US weekly oil and gas rig count falls by the most since February this year

US energy firms cut the most oil and natural gas rigs in a week since February this year, energy services firm Baker Hughes Co. said in its closely followed report on Friday.

The oil and gas rig count, an early indicator of future output, fell by seven to 748 in the week to May 05, 2023.

Despite this week's rig decline, Baker Hughes said the total count was still up 43 rigs, or 6%, over the same period last year.

Oil rigs fell by three to 588 this week, in their biggest weekly decline since March. Gas rigs fell by four to 157, their biggest weekly decline since February.

US oil futures were down about 11% so far this year after gaining about 7% in 2022. US gas futures plunged about 52% so far this year after rising about 20% last year.

That drop in gas prices helped cause the number of rigs active in the Haynesville basin in Arkansas, Louisiana and Texas, the nation's third biggest shale gas field, to fall this week to 62, the lowest since March 2022, according to Baker Hughes.

US oil and gas production grew rapidly in the first two months of 2023 – a delayed response to the high prices and upturn in drilling that characterized much of last year following Russia’s invasion of Ukraine.

But growth is set to decelerate sharply as the more recent slump in prices curtails new drilling and well completions, with the impact evident by the fourth quarter of 2023.

This week, Chesapeake Energy Corp, EOG Resources and APA Corp said they could delay some well completions or ramp down drilling due to weak prices.

Shale producer Diamondback Energy noted rig prices are falling and steel costs are set to decline by about US$20 to US$25 per foot, a sign the inflationary pressures that plagued the oilfield in the past year are easing.

 

 

Russian oil companies add 2,001 new oil wells in Jan-Mar 2023 quarter

Russian oil companies put into operation 2,001 new oil wells in the first quarter of 2023, up 10%YoY, according to Vedomosti daily, citing two sources familiar with Energy Ministry's statistics.

The increase in commissioning of new wells comes amid Russia's voluntary cut in oil production. Russian Deputy Prime Minister Alexander Novak said last week that Russian oil and gas condensate production is expected to decline to around 515 million tons (10.3 million bpd) this year from 535 million tons in 2022.

Major Russian oil companies didn't respond to Vedomosti's requests for comment, the daily said. Rosneft, Lukoil, Gazprom Neft, Surgutneftegaz and Tatneft did not immediately respond to Reuters' requests for comment.

The Energy Ministry's press office said that the government was working together with oil and gas companies to ensure the replacement and growth of oil reserves, the newspaper reported.

"This is done both to maintain current production volumes and to increase them in the future, including through the commissioning of new fields," Vedomosti said, citing the ministry.

 

 

Iranian diesel being smuggled into Pakistan in huge quantity

According to a report by The News International, around 8,000 tons high speed diesel (HSD) is being smuggled into Pakistan from Iran on a daily basis.

Huge quantities of smuggled Iranian HSD has not only had a significantly devastating impact on the production of the domestic refineries, which have a combined HSD production capacity of about 15,000 metric tons per day, but it has also inflicted heavy revenue losses worth billions on the government, Attock Refinery Limited CEO Adil Khattak said.

The Government of Pakistan either does not understand the gravity of the situation or was just turning a blind eye due to the shortage of foreign exchange required for legal imports of the deficit products.

Smuggling of petroleum products from Iran to a limited extent has always been happening in connivance with border authorities, but the scale has never been this huge and unparalleled, which if allowed to continue unabated could lead to the shutdown of local refineries.

Khattak said that the impact of this smuggled HSD had already started showing with Attock Refinery reducing its output to 25% only.

“What is even more alarming is that the emboldened smuggler mafia, with no fear of any reprisal, is offering supply of smuggled products to OMCs (oil marketing companies) on discounted rates minus the petroleum development levy (PDL),” he said. With the presence of some unscrupulous elements amongst the OMCs, their involvement in this criminal activity cannot be ruled out.

Oil and Gas Regulatory Authority (OGRA), Interior Ministry and the border authorities need to wake up before it was too late.

Earlier, Attock Refinery had written a letter to OGRA asking for intervention to ensure the uplifting of HSD by OMCs on consistent basis to help the company operate at an optimum level.

Attock Refinery on Wednesday had announced that it would shut down its plant due to the ongoing smuggling of petroleum products from neighbouring countries.

The refinery announced that oil marketing companies had been slow to uplift HSD from Attock Refinery in recent months, due to the possibility of smuggled products entering the supply envelope.

This has led to a build-up of HSD stocks at the refinery, with very little or no space available in storage tanks. As a result, the refinery has been left with no choice but to shut down its main distillation unit, which has a capacity of 32,400 barrels per day (BPD), for a period of five days, a company statement said.

During this time, the refinery will partially operate at around 25% capacity to carry out essential maintenance work on its downstream units, it added.

The opening stocks of HSD with refineries as of the morning of May 02 stood at 17,000 tons with Attock Refinery, 20,300 tons with National Refinery, 22,000 tons with Pakistan Refinery, 40,500 tons with PARCO, and 11,000 tons with BYCO. The stocks with PAPCO and OMCs stand at 544,000 tons, which brings the total stocks at 654,000 tons.

 

OIC condemns killing of Palestinians in Nablus

The General Secretariat of the Organization of Islamic Cooperation (OIC) has condemned the horrific crime committed by the Israeli occupation forces in the Palestinian city of Nablus.

The OIC called on the international community to intervene to put an end to these ongoing Israeli crimes and provide protection to the Palestinians.

The Israeli army has killed at least three Palestinian fighters and wounded four others while firing live ammunition during a raid in Nablus in the northern occupied West Bank, according to Palestinian officials.

The Israeli army and intelligence service said in a statement that the men were behind a attack on April 07 north of Jericho that killed two British-Israeli sisters when gunmen opened fire on their vehicle. Their mother also later died of her wounds.

Hamas, which is governing the besieged Gaza Strip, said the three men who were killed on Thursday were members of its armed wing.

Hamas, in its statement, claimed responsibility for the attack near Jericho that killed Rina and Maia Dee, and their mother Lucy, residents of the illegal settlement of Efrat, south of Jerusalem.

More than half a million Israelis live in some 200 settlements built on Palestinian land considered illegal under international laws.

The British-Israelis had been on a family outing during the Passover holiday, according to a statement issued by the council of Efrat, the Israeli settlement in the occupied West Bank where they lived.

Hamas spokesman Hazem Qassem told Al Jazeera that “the occupation is completely delusional that by committing its crime in Nablus, it will stop the resistance in the West Bank.”

The Al Qassam Brigade, the armed wing of Hamas, identified the men killed on Thursday as Hassan Qatanani, Muath al-Masri, and Ibrahim Jaber.

The brigade called them “heroes of the Jordan Valley operation that was carried out about a month ago, in which three settlers were killed, in response to the occupation’s crimes against Al-Aqsa Mosque, and the assault on Muslim women.”

As the funerals of the three men were held, political factions in Nablus went on a general strike on Thursday in response to the raid.

The Palestinian Red Crescent said four people were transferred to hospital for treatment and at least 150 people, including schoolchildren, suffered tear gas inhalation.

The raid followed an exchange of cross-border strikes between Israel and Gaza earlier in the week and more than a year of intensifying violence that has seen repeated Israeli raids in the West Bank as well as a series of attacks by Palestinians on Israelis.

Locals in Nablus said large numbers of Israeli troops, including undercover units, raided the Old City as residents were starting the day. The soldiers surrounded one house and exchanged fire with the Palestinian fighters inside, they said.

“So many men from the city have been killed,” a man who identified himself only as Kareem for fear of reprisals told the Associated Press news agency. “We are used to these raids. That’s the story of life in Nablus.”

Reporting from the city, Al Jazeera’s Nida Ibrahim said there was “a tense mood”.

“We’ve heard chants of defiance at the funerals and vows to retaliate,” she said.

US Fed hikes rates despite recession fears

The Federal Reserve voted to raise interest rates Wednesday by another 0.25 percentage points, brushing aside concerns about the financial sector and an expected recession later this year.

The Fed’s rate-setting committee voted unanimously Wednesday to boost its baseline interest rate to a range of 5 to 5.25 percent, the point at which Fed officials expected in March to stop hiking rates, according projections from the Fed’s last meeting.

The latest rate hike is the 10th in a row since the Fed began its program of quantitative tightening in March of last year.

Over the past 14 months, the Fed has boosted borrowing costs and shrunk its balance sheet in a historically swift battle with inflation.

There is still some doubt about what the Fed will do at its next meeting in June as both the broader economy and inflation continue to slow. The collapse of First Republic Bank and deepening concerns about financial stability has also shaken confidence in the economy.

“The US banking system is sound and resilient,” according to a Wednesday statement from the Federal Open Market Committee (FOMC), the Fed’s rate-setting panel.

Even so, the FOMC acknowledged that “tighter credit conditions for households and businesses are likely to weigh on economic activity, hiring, and inflation. The extent of these effects remains uncertain.”

The Fed may pause on rate hikes and fulfill its March projections for the terminal rate. A rebound in inflation, however, could push Fed officials to keep boosting rates.

Inflation has been decreasing steadily since the middle of last year, with the annual inflation rate falling to 5% in March, according to the Labor Department’s consumer price index.

The broader economy is also slowing under the weight of Fed rate hikes.

US gross domestic product grew at an annualized rate of 1.1% in the first quarter, according to Commerce Department data, much slower than the 2.6% growth rate in the final three months of 2022.

While the unemployment rate has remained near 50-year lows, job gains have been slowing.

Economists expect this trend to continue with the Friday release of the April jobs report.

“The April jobs report should confirm that the labor market slowdown is well underway and that the economy is cooling,” EY economist Lydia Boussour wrote in a Tuesday analysis.

Boussour expects the US to have added 175,000 jobs in April, “a result that would imply a marked downshift in the three-month moving average of job growth from 345,000 to a much cooler 246,000,” she wrote.

Job openings also dipped to 9.6 million in March, according to data from the Labor Department Job Openings and Labor Turnover Survey (JOLTS) released Tuesday, the lowest number in nearly two years.

“JOLTS was a good case for signaling a pause in June,” said Claudia Sahm, a former Fed research director and founder of Sahm Consulting, in an interview with The Hill.

The failure of three major banks within two months and lingering concerns about the delayed impact of Fed rate hikes are also raising the stakes of future increases.

“Historical recessions related to financial market problems tend to be more severe and persistent than average recessions,” the Fed warned in the minutes of its March rate-setting committee meeting

 

Ukraine tried to kill Putin with night-time drone attack on Kremlin, accuses Russia

Russia accused Ukraine on Wednesday of attacking the Kremlin with drones overnight in an attempt to kill President Vladimir Putin - the most serious allegation that Moscow has levelled at Kyiv in more than 14 months of war, reports Reuters.

President Volodymyr Zelenskiy promptly denied any Ukrainian involvement, telling a press conference in Helsinki: "We don't attack Putin, or Moscow, we fight on our territory."

A senior Ukrainian presidential official said the incident instead suggested Moscow was preparing a major terrorist provocation.

US Secretary of State Antony Blinken said Washington had not been able to validate the reported attack, and that Russian assertions should be taken with a very large shaker of salt.

Russia reserved the right to retaliate, Putin's office said, and Russian hardliners demanded swift retribution against Zelenskiy himself.

"Two uncrewed aerial vehicles were aimed at the Kremlin. As a result of timely actions taken by the military and special services with the use of radar warfare systems, the devices were put out of action," the presidency said in a statement.

"We regard these actions as a planned terrorist act and an attempt on the president's life, carried out on the eve of Victory Day, the May 9 Parade, at which the presence of foreign guests is also planned ...

"The Russian side reserves the right to take retaliatory measures where and when it sees fit."

Baza, a Telegram channel with links to Russia's law enforcement agencies, posted a video showing a flying object approaching the dome of the Kremlin Senate building overlooking Red Square - site of next Tuesday's Victory Day parade - and exploding in an intense burst of light just before reaching it.

Two similar videos posted on social media showed two objects flying on the same trajectory towards the dome, with the clock on the Kremlin's Spassky Tower reading 2:27 and 2:43. The first seemed to be destroyed with little more than a puff of smoke, the second appeared to leave blazing wreckage on the dome.

Reuters checks on the time and location indicated that the videos could be authentic, although it was not clear how Ukraine, if it were involved, could seriously have expected to kill Putin with a drone strike on the Kremlin - a huge, historic walled citadel in the heart of Moscow.

Ukrainian presidential adviser Mykhailo Podolyak said in comments sent to Reuters, "In my opinion, it is absolutely obvious that both 'reports about an attack on the Kremlin' and simultaneously the supposed detention of Ukrainian saboteurs in Crimea ... clearly indicate the preparation of a large-scale terrorist provocation by Russia in the coming days."

The powerful speaker of the lower house of Russia's parliament, Vyacheslav Volodin, demanded the use of weapons capable of stopping and destroying the Kyiv terrorist regime.

Former president Dmitry Medvedev, now deputy head of Russia's Security Council, said the incident leaves us no option but to physically eliminate Zelenskiy and his clique.

A British expert on Russia, Mark Galeotti, said it was unlikely that the alleged attack had targeted Putin, who notoriously rarely goes to the Kremlin, let alone stays there overnight.

"If we presume it was a Ukrainian attack," Galeotti tweeted, "Consider it a performative strike, a demonstration of capability and a declaration of intent, 'don't think Moscow is safe.'"

The presidential administration said fragments of the drones had been scattered on the territory of the Kremlin complex but there were no casualties or material damage.

The RIA news agency said Putin had not been in the Kremlin at the time, and was working on Wednesday at his Novo Ogaryovo residence outside Moscow.

Victory Day is a major public holiday commemorating the defeat of Nazi Germany in World War Two, and a chance for Putin to rally Russians behind what he calls his special military operation in Ukraine.

Russia marks the occasion with a huge military parade on Red Square, for which seating has already been erected.

The state news agency TASS said the parade - for which the Kremlin last week announced tighter security - would still go ahead.

Before the drone attack was announced, some 10 hours after the event, Moscow Mayor Sergei Sobyanin said the city had introduced an immediate ban on unauthorized drone flights.

Russia has accused Ukraine of numerous cross-border attacks since the start of the war, including strikes in December on an air base deep inside Russian territory that houses strategic bomber planes equipped to carry nuclear weapons. In February, a drone crashed in Kolomna, about 110 km (70 miles) from the centre of Moscow.

Ukraine typically declines to claim responsibility for attacks on Russia or Russian-annexed Crimea, though Kyiv officials have frequently celebrated such attacks with cryptic or mocking remarks.

 

NATO to open Japan office for deepening Indo-Pacific engagement

Nikkei Asia reports, NATO is planning to open a liaison office in Tokyo, the first of its kind in Asia. The station will allow the military alliance to conduct periodic consultations with Japan and key partners in the region such as South Korea, Australia and New Zealand as China emerges as a new challenge, alongside its traditional focus on Russia.

NATO and Japan will also upgrade their cooperation, aiming to sign an Individually Tailored Partnership Program (ITPP) before the NATO Summit in Vilnius, Lithuania, on July 11-12. The two sides will deepen collaboration in tackling cyber threats, coordinate stances on emerging and disruptive technologies, and exchange notes on fighting disinformation.

The idea of opening a liaison office was first discussed between Japanese Prime Minister Fumio Kishida and NATO Secretary-General Jens Stoltenberg during the latter's visit to Tokyo at the end of January. In mid-April, the alliance circulated a draft proposal among its 31 members.

The proposal is to open a one-person liaison office in Tokyo next year. Whether the Japanese side provides the office space or if NATO funds the station is still under negotiation. NATO has similar liaison offices at the United Nations in New York, the Organization for Security and Co-operation in Europe in Vienna, as well as in Georgia, Ukraine, Bosnia and Herzegovina, Moldova and Kuwait.

In many cases the host nation offers office space for NATO. If Tokyo provides the funding for a Western military alliance to have a foothold in Japan, it would symbolize a new phase in defense cooperation.

The intent to deepen cooperation is mutual. Japan plans to create an independent mission to NATO, separating it from the Embassy in Belgium, where it is currently based. A new ambassador will be dispatched, to relieve the NATO duties of Ambassador to Belgium Masahiro Mikami. Kishida told Stoltenberg of the plans at the January meeting.

Officials hope that the NATO-Japan signing of the ITPP would create momentum leading up to the Vilnius summit. The gathering is expected to be attended by the leaders of Japan, South Korea, Australia and New Zealand -- like last year -- signaling NATO's deeper engagement with the Indo-Pacific.

Last June, Kishida, South Korean President Yoon Suk Yeol, Australian Prime Minister Anthony Albanese and then-New Zealand Prime Minister Jacinda Ardern attended the NATO Summit in Madrid. Known as the Asia-Pacific partners (AP4) of NATO, they held a meeting on the sidelines.

Danish Ambassador to Japan Peter Taksoe-Jensen told Nikkei Asia in a phone interview that a NATO liaison office would be the first of its kind in the Indo-Pacific and more than just symbolic. "It would be a very visible, real way to strengthen the relations between Japan and NATO," he said.

The Danish Embassy acts as the contact-point embassy of the alliance in Japan and is coordinating with the member states in Tokyo regarding NATO-Japan collaboration.

Taksoe-Jensen noted that the geopolitical landscape has changed drastically since NATO issued its previous Strategic Concept in 2010.

"At the time, Russia was considered a potential partner and there was no mention of China. In 2022, at the Madrid Summit, allied leaders decided that Russia was no longer a partner but a foe, and that there was also an acknowledgment that China's rise would and could have an impact on trans-European security," he said.

"This is why it is important for NATO to keep up relations with our partners in this region." The envoy said that the liaison office would also reach out to other important actors in the region such as India and ASEAN countries.

Taksoe-Jensen said NATO-Japan cooperation, going forward, will focus on challenges that transcend regions, such as cyber threats, disruptive technology and disinformation activities.

This cooperation, Nikkei has learned, will be formalized in the coming weeks, when NATO and Japan will launch the ITPP to lay out cooperation on fields such as cybersecurity, disinformation and space. It will be an upgrade from the Individual Partnership and Cooperation Program (IPCP) that the two sides signed in 2014.

"There will also be a look at interoperability," Taksoe-Jensen said, regarding how NATO and Japanese forces work together in different areas. But he said it was "a step too far at the moment" to consider the two sides to bolster regional deterrence together.

Michito Tsuruoka, an associate professor at Keio University, said that the war in Ukraine has changed the way NATO sees China. "In addition to the problems China poses by itself, a new dimension has been added: that of China as a supporter of Russia. This now becomes directly related to Europe's security."

Stoltenberg repeatedly mentioned the danger of China and Russia collaborating during his trip to Japan, Tsuruoka told Nikkei Asia.

Tsuruoka said that NATO having a foothold in Tokyo would have a significant meaning for Japan. "It means that when NATO looks at Asia, including China, it will be doing so through Tokyo's prism. When the representative sends back information to NATO headquarters, it will always be via Tokyo."

NATO spokesperson Oana Lungescu stressed Japan's importance in a statement to Nikkei on Wednesday.

"Among NATO's partners, none is closer or more capable than Japan," Lungescu said. "We share the same values, interests and concerns, including supporting Ukraine and addressing the security challenges posed by authoritarian regimes, and our partnership is getting stronger."

She noted long-standing cooperation between NATO and Japan, as demonstrated by Stoltenberg's visit to Japan at the start of the year and the Japanese foreign minister's participation at the meeting of NATO foreign ministers in April.

"The Secretary General has also invited the Prime Minister of Japan, as well as the leaders of our other Indo-Pacific partners, to the Vilnius Summit in July," Lungescu said.

"As to plans to open a liaison office in Japan, we won't go into the details of ongoing deliberations among NATO allies, but in general, NATO has offices and liaison arrangements with a number of international organizations and partner countries, and allies regularly assess those liaison arrangements to ensure that they best serve the needs of both NATO and our partners," she said.