The price of Brent crude oil retreated from above US$70 per barrel, following concerns of the halt in inoculations with the AstraZeneca vaccine over blood clot concerns in some European countries, threatening the global energy demand recovery
Brent crude oil futures for May contracts traded at US$68.88 per barrel on 15 March.
“There are no silver linings for oil prices this week,” said Rystad Energy head of oil markets analyst Bjornar Tonhaugen. “The positivity that helped prices reach and stay close to $70 per barrel earlier this month has now evaporated, giving way to concerns over vaccination campaign setbacks and crude stock levels,” he said.
France, Germany, Italy and Spain are among 13 European countries that have all halted administering the Oxford-Astra-Zeneca vaccine after reports of blood clots in a small number of recipients being inoculated. These reports are being investigated by the European Medicines Agency.
“Halting the application of AstraZeneca’s Covid-19 vaccine in several countries across the world has caused many more nations to debate a similar stance and has put the speed of the oil demand recovery at risk,” said Mr Tonhaugen.
Meanwhile, driven by increased deepwater activity in the North Sea and South America, global floater activity increased to its highest weekly level in more than a year.
Westwood Global Energy Group’s RigLogix reported 112 floaters – semi-submersibles, drill ships and other mobile offshore drilling units (MODUs) were under contract for week 11 2021, a week-on-week rise of two, with 22 active units in the North Sea and 30 in South America.
Brazil has 17 offshore drilling rigs actively drilling, with four waiting on location, six workover units active, one hot stacked, three warm stacked and two cold stacked, according to Westwood Energy Global Energy. Contracts for 21 rigs have been cancelled, with two other rigs in the shipyard for inspections and five under construction as of 1 March.
Another big driver of exploration activity in South America is Guyana, where energy analyst Rystad Energy expects an annual record of 16 wells drilled in 2021.
Guyana’s exploration drilling activity will be led by ExxonMobil as operator of the Stabroek and Canje blocks. Having set an ambitious divestment target of $15Bn by offloading mature assets in Asia, Europe, and Africa, the US supermajor is expected to prioritise investments in high-value assets such as Stabroek, according to Rystad Energy.
While the year’s first completed well, Bulletwood-1 at Canje block, did not deliver as expected, Guyana holds significant attractive reserves, said Rystad Energy upstream analysts Santosh Kumar. “Rystad Energy data suggests that close to 300M barrels of oil equivalent has been discovered on average for each exploration well (wildcat and appraisal) drilled in the country over the past six years. With around 16 exploration wells planned, including some in riskier frontier regions, 2021 holds a lot of promise,” said Mr Kumar.
To support its campaign, ExxonMobil has contracted a fleet of six drill ships, with Noble Sam Croft arriving in April. The Rystad Energy Offshore Rig tracker shows that three drill ships are currently located in the greater Liza area performing development drilling activity. The recently arrived DP3 harsh environment drill ship Stena DrillMAX already initiated drilling activities on the Longtail-2 appraisal well, while Stena Carron, which recently concluded drilling Bulletwood-1, has now spud the Jabillo-1 exploration well in the Canje block.
ExxonMobil and its partners will deploy four floating production, storage and offloading units (FPSOs) to develop the existing resources within the block, and will ramp up drilling activities, as it plans to have at least five FPSOs online by 2026.
Success at this year’s Mako-2 and Uaru-2 wells on the Stabroek block could potentially firm up the Mako/Uaru area as a candidate for the next FPSO location, said Rystad Energy. On the Canje block, plans are in place to drill two wells in 2021 in addition to the uncommercial Bulletwood-1 find, with the Jabillo well already in progress.
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