Oil Daily | IEA Calls for New Oil Field Investments Amid Declining Production; California Approves Drilling Bill

【Global Oil Supply and Demand】

The International Energy Agency (IEA) reports that faster decline rates at existing oil and gas fields necessitate new resource development to maintain current production levels. This marks a shift from its previous narrative that no new investment is needed for a net-zero scenario by 2050. More than 45 million barrels per day of oil and 2,000 bcm of natural gas will be required from new fields by 2050.

The IEA highlights accelerated decline rates in operating fields due to reliance on shale and deep offshore resources. Executive Director Fatih Birol stresses that nearly 90% of upstream investment annually offsets supply losses at existing fields, acknowledging underinvestment threatens global energy supply. Without upstream investment, production equivalent to Brazil and Norway combined could be removed from the market.

California passed Senate Bill 237 to revive crude production due to declining refining capacity and increased import dependence. The law permits 2,000 new drilling permits per year starting January 2026 in Kern County, aiming to supply 25% of crude used by state refineries. Opponents warn of environmental risks and question its impact on gas prices.

California's SB 237 responds to potential refinery closures and rising gas prices, allowing new drilling permits to boost in-state production. However, refinery capacity issues may limit benefits to consumers. Implementation depends on permit approval and production increase, amid challenges like infrastructure gaps and regulatory pressures.

U.S. motorists experience relief as gas prices drop, transitioning to cheaper winter gasoline. GasBuddy data shows a national average price decrease, with further declines expected as refineries ramp up supply. Regional challenges persist, but improvements on the West Coast could lead to continued price reductions.

【Industry News】

The Ksi Lisims LNG project in British Columbia received environmental assessment certification, moving closer to construction. Despite opposition, the project gains approval due to First Nation support and aims to produce 12 million tons of LNG annually for Pacific Basin markets, focusing on Asia's growing demand for low-emission fuels.

Ksi Lisims LNG project, backed by the Nisga'a Nation, gets Canadian environmental approval amidst opposition. It aims to produce 12 million tons annually, targeting Asian markets. Canada's government supports hydrocarbon resources, marking the second LNG project built in Canada within a decade, expected to generate substantial income.

Ukraine restricts Indian diesel imports due to India's purchases of Russian crude, effective October 1. India continues buying Russian crude despite U.S. tariff pressure, incentivized by discounts. Ukrainian fuel imports are necessary due to Russian attacks on depots, but Kyiv avoids fuel processed from Russian crude.

Ukraine's drone strike targets Russia's Kirishi refinery, causing shutdowns and major damage. Limited operations at Primorsk oil terminal follow, threatening supply disruptions. Russian officials downplay damage, but Ukraine's strike deepens penetration into Russia's energy network, affecting export flows from Primorsk and Ust-Luga.

【Company News】

ExxonMobil launches an auto-voting system for retail shareholders, bolstering defense against climate-focused campaigns. Approved by the SEC, the system aligns votes with management recommendations, strengthening support at annual meetings. Critics warn of reduced dissent visibility, while Exxon aims to counteract activist influences.

Ukraine limits Indian diesel imports due to its processing from Russian crude, effective October 1. India maintains Russian crude purchases, benefiting from discounts despite U.S. tariffs. Ukraine's fuel imports remain essential amid Russian attacks on depots, but Kyiv avoids imports tied to Russian crude processing.

Elon Musk buys $1 billion in Tesla shares following a proposed $1-trillion pay package. This comes after Tesla's board suggests goals for major production and market capitalization. Tesla's stock rises post-acquisition, but challenges remain in reversing political backlash affecting sales, requiring sustained investor confidence.

Azerbaijan's Socar nears a deal to acquire Italian refiner Italiana Petroli from the Brachetti-Peretti family. Socar, competing with Gunvor and Bin Butti Group, expands foreign cooperation for projects. The acquisition aligns with strategic partnerships to bolster Azerbaijan's hydrocarbon sector amid global energy demands.

【Others】

China's export restrictions on germanium and other critical minerals raise supply chain issues for Western military systems. Germanium prices hit a 14-year high, prompting companies to seek alternative sources. Lockheed Martin collaborates with Korea Zinc, while Nyrstar evaluates a processing facility to counteract Chinese dominance.

The global renewable chemicals market is projected to grow to $525.8 billion by 2035, driven by sustainability shifts and bio-based product demand. Challenges include high production costs and supply chain variability, but technological advancements and collaborations help mitigate obstacles. The Asia Pacific region leads, with North America expected to experience significant growth.