What to Watch

 

Saudis, SoftBank Group Announce World’s Largest Solar Power Project

 

Saudi Arabia’s sovereign-wealth fund is joining forces with Japan’s SoftBank Group to build the world’s biggest solar-power-generation project, writes The Wall Street Journal’s Margherita Stancati and Michael Amon.

 

The project would kick-off this year with a $1 billion investment from the joint Saudi-SoftBank Vision Fund, and would provide about 200 gigawatts of power by 2030, said Masayoshi Son, the chief executive of SoftBank.

 

Saudi Arabia, the world’s top crude exporter, has long touted its potential to become a solar powerhouse, but its plans have been hampered by the elevated costs associated with building large solar fields in its inhospitable regions.

 

At present Saudi Arabia provides highly subsidized power to its citizens, using its vast reserves of crude oil as an inexpensive source of electricity

 

Meanwhile, oil prices edged down Wednesday morning on the back of an expected rise in U.S. crude stockpiles and a strengthening U.S. dollar.

 

Brent crude, the global benchmark, was down 0.66% at $69.65 a barrel on London’s Intercontinental Exchange. On the New York Mercantile Exchange, West Texas Intermediate futures were trading down more than 1% at $64.59 a barrel.

 

Energy News

 

Carlyle-Led Consortium to Buy Akzo Nobel’s Chemicals Unit

 

A group led by U.S. private-equity firm Carlyle Group agreed Tuesday to acquire the chemicals business of Dutch paints giant Akzo Nobel for $12.6 billion. Akzo’s chemicals are used in a wide range of products, from plastic bags to solar panels.

 

BYD: Buffeted by Beijing

 

Beijing’s decision to cut subsidies  for new energy vehicles caused a Chinese car maker to announce a slump in profits. The shares of BYD, a car maker backed by Warren Buffett, dropped 11% Wednesday after it said it’s expecting its net profit to fall by up to 92% this quarter.

 

“We are working to shift from a year-to-year agreement to a 10 to 20 year agreement.”

– Saudi Crown Prince Mohammed bin Salman

 

OPEC and Russia Consider a Decades-Long Oil Alliance

 

Saudi Arabia, the de facto leader of the Organization of the Petroleum Exporting Countries, is looking to extend its strategic oil alliance with Russia for about 20 years, Reuters reports. OPEC and external producers including Russia have already been involved in a years-long effort to eliminate about 2% of the global supply in order to re-balance the oil market and prop up crude prices.

 

Big Number

 

4.2 %

 

China’s yuan-denominated crude-oilfutures fell on Wednesday, after three days of trading since their launch, Reuters reports. Prices tumbled 4.2% to $65.09 a barrel.

 

FutureCurve

 

Today: The U.S. Energy Information Administration releases U.S. production figures.

 

Friday: Major stock exchanges in New York and London will be closed in observance of a holiday.

 

April 18–19: IQPC hosts the Oil & Fuel Theft Summit in Geneva. Speakers include Mahmoud Al-Bayati, the director general for counter-terrorism for Iraq, William J. Waggoner, the Chief Executive Officer for the Mexico Petroleum Company and Daniel Gianfalla, a member of the national maritime security advisory committee at the U.S. Department of Homeland Security.

 

Reporter’s Notebook

 

The WSJ’s Dan Molinski on U.S. overseas sales of oil. The U.S. nearly doubled crude oil exports last year to 1.1 million barrels per day compared with 591,000 in 2016, but that was dwarfed by a quadrupling of liquefied natural gas exports. The EIA said U.S. LNG exports reached 1.9 billion cubic feet per day in 2017 compared with 0.5 billion cubic feet per day in 2016, with 53% shipped to three countries: Mexico, South Korea and China. Mexico saw growing gas demand and delays in pipeline construction for delivery of regular natural gas, which forced LNG imports instead. LNG shipped to South Korea, the EIA said, “were part of long-term contracts between sellers Cheniere Energy and Shell and the Korean natural gas buyers.” China, meanwhile, bought mostly on a spot basis.

 

WSJ reporter Alison Sider on the impact of electric cars on oil.Electric vehicles could be the best thing to happen to the oil market in years, Goldman Sachs analysts said. Fear that drivers will shift away from petroleum fuels is already dampening investments in the kinds of expensive oil projects that pay off only over long periods of time. But Goldman analysts expect that adoption of electric vehicles is likely to come slowly. Goldman estimated that electric vehicles will dent oil demand by 1 to 4 million barrels of oil a day. But shelved or delayed oil production projects will cost the world 6 million barrels per day of supply by 2025. “We therefore believe that EVs are likely to have a net tightening effect on the oil market in the 2020s,” Goldman said.