The past month has seen a considerable amount of news in the Oil & Gas Industry. The World Bank initiative “Zero Routine Flaring by 2030” has received important support from countries in the Middle East and North Africa, assisting with the elimination of routine gas flaring. Israel has now approved a deal that could help to fast-track development of the Leviathan offshore natural gas field, while Iran has suggested it has no plans to slow oil production before June’s Opec meeting. Wild predictions continue for the Oil & Gas Industry – will prices continue to rise or will increased production from Iran bring them down?
A first in the region: The Kingdom of Bahrain endorses the “Zero Routine Flaring by 2030” initiative
The Kingdom of Bahrain has become the first country in the Middle East and North Africa region to join the “Zero Routine Flaring by 2030” initiative. Flaring of gas contributes to climate change and impacts the environment through emission of carbon dioxide (CO2), black carbon and other pollutants. It is also responsible for wasting valuable energy resources that could be used to advance the sustainable development of producing countries. The “Zero Routine Flaring by 2030” initiative, introduced by the World Bank, brings together governments, oil companies, and development institutions that recognise the unsustainable flaring situation, and agree to cooperate to eliminate routine flaring no later than 2030.
Israel’s government approves Leviathan natural gas deal
Israel has now approved a deal that could help to fast-track development of the Leviathan offshore natural gas field, ending years of regulatory uncertainly that has restricted the country’s Oil & Gas Industry. Leviathan is one of the largest offshore discoveries of the past decade and was found in the Eastern Mediterranean in 2010. Energy Minister Yuval Steinitz recently announced a new deal empowering the state to offer improved stability for Leviathan partners, Texas-based Noble Energy and Israel’s Delek Group.
Iran has no plans to freeze its oil production before Opec
Following an April meeting between Opec countries – along with other major oil exporters including Russia – to discuss a deal on capping production at January levels for a six-month period to boost depressed prices, Iran has suggested a freeze will be unlikely. Iran is seeking to regain its oil market share following the lifting of Western sanctions. Deputy Oil Minister Rokneddin Javadi said Tehran intended to raise its crude exports to pre-sanction levels in the coming months, with no indication of stopping production ahead of a second Opec meeting in June.
The wildest predictions for oil prices in 2016
There have been numerous discrepancies in oil price predictions for 2016, with some commentators looking for prices of $10 per barrel and others expecting prices near $100. Despite rebounding prices, companies are continuing to see little profit from oil at current prices, instead continuing to operate in the hope that the industry can recover in the future.
Some analysts maintain that the current level of “high” prices could be short lived, with Saudi Arabia and Iran both preparing to increase production and the effect of Canadian wildfires being quickly resolved to minimise impact on output. Predictions confirm that there are reasons to be both bullish and bearish about the state of the oil industry, with analysts taking each side of the trade. Where the market goes from here is anyone’s guess – so investors and companies should be prepared for either eventuality, using lower prices to invest in strong energy management infrastructure before prices rise.