This is a repetition of what happened in 2013 and 2014, and eventually led to another oil price crunch as seen Brent crude and WTI below US $ 30 a barrel. As a result, many Aegis focused on the U.S., producers who are dependent on debt will be subjected.
Banks that provide the debt needed by shale producers are the natural target for NOPEC's opponents. Banks are burned during the crisis in 2014 and are still recovering and regaining their industry confidence. Nylon towels are wiped out while the WTI climbs below US $ 60 per barrel, but lenders are certain that this is a bigger extent of OPEC action: the cartel reduces production and the impact on prices has become increasingly visible.
<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = " Related: Pakistan Aims To Related this: Pakistan aims to become a Natural Gas Hotspot
In fact, if OPEC starts to pump again to the maximum capacity, even without Iran and Venezuela, and with continued losses in Libya, it will prove of the prices are significant, especially when Russia is in. After all, state oil companies are in pain to start pumping more.
The NOPEC law has little chance of becoming a law. this is the first attempt by US lawmakers to make OPEC accountable for its cartel's behavior, and none of it has done so in a law.However, the very threat of Al-Mazrouei shows the weakest US shale point: the industry's hopes for borrowed money.
<p cl ass = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm" The issue was assessed deeply by energy expert Philip Verleger in a Oilprice story earlier this month and what the problem falls on is too much on debt Shale, as chief executive of Total put it in an interview in 2018 in Bloomberg, is extremely capital-intensive. Returns can be attractive if you are drilling and fracking in a sweet place on the patch of blackboard. By doing all the better but ultimately you need lots of cash to continue drilling and fracking, despite all the compliments about declining production costs on the chalkboard. "data-reactid =" 18 "> The issue was assessed deeply by energy expert Philip Verleger in a Oilprice story earlier this month and what the problem boils down to is too much debt Shale, as chief executive of the Total put into an interview in 2018 in Bloomberg, is very strong in the capital. The returns may be attractive if you are drilling and fracking in a sweet patchy patch site. It can also be improved by doing all the better but ultimately you need a lot of money to continue drilling and fracking, despite all the compliments about the decline in shale-playing production costs.
The fact that this is a lot of cash may come from banks only highlighted before: the oil and gas industry chalkboard is faced with a crisis of confidence in investors after 2014 crawling ash because the only way it knows how to do business is to pump the constantly increasing amount of oil and gas. Returning shareholders do not take the lead in the agenda. It needs to change after the crash and most of the smaller players-the survivors-have not yet fully recovered. Free money remains a luxury.
<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "[RelatedProjects:AngEIAPegilanProjectProjectOilOutput " data -reactid = "20"> Related: EIA Prevents US Oil Output Projects
The industry knows this weakness. The American Petroleum Institute has been called against NOPEC, almost as vocally as OPEC itself, and Bob Dudley of BP this week at Houston's CERAWeek said that NOPEC "may have serious unexpected consequences if it releases of litigation around the world. "
"Seriously misunderstood consequences" is not a phrase bankers who want to hear. The chances are they join the opposition to the law to keep the shale wheels. In the meantime, the industry may want to consider ways to reduce its dependence on borrowed money, perhaps by removing production at a point before it is forced to do so.
By Irina Slav for Oilprice.com
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