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▌Exxon Mobil sues US government for its levy of a $2 million fine. The US Treasury Department on Thurs. placed the fine on Exxon Mobil for its three-year-old joint venture with Russia’s Rosneft. Treasury cited “reckless disregard” of US sanctions weeks after Russia’s annexation of Crimea in Ukraine. Specifically, between May 14 – May 23, US-based Exxon executives signed eight documents with Igor Sechin the CEO of Rosneft, who individually was the subject of sanctions. Exxon Mobil claims that the fine is “fundamentally unfair” and that Sechin “was subject to sanctions only in his individual capacity” and that guidance from the Obama administration said the sanctions “applied only to the ‘personal assets’ of the sanctioned individuals…but did not restrict business with the companies those individuals managed”. The issue at hand occurred when current Secretary of State Rex Tillerson was CEO of Exxon Mobil.
▌US fuel ethanol production continues to grow in 2017. In 1H 2017, US weekly ethanol production averaged 1.02 mbpd, a 5% increase from the same period in 2016. If ethanol production continues to grow through the second 2H, like the EIA predicts, 2017 will set a new record for annual fuel ethanol production. The growth can be tied to the high production of corn, the main feedstock of ethanol in the US. In fact, the Department of Agriculture estimates the US produced a record of 15.1B bushels of corn in the harvest year 2016-2017.
▌Total in talks with Myanmar to build power plant, supply LNG. The company, which sold 11 MT of LNG last year, is seeking to move further into downstream activities like power plants to help stimulate gas demand as it diversifies away from oil. The move underscores a concern among natural gas producers that there is not enough global demand to absorb current excess supply as spot prices in Asia, traditionally a region of higher gas prices, have dropped 70 percent since 2014. Total, however, is optimistic about the future of gas in Myanmar, which is predicted to grow quickly over the next decade in energy-intensive industries.
▌Smaller Chinese companies seek LNG, start of terminal operations. Smaller players are pushing ahead with plans for regasification and storage terminals in an effort to secure a toehold in the domestic supply chain. Zhenjiang Provincial Energy has announced its interest in buying 1 Mmta of LNG for 20 years beginning in 2020, when it is expected to have terminal access. It is also in talks with CNOOC over acquisition of a majority stake in Ningbo phase 2 expansion and with Sinopec for capacity at the proposed Wenzhou terminal.
▌Midwest wholesale asphalt barge prices firmed last week, while rail was steady. Flux remained unchanged. ▌The market continued to see healthy levels of LNG chartering activity this past week, some for multi-months, which has caused excess shipping to be partially absorbed both East and West. Provided that fixture activity remains high, commercial terms should continue to improve. ▌2016 NGL productin volumes were recorded higher than the estimate at the start of 2016 by around 0.8 million Sm3, and 1H 2017 figures point to higher than anticipated NGL production for 2017 as well. ▌Energy stocks recover from 7-month downward trend
▌European shares static as corporate earnings fail to lift effect of strong euro on exporters.