Oil Daily | South Sudan-CNPC Pipeline Talks, Ecopetrol Disruptions, OPEC Price Concerns, ADNOC Bond Sale

【Oil-Producing Countries Dynamics】

South Sudan and CNPC are discussing an alternative pipeline to Djibouti via Ethiopia to improve export capabilities. During a visit to China, the South Sudanese President and CNPC discussed boosting oil production by building a new refinery and distribution networks. South Sudan’s oil sector, which contributes 90% of state revenue, is struggling due to a ruptured pipeline in Sudan. The latest conflict in Sudan has further impacted South Sudan’s oil exports and revenues.

Colombia's Ecopetrol has faced disruptions due to attacks on pipelines and a nationwide truckers' strike, impacting fuel supplies and crude production. The company reported a 17% decline in Q2 net profit due to challenging market conditions and external factors like currency revaluation and inflationary pressures.

【Latest Oil Policies】

We could see $60-per-barrel oil prices next year if OPEC fails to implement more production cuts, Citi noted. Slowing demand and strong non-OPEC supply could push prices down further. Geopolitical tensions are currently not significantly impacting oil prices. The market's confidence in OPEC's ability to defend oil prices is waning.

【Industry News】

A refining capacity shortage could materialize next year due to capacity shutdowns and low refining margins, according to Phillips 66's CEO. U.S. refiners have already planned production cutbacks amid low margins, with some facilities operating at their lowest rates in years. This could set the stage for another round of heavy maintenance and impact U.S. crude balances.

Abu Dhabi’s ADNOC is starting its first bond sale with a three-tranche dollar-denominated issuance to fund development. This follows the establishment of a Global Medium Term Note program to raise debt from capital markets. The bond sale aims to take advantage of favorable borrowing costs.

【Company News】

Shell has alleged that Venture Global wrongfully earned $3.5 billion by selling LNG on the spot market instead of fulfilling long-term contracts. Shell's study suggested significant revenue losses and increased costs for European customers, particularly Poland's Orlen. Venture Global has delayed fulfilling long-term contracts due to an incomplete facility.

Adnoc has agreed to acquire a 35% stake in ExxonMobil's proposed low-carbon hydrogen and ammonia project in Texas, expected to become the world’s largest. The project aims to produce up to 1 billion cubic feet daily of blue hydrogen and more than 1 million tonnes of low-carbon ammonia annually. A final investment decision is expected by 2025.

Independent producer Vista Energy plans to invest around $1.1 billion in Argentina’s Vaca Muerta shale basin. The company aims to cut costs, boost efficiencies, and increase production in what is considered one of the world's largest shale gas deposits. Argentina plans to raise oil and gas output and exports from Vaca Muerta.

【Others】

Crude oil inventories in the U.S. fell by 7.4 million barrels for the week ending August 30, according to API. Gasoline and distillate inventories also dropped. The Department of Energy reported an increase in the Strategic Petroleum Reserve. Oil prices continued to decline amid economic concerns.