Oilfield services company Baker Hughes counted 731 rigs last week, down 17 from the week before, marking the steepest weekly fall since 2016. 

According to the US Department of Energy’s own data, the number of oil and gas rigs in operation in the country declined by 4% in the first three months of the year. In December 2022, 780 oil and gas rigs were in operation, compared with 752 in March of this year. In March 2022, the total was 662, suggesting that despite a recent decline numbers remain high.  

Texan auctioneer Kruse Asset Management plans to put two unused drilling rigs for auction next week. The rigs, built in 2019, are valued at $40m and $30m. Chief executive Dan Kruse told the Financial Times that “there’s no reason for them to be so cheap, but there’s just no demand”. 

Oil and gas production in the US climbed following the Covid-19 pandemic in 2020 with increasing numbers of rigs. The Biden Administration has faced accusations of greenwashing for its categorisation of natural gas as a “low carbon” energy source.  

A growing number of private companies have been acquired by richer public companies, leading to pressure to direct excess funds to shareholders.  

Recently, New York-listed Matador Resources acquired Permian driller Advance Energy for $1.6bn, adding more than 100 million barrels of oil and natural gas equivalent to its reserves. Additionally, public company Ovintiv bought $4.3bn worth of assets from Encap Investments last month. 

Falling energy prices following Russia’s invasion of Ukraine have accentuated a pullback in US drilling. A number of US drillers are planning the construction of new liquefied natural gas export terminals, but no new projects are scheduled to come online until late 2024. 

Oil and natural gas production in the US under Biden 

In 2022, the US produced 35.81 trillion cubic feet (tcf) of dry natural gas, averaging to 98.11 billion cubic feet per day, the highest annual amount recorded. Additionally, 0.80tcf of offshore natural gas was produced. The US Government estimates that this is around 1.29tcf greater than 2021 levels.  

Despite recent falls in rig count numbers, the Biden administration continues to pursue a pro-natural gas policy, despite environmental pledges. 

In March, the Biden administration met with criticism from environmentalists after approving ConocoPhillips’ $7bn oil and gas project in Alaska. The Willow project was disputed by local indigenous communities due to its potential impact on the local environment.  

In the face of planetary concerns, Ryan Lance, CEO of ConocoPhilips, claims that drilling for new oil and gas in Alaska, “fits within the Biden Administration’s priorities on environmental and social justice, facilitating the energy transition and enhancing our energy security, all while creating good union jobs and providing benefits to Alaska Native communities”. 

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This strategy prioritises pricing by providing the customers with alternative costs, and marginal value for the company, Petrobras said in a statement. 

“With this commercial strategy, Petrobras will be more efficient and competitive, acting with more flexibility to dispute markets with its competitors,” said Petrobras president Jean Pual Prates. 

The policy approval ends mandatory compliance to the import parity price by maintaining alignment with competitive prices by point of sale. The company said the competitive pricing “maintains a price level that guarantees the realisation of investments foreseen in strategic planning”. 

Diesel and gasoline prices will fall by almost 13% starting Wednesday under the new pricing policy. Reuters reported that liquified petroleum gas (LPG) will also fall by more than 21%. 

Further readjustments will be made whenever necessary in order to avoid the volatility of international and exchange rates. This will ensure optimal participation in the market, optimisation of the refining assets and profitability in a sustainable way, the company said. 

The policy will be tested when oil prices for motor fuels or LPG rise, and by what customer demand dictates. An oil expert said Petrobras must import fuel at market prices to meet demand, Reuters reported. By not doing so, the company could incur losses if prices go higher and the same is not passed on to the customers. 

Brazilian President Luiz Inacio Lula Da Silva was publicly critical of privatising companies such as Eletrobras under the former president’s term. Petrobras has been under pressure to reduce fuel and gasoline prices since Lula was elected. 

According to Petrobras, diesel and gasoline price adjustments will be disclosed on the communication channels and the company’s website for customers’ convenience. 

For now, Reuters reported Petrobras’ shares have risen by almost 5% after the approval of the pricing policy. 

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Under the agreement, KOSPO will buy approximately 0.4 million tonnes per annum (mtpa) of LNG on a delivered ex-ship basis from Cheniere Marketing International, a unit of US-based Cheniere.

The long-term SPA will start in 2027 and continue until 2046, with a smaller quantity to be delivered from 2024.

The price for LNG delivered before 2027 will be based on market rates, after that, it will be indexed to the Henry Hub price, with an additional fee.

The volumes specified in the agreement between 2028 and 2046 are contingent upon a favourable final investment decision for the first train of the Sabine Pass Liquefaction Expansion Project (SPL Expansion Project).

Cheniere President and CEO Jack Fusco said: “We are pleased to enter into this long-term LNG contract with KOSPO, the leading power generation company in Korea, in support of KOSPO’s growing natural-gas-fired power generation capacity.

“This SPA is expected to support the SPL Expansion Project, and we are excited to build commercial momentum as the project’s development progresses.

“This SPA further highlights Cheniere’s leadership in providing flexible, cleaner burning energy supply to meet both the energy security needs and environmental goals of our customers in both the short and long term.”

The SPL Expansion Project aims to add up to three natural gas liquefaction trains, which are anticipated to have a combined LNG production capacity of around 20mtpa.

Earlier this year, Cheniere subsidiary Cheniere Energy Partners commenced the pre-filing review process for the project with the Federal Energy Regulatory Commission under the National Environmental Policy Act.

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The newly formed unit will focus on the acquisition, development and operation of oil and gas assets.

Particularly, Morgan E&P will look to acquire assets in the Bakken area of North Dakota (Williston Basin), according to Equus Total Return.

John Hardy will serve as CEO Of Morgan E&P while Brian McNiell has been named as the president of the newly formed subsidiary.

McNiell, who has over 25 years of experience, served for eight years as president and senior managing director of Mancos Resources.

At Mancos Resources, he was responsible for making direct investments and offering M&A services in the infrastructure and natural resource space. 

J. Carlo Limchuatuan has been named as the COO of Morgan E&P. He has more than two decades of experience in investing, advising and operating energy and energy infrastructure companies.

McNiell commented: “Carlo and I have known John for many years and are now looking forward to working with him to build Morgan.”

Furthermore, Clarence Wong has been named as senior vice president of operations and engineering of Morgan E&P.

Wong has experience of nearly 25 years as a chemical, mechanical and process engineer in the upstream, midstream, downstream and renewable segments. 

He previously worked with companies like Enbridge, Marathon Oil Corporation, Breitburn Energy and Equinor. 

Wong oversaw approximately 100 personnel and contractors at any given time, over 1,000 wells, and daily production of over 20,000 barrels of oil equivalent.

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Borrel, who stands as the bloc’s high representative for foreign policy, told the newspaper that Brussels was aware India had begun to buy large quantities of Russian crude oil at discounted prices and worried it was then selling refined products from this crude, particularly diesel and jet fuel, to European countries.

Last month, it was reported that India’s diesel exports to Europe rose 12%-16% in the last fiscal year, reaching 150,000-167,000 barrels per day (bpd). The main European buyers of Indian diesel are France, Turkey, Belgium and the Netherlands. European imports of jet fuel refined in India  also saw a huge leap last year, increasing from 40,000-42,000 bpd in 2021-2022 to 70,000-75,000 bpd in fiscal year ending 2023.

“If diesel or gasoline is entering Europe . . . coming from India and being produced with Russian oil, that is certainly a circumvention of sanctions and member states have to take measures,” Borrell said to the Financial Times.

Price caps and outright bans imposed on Russian crude oil and oil products by the EU and G7 member states have resulted in Moscow taking a hit on revenue brought in by energy sales. In February, the country’s tax income from oil and gas sales fell to its lowest level since August 2020.  Since the war in Ukraine began, Russia has seen a 46% average decline in its monthly energy sector tax revenue.

In March, Russia’s energy minister Nikolai Shulginov said that all oil exports affected by Western sanctions had been rerouted to “friendly” countries. “We have managed to completely redirect the entire volume of exports affected by the embargo. There was no decrease in sales,” he said.

At the end of March, imports of Russian crude to India had increased by 2200%, according to Russian Deputy Prime Minister Alexander Novak. Throughout this year, India’s imports of Russian oil have continued to hit record highs every month. Elsewhere, Morocco and Turkey have also been taking advantage of cheap Russian gas and oil. Morocco’s imports of Russian diesel surged from 600,000 bpd in 2021 to more than 2 million in January 2022.

Borrell acknowledges that it is understandable that India wants to take advantage of lowered Russian crude prices, but suggested that he is not comfortable with the amount of refined Russian oil entering Europe.

“That India buys Russian oil, it’s normal. And if, thanks to our limitations on the price of oil, India can buy this oil much cheaper, well the less money Russia gets, the better,” he said. “But if they use that in order to be a centre where Russian oil is being refined and by-products are being sold to us . . . we have to act.”

However, other sanctions set complicated precedents. Despite US sanctions on Venezuelan and Iranian oil, for example, it is generally accepted that once the crude has been refined elsewhere, it is no longer considered as being from the country that produced it. Further difficulties arise when trying to identify the origin of refined oil; India imports crude from several countries and identifying specific origins could prove tricky.

Borrell’s comments came ahead of a meeting on Tuesday with India’s foreign minister S Jaishankar. Is it also likely that India’s Prime Minister Narendra Modi will come under pressure from G7 leaders on Russian oil at the summit scheduled for the end of this week in Japan.

On Monday it was reported that at the same summit, EU and G7 leaders will move to ban Russian gas imports on routes where Russia has previously cut supply in retaliation for the sanctions placed on its oil. That decision would forcefully prevent the resumption of Russian pipeline gas exports to western Europe, through terminals in Poland and Germany.

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The company acquired the remaining stake in the project following the completion of the merger transaction among subsidiaries of Next Bridge, McCabe Petroleum Corporation (MPC), Wolfbone Investments (Wolfbone), and Gregory McCabe, the owner of MPC and Wolfbone.

The merger deal was announced in December last year.

Next Bridge acquired Wolfbone’s remaining 22.62% working interest in the Orogrande project. Under the terms of the deal, McCabe acquired 56,297,638 shares of Next Bridge common stock.

In addition, the company completed the transactions under six separate contribution and exchange agreements to acquire the remaining 10.87% working interest in the Orogrande project. 

Under the terms of the contribution agreements, Next Bridge issued an aggregate of 27,060,637 common stock shares to each of the six working interest owners of the project to acquire the remaining stake.

Next Bridge now operates the entire land position in the project, comprising around 134,000 contiguous block acres.  

Next Bridge chairman and CEO Clifton DuBose said: “We are pleased to have closed the Wolfbone merger while successfully negotiating agreements with the other six working interest owners in the Orogrande project.

“The completion of all these separate transactions to acquire the remaining working interest in the Orogrande project marks a significant milestone for Next Bridge as we now own 100% of our most valuable asset. 

“We also note and appreciate the trust that Gregory McCabe and the other working interest owners have shown in us to develop the Orogrande project in order to provide returns to all of our shareholders as we continue our drilling and operational plans.”

The company is engaged in the acquisition, exploration and development of oil and natural gas assets in the US.

It also holds two minor well interests in Oklahoma and minor interests in the eastern edge of the Midland Basin in Texas.

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The contract is valid for five years and comes with a pair of two-year extension options.

Neptune Energy Supply Chain Management & Logistics Norway head Kjell-Petter Schou Andreassen said: “The new contract strengthens our collaboration with Tenaris, which has supported our strong operational and safety performance across all of our drilling activities.”

Under the contract, Tenaris will manufacture, transport and provide pipe-handling and repair services for a range of casing materials used in offshore drilling activities.

The casing materials include high alloy casing with connections such as TenarisHydril Blue, Blue Quick Seal and Blue Max, as well as high-performance conductor casing with TenarisHydril BlueDock weld-on connectors.

This will initially support an exploration well and an appraisal well in the Neptune-operated Gjøa area in the Norwegian part of the North Sea this year. The contract became effective last month.

Tenaris Norway country manager Christer Andersen said: “Tenaris is delighted to have been selected as Neptune`s partner for the supply of OCTG tubulars and services.

“We look forward to continuing to add value to Neptune’s operations in the years to come with our global industrial footprint, state-of-the-art technology and our advanced, low-carbon product portfolio.”

In August last year, Neptune made a discovery at the Ofelia exploration well, near the Gjøa field in the Norwegian North Sea.

In its annual report for 2022, the company stated that it will drill an appraisal well at the Ofelia discovery in the third quarter this year, followed by an exploration well at the Cerisa prospect.

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According to Bangladesh’s Power, Energy and Mineral Resource Ministry, two floating storage regasification units of the LNG terminal near the Moheshkhali channel were moved to the deep sea on Friday. 

Load shedding had increased across the country, including the capital, as the Bangladesh Government suspended the gas supply to prepare for Cyclone Mocha, which hit coastal areas on 14 May. 

Bangladesh Power Development said it shed 2,000MW of load across the country on Saturday, leading up to the suspension of the LNG supply. The power generation was marked at 10,749MW against a demand of 12,800MW, with a power supply deficit of more than 14% on Sunday. 

Al Jazeera reported that a senior leader of the main opposition Bangladesh Nationalist Party, Zainul Abdin Farroque, accused the ruling government of not taking precautions to ensure a stable power supply despite hiked tariffs. 

Farroque said: “I am in my village now and there was electricity for just 57 minutes for last 24 hours.” However, the LNG terminal resumed operations on late Monday, boosting supplies by two-thirds to 500 standard cubic feet per day on Tuesday, the chairman of the natural gas company said. 

Moheshkhali LNG terminal is set to resume operations in the next few days, Petrobangla chairman Zanendra Nath Sarker told Reuters. Sarkar also said that the three LNG vessels shipped in by Petrobangla, which were due to arrive this week, will be delayed due to the weather conditions. The first vessel will arrive five days late on 18 May. 

Tens of thousands of Bangladeshi citizens have been affected by the cyclone, which destroyed homes and important facilities. Government authorities have suspended the operation of all sea transportation on the Bhasan Char-Chittagong route from 10 May due to rough sea conditions, according to ReliefWeb, an information provider on global crises and disasters.

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Zefiro, led by former JP Morgan employees from the carbon market team, aims to lower methane emissions by plugging orphaned and abandoned oil and gas wells. The business creates offsets for methane emissions, also known as carbon offset credits.

Pennsylvania-based P&G has been offering services to plug orphaned oil and gas wells for more than five decades.

The family owned company primarily focuses on idle wells in shale and sandstone formations across the Appalachian Basin.

With the Zefiro purchase, Luke Plants will succeed his father, Steve, as P&G’s CEO.

Steve Plants will continue to work for P&G as president of abandonment operations.

The financial and other terms of the deal to buy P&G, which employs around 100 people, have not been revealed.

Commenting on the deal, Steve Plants said: “Our family has been plugging wells for more than 50 years and our partnership with Zefiro is a game changer for finally bringing about a large-scale, nationwide solution to methane emissions from abandoned wells.”

Luke Plants commented: “Public concern and awareness about the health and environmental implications of orphaned oil and gas wells is at an all-time high. And with the federal government behind a solution and the support of Zefiro, we will be among the first to tackle the problem and take our experience and lessons learned to other basins across the US.”

Zefiro founder and chairman Talal Debs said: “Zefiro’s strategy is to integrate real (physical process) innovation with new forms of capital, through the ‘environmental’ credit markets; the result will be a new kind of enterprise.

“By enlisting veteran operators like Plants & Goodwin, we are taking the first big step to making our unique vision a reality.”

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The engineering, procurement and construction contract is for work on the liquefaction trains required for its NFS expansion project.

Under the contract, the JV will construct two liquefied natural gas (LNG) mega trains with a combined capacity of 16 million tons per annum (mtpa).

It will also be responsible for building associated facilities for gas treatment, natural gas liquids recovery, as well as helium extraction and refining within Ras Laffan Industrial City.

Qatar Minister of State for Energy Affairs and QatarEnergy president and CEO Saad Sherida Al-Kaabi said: “QatarEnergy is proud to announce yet another significant milestone in the world’s largest LNG project, reinforcing our commitment to meeting the global demand for natural gas.”

“The NFS project is a unique development that minimises its environmental footprint by design. It includes one of the largest CO₂ capture and sequestration facilities and constitutes an important step towards achieving QatarEnergy’s target of more than 11mtpa of CO₂ capture and sequestration by 2035.”

The North Field East and North Field South projects form part of the wider North Field expansion project, which aims to boost the existing North Field’s LNG production capacity.

By 2028, these two projects are expected to add 48mtpa to the export capacity of Qatar, bringing the country’s total export capacity to 126Mtpa.

QatarEnergy owns a 75% stake in the NFS project and has already brokered a deal for the remaining 25% stake with TotalEnergies, Shell and ConocoPhillips.

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