Oil Daily | Libya Production Slumps, China Demand Falters, ConocoPhillips Acquires Marathon Oil

【Oil-Producing Countries Dynamics】

Ecuador has shut down one well and begun dismantling infrastructure in a protected area of the Amazon, a year after Ecuadorians voted in a referendum to end oil drilling in a national park. The government has requested a five-year extension to dismantle all operations in the Yasuni National Park.

Libya’s crude oil production slumped by 700,000 barrels daily as the eastern government began shutting down oil fields amidst escalating internal political fighting. The eastern and Tripoli-based governments are in conflict over the leadership of the Central Bank of Libya, the depository of the country's oil revenues.

Crude oil production in Iraq’s semi-autonomous region of Kurdistan is currently about 350,000 barrels per day, all going to local buyers at steep discounts due to the key export route via a pipeline to Turkey’s Mediterranean coast being shut down. The pipeline closure followed a dispute over Kurdish oil exports.

China’s biggest state-owned oil and gas corporations reported record-high profits, though the outperforming upstream divisions masked weak refining businesses reflecting tepid Chinese fuel demand. Sinopec, PetroChina, and CNOOC all showed weaker refining metrics due to reduced demand, especially for diesel.

【Company News】

Shareholders in Marathon Oil approved a $16 billion acquisition by ConocoPhillips, with the deal expected to close in the fourth quarter of this year, pending a Federal Trade Commission review. The acquisition would position ConocoPhillips as the largest independent producer, extending its market value to over $150 billion.

Lukoil booked a net profit of $6.4 billion for the first half of 2024, up 4.6% year-on-year due to higher sales volumes. Despite higher results, Lukoil faced setbacks in both the upstream and downstream businesses due to OPEC agreements and emergency repairs at refineries following intensified drone attacks.

【Latest Oil Policies】

Kamala Harris stated she would not ban fracking if she becomes the next U.S. president, reversing an earlier stance. Harris emphasized the potential for a thriving clean energy economy without banning fracking, noting the need to secure votes from swing states like Pennsylvania.

The UK government plans to introduce new environmental guidance for oil and gas companies operating in the North Sea following a Supreme Court ruling requiring regulators to consider Scope 3 emissions for future projects. The government also mentioned not challenging judicial reviews against the Jackdaw and Rosebank oil and gas fields.

【Industry News】

Crude oil prices steadied following gains due to production shutdowns in Libya. Analysts believe prices are set for a monthly decline due to disappointing demand from China. Goldman Sachs and Morgan Stanley lowered their price forecasts, citing China's demand, rising U.S. shale production, and high global inventories.

【Others】

The futures curve of Europe’s benchmark natural gas prices indicates that traders are more concerned about immediate supply risks than the upcoming winter heating season. The narrower premium between October and September futures contracts signals a focus on supply concerns due to maintenance in Norway and the Russia-Ukraine war.