Baytex Energy Corp T.BTE

Oilprice intelligence report July 25th 2023

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Tuesday, July 25th, 2023

Dear Member ,

Oil prices have been slowly but surely edging higher in July as rising optimism around Chinese demand combines with supply concerns to boost bullish sentiment.









Chart of the Week



- Chinese authorities have reformed natural gas pricing in the country, linking retail residential gas prices to distributors’ purchasing costs to avoid squeezing the margin of power-generating companies too much.

- The deregulation of natural gas prices in China has almost immediately engendered a wave of retail price increases, mostly between 10%-15%, with China Gas expecting its gross margin to increase 30% in 2023.

- The pricing reform is expected to boost two areas: coal-to-gas projects that were previously suppressed by the price caps and LNG imports as passing on purchasing costs to customers becomes the norm.

- LNG prices in Northeast Asia hit an all-time high of $69.9 per mmBtu last August, but weaker-than-expected Chinese buying and higher LNG supplies have depressed the JKM marker to $11 per mmBtu currently. 

Market Movers

- French oil major TotalEnergies (NYSE:TTE) intends to take full control of Total Eren, a power producer with hydro, wind, and solar plants, buying the remaining 70% and bringing Total Eren's total enterprise value to $4.2 billion.

- UK-based energy firm Shell (LON:SHEL) agreed to sell its 35% stake in the Masela natural gas block in offshore Indonesia to Malaysia’s Petronas and Indonesia’s Pertamina for a consideration of $650 million. 

- Canada’s midstream giant TC Energy (NYSE:TRP) agreed to divest a 40% interest in its Columbia Gas and Columbia Gulf Transmission pipelines to Global Infrastructure Partners (GIP) for $4 billion. 

Tuesday, July 25, 2023

Late July is usually the off-season for major market developments, but oil prices have been edging higher as the few factors out there are mostly bullish ones. China’s repeated pledges to stimulate economic activity as well as physical tightness that ramped up backwardation have been duly noted by the market, seeing ICE Brent move above $82 per barrel, the highest since May. 

G20 Can’t Agree On Emissions Target. Energy ministers of the G20 group failed to reach common ground on curbing fossil fuel emissions, not even being able to agree on whether the final communique should stipulate a "phasedown” of "unabated” fossil fuels or not, worsening the outlook for COP28.

US Government Offers Funds to Cut Methane. The US Environmental Protection Agency will provide up to 1.55 billion in government funding to reduce methane emissions from the oil and gas sector, with half of the financial assistance allocated to state authorities.

Egypt Denies Problems with Giant Gas Field. The Egyptian government refuted claims that its supergiant Zohr gas field, located in the Mediterranean waters of the African country, was having problems after several news outlets reported that production started declining. 

Canada Wants to Cut Oil Subsidies. The Canadian government has set up a framework to revoke fossil fuels subsidies that it considers inefficient, becoming the first G20 nation to start a phase-out of state support for oil and gas even if ongoing subsidy agreements are to stay in place.



Chevron Loses Hope on Indonesia. Italian oil major ENI (BIT:ENI) is set to sign an agreement with US major Chevron (NYSE:CVX) to fully take over the latter’s stake in the Indonesia Deepwater Development Project comprising at least three confirmed gas fields for an undisclosed sum.  

Venezuela Cools Down 2023 Output Expectations. In a rare display of honesty, Venezuela’s energy minister Pedro Tellechea admitted the country’s oil production rate will remain near the current 830,000 b/d for the rest of 2023 and will not reach the previously mulled 1 million b/d mark.

Iraq Renews Lebanon Oil Supply Deal. Iraq renewed its agreement with Lebanon to provide the crisis-ridden Middle Eastern country with up to 2 million tons of crude per year, also helping it to overcome a years-long economic downfall by doubling the amount of fuel oil it provides to Beirut.

Chevron Mulls Lithium Expansion. After ExxonMobil invested in two US-based lithium-producing projects, US oil major Chevron (NYSE:CVX) said it is considering opportunities to produce lithium and that it has no plans to spend big on wind or solar because of low returns and high competition. 

Frac Fleets Start to Feel the Pinch. US oilfield services firm Liberty Energy is considering cutting the number of active frac fleets on account of weakening demand, saying it might reduce the fleet count by one to three fleets all the while seeking to maintain current pricing.
 
Nigeria Struggles with Force Majeure. After a suspected leak was reported at the offshore Forcados terminal in Nigeria two weeks ago, oil flows to the plant were curtailed and remain such until this day, but the project operator Shell (LON:SHEL) is still yet to declare force majeure.

Russia Wants to Send More LNG to Japan. As Russia’s leading LNG producer Novatek is eyeing a late 2023 commissioning of its 19.8 mtpa Arctic LNG 2 project, it wants to supply Japan with more than 2 million tonnes of LNG as a Japanese consortium comprising JOGMEC and Mitsui owns a 10% stake.

Europe’s Chemical Sector Mired in Trouble. The European chemical industry is facing a perfect storm of high energy prices and weak demand, the industry body CEFIC has warned, predicting that chemical output in Europe will fall by 8% this year and that utilization rates will decline to 75%.

Copper Prices Buoyed by China Summit. As the metals market eagerly anticipates the meeting of China’s Politburo this week, CME copper prices shot up to almost $8,500 per metric tonne whilst the Shanghai futures exchange moved sideways amidst caution about Beijing’s stimulus package.

Tom Kool
Editor, Oilprice.com

Tuesday, July 25th, 2023

Dear Member ,

Oil prices have been slowly but surely edging higher in July as rising optimism around Chinese demand combines with supply concerns to boost bullish sentiment.









Chart of the Week



- Chinese authorities have reformed natural gas pricing in the country, linking retail residential gas prices to distributors’ purchasing costs to avoid squeezing the margin of power-generating companies too much.

- The deregulation of natural gas prices in China has almost immediately engendered a wave of retail price increases, mostly between 10%-15%, with China Gas expecting its gross margin to increase 30% in 2023.

- The pricing reform is expected to boost two areas: coal-to-gas projects that were previously suppressed by the price caps and LNG imports as passing on purchasing costs to customers becomes the norm.

- LNG prices in Northeast Asia hit an all-time high of $69.9 per mmBtu last August, but weaker-than-expected Chinese buying and higher LNG supplies have depressed the JKM marker to $11 per mmBtu currently. 

Market Movers

- French oil major TotalEnergies (NYSE:TTE) intends to take full control of Total Eren, a power producer with hydro, wind, and solar plants, buying the remaining 70% and bringing Total Eren's total enterprise value to $4.2 billion.

- UK-based energy firm Shell (LON:SHEL) agreed to sell its 35% stake in the Masela natural gas block in offshore Indonesia to Malaysia’s Petronas and Indonesia’s Pertamina for a consideration of $650 million. 

- Canada’s midstream giant TC Energy (NYSE:TRP) agreed to divest a 40% interest in its Columbia Gas and Columbia Gulf Transmission pipelines to Global Infrastructure Partners (GIP) for $4 billion. 

Tuesday, July 25, 2023

Late July is usually the off-season for major market developments, but oil prices have been edging higher as the few factors out there are mostly bullish ones. China’s repeated pledges to stimulate economic activity as well as physical tightness that ramped up backwardation have been duly noted by the market, seeing ICE Brent move above $82 per barrel, the highest since May. 

G20 Can’t Agree On Emissions Target. Energy ministers of the G20 group failed to reach common ground on curbing fossil fuel emissions, not even being able to agree on whether the final communique should stipulate a "phasedown” of "unabated” fossil fuels or not, worsening the outlook for COP28.

US Government Offers Funds to Cut Methane. The US Environmental Protection Agency will provide up to 1.55 billion in government funding to reduce methane emissions from the oil and gas sector, with half of the financial assistance allocated to state authorities.

Egypt Denies Problems with Giant Gas Field. The Egyptian government refuted claims that its supergiant Zohr gas field, located in the Mediterranean waters of the African country, was having problems after several news outlets reported that production started declining. 

Canada Wants to Cut Oil Subsidies. The Canadian government has set up a framework to revoke fossil fuels subsidies that it considers inefficient, becoming the first G20 nation to start a phase-out of state support for oil and gas even if ongoing subsidy agreements are to stay in place.



Chevron Loses Hope on Indonesia. Italian oil major ENI (BIT:ENI) is set to sign an agreement with US major Chevron (NYSE:CVX) to fully take over the latter’s stake in the Indonesia Deepwater Development Project comprising at least three confirmed gas fields for an undisclosed sum.  

Venezuela Cools Down 2023 Output Expectations. In a rare display of honesty, Venezuela’s energy minister Pedro Tellechea admitted the country’s oil production rate will remain near the current 830,000 b/d for the rest of 2023 and will not reach the previously mulled 1 million b/d mark.

Iraq Renews Lebanon Oil Supply Deal. Iraq renewed its agreement with Lebanon to provide the crisis-ridden Middle Eastern country with up to 2 million tons of crude per year, also helping it to overcome a years-long economic downfall by doubling the amount of fuel oil it provides to Beirut.

Chevron Mulls Lithium Expansion. After ExxonMobil invested in two US-based lithium-producing projects, US oil major Chevron (NYSE:CVX) said it is considering opportunities to produce lithium and that it has no plans to spend big on wind or solar because of low returns and high competition. 

Frac Fleets Start to Feel the Pinch. US oilfield services firm Liberty Energy is considering cutting the number of active frac fleets on account of weakening demand, saying it might reduce the fleet count by one to three fleets all the while seeking to maintain current pricing.
 
Nigeria Struggles with Force Majeure. After a suspected leak was reported at the offshore Forcados terminal in Nigeria two weeks ago, oil flows to the plant were curtailed and remain such until this day, but the project operator Shell (LON:SHEL) is still yet to declare force majeure.

Russia Wants to Send More LNG to Japan. As Russia’s leading LNG producer Novatek is eyeing a late 2023 commissioning of its 19.8 mtpa Arctic LNG 2 project, it wants to supply Japan with more than 2 million tonnes of LNG as a Japanese consortium comprising JOGMEC and Mitsui owns a 10% stake.

Europe’s Chemical Sector Mired in Trouble. The European chemical industry is facing a perfect storm of high energy prices and weak demand, the industry body CEFIC has warned, predicting that chemical output in Europe will fall by 8% this year and that utilization rates will decline to 75%.

Copper Prices Buoyed by China Summit. As the metals market eagerly anticipates the meeting of China’s Politburo this week, CME copper prices shot up to almost $8,500 per metric tonne whilst the Shanghai futures exchange moved sideways amidst caution about Beijing’s stimulus package.

Tom Kool
Editor, Oilprice.com

[GREGORY369]

problem with baytex too many daytraders