Lasting Change To Oil & Gas #5 – Libya Likely Stuck Around 1 mmb/d By Its Inability to Peacefully Resolve Sharara Shut In

This is Blog #5 in our series of blogs to mid Feb on overlooked “Lasting Changes To Oil & Gas” that emerged/solidified in the last several months and that are reshaping (both positively and negatively) the 2019 to 2025+ outlook for oil and natural gas.  Libya had become a negative to oil prices in H2/18 as it was only 3 to 4 months ago that there was big positive momentum to Libya’s oil production returning to May 2013 levels of 1.2 mmb/d.  We may not have agreed with the Libya NOC target to get to 2 mmb/d, but its oil outlook looked strong as Libya was also announcing the return of IOCs in Oct with the resolution of the security situation in Libya.  This strong momentum was interrupted when Libya NOC declared force majeure on Dec 10 on the shut in of its 315,000 b/d Sharara oil field in southwest Libya due to security concerns.  But we now see the risk that its outlook for an expected increase in oil production in 2019, 2020 and 2021 is now at risk with Libya moving away from negotiating a peaceful resolution at Sharara to bringing in armed forces from Libya’s eastern leader Khalifa Haftar to regain control of security.  The loss of Sharara oil production is, by itself, significant at 315,000 b/d, but the bigger impact to global oil markets is that it sets up ongoing military clashes in southwest Libya region around the Sharara oil field and means that Libya isn’t likely to move toward the NOC target of 2 mmb/d, but rather be stuck in the same situation as the past few years with production around 1 mmb/d plus or minus with interruptions like Sharara taking production down on some sort of regular basis ie. the same old story.

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Lasting Change To Oil & Gas #4 – Bill Gates “Unlikely To Have Super-Cheap Batteries Anytime Soon” To Store Sufficient Energy

This is Blog #4 in our series of blogs to Jan 31 on overlooked “Lasting Changes To Oil & Gas” that emerged/solidified in the last several months and that are reshaping (both positively and negatively) the 2019 to 2025+ outlook for oil and natural gas. This blog could easily be called Blog #2B as we would have highlighted this in our Dec 20, 2018 Blog #2 “Lasting Change To Oil & Gas #2 – Speed Bumps On The March To Renewable Energy Means Oil Is Stronger In The Mid/Long Term[LINK].  This week, Bill Gates highlighted the need to have breakthroughs in clean energy and “But solar and wind are intermittent sources of energy, and we are unlikely to have super-cheap batteries anytime soon that would allow us to store sufficient energy for when the sun isn’t shining or the wind isn’t blowing.”  One of our mid to long term oil concerns has been that, by Jan 1, 2019, we expected that the breakthrough would be there for battery storage of electricity to be cheap enough (good economics) and available enough such that there is visibility for a predictive timeline in the 2020s of a major adoption reliance on renewable energy to start a more significant displacement of oil and natural gas for electricity.  Gates still waiting for a breakthrough on battery storage is significant as he has specific insight into battery storage and other energy storage companies.  His comments certainly suggest the visibility for a broad battery storage adoption isn’t here in 2019 (as we expected) for a predictive rollout.  Any delay in broad big application of solar/wind (ie. Saud Arabia) is a direct positive to oil.   Gates shares an important insight and supports our Blog #2 that there are speed bumps on the march to renewable energy and this mean oil is stronger in the mid/long term. Continue reading “Lasting Change To Oil & Gas #4 – Bill Gates “Unlikely To Have Super-Cheap Batteries Anytime Soon” To Store Sufficient Energy”