The International Energy Agency (“IEA”) has said it expects the U.S to account for more than 80% of global oil production growth over the next 10 years and to produce 30% more gas than Russia in the same period. Speaking at ‘COP-23’ the UN Convention’s on climate change, taking place in Bonn, Germany, IEA head Fatih Birol, said the United States, whose upstream energy industry has seen a resurgence with the development of fracking technology, would become the “undisputed leader of oil and gas production worldwide” and that “this has implications for the oil markets, prices, trade flows, investment trends and the geopolitics of energy,” He said the IEA expected oil markets to rebalance in 2018 if oil demand remained “more or less” as robust as it was now and if the Organization of the Petroleum Exporting Countries (“OPEC”) and its allies extended output cuts. OPEC and other producers are expected to extend production cuts beyond a March 2018 deadline in a bid to cut oversupply. The Paris-based IEA cut its oil demand forecast in its monthly report for October 2017 by 100,000 barrels per day (“bpd”) for 2017 and 2018, to an estimated 1.5 million bpd and 1.3 million bpd, respectively. It also said oil inventories in the developed world fell by 40 million barrels in September 2017, dropping below 3.0 billion barrels for the first time in two years. According to OPEC, inventories were 154 million barrels above the five-year average in September 2017. OPEC states have said they want to reduce stocks to their five-year average. (Source: https://www.reuters.com/article/us-oil-iea-birol/u-s-to-account-for-most-world-oil-output-growth-over-10-years-iea-idUSKBN1DG1XP; 16 November 2017)

Norway’s sovereign wealth fund proposes to end oil and gas investment

Norway’s trillion-dollar sovereign wealth fund (the Government Pension Fund of Norway) has proposed divesting from its investments in oil and gas stocks, warning that the country already has enough exposure to the petroleum sector. The Norwegian central bank, which runs the Oslo-based fund, has stated it believes that divesting from its oil and gas holdings, which include stakes in companies such as BP Plc, Royal Dutch Shell Plc, Total S.A, Chevron Corp and ExxonMobil Corp— would make the country’s wealth “less vulnerable to a permanent drop in oil and gas prices”. The central bank said Norway’s own energy sector and the government’s controlling stake in Statoil ASA, the national oil company, was the driver for its proposal. The bank said in a letter to the finance ministry that it took no view on the future path of oil and gas prices or the “sustainability” of the sector, but the proposal follows a three-year downturn in energy prices that has hurt the country’s growth and government revenues. The central bank said its analysis suggested that during times of stable oil prices, energy stocks were closely correlated with the broader market, but tended to fall much harder when oil and gas prices dropped. The fund is not expected to sell immediately because the proposal needs to be approved by the government and parliament. Norway produces more than 3.7m barrels of oil equivalent a day of liquids and gas output, making it Western Europe’s biggest energy producer, despite a population of just 5.2m people. Norway’s finance ministry said it would study the proposal, with the government expected to make a decision in autumn 2018. (Source: https://www.ft.com/content/611c2e9e-cad9-11e7-aa33-c63fdc9b8c6c; 16 November 2017)