Oil Daily | OPEC Extends Cuts to 2026 Amid Surplus; Alberta Faces Production Constraints; Russian Gas Eases

【Oil-Producing Countries Dynamics】

Alberta reduced its inactive oil and gas wells by 5% to 79,000 last year, spending over C$769 million on closures. The Alberta Energy Regulator emphasized ongoing efforts are necessary to decrease inactive wells. Canada averaged 5.7 million barrels of oil daily in 2023, with oil sands representing 57%.

Alberta faces production constraints due to a proposed emissions cap, which would cut greenhouse gases by 35% from 2019 levels. The cap-and-trade system is seen by Alberta as a production cap. The province is considering challenging the regulation's constitutionality.

Despite OPEC's postponed rollback of production cuts, oil prices faced a weekly loss due to weak demand perceptions, though analysts warn of potential market corrections. OPEC's actions have reduced expected surpluses for 2025, but the market remains in surplus, with some analysts suggesting the full oil removal impact isn't priced in.

Russia has eased natural gas payment requirements, no longer mandating Gazprombank use for transactions. This move, amid US sanctions, offers payment flexibility but still requires payments in rubles. Analysts are divided on the long-term impact, but this change provides relief to countries heavily reliant on Russian gas.

OPEC delayed its planned output increase to April 2025, extending production cuts to the end of 2026. This decision reflects a market-dependent tapering approach, contrary to fears of automatic cut rollback. The move indicates OPEC's response to pessimistic 2025 oil balance predictions.

Crude oil supplies from Russia to the Czech Republic via the Druzhba pipeline were halted. The Czech operator confirmed strategic reserves could cover disruptions for 90 days. The Czech Republic plans to phase out Russian oil imports by July 2025, with infrastructure upgrades underway.

Middle East-China trade is growing faster than Gulf-West trade, predicted to surpass it by 2027. Despite a 17% decline in oil prices in 2023, hydrocarbons remain central to Gulf-Asia trade. China's oil demand is expected to peak around 2030 but remain significant for Gulf producers.

【Latest Oil Policies】

The UK government aims for 95% clean power by 2030, aligning closely with previous Conservative targets. This milestone revises Labour's earlier zero-carbon electricity goal. The UK plans significant renewable energy expansion, including onshore and offshore wind and solar, while facing challenges in decarbonization efforts.

【Industry News】

Chevron plans to reduce capital expenditure in the Permian Basin for 2025, focusing more on free cash flow. The company aims for structural cost cuts and continues investing in lower-carbon projects, indicating a prioritization of cash and shareholder returns over production growth.

Petrobras and Ecopetrol confirmed a major natural gas discovery in Colombia's Guajira Offshore Basin, potentially doubling the country's reserves. However, security and policy challenges persist, including pipeline attacks and fossil fuel transition policies under President Petro's administration.

Many small traders have exited Russian crude oil trading with India due to Russia's high interest rates. Despite Russia being India's largest crude supplier, higher interest rates have increased trade costs, leaving the market to a few trading houses like Litasco Middle East and others.

【Company News】

Private equity firm EQT is launching a new fund, EQT Transition Infrastructure, to invest in clean energy. Its first acquisition is Germany's juniz Energy. The strategy aims to support sustainable energy infrastructure, led by Jan Vesely in New York and Asis Echaniz in Madrid.