RE:Russia's grey fleet keeps it oil and gas exports movingObscure1, I feel I must step in and offer my thoughts, as your figures regarding oil are not correct as I understand them.
Russian oil had been selling at up to a $30 discount to Brent, and even that has recently narrowed to less than $15, and I heard even down to a $9 discount which is tighter than WCS to WTI. They are also selling oil for more than the $60 price cap, and sometimes making agreements FOB Russia to get it done under the cap.
The dark fleet of tankers using ship to ship transfers helps Russia avoid the price cap limit so they can sell for the maximum price a buyer will pay. Still, markets are limited for their products and crude at this time as ther are only so many willing to risk paying more than the price cap allows. Some of their customers are nearly bankrupt countries on the verge of default, starving and struggling day to day, let alone can they consider spending capital on new energy systems. These countries need a continuous supply of oil to survive.
With growing oil demand and now surpassing China with the world's largest population, India is enjoying any discount they can get for crude and taking all they can get from Russia, yet still they have to go elsewhere for more.
China has even been buying Canadian heavy oil. It was piped from Ft. Mac, to the USGC, loaded on a ship, through the Panama canal and across the Pacific. Even with such a costly long journey, there is still profit to be had for the Canadian producers. We are only months away to find out just how TMX will help Canada's producers achieve a better price in international markets, which will tighten the differentials on existing lines to the US and USGC export terminals.
Many oil producing countries themselves are receiving Russian oil and consuming it, which is allowing them to export more of their own oil they would have been using, at world prices. The arbitrage is to their benefit.
True that Saudi lifting cost is the lowest in the world, but their country relies heavily on oil revenues as they have no taxes. Their breakeven with social costs and government requirements is around $70 to $80/ bbl. They will not sell it anywhere near the low lifting costs, hence the desire and push to keep prices at these levels or higher.
For many oil producing nations where such low lifting costs exist, there is no way that solar/ battery energy sources can compete with those low oil production costs to provide their own basic energy needs. It is still far more economical for them to continue to burn oil to generate electricity instead of using renewables, which is ramping up now to consume an additional 1 mbpd for cooling needs this summer.
Asian, India and China oil consumption growth is real. China has been drawing down their own oil reserves, and is still buying record amounts of crude. The state refineries have received the main benefit of the Russian discount, forcing the teapot refiners to buy on the open market. China's product exports are now going to decrease as they are redirecting products to feed their own growing market demand. This and a large anticipated pent up European travel demand this summer should reduce gasoline stockpiles in Europe and elsewhere, allowing RBOB and distillate inventories to draw and prices to jump, along with crack spreads, which are presently holding down crude prices. The west to east product arbitrage is currently weak, where lower US product exports may cause a short period of NA product inventory strength. Meanwile, US crude exports should continue to be strong, reducing inventories even further.
With global oil consumption set to soar in Q3/Q4 to around a record 101 to 103 mbpd as forecast by any agency you choose, it will exceed supply, even as it accounts for demand loss due to a reduced recessionary environment. Our window to enjoy sub $100 oil is closing fast, and no renewable initiatives can come fast enough to displace enough oil in the next months to spare us from the inevitable squeeze.
OPEC+ has been proactive, cutting in Q2 to offset a temporary demand loss largely due to a mild winter in Europe and North America.
All that said, I'm sure there are better investments somewhere out there that will do far better than SU, and without the ESG issues, future ore supply, and the negative fallout from news of a handful of dead birds. I'm not familiar with any though.
For me, I am confident that SU share prices, and other producers in the oil industry have been in the doghouse for so long, that if the oil supply demand balance begins to shift as forecast, it will force an industry wide rerating, and those with the most leverage to oil price will jump the most. As a vertically integrated producer, SU will get a good lift as it can capture the entire profit from oil sand to pump. It has been so far down as your past comparison has pointed out, it is one of the cheapest games in town on many metrics. Whether the low price is warranted now or not, a massive increased cash flow makes the market overlook a lot of negatives.
So for me, I'm far more comfortable with a company going all in on oil, rather than one dabbling in the crowded field of renewables.
Considering 3 years ago, I barely had enough cash to retire with and live off of, the overblown fear and panic of an imminent demise of oil has paid me well, and I have been very fortunate that the same fear still persists and continues to provide tremendous opportunity. However it pains me to no end having to sell off some great holdings this week in order to pay a 7 figure tax bill. Worse, I know the money will be wasted and used against us all by the clown car of fools we have running the show in Ottawa.
The villa additions and pools construction here at home is in full swing. About 20 workers on site, 800 cubic meters of concrete, 50,000 kgs of steel, 171 pilings 9m deep, and I just bought up the adjoining land and properties on my hill.
I have several good solar companies here in Thailand offering to provide the design and build for my solar system with my heavy load of 12 air cons, 15 pool and fountain pumps, cave grotto and volcano, entertainment center, guest house rooms, maid room, lighting and all the refrigeration. I even have a separate detached garage planned to keep a future EV fire isolated and from spreading to the rest of the property.
All solar vendors here agree that the battery technology now is still far too expensive and impractical to be of use compared to using the base and nighttime load from the grid. I can also get the best prices for the most modern system equipment here with minimal tax, as I am so close to China. Even for power failures, it seems that a backup gasoline or diesel generation system is far more cost effective than to try to do the same with batteries. It seems if you produce power with solar, it is just too expensive to store it with batteries, so you have to be prepared to use it somehow as it is generated, push it into the grid, or switch it off.
The point that I see is that in the real world, there are still many significant challenges that this transition has not been able to meet. It is full of high hopes and dreams, but it is just not ready, and overall, oil will continue be in demand in many places for a lot longer than most think.
On the bright side, my wife is still getting better slowly, even though she has is a long recovery ahead of her.
Obscure1 wrote: [url=https://https://edition.cnn.com/videos/business/2023/04/24/russia-grey-fleet-oil-tanker-sebastian-pkg-ovn-intl-hnk-vpx.cnn][/url]
My point?
Saudi is dumping billions of dollars into new Chinese (18% of the world population) refineries to insure future sales
Russia is selling Urals oil under $30 per barrel and has created a ship-to-ship grey fleet to insure exports continue
The GCC ( Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the UAE) accounted for 35% of India's oil imports (18% iof the world population) and 70% of its gas imports in 2022 in fiscal year 2021-2022
What is SU doing?
How is SU going to compete with $20's oil from Russia or Saudi's $10 well head cost which are land-linked and much closer to 36% of the world's population?
What are Alberta and Canada doing to support SU?
EV's are coming fast.
Much cheaper dispatchable (installed at site as opposed to long transmission loss) solar/battery storage solutions for the grid are coming fast to rich countries in Europe/USA (15% of the world's population) that can afford infrastructure changes.
Third world countries (most of the remaining 49% of the world's population) will soon be able to build dispatchable solar/batter storage solutions for a fraction of cost of building an oil and gas infrastructure.
I invested in a private Canadian company a couple of years ago that I believe will soon be able to hook up their technology to any energy source (oil/gas/nuclear/hydro/electric/solar/wind/hydrogen) which will slash the energy costs of large need customers (1+ MW) by 50% and eliminate the fear of power outages. The company expects their Enterprise Value will be close to 11 figures when they go public later this decade. My point is that if a retired old guy like me can find opportunities like this, what the helll is Suncor doing??????
There are so many better things people can invest in than Suncor. When you add in the fact that Canada and even Alberia have turned their backs on Suncor, I'm not sure there are many worse investments than Suncor.
Maybe I'm just stupid.