|Bid||2,173.50 x 0|
|Ask||2,174.00 x 0|
|Day's range||2,148.50 - 2,182.50|
|52-week range||8.89 - 2,647.00|
|Beta (5Y Monthly)||0.84|
|PE ratio (TTM)||8.63|
|Forward dividend & yield||1.43 (6.66%)|
|1y target est||N/A|
(Bloomberg Opinion) -- The long-threatened U.S. sanctions against Nord Stream 2, Russia’s $10.5 billion natural gas pipeline to Germany, will finally take effect next week, but their timing and design can only slow down the project’s now-certain completion. Even so, Ukraine, the primary injured party from the new pipeline, is grateful for small favors from Washington.The sanctions — crafted by Senators Ted Cruz, Republican of Texas, and Jeanne Shaheen, a New Hampshire Democrat — have been attached to the 2020 National Defense Appropriations Act, which already has been approved by Congress; President Donald Trump has promised to sign it. The State and Treasury Departments will have 60 days to present to Congress a list of vessels involved in the construction of Nord Stream 2 and another Russian pipeline, TurkStream, and of people and firms that provided these ships. Those people and entities will have 30 days to wind down their business or they will be barred from entry to the U.S. and could have their assets frozen.The sanctions come too late to hurt TurkStream, which runs under the Black Sea to the western area of Turkey. The underwater part of the pipeline is complete and even filled with Russian natural gas. Turkish President Recep Tayyip Erdogan has said the pipeline would be operational in early January.Nord Stream 2, a twin pipeline running under the Baltic Sea that allows Russia to avoid shipping gas overland through Ukraine, is another matter. Gazprom, the monopoly exporter of Russian pipeline gas, originally intended to complete it by the end of the year, and still had a chance to do in late October, when the Danish government gave permission to lay pipe in its waters. But inclement weather has played havoc with the construction, and earlier this week, the project’s operating company promised completion “in the coming months.” In late November, Dmitri Kozak, Russia’s deputy prime minister in charge of energy, said Nord Stream 2 would begin operation “in mid-2020.”Even with the effective 90-day grace period allowed by the U.S. sanctions, the last 168 kilometers of each of the two strings of pipe may not be laid by the time the punitive measures kick in. It’s unlikely that Allseas, the Swiss-based contractor now working on Nord Stream 2, will defy the U.S. restrictions if it’s not done in time. Then, Gazprom will need to use the only pipe-laying vessel it owns, the Academician Chersky, to finish the job — a slow and iffy scenario, even if Russian Foreign Minister Sergey Lavrov says Nord Stream 2 won’t be halted. Congress could have been much harsher with its sanctions, though. It could have hit Nord Stream 2’s financial investors, all major European energy companies: Engie SA, Uniper SE, OMV AG, Wintershall Dea GmbH and Royal Dutch Shell Plc. It could have sanctioned Russian debt. It could have made it impossible to import equipment for the construction of Russian pipelines and do repairs and maintenance on them. All of these measures have been considered at various times, but struck down in order to avoid a major confrontation with the European Union and an upheaval in financial markets.As things stand, the punitive measures have the appearance of a vindictive gesture, a nuisance move that won’t change what comes next. Russian President Vladimir Putin’s grand plan of supplying gas both to Europe bypassing Ukraine and to China through the just-opened Power of Siberia pipeline can no longer be scuppered. The likely Nord Stream 2 delay may even be beneficial for Russia, in a way. Competition from Middle Eastern and U.S. liquefied natural gas and warm weather have driven down the price of Russian pipeline gas in Europe. In the three months through September, the average gas price, $169.8 per 1,000 cubic meters, was 18% lower than in the preceding three months and 32% lower than a year before. The last time Gazprom faced such prices was in 2004. Increasing supplies in such a market situation would send prices tumbling even further.No matter how carefully the U.S. sanctions are crafted to spare European allies, Germany is still irritated. On Thursday, German Foreign Minister Heiko Maas tweeted in response to the U.S. measures that “the European energy policy will be decided in Europe, not in the U.S. We fully reject external interference and extraterritorial sanctions.” Theoretically, the European Union could even retaliate by raising duties on American LNG.But the U.S. sanctions, belated, weak and irritating to the German government as they are, still aren’t completely pointless. Ukrainian President Volodymyr Zelenskiy’s office thanked U.S. Congress for them on Thursday, and while Ukraine routinely thanks Western governments for sanctioning Russia, this time there’s a specific reason for the gratitude. Ukraine and Russia are locked in a dispute over the future of Russian gas supplies through Ukraine’s pipeline system. The current contract runs out at the end of the year, and Ukraine wants a long-term agreement to replace it while Russia doesn’t want to commit itself. The possibility of a protracted delay to Nord Stream 2 strengthens the Ukrainian position because it makes Russia nervous, and time is running out for the EU-brokered negotiations if supplies of Russian gas to Europe are to continue without interruption. To contact the author of this story: Leonid Bershidsky at email@example.comTo contact the editor responsible for this story: Tobin Harshaw at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Leonid Bershidsky is Bloomberg Opinion's Europe columnist. He was the founding editor of the Russian business daily Vedomosti and founded the opinion website Slon.ru.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
WASHINGTON/VIENNA, Dec 12 (Reuters) - Underscoring U.S. lawmakers' continuing unhappiness with Russia, a Senate committee on Wednesday advanced legislation seeking to hamper Russian energy pipelines and boosting NATO but delayed voting on a measure nicknamed the "sanctions bill from hell" that would punish Moscow for meddling in the 2016 U.S. election. The Senate Foreign Relations Committee approved four energy bills, including the "Energy Security Cooperation with Allied Partners in Europe Act of 2019," which opposes Russia's Nord Stream 2 pipeline, encourages NATO countries not to buy Russian gas and expedites U.S. natural gas exports.
(Bloomberg Opinion) -- Along with never invading Russia or getting into a Twitter argument, we can add another golden rule — this one specifically for U.S. oil majors: Never buy a shale-gas business.Chevron Corp.’s $10-11 billion impairment, announced late Tuesday, relates mostly to the Appalachian gas assets it picked up in 2011’s $4.9 billion acquisition of Atlas Energy Inc. Back then, the Permian basin was not a regular topic on the business channels, nor was it a central pillar of Chevron’s spending plans. But now it is, and simultaneously plowing billions into a Permian oil business that spits out gas essentially for free while running a dry-gas business in the Marcellus shale is like flooring it with the parking brake on.Chevron joins the ranks of Exxon Mobil Corp. — which paid $35 billion for XTO Energy Inc. less than a year before the Atlas deal and has been haunted by it ever since — and ConocoPhillips, which bought Rockies gas producer Burlington Resources Inc. way back in 2006 for $36 billion and then wrote most of that off in 2008.But there is far more to this than just mistimed forays into the graveyard of optimism that is the U.S. natural gas market — and not just for Chevron.Big Oil just had a forgettable earnings season. Chevron announced cost overruns on the giant Tengiz expansion project in Kazakhstan. Exxon continued borrowing to cover its dividend. Across the pond, BP Plc and Royal Dutch Shell Plc flubbed resetting expectations on dividends and buybacks. What ties all of these together are weak returns on capital. Chevron’s problems in Kazakhstan are echoed in its impairment of another asset, the Big Foot field in the Gulf of Mexico. This is another mega-project that went awry and, in an era when producers can no longer count on an oil upswing to save the economics, is found wanting. Chevron is also ditching the Kitimat LNG project in Canada that it bought into in 2013.All this is a particularly sore spot for Chevron given its problems with Australian liquefied natural gas mega-projects earlier this decade. CEO Mike Wirth’s decision to clear the decks seems intended in part to signal that, unlike the experience of his predecessor with Australian LNG development, he will drop big assets that don’t make the cut financially.Discovering, financing and developing mega-projects is why the supermajors were created at the end of the 1990s. Today, when investors are interested at all, they’re leery of capital outlays, aware the outlook for oil and gas markets is challenged in fundamental ways. So tying up money in big, risky, multi-year ventures is a good way to crush your stock price.Wirth isn’t abandoning conventional development; Big Foot aside, the Gulf Of Mexico has several new projects in the pipeline, for example. But to offset the drag on returns from the extra spending at Tengiz, he must streamline the rest of the portfolio. This is the story of the sector writ large. “Too much capital is chasing too few opportunities,” as Doug Terreson of Evercore ISI puts it. Conoco, which remade itself radically after the Burlington debacle, set the tone with its recent analyst day, emphasizing the need to get the industry’s long-standing spending habits under control and focus on returns to win back investors who are free to put their money into other sectors. Chevron’s write-offs and shareholder payouts (38% of cash from operations over the past 12 months) are of a piece with this. While the company has laid out guidance for production to grow by 3% to 4% a year, that is very much subject to the returns on offer. Capital intensity — as in, shrinking it — is what counts.Chevron’s move throws the spotlight especially on big rival Exxon. While Exxon has taken some impairment against its U.S. gas assets, that represented a small fraction of the XTO purchase. Exxon also sticks out right now for its giant capex budget (bigger than Chevron’s by more than half), leaving no room for buybacks or even to fully cover its dividend.In the first decade of the supermajors, when peak oil supply was a thing, big projects with big budgets to match were something to boast about. As the second decade draws to an end, only the leanest operators will survive. Chevron won’t be the last oil major to rip off the band-aid, just as we haven’t yet seen the full extent of the inevitable restructurings and consolidation among the smaller E&P companies. On this front, there’s another golden rule: Better to get it done sooner rather than later. To contact the author of this story: Liam Denning at email@example.comTo contact the editor responsible for this story: Mark Gongloff at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Liam Denning is a Bloomberg Opinion columnist covering energy, mining and commodities. He previously was editor of the Wall Street Journal's Heard on the Street column and wrote for the Financial Times' Lex column. He was also an investment banker.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
Investec Asset Management, which manages around 111 billion pounds ($142 billion), including over $1 billion in gold assets, wants companies to disclose emissions data across their supply chain, a letter to one of the companies seen by Reuters showed. Investec portfolio manager George Cheveley confirmed the request, saying Investec had asked for data on gold because it had a "significant interest" in the companies. With U.N. talks continuing in Madrid this week to bolster the 2015 Paris Agreement to curb global warming, Cheveley said he wanted a dialogue to increase gold companies' responsibility over their products beyond the mine gate.
Israel's Energy Ministry has advised three energy companies not to start work on the Aphrodite gas field off Cyprus until the two countries reach agreement over ownership of the reserves. Cyprus and Israel have been in dispute for several years over the gas reserves that straddle their maritime border, with no guarantee of any immediate resolution. Cyprus last month signed a 25-year concession with Noble Energy, Shell and Delek Drilling for exploitation of the Aphrodite field, which was first discovered in 2011.
Benchmark northwest European diesel refining margins eased on Monday but were supported by Royal Dutch Shell's shutdown of half of Europe's largest refinery. * Shell said it had shut a unit at its Pernis oil refinery in the Netherlands after a crude spill a day earlier.
Royal Dutch Shell said on Monday it had shut a unit at its Pernis oil refinery in the Netherlands after a crude spill a day earlier. Shell did not specify the unit concerned, but industry monitor Genscape said the 200,000 barrel per day (bpd) crude unit (CD6) was shut on Monday morning. Genscape said one of the furnace stacks of the cogeneration unit was also shut on Monday morning.
2019 has been a tough year for oil companies, but some of the oil majors have fared surprisingly well due to their economies of scale advantage and low breakeven prices per barrel
Big oil companies operating in Mexico have launched a drive to convince leftist President Andres Manuel Lopez Obrador to resume auctions of oil and gas contracts he has branded a failure in reviving the industry. Chevron Corp, Exxon Mobil Corp and Royal Dutch Shell Plc, among other firms in Mexico's Association of Hydrocarbon Companies (Amexhi), say they have met output targets and investment pledges worth hundreds of millions of dollars in the initial phases of their contracts. "We've been complying (with contractual obligations), and by any metric you look at, we've been successful," Amexhi President Alberto de la Fuente told reporters this week.
Companies including Canada's Parex Resources and Ecopetrol SA won contracts to operate oil blocks in Colombia’s auction round on Thursday, as the Andean nation seeks to reinvigorate its petroleum sector. Ecopetrol and its subsidiary Hocol SA, Frontera Energy Corp and Amerisur Resources Plc were all awarded one contract each, the national hydrocarbons agency (ANH) said, after their initial bids did not receive counter-offers. Other successful bidders included Gran Tierra Energy , and Parex, who were awarded two contracts each, while CNE Oil and Gas SAS was awarded three contracts.
Shares in M&C Saatchi Plc plunged around a half in value on Wednesday after the ad agency issued its second profit warning in less than three months due to an accounting scandal. The accounting review related to several units in the company's UK business overstating income and receivables, among others, and M&C said it would restructure its UK operations. "This restatement of our numbers and the reduction in forecasts make for very difficult reading," said Chief Executive David Kershaw.
Investors cheered Spanish group Repsol's pledge to slash net carbon emissions to zero by mid-century, saying they hope it will pile pressure on rival oil and gas companies to follow suit in the fight against climate change. The world's top oil and gas companies are under heavy pressure, not only from environmental groups but also from institutional investors, to fall in line with targets set in the 2015 Paris climate agreement to limit global warming. Repsol on Monday became the first leading energy firm to commit to a net-zero emission target, outdoing Royal Dutch Shell that had set out an ambition to halve emissions by 2050.
Royal Dutch Shell , Mitsubishi Corp and Trafigura presented bids for a contract to lift some 20.2 million barrels of Ecuadorean crude between 2020 and 2023, the Andean country's energy minister told reporters on Tuesday. The country expects to pick a winner for the contract, which is expected to generate $950 million (£740.45 million) in export income for Ecuador, in the coming days, said the minister, Jose Agusto. Ecuador invited some 51 companies to participate in the auction, the first of its kind in more than a decade.
Royal Dutch Shell, Mitsubishi Corp and Trafigura presented bids for a contract to lift some 20.2 million barrels of Ecuadorean crude between 2020 and 2023, the Andean country's energy minister told reporters on Tuesday. The country expects to pick a winner for the contract, which is expected to generate $950 million in export income for Ecuador, in the coming days, said the minister, Jose Agusto. Ecuador invited some 51 companies to participate in the auction, the first of its kind in more than a decade.
(Bloomberg) -- The European Union is gearing up for the world’s most ambitious push against climate change with a radical overhaul of its economy.At a summit in Brussels next week, EU leaders will commit to cutting net greenhouse-gas emissions to zero by 2050, according to a draft of their joint statement for the Dec. 12-13 meeting. To meet this target, the EU will promise more green investment and adjust all of its policy making accordingly.“If our common goal is to be a climate-neutral continent in 2050, we have to act now,” Ursula von der Leyen, president of the European Commission, told a United Nations climate conference on Monday. “It’s a generational transition we have to go through.”The commission, the EU’s regulatory arm, will have the job of drafting the rules that would transform the European economy once national leaders have signed off on the climate goals for 2050. The wording of the first draft summit communique, which may still change, reflects an initial set of ideas to be floated by the commission on the eve of the leaders’ gathering.The EU plan, set to be approved as the high-profile United Nations summit in Madrid winds up, would put the bloc ahead of other major emitters. Countries including China, India and Japan have yet to translate voluntary pledges under the 2015 Paris climate accord into binding national measures. U.S. President Donald Trump has said he’ll pull the U.S. out of the Paris agreement.In a pitch of her Green Deal to member states and the European Parliament on Dec. 11, von der Leyen is set to promise a set of measures to reach the net-zero emissions target, affecting sectors from agriculture to energy production. It will include a thorough analysis on how to toughen the current 40% goal to reduce emissions by 2030 to 50% or even 55%, according to an EU document obtained by Bloomberg News.Make It IrreversibleIn the next step, the commission will propose an EU law in March that would “make the transition to climate neutrality irreversible,” von der Leyen told the UN meeting. She said the measure will include “a farm-to-fork strategy and a biodiversity strategy” and will extend the scope of emissions trading.The EU Emissions Trading System is the world’s largest cap-and-trade market for greenhouse gases. It imposes pollution caps on around 12,000 facilities in sectors from refining to cement production, including Royal Dutch Shell Plc and BASF SE. Von der Leyen eyes the inclusion of road transport into the market and cutting the number of free emission permits for airlines.Some of the transportation industry’s biggest polluters have already stepped up efforts to reduce their environmental impact. In June, France’s Airbus SE, its U.S. rival Boeing Co. and other aviation companies pledged to reduce net CO2 emissions by half in 2050 compared with 2005 levels. EasyJet Plc, the U.K.-based discount airline, has promised to offset all of its carbon emissions by planting trees and supporting solar-energy projects, while Air France will take similar steps on its domestic routes.Germany’s Volkswagen AG, the world’s largest automaker, aims to become CO2 neutral by 2050, while Daimler AG plans to reach that target for its Mercedes-Benz luxury car lineup by 2039.To ensure that coal-reliant Poland doesn’t veto the climate goals next week, EU leaders will pledge an “enabling framework” that will include financial support, according to the document, dated Dec. 2. The commission has estimated that additional investment on energy and infrastructure of as much as 290 billion euros a year may be required after 2030 to meet the targets.The EU leaders will also debate the bloc’s next long-term budget next week. The current proposal would commit at least $300 billion in public funds for climate initiatives, or at least a quarter of the bloc’s entire budget for the period between 2021 and 2027.(Updates with details on draft sumit communique from fourth paragraph.)\--With assistance from Ania Nussbaum, Siddharth Philip and Christoph Rauwald.To contact the reporters on this story: Ewa Krukowska in Brussels at email@example.com;Nikos Chrysoloras in Brussels at firstname.lastname@example.orgTo contact the editors responsible for this story: Chad Thomas at email@example.com, Chris ReiterFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- Since 1980, the year Saudi Aramco was fully nationalized, the world’s largest oil producer has pumped about 116 billion barrels of crude oil from giant fields below the kingdom’s desert and the waters of the Persian Gulf.At today’s rate of consumption that crude would keep the world going for more than three years without using a single drop from any other oil-producing country. Put it through a refinery and you’d get enough gasoline to fill the tanks of more than 70 billion Chevy Suburban SUVs.And then there’s the carbon. All that oil has released more than 30 billion tons of carbon dioxide into the atmosphere in the last four decades, more than double China’s annual emissions. An analysis published in the Guardian newspaper last month reckoned Aramco’s oil was responsible for more emissions than any other single company.On one level that’s not surprising -- the modern global economy runs on petroleum and Aramco has been the prime supplier. But as Aramco makes the transition to becoming a publicly listed company, environmental concerns are one reason global investors have proved reluctant to embrace the world’s largest oil producer.Exxon Mobil Corp., Royal Dutch Shell Plc and other large oil and gas producers are already being pressed by a cohort of fund managers moving environmental, social and governance concerns up the agenda. Before Saudi Arabia decided to concentrate the IPO on local investors, one of the world’s largest sovereign wealth funds, Singapore’s Temasek, had decided to pass on Aramco because of environmental concerns.Big Oil is already under pressure “due to excessive carbon emissions, environmental footprint, social and community disruption, corruption exposure, health and safety and the now ubiquitous ‘stranded asset risk,”’ said Oswald Clint, an analyst at Sanford C. Bernstein Ltd. “Clearly then, the undisputed No.1 oil producer globally, Saudi Aramco, will come under a lot of scrutiny from investors as it embarks upon the public chapter of its life.”But Aramco is convinced it has a good story to tell on emissions. It goes like this: as the energy transition freezes and then shrinks demand for oil the complex, expensive, high-carbon supply sources like the Canadian oil sands will be increasingly abandoned. At the end of the story, only fields that are profitable in a world with strict emissions laws and depressed prices will remain, and from there this world will draw its last drop of oil.In Aramco’s 658-page IPO prospectus, the company explains why it possesses that last drop. There’s a table showing drilling a ton of Saudi oil takes half the energy of producing a barrel in the U.S. It shows that last year its lifting costs, expenses associated with bringing crude to market, were far lower than at each of the five oil majors -- Exxon, Shell, BP Plc, Chevron Corp. and Total SA -- even after those competitors worked vigorously for years to eliminate bloat.Aramco “is uniquely positioned as the lowest cost producer globally,” according to the prospectus. That’s “due to the unique nature of the kingdom’s geological formations, favorable onshore and shallow water offshore environments in which the company’s reservoirs are located.”An analysis from the influential consultant Carbon Tracker backed that up, saying the company was probably going to be “one of the last oil producers standing” in a carbon-constrained future.Mixed ObjectivesBut it isn’t likely to be that simple.While each individual barrel of Aramco oil was produced at a competitively low volume of CO2, much of the company’s value is derived from the sheer number of barrels at its disposal. The company has five times the amount of proved liquids reserves than the five largest oil majors combined, according to the Aramco prospectus.It has so much crude that even in a case where Saudi Aramco is the last oil company on earth, it still can’t produce all its barrels in a world that limits global warming to less than 2 degrees Celsius, according to an analysis from Rob Barnett at Bloomberg Intelligence.Under that scenario, a good chunk of Aramco’s reserves -- set to last more than 50 years -- may well end up as stranded assets.Governance is also likely to be a concern for potential investors. Just 1.5% of Aramco shares will be listed, leaving the Saudi state in a totally dominant position. Aramco will remain the main source of revenue for the kingdom, already running a larget fiscal deficit.“Governance issues will be a concern for investors,” analysts at Jefferies wrote in a research note. “The kingdom controls the board, is the resource owner and dictates production objectives.”Saudi Aramco has implemented some programs to cut its net carbon footprint, such as pledging to plant 1 million trees by 2025. It also is a founding member of the Oil and Gas Climate Initiative, which funds carbon-reduction technology and has made pledges to cut flaring. However, its oil major competitors have been listening to environmental complaints for decades also do that, and have gone further.An analysis from Bernstein showed the full-cycle emissions of Exxon, Shell and BP have trended downwards since about 2000. They are expected to keep falling as they implement measures suggested to them by eco-conscious shareholders, the report showed. Aramco’s full-cycle emissions have meanwhile increased sharply, reaching about double the volume of the three largest oil majors combined in 2015.Other oil companies are starting to take more radical action as pressure from governments, investors and customers to tackle the climate crisis builds. On Monday, Spain’s Repsol decided to promise zero net carbon emissions by 2050, while writing down the value of the business to reflect lower long-term oil prices Ben van Beurden, chief executive officer of Shell, said in an interview at the sidelines of the Oil & Money Conference in London in October that if he had any advice for Aramco at its IPO, it’s to learn to work with the oil industry’s climate critics. After all, they aren’t going anywhere.“When you get out in the market, you will get a lot of advice, a lot of conflicting advice, a lot of opinions and everything else,” van Beurden said. I think the IPO “is the opportunity for Aramco to plug into much more of the opinions of the world. To have their thinking shaped by that as well, rather than by events in the kingdom.”To contact the reporters on this story: Will Kennedy in London at firstname.lastname@example.org;Kelly Gilblom in London at email@example.comTo contact the editors responsible for this story: Will Kennedy at firstname.lastname@example.org, Rakteem KatakeyFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.