UAE state energy company ADNOC’s recently formed gas unit will launch on the Abu Dhabi stock market on Monday in a $2.5 billion initial public offering aimed at tapping high demand for the fuel.

Shares in ADNOC Gas, which only became operational at the start of this year, were heavily oversubscribed even after the offering was expanded from 4.0 to 5.0 percent of issued share capital in response to strong interest.

The final price was set at 2.37 dirhams ($0.65) per share, towards the top of its range, raising about $2.5 billion and implying a market capitalisation of around $50 billion.

ADNOC Gas is the biggest flotation yet on the Abu Dhabi stock exchange, which opens at 9:30 am (0530 GMT).

At more than 50 times oversubscribed, it is the biggest demand ever seen for an initial public offering in the Middle East and North Africa, outstripping oil firm Saudi Aramco’s world-record $29.4 billion listing just over three years ago.

The rapidly organised IPO from ADNOC, one of the world’s biggest oil firms, follows last year’s scramble for alternative gas resources after Russia’s invasion of Ukraine, and comes as countries search for cleaner fuels to mitigate global warming.

Energy consultant Roudi Baroudi, who heads the Qatar-based Energy and Environment Holding firm, said he expected brisk demand when the shares start trading.

“There is every reason to expect that the massive oversubscription we saw will carry over into strong interest when the shares are floated publicly,” Baroudi told AFP.

– ‘Transition fuel’ –

Abu Dhabi National Oil Company, the United Arab Emirates’ key revenue-earner, retains a 90 percent stake in the subsidiary formed from its former gas processing, LNG and industrial gas units.

Gas is being touted as cleaner than other fossil fuels as countries around the world strive to reduce their emissions.

Baroudi said Liquified Natural Gas (LNG) was “the most important transition fuel in the move away from hydrocarbons”.

In 2021, the UAE produced 57 billion cubic metres (bcm) of natural gas, or about 1.4 percent of global output, according to the BP Statistical Review of World Energy.

That same year, the Emirates exported 8.8 bcm of LNG, 1.7 percent of world LNG exports, the Statistical Review said.

“As global efforts to battle climate change gain pace, the role of natural gas in general… is widely expected to grow,” Baroudi said.

“ADNOC enjoys a solid reputation, so it was to be expected that the ADNOC Gas IPO would attract strong interest.”

ADNOC Gas could be the first in a series of share offerings in Abu Dhabi this year.

At least eight companies are expected to follow in fields ranging from technology to asset management and regenerative medicine, Bloomberg said, citing Sameh Al Qubaisi, director general of economic affairs at Abu Dhabi’s Department of Economic Development.

https://www.digitaljournal.com/business/uaes-adnoc-gas-to-start-trading-in-2-5bn-ipo/article

By Ron Bousso

LONDON (Reuters) – BP is ramping up oil exploration and drilling activity in frontier prospects as the energy giant tries to stem a decline in its oil and gas output after years of focusing on a shift to renewables to cut carbon emissions.

The move comes as companies try to balance pressure to slash climate-warming pollution against a desire to capitalise on soaring profits from oil and gas sales, even as governments work to tame energy prices following Russia’s invasion of Ukraine.

BP said that on Monday it started drilling a wildcat, or exploratory, well far off the east coast of Canada which could open a new oil province in one of the world’s most remote locations.

The Stena IceMax drilling ship arrived on Sunday at the site of the Ephesus well in the Orphan basin some 400 kilometres offshore, according to ship tracking data.

Early seismic testing shows the Orphan basin may hold up to 5 billion barrels of oil equivalent (boe), one company source said. BP has drilled for oil there in the past with no success, but continues its search for resources.

It also holds a 35% stake in the nearby Bay du Nord offshore acreage operated by Norway’s Equinor, which is considering developing the block after making several discoveries there.

In addition BP has revived in recent weeks plans to develop a complex oil reservoir in the Gulf of Mexico named Kaskida that was shelved a decade ago due technical challenges. The new technology it will use to do so, if successful, could help unlock other similar resources around the world, it said.

GRAPHIC: BP’s spending https://www.reuters.com/graphics/BP-SPENDING/egpbyezxwvq/chart.png

STRATEGY SHIFT

BP largely abandoned exploration of new oil and gas frontiers after Chief Executive Officer Bernard Looney in 2020 announced plans to reduce its oil and gas output by 40% by 2030 as part of an ambitious climate strategy.

Instead, BP focused on searching for small reservoirs in basins where it operates such as the Gulf of Mexico, the North Sea and Angola that can be easily and quickly linked to existing platforms.

But Looney decided in February to scale back plans to cut oil and gas output – already down some 10% from 2019 levels – in response to investor pressure, now aiming to cut output by 25% by 2030 to 2 million boe per day.

The focus has once again shifted to discovering, developing and acquiring new resources to offset a 3% to 5% natural decline of fields as reservoirs are depleted.

BP will reach its lower production target mostly through selling ageing oil and gas assets by 2030, while maintaining its underlying production by investing in new fields, Looney said in February.

The group has 15 oil and gas projects, including in Canada, Brazil, Senegal and Mauritania, which it is considering developing after 2025 to sustain its production, Chief Financial Officer Murray Auchincloss told Reuters.

In recent weeks, it has announced plans to acquire a stake from Shell in Australia’s giant Browse gas project, and is also in talks, together with Abu Dhabi’s national oil company, to buy a 50% stake in Israeli gas producer NewMed Energy.

While investing more in oil and gas, BP in February said it was also increasing spending on low-carbon fuels and renewables.

KASKIDA

BP now expects to make a final decision on the development of its 100% owned Kaskida reservoir by the second half of 2024, with the field expected to start production by the end of the decade, Auchincloss said.

The Kaskida prospect was discovered in 2006 some 250 miles southwest of New Orleans by the Deepwater Horizon drilling rig, on which 4 years later a deadly blast occurred, leading to the largest oil spill in U.S. history.

The field, which holds an estimated 4 billion barrels of oil, was the heart of a large BP project to develop technology to drill in high pressure and high temperature offshore reservoirs.

The so-called Project 20K aimed to design and develop drilling rigs, subsea production system and blowout prevention equipment to produce oil and gas in reservoirs with extreme conditions of pressure of up to 20,000 pounds per square inch and temperatures as high as 350°F (175°C).

The project was however put on hold in 2013 due to its high costs and technical challenges.

BP has now decided to revive it thanks to improvements in geological analytics and drilling technology, Auchincloss said.

“We always kept Kaskida as an option, and it looks like its time has now come,” he told Reuters.

BP believes that the Kaskida prospect will allow it to unlock other, similar geological reservoirs in the Gulf of Mexico, where it is one of the largest producers, he added.

The group is the front-runner in a licensing round for the Keathley Canyon lease, which contains already-discovered resources that could be used to expand the Kaskida project, according to an internal memo seen by Reuters.

(This story has been refiled to add a dropped word in paragraph 3)

(Reporting by Ron Bousso; Editing by Jan Harvey)

QatarEnergy has entered into two Production Sharing Contracts for Blocks 6 and 8 offshore the Republic of Suriname, following successful bids in these blocks, as previously announced in June 2021.
Pursuant to the signed agreements, QatarEnergy will own a 20% working interest in both blocks, where licensing of the new 3D seismic and associated exploration activities are planned. The remaining working interest is shared equally between TotalEnergies (Operator) and Staatsolies affiliate, Paradise Oil Company.
Commenting on the signing of the agreements, HE Minister of State for Energy Affairs, the President and CEO of QatarEnergy Eng. Saad bin Sherida Al Kaabi said: “We are pleased to have concluded our entry into Blocks 6 and 8 along with our partners, TotalEnergies and Staatsolie, and look forward to commencing exploration in this promising basin.”
HE Minister Al Kaabi added: “I would like to take this opportunity to thank the Surinamese authorities, Staatsolie, and our strategic partner TotalEnergies for their excellent commitment and support that resulted in the signing of these agreements.”
The contracts, and other key agreements, were signed on behalf of QatarEnergy by Manager of International Upstream and Exploration Ali Abdullah Al Mana during a ceremony hosted by Staatsolie, Surinames State Oil Company in Paramaribo, the capital of Suriname.
Located in the Southern part of offshore Suriname, the adjacent Blocks 6 and 8 are immediately South of Block 58 in shallow waters, with depths ranging between 40 and 65 metres.

Bloomberg
London

Opec’s oil production fell last month as Iraq’s exports were reduced by a pipeline suspension while a labour strike cut shipments from Nigeria.
Output from the Organisation of Petroleum Exporting Countries declined by 310,000 barrels a day to an average of 28.8mn, the lowest level in almost a year, according to a Bloomberg survey.
Opec and its allies have announced new production cutbacks starting this month to shore up global oil markets, but the biggest supply changes in April were unintentional.
Iraq accounted for about 80% of the drop.
A political spat between the central government in Baghdad and the semi-autonomous Kurdistan region has led to the halt of a pipeline that normally carries 500,000 barrels a day to international markets via Turkiye.
In Nigeria, a production recovery seen in the run-up to presidential elections has fizzled, with industrial action forcing Exxon Mobil Corp to renege on shipments from several terminals last month.
Still, the supply losses by Opec and its allies — both deliberate and accidental — are barely propping up an oil market that’s being roiled by fears over economic growth in China and the wider world.
Crude futures briefly sank below $72 a barrel in New York on Tuesday to the lowest since March.
While group leader Saudi Arabia drew another rebuke from the White House when the latest curbs were unveiled on April 2, the move is looking increasingly prescient as oil prices sag.
Production from the full 23-nation Opec+ alliance should decline by another 1.2mn barrels a day this month as those new curbs take effect. Russia, another member of the Opec+ coalition, also announced cutbacks in response to sanctions over its invasion of Ukraine, but the implementation so far remains unclear.
In terms of supplies in April, the largest adjustments were involuntary.
Iraq’s output slumped by 250,000 barrels a day to 4.13mn — the lowest since late 2021 — after Turkiye suspended the northern pipeline following a ruling by an international business tribunal. While Baghdad and Kurdish authorities have struck a temporary deal to get oil flowing again, “technical matters” are delaying the restart.
Nigeria retreated by 120,000 barrels a day to 1.32mn, the survey showed, reversing a surge seen earlier this year when the country reached an accord with a former warlord in the oil-rich Niger Delta region.
Workers at Exxon Mobil facilities in the country returned to work last week, allowing production and exports to resume after a two-week industrial action.
Bloomberg’s survey is based on ship-tracking data, information from officials and estimates from consultants including Kpler Ltd, Rapidan Energy Group and Rystad Energy.
Opec+ is due to meet on June 4 to review production levels for the second half of the year.

The world is becoming awash with natural gas, pushing prices lower and creating an overabundance of the fuel in both Europe and Asia — at least for the next few weeks.

The trend has been a rare sight over the past year since the war in Ukraine upended energy markets and Europe rushed to secure as many alternative supply sources as possible.

Now, inventories are filling up from South Korea to Spain, a result of mostly mild winter weather and efforts to reduce consumption. Tankers filled with liquefied natural gas — a stopgap in replacing lost Russian pipeline flows — now often struggle to find a home, spending weeks idling at sea.

Demand for gas typically slides as the heating season ends, before hotter weather lifts cooling needs later in the summer. The fuel then mainly goes into storage sites to prepare for the next season, but this year, refilling efforts in Europe may be completed as early as late August, Morgan Stanley said.

“There does appear to be a brief gas glut that should sustain pressure on LNG prices in the next few weeks, potentially nudging benchmarks slightly lower,” said Talon Custer, a Bloomberg Intelligence energy analyst.

While gas prices in Europe and Asia have plummeted from last year’s highs, they’re still well above the average of the last ten years, signaling possible concern that the current glut could disappear. Custer says prices “may be close to a floor” as cheaper gas costs could spur additional demand.

All eyes are on the summer weather, as any extreme heat and droughts could boost consumption. By the beginning of the third quarter, importers will start to prepare for the winter, heating up competition for LNG cargoes, Custer said.

But for now, the glut is spreading.

From Spain to China

In Spain, home to the most LNG terminals in Europe, gas storage is already 85% full, meaning the nation’s market could quickly turn to overcapacity and weigh on spot prices, RBC Capital Markets said.

In Finland, LNG import slots for the summer period were reduced to 10 from 14, in part due to an expected reduction in demand. Europe rapidly installed mobile LNG import terminals as it cut dependency on Russian pipeline gas, and more will be added this year and next.

Meanwhile, global LNG exports rebounded in March to an all-time high due in part to a recovery in US production. The additional supply is contributing to lower prices as traders struggle to find a home for shipments.

The UK’s exports of gas to the continent are surging as the nation lacks large storage sites, and LNG keeps flowing at record rates for the time of the year. In addition, China saw record re-exports of LNG amid a slow recovery after pandemic restrictions were lifted, and some vessels are diverting from another major LNG importer, South Korea. Japan, a big buyer, is also offering to sell shipments to stave off an oversupply at home.

In South America, demand remains weak until Argentina deploys its second floating import terminal in May, in time for colder weather in the Southern Hemisphere, said Leo Kabouche, an analyst at Energy Aspects Ltd.

Still, planned annual maintenance at gas facilities from late April through the summer could put a lid on excessive supply. Other risks remain, too, from further cuts to Russian deliveries or unexpected outages. Global LNG supply is largely expected to remain limited for another two years.

That’s reflected in forward prices, which are seen higher in the coming months and in particular in the winter, and remain elevated through the start of 2025.

“For 2023, the European gas balance is much more fragile” than last year, the French Institute of International Relations said in a note last week. “Any slight disruptions in supplies can have major impacts.”

— With assistance by Elena Mazneva and Francois De Beaupuy

US oil bosses generally collected huge paychecks last year on the back of high energy prices and record profits, with Exxon Mobil Corp’s chief executive winning a 52 per cent increase.

The largest U.S. oil company on Thursday disclosed chief executive Darren Woods was paid $35.9m last year.

Oil company workers did not see the same level of increases with median annual compensation for workers declining at several big energy companies.

The median pay for an Exxon worker fell nine per cent last year to $171,582 while Chevron’s median worker pay dropped 12 per cent, to $161,488, filings showed.

The two largest US oil majors posted record profits in 2022 on high energy prices and costs cuts measures including payroll reductions. Exxon posted the most among Western oil majors, $56bn.

Chevron’s profit more than doubled in 2022 to a record $36.5bn.

Exxon’s chief received the highest percentage increase among peers with Chevron chief executive Michael Wirth receiving a four per cent increase.

Occidental Petroleum’s chief executive Vicki Hollub’s pay rose 35 per cent while ConocoPhillips chief executive Ryan Lance’s pay fell 16 per cent, all compared to their prior year.

The median annual pay for Occidental workers rose 19 per cent last year to $187,168 while at Conoco it fell one per cent to $177,533 according to their proxy filings.

Under a new calculation disclosure required by the SEC on potential gains by executives on unvested stock awards, Woods’ pay was $89.7m in 2022, a securities filing showed.

The figure provides more transparency on compensation given by companies in equity, according to shareholders advocacy group As We Sow.

But it is not the best reflection of a compensation as the total value cashed out by executives could only be known when options are exercised or stock are sold, the group says.

Under the same metric, Woods lost more than $7m in 2020.

Oil and gas investment increased by 7% y-o-y to reach $718bn in 2022 and is expected to rise further in 2023, but looming uncertainties may deter investment, the Gas Exporting Countries Forum said in its fourth edition of its Annual Gas Market Report Wednesday.
In 2023, oil and gas investment is expected to rise further, on the back of greater investment in the upstream industry and LNG import terminals.
However, several looming uncertainties, including a slowdown in global economic growth, tight financial conditions, inflation, and high energy price volatility, may deter investment, GECF noted.
Spot gas and LNG prices in Europe and Asia reached record highs in 2022, with significant volatility throughout the year. This, the report noted, was mainly due to a tight LNG market as Europe’s LNG demand surged to replace lower pipeline gas imports.
In 2022, the Title Transfer Facility (TTF) spot gas prices in Europe averaged $38/MMBtu, 136% higher y-o-y, while Northeast Asia (NEA) LNG spot prices averaged $33/MMBtu, a 79% increase y-o-y.
This shift in prices made Europe the premier LNG market for suppliers, as TTF spot prices maintained a high premium over Asian LNG spot prices. In 2023, spot prices are expected to remain volatile.
Factors such as a relatively mild winter, high gas storage levels in Europe, and weakened gas demand growth in the midst of a slowdown in global economic growth may exert downward pressure on spot prices.
However, there may be some upward pressure on spot prices this year due to the anticipated recovery in China’s gas demand,
higher imports in price-sensitive countries in Asia Pacific, and a rebound in gas demand in the industrial sector.
Additionally, any further supply disruptions or extreme weather conditions during the year may also boost prices, GECF said.
Energy security concerns took precedence over climate change mitigation goals in 2022, with policymakers focusing on meeting the energy needs of their people, the report said.
Following a record rebound in 2021, global gas consumption declined in 2022, but is expected to resume growth in 2023 and reach an all-time high level, with the power generation sector remaining the largest consumer of gas.
US, China, and some emerging countries in Asia Pacific are forecasted to drive the growth of global gas consumption in 2023, it said.
GECF secretary-general Mohamed Hamel said, “The Annual Gas Market Report is comprehensive and I hope it will become an essential tool for anyone interested in natural gas.”
The publication comes at a time when natural gas markets are undergoing fundamental transformations in terms of physical flows, investment, trade, and market functioning.
“The developments in the gas industry are an indication of the bright prospects for the expansion of the global gas industry, as natural gas is set to play a pivotal role in socio-economic development and towards just and inclusive energy transitions,” Hamel added.

Central bankers who spent past weeks puzzling over how financial turmoil will impact their outlook now have a jolt in the form of higher oil prices to contend with.

The surprise production cut announced by OPEC+ on Sunday spurred oil traders to speculate $100 a barrel crude could be back on the horizon. In New York, oil was trading over $80 Monday morning.

For officials in Frankfurt, London and Washington who have been focused on core inflation rates — stripped of energy and food — higher oil costs could put renewed pressure on headline prices. That would serve as a reminder of the risk that high overall inflation rates get embedded in households’ expectations, forcing even more monetary policy tightening.

At the same time, production announcements such as Sunday’s can sometimes have limited lasting effects. For his part, Federal Reserve Bank of St. Louis President James Bullard said Monday that he’d already expected higher oil prices, given China’s reopening, Europe’s skirting of a recession and continued strong US data.

“This was a surprise, the OPEC decision, but whether it will have a lasting impact I think is an open question,” Bullard said in an interview with Bloomberg Television. Some oil-price fluctuation “might feed into inflation, and make our job a little bit more difficult,” he added.

European Central Bank Governing Council member Gediminas Simkus said Monday that “there are more factors there than the OPEC+ decisions.”

“In the context of interest rates, general trends are most important. In the last reading, we saw core inflation grew,” Simkus said.

OPEC’s decision marks the third Monday in less than a month when global monetary officials have woken up to a new headache, with episodes of market turmoil following the collapse of Silicon Valley Bank and the forced takeover of Credit Suisse Group AG each having threatened to derail interest-rate hiking plans.

This time, the news adds to the case for institutions from the Federal Reserve to the Bank of England and ECB to stay the course on their monetary-tightening plans, with inflation rates still well above targets.

With fears of a full-blown financial crisis fading last week, money markets were already starting to reprice for more tightening. The oil-production news spurred such moves Monday.

Interest-rate futures suggest about a 65% chance of a quarter-point Fed hike in May, compared with roughly 58% late Friday.

In Europe, the latest readings had shown headline inflation coming down, thanks to energy, with more concerning signs of elevated price increases in the services sector.

Fed Chair Jerome Powell has emphasized the importance of core services inflation excluding housing, which US central bankers see as particularly influenced by the tight labor market.

Data due on Friday on employment and wage costs in America were already set to be a key focus in setting expectations for the Fed’s next policy decision, on May 3.

To the extent that the OPEC+ production cut proves to have a lasting impact — feeding through to gasoline prices ahead of the summer driving season — that could strengthen job-seekers’ wage demands, adding to central bankers’ concerns.

“At the margin, this is a small negative as it will bump up inflation,” said Stephen Stanley, chief US economist at Santander US Capital Markets LLC. “But the Fed typically likes to look through oil price shocks, so the impact on policy is likely to be quite small.”

Another consideration for policymakers: higher energy costs would pose a hit to household budgets for spending on other items, such as travel and dining out. Amid a likely tightening in the availability in credit thanks to the recent banking turmoil, that would be another restraint on the economic outlook.

“Higher oil prices in the near term give the Fed more anxiety about inflation expectations,” said Derek Tang, an economist at LH Meyer/Monetary Policy Analytics in Washington. “But over the medium term, if oil prices stay high, it’s a drag on growth and employment,” he said. So for policy interest rates, “the impact might be a higher peak but quicker reversal.”

In any case, given the moves already taken by central banks since last year, rate-hiking cycles are seen closer to the end than the start at this point.

“With the rapid rate rises since mid-2022, the ECB, Fed and BOE have now largely got on top of their inflation problems,” said Michael Saunders, a former UK policymaker who is now at Oxford Economics. “At this stage, this rise in oil prices does not alter that view.”

Middle East crude oil supplies are set to tighten further from May after Opec+ announced plans to cut output again, raising costs for refiners from Asia to Europe and pushing them to seek more supply from Russia, Africa and the Americas.
Oil prices jumped more than $4 a barrel on Monday after the Organisation of the Petroleum Exporting Countries and their allies including Russia surprised markets by announcing production cuts of about 1.16mn barrels per day (bpd) from May through the rest of the year.
The pledges will bring the total volume of cuts by the group known as Opec+ since November to 3.66mn bpd according to Reuters calculations, equal to 3.7% of global demand.
Opec+ had been expected to hold output steady through the end of this year, having cut output by 2mn bpd in November last year.
An official at a South Korean refiner said the cut was “bad news” for oil buyers and Opec was seeking to “protect their profit” against concerns of a global economic slowdown.
The supply cut would drive up crude prices just as weakening economies depress fuel demand and prices, squeezing refiners’ profits, the South Korean refining official and a Chinese trader said.
Both declined to be identified as they were not authorised to speak to media.
Tighter Opec+ crude supply will be negative for Japan as it may further boost inflation and weaken its economy, Takayuki Honma, chief economist at Sumitomo Corp Global Research, said.
“Producing countries apparently want to see oil prices rise to $90-$100/bbl, but higher oil prices also mean higher risk of economic downturn and sluggish demand,” he added.
The Opec+ production cuts come as purchases by China, the world’s top crude importer, are expected to hit a record in 2023 as it recovers from the Covid-19 pandemic, while consumption from No 3 importer India remains robust, traders said.
At the same time, European refiners’ demand for Middle East crude has risen — especially for Basrah Heavy and Oman crudes — to replace Russian oil banned by the European Union since December, traders and an Indian refining official said.
“Now they’ll face the heat,” he said, predicting the market will become “very tight”.
Kuwait has already notified buyers it will cut exports to keep more crude for its Al Zour refinery, and Saudi Aramco is ramping up operations at its Jizan refinery.
Top exporter Saudi Aramco, which had been expected to cut official selling prices for term oil sales to Asia in May, may now decide to raise prices instead, traders said.
With higher prices and less supply of Middle East sour crude, China and India may be pushed to buy more Russian oil, boosting revenue for Moscow, said the Indian refining official, who declined to be named as he was not authorised to speak to media.
The rise in Brent prices could push Urals and other Russian oil products to prices above the caps set by the Group of Seven Nations (G7) aimed at curbing Moscow’s oil revenues, he said.
While traders and analysts had expected crude to be in surplus in the second quarter with Asian refineries down for maintenance and French refineries shut due to strikes, they now expect the Opec+ cuts to tighten markets ahead of summer, the high-demand season.
The Opec cuts would help soak up the excess volumes in the west, said a Chinese refining source. Refiners in Japan and South Korea said they are not considering taking Russian barrels due to geopolitical concerns and may look for alternative supply from Africa and Latin America.
“Japan could seek more supply from the United States, but bringing the US oil through the Panama Canal is expensive,” Sumitomo’s Honma said.
Traders are also watching for responses from the United States, which called Opec+’s move inadvisable.
“In essence, the purpose of this massive surprise production cut is mainly to regain market pricing power,” the Chinese trader said.