Oil Daily | Occidental and Tullow Report Strong Profits; China Oil Imports Decline; Middle East Tensions Rise

【Company News】

Occidental Petroleum reported second-quarter profits of $1.03 per share, totaling $1 billion. The result exceeded analyst expectations by 34%. The company's oil and gas pretax profits for the quarter were $1.6 billion, up from $1.2 billion in the first quarter. Oxy produced 1.258 million barrels of oil equivalent daily during the reporting period, exceeding its guidance figure. The company expects full-year production to include CrownRock assets, with a total of 1.315 million bpd and a third-quarter average of 1.39 million bpd. Occidental plans asset sales worth $970 million and debt repayments of $4.5 billion within the next year. Capital spending for this year was raised to $6.9 billion.

Independent producer Tullow Oil reported more than doubled profit after tax for the first half of 2024 amid higher oil and gas production and increased crude oil realizations. Tullow Oil's profit after tax was $196 million for the first half, up from $70 million in the same period of 2023. Revenue fell to $759 million from $777 million. The company reduced capital expenditure in the first half and expects lower capex in the near term. Full-year capex guidance is revised to about $230 million. Tullow expects a significant free cash flow uplift in the second half of 2024.

Mining and commodity trading giant Glencore has decided to retain its coal and carbon steel materials business after assessing shareholder views. Shareholders supported the retention, believing it enhances Glencore’s cash-generating capacity for investments in transition metals and accelerates the return of excess cash flows to shareholders. The board believes retention offers the lowest risk pathway to create value for shareholders today.

NextDecade Corporation’s Rio Grande LNG project saw its remand authorization vacated by a U.S. appeals court, which ruled that FERC should have issued a supplemental Environmental Impact Statement during its remand process. NextDecade is reviewing the court’s decision and assessing its options. Construction continues on the first three liquefaction trains and related infrastructure at the Rio Grande LNG Facility.

【Global Oil Supply and Demand】

China imported 9.97 million barrels of oil daily last month, a 12% decrease from June and 3% lower than July 2023. The decline follows an 11% annual decrease in June imports, attributed to slumping refining margins and weaker fuel demand. The property sector crisis and the rise of LNG use in trucking have also dampened diesel demand, which is expected to decline by 2% to 7% in the second half of 2024.

【Oil-Producing Countries Dynamics】

Tensions in the Middle East have heightened amid concerns of potential supply disruptions due to the Israel-Iran conflict. Iranian military officials have issued strong responses to Israel's actions, increasing fears of a broader regional conflict that could impact energy infrastructure.

A Ukrainian ground assault on Russian regions continued, forcing Russia to evacuate residents from the Kursk region. Both Ukraine and Russia have targeted each other's energy infrastructure in the past, and the conflict is now expanding to the African front with diplomatic ties severed by Mali and Niger. Ukraine was scrutinized for its alleged role in an attack conducted by Tuareg rebels in Mali.

【Latest Oil Policies】

The U.S. Environmental Protection Agency is auditing at least two biofuel producers over concerns of fraudulent use of used cooking oil to claim government subsidies and tax reliefs. The audits were launched amid concerns that some used cooking oil supplies are re-labeled virgin palm oil. U.S. Senators have called for increased scrutiny and guidance on used cooking oil to maintain the integrity of clean fuels programs.

【Industry News】

China approved the proved gas in-place volumes of over 100 billion cubic meters in a new discovery in the South China Sea. The Lingshui 36-1 gas field is the world’s first large ultra-shallow gas play in ultra-deepwater. CNOOC is boosting domestic oil and gas exploration and production to enhance China’s energy supply and security.

Qatar will invest $180 million in the Europe-based critical minerals investment company TechMet, joining the U.S. development bank in supporting the firm. TechMet focuses on building businesses across the critical minerals value chain. The investment is seen as a strategic move, with Qatar being a key U.S. ally while maintaining good terms with China.

【Others】