The most recent articles published about Consilience or written by Consilience associates on topical subjects
Tough Times Ahead
Petroleum review – August 2016 – Liz Bossley
“Following the referendum vote, Liz Bossley, CEO of The Consilience Energy Advisory Group, argues the cup is neither half full, for half empty, but smashed to the ground!
The UK government’s attempt to cherry pick bits of EU legislation is in for a tough time.”
Can bitcoin be the new oil currency?
Petroleum review – June 2016 – Liz Bossley
What would Winston Churchill and Franklin D Roosevelt (FDR) make of cryptocurrency? Churchill presided in 1925 over Britain’s return to the gold standard after WWI, before it was finally abandoned again in 1931.
Take your Partners for the Producers Two-step
Liz out loud – March 2016
“My last blog (See “Producers, strapped for cash? What are your Options?“) looked at a trading strategy for producers to manage cash flow associated with a low absolute price of oil, i.e. to hedge the height of the forward oil curve, A. See Chart 1.This blog will look at a strategy for producers to hedge the slope of the forward oil curve, T.
The earlier blog, referred to above, discussed the possibility of producers raising cash by selling options when oil prices are low. This blog addresses the issue that, when oil prices are low and producers are hesitant about locking in low levels, the slope of the forward curve is typically in an attractive contango formation, i.e. forward prices are higher than current prompt prices. Producers like contango because it allows them to sell forward contracts at prices that are higher than the prompt prices that they, and their shareholders, see reported in the press.”
Producers Strapped for Cash? What are your Options?
Liz Out Loud – March 2016
“I have spent a lot of time recently with oil producers who, with some notable exceptions, are very gloomy indeed.
Anyone who reads my blogs or books knows that I have never forecast oil prices and I don’t intend to start now. The oil price is fundamentally unforecastable, prone as it is to political shocks and unforeseen events. Instead I prefer to consider trading opportunities as they arise and deal with life as it is, not as I would like it to be.”
When does Maintaining Confidentiality become Market Abuse?
Liz Out Loud – December 2015
On 25th November 2015 there was an agreement between the European Parliament and the European Council on the regulation of benchmarks, including oil benchmarks. On 17th December 2015 the price reporting agency, Platts, held a meeting to discuss, among other things, the future make-up of the influential Dated Brent benchmark.
We are better informed, but are we any the Wiser?
Oxford Energy Forum – December 2015
Long before the banking crisis and the Libor scandal kicked off in 2008, regulators were hard at work trying to protect markets and investors from deliberate abuse and from structural fl aws that could bring the whole system down in a cascade of cross defaults.
We’re Going to Need a Bigger Tank!
Liz Out Loud – December 2015
Sale and purchase contracts are likely to need some revision before the ink has dried on supply commitments for 2016. Also those who have hedged their operating revenue or have financed capex based on the forward oil price curve of one of the existing benchmarks – Brent, Dubai or “WTI” – better familiarise themselves with the concept of basis risk. Because it is all change again in the world of price benchmarks.
The Battle of the Benchmarks
Liz Out Loud – September 2015
On 18th September Platts reported that “The International Organization of Securities Commissions (IOSCO) on Thursday said that price reporting agencies had made its recommended operating principles an “integral part” of their practices and said it saw no more need for annual reviews of their implementation.”
Also on 18th September Bloomberg reported that “Major oil companies including Royal Dutch Shell Plc and price publisher Platts were told by regulators to redact business secrets from documents obtained during antitrust raids in a sign the European Union may be moving ahead with a two-year-old probe..”
Liz Out Loud September 2015
In this the silly season, while the world (except hard-working consultants) are off on holiday, two little press releases have slipped by almost unnoticed: Maersk announced that it will be seeking permission to close down the 7,000b/d J-Block Janice field next year because of falling oil prices; and, the Johan Sverdrup plan of development for Phase 1 received final consent by the Norwegian Ministry of Petroleum on 20 August 2015.
To most traders these announcements are very frustrating because they stop at the good bit- what are the trading implications?
How not to sell crude oil
What do you do when the world is awash with oil, your biggest customer has suddenly become almost self-sufficient and your nearest competitor is producing a more suitable quality of oil for your remaining market? You ban 113 crude tankers from entering your territorial waters with immediate effect, of course- simples!
Low oil prices: Don’t eat the Seed Corn!
The old adage that “necessity is the mother of invention” is proving true in the independent E&P oil sector. Faced with low oil prices, independent oil producers are introducing oil price “optionality” into their crude oil sales contracts. Crude producers reeling from low prices are offering optionality as one way of boosting the prices they achieve.