Oil Daily | Equinor Halts Johan Sverdrup Production Amid U.S. Crude Stock Build and UK LNG Funding Review

【Global Oil Supply and Demand】

Crude oil inventories in the United States saw a significant rise, with the American Petroleum Institute reporting a 5.025 million barrel increase for the week ending January 24. The Department of Energy noted a small rise in the Strategic Petroleum Reserve, while distillate inventories experienced a decline. Cushing inventories showed a slight increase.

Following a power outage, Equinor halted production at the Johan Sverdrup oilfield in the North Sea. The outage impacts one of Western Europe's largest oil fields, with Equinor initiating repairs. Previously, the field reached a peak production level of 755,000 barrels per day, accounting for a third of Norway's oil production.

The UK government is considering whether a 2020 commitment to finance the Mozambique LNG project with $1.15 billion is still binding. The project, led by TotalEnergies, was halted in 2021 due to security concerns, with the Labour government exploring legal options regarding the UK’s obligation.

【Oil-Producing Countries Dynamics】

Colombia's President, Gustavo Petro, terminated a joint venture between Ecopetrol and Occidental Petroleum due to environmental concerns about hydraulic fracturing. Petro opposes fracking and aims to transition Colombia's energy policy towards clean energy sources while investing in projects for biodiversity protection and electrification.

BP plans to invest up to $25 billion in the Kirkuk oil fields in Iraq. After facing setbacks due to regional instability, BP aims to increase production through a profit-sharing agreement. The deal is seen as a significant foreign investment in Iraq’s oil sector, with potential benefits for both BP and Iraq.

【Latest Oil Policies】

The Trump administration is exploring the cancellation of federal loans for transition projects, refocusing funds towards nuclear energy, liquefied gas, and other White House priorities. The Department of Energy is reviewing loans from the previous administration but faces uncertainty about the legality of canceling them.

President Donald Trump aims to reduce Iranian oil exports to zero and expressed intentions for the U.S. to take control of the Gaza Strip. These moves come amid plans to dismantle unexplored bombs in the region and create economic opportunities. Trump's approach to Iran aligns with preventing nuclear weapon development.

【Industry News】

The American Petroleum Institute reported an increase in U.S. crude inventories, with gasoline stocks also rising. Despite these builds, distillate inventories saw significant declines. Refining and marketing margins for companies like Marathon Petroleum fell, highlighting challenges in the refining sector despite beating earnings expectations through midstream and renewable diesel divisions.

【Company News】

Abu Dhabi’s ADNOC is transferring some U.S. natural gas and green energy assets to its international investment firm, XRG. XRG focuses on investments in natural gas, chemicals, and lower-carbon energy. ADNOC is partnering with Exxon in Texas and acquiring stakes in other U.S. projects to expand its energy portfolio.

Equinor halted production at the Johan Sverdrup oilfield due to a power outage. The field is Western Europe's largest oil producer, with a capacity of 755,000 barrels per day. The outage occurred amidst ongoing U.S.-China trade tensions affecting oil prices.

Shell has restarted production from the Penguins field in the UK North Sea with a new FPSO facility. The field redevelopment aims to extend its life by 20 years and supply domestic energy. This comes after a court deemed government approvals for other UK fields unlawful.

【Others】

U.S. clean energy groups are lobbying Congress to retain tax credits from Biden-era climate laws. These incentives are crucial for promoting employment and private investments, boosting power capacity, and countering China's dominance in green energy. Companies emphasize the role of tax policies in planning investments and sustaining jobs.

President Trump has delayed tariffs on Canadian and Mexican imports following talks with the countries' leaders. These discussions resulted in commitments to enhance border controls and drug traffic measures. Trump's willingness to negotiate reflects the importance of Canadian and Mexican crude oil exports to the U.S. refining sector.