Oil Updates — Crude slides; Shell, Exxon launch sale of Dutch gas venture

RIYADH: Oil fell on Tuesday after a two-day rally as concern about weaker demand returned along with the prospect of more interest rate hikes, trumping support for the Organization of Petroleum Exporting Countries and allies first output target cut since 2020.

New COVID-19 lockdowns in China have added to worries that high inflation and rate hikes will hit demand. The European Central Bank is widely expected to lift rates sharply when it meets on Thursday.

Brent crude was down $2.33, or 2.4 percent, to $93.41 at 0940 GMT. 

US West Texas Intermediate fell from Monday’s trading to $87.02, up 15 cents from Friday’s close. There was no settlement on Monday, the US Labor Day holiday.

Shell, Exxon launch sale of major Dutch gas venture: document

Shell and Exxon Mobil have put up for sale one of Europe’s largest and oldest natural gas production ventures, betting on soaring energy prices amid tensions with Russia to attract buyers, according to a document and industry sources, Reuters reported. 

The top two Western energy giants could raise over $1 billion from the sale of the 50-50 NAM joint venture in the Netherlands, two industry sources said.

It would be part of both companies’ efforts to shed aging assets that are no longer central to their operations.

Shell and Exxon recently launched the sale process for NAM’s offshore gas operations, which include dozens of fields and around 20 offshore platforms, as well as a network of pipelines and three processing plants, according to the document and sources.

NAM started producing natural gas in 1963 following the discovery of the giant Groningen field and has been a major source of gas for the Netherlands and Europe for decades.

Its output has nevertheless been in a steady decline since 2014 and is set to fall further in the coming years after the Dutch government decided to shut Groningen in order to limit seismic risk in the region.

The field is expected to shut down in 2023 or 2024 but its life could be extended, the government has said.

Capricorn lowers production outlook on drilling delays in Egypt

Oil and gas producer Capricorn Energy on Tuesday lowered its annual production outlook, as it drilled fewer wells in Egypt in the first half due to commissioning delays and logistics challenges.

The group now expects to produce 33,000 to 36,000 barrels per day for the year. It also reported an operating loss of $37.3 million for the six months ended June 30, compared with a loss of $47.4 million the previous year.

Russia will respond to oil price caps by shipping more to Asia: Minister

Russia will respond to price caps on Russian oil by shipping more supply to Asia, its energy minister Nikolai Shulginov told reporters at the Eastern Economic Forum in Vladivostok on Tuesday.

“Any actions to impose a price cap will lead to deficit on (initiating countries’) own markets and will increase price volatility,” he said.

Finance ministers of the United States, Germany, Italy, Japan, Great Britain, France and Canada gave the green light last week to the idea of capping the price of Russian crude to reduce Moscow’s revenue in response to its invasion of Ukraine.

(With input from Reuters)