Oil Updates — Crude gains; OPEC’s revenue surged in 2021; Petrofac sees modest free cash outflow

RIYADH: Oil prices rallied for a third day on Tuesday as major producers Saudi Arabia and the UAE looked unlikely to be able to boost output significantly, while political unrest in Libya and Ecuador added to supply concerns.

US West Texas Intermediate crude futures rose $1.8, or 1.6 percent, to $111.36 a barrel by 0644 GMT, extending a 1.8 percent gain in the previous session.

Brent crude futures climbed $1.9, or 1.7 percent, to $116.99, adding to a 1.7 percent rise in the previous session.

OPEC boosts oil income in 2021, well completions drop

Oil revenue for the Organization of the Petroleum Exporting Countries surged in 2021 as prices and demand recovered from the worst of the COVID pandemic, while the number of its members’ active rigs posted a modest rebound and new completed wells declined, data from the group showed.

The value of petroleum exports by the 13-member group reached $561 billion in 2021, up 77 percent from 2020, OPEC’s Annual Statistical Bulletin published on Tuesday showed.

As output was raised in 2021, the number of active oil rigs in OPEC members rose by 11 percent to 489, a smaller increase than that seen worldwide. Top exporter Saudi Arabia added six rigs to 65 in 2021, although the total was below the 2019 level.

OPEC and its allies, known as OPEC+, have been struggling to boost output in line with targets, reflecting under-investment by some members in drilling and exploration. The shortfall is one of the reasons oil prices have soared in 2022.

Petrofac sees modest free cash outflow

Oilfield services provider Petrofac Ltd., said on Tuesday it expects modest free cash outflow during 2022 due to delays in cash collections from clients, although it projects net debt to be reduced in the second half of 2022.

Shares of the company jumped nearly 5 percent in early trading.

Petrofac also said its net debt had doubled to $345 million, as of June 23, following the payment of a penalty to Britain’s Serious Fraud Office and slower payments from clients.

The company was fined $104 million last year after pleading guilty to bribes related to contracts in Iraq, Saudi Arabia and the UAE between 2011 and 2017. 

In the second half of the year, Petrofac expects revenue for its Asset Solutions unit to be higher, supported by strong order intake in the year to date.

“We have a healthy 18-month Group bidding pipeline and we expect to secure significant new orders in 2023, underpinned by opportunities in the UAE and offshore wind,” CEO Sami Iskander said in a statement.

The company said its half-year trading was in line with expectations, as an upswing in oil prices raised demand.

Sri Lanka to let firms from oil-producing nations import, sell fuel

Sri Lanka will allow companies from oil-producing nations to import and sell fuel in the country, the power and energy minister said on Tuesday, as the country tries to overcome a massive shortage of petrol and diesel.

“Cabinet approval was granted to open up the fuel import and retail sales market to companies from oil-producing nations,” Kanchana Wijesekera said on Twitter. 

“They will be selected on the ability to import fuel and operate without forex requirements from the central bank and banks for the first few months of operations.”

(With input from Reuters)