By Clyde Russell, Asia Commodities and Energy Columnist
Hello Power Up readers! The price of crude oil continues to fluctuate in response to headlines out of the Middle East, a situation likely to persist as long as geopolitical tensions dominate the market narrative. But while the focus is on the Red Sea and the conflict in Gaza, there are significant developments affecting other parts of the energy sector.
The major oil companies are trying to lure shareholders by offering record returns, but leading wind power companies are expecting tough times. Germany is preparing to nationalise the local activities of Russia’s Rosneft, while Australia’s Woodside Energy walked away from a deal to buy rival Santos, a $52 billion merger that would have created a major global liquefied natural gas group.
Signage is seen outside a BP (British Petroleum) petrol station in Liverpool, Britain, February 7, 2023. REUTERS/Phil Noble/File Photo.
Top Western oil companies are handing shareholders more money than ever, and promising even more cash in the future, in a pitch to keep investors happy amid an uncertain future for fossil fuels.
The big five – BP, Chevron, Exxon Mobil, Shell and TotalEnergies – returned a combined $111 billion in dividends and share repurchase in 2023, as Ron Busso reports here. The rise of the tech sector has lured investors away from oil and gas, and the increased payouts are a sign the majors want to retain traditional investors such as pension funds by giving steady, long-term dividends.
A view of the turbines at Orsted’s offshore wind farm near Nysted, Denmark, September 4, 2023. REUTERS/Tom Little/File Photo
The world’s three biggest wind power groups have given downbeat assessments for the year ahead as they grapple with project delays, equipment problems and inflation. Siemens Energy, the biggest maker of offshore turbines, expects a loss, rival Vestas won’t pay a dividend for 2023, while Orsted has announced a portfolio review, as Christoph Steitz, Stine Jacobson and Jacob Gronholt-Pedersen report here.
Woodside Walks Away
$52 billion merger deal with Santos scrapped
Gastech 2023 participants gather at the Australia’s Woodside Energy’s booth in Singapore September 7, 2023. REUTERS/Florence Tan/File Photo
Australia’s Woodside Energy has ended talks with smaller rival Santos to form a $52 billion global LNG giant, with the bigger company saying it will only pursue a deal that clearly benefits its shareholders, as Scott Murdoch and Lewis Jackson report here.
The talks, first revealed in December, faltered as the two companies couldn’t agree on a valuation, according to two sources with direct knowledge of the matter. Woodside had faced pressure from some of its shareholders not to pay a premium for Santos amid concern that the deal didn’t offer enough synergies to make economic sense.
India Leads Oil Demand
IEA says third-biggest importer will drive global growth
Traffic moves along a highway shrouded in smog in New Delhi, India, November 15, 2020. Picture taken with a drone. REUTERS/Danish Siddiqui/File Photo
India is expected to be the biggest driver of global crude oil demand between 2023 and 2030, according to a new report from the International Energy Agency. The South Asian nation is forecast to post an increase in oil demand of almost 1.2 million barrels per day, accounting for more than one-third of the global total of 3.2 million bpd, as Sethuraman N.R. and Nidhi Verma report here.
Quote of the Day
“What we are saying is that someone who isn’t being paid 24 hours a day shouldn’t be penalised if they’re not online and available 24 hours a day.”
Australian Prime Minister Anthony Albanesespeaking to reporters after unveiling plans to introduce laws giving workers the right to ignore unreasonable calls and messages from their bosses outside work hours without penalty.
Output growth to fade as deals slow activity
Crude oil production in the Permian shale basin in Texas and New Mexico will see its slowest annual growth in three years in 2024, as a slew of acquisitions cuts activity among private drillers, as Stephanie Kelly reports here. Lower growth in the largest U.S. oilfield could drag on overall gains in U.S. output, with the Energy Information Administration this month slashing its growth forecast for 2024 by 120,000 barrels per day to 170,000 bpd, a massive cut from the increase of over 1 million bpd achieved in 2023.
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