The Market, Energy, And Political Page, T+30 -- December 6, 2018

The news coming out of OPEC does not sound good for those hoping for a cut in production. US is no doubt putting a lot of pressure on Saudi Arabia. Russia, too, a huge problem. 

It's back ... the Groningen. I can't count the number of posts I had on this Dutch natural gas field over the years ... until it went away. But now this: the story is back even if Groningen is not. From Rigzone:

The EU is facing the perfect storm of dwindling local supply, rising demand and increased dependence on Russian state-owned Gazprom for its supply of natural gas, as analysts and observers mull what, if any governmental action, must be taken.

At issue is mainly how output from the Groningen field in the Netherlands will continue to decline, thus making the EU more dependent on both pipeline and liquid natural gas (LNG) from outside the EU borders.

According to European Commission data, the EU imported 69 percent of its natural gas in by the first semester of 2018. Over 37 percent of the gas the EU member countries imported by the first semester 2018 came from Russia, while 33 percent and 11 percent came from Norway and Algeria, respectively.

Excluding Turkey, the EU imported record high pipeline volumes from Norway and Russia, which increased to 116 billion cubic meters and 169, respectively, in 2017, according to data from Rystad Energy. “We expect Europe to increase its imports over the next years as the Groningen field will continue to decline driven by the announced scale backs,” Sindre Knutsson, senior analyst, gas markets, Rystad Energy. “Post 2020, both Norwegian and UK production is set to decline, strengthening this effect.”

Russia aside, the risk of over-dependence on a single supplier is more important than the possible downsides of boosting gas imports overall, said Thierry Bros, senior research fellow, Oxford Institute for Energy Studies, said.

Declining gas production in the region is coupled with rising demand, which obviously means the EU will need more gas from different sources — but that not necessarily mean the EU member states will be “overly dependent” per se, Bros said.

And then a long bit on the Russian factor. Well worth the read. 

Revisiting "bait and switch": the writer places the blame in the wrong place. Also from Rigzone:

The Organization of Petroleum Exporting Countries (OPEC) created a mess.
That’s according to FGE founder and chairman Fereidun Fesharaki, who made the statement in a television interview with Bloomberg on Wednesday.

“Donald Trump said that he is going to take it [Iran oil exports] from three million barrels per day to zero and OPEC countries they prepared for it, producing too much oil in September and October, and now we have a huge amount of inventories,” Fesharaki said in the interview.

“We need to cut 1.4 million barrels per day of oil for three months to be able to bring it in balance. So it is not something which can be fixed quickly, but OPEC created a mess, partly because of … [its] own actions, partly because being misled by Donald Trump, but now OPEC has to clean up the action with a little bit of help from the Russians,” he added.

Fesharaki highlighted three possible OPEC meeting scenarios in the Bloomberg interview.

“You can have a one million barrels per day cut which the markets will be disappointed [in] but would not allow a significant drop in the price, maybe a couple of dollars. You can have a no deal, which could then result in substantial drop in the price, or you can have 1.3, 1.4 million barrels per day deal and the markets will move up slightly,” Fesharaki stated in the interview.

One can blame OPEC if one wants, but it was the "bait and switch" on the waivers that were directly responsible. Saudi Arabia was either a) taking advantage of the situation; or, b) was being responsible by increasing production in anticipation of a global shortage of oil. But it was the waivers that upset the apple cart, or perhaps better said, tipped over the oil bbl.