2024-05-20 11:58

May 20 (Reuters) - Saudi Arabia's crude oil exports rose for the second straight month in March, reaching their highest in nine months, data from the Joint Organizations Data Initiative (JODI) showed on Monday. WHY IT IS IMPORTANT Saudi Arabia is the world's largest exporter of crude oil. Sources with knowledge of the matter have told Reuters that Saudi Arabia and its allies in the OPEC+ group could extend some voluntary output cuts if demand fails to pick up. BY THE NUMBERS Crude exports from the world's largest oil exporter increased 1.5% to 6.413 million barrels per day (bpd) in March, up from 6.317 million bpd in February. The country's crude production fell to 8.973 million bpd in March from 9.011 million bpd in the prior month. Data also showed that Saudi refineries' crude throughput fell by 0.115 million bpd to 2.560 million bpd and direct crude burning declined by 53,000 bpd to 307,000 bpd in March. CONTEXT Monthly export figures are provided by Riyadh and other members of the Organization of the Petroleum Exporting Countries (OPEC) to JODI, which publishes them on its website. Earlier this month, Saudi Arabia raised the official selling price of its flagship Arab Light crude to Asia for June, which was at the higher end of traders' expectations in a Reuters survey. OPEC+ is likely to hold its June 1 oil policy meeting online instead of in Vienna. Sign up here. https://www.reuters.com/business/energy/saudi-arabias-crude-exports-hit-nine-month-high-march-2024-05-20/

2024-05-20 11:30

May 20 (Reuters) - Abu Dhabi National Oil Company (ADNOC) has acquired an 11.7% stake in NextDecade's (NEXT.O) New Tab, opens new tab Rio Grande liquefied natural gas export facility in Texas and entered a supply agreement, marking the UAE energy giant's first large investment in the United States. ADNOC said on Monday it had acquired the stake in phase 1 of the project, which includes the first three liquefaction trains, and agreed to a 20-year supply agreement for the fourth train, which is subject to a final investment decision (FID). ADNOC has big ambitions in gas and LNG, which along with renewable energy and petrochemicals, it sees as pillars for its future growth. It plans to grow its 6 million metric tons per annum (mtpa) LNG capacity to 15 mtpa by 2028. With demand for the chilled fuel expected to grow 50% by 2030, ADNOC - and Saudi peer Aramco (2223.SE) New Tab, opens new tab - are tapping opportunities in the United States, which has become the world's biggest exporter of LNG as it sends record volumes to Europe. Reuters reported in March that ADNOC was in talks with NextDecade while Aramco was in discussions to invest in Sempra Infrastructure's Port Arthur LNG project in Texas. Musabbeh Al Kaabi, ADNOC's executive director for low carbon solutions and international growth, said the deal "marks a significant milestone in ADNOC’s international growth strategy and provides us access to one of the world’s top LNG export markets". The United States became the world's biggest LNG supplier in 2023, ahead of Australia and Qatar, as supply disruptions and sanctions linked to Russia's war in Ukraine created more demand for exports and boosted prices. NextDecade is planning to start construction of the fourth liquefaction train in the second half of 2024 after the FID. Its Rio Grande LNG export plant has been in development for several years, suffering repeated delays, and its phase 1 is now expected to reach completion by early 2029 at an expected cost of about $18 billion. The total proposed project includes five 5.4-mtpa liquefaction trains capable of turning about 3.6 billion cubic feet per day of natural gas. ADNOC's offtake agreement from the fourth train is for 1.9 mtpa "on a free on board (FOB) basis at a price indexed to Henry Hub", subject to the FID, ADNOC said. ADNOC bought the stake in the first phase through an investment vehicle of Global Infrastructure Partners, buying a portion of GIP's existing stake. It "also secures the option from GIP for equity participation in the future Trains 4 and 5 of the project", ADNOC added. Sign up here. https://www.reuters.com/markets/deals/adnoc-buys-stake-nextdecades-rio-grande-lng-inks-supply-deal-2024-05-20/

2024-05-20 11:03

PERTH, May 20 (Reuters) - Australia's energy producers endorsed a government strategy to boost natural gas development, but warned the country still faces new gas supply shortfalls this decade while markets remain volatile due to global conflicts. Meg O'Neill, chair of the Australian Energy Producers, said the group welcomed the Future Gas Strategy released by the government earlier this month, which highlighted that new gas sources will be needed to meet both domestic and export demand during the energy transition. This comes amid volatility in the oil and gas market due to the conflicts in Ukraine and the Middle East, according to a copy of a speech she is due to give at an Australian gas industry conference in Perth on Tuesday. "This is a challenge Australia faces this decade. As the Future Gas Strategy points out, without action, the east coast of Australia faces projected shortfalls by 2028 and the west coast by 2030," O'Neill says in the speech, adding that this could increase volatility and drive up prices for households and businesses. "The best solution to a shortage is always supply, supply, supply... And we welcome acknowledgment in the Strategy that we'll need the right regulatory settings to do so." The Future Gas Strategy from Australia, last year's second largest exporter of liquefied natural gas (LNG), came after the government faced criticism for its range of short-term measures to boost domestic gas supply and lower soaring energy prices, such as price caps and export limits from the country's three east coast projects. The measures prompted concern from the industry that they would hurt long-term energy investments. Australia produces more gas than it needs to meet its domestic demands, but most supply is contracted for export. The country shipped out 80.9 million metric tons of LNG in 2023, according to data and analytics group Kpler. Its biggest customers are China, Japan and South Korea, which are also the world's top three importers of the super-chilled fuel. Australia's energy market operator, however, said in March that the country's southeast region faces the risk of gas shortages during next year's winter months as demand may exceed supply, and called for urgent new investment to prevent any potential shortfall. Sign up here. https://www.reuters.com/business/energy/australia-gas-producers-endorse-govt-strategy-warn-shortages-this-decade-2024-05-20/

2024-05-20 10:30

HELSINKI, May 20 (Reuters) - Alphabet-owned Google (GOOGL.O) New Tab, opens new tab will invest a further 1 billion euros ($1.1 billion) into the expansion of its data centre campus in Finland to drive its artificial intelligence (AI) business growth in Europe, it said in a statement on Monday. In recent years, many data centres have been located New Tab, opens new tab in the Nordic countries because of the region's cooler climate, tax breaks and abundant availability of renewable power. Finland's Nordic neighbours Sweden and Norway New Tab, opens new tab have recently grown increasingly critical of hosting them, with some industry experts arguing the Nordic countries should use their renewable power for products such as green steel that could leave higher surplus value in the countries. But Finland's wind power capacity has increased so rapidly in recent years, by 75% to 5,677 megawatts in 2022 alone, that on windy days prices have plummeted to negative, industry statistics showed. Therefore there is still renewable capacity available for data centres such as Google's, which acquires wind power in Finland under long term contracts. Analysts believe data centres' power consumption is set to massively increase due to the rapid growth in AI usage, which Google, too, cited for one of the reasons behind its investment decision, alongside its Hamina data centre in Finland already operating with 97% carbon-free energy. "Heat coming out of our Finnish data center will be re-routed to the district heating network in nearby Hamina, covering local households, schools and public service buildings," Google said in the statement. It added that it aimed to achieve net zero emissions across all of its operations and value chain by 2030. In addition to its Finnish investment, the search and cloud giant announced last month it would build new data centres in the Netherlands and Belgium. ($1 = 0.9225 euros) Sign up here. https://www.reuters.com/technology/google-invests-1-billion-euros-finnish-data-centre-drive-ai-growth-2024-05-20/

2024-05-20 10:09

LONDON, May 20 (Reuters) - The pound held steady on Monday as markets waited for April inflation data later in the week which is expected to show the rate of UK price rises falling back to the Bank of England's target. Sterling was unchanged from Friday's closing price at $1.2704. The pound has risen around 2% so far this month as the U.S. dollar has fallen on the back of weak growth and inflation figures, while British data has been stronger than expected. Data on Wednesday is expected to show that the UK's headline rate of inflation fell to 2.1% in April, down sharply from 3.2% in March, thanks mostly to a fall in the cap on household energy bills. Inflation peaked at 11.1% in October 2022 but has dropped in recent months, reflecting lower energy prices and a slowdown in food inflation. "Wednesday's CPI (consumer price index) print in the UK will be a pivotal moment for the pound," said Francesco Pesole, FX strategist at ING. "Our economics team thinks that services inflation will come slightly hotter than the BoE's forecast, which should tilt the balance in favour of August for the first cut." Markets currently expect the Bank of England, which has a 2% inflation target, to cut interest rates twice this year, most likely starting in August. Pricing in derivatives markets suggest traders see a 55% chance of the first cut coming in June. Bank of England Deputy Governor Ben Broadbent said on Monday it was "possible" that an interest rate cut will take place in the next few months, potentially "some time over the summer". The euro was flat against the pound at 85.55 pence, having traded at around that level for a month. Also of interest this week is survey-based economic data for Britain, due out on Thursday, which is expected to show that growth continued in May. Sign up here. https://www.reuters.com/markets/currencies/sterling-steady-ahead-expected-drop-inflation-2024-05-20/

2024-05-20 10:06

NEW YORK, May 20 (Reuters) - Major U.S. fuel makers returned billions in capital to shareholders in the first quarter and boosted share repurchase programs, even as refining margins softened from recent records and utilization rates fell. Three of the biggest U.S. independent oil refiners - Marathon Petroleum (MPC.N) New Tab, opens new tab, Phillips 66 (PSX.N) New Tab, opens new tab, and Valero Energy (VLO.N) New Tab, opens new tab - earned combined adjusted profits of $2.93 billion and returned $5.5 billion to shareholders through stock repurchases and dividends in the first quarter, according to Reuters calculations. That compares with $6.6 billion returned during the same quarter a year ago, when profits totaled $7.75 billion. Refiners are tapping into their exiting cash to pay for buybacks and capital returns to shareholders, said Matthew Blair, managing director at TPH&Co. Many companies are carrying excess cash because spending on growth projects has been limited, he said. Even with lower year-on-year profits, investors have responded positively to their return of capital strategy, which Wall Street has pushed for in recent years following weak returns in the sector. Year-to-date, shares of Valero are up more than 21%, while Marathon is up about 18%. That compares with the S&P 500 energy sector's (.SPNY) New Tab, opens new tab 11.70% increase so far this year. "Refining margins were a little softer year-over-year but refiners are still making significant money to the point where they can pay heavy dividends," Brian Kessens, a senior portfolio manager at investment management firm Tortoise, said in an interview. Refining margins have scaled back from the peaks hit after Russia's invasion of Ukraine in 2022, amid a rise in global refining capacity that has led to a drop in fuel prices. Marathon paid out $2.5 billion to its shareholders during the quarter and boosted its repurchase authorization by an additional $5 billion despite taking a hit due to weaker margins and heavy turnaround activity at its facilities. The company has approximately $8.8 billion available under its share buyback authorizations. Marathon's crude capacity utilization was 82% during the quarter, down 9% from the previous quarter. "We continue to believe share repurchases make sense at the current share price level," Marathon CEO Michael Hennigan told investors during the company's earnings call in April. Shares of Marathon are currently around $173 each, down from a high of $219 in April. Dallas, Texas-based HF Sinclair (DINO.N) New Tab, opens new tab announced a new $1 billion share buyback program after beating first-quarter earnings expectations, while Valero returned $1.4 billion to shareholders in the first quarter. DEMAND OUTLOOK U.S. refiners have a favorable market outlook as they come out of seasonal maintenance and crank out more fuel for the upcoming summer driving season, executives said. Refinery runs are expected to increase from an average of 15.4 million barrels per day in the first quarter to 16.2 million barrels in the third quarter, the U.S. Energy Information Administration said in its monthly forecast in May. "Within our own domestic and export business, we are seeing steady demand year-over-year for gasoline and growth for diesel and jet fuel," said Marathon's Hennigan, adding that global oil demand is expected to continue to set records for the foreseeable future. For the year, the EIA is forecasting global oil and liquid fuels consumption will rise by about 1 million bpd this year to 102.9 million bpd. Profit margins for diesel New Tab, opens new tab have been soft in recent months as refineries around the world boost their supplies and mild weather in the northern hemisphere and slow economic activity put a dent in demand. "Prices for diesel are in contango ... but we are constructive," said Brian Mandell, executive vice president at Phillips 66, referencing a market structure that indicates abundant supply. "We do think the market will come back," he added. Sign up here. https://www.reuters.com/business/energy/us-refiners-reward-shareholders-with-big-returns-despite-softer-q1-profits-2024-05-20/