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In this week's Trillion Dispatch

  • Russian oil price rise, buyers increase

  • Oil prices to rise throughout 2023

  • India to increase LNG imports

The Big Idea...

European Energy Prices Spike Amid Supply Woes in France

(Bloomberg) -- European energy prices soared amid concerns about France’s nuclear fleet and disruptions due to widespread strikes, along with a late-winter cold blast in other parts of the region.

Benchmark natural gas futures settled 21% higher, the biggest jump since June. French year-ahead power surged 16%, the most in more than six months. 

Traders are closely monitoring the market for any potential factors that could affect gas and power prices, after both slumped recently. Defects discovered at two French nuclear reactors have raised concerns about the long-term health of the nation’s fleet, while strikes are set to upend operations at energy facilities into next week.

France’s four liquefied natural gas terminals remain blocked by the labor action, which is currently expected to continue until March 14. 

While the country was a net power exporter on Friday — thanks partially to strong wind generation — strikes at Electricite de France SA’s facilities curbed its capacity by 11.2 gigawatt in the morning. The company’s workers also plan to strike again next week, adding to market tremors.

Separately, EDF this week announced that it discovered new defects at two nuclear reactors that were halted for maintenance and repairs. That’s renewed concerns that the company’s electricity output will remain largely constrained this year after plunging in 2022.

By: Elena Mazneva and Asad Zulfiqar, Bloomberg News
©2023 Bloomberg L.P.

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Russian Oil Gets More Pricey as Pool of Asian Buyers Expands

(Bloomberg) -- The price of Russian crude and fuel is rising for buyers in Asia as a pool of bigger customers from China and India expands, putting pressure on smaller refiners that have eagerly consumed the cheap oil.

Offer levels for Russia’s Urals and ESPO crude, as well as fuel oil, surged over the past weeks, according to traders with knowledge of the matter. Increased interest from Chinese state-owned and large private refiners such as Sinopec, PetroChina Co. and Hengli Petrochemical Co., in addition to a jump in Indian demand, led cargoes to be snapped up at higher prices, they said.

The larger refiners have muscled in to a patch typically dominated by China’s smaller independent processors, known as teapots, which have been consistent consumers of discounted Russian crude. ESPO oil from the nation’s Far East has been a particular favorite due to its short shipping distance.

Offers for ESPO that’s typically loaded at Kozmino port was close to $6.50 to $7 a barrel below ICE Brent on a delivered basis to China, while flagship Urals shipped from western ports was around $10 under the same benchmark, said traders. That’s an increase of as much as $2 from last month, marking one of the steepest jumps since sanctions were imposed on Dec. 5, they added. 

China and India have become key outlets for Russian crude after most others shunned its energy due to the war in Ukraine. The pool of buyers willing to import cheap oil from the OPEC+ producer has grown as more players set aside concerns over Western sanctions that had kept them on the sidelines.

By: Bloomberg News with assistance from Elizabeth Low.
©2023 Bloomberg L.P.

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Oil Prices Are Set To Rise Throughout 2023

Crude oil prices started this week with a loss. The reason for that initial weekly loss came down to overall global economic growth pessimism and expectations that the U.S. Federal Reserve will continue raising interest rates, making the dollar more expensive and sapping demand for dollar-priced crude.

But by the end of Monday, oil prices had rebounded and were trading higher, extending the rally into morning Asian trade on Tuesday. The reason—comments from attendees at the CERAWeeek industry conference—suggested that supply will tighten before too long.

Just another week in oil, some would say, and indeed, oil prices fluctuate constantly, to such an extent it is extremely difficult to predict them with any accuracy, especially over a shorter period of time. Yet it does bear pointing out that most forecasters seem to expect higher prices for oil later this year. There appears to be broad consensus on this.

Some, such as Forbes' Bill Sarubbi, note the technical data of oil trading to suggest prices are going to go higher. In a recent story, Sarubbi said that historical data shows oil prices tend to rise between March and May most of the time, so it makes sense to expect them to rise this year as well.

Others, such as Refinitiv, the data analytics firm, single out two factors that will drive prices on the supply and demand sides, respectively: Russia and China. And Refinitiv expects Brent crude to rise above $100 per barrel by the end of the year and average $90 for the full year 2023.

By: Irina Slav for Oilprice.com
© OilPrice.com

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India’s Efforts to Avoid a Power Crisis Set to Boost LNG Imports

(Bloomberg) -- India will boost fuel imports after gas-fired power stations were asked to increase output to meet soaring demand during the summer months.

Gail India Ltd. will tap the seaborne market to supply state-run power producer NTPC Ltd., which has been asked by the government to run 5 gigawatts of plants to meet peak demand during April and May, according to people familiar with the matter, who asked not to be named as the details are private.

New Delhi-based NTPC estimates it will require 250 million metric standard cubic meters of the fuel during the two-month period, according to some of the people. An additional 4 gigawatts of capacity run by other companies will also be kept ready to operate if needed.

NTPC and a Gail spokesman didn’t immediately reply to emails seeking a comment. 

India’s government is taking action as harsher-than-expected weather threatens to create a surge in electricity demand. An early onset of hot weather has already pushed power demand to near-record levels, stoking fears of a repeat of the intense heat wave last year. 

India has already invoked an emergency rule forcing some plants running on imported coal to run at capacity. 

Nearly 25 gigawatts of India’s gas-fired capacity has been lying underutilized for years, as the electricity is too costly for the competitive market dominated by coal. Bringing these units back shows the extent of the challenge, as the nation is forced to ditch concerns over high prices to meet supply shortfalls.  

By: Rajesh Kumar Singh and Rakesh Sharma, Bloomberg News
©2023 Bloomberg L.P.

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Norway Isn’t Worried About An Oil Buying Cartel

Norway isn’t worried about The EU’s plan to join together to purchase natural gas from global markets, the country’s oil and energy minister said on Friday.

The natural concern would be, of course, that a group of countries rallying together to collectively purchase natural gas would effectively act as an oil-buying cartel that could exert extended influence in the global markets.

Norway’s oil and energy minister Terje Aasland told reporters on Friday that the arrangement could actually benefit Norway’s energy companies through “negotiations on a commercial basis.”

Twenty-two of the 27 EU member states have shown an interest in collaborating with other member states for gas demand.

Norway is now Europe’s largest natural gas supplier after replacing much of the supplies that were previously coming from Russia.

The EU’s buyers group is prepared to offer its first tender for gas supplies next month on the international market following months of discussions on how to secure gas supplies without unwittingly jacking up the price by competing with each other.

The EU and the four neighboring countries will need 24 billion cubic meters of natural gas over the next three years—a significant amount of gas to purchase on the spot market without causing a spike in prices.  
 

By: Julianne Geiger for Oilprice.com

©2023 Bloomberg L.P.

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Trillion Energy News

WEEKLY DRILLING REPORT MARCH 10, 2023

WELL: West Akcakoca-1

  • Days since move: 23
  • Progress: 587 metres
  • Measured Depth: 3724 metres

Week Summary:

  1. Drill 8 ½” x 9” hole to 3724
Further Activities:
  1. Drill 8 ½” x 9” hole to TD of about 3820 metres (finished by Friday)
  2. Evaluate the gas readings in the mud logging
  3. Run in and cement 7” casing
  4. Clean borehole, perforate, test and turn over to production
  5. Skid back over to Guluc 2 to perforate, test and turn over to production
 
Well drilling activity is going as expected. 

Trillion Energy is an oil and gas producing company with multiple assets throughout Turkey and Bulgaria. The Company is 49% owner of the SASB natural gas field, one of the Black Sea’s first and largest-scale natural gas development projects; a 19.6% (except three wells with 9.8%) interest in the Cendere oil field; and in Bulgaria, the Vranino 1-11 block, a prospective unconventional natural gas property

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