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Russia’s Oil and Gas Revenues Surged by 73.5% in January-May

Russia’s Oil and Gas Revenues Surged by 73.5% in January-May

Russia’s budget revenues from oil and gas soared by 73.5% in January-May of 2024 compared to the first five months of 2023, according to data from Russia’s finance ministry released on Monday.

Between January and May 2024, the revenues for the Russian federal budget from oil and gas hit $55.7 billion (4.95 trillion Russian rubles), per the data reported by Russian news agency TASS.

“In line with parameters of the socioeconomic outlook, a steady surplus of oil and gas revenues above their base level is also expected in months to come,” TASS quoted a statement from the ministry as saying.

Non-oil and gas revenues also rose, by 34% in January-May 2024 compared to the same period last year.

Russian oil revenues have been rising in recent months compared to the year-ago levels as Moscow is increasingly finding ways to circumvent sanctions and find buyers willing to risk purchasing its crude and refined petroleum products.

In April 2024, for example, Russia’s oil and gas revenues hit $13.5 billion (1.23 trillion Russian rubles), Russian finance ministry data showed in early May. The Kremlin received nearly double the oil income for the budget than it did in the same month of 2023.

The weaker Russian ruble and the higher price of Russia’s flagship Urals crude amid higher international oil prices contributed to higher revenues from oil-related taxes and from all total oil and gas sales, according to estimates by Bloomberg.

The doubled revenues from oil for Russia highlight the difficulties of the Western countries to reduce Putin’s income from oil, despite the price cap on Russia’s oil and the ramp-up of the sanctions enforcement in recent months.

Then in May 2024, Russia’s oil proceeds increased by almost 50% from a year ago, as Moscow continues to manage to circumvent sanctions and get a higher price for its crude.

Ukrainian Drones Hit Major Rosneft Refinery in Russia

Ukrainian Drones Hit Major Rosneft Refinery in Russia

Just as Russia had started to bring back some refinery capacity damaged by Ukrainian drone attacks earlier this year, a new wave of drone attacks hit a major refinery owned by Rosneft, for a second time.

Rosneft’s Ryazan refinery southeast of Moscow caught fire after the overnight drone attack, an anonymous Ukrainian military source with knowledge of the situation told Bloomberg News on Wednesday.

The refinery in the region of Ryazan, whose main city of the same name is some 120 miles southeast of Moscow, was first attacked by drones in the middle of March. The first attack also led to a fire.

This year, Ukraine has stepped up attacks on oil refineries in Russia, which have reduced Russian refining capacity, and, reportedly, have the White House concerned about rising international prices.

The United States has repeatedly urged Ukraine to halt its drone attacks on Russian oil refineries due to Washington’s assessment that the strikes could lead to Russian retaliation and push up global oil prices, the Financial Times reported in March, citing sources familiar with the exchange.

As of mid-April, Russia had brought back online some oil refining units, reducing the capacity taken offline by Ukrainian drone hits to around 10%, from 14% at the end of March.

The refining capacity in Russia that was offline due to drone attacks was estimated by Reuters in mid-April at around 660,000 barrels per day (bpd), compared to 907,000 bpd offline at the end of March.

Russia said in early April it can repair all damaged units within two months.

Russia’s Energy Minister Nikolai Shulginov said that all damaged refineries in the country would be restarted by the beginning of June.

“Repairs are underway at the refineries. We plan to re-launch a number of refineries after repairs in April-May, possibly before the beginning of June,” Russian news agency Interfax quoted Shulginov as saying.

“All facilities that were damaged will be re-commissioned,” the minister added.

Russian Refineries Install Nets as Protection From Drone Attacks

Russian Refineries Install Nets as Protection From Drone Attacks

Russian oil company Bashneft, part of state-controlled giant Rosneft, has installed metal mesh at its refineries to protect them from drone attacks from Ukraine, Russian media reported on Friday, quoting Radiy Khabirov, the head of the Bashkortostan region where Bashneft is based.

“We don’t stop there. There are a number of solutions there, which I won’t talk about yet. They are classified. But believe me, we worry about this very much,” the Bashinform agency quoted Khabirov as saying.

This year, Ukraine has intensified attacks on oil refineries in Russia, which have reduced Russian refining capacity, and which, reportedly, have the White House concerned about rising international prices.

The United States has repeatedly urged Ukraine to halt its drone attacks on Russian oil refineries due to Washington’s assessment that the strikes could lead to Russian retaliation and push up global oil prices, the Financial Times reported last month, citing sources familiar with the exchange.

The drone attacks from Ukraine on Russian refineries could disrupt fuel markets globally, the International Energy Agency (IEA) said last week, estimating that up to 600,000 barrels per day (bpd) of Russia’s refinery capacity could be offline in the second quarter.

Russia has brought back online some oil refining units in recent weeks, reducing the capacity taken offline by Ukrainian drone hits to around 10%, from 14% at the end of March, calculations by Reuters showed earlier this week.

The refining capacity in Russia that is currently offline due to drone attacks is now estimated by Reuters at around 660,000 barrels per day (bpd), compared to 907,000 bpd offline at the end of March.

Still, maintenance and other outages at Russia’s refineries will actually raise the refining capacity that will be offline this month compared to March, according to Reuters’s data and calculations.

Russia said in early April it could repair all damaged units within two months. Russia’s Energy Minister Nikolai Shulginov has said that all damaged refineries in the country would be restarted by the beginning of June.

Occidental’s CEO Sees Oil Supply Crunch from 2025

Occidental’s CEO Sees Oil Supply Crunch from 2025

  • The ratio of discovered resources versus demand has dropped in recent decades and is now at around 25%.
  • Oxy CEO Hollub: “2025 and beyond is when the world is going to be short of oil.”.
  • Oil industry executives have been warning that new resources, new investments, and new supply will be needed just to maintain the current supply levels as older fields mature.
Permian

The world would find itself short of oil from 2025 onwards as exploration for longer-producing crude reserves is set to lag demand growth, Vicki Hollub, chief executive of Occidental Petroleum, said at the Davos forum on Tuesday.

For most of the second half of the 20th century, oil companies were finding more crude than global consumption, around five times the demand volumes, Hollub said, as carried by Reuters.

The ratio of discovered resources versus demand has dropped in recent decades and is now at around 25%.

“In the near term, the markets are not balanced; supply, demand is not balanced,” Oxy’s CEO said.

“2025 and beyond is when the world is going to be short of oil.”

According to the executive, the oil market will find itself moving from an oversupply in the near term to a long period of supply shortages.

Oil industry executives have been warning that new resources, new investments, and new supply will be needed just to maintain the current supply levels as older fields mature.

One of the most persistent warnings has come for years from Saudi Arabia, the world’s largest crude oil exporter, and its state oil giant Aramco.

The Kingdom and Aramco have repeatedly said that the focus of the energy sector and the debates on the energy transition should be on how to cut emissions, not on reducing oil and gas production.

…click on the above link to read the rest…

OPEC Output Drops As Saudi Production Falls By 156,000 Bpd

OPEC Output Drops As Saudi Production Falls By 156,000 Bpd

Crude oil production from all 13 OPEC members slid by 49,000 barrels per day (bpd) in January from December as top producer Saudi Arabia slashed output by 156,000 bpd, OPEC’s latest Monthly Oil Market Report (MOMR) showed on Tuesday.

OPEC’s crude oil production in January fell by 49,000 bpd from December to average 28.88 million bpd, according to secondary sources in OPEC’s report.

Saudi Arabia, the biggest producer and de facto leader of the cartel, pumped 10.319 million bpd in January, down by 156,000 bpd month on month, and more than 100,000 bpd below its quota of 10.478 million bpd as part of the OPEC+ agreement, set out at the October meeting and valid from November 2022 through December 2023, or until OPEC+ decides otherwise.

A Bloomberg survey found earlier this month that OPEC’s crude oil production fell in January due to cuts by Saudi Arabia which may have been steeper than the Kingdom’s quota.

Saudi Arabia, however, self-reported to OPEC that its crude oil production averaged 10.453 million bpd in January, up by 17,000 bpd from December.

According to OPEC’s secondary sources, Nigeria and Angola boosted their production the most, by 65,000 bpd and 47,000 bpd, respectively. But these producers are among the biggest laggards in their OPEC+ targets—they continue to pump well below their quotas.

The monthly Reuters survey pegged OPEC’s January production nearly in line with the OPEC figures from secondary sources reported today—production at 28.87 million bpd, down by 50,000 bpd from December.

The 10 OPEC members that are part of the OPEC+ collective target production were estimated to have produced around 920,000 bpd below the January target, per the Reuters survey.

Going forward, OPEC and OPEC+ don’t plan to change the course in oil production targets after Russia announced last week a 500,000 bpd cut in its output for March.

Washington Has Trouble Refilling The SPR After 220 Million Barrel Draw

Washington Has Trouble Refilling The SPR After 220 Million Barrel Draw

  • The DoE has received several offers for February purchases to refill the SPR.
  • For February, the plan was to purchase 3 million barrels, ideally when oil dropped to around $70 per barrel.
  • The rejected bids are prompting speculation that refilling the SPR will be challenging, at best.

After drawing over 221 million barrels of oil from the Strategic Petroleum Reserve (SPR) in 2022, Washington is having a tough time refilling it in the New Year, with the Department of Energy (DoE) rejecting the first offers on the grounds that they failed to benefit taxpayers.

The DoE has by now received several offers for February purchases to refill the SPR, according to both Bloomberg and Reuters. However, those offers have been rejected as too expensive or failing to meet other requirements.

For February, the plan was to purchase 3 million barrels, ideally when oil dropped to around $70 per barrel. This 3-million-barrel pilot program would have given sellers a fixed price for future deliveries and is in contrast to the DoE’s normal operating procedure, which had seen it purchase oil for faster delivery without fixed-price contracts.

Right now, WTI is trading around $75/$76 per barrel, and new data from the Energy Information Administration (EIA) released on Monday shows another 0.8 million barrel draw from the SPR.

According to Bloomberg, citing unnamed sources “familiar with the matter”, the DoE will now postpone its originally planned February purchases and embark on a new approach for fixed-price offers.

“DOE will only select bids that meet the required crude specifications and that are at a price that is a good deal for taxpayers,” the DoE said in a Friday statement carried by news agencies. “Following review of the initial submission, DOE will not be making any award selections for the February delivery window.”

…click on the above link to read the rest…

Pakistan ‘Has No Option But To Ration’ Natural Gas Supply This Winter

Pakistan ‘Has No Option But To Ration’ Natural Gas Supply This Winter

  • The energy crisis in Pakistan has deepened this year.
  • Gas supplies available for households will be very limited this winter.
  • Pakistani households will have gas available for three hours in the morning, two hours in the afternoon, and three hours in the evening.

Pakistan has no other option but to ration natural gas supply this winter, with gas provided three times a day for cooking to households, amid acute shortages and a forex crisis in the world’s fifth most populous country, an official from the petroleum ministry told a Parliament panel this week.

The energy crisis in Pakistan has deepened this year, and now, natural gas supplies will be very limited for households, according to officials.

“There would be no gas supply (to household consumers) for 16 hours” a day, Muhammad Mahmood told the Parliament’s Standing Committee on Petroleum, as carried by the local outlet Dawn.

Pakistani households will have gas available for three hours in the morning, two hours in the afternoon, and three hours in the evening, Mahmood added.

Pakistan—whose population is the fifth largest in the world after China, India, the United States, and Indonesia—has been experiencing an energy crisis as the country cannot afford to import a lot of energy products at the current high prices. The stronger U.S. dollar and the sky-high LNG prices have worsened the country’s finances, with foreign exchange reserves down in October to their lowest level in three years.

In April, soaring prices of LNG and coal on the international markets left Pakistan with having to cut electricity supply to households and industry as the country, in a deep political and economic crisis, could not afford to buy more of the expensive fossil fuels.

…click on the above link to read the rest…

Czech PM Blames Russian Propaganda For Mass Protests In Pragu

Czech PM Blames Russian Propaganda For Mass Protests In Prague

Czech Prime Minister Petr Fiala is blaming pro-Russian forces for mass demonstrations this weekend that saw tens of thousands of people protest against the government, the European Union and NATO amid soaring energy prices and inflation.

The “Czechia First” demonstration saw 70,000 people gather to protest the government in a development the Czech prime minister is blaming on elements influenced by Russian propaganda.

“It is clear that Russian propaganda and disinformation campaigns repeatedly appear on our territory and that someone is simply succumbing to them,” Fiala said, as reported by Euractiv.

Protesters, brought together by the Communist Party, the Freedom party, the Direct Democratic Party, and other groups labeled as “radical”–both far-left and far-right–called on the government to address soaring energy prices and the highest cost of living since the early 1990s for everything from housing to consumer goods.

Protesters called for a new deal with Russia for gas supplies, just a day after Moscow said natural gas flows through Nord Stream 1 to Europe that had been cut off for maintenance would not be restored on Saturday as scheduled, and would be delayed indefinitely.

Inflation has hit 17% and is marching towards 20% in the coming months, according to Fortune, citing the Czech central bank.

The mass protests also came a day after a no-confidence vote against the five-party coalition government failed.

While the prime minister blamed Russian influence, other coalition government officials warned against sidelining real economic issues facing the people.

News reports noted that some demonstrators donned T-shirts favoring Russian President Vladimir Putin and some carried anti-EU and anti-NATO posters.

…click on the above link to read the rest of the article…

Hezbollah Threatens Israel With War Over Disputed Gas Field

Hezbollah Threatens Israel With War Over Disputed Gas Field

  • Lebanon’s armed Hezbollah group threatened Israel that drilling at the Karish gas field could result in war.
  • Israel and Lebanon are in a years-long dispute over the demarcation of their territorial waters in the Mediterranean.
  • Israel has already warned early on that any damage to the drilling rig in Karish will result in an immediate reaction.

Lebanon’s armed Hezbollah group warned Israel on Sunday against drilling at an offshore gas field, renewing a threat that it could escalate the offshore border demarcation dispute to a war.

Hezbollah, backed by Iran, aired a video on its Al-Manar television channel, showing drone footage of Israeli barges at the gas field and their coordinates. The video ends with footage of a rocket with the words “within range” in Arabic and Hebrew. The text on the video message opens with “Playing with time is useless,” also in both languages.

Israel and Lebanon, which do not have diplomatic relations, are in a years-long dispute over the demarcation of their territorial waters in the Mediterranean.

The dispute escalated this summer after UK’s Energean, which has been awarded the right to drill at the offshore Karish field, arrived on the site with a rig, prompting an immediate reaction from Beirut. The Lebanese president and the caretaker prime minister of the country accused Israel of violating Lebanon’s sovereignty.

Karish is the focus of the rift. According to Israel, Karish lies in its territorial waters. According to Lebanon, it falls within a triangle of contested waters because the two cannot agree where exactly the border passes.

Israel has already warned early on that any damage to the drilling rig in Karish—like attacks on any gas drilling rigs in its waters—will be construed as an attack on the state, implying there would be an immediate reaction.

…click on the above link to read the rest of the article…

Gas Levy Could Triple Household Heating Bills In Germany

Gas Levy Could Triple Household Heating Bills In Germany

Germany plans to introduce a levy for all its gas consumers beginning in October as the government looks to avoid a wave of collapsing gas-importing and gas-trading companies amid record-high natural gas prices, a new bill seen by Reuters showed on Thursday.

Russia is further reducing flows via Nord Stream this week, to just 20% of the pipeline’s capacity, days after restarting the link at 40% capacity after regular maintenance.

The German government has already intervened to rescue energy group Uniper, Russia’s single largest gas buyer in Germany. Uniper—and many other German gas traders and suppliers—have been reeling from reduced Russian supply and soaring prices of non-Russian gas. Germany and Uniper agreed last week on a $15 billion bailout package, including the German government taking a 30-percent stake in the company and making more liquidity and credit lines available to the group.

Under the plans of the government, all consumers of gas, including households, will have to pay an additional levy, which will go to support Germany’s gas importing companies, which struggle with a lack of Russian gas and sky-high prices of non-Russian alternatives. The details of the bill are set to be announced next month.

Households and industrial consumers are expected to pay the levy through September 2024, according to the draft Reuters has seen.

“One doesn’t know exactly how much (gas) will cost in November, but the bitter news is that it’s definitely a few hundred euros per household,” German Economy Minister Robert Habeck was quoted by Reuters as saying on Thursday.

Marcel Fratzscher, president of DIW, the German Institute for Economic Research, told Düsseldorf’s Rheinischen Post newspaper that German households should prepare for at least tripled costs of heating on gas. The levy should be accompanied by a relief package for lower-income households, otherwise the new charge could lead to a “social catastrophe,” Fratzscher added.

IEA Chief: Europe Must Cut Gas Usage 20% To Survive Winter

IEA Chief: Europe Must Cut Gas Usage 20% To Survive Winter

After calling on all member states to reduce gas consumption by 15% in the face of the threat of a complete Russian gas cutoff, the IEA says the European Union will need to cut even more in order to get through the winter.

“Even if there is no single accident… #Europe still needs to reduce its gas consumption about 20% compared to today in order to have safe and normal winter months,” IEA chief Fatih Birol said, issuing what he called a “red alert” for energy markets.

The short-term issue with the Nord Stream 1 pipeline may have been resolved, Birol told CNN, but “it’s too early to be happy about this”.

The amount Europe is receiving now from Russia is only about one-third of what it was receiving prior to the force majeure, and the IEA chief warned that even that reduced flow “can be cut anytime”.

After a 10-day pause for regular maintenance, Russian gas flows via Nord Stream resumed on Thursday morning, with orders for gas set at around 40% of Nord Stream’s capacity, the level from before the maintenance after Russia slashed flows in mid-June. Flows early on Thursday were at around 21.5 GWh, compared to 30GWh prior to the start of maintenance on July 11th, and compared to 70 GWh before Russia reduced supplies by 60% on June 13th.

On Wednesday, the European Commission unveiled measures for the bloc to conserve gas to pre-empt a Russian cutoff, asking member states to reduce consumption by 15% until next spring.

According to Birol, this won’t be enough to ensure a smooth winter for Europe, and there is no alternative to consumption reductions.

…click on the above link to read the rest of the article…

IEA: Current Energy Crisis Is “Much Bigger” Than 1970s Oil Crunch

IEA: Current Energy Crisis Is “Much Bigger” Than 1970s Oil Crunch

  • IEA Chief Birol: The world faces a “much bigger” energy crisis than the one of the 1970s.
  • Back in the 1970s, the crisis was just about oil.
  • Birol: The world, especially Europe, could face a summer of shortages of gasoline, fuel, and jet fuel.

The world faces a “much bigger” energy crisis than the one of the 1970s, the Executive Director of the International Energy Agency (IEA), Fatih Birol, told German daily Der Spiegel in an interview published on Tuesday.

“Back then it was just about oil,” Birol told the news outlet. “Now we have an oil crisis, a gas crisis and an electricity crisis simultaneously,” said the head of the international agency created after the 1970s shock of the Arab oil embargo.

The energy crisis started in the autumn of last year, but the Russian invasion of Ukraine made it much worse as the markets fear disruption to energy supply out of Russia, while Western governments are imposing increasingly restrictive sanctions on Moscow over the war in Ukraine.

The EU agreed late on Monday to ban most of the imports of Russian oil, leaving pipeline supply exempted from the embargo, for now. This will further tighten already tight crude and product markets.

The world, especially Europe, could face a summer of shortages of gasoline, fuel, and jet fuel, the IEA’s Birol told Der Spiegel.

Fuel demand is set to rise as the main holiday season in Europe and the United States begins, Birol added.

Upended crude oil flows add to reduced global refinery capacity resulting in low inventories of products, including in the United States.

Refinery capacity for supply, globally and in the U.S, that is now a few million barrels per day lower than it was before the pandemic.

BofA: Sharp Decline In Russian Exports Could Send Oil Above $150

BofA: Sharp Decline In Russian Exports Could Send Oil Above $150

  • Analysts: Asian buyers are unlikely to be able to absorb all the Russian oil unwanted in the West.
  • There is a distinct possibility of a sharp drop in Russian oil exports.
  • BofA: A sharp contraction in Russian oil exports could push Brent well past $150/bbl.

Brent Crude prices could jump to well above $150 per barrel if Russia’s oil exports fall off a cliff in the coming months, according to Bank of America.

“With our $120/bbl Brent target now in sight, we believe that a sharp contraction in Russian oil exports could …. push Brent well past $150/bbl,” analysts at Bank of America (BofA) Global Research wrote in a research note on Friday carried by Reuters.

In a base-case scenario, Bank of America expects Brent Crude prices to average $104.48 a barrel this year and $100 a barrel in 2023.

Early on Friday, Brent Crude was trading at over $117 per barrel, the highest in two months, amid tight fuel supplies globally and bullish prospects of demand with the U.S. driving season beginning with the Memorial Day holiday weekend and Shanghai in China set for gradual reopening from June 1st.

There is a distinct possibility of a sharp drop in Russian oil exports as the EU continues to seek consensus and persuade Hungary to drop its opposition to a Russian oil embargo. Reports have it that some EU member states are inclined to accept a temporary exemption of Russian pipeline supply to central Europe via the Druzhba pipeline from the embargo as a bargaining chip to convince Hungary to agree to a ban on imports of Russian seaborne oil.

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Citi: Soaring Energy Bills Raise Chances Of Windfall Taxes In Europe

Citi: Soaring Energy Bills Raise Chances Of Windfall Taxes In Europe

  • Gas and electricity bills in Europe could jump to 4.5 percent of household disposable income in 2023.
  • Rising utility bills raise pressure on politicians to implement windfall tax.
  • Rising energy commodity prices weigh most on Eastern European countries.

The higher the energy bills in Europe become, the higher the chances are for a windfall tax on energy companies and utilities, as governments will be forced to ease the growing pressure on household finances, Citigroup says.

Europe as a whole could see a utility bill rise of over 3 percent of gross domestic product (GDP) through 2024, Citigroup Global Markets analysts Piotr Dzieciolowski, Jenny Ping, and Antonella Bianchessi wrote in a note on Monday carried by Bloomberg.

Gas and electricity bills in Europe could jump to 4.5 percent of household disposable income in 2023, up from 3.5 percent in 2021. The utility bills could further rise to 4.8 percent of household disposable income in 2024, according to Citi analysts.

In countries in Eastern Europe, where the prices of commodities account for a larger share of bills, the disposable income is likely to shrink the most, the investment bank says.

Per a Citi survey, one-quarter of respondents across Europe aged 18 to 29 say they would not be able to pay their bills on time if bills rose by one-tenth.

Bills have been surging in Europe since the autumn of 2021 when the natural gas shortage led to higher gas and electricity prices. The Russian invasion of Ukraine further strained household income as utility bills surged with the skyrocketing commodity prices.

Spain and Portugal set a cap on the price of gas used for generating electricity, after the EU allowed them to do so, acknowledging their exceptional energy requirements.

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Dutch Plan To Boost Gas Output At Earthquake-Prone Site Sparks Anger

Dutch Plan To Boost Gas Output At Earthquake-Prone Site Sparks Anger

Residents in the Groningen area in the Netherlands have voiced their anger at a plan by the Dutch government to potentially double this year production from the Groningen gas field, which has been hit by earthquakes in the past.

The Dutch government said on Thursday that it might need more gas to be pumped at Groningen, once Europe’s biggest gas field, which the Netherlands has pledged to phase out this decade after frequent earthquakes in the past damaged homes in the area.

After years of debates and measures to curb production at the field, the Dutch government decided in 2018 that output at Groningen would be terminated by 2030, with a reduction by two-thirds until 2021-2022 and another cut after that. The authorities had already limited production from the field because of the earthquakes, but they decided in 2018 that the risks and costs were no longer acceptable.

Now the government says that more gas needs to be extracted from the Groningen gas field in 2022 to ensure supply because of long-term export contracts with Germany and a delay in the commissioning of a facility in the Netherlands to treat imported gas for use for Dutch households.

The government is expected to make a final decision by April 1 on how much gas will be extracted from Groningen this year.

“I realize it really is a disappointment for people in the quake region that it has indeed proved necessary to extract more gas,” Dutch Economic Affairs Minister Stef Blok said on Friday, as carried by Associated Press.

The Groningen Earth Movement, a group of residents who have suffered damages from earthquakes, slammed the plan for more gas extraction at the field.

The Ministry of economic affairs and climate policy is playing with the safety of people in Groningen, the movement said, adding that “a government should not and cannot treat the safety of its citizens so lightly.”

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