KQ

https://noc.ly/index.php/en/new-4/5009-sabotage-halts-sharara-production-%E2%80%93-force-majeure-reinstated


18

Energy Tidbits

Figure 19: Reuters Survey of OPEC Aug 2019 Production

Source: Reuters

Oil – Russia produced 11.3 mmb/d in Aug, above quota of 11.18 mmb/d

On Fri, Bloomberg terminal posted, in Russian, the Interfax reporting comments from Russia energy minister Novak on Russia’s Aug oil production. The GoogleTranslate version noted Russia did not meet their quota cuts. It said “In August, Russia increased oil production to 11.3 million bpd”, but that Novak said Russia remains committed to a 100% execution of reaching their quota. At 11.3 mmb/d, Russia is 120,000 b/d above its 11.18 mmb/d quota.

Oil – Saudi will need to press Iraq and Nigeria to comply for stronger Q4 oil prices

One of the key takeaways from the Reuters survey is the need for Iraq and Nigeria to comply if Saudi wants stronger oil prices in Q4. On Fri, we tweeted [LINK] “Reuters survey OPEC Aug production, 1st mthly increase since Oct, +77,000 b/d to 29.605 mmb/d. Compliance strong due to Saudi. But Saudi will need Iraq +248,000 b/d, Nigeria +245,000 b/d to hit quota for stronger Q4 prices …” and [LINK] “… Demand is seasonally stronger in H2 vs H1, but offset by increasing US oil prod w/ Permian oil pipelines (EIA +780,000 b/d Q4 vs Q2), start up 1st phase Norway’s Johan Sverdrup field +440,000 b/d may start in Oct, lower Saudi domestic consumption for power post summer.” There is no question that oil demand is always seasonally much stronger in H2 vs H1. As the earlier table in the memo shows, for Q4/19 oil demand vs Q2/19 oil demand, the EIA is +1.69 mmb/d, IEA is +1.70 mmb/d and OPEC is +1.66 mmb/d. However, we expect these 2019 oil demand growth forecasts to be lowered in their upcoming Sept monthly outlooks. But offsetting the normal seasonal increase the EIA forecasts US oil supply to be +780,000 b/d in Q4/19 vs Q2/19, Norway’s massive new Johan Sverdrup oilfield sounds like its Phase 1 production may be starting in Oct instead of Nov and Phase 1 plateau capacity is forecast at 440,000 b/d, and Saudi Arabia starts to decrease its seasonally high domestic consumption of oil for electricity post the summer. The math may not perfectly offsetting, but it reinforces that Saudi Arabia needs Iraq and Nigeria to comply if it wants a stronger oil market in Q4/19.

Oil – China official crude oil imports from Iran were 219,000 b/d in July

This week, China’s General Administration of China Customs posted its oil import data by country for July, including Iran (Bloomberg code CCCIIQIR). The customs data shows the official China customs data for Iran oil imports and would exclude any unofficial Iran tankers gone dark. China customs data shows oil imports from Iran were 219,000 b/d in July, 209,000 b/d in June and 255,000 b/d in May. Prior to the US going to its Iran oil exports to zero in May, China averaged 556,000 b/d for the first four months of 2019. Below is the China customs data for oil imports from Iran.

Thousand

b/d July Aug Sept Oct Nov Dec Jan Feb Mar Apr May June July MoM Quota

July -

Quota July YoY

Algeria 1,050 1,060 1,060 1,060 1,060 1,070 1,060 1,030 1,025 1,025 1,025 1,010 1,030 20 1,025 5 -20

Angola 1,420 1,430 1,500 1,530 1,510 1,470 1,450 1,440 1,450 1,420 1,500 1,400 1,390 -10 1,481 -91 -30

Congo 320 320 300 310 320 320 320 330 330 340 330 330 340 10 315 25 20

Ecuador 530 530 530 530 520 520 520 520 530 530 530 530 530 0 508 22 0

Equatorial Guinea130 130 130 120 120 120 120 120 130 120 110 110 110 0 123 -13 -20

Gabon 200 200 190 190 200 190 190 200 200 200 190 200 210 10 181 29 10

Iran 3,700 3,550 3,450 3,350 2,900 2,800 2,750 2,800 2,750 2,600 2,200 2,150 2,100 -50 -1,600

Iraq 4,540 4,650 4,620 4,650 4,550 4,700 4,650 4,580 4,500 4,530 4,650 4,650 4,600 -50 4,512 88 60

Kuwait 2,800 2,800 2,800 2,730 2,730 2,800 2,710 2,700 2,710 2,690 2,710 2,650 2,700 50 2,724 -24 -100

Libya 650 920 1,050 1,220 1,200 950 880 900 1,100 1,150 1,250 1,220 1,190 -30 540

Nigeria 1,820 1,800 1,850 1,880 1,840 1,890 1,840 1,820 1,850 1,920 1,820 1,860 1,800 -60 1,685 115 -20

Saudi Arabia 10,400 10,480 10,530 10,650 11,000 10,600 10,250 10,120 9,800 9,850 10,050 9,800 9,650 -150 10,311 -661 -750

UAE 2,970 2,970 3,050 3,270 3,350 3,240 3,070 3,050 3,045 3,050 3,055 3,046 3,068 22 3,072 -4 98

Venezuela 1,420 1,300 1,250 1,180 1,230 1,200 1,170 1,050 900 800 750 740 700 -40 -720

Total OPEC 1431,950 32,140 32,310 32,670 32,530 31,870 30,980 30,660 30,320 30,225 30,170 29,696 29,418 -278 -509 -2,532

Iraq and Nigeria

will need to

comply for higher

prices

China imports

219,000 b/d from

Iran in June

Russia 120,000

b/d over quota in

Aug




19

Energy Tidbits

Figure 20: China Oil Imports From Iran, Excludes Unofficial Tankers Gone Dark

Source: Bloomberg, China’s General Administration of China Customs

Oil – Where are Iran tankers gone dark ending up?

For the last few months, every time we see OPEC production data like the Reuters survey, our number one question is, given Iran’s estimated production levels, our Energy Tidbits memo have wondered where is Iran oil going in the face of US working to get Iran’s exports to zero. Early Sat morning, ISNA (Iranian Students’ New Agency) reported on comments from Iranian deputy Foreign Minister for Political Affairs, Abbas Araghchi “Mentioning G7 summit and Iranian Foreign Minister, Mohammad Javad Zarif’s visit to France, the official said, “French President, Emmanuel Macron had held meeting with Trump on the sideline of G7 summit and the American side has shown some flexibility in issuing waivers for Iran’s oil sales”. The ISNA story made us think and we then tweeted [LINK] “Food for thought. Iran “American side has shown some flexibility in issuing waivers for Iran’s oil sales", no US response yet. Maybe not waivers, maybe blind eye to some tankers gone dark? Surely US satellites can track <20 mph tankers to Asia? ...” and [LINK] “… Reuters survey Iran July 2.1 mmb/d. China July Iran imports 219,000 b/d excl tankers gone dark, maybe ~200,000 b/d snuck out via trucking, floating storage has to be near full by now. Does this help explain why no crackdown on darkened tankers to Asia?” Our Supplemental Documents package includes the ISNA story. [LINK]

Oil – Iran reminds it can be back to full production in 3 days

It still looks unlikely for there to be a quick end to the US sanctions on Iran, but there was a reminder this week on how this is the main risk to oil whenever Iran production comes back online. Shana, the news agency for the Iran oil ministry, posted a story on Tuesday [LINK] where the Iranian Petroleum minister commented “the country can maximize its crude oil output in less than 3 days.” In the latest OPEC MOMR, Iran’s production as per secondary sources was reported to be at 2.213 mmb/d in July 2019, compared to 3.780 mmb/d in April 2018 when the US exited the nuclear deal. 1.570 mmb/d of oil being added within 3 days would likely be devastating for oil prices.

Oil – Rouhani quickly shot down any post G7 potential for a Trump meeting

We, like many, spent a lot of time watching the G7 coverage especially any of the Trump press appearances. The big ones to watch were the Mon Trump/Macron press conference and then the subsequent Trump alone conference. Post the Trump Q&A, there seemed to be a common view (us included) that Trump had reduced the tension in the Iran conflict, spoke in a matter of fact manner on Macron’s short term letter of credit proposal for Iran and reiterated his openness to meet with Rouhani. However, that was quickly shot down the next day by Rouhani. On Tues, we tweeted [LINK] “So much for Trump opening to Iran meet.

Iran reminds it

can be back to

full production

in 3 days

Where are Iran

gone dark

tankers going?

Rouhani rejects

any Trump

meeting



https://en.isna.ir/news/98060904454/US-shows-flexibility-in-issuing-waivers-for-Iran-s-oil-sales

https://en.shana.ir/news/292524/3-Days-Enough-for-Maximizing-Iran-Oil-Output



20

Energy Tidbits

Today, Rouhani “If somebody wants to just take a picture with Hassan Rouhani, this is not possible unless they lift all unjust sanctions and respect the Iranian nation’s rights, which will be a gamechanger” … and [LINK] “… potential deal breaker remains ballistic missiles. Re reports the US only wants is no nuclear, Rouhani “This is incorrect. We are not seeking atomic weapons, because our military doctrine is based on conventional weapons, and we are not seeking to develop WMDs at all”. Our Supplemental Documents package includes the ISNA story on Rouhani’s rejection. [LINK]

Macron seemed to have fairly advanced Iran proposals One of the surprises from the G7 was that Macron seemed to have some fairly detailed discussions and made proposals to Iran ahead of the G7, and that he sounds to have discussed the proposals in some detail. But what surprised us the most was Trump’s Q&A on the Macron proposal. And he seemed to talk about it in a matter of fact manner and combine that with his consistent comments earlier on he thinks Iran wants to make a deal. It sounded like a de-escalation and we took away a view that Macron’s way of getting Iran compensation isn’t offside with Trump as Trump doesn’t see it as paying Iran compensation, rather must advancing some money. We created a transcript of the Trump Press Conference [LINK] Aug 26 on macron’s iran proposal. Trump’s quotes are in italics and are accurate. The questions are partially paraphrased. At 46:25 min mark. Q, macron is talking there might be a need for compensation to Iran, would you be open to giving Iran compensation? Trump: “No. what he is talking about in terms of compensation is that they are out of money. They may need a short term letter of credit or loan. No we’re not paying. We don’t pay. But they may need some money to get them over a very rough patch. If they do need money, and it would be secured by oil, which means great security. They have a lot of oil. But its secured by oil. So we’re really talking about a letter of credit type facility.” Q from the US or ? Trump: “it would be from numerous countries, from numerous countries. And it comes back, it would expire, it would be paid back immediately and very quickly.”

Oil – Yemen: Even worse week of fighting within the Saudi/UAE coalition vs Houthis

It was a wild week in South Yemen for even more fighting/conflict within the Saudi/UAE coalition vs the Houthis. Increased fighting outside of Aden, back and forth fighting in the oil regions, fighting intensified within Aden, Hadi Yemen govt wants the UAE kicked out of the coalition, the UAE made air strikes against “terrorist” positions in Aden (the terrorists were elements aligned with the Hadi govt. We described the describe the situation in our tweet [LINK] “Not clear who's winning STC vs Hadi intensified fight f/ South Yemen control, but its taken priority f/ fighting Houthis. UAE air strikes in Aden to support STC. Houthis can focus on drones v KSA. "Houthis must love it, Saudis must hate it”. We have been tweeting about these events with the tag line “Houthis must love it, Saudis must hate it” because the coalition to fight the Houthis is looking like it is falling apart. Maybe not officially apart, but fighting internally amongst themselves instead of fighting the Houthis. Its hard to see how the Hadi and STC trust each other enough to get back to working together vs the Houthis. We still wonder if this is leading to a return to separate North and South Yemen.

More fighting

within

Saudi/UAE

alliance


https://en.isna.ir/news/98060502457/No-development-in-Iran-US-ties-without-lifting-sanctions-abandoning

https://www.pscp.tv/w/1OwGWdaLjgZJQ?t=1s



21

Energy Tidbits

Figure 21: Yemen Oil and Natural Gas Fields/Pipelines Circa 2016

Source: National Yemen

Oil – If US opens talks with Houthis, is this a path for Saudi to reluctantly negotiate?

There was an interesting WSJ story that didn’t get much traction, but caught our attention. Bloomberg terminal posted the story “U.S. Plans to Open Direct Talks With Iran-Backed Houthis in Yemen” “The Trump administration is preparing to initiate direct talks with Iran-backed Houthi forces in Yemen in an effort to end the four-year-old war, a conflict that has become a volatile front line in the conflict with Tehran, according to people familiar with the plans. The U.S. is looking to prod Saudi Arabia into taking part in secret talks in Oman with Houthi leaders in an effort to broker a cease-fire in Yemen, according to these people.” The report seemed to be dismissed as Trump trying to lead on what he thought was right and to some degree undercut the Saudi war against the Houthis. But when we read, our initial wondering was if this was really something Saudis asked them to do or wanted them to do. And if this was a way to try to find the way to a negotiated end that lets the Saudis look like they are being reluctantly forced to end the Houthis war. This is a war that has lasted over 4 years that was expected to be won in a matter of weeks or a few months. And we have to believe it is a risk factor that the Saudis don’t want lingering in the event of an IPO. As we have said before, it wouldn’t be great to have another Houthi long range missile strike on a major Saudi oil infrastructure in the middle of the IPO marketing. Our Supplemental Documents package includes the Bloomberg terminal story.

Oil – Bab el-Mandeb saw ~6.2 mmb/d oil/products to Europe/US/Asia in 2018

Our reminder on the Bab el-Mandeb tanker chokepoint is that the Houthis have attacked with rockets/explosive tankers therein. It is a real risk, especially to Saudi alliance tankers. This week, the EIA posted “The Bab el-Mandeb Strait is a strategic route for oil and natural gas shipments” that reminds of the strategic importance to global oil markets of the Bab el-Mandeb, the “sea route chokepoint between the Horn of Africa and the Middle East, connecting the Red Sea to the Gulf of Aden and Arabian Sea. Most exports of petroleum and natural gas from the Persian Gulf that transit the Suez Canal or the SUMED Pipeline pass through both the Bab el-Mandeb and the Strait of Hormuz.” “The Bab el-Mandeb Strait is 18 miles wide at its narrowest point, limiting tanker traffic to two 2-mile-wide channels for inbound and outbound shipments. Closure of the Bab el-Mandeb Strait could keep tankers originating in the Persian Gulf from transiting the Suez Canal or reaching the SUMED Pipeline, forcing them to divert around the southern tip of Africa, which would increase transit time and shipping costs. In 2018, an estimated 6.2 million barrels per day (b/d) of crude oil,

Updated EIA

Bab el-Mandeb

brief

US plans to

have direct talks

with Houthis?


22

Energy Tidbits

condensate, and refined petroleum products flowed through the Bab el-Mandeb Strait toward Europe, the United States, and Asia, an increase from 5.1 million b/d in 2014. Total petroleum flows through the Bab el-Mandeb Strait accounted for about 9% of total seaborne-traded petroleum (crude oil and refined petroleum products) in 2017. About 3.6 million b/d moved north toward Europe; another 2.6 million b/d flowed in the opposite direction mainly to Asian markets such as Singapore, China, and India.” Our Supplemental Documents package includes the EIA brief. [LINK]

Figure 22: Red Sea and Bab el-Mandeb

Source: EIA

Oil – Surprise story Aramco looking at 2-step IPO with step 1 in late 2019

There has been a lot of increasing chatter over the past two months on Saudi Aramco getting geared up for an IPO. However, we believe most were surprised by the reports this week that Saudi Aramco could do the first tranche of the IPO before year end. Its Sept 1 and they would have to commit to that asap. The reports on the structure are interesting as Aramco would have a two step IPO. Step 1 would be a 5% tranche and on Saudi Arabia exchange before year end. Step 2 would be on an international exchange in 2020/2021. Other reports were that the New York was out and that Tokyo was the most likely exchange for the international listing. Our Supplemental Documents package includes the Bloomberg terminal reporting.

Oil – Saudi’s anti corruption focus mid/junior level civil servants, not like Nov 2017

We don’t expect Friday’s announcement of a new head of Saudi Arabia’s National Anti-Corruption Commission, Mazen al-Kahmous, to have any significant market impact. It seems different than the No 2017 anti corruption purge. Al Arabiya (Saudi Arabia) [LINK] reported he “said on Friday that the Commission will work to continue the campaign led by Saudi Crown Prince Mohammed bin Salman. “I convey a stern warning from the Crown Prince that the next phase will be to eradicate corrupt mid-level and junior civil servants, where they will be a prime target,” Al Kahmous said in his first remarks after being appointed head of the Anti-Corruption Commission, reports Asharq al-Awsat. He said that the commission will work to eliminate bureaucracy and form an anti-corruption committee of all concerned parties.” This is very different than the Sat night Nov 4, 2017 arrests (see our Nov 5, 2017 Energy Tidbits) that reportedly included 11 princes, 4 sitting ministers, and dozens of other prominent officials

Aramco looking

at 2-step IPO with

step 1 by year

end

Saudi anti

corruption focus

mid/junior civil

servants

https://www.eia.gov/todayinenergy/detail.php?id=41073

https://english.alarabiya.net/en/News/gulf/2019/08/31/Anti-corruption-panel-to-continue-campaign-led-by-Saudi-Crown-Prince.html


23

Energy Tidbits

and business people. The arrest that received big press was Prince Alaweed, the billionaire investor in Titter, Citigroup, etc, The anti corruption initiative was announced on Sat Nov 4 afternoon and the reports of the arrests came within a couple hours. That purge, especially Alaweed caused uncertainty in markets. We don’t expect that with this focus on mid and junior level civil servants.

Oil – UN warns full out civil war in Libya is likely

As noted earlier in the memo, we still haven’t heard any update from the Libya NOC on the status of the force majeure that was announced on July 31. We have been noting how Libya fighting is escalating and expanding to more areas outside of Tripoli, and there are more frequent power outages. Our expectation remains for Libya oil production to be up and down with ongoing interruptions. This week, the UN Secretary General commented on Libya and warned of the potential for Libya to be in a fall out civil war. The UN warned in a report that it expects a civil war to start soon, unless there is “the support of the international community in finding a political solution for the country”. A Bloomberg Terminal story on Fri reported on the UN chief’s comments in the report, "Unless action is taken in the near term, it is highly likely that the current conflict will escalate into full civil war," Guterres said in the report. Our Supplemental Documents package includes the Bloomberg Terminal story.

Oil – FARC returns, says will resume fight in Colombia

There will be increased geopolitical risk in Colombia after the rebel organization FARC announced it will return to fighting the government after a three year ceasefire [LINK]. This does not mean that oil projects cannot be completed, but there will be increased cost, risk, and time for completion in certain areas. The Marxist guerilla group had been at war with Colombia’s govt from 1964 – 2016 but a peace deal was brokered by the previous president. A FARC leader made the announcement on Thurs that he plans to return to war, “Luciano Marin, better known as Ivan Marquez, published a video on YouTube announcing that he and his Revolutionary Armed Forces of Colombia (Farc) colleagues were once again taking up arms.” Colombian president Ivan Duque responded quickly, he “announced he was launching an offensive against the rebels, and said they were being backed by Nicolas Maduro.” It is still uncertain how serious the impact of the new conflict will be on Colombia and how many guerillas will return to war after the peace deal

Oil – Analysts lowering oil price and demand forecasts

Last week’s (Aug 25, 2019) Energy Tidbits memo was titled “Expect Analysts To Make Big Cuts To 2019 Oil Demand Growth Forecasts Following US/China Trade War Escalation” because of the US/China trade war developments on Fri and Sat. Last weekend took away any fence sitters, who may have been waiting for after Labor Day to make their forecast changes. On Fri, Reuters reported on this theme with its story “Analysts slash oil price forecasts due to fears over economy, trade: Reuters poll. Analysts have slashed their oil price forecasts to the lowest in more than 16 months, citing softening global demand as an economic slowdown looms and uncertainty prevails on the U.S.-China trade front, a Reuters poll showed on Friday.” Reuters did not provide detail on how their softening global demand translated into reductions to global oil growth forecasts. The only ones we saw had taken global oil growth in 2019 down to 0.8 mmb/d YoY from above 1 mmb/d previously. We remind that we expect the major energy agencies to lower their oil demand growth forecasts in their Sept updates. Currently the EIA, IEA and OPEC 2019 oil demand growth forecast that range from +1.0 to +1.1 mmb/d YoY in 2019. One thing to keep in mind as we look forward to the updated Sept EIA, IEA and OPEC oil demand forecast is that they tend to layer in demand cuts over a couple months instead of making one big cut. Our Supplemental Documents package includes the Reuters story. [LINK]

FARC returns,

says will resume

fight in Colombia

UN warns full

out civil war in

Libya is likely

Analysts lower oil

demand and price

forecasts

https://www.telegraph.co.uk/news/2019/08/29/farc-leader-announces-return-war-colombia/

https://www.reuters.com/article/us-oil-prices-poll/analysts-slash-oil-price-forecasts-due-to-fears-over-economy-trade-reuters-poll-idUSKCN1VK19J?rpc=401&


24

Energy Tidbits

Oil – ACC Chemical Activity Barometer shows weaker data in August

The hold back on oil has been demand outlook driven by economic weakness in most places outside the US. US economic growth has been the bright light in the global picture so far, but we have been seeing more weakness in the outlook. One of the better looking forward indicators is the monthly American Chemistry Council’s August “Chemical Activity Barometer” (CAB) [LINK]. The CAB has a good track record as a leading indicator of a recession in the US economy with an average lead time of 8 months as a prior indicator, but lead time ranging from 2 to 14 months. The August CAB fell 0.1% on a three month moving average basis, but the unadjusted CAB fell 0.5% in August, and rose 0.1% in July. Additionally, the CAB reading for July was revised upwards by 0.58 points and June was revised up 0.62 points. The key takeaway here is the clear change in tone towards the negative side from the American Chemical Association, as they write “A pattern of fluctuating CAB readings – months up followed by months down – indicates late-cycle activity… The barometer signals gains in U.S. commerce into early 2020, but at a slow pace, while rising volatility suggests change may be coming.”

Figure 23: August Chemical Activity Barometer vs Industrial Production

Source: American Chemistry Council

Oil & Natural Gas – Hurricane Dorian, turning north, not moving into Gulf Coast

This morning, the National Hurricane Center upgraded Dorian to its highest category 5 with sustained winds of 160 mph. Category 5 is 157 mph and above. This is the most powerful level of hurricanes and it is now about to hit the northern Bahamas. Notwithstanding the huge risk to Bahamas, there were huge sighs of relief as Dorian shifted and didn’t make direct hits on Puerto Rico and Dominican Republic. These shifts also brought sighs of relief to many parts of Florida. On Tues/Wed, the Dorian story was how a high pressure system in the Atlantic had pushed Dorian west and south (see our Aug 28 tweet [LINK] with it looking to make a direct landfall hit around Palm Beach and then move north to hit most of Florida’s major cities. Fortunately, that shifted over the past two days and Dorian is now moving back to its original path (at least as of this morning’s forecast) of not making a direct landfall hit on Florida and moving up along the Atlantic coast. In addition to looking to hit most major Florida cities, Dorian had a reasonable chance of re-emerging into the Gulf of Mexico. In fact, some of the GoM oil and gas operators began to evacuate non-essential personnel from platforms, but the big change in Dorian’s path in the last two days meant those evacuation notices were reversed on Fri..

Dorian is going

north along Atlantic

Coast

Chemical Activity Barometer looking weaker in August

https://www.americanchemistry.com/Media/PressReleasesTranscripts/ACC-news-releases/Chemical-Activity-Barometer-Down-in-August.html



25

Energy Tidbits

Figure 24: Hurricane Dorian

Source: National Hurricane Center

Reminder, peak Atlantic hurricane season is Aug 20 thru Oct 10 Our prior Energy Tidbits have noted before how peak Atlantic hurricane season is in the Aug/Sept/Oct. Last year, the Weather Channel had a good graphic (see below) and wrote [LINK] “Historically speaking, September has recorded the most Atlantic hurricane formations since 1851 with 404. That's an average of two or three forming in the month every year, according to NOAA. August ranks second with 245 hurricanes, and October ranks third with 205. The period between Aug. 20 and Oct. 10 accounts for 60 percent of all Atlantic Basin hurricanes and 75 percent of all major hurricanes (Category 3 or stronger) in that basin, according to Dr. Phil Klotzbach, a tropical scientist at Colorado State University.”

Figure 25: Atlantic Peak Hurricane Season

Source: Weather Channel

https://weather.com/storms/hurricane/news/2018-08-27-tropical-atlantic-about-to-wake-up-september-peak-hurricane-season


26

Energy Tidbits

Oil & Natural Gas – Bill C-69 kicks in, “Canada Energy Regulator” replaces NEB

On Wednesday, the controversial Bill C-69, also known as the “no more pipelines” bill came into effect. The National Energy Board has now been replaced by the Canada Energy Regulator, as mandated by Parliament passing C-69 on June 21, 2019. The website lists the changes to the agency. [LINK] On Wed, we tweeted [LINK] “The infamous (at least in Calgary) Canada Bill C-69, passed June 21, kicks in today with startup of new Canada Energy Regulator replacing the National Energy Board. One item to note, CER suspending publication of any Market Snapshots until after election.”

Electricity – More Trump anti wind comments

There must be something about Trump being at a “G” conference that brings out his negative views on wind. Our June 30, 2019 Energy Tidbits noted Trump’s G20 press conference and his can’t miss (and lengthy) comments on clean energy, in particular his view on wind subsidies “The United States is paying tremendous amounts of money on subsidies for wind, I don’t like it. I don’t like it. I don’t want to do that“. We listened to the Trump/Macro and Trump only G7 press conference. Trump followed thru at this week’s G7 conference with more anti wind comments “We’re the No. 1 energy producer in the world,”I’m not going to lose that wealth on dreams, on windmills, which, frankly are not working all that well.” We have the same three key takeaways as noted previously (i) It makes it hard to see Trump supporting wind/solar subsidies at federal level. (ii) Lower environmental costs for businesses to operate in the US relative to Canada ie. like this week’s proposed EPA methane capture relaxation. (iii) Positive for oil, natural gas and coal. Not giving subsidies to clean energy to force a straight cost on cost comparison means a longer lift potential for oil, natural gas and coal.

Capital Markets – Top 10 sovereign wealth funds are $5.8 trillion

There is no question that sovereign wealth will be increasingly the target for capital allocation and we were reminded of this after seeing the Bloomberg story [LINK] that BOA “is building up its teams focused on the world’s wealthiest family offices, buyout firms and sovereign wealth funds to take advantage of a surge in dealmaking”. BOA certainly has lots of company in focusing on sovereign wealth funds and no surprise as the top 10 sovereign wealth funds have an estimated $5.8 trillion in assets, including the Norway Government Pension Fund Global at $1.1 trillion as the only fund over the $1 trillion mark. Below is the top 20 sovereign wealth funds from the Sovereign Wealth Fund Institute rankings. [LINK]

Figure 26: Top 20 Sovereign Wealth Funds

Source: Sovereign Wealth Fund Institute

Rank Profile Type Total Assets ($) Region Link

1 Norway Government Pension Fund Global Sovereign Wealth Fund $1,108,170,000,000 Europe https://www.nbim.no/

2 China Investment Corporation Sovereign Wealth Fund $941,417,000,000 Asia http://www.china-inv.cn/en/

3 Abu Dhabi Investment Authority Sovereign Wealth Fund $696,660,000,000 Middle East https://www.adia.ae/En/home.aspx

4 Kuwait Investment Authority Sovereign Wealth Fund $592,000,000,000 Middle East http://www.kia.gov.kw/en/Pages/default.aspx

5 Hong Kong Monetary Authority Investment Portfolio Sovereign Wealth Fund $509,353,000,000 Asia https://www.hkma.gov.hk/eng/index.shtml

6 GIC Private Limited Sovereign Wealth Fund $440,000,000,000 Asia https://www.gic.com.sg/

7 National Council for Social Security Fund Sovereign Wealth Fund $437,900,000,000 Asia http://www.ssf.gov.cn/Eng_Introduction/201206/t20120620_5603.html

8 SAFE Investment Company Sovereign Wealth Fund $417,844,700,460 Asia https://www.safe.gov.cn/en/

9 Temasek Holdings Sovereign Wealth Fund $375,383,000,000 Asia https://www.temasek.com.sg/en/index.html

10 Public Investment Fund Sovereign Wealth Fund $320,000,000,000 Middle East https://vision2030.gov.sa/en/programs/PIF

11 Qatar Investment Authority Sovereign Wealth Fund $320,000,000,000 Middle East https://www.qia.qa/

12 Investment Corporation of Dubai Sovereign Wealth Fund $239,379,000,000 Middle East https://www.icd.gov.ae/

13 Mubadala Investment Company Sovereign Wealth Fund $228,934,000,000 Middle East https://www.mubadala.com/en

14 Korea Investment Corporation Sovereign Wealth Fund $131,600,000,000 Asia http://www.kic.kr/en/

15 Future Fund Sovereign Wealth Fund $198,800,000,000 Australia and Pacific https://www.futurefund.gov.au/

16 National Development Fund of Iran Sovereign Wealth Fund $91,000,000,000 Middle East http://en.ndf.ir/

17 Alberta Investment Management Corporation Sovereign Wealth Fund $86,289,300,000 North America https://www.aimco.alberta.ca/

18 Samruk-Kazyna Sovereign Wealth Fund $71,344,300,000 Asia https://www.samruk-kazyna.kz

19 National Welfare Fund Sovereign Wealth Fund $68,550,000,000 Europe https://www.minfin.ru/en/key/nationalwealthfund/

20 Alaska Permanent Fund Corporation Sovereign Wealth Fund $66,300,200,000 North America https://apfc.org/

Canada Energy

Regulator starts,

replaces NEB

Trump’s

continued

negative

comments vs

wind

Top 10 sovereign

wealth funds

have $5.8 trillion

https://www.cer-rec.gc.ca/bts/bllc69/index-eng.html


https://www.bloomberg.com/news/articles/2019-08-29/bofa-chases-10-trillion-private-capital-pool-driving-m-a-wave

https://www.swfinstitute.org/fund-rankings/sovereign-wealth-fund


27

Energy Tidbits

Capital Markets – Exxon falls from S&P 500 Top 10 For First Time Ever

It may not be a factor for capital availability for Cdn oil and gas companies, but Exxon’s falling out of the S&P 500 ‘s top 10 for the first time ever is indicative of the decreasing portion of portfolios for oil and gas stocks and their overall prominence for investors. This week, Bloomberg terminal posted a story “Exxon falls from S&P 500 Index’s Top 10 For First Time Ever”. Exxon fell to #12 and Bloomberg wrote “Exxon Mobil Corp. fell out of the S&P 500 Index’s 10 biggest companies for the first time since the index’s inception some 90 years ago, the consummation of a long-term trend of tech titans replacing industrial giants in the top ranks of U.S. stock market. Visa Inc. replaced Exxon as the 10th biggest member of the index by weighting on Aug. 1 and two weeks later Procter & Gamble Co. also overtook the oil giant, according to data compiled by Bloomberg. S&P Dow Jones Indices confirmed the move in its month-end weightings published”. The top 10, in order, are Microsoft, Apple, Amazon, Facebook, Berkshire Hathaway, Alphabet (Class C), Alphabet (Class A), JP Morgan Chase, Visa, Procter & Gamble, and then Exxon at #12.

Governance – New Canada labour code changes

There was a good article in the National Post last week “Trudeau springs a nasty surprise on many Canadian employers” [LINK] that surprised us because we hadn’t heard much about it in on the news. The reason we mention it is that we have to believe that these changes to the labour code affecting federal employees will ultimately roll over into future private sector labour negotiations. Having come from a family that ran a small business that included mom, dad, one of the kids and two outside employees, these type of labour code changes would be a killer to a small business. The article states “The government proclaimed a dizzying array of amendments from Bill C-86, Budget Implementation Act, 2018, No. 2 and Bill C-63, Budget Implementation Act, 2017, No. 2 to come into force on Sept. 1. These amendments make significant changes to the Canada Labour Code (the “Code”), the legislation that establishes the rights and responsibilities of an estimated 18,000 federally regulated employers and their 900,000 employees across Canada.” A couple examples are: “right to request flex work. After six consecutive months of employment, employees will have the right to request a change to hours, work schedule, location and other terms and conditions that may be specified in new regulations or legislation. An employer may refuse such a request only on certain grounds.” “Personal leave. Employees will be entitled to a new personal leave of up to five days per calendar year, including three days with pay, after three consecutive months of continuous employment”.

Energy Tidbits – Now on Twitter

For new followers to our Twitter, we are trying to tweet on breaking news or early views on energy items, most of which are followed up in detail in the Energy Tidbits memo or in separate blogs. Our Twitter handle is @Energy_Tidbits and can be followed at [LINK]. We wanted to use Energy Tidbits in our name since I have been writing Energy Tidbits memos for over 19 consecutive years. Please take a look thru our tweets and you can see we aren’t just retweeting other tweets. Rather we are trying to use Twitter for early views on energy items. Our Supplemental Documents package includes our tweets this week.

Energy Tidbits – Sign up on our email distribution for tidbits and blogs

Please note that we have set up our Energy Tidbits memo on our Stream Asset Financial website alongside our blogs. The distribution for the Energy Tidbits memo will be via the same notification system used for our blogs. To ensure you receive Energy Tidbits memos, please go to our blog sign up. We will be using the blog notification list for Energy Tidbits. The blog sign up is available at [LINK].

Sign up to receive

future Energy

Tidbits memos

Energy Tidbits now

on Twitter

New labour code

items for federal

employees

Exxon falls from

S&P 500 Top 10

https://business.financialpost.com/opinion/trudeau-springs-a-nasty-surprise-on-many-canadian-employers

https://twitter.com/Energy_Tidbits

http://www.safgroup.ca/research/trends-in-the-market/


28

Energy Tidbits

LinkedIn – Look for quick energy items from me on LinkedIn

I can also be reached on Linkedin and plan to use it as another forum to pass on energy items in addition to our weekly Energy Tidbits memo and our blogs that are posted on the SAF Energy website [LINK].

Misc Facts and Figures.

During our weekly review of items for Energy Tidbits, we come across a number of miscellaneous facts and figures that are more general in nature.

Reminder, Saudi got >$100b from its Nov 2017 anti corruption arrests There should be two big differences between this new Saudi anti corruption push vs Nov 2017. First, they aren’t likely to put mid/junior civil servants in the Ritz Carlton like last time. We just checked and the Ritz Carlton Riyadh is still shows rooms available in Sept. Second, they aren’t likely to get as much money back. Our March 25, 2018 Energy Tidbits noted the comments from MBS in his 60 Minutes interview [LINK]. The 60 Minute transcript said “Norah O'Donnell: How much money did you get back? Mohammed bin Salman: The amount exceeds $100 billion, but the real objective was not this amount or any other amount. The idea is not to get money, but to punish the corrupt and send a clear signal that whoever engages in corrupt deals will face the law” US/Russia deploy nuclear bombers, reminds of Cold War Being a baby boomer, I can’t help think of the early 60’s in grade school whenever I see the two most powerful military forces in the world doing a tit for tat reminiscent of the Cold War era. This week, reports [LINK] “The United States European Command has announced that the US Air Force has deployed B-2 nuclear capable stealth bombers in England”. This looks like the tat for Russia earlier this month [LINK] “Russia says it has flown two nuclear-capable bombers to its Far East region across from Alaskan territory, an action state media claim demonstrates the Kremlin's ability to base such warplanes near U.S. radar and missile-launch sites.” We don’t think anyone believe the US and Russia would get into a nuclear war, but these are moves like you would see in the Cold War, which is why I can’t help thinking of the early 60’s drill in grade school for what to do in the event of a nuclear attack [LINK]

Figure 27: Public School Air Drill 1962

Source: Groovy History

Look for energy

items on LinkedIn

http://www.safgroup.ca/

https://www.cbsnews.com/news/saudi-crown-prince-talks-to-60-minutes/

https://sputniknews.com/military/201908271076652256-us-air-force-deploys-b-2-nuclear-capable-stealth-bombers-in-england---eucom/?utm_source=https://t.co/C0SrPcboka?amp=1&utm_medium=short_url&utm_content=98PJ&utm_campaign=URL_shortening

https://www.rferl.org/a/russia-sends-nuclear-capable-bombers-to-base-near-u-s-alaskan-coast-in-exercise/30110004.html

https://groovyhistory.com/public-school-air-raid-drills-do-you-remember


29

Energy Tidbits

You don’t dig your way to China from North America Baby boomers will also remember being told in the 60’s, if you digging, you will dig all the way to China. Basically telling kids in the 60’s that China was on the exact opposite of the earth. Now we recognize that this was likely started in the US, but it certainly was a saying in Canada. We were reminded of this in our weekly scan of Mother Nature Network “This map shows where you would end up if you dug a hole to the other side of the world” [LINK]. MNN wrote “Parents in America are in the habit of telling their kids that they'd end up in China, but that's actually rather far from the truth. Earth is a sphere, so if you start digging in the Northern Hemisphere, then you've got to end up in the Southern Hemisphere. China is far away, but it's also in the Northern Hemisphere. So if you're digging from America, then China can be ruled out from the get-go.” And showed the antipodes for China is Argentina. MNN links to a website Antipodes Map [LINK] “This map helps you find the antipodes (the other side of the world) of any place on Earth”. We typed Calgary in to see its antipodes and its somewhere off the southern tip of Africa.

Figure 28: Antipodes Of Calgary

Source: Antipodes Map

https://www.mnn.com/lifestyle/eco-tourism/stories/map-shows-where-you-would-end-if-you-dug-hole-other-side-world

https://www.antipodesmap.com/#antipodes-map

Energy Tidbits Sept 1, 2019 - SAF Group · Sept 1, 2019 . The Disclaimer: Energy Tidbits is...

Documents

Transcript of Energy Tidbits Sept 1, 2019 - SAF Group · Sept 1, 2019 . The Disclaimer: Energy Tidbits is...