S&P’s Simon Redmond and Elena Anankina analyse the pandemic’s effect on the energy transition in Euractiv

The COVID-19 pandemic has had a profound impact on the energy sector. Writing in Euractiv, Simon Redmond and Elena Anankina, Senior Directors at S&P Global Ratings, analyse the contrasting effects of the outbreak on the oil and natural gas sectors, and the implications for the wider energy transition.

Oil has suffered the most pronounced short-term impact of all energy sources, with demand falling by over 20 million barrels a day in March and April 2020 alone. On the other hand, gas has remained relatively resilient to the immediate impacts of the pandemic.

The downside for gas, rather, is expected to be longer term: its role as a “bridge fuel” is set to be shortened by an expedited transition to renewables. And, while oil demand has taken a short-term hit, its long term trajectory is set to be largely unchanged. The full article, in Euractiv, can be found here.

 

S&P Global Ratings’ Michael Ferguson explores how California’s 100% renewable mandate will impact power markets; covered by the specialist press

In September, California Governor, Jerry Brown, unveiled a new gold standard for renewable energy in the U.S. – a mandate requiring the state to go 100% “green” by 2045. Yet for all the bill’s praise, a report published by S&P Global Ratings suggests that numerous technological and political challenges lie ahead.

As California edges towards its renewable goal, the economics of gas-fired generation promises to worsen. On the flip side, renewable energy will of course benefit though the extent of this will depend on the asset type. The durability and reliability of hydro and geothermal power, for instance, put these assets in pole position. Question marks remain over solar and wind, however:  the intermittent nature of these resources will, according to some estimates, necessitate a 200-fold increase in battery storage. Development in this sector has yet to truly take off.

Following Moorgate’s outreach, Climate Change News, Infrastructure Investor, Energy Manager Today, Energy Manager Today, NA Clean Energy, and Environmental Finance covered the news.

Proposition 112: S&P Global Ratings outlines the credit negative impacts for Colorado-based utilities before critical vote; covered by the specialist press

On the recent November ballot, Colorado’s citizens voted against measures that would have changed the nature of the state’s oil and gas development. Before the vote’s defeat, S&P Global Ratings published a report outlining the possible risks for energy exploration and production (E&P) companies, should the proposal be made law.

Proposition 112 would have required that E&P companies extend well setbacks (the permissible distance between a wellhead and surrounding structures) from 500 feet to 2,500 feet. This distance would have, in effect, rendered 85% of the state unusable for oil and gas drilling. By some estimates, this could have decreased the state’s GDP by some US$26 billion annually by 2030.

Michael Grande, director, S&P Global Ratings, said: “Passage of Proposition 112 is clearly a credit negative for the energy companies we rate, and it will affect some companies more than others.”

Following Moorgate’s outreach, Upstream (behind a paywall), Oil Voice, and Oil Gas Journal covered the news.

S&P Global Ratings publishes its inaugural edition of U.S. Corporate Insights

 S&P Global Ratings has published its inaugural edition of U.S Corporate Insights – answering the questions on investors’ mind regarding the latest corporate credit trends, such as: how are looming trade wars and higher debt levels affecting appetite? And, as we near the latter stages of the credit cycle, is the current state of play one of peak, plateau, or peril?

The edition also provides sector views from S&P Global Ratings analysts on oil and gas, autos, real estate, and media and telecoms.

Read the latest edition here

Moorgate compiles, edits and designs U.S Corporate Insights

Natixis, IBM and Trafigura team up on blockchain oil platform – reported by the press

Natixis, IBM and Trafigura have pioneered the first blockchain solution in commodity trade finance for US crude oil transactions. The distributed ledger platform, built on the Linux Foundation open source Hyperledger Fabric, allows major steps in a crude oil transaction to be digitized on the blockchain, ensuring improved transparency, enhanced security, and optimized efficiency.

More specifically, the new trading platform allows trade documents, shipment updates, delivery and payment status to be shared across a single shared ledger, helping to reduce transaction time, duplication of documents and authentication processes among all trading partners.

The initiative is part of a broader effort to modernize trading in the global crude oil industry, which today is predominantly driven by manual, non-digital processes.

Following Moorgate’s outreach, the news was covered by: Finextra, Coinspeaker, GTR, Finance Magnates, Banking Technology, Bitcoin Magazine and Business Insider.

 

Natixis’ Abhishek Deshpande sheds light on OPEC’s oil production freeze in The Economist

Abhishek DeshpandeFollowing the decision taken by the Organisation of Petroleum Exporting Countries’ (OPEC) in November to cut production by 1.2m barrels a day – the first agreed cut since 2008 – Abhishek Deshpande, Natixis’ senior oil analyst, offered his oil market forecast to The Economist.

While some speculators believe the production freeze marks the beginning of the end for the global oil market glut, Deshpande believes any continuation of the oil price’s surge is, in fact, reliant on non-OPEC members committing to cut output at a meeting on December 9th.

Deshpande says, “Traders will monitor oil-tanker traffic to ascertain whether fewer are leaving port. They cannot monitor Russia’s pledge to cut 300,000 b/d of production, because much of its production moves by pipeline.”

To read the full article, please click here.

Specialist press cover Commonwealth Enterprise and Investment Council and Ship Owners Association of Nigeria’s joint Maritime event

The Commonwealth Enterprise and Investment Council (CWEIC) and the Ship Owners Association of Nigeria’s (SOAN) joint event “The Future of the Maritime Industry in Nigeria” at Marlborough House on 28th September was featured in All About Shipping, Hellenic Shipping News, Oil, Gas and Shipping Magazine, Marine Link, This Day and Marine Network.

Investors, business leaders and government officials – representing maritime interests from across the Commonwealth – united in a bid to stimulate discussion, increase cooperation and forge partnerships around the myriad opportunities of Nigeria’s maritime sector. Hosted as part of CWEIC’s Commonwealth Maritime Initiative (CMI), which aims to promote the maritime industry as a key driver of economic growth and trade (cargo carried by sea is set to quadruple by 2050), and to connect maritime business interests with state-level representatives and organisations from across the Commonwealth.

Focusing initially on Nigeria   ̶   before expanding across the Commonwealth  ̶   the CMI aims to maximise commercial opportunities in an industry often suffering from chronic underinvestment. Nigeria, Africa’s largest economy with a huge maritime ecosystem, is its initial focus   ̶   offering substantial investment and development opportunities across shipping, mining, manufacturing and service industries.

commonwealth-maritime-initiative-nigeriaNigeria’s maritime industry was hailed as a driver of economic growth and alternative revenues for a country trying to diversify away from reliance on oil. Nigeria’s government recently announced economic reforms aimed at transforming Nigeria into one of the most attractive investment destinations in the world by 2019, with maritime set to play a key role in Nigeria’s economic future.

Greg Ogbeifun, Chairman of SOAN and Co-Chair of the CMI said: “The roundtable gave CMI members the chance to network and explore Nigerian maritime investment opportunities, learn about industry best practices and challenges, and be at the forefront of radical and exciting change in the Nigerian economy. The UK is the world leader in maritime services, and by hosting this event in London we ensured conditions were ideal for an insightful, productive and profitable meeting of minds.”

Following this successful event, CWEIC will expand the CMI across the Commonwealth, highlighting further investment opportunities across the many developing, coastal economies within the 53 nation collective.

 

Natixis’ Abhishek Deshpande scoops The Petroleum Economist’s energy executive of the year award

Abhishek DeshpandeNatixis’ senior oil analyst, Abhishek Deshpande has been named The Petroleum Economist’s “2016 Energy Executive of the Year”.

Judged by industry leaders – including former OPEC Secretary General, Abdalla El- Badri and former BP executive, Lord John Browne, Baron Browne of Madingley – The Petroleum Economist Awards acknowledge the individuals, as well as organisations and projects, who are advancing the energy industry.

In an awards ceremony at the Banking Hall in the City of London, Deshpande’s stewardship of Natixis’ commodities research team was championed as market-leading, and has supported the banks’ sales, trading and finance activities throughout the year. Indeed, his bold prediction on Brent North Sea crude oil prices in Q4 2015 won Deshpande many plaudits across the industry.

To read the full article, please click here.

Natixis’ Abhishek Deshpande comments on the oil market’s bearish outlook in City A.M.

03cdc0e1a48d0085cf209f9e1439eb50_400x400With Brent crude falling to $44.56 per barrel in today’s late morning trading, Natixis’, senior oil analyst, Abhishek Deshpande spoke to City A.M. about his views on the market’s current spell of negativity.

Following increased supply due to record output from the Organisation of Petroleum Exporting Countries (OPEC) and increased drilling activity in the US, coupled with disappointing supply, the oil market has turned increasingly bearish.

Deshpande comments: “Money managers’ speculative positions have been coming off significantly”, following the news hedge fund managers have tripled their bets against the oil price rallying.

To read the full article, please click here.

S&P Global Ratings outlines LNG’s top ten trends: what to look out for in 2016

energyvoiceIn an article for Energy Voice – a magazine focusing on the renewable, oil, and gas sectors – Simon Redmond, a commodities specialist at S&P Global Ratings, outlines the ‘top ten’ developments to watch out for in the liquefied natural gas (LNG) market.

Redmond explains that while LNG has historically maintained a relatively stable price, the coming months will likely see increased market volatility as demand declines, production continues at similar rates and the resulting global glut diminishes unit prices.

“In order to reflect the new ‘low-price’ environment, LNG contracts are being re-negotiated to favour utilities and off-takers over the traditionally favoured producers,” according to Redmond.

As a result – and given tighter profit margins – Redmond warns that LNG projects may take longer to repay their debts, meaning an adverse impact on related credit ratings could be on the cards. He also notes that despite the current glut, the need to entice investors to capital intensive LNG projects should continue to drive producers’ strategy, efficiency and, in turn, profits.

To read the full article, please click here.