Oil Daily | Equinor Starts Production at Johan Castberg, Boosting Norway's Energy Exports Amid U.S. Output Drop

【Company News】

TG Natural Resources, partly owned by Tokyo Gas and Castleton Commodities International, will purchase 70% of Chevron's natural gas assets in East Texas for $525 million. The acquisition adds over 250 locations to TGNR's Haynesville inventory, extending its reserve life beyond 20 years, allowing operational synergies worth $170 million, and enhancing U.S. LNG export opportunities.

Varo Energy, backed by Vitol and Carlyle Group, is set to acquire Swedish refiner Preem in an all-cash deal to enhance renewable fuel production. The acquisition, which boosts Varo's operations in Scandinavia, will make the company Europe's second-largest biofuel producer and a key player in the decarbonization of transport.

Equinor's Johan Castberg oilfield in the Barents Sea has commenced production, marking Norway's second operational field in the region. The field, with an estimated 450-650 million barrels of recoverable oil, is expected to repay its $8 billion investment in less than two years and produce oil for the next 30 years.

【Oil-Producing Countries Dynamics】

Indian refiners are seeking alternative crude supplies due to potential U.S. tariffs on Russian oil amidst the Ukraine conflict. With India's heavy reliance on imported crude and Russia as its biggest supplier, the country is exploring options from the Middle East, North Sea, and the Mediterranean to mitigate risks from U.S. sanctions.

Shell, Chevron, and Exxon have cautioned against Australia's plan to curb gas exports to address domestic shortages, claiming it could worsen the situation. The proposal aims to reserve gas for the local market amid potential shortages by 2027, but producers warn it may deter investment and not increase supply.

【Latest Oil Policies】

Vietnam has announced import tariff reductions on goods including LNG and cars as it prepares for U.S. tariffs aimed at reducing trade deficits. The tariff cuts are expected to increase LNG imports, aligning with U.S. interests despite Vietnam's relatively small purchase volume compared to larger importers like the EU.

South Africa allows eight Eskom coal plants to exceed emissions limits temporarily to avert power blackouts. With stringent conditions, the exemptions reflect the country's ongoing energy crisis and reliance on coal, while emphasizing the necessity of transitioning to renewable energy for economic stability.

【Industry News】

January saw a decline in U.S. crude oil production by 305,000 bpd to 13.15 million bpd, with Texas and New Mexico facing significant drops. Despite record production in 2023, the U.S. faces challenges with sanctions, Iranian oil constraints, and the effects of tariff wars impacting long-term production trends.

Equinor's start of production at Johan Castberg oilfield, delayed by winter weather, signals a boost in Norway's energy exports. The field, expected to produce at peak levels of 220,000 bpd, will bolster Norway's position as a major energy supplier and contribute to expected production increases by 2025.

【Others】

The OPEC group's production rise and potential U.S. economic slowdowns are expected to limit oil price increases. Analysts foresee average Brent prices at $72.94 a barrel this year, influenced by non-OPEC supply growth and trade policy impacts, with potential further drops due to economic uncertainties.

Norway's sovereign wealth fund to acquire a 49% stake in RWE's offshore wind projects for $1.5 billion. The investment in Nordseecluster and Thor wind farms, expected to power 2.6 million households, aligns with Norway's strategy to diversify into renewables amid RWE's reduced capex for low-carbon projects.